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NXR Norcros Plc

177.00
-3.00 (-1.67%)
12 Apr 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Norcros Plc LSE:NXR London Ordinary Share GB00BYYJL418 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -3.00 -1.67% 177.00 177.00 180.00 178.50 175.00 176.00 212,821 16:29:55
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Ceramic Wall And Floor Tile 441M 16.8M 0.1882 9.40 158.02M

Norcros PLC Interim Results (6211T)

16/11/2023 7:00am

UK Regulatory


Norcros (LSE:NXR)
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From Oct 2023 to Apr 2024

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TIDMNXR

RNS Number : 6211T

Norcros PLC

16 November 2023

16 November 2023

Norcros plc

Results for the six months ended 30 September 2023

Robust performance - share gains reflecting the strength and positioning of our market leading brands

Norcros is a market leading group of brands providing design led, high quality bathroom and kitchen products. The Group today announces its results for the six months ended 30 September 2023.

Financial Summary

 
                               6 months to     6 months to      % change 
                               30 September    30 September    2023 v 2022 
                                   2023            2022 
 Revenue                          GBP201.6m       GBP219.9m         (8.3%) 
                             --------------  --------------  ------------- 
 Revenue constant currency 
  LFL(1)                                                            (4.1%) 
                             --------------  --------------  ------------- 
 Underlying operating 
  profit(2)                        GBP21.4m        GBP22.0m         (2.7%) 
                             --------------  --------------  ------------- 
 Underlying profit before 
  taxation(2)                      GBP18.1m        GBP19.9m         (9.0%) 
                             --------------  --------------  ------------- 
 Diluted underlying EPS(2)            15.6p           17.8p        (12.4%) 
                             --------------  --------------  ------------- 
 Operating profit                  GBP15.3m        GBP16.1m         (5.0%) 
                             --------------  --------------  ------------- 
 Underlying net debt(2)          (GBP46.6m)      (GBP58.9m) 
                             --------------  --------------  ------------- 
 Interim dividend per 
  share                                3.4p            3.4p 
                             --------------  --------------  ------------- 
 

Highlights

-- Robust trading performance with further market share growth driven by successful new product launches and best in class service levels

-- Revenue of GBP201.6m (2022: GBP219.9m) and underlying operating profit of GBP21.4m (2022: GBP22.0m) with a record UK performance at GBP18.7m

-- Excellent cash generation at 121% of underlying EBITDA and low leverage at 1.0x underlying EBITDA

   --      Successful launch of market leading sustainable products across our brands 

-- Interim dividend of 3.4p per share, reflecting the Board's confidence in the Group's prospects

   --      Good progress in the refinement and execution of strategic priorities 

Thomas Willcocks, Chief Executive Officer, commented:

"We have delivered a robust first half performance against a challenging macroeconomic backdrop. Although market conditions remain uncertain, we are confident that the ongoing refinement and execution of our strategy, backed by the strength of our design led market leading brands, will continue to deliver market share gains for the year ending 31 March 2024. We continue to expect full year underlying operating profit to be in line with market expectations (3) ."

There will be a presentation today at 9.00 am GMT for analysts at the offices of Hudson Sandler, 25 Charterhouse Square, London, EC1M 6AE. The supporting slides will be available on the Norcros website at

http://www.norcros.com   later in the day. 

(1) LFL (like for like) basis, adjusted for Grant Westfield (acquired 31 May 2022) and Norcros Adhesives

(2) Definitions and reconciliations of alternative performance measures are provided in note 3

(3) Norcros compiled market consensus for the year to 31 March 2024, as at 16 November 2023, is for an underlying operating profit of GBP43.4 million

Enquiries

 
 Norcros plc                           Tel: 01625 547700 
 Thomas Willcocks, Chief Executive 
  Officer 
 James Eyre, Chief Financial Officer 
 
 Hudson Sandler                        Tel: 0207 796 4133 
 Nick Lyon 
 Sophie Miles 
 
 

Notes to Editors

Norcros is a design and service led bathroom and kitchen business with market leading brands operating primarily in the UK and South Africa.

In the UK, Norcros operates under seven brands: Triton, Merlyn, Multipanel (Grant Westfield), Vado, Croydex, Abode and Johnson Tiles.

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 2,400 people. The Company is listed on the London Stock Exchange. For further information, please visit the Company website: http://www.norcros.com

OVERVIEW OF RESULTS

The Board is pleased to report another robust set of results for the six months ended 30 September 2023. Market share growth and targeted cost management saw the Group deliver an underlying operating profit of GBP21.4m for the period (2022: GBP22.0m). Group operating margins increased to 10.6% (2022: 10.0%), reflecting the successful execution of our strategy and improvements made to our business portfolio. Cash generation was excellent at 121% of underlying EBITDA, benefiting from the focus on working capital in the period.

The UK business delivered a strong performance with revenue of GBP143.9m (2022: GBP142.8m), 0.8% above the prior year, and just 0.8% below on a like for like basis, adjusting for the acquisition of Grant Westfield and closure of Norcros Adhesives. Our brands, which include market leaders Triton, Merlyn, and Grant Westfield, again demonstrated our proven ability to profitably grow share through the cycle, driven by our in-house product design capabilities and market leading service levels.

Our South African business performed resiliently despite heightened energy disruption which adversely impacted market demand in the period. Revenue of GBP57.7m (2022: GBP77.1m) was down 11.0% on a constant currency basis and 25.2% lower on a reported basis. Our experienced management team are adept at managing these challenges by controlling costs and leveraging our brands and financial strength to take share from weaker competitors.

The Group results are a testament to the strength of our design led market leading brands and their positioning in the more resilient mid-to-premium market segment. Our individual brands all employ in-house, sector specialist new product development teams, with a quarter of our revenue coming from products launched in the last 36 months. Significant and successful launches in H1 included ENVi(R) (Triton), Pure (Grant Westfield) and Zone (Vado). These products are increasingly focused on making a positive difference to the environment. Although our brands operate separately, we do collectively take advantage of our scale to deliver revenue and cost synergies, driving sustained market share growth. Given the strength of and continued investment in our model we are confident that we will continue to deliver profitable market share growth as we consolidate what remain fragmented and attractive bathroom and kitchen product markets.

Results

Group revenue for the 26-week first half was GBP201.6m (2022: GBP219.9m), an 8.3% decrease on the prior year on a reported basis and 4.1% below the prior year on a constant currency like for like basis. The robust performance driven by the strength of our brands, their market positioning, and the benefits of our ongoing investment in new product development, enabled the Group to deliver further market share gains.

Underlying operating profit was GBP21.4m (2022: GBP22.0m), reflecting the lower revenue in the period. The underlying operating profit margin improved to 10.6% (2022: 10.0%).

Operating profit was GBP15.3m (2022: GBP16.1m) after deducting acquisition related costs of GBP3.9m (2022: GBP4.9m). Acquisition related costs represent amortisation of acquired intangibles of GBP3.3m (2022: GBP3.1m), acquisition related advisory fees of GBP0.1m (2022: GBP1.5m) and deferred remuneration of GBP0.5m (2022: GBP0.3m). An exceptional cost of GBP1.4m was recognised in the period in relation to the costs associated with a reduction in manufacturing capacity at Johnson Tiles (UK). IAS 19R administration expenses were GBP0.8m (2022: GBP1.0m) in the period.

Underlying profit before taxation was GBP18.1m (2022: GBP19.9m), reflecting the increase in bank interest costs to GBP2.5m (2022: GBP1.2m) primarily due to higher bank base rates. IFRS 16 interest costs in the period on lease liabilities were GBP0.8m (2022: GBP0.9m). The application of IFRS 16 had a GBP0.1m improvement on underlying profit before taxation (2022: nil impact). Profit before taxation was GBP11.7m (2022: GBP14.0m).

Diluted underlying earnings per share were 15.6p (2022: 17.8p), predominantly impacted by the reduction in underlying profit before taxation.

The Group generated an underlying operating cash inflow of GBP27.4m (2022: GBP16.1m), reflecting our continued focus on working capital. Capital expenditure was GBP4.2m in the first half (2022: GBP3.3m), with focused investment in new product development, systems, and our facilities.

Financial Position

Group net debt (pre-IFRS 16) was GBP46.6m at the half year (31 March 2023: GBP49.9m), reflecting a continued focus on working capital. Inclusive of IFRS 16 lease liabilities, net debt was GBP68.9m (31 March 2023: GBP74.6m). The Group remains in a strong financial position with leverage at circa. 1.0x EBITDA and significant headroom within its committed GBP130m RCF financing facility maturing October 2026. IFRS 16 has no impact on cash flow nor on the Group's existing bank covenants.

Pension Scheme

The gross surplus relating to our UK defined benefit pension scheme as calculated under IAS 19R has increased from GBP14.9m at 31 March 2023 to GBP15.7m. This increase in the surplus is primarily due to an increase in the discount rate to 5.60% (31 March 2023: 4.90%), offset by a reduced value of assets. The Group's UK defined benefit pension scheme obligations continue to be appropriately funded and well managed.

Dividend

The Board recognises the importance of dividends to shareholders and is declaring an interim dividend of 3.4p (H1 2022: 3.4p) per share, reflecting the robust first half performance and its confidence in the Group's prospects. The dividend is payable on 16 January 2024 to shareholders on the register on 1 December 2023. The shares will be quoted ex-dividend on 30 November 2023.

NORCROS UK OPERATING REVIEW

Our UK business achieved first half revenue of GBP143.9m (2022: GBP142.8m), representing growth of 0.8% on a reported basis and achieved a record level of underlying operating profit in the period. On a like for like basis, adjusting for Grant Westfield (acquired on 31 May 2022) and Norcros Adhesives in the period, revenue was just 0.8% lower than the previous year. Reductions in volume were broadly offset by price increases.

Triton, Merlyn, and Grant Westfield all performed strongly, driven by new product launches, excellent stock availability and outstanding customer service. Vado's performance was impacted by a delay in new product launches, although the second quarter was stronger than the first. Our other UK brands continued to grow market share and performed in line with our expectations.

RMI remains the largest component in the UK market. Our market leading brands are positioned in the mid-premium RMI segment which has remained relatively resilient in the period. Despite the well reported reduction in new housebuilding activity, we continue to take market share and there remains a significant shortage of homes in the UK.

Whilst representing a smaller proportion of the business, UK based export revenue was higher than the prior year, driven by higher sales in Ireland, France, and the Middle East.

As a result of the above, and the improvements made to our brand portfolio, UK underlying operating profit for the year was 14.7% higher, increasing by GBP2.4m to GBP18.7m (2022: GBP16.3m), with the operating margin increasing to 13.0% (2022: 11.4%). Operating cash conversion was significantly ahead of the prior year, supported by our continued and successful focus on working capital.

Our UK 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, Group relationships and superior customer service.

NORCROS SOUTH AFRICA OPERATING REVIEW

In South Africa, Norcros delivered revenue of GBP57.7m (2022: GBP77.1m), 11.0% lower on a constant currency basis due to materially higher levels of energy rationing adversely impacting consumer confidence and demand. All our operations, including our retail stores, are equipped to handle energy interruptions and as a result can and do remain open during energy 'loadshedding'. Our ongoing focus on product development and customer service continued to drive market share gains in the period.

TAL, our market leading adhesive business in South Africa, posted a strong performance leveraging our brand strength, and our leading technical support capabilities to grow share in the period. Johnson Tiles and Tile Africa were negatively impacted by the market slowdown, particularly in the new housebuilding sector, where both have leading positions. As a result, both businesses saw revenue behind the record prior year levels. House of Plumbing revenue was in line with the previous year despite the challenging market conditions, reflecting market share gains.

As a result of the above, underlying operating profit for the year was GBP2.7m (2022: GBP5.7m), with the operating margin at 4.7% (2022: 7.4%). Operating cash was below the prior year reflecting the difficult trading conditions, partially offset by proactive working capital management.

Our South African business is resilient and will continue to focus on taking market share from weaker competitors. In addition, the business will look to further advance its House of Plumbing national roll out program. Going forward, we envisage energy supply constraints to stabilise over time and benefit from higher levels of private energy generation.

STRATEGIC PRIORITIES

In June this year, we communicated our strategic priorities, namely, Portfolio Development, Organic Growth, Operational Excellence and ESG. We have made early but meaningful progress in all four areas in the first half of this year.

   1.   Portfolio Development 

Norcros has, over the last ten years, successfully grown our share of the bathroom and kitchen markets in our core geographies, both organically and through carefully selected acquisitions. As markets and categories develop, we will continue to assess the performance of our individual brands and ensure that our capital allocation is aligned accordingly.

During the period, the UK adhesives business was closed in line with our communicated plan. We have also recently announced the decision to reduce the capacity of our Johnson Tiles (UK) plant by circa 50% in response to lower UK tile demand. Our most recent acquisition, Grant Westfield, is performing well with strong new channel growth. This again demonstrates our ability to introduce acquired businesses to our blue-chip customer base, including in this case, Wickes, Topps Tiles and Screwfix.

A core component of our strategy is consolidating what remain attractive but fragmented bathroom and kitchen product markets through targeted earnings accretive acquisitions. We have a well-developed acquisition pipeline and we will continue to assess strategically compelling opportunities.

   2.   Organic Growth 

Our focus on driving market share growth in our businesses has three underlying drivers, namely new product development (increasingly in sustainable products), cross-selling and market leading customer service. Our new product vitality index is 25% (proportion of turnover from products launched in the last three years) with standout launches in the period including:

o Triton launched ENVi(R), a world first in showering. The ENVi(R) is the first of Triton's next generation 'behind the wall' sustainable electric shower offering, including control and user feedback on water and energy costs.

o Grant Westfield updated its Tile Collection and launched the new Pure Collection. The business was nominated for two awards for the Tile Collection (Best KBB Product at the BKU Awards and Best Surface Product at the KBB Focus Awards).

o VADO launched the patented recessed Zone shower valve in multiple finishes. Zone is the industry's first recessed all-flush thermostatic valve with push button and temperature dial control, the perfect solution for a minimal aesthetic with easy-to-clean benefits.

In addition, we continue to build processes to enhance our ability to cross-sell and leverage our extensive broad channel base across our brands and to drive market share growth.

   3.   Operational Excellence 

Norcros' commitment to customer service is core to what we do every day. Our operational platforms, and especially the data, required to ensure that our customers stay ahead as their routes to market evolve and multiply, will remain key areas of focus and investment.

Over the last six months, the Group has invested in new ERP and Customer Service systems across several of our UK and SA businesses. This ongoing and targeted investment in our operations will continue to drive efficiency gains and further develop our compelling service offering.

Additionally, we continued to drive our Group wide programme of improvement of our warehousing and logistics capabilities. In the period, we have made further investments to help drive operating efficiencies, cost savings and enhance service levels.

4. Environment, Social and Governance

Norcros views corporate responsibility and sustainability standards as a distinct source of competitive advantage. As set out in our 2023 Annual Report, our key ESG focus areas are our people, environment, innovative and sustainable products, and governance. These themes underpin our strategic growth and operational performance plans. Over the last two years, we have invested in our ability to better measure the impact that we have across these focus areas. Importantly, these measurements are being used to prioritise our investment as we look to play our part in creating a fairer and more sustainable world. Progress over the last six months includes:

o Submitting our carbon emission targets for validation by the Science Based Targets Initiative and completing our first disclosure to the Climate Disclosure Project.

o Triton, Vado, Merlyn and Abode achieving Carbon Neutral status. We recognise that carbon neutrality is a first of several steps towards achieving our Net Zero target.

o Accelerating the launch of sustainable products, including ENVi(R) (Triton) and Pure (Grant Westfield). Triton won the Planet Mark Best Sustainability Campaign award for understanding its responsibility and tackling it with authenticity.

o Leveraging our ability to measure and record our activities to support our suppliers and customers in meeting their ESG commitments. We have been awarded 'engaged supplier' status with several customers helping cement our long term value in these relationships.

o Our people focused ESG priority is accelerated talent and DE&I development. We have appointed Helen Gopsill as Norcros Chief People Officer to lead this.

o Investing meaningfully in the communities we live and work in, including our flagship safe toilet initiative in South African schools.

Investing in ESG is not only the right thing to do but makes commercial sense and underpins our long-term strategic growth plan.

SUMMARY

Norcros has developed a leading and growing position in the bathroom and kitchen product markets and segments that we compete in. The growth opportunities in these fragmented markets remains significant. We are confident that our proven and evolving business model positions us well to take advantage of these opportunities and that we will continue our strong record of sustainable and profitable growth.

Thomas Willcocks James Eyre

Chief Executive Officer Chief Financial Officer

16 November 2023

Condensed consolidated income statement

Six months to 30 September 2023

 
                                                               6 months        6 months 
                                                                     to              to   Year ended 
                                                           30 September    30 September     31 March 
                                                                   2023            2022         2023 
                                                            (unaudited)     (unaudited)    (audited) 
                                                 Notes             GBPm            GBPm         GBPm 
----------------------------------------------  ------  ---------------  --------------  ----------- 
 Revenue                                                          201.6           219.9        441.0 
----------------------------------------------  ------  ---------------  --------------  ----------- 
 Underlying operating profit                                       21.4            22.0         47.3 
 IAS 19R administrative expenses                                  (0.8)           (1.0)        (1.6) 
 Acquisition related costs                           4            (3.9)           (4.9)        (8.4) 
 Exceptional operating items                         4            (1.4)               -        (9.8) 
----------------------------------------------  ------  ---------------  --------------  ----------- 
 Operating profit                                                  15.3            16.1         27.5 
 Finance costs                                       7            (3.9)           (2.3)        (6.4) 
 IAS 19R finance credit                                             0.3             0.2          0.6 
----------------------------------------------  ------  ---------------  --------------  ----------- 
 Profit before taxation                                            11.7            14.0         21.7 
 Taxation                                            6            (2.4)           (3.0)        (4.9) 
----------------------------------------------  ------  ---------------  --------------  ----------- 
 Profit for the period attributable to equity 
  holders of the Company                                            9.3            11.0         16.8 
----------------------------------------------  ------  ---------------  --------------  ----------- 
 Earnings per share attributable to equity 
  holders of the Company 
 Basic earnings per share: 
 From profit for the period                          5            10.4p           12.6p        19.1p 
----------------------------------------------  ------  ---------------  --------------  ----------- 
 Diluted earnings per share: 
 From profit for the period                          5            10.3p           12.4p        18.8p 
----------------------------------------------  ------  ---------------  --------------  ----------- 
 Weighted average number of shares for basic 
  earnings per share (millions)                      5             89.2            87.1         88.1 
----------------------------------------------  ------  ---------------  --------------  ----------- 
 Alternative performance measures 
 Underlying profit before taxation (GBPm)            3             18.1            19.9         41.8 
 Underlying earnings (GBPm)                          3             14.1            15.8         33.5 
 Basic underlying earnings per share                 5            15.8p           18.1p        38.0p 
 Diluted underlying earnings per share               5            15.6p           17.8p        37.4p 
----------------------------------------------  ------  ---------------  --------------  ----------- 
 

Condensed consolidated statement of comprehensive income

Six months to 30 September 2023

 
                                                           6 months        6 months 
                                                                 to              to   Year ended 
                                                       30 September    30 September     31 March 
                                                               2023            2022         2023 
                                                        (unaudited)     (unaudited)    (audited) 
                                                               GBPm            GBPm         GBPm 
--------------------------------------------------  ---------------  --------------  ----------- 
 Profit for the period                                          9.3            11.0         16.8 
--------------------------------------------------  ---------------  --------------  ----------- 
 Other comprehensive income and expense: 
 Items that will not subsequently be reclassified 
  to the Income Statement 
 Actuarial losses on retirement benefit 
  obligations                                                 (0.5)           (9.4)        (5.6) 
 Items that may be subsequently reclassified 
  to the Income Statement 
 Cash flow hedges - fair value gain/(loss) 
  in year net of taxation                                       1.7             2.8        (2.9) 
 Foreign currency translation adjustments                     (2.9)           (2.4)        (8.3) 
--------------------------------------------------  ---------------  --------------  ----------- 
 Other comprehensive expense for the period                   (1.7)           (9.0)       (16.8) 
--------------------------------------------------  ---------------  --------------  ----------- 
 Total comprehensive income for the period 
  attributable to equity holders of the 
  Company                                                       7.6             2.0            - 
--------------------------------------------------  ---------------  --------------  ----------- 
 

Items in the statement are disclosed net of tax.

Condensed consolidated balance sheet

At 30 September 2023

 
                                                              At              At           At 
                                                    30 September    30 September     31 March 
                                                            2023            2022         2023 
                                                     (unaudited)     (unaudited)    (audited) 
                                          Notes             GBPm            GBPm         GBPm 
---------------------------------------  ------  ---------------  --------------  ----------- 
 Non-current assets 
 Goodwill                                                  107.5           108.1        107.9 
 Intangible assets                                          56.6            68.0         59.2 
 Property, plant and equipment                              24.3            30.3         24.8 
 Pension scheme asset                        12             15.7             8.2         14.9 
 Right of use assets                                        17.9            21.4         20.0 
---------------------------------------  ------  ---------------  --------------  ----------- 
                                                           222.0           236.0        226.8 
---------------------------------------  ------  ---------------  --------------  ----------- 
 Current assets 
 Inventories                                                97.2           112.7        103.9 
 Trade and other receivables                                78.6            80.0         83.3 
 Derivative financial instruments                              -             5.3            - 
 Cash and cash equivalents                    8             32.6            31.1         29.0 
---------------------------------------  ------  ---------------  --------------  ----------- 
                                                           208.4           229.1        216.2 
---------------------------------------  ------  ---------------  --------------  ----------- 
 Current liabilities 
 Trade and other payables                                 (91.9)         (114.0)       (99.2) 
 Lease liabilities                                         (6.3)           (5.7)        (6.1) 
 Current tax liabilities                                   (1.0)           (1.9)        (0.9) 
 Derivative financial instruments                              -               -        (2.0) 
 Provisions                                                    -               -        (4.5) 
                                                          (99.2)         (121.6)      (112.7) 
---------------------------------------  ------  ---------------  --------------  ----------- 
 Net current assets                                        109.2           107.5        103.5 
---------------------------------------  ------  ---------------  --------------  ----------- 
 Total assets less current liabilities                     331.2           343.5        330.3 
---------------------------------------  ------  ---------------  --------------  ----------- 
 Non-current liabilities 
 Financial liabilities - borrowings           8           (79.2)          (90.0)       (78.9) 
 Lease liabilities                                        (16.0)          (19.7)       (18.6) 
 Deferred tax liabilities                     6           (14.7)          (17.3)       (15.0) 
 Other non-current liabilities                             (6.9)           (0.5)        (6.2) 
 Provisions                                                (2.9)           (1.5)        (1.2) 
---------------------------------------  ------  ---------------  --------------  ----------- 
                                                         (119.7)         (129.0)      (119.9) 
---------------------------------------  ------  ---------------  --------------  ----------- 
 Net assets                                                211.5           214.5        210.4 
---------------------------------------  ------  ---------------  --------------  ----------- 
 Financed by: 
 Share capital                                9              8.9             8.9          8.9 
 Share premium                                              47.6            47.6         47.6 
 Retained earnings and other reserves                      155.0           158.0        153.9 
---------------------------------------  ------  ---------------  --------------  ----------- 
 Total equity                                              211.5           214.5        210.4 
---------------------------------------  ------  ---------------  --------------  ----------- 
 

Condensed consolidated statement of cash flow

Six months to 30 September 2023

 
                                                                 6 months        6 months 
                                                                       to              to   Year ended 
                                                             30 September    30 September     31 March 
                                                                     2023            2022         2023 
                                                              (unaudited)     (unaudited)    (audited) 
                                                    Notes            GBPm            GBPm         GBPm 
-------------------------------------------------  ------  --------------  --------------  ----------- 
 Cash generated from operations                        10            23.6            11.6         37.7 
 Income taxes paid                                                  (2.6)           (4.3)        (7.7) 
 Interest paid                                                      (3.3)           (2.1)        (5.5) 
-------------------------------------------------  ------  --------------  --------------  ----------- 
 Net cash generated from operating activities                        17.7             5.2         24.5 
-------------------------------------------------  ------  --------------  --------------  ----------- 
 
 Cash flows from investing activities 
 Purchase of property, plant and equipment 
  and intangible assets                                             (4.2)           (3.3)        (6.0) 
 Acquisition of subsidiary undertakings net 
  of cash acquired                                                      -          (78.3)       (78.3) 
 Net cash used in investing activities                              (4.2)          (81.6)       (84.3) 
-------------------------------------------------  ------  --------------  --------------  ----------- 
 
 Cash flows from financing activities 
 Net proceeds from issue of ordinary share 
  capital                                                               -            18.1         18.1 
 Purchase of treasury shares                                        (0.8)               -            - 
 Principal element of lease payments                                (2.3)           (2.4)        (4.6) 
 Drawdown of borrowings                                                 -            71.0         60.0 
 Dividends paid to the Company's shareholders                       (6.1)           (6.1)        (9.2) 
-------------------------------------------------  ------  --------------  --------------  ----------- 
 Net cash (used in)/generated from financing 
  activities                                                        (9.2)            80.6         64.3 
-------------------------------------------------  ------  --------------  --------------  ----------- 
 
 Net increase in cash and cash equivalents                            4.3             4.2          4.5 
 Cash and cash equivalents at beginning of 
  the period                                                         29.0            27.4         27.4 
 Exchange movements on cash and cash equivalents                    (0.7)           (0.5)        (2.9) 
-------------------------------------------------  ------  --------------  --------------  ----------- 
 Cash and cash equivalents at end of the period                      32.6            31.1         29.0 
-------------------------------------------------  ------  --------------  --------------  ----------- 
 
 
 Alternative performance measures 
 Underlying operating cash flow      3   27.4   16.1   44.8 
----------------------------------      -----  -----  ----- 
 

Condensed consolidated statements of changes in equity

Six months to 30 September 2023 (unaudited)

 
                                         Ordinary 
                                            share      Share     Treasury    Hedging   Translation    Retained 
                                          capital    premium      reserve    Reserve       reserve    earnings   Total 
                                             GBPm       GBPm         GBPm       GBPm          GBPm        GBPm    GBPm 
--------------------------------------  ---------  ---------  -----------  ---------  ------------  ----------  ------ 
 At 31 March 2023                             8.9       47.6        (0.1)      (1.4)        (21.1)       176.5   210.4 
 Comprehensive income: 
 Profit for the period                          -          -            -          -             -         9.3     9.3 
 Other comprehensive income/(expense): 
 Actuarial loss on retirement 
  benefit obligations                           -          -            -          -             -       (0.5)   (0.5) 
 Fair value gain on currency 
  hedges                                        -          -            -        1.7             -           -     1.7 
 Foreign currency translation 
  adjustments                                   -          -            -                    (2.9)           -   (2.9) 
--------------------------------------  ---------  ---------  -----------  ---------  ------------  ----------  ------ 
 Total other comprehensive 
  income/(expense)                              -          -            -        1.7         (2.9)       (0.5)   (1.7) 
--------------------------------------  ---------  ---------  -----------  ---------  ------------  ----------  ------ 
 Transactions with owners: 
 Purchase of treasury shares                    -          -        (0.8)          -             -           -   (0.8) 
 Dividends paid                                 -          -            -          -             -       (6.1)   (6.1) 
 Value of employee services                     -          -            -          -             -         0.4     0.4 
--------------------------------------  ---------  ---------  -----------  ---------  ------------  ----------  ------ 
 At 30 September 2023                         8.9       47.6        (0.9)        0.3        (24.0)       179.6   211.5 
--------------------------------------  ---------  ---------  -----------  ---------  ------------  ----------  ------ 
 

Six months to 30 September 2022 (unaudited)

 
                                         Ordinary 
                                            share      Share     Treasury    Hedging   Translation    Retained 
                                          capital    premium      reserve    Reserve       reserve    earnings   Total 
                                             GBPm       GBPm         GBPm       GBPm          GBPm        GBPm    GBPm 
--------------------------------------  ---------  ---------  -----------  ---------  ------------  ----------  ------ 
 At 31 March 2022                             8.1       30.3        (0.1)        1.5        (12.8)       173.3   200.3 
 Comprehensive income: 
 Profit for the period                          -          -            -          -             -        11.0    11.0 
 Other comprehensive income/(expense): 
 Actuarial loss on retirement 
  benefit obligations                           -          -            -          -             -       (9.4)   (9.4) 
 Fair value gain on currency 
  hedges                                        -          -            -        2.8             -           -     2.8 
 Foreign currency translation 
  adjustments                                   -          -            -          -         (2.4)           -   (2.4) 
--------------------------------------  ---------  ---------  -----------  ---------  ------------  ----------  ------ 
 Total other comprehensive 
  income/(expense)                              -          -            -        2.8         (2.4)       (9.4)   (9.0) 
--------------------------------------  ---------  ---------  -----------  ---------  ------------  ----------  ------ 
 Transactions with owners: 
 Shares Issued                                0.8       17.3            -          -             -           -    18.1 
 Dividends paid                                 -          -            -          -             -       (6.1)   (6.1) 
 Value of employee services                     -          -            -          -             -         0.2     0.2 
--------------------------------------  ---------  ---------  -----------  ---------  ------------  ----------  ------ 
 At 30 September 2022                         8.9       47.6        (0.1)        4.3        (15.2)       169.0   214.5 
--------------------------------------  ---------  ---------  -----------  ---------  ------------  ----------  ------ 
 

Year ended 31 March 2023 (audited)

 
                                 Ordinary 
                                    share      Share     Treasury    Hedging   Translation    Retained 
                                  capital    premium      reserve    Reserve       reserve    earnings    Total 
                                     GBPm       GBPm         GBPm       GBPm          GBPm        GBPm     GBPm 
------------------------------  ---------  ---------  -----------  ---------  ------------  ----------  ------- 
 At 31 March 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                               -          -            -      (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 
------------------------------  ---------  ---------  -----------  ---------  ------------  ----------  ------- 
 

Notes to the accounts

Six months to 30 September 2023

1. Accounting policies

General information

The principal activity of Norcros plc ("the Company") and its subsidiaries (together "the Group") is the provision of design led, high quality bathroom and kitchen products, mainly in the UK and South Africa.

The Company is incorporated in England as a public company limited by shares. The shares of the Company are listed on the London Stock Exchange market of listed securities. The address of its registered office is Ladyfield House, Station Road, Wilmslow, SK9 1BU, UK.

This condensed consolidated interim financial information was approved for issue on 16 November 2023 and does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006 and has neither been audited nor reviewed.

Basis of preparation

This condensed consolidated interim financial information for the six months to 30 September 2023 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, 'Interim financial reporting'.

The Directors consider, after making appropriate enquiries at the time of approving the condensed consolidated interim financial information, that the Company and the Group have adequate resources to continue in operational existence and, accordingly, that it is appropriate to adopt the going concern basis in the preparation of the condensed consolidated interim financial information.

The condensed consolidated interim financial information should be read in conjunction with the Annual Report and Accounts for the year ended 31 March 2023, which has been prepared in accordance with IFRS as adopted by the UK. The Annual Report and Accounts was approved by the Board on 14 June 2023 and delivered to the Registrar of Companies. The report of the external auditor on the financial statements was unqualified.

Accounting policies

The principal accounting policies applied in the preparation of this condensed consolidated interim financial information are included in the financial report for the year ended 31 March 2023. These policies have been applied consistently to all periods presented.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to the expected total annual profits or losses.

Risks and uncertainties

The principal risks and uncertainties affecting the Group, together with the approach to their mitigation, remain as set out on pages 40 to 44 in the 2023 Annual Report, which is available on the Group's website (www.norcros.com). The principal risks stated were: pandemics (including Covid-19), acquisition risk, environmental, social and governance (ESG), staff retention and recruitment, market conditions, loss of key customers, competition, reliance on production facilities, loss of a key supplier, information technology and cyber security risk, exchange rate risk, funding and liquidity risk and pension scheme risk.

This interim statement includes comments on the outlook for the remaining six months of the financial year.

Forward-looking statements

This interim statement contains forward-looking statements. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to be correct. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements.

The Group undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Accounting estimates and judgements

The preparation of condensed consolidated interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets and liabilities, income, and expense. Actual results may differ from these estimates.

In preparing the condensed consolidated interim financial information, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 March 2023.

2. Segmental reporting

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

 
                                              6 months to 30 September 
                                                  2023 (unaudited) 
---------------------------------  ------ 
                                                         South 
                                                 UK     Africa     Group 
                                    Notes      GBPm       GBPm      GBPm 
---------------------------------  ------  --------  ---------  -------- 
 Revenue                                      143.9       57.7     201.6 
---------------------------------  ------  --------  ---------  -------- 
 Underlying operating profit                   18.7        2.7      21.4 
 IAS 19R administrative expenses              (0.8)          -     (0.8) 
 Acquisition related costs              4     (3.8)      (0.1)     (3.9) 
 Exceptional operating items            4     (1.4)          -     (1.4) 
 Operating profit                              12.7        2.6      15.3 
---------------------------------  ------  --------  ---------  -------- 
 Finance costs (net)                                               (3.6) 
---------------------------------  ------  --------  ---------  -------- 
 Profit before taxation                                             11.7 
 Taxation                               6                          (2.4) 
---------------------------------  ------  --------  ---------  -------- 
 Profit for the period                                               9.3 
---------------------------------  ------  --------  ---------  -------- 
 Net debt                               8                         (46.6) 
---------------------------------  ------  --------  ---------  -------- 
 
 
                                              6 months to 30 September 
                                                  2022 (unaudited) 
---------------------------------  ------ 
                                                         South 
                                                 UK     Africa     Group 
                                    Notes      GBPm       GBPm      GBPm 
---------------------------------  ------  --------  ---------  -------- 
 Revenue                                      142.8       77.1     219.9 
---------------------------------  ------  --------  ---------  -------- 
 Underlying operating profit                   16.3        5.7      22.0 
 IAS 19R administrative expenses              (1.0)          -     (1.0) 
 Acquisition related costs              4     (4.8)      (0.1)     (4.9) 
 Operating profit                              10.5        5.6      16.1 
---------------------------------  ------  --------  ---------  -------- 
 Finance costs (net)                                               (2.1) 
---------------------------------  ------  --------  ---------  -------- 
 Profit before taxation                                             14.0 
 Taxation                               6                          (3.0) 
---------------------------------  ------  --------  ---------  -------- 
 Profit for the period                                              11.0 
---------------------------------  ------  --------  ---------  -------- 
 Net debt                               8                         (58.9) 
---------------------------------  ------  --------  ---------  -------- 
 
 
                                              Year ended 31 March 2023 
                                                      (audited) 
---------------------------------  ------ 
                                                         South 
                                                 UK     Africa     Group 
                                    Notes      GBPm       GBPm      GBPm 
---------------------------------  ------  --------  ---------  -------- 
 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              4     (8.2)      (0.2)     (8.4) 
 Exceptional operating items            4     (9.8)          -     (9.8) 
 Operating profit                              17.6        9.9      27.5 
---------------------------------  ------  --------  ---------  -------- 
 Finance costs (net)                                               (5.8) 
---------------------------------  ------  --------  ---------  -------- 
 Profit before taxation                                             21.7 
 Taxation                               6                          (4.9) 
---------------------------------  ------  --------  ---------  -------- 
 Profit for the period                                              16.8 
---------------------------------  ------  --------  ---------  -------- 
 Net debt                               8                         (49.9) 
---------------------------------  ------  --------  ---------  -------- 
 

There are no differences from the last Annual Report in the basis of segmentation or in the basis of measurement of segment profit or loss.

3. Alternative performance measures

The Group makes use of a number of alternative performance measures to assess business performance and provide additional useful information to shareholders. Such alternative performance measures should not be viewed as a replacement of, or superior to, those defined by Generally Accepted Accounting Principles (GAAP). Definitions of alternative performance measures used by the Group and, where relevant, reconciliations from GAAP-defined reporting measures to the Group's alternative performance measures are provided below.

The alternative performance measures used by the Group are:

 
 Measure                             Definition 
 Underlying operating profit         Operating profit before IAS 19R administrative 
                                      expenses, acquisition related costs 
                                      and exceptional operating items 
                                    ------------------------------------------------- 
 Underlying profit before taxation   Profit before taxation before IAS 19R 
                                      administrative expenses, acquisition 
                                      related costs, exceptional operating 
                                      items, amortisation of costs of raising 
                                      finance, net movement on fair value 
                                      of derivative financial instruments 
                                      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 operating margin         Underlying operating profit expressed 
                                      as a percentage of revenue 
                                    ------------------------------------------------- 
 Basic underlying earnings per       Underlying earnings divided by the 
  share                               weighted average number of shares for 
                                      basic earnings per share 
                                    ------------------------------------------------- 
 Diluted underlying earnings per     Underlying earnings divided by the 
  share                               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 IFRS16 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. IFRS16 
                                      lease commitments are not included 
                                      in line with our banking covenants 
                                    ------------------------------------------------- 
 

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 annual bonus and long-term incentives earned by the Directors. 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:

Condensed Consolidated Income Statement

   (a)   Underlying profit before taxation and underlying earnings 
 
                                                     6 months        6 months 
                                                           to              to   Year ended 
                                                 30 September    30 September     31 March 
                                                         2023            2022         2023 
                                                  (unaudited)     (unaudited)    (audited) 
                                                         GBPm            GBPm         GBPm 
--------------------------------------------  ---------------  --------------  ----------- 
 Profit before taxation                                  11.7            14.0         21.7 
 Adjusted for: 
 IAS 19R administrative expenses                          0.8             1.0          1.6 
 Acquisition related costs                                3.9             4.9          8.4 
 Exceptional operating items                              1.4               -          9.8 
 Amortisation of costs of raising finance                 0.3             0.2          0.3 
 Discounting of contingent consideration                  0.3               -          0.6 
 IAS 19R finance income                                 (0.3)           (0.2)        (0.6) 
--------------------------------------------  ---------------  --------------  ----------- 
 Underlying profit before taxation                       18.1            19.9         41.8 
 Taxation attributable to underlying profit 
  before taxation                                       (4.0)           (4.1)        (8.3) 
--------------------------------------------  ---------------  --------------  ----------- 
 Underlying earnings                                     14.1            15.8         33.5 
--------------------------------------------  ---------------  --------------  ----------- 
 
   (b)   Underlying EBITDA 
 
                                                       6 months        6 months 
                                                             to              to   Year ended 
                                                   30 September    30 September     31 March 
                                                           2023            2022         2023 
                                                    (unaudited)     (unaudited)    (audited) 
                                                           GBPm            GBPm         GBPm 
----------------------------------------------  ---------------  --------------  ----------- 
 Operating profit                                          15.3            16.1         27.5 
 Adjusted for: 
 IAS 19R administrative expenses                            0.8             1.0          1.6 
 Acquisition related costs                                  3.9             4.9          8.4 
 Exceptional operating items                                1.4               -          9.8 
----------------------------------------------  ---------------  --------------  ----------- 
 Underlying operating profit                               21.4            22.0         47.3 
 Depreciation and amortisation (owned assets)               2.1             2.5          5.0 
 Depreciation of leased assets                              2.2             2.4          4.6 
 Lease costs                                              (3.1)           (3.3)        (6.4) 
----------------------------------------------  ---------------  --------------  ----------- 
 Underlying EBITDA (pre-IFRS 16)                           22.6            23.6         50.5 
----------------------------------------------  ---------------  --------------  ----------- 
 

Condensed Consolidated Statement of Cash Flow

Underlying operating cash flow

 
                                                            6 months        6 months 
                                                                  to              to   Year ended 
                                                        30 September    30 September     31 March 
                                                                2023            2022         2023 
                                                         (unaudited)     (unaudited)    (audited) 
                                                                GBPm            GBPm         GBPm 
 Cash generated from continuing operations 
  (note 10)                                                     23.6            11.6         37.7 
 Adjusted for: 
 Cash flows from exceptional items and acquisition 
  related costs                                                  1.8             2.6          3.3 
 Pension fund deficit recovery contributions                     2.0             1.9          3.8 
---------------------------------------------------  ---------------  --------------  ----------- 
 Underlying operating cash flow                                 27.4            16.1         44.8 
---------------------------------------------------  ---------------  --------------  ----------- 
 

4. Acquisition related costs and exceptional operating items

An analysis of acquisition related costs is shown below.

 
                                           6 months        6 months 
                                                 to              to   Year ended 
                                       30 September    30 September     31 March 
                                               2023            2022         2023 
                                        (unaudited)     (unaudited)    (audited) 
                                               GBPm            GBPm         GBPm 
----------------------------------  ---------------  --------------  ----------- 
 Acquisition related costs 
 Intangible asset amortisation(1)               3.3             3.1          6.2 
 Advisory Fees(2)                               0.1             1.5          1.4 
 Deferred remuneration(3)                       0.5             0.3          0.8 
                                                3.9             4.9          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 Deferred consideration payable to the divisional employees of the acquired business is required to be treated as remuneration, and, accordingly, is expensed to the Income Statement as incurred over the period of the related agreement.

 
                                      6 months        6 months 
                                            to              to   Year ended 
                                  30 September    30 September     31 March 
                                          2023            2023         2023 
                                   (unaudited)     (unaudited)    (audited) 
                                          GBPm            GBPm         GBPm 
-----------------------------  ---------------  --------------  ----------- 
 Exceptional Operating Items 
 Restructuring costs1                      1.4               -          4.8 
 Impairment(2)                               -               -          5.0 
                                           1.4               -          9.8 
-----------------------------  ---------------  --------------  ----------- 
 

1 The exceptional restructuring cost in the current year relates to the aforementioned restructuring in Johnson Tiles. In the prior year, exceptional restructuring costs of GBP4.8m were incurred in relation to the restructuring programme implemented at Norcros Adhesives. This GBP4.8m represented a provision for the costs associated with closure including the write down of current and non-current asset values and costs such as redundancy.

2 As a result of demand uncertainty, the Johnsons Tiles tangible and right of use assets were impaired in the prior year with a non-cash impairment charge of GBP5.0m recognised as an exceptional item in the income statement.

5. Earnings per share

Basic and diluted earnings per share

Basic earnings per share (EPS) is calculated by dividing the profit attributable to shareholders by the weighted average number of ordinary shares in issue during the period, 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.

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

 
                                     6 months        6 months 
                                           to              to   Year ended 
                                 30 September    30 September     31 March 
                                         2023            2022         2023 
                                  (unaudited)     (unaudited)    (audited) 
                                         GBPm            GBPm         GBPm 
-----------------------  ---  ---------------  --------------  ----------- 
 Profit for the period                    9.3            11.0         16.8 
----------------------------  ---------------  --------------  ----------- 
 
 
                                                     6 months        6 months 
                                                           to              to   Year ended 
                                                 30 September    30 September     31 March 
                                                         2023            2022         2023 
                                                  (unaudited)     (unaudited)    (audited) 
                                                       Number          Number       Number 
---------------------------------------  ---  ---------------  --------------  ----------- 
 Weighted average number of shares for 
  basic earnings per share                         89,170,488      87,121,128   88,129,432 
 Share options                                      1,370,636       1,443,078    1,370,679 
--------------------------------------------  ---------------  --------------  ----------- 
 Weighted average number of shares for 
  diluted earnings per share                       90,541,124      88,564,206   89,500,111 
--------------------------------------------  ---------------  --------------  ----------- 
 
 
                                            6 months         6 months 
                                                  to               to   Year ended 
                                        30 September     30 September     31 March 
                                                2023             2022         2023 
                                         (unaudited)      (unaudited)    (audited) 
-----------------------------  ----  ---------------  ---------------  ----------- 
 Basic earnings per share: 
 From profit for the period                    10.4p            12.6p        19.1p 
-----------------------------------  ---------------  ---------------  ----------- 
 Diluted earnings per share: 
 From profit for the period                    10.3p            12.4p        18.8p 
-----------------------------------  ---------------  ---------------  ----------- 
 

Basic and diluted underlying earnings per share

Basic and diluted underlying earnings per share have also been provided which reflect underlying earnings from continuing operations divided by the weighted average number of shares set out above.

 
                                                   6 months        6 months 
                                                         to              to   Year ended 
                                               30 September    30 September     31 March 
                                                       2023            2022         2023 
                                                (unaudited)     (unaudited)    (audited) 
                                                       GBPm            GBPm         GBPm 
------------------------------------  ----  ---------------  --------------  ----------- 
 Underlying earnings for the period 
  (note 3)                                             14.1            15.8         33.5 
------------------------------------------  ---------------  --------------  ----------- 
 
 
                                                      6 months        6 months 
                                                            to              to   Year ended 
                                                  30 September    30 September     31 March 
                                                          2023            2022         2023 
                                                   (unaudited)     (unaudited)    (audited) 
---------------------------------------  ----  ---------------  --------------  ----------- 
 Basic underlying earnings per share                     15.8p           18.1p        38.0p 
 Diluted underlying earnings per share                   15.6p           17.8p        37.4p 
---------------------------------------------  ---------------  --------------  ----------- 
 

6. Taxation

Taxation comprises:

 
                                                            6 months        6 months 
                                                                  to              to   Year ended 
                                                        30 September    30 September     31 March 
                                                                2023            2022         2023 
                                                         (unaudited)     (unaudited)    (audited) 
                                                                GBPm            GBPm         GBPm 
---------------------------------------------------  ---------------  --------------  ----------- 
 Current 
 UK taxation                                                     1.1             1.3          1.8 
 Overseas taxation                                               1.6             2.0          4.6 
 Prior year adjustment                                             -               -        (0.7) 
---------------------------------------------------  ---------------  --------------  ----------- 
 Total current taxation                                          2.7             3.3          5.7 
---------------------------------------------------  ---------------  --------------  ----------- 
 Deferred 
 Origination and reversal of temporary differences             (0.3)           (0.3)        (0.8) 
---------------------------------------------------  ---------------  --------------  ----------- 
 Total tax charge                                                2.4             3.0          4.9 
---------------------------------------------------  ---------------  --------------  ----------- 
 

Current tax expense is recognised based on management's estimate of the weighted average annual income tax rate expected for the full financial year.

In the Spring Budget 2021, the Government announced that from 1 April 2023 the corporation tax rate would increase to 25% and this rate increase is reflected in the above estimates.

The movement on the deferred tax account is as shown below:

 
                                                           6 months        6 months 
                                                                 to              to   Year ended 
                                                       30 September    30 September     31 March 
                                                               2023            2022         2023 
                                                        (unaudited)     (unaudited)    (audited) 
                                                               GBPm            GBPm         GBPm 
--------------------------------------------------  ---------------  --------------  ----------- 
 Deferred tax liability at the beginning of 
  the period                                                 (15.0)           (9.4)        (9.4) 
 Credited to the Consolidated Income Statement                  0.3             0.3          0.8 
 Credited to other comprehensive income                           -             2.5          2.7 
 Deferred tax liability recognised on acquisition                 -          (10.7)        (9.1) 
 Deferred tax liability at the end of the period             (14.7)          (17.3)       (15.0) 
--------------------------------------------------  ---------------  --------------  ----------- 
 
 
                                                          6 months        6 months 
                                                                to              to   Year ended 
                                                      30 September    30 September     31 March 
                                                              2023            2022         2023 
                                                       (unaudited)     (unaudited)    (audited) 
                                                              GBPm            GBPm         GBPm 
-------------------------------------------------  ---------------  --------------  ----------- 
 Accelerated capital allowances                              (0.4)           (0.1)        (0.4) 
 Other timing differences                                      3.0             1.3          3.2 
 Deferred tax liability relating to intangible 
  assets                                                    (13.4)          (16.5)       (14.1) 
 Deferred tax liability relating to pension 
  surplus                                                    (3.9)           (2.0)        (3.7) 
-------------------------------------------------  ---------------  --------------  ----------- 
 Deferred tax liability at the end of the period            (14.7)          (17.3)       (15.0) 
-------------------------------------------------  ---------------  --------------  ----------- 
 

7. Finance costs

 
                                                        6 months        6 months 
                                                              to              to   Year ended 
                                                    30 September    30 September     31 March 
                                                            2023            2022         2023 
                                                     (unaudited)     (unaudited)    (audited) 
                                                            GBPm            GBPm         GBPm 
 Finance costs 
 Interest payable on bank borrowings                         2.5             1.2          3.7 
 Interest on lease liabilities                               0.8             0.9          1.8 
 Amortisation of costs of raising debt finance               0.3             0.2          0.3 
 Discounting of deferred consideration                       0.3               -          0.6 
 Finance costs                                               3.9             2.3          6.4 
-----------------------------------------------  ---------------  --------------  ----------- 
 

8. Borrowings

 
                                                 At              At           At 
                                       30 September    30 September     31 March 
                                               2023            2022         2023 
                                        (unaudited)     (unaudited)    (audited) 
                                               GBPm            GBPm         GBPm 
----------------------------------  ---------------  --------------  ----------- 
 Non-current 
 Bank borrowings (unsecured): 
 - bank loans                                  80.0            91.0         80.0 
 - less: costs of raising finance             (0.8)           (1.0)        (1.1) 
----------------------------------  ---------------  --------------  ----------- 
 Total borrowings                              79.2            90.0         78.9 
----------------------------------  ---------------  --------------  ----------- 
 

The fair value of bank loans equals their carrying amount as they bear interest at floating rates.

The repayment terms of borrowings are as follows:

 
                                             At              At           At 
                                   30 September    30 September     31 March 
                                           2023            2022         2023 
                                    (unaudited)     (unaudited)    (audited) 
                                           GBPm            GBPm         GBPm 
 Not later than one year                      -               -            - 
------------------------------  ---------------  --------------  ----------- 
 After more than one year: 
 - between one and two years                  -               -            - 
 - between two and five years              80.0            91.0         80.0 
 - costs of raising finance               (0.8)           (1.0)        (1.1) 
------------------------------  ---------------  --------------  ----------- 
 Total borrowings                          79.2            90.0         78.9 
------------------------------  ---------------  --------------  ----------- 
 

The Group has a multicurrency GBP130m revolving credit facility (plus a GBP70m uncommitted accordion facility) with four lenders. The facility has a maturity date of October 2026 with a further one-year extension option available to October 2027.

Net debt

The Group's net debt is calculated as follows:

 
                                          At              At           At 
                                30 September    30 September     31 March 
                                        2023            2022         2023 
                                 (unaudited)     (unaudited)    (audited) 
                                        GBPm            GBPm         GBPm 
---------------------------  ---------------  --------------  ----------- 
 Cash and cash equivalents              32.6            31.1         29.0 
 Total borrowings                     (79.2)          (90.0)       (78.9) 
---------------------------  ---------------  --------------  ----------- 
 Net debt                             (46.6)          (58.9)       (49.9) 
---------------------------  ---------------  --------------  ----------- 
 

9. Called up share capital

 
                                                               At              At           At 
                                                     30 September    30 September     31 March 
                                                             2023            2022         2023 
                                                      (unaudited)     (unaudited)    (audited) 
                                                             GBPm            GBPm         GBPm 
------------------------------------------------  ---------------  --------------  ----------- 
 Issued and fully paid 
 89,274,204 (September 2022: 89,271,813, March 
  2023: 89,274,204) ordinary shares of 10p each               8.9             8.9          8.9 
------------------------------------------------  ---------------  --------------  ----------- 
 

In the prior year 8,088,700 ordinary shares were issued as an equity placing ahead of the Grant Westfield acquisition resulting in a share premium of GBP17.2m. 133,078 ordinary shares of 10p were also issued to satisfy vesting of options under the Company's SAYE and DBP share schemes.

10. Consolidated Cash Flow Statements

(a) Cash generated from operations

 
                                                             6 months        6 months 
                                                                   to              to   Year ended 
                                                         30 September    30 September     31 March 
                                                                 2023            2022         2023 
                                                          (unaudited)     (unaudited)    (audited) 
                                                                 GBPm            GBPm         GBPm 
-----------------------------------------------  ---  ---------------  --------------  ----------- 
 Profit before taxation                                          11.7            14.0         21.7 
 Adjustments for: 
 - IAS 19R administrative expenses included 
  in the Income Statement                                         0.8             1.0          1.6 
 - acquisition related costs included 
  in the Income Statement                                         3.9             4.9          8.4 
 - exceptional operating items included 
  in the Income Statement                                         1.4               -          9.8 
 - cash flows from exceptional items and 
  acquisition related costs                                     (1.8)           (2.6)        (3.3) 
 - depreciation of property, plant and 
  equipment                                                       2.0             2.4          4.9 
 - underlying amortisation                                        0.1             0.1          0.1 
 - depreciation of right of use assets                            2.2             2.4          4.6 
 - finance costs included in the Income 
  Statement                                                       3.9             2.3          6.4 
 - pension fund deficit recovery contributions                  (2.0)           (1.9)        (3.8) 
 - IAS 19R finance income included in 
  the Income Statement                                          (0.3)           (0.2)        (0.6) 
 - IFRS2 Charges                                                  0.4             0.2          1.2 
----------------------------------------------------  ---------------  --------------  ----------- 
 Operating cash flows before movements 
  in working capital                                             22.3            22.6         51.0 
 Changes in working capital: 
 - decrease/(increase) in inventories                             4.2           (8.3)        (3.0) 
 - decrease/(increase) in trade and other 
  receivables                                                     3.1             0.1        (3.1) 
 - decrease in trade and other payables                         (6.0)           (2.8)        (7.2) 
----------------------------------------------------  ---------------  --------------  ----------- 
 Cash generated from operations                                  23.6            11.6         37.7 
----------------------------------------------------  ---------------  --------------  ----------- 
 

Cash flows from exceptional items and acquisition related costs includes expenditure charged to exceptional provisions relating to onerous lease costs, acquisition related costs (excluding deferred remuneration) and other business rationalisation and restructuring costs.

(b) Analysis of net debt

 
                                 Net cash                 Underlying 
                              and current   Non-current    net cash/          Lease      Net 
                               borrowings    borrowings       (debt)    Liabilities     debt 
                                     GBPm          GBPm         GBPm           GBPm     GBPm 
--------------------------  -------------  ------------               ------------- 
 At 1 April 2023                     29.0        (78.9)       (49.9)         (24.7)   (74.6) 
 Cash flow                            4.3             -          4.3            3.1      7.4 
 Non-cash finance costs                 -         (0.3)        (0.3)          (0.8)    (1.1) 
 Other non-cash movements               -             -            -          (0.8)    (0.8) 
 Exchange movements                 (0.7)             -        (0.7)            0.9      0.2 
 At 30 September 2023                32.6        (79.2)       (46.6)         (22.3)   (68.9) 
--------------------------  ------------- 
 
 
 
                                 Net cash                 Underlying 
                              and current   Non-current    net cash/          Lease      Net 
                               borrowings    borrowings       (debt)    Liabilities     debt 
                                     GBPm          GBPm         GBPm           GBPm     GBPm 
--------------------------  -------------  ------------               ------------- 
 At 1 April 2022                     27.4        (18.8)          8.6         (24.0)   (15.4) 
 Cash flow                            4.2        (71.0)       (66.8)            3.3   (63.5) 
 Non-cash finance costs                 -         (0.2)        (0.2)          (0.9)    (1.1) 
 Other non-cash movements               -             -            -          (4.3)    (4.3) 
 Exchange movements                 (0.5)             -        (0.5)            0.5        - 
 At 30 September 2022                31.1        (90.0)       (58.9)         (25.4)   (84.3) 
--------------------------  ------------- 
 
 
 
                                 Net cash                 Underlying 
                              and current   Non-current    net cash/          Lease      Net 
                               borrowings    borrowings       (debt)    Liabilities     debt 
                                     GBPm          GBPm         GBPm           GBPm     GBPm 
--------------------------  -------------  ------------               ------------- 
 At 1 April 2022                     27.4        (18.8)          8.6         (24.0)   (15.4) 
 Cash flow                            4.5        (60.0)       (55.5)            6.4   (49.1) 
 Non-cash finance costs                 -         (0.1)        (0.1)          (1.8)    (1.9) 
 Other non-cash movements               -             -            -          (7.2)    (7.2) 
 Exchange movements                 (2.9)             -        (2.9)            1.9    (1.0) 
--------------------------  -------------  ------------  -----------  -------------  ------- 
 At 31 March 2023                    29.0        (78.9)       (49.9)         (24.7)   (74.6) 
--------------------------  -------------  ------------  -----------  -------------  ------- 
 
 

11. Dividends

A final dividend in respect of the year ended 31 March 2023 of GBP6.1m (6.8p per 10p ordinary share) was paid on 4 August 2023.

On 16 November 2023, the Board declared an interim dividend in respect of the year ended 31 March 2024 of 3.4p per 10p ordinary share. This dividend is payable on 16 January 2024 to shareholders on the register on 1 December 2023 and is not reflected in this condensed consolidated interim financial information. The shares will be quoted ex-dividend on 30 November 2023. Norcros 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 interim dividend is 21 December 2023.

12. Retirement benefit obligations

(a) Pension costs

Norcros Security Plan

The Norcros Security Plan (the "Plan"), the principal UK pension scheme of the Group's UK subsidiaries, is funded by a separate trust fund which operates under UK trust law and is a separate legal entity from the Company. The Plan is governed by a Trustee board which is required by law to act in the best interests of the Plan members and is responsible for setting policies together with the Company. It is predominantly a defined benefit scheme with a modest element of defined contribution benefits. The scheme is closed to new members and future accrual with effect from 1 April 2013, although active members retain a salary link.

The valuation used for IAS 19R disclosures has been produced by Isio, a firm of qualified actuaries, to take account of the requirements of IAS 19R in order to assess the liabilities of the scheme at 30 September 2023. Scheme assets are stated at their market value at 30 September 2023.

(b) IAS 19R, 'Retirement benefit obligations'

The principal assumptions used to calculate the scheme liabilities of the Norcros Security Plan under IAS 19R are:

 
                                    At              At          At 
                          30 September    30 September    31 March 
                                  2023            2022        2023 
----------------------  --------------  --------------  ---------- 
 Discount rate                   5.60%           5.25%       4.90% 
 Inflation rate (RPI)            3.30%           3.55%       3.25% 
 Inflation (CPI)                 2.60%           2.75%       2.55% 
 Salary increases                2.85%           3.00%       2.80% 
----------------------  --------------  --------------  ---------- 
 

The amounts recognised in the Condensed Consolidated Balance Sheet are determined as follows:

 
                                                    At               At           At 
                                          30 September     30 September     31 March 
                                                  2023             2022         2023 
                                           (unaudited)      (unaudited)    (audited) 
                                                  GBPm             GBPm         GBPm 
-------------------------------------  ---------------  ---------------  ----------- 
 Total market value of scheme assets             275.4            287.3        299.9 
 Present value of scheme liabilities           (259.7)          (279.1)      (285.0) 
-------------------------------------  ---------------  ---------------  ----------- 
 Pension surplus                                  15.7              8.2         14.9 
-------------------------------------  ---------------  ---------------  ----------- 
 

13. Related party transactions

The remuneration of executive and non-executive Directors will be disclosed in the Group's Annual Report for the year ending 31 March 2024.

14. Financial risk management and financial instruments

Financial risk factors

The Group's operations expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and energy price risk); credit risk; and liquidity risk. An explanation of these risks and how the Group manages them is set out on page 149 to 152 of the Group's 2023 Annual Report. The interim financial information does not include all financial risk management information and disclosures required in annual financial statements; they should be read in conjunction with the Group's 2023 Annual Report. There have been no material changes in the risk management process or in any risk management policies since the year end.

Statement of Directors' responsibilities

The Directors confirm that this condensed consolidated interim financial information has been prepared in accordance with International Accounting Standard 34, 'Interim financial reporting', as adopted by the European Union and that the Interim Report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

-- an indication of important events that have occurred during the first six months and their impact on the condensed consolidated interim financial information and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

-- material related party transactions in the first six months and any changes in the related party transactions disclosed in the last Annual Report.

The Directors of Norcros plc and their respective responsibilities are as presented on our website www.norcros.com.

By order of the Board

Thomas Willcocks James Eyre

Chief Executive Officer Chief Financial Officer

16 November 2023

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