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Validation results
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Norcros plc
Annual Report and Accounts 2023
INSPIRING
L I V I N G
SPACES
Norcros plc Annual Report and Accounts 2023
Strategic report
Highlights
Investment case
At a glance
Markets
Chair’s statement
Chief Executive Oficer’s statement
Business model
Strategy and objectives
Key performance indicators
Business performance
UK business review
South Africa business review
Chief Financial Oficer’s report
Risk management
Principal risks and uncertainties
Viability statement
Environmental, social and governance
Stakeholder engagement
Corporate governance
Board of Directors
Corporate governance
Audit and Risk Committee report
Nomination Committee report
Remuneration Committee
annual statement
Directors’ remuneration policy report
Annual report on remuneration
Directors’ report
Statement of Directors’ responsibilities
Financial statements
Independent auditor’s report
Consolidated income statement
Consolidated statement of
comprehensiveincome
Consolidated balance sheet
Consolidated cash low statement
Consolidated statement of changes in equity
Notes to the Group accounts
Parent Company balance sheet
Parent Company statement of
changesinequity
Notes to the Parent Company accounts
OUR PURPOSE
To inspire and enhance our
customers’ living spaces.
OUR MISSION
To be a leading supplier of bathroom
and kitchen products in selected
geographies, offering strong brands,
contemporary designs, trusted quality,
outstanding service, innovation
andawide product range.
FRONT COVER
Grant Westield: Recent acquisition of Multipanel business for low maintenance alternative to tiles,
completely grout free with unique tongue and groove installation and Hydrolock connection.
PICTURED OPPOSITE AND ON BACK COVER
Grant Westield: New Tile Collection launched in August 2022, making it the irst and only manufacturer
of tile-effect wall panels to be both made in Britain and Forest Stewardship Council certiied. Looks like
tile, performs like panel.
Norcros plc Annual Report and Accounts
Johnson Tiles: Rigid luxury vinyl tiles offer a
deep structured decorative layer to provide
the authenticity of premium hardwood
looring, without the extensive care regime.
Klix can be cleaned using steam cleaners
and wet mops for easy maintenance. Plus,
this collection is itted with an industry-
leading Armor coating, which provides
technology made from a proprietary formula
of active ingredients, bringing extreme
hardness along with superior scratch,
wearand stain resistance.
STRATEGIC
REPORT
Highlights
Investment case
At a glance
Markets
Chair’s statement
Chief Executive Oficer’s statement
Business model
Strategy and objectives
Key performance indicators
Business performance
UK business review
South Africa business review
Chief Financial Oficer’s report
Risk management
Principal risks and uncertainties
Viability statement
Environmental, social
andgovernance
Stakeholder engagement
Annual Report and Accounts Norcros plc
Total revenue £m
£441.0m +1.5%
1
441.0
396.3
324.2
342.0
331.0
Underlying operating proit £m
£47.3m +13.2%
47.3
41.8
33.8
32.3
34.4
Record revenue and underlying operating
proit and a strong inancial position.
1 On a constant currency like for like basis after adjusting
forGrantWestield, acquired 31 May 2022.
Year to 31 March 2023 highlights
• Resilience of the Group’s business model in challenging
market conditions
• Strong execution of strategy
• Record full year revenue of £441.0m (2022: £396.3m),
11.3%higher than prior year on a reported basis
and1.5%higher on a constant currency like for like basis
after adjusting for Grant Westield
• Record underlying operating proit
2
of £47.3m,
13.2%higher than prior year (2022: £41.8m)
• Operating proit of £27.5m (2022: £36.2m) after
acquisition related costs and exceptional items
• Underlying net debt
2
of £49.9m (2022: net
cash of £8.6m)
• Underlying ROCE
2
of 18.5% (2022: 23.9%)
• Diluted underlying EPS
2
of 37.4p (2022: 38.2p)
• Progressive dividend at 10.2p for the year (2022: 10.0p)
• The acquisition of Grant Westield completed in May 2022,
successfully integrated and performing strongly
Key messages
• Our record performance is a testament to our proven
business model and the dedication of our employees
• The Group has delivered record revenue and underlying
operating proit
• UK – a strong performance beneiting from the contribution
from Grant Westield, the breadth of distribution channels,
stock availability and market leading service levels
• SA – a robust performance relecting leading positions, stock
availability and enhanced product offer against challenging
market conditions in the second half
• The Group has extended its £130m multicurrency revolving
credit facility for a further year until October 2026
• We remain conident that the Group’s proven business
model, leading customer service proposition, leading brands
and highly experienced management teams will continue
todeliver market share gains in the year ahead
2 Deinitions and reconciliations of alternative performance measures
are provided in note 8 to the inancial statements.
3 Adjusted for Grant Westield and Norcros Adhesives.
Current trading
• Group revenue in the two months to the end of
May 2023 was 1.3% ahead of the strong prior year
comparator on a reported basis and 3.6% below
onaconstant currency like for like
3
basis (UK +1.3%,
SA -12.7%) with South Africa impacted by electricity
supply interruptions, which are being actively
managed. Market conditions are likely to remain
uncertain. However, the Board is conident that
our market leading brands and strong execution of
strategy will continue to deliver outperformance,
leading to further progress and market share gains
inline with its expectations in the year ahead.
HIGHLIGHTS
Strategic report
Norcros plc Annual Report and Accounts
Why we outperform?
It’s in our DNA.
INVESTMENT CASE
We have a clear investment case and aresilient business model;
we are well positioned for future growth.
Focused operating model
A leading supplier of bathroom and kitchen
products in selected geographies.
Experienced
managementteam
Our management team has considerable
years of experience of successfully
operating in our markets and segments.
Leading market positions
andbrands
Our brands and products hold market
leading positions or have a signiicant
share of the markets we operate in.
Group-scale advantages
versus smaller competitors
A well-developed and leading supply chain
infrastructure, joint product development
sharing costs and strong balance sheet
tosupport business growth.
2
3
4
Annual Report and Accounts Norcros plc
Flexible and capital
lightmodel
Focusing investment where our expertise
achieves the best return for investors.
Balanced and diversiied
businessportfolio
Multi-product, broad channel
coverage, wide market positioning
andgeographicaldiversiication.
Clear and focused strategy
£600m revenue by 2025, 50% of revenues
derived from overseas and sustainable
ROCE of >15%.
Innovation and new
productdevelopment
We constantly invest in innovation and
developing our product portfolio to better
meet our customer requirements and
refresh our offering.
6 8
5 7
Strategic report
Norcros plc Annual Report and Accounts
A portfolio of market leading
businesseswith strong brands.
Market leader in the manufacture and
marketingofshowers in the UK
The UK and Ireland’s number one supplier of shower enclosures
and trays to the residential, commercial and hospitality sectors
UK
In the UK we offer a wide range of quality bathroom and kitchen products both for domestic
and commercial applications. Our portfolio of businesses is well established, services a
broad customer base and beneits from leading market positions and strong brands.
AT A GLANCE
14%
of Group revenue
13%
of Group revenue
£63.7m
revenue FY 2023
Leading manufacturer and supplier of taps, mixer showers,
bathroom accessories and valves
10%
of Group revenue
£42.3m
revenue FY 2023
£57.5m
revenue FY 2023
Grant Westield is a leading manufacturer of highend
waterproof bathroom wall panels
9%
of Group revenue
£39.5m
revenue FY 2023
Annual Report and Accounts Norcros plc
Read more about our UK businesses
onpages 24 to 31
Leading niche designer and distributor of high quality
kitchentaps, bathroom taps and kitchen sinks
4%
of Group revenue
£17.7m
revenue FY 2023
Leading manufacturer and supplier ofceramictiles in the UK
8%
of Group revenue
£35.3m
revenue FY 2023
Market leading, innovative designer, manufacturer and
distributor of high quality bathroom furnishings and accessories
6%
of Group revenue
£25.5m
revenue FY 2023
Strategic report
Norcros plc Annual Report and Accounts
AT A GLANCE CONTINUED
South Africa
Our complementary businesses in South Africa operate principally from a shared
manufacturing and administrative site near Johannesburg, allowing them to
maximise operational, revenue and cost synergies.
Read more about our South African
businesses on pages 32 to 34
Leading chain of retail stores focused on tiles, and associated
products, such as sanitaryware, showers and adhesives
Leading manufacturer of ceramic and building adhesives
Leading manufacturer of ceramic andporcelain tiles
Market leading supplier of specialist plumbing materials
focused on the speciication and commercial sectors
17%
of Group revenue
5%
of Group revenue
4%
of Group revenue
7%
of Group revenue
£75.5m
revenue FY 2023
£22.5m
revenue FY 2023
£17.9m
revenue FY 2023
£29.3m
revenue FY 2023
®
Annual Report and Accounts Norcros plc
TAKING ECOCONSCIOUS
CHIC TO THE NEXT LEVEL
The new Industria 3 IN 1 Steaming Hot Water Tap serves
the growing demand for industrial style kitchens while
reducing energy and water wastage.
Abode’s Pronteau offers a range of WRAS approved
steaming hot water taps, regulated and approved under
the Water Regulatory Advisory Scheme, to provide
assurance that the products are rigorously tested for safe
use. All components are also WRAS approved.
The new Pronteau Industria 3 IN 1 delivers domestic cold,
hot and iltered steaming hot water via a specially designed
dual-stage handle for optimum safety.
It is also part of the free of charge Abode ilter recycle scheme.
Users can return expired ilters to Abode, via Royal Mail, at no
cost and for added peace of mind, the new Industria 3 IN 1
Steaming Hot Water Tap is covered by a ive-year warranty.
ABODE
Strategic report
Norcros plc Annual Report and Accounts
MARKETS
UK and South Africa market demand is dependent on:
• New building activity
• Repair, maintenance and improvement (RMI) activity
Inluenced by macroeconomic factors:
• Consumer conidence
• Economic growth
• Interest and inlation rates
• Government expenditure
Key market drivers
The Group offers a wide range of quality bathroom and kitchen
products for both domestic and commercial applications across
the UK, Ireland, South Africa and a number of export markets.
The UK overall bathroom market is large and mature and is highly
fragmented with no dominant or global player across all product
categories. Many of the market product category sub-segments
are also highly fragmented with no one company serving all
segments and channels. Shower enclosures, bathroom furniture
and accessories sub-markets are particularly fragmented,
characterised by a signiicant number of SME players.
The South African overall bathroom market is large although more
concentrated than in the UK, albeit selected market segments (e.g.
plumbing) are regionally fragmented with limited national players.
Both Norcros and the other market leader deploy integrated
business models from production to retail to reach all segments
and channels.
In both the UK and South Africa, market demand is dependent on
new building activity and RMI activity in both the public and private
sectors. This is in turn inluenced by macroeconomic factors,
such as GDP, interest rate luctuations, inlation rates, availability of
credit, equity market conditions, unemployment rates, consumer
conidence, changes in government policy and housing shortages.
Merlyn: Arysto by Merlyn’s Wall Hinge Shower Door with
Inline Panel and Side Panel is perfect for emulating the
stylish designs associated with designer bathrooms.
Featuring toughened safety glass with Mershield Stayclear
easy clean protected glass, together with a lifetime guarantee.
Opportunities to grow
share in all markets.
Annual Report and Accounts Norcros plc
• Large target market – c. £2.1bn @ MSP
1
• Shortage of housing
• Fragmented by product and channel
• Norcros market leading positions
• No overall dominant or global player
• No one company serving all segments and channels
• Complementary kitchen market segments
• Further opportunity to grow market share
Quarterly housing completions and transactions
Sources: GOV.UK (March 2023) and HMRC – (Q1 2023)
2005
2006
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
60,000
55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
2023
2021
2022
2020
2019
2017
2015
2013
2018
2016
2014
2012
2011
2010
2009
2008
2007
UK South Africa
• Sizeable target market – c. £1.6bn @ MSP
1
• Supportive dynamics:
• Shortage of housing
• Construction levels are still less than half 2007 peak
• Favourable long-term socio-economic demographics
• Integrated business models – Norcros market
leading positions
• Complementary sub-markets alternative coverings
• Further opportunity to grow market share
Large fragmented market
Signiicant consolidation opportunity
Medium-term potential
Market leading positions
LHS: Starts (England) RHS: Transactions (UK)
Quarterly – dwellings completed and plans passed
Source: SA Stats – Q1 2023
Planning Completions
FY09
FY07
FY08
30,000
25,000
20,000
15,000
10,000
5,000
0
FY20
FY18
FY16
FY23
FY22
FY21
FY19
FY17
FY15
FY14
FY13
FY12
FY11
FY10
Quarterly completions and starts
Quarterly transactions
UK GfK consumer conidence
Source: Growth for Knowledge – May 2023
10
0
-10
-20
-30
-40
-50
-60
FY19
FY13
FY16
FY15
FY14
FY17
FY20
FY18
FY23
FY22
FY21
FNB/BER consumer conidence index
Source: FNB/BER – Q1 2023
30
20
10
0
-10
-20
-30
-40
FY13
FY14
FY15
FY18
FY16
FY19
FY17
FY23
FY22
FY20
FY21
1 MSP = manufacturer’s selling price.
Strategic report
Norcros plc Annual Report and Accounts
CHAIR’S STATEMENT
Overview
I am pleased to report another record performance for the Group
with results at the top end of market expectations. Norcros has
continued to demonstrate resilience and growth in our markets
despite challenging conditions. The Group’s business model and
strategy have proven to be highly effective through a sustained
period ofmacroeconomic uncertainty.
Group revenue for the year was £441.0m (2022: £396.3m), 11.3%
higher than the prior year on a reported basis and 1.5% higher
onaconstant currency like for like basis.
Underlying operating proit was at a record level of £47.3m (2022:
£41.8m), 13.2% ahead of the prior year relecting the contribution
from Grant Westield and further market share gains.
The Group inished the year with net debt of £49.9m (2022: net cash
of £8.6m), the year on year movement relecting the successful
acquisition of Grant Westield, partially offset by strong cash
generation in the period.
Strategy
Notwithstanding the macro challenges in recent years of
Brexit, COVID-19, the war in Ukraine and the UK “mini budget”
inSeptember 2022, we have made strong strategic progress and
our focused growth strategy continues to be valid and relevant.
Our performance during the period demonstrates our focus upon
sustaining a pre-tax return on underlying capital employed of 15%
over the economic cycle and this continues to be key in how we
evaluate opportunities and deploy capital. We made the decision
to close our UK Adhesives business during the year, and whilst
this was a dificult decision, it will improve the Group’s inancial
performance going forward. Our business model, strategy and
core capabilities including sustainable product design and
innovation, well developed sourcing partnerships, and market
leading customer service have again delivered excellent results.
The business will continue to drive market share growth in our
existing businesses while taking advantage of further acquisition
opportunities in what remain fragmented markets.
Dividend
For the year ended 31 March 2023, the Board is recommending a
inal dividend of 6.8p (2022: 6.9p) per share. When combined with
the interim dividend of 3.4p (2022: 3.1p) per share, which was paid
on 10 January 2023, this will make a total dividend for the year of
10.2p (2022: 10.0p) per share, a 2.0% increase on the previous year
whilst maintaining a prudent level of dividend cover.
Environmental, social and governance (ESG)
The Board is committed to embedding sustainability within our
business strategy. We are proud of our history of environmental
and social leadership, our achievements in setting industry leading
standards in our products, and the support we provide to the
communities in which we live and work.
Another record performance, relecting the
resilience of the Norcros business model.
The Group has
outperformed in its
markets against a
backdrop of challenging
market conditions.
Thisisatestament to our
strategy and importantly
our team and their
commitment to delivering
on our strategic priorities.”
David McKeith
Acting Board Chair
Annual Report and Accounts Norcros plc
I am pleased we have made signiicant progress this year. We
have extensively updated our ESG strategy around eight priority
ESG themes which are commented on in detail later in the report,
inalised a 2040 Net Zero Transition Plan and made enhancements
to our emissions and energy data collection process. We are
pleased to have further developed our report aligned to the
recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD), which outlines our approach to managing
climate-related risks and opportunities across the Group.
Pension scheme
The net position relating to our UK deined beneit pension
scheme (as calculated under IAS 19R) remains in a surplus
of £14.9m at 31 March 2023 (2022: £19.6m). Deicit repair
contributions were £3.8m in the year.
The pension scheme is mature, with an average member age of 78,
and experienced a reduction in member numbers in the year from
6,002 to 5,641. We remain conident that our pension obligations
continue to be appropriately funded and well managed. The Group
recognises that the pension scheme is a key stakeholder and the
Group and the Trustee continue to work constructively together.
Board changes and senior management appointments
In January 2023, I was appointed Acting Board Chair until the
Group appoints a new Non-executive Director as Board Chair
and we are pleased to conirm that, as announced, Steve Good
will be appointed a Director from 1 July 2023 and will become
Board Chair Designate from that date. Steve Good will be seeking
election at the AGM and if elected he will assume the Board Chair
role at the conclusion of the AGM. I will not be seeking re-election
at the AGM.
Thomas Willcocks was appointed to the Board as Chief Executive
Oficer with effect from 1 April 2023 following Nick Kelsall’s
retirement. Thomas joined Norcros in 2006 and was promoted
to Managing Director of Norcros South Africa in 2009 and has
overseen the sustained and proitable growth of our South African
business. On 1 August 2021, Thomas became our Group Business
Director – UK before joining the Board. I have worked closely
with both Nick and Thomas as we have developed and grown
the Norcros business, and it has been a pleasure to be able to
stand back and recognise the success achieved. I would like to
thank Nick for his focused and determined leadership over this
time andwish him and his family the very best in his retirement.
Nickhas handed over to an experienced team led by Thomas
andJames Eyre (CFO), which is testament to his development
ofthe Norcros business and team throughout his tenure.
Stefan Allanson was appointed to the Board on 1 January 2023 as
a Non-executive Director and Chair (Designate) of the Audit and
Risk Committee. Stefan is the Chief Financial Oficer of MJ Gleeson
plc and has held senior inance roles at Keepmoat Ltd, Tianhe
Chemicals Ltd, The Vita Group Ltd and Honda Motor Company.
The Board composition can be found on pages 82 and 83.
The Group Executive Committee comprises our CEO (Thomas
Willcocks), CFO (James Eyre) and Group Counsel and Company
Secretary (Richard Collins). The search for a replacement Group
Business Director – UK, who will also join the Executive Committee,
is well advanced.
O B I T U A RY
Gary Kennedy, former Chair
With great sadness, Norcros announced
thatGaryKennedy, the Board Chair and
a Non-executive Director of Norcros plc,
passed away on 13 February 2023. The Board
of Directors on behalf of the entire Group
expresses its sincere condolences to Gary’s
family and many friends.
Gary joined the Board as Non-executive Chair
on 8 December 2021. Gary had a remarkable
career with extensive executive experience,
along with a wealth of non-executive director
experience. He was also non-executive chair
at Greencore Group plc, where he assumed
the role of executive chair from 31 March 2022
until the appointment of the new CEO. Gary
was chair of Goodbody Stockbrokers (Ireland)
and also served as chair of Connect Group plc
and on the boards of Green REIT plc, Elan plc,
Allied Irish Bank, Friends First Holdings and the
IDA Ireland. He was also government appointed
director of Irish Bank Resolution Corporation.
Gary also made a major contribution, achieving
great results in promoting women at senior
levels. He strongly believed in using all the
talent available and understood that diversity
of views and experience enhanced and
enriched the overall effectiveness and decision
making process in companies.
Nick Kelsall, former Chief Executive Oficer,
praised Gary for his contribution to the
goals of the Group and was moved by the
number of people who expressed sadness at
Gary’s passing.
“Although Gary was with us for only a short
period of time, he quickly got to know our
business and our people. His engagement
was always warm, trusting and genuine and he
swiftly gained the respect of the Board and the
people that worked closely with him. A very
ine person that we will all miss.”
Strategic report
Norcros plc Annual Report and Accounts
Governance
As Acting Board Chair, one of my primary responsibilities is
ensuring that the Group continues to operate to the highest
standards in all governance and risk management aspects. Our
aim at Norcros has always been to operate in line with our values
and the “Norcros DNA” which sets us apart from our competitors
while ensuring that proper operating procedures and internal
controls are always maintained. Transparency is central to this
objective, and you will ind more detail about our approach and
further progress over the last year in the Corporate Governance
section on pages 84 to 87.
I would like to thank the
Group’s employees for
their dedication and
contribution over the
lasttwelve months.”
David McKeith
Acting Board Chair
People
Our employees are our most valuable asset. Given our
entrepreneurial, design and service led business model, the
Group remains committed to ensuring a safe and positive working
environment within an open, transparent and entrepreneurial culture
and de-centralised operating model. On behalf of the Board, I would
like to speciically thank the teams in each of our businesses who
have helped to deliver on the Group’s strategic objectives over the
last twelve months. Recognising the central part that our people at
all levels play, I am pleased to announce that we have also created
the position of Chief People Oficer. The position will help accelerate
the Group and individual businesses’ development of our internal
talent and future recruitment. In further developing our talented
team, we remain committed to being the employer of choice in
our markets, including increasing our focus on ensuring that our
businesses attract and retain diverse andinclusive teams.
Current trading
Group revenue in the two months to the end of May 2023 was
1.3%ahead of the strong prior year comparator on a reported
basisand 3.6% below on a constant currency like for like basis
(UK+1.3%, SA -12.7%) with South Africa impacted by electricity
supply interruptions, which are being actively managed.
Summary
The Group has delivered another record performance despite the
ongoing economic challenges. The Board remains conident that
our highly experienced management teams, leading customer
service propositions and strong inancial position, will drive further
market share growth in line with its expectations in the year ahead.
David McKeith
Acting Board Chair
14 June 2023
CHAIR’S STATEMENT CONTINUED
Annual Report and Accounts Norcros plc
CHIEF EXECUTIVE OFFICER’S STATEMENT
Overview
I was delighted to join the Board from 1 April 2023 and would
like to thank my predecessor, Nick Kelsall, for his outstanding
commitment and leadership over a Norcros career spanning
30years. This well managed transition comes at a time when the
business is inancially sound and has once again delivered record
levels of revenue and underlying operating proit.
Norcros has continued to build on the progress of recent years.
The performance in the current year relects the strength of our
leading brands, supply chain infrastructure, stock availability,
andinancial strength.
Group revenue at £441.0m (2022: £396.3m) increased by 11.3%
on a reported basis and by 1.5% on a constant currency like for like
basis. The strong trading performance in the irst half of the year
continued into the second half with further revenue growth in the
UK and a robust full year performance in South Africa.
Group underlying operating proit for the year increased by 13.2%
to a record level of £47.3m (2022: £41.8m) relecting the increased
revenue in the year and an operating margin slightly ahead of last
year at 10.7% (2022: 10.5%).
UK
Revenue in the UK was £295.8m for the year (2022: £256.7m),
15.2% higher than the prior year on a reported basis and broadly
in line on a like for like basis. A resilient trade sector in the period
offset softer demand in the retail sector, which was particularly
impacted by customer destocking in the irst half of the year.
All businesses, other than the UK Adhesives division, performed
well in the year with particularly strong performances at Triton
and Merlyn. Our UK businesses continued to capitalise on their
strong market positions and excellent customer service. We
have successfully developed our portfolio in the year. On 31
May 2022, we completed the acquisition of 100% of the share
capital of Granit Holdings Limited and its subsidiaries including
Grant Westield Limited, trading as Multipanel. Grant Westield is
a quality business with a strong track record of proitability and
cash generation. Since the acquisition, the business has been
successfully integrated and made a strong contribution to the
Group through its complementary range of waterproof bathroom
panels. In addition, we have also taken decisive action at our
UK Adhesives division, announcing the closure of this small but
loss making business. Against a backdrop of lower current and
uncertain short-term demand for our locally produced tiles, we
have made the decision to impair the carrying value of the assets
at Johnson Tiles. Further detail can be found in the Chief Financial
Oficer’s Report on page 35.
UK underlying operating proit for the year was another record at
£37.2m (2022: £30.9m) with an improved underlying operating
margin of 12.6% (2022: 12.0%). Underlying operating proit growth
was supported by the contribution from Grant Westield.
Operating cash low was higher than the prior year driven by
the increased level of operating proit and higher underlying
operating cash conversion supported by our continued focus
onworking capital.
Record Group performance relects the strength
of our entrepreneurial design led business model.
Norcros has again
grownmarket share
andIam pleased to
reportrecord levels of
revenue and underlying
operating proit.”
Thomas Willcocks
Chief Executive Oficer
Strategic report
Norcros plc Annual Report and Accounts
CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED
South Africa
Revenue in South Africa increased by 4.7% on prior year on a
constant currency basis, and by 4.0% on a Sterling reported basis,
to £145.2m (2022: £139.6m). All divisions delivered revenue growth
on the prior year.
This revenue growth was mainly driven by robust demand in the
housebuilding sector and the full year impact of the expansion of our
House of Plumbing branch portfolio. An exceptional performance
over the irst half was diluted by heightened levels of loadshedding
(electricity rationing), especially in the fourth quarter and we
continue to manage this in the current year. The breadth of our
revenue channels once again beneited our performance.
South African underlying operating proit for the year was robust at
£10.1m (2022: £10.9m), relecting our market leading positions and
share growth in a dificult market, particularly in the second half of
the year. Underlying operating margin was 7.0% (2022: 7.8%). We
are accustomed to the higher levels of variability in this developing
market and have a proven experienced team with a track record
inthis region.
Operating cash low was lower than prior year largely as a result
ofcontinued investment into working capital (primarily inventory)
to support our service levels and stock availability.
Strong inancial position
The Group continues to have a strong balance sheet with net debt
of £49.9m (2022: net cash of £8.6m). The year on year movement
relects the acquisition of Grant Westield and a planned
investment into working capital in the year of £13.3m to further
support business growth and customer service, with a resultant
underlying operating cash inlow of £44.8m (2022: £28.6m)
in the year.
The Group has extended its £130m multicurrency revolving credit
facility (RCF) for a further year. The facility has a three year and
seven-month term to October 2026, with a further year extension
available. It also includes the option for an uncommitted accordion
facility of £70m. The Group therefore remains well positioned to
progress its growth strategy.
Following the acquisition of Grant Westield in May 2022, leverage
at the 2023 year end is circa 1.0x EBITDA on a pre-IFRS 16 basis.
Strategy
In April 2018 the business launched a refreshed strategy for
growth and a 2023 vision for the Group, including an updated
set of strategic targets which were: to increase Group revenue to
£600m by 2023; to maintain revenue derived outside of the UK
at approximately 50% of Group revenue; and to sustain a pre-tax
return on underlying capital employed of more than 15% over the
economic cycle. The previous timescale of 2023 was extended to
2025 relecting the COVID-19 disruption. This growth strategy has
delivered strong organic and acquisition driven growth at above
targeted returns:
• Group revenue increased by 11.3% to £441.0m, supported
bytheacquisition of Grant Westield on 31 May 2022.
• On a Sterling reported basis, Group revenue derived outside
ofthe UK was 40.6%.
• Group underlying return on capital employed was 18.5% on a
pre-IFRS 16 basis.
The Group’s strong performance and the decisive response to the
inlationary and supply chain challenges and market conditions
continue to demonstrate the resilience of our business model
andthe effectiveness of our strategy.
Norcros has a strong and scalable position in the bathroom
and kitchen product markets. The markets in our existing and
adjacent geographies remain highly fragmented with signiicant
consolidation opportunities to either broaden our product
portfolio or further consolidate our current offerings. The
signiicant strength of the balance sheet means the business is
well placed to take advantage of further acquisitions or organic
growth opportunities as they arise. Norcros’ proven record of
growing existing and carefully selected acquired businesses
remains a core business strength.
Sustained investment in our in-house new product development
programmes will continue to drive organic growth alongside our
market leading brands, customer service and best in class quality.
Our product vitality rate (the percentage of revenue in the period
derived from new products launched in the last three years)
remained high at 24% (2022: 29%) but short of our demanding
target of 30% mainly due to the COVID-19 related disruption to
supply chains. Our vitality rates are nonetheless market leading
and we continue to invest in our pipeline as new product launches
return topre-COVID-19 levels.
ESG
Sustainability is a key priority for the Group and we continue to
work closely with our businesses to drive progress in line with our
previously mentioned updated ESG strategy.
Further progress was made in the year as we continue the journey
to net zero. For the irst time, we have set scope 1, 2 and 3 carbon
emissions targets. Data collection, measurement and visibility will
continue to be developed internally and with our partners. Further
details of our ESG strategy can be found on pages 20 to 21.
Our well developed social and governance programs are detailed
later in the report, with a notable example being our SAFE
bathrooms initiative in underprivileged South African schools.
Annual Report and Accounts Norcros plc
Summary and outlook
Norcros has made excellent progress in our markets despite the
challenging conditions and again delivered record results. Our
Group performance demonstrates the strength of our business
model and the calibre and support of all our employees. Our
businesses, both in the UK and South Africa, continue to make
strong progress, gain market share and beneit from the ongoing
development of our leading brands, supply chain infrastructure
and stock availability. Grant Westield has been an excellent
addition to our portfolio and has performed well in the year.
Our UK businesses performed well with strong second half
growth year on year. The market leading positions and continuing
excellent service levels, ensured that key retail customers were
retained with new account wins. The trade and speciication sector
demonstrated ongoing resilience and continues to represent
an important opportunity for the group, including the recently
acquired Grant Westield business, going forward.
Our South African business has continued to deliver revenue
growth, notwithstanding the challenging market conditions
experienced in the second half of the year. The business remains
in a strong competitive position to grow market share, particularly
in bathrooms.
The markets in which we operate in the UK and South Africa
remain fragmented and attractive for organic and acquisitive
growth opportunities. Our acquisition in the year of Grant
Westield demonstrates the Group’s ability to capitalise on growth
opportunities and leverage off the existing Group businesses, and
especially our broad and well established distribution channels.
In summary, we have ended the year strongly, outperforming
our markets and, once again, delivered record levels of revenue
and underlying operating proit. While market conditions remain
uncertain, especially in South Africa, the Board believes that
the Group’s proven business model and highly experienced
management teams will continue to deliver market share growth
inline with its expectations in the year to 31March 2024.
Thomas Willcocks
Chief Executive Oficer
14 June 2023
Nick Kelsall, former CEO
After 30 years of service with the Norcros Group,
NickKelsall, Chief Executive Oficer, notiied the Board
ofhis intention to retire with effect from 31 March 2023.
Nick was appointed CEO in April 2011 and over the last
twelveyears has transformed the Group through the
successful execution of a focused growth strategy into a
highly proitable and resilient market leading business with
strong brands. The Group has delivered an enviable track
record of sustained domestic and international growth
during Nick’s leadership, through his strategic vision
andbusiness acumen.
Nick previously served as the Group’s Chief Financial
Oficer from October 1996, having joined Norcros in 1993.
To ensure a smooth and effective handover, Nick will
remain an employee until 31January 2024.
Commenting on these changes, David McKeith, Acting
Board Chair, said: “Nick has devoted the majority of his
career to Norcros and has converted it into the resilient,
proitable and market leading business it is today. I know
that all Norcros shareholders, Directors and staff will join
me in thanking him profusely for everything he has done
for the Group. We all wish him well for the future.”
Nick Kelsall commented: “It has been both a privilege and
an honour to lead the Norcros business which has been
a huge part of my life. Norcros has been transformed
and is unrecognisable from the business that I joined
30 years ago. The business is in great shape with huge
opportunities, and I am immensely grateful for the support
of the very talented colleagues that I have worked with
right across our business globally. I wish them every
success for the future.”
Strategic report
Norcros plc Annual Report and Accounts
BUSINESS MODEL
Maximising shareholder value
throughcontinuous investment.
We have a well-established, successful track record of serving consumers, architects, designers,
developers, retailers and wholesalers. Our emphasis is on strong branding, contemporary designs,
trusted quality, outstanding service, innovation and breadth of product range.
We invest signiicantly and continuously in our people, brands, product
development and processes and we aim to develop our business in
boththequality of our products and the scale of our activities.
We serve consumers,
architects, designers,
developers, retailers and
wholesalers offering
outstanding customer
service, bespoke
solutions and unrivalled
technical support.
How we do business
We are focused on providing sustainable
value creation whilst being committed to
operating in an ethical, entrepreneurial
and responsible manner with the highest
standards of corporate governance.
People
• Providing our employees with a safe
andpositive working environment
• Open, transparent and entrepreneurial
culture and de-centralised operating model
• Strong cultural values aligned to our
“Norcros DNA”
Products
• Strong brands, contemporary designs,
trusted quality, innovation and a wide
product range
• Continuous NPD programme driving
organic market share growth
Process
• Customer centric approach
• Committed to operating in an ethical
andresponsible manner
• Upholding the highest levels of corporate
responsibility and governance
• Minimising our negative impact on
theenvironment
Our key inputs
Brand portfolio
Market
share
We have a wide range of
strong brands with market
leading positions across
our chosen markets.
Synergies
and scale
We beneit from
economies of scale and
shared synergies across
our complementary
businesses.
We focus on investment in
newproducts with 24% of 2023
revenue derived from products
launched in the last three years.
Innovation
Annual Report and Accounts Norcros plc
The key areas of value creation across our stakeholder
base are below:
Shareholders
• Progressive and resilient return of value to shareholders
• Continued execution of growth strategy with strong pipeline
of opportunities
• Strong inancial position with robust cash-generative businesses
• Return on capital employed maintained above strategic target
Customers
• Over 7,500 business customers supplied during the year with
innovative high quality branded products
• Continued innovation and deployment of technology to
service our customers
• Sustained investment in our leading brands to ensure longevity
• Customer-focused approach delivering outstanding customer
service and unrivalled technical support
Employees
• Nearly 2,400 employees around the world
• Focus on training and development
• Experienced, devolved management teams
andwell-established local trading relationships
• Empowering culture to enable our people to meet
theiraspirations
Society
• Playing a key role in the communities we serve by supporting
local businesses, schools and colleges, through education
and training schemes
• Supporting the local communities with a range
ofcharitableevents
Environment
• Committed to monitoring and minimising our environmental
impacts and encouraging our suppliers to do the same
• Committed to adapting our business to changing consumer
demands for our products
We base our business on understanding our
customers’ needs. Norcros is a substantial and growing
international Group with consistent, high quality
standards and considerable resources.
What makes us different
• Design
We design great products that are of high quality
anddesirable for customers.
• Sourcing
Our products are sourced and manufactured to the
highest standards and are quality monitored at each
stage of the supply chain.
• Customer service
Building customer relationships, providing outstanding
service and unrivalled technical support.
• Market leading brands
Our broad brand positioning facilitates channel
development and acquisition of new accounts.
• Complementary products, channels
andregions
Our complementary and extensive product range
provides a one-stop-shop to our existing customer base
and is important in attracting new customers.
• Successful acquisition strategy
We target acquisitions in complementary product,
market and industry segments exhibiting attractive
returns on capital.
The value we create
Strategic report
Norcros plc Annual Report and Accounts
STRATEGY AND OBJECTIVES
Progress in 2023
• UK and SA market share growth
during challenging year, particularly
in Triton, Merlyn, Abode and
Tile Africa
• Further development of cross-
selling synergies across our
business portfolio
• New key accounts added,
especially in the trade and
speciication channels
• Grant Westield introduced to, and
growing, signiicant newaccounts
Priorities for 2024
• Drive increased revenue synergies
through cross-selling opportunities,
including in the export market
• Driving further progress in our
overall customer proposition
• Investment in NPD
• Further investment in key
accountmanagement
• Building on our head start as an
engaged supplier through our
ESGstrategy to grow share
Organic Growth
Accelerating organic
growth through cross-
selling, new product
development and
customer relationships
About our strategy
The Board believes the execution of this
growth strategy will enhance shareholder
value. The strategy is balanced between
organic growth and building on our proven
acquisition track record.
Organic growth will continue to be driven
by capitalising on our leading market
positions in the UK, South Africa and
new export markets. Our organic growth
initiatives are focused on continued
development of our market leading, design
led brands and market positions. We will
reinforce our in-house design capability,
building on our sustainability credentials,
while accelerating cross-selling
synergies and the development of our
Group operating eficiencies. Increased
investment in our team and systems
will underpin our current and future
growth plans.
Acquisitions are an area where our team
has a proven track record. We have a
well developed acquisition pipeline and
will continue targeting complementary
market and regional segments exhibiting
attractive returns on capital. Our focus is
on complementary bathroom and kitchen
product categories with strong exposure
tocommercial and speciication segments.
Our robust inancial position allows us
to move forward with conidence as we
continue to consolidate increasingly
fragmented markets following a sustained
period of economic headwinds. We
will simultaneously continue managing
our existing portfolio to ensure the best
possible returns as demonstrated by the
closure of the loss making UK Adhesives
business this year. The successful
acquisition and integration of Grant
Westield, Vado, Croydex, Abode, Merlyn
and the House of Plumbing businesses all
demonstrate our ability to drive proitable
growth through acquisitions.
A focused growth strategy delivering
strong sustainable results.
Progress in 2023
• Successful acquisition and
integration of Grant Westield –
aleading UK designer and supplier
of waterproof bathroom wall panels,
operating under the renowned
Multipanel brand
• Closure of Norcros Adhesives
– reallocating capital for the
long-term beneit of our businesses
and shareholders
Priorities for 2024
• Progressing our well-developed
acquisition pipeline
• Broadening our portfolio of brands
and product categories to offer a
“one-stop-shop” for bathrooms
• Further developing our
international pipeline
• Driving scale based operational
eficiencies
• Maintaining our disciplined
approach to leverage and capital
allocation
Portfolio
Development
Continue to target
acquisitions in
complementary product
markets with attractive
returns on capital
Annual Report and Accounts Norcros plc
Progress in 2023
• Signiicant freight beneits through
Group wide collaboration
• Modernisation of inancial,
operating and digital platforms with
increased divisional alignment and
standardisation
• TAF’s successful introduction of
Nuvo bathroom ranges utilising
Group supply chain
• Cross divisional collaboration on
channel speciic product range
design, especially colour matching
Priorities for 2024
• Scale cross-selling synergies
• Margin development by further
leveraging Group sourcing and
logistics scale opportunities
• Increased investment in simplifying
and modernising our systems to
drive operational eficiency and
engagement
• Group forums continue to drive
accelerated group wide adoption of
best practices
• Increase alignment in our new
product development programs
Progress in 2023
• Updated ESG strategy, conirming
8 ESG Priority Themes and
associated KPIs
• Reported against Task Force
on Climate-related Financial
Disclosures (TCFD)
• Developed 2040 Net Zero Transition
Plan including targets for scope 1, 2
and 3 carbon emissions
• Triton, Abode and Vado achieved
Carbon Neutral status
Priorities for 2024
• Validation of our Carbon
Targets by SBTi
• Delivery against our Net Zero
Transition Plan
• Disclose through CDP for the
irst time
• Building on our social agenda with
aspeciic focus on D&I credentials
• Increased focus on health
andsafety, facilities and
wellbeingto enhance
employeevalue proposition
Operational
Excellence
Driving eficiency and
effectiveness though Group
synergies and increased
investment in operating
systems and facilities
ESG
Develop already high
standards of corporate
governance and social
responsibility, while
placing sustainability at
the heart of our business
Progress in 2023
• Chief People Oficer role created to
increase alignment and accelerate
development of our teams
• Reviewed talent plans to ensure
that we can successfully deliver
our strategy
• Excellent further progress made in
SA, addressing historical racial and
gender imbalances
• Flick online training platform
launched across the UK businesses
Priorities for 2024
• Group people strategy to be
refreshed and relaunched
• Centrally coordinate accelerated
progress in our D&I programme
• Embed new group wide approach
to learning and development
• Continue to actively address team
wellbeing challenges that have
been exacerbated by COVID-19
andgeo-political related pressures
Talent
Our teams are the
keydifferentiator in
ourdecentralised
business model
Strategic report
Norcros plc Annual Report and Accounts
KEY PERFORMANCE INDICATORSKEY PERFORMANCE INDICATORS
Measuring our progress.
Total revenue £m
£441.0m +11.3%
Group revenue outside the UK %
40.6% -330bps
2023
40.6
2021
41.641.6
2020
43.1
2019
41.7
Underlying operating proit £m
£47.3m +13.2%
2023
47.3
2021
33.8
2020
32.3
2019
34.4
1
Deinition Reported Group revenue
for the year.
Performance Total revenue for the year
increased by 11.3% on a reported basis
and by 1.5% on a constant currency like
forlike basis.
Deinition Revenue from the Group’s
South African operating segment plus
export revenue from the Group’s UK
operating segment.
Performance Group revenue outside the UK
has decreased in the year to 40.6%, relecting
the acquisition of Grant Westield in the year.
In constant currency terms from when the
targets were set we are more closely in line
with the strategic target (of 50%) at 43.8%
(2022: 47.0%).
Deinition Reported operating proit
as adjusted for IAS 19R administrative
expenses, acquisition related costs and
exceptional operating items, as deined in
note 8 to the inancial statements.
Performance Underlying operating proit
increased by £5.5m (+13.2%). This relected
the contribution from Grant Westield and
a strong trading performance in the UK
and in South Africa.
Underlying return on capitalemployed %
18.5% -540bps
2023
18.5
2021
18.2
2020
16.4
2019
18.2
Dividend per share p
10.2p +2.0%
2023
10.2
2022 2022 2022
23.9 10.0 28.6
2021
8.2
2020
3.1
2019
8.4
Underlying operating cash low £m
£44.8m +56.6%
2023
44.8
2021
65.8
2020
38.4
2019
39.8
Deinition Underlying operating
proitona pre-IFRS 16 basis expressed
asapercentage of the average of
openingand closing underlying capital
employed (as deined in note 8 to the
inancial statements).
Performance Underlying ROCE remained
above the strategic target of 15% over the
economic cycle.
Deinition The total of the interim dividend
and the proposed inal dividend for the
inancial year.
Performance In line with the Board’s
progressive albeit prudent dividend policy,
the dividend per share increased 2.0% to
10.2p per share from 10.0p per share.
Deinition Cash generated from continuing
operations adjusted for cash lows from
exceptional items and pension fund deicit
recovery contributions, as deined in note 8
to the inancial statements.
Performance Underlying operating cash
generation increased to £44.8m relecting
a strong trading performance and a
reduced investment into working capital.
2023
441.0
2021
324.2
2020
342.0
2019
331.0
2022
396.3
2022
43.9
2022
41.8
We use the following key performance indicators (KPIs)
tomeasure our progress against our strategicpriorities.
Link to strategy
1 2 3 4 5
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
1 2 3 4 5 1 2 3 4 5
Link to strategy Link to strategy
Link to strategy Link to strategy Link to strategy
1 Portfolio developmentLink to strategy 2 Organic growth 3 ESG 4 Operational excellence 5 Talent
1 On a pre-IFRS 16 basis.
Annual Report and Accounts Norcros plc
BUSINESS PERFORMANCE
A record performance fortheGroup.
m
m
Revenue
Operating proit
IAS R administrative expenses
Acquisition related costs
Exceptional operating items
Underlying operating proit
m
m
Revenue – UK
Revenue – South Africa
Revenue – Group
Underlying operating proit – UK
Underlying operating proit – South Africa
Underlying operating proit – Group
Underlying operating proit margin – UK
Underlying operating proit margin – South Africa
Underlying operating proit margin – Group
m
m
Underlying operating proit
Depreciation of right of use assets
Lease costs
Depreciation and underlying amortisation owned assets
Underlying EBITDA pre-IFRS
Net working capital movement
IFRS charge
Operating proit impact of IFRS
Depreciation of right of use assets
Underlying operating cash low
Basic underlying earnings per share p p
Diluted underlying earnings per share p p
The Group makes use of a number of alternative performance measures to assess business performance and provide additional useful
information to shareholders. Deinitions and reconciliations of these alternative performance measures are provided in note 8.
Strategic report
Norcros plc Annual Report and Accounts
UK BUSINESS REVIEW
In the UK, full year revenue was 15.2% higher than the prior year
on a reported basis at £295.8m (2022: £256.7m) relecting the
contribution from Grant Westield, market share gains and selling
price increases to recover higher input costs.
On a like for like basis, full year revenue was broadly in line with the
strong prior year comparator with growth in the second half of the
year of 3.3%.
Over the year, our UK businesses delivered a strong performance,
beneiting from the diverse customer base and an increased focus
on the trade and speciication sector.
Compared to the strong prior year comparator, the retail sector
was impacted by softer demand and some customer destocking in
the irst half. The market did improve in the second half of the year
and we are well positioned to continue to grow market share.
The trade sector, where we enjoy market leading positions,
proved resilient with a particularly strong fourth quarter. Sales to
national and independent merchants and housebuilders were
robust. Representing a smaller proportion of our revenue, export
was lower year on year relecting softer irst half demand in our
export markets.
New product development remains a focus at all of our UK
businesses. This core in-house strength is a key driver in our
strategy to grow our brands’ long-term leading market positions.
Strong progress has been made on our ESG strategy with
anumber of businesses achieving the Environmental Management
standard ISO 14001 in the year, a key milestone on the path to net
zero. We have also set targets and KPIs to align our businesses
to our ESG strategic priorities. Further detail is included in the
ESG section.
Underlying operating proit for the year grew by £6.3m to a record
level of £37.2m (2022: £30.9m) with an operating margin of 12.6%
(2022: 12.0%). This increase in proitability mainly relected the
contribution from Grant Westield and the return to proitability
atJohnson Tiles in the period.
Operating cash conversion was signiicantly ahead of the prior
year supported by our continued focus on working capital.
During the second half of the year, revenue grew 3.3% on a like for like
basis as we beneited from our brands’ leading market positions.
Highlights 2023
Share of Group revenue
£295.8m
Share of Group underlying
operating proit
£37.2m
67%
share
79%
share
Record revenue
andoperating proit.
35.3
57.5
25.5
42.3
63.7
17.7
2019
UK revenue £m
£295.8m
+15.2%
2023
41.4
41.4
56.6
21.7
16.2
39.5
228.1
295.8
2020 2021 2022
41.7
23.7
42.3
48.6
14.8
42.5
32.8
24.1
38.2
54.5
15.0
43.3
14.3
14.3
39.5
34.2
27.0
43.9
60.1
18.9
58.3
225.4
220.2
256.7
11.3
11.8
12.3
Triton
Croydex
Vado
Abode Johnson Tiles Norcros Adhesives
Grant WestieldMerlyn
Annual Report and Accounts Norcros plc
TRITON LAUNCHES
NEWDUELEC®
Triton’s DuElec
®
system is the solution for homeowners
wanting an eficient electric shower which doesn’t
compromise on style and luxury experience.
The innovative solution allows the user to easily switch
between a typical handheld shower head and an
additional, large overhead drencher, to enjoy a rainfall
shower experience.
Triton’s Amore DuElec
™
offers an energy eficient way to heat
and use water, for a cleaner conscience when showering.
By heating instantly and on demand, it avoids unnecessary
wastage without compromising on performance. An
average family of four could save up to 48,000 bottles of
water over a year by switching from mixer to electric, which
is the equivalent of 0.31 tonnes of carbon.
TRITON
Strategic report
Norcros plc Annual Report and Accounts
UK BUSINESS REVIEW CONTINUED
Triton
Revenue at Triton, the UK’s market leader in showers, was
£63.7m (2022: £60.1m), 6.0% higher than the prior year relecting
market share gains in the period driven by our market leading
sustainability programme.
Triton has beneited from strong retail sales over the last three
years by ensuring excellent product availability and maintaining
high customer service levels. Second half retail revenue was
particularly strong after experiencing some destocking in the irst
half from larger retail customers. Full year retail sector revenue was
up by 4.6% compared to the prior year.
Trade sector revenue was 11.7% higher than the prior year, relecting
the strengthening of our team in this market segment, with growth
continuing in contract business and Triton taking share in the
social housing and local authority market. Export revenue also
recovered in the second half albeit full year revenue was 2.5%
behind the prior year relecting irst half customer destocking.
New products continue to be a key driver in maintaining Triton’s
long-term leading market position where ongoing investment and
new product launches have proven successful. Notable revenue
growth in the year was delivered from the DuElec
®
range of dual
outlet electric showers and the introduction of new inishes.
Proud to be manufactured in Britain for almost 50 years and a
member of the “Made in Britain” scheme since 2014, Triton is
known as a leader in electric shower innovation with a focus on
its environmental credentials. Investment in brand and marketing
campaigns continued with the “Every Drop Makes a Difference”
theme, raising awareness about the eficiency and sustainability
beneits of electric showers. The campaign achieved a Special
Recognition in Driving Behaviour Change Award from the
Bathroom Manufacturers Association and was Highly Commended
at the HVAC Industry Energy Savings Awards. Triton’s Enrich
electric shower also won the inaugural Screwix sustainability
award. During the year Triton achieved Carbon Neutral status
andcontinued to work towards its target to be net carbon zero
bythe end of 2035.
Triton again delivered an underlying operating proit ahead
oftheprior year.
Merlyn
Merlyn, the UK and Ireland’s number one supplier of shower
enclosures and trays to the residential, commercial and
hospitality sectors, performed strongly and recorded revenue
of £57.5m (2022: £58.3m), slightly behind the strong prior year
comparator. The business continued to grow its market share,
leveraging its leading position in the UK through its leading
design, quality product offering, stock availability and exceptional
customer service.
UK revenue was in line with the prior year. The retail sector
improved in the second half, driven by new customer wins and
organic growth, with revenue inishing the year broadly in line with
the prior year.
Trade revenue increased by 2.0% with growth across a number
of existing customers, in addition to a number of new contracts
including Vistry and Larkleet, offset by slightly reduced sales to
national merchants. Merlyn renewed agreements with all of the
major buying groups and national merchants in the year. Exports
decreased by 12.7% in the year relecting customer destocking in
Ireland and France.
New product development remains an integral component
of Merlyn’s growth strategy with the successful launch of the
Sleek modern shower enclosure range. Further investment in
Merlyn’s online presence was relected in the launch of the new
Merlyn website with a new “ind your perfect solution” feature.
Recognising the strength of the brand, Merlyn was shortlisted at
the BKU Awards for Shower Brand of the Year after winning the
prestigious award plus Best Sales Representative in 2022. Merlyn
has further developed its environmental credentials during the
year and has now, amongst other initiatives, eliminated the use
ofsingle use plastics with fully recyclable alternatives.
Merlyn recorded underlying operating proit ahead of the
prior year.
Revenue at Triton, the UK’s market leader
in showers, was £63.7m (2022: £60.1m),
6.0% higher than the prior year relecting
market share gains in theperiod.”
Annual Report and Accounts Norcros plc
MERLYN PATENT
Merlyn’s “one-person-it” shower enclosures remove the
struggle to assemble the frame off the tray and lift into place
– often with another person’s help.
The unique aspects of the design centre around two key
features. Firstly, the slot and lock connection device simpliies
the assembly, where traditionally several screws had to be
used. Secondly, the patent incorporates the frame adjustment
into the connection device; whereas before two overlapping
proiles were used, it is now replaced with a single proile with
the frame being adjusted and locked by an Allen key.
The patent is granted to Merlyn by the British Patent Ofice
for the IQ/Easy quick it system used on sliding, quadrant
and corner doors – published on 1 February 2023 for up
to 20 years.
MERLYN
Norcros plc Annual Report and Accounts
RED DOT WINNER FOR
PRODUCT DESIGN 2022
Arrondi, designed by the internationally renowned
architects and interior designers, Conran and Partners, who
collaborated with Vado to deine a new aesthetic direction
in a market which typically sees a strict delineation between
the “traditional” and “contemporary”.
With a shared commitment to sustainability, Vado and Conran
and Partners have worked together to ensure Arrondi meets
with each business’ core environmental credentials.
• All basin mixers are itted with industry leading HO
ecolow regulators, delivering controlled water
use at5litres per minute (at 1.0 bar MP) without
compromising performance
• All packaging is 100% recyclable and plastic free –
inlinewith Vado’s sustainability commitment
• Circular design approach using market leading
components to maximise longevity and reduce impact
on the environment
• Reassuring 15-year guarantee, making Arrondi an
investment range you can trust
VADO
Annual Report and Accounts Norcros plc
UK BUSINESS REVIEW CONTINUED
Grant Westield
Grant Westield, our recently acquired market leading
manufacturer of high end waterproof bathroom wall panels,
recorded revenue for the ten months post-acquisition in line with
expectations at £39.5m, ahead of the equivalent prior year period.
The business was successfully integrated in the irst half of the
year and has continued to develop, working with other Norcros
businesses on several customer and channel opportunities. This
collaboration has resulted in a new and developing relationship
with Topps Tiles. The majority of Grant Westield’s revenue is
through the trade channel with a small level of export revenue.
Sales through the national merchants such as City Plumbing,
Wolseley Group and Travis Perkins were strong. The online channel
is growing and has performed well.
The Multipanel Tile collection, which was successfully launched
post acquisition, has been well received and has reinforced the
reputation of Grant Westield for product innovation and quality. It
is the only tile effect panel manufactured in the UK. The business
achieved the Environmental Management standard ISO 14001
in the year.
Grant Westield delivered an underlying proit performance in line
with expectations.
Vado
Vado, our leading manufacturer of taps, mixer showers, bathroom
accessories and valves, recorded revenue of £42.3m for the year
(2022: £43.9m), 3.6% lower than the strong prior year comparator.
In the UK, our retail sector revenue was impacted in the period
with revenue 14.7% lower than the prior year, albeit performance
improved signiicantly in the second half of the year. The trade
sector performed robustly, with revenue up 9.4% on prior year. This
was driven by continuing to work with all existing key customers
along with several contract wins, particularly in the second half of
the year, such as The Cocoa Works, apartments at Silverstone and
withBerkeley Homes. Export revenue was broadly in line with the
prior year. Reduced sales in Ireland were offset by strong sales in
the Middle East inthesecond half of the year.
Following the successful launch of the Arrondi range which was
created in partnership with Conran and Partners and won a Red
Dot Design award, the business continued to invest in new product
development with further market leading launches in the lush
plate, frames, and cistern markets.
Vado generated an underlying operating proit ahead of prior year.
Croydex
Croydex, our market leading, innovative designer, manufacturer,
and distributor of high quality bathroom furnishings and accessories,
recorded revenue of £25.5m (2022: £27.0m) for the period,
5.6% lower than the strong prior year comparator. Pleasingly,
performance inthe second half was ahead of prior year as a result
of operationalimprovements.
Retail sector revenue in the irst half of the year was signiicantly
impacted by customer destocking and whilst the second half
improved signiicantly, full year revenue was 22.1% behind the prior
year. E-commerce sales were soft in the irst half against a strong
comparator of the prior year but were stronger at the end of the
year including new listings with Dunelm online. The trade sector
continued to perform well with strong sales across the national
and independent merchants. Revenues were 16.3% ahead of the
prior year. Export sales were below prior year by 7.7% largely as a
result of reduced demand from the USA.
Underlying operating proit was marginally behind the prior year
albeit the second half was ahead of the prior year.
Grant Westield, our recently acquired
market leading manufacturer of high
endwaterproof bathroom wall panels,
recorded revenue for the ten months
post-acquisition in line with expectations
at £39.5m, ahead of the equivalent prior
year period.”
Norcros plc Annual Report and Accounts
NEW PROCESSES PROVIDE
TEXTURE, STRUCTURE
ANDINTEREST
Johnson Tiles’ launch of the Luxx range draws inspiration
fromstriking marble patterns and on-trend animal textures,
bringing a sense of glam and style, echoing the Johnson
Tiles Astral range.
Luxx offers a variety of different prints available to suit
any design scheme. Options range from Pinto Marble
andCarbon Quartz to the four featured animal prints
of Turtle, Snake, Cheetah and Zebra. These all have
adistinctive andbold appearance.
JOHNSON TILES
Annual Report and Accounts Norcros plc
UK BUSINESS REVIEW CONTINUED
Abode
Abode, our leading designer and distributor of high quality hot
water taps, bathroom mixers, kitchen sinks and taps, recorded
revenue of £17.7m for the year (2022: £18.9m), a 6.3% decrease on
prior year largely relecting a strong prior year comparator and the
exit from some low margin business in the year.
The business continued to beneit from its strong market positions
with key customers, which were further developed in the year
with the launch of the loyalty scheme “Abode Accumulate”. The
business has continued to grow market share over the period
and retail growth has been supported by MasterChef champion
Shelina Permalloo who became a brand ambassador in the year.
Her “Cook with Pronteau” features have increased awareness of
the Abode Pronteau hot water taps helping drive market share
gains in this attractive segment.
Abode celebrated its 20th anniversary in the year and achieved
Carbon Neutral status as a result of its focus on developing
sustainable products that provide customers with “water the way
you want it”, sustainably. Abode has a strong new product pipeline
going into the new inancial year.
Underlying operating proit was higher than prior year as a
result of an improved customer mix and a strong focus on
operationaleficiencies.
Johnson Tiles
Johnson Tiles, our UK market leading ceramic tile manufacturer
and a market leader in the supply of both own manufactured and
imported tiles, recorded revenue of £35.3m (2022: £34.2m), 3.2%
higher than the prior year.
Trade sector revenue was up 14.0% on the prior year. Johnson Tiles’
strong relationships with the national house developers continued,
including Barratt, David Wilson, Persimmon, Charles Church,
Redrow and Countryside. Major projects in the commercial and
public speciication sectors included Buckingham Palace and
the National Portrait Gallery. Retail sector revenue was down 9.3%
on the prior year, driven primarily by the continued exit of lower
margin product categories. Export revenue, a small contributor to
the overall business, was 25.0% below prior year due to reduced
revenues on low margin products in the Middle East and France.
Johnson Tiles has developed a market leading position on
sustainability over many years focusing strongly on recycling
energy, water, and waste. The business achieved Gold status at
the Supply Chain Sustainability School and became the irst tile
factory in the world to achieve BES 6001 (Responsible Sourcing
inConstruction).
The business returned to proitability in the year after incurring a
signiicant energy related loss in the prior year, testament to the
experience and focus of our team’s early intervention. However,
against a backdrop of uncertain and potentially lower demand for
our locally produced tiles, a decision has been taken to impair the
carrying value of the associated assets. Further detail can be found
in the Chief Financial Oficer’s Report on page 35.
Norcros Adhesives
Norcros Adhesives, our UK manufacturer and supplier of tile and
stone adhesives and ancillary products recorded revenue of
£14.3m (2022: £14.3m), in line with prior year.
As mentioned earlier, we have taken the dificult but necessary
decision to close the business. The revenue of £14.3m (2022: £14.3m)
and the loss in the year of £2.7m have been included in the underlying
results for the current and prior year. An exceptional restructuring
cost of £4.8m has also been recognised in the year in relation to
the costs associated with the closure. Further detail can be found
in the Chief Financial Oficer’s Report on page 35.
Abode, our leading
designer and distributor of
high quality hot water taps,
bathroom mixers, kitchen
sinks and taps celebrated
its twentieth anniversary
and continued to grow
market share over
theperiod.”
Strategic report
Norcros plc Annual Report and Accounts
SOUTH AFRICA BUSINESS REVIEW
Highlights 2023
The strong start to the year was offset by energy disruptions, especially in the fourth quarter.
Thebusinesscontinued to take market share.
Revenue for the year increased by 4.7% on prior year on a
constantcurrency basis and increased by 4.0% on a Sterling
reported basis to £145.2m (2022: £139.6m) compared to the
strongprior year comparator.
Revenues on a constant currency basis increased year on year
across all South African divisions, and the business continued
to take market share by capitalising on its leading market
positions and excellent customer service. Market conditions in
the second half of the year were more challenging as energy
supply constraints increased. The local management team have
actively managed the impact of these energy interruptions. The
businesses are well invested in terms of backup power generation.
Market share growth continues to be driven by new product
development and accelerated growth into the bathroom and
plumbing channels.
Underlying operating proit for the year was £10.1m (2022: £10.9m),
the reduction largely relecting a record prior year comparator
and reduced retail demand as consumer renovation spend has
been replaced in the short term by domestic energy backup and
saving projects. Cash generation was below prior year due to lower
underlying operating proit and further investment in both working
capital and capital expenditure. The business remains in a strong
competitive position and is well placed to continue to gain market
share in its respective markets.
Market share gains.
Share of Group revenue
£145.2m
Share of Group underlying
operating proit
£10.1m
South Africa revenue £m
£145.2m
+4.7%
1
33%
share
21%
share
Johnson Tiles South Africa TAL HoPTile Africa
2019
102.9
24.0
63.9
15.0
2023
145.2
22.5
75.5
17.9
2020 2021 2022
116.6
104.0
139.6
22.1
23.7
56.8
14.0
19.1
17.5
54.9
12.5
1 On a constant currency basis.
22.5
25.1
29.3
75.5
16.5
Revenue for the year
increased by 4.7% on
prioryear on a constant
currency basis.”
Annual Report and Accounts Norcros plc
TILE AFRICA
UNIQUE FLOOR COVERING
Tile Africa’s (TAF) Commercial division has expanded
its range of loor coverings to include alternative loor
coverings, such as the STB Epoxy Power Trowel Flooring
System, a unique loor covering made of glacial quartz and
resin that has been gaining popularity.
TAF Commercial recently installed 1,850m
2
of this looring
application for the Spar group at the new Superspar in
Wonderboom near Pretoria in South Africa. This looring
is ideal for high trafic areas due to its high strength,
seamless appearance and slip-resistant nature, making
it perfect for large retail environments. Additionally, the
looring requires little maintenance and is easy to clean,
making it an excellent choice for busy spaces where
downtime for cleaning is limited.
The Spar group’s decision to opt for the Epoxy Power
Trowel Flooring System is a testament to the quality of
TAF Commercial’s offering and the beneits of choosing
alternative loor coverings.
Strategic report
Norcros plc Annual Report and Accounts
SOUTH AFRICA BUSINESS REVIEW CONTINUED
Johnson Tiles South Africa
Johnson Tiles South Africa, our tile manufacturing business,
recorded revenue of £17.9m (2022: £16.5m), an 8.5% increase on
areported basis and 9.1% higher on a constant currency basis.
Strong levels of manufacturing output continued during the
year as productivity and eficiency initiatives delivered a good
performance against a backdrop of energy and water supply
challenges. Whilst demand in the retail sector has reduced in the
second half of the year, this has been offset by resilient demand
in the housebuilding sector, where the business holds a leading
market position.
The new product development pipeline remains an important
growth driver, with an increasing focus on sustainability. Products
were speciied and installed in leading developments across the
country, including in a number of quality residential developments
developed by national market leaders Central Development
Properties and Balwin Properties inJohannesburg, Cape Town,
and Durban.
Underlying operating proit was ahead of the prior year.
Tile Africa
Tile Africa, our leading retailer of wall and loor tiles, sanitaryware
and bathroom ittings, recorded revenue of £75.5m (2022: £75.5m),
in line on a reported basis and 0.5% higher onaconstant
currency basis.
Market share gains were driven though further improvements in
operations leading to better than market stock availability. The
business also continues to beneit from the focus on the bathroom
sector, offering a compelling one-stop-shop for retail and
commercial customers. The two private label bathroom ranges,
Nuvo and Evox, continue to grow revenue at higher margins,
beneiting from the international supply chain synergies. The
introduction of quality bathroom furniture is performing well.
A growing number of alternative loor covering installations
were completed in the year and the appeal and demand for our
alternative coverings continues to grow. The larger commercial
contracts sector remains subdued but we continue to make
progress supplying national and regional housebuilders and
growing our position as the specialist partners of choice for
commercial customers in retail and hospitality.
Tile Africa currently operates from thirty-three owned stores and
two franchise stores. No new Tile Africa stores were opened in the
year as we focused on store upgrades (bathrooms and alternative
looring) and investing in our value for money stores under the
HomeXpress sub-brand. This process has been completed with
ive stores moving into this category. A full upgrade of our Tile
Africa Store in Nelspruit was successfully completed incorporating
a full bath store within a store and alternative loor section.
Tile Africa’s underlying operating proit was in line with the
prior year.
TAL
TAL, our market leading adhesives business, recorded revenue
of£22.5m (2022: £22.5m), in line with the prior year on a reported
basis and a 0.9% increase on a constant currency basis.
TAL has retained all its key accounts albeit large commercial new
build projects remained subdued, which impacted demand for
TAL’s high speciication rapid setting adhesives and system-driven
construction products. Retail sales were impacted by lower
consumer conidence and considerable competitor activity,
including new capacity, in the market.
Notwithstanding market conditions, TAL remains the leading
brand in South Africa, with the business supplying market leading
products and technical expertise to several construction projects
during the year, including a new mall in Pretoria North, Marino
Mall in Ermelo, Midlands Mall in Kwazulu-Natal, refurbishment
ofschools and hospitals in Mahikeng and Kwazulu-Natal and
theSetari residential apartments in Cape Town.
TAL’s underlying operating proit was below the prior year.
House of Plumbing
House of Plumbing, our market leading supplier of specialist
plumbing materials into the speciication and commercial sector,
recorded full year revenue of £29.3m (2022: £25.1m), 16.7% higher
than the prior year on a reported basis and 17.7% higher on a
constant currency basis.
The business has leveraged its increased national footprint to
deliver revenue growth despite the softer commercial projects
sector. House of Plumbing now operates eight branches with
focus on providing expert technical advice and consistent stock
availability with the business planning to continue to extend its
geographical footprint.
During the year, House of Plumbing supplied several landmark
projects, including Unilim Student Housing in Mankweng, Coca
Cola Factory in Durban, Ekangala Housing Project, Frimax Factory
in Tongaat and the University of Venda.
House of Plumbing’s underlying operating proit was marginally
lower than the prior year.
Annual Report and Accounts Norcros plc
CHIEF FINANCIAL OFFICER’S REPORT
Underlying operating proit increased by
13.2% to £47.3m, a new record for the Group.
• Group revenue increased by 11.3% to £441.0m (2022: £396.3m)
• Group underlying operating proit increased by 13.2%
to£47.3m (2022: £41.8m)
• Group operating proit was £27.5m (2022: £36.2m)
• Group underlying proit before tax was £41.8m (2022: £39.3m)
• Group proit before tax was £21.7m (2022: £33.0m)
• Underlying operating cash low of £44.8m (2022: £28.6m),
89%of underlying EBITDA (2022: 63%)
• Net debt of £49.9m (2022: net cash of £8.6m)
• Pension scheme in a surplus position of £14.9m (2022: £19.6m)
Financial overview
m
m
Revenue
Underlying operating proit
IAS R administrative expenses
Acquisition related costs
Exceptional operating items
Operating proit
Net inance costs
Proit before taxation
Taxation
Proit for the year
Revenue
Group revenue at £441.0m (2022: £396.3m) increased by 11.3%
on a reported basis and by 1.5% on a constant currency like for like
basis after adjusting for Grant Westield, acquired on 31 May 2022.
Underlying operating proit
Underlying operating proit increased by 13.2% to £47.3m
(2022:£41.8m). Our UK businesses recorded an underlying
operating proit of £37.2m (2022: £30.9m), and our South African
businesses recorded an underlying operating proit of £10.1m
(2022: £10.9m). Group underlying operating proit margin was
10.7% (2022: 10.5%).
IAS 19R administrative costs
These costs represent the costs incurred by the Trustee of
administering the UK deined beneit pension scheme and are
relected in the Income Statement under IAS 19R. Costs of £1.6m
are lower than the prior year (2022: £1.7m) largely as a result of the
additional fees incurred in the prior year relating to the triennial
actuarial valuation.
The Group is in a
stronginancial position
and iswell placed
tofurther progress
itsstrategic priorities.”
James Eyre
Chief Financial Oficer
Strategic report
Norcros plc Annual Report and Accounts
CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Acquisition related costs
A cost of £8.4m (2022: £4.8m) has been recognised in the year
and is analysed as follows:
m
m
Intangible asset amortisation
Advisory fees
Deferred remuneration —
Intangible asset amortisation has increased from £3.7m to £6.2m
following the acquisition of Grant Westield.
The advisory fees relate to the costs incurred in relation to
acquisition activity.
In accordance with IFRS 3, a proportion of the contingent
consideration is treated as remuneration, and, accordingly,
isexpensed to the Income Statement as incurred. In the
currentyear this represents acost of £0.8m in relation
totheGrantWestield acquisition.
Exceptional operating items
An exceptional operating charge of £9.8m (2022: credit of £0.9m)
has been recognised in the year.
m
m
Restructuring costs —
Impairment —
Release of UK property provision —
Norcros Adhesives
The exceptional restructuring cost charge of £4.8m was incurred
in relation to the aforementioned restructuring programme
implemented at Norcros Adhesives. £4.8m (of which circa £2m
represents the gross cash cost) represents a provision for the costs
associated with closure including the write down of current and
non-current asset values and costs such as redundancy. As a result
of realisations on assets, the net impact on cash is not expected to
be material.
The revenue of £14.3m, representing approximately 3% of Group
revenue (2022: £14.3m) and the loss in the year of £2.7m (following
a small loss in the prior year) have been included in the underlying
results for the current and prior year.
Johnson Tiles
The Group reviews all cash-generating units to determine whether
any of the assets related to our operations are impaired. These
reviews are performed by comparing the estimated future cash
lows generated by the divisions with the carrying value of the
assets generating those cash lows. The future cash lows are
sensitised for items including reduced margins, increasing energy
costs and working capital variances to illustrate a value in use
for the business. As a result of these reviews and a reduction in
demand for our locally produced tiles, tangible and right of use
assets within the Johnson Tiles UK business have been impaired
with a non-cash impairment charge of £5.0m recognised as an
exceptional item in the Income Statement.
During the prior year, the release of UK property provision related
to the settlement of a legacy onerous property lease and the
release of the surplus provision.
Finance costs
m
m
Interest payable on bank borrowings
Interest on lease liabilities
Amortisation of costs of raising debt
inance
Discounting of contingent
consideration —
Discounting of property lease
provisions —
Finance costs
IAS R inance credit/cost
Net inance costs
Net inance costs for the year of £5.8m compares to £3.2m in
2022. This movement is mainly due to the increase in the level of
borrowings in the year relating to the Grant Westield acquisition
and the increase in Bank of England base rates in the UK.
The Group has recognised a £0.6m IAS 19R interest credit in
respect of the UK deined beneit pension scheme surplus
(2022:cost of £0.4m) due to the surplus throughout the year.
Underlying proit before tax
Underlying proit before tax was £41.8m (2022: £39.3m), mainly
relecting the increase in underlying operating proit noted above,
partially offset by the increased interest costs.
Taxation
The tax charge for the year of £4.9m (2022: £7.3m) represents
an effective tax rate for the year of 22.6% (2022: 22.1%). The
increase in the effective tax rate mainly relates to the increase
innon-deductible acquisition related costs in 2023.
The standard rates of corporation tax in the UK, South Africa
andIreland in the period were 19% (2022: 19%), 28% (2022: 28%)
and 12.5% (2022: 12.5%) respectively.
Dividends
In light of the strong performance in the year, the Board
recommends a inal dividend of 6.8p per share (2022: 6.9p). This,
combined with the interim dividend of 3.4p per share (2022: 3.1p),
results in a total dividend of 10.2p per share (2022: 10.0p). The total
dividend is equivalent to a dividend cover of 3.7 times, broadly in
line with the year ended 31 March 2022 (3.8 times). The cash cost
of the total dividend is £9.1m.
This inal dividend, if approved at the Annual General Meeting,
willbe payable on 4 August 2023 to shareholders on the register
on 30 June 2023. The shares will be quoted ex-dividend on
29June2023. Norcros plc operates a Dividend Reinvestment Plan
(DRIP). Ifa shareholder wishes to use the DRIP the latest date to
elect for thisin respect of this inal dividend is 14 July 2023.
Annual Report and Accounts Norcros plc
Balance Sheet
The Group’s Balance Sheet is summarised below.
m
m
Property, plant and equipment
Right of use assets
Goodwill and intangible assets
Deferred tax
Net current assets excluding cash
and borrowings
Pension scheme surplus
Lease liabilities
Other non-current assets and liabilities
Net debt/cash
Net assets
Total net assets increased by £10.1m to £210.4m (2022: £200.3m).
Net current assets increased by £12.4m largely relecting the cash
investment into working capital to support business growth.
Property, plant and equipment decreased by £4.2m to £24.8m
andincluded additions of £5.4m (2022: £5.3m) and acquired
assets of £1.1m. The Group recognised an impairment charge
of £4.1m (2022: £nil), the depreciation charge was £4.9m (2022:
£5.1m) and foreign exchange losses were £1.7m (2022: gain of
£0.8m) relating to assets held in South Africa.
Right of use assets increased by £0.1m to £20.0m (2022: £19.9m),
relecting the acquisition of Grant Westield offset by the
impairment of Johnson Tiles assets. Lease liabilities of £24.7m
(2022: £24.0m) increased by £0.7m.
The deferred tax liability increased by £5.6m to a liability of £15.0m
(2022: liability of £9.4m). The increase is mainly the result of the
deferred tax arising on acquired intangibles.
Pension schemes
On an IAS 19R accounting basis, the gross deined beneit pension
scheme valuation of the UK scheme showed a surplus of £14.9m
compared to a surplus of £19.6m last year. The present value
of scheme liabilities decreased by £83.3m primarily due to an
increase in the discount rate to 4.90% (31 March 2022: 2.75%) and
beneit payments made in the period. The value of scheme assets
decreased by £88.0m largely due to beneit payments made in the
period and reduced asset valuations.
As agreed at the 2021 triennial valuation, deicit repair contributions
are £3.8m per annum from 1 April 2022 to March 2027 (increasing
with CPI, capped at 5%, each year).
The Group’s contributions to its deined contribution pension
schemes were £4.0m (2022: £3.7m).
Cash low and net debt
Underlying operating cash low was £16.2m higher than in the prior
year at £44.8m (2022: £28.6m).
m
m
Underlying operating proit
Depreciation and underlying
amortisation owned assets
Depreciation of right of use assets
Lease costs
Underlying EBITDA pre-IFRS
Net working capital movement
IFRS charge add-back
Lease costs
Underlying operating cash low
Underlying operating cash
conversion
The main drivers of the improvement in underlying operating cash
low were the increased level of underlying operating proit and
a continued focus on working capital. Underlying operating cash
conversion in the year was 89% of underlying EBITDA (2022: 63%).
m
m
Underlying operating cash low
Cash lows from exceptional items
and acquisition related costs
Pension fund deicit recovery
contributions
Cash low generated from
operations
Net interest paid
Taxation
Net cash generated from
operating activities
Acquisition of subsidiary undertaking
net of cash acquired —
Capital expenditure
Dividends
Share transactions
Principal element of lease payments
Exchange movement
Movement in costs of raising inance
Net cash movement
Opening net cash
Closing net debt/cash pre-IFRS
Cash generated from operating activities was £9.9m higher
thanthe prior year at £24.5m, largely due to the £16.2m increase
inunderlying operating cash lows, partially offset by higher
interest payments.
Cash lows from exceptional items and acquisition related costs
in the current year primarily relate to the advisory fees for the
acquisition of Grant Westield.
Strategic report
Norcros plc Annual Report and Accounts
CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Cash low and net debt continued
Capital expenditure at £6.0m (2022: £5.4m) includes investment in new product programmes, store upgrades, IT systems and
manufacturing facilities.
The Group ended the year with net debt of £49.9m (2022: net cash of £8.6m) on a pre-IFRS 16 basis after a net cash outlow of £58.5m.
Net debt inclusive of IFRS 16 lease liabilities was £74.6m (2022: £15.4m).
Funding and liquidity
The Group extended its multicurrency revolving credit facility by a further year in the period. The Group has committed banking facilities
of £130m (plus a £70m uncommitted accordion) with a maturity date of the facility of October 2026 with a further year extension available.
James Eyre
Chief Financial Oficer
14 June 2023
Average rate vs
South African Rand
Euro
US Dollar
Closing rate vs
South African Rand
Euro
US Dollar
Change
Revenue m
Underlying operating proit m
Underlying proit before tax m
Underlying diluted earnings per share pence
Underlying return on capital employed bps
Underlying operating cash low m
Net debt/cash m m
Annual Report and Accounts Norcros plc
RISK MANAGEMENT
Risk management framework
How we manage risk
Our risk management activities form
part of a lexible and robust governance
framework, which is owned by the Board,
overseen by the Audit and Risk Committee
and embedded at operational level. It
consists of the following key elements:
Deined risk responsibilities:
Board – Overall responsibility for risk
management. Deines the Group’s Risk
Management Policy, sets risk appetite
levels for each risk category and provides
leadership on the Group’s risk culture
Audit and Risk Committee –
Provides oversight, challenge and
independent assurance on the risk
management framework
Management – Day to day operational
management of risk following Group
policies and embedded reporting
procedures
Deined risk policies and
reportingprocedures:
• Formal Board-approved Group Risk
Management Policy
• Deined risk appetite levels for each
category of risk
• Standardised, regular risk reviews and
embedded risk reporting
• Divisional support from Head of Group
Internal Audit and Risk Assurance
Risk management remains a priority for the Group to help sustain the success of the business in the future. There is a range of potential
risks and uncertainties which could have a material impact on the Group’s performance. The objective of our risk management framework
is to support the business in meeting its strategic and operational objectives through the identiication, monitoring and mitigation of risks
within clearly deined risk appetite levels for each risk category.
Supporting sustainable business objectives
through embedded risk management.
Risk landscape
Current risks:
Risks that could affect our
business, customers, supply chain,
employees and other stakeholders
and impact the achievement of our
strategic goals
Emerging risks:
“New” risks with relatively
unclear potential future impact
or likelihood, identiied through
the embedded internal risk
assessment process
What we assess
Risk appetite: Acceptable level of risk, deined
bytheBoard, for each category of risk
Risk ownership: Each risk has a named owner
Risk scoring: Each risk is assessed in terms of its
inancial and reputational impact, and its likelihood,
using a standard scoring scale
Inherent (gross) risk score: Assessment before
mitigating controls or actions are applied or taken
Residual (net) risk score: Assessment after mitigating
controls or actions are applied or taken
Actions: Required actions to address risks that exceed
risk appetite, including deined timelines
Risk categories
• Strategic
• Commercial
• Operational
• Financial
• People
• Regulatory and legal
• Fraud
• Health and safety
• Information technology and cyber
• Environmental, social and
governance (includes
climate change)
What we monitor
Group and business units
Risk monitoring
Regular review and updating of risk registers
Group
Strategic risk management
Identiication, review and
management of Group risks
Business units
Operational risk management
Update and maintain risk registers
relecting key risks identiied and
mitigating actions taken
Group Internal Audit and Risk Assurance
Provide independent, objective assurance
Facilitate business risk reviews
Reporting on principal risks and uncertainties
Group Audit and Risk Committee
Risk management framework oversight and challenge
Review management of top risks
Integrated top-down and bottom-up risk management process
Strategic report
Norcros plc Annual Report and Accounts
PRINCIPAL RISKS AND UNCERTAINTIES
Principal risks and uncertainties
Our risk management framework identiies the principal risks and
uncertainties that we consider may threaten the Group’s business
model, future performance, solvency or liquidity. These are
explained in further detail in the table below, including how they
are being managed. The Board has carried out a robust assessment
of the principal risks and taken them into consideration when
assessing the long-term viability of the Group and Company on
page 45. The list does not comprise all the risks that the Group
may face, and they are not listed in any order of priority.
During the past three years, many of our existing principal risks
were affected by the COVID-19 global pandemic. The perceived
risks from COVID-19 have now diminished to such an extent that
the World Health Organization has oficially declared an end to the
global COVID-19 emergency. However, we remain of the opinion
that uncertainty resulting from pandemics more widely, including
new or mutated strains of COVID-19, is likely to remain a potentially
signiicant risk for the foreseeable future; we therefore continue to
identify pandemics as a principal risk and uncertainty.
Strategic risks
Pandemics (including COVID-19)
Risk movement
Reducing
Description
The ongoing effects of the COVID-19 pandemic
have reduced to such an extent that the World
Health Organization has declared an end to the
global COVID-19 emergency. While measures
such as travel restrictions, social lockdowns and
business closures are no longer in place, we
recognise that there remains a risk that a global
pandemic, including a resurgence of the
COVID-19 virus, or a variant of it, could continue
to be a source of uncertainty in the short term.
Failure to adapt quickly and respond to the
impacts of future pandemics, and their
implications in the markets in which we operate,
may result in disruption to our supply chain,
affect employee attendance and physical or
mental health, and could adversely impact our
operations and inancial results.
Impact
While the Group performed robustly
throughout the global COVID-19 pandemic,
the mid- to long-term inancial impact of the
pandemic, and any other future pandemics,
on our main markets remains uncertain.
Outbreaks of new, novel viruses, COVID-19
variants that are vaccine resistant, or vaccine
supply issues that impact the rollout of
vaccinations in some of our key markets could
lead to the reintroduction of restrictions or
other impacts that could be detrimental
toourtrading in the short term.
Mitigation
We demonstrated, during the COVID-19 pandemic,
that our business continuity plans enabled us to
quickly safeguard our employees and limit the
inancial impact on the business through a range
of measures including the temporary suspension
of operations, bringing forward planned factory
maintenance shutdowns and reducing
discretionary expenditure. We ensured that those
employees who could continue to do their jobs
from home were technologically enabled to do so
securely, and we provided safe systems of work for
those who could not practically work from home.
We could reintroduce any or all of these measures
again should the need arise.
We continue to monitor global developments
related to pandemics, including COVID-19.
Annual Report and Accounts Norcros plc
Strategic risks continued People risk
Acquisition risk Environmental, social and
governance (ESG) risk
Staff retention and recruitment
Risk movement Risk movement Risk movement
Stable
Increasing
Increasing
Description
Part of the Group’s strategy is to grow through
selective acquisitions.
The impact of signiicant global events may
affect the cost, timing or availability of potential
acquisitions, and the availability of equity or bank
funding. However, such events may also provide
additional opportunities that would not otherwise
have existed.
The Group might fail to successfully integrate
acquisitions into its existing business model.
Impact
The operational performance of acquired
businesses may not reach expectations
impacting Group proitability and cash low,
aswell as affecting the Group’s reputation.
Mitigation
The Group has detailed target appraisal
procedures in place, including appropriate
duediligence, and has senior management
experienced in M&A work. The Group also has
robust Board approval procedures in place to
ensure independent review of proposals.
Integration plans are inalised prior to acquisitions
completing to ensure newly acquired businesses
are integrated eficiently and swiftly after
acquisition. Group Internal Audit and Risk
Assurance conducts post-integration audits to
ensure operations are fully integrated. Past
acquisitions provide demonstrable evidence of
the Group’s ability to successfully integrate new
businesses and this was demonstrated again in
2022, following the acquisition of Grant Westield
and its integration into the Group.
Description
The need to develop more sustainable ways
ofdoing business is vital. Investors, customers
and a wide range of other stakeholders are
increasingly wanting to form relationships
withcompanies that have a clear plan and
framework to improve their ESG credentials.
A signiicant part of ESG risk is related to
climate change and the potential effects of
both physical and transition climate-related
risks. See the TCFD section on pages 68 to 77.
There is a risk from failing to meet increasing
regulatory and reporting requirements.
Impact
Failure to adequately mitigate ESG risks or to
satisfactorily meet reporting requirements
could lead to the Group losing customers,
investors or support from other stakeholders
that would negatively impact our reputation,
future proits or funding opportunities that
could further limit future growth.
Mitigation
The Group has a history of being focused on
providing sustainable value creation whilst
being committed to operating in an ethical,
entrepreneurial and responsible manner with
the highest standards of corporate governance.
In recognition of the importance of ESG, the
Group has established an ESG governance
structure and continues to develop this through
implementing Group policies, strengthening
carbon data reporting and developing our wider
ESG reporting capabilities (see the ESG section
on pages 46 to 77).
Description
The Group currently employs 2,358 people
worldwide. The Group’s ability to grow and
increase its market share depends signiicantly
on its continuing ability to recruit and retain
highly skilled employees in each area of its
activities and to be an employer of choice in the
communities where it operates.
The current employment landscape, including
high levels of employment, rising inlation,
increasing national minimum and living wage
rates and lexible working demands, continues
to present uncertainty in the recruitment and
retention of appropriately skilled employees.
Impact
Future growth plans may be restricted or
delayed by dificulties experienced in recruiting
and retaining appropriate employees.
Mitigation
Group policy is to remunerate employees in line
with market rates and practices. In addition to
competitive salaries, employees are offered
bonus schemes, share option schemes and
other beneits.
Executive and key management are incentivised
through an Approved Performance Share Plan
(APSP). A grant of options under the APSP has
taken place annually since 2011.
The Group offers employees appropriate training
and development opportunities and has a
demonstrable track record of internal promotion.
A Chief People Oficer role was created in the year.
Strategic report
Norcros plc Annual Report and Accounts
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Commercial risks
Market conditions Loss of key customers Competition
Risk movement Risk movement Risk movement
Increasing
Stable
Stable
Description
Demand in our markets is dependent on new
building activity and repair, maintenance and
improvement (RMI) activity in both the public
and private sectors. This is in turn inluenced by
macroeconomic factors, consumer conidence
and government spending policy in our
keymarkets.
The global economy continues to recover slowly
with a range of negative factors affecting its
recovery from the unprecedented impact of the
COVID-19 pandemic. These include inlation and
the increased cost of living, and the ongoing
conlict in Ukraine affecting energy and food prices
during the year. On the positive side, freight costs
and the shipping container issues experienced
previously have eased during the year.
The disposable income of consumers may be
adversely impacted by rising inlation especially
in food, household energy bills and fuel and
transport costs.
Impact
Demand for our products remains robust despite
the current macroeconomic pressures. However,
demand could still weaken in the short to medium
term as consumer spending patterns change,
impacting proitability and cash generation.
In the short to medium term, ongoing increasing
inlationary pressures could lead to reduced
proitability, as customers’ discretionary
spending reduces.
Mitigation
There are a number of mitigating factors in place
that could limit the impact of potential changes
in consumer spending patterns on the Group.
These include the breadth of products offered,
the geographical spread of our businesses, a
lexible cost base and supply chain, investment
in new product development and the
replacement cycle of several of our key products.
We maintain appropriate headroom against our
borrowing facilities and covenants, maintain
strong working capital and capital expenditure
controls and have disciplined planning,
budgeting and forecasting processes.
Our businesses actively manage their supply
chains and monitor input costs whilst liaising
with their customers. They mitigate risks through
proactive sourcing and pricing strategies.
Description
While the Group has a diverse range of
customers there are nevertheless certain key
customers which account for higher levels
ofrevenue.
The deterioration in market conditions noted
elsewhere continues to heighten the risk that
key customers could go out of business, or that
they could change their business models,
e.g.they may move to an online, or other
alternative, model and we may miss this
opportunity if we fail to adapt to such changes.
Impact
Many of the contractual arrangements with
customers are short term in nature (as is
common in our markets) and there exists a risk
that the current performance of a business
may not be maintained if such contracts were
not renewed or extended or were maintained
at lower volumes due to a decline in economic
activity or our failure to provide goods or services
in the way a customer requires us to do so.
Mitigation
The importance of relationships with key
customers is recognised and managed by
senior management within the Group who have
direct and regular access to their counterparts
at the highest levels of management.
Rebate schemes and incentive programmes
help maintain these key relationships in a
competitive market situation.
The Group stresses key selling points such as
the continuity of supply, inancial strength of
theGroup and level of customer service to help
maintain relationships. As well as an excellent
product offering, the Group is also able to assist
with customers’ sourcing, storage and
logisticsrequirements.
Each of our businesses continues to develop
and evolve its digital and online offering in
response to the changing trading environment.
Description
The Group operates within a highly competitive
environment in all its markets. The actions of
ourcompetitors, including their marketing
strategies and new product development, could
lead to them gaining competitive advantage in
key products and markets.
Impact
The Group recognises that there is a risk to its
results and inancial condition caused by the
actions of its competitors.
Mitigation
To help identify and manage such risks, the
competitive environment, the speciic business
marketplace and the actions of particular
competitors are reviewed and discussed at both
Group and operating divisional Board meetings.
In addition, each market is carefully monitored
to identify any signiicant shift in policy by any
competitor, any change in the routes to market,
or any indication of new competitors and/or
new product technology entering the market.
Annual Report and Accounts Norcros plc
Operational risks
Reliance on production facilities Loss of key supplier Information technology
andcyber security
Risk movement Risk movement Risk movement
Stable
Stable
Increasing
Description
The Group operates a number of facilities for the
manufacture of tiles and adhesives.
Impact
If any of these facilities (including technology
used to operate them) were to fail, the effect on
the Group could be signiicant.
Mitigation
The Group has a well-established ongoing
preventative maintenance programme as
wellasa comprehensive and lexible “annual
shutdown” programme throughout its
manufacturing operations.
Furthermore, the Group has experienced,
globally co-ordinated product sourcing
functions, which could mitigate the risk of failure.
Finished goods inventory holdings across the
operations provide limited “buffer” stocks in the
event of operational failure. Disaster recovery
plans are in place and business continuity plans
have been developed and are tested.
Additionally, a business interruption insurance
policy is in place to mitigate losses caused by
aserious insurable event affecting
manufacturing capability.
Description
The Group’s extended supply chain, with its
dependency on interconnected third parties
for manufacturing, has several potential points
of failure. Raw materials, components and
energy represent a signiicant proportion of
theGroup’s input costs. The potential lack of
availability of, or poor quality standards in, these
key elements represents a signiicant risk.
Reliance on a single supplier within the supply
chain, or on several suppliers in close
geographical proximity, could lead to a failure
to acquire the required quantity or quality of
essential resources.
Impact
The lack of supply of raw materials such as clay
or sand, components such as electronics, glass
or brassware, or gas or electricity could have
signiicant impacts on the Group’s ability to
manufacture product. The risk of energy supply
interruption is elevated in South Africa as its
utility infrastructure is less well developed than
in the UK.
Mitigation
The Group manages supply chain risks through
long-term relationships with key suppliers,
audits of key suppliers, dual supply of critical
materials or components, where considered
appropriate, and holding appropriate levels
ofinished goods stock.
The Group maintains strict product quality
standards and has dedicated procurement
andquality control resource in China to ensure
these standards are adhered to. The Group
aims to mitigate risks on energy supply where
these arise. The Group regularly reviews the
geographical concentration of its supplier
baseand mitigates risks arising where it is
commercially and economically practical
todoso.
Description
The Group relies heavily on several processes
and automated systems to manage data and
conduct its business. The continuing prevalence
and increasing sophistication of cyber-crime
and data loss incidents, along with stringent data
protection legislation compliance requirements,
present risks to all businesses and organisations
across the globe. The risk from state-backed
cyber-attacks has increased recently.
The evolution of home and remote working
methods presents increased cyber security risks
due to remote system access from potentially
less secure working environments and
unfamiliar working practices.
Impact
A major failure of systems or a successful
cyber-attack could result in a temporary inability
to conduct operations or a loss of commercial
and/or customer data. Such an incident may
result in regulatory breaches, inancial loss,
operating disruption or damage to the
reputation of the Group.
Mitigation
During the year, the Group employed the
services of a third party cyber security specialist
company to carry out an independent evaluation
of our cyber security maturity. The review led to
improvement roadmaps being established for
each of the businesses reviewed, and for the
Group as a whole, which are being worked on to
improve our security posture across the business.
The latest network and security protocols are
deployed, updated and regularly tested.
Dedicated business cyber security managers
monitor services and networks in line with
established policies and procedures.
Each business maintains remote backups of
data. The Group undertakes annual penetration
testing conducted by certiied third parties and
conducts ongoing vulnerability scanning, which
takes place regularly throughout the year.
Data protection regulation compliance reviews
are undertaken to conirm the effectiveness of the
relevant processes and controls. Data protection
representatives have been nominated at each
business to help co-ordinate the Group’s approach
to data protection and provide local advice.
The Group operates an online awareness
training programme with cyber security,
information security and data protection
training mandated for all users of IT equipment.
A third-party specialist incident response
provider is retained to assist the Group with an
appropriate and quick response to any cyber
breach or data breach incidents that may occur.
New equipment, and security tools and
methods such as virtual private networks and
multi-factor authentication, are employed to
mitigate remote working risks.
Strategic report
Norcros plc Annual Report and Accounts
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Financial risks
Exchange rate risk Funding and liquidity risk Pension scheme risk
Risk movement Risk movement Risk movement
Stable
Stable
Stable
Description
The Group’s inancial performance is subject to
the effects of luctuations in foreign exchange
rates. In particular, the Group sources a
signiicant proportion of its components and
goods for resale from the Far East and Europe
which are denominated in foreign currencies
(primarily the US Dollar, Euro and Renminbi).
Impact
Should Sterling or the South African Rand
weaken against these currencies this could result
in an increase in future input costs.
Mitigation
The Group typically seeks to hedge its foreign
exchange transactional lows for up to twelve
months forward, which largely removes the
effects of day to day exchange rate volatility
onour businesses.
Regular monitoring of exchange rates and
market conditions, together with frequent
dialogue with suppliers, allows our businesses
time to negotiate revised commercial terms with
customers to mitigate the impact of longer-term
changes in exchange rates.
The Group may, where it is considered appropriate,
denominate some of its borrowings in other
currencies to hedge translational asset risk.
Description
The Group’s ability to grow and adapt its
business is dependent, in part, on its ability
tosource funding through bank inancing
facilities. Whilst the Group has committed
funding until October 2026 it is possible that
the Group may ind it dificult to obtain
inancing on commercially acceptable terms
inthe longer term.
Impact
The inability to source adequate longer-term
funding could impact our longer-term growth
strategy whilst a breach of one or more of the
banking covenants could result in the Group’s
debt becoming immediately repayable.
Mitigation
The Group completed a reinancing of its
banking facilities last year. We reforecast our
liquidity and funding requirements and
covenant performance monthly. Senior
executives and divisional management teams
review, monitor and track short-term liquidity
weekly and covenant performance monthly.
Description
The Group’s pension position is subject to a
number of risks including changes in interest
rates, asset values, inlation and mortality (see
note 24 for more detail).
Impact
These risks could increase the assessed
pension scheme liability adversely or affect
thefunding of the deined beneits under the
scheme and consequently the Group’s
fundingobligations.
Mitigation
The scheme was closed to new members and
future accrual with effect from 1 April 2013 and
replaced by an auto-enrolment compliant
deined contribution scheme. Risks from rising
costs of providing a inal salary pension scheme
have therefore been materially reduced.
All asset investments are managed by
professional fund managers and a diverse asset
portfolio is maintained to spread risk and return.
Executive Management regularly monitors
thefunding position of the scheme and is
represented on the Trustee board to monitor
and assess investment performance and other
risks to the Group.
The Group considers each valuation (IAS 19R
and technical provisions basis) and reassesses
its position regarding its pension commitments
in conjunction with external actuarial advice.
The Group’s inancial results show a net surplus
in this scheme, as at 31 March 2023, of £14.9m
(2022: surplus of £19.6m) assessed in accordance
with the accounting standard IAS 19R. The
present value of scheme liabilities decreased by
£83.3m due to an increase in the discount rate
to 4.90% (31 March 2022: 2.75%) and beneit
payments made in the period. The assets’ value
reduced due to beneit payments made in the
period and reduced asset valuations.
Last year, the Group reached agreement
withthe Trustee on the 2021 triennial actuarial
valuation for the UK deined beneit scheme
and on a revised deicit recovery plan. The
actuarial deicit at 31 March 2021 was £35.8m
(2018: £49.3m). Deicit repair contributions were
agreed at £3.8m per annum from 1 April 2022 to
March 2027 (increasing with CPI, capped at 5%,
each year).
Annual Report and Accounts Norcros plc
VIABILITY STATEMENT
In accordance with provision 31 of the 2018 revision of the UK
Corporate Governance Code, the Directors have assessed the
viability of the Group over a longer period than the twelve months
required by the “going concern” provision. Taking into account the
Group’s current position and the nature of the principal risks and
uncertainties it faces, the Board has decided to assess the viability
of the Group over a three-year period to 31 March 2026. The Board
considers this period appropriate as it believes it is not possible to
credibly forecast beyond this time horizon and it is also the period
over which long-term incentives are set for Executive Directors and
senior management.
A viability statement inancial model was developed on a
bottom-up basis by taking the output of the annual budgeting
process built up by individual businesses, then subjected to
review and challenge by the Board and then applying conservative
general and business-speciic assumptions to build years two
and three. The Board considers the outputs from this inancial
model, including the Group’s cash lows, headroom under
existing inancial facilities, dividend cover and other key inancial
ratios over the three-year period. The inancial model has then
been stress tested by modelling the most extreme but plausible
scenario, that being a global pandemic similar in nature to
COVID-19, which at its peak saw a revenue reduction of 25% on the
prior year over a six-month period. The Directors have considered
the impact of this scenario on the Group’s inancial performance
(speciically headroom on our inancial facilities and covenants)
after taking account of mitigating actions that could be made, with
the result being that the Group maintains the necessary liquidity
levels and complies with the facility covenants despite the impact
of signiicant declines in revenues, earnings, cash outlows and
increasing leverage.
Reverse stress testing has also been applied to the model, which
represents a further decline in sales compared with the reasonable
worst case. Such a scenario, and the sequence of events which
could lead to it, is considered to be implausible and remote.
Therefore, the Directors have a reasonable expectation that the
Group and Company will be able to continue in operation and
meet their liabilities as they fall due over the period to March 2026.
VADO
New Dubai
showroom
The Hydrologics Dubai showroom
supports Vado’s growing
customer base in this key region.
The new facility provides the
Export team with additional
support for new and existing
customers – a great base for
educating architects and
designers about Vado’s product
portfolio and brand.
Strategic report
Norcros plc Annual Report and Accounts
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Sustainability is at the
centre ofourstrategy.
EMBEDDING SUSTAINABILITY
Why sustainability matters
At Norcros, sustainability forms a core part of our strategic
planning and decision making processes and is increasingly
providing a competitive advantage. We will continuously develop
our environmental and societal contribution and we will continue
to conduct business to the highest governance standards.
We have a history of environmental and social leadership.
We also recognise that there are meaningful opportunities
toaccelerate our contribution to the environment and society.
Weareincreasingly designing and supplying sustainable products
that not only create commercial returns but also reduce our
suppliers and customers carbon footprints, energy and water
consumption and bills. Our products have a relatively low but
increasing level of recycled material, as we take a more circular
approach to what we do. We pride ourselves on reducing our
operational environmental impact through energy saving,
recycling and waste management schemes. We also play
anactiverole in our communities.
The business has reviewed our ESG strategy, focusing on eight key
issues that are highlighted in our ESG Management Information
(MI) Framework. A key component in the framework is our Net
Zero Transition Plan, including setting carbon emission reduction
targets for the irst time.
Achievements since our last Annual Report include:
• Development of a new ESG strategy and KPIs. We have
identiied eight priority themes, each with a Norcros ambition
and a series of KPIs. This is already helping us to align our
business behind our ESG priorities. Our Sustainability Report
is aligned to these eight priority themes.
• We have developed our Net Zero Transition Plan. We have
set a target of achieving net zero by 2040.
• We have set carbon emissions targets. In addition to our Net
Zero target, we have set interim targets for scope 1 and 2 and
scope 3 carbon emissions for 2028. We have developed our
end-to-end carbon footprint methodology, which includes
a full scope 3 analysis for years ended March 2022 and
March 2023. We have set targets in line with the approach
outlined by SBTi.
• The business has started the process of validating
our science-based emissions targets. We have signed
a commitment letter to join the Science Based Targets
initiative (SBTi) indicating that we will work to set a science-
based emission reduction target aligned with the SBTi’s
target-setting criteria. We will work with the SBTi to validate
our targets.
• We continue to invest in carbon reduction initiatives and
minimise our environmental impact across our portfolio
of businesses. Recent examples include Triton reducing gas
consumption by c25% on the previous year, saving c50 tCO
2
e,
following the installation of a Heat Recovery and Ventilation
system in January 2022. Johnson Tiles UK was awarded the
“Decarbonisation in Action: Deeper Decarbonisation” award
for “Paving the Way to a Sustainable Future with Barratt
Zed House” project and introduced Environmental Product
Declaration certiicates for all products manufactured in the
UK. Our Triton, Vado and Abode businesses have achieved
Carbon Neutral status. Grant Westield has achieved
certiication of their Environmental Management system to
the ISO 14001 standard and are contributing to the circular
economy with all post production being converted into
biomass fuel. These speciic examples provide a lavour of
an authentic and broader programme covering carefully
identiied areas where we can make a meaningful difference,
including packaging, plastics and fuel.
Achievements and priorities
Annual Report and Accounts Norcros plc
EMBEDDING SUSTAINABILITY
• We have created the new role of Chief People Oficer and
started the process of developing a Group people strategy.
Recognising the critical importance of our team, especially
in our decentralised business model, we have decided to
improve the co-ordination of our talent, D&I, and wellbeing
programmes in line with the Talent & Workforce Development
and Diversity & Inclusion themes in our updated ESG strategy.
• We continue to make progress on enhancing our supply
chain practices. We have historically strong and long serving
partners who are working with us as we continue to develop
our ESG strategy and related policies. A Group Supply Chain
Policy will follow in 2023/24. Of note this year, Johnson Tiles
UK achieved Gold status at the Supply Chain Sustainability
School and became the irst tile factory in the world to achieve
BES6001 (Responsible Sourcing in Construction) certiication.
• We continue to innovate in the development of low carbon
products. Our businesses and products have a strong leaning
to energy and water meaning that we play an increasingly
meaningful role developing products that reduce and re-
cycle. Triton’s Enrich Electrical Shower received the Screwix
‘Most Sustainable Product’ award.
• Embedding our ESG strategy across the Norcros
Decentralised Business Model. A group wide ESG Forum,
co-ordinated from the centre, has met on a monthly basis to
share best practice and help us develop our baseline scope
1, 2 and 3 emissions, set our science-based targets and
develop our Net Zero Transition plan. We have also updated
our capital allocation criteria to make ESG impact a key factor
as we prioritise new investments or expenditure, with the
electriication of our vehicles being one such example.
• We have reported against the recommendations of the
Task Force on Climate-related Financial Disclosures
(TCFD) recommendations for the second time, building
onour disclosure from 2022 and expanding on our risks
andopportunities identiied.
• 38% of the Group’s electricity consumption came from
renewable sources.
Looking forward, our ESG priorities are to:
• Continue to embed our ESG strategy across our
organisation, further developing our ESG Forum,
monitoring our ESG themes & KPIs and continuing to make
our ESG themes a priority in our strategic and operational
decision making;
• Continue to deliver the programme of initiatives we have
undertaken across our business units to support their staff
and their communities. This covers activities across all eight
of our priority ESG themes that cut across Environmental,
Social and Governance impacts;
• Further develop our Net Zero Plan. This involves
publication of our net zero transition plan aligned to the
Transition Plan Taskforce (TPT) draft standards. We will also
continue to deliver on the detailed underpinning initiatives
that drive carbon reduction across our business;
• Keep the KPIs reported in our MI Framework under
review as we measure and monitor them in the irst year.
We will speciically review the coverage of some of the KPIs
we have implemented across our Group including revenue
from low carbon products, waste data and percentage of
packaging used from recycled materials;
• Continue to focus on sustainability as part of our
new product development programmes, looking to
increase the development of low carbon products to meet
consumer demands;
• Report against CDP for the irst time; and
• Keep asking new questions and stretching ourselves
aswe continuously develop our key ESG themes.
Achievements and priorities
Strategic report
Norcros plc Annual Report and Accounts
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
EMBEDDING SUSTAINABILITY CONTINUED
Sustainability governance
The Board of Norcros plc is responsible for ensuring key
sustainability policies, such as the Code of Ethics and Standards of
Business Conduct, are communicated, understood and observed
by all Group businesses, employees and associates. Day to day
responsibility for promoting and implementing these policies is
delegated to business unit senior management. Last year, we
established our group ESG Forum (previously divisional only) to
provide more structure to our sustainability management process.
Throughout the year we have held monthly ESG Forum meetings
which allow us to prioritise our impact through organisational
workstreams and to monitor progress against our plans across
the Group. The continuity of the ESG Forum has accelerated
the development of our sustainability strategy and has enabled
sharing of best practice across the Group. Full details of our
sustainability governance model and its responsibilities are
outlined in the Taskforce on Climate-related Financial Disclosures
(TCFD) Report (page 68).
Materiality assessment and ESG MI Framework
During 2023, to better align with the evolving ESG challenges
andour stakeholder led materiality assessment, we have
extensively revised our ESG strategy, providing structure and
focus for our actions. We have used our materiality analysis
resultsfrom 2022 (Annual Report 2022, page 44) to direct our
ESG strategy on issues that matter most to the Group from a
inancial and business purpose perspective, and that impact
society and our stakeholders. The material issues we identiied
have been developed into eight Priority ESG themes, which
shapeour ESGstrategy, priorities and reporting and are the basis
of ourESGMI Framework.
Our MI Framework enables us to monitor our ESG journey and
ensure we execute our strategy. This is our irst year of reporting
and measurement. The Board will track our progress throughout
the year. Below is a summary of the eight Priority ESG Themes and
the metrics that we are using to track each theme. We are planning
to set targets on these in the remainder of 2023 and as we further
develop our ESG strategy we may look to expand the scope of
reporting against these themes to include more metrics.
Priority ESG themes Norcros ambition Indicator Progress in Financial Year / Read more
HEALTH AND SAFETY
Working to be incident and injury free 1. Accident Incidence Rate
(Reportableinjuriesper 100,000 employees)
781
Page 51
2. Fatalities
0
Page 50
TALENT AND
WORKFORCE
DEVELOPMENT
Employer of choice in the kitchens,
bedrooms and bathrooms (KBB) sector
1. Average number of training hours
per employee
52 hours
Page 53
2. Total employee turnover
13.5%
Page 53
DIVERSITY
ANDINCLUSION
Diversity & Inclusion are at the heart
of who we are; we continue to build
and develop a team with a variety of
backgrounds, skills and views
1. Gender diversity
Male: 68%
Female: 32%
Page 55
CLIMATE CHANGE
ANDEMISSIONS
A sustainable business, reducing our
impact on the environment:
• Net zero by 2040
• Minimise waste to landill
• Reduce energy and water use at our sites
• Operate at or work towards Environmental
Management standard ISO 14001
• Minimise toxic emissions and waste
1. Total scope 1, 2 and 3 emissions
872,497 tonnes CO
2
e
Page 58
2. Total waste
15,656 tonnes
Page 63
3. Water withdrawal
195,266 m
3
Page 63
4. Water consumption
135,865 m
3
Page 63
5. Total energy consumption
295,435,941 kWh
Page 58
INNOVATIVE AND
EFFICIENTPRODUCTS
Be leaders in energy and water eficient
processes and green products (with low
embedded carbon)
1. Revenue from low carbon products
and services
£9.8m
Page 64
2. Proportion of revenue from products that
have been new in last three years
24%
Page 64
3. Percentage of packaging used from
recycled materials
40%
Page 64
PRODUCT QUALITY
ANDSAFETY
Design, manufacture and/or supply high
quality and safe products
1. Customer products recalled due to
safety issues as a proportion (%) of total
products sold
0.003%
Page 65
2. Customer products recalled due to poor
product quality as a proportion (%) of total
products sold
0.91%
Page 65
SUPPLY CHAIN
MANAGEMENT
Ensure our supply chain operates in line
with our ESG standards by applying a new
Norcros Supply Chain Policy
1. Establish Supply Chain Policy in inancial
year 2023/24
N/A
Page 66
ETHICAL CONDUCT
ANDINTEGRITY
Operate with integrity and respect to
regulations and laws in all dealings
1. Proportion (%) of eligible employees who
received training on bribery and corruption
76%
Page 67
2. Total number of reported breaches of Code of
Ethics and Standards of Business Conduct in
total (and those speciically relating to bribery)
14
Page 67
3. Total number of investigated breaches of
Code of Ethics and Standards of Business
Conduct in total (and those speciically
relating to bribery)
14
Page 67
4. Total number of upheld breaches of Code of
Ethics and Standards of Business Conduct in
total (and those speciically relating to Bribery)
14
Page 67
5. Percentage of staff disciplined or dismissed
due to non-compliance with Anti-Bribery and
Corruption Policy
0.37%
Page 67
Annual Report and Accounts Norcros plc
EMBEDDING SUSTAINABILITY CONTINUED
Priority ESG themes Norcros ambition Indicator Progress in Financial Year / Read more
HEALTH AND SAFETY
Working to be incident and injury free 1. Accident Incidence Rate
(Reportableinjuriesper 100,000 employees)
781
Page 51
2. Fatalities
0
Page 50
TALENT AND
WORKFORCE
DEVELOPMENT
Employer of choice in the kitchens,
bedrooms and bathrooms (KBB) sector
1. Average number of training hours
per employee
52 hours
Page 53
2. Total employee turnover
13.5%
Page 53
DIVERSITY
ANDINCLUSION
Diversity & Inclusion are at the heart
of who we are; we continue to build
and develop a team with a variety of
backgrounds, skills and views
1. Gender diversity
Male: 68%
Female: 32%
Page 55
CLIMATE CHANGE
ANDEMISSIONS
A sustainable business, reducing our
impact on the environment:
• Net zero by 2040
• Minimise waste to landill
• Reduce energy and water use at our sites
• Operate at or work towards Environmental
Management standard ISO 14001
• Minimise toxic emissions and waste
1. Total scope 1, 2 and 3 emissions
872,497 tonnes CO
2
e
Page 58
2. Total waste
15,656 tonnes
Page 63
3. Water withdrawal
195,266 m
3
Page 63
4. Water consumption
135,865 m
3
Page 63
5. Total energy consumption
295,435,941 kWh
Page 58
INNOVATIVE AND
EFFICIENTPRODUCTS
Be leaders in energy and water eficient
processes and green products (with low
embedded carbon)
1. Revenue from low carbon products
and services
£9.8m
Page 64
2. Proportion of revenue from products that
have been new in last three years
24%
Page 64
3. Percentage of packaging used from
recycled materials
40%
Page 64
PRODUCT QUALITY
ANDSAFETY
Design, manufacture and/or supply high
quality and safe products
1. Customer products recalled due to
safety issues as a proportion (%) of total
products sold
0.003%
Page 65
2. Customer products recalled due to poor
product quality as a proportion (%) of total
products sold
0.91%
Page 65
SUPPLY CHAIN
MANAGEMENT
Ensure our supply chain operates in line
with our ESG standards by applying a new
Norcros Supply Chain Policy
1. Establish Supply Chain Policy in inancial
year 2023/24
N/A
Page 66
ETHICAL CONDUCT
ANDINTEGRITY
Operate with integrity and respect to
regulations and laws in all dealings
1. Proportion (%) of eligible employees who
received training on bribery and corruption
76%
Page 67
2. Total number of reported breaches of Code of
Ethics and Standards of Business Conduct in
total (and those speciically relating to bribery)
14
Page 67
3. Total number of investigated breaches of
Code of Ethics and Standards of Business
Conduct in total (and those speciically
relating to bribery)
14
Page 67
4. Total number of upheld breaches of Code of
Ethics and Standards of Business Conduct in
total (and those speciically relating to Bribery)
14
Page 67
5. Percentage of staff disciplined or dismissed
due to non-compliance with Anti-Bribery and
Corruption Policy
0.37%
Page 67
Strategic report
Norcros plc Annual Report and Accounts
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
Safety irst
Our Group Health and Safety Policy is driven from the top of the
organisation with the Board having ultimate responsibility. The
policy, which covers all employees, sets out our commitment to
create, maintain and continuously improve a safe and healthy
working environment for employees, contractors and visitors.
Our working environment is designed to prevent occupational
accidents and illnesses. We monitor key health and safety KPIs at
operational Board and management meetings.
Six of our business units, covering 54% of turnover, are externally
certiied to the Health and Safety Management System ISO 45001
standard and we are looking to expand this coverage across
the Group.
Many of our employees have access to online health and safety
training, which provides a range of training modules as required.
Inaddition, where hands-on or specialist training is required, we
use regular “toolbox talks” and provide more speciic training
where this is identiied as being necessary.
Safety performance
We have a proud track record of safety performance, and we are
starting to report on this as part of our ESG annual report. There
were no fatalities recorded in the year (2022: nil) and there have
been no fatalities recorded over the last decade when the current
executive team have been in post. We record Accident Incidence
Rate (AIR) monthly for each location and for the whole Group; this
includes all reported accidents, however minor. We recorded a total
of 18 serious reportable accidents in 2023 (2022: ive, 2021: four).
Health & Safety
Compared to statistics reported by the HSE, Triton already
has a lower accident rate than national averages. To maintain
and improve their position a review and refresh of near
missreporting has led to the launch of their “See It, Sort It,
Report It!” initiative. To increase activity of reporting simplicity
was essential in the design process, all colleagues have
access to the system via custom reporting slips or scanning
a QR code on their smart phone. The collection of the data
has provided insight into “hot spots” where risk mitigation
initiatives have been launched, and also most common
reported unsafe conditions where communication and
training can be deployed. This activity supports Triton’s
value of “Working Safely & Sustainably”.
Our working environment
isdesigned to prevent
occupational accidents and
illnesses. We monitor key
health and safety KPIs at
operational board and
management meetings.”
Our ambition:
Working to be incident
andinjury free
Link to SDGs
HEALTH AND SAFETY
Annual Report and Accounts Norcros plc
Accident Incidence Rate (AIR) – Serious Reportable
Accidents
AIR per
employees Serious
Reportable
Accidents *
We record the root cause of all accidents across the Group.
Signiicant percentages of all accidents in 2023 were caused by
exposure to a harmful substance; hitting something stationary;
slips, trips and falls; or by handling, lifting or carrying. We are
determined to learn safety lessons from these experiences and to
improve our health and safety performance. All accident statistics
and their causes are regularly reviewed by the Group Health
and Safety Managers’ Forum. We maintain externally managed
whistleblowing reporting lines that are available to all employees
where they can report conidentially, and anonymously should
they want to, any concerns they may have in respect of health
andsafety matters.
* Improved monitoring and reporting and the addition of Grant Westield (manufacturing).
Health and wellbeing
We treat everyone with respect and encourage them to be
themselves. We promote employee wellbeing and reduce stress
through several initiatives and support mechanisms. Support is
provided to all UK and Ireland employees through our Employee
Assistance Programme that extends to all aspects of wellbeing,
including free access to various independent support helplines
(e.g.stress, health, lifestyle, etc.). Across the Group, we have various
other health and wellbeing initiatives which aim to improve the
mental wellness of our teams. These include additional “wellness”
days off, on-site welfare facilities and mental health irst aid training.
Norcros SA’s
WellnessCentre
Norcros SA runs a well-established Wellness Program
withan on-site Wellness Centre at the Olifantsfontein site,
providing Primary Health Care, Occupational Health,
andprofessional Wellness Programs and support.
Merlyn’s Gut Health Day
Dr Annmarie Eustace Ryan visited Merlyn head ofice and
gave a fascinating talk about the vital importance of gut
health and gave insight into the relationship between good
gut health, feeling well and preventable illnesses.
Annmarie is a Gut Health Expert and a Consultant
Gastroenterologist at Tipperary University Hospital and
author of the children’s book, Bug of War written to explain
to children and parents why eating certain foods and
avoiding certain foods is the best way to feel well and to
prevent illness.
HEALTH AND SAFETY
Strategic report
Norcros plc Annual Report and Accounts
TALENT AND WORKFORCE DEVELOPMENT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
This year we have created the role of Chief People Oficer.
Thisdemonstrates Norcros’ focus on becoming an employer
of choice, which will help us attract, retain and develop the
best talent in the sector and to ensure we are ‘it for the future’.
Attracting the most talented individuals from diverse communities
is key to ensuring we have the skills and capabilities we need to
deliver our strategy. We are placing increased focus and emphasis
upon developing, motivating and retaining our people as we seek
to safeguard our ability to serve our customers for the long term.
We also continue to encourage and enable collaboration across
the Norcros Group through shared special interest forums and
networks that enable knowledge sharing and learning and create
opportunities for personal development.
As we move into 2023/24, we are starting to develop a new Group
level People strategy and standardised reporting framework that
will continue to focus on talent and workforce development.
Workforce engagement
We engage with employees across the Group through our
divisional structure. This ensures that all communication and
engagement is appropriate to each business and location. We
have a very effective approach to cascading information about
business changes, key issues and business performance updates
through the organisation using a variety of channels including the
line management structure, emails and Microsoft Teams calls.
The Board stays in touch with employees via regular meetings
with divisional management and site visits to its operations, as
well as regular reports on employee matters. This area of focus
is led by Alison Littley as the designated Non-executive Director
for workforce engagement, together with the executive team.
Inthe course of the year Alison Littley on behalf of the Board
haddirect engagement with representative groups from six
of ourbusinesses, and more such meetings have and will take
placein the current inancial year.
Talent and career management
All of our businesses have staff training programmes that are
suitable for the development of appropriate technical and people
skills. We are committed to education and career development,
and for those in senior leadership roles, coaching and mentoring
have been offered alongside the opportunity to attend courses
or other developmental activities. Coaching and mentoring
is focused on the individual’s unique work challenges and
opportunities as well as on the individual’s personal style and
behaviour. We acknowledge that the world of work is changing
for many, and we commit to staying relevant in our approach to
careers and talent development.
We implemented our learning platform Flick in 2021 and we have
continued to embed this across the business over the last year.
Flick is an online awareness training platform covering three
mandated training modules on Anti-Bribery and Corruption,
Information Security and GDPR. There are a range of other training
modules such as Cyber Security and Equality and Diversity that are
also available to the Group’s UK employees.
Our ambition:
Employer of choice in the
kitchens, bedrooms and
bathrooms (KBB) sector
Link to SDGs
Attracting the most talented
individuals from diverse
communities is key to
ensuring we have the skills
and capabilities we need to
deliver our strategy.”
Annual Report and Accounts Norcros plc
TALENT AND WORKFORCE DEVELOPMENT
Norcros SA – investing
inthe future generation
ofskilled artisans
Norcros SA’s social commitment is relected in its recent
partnership with the Steel and Engineering Industries
Federation of Southern Africa (SEIFSA) to launch the Youth
in Engineering apprenticeship programme. Launched in
August last year, the scheme saw 20 apprentices from
6,000 applicants launch their careers as artisans. It is a
three-year course that requires learners to fulil each year’s
training criteria before progressing to the next academic year.
Each apprentice will have the opportunity to work at either
the TAL or the Johnson Tiles plant at Olifantsfontein for three
months, where they can apply their skills and gain practical
experience. The ultimate goal of the programme is to train
and help learners achieve their Red Seal artisan trade
certiication, which is proof that they have met the national
standard in their trade.
Training statistics
Training time Total
UK
Proportion of employees who received training
Total number of training hours
Average number of training hours per employee
South Africa
Proportion of employees who received training
Total number of training hours
Average number of training hours per employee
Group total
Proportion of employees who received training
Total number of training hours
Average number of training hours per employee
The table above outlines the Group’s training statistics for 2023.
Aspart of our ESG MI Framework and our developing People
strategy, we will monitor training KPIs, consider targets and
manage our business towards the optimum type of training
toachieve our strategic objectives.
Labour
All our employees are entitled to a fair salary and other terms and
conditions of employment, as appropriate. Our policy is to comply,
at the very least, with minimum wage legislation for any job role for
all employees and we seek to be competitive as is appropriate to
the role and business in question. Legally required beneits such
as annual leave, sick leave, maternity leave and normal working
patterns and hours are of course applicable to all.
All UK and Ireland employees have access to a save as you
earn scheme, which is a savings-related share scheme where
employees can buy shares with their savings at a ixed price.
Employees are encouraged to be involved in the Company’s
performance through employee share schemes, and other
means of incentivisation and reward. As per UK regulation,
allour UK employees have the option to enrol in our workplace
pension scheme.
Employee turnover
Employee
turnover
UK
South Africa
Total
Whilst we have always recorded employee turnover within our
business units, we have started to record this KPI on a standard
basis across our Group. With our increasing focus on staff
retention we will continue to monitor this KPI and our businesses
will take appropriate actions.
Strategic report
Norcros plc Annual Report and Accounts
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
We believe that a diverse and inclusive organisation promotes
greater innovation and more effective decision making. Our Code
of Ethics and Standards of Business Conduct sets out our overall
approach, in which all employees are encouraged to advance
within the Group and have equal opportunities to do so subject
to their possessing the necessary skills and aptitudes. The Board
is committed to gender equality, which includes equality of pay
between men and women. The Board is satisied that there is no pay
inequality at Norcros, where men and women are paid equally for
equal work.
Norcros is committed to not discriminating in the employment
of any person due to race, colour, national origin, family
responsibility, trade union membership, sex or gender identity,
sexual orientation, age, religion or belief, disability status or any
other category protected under applicable legislation in any
jurisdiction in which it operates. This commitment applies to all
personnel actions including hiring, promotion, termination, transfer
and compensation/beneits. We maintain external independent
whistleblowing reporting lines where employees can report any
concerns they may have in respect of discrimination conidentially
and anonymously should they wish to.
In the event of existing employees becoming disabled, every effort
is made to ensure that their employment with the Group continues,
and that appropriate training is arranged. It is the policy of the Group
that the training, career development and promotion of disabled
persons should, as far as possible, be identical to that of an able-
bodied person.
Norcros SA empowers
women in plumbing with
the WIP Programme
House of Plumbing is proud to empower women in the
plumbing industry by launching the Women in Plumbing
(WIP) Programme. It aims to bridge the gap for trained and
qualiied women plumbers and to provide them with more
career opportunities. Out of over 4,000 applicants, 20
female apprentices were selected to participate in the
three-year programme.
The programme is fully sponsored by Norcros SA and
House of Plumbing, with the apprentices receiving
theoretical and practical training in college and on site.
They also have the opportunity to learn more about
plumbing products, industry practices and various career
avenues from House of Plumbing suppliers during weekly
training sessions.
DIVERSITY AND INCLUSION
Our ambition:
Diversity & Inclusion are at
theheart of who we are; we
continue to build and develop
ateam with a variety of
backgrounds, skills and views
Link to SDGs
The Group promotes diversity and inclusion through several
initiatives and support mechanisms. For our UK businesses, diversity
and inclusion training has been included in our Flick platform
for 2023, which included aspects such as unconscious bias and
preventing bullying and harassment. In Norcros South Africa, we
have women’s forums in each division and have carried out diversity
and inclusion surveys to evaluate employee outlook in relation to
diversity. The different divisions also have varying special leave
policies including compassionate leave, carer leave and study leave,
which help employees balance the demands of domestic and work
responsibilities at times of either urgent or unforeseen need.
We already deliver a range of D&I initiatives across our business.
As we further develop our D&I programme, we are introducing
more Group-wide co-ordination, increasing focus on how D&I
can contribute to our employee value proposition and improve
employee engagement, and we will introduce new KPIs and targets
including ethnicity.
Number of staff by year by region
UK
South Africa
Total
Annual Report and Accounts Norcros plc
Community partnerships
Our commitment to the society in which we operate is deep.
All Group businesses have programmes of social engagement,
including many charitable activities, and will have a positive impact
on the local communities in which they operate. We empower our
businesses to support local charities and community projects,
and provide local employment. Given our de-centralised structure,
business units in the Group are encouraged to become involved
in and support local initiatives where possible. The Executive
Management of the Group supports this commitment to our
society and reviews each business’ activities monthly.
Norcros SA employment
equity committees
Each of our South African divisions has employment equity
committees which are there to ensure that the business
promotes equity in the workplace and ensure that all receive
equal opportunities. Divisional meetings take place once a
quarter and discussion points include identifying barriers to
equality and monitoring compliance against employment
equity targets.
Norcros South Africa
invests in communities
with CSI Programme
Norcros South Africa’s Corporate Social Investment (CSI)
Programme has a mission to invest in the wider community
by participating in a country-wide project to provide safe
and clean toilets in schools. Its aim is to change the lives of
at least 3,000 learners in the next ive years by converting a
minimum of ive schools from pit latrines to safe and healthy
ablution facilities.
The company has already made signiicant progress towards
this objective with the successful completion of the 2022
project at Mohlaletse Secondary School in Sekhukhune
District, Limpopo. The project is part of the South African
Government’s Sanitation Appropriate for Education (SAFE)
initiative, aimed at eliminating pit latrines at schools.
DIVERSITY AND INCLUSION
Gender diversity statistics
1
Male: 46 (2022: 37)
Female: 15 (2022: 11)
Male: 1,596 (2022: 1,489)
Female: 762 (2022: 707)
Senior
management
1
Total
employees
2
1 Table outlines senior manager and employee numbers and gender split as required
under the Companies Act. Senior manager is deined in line with the Companies
Act as a person who — (a) has responsibility for planning, directing or controlling the
activities of the Company, or a strategically signiicant part of the Company, and (b)
is an employee of the Company. These igures are accurate as of31March 2023.
2 Total employee igures include Senior Management and Directors as of
31March 2023.
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Norcros plc Annual Report and Accounts
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
We are committed to minimising the environmental impact of
our operations, products and services wherever possible. Making
progress in improving our energy eficiency and reducing carbon
emissions, waste and water use are important for our customers,
our staff and our stakeholders. At this stage, our initiatives are
delivered within our business units and include action in the
following key areas.
Managing environmental performance
Our individual business units track and monitor their environmental
impacts. The main vehicles for compliance and improvement
across sites are our environmental management systems. Seven
of our businesses, covering 61% of turnover, are certiied to
the Environmental Management ISO 14001 standard and our
businesses report regularly on any environmental issues that
arise. Amongst other issues, our ISO 14001 certiied management
system includes our handling of waste and hazardous materials.
The Group has not had any environmental ines in the last twelve
months (2022: none). This year the Group has been working on
a new Environmental Policy which outlines our position on key
environmental issues and this will be developed further next year.
CLIMATE CHANGE AND EMISSIONS
Abode achieves Carbon
Neutral status through
Planet Mark
In March 2022 Abode achieved the Planet Mark Carbon
Neutrality Certiication. Abode’s achievement of Carbon
Neutral status is the irst stepping stone on the journey
towards net zero carbon and in November 2022, Abode
invested in the installation of solar panels at its Barnsley
head ofice. The installation consisted of 125 solar
photovoltaic panels with a combined output of 50kWh.
These PV panels should generate enough electricity for all
ofAbode’s current site requirements and Abode will also
beneit from being able to sell the excess energy generated
in the summer months back to the grid.
Further improvements Abode has made throughout the year
include all ofice lighting being converted to LED and sensor
installations to reduce the usage of electric lighting. To
support Abode’s target of electriication of the company
leet, there are also plans to install further EV charging
points which will beneit from energy generated from the
solar panel installation.
Our ambition:
A sustainable business,
reducing our impact on
theenvironment
Our environmental goals:
• Net zero by 2040
• Minimise waste to landill
• Reduce energy and water use at our sites
• Operate at or work towards Environmental Management
standard ISO 14001
• Minimise toxic emissions and waste
Link to SDGs
Annual Report and Accounts Norcros plc
CLIMATE CHANGE AND EMISSIONS
Energy management and greenhouse gas emissions
Climate change is one of the biggest challenges of our time
and the transition to a low carbon economy has the potential
to signiicantly impact our business as well as our clients and
suppliers. Norcros aims to minimise our impact on climate change
by reducing our carbon emissions across all operations.
We engaged with CEN-ESG to undertake a review of our carbon
management practices in each of our business units. The
indings of this review have helped us to determine the carbon
hotspots in our operations which led us to develop business unit
carbon reduction roadmaps that will result in the Group reducing
emissions in line with our emissions reduction targets.
Energy eficiency initiatives
We have a range of initiatives underway across the Group to
reduce our carbon footprint and energy consumption. Below
are some initiatives that have occurred across the Group
during the year:
• Triton has rolled out the irst electric vans in its leet of vehicles
(EVs), with 5 of their service engineers now using the electric
vehicles to visit and service customers’ showers. Triton also
utilises 100% certiied renewable electricity across the Nuneaton
manufacturing site and a new HVAC/heat recovery system
installation has helped reduce consumption of gas on the
Nuneaton head site by 25% in 2023.
• Abode has increased the number of EVs in their leet as well as
installing two new EV chargers.
• Grant Westield has upgraded all lighting to LED, installed a
solar array on the roof and purchased two EV chargers as well
as implementing a policy which requires all company cars to be
hybrid or electric.
• Johnson Tiles UK has installed six EV chargers and retroitted
one area of its factory with LED lighting. Johnson Tiles UK also
uses 100% certiied renewable electricity across its business.
• Merlyn has switched its head ofice and warehouse operations
to 100% renewable electricity.
• Johnson Tiles SA has completed the replacement of 90% of
outside lighting with LED lighting and all air conditioning that
needs replacing gets changed with more energy eficient
inverter conditioning units.
• Tile Africa has converted most of its diesel forklift leet to electric
forklifts and uses evaporative coolers in its new and upgraded
CX stores which are signiicantly more eficient and cost
effective than the cassette air conditioning units.
• TAL’s supply chain department has embarked on a carbon
footprint and eficiency drive by moving towards high capacity
trucks that reduce the carbon footprint per kg of product
shipped to our customers.
Carbon emissions
The tables on page 58 have been prepared for the reporting
period of 1 April 2022 to 31 March 2023 using the reporting period
of 1 April 2021 to 31 March 2022 for comparison.
The Group has deined its organisational boundary using an
operational control approach. GHG emissions are in CO
2
e,
including GHGs in addition to carbon dioxide and include our
head ofice and all divisions excluding Norcros Adhesives, which
is excluded on the basis of immateriality (below 0.5% of total
footprint) and in view of the announced closure. Scope 1 and 2
data has been calculated from monthly measured data (e.g., fuel
and electricity use) using the appropriate conversion factors in
accordance with the principles and requirements of the World
Resources Institute (WRI) GHG Protocol: A Corporate Accounting
and Reporting Standard (revised version) and Environmental
Reporting Guidelines: Including Streamlined Energy and Carbon
Reporting requirements (March 2019). We are reporting our scope
3 emissions for the irst time this year, with guidance from the
GHG Protocol Corporate Value Chain (Scope 3) Accounting and
Reporting Standard and the GHG Protocol Technical Guidance for
Calculating Scope 3 Emissions, as required.
In line with the Greenhouse Gas Protocol, we continue to review
our reporting in light of any changes in business structure,
calculation methodology and the accuracy or availability of
data. As a result, we have restated 2022 emissions data to
relect changes in methodology and data. Due to recognised
inherent uncertainties in calculating scope 3, we have adopted
a continuous improvement approach. We will continue to review
our processes and disclose any restatements in a timely and
transparent manner.
Absolute scope 1 and 2 emissions increased 20% and absolute
energy consumption increased 21% year on year. This is in part
due to the purchase of Grant Westield but principally due to an
increased manufacturing output in our South African divisions,
more normalised operating conditions after the lifting of remaining
restrictions of COVID-19 and ongoing growth in headcount. The
Group’s UK divisions’ scope 1 and 2 emissions have decreased year
on year by 11% which is a result of the energy eficiency initiatives
discussed above. Absolute scope 3 emissions have decreased 9%
year on year due to a lower spend rate on purchases in 2023 in
comparison to 2022, when our divisions restocked raw materials
post-COVID-19.
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Norcros plc Annual Report and Accounts
Carbon emissions continued
FY FY
UK
Global
excl. UK
Group
Total UK
Global
excl. UK
Group
Total
Intensity measure
Group turnover m
GHG emissions (tCO
2
e)
Total scope tCO
e
Scope location based tCO
e
Scope market based tCO
e
Total scope location based tCO
e
Total scope market based tCO
e
Upstream scope tCO
e
Downstream scope tCO
e
Total scope tCO
e
Total scope , and location based
tCO
e
Total scope , and market based
tCO
e
Scope and GHG emissions intensity
ratio per Group turnoverm
Energy consumption (kWh)
Total renewable fuels consumption kWh — — — — — —
Diesel
Natural gas
Petrol
LPG — —
Oil gas oil — —
Total non-renewable fuels consumption
kWh
Total fuels consumption kWh
Consumption of purchased or acquired
electricity renewable kWh —
Consumption of self-generated non-fuel
renewable energy solarkWh — — — —
Consumption of purchased or acquired
electricity non-renewable kWh
Total electricity consumption kWh
Consumption of purchased or acquired
heating kWh — — — — — —
Total renewable energy consumption kWh
—
Total non-renewable energy consumption
kWh
Total energy consumption kWh
renewable electricity from total electricity
grid electricity from total electricity
Energy intensity ratio per Group turnover
m
1 Excludes Norcros Adhesives.
CLIMATE CHANGE AND EMISSIONS CONTINUED
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
Annual Report and Accounts Norcros plc
CLIMATE CHANGE AND EMISSIONS CONTINUED
Scope 3 emissions
During the year we conducted our irst full assessment of our value
chain emissions, using data from 2022 and then updating our
footprint for this year across our eleven business units and Head
Ofice, with the exclusion of Norcros Adhesives. Our evaluation
conirmed that our value chain emissions are signiicantly greater
than our operational carbon footprint, with our scope 3 emissions
accounting for 92% of our total emissions.
We calculated all applicable scope 3 categories for our carbon
footprint with four categories not applicable to our business.
Thecalculation of emissions for our key scope 3 sources is:
• Use of sold products – we calculate the lifetime energy use
for representative products of our key product ranges, using
our annual sales volume, average power use per product and
estimated hours in use over life. Emissions factors for our key
sales regions are applied to this data.
• Purchased goods and services – we use purchase data by
quantity or number of raw materials or components and apply
life cycle assessment based emissions factors directly against
our purchase data or against representative raw materials within
each component category. Spend-based analysis is used for any
services. We include no primary data from suppliers.
• Upstream transportation and distribution – all inbound, intra-
Group and outbound logistics the Group pays for are mapped
against the transportation mode, weight and distance travelled
to calculate emissions on a wheel-to-well basis.
Category Status
tCO
e
tCO
e
. Purchased goods and services Relevant, included
. Capital goods Relevant, included
. Fuel-and-energy-related activities not included in scope or Relevant, included
. Upstream transportation and distribution Relevant, included
. Waste generated in operations Relevant, included
. Business travel Relevant, included
. Employee commuting Relevant, included
. Upstream leased assets Relevant, included
Total upstream scope
. Downstream transportation and distribution Relevant, included
. Processing of sold products Not applicable N/A N/A
. Use of sold products Relevant, included
. End-of-life treatment of sold products Relevant, included
. Downstream leased assets Not applicable N/A N/A
. Franchises Not applicable N/A N/A
. Investments Not applicable N/A N/A
Total downstream scope
Total scope
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Norcros plc Annual Report and Accounts
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
CLIMATE CHANGE AND EMISSIONS CONTINUED
Targets
We have set science-based targets across scopes 1, 2 and 3
which afirm our long-term commitment to net zero by 2040,
and we introduce interim targets for 2028. Our targets have
yet to be validated by the Science Based Targets Initiative
(SBTi), but they provide a path for signiicant reduction in our
emissions through to 2028 and beyond.
By 2028, we have set the following targets:
• reduce absolute scopes 1 & 2 GHG emissions by 33.6%,
from a 2023 base year; and
• reduce absolute scope 3 GHG emissions by 20.0%, from
a2023 base year.
By 2040, our target is to reach net zero GHG emissions across
the value chain.
Our emissions
targets and
Net Zero Plan
Recognising the urgent need to address climate change and
reduce greenhouse gas emissions, this year we have developed
ambitious net zero targets and a high level decarbonisation
pathway to manage our value chain emissions going forward.
Thisaligns with our strategic objective of placing sustainability
atthe heart of our business.
Annual Report and Accounts Norcros plc
Our value chain emissions
SCOPE 3
UPSTREAM
28%
This represents embodied carbon
emissions in our purchased goods and
services (23% of total emissions) with
a further 3% of total emissions coming
from inbound transportation. Controlling
these emissions requires engagement
with suppliers and transport providers,
aswell as product innovation.
SCOPE 1 AND 2
OPERATING EMISSIONS
8%
Our operations contribute 5% of total
emissions from the use of fuels and 3%
from the use of electricity. We manage
these through renewable electricity and
energy eficiency measures.
SCOPE 3
DOWNSTREAM
64%
Most of our value chain emissions occur
downstream of our operations. 63% of
our total emissions relate to products
in use, where energy eficiency of our
products and grid decarbonisation are
important. Outbound transportation
accounts for 1%.
Our emissions proile
Despite the diverse nature of the Group, our emissions proile is
concentrated in a handful of categories and within those, certain
business units often dominate. This helps focus on areas for action,
but it can also limit the number of levers to meaningfully reduce
total emissions.
Most of our scope 1 emissions (94%) relate to natural gas used in
the kilns of our tile manufacturing businesses in both UK and South
Africa. Our scope 1 also includes emissions related to heating,
HFCs and leet emissions across all business units. A number of
our UK-based business units already generate or source renewable
electricity, which means our scope 2 emissions from purchased
electricity are largely derived from our sites in South Africa.
Our scope 3 emissions are signiicantly greater than our
operational carbon footprint. Our largest exposure is Use of Sold
Products (63% of our total emissions). This category is dominated
by the lifetime use phase of electricity related emissions from
the Triton and House of Plumbing product ranges, with minor
contribution from electrical items sold by Abode and Croydex.
Purchased Goods and Services (23%) represents the embedded
carbon within our raw materials and purchased items and is
spread across all business units. Upstream and Downstream
Transportation and Distribution emissions (3% and 1% respectively)
represent inbound, outbound company-paid logistics, and
outbound third-party paid logistics, largely by road and sea, and
are also common to all business units.
CLIMATE CHANGE AND EMISSIONS CONTINUED
Our transition plan
We have developed our irst Group-level transition plan aligned
to our science-based targets which outlines our decarbonisation
roadmap. This is underpinned by speciic targets for all our
business units.
Our near-term targets for scopes 1, 2 and 3 are achievable through
currently available technologies and are based on projects we
have already assessed and other potentially available projects.
Our long-term plan includes the high level drivers for how we can
achieve our ultimate net zero target.
There are signiicant risks to the delivery of our targets. We
have explored these further in our TCFD Report. Some of the
risks include:
• input and support from supply chain partners to reduce
footprint on the components/products we use;
• decarbonisation of the electricity grid in our operating regions,
speciically in the UK and South Africa to support reduction of
scope 2 emissions. This is a particular risk in South Africa;
• decarbonisation of transportation; and
• development of new technology to reduce carbon emissions,
inparticular around production of ceramic tiles.
We will monitor the delivery of our plan and review progress
regularly. We plan to undertake a full review of our Net Zero Plan
in2025 which will allow us to accommodate any unforeseen issues
and emerging technologies as they arise.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
CLIMATE CHANGE AND EMISSIONS CONTINUED
Scope 1 and 2 roadmap
TARGET:
33.6%
absolute reduction by 2028 from a 2023 base
year in line with SBTi 1.5˚C
Scope 1 and 2
baseline (2023)
Growth
Growth
Process and
energyeficiencies
Process and
energyeficiencies
Greener electricity
Greener electricity
Scope 1 and 2 near-
term target (2028)
Scope 1 and 2 net zero
target (2040)
Scope 3 roadmap
TARGET:
20.0%
absolute reduction by 2028 from a 2023 base
year in line with SBTi well below 2˚C
Scope 3
baseline (2023)
Growth
Product
and sourcing
Growth
Product and sourcing
Grid decarbonisation
Grid decarbonisation
Transportation
Scope 3 near-term
target (2028)
Scope 3 net zero
target (2040)
Scope 1 and 2 emissions – our plan
Key to reducing our operational emissions is:
Scope 1
• Near term: tile production and operational improvements (e.g.
heat recovery systems, retroitting energy eficient burners to
kilns); electriication of our heating and leet (e.g. air source heat
pumps, EVs); replacement of high GWP refrigerants; and other
energy eficiencies.
• Long term: alternative fuel in our kilns (e.g. biogas, hydrogen,
hydrogen mix or electric); and product innovation to reduce
iring times or temperatures.
Scope 2
Switching to renewable electricity supply, either through on-site
renewables (e.g. rooftop solar installation at our main South
African production site and potentially our Tile Africa and House of
Plumbing site estate) or securing purchased renewable electricity
supply. The availability of purchased renewable electricity in South
Africa is less prevalent than in the UK currently due to the lower
maturity of the renewables market.
Scope 3 emissions – our plan
Given our products in use exposure, the single biggest factor in
our ability to hit our near-term scope 3 target and net zero by 2040
target is the pace of decarbonisation of grids globally, especially
the UK grid, which is our main market. We cannot directly inluence
the pace of grid decarbonisation and rely on governments to
implement appropriate policies to achieve this. That said, we are
encouraged by the forecasts in the UK’s Future Energy Scenarios,
which see effective decarbonisation of the UK electricity grid by
2035 in three of the four modelled outcomes.
Through product innovation and in collaboration with our
suppliers we can inluence emissions not only in use phase,
but also in embedded emissions in our purchased goods and
end of life. By investigating alternative materials, reducing the
number of components in our products and increasing the overall
eficiency of our products, we can reduce both the upstream
and downstream impacts of our product range, including the
associated packaging. We foresee moderate impacts in the near
term from this activity with the majority coming in the long-term
time horizon, subject to more substantial engagement with our
suppliers and embedding change into our product development
practices. We also expect our suppliers will make eficiency
improvements in the way that we will in our own operations, such
as upgrading equipment to be lower emissions, electriication of
heating and other operational eficiencies.
Most of our products are shipped to us and our customers by
sea or by road. We are looking at how we package and ship our
products to see if there are opportunities for reducing the overall
emissions footprint associated with logistics. We have factored
in conservative assumptions on the decarbonisation of global
transportation, which will drive the decarbonisation of logistics,
business travel and employee commuting.
Some of our divisions already use carbon offsets to achieve
Carbon Neutral status. In line with the SBTi criteria, our Group
targets and transition plan do not include the use of carbon
offsets. Whilst no such action is planned, we may use offsets
as an option for additional emission reductions beyond the
science-based targets, or as a way to reduce our residual
emissions in 2040 to zero.
Annual Report and Accounts Norcros plc
Air emissions management
Air emissions are an important part of Johnson Tiles UK and SA’s
tile manufacturing process. Air emissions originate principally from
our kilns and dryers and we have implemented methods to control
our emissions such as wet scrubbers and baghouse ilters. Air
emissions are monitored internally as well as all process emissions
being monitored and veriied by a third party on an annual basis
to ensure our measurement methods are in compliance with our
operating permits. Johnson Tiles SA also undergoes an Annual
Emissions License (AEL) audit to demonstrate that its processes
and applications are operated in accordance with South African air
quality regulations and to reduce any potential negative impacts
on community health and the wider environment.
Ceramic tile manufacture produces less toxic emissions than
other building materials (e.g. bricks). Both our South African and
UK businesses have consistently met the targets required for our
permits in particulate matter (PM) and hydrogen luoride (HF)
measured for our kilns and spray dryers. These are monitored
and independently measured at least annually. Johnson Tiles
UK operates at around 10–20% of its target limit and after the
South African limit on HF was reduced from 100mg/m
3
to 50mg/
m
3
Johnson Tiles SA has met these more stringent targets. This
demonstrates our track record of meeting toxic emissions targets
and we aim to maintain our levels of PM and HF below legal limits.
Water consumption
Water eficiency is an increasingly important issue for us. This
includes, where possible, reducing the amount of water we
use in all our operations and designing products that help our
customers reduce the amount of water used for their domestic or
commercial purposes. To prevent water loss in Triton’s systems a
continued programme of total preventative maintenance (TPM)
is ongoing including inspection of welfare facilities and pipework
throughout the site and the installation of shut-off valves on the
central heating system to detect and prevent leaks. Triton also
continues to target water use reduction by ongoing rollout of
air decay testing, replacing the need for “wet” testing. The most
recent and signiicant activity has been the removal of wet testing
on the Omnicare range of products saving 3.1 litres per unit with an
annual reduction of 102,300 litres.
Water withdrawal
Water withdrawal m
UK
SA
Total
Intensity ratio m
per m revenue
Water consumption
Water consumption m
UK
SA
Total
Intensity ratio m
per m revenue
The tables above outline: (i) water withdrawal for all of our business
units; and (ii) water consumption across nine of our business units,
which account for 77% of Group revenue. This is the irst full year
of collecting water-related data across the Group and we will
continue to monitor water usage through the year.
Waste management
Reducing packaging and increasing the amount of recycling are
important goals for all our business units from an operational,
commercial and environmental perspective. Various initiatives
aimed at reducing waste sent to landill and encouraging recycling
are in place such as on-site segregated recycling bins; employees
are expected to support these schemes by sorting waste and
disposing of it appropriately.
Tile Africa has been focusing on an initiative to improve recycling
of plastics and cardboard across all stores as well as minimising
the broken tiles going into skips by selling off the broken tiles.
This reduces the material going into landills, recovers some costs
against breakages and lowers the frequency of skip collections
saving the additional collection costs. Johnson Tiles SA has also
conducted an Environmental Legal Compliance audit with all
waste being covered as part of this audit.
Waste generation* tonnes
Group total
Hazardous waste
Non-hazardous waste
Total waste
Waste treatment/disposal tonnes
Group total
Hazardous waste recycled
Hazardous waste incinerated
Hazardous waste sent to landill
Non-hazardous waste recycled
Non-hazardous waste incinerated
Non-hazardous waste sent to landill
Total waste recycled
Total waste incinerated
Total waste sent to landill
Total waste non-recycled
Total waste
* Adhesives has been excluded from the data tables above on the basis of
immateriality and that it is currently being closed.
The table above outlines waste generation and treatment across
nine of our business units, which account for 89% of Group
revenue. This is the Group’s irst year of collecting waste data and
we will aim to increase the coverage of waste data in the coming
years. As part of our ESG MI Framework we will now look to set
targets on waste reduction and increase the proportion of our
waste that is recycled.
CLIMATE CHANGE AND EMISSIONS CONTINUED
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
Abode – Naturale Aquiier
An example of how the Group designs products for
sustainability is Abode’s Naturale Aquiier tap, launched
in2022. It has been designed to help reduce unnecessary
water and energy usage through features such as water
saving technology and cold start valve. The water ilter tap
also reduces reliance on single use plastic water bottles.
INNOVATIVE AND EFFICIENT PRODUCTS
The Group is also committed to minimising the environmental
impact of its products and services wherever possible. We have
provided our customers with some environmentally beneicial
products that are energy eficient, easily recyclable and durable
to increase their longevity. To be a sustainable business, we
need to continue to develop innovative solutions and we are
always developing new products and technologies that align to
customer and market demands as well as investing in research and
development to stay ahead of our competitors. We aim to improve
the material eficiency of our products and production processes.
An example of this is Johnson Tiles UK’s tile manufacturing
process which is carefully calibrated to ensure that every single
tile manufactured contains a minimum of 20% recycled ceramic
material as part of its pioneering ceramic waste recycling system.
Across our product portfolio we have strict quality standards,
ensuring we only use the very best components and latest
manufacturing techniques to ensure long-life performance – this
reduces the lifetime environmental impact as there is a reduced
need for maintenance and replacement of products. The
impacts from climate change and the accelerated commitment
to environmental legislation from governments, such as net
zero by 2050 in the UK, has created opportunities for Norcros to
capitalise on consumer and market demands for products that help
customers reduce their environmental impacts. The Group offers a
number of innovative products that already provide customers with
solutions to reduce their carbon emissions while also saving money.
Developing low carbon and innovative products is a core part of
our strategy. To track the development of innovative and eficient
products we measure revenue from low carbon products
1
and the
new product development (NPD) vitality index, which measures
the percentage of revenue that comes from products that have
been new in the last three years.
This is the irst year that we are tracking low carbon products and
several of our product ranges that have sustainability features have
been excluded from this number, due to our methodology still
being established. Going forward our businesses will continue to
explore low carbon product development where there is customer
demand to increase our revenue from low carbon products.
A way to reduce the environmental impact of our products is using
more sustainable packaging. We encourage our businesses to
procure packaging that is made from recycled materials or can
easily be recycled. Initiatives introduced this year include the
elimination of single use plastics in packaging designs at Merlyn,
the use of 100% recycled packaging cartons at Johnson Tiles
South Africa, and plastic transit materials being replaced with
cardboard at Triton. As a Group, six of our business units have
been able to collect data on recycled packaging, and this year 40%
of packaging that has been used across these six businesses is
from recycled materials.
1 We require our businesses to use the deinitions of the EU Taxonomy for setting the
parameters for low-carbon products.
IN 2023
£9.8m
1
of our revenue came from low
carbon products
24%
of revenue came from
products that have been new
in thelastthree years
Johnson Tiles UK
Environmental Product
Declaration (EPD) Certiicate
Johnson Tiles UK has become the irst and only tile
manufacturer in the UK to hold an EPD Certiicate.
Thecertiicate enables Johnson Tiles UK to quantify the
environmental impact of its tiles and allows its suppliers to
compare the impacts of materials at the product selection
stage, ensuring that the most sustainable options are
speciied. The process required Johnson Tiles to complete a
full life cycle analysis of its manufactured products, including
raw materials, energy, transportation, use and disposal.
Our ambition:
Be leaders in energy and
watereficient processes
andgreen products
(withlowembedded carbon)
Link to SDGs
Annual Report and Accounts Norcros plc
PRODUCT QUALITY AND SAFETY
Norcros is committed to designing, manufacturing and supplying
products that are reliable and safe to use. All our products are tested
to ensure that they meet safety requirements in the countries in
which they are sold and information about safe use and disposal
of Norcros products is provided through warning labels, manuals
and other documentation where this is appropriate. Seven of our
business units, covering 71% of turnover, are externally certiied to
the Quality Management ISO 9001 standard.
We pride ourselves on designing safe and high quality products. Less
than 1% of our products have been recalled due to poor quality and
less than 0.01% of products have been recalled due to safety issues.
Our ambition:
Design, manufacture and/or
supply highquality and
safeproducts
Link to SDGs
Grant Westield – 35 Years
of Certiication
In June 2022, following a rigorous audit process, Grant
Westield was recertiied ISO 9001 compliant.
This prestigious accreditation highlights Grant Westield’s
adherence to internationally recognised best practices for
quality management. It provides assurance to customers,
partners, and stakeholders that the business has
implemented stringent quality control measures, risk
management processes, and a customer-centric approach
throughout its operations. Moreover, it serves as a
differentiating factor, demonstrating their commitment to
quality and an ability to consistently deliver products that
meet the highest standards.
The team at Grant Westield were immensely proud to
receive conirmation of certiication and continue an
impressive record of retaining this prestigious recognition
for more than 35 years.
Strategic report
Norcros plc Annual Report and Accounts
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
SUPPLY CHAIN MANAGEMENT
Abode and Travis Perkins
Abode is supporting the Travis Perkins Group, supplying it
with embodied carbon data for products supplied via its
kitchens business, Benchmarx. This work will provide a
better understanding of the environmental and social impact
related to the range of Abode brand products they sell. This
is the irst step in its engagement with suppliers, before
initiating projects exploring alternative material sourcing and
possibly even the co-inancing of supply chain innovations.
Grant Westield, Forest
Stewardship Council
Commitment to environmental responsibility is recognised
through the Forest Stewardship Council
®
(FSC
®
C128180)
and Programme for the Endorsement of Forest Certiication
(PEFC) chain of custody certiications. This ensures that the
timber used originates from responsibly managed forests
and the inished products comply with globally recognised
ecological, social and economic standards.
These certiications form part of a rolling programme of
environmental and sustainability initiatives within Grant
Westield’s manufacturing processes and its design
approach including:
• sourcing materials and manufacturing in the UK to reduce
carbon footprint where possible;
• recycling 99% of post-production waste into biomass
materials and other products – reducing landill and
contributing to the circular economy;
• ensuring 100% of our panels are recyclable; and
• offering a 30-year warranty, giving peace of mind your
bathroom will stand the test of time.
Our ambition:
Ensure our supply chain
operates in line with our ESG
standards by applying a
newNorcros Supply Chain Policy
Link to SDGs
The way our products are sourced has a signiicant impact on
our environmental and social sustainability. We are committed to
encouraging our suppliers to minimise their environmental impact
and we also expect all of our suppliers to conduct themselves to
standards equivalent with the Code of Ethics and Standards of
Business Conduct. This year Johnson Tiles UK has achieved its
BES 6001 certiication, a standard that assesses management
practices and also the nature, sources and make-up of the various
component materials in products, as well as “Gold Standard”
accreditation from the Supply Chain Sustainability School
(whichispartnered with the housebuilder Barratt).
Norcros does not accept and will not tolerate the use of child
labour or forced labour (i.e. modern slavery) anywhere in its own
business or its supply chain. The Company has issued a public
statement to this effect, which can be found on its website at
https://www.norcros.com/investor-centre/other-disclosures/.
We also encourage our direct suppliers to promote human rights
throughout the supply chain. Our supplier assessments include
evaluation of policies and practices in this area.
We are currently working on developing a cross Group supply
chain policy and plan to publish an updated version in the coming
months. This policy will establish the formal mechanism for
compliance with our Safety, Environmental, and Human Rights
policies by our suppliers. We plan to continue our discussions
around the development of internal and external KPIs associated
with our supply chain in the rest of 2023.
Annual Report and Accounts Norcros plc
ETHICAL CONDUCT AND INTEGRITY
The Code of Ethics and Standards of Business Conduct (the Code
and Standard) applies in all areas of Norcros Group’s business
and to all oficers, Directors, employees, contractors and agency
staff employed by or working for Norcros plc or any division of
Norcros plc. The Board of Norcros plc is responsible for ensuring
these business principles, such as anti-bribery and corruption and
diversity, are communicated to, and understood and observed by,
all Group businesses, employees and associates. This Code and
Standard will be made available to every employee at the start of
their relationship with Norcros and will also be communicated to
all new employees of any business acquired by Norcros. This year
there were 14 reported breaches of the Code and Standard with
all of them occurring at South African business units. Of those 14
breaches, all have been investigated and upheld. The rollout of
Bribery and Corruption training, as well as other topics within the
Code and Standard such as Bullying and Harassment, will help to
reduce the number of future breaches.
Whistleblowing
Norcros encourages an environment where honest and open
communication is expected, with employees feeling comfortable
bringing forward any concerns or violations of Group policies. This
is embedded into the Code and Standard and legal protection
exists for all whistleblowers. Norcros maintains a whistleblowing
policy and engages two independent and conidential whistleblowing
service providers, one covering South Africa speciically and the
other covering all other locations. Both lines operate 24/7 and
365 days a year in the whistleblower’s chosen local language.
Concerns and reports can be made in conidence anonymously,
and we will not discriminate or retaliate against any employee who
reports suspected violations in good faith or who co-operates
inany investigation or enquiry regarding possible violations.
Reports on the use of these services, any signiicant concerns
that have been raised, details of investigations carried out and
any actions arising as a result are reported to the Audit and Risk
Committee at each meeting. The Committee also receives papers
on incidents of fraud or attempted fraud and reviews them at
each meeting. At least annually, the Committee conducts an
assessment of the adequacy of the Group’s procedures in respect
of compliance, whistleblowing and fraud.
Our ambition:
Operate with integrity and
respect to regulation and
lawsin all dealings
Link to SDGs
Anti-bribery and corruption
Norcros prohibits bribery and all other types of fraud and will
take disciplinary and/or legal action as appropriate in all cases of
actual or attempted fraud across all operations. We have a strict
Anti-Bribery and Corruption Policy, which applies to suppliers, set
out in the Code and Standard and we conduct our business in a fair,
open and transparent manner. The Board of Directors has overall
responsibility for ensuring this policy complies with our legal and
ethical obligations, and that all those who have inluence comply
with it. We prohibit, and will not accept, facilitation payments or
“kickbacks” of any kind. Facilitation payments are typically unoficial
payments made to secure or expedite a routine government action
by a government oficial. Employees are required to undertake
training under our Anti-Bribery and Corruption Policy at regular
intervals and appropriate procedures are in place at all locations to
mitigate the risk of any employee committing an offence against
the policy. Throughout the year 76% of eligible Group employees
received training on Bribery and Corruption. There were nine
incidents of employees being disciplined or dismissed due to
non-compliance with our Anti-Bribery and Corruption Policy. This
accounts for 0.37% of total Group employees. All of these incidents
occurred in our South African business units, and we have taken
measures to reduce risk of similar incidents in the future.
Norcros’ Anti-Bribery and Corruption Policy sets out our approach
in the following areas:
• hospitality and gifts offered to third parties;
• hospitality, gifts and other goods or services offered to Norcros
employees by third parties;
• payment of third parties’ travel expenses;
• facilitation payments;
• political contributions;
• lobbying;
• sponsorships; and
• civic, charitable and other donations.
Human rights
Our corporate values focus on respect, integrity and fairness.
We are committed to respecting the dignity of the individual and
to supporting the United Nations (UN) Declaration of Human
Rights, the UN Universal Declaration of Human Rights, and the
International Labour Organisation’s Declaration on Fundamental
Principles and Rights at Work and other core conventions. These
principles are applicable across all our operations. The Directors
do not consider human rights issues to be a material risk for the
Group, principally due to the existing regulatory frameworks in
place in the UK and South Africa, being the primary geographical
locations in which we operate. In South Africa, the businesses are
cognisant of their responsibilities under the Broad-Based Black
Economic Empowerment legislation. In addition, the Group has its
Modern Slavery Act Statement and a supporting policy.
Tax transparency
Norcros plc is committed to trading within the law and conducting all
of its business activities in an honest and ethical manner. Our Tax Policy
governs all of our business dealings and the conduct of all persons or
organisations which are appointed to act on our behalf. Norcros plc
and its subsidiaries has a zero-tolerance approach to all forms of tax
evasion, whether under UK law or under the law of any foreign country.
Strategic report
Norcros plc Annual Report and Accounts
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
TCFD REPORT
Vado: Arrondi, Red Dot Winner for Product
Design 2022. Designed by the internationally
renowned architects and interior designers,
Conran and Partners, who collaborated with
Vado to deine a new aesthetic direction in a
market which typically sees a strict delineation
between the “traditional” and “contemporary”.
With a shared commitment to sustainability,
Vado and Conran and Partners have worked
together to ensure Arrondi meets with each
business’ core environmental credentials.
Annual Report and Accounts Norcros plc
INTRODUCTION
This year we have taken greater strides in the Group’s management
of climate change. We have developed our ESG strategy and KPIs
and enhanced our environmental data collection and reporting
through our divisional ESG Forum. We have developed net zero
targets and a Net Zero Transition Plan (including a high level
decarbonisation proile for the Group), aligned to the Science
Based Targets initiative (SBTi) framework and in line with the Paris
Agreement for 1.5˚C. for our operational emissions. Our targets
reafirm the Group’s ambition for net zero across the value chain
by 2040 and provide ambitious near-term targets for the Group.
We recognise that climate change poses signiicant risks and
opportunities to our business and stakeholders. Our TCFD Report
demonstrates how we incorporate climate-related risks and
opportunities into the Group’s risk management, strategic planning
and decision making processes, aligned to our net zero ambition.
This year we have enhanced the analysis of our exposure to
natural hazards such as heat stress, ire weather stress, lood risk,
storms and drought with a detailed bottom-up site analysis using a
geospatial climate hazard mapping tool.
We consider our disclosure to be consistent with all of the Task Force
on Climate-related Financial Disclosures (TCFD) Recommendations
and Recommended Disclosures as detailed in “Recommendations
of the Task Force on Climate-related Financial Disclosures” (2017) and
we have considered the additional guidance set out in the TCFD 2021
Annex, “Implementing the Recommendations of the Task Force on
Climate-related Financial Disclosures”.
TCFD REPORT
Recommendation Recommended disclosures Reference
Governance
Disclose the organisation’s
governancearound climate-related
risks and opportunities
a) Describe the Board’s oversight of climate-related risks
andopportunities
Page 70
b) Describe management’s role in assessing and managing
climate-related risks and opportunities
Page 70
Risk management
Disclose how the organisation
identiies, assesses, and manages
climate-related risks
a) Describe the organisation’s processes for identifying and assessing
climate-related risks
Page 71
b) Describe the organisation’s processes for managing
climate-related risks
Page 71
c) Describe how processes for identifying, assessing, and managing
climate-related risks are integrated into the organisation’s overall
riskmanagement
Page 71
Strategy
Disclose the actual and potential
impacts of climate-related risks and
opportunities on the organisation’s
businesses, strategy, and inancial
planning where such information
ismaterial
a) Describe the climate-related risks and opportunities the organisation
has identiied over the short, medium, and long term
Page 71
b) Describe the impact of climate related risks and opportunities
ontheorganisation’s businesses, strategy, and inancial planning
Page 71
c) Describe the resilience of the organisation’s strategy, taking into
consideration different climate-related scenarios, including a 2°C
orlower scenario
Page 71
Metrics and targets
Disclose the metrics and targets used
to assess and manage relevant climate-
related risks and opportunities where
such information is material
a) Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with its strategy and risk
management process
Pages 72 to 77
b) Disclose scope 1, scope 2, and, if appropriate, scope 3 greenhouse gas
(GHG) emissions, and the related risks
Pages 72 to 77
c) Describe the targets used by the organisation to manage
climate-related risks and opportunities and performance against targets
Pages 72 to 77
Strategic report
Norcros plc Annual Report and Accounts
TCFD REPORT CONTINUED
GOVERNANCE
Board
The Board of Directors oversees and is ultimately accountable
for progress against our Net Zero Transition Plan and our wider
sustainability strategy, as well as reviewing and managing the
climate-related risks and opportunities of the Group. The Board
is kept informed of climate-related matters through regular
scheduled updates at Board meetings with ESG (including climate
change) on the agenda at least twice a year. The Board monitors
and oversees progress of the Group’s sustainability performance,
through the ESG Management Information Framework, which
includes monitoring the Group’s emissions (scope 1, 2 and 3).
The Audit and Risk Committee supports the Board in ensuring
climate-related issues are integrated into the Group’s risk
management process. Climate-related risk assessments are
conducted twice a year and are fully incorporated into the
Group’s principal risk process. Materially signiicant risks, including
climate-related risks, that fall outside risk appetite levels need to
be reviewed and approved by the Board unless treatment actions
can bring them in line with the appropriate risk appetite level, as
outlined below.
Management
As climate-related issues are fundamental to the Group’s business
purpose, the CEO has overall responsibility for their oversight,
ensuring climate-related issues are considered in the review of
Norcros’ strategy, budget and business. The CEO is also responsible
for reporting on progress to the Board, which is done at two Board
meetings a year. At a management level, last year, the Group
created a Sustainability Committee (ESG Forum), comprised of
representatives of the underlying business units. The Group level net
zero targets have been cascaded to each business unit so there is
accountability throughout the organisation. We will review the carbon
reduction plans to deliver the emissions targets in each business unit
each year and monitor progress of key milestones twice a year.
ESG Forum
The ESG Forum met monthly during FY 2023 during the phase
of data capture and strategic development, but now convenes
quarterly with two in-person meetings. Led by the Corporate
Development and Strategy Director, these meetings serve as
a platform to track progress on our Net Zero Transition Plan
and crucially to exchange ideas, challenges and best practices
across the Group. The ESG Forum is responsible for assessing
and managing climate-related issues, and reviewing progress
against the Group’s ESG MI Framework, directing action in its
respective business units and feeding back data, achievements
and barriers to be resolved. It promotes awareness of, and action
on, sustainability within the Company and promotes a consistent
approach to sustainability communication and data and to
meeting external disclosure requirements.
Representatives of the ESG Forum are themselves informed by
operational and project teams within their business units. Divisions
have their own structures in place to monitor and implement
carbon reduction programmes. As an example, Triton has
introduced a “Sustainability 6” governance structure.
This tracks six key, multi-year sustainability initiatives, each one
linked to key value chain carbon reduction drivers. Each initiative
has a Board sponsor and strategic/technical lead (at the divisional
level) who manage a working group to monitor and deliver on the
initiative.
Now we have a Net Zero Transition Plan and wider ESG KPIs in
place, the Norcros management team will consider further KPIs
and targets and align staff incentives.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
ESG Forums
(UK and SA)
Business unit operations and project teams
Board
(twice yearly agenda item)
Executive Management
(quarterly)
ESG Management Information Framework
Ambition, Targets and Objectives
Annual Report and Accounts Norcros plc
TCFD REPORT CONTINUED
CLIMATERELATED RISK MANAGEMENT
ESG risks and particularly climate-related risks within this are
classed as a principal risk by the Group. Climate-related risks
and opportunities were assessed and prioritised on the existing
Group ive-point risk scoring criteria for both inancial impact and
reputation impact (minimal, low, intermediate, high, severe) and
for likelihood (remote, unlikely, possible, likely, certain). Overall
risk scores are calculated as the multiple of impact and likelihood.
Likelihood is based on the probability of the risk crystallising and
affecting the business at least once during a three-year period
and the longer time horizon of some climate-related risks is thus
relected in a lower likelihood score. By using the existing Group
risk framework, climate-related risks are fully integrated into the
current risk management framework and the relative signiicance
of climate-related risks in relation to other risks can be determined.
A summary of key risks in the divisional and corporate risk registers
is presented to the Audit and Risk Committee every six months. In
addition, there is a Group level risk review in March which identiies
and reviews Group level/strategic risks.
The decision to control or accept risks is partially determined by
the nature of the risk and its scoring. Management will regularly
review risk exposures against deined acceptable risk appetite
levels and develop remedial actions, with target dates, to address
risks scoring higher than the accepted risk appetite level. Except
for “strategic”, “operational” and “commercial” risks, which carry
amedium risk appetite, all other risk types carry a low risk appetite.
Risk scoring outside of these risk appetite levels requires treatment
actions to bring them in line with the appropriate risk appetite level,
or they need to be reviewed and approved by Board Directors.
STRATEGY
The time horizons of where our climate-related risks and
opportunities irst occur are:
Short term: 2023 to 2026 – in line with our current strategic
planning and incorporates our planned capital expenditures.
Medium term: 2026 to 2033 – aligned to where we will most
likely see the impact of regulatory frameworks such as carbon
pricing, the technology life cycle and our interim emission
reduction targets.
Long term: 2033 to 2050 – aligned to the UK Government’s
net zero pledge, allowing incorporation of the useful life of
our property assets, physical and transition risk time horizons
andtheGroup’s net zero target.
We consider risks and opportunities in all physical and transition
categories outlined in the TCFD guidance risks and under current
and emerging regulatory requirements, and whether they occur
within our own operations or upstream and downstream of the
Group. In the following tables, we have identiied and expanded on
a number of key risks and opportunities that could have a material
inancial impact on the organisation.
Climate-related scenario analysis has been used to improve our
understanding of the behaviour of certain risks to different climate
outcomes. We have used the following public climate-related
scenarios which help us better understand the resilience of the
business to climate change:
• Stated Policies (STEPS)
1
– the roll forward of already announced
policy measures. This scenario outlines a combination of
physical and transition risk impacts as temperatures rise by
2.5°C by 2100.
• Net Zero Emissions by 2050 (NZE)
1
– in this scenario GHG
emissions are strongly reduced resulting in a trajectory
consistent with limiting the temperature increase to less than
1.5°C by 2100.
• RCP 8.5
2
– an extreme physical risk scenario, where mean global
surface temperatures rise by c.4.3°C by 2100 from pre-industrial
levels as the global response to mitigating climate change
is limited.
1 IEA (2022), World Energy Outlook Source: IEA (2022), World Energy Outlook
2022, https://iea.blob.core.windows.net/assets/c282400e-00b0-4edf-9a8e-
6f2ca6536ec8/WorldEnergyOutlook2022.pdf.
2 IPCC, 2014: Climate Change 2014: Synthesis Report. Contribution of Working
Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel
onClimate Change.
The scenario analysis conducted this year builds on that
completed in 2022. This year we incorporate use of the more
ambitious NZE scenario (from the SDS scenario used last year) as
it forms an input into the 1.5°C pathway used by the SBTi against
which we are aligned.
These scenarios have been supplemented with additional sources
that are speciic to each risk to inform any assumptions included
in projections. Our scenario analysis includes qualitative and some
quantiied impacts where the underlying data is available and
where the current understanding of the risks is robust.
We have analysed the climate-related risks under all three
scenarios and identiied plans to mitigate against the impacts
of these risks and take advantage of opportunities. They have
been incorporated into our transition pathway to net zero and
into divisional, management and the Board’s strategic framework
within our current expenditure envelope. Weare conident that
implementation of these actions will result ina business resilient
tothe discussed climate-related risks.
Strategic report
Norcros plc Annual Report and Accounts
RISKS
Five transitional and two physical climate-related risks have been identiied that could have an impact on our business. Three of them
(i) decarbonisation of SA (and UK) grid, (ii) pace of decarbonisation across supply chain and (iii) new technology for kilns are the most
material to our operations. Our Net Zero plan and emissions reduction initiatives form the basis of our mitigation strategies.
TCFD REPORT CONTINUED
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
TCFD Category Transition (Current and Emerging Regulation)
Carbon pricing (carbon tax) in own operations
Own operations
Higher costs associated
with energy
Medium term
Certain (5)
Intermediate (5)
25
UK and South Africa
manufacturing division
Scope 1 and 2 emissions
Norcros views the implementation of operational carbon pricing as a certainty, which is applied
to our gas and electricity used in tile manufacturing. We expect signiicant but gradual price
increases in the medium term, with greater forecast price rises in the NZE Scenario. An estimate
for the impact of carbon pricing of scope 1 and 2 emissions for 2023 assuming no change going
forward, using IEA price forecasts, projected in the long term are as follows:
USm
USm
USm
Carbon pricing UK
STEPS
NZE
Carbon pricing South Africa
SA expected carbonprice
NZE
The table above illustrates the impact assuming our scope 1 and 2 emissions are unchanged from
2023 levels. However, the impact of the risk is expected to be moderated through our transition plan,
which factors in reductions of our scope 1 and 2 emissions to minimal levels, to achieve our target of
net zero by 2040.
Mitigation: Key near-term scope 1 actions consist of improvements in the tile manufacturing
processes, such as heat recovery systems and energy eficient burners in kilns, and initiatives to
reduce scope 2 include on-site and purchased renewableelectricity.
TCFD Category Transition (Emerging Regulation)
Carbon pricing in the value chain
Upstream
Increased cost of purchased
goods and inbound
transportation
Medium term
Certain (5)
Intermediate (5)
25
Global, all divisions
Scope 3 emissions
(Category 1)
Parts of our supply chain include the processing of primary metals and building materials. New,
low emission production processes are still being developed for commercial use and these could
lead to increased costs in our supply chain. Emissions intensive basic materials industries are also
exposed to global regulatory and policy decisions in the drive to reduce emissions, and these
changing policies may also impact our supply chain.
Mitigation: The diversity of supply sources reduces this risk to the Group. Norcros engages with its
suppliers to determine the embodied carbon for certain raw materials and then ensures they work
together to “design out” carbon products and processes. This includes considering lighter weight
options (e.g. thinner tiles) and lower embodied carbon inputs (where the raw materials used have
acceptable technical qualities with lower carbon emissions). Our Net Zero Transition Plan details
our pathway to reducing these emissions.
Business area
Impact measure
Primary potential
inancial impact
Risk rating
Time horizon
Location
Likelihood
Measurement
Key
Annual Report and Accounts Norcros plc
TCFD Category Transition (Market and Reputation)
Reliance on third parties or technologies to decarbonise
Own operations
and Upstream
Higher costs,
lower revenue
Medium term
Certain (5)
Low (3)
15
Global, all divisions
Scope 3 emissions
Achievement of our NZ target in 2040 relies on certain factors beyond our control, for instance,
the decarbonisation of electricity grids, suppliers and retail partners meeting decarbonisation
timelines and the development of zero emissions transportation. Our NZ target is reliant on
technology to develop alternative fuels to run kilns (e.g., biogas or hydrogen) and requires the
purchase of electricity generated from renewable sources in South Africa, which is less readily
available than in the UK.
Mitigation: We work collaboratively with retailers and engage with governmental and industry
bodies to shape supply chain decarbonisation policy. We continue to invest in research and
development to promote the development of low carbon raw materials and technologies,
inparticular for energy intensive kilns.
TCFD Category Transition
Cost of capital linked to sustainability criteria
Own operations
Higher cost of capital
Medium term
Likely (4)
Low (3)
12
Global, all divisions
Scope 1, 2 and 3 emissions,
UK interest rates
Providers of capital (investors and banks) are increasingly incorporating sustainability into their
assessments, which represents a risk to the availability and cost of capital. The Group’s existing
£130m multicurrency revolving credit facility (which runs to October 2026) means the risk is
minimal in the short term. However, over the medium term investors and banks are expected to
be more stringent and withdraw funding or apply punitive charges if ongoing targets on emission
reduction are not aligned to their own net zero targets.
Mitigation: Norcros remains in continued dialogue with lenders, rating agencies and investors
to ensure climate change disclosure is in line with the latest regulatory requirements and our
progress towards our own net zero by 2040 target will help to mitigate this risk.
TCFD REPORT CONTINUED
Strategic report
Norcros plc Annual Report and Accounts
RISKS CONTINUED
TCFD Category Transition
Customer and consumer pressure
Downstream
Lost revenue
Medium term
Likely (4)
Low (4)
16
Global, all divisions
Scope 3 emissions
Driven by industry standards and government regulation, large retailers and homebuilders require
suppliers to be at the forefront of embodied carbon reduction and the reduction of energy and
water in use by their products. There is a medium-term risk that some product lines are no longer
of interest to customers aligning with net zero.
Mitigation: We engage with customers and brands to ensure new products are designed to
meet changing customer requirements, ensuring our targets are aligned with theirs and meet
internal and external environmental requirements. Our new MI Framework also enables us the
track total revenue derived from low carbon products. Speciic initiatives include, for example,
Triton providing consumers a water/energy savings calculator and incorporating recycling and
minimisation of waste into packaging design. Abode has engaged with key customers to provide
“cradle to grave” emissions per kg for each product supplied.
Two physical climate-related risks have been identiied which become material under the RCP 8.5 scenario.
TCFD Category Physical (Chronic)
Flood risk
Own operations
Higher costs/disruption of
production
Long term
Possible (2)
Low (4)
8
South Africa, UK, China
Meteorological forecasting
The Munich Re Location Risk Intelligence Tool was used to assess physical climate risk, and
identiied six sites, especially in the RCP 8.5 scenario of having a High or Very High likelihood of
looding. These were located in South Africa, the United Kingdom and China. Of the six sites the
Grant Westield headquarters in Edinburgh are manufacturing facilities and could have the largest
net impact on the business, given the revenue contribution to the Group. The rest are sales or
administrative in nature and could be more easily relocated in case of potential looding or other
signiicantly disruptive climate event.
Mitigation: All divisions have business continuity and recovery plans which monitor risks to staff
and premises from meteorological events. Additionally all sites have lood damage insurance
cover with limits that relect the magnitude of risk, and the diversiied locations mean it is unlikely
that more than one of the identiied sites would lood at any given time.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
TCFD REPORT CONTINUED
Annual Report and Accounts Norcros plc
TCFD Category Physical (Chronic)
Water scarcity
Own operations
Higher costs/disruption of
production
Long term
Possible (1)
Low (3)
3
South Africa
Annual freshwater
resource levels
Despite issues regarding water scarcity persisting in Cape Town, none of our sites are at Very High
risk of water scarcity. In the RCP 8.5 scenario, only 1 of our 22 sites assessed was considered to be
at ‘Very High’ risk of future water stress. This site was located within Cape Town in South Africa and
produces adhesives for the manufacture of tiles.
Mitigation: Divisional managers closely monitor the supply of water as Cape Town has had serious
water scarcity issues in recent years. To date, this has not impacted production at the facility
and therefore the operation has presented resilience to the risk. Nonetheless management is
investigating the possibility of bore holes or tinkered water as an alternative. If insuficient water
was available, management would source from other locations in South Africa which are also used
to manufacture adhesives.
OPPORTUNITIES
TCFD Category Product and Services
Product design – resource eficient manufacturing
Own operations/
downstream
Increased sales/
decreased costs
Medium term
Likely (4)
Intermediate (6)
24
Global, all divisions
Scope 3 emissions,
revenues from energy
eficient products
(Green revenues)
Products manufactured though energy eficient processes with recycled raw materials are an
important part of our Net Zero transition plan. Increasingly our customers require data on the
embodied carbon in our products, with suppliers who report emissions and have certiied “green”
products being placed on a preferred list.
Impact: For example, Johnson Tiles UK has an independently veriied EPD certiicate across all
UK product ranges and uses a percentage of recycled ceramic in manufacturing tiles. Similarly,
Abode water ilter taps are 100% recyclable and use no chemicals in the manufacturing process
and as they are made from stainless steel, as less likely to scratch and hence have a longer
lifespan. 100% of Grant Westield’s panels are recyclable with the Programme for the Endorsement
of Forest Certiication (PEFC) conirming all timber used originates from responsibly managed
forests, contributing to the circular economy. There is also a signiicant opportunity to improve the
eficiency of the tile manufacturing process through heat and hot air recovery from the kilns and
the retroit of energy eficient burners.
TCFD REPORT CONTINUED
Strategic report
Norcros plc Annual Report and Accounts
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
TCFD REPORT CONTINUED
OPPORTUNITIES CONTINUED
TCFD Category Products
Product design – resource eficient products
Own operations/
downstream
Increased sales
Medium term
Likely (4)
High (8)
32
Triton, Abode
Scope 3 emissions,
revenues from energy
eficient products
(Green revenues)
Products which are energy or water eficient will reduce customer and consumer energy use
andhelp reduce scope 3 emissions. Innovative product design is key to continued revenue growth
and also helps to maintain competitive positioning.
Impact: To maximise this opportunity we target R&D and marketing spend and collaborate with
key clients to develop and sell best-in-class, resource eficient products. Triton’s eco models save
water and energy compared to more conventional showers. They are registered under the BMA’s
water eficiency scheme and have an EU energy label, while Triton’s electric showers are A rated
energy eficiency providers. This provides an opportunity to take a greater market share of an
increasingly environmentally driven market. The Abode Water Filter Tap also reduces reliance on
single use plastic water bottles and reduces water wastage with a 5LPM low limiter as it delivers
cold iltered water alongside domestic hot and cold water.
TCFD Category Resource Eficiency
Water, energy, waste savings
Own operations
Decreased costs
Medium term
Likely (4)
High (8)
32
Global, all divisions
Water and waste costs
per annum, Scope 1 and
2 emissions
Energy
The Group’s near-term decarbonisation proile includes opportunities for energy eficiency
andelectricity savings.
Impact: Using the heat from the kilns used to manufacture tiles in prior production stages and
technologies like retroitting more eficient burners to the kilns are also available and factored
into the Group’s decarbonisation proile. In the UK 93% of electricity is currently sourced from
renewable contracts.
Water
Various opportunities and initiatives exist to reduce water usage across the Group.
Impact: Johnson Tiles UK consumes large quantities of water in the tile manufacturing process.
Various initiatives are underway aimed at re-using up to 30% of the total factory usage and
removing water from another part of the production process.
Water tanks for harvesting rainwater could be installed as well as water iltration systems to provide
safe drinking water to stores, all reducing water usage.
Waste savings
Norcros aims to reduce and recycle waste products and packaging wherever possible.
Impact: Johnson Tiles recycles 12,000 tonnes of ceramic waste per annum. We estimate recycling
this waste saves 16,800m
3
at landill, and an estimated 235,000 miles of HGV journeys per year.
Ifsimilar measures were introduced across all divisions this could materially reduce emissions
andcost across the organisation.
Packaging accounts for c.5% of waste generated by Norcros. We aim to reduce the environmental
impact of our packaging through reducing packaging in absolute terms, using more recycled
content and eliminating single use plastics. For example, Croydex has eliminated all polystyrene
from packaging for UK and EU markets in 2022 with all packing materials now recyclable. Recent
acquisition Grant Westield recycles 99% of post-production waste into biomass materials and
other products.
Annual Report and Accounts Norcros plc
TCFD REPORT CONTINUED
TCFD Category Energy Source
Green generation
Own operations
Decreased operating costs
Medium term
Likely (4)
Intermediate (5)
20
Global, all divisions
Energy used from
renewable sources
Norcros aims to reduce our reliance on third-party electricity. This offers an opportunity
tobecome less dependent on the national grid, which in South Africa has a low proportion
ofrenewable energy.
Impact: We are targeting generation of our own renewable energy through an on-site solar PPV
at Olifantsfontein. This has the potential to reduce the site’s purchased electricity by around one
third, saving 4,400 tCO
2
e annually. Our Tile Africa (35) and House of Plumbing (5) stores could
host rooftop solar arrays across the estate that would produce meaningful electricity savings. We
are also investigating purchased renewable electricity in our remaining divisions in the UK and
South Africa, which could reduce our market-based emissions to zero. In South Africa, contracting
guaranteed renewable electricity supply via long-term power purchase agreements (PPAs) is one
of the largest opportunities for the Group.
TCFD Category Resource Eficiency
Transportation
Own operations/
Upstream/Downstream
Decreased costs
Near/Medium term
Likely (4)
Low (4)
16
Global, all divisions
Scope 1 and 3 (Upstream
and Downstream
Transportation and
Distribution)
Decarbonisation of our distribution and depot leets would help to reduce scope 1 emissions.
Thismay require transitional investment and further technological development, especially for zero
emissions HGVs.
Impact: Various divisions have plans to make their leets more sustainable. Abode has a target
to ensure all company cars will be hybrid by 2025. Triton forklift trucks are already electric, with
lithium ion batteries and the division is now in the process of electriication of the service engineer
leet. We also expect our third party logistic suppliers to move away from ICE to EVs thus reducing
our Scope 3 upstream & downstream transportation and distribution emissions, although we
expect the bulk of this reduction in the medium term. We are reliant on global trends in this area
and our transition plan to 2040 includes a reduction in the carbon intensity of inbound and
outbound freight.
Metrics and targets
Our full carbon footprint is reported in alignment with the Greenhouse Gas Protocol on pages 58 and 59. In addition, we report on our
emissions intensity, total consumption of electricity, renewable electricity, gas and water, and treatment of waste; see pages 58 to 63.
We continue to monitor our climate exposures and action plans through our risk management framework and governance structure.
Our main climate-related objectives are monitored through our ESG MI Framework through the year and reported to and reviewed by
the Board.
This year, we have set science-based targets. These targets have yet to be validated by SBTi, but they reafirm our long-term commitment
to net zero across the value chain by 2040 and introduce ambitious interim targets for 2028. Our Group targets include speciic targets
for each business unit. For further details on our climate targets and Net Zero Transition Plan, see pages 60 to 63.
Strategic report
Norcros plc Annual Report and Accounts
STAKEHOLDER ENGAGEMENT
Shareholder support for our
strategy is essential for the Group’s
long-term success.
Why and how we engage:
• We aim to provide a transparent,
clear, consistent message on
both our performance and our
plans to create value, across our
communication channels.
• We engage to ensure the Group
responds to the changing needs
and interests of shareholders
and to ensure our strategy
remains relevant.
• We engage through investor
roadshows and give our
shareholders the opportunity
for contact with our Board on a
regular basis.
Outcomes of our
engagementinclude:
• The formulation of our Directors’
remuneration policy.
• Engagement with our shareholders
has inluenced our acquisition,
capital investment and progressive,
albeit prudent, dividend policy.
• The acquisition of the Grant
Westield business was partly
funded through equity, the demand
for which was extremely strong,
demonstrating support for the
Group’s strategy.
Engaging with our stakeholders.
Shareholders
Statement by the Directors in relation to their statutory duty in accordance with Section 172(1) of the
Companies Act 2006.
Section 172 statement
The Board of Directors of Norcros plc consider that they, both
individually and collectively, have acted in a way that would be most
likely to promote the success of the Company for the beneit of
its members as a whole (having regard to the stakeholders and
matters set out in Section 172(1) (a–f) of the Companies Act 2006) in
the decisions they have taken during the year ended 31March 2023.
In making this statement the Directors have had regard to the
longer-term consideration of stakeholders and the environment
and have taken into account the following:
a) the likely consequences of any decisions in the long term;
b) the interests of the Company’s employees;
c) the need to foster the Company’s business relationships
withsuppliers, customers and others;
d) the impact of the Company’s operations on the community
and the environment;
e) the desirability of the Company maintaining a reputation
forhigh standards of business conduct; and
f) the need to act fairly as between members of the Company.
The Board’s understanding of the interests of the Company’s
stakeholders is informed by the programme of stakeholder
engagement detailed below. Section 172 considerations are
embedded in decision making at Board level and throughout the
Group. The Directors fulil their duties by ensuring that there is
a strong governance structure and process running through all
aspects of the Group’s operations. The strategy for the Group has
been carefully considered by the Board in conjunction with the
Group’s Executive Management teams.
The Board dedicated time for it to consider all stakeholder
interests, primarily those of its shareholders as a whole, but also
employees, suppliers, customers and the members of the Group’s
pension schemes. All these stakeholders (amongst others) have
been impacted in different ways by the global economic and other
challenges facing the Group and the Board has had regard to this
and has formulated a number of measures to address stakeholder
interests in a balanced way.
Annual Report and Accounts Norcros plc
Our commitment to customer service
remains critical to our success.
Why and how we engage:
• We engage to develop customer-
focused solutions, ensuring the
Group understands and responds
to evolving customer needs. This
helps us retain our customers and
attract new ones.
• We also engage with customers
to understand the environmental
challenges they face.
• We engage through our
experienced customer service
teams, engaging with customers on
a daily basis and regular monitoring
of performance against service level
agreements and quality standards.
Outcomes of our
engagementinclude:
• The Group proactively invested
into inventory to protect our
service and stock availability in
light of exceptional supply chain
challenges.
• New product launches in response
to customer needs.
• Obtaining accreditations such as
WRAS approval so that our hot
water taps can be used in new
build markets.
Customers
The Board continues to regard our
employees as our most valuable
asset. The Group’s strategy and
business model are underpinned
bythe commitment and efforts
ofallouremployees.
Why and how we engage:
• We engage to ensure that all
employees are valued and are given
the opportunity to provide feedback
and participate in shaping the
development of the Group.
• This helps us underpin our culture of
safety and ensures that employees
at all levels in the business play a
role in promoting and upholding a
strong focus on health and safety,
for the beneit of the Group and the
wider community.
• We engage with staff throughout
the Group through our divisional
structure. Engagement is led by
Alison Littley as the designated
Non-executive Director for
workforce engagement
(see page 52).
Outcomes of our
engagementinclude:
• The Group’s culture has been a
particular focus of the Board and is
embodied in how we endeavour to
go about our business. All members
of the Board undertake regular
site visits and receive reports and
other information to enhance their
understanding.
• Employees are encouraged to
be involved in the Company’s
performance through employee
share schemes, and other means
ofincentivisation and reward.
Employees
At Norcros, sustainability is at the
centre of our strategy. We aim to
manage our societal and environmental
impact by conducting business to
the highest standards as well as using
resources more eficiently.
Why and how we engage:
• We engage to better understand
environmental challenges and how
we can contribute to meeting them
and minimise the impact of the
Group on the environment.
• This also enables us to adhere to
relevant environmental legislation
and regulations and to ensure that
high environmental standards
are respected at each of the
Group’s sites.
• We engage with customers,
suppliers and other stakeholders
to understand the environmental
challenges they face and look for
ways to improve the eficiency
ofour businesses.
Outcomes of our
engagementinclude:
• We recognised that our
shareholders are also placing
increasing importance on
environmental issues and wanted
to understand the actions of the
Group. We developed our ESG
plan to provide an overarching
framework to the work we do.
• We have established a strong
governance structure, including
business level ESG Forums, to
coordinate our sustainability strategy.
• We carried out a full carbon
footprintassessment across scope 1,
2 and 3 emissions.
Environment
Strategic report
Norcros plc Annual Report and Accounts
STAKEHOLDER ENGAGEMENT CONTINUED
Strategic Report
To the members of Norcros plc
The Strategic Report provides a review
of the business for the inancial year and
describes how we manage risks.
The report outlines the developments
and performance of the Group during the
inancial year and the position at the end
of the year and discusses the main trends
and factors that could affect the business
in the future.
Key performance indicators are published
to show the performance and position of
the Group. Also provided is an outline of
the Group’s vision, strategy and objectives,
along with the business model.
Our commitment to the society in
which we operate is deep. Every
Group business has programmes of
social engagement, including many
charitable activities.
Why and how we engage:
• We engage to have a positive
impact on the local communities in
which our businesses operate.
• We empower our businesses to
support local charities and initiatives
and community projects, and also
provide local employment.
• The Executive Management of the
Group supports this commitment
to our society and reviews
each business’ activities on a
monthly basis.
Outcomes of our
engagementinclude:
• Charitable activities and initiatives
across the Group.
• Our business in South Africa
launched its irst female graduate
scheme to continue the signiicant
progress towards achieving
gender equality.
• Triton, as one of the area’s largest
employers, has continued to invest
in its apprenticeship scheme giving
school leavers the opportunity to
earn as they learn.
Society
Triton continues Coventry canal
clean-up with help from local school
Triton Showers has continued its collaboration with the Canal & River Trust by
organising and holding a second “Canal Clean-up” event, which took place in
September 2022.
Joined by students and teachers from Oak Wood School, tenvolunteers from Triton
spent a day cleaning up a 1km stretch of water that runs along the side of the
manufacturer’s headquarters.
The event, which Triton has pledged to carry out at least six times each year, saw
employees support the local community by clearing the canal and surrounding area
of litter, painting over grafiti and repairing fences.
Approval
The Group Strategic Report on
pages3 to 80 of Norcros plc was
approved by the Board and signed
onits behalf by:
Thomas Willcocks
Chief Executive Oficer
14 June 2023
Annual Report and Accounts Norcros plc
Corporate governance
Croydex: Mirrors and mirrored cabinets create
the feeling of space in any size bathroom,
especially where space is at a premium.
Adding cabinets and mirrors into any bathroom
is a great way of emphasising space and light,
whilst ensuring a stylish focal point.
The Croydex collection offers plenty of variety
designed to suit rooms of different shapes and
sizes. The Flexi-Fix
™
range of wall mounted
products features a unique “X” plate which can
either be itted using existing ixing holes or
screwed to new ones. Alternatively, the patented
bracket can be glued to most surfaces, including
uneven walls or shiny tiles, eliminating the need
for drilling completely. With three ways to ix,
there’s an option for everyone.
CORPORATE
GOVERNANCE
Board of Directors
Corporate governance
Audit and Risk Committee report
Nomination Committee report
Remuneration Committee
annual statement
Directors’ remuneration
policyreport
Annual report on remuneration
Directors’ report
Statement of Directors’
responsibilities
Corporate governance
Norcros plc Annual Report and Accounts
BOARD OF DIRECTORS
A strong leadership team committed
todriving our strategy for growth.
Re-election of allDirectors
With the exception of David McKeith, it is proposed that each Director will seek election or re-election at the 2023 AGM. David
McKeith will not be seeking re-election at the 2023 AGM. As announced by the Company on 30 May 2023, Steve Good will be
appointed a Director on 1 July 2023 and will become Board Chair Designate from that date. Steve Good will therefore be seeking
election at the 2023 AGM. The Board is satisied that the Directors, individually and collectively, have the balance of technical
expertise, skills and experience to manage the Company’s affairs and to further the Group’s strategic objectives. In particular, each
Director has experience of growing an international business, organically, as well as by acquisition. A detailed CV for each Director,
including their particular areas of experience and expertise, is available on the Company’s website, www.norcros.com.
Thomas Willcocks
Chief Executive Oficer
James Eyre
Chief Financial Oficer
David McKeith
Acting Board Chair and
Non-executive Director
Date of appointment
Appointed to the Board in July 2013. From
January 2023, he has been Acting Board
Chair pending the appointment ofa new
Chair and will not seek re-election at
the 2023 AGM
Date of appointment
Appointed as Chief Executive Oficer
from1 April 2023
Date of appointment
Appointed Chief Financial Oficer
inAugust 2021
Length of tenure
Nine years
Length of tenure
One year
Length of tenure
Two years
Skills andexperience
David was the senior partner of the
Manchester and Liverpool ofices of
PricewaterhouseCoopers LLP and served
on its UK supervisory board. He was a
non-executive and audit committee chair
of Sportech plc and the chair of the Halle
Orchestra, Manchester, and is a trustee of
Manchester Collective. David is a Fellow
of the Institute of Chartered Accountants
in England and Wales. His areas of
expertise include accounting, taxation
andprofessional services.
Skills andexperience
Previous to this appointment, Thomas has
operated as Group Business Director –
UK, with operational responsibility for the
Group’s UK business segment. He joined
Norcros South Africa as Tile Africa’s Store
Development Manager in 2006 and was
promoted in 2007 to General Manager
of Tile Africa before being appointed as
Managing Director of Norcros South Africa
in 2009. In this role, he has overseen the
sustained and proitable growth of our
South African business until taking up the
Group role in 2021. Thomas previously
worked for the Spar Group in South Africa
and the UK. He grew up in Swaziland and
was educated in South Africa where he
graduated with a Bachelor of Commerce
degree from the University of Natal.
Skills andexperience
James joined Norcros as Director of
Corporate Development and Strategy
in 2014 before being promoted to Chief
Financial Oficer in August 2021. He
began his career at Arthur Andersen and
subsequently has held a number of senior
inancial positions with Bank of Scotland,
Rothschild & Co, Bank of Ireland and,
immediately prior to joining Norcros, with
AstraZeneca. James became a trustee
of the David Lewis Centre in 2012 and
stepped down from this role in 2016. He
is a member of the Institute of Chartered
Accountants in England and Wales. James
has extensive experience in international
M&A, business development and strategy.
A N R
Annual Report and Accounts Norcros plc
A Audit and Risk Committee N Nomination Committee R Remuneration Committee
Chair of Committee
Alison Littley
Non-executive Director
Richard Collins
Company Secretary
A RN
Date of appointment
Appointed to the Board in January 2023
Date of appointment
Appointed to the Board in May 2019
Date of appointment
Joined the Company in June 2013 as
Company Secretary and Group Counsel
Length of tenure
One year
Length of tenure
Four years
Length of tenure
Ten years
Skills andexperience
Stefan was appointed a Non-executive
Director on 1 January 2023 and is
Chair (Designate) of the Audit and Risk
Committee. Stefan is chief inancial oficer
of MJGleeson plc, the Main Market listed
low cost housebuilder and land promoter,
where he has held the role since 2015. Prior
to Gleeson, Stefan held senior inance roles
at Keepmoat Ltd, Tianhe Chemicals Ltd,
The Vita Group Limited, The SkillsMarket
Ltd and Honda Motor Company.
Skills andexperience
Alison was appointed a Non-executive
Director in May 2019 and appointed
Chair of the Remuneration Committee
in July 2019. She will assume the Senior
Independent Director role in July 2023.
Alison has substantial experience in
multinational manufacturing and supply
chain operations, and a strong international
leadership background gained through a
variety of senior management positions
in Diageo plc and Mars Inc and an
agency to HM Treasury where she was
chief executive oficer. She is currently
a non-executive director at Eurocell plc,
MusicMagpie plc and Xaar plc. Alison
was formerly a non-executive director
of James Hardie Industries Plc, Headlam
Group plc, Geoffrey Osborne Group and
Weightmans LLP.
Skills andexperience
Richard is a highly experienced lawyer and
company secretary, and is a member of
the Group’s Senior Executive Committee.
He qualiied as a solicitor in 1988 and was
previously company secretary and director
of risk and compliance at Vertex Financial
Services. Prior to that, Richard was
company secretary and head of legal with
Tribal Group plc, Blick plc and Aggregate
Industries plc.
Stefan Allanson
Non-executive Director
A N R
Corporate governance
Norcros plc Annual Report and Accounts
CORPORATE GOVERNANCE
David McKeith
Acting Board Chair
Chair’s introduction togovernance
For the year under review the Company has complied with
the 2018 UK Corporate Governance Code save for the matters
referred to in this report. We have carried out a thorough
evaluation of Board performance, which remains satisfactory.
As is set out in the Board Chair’s Statement on page 12, there
were changes to the Board during the year; for the year under
review its composition was as follows:
Board of Directors
The Board is committed to ensuring that high standards of
corporate governance are maintained by Norcros plc and is
accountable to the Company’s shareholders for good corporate
governance. Its policy is to manage the affairs of the Company in
accordance with the principles of the UK Corporate Governance
Code referred to in the Listing Rules of the UK Listing Authority.
For the year under review, the Company has complied with the UK
Corporate Governance Code as revised in 2018 (the Code) in all
respects save for the following matters concerning David McKeith
arising from the illness and tragic death of Gary Kennedy:
• David has been Chair of the Audit and Risk Committee while also
acting as Board Chair. He will cease to chair and be a member of
the Audit and Risk Committee when Stefan Allanson becomes
Chair of that Committee at the conclusion of the 2023 AGM; and
• David was appointed as a Director in July 2013. His directorship
therefore exceeds 9 years. It was intended that he would step
down from the Board after the 2022 AGM as soon as a new Chair
of the Audit and Risk Committee had been appointed, but David
stayed on as aDirector for the reasons given above. David will
not seek re-election at the 2023 AGM.
A copy of the Code is publicly available from www.frc.org.uk. The
following sections of this statement describe the Board’s approach
to corporate governance and how the principles of the Code are
applied. These sections refer to the year ended 31 March 2023,
unless otherwise stated.
Board balance and independence
The Board normally comprises the Non-executive Chair, two
Non-executive Directors and two Executive Directors, and all
Directors are equally responsible for the proper stewardship and
leadership of the Company. The Directors holding ofice at the
date of this report and their biographical details are given on
pages 82 and 83. It should be noted that from 24 January 2023,
David McKeith was acting as Board Chair, which was a transitional
arrangement whilst a Board Chair was being recruited. Stefan
Allanson joined the Board on 1 January 2023 as a Non-executive
Director and Chair (Designate) of the Audit and Risk Committee.
Taking into account the provisions of the Code, the Chair and
all the Non-executive Directors are considered by the Board
to be independent of the Company’s Executive Management
and free from any business or other relationship that could
materially interfere with the exercise of their independent
judgement. The terms and conditions of appointment of the
Board Chair and the Non-executive Directors are available for
inspection at the registered ofice of the Company. The letters
of appointment set out the expected time commitment. Other
signiicant commitments of the Chair and Non-executive Directors
are disclosed to the Board on a regular basis throughout the
year. TheBoard was satisied that the Chair’s other signiicant
commitments did not prevent him from devoting suficient time
tothe Company throughout the year under review.
Breakdown of Executive and Non-executive Directors
Non-executive Chair 1
Non-executive Directors 2
Executive Directors 2
Note: Gary Kennedy was incapacitated
due to ill health from 23 January 2023
and passed away on 13 February 2023.
From 24 January 2023, David McKeith
(a Non-executive Director) was Acting
Board Chair.
Committed to ensuring high standards
ofcorporate governance.
Annual Report and Accounts Norcros plc
Audit and Risk Committee
David McKeith (C)
Stefan Allanson (Committee Chair
(Designate) from 1 January 2023)
Alison Littley
Remuneration Committee
Alison Littley (C)
David McKeith
Gary Kennedy (served on
Committeeuntil 13 February 2023)
Stefan Allanson (from 1 January 2023)
Nomination Committee
Gary Kennedy (C)
(Chairuntil23January 2023, served
on Committee until 13 February 2023)
David McKeith (Acting
Chairfrom24January 2023)
Alison Littley
Stefan Allanson (from 1 January 2023)
The Board
David McKeith (Acting Board Chair from 24 January 2023)
Gary Kennedy (Chair until 23 January 2023, passed away on 13 February 2023)
Governance structure
David McKeith is the Senior Independent Non-executive Director.
He is available to shareholders if they have any issues or concerns
which contact through the normal channels of Board Chair, Group
Chief Executive or Chief Financial Oficer has failed to address or
resolve, or for which such contact is inappropriate. While acting
as Board Chair, he has temporarily combined this role with being
Senior Independent Non-executive Director. As was announced by
the Company on 30 May 2023, in anticipation of David McKeith’s
retirement from the Board, Alison Littley will from 1 July 2023
assume the role of Senior Independent Non-executive Director.
The Board notes that David McKeith was appointed to the Board
in July 2013 and that in accordance with the Code he ceased
to be regarded as independent on the ninth anniversary of his
appointment. Notwithstanding this, the Board regards Mr McKeith
as independent in his approach and in the performance of his
responsibilities. As the appointment of a new Board Chair has now
been announced, David will not seek re-election at the 2023 AGM.
In keeping with the Board’s succession plan, Mr McKeith will step
down from the Board at the Company’s 2023 AGM following the
appointment of Stefan Allanson on 1 January 2023 and Steve Good
from 1 July 2023.
All Directors are supplied, in a timely manner, with all relevant
documentation and inancial information to assist them in the
discharge of their duties by the making of well-informed decisions
that are in the best interests of the Company as a whole. The Board
regularly reviews the management and inancial performance
of the Company, as well as long-term strategic planning and risk
assessment. Regular reports are given to the Board on matters
such as pensions, health and safety, and litigation.
Any concerns that a Director may have about how the Group is
being run or about a course of action being proposed by the Board
will, if they cannot be resolved once those concerns have been
brought to the attention of the other Directors and the Board Chair,
be recorded in the Board minutes. In the event of the resignation
of a Non-executive Director, that Director is encouraged to send a
written statement setting out the reasons for the resignation to the
Chair who will then circulate it to the other members of the Board
and the Company Secretary.
Board Chair and Chief Executive Oficer
The positions of Chair and Chief Executive Oficer are held by
separate individuals and the Board has clearly deined their
responsibilities. The Chair is primarily responsible for the effective
working of the Board, ensuring that each Director, particularly the
Non-executive Directors, is able to make an effective contribution.
The Chief Executive Oficer has responsibility for running the
Group’s businesses and for the implementation of the Board’s
strategy, policies and decisions.
Board, Committee and Director evaluation
The performance of the Board is appraised by the Chair. The
Executive and Non-executive Directors are evaluated individually
by the Chair. The Board, led by the Senior Independent
Non-executive Director, appraises the Chair, and the Board
evaluates the performance of its three Committees. Evaluation
processes are conducted periodically and they are organised
to it in with Board priorities and succession planning activity.
Aformal evaluation took place in respect of the year under review
in accordance with the requirements of the Code. This evaluation
was conducted by means of detailed questionnaires, the results
of which were then considered as appropriate, combined with
meetings and discussions. The Chair is responsible for the review
of each Director’s development and ongoing training requirements
to ensure that the performance of each Director continues to
be effective. The overall results of the evaluation process were
satisfactory, and the outcomes of it indicated the following areas
offocus for the Board and its Committees going forward:
• succession planning;
• continuing development of remuneration policy; and
• promotion of diversity.
Advice for Directors
Procedures have been adopted for the Directors to obtain access
through the Company Secretary to independent professional
advice at the Company’s expense, where that Director judges it
necessary in order to discharge their responsibilities as a Director
of the Company.
All Directors have access to the advice and services of the
Company Secretary, who is responsible to the Board for ensuring
that Board policies and procedures are complied with. Both the
appointment and removal of the Company Secretary are matters
reserved for decision by the Board.
Corporate governance
Norcros plc Annual Report and Accounts
CORPORATE GOVERNANCE CONTINUED
Board procedures
The Board has a formal schedule of matters speciically reserved
to it for decision which it reviews periodically. This ensures the
Board makes all major strategy, policy and investment decisions
affecting the Company. In addition, it is responsible for business
planning and risk management policies and the development of
policies for areas such as safety, health and environmental policies,
Directors’ and senior managers’ remuneration and ethical issues.
The Board provides direction to the management of the Company,
and it is ultimately accountable for the performance of the Group.
The Board operates in such a way as to ensure that all decisions
are made by the most appropriate people in a timely manner
that will not unnecessarily delay progress. The Board has formally
delegated speciic responsibilities to Board Committees,
namely the Nomination Committee, Audit and Risk Committee
and Remuneration Committee. The Terms of Reference of
those Committees are published on the Company’s website at
www.norcros.com.
The report of the Nomination Committee is on page 93, the report
of the Audit and Risk Committee is on pages 88 to 92 and the
report of the Remuneration Committee is on pages 94 to 113.
The Board will also appoint Committees to approve speciic
processes as deemed necessary, such as aspects of corporate
transactions, or to authorise share option administrative actions.
The directors and management teams of each Group company
are responsible for those business entities. They are tasked with
the delivery of targets approved by the Board on budgets, strategy
and policy.
Directors’ roles
The Executive Directors work solely for the Group. However, in
appropriate circumstances, Executive Directors are encouraged to
take on one non-executive directorship in another non-competing
company or organisation. The Chief Executive Oficer and the
Chief Financial Oficer have no non-executive directorships.
The terms and conditions of appointment of the Non-executive
Directors are available upon written request from the Company.
All the Non-executive Directors conirm that they have suficient
time to meet the requirements of their role. They also conirm to
disclose to the Company their other commitments and to give an
indication of the time involved in each such commitment.
The annual evaluation process includes an assessment of whether
the Non-executive Director is spending enough time to fulil their
duties. If a Non-executive Director is offered an appointment
elsewhere, the Board Chair is informed before any such offer is
accepted and the Chair will subsequently inform the Board.
The Board has suitable procedures in place for ensuring that its
powers to authorise conlict situations are operated effectively.
Such powers are operated in accordance with the Company’s
Articles of Association by means of each Director having a
responsibility to notify the Board of any conlict situation and for
the Board to deal with that situation as appropriate.
The Board ensures that all new Directors (including Non-executive
Directors) will receive a full, formal and tailored induction on joining
the Company. As part of that induction procedure, the Chair will
ensure that major shareholders have the opportunity to meet a
new Non-executive Director. The Chair also periodically assesses
the training and development needs of all Directors and ensures
that any suitable training and updates are provided to Directors.
Retirement by rotation
Each of the Directors is subject to election by shareholders at the
irst Annual General Meeting after their appointment. Thereafter,
in accordance with the Company’s Articles of Association, all of
the Directors are subject to retirement by rotation such that one
third of the Directors retire from the Board each year and each
Director must seek re-election at intervals of no more than three
years. However, the Board has decided that every Director should,
where appropriate, offer themselves for re-election at each Annual
General Meeting. Accordingly, each continuing Director will seek
re-election at the next Annual General Meeting. Biographical
details of all of the Directors are set out on pages 82 and 83, where
there is also a statement on the Directors’ suitability for re-election.
Financial reporting
When releasing the annual and interim inancial statements the
Directors aim to present a fair, balanced and understandable
assessment of the Group’s results and prospects. The Directors
have a collective responsibility for the preparation of the Annual
Report and Accounts which is more fully explained in the
Statement of Directors’ Responsibilities on page 117.
Attendance by individual Directors at meetings
oftheBoard and itsCommittees
The attendance of Directors at the Board and principal Board
Committee meetings during the year is detailed in the table below:
Main
Board
meetings
Audit and Risk
Committee
meetings
Remuneration
Committee
meetings
Nomination
Committee
meetings
Gary Kennedy, Chair
/ / / /
David McKeith
/ / / /
Alison Littley / / / /
Stefan Allanson
/ / / —
Nick Kelsall / — — —
James Eyre / — — —
1 Gary Kennedy was incapacitated due to ill health from 23 January 2023 and passed
away on 13 February 2023. He attended all Board and Committee meetings that he was
able to attend.
2 David McKeith acted as Board Chair from 24 January 2023.
3 Stefan Allanson was appointed on 1 January 2023. He attended all Board
andCommittee meetings held after this date.
Relations with shareholders
The Company recognises the importance of maintaining good
communications with shareholders. The Company actively
engages with shareholders on speciic matters and takes a
number of other steps to ensure that the Board and, in particular,
the Non-executive Directors develop an understanding of the
views of major shareholders about the Company. Directors have
regular meetings with the Company’s major shareholders and
received regular feedback on the views of those shareholders
through the Company’s broker. Reports of these meetings, and
any shareholder communications during the year, are given to
the Board. In addition, the Company publishes any signiicant
events affecting the Group and updates on current trading. The
Board Chair and the Non-executive Directors are also offered the
opportunity to attend meetings with major shareholders and the
Non-executive Directors, and in particular the Senior Independent
Director, would attend such meetings if requested to do so by any
major shareholder.
The Board regularly receives copies of analysts’ and brokers’
brieings. The Annual and Interim Reports, together with all
announcements issued to the London Stock Exchange, are
published on the Company’s website at www.norcros.com.
Annual Report and Accounts Norcros plc
The Notice of the Annual General Meeting is sent to shareholders
at least 20 working days before the meeting. It is the Company’s
practice to propose separate resolutions on each substantially
separate issue.
For each resolution, proxy appointment forms should provide
shareholders with the option to direct their proxy to vote either for
or against the resolution or to withhold their vote. The Company
ensures that all valid proxy appointments received for general
meetings are properly recorded and counted. For each resolution
the Company ensures that the following information is given at the
meeting and made available as soon as reasonably practicable on
a website which is maintained by or on behalf of the Company:
• the date of the meeting;
• the text of the resolution;
• the number of votes validly cast;
• the proportion of the Company’s issued share capital
represented by those votes;
• the number of votes cast in favour of the resolution;
• the number of votes against the resolution; and
• the number of shares in respect of which the vote was withheld.
The Board Chair seeks to arrange for the Chairs of the Audit and
Risk, Remuneration and Nomination Committees (or a deputy if
any of them is unavoidably absent) to be available at the Annual
General Meeting to answer any questions relating to the work of
these Committees.
Accountability and audit
The respective responsibilities of the Directors and auditor in
connection with the inancial statements are explained in the
Statement of Directors’ Responsibilities on page 117 and the
Auditor’s Report on pages 119 to 124. The Directors ensure the
independence of the auditor by requesting annual conirmation of
independence which includes the disclosure of all non-audit fees.
Risk management and internal control
The Board is responsible for the Group’s system of internal control
and for reviewing its effectiveness (covering all material controls
including inancial, operational, risk management and compliance).
This is undertaken via an annual programme to review the internal
control environment at each business unit. Each review is carried
out by the Group Head of Internal Audit and Risk Assurance, who is
independent of that business unit. The results of these reviews are
communicated to the Audit and Risk Committee.
The Board has carried out a robust assessment in order to identify
and evaluate what it considers to be the principal risks faced by the
Group and has also assessed the adequacy of the actions taken to
manage these risks. This process has been in place for the period
under review and up to the date of the approval of the Annual Report
and Accounts. The principal risks are disclosed on pages 40 to 44.
The Group’s insurance continues to be managed and co-ordinated
centrally with the assistance of insurance brokers. This gives
the Group full visibility of both claims history and the insurance
industry’s perception of the Group’s overall risk via the respective
insurance premiums. The Company examines the size and trend
of these premiums and the extent to which it can mitigate the risk
and reduce the overall risk burden in the business by considering
the appropriate level of insurance deductible and the potential
beneit of self-insurance in some areas.
Viability
In accordance with the Code, the Board has assessed the
prospects of the Company, using a three-year assessment
timescale, and concluded that there is a reasonable expectation
that the Company will be able to meet its liabilities and continue in
operation. The full Viability Statement is contained on page 45.
Operational structure, review and compliance
In addition to the Chief Financial Oficer, the Group has Senior
Financial Managers at its Head Ofice. The current Group Head
of Internal Audit and Risk Assurance was appointed in March
2020 and he is responsible for the Internal Audit and Risk
Assurance function for the Group. Further information on the
work of this function is in the Audit and Risk Committee Report on
pages 88 to 92.
The key elements of the controls framework within which the
Group operates are:
• an organisational structure with clearly deined lines
of responsibility, delegation of authority and reporting
requirements;
• an embedded culture of openness of communication between
operational management and the Company’s Executive
Management on matters relating to risk and control;
• deined expenditure authorisation levels; and
• a comprehensive system of inancial reporting. An annual
budget for each business unit is prepared in detail and approved
by the Group Executive Management. The Board approves the
overall Group’s budget and plans. Monthly actual results are
reported against budget and the prior year and the forecast for
the year is revised where necessary. Any signiicant changes
and adverse variances are reviewed by the Board and remedial
action is taken where appropriate. There is weekly cash and
treasury reporting to the Chief Financial Oficer and periodic
reporting to the Board on the Group’s tax and treasury position.
The system of internal control is designed to manage rather than
eliminate the risk of failing to achieve business objectives and
can only provide reasonable and not absolute assurance against
material misstatement or loss. It is tested and developed as
appropriate by the Group Head of Internal Audit and Risk Assurance
working in conjunction with the Audit and Risk Committee.
The control framework as outlined above gives reasonable
assurance that the structure of controls in operation is appropriate
to the Group’s situation and that risk is kept to acceptable levels
throughout the Group.
Takeover directive
Share capital structures are included in the Directors’ Report on
pages 114 to 116.
Approved by the Board of Directors on 14 June 2023 and signed
onits behalf by:
David McKeith
Acting Board Chair
14 June 2023
Corporate governance
Norcros plc Annual Report and Accounts
AUDIT AND RISK COMMITTEE REPORT
David McKeith
Chair of the Audit
andRiskCommittee
During the year, the Committee continued to focus on
oversight and monitoring of key risks and risk management
policies and procedures.
Role of the Audit and RiskCommittee
The main responsibilities of the Audit and Risk Committee are:
• reviewing the Company’s inancial reporting;
• monitoring the Company’s risk management and internal
control procedures;
• overseeing the appointment and work of the external auditor;
• overseeing the work of the Internal Audit and Risk Assurance
function; and
• advising the Board on whether the Annual Report
andAccounts are fair, balanced and understandable.
Responsibilities
The Committee’s Terms of Reference are in compliance with the
UK Corporate Governance Code 2018 and provide full details
of its role and responsibilities. A copy can be obtained from the
Company’s website, www.norcros.com.
The Committee is a sub-committee of the Board whose main
responsibilities include:
• monitoring the integrity of the inancial statements of the
Company and any formal announcements relating to the
Company’s inancial performance, and reviewing signiicant
inancial reporting judgements contained in them;
• providing advice (where requested by the Board) on whether
the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable, and provides the information
necessary for shareholders to assess the Company’s position
and performance, business model and strategy;
• reviewing the Company’s internal inancial controls and internal
control and risk management systems;
• monitoring and reviewing the effectiveness of the Company’s
Internal Audit and Risk Assurance function;
• at the appropriate time, conducting the tender process and
making recommendations to the Board about the appointment,
re-appointment and removal of the external auditor, and
approving the remuneration and terms of engagement of the
external auditor;
• reviewing and monitoring the external auditor’s independence
and objectivity;
• reviewing the effectiveness of the external audit process,
takinginto consideration relevant UK professional and
regulatoryrequirements;
• developing and implementing policy on the engagement of the
external auditor to supply non-audit services, ensuring there is
prior approval of non-audit services, considering the impact this
may have on independence, taking into account the relevant
regulations and ethical guidance in this regard, and reporting
tothe Board on any improvement or action required; and
• reporting to the Board on how it has discharged its responsibilities.
Monitoring the Company’s
reporting and risk management.
Members
During the year to 31 March 2023, the Committee has consisted
of David McKeith and Alison Littley, with Stefan Allanson joining
the Board as Chair (Designate) of the Audit and Risk Committee on
1January 2023 and he will become Chair of the Committee at the
conclusion of the 2023 AGM. On 24 January 2023, DavidMcKeith
assumed the role of Acting Board Chair. Biographies of all
members of the Committee appear on pages 82 and 83.
The Chair of the Committee, David McKeith, is considered to have
recent and relevant inancial experience as he is a fellow of the
Institute of Chartered Accountants in England and Wales and a
former senior partner of PricewaterhouseCoopers LLP. He also
acted as chair of the audit committee for Sportech plc, where he
was a non-executive director until he resigned from that position
inAugust 2016.
The Board is satisied that the Committee has the appropriate
level of expertise to fulil its Terms of Reference. The Committee
reviewed its own Terms of Reference, performance and
constitution during the year.
Annual Report and Accounts Norcros plc
Signiicant inancial reporting matters in the 2023
Annual Report
The signiicant inancial reporting matters that the Committee
considered in the year are detailed below:
Going Concern and Viability Statement
The Group has prepared a Going Concern and Viability Statement
relecting the potential impact of principal risks and uncertainties,
including a situation similar in nature to the COVID-19 pandemic,
on liquidity and solvency. This has been performed by modelling a
reasonable worst-case scenario and then applying a reverse stress
test on the Group’s current forecasts. Further details are included
on page 45 and on page 130.
The Committee, alongside the Board, has reviewed and
considered the detailed forecast scenarios and agrees with
management’s conclusions.
Deined beneit pension scheme liabilities
The Group’s UK deined beneit pension scheme is signiicant both
in terms of its context in the overall Balance Sheet and the results
of the Group. The Group’s UK deined beneit pension scheme (as
calculated under IAS 19R) shows a surplus of £14.9m at 31 March
2023 from a surplus position of £19.6m at 31 March 2022.
The valuation of the present value of scheme liabilities involves
signiicant judgement and expertise particularly in respect of the
assumptions used. In order to value the liabilities, management has
engaged an independent irm of qualiied actuaries, Isio (formerly
KPMG Pensions). The Committee reviewed the outputs from this
work and benchmarked the assumptions, particularly the net
discount rate, with those applied by other companies with deined
beneit pension schemes with similar characteristics and having
the same measurement date. The Committee concurred with the
assumptions put forward by management to value the liabilities.
The Committee considered the approach and judgement taken
by management in determining the value of the surplus and
concurred with management’s view.
Acquisition accounting
As part of its consideration of how the Group has accounted
for the acquisition of Grant Westield, the Committee reviewed
management’s assessment of Grant Westield’s intangible assets.
The Committee has experience of reviewing intangible assets
following the acquisitions of Vado in 2013, Croydex in 2015,
Abode in 2016, Merlyn in 2017 and House of Plumbing in 2019.
The Committee reviewed a paper prepared by management
and challenged the assumptions used, the nature of the assets
identiied and the proposed useful lives of each asset, and agreed
to recognise intangible assets in respect of Grant Westield’s
customer relationships and brand valued at £35.5m.
In conducting these reviews, the Committee considered the
work and recommendations of the Company’s inance function
and received reports from the Company’s external auditor on
its indings.
Restructuring at Norcros Adhesives and impairment
atJohnsonTiles UK
The Group recognised a restructuring provision in relation to the
closure of Norcros Adhesives of £4.8m relecting the impairment
of assets and costs associated with closure. The Group also
recognised a non-cash impairment of the carrying value of assets
at Johnson Tiles UK of £5.0m following a review of future cash
lows based on uncertain demand.
The Committee considered the approach and judgements taken
by management in determining the value of the provisions and
concurred with management’s view.
Fair, balanced and understandable
The Committee formally reviews the Company’s annual and
interim inancial statements and associated announcements,
and considers signiicant accounting principles, policies and
practices and their appropriateness, inancial reporting issues and
signiicant judgements made, including those summarised above.
The Committee also advises the Board on whether it considers
that the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable, and provides the necessary
information for shareholders to assess the Company’s inancial
position and performance, strategy and business model.
The Committee concluded that these disclosures, and the
processes and controls underlying their production, meet the
latest legal and regulatory requirements for a listed company
and that the 31 March 2023 Annual Report and Accounts are fair,
balanced and understandable.
Meetings of the Committee
The Committee met formally three times during the year ended
31 March 2023. By invitation, the Board Chair, Chief Executive
Oficer, Chief Financial Oficer, Company Secretary, Group
Head of Internal Audit and Risk Assurance and Group Financial
Controller also attended each of these meetings together with the
engagement partner and other members of the audit team from
the external auditor.
The Committee may invite other individuals either from within the
Company or external technical advisers to attend meetings to
provide information or advice as it sees it.
At each meeting the Committee had the opportunity to discuss
matters with the external and internal auditor without management
being present. The Chair of the Committee also has regular
discussions with the external audit partner outside of the formal
Committee process, and he met with the Group Head of Internal
Audit and Risk Assurance without management being present.
At each of its meetings the Committee reviews any inancial
communications issued to the market.
Corporate governance
Norcros plc Annual Report and Accounts
AUDIT AND RISK COMMITTEE REPORT CONTINUED
Principal activities of the Audit and Risk Committee during the year
A wide variety of issues were addressed in the year; they are summarised in the table below:
Area Activities
Financial reporting Review of the Company’s trading updates and other inancial communications
Review of the Company’s interim results for the six months ended 30 September 2022
Review of the Company’s Annual Report and Accounts for the year ended 31 March 2023, including
consideration of:
• signiicant inancial reporting matters;
• whether the Annual Report and Accounts are fair, balanced and understandable; and
• the requirements of the going concern assessment and Viability Statement
Review of changes to corporate reporting requirements
Review of the restructuring provision at Norcros Adhesives
Review of the impairment of assets at Johnson Tiles UK
Review of the acquisition accounting for Grant Westield
External audit Review of the external auditor’s proposed audit work plan for the year ended 31 March 2023, including its
assessment of the principal inancial reporting risks
Review of the external auditor’s terms of engagement and proposed fees
Assessment of the external auditor’s independence, objectivity, qualiications and expertise, including a review
ofits internal quality control checks
Review of the indings from the external audit for the year ended 31 March 2023
Internal audit Review of the internal audit work programme for 2022/23
Approval of the annual internal audit programme for 2023/24
Review of current internal audit resource levels
Assessment of the work carried out to test and review internal controls and cyber security, together with the status
of recommendations made and actions agreed
Review of indings and agreed actions arising from internal audit assignments
Compliance Review of the whistleblowing log
Review of the fraud and attempted fraud log
Review of the data protection log including data incidents, data subject access requests, etc.
Risk management Review of the Group’s reported principal risks and uncertainties including consideration of any new or emerging
risks and uncertainties identiied and amendment of current principal risks as required
Review of the actions taken by the Group to manage its principal risks particularly those arising from cyber
security and ESG risks such as climate change
Governance Conducted an appraisal of the performance of the Committee
Review of the Group’s policy in respect of the employment of former employees of the external auditor
Review of the Group’s policy in respect of the engagement of the external auditor for non-audit services
andnon-audit services provided by the external auditor during the year
Review of the Committee’s Terms of Reference and constitution in line with current best practice
Annual Report and Accounts Norcros plc
Internal audit framework
The Group has a dedicated Group-wide Internal Audit and Risk
Assurance function that is led by an experienced Group Head of
Internal Audit and Risk Assurance. This role is supported by a small
dedicated internal audit team based in South Africa focused on
the particular risks faced by the Group’s retail and manufacturing
operations in South Africa. Internal audit resources are kept under
constant review to ensure an appropriate level of independent
assurance is obtained by the Committee.
The Group operates a rolling twelve-month audit plan prepared
by the Group Head of Internal Audit and Risk Assurance. The
plan is risk based using assessments carried out by the Group,
includes senior management input, and is reviewed and
approved by the Committee. At each meeting, the Committee
considers the results of the audits undertaken during the
preceding period and the adequacy of management’s response
to matters raised. Additionally, the related mitigations against
issues and actions raised from these audits are systematically
followed up in subsequent Committee meetings until they are
adequatelyresolved.
The Group control and risk self-assessment questionnaires, which
are completed annually by each business unit, are reviewed by the
Group Head of Internal Audit and Risk Assurance and the Group
Financial Controller. This includes a management representation
requiring each division to conirm that it has applied and followed
all required policies and procedures in the year. Key control issues
that arise from this review are raised with the Committee, with
the results of this assessment also feeding into the audit plan
andindividual audit engagements.
Group Internal Audit and Risk Assurance activities
during the year
The Group Internal Audit and Risk Assurance team provided
assurance across a wide range of risks during the year, in line
with the standards set out in the approved audit charter. The
annual audit plan, which is approved by the Committee, included
business reviews of operational units, assessing the effectiveness
of key internal controls in place over selected systems and
processes, which this year included Group Occupational Health &
Safety Management and Group Payroll systems at all locations. In
South Africa (SA), the primary focus was on the controls in place
at retail outlets with completion of a cycle of operational reviews
across all stores. The plan also included operational reviews of
three distribution centres and it covered SA Head Ofice inancial
and other risk-based reviews in line with the Group audits noted
above. Actions agreed during previous audit visits were reviewed
to conirm management’s progress.
Other key activities of the function during the year included
oversight of the Group’s online awareness training programme,
which covers an expansive range of topics including anti-bribery
and corruption, information security, data protection, cyber
security and modern slavery, along with a range of health and
safety and soft skills training courses. The team also liaises closely
with our insurers on a range of risk management projects including
cyber security and incident response, business continuity and
disaster recovery planning, and company vehicle driver licence
checking and driver behavioural training.
Internal Audit also facilitates the annual control and risk self-
assessment process covering inancial and information security
controls and, through audit reviews, it provides independent
assurance that the controls declared by management are in place
and operating effectively.
Summaries of all indings and actions, and updates on all audit
work and other key activities, are provided at each Audit and Risk
Committee meeting.
Risk management framework
Our risk management framework is highlighted on page 39 of our
Strategic Report. The Audit and Risk Committee’s role in the risk
management framework can be summarised as:
1. review of current and future (emerging) risk through the
discussion of risk and mitigating actions with divisional
management in annual strategic reviews;
2. annual review of the risk management reporting process and
associated outputs to ensure they are robust and effective and
include strategic and operational risks that could threaten the
business model and future strategy; and
3. review of the Annual Report to ensure that it is a fair relection
of risk assessments undertaken.
Internal control and risk management review
The Board has overall responsibility for the Group’s system
of internal control and risk management and for reviewing its
effectiveness. The internal control systems are designed to meet
the needs of the Group and to manage rather than eliminate the
risk of failure to achieve business objectives. Such systems can
only provide reasonable and not absolute assurance against
material misstatement or loss.
The Committee undertakes a review, at least annually, of the
effectiveness of the Company’s system of internal controls
and risk management and the Board will take into account the
Committee’s Report, conclusions and recommendations in this
regard. The Board conirms that it has reviewed the effectiveness
of the internal control system, including inancial, operational and
compliance controls and risk management in accordance with the
UK Corporate Governance Code, for the period from 1 April 2022
to the date of approval of the Annual Report and Accounts for the
year ended 31 March 2023.
Fraud and whistleblowing
The Group maintains a whistleblowing policy and engages two
independent conidential whistleblowing service providers,
one covering South Africa speciically and the other covering
all other locations. Reports on the use of these services, any
signiicant concerns that have been raised, details of investigations
carried out and any actions arising as a result are reported to the
Committee at each meeting.
The Committee also receives papers on incidents of fraud or
attempted fraud and reviews them at each meeting. At least
annually, the Committee conducts an assessment of the
adequacy of the Group’s procedures in respect of compliance,
whistleblowing and fraud.
Corporate governance
Norcros plc Annual Report and Accounts
AUDIT AND RISK COMMITTEE REPORT CONTINUED
External auditor
The Committee has primary responsibility for making
recommendations to the Board on the appointment,
re-appointment and removal of the external auditor. The
Committee keeps under review the scope and results of the audit
and its effectiveness, as well as the independence and objectivity
of the auditor.
The Committee is aware of the need to safeguard the auditor’s
objectivity and independence and the issue is discussed by the
Committee and periodically with the audit engagement partner
from BDO LLP. In accordance with Auditing Practices Board
requirements, external auditor independence is maintained by the
rotation of the engagement partner every ive years. The current
audit engagement partner, Gary Harding, was appointed following
the change of auditor in 2020.
Policies on the award of non-audit work to the external auditor
and the employment of ex-employees of the external auditor are
in place and reviewed annually. Additionally, the approval of the
Chair of the Committee is required prior to awarding high value
non-audit work to the external auditor, and the non-audit work
planned and performed is monitored by the Committee at each
meeting. BDO LLP assisted the Group with a response to a letter
from the Financial Reporting Council. The Financial Reporting
Council performed a limited scope review of the 2022 Annual
Report and Accounts to consider compliance with reporting
requirements. The Financial Reporting Council’s role was not to
verify the information provided and the review does not provide
any assurance that the 2022 Annual Report and Accounts is
correct in all material respects. The assistance provided by BDO
isa permissible non-audit service.
The external audit starts with the design of a work plan that
addresses the key risks of the audit which were conirmed at the
March 2023 meeting of the Committee. The Committee also
agreed the terms of engagement and the fees payable for the
engagement. At each meeting the Committee had the opportunity
to discuss matters with the external auditor without management
being present. The Chair of the Committee also has regular
discussions with the external audit partner outside the formal
Committee process.
For the year ended 31 March 2023, the Committee was satisied
with the independence, objectivity and effectiveness of the
relationship with BDO LLP as external auditor.
External audit tender and appointment of auditor
The external auditor, BDO LLP, was appointed at the 2020 AGM
inJuly 2020 following a competitive tender process.
On behalf of the Audit and Risk Committee.
David McKeith
Chair of the Audit and Risk Committee
14 June 2023
Annual Report and Accounts Norcros plc
NOMINATION COMMITTEE REPORT
Role of the Nomination Committee
The main responsibilities of the Nomination Committee are:
• evaluating the balance of skills, knowledge, independence,
diversity and experience of the Board;
• succession planning for the Board and at senior
management level;
• determining the scope of the role of a new Director and
the skills and time commitment required and making
recommendations to the Board about illing Board
vacancies; and
• appointing additional Directors.
The Terms of Reference of the Committee are available for
inspection upon written request to the Company and on its
website at www.norcros.com.
The Nomination Committee and the Board seek to maintain an
appropriate balance between the Executive and Non-executive
Directors. The Nomination Committee is chaired by the Chair of
the Board and consists of all the Non-executive Directors. The
Board Chair will not chair the Committee when it deals with the
appointment of a successor to that role.
During the year under review, the Nomination Committee led
the process to ind a new Non-executive Director and a new
Chair. TheCommittee also dealt with the succession of the Chief
Executive Oficer given the retirement of Nick Kelsall from this role
on 31 March 2023. A thorough selection process was undertaken,
considering both internal and external candidates, leading to the
appointment of Thomas Willcocks as CEO effective 1 April 2023.
The Nomination Committee also evaluates the balance of skills,
knowledge, diversity and experience of the Board. If a new
appointment to the Board is required, the Committee will use the
appropriate selection process and will determine the scope of the
role of a new Director and the skills and time commitment required
and make recommendations to the Board about illing Board
vacancies and appointing additional Directors.
In selecting candidates due regard will be given to the balance
of the Board, and to the beneits of different backgrounds and
experience, and to diversity on the Board including gender.
Appointments will be made in accordance with the Group’s
diversity and inclusion policy, on the basis of merit and the most
appropriate experience against objective criteria in the best
interests of shareholders. The Board endeavours to ensure that
these principles are applied throughout the Group.
In the year under review the Committee has, in addition to its
routine responsibilities, continued to focus on succession planning
issues, and it is satisied that there are in place appropriate
plans for succession planning for Board members and senior
management across the Group.
David McKeith
Acting Chair of the Nomination Committee
14 June 2023
Evaluating the Board and succession
planning for a sustainable future.
David McKeith
Acting Chair of the
Nomination Committee
Corporate governance
Norcros plc Annual Report and Accounts
REMUNERATION COMMITTEE ANNUAL STATEMENT 2023
Alison Littley
Chair of the
RemunerationCommittee
Role of the Remuneration Committee
The main responsibilities of the Remuneration Committee are:
• determining the remuneration policy and keeping it under
review, including consulting with, and obtaining approval
from, shareholders as appropriate;
• implementing the approved remuneration policy as regards
Executive Director remuneration, beneits and incentives,
including the setting of targets and determination of
payouts of all incentive arrangements;
• ensuring alignment of the remuneration structure for senior
executives to the Executive Directors’ remuneration policy,
including approval of changes to packages;
• keeping under review the Executive Directors’ remuneration
policy (and the approach to implementation) in the context
of pay policies and practices across the wider workforce,
and the Group’s culture; and
• preparing the Annual Report on Remuneration, to be
approved by the members of the Company at the Annual
General Meeting.
Dear shareholders,
On behalf of the Board, I am pleased to present the Directors’
Remuneration Report for the year ended 31 March 2023.
Throughout the year the Committee has continued to strive to
balance the perspectives of the Company’s stakeholders with its
obligations, as steward of the Group, to ensure remuneration is:
• it for purpose;
• competitive without being excessive;
• able to incentivise and fairly reward delivery of our short and
longer-term ambitions; and
• cascaded appropriately throughout the Group.
I hope this report clearly explains how we have sought to achieve
this aim for the year in review and the current inancial year.
Directors’ remuneration policy
A key focus for the Committee during the year has been to
review the Directors’ remuneration policy. The current policy was
approved by 96% of shareholders at the 2020 AGM, and expires
later this year. Ahead of seeking approval of a new policy at the
2023 AGM, the Committee reviewed the existing framework to
ensure it remains credible and effective, is closely aligned with
strategy and the Group’s culture and appropriately relects market
and governance best practice. We concluded that the current
policy remains broadly it for purpose for Norcros. Therefore, in
early 2023, the Committee consulted extensively with principal
shareholders on proposals to submit for approval at the 2023 AGM
a largely unchanged policy, save for two changes intended to
future-proof the policy which will not be used in the year ending
31March 2024, these being:
• increasing the Approved Performance Share Plan (APSP) award
limit, from 100% to 150% of salary for the CEO, and to 125% of
salary for the CFO. This proposal is designed to ensure there is
appropriate lexibility to upweight the emphasis in the package
on long-term performance, and/or take account of potential
increases in the scale and scope of the business, over the
term of the policy. To the extent that the additional headroom
is utilised, the Committee will at that time consider whether it
would be appropriate to make a commensurate increase to the
level of the shareholding requirement; and
• ensuring lexibility to incorporate additional measures to the
APSP, including non-inancial measures, e.g. linked to other
strategic priorities such as ESG. This lexibility will be capped
at 25% of the APSP opportunity. At the same time, it is also
proposed that similar lexibility provided for by the current policy
in relation to the annual bonus be increased from 20% to 25%
ofthe opportunity.
The Committee welcomed all feedback received through this
engagement process, the broadly supportive nature of which
informed our decision to put forward for shareholder approval
unchanged proposals for the policy. If approved, the proposed
policy will take effect from the date of the 2023 AGM, for a period
of up to three years.
Fairly rewarding contribution
tothe success of the Group.
Annual Report and Accounts Norcros plc
The performance context for remuneration in the year
As reported earlier in this Annual Report, performance highlights include:
• resilience of the Group’s business model in challenging market conditions;
• strong execution of strategy;
• full year revenue of £441.0m (2022: £396.3m), 11.3% higher than prior year on a reported basis and 1.5% higher on a constant currency
like for like basis after adjusting for Grant Westield;
• record underlying operating proit of £47.3m, 13.2% higher than prior year (2022: £41.8m); and
• the completion in the year of the acquisition of Grant Westield and its successful integration into the Group.
This performance is testament to the Group’s proven business model and leading customer service proposition, in addition
to the proactive management and the leadership of our CEO and CFO, the commitment of all of our people and the effective
successionmanagement for our executive positions.
Remuneration for the year in review
Annual bonus
Due to the continued robust performance summarised above, the operating proit targets set for the annual bonus were achieved as to
32.3%, resulting in the bonus payments detailed on page 107. In keeping with our normal practice, the Committee reviewed the formulaic
outcome in the context of alignment with the Group’s underlying performance, as well as the experience of other stakeholder groups,
noting in particular recent feedback from shareholders. The Committee’s assessment of this outcome is explained indetail below:
Aspect reviewed Evaluation by the Committee
The challenge of stretching
targets set at the start
of the year
The targets were set at the start of the inancial year (at a time of ongoing uncertainty) to span an appropriate
range of possible performance outcomes identiied in the budgeting process. The Committee reviewed the
actual outturn in the context of the assumptions underlying the budgeting process at the time, concluding
that they and therefore the targets built from them, remained representative of trading conditions
experienced over the course of the year in review
The Group’s longer-term
performance trajectory
Notwithstanding the formulaic outcome, the Committee evaluated performance in the context of this being
a record proit performance for the Group, and concluded that the formulaic payout was warranted
Shareholder experience
We continued to deliver against our stated and progressive dividend policy, and our strategy for
continuedgrowth
Employee experience
We continue to prioritise the safety, health and wellbeing of all our people. During the year in review, the
Group focused available wage inlation budgets on our lower paid colleagues to support employees through
the current inlationary environment and associated cost of living pressures
Customer experience
We maintained the highest standards of service to our customers, particularly given the global challenges
tosupply chains
In the context outlined, the Committee is satisied that the bonus
targets were challenging and that the outcomes relect the
exceptional leadership and hard work of the Executive Directors
and the wider workforce to produce these excellent results,
notwithstanding continued supply chain challenges and pressure
from cost inlation.
2020 APSP
2020 APSP awards were made in November 2020, at a time of
heightened macroeconomic uncertainty caused by the COVID-19
pandemic. To help mitigate the impact of this uncertainty on its
ability to set robust, challenging and motivational cumulative
EPS targets, the Committee resolved to calibrate the targets
attaching to the 2020 APSP on the basis of 2023 inancial year
performance only and to set a wider performance range than
has been typical practice at Norcros but lower the payment at
threshold from 25% to 0% of maximum. The EPS performance
condition for the 2020 APSP awards was achieved as to 98.9%.
The Committee has considered this formulaic outcome in the
context of the factors referred to above, and concluded that this
outcome is justiied. Accordingly, the formulaic vesting outcome
of the 2020 APSP options was approved. Whilst 2020 APSP awards
do not vest until November, the Committee is presently satisied
that no windfall gains have arisen on these awards. The award
date for this cycle was delayed until later in the year (at which time
the share price had recovered partially from its March 2020 low)
and the share price, which continues to be impacted by external
market conditions, remains below the grant date share price. The
Committee’s view on any windfall gains will be reviewed again
atthe time of vesting.
2022 APSP
Awards for the year in review were made in July 2022 and suitably
challenging EPS targets set (see page 108 for further details).
Nick Kelsall’s retirement
As announced on 30 January 2023, Nick Kelsall retired as CEO and
a Board Director on 31 March 2023. Full details of his remuneration
in relation to the year in review are set out in the Annual Report
on Remuneration. He remains an employee of the Group until
30January 2024, during which time he continues to receive salary
and contractual beneits. He is not eligible for a bonus for the
year ending 31 March 2024 and will not receive an APSP award in
2023. Nick retains interests in the Deferred Bonus Plan (DBP), which
shall vest at the normal time subject to the rules of the Plan. The
Committee resolved to treat Nick as a good leaver, recognising his
30 years’ service and valued contribution to the Group, in respect
of unvested awards under the APSP. Awards will be pro-rated for
time and shall vest on the respective normal vesting date subject
to the achievement of the relevant performance condition. He is
also subject to the post-employment shareholding requirement as
per our policy.
Corporate governance
Norcros plc Annual Report and Accounts
REMUNERATION COMMITTEE ANNUAL STATEMENT 2023
CONTINUED
Remuneration for the year to 31 March 2024
The workforce context
The Committee’s decision making in relation to Executive
Director remuneration continues to be heavily informed by the
Group’s workforce remuneration practices and the decisions
taken by management in this regard. This year, the Committee
has been particularly mindful of the impact on the workforce
of the inlationary environment and associated cost of living
pressures. In this context, the Committee supported thedecision
by management to budget for a material cost of living increase,
of c.6% on average across the Group, and to taper this through
the organisation with the highest percentage increases being
awarded to our lowest paid colleagues. This approach is
considered to be fair and appropriately relect the prevailing
inlationary environment, and its asymmetric impact on different
organisational levels of the Group.
The Executive Directors
Thomas Willcocks was appointed CEO effective 1 April 2023, and
his salary set by the Committee at £420,000 from this date. The
Committee will keep this under review in the context of Thomas’
development and performance in the role, and will increase this
over time, by more than the workforce average if necessary, to
an appropriately competitive level commensurate with Thomas’
performance and contribution. In keeping with our normal
practice, any salary increase will be explained in the relevant
Annual Report on Remuneration.
As disclosed in last year’s report, the Committee resolved to
increase James Eyre’s base salary to £320,000 in two stages.
The irst of these stages, to £290,000, was implemented with
effect from 1 April 2022. In determining to implement the
second increase with effect from 1 April 2023, the Committee
took into account a range of factors, including James Eyre’s
continued strong performance and contribution to the Group
– particularly his invaluable support to Nick Kelsall and Thomas
Willcocks through the CEO transition – as well as the inlationary
environment (which was unforeseen at the time of agreeing the
two-stage increase). In this context, the Committee concluded that
it was appropriate to implement the second increase as originally
intended, noting that this salary level is now positioned to be
appropriately competitive for similar roles of comparable scope,
scale and complexity.
Both Executive Directors receive a pension contribution, or
allowance in lieu, of 8% of salary, in line with the employer contribution
available for the wider UK workforce. Other beneits consist of car
allowance, aligned at £15,000 for all Executive Directors for the
year ending 31 March 2024, and private medical insurance.
No changes are proposed to the annual bonus in 2024.
No changes are proposed to the APSP opportunities (100% of
salary) in 2024. The APSP will continue to be based 100% on
three-year cumulative EPS, with inal vesting also subject to an
assessment of the quality of earnings by reference to the Group’s
ROCE performance. This additional, discretionary underpin
relects shareholder feedback received during engagement on the
proposed policy, for some linkage in the APSP to returns alongside
EPS to help ensure that growth does not come at the expense of
longer-term returns. The Board of Directors supports this principle
and, in this context, introducing return on capital to the APSP
was considered by the Committee during its review of the policy.
In deciding to propose an unchanged scorecard for the 2023
APSP, which is cascaded into the Group on consistent terms to
reinforce collective behaviours that support longer-term success,
the Committee was mindful of the need to ensure that incentives
balance alignment with strategy and reinforcing performance
that is within the control of all participants. Capital allocation
decisions, M&A in particular, are taken by the Board as a whole and
are outside the control of the signiicant majority of participants.
Therefore, the Committee concluded that linking APSP outcomes
formulaically to return on capital at this time could impact a
scheme that is simple, well understood and motivational.
The Committee will keep under review its approach to
implementation of the policy in the context of wider business
performance and the stakeholder experience. We also remain
committed to setting stretching targets for the incentives, taking
into account the award opportunity when doing so to help ensure
that pay outcomes are commensurate with performance outturns.
The Board Chair
The Committee is also responsible for setting the remuneration of
the Board Chair. In doing so, it adopts a consistent set of principles
to those for executive and workforce remuneration. For the year
from 1 April 2023 the Committee has resolved to increase the
Board Chair’s fee from £145,000 p.a. to £149,350 p.a.
Concluding remarks
On behalf of the Committee, we hope that we can count on your
support for the resolutions to approve this Directors’ Remuneration
Report and the revised remuneration policy at the 2023 AGM, where I
will be available to answer any questions in relation to this report.
Alison Littley
Chair of the Remuneration Committee
14 June 2023
Annual Report and Accounts Norcros plc
DIRECTORS’ REMUNERATION POLICY REPORT
Remuneration disclosure
This Directors’ Remuneration Report has been prepared in accordance with the provisions of the Companies Act 2006 and Schedule
8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. The report meets
the requirements of the UK Listing Authority’s Listing Rules and the Disclosure Guidance and Transparency Rules. In this report, we
describe how the principles of good governance relating to Directors’ remuneration, as set out in the UK Corporate Governance
Code (the Code), are applied in practice. The Remuneration Committee conirms that throughout the inancial year the Group has
complied with these governance rules and best practice provisions set out in the Code except as regards the alignment of Executive
Director pension contributions with those for the workforce as a whole. As described elsewhere in this report, Nick Kelsall volunteered
a reduction to his pension contribution to bring this in line with the UK workforce average from 1 January 2023.
Directors’ remuneration policy
This section of the report sets out the remuneration policy for Executive Directors and Non-executive Directors, which will be put to
a binding shareholder vote at the 2023 AGM. If this resolution is carried, the policy will come into effect on that date and will remain
effective for up to a three-year period ending on the date of the 2026 AGM. The policy set out in this report is unchanged from that
approved by shareholders in 2020, other than the updates that are set out below in italicised text and explained in further detail in the
Annual Statement.
Executive Director remuneration policy table
This policy has been designed to support the principal objective of enabling the Group to attract, motivate and retain the people it needs
to maximise the value of the business.
Assessment of proposed policy against the 2018 UK Corporate Governance Code (the Code)
The Committee believes that the proposed policy complies with
the six pillars set out in paragraph 40 of the Code.
Clarity: The Committee believes that the disclosure of the
remuneration arrangements is transparent with clear rationale
provided on its maintenance and any changes to policy. The
Committee remains committed to consulting with shareholders
on the policy and its implementation.
Simplicity: The policy and the Committee’s approach
to implementation are simple and well understood. The
performance measures used in the incentive plans are well
aligned to the Group’s strategy.
Risk: The Committee has ensured that remuneration
arrangements do not encourage and reward excessive risk
taking by setting targets to be stretching and achievable, with
discretion to adjust formulaic bonus and APSP outcomes
retained by the Committee to ensure pay outcomes remain
aligned with performance outturns.
Predictability and proportionality: The link of the performance
measures to strategy and the setting of targets balances
predictability and proportionality by ensuring outcomes do not
reward poor performance.
Culture: The policy is consistent with the Group’s culture as well
as strategy, therefore driving behaviours that promote the long-
term success of the Company for the beneit of all stakeholders.
Component and objective Operation Opportunity Performance measures
Base salary
To enable the Group to
attract, motivate and
retain the people it needs
to maximise the value of
the business
Generally reviewed each year,
withincreases effective 1 April with
reference to salary levels at other
FTSE companies of broadly similar
size or sector to Norcros.
The Committee also considers
the salary increases applying
across the rest of the UK business
when determining increases for
ExecutiveDirectors.
Base salary increases are applied
inline with the outcome of the
annualreview.
Salaries in respect of the year
under review (and for the
following year) are disclosed
in the Annual Report on
Remuneration.
Salary increases for Executive
Directors will normally not
exceed those of the wider
workforce over the period
this policy will apply. Where
increases are awarded in
excess of the wider employee
population, for example if
there is a material change
in the responsibility, size
or complexity of the role,
the Committee will provide
the rationale in the relevant
year’s Annual Report on
Remuneration.
n/a
Corporate governance
Norcros plc Annual Report and Accounts
Component and objective Operation Opportunity Performance measures
Pension
To provide a level of
retirement beneit that
is competitive in the
relevant market
Executive Directors receive pension
contributions (either as a direct
payment or a cash allowance).
Base salary is the only element of
remuneration that is pensionable.
Executive Directors receive
a Company contribution
in line with the employer
contribution available for
the wider workforce in the
relevantmarket.
n/a
Beneits
Provision of beneits
inlinewith the market
Executive Directors are provided
with a company car (or a cash
allowance in lieu thereof) and
medical insurance. Other beneits
may be introduced from time to
time to ensure the beneits package
is appropriately competitive and
relects the needs and circumstances
of the Group and individual Executive
Director.
Beneits may vary by role, and
the level is determined each
year to be appropriate for the
role and circumstances of each
individual ExecutiveDirector.
It is not anticipated that the
cost of beneits (as set out
in the Annual Report on
Remuneration) would increase
materially over the period for
which this policy will apply.
The Committee retains the
discretion to approve a
higher cost in exceptional
circumstances (e.g. relocation
expenses or an expatriation
allowance on recruitment,
etc.) or in circumstances
where factors outside the
Company’s control have
changed materially (e.g. market
increases in insurance costs).
n/a
Annual bonus
andDeferred Bonus
PlanDBP
To focus Executive
Directors on achieving
demanding annual
targets relating to
Group performance and
encourage retention
Performance targets are set at the
start of the year and aligned with the
annual budget agreed by the Board.
At the end of the year, the Committee
determines the extent to which these
targets have been achieved.
50% of the total bonus payment is
paid in cash, and 50% is converted
into nil-cost options over Norcros
shares under the Deferred Bonus Plan
(DBP). These options are exercisable
after three years, subject to continued
employment and malus (in whole or
in part) during the deferral period in
the event of a material misstatement
in accounting records, gross
misconduct, calculation error or
corporate failure.
Cash bonuses may be subject to
clawback over the deferral period in
similar circumstances as identiied
above.
A payment equivalent to the dividends
that would have accrued on deferred
bonus awards that vest will be made
to participants on vesting.
Maximum opportunity: 100%
of base salary.
Target opportunity: 50% of
base salary.
For threshold performance,
thebonus payout is up
to25%of maximum.
The bonus will be based primarily
on the achievement of inancial
performance targets but may,
from time to time, include non-
inancial performance measures
(the weighting of which, if any,
will be capped at 25% of the
total opportunity). Details of the
measures on which the bonus
will be based shall be disclosed
in the relevant Annual Report
onRemuneration.
The Committee has discretion
to adjust the formulaic bonus
outcomes (including down to zero)
within the limits of the scheme
to ensure alignment of pay
withperformance.
Further details, including targets
attached to the bonus for the year
under review, are provided in the
Annual Report onRemuneration.
DIRECTORS’ REMUNERATION POLICY REPORT CONTINUED
Executive Director remuneration policy table continued
Annual Report and Accounts Norcros plc
Component and objective Operation Opportunity Performance measures
Approved Performance
Share Plan APSP
To incentivise Executive
Directors to deliver
long-term performance
that is aligned with
shareholders’ interests
APSP awards comprise annual
conditional awards of nil-cost options
following the announcement of the
Group’s inal results.
Awards normally vest after three
years, subject to the achievement
of a performance condition and
continued employment with the
Group until the vesting date.
To the extent an award vests,
Executive Directors will be required
to hold net vested shares for an
additional holding period of two years.
A payment equivalent to the
dividends that would have accrued
on APSP awards that vest will be
made to participants on vesting.
APSP awards are also subject to
malus over the vesting period
and clawback over the holding
period (in both cases in whole or
in part) in the event of a material
misstatement in accounting records,
gross misconduct, calculation error
orcorporate failure.
Maximum opportunities:
CEO – 150% of base salary.
CFO – 125% of base salary.
Threshold performance results
in 25% vesting.
Details of actual APSP awards
in respect of each year will be
disclosed in the Annual Report
on Remuneration.
Vesting of APSP awards is
dependent upon Group
performance over a three-
year period. Any non-inancial
measures will have a maximum
aggregate weighting of 25% of
the opportunity. Details of the
measures attaching to each
award cycle will be disclosed in
the relevant Annual Report on
Remuneration. At the start of
each cycle, the Committee will
determine the targets that will
apply to an award.
If the performance targets are not
met at the end of the performance
period, awards will lapse.
The Committee has discretion
to adjust the formulaic APSP
outcomes within the limits of
the scheme if certain relevant
events take place (e.g. a
capital restructuring, a material
acquisition/divestment, etc.) with
any such adjustment to result in the
revised targets being no more or
less challenging to achieve.
The Committee will consult
major shareholders on changes
to the APSP, although it retains
discretion to make changes to the
performance measures attaching
tofuture cycles without reverting
toa full shareholder vote.
Further details, including the
targets attached to the APSP
in respect of each year, are
disclosed in the Annual Report
onRemuneration.
SAYE
To encourage the ownership
of Norcros plc shares
An HMRC-approved scheme where
employees (including Executive
Directors) may save up to the
individual monthly limit set by HMRC
from time to time over three years.
Options are granted at a discount
ofup to 20%.
Savings capped at the
individual monthly limit set by
HMRC (or other such lower
limit as the Committee may
determine) from time to time.
n/a
Corporate governance
Norcros plc Annual Report and Accounts
Component and objective Operation Opportunity Performance measures
Shareholding
requirements
To align Executive Director
and shareholder interests
and reinforce long-term
decision making, including
for a period following
cessation of employment
Executive Directors are required to
retain at least 50% of any DBP or
APSP awards that vest (net of tax)
until they have built up a personal
holding of Norcros plc shares worth a
deined multiple of their salaries (of at
least 100% of salary).
Details of the in-post shareholding
requirements that apply to the
Executive Directors are set out in the
Annual Report on Remuneration.
Executive Directors will additionally
be required normally to maintain
a holding in Norcros plc shares for
a period of two years after they
cease to be a Director of the Group.
For the irst year this shareholding
guideline will be equal to the lower
of a Director’s actual shareholding at
the time of their departure and the
shareholding requirement in effect
at the date of their departure, and for
the second year 50% of that igure.
The speciic application of this
shareholding guideline will be at
the Committee’s discretion. Only
shares that are held beneicially
by an Executive Director or their
spouse or partner, or nil-cost options
granted under the DBP count in the
assessment of whether an Executive
Director has met the required
ownership level.
n/a n/a
Notes to the policy table
Payments from previous awards
For the avoidance of doubt the Group will honour any commitment entered into, and Executive Directors will be eligible to receive
payment from any award made, prior to the approval and implementation of the remuneration policy detailed in this report. Details
ofthese awards are, and will be, disclosed in the Annual Report on Remuneration.
Performance measure selection and approach to target setting
The measures used in the annual bonus will be selected by the Committee to directly reinforce our medium-term growth-orientated
strategy (see page 20 and 21 for further details of the strategy; details of the measures selected for use in the bonus for the year in review
and for the coming year are set out in the Annual Report on Remuneration). For the APSP, the Committee shall select measures that are
transparent, objective and effective measures of performance that are in the long-term interests of all of our shareholders (further details
of the APSP measures are set out in the Annual Report on Remuneration).
Targets applying to the annual bonus and APSP are reviewed annually, based on a number of internal and external reference points.
Annual bonus targets are aligned with the annual budget agreed by the Board. Annual bonus targets are considered to be commercially
sensitive but will be disclosed retrospectively in the following year’s Annual Report on Remuneration. APSP targets relect industry
context, expectations of what will constitute appropriately challenging performance levels and factors speciic to the Group. The
Committee will determine the APSP targets at the time awards are made and these targets (along with other relevant details of the grant)
will ordinarily be disclosed in the following year’s Annual Report on Remuneration.
Differences from remuneration policy for other employees
The remuneration policy for other employees is based on broadly consistent principles as described above. Annual salary reviews across the
Group take into account Group performance, local pay and market conditions, and salary levels for similar roles in comparable companies.
Executives and senior managers are eligible to participate in annual bonus schemes. Opportunities and performance measures vary by
organisational level, geographical region and an individual’s role. Other members of the Group senior leadership team participate in the
APSP on similar terms as the Executive Directors, although award sizes may vary by organisational level. All UK and Republic of Ireland
employees are eligible to participate in the Group’s SAYE scheme on identical terms.
DIRECTORS’ REMUNERATION POLICY REPORT CONTINUED
Executive Director remuneration policy table continued
Annual Report and Accounts Norcros plc
Performance scenario charts
Chief Executive Oficer
Minimum 100%
£470k
On target 60% 27% 13%
£785k
Maximum 36% 32% 32%
£1,310k
Maximum
+ 50% SPG
31% 28% 41%
£1,520k
Chief Financial Oficer
Minimum 100%
£361k
On target 60% 27% 13%
£601k
Maximum 36% 32% 32%
£1,001k
Maximum
+ 50% SPG
31% 28% 41%
£1,161k
Fixed pay Annual bonus APSP
The charts above provide estimates of the potential future reward opportunity for Executive Directors, and the potential mix between the
different elements of remuneration under four different performance scenarios: “Minimum”, “On target”, “Maximum” and “Maximum + 50%
share price growth (SPG)”. This information is for the current inancial year, as explained below.
The potential opportunities illustrated above are based on the proposed policy applied to base salaries at 1 April 2023. For the annual
bonus, the amounts illustrated are those potentially receivable in respect of performance for the year to 31 March 2024. It should be
noted that any bonus deferred into the DBP and APSP awards does not normally vest until the third anniversary of the date of grant. This is
intended to illustrate the relationship between executive pay and performance. The values of the DBP and APSP assume no increase in the
underlying value of the shares (except the APSP value under the “Maximum + 50% SPG” scenario) and actual pay delivered will further be
inluenced by changes in factors such as the Group’s share price and the value of dividends paid.
Valuation assumptions
The “Minimum” scenario relects base salary, pension and beneits (i.e. ixed remuneration), being the only elements of the Executive
Directors’ remuneration package not linked to performance.
The “On target” scenario relects ixed remuneration as above, plus target bonus payout (50% of salary) and APSP threshold vesting at
25% of the maximum award level.
The “Maximum” scenario relects ixed remuneration, plus full payout under all incentives (100% of salary under each of the annual bonus
and APSP).
The “Maximum + 50% SPG” scenario relects ixed remuneration, plus full payout under all incentives (100% of salary under each of the
annual bonus and APSP). The value of the APSP additionally relects 50% SPG.
Approach to Executive Director recruitment and remuneration
External appointment
In cases of hiring or appointing a new Executive Director from outside the Group, the Remuneration Committee may make use of all
existing components of remuneration, as follows:
Component Policy
Base salary The base salaries of new appointees will be determined by reference to relevant market data, experience and skills
of the individual, internal relativities and the current salary of the incumbent in the role.
Where a new appointee has an initial base salary set below market, the Committee may make phased increases over
a period of three years, subject to the individual’s development and performance in the role.
Beneits As set out in the policy table, beneits may include (but are not limited to) the provision of a company car or car allowance,
medical insurance, and any necessary expatriation allowances or expenses relating to an executive’s relocation.
Pension New appointees will receive pension contributions into a deined contribution pension arrangement or an
equivalent cash supplement, or a combination of both. Company contributions to pension will be in line with that
available for the wider workforce in the relevant market.
SAYE New appointees will be eligible to participate on identical terms to all other employees.
Annual bonus The bonus structure described in the policy table will apply to new appointees. The maximum opportunity will
be 100% of salary, pro-rated in the year of joining to relect the proportion of that year employed. Performance
measures may include strategic and operational objectives tailored to the individual in the inancial year of joining.
50% of any bonus earned will be deferred into the DBP on the same terms as other Executive Directors.
APSP New appointees will be granted annual awards under the APSP on the same terms as other Executive Directors
(including in relation to award opportunities), asdescribed in the policy table.
Corporate governance
Norcros plc Annual Report and Accounts
Approach to Executive Director recruitment and remuneration continued
External appointment continued
In determining the appropriate remuneration structure and level for the appointee, the Remuneration Committee will take into
consideration all relevant factors to ensure that arrangements are in the best interests of our shareholders. It is not the intention of the
Committee that a cash payment such as a “golden hello” would be offered. However, the Committee may make an award in respect of a
new appointment to “buy out” incentive arrangements forfeited on leaving a previous employer, over and above the approach and award
limits outlined in the table above. Any such award will be made under existing incentive structures, where appropriate, and will be subject
to the normal performance conditions of those incentives. The Committee may also consider it appropriate to make “buy out” awards
under a different structure, using the relevant Listing Rule where necessary, to replicate the structure of forfeited awards. Any “buy out”
award (however this is delivered) would have a fair value no higher than that of the awards forfeited, taking into account relevant factors
including performance conditions, the likelihood of those conditions being met and the proportion of the vesting period remaining.
Details of any such award will be disclosed in the irst Annual Report on Remuneration following its grant.
Internal promotion to the Board
In cases of appointing a new Executive Director by way of internal promotion, the policy will be consistent with that for external
appointees detailed in the table above (i.e. excluding the lexibility to make “buy out” awards). Where an individual has contractual
commitments made prior to their promotion to the Board, and it is agreed that a commitment is to continue, the Group will continue
to honour these arrangements even if there are instances where they would not otherwise be consistent with the prevailing Executive
Director remuneration policy at the time of promotion.
Service contracts and policy for payment for loss of ofice
Executive Directors have signed rolling contracts, terminable on twelve months’ notice by either the Group or the Director. The Group
entered into a contract with Thomas Willcocks on 1 April 2023, and with James Eyre on 1 August 2021. Copies of these contracts are
available to view at the Group’s registered ofice.
The Committee’s policy for Directors’ termination payments is to provide only what would normally be due to Directors had they remained
in employment in respect of the relevant notice period, and not to go beyond their normal contractual entitlements. Any incentive
arrangements will be dealt with subject to the relevant rules, with any discretion exercised by the Committee on a case by case basis
taking into account the circumstances of the termination. Termination payments will also take into account any statutory entitlement
at the appropriate level, to be considered by the Committee on the same basis. The Committee will monitor and where appropriate
enforce the Directors’ duty to mitigate loss. When the Committee believes that it is essential to protect the Group’s interests, additional
arrangements may be entered into (for example post-termination protections above and beyond those in the contract of employment) on
appropriate terms.
Under the service contracts for each Executive Director, the Company has the discretion to terminate the employment lawfully without
any notice by paying to the Director a sum equal to, but no more than, the salary and other contractual beneits of the Director. The
payment would be in respect of that part of the period of notice which the Director has not worked, less any appropriate tax and other
statutory deductions. The Director would be entitled to any holiday pay which may otherwise have accrued in what would have been the
notice period. The Company may pay any sums due under these pay in lieu of notice provisions as one lump sum or in instalments of
what would have been the notice period. If the Company elects to pay in instalments, the Director is under an express contractual duty to
mitigate their losses and to disclose any third party income they have received or are due to receive. The Company reserves the right to
reduce the amount of the instalments by the amount of such income. The Committee would expect to include similar pay in lieu of notice
provisions in any future Executive Directors’ service contract.
Also under their service contracts, if the Director’s employment is terminated for whatever reason, they agree that they are not entitled to any
damages or compensation to recompense them for the loss or diminution in value of any actual or prospective rights, beneits or expectations
under or in relation to the APSP, the DBP, the SAYE plan or the annual discretionary bonus scheme. This is without prejudice to any of the rights,
beneits or entitlements which may have accrued to the Director under such arrangements at the termination of employment.
The table below summarises how awards under the annual bonus, DBP and APSP are typically treated in speciic circumstances, with the
inal treatment remaining subject to the Committee’s discretion:
Reason for cessation Calculation of vesting/payment Timing of payment/vesting
Annual bonus
Voluntary resignation
orsummary dismissal
No bonus paid. n/a
All other circumstances Bonuses are paid only to the extent that the associated objectives, as
set at the beginning of the plan year, are met. Any such bonus would
normally be paid on a pro-rata basis, taking account of the period
actually worked.
At the normal payment
date unless the Committee,
in its absolute discretion,
determines that awards
should be paid out on
cessation of employment.
DIRECTORS’ REMUNERATION POLICY REPORT CONTINUED
Annual Report and Accounts Norcros plc
Reason for cessation Calculation of vesting/payment Timing of payment/vesting
DBP
Summary dismissal Awards lapse. n/a
Injury, illness, disability,
death, retirement with
the agreement of the
Group, redundancy or
employing company
leaving the Group
Unvested awards vest. At the normal vesting date
unless the Committee,
in its absolute discretion,
determines that awards
should vest on cessation
ofemployment.
Voluntary resignation
or other reason not
stated above
Unvested awards lapse unless the Committee, in its absolute discretion,
determines that an award should vest.
If the Committee determines
that an award should vest,
then awards will vest on their
normal vesting date, unless
the Committee, in its absolute
discretion, determines
that awards should vest on
cessation of employment.
Change of control Unvested awards will be pro-rated for the portion of the vesting
period elapsed on change of control, unless the Committee, in its
absolute discretion, determines otherwise. Awards may alternatively be
exchanged for new equivalent awards in the acquirer, where appropriate.
On change of control.
APSP
Summary dismissal Awards lapse. n/a
Voluntary resignation,
injury, retirement with
the agreement of the
Group, redundancy or
other reason that the
Committee determines
in its absolute discretion
Unapproved option awards lapse unless the Committee, in its absolute
discretion, determines otherwise. Awards that do not lapse will continue
to be eligible to vest on the normal vesting date, subject to being pro-
rated for time to the date of cessation of employment and performance
over the complete performance period. The Committee may, in its
absolute discretion, determine that awards shall vest on cessation in
exceptional circumstances, subject to being pro-rated for time and
performance to the date of cessation of employment.
Approved option awards lapse, except in the case of retirement with the
agreement of the employer, when awards will vest, subject to pro-rating
as stated above.
Any awards in a holding period will normally remain subject to the
holding requirement until the period ends.
At the normal vesting date
unless the Committee,
in its absolute discretion,
determines otherwise.
Death Unapproved option awards vest in full but may be subject to the
application of the performance conditions attached to them. Approved
option awards are pro-rated for time and performance to that date.
Immediately.
Change of control Unapproved option awards vest in full, but may be subject to the
application of the performance conditions attached to them. Approved
option awards are pro-rated for time and performance to that date.
Any awards in a holding period will normally be released.
Awards vest, subject to being pro-rated for time and performance to
the date of cessation of employment, unless the Committee determines
otherwise. Awards may alternatively be exchanged for new equivalent
awards in the acquirer, where appropriate.
On change of control.
External appointments
Executive Directors are permitted to take up non-executive positions on the boards of other companies, subject to the prior approval of
the Board. The Executive Directors may retain any fees payable in relation to such appointment. Details of external appointments and the
associated fees received are included in the Annual Report on Remuneration.
Corporate governance
Norcros plc Annual Report and Accounts
Consideration of employment conditions elsewhere in the Group
The Group seeks to promote and maintain good relations with employees and (where relevant) their representative bodies as part of its
broader employee engagement strategy. The Committee is mindful of salary increases applying across the rest of the business in relevant
markets when considering salaries for Executive Directors but does not currently consult with employees speciically on executive
remuneration policy and framework. However, as part of its broader remit, the Committee has detailed oversight of, and is invited to input
on, workforce remuneration policies and practices to help ensure these are underpinned by, and implemented to reinforce, a consistent
set of values and principles.
Consideration of shareholder views
The Committee considers shareholder views received during the year and at the Annual General Meeting each year, as well as guidance
from shareholder representative bodies more broadly, in shaping remuneration policy. The vast majority of shareholders continue to
express support for remuneration arrangements at Norcros. In developing the proposed policy set out in this report, we consulted with
shareholders representing a total of c.80% of our issued share capital, as well as shareholder representative bodies. We are pleased to
report that many investors who provided feedback indicated support for the proposed approach. The Committee keeps the remuneration
policy under regular review, to ensure it continues to reinforce the Group’s long-term strategy and aligns Executive Directors with
shareholders’ interests. We will continue to consult shareholders before making any signiicant changes to our remuneration policy.
Non-executive Director remuneration policy
Non-executive Directors (including the Board Chair) have letters of appointment which specify an initial term of at least three years,
although these contracts may be terminated at one month’s notice by either the Company or Director. In line with the UK Corporate
Governance Code guidelines, all Directors are subject to re-election annually at the AGM.
Details of terms and notice periods for Non-executive Directors are summarised below:
Non-executive Director
Date of
appointment Notice period
David McKeith July month
Alison Littley May month
Stefan Allanson January month
It is the policy of the Board of Directors that Non-executive Directors are not eligible to participate in any of the Group’s bonus, long-term
incentive or pension schemes. Details of the policy on fees paid to our Non-executive Directors are set out in the table below:
Component and objective Operation Opportunity
Performance
measures
Fees
To attract and retain
Non-executive Directors
of the highest calibre
with broad commercial
experience relevant
to the Group
The fee paid to the Chair is determined by the
Committee excluding the Chair. The fees paid to the
other Non-executive Directors are determined by the
Chair and the Executive Directors.
Fee levels are reviewed periodically, with any
adjustments effective 1 April. Fees are reviewed by
taking into account external advice on best practice
and fee levels at other FTSE companies of broadly
similar size and sector to Norcros. Time commitment
and responsibility are also taken into account when
reviewing fees.
Aggregate fees are limited to
£350,000 p.a. by the Group’s
Articles of Association.
Fee increases will be applied
taking into account the
outcome of the review.
The fees paid to Non-
executive Directors in
respect of the year under
review (and for the following
year) are disclosed in
the Annual Report on
Remuneration.
n/a
Approach to Non-executive Director recruitment remuneration
In recruiting a new Non-executive Director, the Remuneration Committee will use the policy as set out in the table above. A base fee in line
with the prevailing fee schedule would be payable for serving as a Director of the Board, with additional fees payable for acting as Chair
ofthe Audit and Risk or Remuneration Committees, or as a Senior Independent Director.
DIRECTORS’ REMUNERATION POLICY REPORT CONTINUED
Annual Report and Accounts Norcros plc
ANNUAL REPORT ON REMUNERATION
The following section provides details of how our 2020 policy was implemented during the year ended 31 March 2023 and how the
proposed 2023 policy will be implemented in the year ending 31 March 2024.
Remuneration Committee membership in the year ended 31 March 2023
The Remuneration Committee is responsible for recommending to the Board the remuneration policy for Executive Directors and
the members of the Group’s senior management, and for setting the remuneration packages for the Board Chair and each Executive
Director. The Committee’s responsibilities are set out in its Terms of Reference, which can be found on the Company’s website at
www.norcros.com.
During the year under review, the following Directors were members of the Remuneration Committee:
• Alison Littley (Committee Chair);
• David McKeith;
• Gary Kennedy (from appointment on 8 December 2021 to 13 February 2023); and
• Stefan Allanson (from 1 January 2023).
All members of the Committee are independent. They serve on the Committee for a minimum three-year term and a maximum of
nine years, provided the Director remains independent. As part of an effectiveness review for the entire Board, an evaluation of the
Remuneration Committee was undertaken in the year to 31 March 2023. We are pleased to report this review concluded that the
Committee continues to operate effectively.
In addition, the Chief Executive Oficer was invited to attend Committee meetings as appropriate to advise on speciic questions raised
by the Committee and on matters relating to the performance and remuneration of senior managers, other than in relation to his own
remuneration. The Group Counsel and Company Secretary acts as secretary to the Committee. No individual was present while decisions
were made regarding their own remuneration.
The Committee met seven times during the year. Attendance by individual members at meetings is detailed on page 86.
Main activities of the Committee during the year ended 31 March 2023
The main activities carried out by the Committee during the year under review were:
• reviewing and setting salary levels for Executive Directors and senior management;
• approving the remuneration terms for Nick Kelsall on his retirement as CEO;
• approving the remuneration package for Thomas Willcocks on his appointment as CEO (effective 1 April 2023);
• reviewing the Directors’ remuneration policy (ahead of this being put to a binding shareholder vote at the 2023 AGM);
• determining the annual bonus outcome for the year ended 31 March 2022;
• setting operating proit targets for the annual bonus for the year ended 31 March 2023;
• calibrating EPS targets for, and granting of, 2022 APSP awards;
• reviewing developments in remuneration governance;
• reviewing and setting the fees payable to the Non-executive Board Chair; and
• reviewing the pay policies and practices for the wider workforce.
Advisers
During the year under review, the Committee sought independent advice from Ellason LLP. Ellason is a member and signatory of the
Code of Conduct for Remuneration Consultants, details of which can be found at www.remunerationconsultantsgroup.com. In the year
to 31 March 2023, Ellason provided the following services:
Services provided
Fees
excl. VAT
Ellason Guidance on developments in remuneration governance and market trends and implications for
Norcros, remuneration benchmarking for annual review and new appointments, Remuneration Report
drafting support and general support to the Committee throughout the year on remuneration related
matters, including the review of the remuneration policy.
Ellason does not provide other services to the Company or its Directors and the Committee is satisied that the advice it receives is independent.
Corporate governance
Norcros plc Annual Report and Accounts
ANNUAL REPORT ON REMUNERATION CONTINUED
Summary of shareholder voting at the AGM
The following table shows the results of the advisory vote on the 2021 Annual Report onRemuneration at the 2021 AGM, and the binding
vote on the remuneration policy at the 2020 AGM:
Annual Report on Remuneration
AGM
Remuneration policy
AGM
Total number
of votes
of
votes cast
Total number
of votes
of
votes cast
For including discretionary
Against
Total votes cast excluding withheld votes
Votes withheld
Total votes including withheld votes
Single igure for total remuneration for Executive Directors (audited information)
The following table provides a single igure for total remuneration of the Executive Directors for the year to 31 March 2023, together with
comparative igures for the year to 31 March 2022. The values of each element of remuneration are based on the actual value delivered,
where known. The value of the annual bonus includes the element of bonus deferred under the Deferred Bonus Plan.
Nick Kelsall James Eyre
Base salary
Taxable beneits
Annual bonus
Share based payments
— —
Post-employment beneit
SAYE
— — — —
Total ixed
Total variable
Total
1 Base salaries for 2023 relect the amounts disclosed and explained in last year’s Directors’ Remuneration Report.
2 Taxable beneits consist of car allowance (Nick Kelsall – 2023: £15,000, 2022: £15,000; and James Eyre – 2023: £12,000, 2022: £8,000) and private medical insurance.
3 Annual bonus comprises both the cash annual bonus for performance during the year and, where applicable, the face value of the deferred bonus element on the date of deferral.
Any deferred share element is deferred for three years. See “Annual bonus in respect of performance in the year ended 31 March 2023” opposite for further details.
4 For 2023, the APSP value relects the estimated value of APSP awards granted in November 2020, of which 98.9% will vest to Nick Kelsall and James Eyre on 25 November 2023
(equivalent to 192,270 shares and 42,121 shares to Nick Kelsall and James Eyre respectively). James Eyre was not an Executive Director at the time the award was granted, as such
the shares awarded will not be subject to the usual two-year holding period. The reported values include the dividends expected to be accrued on these awards over the period
from grant to the expected vesting date (£54,604 and £11,962 respectively) and are estimated using the three-month average share price to 31 March 2023 of 201.1p. This will be
trued up to relect the vest-date value of awards in next year’s Annual Report on Remuneration. Of the values for the 2020 APSP reported in the table above, c.4% (equivalent to
£13,651 and £2,991 for Nick Kelsall and James Eyre respectively) results from share price growth above the grant price of 194p. For 2022, the APSP value of nil relects the value of
APSP awards granted in July 2019 and which lapsed in full on 25 July 2022.
5 In 2023, pension beneits comprised cash in lieu (Nick Kelsall – £63,070; and James Eyre – £23,200) and amounts related to the deined beneit scheme (Nick Kelsall – £40,560).
See“Total pension entitlements” on page 108 for further details. The pension beneit provided to Nick Kelsall and James Eyre in 2022 comprises cash in lieu (Nick Kelsall – £58,270;
andJames Eyre – £13,915) and amounts related to the deined beneit scheme (Nick Kelsall – £14,640). Nick Kelsall’s pension contribution was reduced voluntarily from 1January2023
to 8% of salary, to align with the contribution available to the wider UK workforce.
6 Embedded gain on grant of Save As You Earn Scheme grants made in the relevant year.
7 The 2022 igures shown for James Eyre relate to the period 1 August 2021–31 March 2022, i.e. from his appointment as CFO and a Board Director.
Annual Report and Accounts Norcros plc
Incentive outcomes for the year ended 31 March 2023 (audited information)
Annual bonus in respect of performance in the year ended 31 March 2023
The 2023 Annual Bonus Plan was based 100% on Group underlying operating proit performance for the year to 31 March 2023. The
maximum annual bonus opportunity for the year was 100% of base salary for the Chief Executive Oficer and for the Chief Financial
Oficer. Based on the Company’s performance in 2023, against the stretching targets set at the start of the year, the Committee approved
annual bonus payouts for the Executive Directors at 32.3% of maximum. Further details, including the proit targets set and actual
performance, are provided below:
Underlying
proit target
m
Payout
of max.
outturn
m
Bonus
of max.
Maximum
Target
Threshold
1 Target was set on a pre-IFRS 16 basis; therefore, the 2023 outturn has been assessed on a similar basis, i.e. underlying operating proit of £45.5m pre-IFRS 16 (reported £47.3m).
In keeping with good practice, the Committee reviewed the formulaic outcome of the annual bonus in the context of business
performance and the wider stakeholder experience. The Committee concluded that the formulaic outcome relected robust results
delivered in such challenging circumstances through exceptional leadership and the hard work of the Executive Directors and the wider
senior management team. The Committee also concluded that the outcomes relect the underlying performance of the Group more
generally, and the experience of other stakeholders. Accordingly, no discretion has been exercised in relation to the bonus outcome for
the 2023 inancial year.
2020 APSP awards vesting
Effective November 2020, APSP awards of 194,409 shares were granted to Nick Kelsall, and of 42,590 shares to James Eyre. Vesting
of these awards was based on Norcros’ diluted underlying EPS in the inancial year to 31 March 2023. Based on performance in the
year to 31March 2023, against the targets originally set, the Committee has determined that these awards will each vest at 98.9%
on 24November 2023, being the end of the relevant three-year vesting period according to the APSP rules. James Eyre was not an
Executive Director at the time the award was granted, as such the shares awarded to him will not be subject to the usual two-year holding
period.Performance targets and actual performance against these, as determined by the Committee, are summarised in the table below:
Diluted
underlying EPS vesting
Norcros’
performance
Award vesting
of APSP award
Threshold p
Maximum p p
Scheme interests awarded in 2023 (audited information)
2022 DBP
During the year under review, the following DBP awards were made to the Executive Directors (relating to the annual bonus earned for
performance over the year to 31 March 2022).
Nick Kelsall James Eyre
Basis of award of earned bonus of earned bonus
Grant date July July
Number of nil-cost options granted
Grant-date share price p
Grant-date face value
Normal vesting date July July
Performance conditions None None
Corporate governance
Norcros plc Annual Report and Accounts
ANNUAL REPORT ON REMUNERATION CONTINUED
Scheme interests awarded in 2023 (audited information) continued
2022 APSP
During the year under review, the following APSP awards were granted to the Executive Directors:
Nick Kelsall James Eyre
Basis of award of base salary of base salary
Grant date July July
Number of nil-cost options granted
Grant-date share price p
Grant-date face value
Normal vesting date July July
Performance period April – March April – March
Performance conditions Three-year aggregate underlying diluted EPS
to March
Threshold: p of element vesting
Maximum: p of element vesting
Straight-line vesting between these points
Holding period July – July July – July
2022 SAYE
In the year ended 31 March 2023, none of the Executive Directors entered into a savings contract for the 2022 SAYE scheme as they were
already contracted under previous SAYE grants at the HMRC limits.
Total pension entitlements (audited information)
As part of their remuneration arrangements, Nick Kelsall and James Eyre are entitled to receive pension contributions from the Company.
Under these arrangements, they can elect for those contributions to be paid in the form of taxable pension allowance, or direct payments
into a personal pension plan or the Group’s UK deined contribution scheme. If a payment is made in the form of taxable pension
allowance, the amount payable is not reduced to allow for employment taxes.
During the year Nick Kelsall elected to take a taxable pension allowance of £63,070 (2022: £58,270) with no amounts paid directly into
apension scheme (2022: £nil). James Eyre elected to take a taxable pension in the year of £23,200 (2022: £13,915) with no amounts paid
directly into a pension scheme (2022: £nil). In line with the Regulations, the single igure table relects the total of these amounts, as well
as the capitalised increase in accrued pension (net of inlation) under the UK deined beneit scheme, of which Nick Kelsall is a deferred
member. James Eyre is not a member of the UK deined beneit scheme. Details of Executive Directors’ retirement beneits under the
Group’s UK deined beneit scheme and taxable pension allowances are summarised in the following table:
Director
Accrued
pension
Accrued
pension
Increase in
accrued
pension
net of CPI
Applicable
period
years
Pension
value in the
year from
DB scheme
Pension value
in the year
from cash
allowance
Total
Nick Kelsall
James Eyre — — — — —
Single igure for total remuneration for Non-executive Directors (audited information)
The table below sets out a single igure for the total remuneration received by each Non-executive Director for the year ended 31 March
2023 and the prior year:
Total fee
Gary Kennedy
Alison Littley
David McKeith
Stefan Allanson
—
1 Gary Kennedy joined the Board on 8 December 2021. He was incapacitated due to ill health from 23 January 2023 and passed away on 13 February 2023.
2 David McKeith acted as Board Chair from 24 January 2023. During this period, Mr McKeith received the Board Chair fee on a pro-rata basis, and did not receive any additional
feefor chairing the Audit and Risk Committee, or in his capacity as Senior Independent Director (for which an additional fee of £3,000 p.a. was introduced from 1 April 2022).
3 Stefan Allanson was appointed on 1 January 2023.
Annual Report and Accounts Norcros plc
Payments made to the outgoing CEO in the year (audited information)
All payments to Nick Kelsall in connection to his tenure as CEO for the full year ended 31 March 2023 are included in the single igure table
above. Nick retired and stepped down from the Board on 31 March 2023, and the Committee has agreed to treat him as a “good leaver” in
respect of his outstanding DBP and APSP awards, in recognition of his long and valued service to the Group. In line with our remuneration
policy, DBP awards will continue to vest on the normal vesting date. APSP awards (which will be pro-rated to the date he ceases
employment with the Group, of 30 January 2024) will vest on the normal vesting date subject to the achievement of the performance
conditions attaching to each award. The applicable holding period will continue to apply. Nick remains subject to the post-employment
shareholding requirement, in line with our remuneration policy.
Payments to past Directors (audited information)
No payments to past Directors were made during the year under review.
External appointments in the year
No external appointments were held by the Executive Directors during the year.
Percentage change in Director remuneration
The table below shows the annual percentage change in remuneration from 2020 to 2023 for each individual who served as a Director
during the year ended 31 March 2023, compared with the percentage change in remuneration for all UK staff employed in continuing
operations. A UK subset of employees (who are employed by the UK operating subsidiary of Norcros plc) was selected as a suitable
comparator group for this analysis because the Directors (who are employed or engaged by Norcros plc) are based in the UK (albeit with
global roles and responsibilities) and pay changes across the Group vary widely depending on local market conditions (in particular
luctuations in the exchange rate between the South African Rand and British Pound). The comparison uses a per capita igure and
accordingly this relects an average across the Group’s businesses. No account is therefore taken of the impact of operational factors
such as new joiners and leavers and the mix of employees.
Salary or fees
Beneits Bonus
Executive Directors
Nick Kelsall n/a
James Eyre n/a n/a n/a n/a n/a n/a
Non-executive Directors
Alison Littley n/a n/a n/a n/a n/a n/a
David McKeith
n/a n/a n/a n/a n/a n/a
Stefan Allanson
n/a n/a n/a n/a n/a n/a n/a n/a n/a
Gary Kennedy
n/a n/a n/a n/a n/a n/a n/a n/a
Average of other employees n/a
1 Salary and fee igures are annualised for this comparison.
2 Year on year comparison relects the impact of Mr McKeith assuming the role of Board Chair from 15 April to 8 December 2021 and from 24 January 2023.
3 No year on year comparison is shown as Stefan Allanson joined the Board during the 2023 inancial year.
4 Gary Kennedy joined the Board on 4 December 2021 and was Chair until he passed away on 13 February 2023.
Relative importance of spend on pay
The table below shows shareholder distributions (i.e. dividends – there were no share buybacks in either year) and Norcros’ expenditure
on total employee pay for the year under review and the prior year, and the percentage change year on year.
m
m change
Dividends i.e. total payments made in year
Dividend per share i.e. total dividend per share in pence in respect of year p p
Total staff costs
1 Total staff costs include the staff costs of Grant Westield since the date of acquisition.
Corporate governance
Norcros plc Annual Report and Accounts
ANNUAL REPORT ON REMUNERATION CONTINUED
CEO pay ratio
The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (the Regulations) require certain
companies to disclose the ratio of the Chief Executive’s pay, using the amount set out in the single total igure table (shown in this report
on page 106), to that of the total remuneration of full-time equivalent UK employees at the 25th percentile, median and 75th percentile.
Therequired information is set out in the table below:
Year Method
th percentile
pay ratio
Median
pay ratio
th percentile
pay ratio
Option B
Option B
Option B
Option B
CEO pay
P pay
P pay
P pay
Total remuneration
Base salary
Total remuneration
Base salary
Total remuneration
Base salary
Total remuneration
Base salary
The 25th percentile, median and 75th percentile igures used to determine the above ratios were selected by reference to the hourly pay
igures for the Group’s UK workforce, taken from its gender pay gap statistics for the relevant year and from these identifying the three
employees who are at each percentile point. The full-time equivalent annualised remuneration (comprising salary, beneits, pension,
annual bonus and long-term incentives) for those employees for the year ended 31 March 2023 was then calculated. This methodology
is deined in the Regulations as Option B, which was chosen as the most appropriate methodology given the employee demographics of
the Group’s UK workforce. The trend year on year of pay ratios for each percentile is that the ratios have increased. This is explained by a
proportionately greater increase in the variable elements of the CEO’s remuneration, relative to the comparators and the resulting impact
of continued robust Group performance on incentive outcomes.
Performance graph and table
The following graph shows the ten-year TSR performance of the Company relative to the FTSE All-Share Construction & Materials Index.
This comparator was chosen because the Company is a constituent member of this index.
Total shareholder return
(Value of £100 invested on 31 March 2013)
Investment (£)
31 March
2013
350
300
250
200
150
100
50
0
31 March
2014
31 March
2015
31 March
2016
31 March
2017
31 March
2018
31 March
2019
31 March
2020
31 March
2021
31 March
2022
31 March
2023
Norcros
FTSE All-Share Index
Annual Report and Accounts Norcros plc
The table below details the Group Chief Executive’s single igure of remuneration over the same period:
CEO single igure of
remuneration
Incumbent Nick
Kelsall
Nick
Kelsall
Nick
Kelsall
Nick
Kelsall
Nick
Kelsall
Nick
Kelsall
Nick
Kelsall
Nick
Kelsall
Nick
Kelsall
Nick
Kelsall
Total remuneration
Annual bonus asa
of max. opportunity —
APSP vesting asa
of max. opportunity — —
Implementation of Executive Director remuneration policy for the year to 31 March 2024
The Remuneration Committee conducted a thorough review of Executive Directors’ remuneration, effective 1 April 2023. The results
ofthis review are as follows:
Base salary
Thomas Willcocks was appointed CEO effective 1 April 2023, and his salary set by the Committee at £420,000 from this date.
As disclosed in last year’s report, the Committee resolved to increase James Eyre’s base salary to £320,000 in two stages. The irst
of these stages, to £290,000, was implemented with effect from 1 April 2022. In determining to implement the second increase with
effect from 1 April 2023, the Committee took into account a range of factors, including James Eyre’s continued strong performance and
contribution to the Group – particularly his invaluable support to Nick Kelsall and Thomas Willcocks through the CEO transition – as well
as the inlationary environment (which was unforeseen at the time of agreeing the two-stage increase). In this context, the Committee
concluded that it was appropriate to implement the second increase as originally intended, noting that this salary level is now positioned
to be appropriately competitive for similar roles of comparable scope, scale and complexity.
Pension
Both Executive Directors receive a pension contribution, or allowance in lieu, of 8% of salary, in line with the employer contribution available
for the wider UK workforce.
Beneits
Other beneits consist of car allowance, aligned at £15,000 for all Executive Directors for the year ending 31 March 2024, and private
medical insurance.
Annual bonus
The annual bonus opportunity for Executive Directors will remain unchanged for the 2024 inancial year with a maximum bonus
opportunity of 100% of salary. The bonus outcome for Executive Directors will continue to be based entirely on Group underlying
operating proit. Of any bonus earned 50% will be deferred into nil-cost options for a further three years under the DBP. Annual bonus
targets will be disclosed in next year’s Annual Report on Remuneration, subject to these no longer being considered by the Board to be
commercially sensitive.
APSP
APSP awards will be made in the 2024 inancial year to the Executive Directors, with face values of 100% of salary. As explained at the start
of this Remuneration Report, vesting of these awards will be subject to the achievement of suitably stretching EPS targets in accordance
with the remuneration policy, and a discretionary assessment by the Committee of the quality of earnings over the performance period
by reference to the Group’s ROCE performance. To the extent an award vests, vested shares will be subject to a further two-year holding
period. The Committee will determine targets at the time awards are made and these targets (along with other relevant details of this
grant) will be disclosed in next year’s Annual Report on Remuneration.
SAYE
Thomas Willcocks and James Eyre will continue to be able to participate in any SAYE contract offered to all employees, on identical terms.
Implementation of Non-executive Director remuneration policy for the year to 31 March 2024
The Board Chair and the Executive Directors reviewed Non-executive Director fees and concluded that it was appropriate to increase
these, as set out below, to relect the growing time commitment of the role (and for similar reasons introduced an additional fee for
the role of Senior Independent Director from 1 April 2022). Accordingly, for the 2024 inancial year, Non-executive Director fees will be
as follows:
Non-executive Director
Fee at
April
Fee from
April
Percentage
increase
Board Chair determined by the Committee
Non-executive Director
Additional fee for acting as Senior Independent Director
Additional fee for chairing Audit and Risk or Remuneration Committees
Corporate governance
Norcros plc Annual Report and Accounts
ANNUAL REPORT ON REMUNERATION CONTINUED
Executive Director shareholdings (audited information)
The table below shows the shareholding of each Executive Director and their respective shareholding requirement as at 31 March 2023:
Options held
Shares owned
Vested but
not exercised
Unvested
and subject
to performance
Unvested but
not subject
to performance
Shareholding
guideline
of salary
current
holding
Requirement
met?
Nick Kelsall — Yes
James Eyre — Building
Current shareholding is based on shares owned outright and valued using the average share price over the twelve months ended
31March2023 of 209.6p.
Details of the options held are provided in the table below.
Directors’ share scheme interests (audited information)
Share options
Scheme
Date
of grant
Vested
date
Expiration
date
Exercise
price
Shares
under
option
April
Granted
in
Vested
in
Exercised
in
Lapsed
in
Shares
under
option
March
Nick Kelsall DBP — — — — —
— — — — —
— — — — —
Total — —
APSP — — — — —
— — — — —
— — — — —
— — — — —
Total — —
SAYE p — — — —
Total — — — —
James Eyre DBP — — — — —
— — — — —
APSP — — — — —
— — — — —
— — — — —
— — — — —
Total — —
SAYE p — — — —
Total — — — —
Three-year
aggregate
EPS targets March EPS
Three-year
aggregate
EPS targets
Three-year
aggregate
EPS targets
Performance vesting a w a r d
award award a w a r d
Threshold p p p p
Maximum p p p p
1 Based on outcome of inal year (year to 31 March 2023) threshold of 28.2p represents 0% vesting.
Shareholder dilution
The Group’s share incentive plans operate in line with the Investment Association’s Principles, which require that commitments under all-
share schemes satisied by newly issued shares must not exceed 10% of the issued share capital in any rolling ten-year period, of which up
to 5% may be used to satisfy options under executive share schemes. The Group’s position against the dilution limits at 31 March 2023 was
3.6% for the all-share schemes limit and 1.1% for executive schemes.
Annual Report and Accounts Norcros plc
Statement of Directors’ shareholding and share interests (audited information)
Director
March
Ordinary shares
March
Ordinary shares
Nick Kelsall
James Eyre
David McKeith
Alison Littley — —
Stefan Allanson — —
Gary Kennedy
1 Shareholding as at 13 February 2023.
This report was approved by the Board of Directors on 14 June 2023 and signed on its behalf by:
Alison Littley
Chair of the Remuneration Committee
14 June 2023
Corporate governance
Norcros plc Annual Report and Accounts
DIRECTORS’ REPORT
The Directors present their Annual Report and the audited
consolidated inancial statements for the year ended
31March 2023.
Accounting reference date
The Company has adopted an accounting period of 52 weeks,
and as a result of this, the exact year end date was 2 April 2023.
All references to the inancial year therefore relate to the 52 weeks
commencing on 4 April 2022. In the previous year the accounting
period was 52 weeks, beginning on 5 April 2021 and ending on
3April 2022.
Results and dividends
The information that fulils the requirements of the Business
Review, which is incorporated in the Directors’ Report by reference,
including the review of the Group’s business and future prospects,
is included in the Chair’s Statement, the Chief Executive Oficer’s
Statement and the Strategic Report on pages 3 to 80. Key
performance indicators are shown on page 22.
The Directors recommend a inal dividend for the year ended
31March 2023 of 6.8p (2022: 6.9p). This follows the decision to pay
an interim dividend earlier in the year of 3.4p (2022: 3.1p).
Directors’ and oficers’ liability insurance
andindemnities
The Company purchases liability insurance cover for its Directors
and oficers which gives appropriate cover for any legal action
brought against them. The Company also provides an indemnity
for its Directors (to the extent permitted by the law) in respect
of liabilities which could occur as a result of their ofice. This
indemnity does not provide cover should a Director be proven
tohave acted fraudulently or dishonestly.
Purchase of own shares
In 2007 the Company formed the Norcros Employee Beneit
Trust (the Trust). The purpose of the Trust is to meet part of the
Company’s liabilities under the Company’s share schemes. The
Trust acquired 87,381 shares during the year (2022: 69,101). At
the Company’s 2022 Annual General Meeting, the shareholders
authorised the Company to make market purchases of up to
8,915,290 ordinary shares. At the forthcoming Annual General
Meeting, shareholders will be asked to renew the authority to
purchase its own shares for another year. Details are contained in
the AGM Notice of Meeting which is available from the Company’s
website: www.norcros.com.
Employees/fostering business relations
Details of the Group’s engagement with, and policies towards,
its employees are contained on pages 52 and 53. Details of how
the Group fosters good business relations with its suppliers and
other business partners are contained on pages 78 to 80. All these
details form part of the Directors’ Report and are incorporated
intoitbycross-reference.
Directors
Biographical details of the present Directors are set out
on pages82 and 83 and on the Company’s website:
www.norcros.com. The Directors who served during the year
andto the date of this report are set out below:
Director Role
Gary Kennedy Chair until January
Non-executive Director
until February
David McKeith Non-executive Director
Acting Chair from January
Alison Littley Non-executive Director
Stefan Allanson Non-executive Director
appointed January
Nick Kelsall Chief Executive Oficer
until March
Thomas Willcocks Chief Executive Oficer
appointed April
James Eyre Chief Financial Oficer
The Company announced on 30 May 2023 that Steve Good will be
appointed as a Director on 1 July 2023. His biographical details are
set out on the Company’s website: www.norcros.com.
The interests of the Directors in the shares of the Company at
31March 2023 and 31 March 2022 are shown on page 113.
Annual Report and Accounts Norcros plc
Compliance with Listing Rules on diversity
In 2022, the UK Financial Conduct Authority introduced new Listing Rules relating to diversity (LR 9.8.6R(9) and (10), and LR14.3.33R(1)).
The Company’s position against these items is setout within this report below.
Listing Rule target
Company’s position
as at March Comment
At least of the board are women. Our aspiration is to achieve gender diversity, recognising that it
requires a careful and measured approach to accommodate Board
attrition, whilst maintaining the existing proile of desired skills
andexperience.
At least one of the senior board positions
Chair, Chief Executive Oficer CEO,
Senior Independent Director SID or
Chief Financial Oficer CFO is a woman.
positions meet
thistarget.
With effect from July , a woman Alison Littley will take on
therole of SID, which means that this target will be met. Going
forward,theintention is to take this target into consideration as part
ofsuccession planning.
At least one member of the board is from
a minority ethnic background which is
deined by reference to categories
recommended by the UK Ofice for
National Statistics ONS.
Board members
meet this target.
The Board continues to take ethnic diversity into account when
considering appointments, as per its Diversity Policy, whilst noting it
will continue to consider diversity of the Board and the Group as a
whole based on our global footprint and operations, in a way which is
best aligned with our growth agenda. Being an international company,
we naturally relect many different nationalities in the Board and senior
management. This is a valuable input to ensure different cultures are
represented within decision makers, warding against groupthink.
1 See comment on Alison Littley becoming a SID from 1 July 2023.
Table 1: Reporting table on sex/gender representation
Number of Board
members
Percentage of
the Board
Number of senior
positions on the Board
CEO, CFO, SID
and Chair
Number in
Executive Management
Percentage of
Executive Management
Men
Women — — —
Not speciied/prefer not to say n/a — — — —
Table 2: Reporting table on ethnicity representation
Number of Board
members
Percentage of
the Board
Number of senior
positions on the Board
CEO, CFO, SID
and Chair
Number in
Executive Management
Percentage of
Executive Management
White British or other White
including minority White groups
Mixed/multiple ethnic groups — — — — —
Asian/Asian British — — — — —
Black/African/Caribbean/Black British — — — — —
Other ethnic groups, including Arab — — — — —
Not speciied/prefer not to say — — — — —
Not speciied/prefer not to say — — — — —
Notes to the tables:
1 There will be a female SID from 1 July 2023.
2 Data collection of the Board undertaken as part of our regular year end data collection.
3 The Board were provided with the categories above and asked to advise how they identify.
4 The personal data has been collected once and it will be up to the individual to advise of any change.
Corporate governance
Norcros plc Annual Report and Accounts
Substantial shareholdings
As at 13 June 2023 the Company had received notiication that the
following were interested in voting rights representing 3% or more
of the Company’s issued share capital:
Name
of total
voting rights
J O Hambro Capital Management Ltd
FIL Ltd
Premier Miton Group
Canaccord Genuity Group Inc
Artemis Investment Management
SVM Asset Management
Allianz Global Investors GmbH
M&G plc
Gresham House Asset Management
Energy and greenhouse gas emissions reporting
The Board has included emissions data in the ESG section in
order to meet the Company’s obligation under The Companies
(Directors’ Report) and Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018 to disclose the Group’s worldwide
emissions of the “greenhouse gases” (GHGs) attributable to human
activity measured in tonnes of carbon dioxide equivalent.
We have reported on all of the emission sources, being Scope1,
Scope 2 and Scope 3 emissions. These are emissions from activities
for which the Group is responsible, emissions resulting from the
purchase of electricity, heat, steam or cooling by a business in
the Group for its own use and emissions from the activities from
assets not owned or controlled by the Group, but that the Group
indirectly affects in its value chain. Also reported are the igures
for aggregate energy consumed by the Group, expressed in
kWh. We use as our chosen intensity measure the ratio of total
emissions (measured in tonnes of CO
2
e) to the total revenue of the
Group (£441.0m). This ratio is chosen because it enables us on a
consistent basis year on year to compare energy use relative to the
overall level of business activity in revenue terms.
The Group recognises that its Scope 1 and 2 GHG emissions only
relect a proportion of our total carbon footprint across the value
chain. A more holistic approach to reducing our indirect impacts
will be required to deliver the scale of reductions demanded by the
climate science, and we keep the embodied carbon impacts of the
materials we use and of our logistics supply chain under review.
This has progressed in the year with the assessment of our value
chain (Scope 3) emissions.
We have used the GHG Protocol Corporate Accounting and
Reporting Standard (revised edition), data gathered to fulil our
requirements under the CRC Energy Eficiency scheme, and
emission factors from the UK Government’s GHG Conversion
Factors for Company Reporting 2018. We use the best information
available to us, such as invoice data or measured energy usage.
Where no more suitable data sources are available, we have used,
where practicable, estimates based on the appropriate information
that is available to the Group.
Political donations
There were no political donations (2022: £nil).
Research and development
The Group’s expenditure on research and development is
disclosed in note 3 to the inancial statements and is focused
onthe development of new products.
Corporate governance
Details of the Group’s corporate governance are contained on
pages 84 to 87. This Corporate Governance Report forms part of
theDirectors’ Report and is incorporated into it by cross-reference.
Going concern
Having taken into account the principal risks and uncertainties
facing the Group detailed on pages 40 to 44 in the Strategic
Report, the Board considers it appropriate to prepare the inancial
statements on the going concern basis, as explained in note 1
tothe inancial statements.
Financial risk management
The Group’s operations expose it to a variety of inancial risks.
Details of the risks faced by the Group are provided in note 21
tothe inancial statements.
Takeover directive
The Company has only one class of shares, being ordinary shares,
which have equal voting rights. The holdings of individual Directors
are disclosed on page 113.
There are no signiicant agreements to which the Company is a
party which take effect, alter or terminate in the event of a change
of control of the Company, except for the banking facilities dated
7March 2022 in respect of the £130.0m unsecured revolving
credit facility and the £70.0m accordion facility which contain
mandatory prepayment provisions on a change of control.
There are no provisions within Directors’ employment contracts
which allow for speciic termination payments upon a change
of control.
Statement of disclosure of information to auditor
In the case of each of the persons who are Directors, the
following applies:
(a) so far as the Director is aware, there is no relevant audit
information of which the Company’s auditor is unaware; and
(b) they have taken all the steps that they ought to have taken as
a Director in order to make themselves aware of any relevant
audit information and to establish that the Company’s auditor
is aware of that information.
Independent auditor
A resolution to re-appoint BDO LLP as auditor to the Company will
be proposed at the Annual General Meeting.
Annual General Meeting
The Annual General Meeting of the Company will take place at
11.00am on 26 July 2023 at Addleshaw Goddard LLP, One Peter’s
Square, Manchester M2 3DE. The notice convening that meeting,
together with the resolutions to be proposed, are available on request
from the Company (info@norcros.com) or from the Company’s website
(www.norcros.com/investor-centre/shareholder-services/agm).
The Directors recommend that all shareholders vote in favour of
all of the resolutions to be proposed, as the Directors intend to do
so in respect of their own shares, and consider that they are in the
best interests of the Company and the shareholders as a whole.
By order of the Board
Richard Collins
Company Secretary
14 June 2023
DIRECTORS’ REPORT CONTINUED
Annual Report and Accounts Norcros plc
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
In respect of the Annual Report, the Directors’
Remuneration Report and the inancial statements
The Directors are responsible for preparing the Annual Report, the
Directors’ Remuneration Report and the inancial statements in
accordance with UK adopted international accounting standards
and applicable law and regulation.
Company law requires the Directors to prepare inancial
statements for each inancial year. Under that law the Directors
are required to prepare the Group inancial statements in
accordance with UK adopted international accounting standards
and have elected to prepare the Company inancial statements in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable
law). Under company law the Directors must not approve the
inancial statements unless they are satisied that they give a true
and fair view of the state of affairs of the Group and Company and
of the proit or loss of the Group for that period. In preparing the
inancial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable international accounting standards
have been followed for the Group inancial statements and
United Kingdom Accounting Standards, comprising FRS 101,
have been followed for the Company inancial statements,
subject to any material departures disclosed and explained in
the inancial statements;
• make judgements and accounting estimates that are reasonable
and prudent;
• prepare the inancial statements on the going concern basis
unless it is inappropriate to presume that the Group and
Company will continue in business; and
• prepare a Directors’ Report, a Strategic Report and a Directors’
Remuneration Report which comply with the requirements of
the Companies Act 2006.
The Directors are responsible for keeping adequate accounting
records that are suficient to show and explain the Group and
Company’s transactions and disclose with reasonable accuracy
at any time the inancial position of the Group and Company
and enable them to ensure that the inancial statements and the
Directors’ Remuneration Report comply with the Companies Act
2006 and, as regards the Group inancial statements, Article 4
ofthe IAS Regulation.
They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities. The Directors are
responsible for ensuring that the Annual Report and Accounts,
taken as a whole, are fair, balanced and understandable and
provides the information necessary for shareholders to assess the
Group’s position and performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the Annual Report
and the inancial statements are made available on a website.
Financial statements are published on the Company’s website
in accordance with legislation in the United Kingdom governing
the preparation and dissemination of inancial statements, which
may vary from legislation in other jurisdictions. The maintenance
and integrity of the Company’s website is the responsibility of the
Directors. The Directors’ responsibility also extends to the ongoing
integrity of the inancial statements contained therein.
Directors’ responsibilities pursuant to DTR 4
The Directors conirm to the best of their knowledge:
• the inancial statements have been prepared in accordance with
the applicable set of accounting standards, give a true and fair
view of the assets, liabilities, inancial position and proit and loss
of the Group; and
• the Annual Report includes a fair review of the development and
performance of the business and the inancial position of the
Group and Company, together with a description of the principal
risks and uncertainties that they face.
Thomas Willcocks James Eyre
Chief Executive Oficer Chief Financial Oficer
14 June 2023
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it can still deliver on function.
FINANCIAL
STATEMENTS
Independent auditor’s report
Consolidated income statement
Consolidated statement
ofcomprehensiveincome
Consolidated balance sheet
Consolidated cash low statement
Consolidated statement of
changes inequity
Notes to the Group accounts
Parent Company balance sheet
Parent Company statement
ofchangesinequity
Notes to the Parent
Companyaccounts
Norcros plc Annual Report and Accounts
Annual Report and Accounts Norcros plc
INDEPENDENT AUDITOR’S REPORT
to the members of Norcros plc
Opinion on the inancial statements
In our opinion:
• the inancial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2023 and
of the Group’s proit for the year then ended;
• the Group inancial statements have been properly prepared in accordance with UK adopted international accounting standards;
• the Parent Company inancial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
• the inancial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the inancial statements of Norcros plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended
31 March 2023 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the
consolidated and parent company balance sheets, the consolidated cash low statement, the consolidated and parent company
statements of changes in equity and notes to the inancial statements, including a summary of signiicant accounting policies.
The inancial reporting framework that has been applied in the preparation of the Group inancial statements is applicable law and UK
adopted international accounting standards. The inancial reporting framework that has been applied in the preparation of the Parent
Company inancial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101
Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the inancial statements section of our report.
We believe that the audit evidence we have obtained is suficient and appropriate to provide a basis for our opinion. Our audit opinion is
consistent with the additional report to the Audit and Risk Committee.
Independence
Following the recommendation of the Audit and Risk Committee, we were appointed by the Directors on 30 July 2020 to audit the
inancial statements for the year ended 31 March 2021 and subsequent inancial periods. The period of total uninterrupted engagement
including retenders and reappointments is three years, covering the years ended 31 March 2021 to 31 March 2023. We remain independent of
the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the inancial statements
in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulilled our other ethical responsibilities
in accordance with these requirements. The non-audit services prohibited by that standard were not provided to the Group or the
Parent Company.
Conclusions relating to going concern
In auditing the inancial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the inancial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent Company’s
ability to continue to adopt the going concern basis of accounting included:
• We obtained management’s assessment that supports the Directors’ conclusions with respect to the disclosures provided around
going concern;
• We challenged the rationale for the assumptions utilised in the forecasts, using our knowledge of the business, the sector and wider
commentary available from competitors and peers;
• We considered the appropriateness of management’s forecasts by testing their mechanical accuracy, assessing historical forecasting
accuracy and understanding management’s consideration of downside sensitivity analysis;
• We obtained an understanding of the inancing facilities from the inance agreements, including the nature of the facilities, covenants
and attached conditions;
• We assessed the facility and covenant headroom calculations, and reperformed sensitivities on management’s base case and stressed
case scenarios; and
• We reviewed the wording of the going concern disclosures, and assessed its consistency with the directors’ assessment of going
concern, including underlying management forecasts.
Based on the work we have performed, we have not identiied any material uncertainties relating to events or conditions that, individually
or collectively, may cast signiicant doubt on the Group and the Parent Company’s ability to continue as a going concern for a period of at
least twelve months from when the inancial statements are authorised for issue.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the Directors’ statement in the inancial statements about whether the Directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of
this report.
Financial statements
Norcros plc Annual Report and Accounts
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Norcros plc
Overview
Coverage
: of Group proit before tax
: of Group revenue
: of Group total assets
Key audit matters
Pension Scheme Liability Assumptions
Acquisition accounting
Materiality
Group inancial statements as a whole
m : m based on : of Proit before tax adjusted for certain non-underlying items,
including acquisition costs and exceptional items.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal
control, and assessing the risks of material misstatement in the inancial statements. We also addressed the risk of management
override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of
material misstatement.
Our Group audit scope focused on the Group’s principal operating locations, being those in the UK, Ireland and South Africa. In the UK
and Ireland, Norcros operates under eight separate divisions: Triton, Merlyn, Vado, Johnson Tiles, Grant Westield, Croydex, Abode and
Norcros Adhesives. In South Africa there are four divisions: Johnson Tiles South Africa, TAL, House of Plumbing and Tile Africa.
Consistent with the group’s operations, we scoped our audit at a divisional level. In the UK, full scope audits were performed by the
Group engagement team on the signiicant components, Triton, Vado and the Parent Company and speciic procedures on Johnson
Tiles. The Grant Westield full scope audit was performed by a component auditor from another BDO LLP ofice in Scotland.
The four South African divisions together with the Merlyn division, whose inance team is based in Ireland, were considered to be
signiicant components and were subject to full scope audits by BDO member irms in South Africa and Ireland respectively.
The remaining components of the Group were considered non-signiicant and these components were principally subject to analytical
review procedures by the Group engagement team.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of involvement needed in order to be able to conclude
whether suficient appropriate audit evidence has been obtained as a basis for our opinion on the Group inancial statements as a
whole. Our involvement with component auditors included the following:
The Responsible Individual and senior members of the Group audit team were involved at all stages of the audit process, directing the
planning and risk assessment work.
Detailed Group instructions were sent to the component auditors, which included the principal areas to be covered by the audits,
materiality levels, signiicant risks, fraud risks and other signiicant auditing and accounting matters, and further set out the information
to be reported to the Group audit team.
The Group engagement team attended planning calls with the South Africa, Ireland and Scotland teams where the scope of their work
was discussed, as well as attending planning calls with divisional management. The Group engagement team reviewed the audit working
papers of the component auditors and attended completion meetings, including attending in person at Merlyn and Grant Westield with
BDO Ireland and BDO LLP in Scotland, and the respective divisional management teams following completion of the work.
Climate change
Our work on the assessment of potential impacts on climate-related risks on the Group’s operations and inancial statements included:
• Enquiries and challenge of management to understand the actions they have taken to identify climate-related risks and their potential
impacts on the inancial statements and adequately disclose climate-related risks within the annual report;
• Our own qualitative risk assessment taking into consideration the sector in which the Group operates and how climate change affects
this particular sector; and
• Review of the minutes of Board and Audit and Risk Committee meetings and other papers related to climate change and performed a
risk assessment as to how the impact of the Group’s commitment as set out in the Strategic Report may affect the inancial statements
and our audit.
We challenged the extent to which climate-related considerations, including the expected cash lows from the initiatives and
commitments have been relected, where appropriate, in management’s going concern assessment and viability assessment.
We also assessed the consistency of management’s disclosures included as Statutory Other Information on pages 46 to 77 within
theinancial statements and with our knowledge obtained from the audit.
Based on our risk assessment procedures, we did not identify there to be any Key Audit Matters materially impacted by climate-related
risks and related commitments.
Annual Report and Accounts Norcros plc
An overview of the scope of our audit continued
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most signiicance in our audit of the inancial
statements of the current period and include the most signiicant assessed risks of material misstatement (whether or not due to fraud)
that we identiied, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit,
and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the inancial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How the scope of our audit addressed the key audit matter
Pension Scheme
Liability
Assumptions
Refer to Note
1 - summary
of signiicant
accounting policies,
key sources
of estimation
uncertainty and
critical judgements
in applying the
group’s accounting
policies and also to
Note 24 Retirement
beneit obligations.
The group has a deined beneit pension plan with
a net scheme asset of £14.9m (2022: £19.6m).
We consider there to be a signiicant risk
concerning the appropriateness of the actuarial
assumptions applied in calculating the group’s
deined beneit pension scheme liability of
£285.0m (2022: £368.3m) as shown in Note 24.
The valuation of the group’s pension scheme
liability was performed by management’s external
actuary and involves signiicant judgement from
the directors and the actuary in the choice of
discount rate used and in the key sources of
estimation uncertainty, in particular in relation to
the inlation assumptions and mortality rates, as
described in the group’s accounting policies.
We obtained the report from management’s actuary used in
valuing the scheme’s liabilities, from which we assessed the
appropriateness of the assumptions underpinning the valuation
of the scheme liabilities.
Speciically, we challenged the discount rate, inlation and
mortality assumptions applied in the calculation by using our
auditor engaged pension experts to assist us to benchmark the
assumptions applied against comparable third-party data and
assessed the appropriateness of the assumptions in the context
of the group’s own position.
Key observations:
Based on our audit work, we considered the assumptions
used in the calculation of the pension liability were within an
acceptable range.
Acquisition
accounting
Refer to Note
1 – summary
of signiicant
accounting
policies, and
Note 31 Business
combinations.
During the year, the Group acquired 100% of
Granit Holdings Limited and subsidiaries (Grant
Westield).
This acquisition was material to the Financial
Statements and there are complexities in the
accounting for business combinations including
identifying the fair value of the consideration
for the acquisition and the net assets acquired.
Furthermore, the Group was required to identify
and value any separable intangible assets
acquired as part of the transaction.
As part of this exercise, management identiied
an acquired separable intangible asset that has
been valued at £35.5m within these Financial
Statements, which involved the use of a number
of estimates.
We obtained assurance over the acquisition through:
• obtaining the sale and purchase agreement and reviewing
the key terms to check that these have been accounted for
correctly;
• inspecting the results of the due diligence exercise performed
by management’s third party experts and comparing these to
the adjustments posted in the opening balance sheet;
• reviewing the details of the acquisition to identify which separable
intangible assets were acquired as part of the transaction;
• assessing the key judgements and fair value adjustments
relating to intangibles, contingent consideration and
provisions to check they were reasonable and in line with the
relevant accounting standards with support from our internal
valuationspecialists;
• using our internal valuation experts to assist us to review the
valuation of the brand and customer relationships which were
separately valued by considering the accuracy of the model
and estimates such as the WACC used within the valuation; and
• reviewing the disclosure included in note 31 to the Financial
Statements to check that this accurately relects the
transaction and that the disclosure is compliant with the
relevant accounting standards.
Key observations:
Based on the audit procedures performed, we consider
the judgements and estimates made in accounting for the
acquisition, and the related disclosure within the Financial
Statements to be appropriate.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We
consider materiality to be the magnitude by which misstatements, including omissions, could inluence the economic decisions of
reasonable users that are taken on the basis of the inancial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily
be evaluated as immaterial as we also take account of the nature of identiied misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the inancial statements as a whole.
Financial statements
Norcros plc Annual Report and Accounts
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Norcros plc
Our application of materiality continued
Based on our professional judgement, we determined materiality for the inancial statements as a whole and performance materiality
as follows:
Group inancial statements Parent company for Group reporting purposes
m
m
m
m
Materiality 1.60 1.60 0.48 0.48
Basis for
determining
materiality
5% of Proit before tax
adjusted for certain non-
underlying items, including
acquisition costs and
exceptional items.
5% of Proit before tax
adjusted for certain non-
underlying items, including
acquisition costs and
exceptional items.
Set based on 30% of
Group materiality.
Set based on 30% of
Group materiality.
Rationale for the
benchmark applied
We considered that using
this basis for determining
materiality was most
appropriate based on
the underlying trading
performance of the Group,
eliminating non-recurring
items and in the interests
of the users of the inancial
statements.
We considered that using
this basis for determining
materiality was most
appropriate based on
the underlying trading
performance of the Group,
eliminating non-recurring
items and in the interests
of the users of the inancial
statements.
Calculated as a
percentage of Group
materiality for Group
reporting purposes,
taking account of the
aggregation risk.
Calculated as a
percentage of Group
materiality for Group
reporting purposes,
taking account of the
aggregation risk.
Performance
materiality
of materiality of materiality of materiality of materiality
Basis for
determining
performance
materiality
70%, based on our
knowledge of the
aggregation risk, the
control environment
and historic
misstatement levels.
70%, based on our
knowledge of the
aggregation risk, the
control environment
and historic
misstatement levels.
70%, based on our
knowledge of the
aggregation risk, the
control environment
and historic
misstatement levels.
70%, based on our
knowledge of the
aggregation risk, the
control environment
and historic
misstatement levels.
Parent Company statutory materiality
We set materiality for the statutory audit of the Parent Company at £3.74m (2022: £3.58m) which represents 3% of Net Assets. Net assets
was determined as the most appropriate measure on which to base materiality for the statutory audit of the Parent Company inancial
statements as the principal activity of the company is that of a holding company. We further applied performance materiality levels of 70%
of the statutory materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.
Component materiality
For the purposes of our Group audit opinion, we set materiality for each signiicant component of the Group, apart from the Parent
Company whose materiality is set out above, based on a percentage of between 30% and 50% (2022: 30% and 48%) of Group materiality
dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged
from £0.48m to £0.80m (2022: £0.48m to £0.77m). In the audit of each component, we further applied performance materiality levels
of 70% (2022: 70%) of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit and Risk Committee that we would report to them all individual audit differences in excess of £48,000
(2022:£48,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in the Annual Report
and Accounts 2023 other than the inancial statements and our auditor’s report thereon. Our opinion on the inancial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the inancial statements or our knowledge obtained in the course of the audit, or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the inancial statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Annual Report and Accounts Norcros plc
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the parent company’s compliance with the provisions of the UK Corporate Governance
Code speciied for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the inancial statements or our knowledge obtained during the audit.
Going concern
and longer-term
viability
• The Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting
and any material uncertainties identiied set out on page 116; and
• The Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers and
why the period is appropriate set out on page 45
Other Code
provisions
• Directors’ statement on fair, balanced and understandable set out on page 89;
• Board’s conirmation that it has carried out a robust assessment of the emerging and principal risks set out
on page 40;
• The section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on page 87; and
• The section describing the work of the Audit and Risk Committee set out on page 90
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies
Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic Report
and Directors’
Report
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the inancial year for which the inancial
statements are prepared is consistent with the inancial statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in
the course of the audit, we have not identiied material misstatements in the Strategic report or the Directors’ report.
Directors’
remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
Matters on which
we are required
to report by
exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us
to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the Parent Company inancial statements and the part of the Directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration speciied by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the preparation of the inancial
statements and for being satisied that they give a true and fair view, and for such internal control as the Directors determine is necessary
to enable the preparation of inancial statements that are free from material misstatement, whether due to fraud or error.
In preparing the inancial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative
but to do so.
Auditor’s responsibilities for the audit of the inancial statements
Our objectives are to obtain reasonable assurance about whether the inancial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to inluence the economic decisions of users taken on the basis of these inancial statements.
Financial statements
Norcros plc Annual Report and Accounts
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Norcros plc
Auditor’s responsibilities for the audit of the inancial statements continued
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below:
Based on our understanding and accumulated knowledge of the Group and the sectors in which it operates we considered the risk of acts
by the Group which were contrary to applicable laws and regulations, including fraud and whether such actions or non-compliance might
have a material effect on the inancial statements. These included but were not limited to those that relate to the form and content of the
inancial statements, such as international accounting standards, the UK Companies Act 2006, the Listing Rules and the UK Corporate
Governance Code; and industry related such as compliance with health and safety legislation, employment law and taxation legislation.
We communicated relevant laws and regulations to all team members, including component audit teams, to ensure they were aware of
any relevant regulations in relation to their work.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the inancial statements (including the risk
of override of controls), and determined that the principal risks were related to posting inappropriate journal entries, revenue being
recognised in the correct period around the year end and management bias in accounting estimates.
Our audit procedures included, but were not limited to:
• Obtaining an understanding of the control environment in monitoring compliance with laws and regulations;
• Discussions with management, the Audit and Risk Committee, the Directors and internal and external legal counsel concerning
consideration of known or suspected instances of litigation, non-compliance with laws and regulation and fraud;
• Use of forensic specialists to assist with the risk assessment at the planning stage and to help design appropriate audit procedures;
• Reviewing minutes of Board meetings throughout the period to corroborate our enquiries and to identify any other matters not already
disclosed by management and the Directors;
• Challenging assumptions and judgements made by management in their signiicant accounting estimates, in particular in relation to
the Group’s deined beneit pension scheme liabilities (see key audit matter above) and customer rebates, incentives and promotional
support accruals;
• Testing a sample of revenue transactions around the year end to supporting documentation (including invoice and proof of delivery) for
all signiicant components to assess if the revenue had been recorded in the correct period;
• Identifying and agreeing journal entries to supporting documentation, in particular any journal entries posted with unusual account
combinations or including speciic keywords;
• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement
due to fraud; and
• Agreeing the inancial statement disclosures to underlying supporting documentation.
We also communicated relevant identiied laws and regulations and potential fraud risks to all engagement team members including
component engagement teams who were all deemed to have appropriate competence and capabilities and remained alert to any
indications of fraud or non-compliance with laws and regulations throughout the audit. For component engagement teams, we also
reviewed the result of their work performed in this regard.
Our audit procedures were designed to respond to risks of material misstatement in the inancial statements, recognising that the risk of
not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit
procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions relected
in the inancial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
Gary Harding (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Manchester, UK
14 June 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Annual Report and Accounts 2023 Norcros plc 125
CONSOLIDATED INCOME STATEMENT
Year ended 31 March 2023
Notes
2023
£m
2022
£m
Continuing operations
Revenue 2 4 41 .0 3 9 6.3
Underlying operating profit 4 7. 3 4 1. 8
IAS 19R administrative expenses 24 () ()
Acquisition related costs 5 (8.4 ) (4.8 )
Exceptional operating items 5 (9. 8 ) 0.9
Operating profit 2 7. 5 36.2
Finance costs 6 (6.4 ) (2 .8 )
IAS 19R finance credit/(cost) 24 ()
Profit before taxation 21.7 3 3.0
Taxation 7 (4.9 ) ( 7. 3 )
Profit for the year attributable to equity holders of the Company 16. 8 2 5 .7
Earnings per share attributable to equity holders of the Company
Basic earnings per share:
From profit for the year 9 1 9 .1 p 3 1. 8 p
Diluted earnings per share:
From profit for the year 9 18 .8 p 3 1. 2 p
Weighted average number of shares for basic earnings per share (m) 9 8 8 .1 8 0.9
Alternative performance measures
Underlying profit before taxation (£m) 8 41. 8 3 9.3
Underlying earnings (£m) 8 33.5 3 1. 5
Basic underlying earnings per share 9 38 .0 p 3 8.9 p
Diluted underlying earnings per share 9 3 7. 4 p 3 8. 2 p
Financial statements
Norcros plc Annual Report and Accounts 2023126
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 March 2023
Notes
2023
£m
2022
£m
Profit for the year 16. 8 2 5 .7
Other comprehensive income and expense:
Items that will not subsequently be reclassified to the Income Statement
Actuarial (losses)/gains on retirement benefit obligations 24 (5.6 ) 2 7. 5
Items that may be subsequently reclassified to the Income Statement
Cash flow hedges – fair value (loss)/gain in year 21 (2.9 ) 3.0
Foreign currency translation of foreign operations (8.3 ) 3.6
Other comprehensive (expense)/income for the year (16 . 8 ) 3 4 .1
Total comprehensive result for the year attributable to equity holders of the Company — 5 9.8
Items in this statement are disclosed net of tax.
Annual Report and Accounts 2023 Norcros plc 127
CONSOLIDATED BALANCE SHEET
At 31 March 2023
Notes
2023
£m
2022
£m
Non-current assets
Goodwill 11 1 0 7. 9 6 1. 2
Intangible assets 12 59. 2 2 9 .1
Property, plant and equipment 13 24.8 2 9.0
Pension scheme asset 24 14 . 9 19.6
Right of use assets 14 20.0 19. 9
Current assets
Inventories 15 10 3 .9 10 0.6
Trade and other receivables 16 83.3 7 1 .1
Derivative financial instruments 21 — 1. 6
Cash and cash equivalents 17 2 9.0 2 7. 4
Current liabilities
Trade and other payables 18 (9 9. 2 ) (10 2 . 4 )
Lease liabilities 19 (6 .1 ) (5 .7 )
Current tax liabilities (0.9 ) (2 .7 )
Derivative financial instruments 21 (2 .0 ) —
Provisions 23 (4. 5 ) —
(112.7 ) (11 0 . 8 )
Net current assets 10 3 .5 8 9.9
Total assets less current liabilities 33 0.3 2 4 8 .7
Non-current liabilities
Financial liabilities – borrowings 20 (78 .9 ) (18. 8 )
Lease liabilities 19 (18 .6 ) (18 . 3 )
Deferred tax liabilities 22 (15. 0 ) (9.4 )
Other non-current liabilities 26 (6.2 ) (0.3 )
Provisions 23 (1. 2 ) (1. 6 )
(11 9 . 9 ) (4 8.4 )
Net assets 210. 4 2 0 0.3
Financed by:
Share capital 25 8.9 8 .1
Share premium 4 7. 6 3 0.3
Retained earnings and other reserves 15 3 . 9 16 1. 9
Total equity 210. 4 2 0 0.3
The financial statements of Norcros plc, registered number 3691883, on pages 125 to 159, were authorised for issue on 14 June 2023
andsigned on behalf of the Board by:
Thomas Willcocks James Eyre
Chief Executive Officer Chief Financial Officer
Financial statements
Norcros plc Annual Report and Accounts 2023128
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 March 2023
Notes
2023
£m
2022
£m
Cash generated from operations 27 3 7. 7 23.6
Income taxes paid (7. 7 ) (6.5 )
Interest paid (5.5 ) (2.5 )
Net cash generated from operating activities 24.5 14 .6
Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets (6.0 ) (5.4 )
Acquisition of subsidiary undertakings net of cash acquired 31 (78.3 ) —
Net cash used in investing activities (8 4.3 ) (5.4 )
Cash flows from financing activities
Proceeds from issue of ordinary share capital 25 1 8 .1 0 .1
Principal element of lease payments (4.6 ) (4 .7 )
Drawdown of borrowings 114 . 0 25.0
Repayment of borrowings (5 4.0 ) (23.0 )
Dividends paid to the Company’s shareholders 28 (9.2 ) (9 .1 )
Net cash generated from/(used in) financing activities 64.3 (11. 7 )
Net increase/(decrease) in cash and cash equivalents 4.5 (2.5 )
Cash and cash equivalents at the beginning of the year 2 7. 4 2 8.3
Exchange movements on cash and cash equivalents (2.9 ) 1. 6
Cash and cash equivalents at the end of the year 29. 0 2 7. 4
Annual Report and Accounts 2023 Norcros plc 129
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 March 2023
Ordinary
share
capital
£m
Share
premium
£m
Treasury
reserve
£m
Hedging
reserve
£m
Translation
reserve
£m
Retained
earnings
£m
Total
equity
£m
At 1 April 2021 8 .1 3 0. 2 (0 .1 ) (1. 5 ) (16.4 ) 1 2 8 .1 14 8 . 4
Comprehensive income:
Profit for the year — — — — — 2 5 .7 2 5 .7
Other comprehensive income:
Actuarial gain on retirement
benefit obligations — — — — — 2 7. 5 2 7. 5
Fair value gain on cash flow hedges — — — 3.0 — — 3.0
Foreign currency translation
adjustments — — — — 3.6 — 3.6
Total other comprehensive
income for the year — — — 3.0 3.6 2 7. 5 3 4 .1
Transactions with owners:
Shares issued — 0 .1 — — — — 0 .1
Dividends paid — — — — — ( 9 .1 ) (9 .1 )
Value of employee services — — — — — 1 .1 1 .1
At 31 March 2022 8 .1 3 0.3 (0 .1 ) 1. 5 (12 . 8 ) 17 3 . 3 2 0 0.3
Comprehensive income:
Profit for the year — — — — — 16 .8 16. 8
Other comprehensive expense:
Actuarial loss on retirement
benefit obligations — — — — — (5.6 ) (5.6 )
Fair value loss on cash flow hedges — — — (2.9 ) — —
(2 .9 )
Foreign currency translation
adjustments — — — — (8.3 ) — (8.3 )
Total other comprehensive
expense for the year — — — (2.9 ) (8.3 ) (5.6 ) (16 .8 )
Transactions with owners:
Shares issued 0.8 1 7. 3 — — — — 1 8 .1
Dividends paid — — — — — (9. 2 ) (9. 2 )
Value of employee services — — — — — 1. 2 1. 2
At 31 March 2023 8.9 4 7. 6 (0 .1 ) (1. 4 ) (2 1 .1 ) 176 . 5 210 .4
Financial statements
Norcros plc Annual Report and Accounts
Annual Report and Accounts Norcros plc
Financial statements
Norcros plc Annual Report and Accounts
NOTES TO THE GROUP ACCOUNTS CONTINUED
Year ended 31 March 2023
Annual Report and Accounts Norcros plc
Financial statements
NOTES TO THE GROUP ACCOUNTS CONTINUED
Year ended 31 March 2023
Annual Report and Accounts Norcros plc
Financial statements
Norcros plc Annual Report and Accounts
NOTES TO THE GROUP ACCOUNTS CONTINUED
Year ended 31 March 2023
Annual Report and Accounts Norcros plc
Financial statements
Norcros plc Annual Report and Accounts
NOTES TO THE GROUP ACCOUNTS CONTINUED
Year ended 31 March 2023
Annual Report and Accounts Norcros plc
Financial statements
Norcros plc Annual Report and Accounts
NOTES TO THE GROUP ACCOUNTS CONTINUED
Year ended 31 March 2023
7. Taxation continued
Annual Report and Accounts Norcros plc
8. Alternative performance measures continued
Financial statements
Norcros plc Annual Report and Accounts
NOTES TO THE GROUP ACCOUNTS CONTINUED
Year ended 31 March 2023
8. Alternative performance measures continued
Annual Report and Accounts Norcros plc
Financial statements
Norcros plc Annual Report and Accounts
NOTES TO THE GROUP ACCOUNTS CONTINUED
Year ended 31 March 2023
Annual Report and Accounts Norcros plc
Financial statements
Norcros plc Annual Report and Accounts
NOTES TO THE GROUP ACCOUNTS CONTINUED
Year ended 31 March 2023
Annual Report and Accounts Norcros plc
Financial statements
Norcros plc Annual Report and Accounts
NOTES TO THE GROUP ACCOUNTS CONTINUED
Year ended 31 March 2023
Annual Report and Accounts Norcros plc
Financial statements
Norcros plc Annual Report and Accounts
NOTES TO THE GROUP ACCOUNTS CONTINUED
Year ended 31 March 2023
20. Financial liabilities – borrowings continued
Annual Report and Accounts Norcros plc
Financial statements
Norcros plc Annual Report and Accounts
NOTES TO THE GROUP ACCOUNTS CONTINUED
Year ended 31 March 2023
21. Financial instruments continued
Annual Report and Accounts Norcros plc
Financial statements
Norcros plc Annual Report and Accounts
NOTES TO THE GROUP ACCOUNTS CONTINUED
Year ended 31 March 2023
24. Retirement benefit obligations continued
(a) Pension costs continued
Risks continued
Annual Report and Accounts Norcros plc
24. Retirement benefit obligations continued
(b) IAS 19R, ‘Employee benefits’ continued
Norcros Security Plan continued
Financial statements
Norcros plc Annual Report and Accounts
NOTES TO THE GROUP ACCOUNTS CONTINUED
Year ended 31 March 2023
Annual Report and Accounts Norcros plc
Financial statements
Norcros plc Annual Report and Accounts
NOTES TO THE GROUP ACCOUNTS CONTINUED
Year ended 31 March 2023
Annual Report and Accounts Norcros plc
31. Business combinations continued
Financial statements
Norcros plc Annual Report and Accounts
PARENT COMPANY BALANCE SHEET
At 31 March 2023
Notes
m
m
Non-current assets
Investments
Other receivables —
Deferred tax assets
Current liabilities
Trade and other payables
Net current liabilities
Total assets less current liabilities
Non-current liabilities
Financial liabilities – borrowings
Net assets
Financed by:
Share capital
Share premium account
Treasury reserve
Retained earnings before loss for the inancial year
Loss for the inancial year
Total shareholders’ funds
The inancial statements of Norcros plc, registered number 3691883, on pages 160 to 166 were authorised for issue on 14 June 2023
andsigned on behalf of the Board by:
Thomas Willcocks James Eyre
Chief Executive Oficer Chief Financial Oficer
Annual Report and Accounts Norcros plc
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 31 March 2023
Ordinary
share
capital
m
Share
premium
m
Treasury
reserve
m
Retained
earnings
m
Total
equity
m
At April
Comprehensive expense:
Loss for the year — — —
Total comprehensive expense for the year — — —
Transactions with owners:
Shares issued — — —
Dividends paid — — —
Equity-settled share options — — — — —
Value of employee services — — —
At March
Comprehensive expense:
Loss for the year — — —
Total comprehensive expense for the year — — —
Transactions with owners:
Shares issued — —
Dividends paid — — —
Equity-settled share options — — — — —
Value of employee services — — —
At March
Financial statements
Norcros plc Annual Report and Accounts
NOTES TO THE PARENT COMPANY ACCOUNTS
Year ended 31 March 2023
1. Statement of accounting policies
General information
Norcros plc (the Company) is the ultimate holding company of the Norcros Group, which designs, manufactures and distributes a range
ofhigh quality and innovative bathroom and kitchen products mainly in the UK and South Africa.
The Company is incorporated in the UK as a public company limited by shares and registered in England and Wales. The shares of the
Company are listed on the London Stock Exchange market of listed securities. The address of its registered ofice is Ladyield House,
Station Road, Wilmslow SK9 1BU, UK.
Accounting reference date
UK company law permits a company to draw up inancial statements to a date seven days either side of its accounting reference date.
Foroperational reasons the Company has in the current inancial year adopted an accounting period of 52 weeks, and as a result of this,
the exact year-end date was 2 April 2023. All references to the inancial year therefore relate to the 52 weeks commencing on 4 April 2022.
In the previous year the accounting period was 52 weeks long, beginning on 5 April 2021 and ending on 3 April 2022.
Basis of preparation
Norcros plc is a qualifying entity able to apply FRS 101, ‘Reduced disclosure framework’. The separate inancial statements of the Company
have been prepared in accordance with FRS 101, on the going concern basis and under the historical cost convention modiied for fair
values, and in accordance with the Companies Act 2006 and with applicable accounting standards.
These inancial statements and accompanying notes have been prepared in accordance with the reduced disclosure framework for all
periods presented. A separate proit and loss account dealing with the results of the Company has not been presented as permitted by
Section 408(3) of the Companies Act 2006.
The following exemptions from the requirements of IFRS have been applied in the preparation of these inancial statements, in
accordance with FRS 101:
• the following paragraphs of IAS 1, ‘Presentation of inancial statements’:
• 10(d) (statement of cash lows);
• 16 (statement of compliance with all IFRS);
• 111 (cash low statement information); and
• 134–136 (capital management disclosures);
• IFRS 7, ‘Financial instruments: disclosures’;
• IAS 7, ‘Statement of cash lows’;
• IAS 8, ‘Accounting policies, changes in accounting estimates and errors’ – impact of future accounting standards;
• IAS 24 (paragraph 17), ‘Related party disclosures’ – key management compensation; and
• IAS 24, ‘Related party disclosures’ – the requirement to disclose related party transactions between two or more members of a group.
As the Group inancial statements include the equivalent disclosures, the Company has taken the exemptions available under FRS 101
inrespect of the following disclosures:
• IFRS 2, ‘Share-based payments’, in respect of Group equity-settled share-based payments; and
• certain disclosures required by IFRS 13, ‘Fair value measurement’, and disclosures required by IFRS 7, ‘Financial instruments: disclosures’.
Critical estimates and judgements
The Directors believe that there are no critical accounting estimates or judgements relating to these inancial statements.
A summary of the more important accounting policies, which have been applied consistently, is set out opposite.
Annual Report and Accounts Norcros plc
1. Statement of accounting policies continued
Investments in subsidiaries
Investments held as ixed assets are stated at cost, less any provision for impairment. The Directors believe the carrying value of
investments is supported by their underlying assets and cash low projections derived from detailed budgets and forecasts. Dividends
received from investments are recognised on receipt of the dividend.
Foreign currency transactions
Monetary assets and liabilities expressed in foreign currencies are translated into Sterling at rates applicable at the year end. Exchange
gains and losses are dealt with in arriving at operating proit.
Taxation
Deferred taxation has been recognised as a liability or asset if transactions have occurred at the Balance Sheet date that give rise to an
obligation to pay more taxation in the future or a right to pay less taxation in the future. An asset is recognised only when the transfer of
economic beneits is more likely than not to occur.
Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the inancial statements in the period in which the
dividends are approved by the Company’s shareholders or when paid if earlier.
Financial assets and liabilities
Borrowings – the Company measures all borrowings initially at fair value. This is taken to be the fair value of the consideration received.
Transaction costs (any such costs that are incremental and directly attributable to the issue of the inancial instrument) are included in the
calculation of the effective interest rate and are, in effect, amortised through the Income Statement over the duration of the borrowing.
Borrowings are classiied as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least
twelve months after the Balance Sheet date.
Share-based payments
The Company operates a number of equity-settled, share-based compensation plans. The fair value of the employee services received
in exchange for the grant of options is recognised as an expense. The total amount to be expensed over the vesting period is determined
by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions. Non-market vesting
conditions are included in assumptions about the number of options that are expected to vest. At each Balance Sheet date, the Company
revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates,
ifany, in the Income Statement, with a corresponding adjustment to equity.
2. Other information
Auditor’s remuneration of £3,000 (2022: £3,000) and staff costs relating to two employees (2022: two) are borne by one of the
Company’s subsidiaries, without recharge.
Further information about the Directors’ remuneration may be found in the Annual Report on Remuneration on pages 105 to 113.
3. Investments
Shares in
subsidiaries
m
At April and March
Details of the subsidiaries owned by the Company, held both directly and indirectly, are shown in note 11.
4. Other receivables
m
m
Amounts owed by Group undertakings —
Amounts owed by Group undertakings are owed entirely by Norcros Group (Holdings) Limited. This intercompany receivable arose in
theyear due to the Company drawdown on bank facilities and subsequent loan to Norcros Group (Holdings) Limited. This drawdown was
performed to facilitate the acquisition of Grant Westield in the year.
Financial statements
Norcros plc Annual Report and Accounts
5. Deferred tax assets
Deferred tax is calculated in full on temporary differences under the liability method. The movement on the deferred tax account is as
shown below:
m
m
Deferred tax asset
The analysis of the deferred tax asset is as follows:
m
m
Other timing differences
m
m
To be recovered after more than twelve months — —
To be recovered within twelve months
The full potential asset for deferred tax is as follows:
m
m
Other timing differences
Tax losses
No deferred tax has been recognised in the inancial statements in respect of the tax losses as the Company does not believe that
utilisation of these losses is probable.
6. Trade and other payables
m
m
Accruals
Amounts owed to Group undertakings —
NOTES TO THE PARENT COMPANY ACCOUNTS CONTINUED
Year ended 31 March 2023
Annual Report and Accounts Norcros plc
7. Financial liabilities – borrowings
m
m
Loans
Costs of raising inance
Repayable after more than one year:
– between one and two years — —
– between two and ive years
– costs of raising inance
The amount of committed banking facility remains at £130m (plus a £70m uncommitted accordion). The Group exercised the irst of its
two one-year extension options in the year, extending the maturity date to October 2026.
The Group has been in compliance with all banking covenants during the year.
8. Called up share capital
m
m
Issued and fully paid
: : ordinary shares of p each
During the period 8,088,700 ordinary shares were issued as an equity placing ahead of the Grant Westield acquisition resulting in a share
premium of £17.2m. 133,078 10p ordinary shares were also issued in order to satisfy vesting of options under the Company’s Approved
Performance Share Plan, Deferred Bonus Plan and SAYE schemes resulting in share premium of £0.1m.
9. Dividends
A inal dividend in respect of the year ended 31 March 2022 of £6.2m (6.9p per 10p ordinary share) was paid on 29 July 2022 and an
interim dividend of £3.0m (3.4p per 10p ordinary share) was paid on 10 January 2023. A inal dividend in respect of the year ended
31March 2023 of £6.1m (6.8p per 10p ordinary share) is to be proposed at the Annual General Meeting on 26 July 2023. These inancial
statements do not relect this dividend.
10. Related party transactions
The Company considers its two employees to be its key management personnel. Compensation for these employees, who have the sole
responsibility for planning, directing and controlling the Company are set out in the Remuneration Report on pages 105 to 113. Employee
remuneration is settled on behalf of the entity by Norcros Group (Holdings) Limited.
11. Contingent liabilities
The Company is party to an omnibus set-off agreement between Lloyds Bank plc and the Group’s UK subsidiaries.
Financial statements
Norcros plc Annual Report and Accounts
12. Subsidiaries
The subsidiaries included in the inancial statements are disclosed below. All companies are 100% owned by the Group.
Held directly by Norcros plc
Company
Country of
incorporation
or registration Registered address
Norcros Group Holdings Limited England Ladyield House, Station Road, Wilmslow SKBU, United Kingdom
Held indirectly by Norcros plc
Company
Country of
incorporation
or registration Registered address
Abode Home Products Ltd England Ladyield House, Station Road, Wilmslow SKBU, United Kingdom
Bathshoponline Ltd England As above
Carlton Holdings Ltd England As above
Crittall Construction Ltd England As above
Croydex Group Ltd England As above
Croydex Ltd England As above
Eurobath International Ltd England As above
H & R Johnson Overseas Ltd England As above
H & R Johnson Tiles Ltd England As above
Lincolnshire Properties Norfolk Street Ltd England As above
Merlyn Industries UK Ltd England As above
Metlex Industries Ltd England As above
Norcros Trustees Ltd England As above
Norcros Adhesives Ltd England As above
Norcros Developments Ltd England As above
Norcros Estates Ltd England As above
Norcros Group Trusteeships Ltd England As above
Norcros Industry International Ltd England As above
Norcros Securities Ltd England As above
Norcros Services Ltd England As above
Plumbex UK Ltd England As above
Samuel Booth and Company Ltd England As above
Stonechester Stoke Ltd England As above
Taps Direct Ltd England As above
Triton Industry Ltd England As above
Triton plc England As above
UBM Pension Trust Ltd England As above
Vado UK Ltd England As above
Grant Westield Ltd Scotland Westield Avenue, Edinburgh, Scotland
Granit Holdings Ltd Scotland As above
Ocean Interiors GMBH Germany Vogt , Aachen, Germany
Ocean Interiors BV Netherlands WTC Heerlen Aachen, Vogt , RK Heerlen, Netherlands
Cronors Insurance Ltd Guernsey Dorey Court, Admiral Park, St. Peter Port GYHT, Guernsey
Merlyn Industries Ltd Ireland Merlyn House, Purcellsinch Industrial Estate, Dublin Road, Kilkenny, Ireland
Christa Pty Ltd Namibia rd Floor, Independence Avenue, Windhoek, Namibia
Tile Africa Windhoek Property Pty Ltd Namibia van Zyl Street, Suiderhof, Windhoek, Namibia
Ceracon Pty Ltd South Africa Porcelain Road, Olifantsfontein , South Africa
General Adhesives Pty Ltd South Africa As above
Johnson Tiles Pty Ltd South Africa As above
Lesatsi Trading Pty Ltd South Africa As above
Norcros SA Pty Ltd South Africa As above
TAL Pty Ltd South Africa As above
Talcor Properties Pty Ltd South Africa As above
Tile Adhesives Pty Ltd South Africa As above
Tile Africa Group Pty Ltd South Africa As above
Triton SA Pty Ltd South Africa As above
RAP Plumbing Supplies Pty Ltd South Africa As above
Norcros Middle East Building
Materials Trading LLC
UAE Warehouse No. , St. No. , Umm Ramool, Marrakesh Road,
P.O. Box , Dubai, UAE
NOTES TO THE PARENT COMPANY ACCOUNTS CONTINUED
Year ended 31 March 2023
Norcros plc’s commitment to environmental issues is relected in this Annual
Report, which has been printed on Heaven 42 Matt, an FSC
®
certiied material.
This document was printed by Park Communications using its environmental
print technology, which minimises the impact of printing on the environment,
with 99% of dry waste diverted from landill. Both the printer and the paper mill
are registered to ISO 14001.
Norcros plc
Ladyield House
Station Road
Wilmslow
Cheshire SK9 1BU
www.norcros.com
Norcros plc Annual Report and Accounts 2023