Norcros Regulatory News (NXR)

Norcros plc

("Norcros" or the "Group")

Results for the year ended 31 March 2011

Norcros, the home consumer products group with operations primarily in the UK and South Africa, announces its preliminary results for the year ended 31 March 2011.

Financial Summary

* Adjusted for the current period covering 53 weeks compared to 52 weeks last year

** Operating profit before exceptional items and other operating income

*** Profit/earnings before exceptional items, non-cash finance costs and share of results from associates

Highlights

·; Group revenue on a constant currency like for like number of weeks basis increased by 8.3%

·; Group trading profits of £11.7m (2010: £7.3m) were 60.3% ahead of the prior year

·; Investment in products and processes has driven increased revenue and market share gains

·; Decisive management actions resulted in a return to profitability in South Africa

·; The Board is recommending a final dividend of 0.24p per share in addition to the interim dividend of 0.12p per share

John Brown, Chairman, commented

"Against a backdrop of markets which were in decline, Norcros has delivered strong profit growth. We achieved this through investment in new products and a focused sales approach which have enabled us to win new accounts and increase market share. At the same time, tough decisions and actions were taken by management to control costs and improve operating efficiencies.

Whilst we anticipate only slow economic recovery in the UK and South Africa over the next year, we have built a robust platform to grow further in our key markets. We therefore look forward to the future with confidence."

23 June 2011

There will be a presentation today at 9.30 am to analysts at the offices of College Hill, The Registry, Royal Mint Court, London, EC3M 4QN. The supporting slides will be available on the company's website at http://www.norcros.com later in the day.

ENQUIRIES

For further information please visit the Company website: www.norcros.com

Chairman's statement

I am pleased to report a strong set of results for the year ended 31 March 2011, ahead of market expectations, with encouraging progress made across all our businesses.

Strategic investment in our businesses has enabled us to make significant market share gains in both the UK and South Africa against an economic environment which continues to be challenging.

Performance in our UK businesses was strong with new product introductions and targeted sales and marketing initiatives driving market share gains. In South Africa, decisive management actions to improve operational efficiencies and to invest in sales and marketing initiatives have resulted in a return to profitability.

Results

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

Group revenue increased by 15.6% to £196.1m (2010: £169.6m). Group revenue on a constant currency like for like number of weeks basis was 8.3% higher, reflecting the relative strength of the South African Rand and the Australian Dollar to Sterling.

Group trading profits of £11.7m (2010: £7.3m) were 60.3% ahead of the prior year. The Group reports exceptional charges for the year of £1.1m (2010: £8.2m), with property provisions relating to onerous leases being largely offset by gains on the disposal of a 25% stake in Beaumont Tiles in Australia and a past service pension credit.

Group benchmark profit before taxation* was £10.2m (2010: £3.4m) as a result of the Group's significantly improved trading performance and reduced finance costs. Profit before tax was £7.5m (2010: loss of £10.0m).

Basic earnings per share as reported was 1.2p (2010: losses of 3.4p) and basic benchmark earnings per share was 1.6p (2010: 1.2p).

Net cash generated from operations in the period was £10.8m (2010: £10.6m) with the impact of increased revenues on working capital largely counterbalancing the trading improvement. Capital expenditure at £6.3m (2010: £3.9m) included new product development at Triton, additional capacity in UK Tiles, further expansion of the UK Adhesive manufacturing facility and further manufacturing plant and store investment in South Africa.

Net debt (before prepaid finance costs) at 31 March 2011 reduced to £12.4m (2010: £18.9m) and leverage measured as net debt/EBITDA was 0.7 times with all banking covenants met.

The UK defined benefit pension scheme valuation calculated under IAS 19 resulted in a reduced deficit of £7.0m (2010: £9.3m). This reflected higher market asset values and the benefit of the move to using CPI rather than RPI for increases in deferred pensions, partially offset by an increase in liabilities due to a decline in the applicable discount rate.

Dividend

As a result of the strong financial position and encouraging trading performance of the Group, and in line with our stated intention to restore a progressive dividend policy, the Board is recommending a final dividend of 0.24p per share in addition to the interim dividend of 0.12p per share which was paid on 7 January 2011. The dividend, if approved at the Annual General Meeting, will be payable on 2 August 2011 to shareholders on the register on 1 July 2011. The shares will be quoted ex-dividend on 29 June 2011.

Post balance sheet event

On 31 May 2011 an agreement was reached with CIP Property (AIPT) Limited, Digica Group Finance Limited and Computacenter (UK) Limited for Norcros to exit its lease obligations at Springwood Drive, Braintree, Essex six years early. The Group has made a total cash payment including costs of £7.8m and anticipates making an annualised cash saving of £3.3m.

Board changes

Nick Kelsall took over as Group Chief Executive on 1 April 2011, succeeding Joe Matthews. Joe remains an Executive Director of the Group until his retirement in July 2011. The Board would like to thank Joe for his long and very substantial contribution to the Group.

The Board undertook an extensive search for a new Group Finance Director and on 18 March 2011 appointed Martin Payne. Martin has most recently held senior financial positions at JCB, the construction equipment manufacturer, and IMI plc, the FTSE 100 engineer. Earlier in his career he spent six years as finance director of H&R Johnson Tiles Limited, a subsidiary of Norcros.

Employees

This strong set of results could not have been achieved without the talent, hard work, and commitment of all our employees. On behalf of the Board I would like to thank everyone in the Group for their continuing support.

Summary and outlook

As has been widely reported, consumer and business confidence in the UK and South Africa is weak and expected to remain so for some time, although some general economic recovery is forecast. Despite this economic environment, our businesses are performing well with management committed to a "self-help strategy", focusing on market share gain and improving operational efficiencies, particularly in South Africa. We believe that the investment undertaken both in capital projects and new product development will continue to give the Group forward impetus.

The strength of our product and service proposition has more than offset the weak market environment resulting in Group revenues, on a constant currency basis, for the first nine weeks of the current financial year being in line with market expectations. The strength of our market positions, the good progress already made and the shape of our balance sheet put us in a good position to make further progress in 2011/12.

J. E. Brown

Chairman

23 June 2011

Business review

Trading performance

United Kingdom

Our market leading products, stringent cost controls and strong brand reputation have enabled us to remain highly competitive and to make market share gains in continuing tough market conditions. Turnover was up 11.0% to £114.0m (2010: £102.7m) or 9.0% on a like for like number of weeks basis. Higher revenues and increased gross margins in all of our UK businesses allowed us to invest significantly in new product development, sales and marketing resource and new capacity. These investments account for the flat trading profit achieved this year of £11.6m (2010: £11.6m). We are now very well placed to take advantage of opportunities, in terms of growing sales, winning new customers and continuing to take market share from our competitors.

Triton Showers

Triton, the UK market's leading domestic shower business, has delivered another year of strong profits and cash generation. In a weak market, it succeeded in generating net sales growth of 4.7% on a like for like number of weeks basis, with UK revenues accounting for all of this growth. Ireland is a significant export market for Triton and flat revenues in this market is significant, coming as it does after three consecutive years of decline arising from the particularly difficult economic conditions.

In the UK revenue growth came from all parts of the business. We strengthened our position during the year, driven by our strong brand, high quality products at affordable prices and emphasis on customer service. We are now a significant supplier to all the major DIY and home shopping retailers and continue to be a leading player in the trade sector. Our decision to focus on ease and speed of fit for installers, and on ongoing technical support, including the increasing use of social media applications, is beginning to show rewards. This year we once again launched a number of new shower products, each one carefully tailored towards a specific marketplace or customer profile.

Gross margins have improved despite cost pressures particularly in copper and plastics. These pricing pressures have been offset by a relentless focus on cost control within the business, both in terms of delivering enhanced product features at lower cost and in driving operational efficiencies. Whilst increased investment in new product and marketing programmes has held back trading profit growth, it has made the business stronger and better placed to further increase profitability and market share.

Johnson Tiles

Johnson Tiles is a leading ceramic tile manufacturer in the UK and a market leader in the supply of both own manufactured and imported tiles to a diverse range of UK channels such as consumer, housebuilder, and both public and private sector specifications. Johnson Tiles is also the leading UK exporter of tiles.

Revenue in Johnson Tiles grew this year by 12.4% on a like for like number of weeks basis. UK revenues increased 16.7% on a like for like number of weeks basis, a performance made all the more impressive by having been achieved in a declining market. This exceptional performance has been driven by focusing on the core values of designing and developing high quality products, delivering excellent customer service and backing this up with strong customer relationships.

Export revenues, however, declined 10.1% on a like for like number of weeks basis primarily reflecting supply issues into the Middle East which arose as a result of disruption in service from of a number of our European suppliers. This performance was partly offset by a strong performance in North America.

During the year we invested further in "inkjet printing technology" which enables us to produce high quality designs which replicate the texture, shades, colour and characteristics of natural materials such as granite, limestone, slate, stone and marble. These designs have been extremely well received in our target markets. We now have the capacity to inkjet print two thirds of our output and have appointed a Creative Director to further drive the development and improve the design of our product offering. Our private sector specification clients have benefited from a recent refurbishment of our Material Lab design studio. Material Lab continues to be the venue of choice for architects and interior designers based in Central London. To support these investments we have further upgraded product and marketing support materials, especially for the Absolute product portfolio which is targeted at the contract market.

As a result of our strong new products and market leading positions, as well as the demise of a number of UK and European competitors, we are seeing a significant growth in demand for our UK manufactured products. In order to take advantage of this we have invested £2.4m in a new kiln in our factory in Stoke-on-Trent. This kiln will increase our UK capacity by some 35%, supporting both existing and future volume growth. The kiln was fully commissioned in March 2011 and is expected to achieve required output rates by June 2011.

Whilst we expect that market conditions will continue to be difficult, we believe that we have built an excellent platform for profitable growth in Johnson Tiles.

Norcros Adhesives

Norcros Adhesives makes adhesive products for ceramic tile fixing, as well as associated products for floor tile fixing.

We achieved a significant increase in sales, up 31% versus last year on a like for like number of weeks basis, despite challenging market conditions. This was achieved by allocating additional resources to drive marketing and sales, which resulted in the addition of several important accounts to our retained client portfolio.

The installation of a £1m, fully automated plant for the manufacture of ready-mix adhesive products in our production facility in Stoke-on-Trent was completed in February 2011. This investment means that in-house manufactured products now account for over 90% of sales, improving market competitiveness.

Trading profit was maintained in line with last year despite increased investment in capacity, new products and additional sales resource. These investments mean that the business is now well placed to take advantage of further growth opportunities and to benefit from economies of scale.

South Africa

Our South African business raised productivity and its business performance as a result of operational improvements implemented in the second half of last year by the new management team. Despite weak markets and global cost pressures, our South African business returned to profitability in the year.

Revenues grew 22.7% to £72.4m (2010: £59.0m), or 7.6% on a constant currency like for like number of weeks basis, with all three divisions contributing positively to this growth. Margins also rose in all three divisions as a result of a greater focus on operational efficiency, improved procurement procedures, better product formulations and a more profitable sales mix. Particularly pleasing was the strong revenue growth from independent customers both locally and in sub-Saharan Africa.

Trading profits of £0.2m were reported against a £3.7m loss last year. This is a significant turnaround and an important step in restoring acceptable profit margins.

Tile Africa

Tile Africa grew revenue 5.8% on a constant currency like for like number of weeks basis. This was driven by improved product offering, marketing and brand penetration.

Higher margins and cost savings relating in part to the store closures in the previous year contributed to a significant improvement in trading performance. We believe that this progress can be sustained as we continue to focus on the key areas of product development, marketing and strong customer service.

Tile Africa continued to upgrade its existing store portfolio to the "Lifestyle" interior design concept as part of our drive to bring consistency to our offering, and improve the customer experience. Four more stores were successfully upgraded to the Lifestyle specification in the year and we intend to upgrade a further four stores in the current year, bringing the number of Lifestyle formats to 27 out of a total of 31 stores by 2012. We closed one underperforming store in the year and intend to open one new store in the current year.

We currently have four franchise stores and will use this format to drive our growth into Africa and smaller outlying regions of South Africa. We aim to open two new franchise stores in South Africa and new franchise stores in Botswana and Swaziland in the current year.

Good progress has been made in our product offering, with improved products being introduced to our stores in the first half of this year. Early results suggest that these products are being well received and will continue to drive our organic sales growth in the year ahead. Tile Africa continues to grow its marketing representation and made further progress in the past year as we grew our exposure, particularly on national television.

Despite the non-residential segment remaining under significant pressure, our contracts division delivered another strong performance by improving our offering and broadening our customer base.

TAL Adhesives

TAL, our adhesives division, delivered another strong performance in a very competitive market on the back of good procurement savings, improved product formulations, new product launches and an expanded customer base. Revenue grew 9.2% on a constant currency like for like number of weeks basis. This growth in sales, together with improved margins saw trading profit increase significantly.

The key drivers of this strong performance were the strengthening of our rapid set offering and new business won in both South Africa and exports. Excellent progress was made in securing new independent business in the year and the introduction of a dedicated export team earlier in the year helped export sales grow 59% in the second half.

Our building products division delivered moderate growth from a low base and we are on track to launch a new and expanded product offering in the second half of this year which should improve TAL's position in this market.

Our industrial adhesives division delivered steady growth despite strong competitive pressure from importers of finished goods as the Rand strengthened. Margins came under pressure as a result of both this and worldwide shortages of key raw materials. We are currently engaged in re-branding this division as we continue in our drive to create a sustainable business unit able to compete in the industrial adhesive market.

Our intention is to continue to increase TAL's market share as a result of accelerated introduction of new products and targeted entry into local retail segments as well further expansion into neighbouring countries.

Johnson Tiles South Africa

Management actions taken during the year to improve operational efficiencies in Johnson Tiles South Africa saw trading losses halve. Revenues grew by 18.2% in the independent sector (customers outside Tile Africa) on a constant currency like for like number of weeks basis. This growth has been driven by product launches into key accounts, widening our base of smaller independent retailers and growing our export revenues, the latter growing 29.2% in the second half of the year.

We have recently engaged specialist consultants to assist in accelerating our manufacturing improvement programme. In addition we are currently installing new buffer equipment to further improve plant efficiency and flexibility. Investment in inkjet printing technology is also planned later this financial year with the dual objective of enhancing the quality of our product design and driving further operational efficiencies. At the same time we have been gradually strengthening our senior manufacturing management team.

The expected improvements in manufacturing are pivotal to supporting the progress already being made by our new sales team in growing our customer base and sales as we drive Johnson Tiles South Africa back to profitability.

Rest of World

Australia

Johnson Tiles Australia achieved revenue growth of 5.6% on a constant currency like for like number of weeks basis and a significantly reduced trading loss of £0.1m compared to a loss of £0.6m last year.

Consumer confidence in the second half was somewhat weaker due to uncertainty about federal Government policies. However, we benefited during the year from the Government stimulus package which helped drive market demand for tiles.

In October 2010, the existing senior management team was replaced and a systematic review of the business undertaken. From this review decisions were taken to make significant improvements to our product offer with the objective of growing market share. We are also evaluating the option of relocating the business to an alternative site in order to realise the underutilised value of the current facility.

This, together with the planned enhancements to the product range and a more focused sales strategy, should ensure a further improvement in trading performance and asset utilisation.

Greece

Our investment in and our loan to Philkeram Johnson, our 50% owned Greek tile and adhesive associate, was fully impaired in previous years' accounts.

The performance of both businesses has been significantly impacted by the downturn in activity levels and the economy generally, culminating in the cessation of tile manufacture in December 2010. Our local partner has been in protracted discussions with the local banking group to restructure the business and ultimately realise the development value of the current freehold site. Regrettably, it has proved impossible to reach agreement with all the members of the banking group and at the time of going to print the business is set to file for bankruptcy. There would be no financial consequences to Norcros.

Summary

In a year when our markets have declined our businesses have delivered encouraging results with growth in revenue and earnings. Market share gains have been achieved in all major businesses due to our market leading products, strong brands, tight cost control measures and, particularly in South Africa, improved operational efficiency. This has been made possible by our commitment to investing through the recession in new product design and development, sales and marketing resource, operational improvements and capacity. Together with a robust balance sheet and the quality of our people, we are confident that the business is in a strong shape to capitalise on the opportunities and drive further market share gains and earnings growth.

Financial review

Revenue

Group revenues increased on a reported basis by 15.6% or by £26.5m to £196.1m (2010: £169.6m). The underlying increase on a constant currency like for like number of weeks basis was 8.3%, principally reflecting the translation impact of the stronger South African Rand and Australian Dollar against Sterling between the two periods. The Group recorded increases in revenue in its UK businesses of 9.0% on a like for like number of weeks basis and increases on a constant currency like for like number of weeks basis in both its South African and Australian operations of 7.6% and 5.6% respectively.

Trading profit

Trading profit, as reported, increased by 60.3% to £11.7m (2010: £7.3m) and on a constant currency basis by 69.6% (2010 restated to constant currency: £6.9m). Our UK businesses continued their strong performance with trading profits of £11.6m for the second year running despite the continuing tough market conditions. Our South African business made a trading profit of £0.2m compared to a loss of £3.7m last year. This substantial turnaround reflects the significant reduction in losses at both our retail and tile manufacturing operations combined with increased profits at TAL, our adhesive operation. In Australia losses have fallen from £0.6m in the prior year to £0.1m this year. Overall trading profit margins increased from 4.3% to 6.0%.

Exceptional items and operating profit

Exceptional items of £1.1m have been charged in the year. The major items comprise a £2.7m gain following the sale of our 25% interest in R.J. Beaumont & Co Pty Limited and £0.4m of gains following minor changes to the UK defined benefit pension scheme, offset by a £4.2m increase in the provision for UK onerous leasehold properties.

Operating profit was £10.6m (2010: loss of £0.8m).

Finance costs

Finance costs decreased to £3.4m from £5.9m in 2010 reflecting a full year's effect of the lower debt and interest costs following the capital raising in December 2009.

Finance income of £0.2m was lower than the £0.6m reported in 2010 as interest receivable on the loan to our Greek associate has not been recognised this year following the impairment of the loan in 2010.

Other finance income of £0.1m (2010: costs of £1.1m) relate to our UK defined benefit pension scheme. The small credit this year reflects the year on year movements in the pension scheme assets, liabilities and discount rates.

Profit before tax

Benchmark profit before tax was £10.2m (2010: £3.4m) reflecting the increased trading profit and reduced finance costs noted above.

The Group reported a profit before tax of £7.5m (2010: loss of £10.0m).

Taxation

A taxation charge of £0.8m has arisen for 2011 (2010: £nil). The charge is principally driven by the year on year reduction in finance costs.

Earnings per share

Benchmark earnings per share amounted to 1.6p (2010: 1.2p). Basic earnings per share was 1.2p (2010: loss of 3.4p).

Dividends

As previously announced it is the Board's intention to return to a progressive dividend policy within the restrictions placed on the Group by the terms of its bank facility agreement and subject to the Group's earnings, cash flow and balance sheet position. As such the Board is recommending a final dividend of 0.24p per share, which, together with the interim dividend of 0.12p, makes a total dividend of 0.36p in respect of the year ended 31 March 2011.

Pension schemes

The Group contributed £2.1m into its UK defined benefit pension scheme during the year (2010 £1.1m). This included a £1.0m additional contribution as part of the 2009 deficit recovery plan.

The total charge in respect of defined benefit schemes to operating expenses (excluding exceptional credits) in the Consolidated Income Statement was £1.3m (2010: £0.6m).

The gross defined benefit pension scheme valuation on the UK scheme showed a deficit of £7.0m compared to a deficit of £9.3m last year. The reduction reflects the increase in the valuation of scheme assets and the benefit of the move to using CPI rather than RPI for increases in deferred pensions, partially offset by an increase in liabilities due to a reduced discount rate of 5.5% from 5.7% last year.

The Group's contributions to its defined contribution pension schemes were £1.0m (2010: £0.8m).

Cash flow and financial position

The Group has recorded another year of good cash generation from its operations amounting to £10.8m (2010: £10.6m) and net cash generated after tax and interest of £9.2m (2010: £7.6m). The table below sets out the key cash flow components and the movement in Group net debt.

Key cash flow components and movement in Group net debt

The Group's interest payments have reduced significantly due to the full year benefit of reduced debt and interest rates following the £27.7m capital raising in December 2009.

Despite the increase in turnover and activity the Group's working capital increased by only £1.0m in the year (2010: decrease of £1.9m). This reflects management's continuing actions to tightly control working capital in the current economic conditions.

Capital expenditure of £6.3m includes our investments in a new kiln and inkjet machine in Johnson Tiles, a paste plant in Norcros Adhesives, new product development at Triton Showers and store refurbishments in South Africa.

The Group received £4.4m from the sale of R.J. Beaumont & Co Pty Ltd in the year. This, together with the factors noted above, allowed the Group to reduce its net debt by £5.3m during the year.

Bank funding

The Group has available a revolving credit facility of £52.8m of which £32.8m is available as cash drawings. This facility expires in October 2012 and is currently subject to a margin of 3.0% above LIBOR.

The Group has also granted warrants to its banks equivalent to 5% of its fully diluted share capital excluding the shares issues as part of the December 2009 capital raising. At 31 March 2011 this represents 8,135,739 ordinary shares (1.41% of the total issued share capital). These warrants are exercisable at 8.97p per share at any time up to July 2017.

Foreign currency translation

Profits from our overseas operations are translated at the average exchange rate for the year and balance sheets of these operations translated at the closing rate of exchange. The table below sets out the relevant exchange rates used.

The movement in average exchange rates compared to 2010 had the effect of increasing 2010 reported Group revenue by £8.1m but reducing Group trading profit by £0.4m.

Key performance indicators

Management uses a full suite of measures to manage and monitor the performance of its individual businesses. The Board considers that its key performance indicators are the measures most relevant in monitoring its progress to creating shareholder value. The relevant statistics for 2011 and 2010 are shown below.

Responsibility Statement

Each of the directors, whose names and functions are listed below, confirms that, to the best of their knowledge:

·; The consolidated financial statements, prepared in accordance with the applicable United Kingdom law and in conformity with IFRS, as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the undertakings included in the consolidation taken as a whole; and

·; The business review includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole.

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

N. P. Kelsall

Group Chief Executive

M. K. Payne

Group Finance Director

Consolidated income statement

Year ended 31 March 2011

Consolidated statement of comprehensive income and expense

Year ended 31 March 2011

Items in the statement are disclosed net of tax.

Consolidated balance sheet

At 31 March 2011

Consolidated cash flow statement

Year ended 31 March 2011

Consolidated statement of changes in equity

Year ended 31 March 2011

Notes to the group accounts

Year ended 31 March 2011

1. Basis of preparation

The financial information set out in this announcement does not constitute the Group's statutory accounts for the year ended 31 March 2011 or 2010. The preliminary results of the Group for the year ended 31 March 2011 have been extracted from audited consolidated financial statements which have not yet been delivered to the Registrar of Companies. The auditors have reported on the Group's statutory accounts for the year ended 31 March 2011. The report does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The financial information for the year ended 31 March 2010 is derived from the statutory accounts for that year.

The consolidated financial statements for the year ended 31 March 2011 have been prepared on the basis of the IFRS accounting policies set out in the Group's Annual Report and Financial Statements for the year ended 31 March 2010.

2. Segmental reporting

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

Continuing operations - year ended 31 March 2011

Revenues of £29.6m (2010: £20.5m) are derived from a single customer. These revenues are attributable to the UK segment.

Continuing operations - year ended 31 March 2010

3. Exceptional items

4. Finance income and costs

5. Non-GAAP measures

Benchmark profit before tax is defined as profit before taxation, exceptional items, amortisation of costs of raising finance, movement on fair value of derivative financial instruments, discounting of property lease provisions, finance costs relating to pension schemes and the Group's share of post-tax results from its associate undertakings. The Directors believe that benchmark profit before taxation and benchmark earnings provide shareholders with additional useful information on the underlying performance of the Group.

6. Earnings per share

Basic EPS is calculated by dividing the profit attributable to shareholders by the weighted average number of ordinary shares in issue during the period, excluding those held in the Norcros Employee Benefit Trust.

For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potential dilutive ordinary shares. At 31 March 2011 the potential dilutive ordinary shares amounted to 116,155 (2010: nil) as calculated in accordance with IAS 33.

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

7. Consolidated cash flow statements

(a) Cash generated from operations

(b) Outflow related to exceptional items

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

(c) Analysis of net debt

Other non-cash movements relate to an increase in transaction costs of £nil (2010: £3.5m) following the refinancing of bank debt in July 2009 less amortisation charged for the year of £1.2m (2010: £0.8m).