Acquisition

RNS Number : 2279B

Norcros PLC

02 April 2013

 



2 April 2013

("Norcros", the "Group" or the "Company")

Acquisition of Eurobath International Ltd trading as Vado

Norcros plc, the market leading supplier of innovative branded showers, tiles and adhesives, is pleased to announce that it has completed the acquisition of 100% of the share capital of Eurobath International Ltd trading as Vado ("Vado"), a private family owned business principally held by the Walker and Williams families for an initial cash consideration of £11.0m plus debt and debt like items assumed as part of this transaction of approximately £0.9m, and further payments of up to £4.1m in total depending upon the future financial performance of Vado. The Board expects the acquisition to be earnings enhancing immediately.

Vado - business

Vado is a leading manufacturer and global distributor of bathroom controls including taps, mixer showers, bathroom accessories and valves, with strong brands and a product offering positioned at the mid to high end segment of its target markets. It has a broad customer base with particular strength in the contract and specification sector where it enjoys an impressive high quality project list in residential, commercial, hotel, and leisure developments and refurbishments throughout the world. In the retail sector it has successfully focused on high end boutique retailers and merchants, with established longstanding relationships with over 1,000 customers. Whilst UK revenue represents 55% of total revenue, one of the key strengths of Vado is its global distribution network which contributes the remaining 45% of total revenue. Vado exports to over 60 countries, most notably in the Middle East and Africa where it has a particularly strong presence.

Vado is based in Cheddar, Somerset, and has 144 employees. It has a strong management team headed by Managing Director Jim Williams, all of whom will be staying with the business.

Further information on Vado can be found at www.vado-uk.com.

Vado - financial performance

Vado has consistently delivered a strong revenue performance with a compound annual growth rate of 16% per annum over the last three years. For the year ended 31 December 2012, Vado's audited results showed revenue of £25.6m, EBITDA of £2.5m, and profit before tax of £2.1m. As at 31 December 2012 Vado also had net operating assets of £7.2m, and gross operating assets of £12.1m.

Acquisition details

Norcros has acquired 100% of the share capital of Vado for an initial cash consideration of £11.0m plus debt and debt like items assumed as part of this transaction of approximately £0.9m.These figures are subject to a capped adjustment following finalisation of completion accounts. Further cash payments not exceeding £4.1m in total are payable in three stages contingent on the EBITDA performance of Vado over the next three years.

Norcros has funded the initial cash consideration and transaction costs from existing cash resources and a £19m increase to its existing banking facility, taking the Group's overall committed credit facilities from £51m to £70m on existing terms. Vado has historically delivered strong cash conversion and it is expected to have a positive impact on Group operating cash flow.

Acquisition Rationale

Whilst Norcros continues to grow successfully through organic means, this acquisition is an important step in supporting and accelerating our growth strategy. The Board believes that the acquisition of Vado will bring a number of compelling benefits to the Group:-

-    The acquisition significantly expands the Group's product reach, brand portfolio and secures strong positions in complementary segments

-    The Group intends to leverage the combined platform of Vado and the Group's market leading Triton shower business to drive increased demand for its products utilizing the enlarged customer base, broader product offering, dual branding, and extended geographical scope

-    The acquisition will also supplement the Group's leading market positions in South Africa and its growing presence in sub Saharan Africa

Commenting on the acquisition, Nick Kelsall, Group CEO said "The acquisition of Vado and its premium brands and excellent product offering is an exciting addition to the Group's portfolio. I have been impressed with the commitment and passion of Vado's management and employees and am confident that they and the business will continue to thrive under Norcros ownership. This transaction represents the first step in our enhanced growth strategy of making selective and complementary acquisitions which have the capability of improving profitability as well as broadening our brand portfolio, product offering and distribution channels."  

Also commenting on the acquisition, Jim Williams, Managing Director of Vado said "The Vado team is looking forward to working with Norcros to develop further business opportunities and to grow as part of a larger organisation".

ENQUIRIES:

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

Notes to Editors

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

·    In the UK, Norcros operates under three brands:

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

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

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

·    In South Africa, Norcros operates under three brands:

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

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

·    TAL - The leading manufacturer of ceramic and building adhesives

·    Norcros is headquartered in Wilmslow, Cheshire and employs around 1600 people. The Company is listed on the London Stock Exchange. For further information please visit the Company website: http://www.norcros.com/

 

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