Exit of Legacy Lease obligation

RNS Number : 4865H

Norcros PLC

31 May 2011

 



Norcros plc

("Norcros" or "the Group")

Exit of Legacy Lease obligation

Norcros, the home consumer products group, announces today that it has entered into and completed an agreement with CIP Property (AIPT) Limited, Computacenter (UK) Limited, and Digica Group Finance Limited to exit its lease obligations at Springwood Drive, Braintree, Essex.

Norcros has held the 25 year head lease on Springwood Drive since 1992, initially being occupied by its then subsidiary, Crittall Windows Ltd ("Crittall"). Crittall was sold by Norcros in 1995 and as part of that transaction Norcros retained the head lease. The decline in property markets has hampered attempts to sub let the site, and in recent years it has been substantially vacant.

Under the terms of the agreement Norcros has made a total cash payment including costs of approximately £7.8m. An exceptional charge of approximately £2.0m will be recognised in the accounts for the year ended 31 March 2011. The Group anticipates an annual cash saving of approximately £3.3m following the surrender of this lease. 

The Group continues to seek a satisfactory solution in respect of its three remaining legacy leasehold obligations which have various terms outstanding. These obligations are forecast to consume cash of approximately £1.6m per annum until 2013, but with a combination of lease expiry and expected increased occupancy, cash outflows are forecast to reduce significantly thereafter. The accounts for the year ended 31 March 2011 will show an exceptional charge of approximately £2.2m in relation to these ongoing obligations.

Commenting on the transaction Nick Kelsall, Group Chief Executive, said "The surrender of the Springwood Drive lease six years before expiry resolves a significant legacy issue for Norcros.  We have eliminated a substantial drain on both free cash flow and management time which will enable the Group to focus its resources on its core operations."

Norcros plc	01625 549 010
Nick Kelsall, Group Chief Executive
Martin Payne, Group Finance Director
College Hill	020 7457 2020
Mark Garraway
Helen Tarbet

 

END

 

 

AGRDKODDABKDQPB