Trading Update

RNS Number : 6497P

Norcros PLC

06 October 2011

 



Norcros

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

Trading Update and Re-financing

Norcros, the home consumer products group, is pleased to issue the following update for the 26 week period ended 2^nd October 2011 in advance of the Group's half year results announcement on 17^th November 2011. The Group also announces today that it has secured a new committed £51m revolving credit facility through to October 2015.

Overview

Despite challenging market conditions in the UK and South Africa, Group revenues for the 26 week period are expected to be approximately £102.3m (2010, 27 week period; £97.3m, like for like 26 week period; £93.7m). This represents a 9.2% increase on a like for like number of weeks basis, and 8.6% on a constant currency like for like number of weeks basis. This reflects a like for like number of weeks increase in our UK businesses of 10.1% and a constant currency like for like number of weeks increase of 9.0% in our South African businesses.

Group trading profit¹ for the 26 week period is expected to be not less than £6.2m (2010, 27 weeks; £6.4m, like for like 26 week period; £6.2m), with Group benchmark profit before taxation² expected to be not less than £5.4m (2010, 27 weeks; £5.6m, like for like 26 week period; £5.4m).

Our UK business, and in particular Triton, the UK market leader in domestic showers, has performed resiliently and continued to gain market share in a difficult market. In South Africa, the implementation of management changes and operational initiatives has adversely impacted profitability in our tile business in the period, but these are expected to result in improved performance in the future. The turnaround in performance of this operation despite the weak market remains a key management priority. TAL, our market leading adhesive business performed robustly relative to the market.

In our UK and South African businesses, management has taken action to mitigate the effect of sustained energy and commodity price increases through the implementation of selective cost reduction actions and selling price increases, the net benefits of which will largely be reflected in the second half of the financial year.

Financial position

Net debt before prepaid finance costs at 2 October 2011 is expected to be in the region of £19.0m (2010: £13.0m), the increase principally reflecting the previously announced exit of the onerous leasehold at Springwood Drive which cost £7.8m but will result in future cash savings which are anticipated to be approximately £3.3m per annum.

Re-financing

Norcros has secured a new committed £51m revolving credit facility through to October 2015 with three banks. Two of the banks, Lloyds and Barclays, are longstanding lenders to the Group, whilst the third, Svenska Handelsbanken, introduces a new relationship.

The terms of this new facility provide the Group with increased flexibility and a lower cost of borrowing reflecting the strong financial position of the Group. The annualised reduction in bank interest as a result of these improved terms is anticipated to be approximately £0.5m per annum.

An exceptional non cash interest charge in the region of £1.2m will be recognised in the results for the half year arising from the write off of unamortised fees relating to the previous re-financing. Fees of approximately £0.8m have been incurred in securing this new facility and will be amortised over the life of the facility.

Summary and Outlook

Against a backdrop of difficult markets in both UK and South Africa, the Group's performance has remained resilient. The new banking facility provides the Group with a conservative level of headroom and increased flexibility to manage the continued development of the business through the next four years. The Board believes Norcros should continue to make good progress provided conditions in the Group's key markets do not deteriorate from current levels.

¹   Defined as Group operating profit before exceptional items and other operating income

²   Defined as Group profit before tax, exceptional items and non-cash finance costs

6^th October 2011

ENQUIRIES:

Norcros plc	Tel: [phone]
Nick Kelsall, Group Chief Executive
Martin Payne, Group Finance Director
College Hill	Tel: [phone]
Mark Garraway
Helen Tarbet

For further information please visit the Company website:

www.norcros.com

 

END

 

 

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