Trading Update

RNS Number : 4679E

Norcros PLC

10 April 2014

 



10 April 2014

Norcros

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

Trading Update

Norcros, the market leading supplier of innovative branded showers, taps, bathroom accessories, tiles and adhesives will announce its preliminary results for the year ended 31 March 2014 on 19 June 2014. In advance of entering the close period, the Group is providing the following trading update.

Trading

The financial year ended in line with market expectations.

Group revenue for the year is expected to be in the region of £229m (2013: £210.7m) which represents year on year growth of 16.4% on a constant currency basis and 8.7% on a reported basis. Group underlying operating profit¹ is expected to be 25% higher than prior year at approximately £16.3m (2013: £13.0m) despite a 20% weaker South African Rand costing £0.4m on translation of South African profits. Group underlying profit before taxation² is expected to be 26% higher at approximately £14.7m (2013: £11.7m).

Revenue growth improved in both UK and South Africa in the last 8 weeks of the year:-

	8 weeks to 31 Mar	52 weeks to 31 Mar
Group revenue -      Reported -      Constant currency	+12.6% +24.1%	+8.7% +16.4%
Group like for like revenue -      Reported -      Constant currency	- 3.2% +6.6%	- 4.4% +2.4%

Like for like excludes acquisitions (Vado - March 2013) and disposals (Nortec - November 2012)

UK market conditions during the year have been mixed, with the trade sector recovery driven by improving new house build and housing transactions. The retail sector remained weak for most of the year although there have been signs of improvement in the last quarter. UK revenue for the full year was 20.6% higher on a reported basis reflecting the Vado acquisition in March 2013. On a like for like basis excluding Vado, UK revenue was 3.1% lower than last year with good progress in Triton Showers and Norcros Adhesives offset by lower revenue at Johnson Tiles.

In its first year under Norcros ownership, Vado has performed in line with expectations and although the comparatives are not reported in our results, revenue for the full year was 16.5% ahead of last year. This strong performance, together with the successful integration of the business during the year, leaves Vado well positioned to make further progress.

Following challenging market conditions in the 18 week period to the end of January 2014, our South African business returned to double digit constant currency growth in the last 8 weeks of the year, resulting in full year revenue growth of 9.1% on a constant currency basis and 11.9% on a like for like basis (excluding Nortec which was disposed of in November 2012). A weaker Rand compared to last year resulted in full year reported Sterling revenue being 8.8% lower than the prior year and 6.6% lower on a like for like basis.

Conditional agreement to dispose of subsidiary

As announced on 25 March 2014, the Group has entered into a conditional agreement to sell 100% of the issued share capital of Norcros Industry (Pty) Ltd. (NIPL) which owns the Group's Australian tiles business, Johnson Tiles (Pty) Ltd. to Kim Hin Industries Berhad (KHIB), a company listed on the Malaysian Bursa, for A$7.55m (£4.2m³) on a debt and cash free basis subject to a normalised working capital adjustment on completion, payable in cash on completion. This transaction will generate a non-cash loss of approximately £1.6m³.

The disposal is conditional upon KHIB gaining shareholder approval for the transaction although irrevocable undertakings of support from KHIB's largest shareholder representing approximately 61% of the share capital of KHIB have been received. It is anticipated that completion will occur no later than 31 May 2014.

For the year ending 31 March 2013, NIPL reported revenue of A$15.9m, operating profit of A$0.3m, EBITDA of A$0.5m, and gross assets of A$12.4m.

Financial position

Closing net debt is expected to be in the region of £27m (2013: £30.7m) and lower than market expectations.

Outlook

UK construction activity and an improving housing market has driven trade sector recovery during the year but the UK retail sector, as expected, is taking longer to benefit, although there have been some encouraging signs more recently. Whilst the medium term outlook in South Africa is positive, the weakening Rand continues to have an adverse effect on Rand profit translation to Sterling. Nevertheless, with our strong brands, leading market positions and continued self-help initiatives focused on market share gain, the Board remains confident that the Group should continue to make progress in line with market expectations for the year to 31 March 2015.

¹ Underlying operating profit is defined as operating profit before exceptional items, amortisation of intangibles, and IAS19R pension administration costs

² Underlying profit before tax is defined as profit before tax, exceptional items, amortisation of intangibles, IAS19R pension administration costs, and non cash finance charges

³ Using the exchange rate as at 24 March of £1=A$1.81

ENQUIRIES:

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

Notes to Editors

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

·      Based in the UK, Norcros operates under four brands:

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

·     Vado - A leading manufacturer and supplier of taps, mixer showers, bathroom accessories and valves

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

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

·      Based 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 1750 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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