Norcros delivers growth on back on Croydex acquisition

Earlier today, Norcros provided the following update on trading performance.

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 2016 on 14 June 2016. In advance of entering the close period, the Group is providing the following trading update.

Trading

Group underlying operating profit¹ for the year is expected to be marginally ahead of market expectations. Group revenue for the year is expected to be in the region of £236m (2015: £222.1m), 6.3% higher than the prior year, 11.0% higher on a constant currency basis, and 2.9% higher on a constant currency like for like basis². 

UK revenue for the year was 9.3% higher than the prior year reflecting the first time contribution from Croydex which was acquired on 25 June 2015. Croydex continued to perform strongly in line with the Board's expectations. On a like for like basis², UK revenue was 2.2% lower than the prior year reflecting more challenging conditions in a number of UK retail channels and export markets.

Our South African business continued to perform strongly recording double digit constant currency revenue growth in the second half of the year, resulting in full year revenue growth of 15% on a constant currency basis. The South African Rand was 15% weaker than the prior year and consequently, South African revenue, on a reported Sterling basis, was in line with the prior year.

Financial position

Closing year end net debt is expected to be in line with market expectations of around £33m (2015: £14.2m). This includes a £20.1m outflow relating to the acquisition of Croydex in June 2015, and a £3.1m outflow, net of cash acquired, relating to the acquisition of Abode Home Products Ltd. completed on 31 March 2016.

Pension - recovery plan agreed

The March 2015 triennial actuarial valuation process for the Group's UK defined benefit pension scheme has now been agreed with the Scheme Trustee, and shows a deficit of £73.5m (2012: £61.9m) representing an 84% funding level (2012: 85%). The increased deficit is driven predominantly by historically low gilt yields.  A revised deficit recovery plan has been agreed with the Scheme Trustee, with a cash contribution of £2.5m per annum starting in April 2016, and increasing with CPI, payable over the next 10 years. This compares to a deficit recovery payment of £2.1m in the year to 31 March 2016 under the previous plan.

Nick Kelsall, Group Chief Executive, said "The Group expects to deliver its seventh consecutive year of growth in revenue and underlying operating profit with profitability substantially ahead of the previous year. We have also reached a satisfactory agreement with the Group's pension scheme Trustees regarding the 2015 triennial valuation and recovery plan, and our financial position remains strong.

Furthermore, the Group continues to make solid progress on its strategy to double revenue to £420m by 2018. The acquisition of Croydex has been integrated seamlessly and has performed strongly in line with our expectations. We have also recently announced the acquisition of the Abode business which is an exciting and excellent fit with our current portfolio and we expect it will be earnings accretive immediately. 

I believe this leaves the Group well positioned to continue to make further progress."

 Notes:-

¹ Underlying operating profit is defined as operating profit before IAS 19R administrative expenses, acquisition related costs and exceptional operating items.

² Like for like (LFL) excludes Croydex which was acquired in June 2015.

Source: Norcros Press Release.

To contact our MD Steve Collinge, email him on steve@irg.co.uk

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