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Norcros Issues Further Trading Update; Non-Executive Director Steps Down
Norcros plc ("Norcros" or the "Group"), a market leading supplier of high quality and innovative bathroom and kitchen products, will announce its preliminary results for the year ended 31 March 2021(1) on 10 June 2021. In advance of this, the Group is providing the following trading update.
Further upgrade: strong finish to year
In our 31 March 2021 trading update we increased our full year profit guidance, reflecting the strong trading momentum within the business. We have continued to outperform our previous expectations in March and ended the year strongly. As a result, the Board now expects underlying operating profit for the year to 31 March 2021(1) to be no less than £33m on a post-IFRS 16 basis, ahead of both our previous underlying operating profit guidance for the year of no less than £31m and the £32.3m reported last year.
Group revenue for the year is expected to be in the region of £324m (2020: £342m), 95% of prior year on a reported basis and 101% of prior year on a constant currency like for like basis (2) after adjusting the prior year for period pro-rating (53 weeks versus 52).
The Group has seen a strong recovery in the second half with revenue 120% of the prior year on a constant currency like for like basis (2) compared to 83% in the first half of the year which was severely impacted by the COVID-19 pandemic, particularly in the first quarter.
| Revenue % of prior year | |||
| Reported FY | LFL2 H1 H2 FY | ||
UK | 98% | 84% | 115% | 100% |
South Africa | 89% | 66% | 123% | 91% |
South Africa (at CC3) | 102% | 79% | 130% | 103% |
Group | 95% | 78% | 118% | 97% |
Group (at CC3) | 99% | 83% | 120% | 101% |
Our UK business has continued to perform strongly with revenue for the second half at 115% of prior year on a like for like basis (2) reflecting the increased activity in the repair, maintenance, and improvement (RMI) sector. Triton and Merlyn have both performed extremely well, gaining market share.
Our South African business also continued to outperform, revenue for the second half was 123% higher on a like for like basis---------2 and 130% of prior year on a constant currency like for like basis (2) with further growth, particularly in Tile Africa, reflecting market share gains in the retail renovation market.
Robust balance sheet and financial position
Due to the strong recovery in trading during the second half of the year and the effective management of working capital, we expect to end the year at 31 March 2021(1) with net cash of circa £10m (on a pre-IFRS16 basis) compared to net debt of £36.4m at 31 March 2020.
Employees
It has been more than a year since the first lockdown and the Board wishes to place on record its thanks to our employees for their commitment and contribution in ensuring a safe workplace and to this strong outperformance in this unprecedented year. Whilst the progress of the COVID-19 vaccination programme is encouraging, our priority continues to be the safety and wellbeing of our people.
Nick Kelsall, Group Chief Executive, said:
"The Group has recovered very strongly from a period of unprecedented uncertainty. Our performance on all fronts is a testament to our business model and our employees, particularly against the backdrop of challenging markets as demand adjusts to the impact of the pandemic and Brexit. It is particularly pleasing to see how well our businesses both in the UK and South Africa responded, taking advantage of the growth opportunities in the RMI segments and continuing to gain market share, benefitting from their leading brands, supply chain infrastructure and stock availability.
Whilst market conditions are likely to remain challenging, the Board is confident that the Group's highly experienced management teams, resilient business model, increased financial strength and our focussed growth strategy will continue to drive outperformance leading to further progress in the year ahead."
Norcros also announced that Mark Allen, the Board Chair and a Non-Executive Director of the Company, has notified the Board of his intention to step down from the Board and the Company has accepted this with effect from today's date.
David McKeith, the Senior Independent Director has assumed the role of acting Board Chair. It is intended that Mr McKeith will continue in this role until Norcros appoints a new Non-Executive Director as Board Chair in due course.
Mark Allen commented:
"It is with a great deal of sadness that I have tendered my resignation from the Board of Norcros. Unfortunately, my other business commitments do not allow me sufficient time to devote to the Company."
Mr McKeith commented:
"The Board of Norcros would like to thank Mark for his contribution to the Group and to wish him well in his other current and future directorships."
(1) The accounting reference 'year to 31 March 2021' relates to the 52-week accounting period commencing on 6 April 2020 and ending 4 April 2021
(2) LFL (like for like) adjusts prior year revenue for 53 to 52 week period pro-rating
(3) CC refers to constant currency basis
Source : Norcros
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