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Norcros Trading Ahead of Expectations

Triton Amore brushed steel shower

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 20221 on 9 June 2022. In advance of this, the Group is providing the following trading update.

Full year trading performance ahead of expectations

The Group has continued to trade robustly, acting decisively to counter unprecedented cost inflation and navigate exceptional supply chain challenges. The Board now expects underlying operating profit for the year to 31 March 20221 to be at a record level and ahead of its previous expectations. 

Group revenue for the year ended 31 March 20221 is expected to be in the region of £396 million (2021: £324.2 million, 2020: £342.0 million), 22.2% above prior year on a reported basis and 20.6% above on a constant currency basis.

Against a pre-pandemic FY20 comparator, this represents a 15.8% increase on FY20 on a reported basis, 18.6% above on a constant currency basis and 20.8% above on a constant currency LFL3 basis.

 

Revenue increase on prior year

 

Revenue increase on FY20

 

Reported

 

Reported

LFL3

 

H1

H2

FY

 

FY

H1

H2

FY

UK

39.6%

(0.4%)

16.6%

 

13.9%

17.5%

14.8%

16.1%

South Africa

68.5%

11.1%

34.0%

 

19.6%

10.9%

35.9%

21.9%

South Africa at CC2

52.4%

11.1%

28.6%

 

28.1%

20.0%

43.8%

30.5%

Group

48.5%

3.4%

22.2%

 

15.8%

15.1%

21.5%

18.1%

Group at CC2

43.8%

3.4%

20.6%

 

18.6%

18.4%

23.6%

20.8%

Our UK business has continued to perform strongly with revenue at 16.6% above prior year and 16.1% above FY20 on a like for like "LFL3" basis, benefitting from the breadth of its distribution channels, stock availability and market leading service levels.

Our South African business also continued to perform robustly, reflecting its leading market positions, stock availability and enhanced product offer resulting in increasing share gains in the second half. Revenue for the year was 28.6% higher than prior year and 30.5% higher than FY20 on a constant currency LFL3 basis. 

Financial position

The Group remains in a strong financial position and has invested in inventory in the period to optimise our service and stock availability proposition in the light of exceptional supply chain challenges. Net cash (on a pre-IFRS 16 basis) at 31 March 20221 is expected to be circa £7 million (2021: net cash of £10.5 million, 2020: net debt of £36.4 million). 

Refinancing of banking facilities

The Group is pleased to announce that it has agreed a new, £130 million multicurrency revolving credit facility ("RCF") with four lenders. The facility is for an initial three year and seven month term, with two further years as extension options, and includes the option for an uncommitted accordion facility of £70 million. 

Triennial pension scheme valuation

The Group has reached agreement recently with the Trustee on the 2021 triennial actuarial valuation for the UK defined benefit scheme and on a new deficit recovery plan. The actuarial deficit at 31 March 2021 was £35.8m (2018: £49.3m). Deficit repair contributions have been agreed at £3.8m per annum from 1 April 2022 to March 2027 (increasing with CPI, capped at 5%, each year). 

Groundwell - exit from last onerous property lease

The Group has also reached agreement with the landlord to exit early the only remaining surplus and legacy onerous property lease at Groundwell, Swindon which was expiring on 23 June 2022. A cash settlement payment of £1.3 million including dilapidation obligations was made in the period. Annualised holding costs were previously £0.6m. 

Notice of results

The Group will announce its full year results for the year ended 31 March 20221 on Thursday 9 June 2022. 

Nick Kelsall, Chief Executive Officer, said: 

"Norcros has continued to build on last year's strong recovery from the unprecedented global disruption and uncertainty caused by the pandemic. It is particularly pleasing to see how well our businesses both in the UK and South Africa have continued to make strong progress notwithstanding the supply chain challenges and a period of exceptional cost inflation.

Whilst market conditions are likely to remain uncertain, exacerbated by the situation in Ukraine, the Board believes that the Group's highly experienced management teams, leading brands, proven business model, and leading customer service proposition will continue to drive outperformance leading to further progress in the year ahead." 

1. The accounting reference 'year to 31 March 2022' relates to the 52-week accounting period commencing on 5 April 2021 and ending 3 April 2022

2. CC refers to constant currency basis

3. LFL adjusts 2020 revenue from a 53 to a 52 week period pro-rating and H1 2020 revenue from a 27 week to a 26 week pro rating

Source : Norcros

Image : Triton Amore shower

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14 April 2022

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