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Norcros annual revenues rise despite exceptional charges

Bathroom accessories company Norcros on Thursday said it expects annual revenues and profits to rise following sales growth in the UK and South Africa.

Bathroom accessories company Norcros on Thursday said it expects annual revenues and profits to rise following sales growth in the UK and South Africa.

The group anticipates revenue for the year ended March 31st 2013 to come to £210m, a 5.0% increase on the previous year's £200.3m.

Underlying operating profits is forecast to rise 7.4% to £13m while pre-tax profits are pegged to climb 9.3% to £11.7m.

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The UK business flew in the face of tough market with a year-on-year revenue growth of 5.0%. A 4.5% decline in revenue of the Triton shower products was offset by a strong performance of Johnson Tiles and Norcros Adhesives.

In South Africa, the company thrived with revenues up 19% on a constant currency basis. The manufacturing performance of the Johnson Tiles South Africa business improved but a rise in energy prices limited margin benefits.

During the year, the firm acquired Eurobath International, trading as Vado, which manufactures taps, mixer showers, bathroom accessories and valves.

The board said it expects Vado to be "earnings enhancing immediately". Vado reported 2012 revenue of £25.6m, earnings before interest, tax, depreciation and amortisation (EBITDA) of £2.5m, and profit before tax of £2.1m.

As a result of the costs of the acquisition, Norcros' closing net debt is anticipated to rise to £31.0m from £17.8m the previous year.

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Norcros has also received a planning consent for the proposed development at Highgate Park, Tunstall, which will include a food store and petrol station.

The deal is subject to a conditional sale contract with Optimisation Developments, a subsidiary of Morrison Supermarkets for gross proceeds of £8.25m and net proceeds of £2.6m.

It is expected that the sale contract with Morrisons will become unconditional by the end of July 2013.

The group said an exceptional charge of £3.0m will affect profits, as three property lase remain vacant despite significant marketing efforts.

"The recent weakness of sterling and rising energy costs have added to the already challenging outlook for our UK and South African markets," the firm said in a statement.

"Nonetheless, our businesses have demonstrated their resilience and ability to gain market share. With the acquisition of the Vado business combined with the ongoing programme of growth initiatives and self-help actions, the board remains confident that Norcros will continue to make further progress."

Shares fell 5.63% to 16.75p at 10:20 Thursday.

RD

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