Norcros agrees £70m refinance and updates on trading

BATHROOM accessories and tile manufacturer Norcros has agreed a £70m refinancing package with three banks running up to 2019.

The Wilmslow-based group, which has operations here and in South Africa, said the agreement for the unsecured revolving credit facility includes a £30m “accordion facility”.

Norcros said the deal with incumbent lenders Barclays and Lloyds and newcomer HSBC – which has replaced Handeslbanken – would cut its net interest costs by approximately £200,000 a year, based on current levels of net debt and leverage.

Ahead of its annual meeting, Norcros, which owns the Triton showers and Vado taps brands, gave an update on trading for the 13 weeks to June 29.

It said group revenue from continuing operations was 0.9% higher on a constant currency basis compared to the same period last year but 5.7% lower in sterling reflecting a weaker South African Rand.

Norcros said market conditions remain “mixed” for its UK businesses. While revenue from the UK market was 1.4% higher than the same period last year with continued growth in the trade sector of 4.2% but with the retail sector 3.7% lower. Export revenue was however 13.2% lower reflecting the timing of commercial projects in Vado outweighing good export growth in Triton.

Revenue from the South African businesses grew by 6.2% on a constant currency basis, but a weaker rand saw sterling reported revenue 13.1% lower than the same period last year.

Tile Africa experienced particularly strong constant currency growth at 12.1% and Johnson Tiles South Africa continued to make good progress towards profitability.

Assessing the outlook Norcros said it expects to meet City expectations for the year, stating: “Given the continuing improvement in the financial performance of our UK and South African tile businesses and the expected recovery in Vado export revenues as commercial projects complete, the board remains confident that the group should continue to make progress in line with market expectations for the current year.”

Commenting on the refinancing, Martin Souter, relationship director at Barclays in Manchester, said: “Following the successful Vado acquisition in March 2013, Barclays is pleased to provide the finance to support their on-going strategic plans. As a longstanding client we value the relationship with Norcros and will continue to provide the expertise it needs to fulfil its strategy.”

Paul Stanley of Lloyds Bank’s mid-markets team and Vicki Daly of its strategic finance arm worked on the deal.