Norcros pays £7.8m to dump lease
WILMSLOW-based showers and tiles maker Norcros Group has paid £7.8m to extricate itself from the remainder of a 25-year lease on a legacy property at Braintree in Essex.
The firm inherited the property at Springwood Drive on a 25-year lease in 1992 when it acquired Crittall Windows. The business was sold three years later, but as part of the deal Norcros kept the head lease on the site.
The company said that the decline in property markets in recent years has “hampered attempts to sub-let the site”, which has been largely vacant.
It has now agreed a deal with CIP Property Ltd, Computacenter (UK) and Digica Group finance to exit the remaining six years of the lease in a deal which has cost it £7.8m.
However, it said the deal will lead to annual savings of £3.3m on its costs following the lease surrender. The firm also said that the deal will lead to an exceptional charge of £2m in its year end accounts to March 31, 2011.
Norcros has three remaining leases which eat up around £1.6m of cash per year until March 2013, but it said that it expected increased occupancy and lease expiries would reduce the overall cost to the company.
Chief executive Nick Kelsall said: “The surrender of the Springwood Drive lease six years before expiry resolves a significant legacy issue for Norcros.
“We have eliminated a substantial drain on both free cash flow and management time which will enable the group to focus its resources on its core operations.”
