Norcros seeks £30m to cut debt
NORTH West tiles and shower maker Norcros is looking to raise £30m after tough trading pushed it to a pre-tax loss.
It is seeking the support of the market through a firm placing and placing and open offer to raise £30m which will help it reduce debts of £45m and save around £9m in associated interest charges.
The Wilmslow-based company said it had been hit by the downturn in its South African market where it also had operational issues at a manufacturing site. UK sales were up 4.2% to £49.7m but its Triton Showers brand was hit by a 20% slump in export orders. Its Johnson Tiles business increased sales by 11%
The group saw revenue rise 5.6% to £83m in the six months to September 30 but it recorded a pre-tax loss of £1.7m, down from a profit of £3.8m.
Norcros’s operating profit fell 25% to £3.5m. After taking exceptional items of £2.5m into account – associated with the closure of underperforming stores – it recorded a loss of £4.2m.
It will issue 428,571,428 new ordinary shares at 7p representing a discount of around 13.9% to yesterday’s closing price. New ordinary shares to be issued will represent approximately 74.2% of the enlarged share capital following the capital raising.
Chairman John Brown said: “The board believes that the markets in which Norcros operates will continue to be adversely impacted by subdued economic activity. We will continue to focus on revenue generation and cash conservation and at the same time ensure our cost base remains aligned to market demand.
“On a successful completion of the capital raising, our leverage and interest costs will be significantly reduced and our financial position considerably strengthened. This combined with the ongoing benefits of the restructuring initiatives already in place, the success of our new product launches and our leading market positions will ensure that the group is well positioned to benefit from the organic growth opportunities in its key markets as well as any market recovery when it occurs.”
The group has implemented £5m of cost savings since March last year and it now employs 20%, or 350, fewer staff. No interim dividend will be paid given the economic environment and the group’s trading performance.
