City round-up: Norcros; Renold; Sosandar

Wilmslow-based bathroom and kitchen supplies group, Norcros, has forecast its underlying operating profit for the year to March 31, 20221 will be a record and ahead of previous expectations.

In a trading update ahead of the release of its annual results on June 9, it said group revenue for the year is expected to be in the region of £396m, compared with £324.2m in 2021, and £342m in 2020, which would be 22.2% above the prior year on a reported basis and 20.6% above on a constant currency basis.

Against a pre-pandemic 2020 financial year comparator, this represents a 15.8% increase on 2020 on a reported basis, 18.6% above on a constant currency basis and 20.8% above on a constant currency like-for-like basis.

The UK business continued to perform strongly with revenue at 16.6% above the prior year and 16.1% above 2020 on a like-for-like basis, benefitting from the breadth of its distribution channels, stock availability and market leading service levels.

The 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 2020 on a constant currency like-for-like basis.

Norcros said it remains in a strong financial position and has invested in inventory to optimise its service and stock availability in light of the exceptional supply chain challenges. Net cash at March 31, 2022 is expected to be approximately £7m, against £10.5m in 2021, and a net debt of £36.4m in 2020.

The group has also agreed a new £130m multicurrency revolving credit facility 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 £70m.

Today’s update also revealed that the group has reached agreement recently with the Trustee on the 2021 triennial actuarial valuation for the UK defined benefit pension scheme and on a new deficit recovery plan. The actuarial deficit at March 31, 2021, was £35.8m, compared with £49.3m in 2018. Deficit repair contributions have been agreed at £3.8m per annum from April 1, 2022 to March 2027, increasing with CPI, capped at five per cent, each year.

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

During the reporting period the group said it continued to trade robustly, acting decisively to counter unprecedented cost inflation and navigate exceptional supply chain challenges.

Chief executive, Nick Kelsall, 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.”

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Renold

Industrial chains manufacturer, Renold, has reported a continuation of its first half momentum into the second half, with record order levels, and better underlying trading profits expected.

In a trading update, the Manchester group said this will deliver revenue for the full year of £195m, a year-on-year increase of 18% on a reported basis, and 21.7% at constant exchange rates.

It said the level of the sales to Russia and Ukraine during fiscal year 2022 were insignificant at around 0.5% of group turnover.

Order intake during 2022 was £223.7m. This is a year-on-year increase of 31.6% on a reported basis and 35.6% at constant exchange rates. Excluding the recently announced £11m long term military contract, order intake for the period increased by 25.2% or 29.2% at constant exchange rates. The current order book of £84.1m is a record high for the group, and compares with £53.5m in 2021.

In addition to better than expected trading profits, there are a number of material one-off, non-recurring items which will contribute to an increase in full year statutory operating profits of around £4m. This includes gains from new lease arrangements on sub-let properties and US PPP COVID loan relief, of which £1.2m was previously recognised and disclosed in the half year results.

Net debt at the end of the fiscal year 2022 was £13.8m, against £13.9m at September 30, 2021, a reduction of £4.6m during the year.

The group said it has strengthened its financial position significantly over the past two years, providing funding capacity to support its strategic growth objectives.

Renold expects to announce its annual results for 2022 on July 13.

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Sosandar

Cheshire-based online fashion brand, Sosandar, has appointed Jon Wragg as an independent non-executive director, with immediate effect.

He is an experienced senior executive with a track record of driving growth in consumer businesses through digital channels. He has worked with global brands across multiple product categories, with substantial experience in the fashion industry, leading own brand development and the management of premium brands.

From April 2014 to September 2021, Jon held a number of executive roles with Superdry, including e-commerce and wholesale director and global wholesale director. During his time at Superdry Jon oversaw rapid sales and profit growth with e-commerce sales tripling in three years, and sales doubling in the larger wholesale division over three years. In addition, he helped establish global partnerships through which circa 500 franchise stores were opened across 65 countries.

Prior to this, Jon spent seven years at ASDA WalMart and 26 years at Littlewoods SDG, now The Very Group, where he led a team of 260 to develop, procure and trade the product portfolio of a £1bn business and was responsible for creating a portfolio of new web-based niche businesses.

Jon is currently an independent non-executive director of Manchester Airport Group, appointed in part for his digital experience, and is a member of the company’s audit, nomination and corporate & social responsibilities committees.

Sosandar non-executive chairman, Bill Murray, said: “Jon brings extensive experience in fashion retail, partnerships and leveraging digital capabilities. He was at Littlewoods when online fashion retailing first came to prominence and has vast knowledge of running a successful e-commerce business.

“We look forward to benefitting from his guidance over the coming years as the group continues to execute on its growth strategy and looks to realise its vision of becoming the go-to one-stop shop for fashion forward women.”