TIDMNXR
RNS Number : 1947N
Norcros PLC
16 January 2019
16 January 2019
("Norcros", the "Group" or the "Company")
Proposed Acquisition of RAP Plumbing Supplies Proprietary
Limited and Trading Update
Norcros, a market leading supplier of high quality and
innovative bathroom and kitchen products is pleased to announce
that its South African business, Norcros South Africa (Proprietary)
Limited has entered into a conditional agreement to acquire 100% of
the share capital of South African based RAP Plumbing Supplies
(Proprietary) Limited, trading as House of Plumbing ("House of
Plumbing"), a private company owned by the directors, a number of
other employees and private investors for a total consideration of
up to South African Rand ("ZAR") 215m (approximately GBP12.1m) on a
debt and cash free and normalised working capital basis.
The transaction is subject to regulatory approval from The
Competition Commission of South Africa. Completion will follow once
this approval has been granted to the satisfaction of Norcros. Of
the total consideration, ZAR 172m (approximately GBP9.7m) will be
settled in cash on completion and up to a further ZAR 43m
(approximately GBP2.4m) may be payable in two years via an earn out
mechanism. The acquisition will be funded entirely from local cash
resources and existing facilities. The Board expects the
transaction to be earnings enhancing immediately.
House of Plumbing - business
House of Plumbing is a market leading supplier of specialist
plumbing materials focused on the specification and commercial
segments of the market supplying plumbing contractors, maintenance
plumbers, and the public. The business operates from three branches
in South Africa located in Johannesburg (which is also where the
head office is based), Pretoria and Lephalale.
The business employs 102 people and has an experienced
management team led by Managing Director Robin Roberson, all of
whom will be staying with the business.
House of Plumbing - financial information
For the year ended 30 April 2018, House of Plumbing's audited
financial statements showed revenue of ZAR 392m (approximately
GBP22.1m), EBITDA of ZAR 33m (approximately GBP1.9m) and profit
before tax of ZAR 34m (approximately GBP1.9m). As at 30 April 2018
the business had gross assets of ZAR 112m (approximately GBP6.3m).
House of Plumbing has continued to trade in line with its
management's expectations for the 8 months ended 31 December
2018.
Acquisition details
Subject to regulatory approval, Norcros will acquire 100% of the
share capital of House of Plumbing for initial cash consideration
of ZAR 172m (approximately GBP9.7m) plus an earn out of up to ZAR
43m (approximately GBP2.4m) payable in the year ending 31 March
2022 on achievement of EBITDA and cash targets. Costs associated
with this incentive will be treated as an acquisition related cost
outside of underlying operating profit.
The upfront cash amount represents 5.2 times the audited EBITDA
for the 12 months to 30 April 2018.
Acquisition rationale
The acquisition of House of Plumbing is a further step in the
Group's growth strategy to expand its bathroom product portfolio
and follows on from a number of very successful acquisitions, most
recently that of Merlyn, and the sustained organic growth in South
Africa. House of Plumbing offers a range of complementary products
and further reinforces the Group's strong positions in the
commercial and specification segments of the market and will
benefit from the additional distribution channels, procurement
experience and strong financial position of the enlarged Group.
Commenting on the acquisition, Nick Kelsall, Group Chief
Executive, said "I am excited by the acquisition of House of
Plumbing as it will enhance our product offer to the important
commercial and specification segments of the South African market
where we have been successfully building our business. The
acquisition also offers a number of opportunities to drive growth
through geographical expansion and through our existing
distribution channels. I look forward to working with Robin and his
team to further develop and grow the business."
Robin Roberson, Managing Director of House of Plumbing remarked,
"We have been impressed by the energy and enthusiasm of the Norcros
management and look forward to working with them to capitalise on
the many new opportunities that being part of the Norcros Group
will bring."
Trading update
The Group has continued to trade in line with the Board's
expectations in both the UK and South Africa since the announcement
of its interim results on 15 November 2018.
Whilst the market environment remains challenging the Board is
confident that our market leading positions, our leading brands and
the financial resilience of our diversified business model will
continue to drive market outperformance and will enable the Group
to make further progress in line with its expectations for the year
to 31 March 2019.
The Group will announce a trading update for the year ending 31
March 2019 on 10 April 2019.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014
Note: Exchange rate of ZAR/GBP 17.7 has been used in this
announcement for acquisition related currency conversions
ENQUIRIES:
Norcros plc Tel: 01625 547 700
Nick Kelsall, Group Chief Executive
Shaun Smith, Group Finance
Director
Hudson Sandler Tel: 0207 796 4133
Nick Lyon
Nelly Akpaka
Notes to Editors
-- Norcros is a leading supplier of high quality and innovative
bathroom and kitchen products with operations primarily in the UK
and South Africa
-- Based in the UK, Norcros operates under seven brands:
o Triton - Market leader in the manufacture and marketing of showers in the UK
o Merlyn - the UK and Ireland's No. 1 supplier of shower
enclosures and trays to the residential, commercial and hospitality
sectors
o Vado - A leading manufacturer and supplier of taps, mixer
showers, bathroom accessories and valves
o Croydex - A market-leading, innovative designer, manufacturer
and distributor of high-quality bathroom furnishings and
accessories
o Abode - A leading niche designer and distributor of
high-quality kitchen taps, bathroom taps and kitchen sinks
o Johnson Tiles - A leading manufacturer and supplier of ceramic tiles in the UK
o Norcros Adhesives - Manufacturer of tile & stone adhesives, grouts and related products
-- Based in South Africa, Norcros operates under three brands:
o Tile Africa - Chain of retail stores focused on ceramic and
porcelain tiles, and associated products such as sanitary ware,
showers and adhesives
o Johnson Tiles South Africa - Manufacturer of ceramic and
porcelain tiles
o TAL - The leading manufacturer of ceramic and building
adhesives
-- Norcros is headquartered in Wilmslow, Cheshire and employs
around 2,100 people. The Company is listed on the London Stock
Exchange. For further information please visit the Company website:
http://www.norcros.com
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END
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