Norcros Trading In Line Amid South Africa RAP Plumbing Supplies Buyout

LONDON (Alliance News) - Bathroom and kitchen products makers Norcros PLC said Wednesday it has ...

Alliance News 16 January, 2019 | 8:59AM
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LONDON (Alliance News) - Bathroom and kitchen products makers Norcros PLC said Wednesday it has continued to trade in line with expectations and will acquire South Africa-based RAP Plumbing Supplies Ltd for up to GBP12 million.

The South African subsidiary of Norcros will buy RAP Plumbing Supplies - which trades as House of Plumbing in South Africa - for up to ZAR215 million, equivalent to GBP12.1 million. This will include an initial ZAR172 million in cash on completion followed by up to a further ZAR43 million payable over the next two years in an earn-out deal.

The acquisition will be funded using cash and existing facilities currently in South Africa. The deal is expected to be immediately earnings enhancing.

For the year ended April 2018, RAP generated pretax profit of ZAR34 million - or GBP1.9 million - on revenue of ZAR392 million.

For comparison, Norcros generated GBP13.5 million in pretax profit on revenue of GBP300.1 million for the year ended March 2018.

"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," Norcros Chief Executive Officer Nick Kelsall said. "The acquisition also offers a number of opportunities to drive growth through geographical expansion and through our existing distribution channels."

In addition, Norcros explained it continued to trade in line with the company's expectations in both the UK and South Africa since it last updated in mid-November.

Despite a "challenging" market, the firm remains "confident that our market leading positions, our leading brands and the financial resilience of our diversified business model will continue to drive market outperformance."

Norcros will deliver its full year results on April 10. Shares in Norcros were 2.6% lower at 190.00 pence on Wednesday.

By Ahren Lester; ahrenlester@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
Norcros PLC 217.00 GBX 0.93 -
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