Norcros Regulatory News (NXR)

13 June 2013

Norcros plc

Results for the year ended 31 March 2013

'Well placed to make further progress'

Norcros, the market leading supplier of innovative branded showers, taps, bathroom accessories, tiles and adhesives, today announces results for the year ended 31 March 2013.

Financial Summary

*Underlying is before exceptional items and where relevant, before non cash finance costs and after attributable tax

 Highlights

·; Fourth consecutive year of revenue and underlying operating profit growth

·; Revenue increased by 10.2% on a constant currency basis

·; Underlying operating profit increased by 7.4%

·; South Africa returned to profit

·; Vado acquisition on 31 March 2013 - first step in a faster and focused growth strategy

·; UK defined benefit pension scheme closed to future accrual

·; Good progress on surplus property

·; Dividend up 9.5% to 0.46p per share

Martin Towers, Chairman, commented:

"In what has been a challenging year, I am pleased to report another strong performance by Norcros. The Group has achieved its fourth consecutive year of growth in both revenue and underlying operating profit despite tough markets and significant energy cost increases, with South Africa returned to profitability this year.

The integration of the Vado business is progressing well. With our leading brands and market positions, high quality and innovative products, strong customer relationships, talented people and successful self-help initiatives, together with the acquisition of Vado which will provide further synergy opportunities, the Board is confident that the Group is well placed to make further progress."

There will be a presentation today at 9.30 am for analysts at the offices of Numis Securities Limited, The London Stock Exchange Building, 10 Paternoster Square, London EC4M 7LT. The supporting slides will be available on the Norcros website at http://www.norcros.com/ later in the day.

ENQUIRIES

Norcros is a leading supplier of high quality and innovative showers, taps, bathroom accessories, ceramic wall and floor tiles and adhesive products with operations primarily in the UK and South Africa.

·; Based in the UK, Norcros operates under four brands:

·; Triton Showers - Market leader in the manufacture and marketing of showers in the UK

·; Vado - A leading manufacturer and supplier of taps, mixer showers, bathroom accessories and valves

·; Johnson Tiles - A leading manufacturer and supplier of ceramic tiles in the UK

·; Norcros Adhesives - Manufacturer of tile & stone adhesives, grouts and related products

·; Based in South Africa, Norcros operates under three brands:

·; Tile Africa - Chain of retail stores focused on ceramic and porcelain tiles, and associated products such as sanitary ware, showers and adhesives

·; Johnson Tiles South Africa - Manufacturer of ceramic and porcelain tiles

·; TAL - The leading manufacturer of ceramic and building adhesives

·; Norcros is headquartered in Wilmslow, Cheshire and employs around 1750 people. The Company is listed on the London Stock Exchange. For further information please visit the Company website: http://www.norcros.com/

Chairman's Statement

In what has been a challenging year, I am pleased to report another strong performance by Norcros in the year to 31 March 2013. The Group has achieved its fourth consecutive year of growth in both revenue and underlying operating profit despite tough markets and significant energy cost increases, with South Africa having returned to profitability this year.

During the year the Board has developed its strategy for the Group, which is to continue to grow through organic means, but also through targeted acquisitions that complement the Group's existing profitable brands, product portfolio, and markets. The acquisition of Eurobath International Ltd. ("Vado") in March 2013 is the first step in implementing this vision, and the Board believes Vado is an excellent fit with the Group and its strategy.

With clear strategic vision and continued progress, the Group is in a strong financial position as it enters a new and exciting phase of its development.

Results and Financial Position

Group revenue for the year increased by 5.2% to £210.7m (2012: £200.3m) representing a 10.2% increase on a constant currency basis.

Underlying operating profit of £13.0m (2012: £12.1m) was 7.4% higher than prior year, with operating margins also ahead at 6.2% (2012: 6.0%).

Underlying profit before taxation was 9.3% higher at £11.7m (2012: £10.7m) driven by higher underlying operating profits and lower financing costs.

An exceptional operating charge of £4.4m (2012: £nil) has been made in the year principally reflecting a £3.0m provision increase relating to our three remaining legacy property leases and Vado acquisition costs of £0.9m.

Profit before tax was 6.4% higher at £10.0m (2012: £9.4m), with higher underlying profit before tax and non cash interest credits offset by an increased exceptional charge.

Basic underlying earnings per share were maintained at 1.9p (2012: 1.9p) with an increase in underlying profit before tax offset by an increased effective tax rate on underlying profit as the shelter from the Group's tax losses reduced in the year. Basic earnings per share as reported were also maintained at 1.6p (2012: 1.6p).

Net cash generated from operations was £6.6m (2012: £6.0m), and included a £7.7m increase in working capital primarily to support new business gained by Johnson Tiles UK with B&Q, whilst prior year net cash generated from operations was impacted by the £7.8m buyout of the Group's legacy property lease obligation at Springwood Drive in May 2011. Capital expenditure at £6.7m (2012: £6.7m) included new sorting, packaging and palletising equipment in Johnson Tiles South Africa, continued investment in tooling for new product in Triton Showers, and the freehold purchase of a new store at Klerksdorp together with other store upgrades as part of the normal store improvement programme in our South African retailer, Tile Africa. This ongoing store improvement programme also gave rise to disposal proceeds of £2.5m (2012: £nil) in the year following the sale of certain freehold sites in Tile Africa.

Closing net debt at £30.7m (2012: £17.8m) included the net cash outflow of £10.6m associated with the acquisition of Vado and increased working capital requirements in Johnson Tiles UK referred to earlier. Leverage as measured by net debt to EBITDA (including a full year of Vado EBITDA on a pro forma basis) was 1.4 times, with all banking covenants met with appropriate headroom.

Strategy

During the year the Board has reviewed the Group's strategy, and has concluded that a faster and focused growth strategy to scale up the size of the Group organically and by acquisition should be pursued. The Board believes the implementation of this strategy will enhance shareholder value as well as rebalance the value of the Group as against its pension scheme liability.

Organic growth will continue to be driven by capitalising on our leading market positions in the UK and South Africa. Our strategic initiatives will ensure we maintain the provision of innovative new product programmes, excellent customer service and investment in our brand portfolio. We will also reinforce our "designed and built in Britain" credentials as well as capture the growth opportunities in South Africa and sub Saharan Africa, where medium term growth rates are likely to be higher than the more developed markets. We will continue to drive faster revenue growth in our existing export markets and develop new emerging export opportunities.

The strengths and characteristics of our recently acquired Vado business perfectly dovetail with all these initiatives and we will seek to realise the exciting revenue synergies that Vado will bring to the Group.

Acquisitions will be targeted at complementary market and industry segments exhibiting attractive returns on capital which are likely to be bathroom and kitchen products with exposure to commercial and specification segments. The recent acquisition of Vado represents a first step in this approach.

The Board has set itself three strategic targets. These are to double Group revenue by 2018, to maintain revenue derived outside of the UK at approximately 50% of Group revenue, and to sustain a pre-tax return on capital employed of 12% to 15% over the economic cycle.

Acquisition

On 31 March 2013 the Group completed the acquisition of 100% of the share capital of Vado, a private family owned business for an initial cash consideration of £11.0m plus debt and debt-like items assumed as part of the transaction of approximately £0.9m, and further payments of up to £4.1m in total depending upon the future financial performance of Vado. The Board expects the acquisition to be earnings enhancing immediately.

Vado is a leading UK based manufacturer of taps, mixer showers, bathroom accessories and valves, with strong brands and a product offering positioned both in the UK and internationally at the mid to high end segment of its target markets. The acquisition is an important step in supporting and accelerating the Group's growth strategy, and is an excellent fit with the Group's existing products and market positions.

For the year ended 31 December 2012, Vado's audited results showed revenue of £25.6m, EBITDA of £2.5m, and profit before tax of £2.1m.

The acquisition was funded by a £19m increase to the Group's existing banking facility, taking the Group's overall committed credit facilities from £51m to £70m on existing terms.

Pension

The Group's UK defined benefit pension scheme was closed to future accrual on 31 March 2013, and replaced with a new auto enrolment compliant defined contribution scheme. Closure to future accrual is a key step in de-risking the pension scheme, preventing the build-up of future liabilities.

The UK defined benefit pension scheme deficit calculated under IAS19 increased to £30.0m (2012: £18.7m). Although asset values continued to increase, liabilities increased further driven by a significant reduction in the discount rate.

Surplus Property

The Group is pleased to report that planning consent for the proposed development at Highgate Park, Tunstall has been obtained. The approved plans for the site include a food store and petrol station which as previously announced is subject to a conditional sale contract with Optimisation Developments Ltd. a subsidiary of WM Morrison Supermarkets plc ("Morrisons") for gross proceeds of £8.25m and net proceeds of £2.6m. It is now expected that the sale contract with Morrisons will become unconditional by the end of August 2013. A further update will be provided at the appropriate time.

In addition to the food store and petrol station, the approved planning consent also includes a number of non-food retail and restaurant/leisure units, which the Group will now actively market to prospective tenants to generate incremental returns, although it is too early to comment on the likely proceeds and timing.

Dividend

The Board is recommending that the final dividend for the year be increased by 8.9% to 0.305p per share. When added to the interim dividend of 0.155p per share which was paid on 8 January 2013 this will make the total dividend for the year 0.46p per share, a 9.5% increase on the previous year. This final dividend, if approved at the Annual General Meeting, will be payable on 30 July 2013 to shareholders on the register on 28 June 2013. The shares will be quoted ex-dividend on 26 June 2013.

Board changes

As announced separately today, John Brown, Senior Independent Director and Chairman of the Audit Committee, has notified the Board of his intention to retire at the AGM on 24 July 2013. David McKeith will join the Board as Senior Independent Director and Chairman of the Audit Committee at the AGM.

David Hamilton, Executive Director and Company Secretary, has also notified the Board of his intention to retire from the Board at the same AGM. Richard Collins has been appointed Company Secretary as of 3 June 2013 although in line with best practice he will not be appointed to the Board as an Executive Director.

On behalf of the Board I wish both John and David well for the future, and I look forward to working with David and Richard in their new roles.

Employees

Continuing to drive strong results in the current economic climate is a testament to the commitment, dedication, and talent of all of our employees. On behalf of the Board I would like to welcome all Vado employees who have joined the Group recently, and to thank everyone in the Group for their continued support.

Summary and outlook

Whilst our South African and Australian businesses have traded in line with expectations in the first two months of the current year, demand in our UK markets has been weaker than expected reflecting the unseasonally cold weather and destocking by key customers. Early action has been taken to mitigate the impact of this and of higher energy costs and weaker exchange rates, including a cost reduction programme at Johnson Tiles UK which could involve up to 75 redundancies. It is expected that this will result in an exceptional charge in the region of £1.5m in the current year, with the resultant savings being more heavily weighted to the second half of the financial year.

The integration of the Vado business is progressing well. Although there is no contribution from Vado in these results, the business has maintained its strong momentum post acquisition largely reflecting outperformance in its export markets which historically have accounted for 45% of total revenue.

We have continued to invest in our businesses through this protracted economic downturn and succeeded in growing market share, revenue and profit. We will continue to apply this successful formula alongside an enhanced growth strategy including targeted acquisitions that complement the Group's current main businesses and markets. With our leading brands and market positions, high quality and innovative products, strong customer relationships, talented people and successful self-help initiatives, together with the acquisition of Vado which will provide further synergy opportunities, the Board is confident that the Group is well placed to make further progress.

M. Towers

Chairman

13 June 2013

Business Review

United Kingdom

Revenue increased in the year by 5.1% to £122.8m (2012: £116.8m). Strong revenue growth in Johnson Tiles was offset by lower revenue at the more profitable Triton Showers, and with continued energy cost increases resulted in a 4.8% reduction in underlying operating profit to £11.9m (2012: £12.5m). Although this represents a reduced margin of 9.7% (2012: 10.7%), it nevertheless was a resilient performance given the challenging market conditions.

Triton Showers

Triton, the UK market leading domestic shower business, continued to gain market share in the UK market, but with a declining UK market and continued tough conditions in the Irish market, revenue for the year was 4.6% lower at £51.1m (2012: £53.6m).

In the UK, revenue for the year was 3.5% lower than prior year but ahead of the market. This represented a much stronger second half performance with revenue only 0.7% lower despite a subdued February and March performance in the retail sector driven by the poor weather conditions impacting footfall in-store. Both trade and retail sector revenues declined by similar amounts in the year, but market share gains were made in both segments.

Export revenue, which represents approximately 14% of overall revenue, was 10.9% lower compared to prior year, but again represents a much stronger second half performance, being only 1.0% lower. The primary export market for Triton is Ireland, and although lower than last year, this is a respectable result given the general economic conditions in this market.

Performance of the Triton T80z Fast Fit range since its launch in the fourth quarter of the previous year has been pleasing having been extremely well received by installers and the trade sector. The range boasts a new "swivel fit" feature for water inlet and a "swing fit" feature for electrical connections which increases installation flexibility and reduces installation time. New product innovation is a continuing feature of the Triton business, and the new stylish Touch electric shower which was launched to the trade in March 2013, has been very well received. As the name indicates the product uses touch control technology, a new feature for Triton electric showers.

With lower revenues in the year, underlying operating profits were also lower, although further cost reduction initiatives and tight overhead control helped maintain strong profitability and cash generation.

Johnson Tiles

Johnson Tiles, the UK market leading ceramic tile manufacturer and a market leader in the supply of both own manufactured and imported tiles, saw revenue increase by 13.8% to £67.3m (2012: £59.1m).

In the UK revenue grew by 16.8% with strong growth in the retail sector more than offsetting a decline in the trade sector. Market share gain in the DIY multiples sector was driven largely by B&Q which has implemented a major tile range review and introduced a new in-store tile shop. Implementation of this new concept involved us increasing our stockholding by £6.6m and delivering over 12 million boxes of tiles and 34,000 POS display boards in a three month period. Our success in this project is testament to the excellent logistics capabilities and strong customer and supplier relationships the business has built. The UK social housing market has declined further in the year with Government spending cuts constraining activity, although we continue to hold our strong market share in this sector with significant projects completed in the year including the MOD in Tidworth, the Foreign Office, as well as Decent Homes programmes in Leeds, Edinburgh and South Wales.

Increased focus on growing our private sector specification business is continuing to progress well. Architects and interior designers recognise our strong product offer backed up by Material Lab, our London based architects and designer centre, our highly knowledgeable sales team, and quality service. Notable successes in the year include further work with Marks and Spencer, Premier Inn, Costa Coffee, Radisson Edwardian Hotels and John Lewis.

Export revenue, which represents approximately 9% of overall revenue, declined 9.3%. Growth was seen in most regions during the year, but sales to the Middle East fell as a result of large projects in the prior year in Kuwait and Qatar not being repeated in the current year.

Manufacturing performance was significantly improved in the year, with the problems following installation of the new kiln in March 2011 fully resolved. However, energy prices rose a further 14% in the year and continue to constrain financial performance, and despite increased revenue, underlying operating profits were marginally lower than prior year.

Norcros Adhesives

Norcros Adhesives, our manufacturer and supplier of tile and stone adhesives and ancillary products, saw revenue grow by 7.1% in the year to £4.4m (2012: £4.1m). Growth in the second half was stronger helped in part by new business won following the exit of a competitor from the UK market.

New product introductions during the year include wet room wall boarding and floor profiles, together with a high performance two part levelling screed. These latest additions to the range now enable Norcros Adhesives to offer the professional fixer one stop sourcing of tile adhesives, screeds and ancillary products.

Investment in new product and continued investment in sales and marketing in order to drive further growth has left underlying operating profit at a similar level to last year.

South Africa

Another strong year of growth in our South African business saw revenue 19.3% higher on a constant currency basis and 4.8% higher on a reported basis at £77.6m (2012: £74.0m). The average exchange rate for Sterling to Rand for the year was 14% weaker at SAR13.37 (2012: SAR11.77). All three businesses within the South African group recorded double digit constant currency revenue growth, and Johnson Tiles South Africa has made significant operational improvements in the year, although a 26% rise in energy costs has limited some of the financial benefits of this improvement. Nonetheless, an overall underlying operating profit for the year of £1.0m (2012: £0.5m loss) marks the return to profit for our South African operations.

Johnson Tiles South Africa

Johnson Tiles South Africa continued to benefit from a number of key successes in the retail sector with independent sector revenue increasing 56.9% on a constant currency basis and 37.7% on a reported basis to £11.3m (2012: £8.2m).

Further gains in the DIY sector have been achieved as we continue our successful strategy of importing ceramic tile products to complement our own manufactured product to create a "one stop shop" for larger retailers, particularly Builders Warehouse.

The operational improvements in Johnson Tiles South Africa noted last year have continued and further progress made this year with significantly better quality, higher throughput and reduced downtime leading to a 16.0% increase in production volumes. New sorting, packaging and palletising equipment was successfully installed in September 2012, and further improvements to planned maintenance and operating practices yielded further efficiencies. Energy costs were however 26% higher than prior year and held back the financial benefit of this improved manufacturing performance. Notwithstanding this, the business recorded a significantly reduced loss in the year.

TAL Adhesives

TAL, our market leading adhesives business in South Africa, saw independent sector revenue grow 22.3% on a constant currency basis and 7.5% on a reported basis to £19.4m (2012: £18.1m), driven by continued market share growth both inside and outside of South Africa. This growth has helped mitigate margin pressure from competition which continues to be challenging, and in conjunction with continued cost control and formulation improvements, has helped TAL produce another profitable and cash generative year.

Within South Africa, the ability to offer a full tiling solution on a single truck to our major retail customers by combining tile and adhesive deliveries has helped drive improved sales and cost efficiencies. To further build on this "one stop" strategy, Tilemate, a range of tile tools has been successfully launched in the year and further initiatives are underway to add to this portfolio of products.

Exports have again shown good growth off the back of new distribution agreements signed in the year in both Southern and Eastern Africa, and have grown 39% in constant currency terms in the year, now representing nearly 10% of total independent sector revenue.

In November 2012, we sold the business and assets of Nortec, TAL's small but loss making industrial adhesives business, to Permoseal Pty Ltd. Nortec revenue for the year was £1.9m (2012: £3.9m) and an exceptional charge of £0.4m reflects the net loss on sale. Excluding Nortec, year on year constant currency growth in TAL was 41% compared to the 22.3% noted above.

Tile Africa

Tile Africa, our leading retailer of wall and floor tiles, adhesive, showers, sanitaryware and bathroom fittings saw revenue increase 11.7% on a constant currency basis but reduce 1.8% on a reported basis to £46.9m (2012: £47.7m). Continued enhancement of the product offering and availability has driven revenue higher despite market conditions being challenging.

Tile Africa currently has 29 owned stores and six franchises. Continual assessment and focus on underperforming stores is a normal ongoing part of running any retail business successfully. Senior management identifies underperforming stores and then works proactively to improve performance, relocate, or close stores. In the past year we successfully relocated the Paarden Eiland store and are in the process of relocating our Klerksdorp store. Our Germiston store has now been completely refurbished in the year, leaving 21 of our owned stores fully refurbished, and this programme continues to be rolled out across most of the remaining store network. We have also closed two underperforming stores at Fourways and N1 City. These two closures as well as the Klerksdorp relocation involved the sale of freehold sites which generated a profit on disposal of £1.2m (2012: £0.4m).

We expect to secure two new sites in the current year with the stores becoming operational in the next financial year. In line with our Group strategy of growing our geographical footprint, Tile Africa will look to use its strongly performing contracts division to spearhead this growth, with the opening of a contracts office being planned for East Africa in the year to March 2015.

Rest of the World

Australia

Johnson Tiles Australia saw revenue in the year increase 8.8% to £10.3m (2012: £9.5m) or 9.3% higher on a constant currency basis. General conditions in the Australian economy have improved in the year, driven by the resources and mining sector, leading to a 12.8% increase in building approvals following reductions in the two previous years. Revenue also benefitted from upgrades and new stores openings by Bunnings, a major Australian retail customer. Furthermore, in October 2012 a new contract to supply Bunnings New Zealand was won, with product being supplied to twenty two stores.

In March 2013 the business and assets of One Stop Tiles Pty Ltd, were acquired. One Stop Tiles has two retail stores in Tasmania and the acquisition of these assets should provide good growth opportunities in a market where we have been under-represented.

The Johnson Tiles Australia business was profitable in the year with underlying operating profit maintained at £0.1m (2012: £0.1m) and remains in a strong position to capitalise on further opportunities in its markets.

Financial review

Revenue

Group revenue increased on a reported basis by 5.2% or by £10.4m to £210.7m (2012: £200.3m). The underlying increase on a constant currency basis was 10.2% reflecting the translation impact of the South African Rand and Australian Dollar against Sterling. The Group recorded increases in revenue in its UK businesses of 5.1% and increases on a constant currency basis in South Africa of 19.3% and in Australia of 9.3%.

Underlying operating profit

Underlying operating profit increased by 7.4% to £13.0m (2012: £12.1m). Our UK businesses delivered underlying operating profits of £11.9m against £12.5m with the benefit of revenue growth in Johnson Tiles being offset by lower revenue at the more profitable Triton Showers and higher energy costs. Our South African businesses returned to profitability with an underlying operating profit of £1.0m compared to a underlying operating loss of £0.5m last year. The benefit of operational improvements made over the last two years in Johnson Tiles South Africa have contributed to this result, although somewhat constrained by higher energy costs, but continued improvements in TAL and Tile Africa have also had an impact. In Australia trading profit of £0.1m is consistent with the performance in 2012. Group underlying operating profit margins improved to 6.2% (2012: 6.0%).

Exceptional items and operating profit

Exceptional items at £4.4m (2012: £nil) include a £3.0m increase in provisions for the Group's legacy property leases. The Group has three remaining legacy leasehold properties which are not actively used by Group operating businesses. The increased provision has been necessary in light of the Group's view of the likely costs (net of any future rental income) which will be incurred over the remainder of the lease tenure.

The remaining charge covers acquisition related expenses of £0.9m in respect of Vado, net costs of £0.3m resulting from the disposal of the small non-core Nortec business previously operated by the Group's South African adhesives business and £0.2m of other restructuring costs.

Operating profit for the year was £8.6m (2012: £12.1m).

Net finance costs

Net finance costs decreased to £0.8m (2012: £3.1m) driven by a £1.6m favourable variance in respect of the movement on fair value of derivatives and lower amortisation of costs of raising debt finance following the refinancing in September 2011. Bank interest payable of £1.3m (2012: £1.4m) was lower than prior year and reflects a full year of improved terms also following the September 2011 refinancing.

IAS19 finance income of £2.2m (2012: £1.6m) relates to the Group's UK defined benefit pension scheme, and reflects the net of expected rates of return on pension scheme assets and expected interest pension scheme liabilities.

A charge of £1.2m for exceptional finance costs was made in 2012 relating to the immediate write off of unamortised finance costs from the previous banking facility which was superseded by the September 2011 facility agreement.

Profit before tax

Underlying profit before tax was £11.7m (2012: £10.7m) reflecting the increased underlying operating profit and reduced finance costs noted above.

The Group reported profit before tax of £10.0m (2012: £9.4m).

Taxation

The taxation charge of £0.9m (2012: £nil) represents an effective tax rate of 9% (2012: nil) and is lower than the standard rate primarily because of the recognition in the year of certain South African deferred tax assets now that our South African businesses are firmly in profit.

Earnings per share

Underlying earnings per share amounted to 1.9p (2012: 1.9p). Basic earnings per share was 1.6p (2012: 1.6p).

Dividends

As previously announced it is the Board's intention to continue a progressive dividend policy subject to the Group's earnings, cash flow and balance sheet position. As such the Board is recommending a final dividend of 0.305p per share, which, together with the interim dividend of 0.155p, makes a total dividend of 0.46p in respect of the year ended 31 March 2013.

Pension schemes

The Group contributed £3.2m (2012 £2.2m) into its UK defined benefit pension scheme during the year. This included an additional contribution of £2.0m (2012 £1.0m) as part of the 2012 deficit recovery plan.

The total charge in respect of defined benefit schemes to operating expenses in the Consolidated Income Statement was £1.3m (2012: £1.5m).

The gross defined benefit pension scheme valuation on the UK scheme showed a deficit of £30.0m compared to a deficit of £18.7m last year. The higher deficit reflects increased liabilities due to a reduced discount rate of 4.20% (2012: 4.95%), although offset partially by higher assets driven by strong investment returns.

The UK defined benefit scheme's March 2012 triennial actuarial valuation process has now been largely completed, and shows a deficit of £62.4m and represents an 85% funding level on this more prudent actuarial basis. The increased deficit is driven predominantly by the well documented historically low gilt yields resulting partly from the Government's use of Quantitative Easing during the banking crisis and subsequent stimulus packages. In light of this, a new deficit recovery payment schedule has been agreed with the Scheme Trustee, with a contribution of £2m per annum starting in March 2013, and increasing with CPI, payable over the next 15 years. This is subject to final regulatory clearance, and we are not aware of any reasons why this clearance will not be given.

The Group's contributions to its defined contribution pension schemes were £1.2m (2012: £1.1m).

Cash flow and financial position

Key cash flow components and movement in Group net debt:

Whilst cash flow from operations increased to £6.6m, the previous year included an outflow of £7.8m related to lease surrender costs to exit the legacy lease at Springwood Drive, Braintree. Excluding this, cash flow from operations was £7.2m lower than 2012 which principally relates to the increase in inventory at Johnson Tiles UK to support new business with B&Q. Net cash generated after tax and interest was £4.3m (2012: £3.8m). The table above sets out the key cash flow components and the movement in Group net debt.

The Group's net interest payments have decreased as a result of benefitting from a full year of lower interest rates in respect of the financing facility agreed in September 2011.

The Group's working capital outflow was £7.7m (2012: outflow of £0.4m), chiefly to support new business gained by Johnson Tiles in the UK with B&Q.

Capital expenditure of £6.7m includes two new sorting lines at Johnson Tiles South Africa, the freehold purchase of a new store at Klerksdorp and continued Tile Africa store improvements and new product development at Triton Showers, particularly in respect of the new single control and touch screen showers.

The Group acquired Eurobath International Limited trading as Vado on 31 March 2013 for initial consideration of £10.6m, net of cash acquired of £0.4m.

Bank funding

Following a re-financing in September 2011 the Group agreed an amendment in March 2013 in order to finance the acquisition of Vado. This increased the revolving credit facility from £51.0m to £70.0m on the same commercial terms. As a result of this amendment the headroom on facilities was £28.6m at 31 March 2013. This facility expires in October 2015 and is currently subject to a margin of 1.75% above LIBOR.

Responsibility Statement

Each of the directors, whose names and functions are listed below, confirms that, to the best of their knowledge:

The consolidated financial statements, prepared in accordance with the applicable United Kingdom law and in conformity with IFRS, as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the undertakings included in the consolidation taken as a whole; and

The business review includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole.

Directors: Martin Towers (Chairman), Nick Kelsall (Group Chief Executive), Martin Payne (Group Finance Director), David Hamilton (Director), John Brown (Non-Executive Director), Jo Hallas (Non-Executive Director), and Vijay Aggarwal (Non-Executive Director).

N. P. Kelsall

Group Chief Executive

M. K. Payne

Group Finance Director

Consolidated income statement

Year ended 31 March 2013

* Underlying is defined as before exceptional items and, where relevant, amortisation of costs of raising finance, movement on fair value of derivative financial instruments, discounting of property lease provisions and finance costs relating to pension schemes, less attributable taxation.

Consolidated statement of comprehensive income and expense

Year ended 31 March 2013

Items in the statement are disclosed net of tax.

Consolidated balance sheet

At 31 March 2013

N. P. Kelsall M. K. Payne

Group Chief Executive Group Finance Director

Consolidated cash flow statement

Year ended 31 March 2013

Consolidated statement of changes in equity

Year ended 31 March 2013

Notes to the preliminary statement

Year ended 31 March 2013

1. Basis of preparation

Norcros plc ("the Company") and its subsidiaries (together "the Group") principal activities are the development, manufacture and marketing of home consumer products in the UK, South Africa and the Rest of the World. The Company is a public limited company which is listed on the London Stock Exchange market of listed securities is incorporated and domiciled in the UK. The address of its registered office is Ladyfield House, Station Road, Wilmslow, SK9 1BU.The financial information presented in this preliminary announcement is extracted from, and is consistent with, the Group's audited financial statements for the year ended 31 March 2013. The financial information set out above does not constitute the Company's statutory financial statements for the periods ended 31 March 2013 or 31 March 2012 but is derived from those financial statements. Statutory financial statements for 2013 will be delivered following the Company's annual general meeting. The auditors have reported on those financial statements; their report was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.The Group's results have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

2. Segmental reporting

The Group operates in three main geographical areas: UK, South Africa and the Rest of the World. All inter-segment transactions are made on an arm's length basis. The chief operating decision maker (being the Board) assesses performance and allocates resources based on geography as each segment has similar economic characteristics, complementary products, distribution channels and regulatory environments.

Continuing operations - year ended 31 March 2013

Revenues of £49.6m (2012: £32.9m) are derived from a single customer. These revenues are attributable to the UK segment.

Continuing operations - year ended 31 March 2012

3. Exceptional items

1 The provision to cover the Group's onerous property leases was increased by £3.0m during the year, following a reappraisal of the future cashflows arising from these leases.

2 The fees arose as a result of the Group's acquisition of Vado.

3 Restructuring costs related to redundancies, asset write-downs and consultancy costs following the implementation of a programme of restructuring initiatives throughout the Group's business units. In 2013 this included a loss of £0.3m on the sale of the small non-core South African Nortec adhesives business.

4 In 2009 the carrying value of the Group's Greek associate was fully impaired together with associated costs including the mark to market value of the related cross currency swap. This swap matured in 2012 and other associated costs were paid. The cost of settling the cross currency swap was £0.5m lower than initially estimated.

5 Following the refinancing of the Group's banking facilities in September 2011, £1.2m of costs relating to the previous banking arrangements were written off.

4. Finance income and costs

5. Non-GAAP measures

Underlying profit before taxation is defined as profit before taxation, exceptional items, amortisation of costs of raising finance, movement on fair value of derivative financial instruments, discounting of property lease provisions and finance costs relating to pension schemes. The Directors believe that underlying profit before taxation and underlying earnings provide shareholders with additional useful information on the underlying performance of the Group.

6. Earnings per share

Basic EPS is calculated by dividing the profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year, excluding those held in the Norcros Employee Benefit Trust.

For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potential dilutive ordinary shares. At 31 March 2013 the potential dilutive ordinary shares amounted to 8,895,196 (2012: 2,383,527) as calculated in accordance with IAS 33.

The calculation of EPS is based on the followings profits and numbers of shares:

7. Consolidated cash flow statements

(a) Cash generated from operations

(b) Outflow related to exceptional items

This includes expenditure charged to exceptional provisions relating to onerous lease costs, acquisition fees and other business rationalisation and restructuring costs.

(c) Analysis of net debt

Other non-cash movements relates to additional financing costs incurred following the increase in the financing facilities in March 2013, less amortisation charged for the year.