Last close As at 05/08/2026
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— 0.00 (0.00%)
Market capitalisation
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Research: Industrials
Norcros’s total revenue grew 2.1% in Q124 versus a strong comparator period despite tough UK market conditions and power outages in South Africa as the company’s strong service offering and multiple routes to market allowed it to unlock market share opportunities. We continue to believe Norcros’s key strengths are undervalued and that most, if not all, of the legacy issues, particularly the pension deficit, have been resolved. We retain our estimates and value Norcros at 246p, implying c 50% upside.
Norcros |
Strong anchors weather the storms |
AGM trading update |
Construction and materials |
2 August 2023 |
Share price performance
Business description
Next events
Analyst
Norcros is a research client of Edison Investment Research Limited |
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Norcros’s total revenue grew 2.1% in Q124 versus a strong comparator period despite tough UK market conditions and power outages in South Africa as the company’s strong service offering and multiple routes to market allowed it to unlock market share opportunities. We continue to believe Norcros’s key strengths are undervalued and that most, if not all, of the legacy issues, particularly the pension deficit, have been resolved. We retain our estimates and value Norcros at 246p, implying c 50% upside.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
03/22 |
396.3 |
39.3 |
38.2 |
10.0 |
4.3 |
6.0 |
03/23 |
441.0 |
41.8 |
37.4 |
10.2 |
4.4 |
6.1 |
03/24e |
442.1 |
36.7 |
31.6 |
10.2 |
5.3 |
6.1 |
03/25e |
447.2 |
37.9 |
32.4 |
10.2 |
5.1 |
6.1 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. EPS is diluted.
UK ‘broadly in line’, RSA hit by power outages
In Q124, total revenue increased 2.1% on a constant currency basis, but declined 4.2% like-for-like on the same basis against a strong prior year comparator. Revenue in the UK was ‘broadly in line’ with the previous year despite the tougher demand environment and Norcros was able to gain market share, particularly in the trade sector due to superior service and offering. In South Africa, widespread national electricity supply interruptions severely affected operations in April and May, though there was some improvement in supply in June. Total revenue was down 10.9% on a constant currency basis versus a strong comparator. Management in South Africa continues to manage the impact of supply interruptions on operations.
New experienced chairman appointed
At the AGM in July, David McKeith, who was acting board chair and chair of the audit and risk committee, stood down from the board and Steve Good was appointed board chair. Steve is currently a non-executive director (NED) of Elementis and has held several other Chair and NED roles. He was chief executive of Low & Bonar for five years to 2014. This change follows the promotion of Thomas Willcocks from group business director – UK, to CEO in April. He had previously held several senior positions in the South African division.
Valuation: Estimates unchanged, c 50% upside
Following the Q1/AGM trading update, we have retained our full-year estimates. Norcros is currently trading at the lower end of its long-term consensus forward P/E range on 5.2x, suggesting that a lot of bad news might already be priced in. Our P/E based valuation implies a value of 237p/share based on our diluted underlying FY24 EPS estimate of 31.6p/share. Our dividend discount model implies a value of 255p/share, and if we take the average of the two, we arrive at 246p, implying c 50% upside.
Exhibit 1: Financial summary
£'m |
2021 |
2022 |
2023 |
2024e |
2025e |
||
Year end 31 March |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
324.2 |
396.3 |
441.0 |
442.1 |
447.2 |
EBITDA |
|
|
39.2 |
47.0 |
52.3 |
49.4 |
49.8 |
Normalised operating profit |
|
|
33.8 |
41.8 |
47.3 |
43.2 |
43.7 |
Operating profit - Underlying |
33.8 |
41.8 |
47.3 |
43.2 |
43.7 |
||
IAS 19R Pension scheme expenses |
(1.4) |
(1.7) |
(1.6) |
(1.7) |
(1.7) |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Impairment and acquisition related costs |
(3.7) |
(4.8) |
(8.4) |
(8.2) |
(8.2) |
||
Other |
(3.8) |
0.9 |
(9.8) |
0.0 |
0.0 |
||
Reported operating profit |
24.9 |
36.2 |
27.5 |
33.3 |
33.8 |
||
Net Interest |
(6.4) |
(3.2) |
(5.8) |
(7.9) |
(7.2) |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
27.4 |
38.6 |
41.5 |
35.3 |
36.5 |
PBT - Underlying |
|
|
30.6 |
39.3 |
41.8 |
36.7 |
37.9 |
Profit Before Tax (reported) |
|
|
18.5 |
33.0 |
21.7 |
25.4 |
26.6 |
Reported tax |
(3.5) |
(7.3) |
(4.9) |
(7.9) |
(8.2) |
||
Profit After Tax (norm) |
23.9 |
31.3 |
36.6 |
27.4 |
28.2 |
||
Profit After Tax (Underlying) |
25.1 |
31.5 |
36.9 |
28.8 |
29.6 |
||
Profit After Tax (reported) |
15.0 |
25.2 |
16.8 |
17.5 |
18.3 |
||
Net income (normalised) |
23.9 |
31.3 |
36.6 |
27.4 |
28.2 |
||
Net income (Underlying) |
25.1 |
31.5 |
36.9 |
28.8 |
29.6 |
||
Net income (reported) |
15.0 |
25.2 |
16.8 |
17.5 |
18.3 |
||
Basic average number of shares outstanding (m) |
81 |
81 |
88 |
89 |
89 |
||
EPS - basic normalised (p) |
|
|
29.65 |
38.70 |
41.53 |
30.73 |
31.64 |
EPS - diluted normalised (p) |
|
|
29.58 |
37.99 |
40.89 |
30.02 |
30.91 |
EPS - diluted, underlying |
|
|
31.06 |
38.23 |
37.43 |
31.55 |
32.44 |
EPS - basic reported (p) |
|
|
18.61 |
31.15 |
19.06 |
19.64 |
20.55 |
Dividend (p) |
8.20 |
10.00 |
10.20 |
10.20 |
10.20 |
||
Revenue growth (%) |
(-5.2) |
22.2 |
11.3 |
0.2 |
0.0 |
||
EBITDA Margin (%) |
12.1 |
11.9 |
11.9 |
11.2 |
11.1 |
||
Normalised Operating Margin (%) |
10.4 |
10.5 |
10.7 |
9.8 |
9.8 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
141.2 |
158.8 |
226.8 |
215.7 |
205.0 |
Intangible Assets |
93.6 |
90.3 |
167.1 |
159.5 |
151.9 |
||
Tangible Assets |
28.0 |
29.0 |
24.8 |
27.6 |
30.8 |
||
Investments & other |
19.6 |
39.5 |
34.9 |
28.6 |
22.3 |
||
Current Assets |
|
|
171.0 |
200.7 |
216.2 |
221.3 |
225.8 |
Stocks |
78.1 |
100.6 |
103.9 |
108.3 |
111.8 |
||
Debtors |
64.6 |
71.1 |
83.3 |
84.0 |
85.0 |
||
Cash & cash equivalents |
28.3 |
27.4 |
29.0 |
29.0 |
29.0 |
||
Other |
0.0 |
1.6 |
0.0 |
0.0 |
0.0 |
||
Current Liabilities |
|
|
(104.1) |
(110.8) |
(112.7) |
(113.0) |
(114.1) |
Creditors |
(95.4) |
(102.4) |
(99.2) |
(99.5) |
(100.6) |
||
Tax and social security |
(1.0) |
(2.7) |
(0.9) |
(0.9) |
(0.9) |
||
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(7.7) |
(5.7) |
(12.6) |
(12.6) |
(12.6) |
||
Long Term Liabilities |
|
|
(59.7) |
(48.4) |
(119.9) |
(101.5) |
(81.5) |
Long term borrowings |
(17.8) |
(18.8) |
(78.9) |
(69.1) |
(57.7) |
||
Other long term liabilities |
(41.9) |
(29.6) |
(41.0) |
(32.4) |
(23.8) |
||
CASH FLOW |
|||||||
Op Cash Flow before WC and tax |
39.2 |
47.0 |
52.3 |
49.4 |
49.8 |
||
Working capital |
21.8 |
(23.6) |
(13.3) |
(4.8) |
(3.3) |
||
Exceptional & other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Tax |
(3.5) |
(6.5) |
(7.7) |
(7.9) |
(8.2) |
||
Other |
(2.0) |
(0.9) |
(2.5) |
(0.9) |
(0.9) |
||
Net operating cash flow |
|
|
55.5 |
16.0 |
28.8 |
35.7 |
37.4 |
Capex |
(2.8) |
(5.4) |
(6.0) |
(8.5) |
(9.0) |
||
Acquisitions/disposals |
0.0 |
0.0 |
(78.3) |
0.0 |
0.0 |
||
Net interest |
(3.2) |
(2.5) |
(5.5) |
(4.8) |
(4.1) |
||
Dividends |
0.0 |
(9.1) |
(9.2) |
(9.0) |
(9.1) |
||
Other |
(3.2) |
(2.5) |
14.6 |
(3.7) |
(3.7) |
||
Net Cash Flow |
46.3 |
(3.5) |
(55.6) |
9.8 |
11.5 |
||
Opening net debt/(cash) |
|
|
36.4 |
(10.5) |
(8.6) |
49.9 |
40.1 |
FX |
0.6 |
1.6 |
(2.9) |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(10.5) |
(8.6) |
49.9 |
40.1 |
28.7 |
Source: Norcros accounts, Edison Investment Research
|
|
Research: TMT
IP Group’s private portfolio valuations remained broadly stable in H123, with its c 4.1% NAV decline in total return (TR) terms mostly due to a de rating of listed holdings (Oxford Nanopore, ONT, in particular) and FX headwinds, though subsequently largely offset by a rebound in quoted holdings to date. IP Group’s holding-level liquidity remains firm and 84% of its direct portfolio holdings have a cash runway of 12 months or more. IP Group shares continue to trade at a wide 53% discount to NAV.