Hello, it's Paul here.

This report is 2 working days late, which was missing from the sequence last week. My apologies for the delay. 

Readers have specifically asked me to look at these stocks, which I think are interesting, so am happy to oblige.

Norcros (LON:NXR)

Share price: 228p
No. shares: 80.3m
Market cap: £183.1m

Interim results

Norcros, a market leading supplier of high quality and innovative bathroom and kitchen products, today announces its results for the six months ended 30 September 2018.

The financial highlights look strong;


Note that underlying operating profit growth of 29.9% is well ahead of revenue growth of +12.1% - impressive to see an improved net profit margin. Sales growth is from acquisitions.

Organic revenues growth was -0.3% on a like-for-like, constant currency basis. Although if Johnson Tiles UK is excluded (which suffered from Kingfisher buying less product), the rest of the group achieved an impressive +4.4% organic growth.

The 105.4% increase in statutory profit before tax is a red herring, because of a one-off £4.3m finance income credit - relating to a favourable movement on derivatives (I assume forex hedges). The underlying figures make more sense to me. I've checked the adjustments, and they look reasonable, apart perhaps from the £0.7m pension scheme administrative expenses, which I think should not be adjusted out, as it's a real, ongoing cost.

Diluted underlying EPS is actually slightly down, despite profit being up. This is due to dilution - 18.25m new shares were issued in a fundraising related to an acquisition called Merlyn Industries Ltd, in Nov 2017.

The period being reported, of 6 months to 30 Sep 2018 includes a full half year of trading from Merlyn. That is reflected in the average number of shares in note 5 being the same as the total number of shares currently in issue. So there's no further dilution to come through in future reporting periods.


As you can see, the share count has risen by about a third in the last year, to fund acquisitions.  The group is doing a buy & build - making good quality acquisitions of complementary companies, then pushing more sales through its…

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