October 2015: Grafton Group

Company of the Month | Mon 2 Nov | Author – Business & Finance
Gavin Slark Grafton

Grafton Group has signed a deal to acquire Netherlands-based Isero for €91.5m.

Grafton Group, the builders’ merchanting and DIY Group with operations in the UK, Ireland and Belgium, has announced that it has signed a deal to buy Isero, a Dutch company that specialises in the distribution of tools and fixings in the Netherlands. It trades from 38 branches under the Gerritse, Breur Ceintuurbaan and Van der Winkel brands.

Isero generated revenue of €94m, and reported adjusted EBITDA of €10m and adjusted operating profit of €8.8m, for the year to June 30th 2015.

The purchase consideration of €91.5m, including the refinancing of assumed debt, is payable in cash on completion. The acquisition is subject to consultation with the Works Council, a customary condition of completing a business transaction of this nature in the Netherlands, and is expected to complete before the year-end.

GROWTH PROSPECTS

Commenting on the acquisition, Gavin Slark, CEO, Grafton, said: “The acquisition of Isero will give Grafton a presence in the Netherlands for the first time and strengthen its branch footprint in the mainland European market. Isero is being acquired at an early stage in the recovery of the Netherlands economy and there are excellent opportunities for the organic and acquisitive expansion of the business.”

According to Slark, “Isero’s business model supports Grafton’s core values. It has a strong management team and customer-centric culture with a focus on value-added services and high stock availability. Isero’s small store format will broaden the Group’s merchanting capabilities and we are excited at the prospect of working with the Isero team.”

RECORD RESULTS

In August, Grafton Group released its half-year results for 2015, reporting strong performance and growth. Revenue was up 7% to £1.08bn, while Group operating profit was up 21% to £61.2m and operating profit margin increased to 5.6% from 5.0%

Property profit contribution increased to £6.1m from £1.6m and Group operating profit margin before property profit increased to 5.1% from 4.8%

The Group also announced investment of £42.9m on acquisition and capital expenditure spend to support future growth.

“The first half of 2015 has seen the Group deliver a strong performance across key financial metrics as it continues to execute its strategic plans,” Slark said. “The overall outlook for Grafton is positive and despite current challenges the Group is well placed to make further progress in the second half towards delivery of its medium-term targets of a 7% operating margin and 15% return on capital employed.”  

About the CEO

Gavin Slark joined the Grafton Group and the Board as chief executive designate in 2011 and was appointed CEO in July of that year. Grafton Group is a leading independent company operating in the merchanting, DIY retailing and mortar manufacturing markets in Ireland, the UK and Belgium.

Before his current role with Grafton, Slark was previously Group chief executive of BSS Group plc, a leading UK distributor to specialist trades including the plumbing, heating and construction sectors. Here he gained extensive strategic, financial, corporate development and capital markets experience and oversaw significant growth for the business. Before BSS Group, Slark served as general manager of ICI Dulux Decorator Centres and was also the regional director for Motor World in the UK.

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