BSS to refocus UGS merchant business

Heating and plumbers merchant group BSS has “no intention” of becoming a heavyside builders merchant, despite its purchase yesterday of UGS, the Banbury-based drainage, civils and heavyside merchant.

BSS to refocus UGS merchant business

BSS chief executive Gavin Slark told that the general builders merchanting part of UGS is quite small and that its core strength, is that of a specialist drainage and civils merchant.

“We will have to sell some ancillary general building products alongside the drainage and civils core products,” he said. “But we have no intention of bringing in big stocks of bricks and blocks or of selling house-building materials to developers. We see UGS’s strength as the specialist civils and drainage sectors and that’s where we intend to reposition it.”

BSS paid £5,1m for the 10-depot UGS, which turned over £36.4m in the 12 months to December 2009 and a EBITDA loss of £0.04m. The sum includes UGS’s debts, which Slark says is not a problem for the group with its strong balance sheet.

UGS will be run as a stand-alone business within the rest of the BSS group. Its managing director is David Rose, previously supply chain director within BSS’s industrial division. Andrew Bygate, UGS’s chairman, will be staying with the business.

“Eventually we will have a look at the business to see if there is the right distribution network. For example, there isn’t a UGS outlet in Scotland so that might be something that would be appropriate. We certainly intend to invest in the business,” Slark said.

BSS currently has 12 implant branches for specialist drainage trades within BSS branches, with two stand-alone branches trading as BSS Drainage.

“We are delighted to secure the acquisition of UGS which will significantly enhance our capability to service the broader drainage market (above and below ground). We see the area of drainage and water management as having significant growth potential in the coming years as infrastructure is upgraded and maintained.

“The business requires some repositioning and as a result it is expected to be earnings neutral in the year to March 2011. From that point onwards we anticipate UGS will be earnings enhancing”.

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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