SIG plc (LON:SHI) , a leading European supplier of specialist building products, today announced that it has agreed to sell VJ Technology to Primary Capital, a UK private equity investment firm, following a competitive disposal process. VJT is a UK distributor of technical fixings, fasteners and consumables to the infrastructure, commercial and wider construction industry, and part of SIG Distribution.
The divestment is in line with SIG’s medium term strategy of disposing of smaller, non-core businesses in order to refocus the Group’s portfolio and strengthen its balance sheet. The strategy review undertaken last year identified VJT’s niche product offering and operating model as being very different to that of the main SIG businesses.
In the year ended 31 December 2017, VJT reported sales of £31.0m, profit before tax of £5.0m and operating cash flow of £4.1m. The gross assets of VJT as at 31 December 2017 were £16.4m.
The consideration from the sale is expected to be c.£29.7m, resulting in a gain on sale of c.£7.4m. The proceeds will reduce net debt.
Completion is expected on or before 30 June 2018, reducing leverage at the half year. The Group remains confident of meeting its headline financial leverage target of 1.0 – 1.5x for the current financial year and, as a result of this disposal and other ongoing actions, is increasingly confident of its ability to achieve its medium term target of headline financial leverage below 1x.
The profits of VJT were excluded from underlying operations for planning purposes and therefore there is no impact on the Group’s expectations for current year underlying profit.
