Ann: Sales & Profit Announcement, page-22

With the little information that exists in the public domain, I some months back attempted to build a crude financial model for Viadux.

I concluded that Viadux was highly unlikely to have been a profitable business (even at the EBITDA level) when Reece acquired it and that it's Gross Profit might have been around $20m or $25m, possibly.

This result appears to bear that out, to some degree, given Reece's Gross Profit rose by 11.2% in DH2017, compared to EBITDA growth of just 10%; and if one strips out Viadux's theoretical $25m Gross Profit, (on a pro rated basis given Reece only took ownership at the start of October 2017), from Reece's DH2017 Gross Profit figure, the underlying growth in Gross Profit would be 9.6%.

So, I think it safe to say that Viadux made no contribution to Reece's Operating Profits in the period; in fact, I strongly suspect there was a couple of percentage point drag on Group EBIT.


Now that we can see what it looks like they paid for Viadux, it works out to a Price to Gross Profit (trailing) of around 1.5x, which is not at all bad. However, I think it is quite irrelevant, anyway, because I suspect that in 5 year's time Viadux will be generating Sales close to $200m, Gross Profits of $50m, and EBITDA close to $20m.