Applied Energy manufactured and distributed electric ventilation, heating and water heating products branded Xpelair, Creda and Redring. The three brands were strong and widely recognised. The merger had been poorly managed, damaging sales and profitability, and a new management team had been brought in to stabilise the company and then take it forward. Graphite invested at the turning point.
The transaction offered the opportunity to acquire a highly cash generative company that owned three well recognised brands. All three brands had significant market share in the electrical wholesale channel. At the time of investment the management team had already started to stem the decline in sales. The opportunity existed to expand the channels to market to include builders’ merchants and DIY retailers as well as to increase export sales. The management team had also identified the need to refresh the product ranges.
KEY BUSINESS ACHIEVEMENTS
Strengthened its operations and achieved a successful turnaround
Strengthened in-house product development and third-party sourcing
Penetrated new routes to market and initiated a programme of low cost sourcing to protect margins
Grew turnover and operating profit while maintaining strong cash flow
RETURN ON GRAPHITE'S INVESTMENT
In 2007 Applied Energy was sold to Glen Dimplex, generating a multiple of 3.5 times cost.