Brickability Group PLC on Wednesday announced the acquisition of a cladding installation and remediation contractor, hoping that increasing its presence in this business line will make up for a dearth of new house building in the UK.

Brickability is a Bridgend, Wales-based distributor of construction materials. It operates from some 70 locations across the UK and has more than 700 employees. Shares were down 0.7% at 46.44 pence on Wednesday in London.

Brickability said it bought Topek Ltd for £45 million, acquiring all of the shares of Group Topek Holdings Ltd. The cash price is split between £27.3 million on completion and deferred consideration of £17.7 million.

The Glasgow-based company was founded in 1981. It installs cladding and rainscreen systems to improve insulation, comply with fire safety standards, and improve the appearance of buildings. Topek generated adjusted earnings before interest, tax, depreciation and amortisation of £8.0 million in the 12 months that ended August 31 on revenue of £21.2 million.

Topek will be added to Brickability’s existing cladding portfolio, which includes Taylor Maxwell Cladding, SBS Cladding, and Architectural Facades.

‘The acquisition of Topek will also significantly increase the group’s presence in the cladding remediation market. Since 2017, the requirement for cladding remediation in the UK has been of huge importance,’ Brickability said, referring to new legal requirements to replace flammable cladding following the deadly Grenfell Tower fire in London.

The business diversification move came as Brickability said it expects revenue for the first half of financial year 2024 to be £324 million, down 8.1% from £352.7 million a year before. On a like-for-like basis, the revenue decline is 14%.

Adjusted Ebitda in the six months that ended September 30 is expected to be no less than £24.0 million. This would be more than halved from £51.5 million in financial 2023.

Brickability said high interest rates will continue to hold back house building in the UK in the second half of the year.

‘Whilst the group has traded in line with board expectations through H1 FY24, and the acquisition will be immediately earnings accretive in the current year, forecast reductions in newbuild volumes are expected to have a corresponding impact upon the performance of the group’s existing businesses throughout the second half of the current financial year,’ it explained.

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