Builders' supplier buys Donegal firm

The Limerick-based family-owned building materials' supplier, McMahon Group, has bought a builders' providers in Co Donegal for an undisclosed sum.

The purchase of James Johnston & Sons, Letterkenny, brings to 14 the number of outlets the McMahon Group operates in Ireland, 10 of them in the Republic.

The group had a turnover of €180 million in 2005 and employs almost 500 people. It is due to open a new store in Portarlington, Co Laois, later this year, and work commenced recently on a purpose-built store in Fermoy, Co Cork. The group is the third-largest builders' providers in the Republic, after Brooks and the Grafton group.

An analyst who covers the building materials sector said such businesses are selling for half to one times sales, or twice fixed assets. This would indicate a figure of approximately €8-€10 million for Johnston, but he emphasised this could be well off the true figure.

There are five shareholders listed in the latest annual return for James Johnston & Sons, all with addresses in Letterkenny. They are: Raymond Johnston (21.8 per cent); Kenneth Johnston (32.3 per cent); David Johnston (17.4 per cent), Arthur Johnston (14.2 per cent) and Ian Johnston (14.2 per cent).

The latest accounts, for the year to the end of December 2004, show a pretax loss of €232,038, compared to a pretax profit of €1.29 million a year earlier. Fixed assets were €4.2 million and retained profits were €3 million.

In March, Johnston's auditors, Donaldson & Thompson, of Limavady Road, Derry, filed a notification that proper books of account had not been kept by the Letterkenny company.

The latest accounts for Derevoya Holdings Ltd, the holding company for the McMahon Group, for the period to the end of December 2004, show it made a pretax profit of €12.29 million that year on a turnover of €144 million. The group paid a dividend of €1.3 million and had retained profits at year's end of €44.6 million.

The group is also involved in property development, according to the accounts. The McMahon business was founded in 1831. Up to the 1990s it was a timber supplier but then developed into a full product offering provider.

"We're on the move," said chief executive John McNamara yesterday when discussing the range of developments coming down the line for the group.