The sale of his Hallam Beauty beauty care products business has put entrepreneur Graham Royle under the spotlight for the first time. Jim Pendrill shines a light on Sheffield’s man of mystery.
GRI. Right, so that obviously stands for
Graham Royle International, correct?
“Well, some might think it stands for
Graham Royle the idiot,” comes the deadpan
response from the 51-year-old Boltonian.
Far from it. The day I meet Royle at his head office in Sheffield he proudly has his copy of Yorkshire Business Insider at the ready, and more specifically has it open at our coverage of the region’s top 500 companies last month where GRI has, for the first time, made it into the top 100.
It’s been a quiet and very private ascent for Royle, which is just the way he likes it. He agrees that this has much to do with the fact that GRI, which now has a turnover of more than £100m, hasn’t got an all-singing and dancing giant factory in Sheffield.
Put it this way, it isn’t a Forgemasters – even though that business is only 13 places higher than GRI on our top 500 ranking. Instead Royle was running his whole business from home until two years ago. “It got a bit crazy after a while. I couldn’t get in to my office for all the papers.”
Hence the head office in Sheffield, but even this is run on a shoestring. The day I meet Royle the only other people in the building are his PA and his finance director, David Kearns.
“Basically we are not really a local business because our customers are global players such as GlaxoSmithKline, PZ Cussons or Proctor & Gamble,” says Royle. “We sell worldwide – to 60 countries last year. Come to think of it, I don’t think we sell anything in Yorkshire so it’s not surprising we are not perceived as a local company. That said, I am quite happy with my anonymity, I don’t need personal adulation.”
On closer inspection, GRI does have considerable Yorkshire interests. The group has maintained a 25 per cent stake in Bradford care products group Hallam Beauty, which was sold earlier this year to Swiss cosmetics business Mibelle, a subsidiary of conglomerate Migros. And in Leeds Royle runs Matrix Chemie, a virtual business that sources and distributes chemicals from around the world. Completing the set is his TensaChem factory in Belgium, which produces ingredients for numerous personal and household care products.
The sale of Hallam, which scooped Insider’s South Yorkshire deal of the year this summer, marks a vindication of Royle’s vision for the business after snapping it up from the administrator in 2005.
At the time he had been looking for a way in to the sector and a visit six months before the business went under reaffirmed his belief that it was there for the taking. “I could see what was coming,” he says. “You only had to walk around the place to see the trouble it was in. No-one would look at you, no-one was speaking. It was untidy; it felt knackered and demoralised.”
No surprises that when the company went under Royle was in pole position to take it over. He knew all about what to do with a struggling manufacturing plant thanks to a career largely spent sorting them out. “I had become a kind of company doctor from many years at factories in many sectors. People knew to call me if they wanted something fixing and turning around for sale. I suppose I am good at people and making things happen. My skills are strategy and people management. I am good at deciding what we need to do. I have always been a strategist and I have the vision.”
Royle realised it was time to start doing things for himself ten years ago, when he was running Manro Performance Chemicals, which had one chemicals plant in Stalybridge and another in Belgium. After getting the Stalybridge plant back into profitability it was sold by its owners, but Royle made a successful pitch to keep control of the Belgian operation.
“I bought it with a vision,” he says. “I wanted to do something different. The chemical industry tended to integrate vertically and everything stemmed from the raw materials at the top of the chain. I wanted to look at different approaches, whereby I could help the big players at a range of levels.”
The key was to set up the Matrix trading operation. “I was looking for a business that did what I wanted but couldn’t find one, so I set one up. At Tensa we sell what we make. At Matrix we sell what we do not make.”
The fusion of Royle’s manufacturing nous, his self-taught knowledge of the chemical world (he describes himself as a “pseudo chemist”) and his willingness to embrace technology has proved a winning formula. In short he has taken much of the hassle out of sourcing chemical ingredients for major corporate players.
Even the global recession failed to dampen his spirits. “Yes, the recession slowed us down a bit and prices went down but volumes still went up. We maintained a profit (£5.1m in 2008) because we are damn good at what we do,” he adds.
In terms of clients Royle cites PZ Cussons as a particularly good example. “The company has plants worldwide and we supply chemicals that we have manufactured and products we have bottled,” he says. “Because of the strong relationships I have with clients I can then give them something different. We are effectively funneling this outsourcing service to them, which is useful if they want small amounts of specific chemicals. It makes their operation more efficient and brings us closer to them.
“Ultimately my clients are brand owners. Purchasing is something they do as a consequence rather than something they want to do. They are more interested in how their shampoo looks in the shops and how you can choose it from the hundreds available.”
Royle says the service differs for different clients. “For the likes of skincare group Simple we do the whole formulation for them. PZ Cussons is more of a half-way house where they have their own experts and between us we come up with the products. We are like a buffer.”
Given the obvious success of the GRI model, why the sale of Hallam then? “We are an entrepreneurial group of companies and our job is to continue to move and develop as opportunities appear. I was looking for another company in Europe to gain a relationship with, and Mibelle is a perfect partner to give me the foothold I was after. It is a different move for Mibelle, too, which makes most of its products direct for its owner Migrot, which is retail led. We also tend to be big in everything to do with hair, whereas they are big in skincare.”
The Hallam payday has obviously given Royle the firepower to look at his next big deal. “As we evolve there will be divestment and acquisitions that come along to reshape the group,” he says.
Another factory or two perhaps? “We are working on some acquisitions, which would increase the range of chemistries we can offer to some of our customers so we can go to them with a big bag of stuff. Yes, I’m interested in buying factories that are struggling and turning them around. We would like to find businesses that are a bit distressed.”
Royle says he would prefer to fund the next deal privately, but if the deal is too big he would consider backing from a venture capitalist. “We spend a lot of time fostering relationships with private equity firms and the right ones know us very well. If there is a deal to be done, which involves a big enterprise, then we know who to call.”
Royle certainly won’t go down the public path. “A listing isn’t going to happen. It would change the group completely.”
His boundless energy and enthusiasm for what he does is evidenced by the fact that it’s hard to get a word in edgeways once he gets started on a subject. Take the state of entrepreneurship in the UK. “Ninety-nine per cent of businesses in the UK are small and medium-sized businesses, the majority of which have fewer than ten people. If every one of those took on one more person there would not be unemployment in this country.”
What’s for sure is that GRI group will evolve and doubtless create more jobs for many years to come. “Look at me,” says Royle. “I’m only 51, I’m not in any rush to retire. I have a saying that business is fun, but not funny, and I’m still enjoying myself.”
Also in: August 2010
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A helping hand
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Retail revolution
With construction on Trinity Leeds scheduled to begin this month, Richard Abbott looks at what impact the retail and leisure development will have on the city.