Final Results

Grafton Group PLC 10 March 2004 GRAFTON GROUP plc PRELIMINARY ANNOUNCEMENT OF RESULTS YEAR ENDED 31 DECEMBER 2003 Highlights • Pretax profits 27 per cent higher at €102m • Sales increase by 30 per cent to €1.5bn • Operating profits before goodwill up 34 per cent to €123.3m • EPS before goodwill and exceptionals increase by 22 per cent to 45.07c • 24 per cent rise in redeemable share redemption • 37 per cent rise to over €1bn brings UK sales to 74 per cent of Group sales • UK operating profit before goodwill increases 46 per cent to €78.6m • Jacksons performs ahead of expectations • Irish operating profit up 16 per cent to €44.8m • €289m spend on acquisitions and capex • Ten acquisitions completed in 2003 Commenting on the results today, Michael Chadwick, Chairman said: 'Grafton maintained the momentum of consistently strong profitable growth in 2003. The performance reflects the successful strategy of diversifying earnings both geographically and across sectoral markets. Growth was accelerated by an acquisition and capex spend of €289m, which included our largest ever acquisition of Jackson Building Centres. We are currently ideally placed to continue growing the business organically and by acquisition. Trading has started well in 2004 and the Group looks forward with confidence to a year of further progress and improved earnings '. GRAFTON GROUP plc PRELIMINARY ANNOUNCEMENT OF RESULTS YEAR ENDED 31 DECEMBER 2003 Grafton Group plc is pleased to announce that 2003 has been another year of excellent progress and that record sales, profits and earnings have been achieved. • Sales were up 30 per cent to €1.5 billion (2002: €1.15 billion). • Operating profit before goodwill increased by 33.6 per cent to €123.3 million (2002: €92.3 million). • Profit before tax increased by 27 per cent to €102.0 million (2002: €80.2 million). • Earnings per share before goodwill and property profit increased by 21.8 per cent to 45.07 cent (2002: 36.99 cent). The Board has decided to redeem one redeemable share per Grafton Unit for a cash consideration of 6.0 cent payable on 19 March 2004, giving total redemption payments for the year 2003 of 10.5 cent. This represents an increase of 23.8 per cent on redemptions of 8.48 cent paid for 2002. The Board has also decided to redeem the remaining six redeemable shares per Grafton Unit for a total cash consideration of 5 cent payable on 19 March 2004. As a result of the final redemption of all remaining redeemable shares in issue, the Board does not expect that an interim dividend will be paid in 2004. The weighted average number of shares in issue increased by 10.7 per cent to 206.66 million (2002: 186.72 million) following the one for five rights issue in March 2003. The comparative earnings and redemption per share amounts for 2002 have been adjusted for the bonus element of the rights issue. The results for 2003 are based on a strong performance across the Group's businesses and demonstrate the core strengths and quality of the Group's brands in the UK and Ireland. During 2003 the Group comfortably undertook a range of acquisition and development initiatives intended to strengthen its market position and provide a stronger base for the future profitable growth of its market leading businesses. In a further strengthening of the Board, the Remuneration Committee has commenced a search for two additional Non-executive Directors whose appointment will reflect the scale and geographical spread of the Group's interests. The Group has already announced that Mr. Norman Kilroy will be retiring as Managing Director in April 2004 having reached retirement age. He will continue as a Non-executive Director until later this year. In 2003 the Group maintained the momentum of consistently strong profitable growth which has been a feature of its results since becoming an independent public company in 1987. The results for 2003 also reflect the benefit of the Group's strategy of diversifying its earnings base both geographically and across the construction sector and related markets. 2003 was a year of substantial progress for the Group's UK businesses with turnover exceeding the equivalent of €1 billion for the first time. UK turnover grew by 37 per cent to €1.1 billion (2002: €808.5 million) and represented 74 per cent of Group turnover. UK operating profit before goodwill amortisation increased by 46 per cent to €78.6 million (2002: €53.7 million) contributing 64 per cent of Group operating profit (2002: 58 per cent). The UK operating profit margin increased as anticipated to 7.1 per cent (2002: 6.6 per cent). In line with the Group strategy of actively participating in the ongoing consolidation in the UK builders merchanting market, nine acquisitions were completed during 2003. The acquired businesses included Jackson Building Centres which was the largest ever acquisition undertaken by the Group and Plumbline, Scotland's largest independent plumbers merchanting chain trading from seventeen branches. Seven bolt-on acquisitions trading from twelve branches were also completed. The nine acquisitions together with the greenfield development of ten branches added 57 trading locations to the Group's UK merchanting network. EuroMix, the Group's UK dry mortar business continued to benefit from its brand and market leadership position showing excellent growth in turnover and profit. A sixth mortar plant at Harlow, Essex commenced trading in May and EuroMix's seventh Dry mortar plant is now under construction in Southhampton In the Republic of Ireland, the Group experienced strong turnover and profit growth on the back of a very buoyant market for both new residential building and repair maintenance and improvement work. Turnover increased 11.8 per cent to €384.5 million (2002: €343.8 million) and operating profit was up 16.0 per cent to €44.8 million (2002: €38.6 million). The operating profit margin increased to 11.6 per cent (2002: 11.2 per cent). Chadwicks Limited, the Group's leading Irish merchanting company, completed a significant Irish acquisition with the purchase in October 2003 of Telfords, a three branch builders merchant based in the Midlands. Further development of the Irish merchanting and DIY businesses continued with the opening of two Chadwicks Plumb Centres in Galway city and North Dublin and two Woodie's DIY stores opened in Cavan and Carlow. The Group's operations continue to be strongly cash generative. Cash flow generated internally amounted to €129.8 million for the year and these funds together with the €67.3 million proceeds of the Rights issue part funded an expansive investment programme which resulted in over €289.4 million being invested in acquisitions and capital programmes. Shareholders funds were €449.8 million at the year end and the net debt to equity ratio was 69% (2002: 75%). Operations Review - United Kingdom UK sales increased by 37 per cent to €1.1 billion (2002: €808.5 million) and operating profit increased by 46 per cent to €78.6 million (2002: €53.7 million). Consistent with margin improvements achieved in recent years, the UK operating profit margin increased to 7.1 per cent (2002: 6.6 per cent). The UK operating profit margin has over the past five years increased from 3.0 per cent in 1998 to 7.1 per cent in 2003 due to increased scale, buying benefits and operational efficiencies. The results of the UK business benefited from a strong performance in like for like activities, incremental profit from an active acquisition programme completed in 2002 and a strong initial ten month contribution from the Jacksons acquisition. Like for like merchanting sales increased by 5.4 per cent. The first phase of improved operational efficiency and purchasing benefits have been realized and are included in the results for the year and are reflected in the continuing increase in operating margin being achieved in the UK. Additional gains are anticipated during 2004 . Sterling was on average 9 per cent weaker during 2003 when compared to 2002 and accordingly the underlying increase in profit in the UK businesses was in fact higher in local currency terms. The results for 2003 demonstrate the UK managements' success in taking advantage of opportunities presented in a consolidating market and improving profitability in the enlarged business. UK Builders Merchanting The UK builders merchanting business, trading principally under the Buildbase and Jackson brands, had a year of very strong growth in sales and operating profit. Buildbase, now regarded as a leading player in the UK merchanting market with strong brand recognition and an integrated branch network, had another excellent year increasing sales and operating profit strongly. The improved performance resulted mainly from solid like for like sales growth and significant progress in integrating a number of small chain and single branch acquisitions completed during 2002. The division benefited from good like for like sales growth in a positive RMI market and from very good progress on integration of the 31 builders merchanting branches acquired during 2002. The 18 branch Jackson acquisition added critical mass to the division and continues to perform ahead of expectations. A further seven UK builders merchanting businesses acquired in 2003 traded from 12 branches. In addition the division developed three greenfield branches. The successful acquisition of Jacksons on 3 March 2003 was in line with the Group's strategy of expanding its presence in the UK Merchanting market and represented a unique opportunity for Grafton to expand its builders merchanting presence into the East Midlands region by acquiring the leading player in that market and one of the UK's most respected merchanting businesses. As previously announced, it is anticipated that the annual synergies and cost savings for the enlarged Group will be achieved ahead of the estimates and in advance of the time frame contained in the original acquisition announcement. Jacksons improved profitability in 2003 and achieved good like for like sales growth, cost savings and improved purchasing benefits due to membership of the enlarged group. The planned further development of the Jacksons business includes the opening of a greenfield branch in Louth, and refurbishment of the Swinton, South Yorkshire branch with a new purpose built facility. In Northern Ireland Macnaughton Blair, the leading Merchant in the region, traded from ten branches and had another excellent year increasing sales and operating profit in a competitive market. Good like for like sales growth, purchasing benefits and a full year contribution from the Peter Woods acquisition made at the end of 2002 all contributed strongly to the company's improved performance UK Plumbers Merchanting Plumbase the UK plumbers merchanting chain increased sales and profit. Good sales growth, a full year contribution from acquisitions made at the end of 2002 and a contribution in the last quarter from the Plumbline acquisition contributed to an improved level of profitability in Plumbase. Plumbase, one of the UK's largest plumbers merchanting chains, increased its branch network by 24 in 2003 and traded from 137 branches at the year end. The Plumbase branch network, which was concentrated in the South East, Midlands, East Anglia, West Country and North West, expanded into Scotland with the acquisition of Plumbline, the leading independent plumbers merchant trading from 17 branches. The three month contribution from Plumbline was in line with expectations and this acquisition offers opportunity for further profit growth in 2004. The nine branch JKS and B J White acquisitions made at the end of 2002 were successfully integrated into the Plumbase network in 2003 and made a good contribution to profit. Plumbase has successfully developed its branch network through a combination of acquisitions and greenfield development and this approach continued in 2003 with the opening of seven greenfield branches. UK Mortar EuroMix, the leading producer of dry mortar in the UK market, continued to consolidate its brand leadership position in this important growth segment of the residential and non-residential building market. The business grew volumes strongly and reported excellent growth in sales and operating profit. EuroMix supplies a range of dry mortars for use in block and brick laying from six plants in the London, Birmingham, Manchester and Glasgow areas. The sixth plant at Harlow, Essex commenced production in May 2003 and the plant at Glasgow increased its capacity following a major investment programme. The EuroMix business has developed a strong reputation for the quality and range of its value added mortar and render products and also for the service and technical support available to its national, regional and local contractor customer base. During the year construction of the seventh EuroMix dry mortar plant in Southampton commenced with production scheduled to start in Summer 2004. Operations Review - Republic of Ireland Irish turnover increased by 11.8 per cent to €384.5 million (2002: €343.8 million) and operating profit increased by 16.0 per cent to €44.8 million (2002: €38.6 million). The operating profit margin increased to 11.6 per cent (2002: 11.2 per cent). The Irish economy proved remarkably resilient during 2003 despite a weak global economic environment. While overall construction output is estimated to have shown only modest growth the residential sector had a very strong year with completions of 68,800 units compared to 57,700 units in 2002. Demand also continued to be strong in the repair, maintenance and improvement market. Irish Merchanting The Irish Merchanting division increased sales by 11.5 per cent to €239.8 million (2002: €215.0 million) including like for like growth of 8 per cent. Chadwicks builders and plumbers merchanting business traded strongly, increasing sales and operating profit due to volume growth and tight operational management of the business. The resumption of growth in residential construction activity in the second half of 2002 continued strongly during 2003. Chadwicks national branch network was well positioned to benefit from record activity in new residential building and a buoyant RMI market where it has a significant presence. Chadwicks continued its successful programme of branch relocations from provincial town centre premises to high profile purpose built out of town sites. The relocation of the Wexford branch at the end of 2003 follows the successful relocation of the Clonmel and Kilkenny branches during 2002. Each new site has increased capacity providing operational efficiency and improved customer service. The acquisition, in October 2003 of Telfords, a long established three branch builders merchant based in Portlaoise, has significantly strengthened Chadwicks presence in the Midlands market. Telfords traded ahead of pre-acquisition expectations and made a positive contribution to profitability in its first three months with the Group. Chadwicks also increased its branch network with the greenfield development of two Plumb Centre branches in Galway and North Dublin. Irish Retailing Woodie's had another excellent year with significant turnover and profit growth. Turnover increased by 12.4 per cent to €110.3 million (2002: €98.1 million). Woodie's like for like sales growth was 4 per cent despite a weak Irish retail environment. Like for like operating profit improved as a result of volume growth, increased product margin due to sourcing benefits, a continuous focus on range improvement and control of store overheads. New store openings in Cavan in August 2003 and Carlow in October 2003 increased Woodie's store network to 16. Both stores traded successfully. Woodie's results also benefited from a full year contribution from the Tralee and Newbridge stores which opened during 2002. Woodie's seventeenth store at Clonmel opened earlier this month. Woodie's have announced plans to open further stores at Naas Road, Dublin, Limerick, Kilkenny and Naas which will bring the network to 21 over the next two years. Irish Manufacturing Manufacturing turnover increased by 12.1 per cent to €34.4 million (2002: €30.7 million) due substantially to volume growth by CPI's EuroMix silo mortar business which supplies the Greater Dublin area. Finance The Group's businesses continued to be strongly cash generative during 2003. Cashflow from operating activities amounted to €129.8 million (2002: €109.3 million). The cost of making the ten acquisitions in 2003 was €220.1 million (2002: €88.8 million) and capital expenditure amounted to €69.3 million (2002: €68.0 million). Total acquisition and capital expenditure was €289.4 million (2002: €156.8 million). Capital expenditure of €69.3 million included the opening of 15 greenfield locations and continued development of the UK mortar business. During 2003, the Group took advantage of historically low long term interest rates to increase its fixed interest rate debt to half of total debt while interest cover improved to 7.5 times (2002: 7.4). Shareholders funds increased by €127.9 million to €449.8 million (2002: €322.0 million) including €67.3 million raised in the one for five Rights Issue completed in March 2003 to part fund the acquisition of Jacksons. Net debt at 31 December 2003 was €311.7 million (2002: €240.6 million) and the net debt to equity ratio was 69 per cent (2002: 75 per cent). The Group realised a profit of €3.4 million on disposal of surplus land principally at Stanford-le-Hope, Essex a site that originated as surplus property on acquisition of British Dredging in 1998. The Group has already announced that the sale of freehold property on the Naas Road, Dublin acquired during 2002 has been completed. A new flagship Woodie's DIY store will be developed on the site and is scheduled for completion during the third quarter of 2004. It is anticipated that a profit in excess of €6 million will be realised and accounted for in 2004 on successful completion of the development. Group Outlook The Group's strong cashflows, balance sheet and interest cover leave it ideally placed to grow its businesses organically and by acquisition. Economic conditions in the UK are expected to continue to underpin demand in the repairs, maintenance and improvement sector. The UK merchanting business will benefit from organic growth, ongoing integration and scale related purchasing benefits being realized through the significant increase in the Group's business. The EuroMix mortar business is expected to continue on a significant growth path with completion of the seventh plant in Southampton. Although there has been a gradual improvement in the Irish economy in recent months and the economic outlook for 2004 is positive, we expect that a number of the factors which have influenced record levels of house completions in Ireland in recent years to moderate leading to a gradual slow down to long term sustainable levels of new house building. Improved consumer sentiment and higher real disposable incomes should provide a favourable environment for Chadwicks to grow its RMI business and for continued growth in the Woodie's DIY business. Woodie's will also benefit in 2004 from a full year's contribution from the two stores opened in the second half of 2003, the recent store opening in Clonmel and from further store openings planned. Trading has started well in 2004 and the Group looks forward with confidence to another year of further progress and improved earnings. Ends 10 March 2004 For reference: Michael Chadwick Joe Murray / Grainne O'Brien Executive Chairman Murray Consultants Grafton Group plc Telephone: (++353) (01) 498 0300 Telephone: (++353) (01) 216 0600 Colm o Nuallain Ginny Pulbrook Finance Director Citigate Dewe Rogerson Grafton Group plc Telephone: (++44) (0207) 282 2945 Telephone: (++353) (01) 216 0600 Grafton Group plc GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2003 2003 2002 €'000 €'000 Turnover Continuing operations 1,280,423 1,152,358 Acquisitions 215,595 - ------- ------- Total turnover 1,496,018 1,152,358 ------- ------- Operating profit before goodwill amortisation Continuing operations 107,314 92,311 Acquisitions 16,009 - ------- ------- 123,323 92,311 Goodwill amortisation 9,358 4,195 ------- ------- Operating profit 113,965 88,116 Profit on disposal of property 3,437 3,711 ------- ------- Trading profit 117,402 91,827 Income from financial assets 1,788 1,611 Interest payable (net) 17,169 13,219 ------- ------- Profit on ordinary activities before taxation 102,021 80,219 Tax on profit on ordinary activities 15,320 12,048 ------- ------- Profit on ordinary activities after taxation 86,701 68,171 Dividends on ordinary shares - paid - 9 - proposed - - ------- ------- - 9 ------- ------- Profit retained for the financial year 86,701 68,162 ======= ======= Earnings per share 41.95c 36.51c ======= ======= Adjusted earnings per share* 45.07c 36.99c ======= ======= Diluted earnings per share 41.15c 35.71c ======= ======= Adjusted diluted earning per share* 44.20c 36.18c ======= ======= * Before goodwill amortisation and property profit Grafton Group plc GROUP BALANCE SHEET AS AT 31 DECEMBER 2003 2003 2002 €'000 €'000 Fixed assets Goodwill 210,840 100,443 Tangible assets 346,812 302,336 Financial assets 33,665 33,579 ------- ------- 591,317 436,358 ------- ------- Current assets Stocks 194,436 159,345 Debtors 272,797 209,276 Cash and short term bank deposits 138,956 103,108 ------- ------- 606,189 471,729 Creditors (amounts falling due within one year) 354,798 282,015 ------- ------- Net current assets 251,391 189,714 ------- ------- Total assets less current liabilities 842,708 626,072 ------- ------- Creditors (amounts falling due after more than one year) 369,926 288,083 Provisions for liabilities and charges 22,941 16,016 ------- ------- 392,867 304,099 ------- ------- Net assets 449,841 321,973 ======= ======= Capital and reserves Share capital 10,781 9,023 Share premium account 102,352 35,465 Capital redemption reserve 57 18 Revaluation reserve 40,260 40,533 Profit and loss account 296,391 236,934 ------- ------- Shareholders' funds - equity 449,841 321,973 ======= ======= Grafton Group plc GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2003 2003 2002 €'000 €'000 Net cash inflow from operating activities 129,793 109,259 Returns on investments and servicing of finance (15,824) (9,424) Taxation (7,057) (5,213) ------- ------- 106,912 94,622 ------- ------- Capital expenditure and financial investment Purchase of tangible fixed assets (69,267) (68,007) Disposal of tangible fixed assets 30,951 14,656 ------- ------- (38,316) (53,351) ------- ------- Acquisitions Acquisition of subsidiary undertakings and businesses (187,497) (76,379) Net (debt) / cash acquired with subsidiary undertakings (1,912) 5,250 Deferred acquisition consideration (1,342) (3,728) ------- ------- (190,751) (74,857) ------- ------- Redemption of shares / dividends Equity dividends paid - (8,330) Redemption of redeemable shares (18,816) (6,610) ------- ------- (18,816) (14,940) ------- ------- Cash outflow before use of liquid resources and financing (140,971) (48,526) ------- ------- Cash (outflow) / inflow from movement in liquid resources (40,312) 7,272 ------- ------- Financing Issue of ordinary share capital 69,170 866 Increase in term debt 78,889 95,329 Capital element of finance leases repaid (1,080) (1,723) Redemption of loan notes payable (11,240) (18,627) Financing from sale and leaseback 22,501 - ------- ------- 158,240 75,845 ------- ------- (Decrease) / increase in cash in the year (23,043) 34,591 ------- ------- Grafton Group plc GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2003 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 2003 2002 €'000 €'000 (Decrease) / increase in cash in the year (23,043) 34,591 Cash inflow from increase in debt and lease financing (89,070) (74,979) Cash flow from management of liquid resources 40,312 (7,272) ------- ------- Change in net debt resulting from cash flows (71,801) (47,660) Loan notes issued on acquisition of subsidiary undertakings (24,567) (14,473) Finance leases acquired with subsidiary undertakings (478) (744) Translation adjustment 25,775 17,138 ------- ------- Movement in net debt in the year (71,071) (45,739) Net debt at 1 January (240,644) (194,905) ------- ------- Net debt at 31 December (311,715) (240,644) ======= ======= Grafton Group plc NOTES TO THE PROFIT AND LOSS ACCOUNT YEAR ENDED 31 DECEMBER 2003 1. Turnover The amount of turnover by class of activity is as follows: 2003 2002 €'000 €'000 Irish merchanting and wholesaling 239,829 215,037 DIY retailing 110,308 98,117 Irish manufacturing and related activities 34,391 30,665 ------- ------- Total turnover from Irish activities 384,528 343,819 UK merchanting and other activities 1,111,490 808,539 ------- ------- 1,496,018 1,152,358 ======= ======= 2. Operating Profit and Trading Profit 2003 2002 €'000 €'000 Republic of Ireland 44,768 38,596 Great Britain and Northern Ireland 78,555 53,715 ------- ------- Operating profit before goodwill amortisation 123,323 92,311 Goodwill amortised (9,358) (4,195) ------- ------- Operating profit 113,965 88,116 Profit on disposal of property 3,437 3,711 ------- ------- Trading profit 117,402 91,827 Income from financial assets 1,788 1,611 ------- ------- 119,190 93,438 ======= ======= The operating profit of €113,965,000 comprises of €102,047,000 relating to continuing operations and €11,918,000 for 2003 acquisitions. 3. Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities 2003 2002 €'000 €'000 Operating profit 113,965 88,116 Depreciation 28,212 22,439 Goodwill amortisation 9,358 4,195 Profit on disposal of fixed assets (1,615) (1,839) Increase in working capital (20,127) (3,652) ------- ------- Net cash inflow from operating activities 129,793 109,259 ======= ======= Increase in working capital 2003 2002 €'000 €'000 Stock 4,682 17,447 Debtors 22,770 13,421 Creditors (7,325) (27,216) ------ ------- 20,127 3,652 ======= ======= 4. Earnings Per Share The computation of basic and diluted earnings per share is set out below: 2003 2002 Profit on ordinary activities after taxation (€'000) 86,701 68,171 ------- ------- Weighted average Grafton Units outstanding during the year 206,659,076 186,717,006 ------- ------- Earnings per share 41.95c 36.51c ------- ------- Number of dilutive Grafton Units under option 9,588,723 10,290,794 Number of Grafton Units that would have been issued at fair value (5,543,126) (6,099,116) ------- ------- Dilutive potential Grafton Units 4,045,597 4,191,678 ------- ------- Number of Grafton Units for calculating diluted earnings per share 210,704,673 190,908,684 and adjusted diluted earnings per share ------- ------- Diluted earnings per share 41.15c 35.71c ======= ======= Earnings per share of 41.95c (2002: 36.51c) have been calculated on profits after taxation of €86,701,000 (2002: €68,171,000) and the weighted average number of Grafton Units of 206,659,076 (2002: 186,717,006 which has been adjusted for the bonus element of the rights issue). The calculation of adjusted earnings per share of 45.07c (2002: 36.99c) is arrived at after eliminating goodwill of €9,358,000 (2002: €4,195,000) and property profit after taxation of €2,922,000 (2002: €3,295,000) from profit after taxation of €86,701,000 (2002: €68,171,000) Diluted earnings per share of 41.15c (2002: 35.71c) have been calculated on profits after taxation of €86,701,000 (2002: €68,171,000) and the weighted average number of Grafton Units in issue during the year adjusted for the dilutive effect of outstanding share options. The calculation of adjusted diluted earnings per share of 44.20c (2002: 36.18c) uses the same earnings figure as for adjusted earnings per share and the weighted average number of Grafton Units as adjusted to reflect the dilutive effect of outstanding share options. Earnings per Share - Adjusted for Bonus Element of Rights Issue 2002 2002 Actual Adjusted Earnings per share (EPS) 38.75c 36.51c Adjusted EPS 39.26c 36.99c Diluted EPS 37.90c 35.71c Adjusted diluted EPS 38.40c 36.18c The Group announced on 4 February 2003 that it was raising approximately €67.3 million, net of expenses, by the issue of up to 35,276,228 New Grafton Units at a price of €2.00 per New Grafton Unit by way of a 1 for 5 Rights Issue. The actual cum rights price on 28 February 2003, the last day of quotation cum rights, was €3.06 and the theoretical ex-rights price for a Grafton Unit was €2.8833 per Grafton Unit. The 2002 earnings per share are calculated by applying the factor 1.06128 (3.06 / 2.8833) to the weighted average number of Grafton Units for 2002 in order to adjust for the bonus element of the Rights Issue. 5. Share Redemption The Board has decided to redeem one redeemable share per Grafton Unit for a cash consideration of 6.0 cent payable on 19 March 2004, giving total redemption payments for the year 2003 of 10.5 cent. This represents an increase of 23.8 per cent on redemptions of 8.48 cent paid for 2002. The Board has also decided to redeem the remaining six redeemable shares per Grafton Unit for a total cash consideration of 5 cent payable on 19 March 2004. As a result of the final redemption of all remaining redeemable shares in issue, the Board does not expect that an interim dividend will be paid in 2004. Both of these redemptions will take effect in respect of Grafton Units on the register at the close of business on 19 March 2004 and the cash consideration will be paid on 26 March 2004. Following these redemptions on 19 March 2004, a Grafton Unit will comprise of one Ordinary share of €0.05 cent each in Grafton Group plc and one C Ordinary share of Stg0.0001p in Grafton Group (UK) plc. 6. Exchange Rates The year end euro / sterling exchange rate was Stg70.48p (2002: Stg65.05p) and the average euro / sterling exchange rate was Stg69.20p (2002: Stg62.88p). Grafton Group plc FINANCIAL OVERVIEW 2003 2003 2002 Change Turnover (€ million) 1,496.0 1,152.4 +30% EBITDA (€ million) 156.8 120.1 +31% Operating profit before goodwill amortisation (€ million) 123.3 92.3 +34% Profit before taxation (€ million) 102.0 80.2 +27% EPS 41.95c 36.51c +15% EPS before goodwill amortisation and property profit 45.07c 36.99c +22% Share redemptions 10.5c 8.48c +24% Share redemption cover (times) 4.3 4.4 Interest cover (times) 7.5 7.4 Cash flow per share 60.1c 53.9c +12% Net assets per share 211.5c 181.6c +16% Net debt to shareholders' funds 69% 75% Depreciation charge (€ million) 28.2 22.4 Goodwill amortisation (€ million) 9.4 4.2 Acquisition and investment expenditure (€ million) 220.1 88.8 Capital expenditure (€ million) 69.3 68.0 This information is provided by RNS The company news service from the London Stock Exchange PTMMTMBAI

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