Final Results
Grafton Group PLC
09 March 2005
GRAFTON GROUP plc
PRELIMINARY ANNOUNCEMENT OF RESULTS
YEAR ENDED 31 DECEMBER 2004
Highlights
• Pre-tax profits 29 per cent higher at €131.9m
• Turnover increase by 25 per cent to €1.9bn
• Operating profit before goodwill up 28 per cent to €157.4m
• EPS before goodwill and property profit increase by 23 per cent to 55.6c
• 24 per cent rise in share purchases / redemptions
• 28 per cent rise in UK turnover to over €1.4bn
• UK operating profit before goodwill increases 38 per cent to €108.4m
• Jacksons performs ahead of expectations
• 17 acquisitions completed in 2004
• Cash generated from operations up 36 per cent to €177 million
• Heiton acquisition completed in January 2005
Commenting on the results today, Michael Chadwick, Chairman said:
'We achieved good quality profit growth in our established businesses in both
the UK and Ireland, supported by acquisition, greenfield development,
integration and scale benefits. Record levels of cash flow funded ongoing
investment in existing businesses and bolt on acquisitions, with interest cover
remaining healthy. Following the Heiton acquisition in early 2005, the Group is
well placed to continue its successful development strategy with a strong
balance sheet and highly cash generative profitable operations.'
GRAFTON GROUP plc
PRELIMINARY ANNOUNCEMENT OF RESULTS
YEAR ENDED 31 DECEMBER 2004
Grafton Group plc is pleased to announce that 2004 has been another year of
excellent progress and that record sales, profits and earnings have been
achieved. This was the Group's thirteenth year of uninterrupted profit growth.
Highlights
• Sales were up 25 per cent to €1.9 billion (2003: €1.5 billion).
• Operating profit before goodwill increased by 28 per cent to €157.4 million
(2003: €123.3 million).
• Profit before tax increased by 29 per cent to €131.9 million (2003:€102.0
million).
• Earnings per share before goodwill and property profit increased by 23 per
cent to 55.64 cent (2003: 45.07 cent).
• Cash generated from operations up 36 per cent to €177 million (2003:€129.8
million).
All of the Group's operations performed strongly in 2004 aided by good market
conditions in the UK and Ireland and the benefit of acquisitions completed
during 2003. The Group's consistent strategy has enabled development of
builders merchanting, DIY and mortar manufacturing businesses in the UK and
Ireland with strong regional and national market positions. These businesses
and brands have given the Group a solid platform for continued profitable growth
and development as well as diversifying its earnings base between the UK and
Ireland and across the construction sector and related markets.
It was another year of significant progress for the UK businesses. Favourable
economic conditions continued to support strong demand in the repair,
maintenance and improvement sector. The completion of a significant acquisition
and development programme in 2003 and the related integration and scale
opportunities resulted in a substantial increase in sales and operating profit.
UK turnover grew by 28 per cent to €1.4 billion (2003: €1.1 billion). UK
operating profit increased by 38 per cent to €108.4 million (2003: €78.6
million). As anticipated, the UK operating profit margin increased, for the
sixth consecutive year, to 7.6 per cent (2003: 7.1 per cent). The UK accounted
for 76 per cent of Group turnover (2003: 74 per cent) and 69 per cent (2003: 64
per cent) of Group operating profit.
The Group was also active on the development front in the UK during 2004 with a
continuing successful bolt-on strategy which involved completion of 17
acquisitions. The businesses acquired trade from 22 branches with annual sales
of €120 million. These businesses enhance coverage of the UK merchanting market
and strengthen our position in the North West region where half of the acquired
branches are located. The Group also improved coverage of the UK merchanting
market with the greenfield development of 12 branches. EuroMix strengthened its
leadership position in the UK dry mortar market with the opening of its seventh
plant in Southampton.
In the Republic of Ireland, a gradual economic recovery as the year developed
and record levels of activity in the residential construction market provided a
favourable background for good growth in turnover and operating profit. Irish
turnover increased by 17 per cent to €451.7 million (2003: €384.5 million) and
operating profit was up 10 per cent to €49.0 million (2003: €44.8 million).
Irish merchanting sales increased by 19 per cent due to the Telfords acquisition
and good like for like growth. Incremental sales from Woodie's Cavan and Carlow
stores which opened during 2003 and the opening of a further three stores in
Clonmel, Naas Road, Dublin and Kilkenny together with like for like sales growth
enabled Woodie's to increase turnover by 18 per cent.
The Group used its strong operating cash flows and balance sheet strength to
fund a significant acquisition and development programme during the year. A
record cashflow of €177 million from operations in 2004 enabled the Group to
continue to implement its development strategy and provide a sound basis for the
future profitable growth of the Group.
Share Purchase / Redemptions
The Board redeemed the remaining six redeemable shares per Grafton Unit for a
cash consideration of 5 cent payable on 26 March 2004.
Following restructuring of the Group's share capital in June 2004, the Board
approved the purchase of one A Ordinary Share per Grafton Unit for 1 cent and
payment was made on 1 October 2004.
The Board has decided to purchase a further A Ordinary Share per Grafton Unit
for a cash consideration of 7 cent payable on 29 March 2005. Total redemption /
share purchase payments to shareholders for 2004 of 13 cent per Grafton Unit
represents an increase of 24 per cent on redemptions of 10.5 cent per Grafton
Unit for 2003.
Heiton Group plc
On the 7 January 2005, following clearance from the Competition Authority in
Ireland, the Group completed the acquisition of Heiton Group plc for a total
consideration of €398 million including debt assumed and the cost of the
Group's 29 per cent investment in the business held prior to the offer. The
consideration payable includes the issue of 21.4 million shares by Grafton to
Heiton Group shareholders.
Heiton Group operations, which are located primarily in Ireland, comprises both
builders merchanting and DIY activities. The Irish builders merchanting
business trades mainly under the Heiton Buckley name and is the largest builders
merchanting business in Ireland operating nationally from 25 branches including
Cork Builders Providers. The business also incorporates Heiton Steel, the
largest steel stockholding business in Ireland, and a 14 branch small plant and
tool hire business trading under the Sam Hire brand. The retail operations of
Heiton Group trade from 15 branches under the Atlantic Homecare DIY brand and,
from 4 stores, under the In-House at the Panelling Centre brand. Heiton Group
also operates a small specialist drainage and ground engineering merchanting
business from 6 branches in the UK.
Heiton's Irish merchanting and DIY businesses are a good strategic fit with
Grafton's existing operations and consolidates the position of Grafton as the
leading player in the Irish merchanting and DIY markets.
The acquisition of Heiton Group provides opportunities for scale benefits from
two complementary businesses.
Board
Mr. Leo Martin, Chief Executive of Heiton, was appointed to the Board of Grafton
on completion of the acquisition. As previously announced, the Board is in the
process of appointing two additional non-executive directors whose appointment
will reflect the scale and geographical spread of the Group's interests.
International Financial Reporting Standards (IFRS)
The results for 2004 are reported under Irish / UK GAAP. Restated interim and
full year results for 2004 under IFRS will be made available during the second
quarter of 2005.
Operations Review - United Kingdom
UK sales increased by 28 per cent to €1.4 billion (2003: €1.1 billion) and
operating profit increased by 38 per cent to €108.4 million (2003: €78.6
million). The operating profit margin increased to 7.6 per cent (2003: 7.1 per
cent), a rate of improvement consistent with that achieved in each of the
previous three years.
In 2004 the UK economy continued a long period of stability and growth. The
economy slowed from above trend growth rates as the year progressed in response
to a tightening of interest rates aimed at slowing growth and the rate of
increase in house prices. It was a very good year for the labour market as the
unemployment rate edged down to 4.7 per cent.
The UK repair, maintenance and improvement market, which is the principle end
user market for the Group's merchants' sales, put in another solid performance
in 2004 with industry estimates indicating volume growth of 3.5 per cent.
The excellent results achieved by the UK businesses reflects strong profit
growth in the established merchanting businesses, incremental profit from the
businesses acquired during 2003 and contributions from the seventeen businesses
acquired during 2004.
Like for like merchanting sales growth of 6.5 per cent, margin improvement as a
result of purchasing synergies and trading initiatives and benefits of
integrating acquisitions contributed to the substantial operating profit
improvement in the like for like businesses.
The Jackson and Plumbline acquisitions completed in 2003 joined the Group with
very good market positions and performed strongly during 2004.
Development of the UK businesses continued during 2004 with the acquisition of
seventeen businesses trading from twenty two branches and thirteen greenfield
developments increasing the number of trading locations to 318. Acquisitions
made during the year included Keel Supply and Hall and Rogers, two specialist
insulation and dry-lining businesses trading from four branches in the North
West. These businesses, which traded strongly post acquisition, add critical
mass over a narrow product group and offer potential growth opportunities.
Greenfield developments comprised eight plumbers merchanting branches, four
builders merchanting and a new mortar plant. Two Scottish builders merchanting
branches at East Kilbride and Glasgow successfully relocated to new purpose
built facilities.
UK Builders Merchanting
The UK Builders merchanting division had an excellent year with sales and
operating profit substantially ahead of 2003. The strong improvement in profit
came from good like for like sales growth in the established branch network,
incremental profit from acquisitions made during 2003 and contributions from
current year acquisitions.
The results reflect the full year benefit of revised purchasing and sourcing
arrangements put in place following the Jacksons acquisition and the continued
successful integration of the 61 branches acquired in 2002 and 2003.
Regional coverage was strengthened with further geographic expansion during
2004. Completion of 15 small acquisitions added twenty branches and a further
four greenfield branches were opened increasing the UK builders merchanting
network to 163 branches at the year end.
Buildbase achieved another year of excellent sales and profit growth. Good like
for like sales growth, margin improvement through improved purchasing terms and
tight control over overheads delivered profit improvement in the like for like
business. This combined with incremental contributions from acquisitions made
in 2003 resulted in a significant improvement in operating profit. Buildbase
continued with the successful integration of businesses acquired during 2003 and
2004 taking advantage of synergy and product growth opportunities while
maintaining the ethos of these small chain and single branch merchants with a
long established presence in their local markets.
Buildbase continued to consolidate and expand its strong position in the UK
builders merchanting market where the brand is now firmly established.
Jacksons, the UK's largest regional independent merchanting business prior to
acquisition in March 2003, achieved an excellent result in its first full year
as part of the Group. The strong advance in operating profit on 2003 levels
reflected good like for like sales growth, tight overhead control and scale
related purchasing synergies.
The Jackson acquisition created a market leadership position for the Group in
the East Midlands builders merchanting market and complements the Buildbase
branch network which is concentrated in the South East and West Midlands. The
strong results for 2004 mean that the financial benefits of the acquisition for
the enlarged Group were realised in 2004, the first full year of ownership and
well ahead of the 2006 time frame anticipated in the original acquisition
announcement.
Buildbase acquired nine businesses trading from twelve branches during 2004 and
opened two branches in Stratford E15 and Cirencester. Developments completed by
Jacksons during the year included the opening of a greenfield branch in Louth,
replacement of the Swinton, South Yorkshire branch with a new purpose built
facility and a small bolt-on acquisition which provides a platform for further
growth in the Lincolnshire market.
In Northern Ireland, Macnaughton Blair strengthened its leading market position
in the province with the acquisition of two builders merchanting businesses
trading from branches in Bangor and Coleraine. These acquisitions provide the
business with a wider geographic coverage in the province and increase the
branch network to 12.
The strong trading performance of Macnaughton Blair in recent years continued
into 2004 and the business experienced very good like for like sales and
operating profit growth with contributions from the Bangor and Coleraine
acquisitions.
UK Plumbers Merchanting
Plumbase, a plumbing heating and sanitary ware merchanting business, with 147
branches has strong regional market positions in the South East, West Country,
Midlands, East Anglia and Scotland. The business further strengthened its
market position during 2004 through the acquisition of two single branch
merchants and the opening of eight new branches.
Plumbase achieved growth in sales and operating profit. Purchasing synergies
and increased sales enabled a good advance in profit in the like for like
Plumbase business.
The results of the division were significantly boosted by a full year
contribution from the Plumbline business acquired in September 2003. Plumbline,
a leading regional plumbers merchanting chain trading from seventeen branches
provided Plumbase with an important initial presence in the Scottish plumbers
merchanting market. The business performed ahead of pre-acquisition
expectations as sales growth, purchasing benefits and the continued development
of a number of branches in the chain which opened in the years prior to
acquisition contributed to the increase in profit.
UK Mortar
The EuroMix mortar business continued to trade well increasing sales and
operating profit in a more competitive market. EuroMix, the market leader in
the supply of dry mortar, has transformed a traditional market by pioneering the
on-site use of dry mortar silo technology to produce a range of quality mortars
for the use in block laying and bricklaying.
The EuroMix business operates from a network of seven strategically located
plants and provides mortar to key national and regional building and
construction companies for use in residential and non-residential construction
projects. The distinctive red and white EuroMix silos are now an established
feature on construction sites throughout the country.
The plant at Harlow, which commenced production in May 2003, traded strongly and
the opening of a plant in Southampton in July provides coverage to house
builders, developers and contractors throughout the South of England. Market
leadership will be further enhanced with the opening of the eighth dry mortar
plant at Severnside, near Bristol. This plant is currently under construction
and will provide market coverage in the West Country.
Operations Review - Republic of Ireland
Irish turnover increased by 17 per cent to €451.7 million (2003: €384.5 million)
and operating profit increased by 9.5 per cent to €49.0 million (2004: €44.8
million). The operating profit margin declined to 10.9 per cent from 11.6 per
cent. This reflected flat operating profit margins in the established
merchanting and DIY businesses, costs associated with Woodie's three new stores,
an anticipated lower margin in the acquired merchanting business and a more
competitive trading environment with increased competition in the DIY and
manufacturing businesses.
The Irish economy delivered an impressive growth performance in 2004 following
two years of below trend growth. The economy steadily gathered pace as the year
developed and exceeded growth expectations for the year as a whole. The
employment market performed strongly with high employment creation and the
inflation environment was benign with the slowest annual growth rate for five
years
The construction market grew by an estimated 9 per cent in 2004 reflecting very
strong activity in the residential sector, strong infrastructure demand and
unchanged volumes in the commercial and industrial sectors. House completions
for 2004 were a record 77,000 units. Record levels of house completions have
been influenced by a prolonged period of low interests rates, strong employment
creation, net inward migration, demand for second homes and demand from
investors in the buy-to-let market.
Irish Merchanting
The Irish Merchanting division increased sales by 19 per cent to €286.1 million
(2003: €239.8 million) including like for like growth of 6.8 per cent.
Chadwicks builders and plumbers merchanting business had a busy year due to
record demand in the residential construction market and good levels of activity
in the repair, maintenance and improvement market. While the merchanting market
enjoyed good volume growth, there was strong competition in the sector from both
the national chains and independent operators.
Chadwicks Wexford branch, which relocated to a modern out of town purpose built
facility at the end of 2003, traded successfully in 2004 and the two Chadwicks
Plumb Centre branches in Galway and North Dublin which opened last year made
good progress growing market share.
Telfords, the three branch builders merchanting business acquired in October
2003, traded ahead of pre-acquisition expectations benefiting from strong sales
growth and purchasing synergies. This long established merchant provides the
Group with an important presence in the Midlands market.
Irish Retailing
Woodie's, the leading player in the Irish DIY market, achieved another year of
sales and profit growth. Sales increased by 18 per cent to €129.8 million
(2003: €110.3 million). Like for like sales growth of 2 per cent for the year
reflected good first half demand, influenced by strong sales of seasonal
products, and the softening of demand in the DIY Superstore sector generally in
the second half of the year in an increasingly competitive market.
The Cavan and Carlow stores which opened in 2003 traded ahead of expectations in
2004. Woodie's continued to consolidate its market leadership position with the
opening of stores in Clonmel and Naas Road, Dublin in the first half and in
Kilkenny in the second half bringing the total network to nineteen.
Development plans for 2005 will involve relocating the Cork and Bray stores and
opening new stores in Naas and Carrickmines. Further store openings in Drogheda
and Navan are planned for 2006.
Irish Manufacturing
CPI's EuroMix business strengthened its position in the dry mortar market in the
greater Dublin area, but its block and readymix divisions suffered from intense
competition.
MFP, the plastics manufacturing business, experienced difficult market
conditions due to increased raw materials prices and intense competition in the
sector.
Financial Review
The generation of strong operating cash flows has traditionally provided the
Group with the financial strength to fund a consistent acquisition and
development programme. Cashflow from operating activities was up 36 per cent to
a record €177.0 million (2003: €129.8 million).
The total spend on acquisitions and capital projects was €164.2 million (2003:
€285.1 million). Acquisition expenditure during the year including net debt
acquired and deferred consideration from prior year acquisitions was €75.3
million (2003: €215.8 million).
Capital expenditure of €88.9 million (2003: €69.3 million) reflected routine
asset replacement expenditure, which was in line with the Group's depreciation
charge, the addition of 16 greenfield locations and redevelopment of a number of
branches.
The Group's spend on acquisitions, investments and capital projects in the five
years to the end of 2004 was €824 million. This investment programme was funded
from the Group's cashflow and debt capacity except for raising €67.3 million
through a rights issue to part fund the Jacksons acquisition in 2003.
Interest cover, an influential measure of the Group's capacity to service its
debt obligations, continued to be very comfortable at 7.6 times (2003: 7.5
times).
Shareholders' funds increased by €86 million to €535.8 million (31 December
2003: €449.8 million).
Net debt at 31 December 2004 was €338.2 million (31 December 2003: €311.7
million) giving a net debt to equity ratio of 63 per cent (31 December 2003: 69
per cent).
The Group realised a development profit of €6.7 million on the new Woodie's
store on the Naas Road, Dublin.
The Group's balance sheet was further strengthened with the acquisition in
January 2005 of Heiton's which was part funded through the issue of 21.4 million
shares and resulted in only a small increase in gearing.
Outlook
The Group's cash generative businesses combined with a strong balance sheet
following completion of the Heiton acquisition and high interest cover leave it
well placed to continue to pursue its successful strategy.
Growth in the UK economy is expected to ease back to its long term sustainable
rate in response to a tightening of monetary policy during 2004 and should
continue to be supportive of growth in the repair, maintenance and improvement
sector, our principle end user market. The Group will focus on realising
integration benefits from acquisitions made during 2004 and also in the wider UK
merchanting business. We expect to further strengthen our position in the UK
merchanting market by completing further acquisitions and through new
developments. The UK mortar business is expected to build on its market
leadership position with the opening of its eighth plant later this year.
The Irish economy has consistently outperformed the European economy over the
past decade and growth forecasts for 2005 are also very good. Low inflation, a
strong employment market and reasonable growth in incomes are expected to lead
to stronger consumer spending which should be supportive of RMI growth in the
Heiton Buckley and Chadwicks merchanting businesses. We expect the number of
house completions in Ireland to gradually moderate to long term sustainable
levels which will be more heavily influenced by population and household
formations as demand for second homes and rented properties reduce. The
Woodie's and Atlantic Homecare DIY businesses are both well placed to benefit
from increased retail spending and should also benefit in 2005 from
contributions from the five stores opened during 2004.
We look forward to further progress in 2005 confident in the success of our
strategy and proven track record of profitable growth in the enlarged Group.
Ends 9 March 2005
For reference:
Michael Chadwick Joe Murray
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
A copy of this statement is also available on our website
Grafton Group plc
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2004
2004 2003
€'000 €'000
Turnover
Continuing operations 1,809,052 1,496,018
Acquisitions 63,294 -
------- -------
Total turnover 1,872,346 1,496,018
------- -------
Operating profit before goodwill amortisation and property
development profit
Continuing operations 152,861 123,323
Acquisitions 4,540 -
------- -------
157,401 123,323
Property development profit 6,729 -
Goodwill amortisation 12,820 9,358
------- -------
Operating profit 151,310 113,965
Profit on disposal of property 792 3,437
------- -------
Trading profit 152,102 117,402
Income from financial assets 1,541 1,788
Interest payable (net) 21,792 17,169
------- -------
Profit on ordinary activities before taxation 131,851 102,021
Tax on profit on ordinary activities 19,788 15,320
------- -------
Profit on ordinary activities after taxation 112,063 86,701
Dividend on ordinary shares 266 -
------- -------
Profit retained for the financial year 111,797 86,701
======= =======
Earnings per share 52.64c 41.95c
======= =======
Adjusted earnings per share* 55.64c 45.07c
======= =======
Diluted earnings per share 51.29c 41.15c
======= =======
Adjusted diluted earning per share* 54.21c 44.20c
======= =======
* Before goodwill amortisation and property profit
Grafton Group plc
GROUP BALANCE SHEET
AS AT 31 DECEMBER 2004
2004 2003
€'000 €'000
Fixed assets
Goodwill 234,309 210,840
Tangible assets 396,886 346,812
Financial assets 47,019 33,665
------- -------
678,214 591,317
------- -------
Current assets
Stocks 237,680 194,436
Debtors 322,838 272,797
Cash and short term bank deposits 135,868 138,956
------- -------
696,386 606,189
Creditors (amounts falling due within one year) 435,559 354,798
------- -------
Net current assets 260,827 251,391
------- -------
Total assets less current liabilities 939,041 842,708
------- -------
Creditors (amounts falling due after more than one year) 369,325 369,926
Provisions for liabilities and charges 33,895 22,941
------- -------
403,220 392,867
------- -------
Net assets 535,821 449,841
======= =======
Capital and reserves
Share capital 10,864 10,781
Share premium account 103,600 102,352
Capital redemption reserve 227 57
Revaluation reserve 39,987 40,260
Profit and loss account 381,143 296,391
------- -------
Shareholders' funds - equity 535,821 449,841
======= =======
Grafton Group plc
GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2004
2004 2003
€'000 €'000
Net cash inflow from operating activities 177,049 129,793
Returns on investments and servicing of finance (19,197) (15,824)
Taxation (7,301) (7,057)
------- -------
150,551 106,912
------- -------
Capital expenditure and financial investment
Purchase of tangible fixed assets (88,917) (69,267)
Disposal of tangible fixed assets 25,437 30,951
------- -------
(63,480) (38,316)
Purchase of financial fixed assets (13,351) -
------- -------
(76,831) (38,316)
------- -------
Acquisitions
Acquisition of subsidiary undertakings and businesses (61,805) (187,497)
Net cash / (debt) acquired with subsidiary undertakings 718 (1,912)
Deferred acquisition consideration (3,750) (1,342)
------- -------
(64,837) (190,751)
------- -------
Redemption of shares / dividends / share purchase
Equity dividends paid (53) -
Redemption of redeemable shares (23,392) (18,816)
Purchase of A ordinary shares (2,131) -
------- -------
(25,576) (18,816)
------- -------
Cash outflow before use of liquid resources and financing (16,693) (140,971)
------- -------
Cash inflow/(outflow) from movement in liquid resources 506 (40,312)
------- -------
Financing
Issue of ordinary share capital 1,288 69,170
Increase in term debt 64,170 78,889
Redemption of loan notes payable (24,758) (11,240)
Capital element of finance leases repaid (23,404) (1,080)
Financing from lease and leaseback - 22,501
------- -------
17,296 158,240
------- -------
Increase / (decrease) in cash in the year 1,109 (23,043)
------- -------
Grafton Group plc
GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2004
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2004 2003
€'000 €''000
Increase / (decrease) in cash in the year 1,109 (23,043)
Cash inflow from increase in debt and lease financing (16,008) (89,070)
Cash flow from management of liquid resources (506) 40,312
------- -------
Change in net debt resulting from cash flows (15,405) (71,801)
Loan notes issued on acquisition of subsidiary undertakings (9,085) (24,567)
Finance leases acquired with subsidiary undertakings (1,388) (478)
Translation adjustment (578) 25,775
------- -------
Movement in net debt in the year (26,456) (71,071)
Net debt at 1 January (311,715) (240,644)
------- -------
Net debt at 31 December (338,171) (311,715)
======= =======
Grafton Group plc
NOTES TO THE PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 DECEMBER 2004
1. Turnover
The amount of turnover by class of activity is as follows:
2004 2003
€'000 €'000
Irish merchanting and wholesaling 286,126 239,829
DIY retailing 129,783 110,308
Irish manufacturing and related activities 35,833 34,391
------- -------
Total turnover from Irish activities 451,742 384,528
UK merchanting and other activities 1,420,604 1,111,490
------- -------
1,872,346 1,496,018
======= =======
2. Operating Profit and Trading Profit
2004 2003
€'000 €'000
Republic of Ireland 49,019 44,768
Great Britain and Northern Ireland 108,382 78,555
------- -------
Operating profit before goodwill amortisation
and property development profit 157,401 123,323
Property development profit 6,729 -
Goodwill amortised (12,820) (9,358)
------- -------
Operating profit 151,310 113,965
Profit on disposal of property 792 3,437
------- -------
Trading profit 152,102 117,402
Income from financial assets 1,541 1,788
------- -------
153,643 119,190
======= =======
3. Reconciliation of Operating Profit to Net Cash Inflow from Operating
Activities
2004 2003
€'000 €'000
Operating profit 151,310 113,965
Depreciation 34,197 28,212
Goodwill amortisation 12,820 9,358
Net profit on sale of scaffolding (2,585) (2,015)
Loss on disposal of other fixed assets 406 400
Increase in working capital (19,099) (20,127)
------- -------
Net cash inflow from operating activities 177,049 129,793
======= =======
Increase in working capital 2004 2003
€'000 €'000
Stock 34,514 4,682
Debtors 28,670 22,770
Creditors (44,085) (7,325)
------- -------
19,099 20,127
======= =======
4. Earnings per Share
The computation of basic and diluted earnings per share is set out below:
2004 2003
Profit on ordinary activities after taxation (€'000) 112,063 86,701
------- -------
Weighted average Grafton Units outstanding
during the year 212,875,181 206,659,076
------- -------
Earnings per share 52.64c 41.95c
------- -------
Number of dilutive Grafton Units under option 11,825,423 9,588,723
Number of Grafton Units that would have been
issued at fair value (6,212,816) (5,543,126)
------- -------
Dilutive potential Grafton Units 5,612,607 4,045,597
------- -------
Number of Grafton Units for calculating diluted earnings per share
and adjusted diluted earnings per share 218,487,788 210,704,673
------- -------
Diluted earnings per share 51.29c 41.15c
======= =======
Earnings per share of 52.64c (2003: 41.95c) have been calculated on profits
after taxation of €112,063,000 (2003: €86,701,000) and the weighted average
number of Grafton Units of 212,875,181 (2003: 206,659,076).
The calculation of adjusted earnings per share of 55.64c (2003: 45.07c) is
arrived at after eliminating goodwill of €12,820,000 (2003: €9,358,000),
property development profit after taxation of €5,888,000 (2003: €nil) and profit
after taxation on disposal of land and buildings of €554,000 (2003: €2,922,000)
from profit after taxation of €112,063,000 (2003: €86,701,000)
Diluted earnings per share of 51.29c (2003: 41.15c) have been calculated on
profits after taxation of €112,063,000 (2003: €86,701,000) 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 54.21c (2003: 44.20c)
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.
5. Share Purchase and Share Redemption
The Board has decided to purchase one A Ordinary Share per Grafton Unit for a
cash consideration of 7.0 cent. This follows the redemption of the remaining
six redeemable shares per Grafton Unit for a cash consideration of 5 cent per
Grafton Unit paid on 26 March 2004 and the purchase of one A Ordinary Share per
Grafton Unit for a cash consideration of 1 cent which was paid on 1 October
2004, to give total payments for 2004 of 13.0 cent. This represents an increase
of 24 per cent on redemptions of 10.5 cent paid for 2003.
The purchase of one A Ordinary share will take effect in respect of Grafton
Units on the register at the close of business on 18 March 2005 and the cash
consideration will be paid on 29 March 2005.
Following the share purchase on 18 March 2005, a Grafton Unit will comprise of
one Ordinary share of €0.05 cent each and eight A Ordinary Shares of 0.01c 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 Stg70.51p (2003: Stg70.48p) and
the average euro / sterling exchange rate was Stg67.86p (2003: Stg69.20p).
Grafton Group plc
FINANCIAL OVERVIEW 2004
2004 2003 Change
Turnover (€ million) 1,872.3 1,496.0 +25%
EBITDA (€ million) 200.7 156.8 +28%
Operating profit before goodwill amortisation and property
development profit (€ million) 157.4 123.3 +28%
Profit before taxation (€ million) 131.9 102.0 +29%
EPS 52.64c 41.95c +25%
EPS before goodwill amortisation and property profits 55.64c 45.07c +23%
Share purchase / share redemptions 13.0c 10.5c +24%
Share purchase / share redemption cover (times) 4.3 4.3
Interest cover (times) 7.6 7.5
Cash flow per share 74.7c 60.1c +24%
Net assets per share 251.0c 211.5c +19%
Net debt to shareholders' funds 63% 69%
Depreciation charge (€ million) 34.2 28.2
Goodwill amortisation (€ million) 12.8 9.4
Acquisition and investment expenditure (€ million) 85.0 220.1
Capital expenditure (€ million) 88.9 69.3
This information is provided by RNS
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