Interim Results
Grafton Group PLC
08 September 2004
Grafton Group plc
Interim Results
For the Six Months Ended 30 June 2004
_______________________________________________________________________
HIGHLIGHTS
Group:
• Sales were up 29% to €911.4m (2003: €706.5m)
• Operating profit before goodwill and property profit increased by 31%
to €69.9m (2003: €53.4m)
• Profit before tax and property profit increased by 30% to €54.3m
(2003: €41.7m)
• Earnings per share before goodwill and property profit increased by
25% to 24.63 cent (2003: 19.63 cent)
UK Operations:
• UK now represents 76% of Group Sales and 72% of Group Operating Profit
• Turnover in the UK increased by 32% or €167.5m to €690m
• UK Operating Profit increased by 41% or €14.6m to €50.2m
Irish Operations:
• Irish Turnover grew by 20% or €37.3m to €221.3m
• Irish Operating Profit increased by 10.7% or €1.9m to €19.7m
Commenting on the results today, Michael Chadwick, Chairman, said:
'Our UK operations have generated high levels of growth which fully endorses
Grafton's strategy of development in that market. The Irish operations have
also shown good growth under strong management in an increasingly competitive
market environment. Group operating cash flow increased strongly to €92.5m
compared with €45.8m. We have a healthy pipeline of bolt on acquisitions and
are confident about the Group's prospects for the remainder of the current
financial year.'
INTERIM STATEMENT
Grafton Group plc is pleased to report record levels of sales, profits and
earnings for the half year to 30 June 2004. Group sales were up 29 per cent to
€911.4 million, compared with €706.5m in the same period last year. Operating
profit before goodwill and property profit increased by 31 per cent to €69.9m
from €53.4m. Profit before tax and property profit was 30 per cent higher at
€54.3m compared to €41.7m. Earnings per share before goodwill and property
profit increased by 25 per cent to 24.63 cent against 19.63 cent. Share
redemption/purchase payments to shareholders increased by 33 per cent for the
period.
Positive market conditions in the UK and Ireland in the half year provided a
favourable operating environment for the continued development of the
Merchanting, DIY and Mortar businesses. These results are consistent with the
Group's long term record of achieving high growth rates and are based on a good
like for like performance in both the UK and Ireland and strong contributions
from acquisitions completed during 2003.
UK turnover was up €167m or 32 per cent to €690m (2003: €523m) and accounted for
76 per cent of Group turnover. The UK businesses had an outstanding half year
reporting operating profit growth of 41 per cent to €50.2m (2003: €35.6m)
representing 72 per cent of Group operating profit. The UK operating margin
improved in line with expectations and was up 46 basis points to 7.3 per cent
(2003: 6.8 per cent).
The Group continued its successful strategy of bolt-on acquisitions which has
been the cornerstone of the development of its UK Merchanting business. Six
acquisitions were completed in the half year, adding nine branches to the UK
network and €60m in annualised turnover. The Group has a healthy pipeline of
potential acquisitions that are expected to complete during the second half.
Greenfield developments include the opening of five Merchanting branches and the
Group's 7th EuroMix dry mortar plant in Southampton.
In Ireland, against a favourable economic background and continued growth in
construction activity, the Group's operations performed strongly in competitive
markets. Turnover increased by 20 per cent to €221m (2003: €184m) and operating
profit was up 11 per cent to €19.7m (2003: €17.8m). Like for like sales growth
and the Telfords acquisition completed in October 2003 increased Merchanting
sales by 22 per cent. Good like for like sales growth and new store openings
enabled Woodie's to increase turnover by 22 per cent.
Share Redemptions / Purchase
The Board redeemed the remaining six redeemable shares per Grafton unit for a
total cash consideration of 5 cent per Grafton Unit which was paid on 26th March
2004. Following the restructuring of the Group's share capital in June 2004,
the Board has now approved the purchase of one A ordinary share per Grafton Unit
for 1 cent. The combined cash payments of 6 cent per Grafton Unit represent an
increase of 33 per cent on the equivalent share redemption of 4.5 cent paid for
the half year to 30 June 2003. No interim dividend will be declared.
OPERATIONS REVIEW
Turnover and Operating Profit - UK and Ireland
Six months to Six months to Increase
30 June 2004 30 June 2003
(unaudited) (unaudited)
€'000 €'000
Turnover
Great Britain and Northern Ireland 690.0 522.5 32%
Republic of Ireland 221.4 184.0 20%
Total 911.4 706.5 29%
Operating Profit
Great Britain and Northern Ireland 50.2 35.6 41%
Republic of Ireland 19.7 17.8 11%
Total 69.9 53.4 31%
The UK results are converted at the average Euro/Sterling rate of exchange for
the half year. Sterling was on average 2 per cent stronger in the first half of
2004 compared to the first half of 2003.
United Kingdom
UK sales increased by 32 per cent to €690.0m (2003: €522.5m) and operating
profit increased by 41 per cent to €50.2m (2003: €35.6m). The operating profit
margin increased to 7.3 per cent from 6.8 per cent. All divisions performed
strongly and like for like sales increased by 6.8%.
The UK economy continues to perform well with strong consumer activity, a
buoyant housing market and good employment creation supported by low inflation
and relatively low interest rates. This has been a very favourable environment
for the UK's businesses which trade mainly in the repair, maintenance and
improvement markets.
The excellent half year results from the UK businesses were due to profitable
growth in the established merchanting branches and incremental profit from nine
acquisitions, with an annualised turnover of €320m, completed during 2003.
Further positive scale and integration benefits were derived from turnover more
than doubling over the last three years.
UK Builders Merchanting
The UK Builders Merchanting division, which trades principally under the
Buildbase and Jacksons brands from 150 locations, achieved excellent sales and
profit growth. This strong performance was aided by good like for like sales
growth in the more established branches, incremental profit from a significant
acquisition programme in 2003 and contributions from acquisitions made during
the half year. The division also benefited from ongoing integration of prior
year acquisitions and purchasing benefits following a substantial acquisition
programme during 2002 and 2003 which added sixty one branches. Six bolt-on
acquisitions and the greenfield development of two branches in London added
eleven branches to the network in the half year. These infill greenfield
developments continue to improve our regional coverage.
Buildbase has been an active participant in the UK Builders Merchanting
consolidation process since acquiring its first branch in Oxford in January
1996. Development of the business has been based mainly on the acquisition of
long established small chain and single branch merchants with strong local
market positions. Buildbase traded strongly in the half year increasing sales
and operating profit at higher margins. Substantial profit growth in the
established business due to increased sales and purchasing benefits was
supplemented by contributions from acquisitions made in 2003.
Jacksons, the UK's largest regional independent merchanting business prior to
acquisition by Grafton in March 2003, traded strongly with good like for like
sales growth and a strong advance in operating profit. The nineteen branch East
Midlands business is an excellent fit with Buildbase's strength in the South
East and West Midlands. We now anticipate that the financial benefits for the
enlarged Group as a result of this acquisition will be realised in this its
first full year under Grafton ownership rather than in 2006 as stated in the
announcement at the time of acquisition. Jacksons increased its presence in the
Lincolnshire market in the half year with the completion of a single branch
acquisition.
In Northern Ireland, Macnaughton Blair, one of the leading merchants in the
province, traded strongly in a stable market and yielded double digit like for
like sales and operating profit growth during the period. The branch network in
the province increased to twelve with the acquisition of two builders
merchanting businesses trading from branches in Bangor and Coleraine.
UK Plumbers Merchanting
The UK Plumbers Merchanting division trades from 140 branches under the Plumbase
brand and has a strong regional presence in the South East, Midlands, East
Anglia, West Country and Scotland. Sales and operating profit increased
strongly in the half year. The results benefited from the acquisition of
Plumbline in September 2003. This seventeen branch business, which has a strong
position in the Scottish market, traded ahead of pre-acquisition expectations.
The ongoing programme of greenfield developments continued with the opening of
three new branches.
UK Mortar
EuroMix, the UK's leading producer of dry mortar for use in block and brick
laying, had a successful half year with a further growth in sales and operating
profit. The plant at Harlow, Essex which commenced production in May 2003 grew
volumes strongly. The opening of the seventh dry mortar plant in Southampton in
July leaves EuroMix well placed to service and support house builders,
developers and contractors throughout the South of England.
Republic of Ireland
In Ireland, against a favourable economic background, the Group's businesses
performed strongly in competitive markets. The Irish economy recovered strongly
during the second half of 2003 and this trend continued into 2004. The Group's
Irish turnover increased by 20 per cent to €221m (2003: €184m) and operating
profit was up 11 per cent to €19.7m (2003: €17.8m). The operating profit margin
reduced to 8.9 per cent from 9.7 per cent. This reflected an increase in
merchanting margins which was offset by lower profitability in manufacturing,
opening costs of 2 new Woodie's DIY stores, the consolidation of lower margins
of acquired businesses and higher pension costs.
Irish Merchanting
The Irish Merchanting division increased sales by 22 per cent to €138.8m (2003:
€114.1m), including like for like growth of 3.4 per cent. Chadwicks increased
sales and operating margins in a very competitive market place. The Irish
Merchanting division benefited from strong demand in the housing market which
was at an all-time high. The Telfords three branch midlands network, acquired
in October 2003, traded ahead of expectations and strengthened the Group's
position in the region. Telfords also benefited from purchasing synergies as
part of the larger merchanting group.
Irish Retailing
Woodie's continued to consolidate its market leadership position in the Irish
DIY market with turnover growth of 22 per cent to €64.8m (2003: €53.1m)
including like for like growth of 6 per cent. Woodie's had an excellent half
year increasing operating profit strongly. Two new stores were opened during
the period, one in Clonmel and a new flagship store on the Naas Road in Dublin.
Stores opened in the second half of 2003 in Cavan and Carlow traded well ahead
of budget. These openings increase Woodie's network to eighteen and further
store openings are planned over the next two years. Woodie's existing stores
in Cork and Bray will be relocated into larger more modern facilities during
2005.
FINANCE
Good cash generation in the half year resulted in a strong cash inflow of €92.5m
(2003: €45.8m) from operations.
The Group successfully completed the sale and leaseback of the new Woodie's
flagship store on the Naas Road realising a development profit of €6.7m which is
separately disclosed in the Profit and Loss account.
The Group spent €32.4m (2003: €148.0m) on six bolt on acquisitions. Capital
expenditure amounted to €45.4m (2003: €37.9m) including a spend of €28.0m (2003:
€22.0m) on development projects. The Group's consistent reinvestment of its
substantial cashflow on acquisitions and development projects is intended to
enhance profits in future years and support the ongoing development of the
Group.
The Group increased its holding in Heiton Group plc to 29.01 per cent in the
half year through the acquisition of 5.18 per cent of the ordinary shares in
issue at a cost of €13.4m.
Payments to shareholders through the redemption of redeemable shares amounted to
€23.4m (2003: €9.3m). This covered the second redemption payment for 2003 of
6.0 cent per Grafton unit and a further payment of 5 cent per Grafton Unit to
redeem the remaining redeemable shares in issue.
EBITDA interest cover was 8.1 times (2003: 7.8 times). Shareholders' funds were
€488.8m at 30 June 2004 (30 June 2003: €410.8m) and net debt amounted to €362.2m
(30 June 2003: €307.3m) giving a debt to equity ratio of 74 per cent (30 June
2003: 75 per cent).
Heiton Group plc
It was announced on 12 August 2004 that the Boards of Grafton Group plc and
Heiton Group plc had agreed the terms of recommended offers to be made by AIB
Corporate Finance on behalf of Grafton Group Holdings, a wholly owned subsidiary
of Grafton, to acquire the entire issued and to be issued share capital of
Heiton Group plc. Heiton Group plc is a builders merchants and DIY retailer in
Ireland trading principally under the Heiton Buckley and Atlantic Homecare
brands. The Group also operates a specialist builders merchants chain in the
UK. In the year ended 30th April 2004 Heiton Group plc reported turnover of
€503m and a profit before taxation of €32.8m. The proposed acquisition of
Heiton is in line with Grafton's stated strategy of participating in the
development of the UK and Irish merchanting and DIY sectors. Grafton believes
that Heiton's Irish merchanting and DIY businesses are an excellent strategic
fit with Grafton's existing operations and would enhance Grafton's position in
the Irish merchanting and DIY markets.
The proposal, if successful, would result in Grafton Group increasing its
shareholding in Heiton from 29% to 100%. As noted in the announcement of the
offers on 12 August 2004 the ordinary share offer values 100% of the current
issued and to be issued ordinary share capital of Heiton at approximately €336
million, based on the closing price of €6.65 per Grafton Unit on the day before
that announcement.
The proposed acquisition is subject inter alia to approval by Grafton
shareholders, Competition Authority approval and valid acceptances being
received in respect of not less than 80 per cent of the ordinary shares in
Heiton Group plc.
OUTLOOK
The Board believes that the Group's strategy of diversifying its earnings base
across the UK and Ireland by building strong brands and market positions through
organic development and acquisitions should continue to provide a sound basis
for profitable growth.
Despite a tightening of interest rates, the outlook for the UK economy is
positive and we expect continued growth in the repair, maintenance and
improvement market which is the principal end use market for our UK business.
The UK businesses should benefit from synergies and ongoing integration of prior
year acquisitions. Current year acquisitions will contribute to future
profitability and we continue to seek out acquisition opportunities which we
believe will add value for our shareholders.
The Irish economy is forecast to enjoy further growth in the medium term.
Activity in the housing market continues to be strong but we expect demand to
moderate from current record levels. A continuation of low interest rates, low
inflation, a stronger labour market and a pick up in consumer spending should
provide a favourable environment for Chadwicks to grow its RMI business and for
further growth in the Woodie's DIY business. Woodie's should also benefit from
recent and planned store openings.
The strong performance in the first half has continued to date in the second
half.
Ends 8th September 2004
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
This statement is also available on our web site www.graftonplc.com
Grafton Group Plc
Group Profit & Loss Account
For the Six Months Ended 30 June 2004
Twelve Months Six Months Six Months
To 31 Dec 03 To 30 June 04 To 30 June 03
(audited) (unaudited) (unaudited)
€'000 €'000 €'000
Turnover
1,280,423 Continuing operations 892,515 706,543
215,595 Acquisitions 18,837 -
------- ------- -------
1,496,018 Total turnover 911,352 706,543
======= ======= =======
Operating profit before goodwill amortisation
107,314 Continuing operations 68,412 53,388
16,009 Acquisitions 1,471 -
------- ------- -------
123,323 69,883 53,388
9,358 Goodwill amortisation 6,195 3,997
------- ------- -------
113,965 Operating profit 63,688 49,391
3,437 Property profit 7,521 -
------- ------- -------
117,402 Trading profit 71,209 49,391
1,788 Income from financial assets 1,541 964
17,169 Interest payable (net) 10,887 8,636
------- ------- -------
102,021 Profit on ordinary activities before taxation 61,863 41,719
15,320 Taxation 9,280 6,258
------- ------- -------
86,701 Profit on ordinary activities after taxation 52,583 35,461
- Dividend 266 -
------- ------- -------
86,701 Profit retained 52,317 35,461
======= ======= =======
41.95c Earnings per share 24.73c 17.64c
45.07c Adjusted earnings per share 24.63c 19.63c
41.15c Diluted earnings per share 24.06c 17.33c
44.20c Adjusted diluted earnings per share 23.97c 19.29c
10.50c Share redemption / share purchase 6.0c 4.50c
Grafton Group Plc
Consolidated Balance Sheet
As at 30 June 2004
31 Dec 03 30 June 04 30 June 03
(audited) (unaudited) (unaudited)
€'000 €'000 €'000
Fixed assets
210,840 Goodwill 228,055 172,415
346,812 Tangible assets 390,398 342,806
33,665 Financial assets 47,047 33,646
------- ------- -------
591,317 665,500 548,867
------- ------- -------
Current assets
194,436 Stock 230,270 183,785
272,797 Debtors 336,786 267,912
138,956 Cash and short term bank deposits 125,744 170,128
------- ------- -------
606,189 692,800 621,825
354,798 Creditors (amounts falling due within one year) 473,670 428,084
------- ------- -------
251,391 Net current assets 219,130 193,741
------- ------- -------
842,708 Total assets less current liabilities 884,630 742,608
------- ------- -------
369,926 Creditors (amounts falling due after 372,676 318,912
more than one year)
22,941 Provision for liabilities and charges 23,118 12,919
------- ------- -------
392,867 395,794 331,831
------- ------- -------
449,841 Net assets 488,836 410,777
======= ======= =======
Capital and reserves
10,781 Share capital 10,846 10,764
102,352 Share premium account 102,418 101,598
57 Capital redemption reserve 206 35
40,260 Revaluation reserve 40,123 40,396
296,391 Profit and loss account 335,243 257,984
------- ------- -------
449,841 Shareholders' funds - equity 488,836 410,777
======= ======= =======
Grafton Group Plc
Group Cash Flow Statement
For the Six Months Ended 30 June 2004
Twelve Months Six Months Six Months
To 31 Dec 03 To 30 June 04 To 30 June 03
(audited) (unaudited) (unaudited)
€'000 €'000 €'000
129,793 Net cash inflow from operating activities 92,525 45,763
(15,824) Returns on investments and servicing of finance (9,112) (8,367)
(7,057) Taxation (3,917) (3,089)
------- ------- -------
106,912 79,496 34,307
------- ------- -------
Capital expenditure and financial investment
(69,267) Purchase of tangible fixed assets (45,390) (37,901)
30,951 Disposal of tangible fixed assets 7,048 5,209
------- ------- -------
(38,316) (38,342) (32,692)
- Purchase of financial fixed assets (13,351) -
------- ------- -------
(38,316) (51,693) (32,692)
------- ------- -------
Acquisitions
(187,497) Acquisition of subsidiary undertakings and businesses (22,601) (118,510)
(1,912) Net cash / (debt) acquired with subsidiary 1,045 (7,006)
undertakings
(1,342) Deferred acquisition consideration (3,670) (962)
------- ------- -------
(190,751) (25,226) (126,478)
------- ------- -------
Redemption of shares / dividends
- Equity dividends paid (53) -
(18,816) Redemption of redeemable shares (23,392) (9,260)
------- -------- -------
(18,816) (23,445) (9,260)
------- -------- -------
(140,971) Cash outflow before use of liquid resources and financing (20,868) (134,123)
------- ------- -------
(40,312) Cash inflow / (outflow) from movement in liquid resources 24,526 (78,451)
------- ------- -------
Financing
69,170 Issue of ordinary share capital 68 68,377
78,889 Increase in term debt 21,394 100,260
(1,080) Capital element of finance leases repaid (397) (187)
(11,240) Redemption of loan notes payable (11,812) (747)
22,501 Financing from lease and leaseback - -
------- ------- -------
158,240 9,253 167,703
------- ------- -------
(23,043) Increase / (decrease) in cash in the period 12,911 (44,871)
======= ======= =======
Reconciliation of net cash flow to movement in net debt
(23,043) Increase / (decrease) in cash in the period 12,911 (44,871)
(89,070) Cash inflow from increase in debt and lease financing (9,185) (99,326)
40,312 Cash flow from management of liquid resources (24,526) 78,451
------- ------- -------
(71,801) Change in net debt resulting from cash flows (20,800) (65,746)
(24,567) Loan notes issued on acquisition of subsidiary undertakings (6,050) (21,475)
(478) Finance leases acquired with subsidiary undertakings (1,147) (87)
25,775 Translation adjustment (22,502) 20,610
------- ------- -------
(71,071) Movement in net debt in the period (50,499) (66,698)
(240,644) Net debt at 1 January (311,715) (240,644)
------- ------- -------
(311,715) Net debt at 30 June (362,214) (307,342)
------- ------- -------
Notes
1. Movements in Group Shareholders' Funds
Twelve Months Six Months Six Months
To 31 Dec 03 To 30 June 04 To 30 June 03
(audited) (unaudited) (unaudited)
€'000 €'000 €'000
86,701 Profit on ordinary activities after taxation 52,583 35,461
- Dividends (266) -
(18,816) Redemption of redeemable shares (23,392) (9,260)
------- ------- -------
67,885 28,925 26,201
68,684 Issue of ordinary share capital 280 67,891
486 Re-issue of treasury shares - 486
Currency translation adjustment
(13,095) - on foreign currency net investments 12,167 ( 8,899)
3,908 - on foreign currency borrowings (2,377) 3,125
------- ------- -------
127,868 Net addition to shareholders' funds 38,995 88,804
321,973 Opening shareholders' funds 449,841 321,973
------- ------- -------
449,841 Closing shareholders' funds 488,836 410,777
======= ======= =======
2. Share Redemption and Share Purchase
On the 19th of March 2004 the Board redeemed the remaining six redeemable shares
per Grafton Unit for a total cash consideration of 5 cent. The Board has
approved the purchase of one A ordinary share per Grafton Unit for a cash
consideration of 1 cent, to give total payments per Grafton Unit of 6 cent.
The purchase of the A ordinary share will take effect in respect of Grafton
Units on the register at close of business on 24 September 2004 and the cash
consideration will be paid on 1 October 2004.
3. Earnings Per Share
The calculation of earnings per share is based on the profit on ordinary
activities after taxation. Adjusted earnings per share is calculated on the
same basis but excluding goodwill amortisation and property profit. The
weighted average number of shares in issue increased by 6 per cent to 212.7
million (2003: 201.0 million) principally as a consequence of the March 2003
Rights Issue to part fund the acquisition of Jacksons.
4. Exchange Rates
The results and cash flows of the Group's United Kingdom subsidiaries have been
translated into Euro using the average exchange rate. The related balance
sheets of the Group's United Kingdom subsidiaries at 30 June 2004 and 30 June
2003 have been translated at the rate of exchange ruling at the balance sheet
date.
The average Euro / Sterling rate of exchange for the six months ended 30 June
2004 was Stg67.35p (six months to 30 June 2003: Stg68.55p and twelve months to
31 December 2003: Stg69.20p). The Euro / Sterling exchange rate at 30 June 2004
was Stg67.08p (30 June 2003: Stg69.32p and 31 December 2003: Stg70.48p).
5. Turnover
The amount of turnover by class of activity is as follows:
Twelve Months Six Months Six Months
To 31 Dec 03 To 30 June 04 To 30 June 03
(audited) (unaudited) (unaudited)
€'000 €'000 €'000
239,829 Irish merchanting and wholesaling 138,831 114,143
110,308 DIY retailing 64,775 53,102
34,391 Irish manufacturing and related activities 17,722 16,760
------- ------- -------
384,528 Total turnover from Irish activities 221,328 184,005
1,111,490 UK merchanting and other activities 690,024 522,538
------- ------- -------
1,496,018 911,352 706,543
======= ======= =======
6. Operating Profit
Twelve Months Six Months Six Months
To 31 Dec 03 To 30 June 04 To 30 June 03
(audited) (unaudited) (unaudited)
€'000 €'000 €'000
44,768 Republic of Ireland 19,710 17,808
78,555 Great Britain and Northern Ireland 50,173 35,580
------- ------- -------
123,323 Operating profit before goodwill amortisation 69,883 53,388
(9,358) Goodwill amortised (6,195) (3,997)
------- ------- -------
113,965 Operating profit 63,688 49,391
3,437 Property profit 7,521 -
------- ------- -------
117,402 Trading profit 71,209 49,391
1,788 Income from financial assets 1,541 964
------- ------- -------
119,190 72,750 50,355
======= ======= =======
7. Reconciliation of Operating Profit to Net Cash Inflow from Operating
Activities
Twelve Months Six Months Six Months
To 31 Dec 03 To 30 June 04 To 30 June 03
(audited) (unaudited) (unaudited)
€'000 €'000 €'000
113,965 Operating profit 63,688 49,391
- Property development profit 6,729 -
28,212 Depreciation 16,431 13,105
9,358 Goodwill amortisation 6,195 3,997
(1,615) Profit on disposal of plant and motor vehicles (1,523) (1,083)
(20,127) Decrease / (Increase) in working capital 1,005 (19,647)
------- ------- -------
129,793 Net cash inflow from operating activities 92,525 45,763
======= ======= =======
8. Interim Statement
The interim figures for the half-year to 30 June 2004 and the comparative
figures for the half-year to 30 June 2003 are unaudited. The figures shown for
the year ended 31 December 2003 have been extracted from the Financial
Statements for the year. A copy of these Financial Statements, on which the
Auditors have issued an unqualified report, has been delivered to the Registrar
of Companies.
Independent Review Report to Grafton Group plc
Introduction
We have been instructed by the company to review the financial information set
out on pages 8 to 13 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' Responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing
Rules of the Irish and London Stock Exchanges require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review Work Performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board. A review consists principally of making
enquiries of Group management and applying analytical procedures to the
financial information and underlying financial data and based thereon, assessing
whether the accounting policies and presentation have been consistently applied
unless otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with Auditing
Standards and therefore provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the financial information.
Review Conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2004.
KPMG
Chartered Accountants
Dublin
7 September 2004
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