Grafton Group PLC · LSE:GFTU
Grafton — H1 2003 Earnings Presentation
29 slides from Grafton's earnings presentation, 2003
Slide 1: Grafton Group PLC
. ES a BS Tp EL. Grafton Group PLC
Slide 2: Profile
Profile Building materials group – UK and Ireland Principal activities Builders and Plumbers merchanting DIY Retailing Dry Mortar Manufacturing Grafton Group plc Interim Results 2003 Market leader or strong market positions Half year turnover exceeds €0.7 billion Trading from more th
Slide 3: Principal Brands / Activities
Principal Brands / Activities Builders Merchanting Significant Market UK positions Plumbers Merchanting Significant Market position Silo Mortar Manufacturing Market Leader Grafton Group plc Interim Results 2003 Builders Merchanting Market Leader Ireland DIY Retailing Market Leader Silo Mortar Manufa
Slide 4: Strategy
Strategy Consistent - Focused To achieve above average long-term returns for shareholders by :- Building on strong positions in businesses serving the UK and Irish construction markets Grafton Group plc Interim Results 2003 Developing in other Irish markets Growing outside Ireland in busin
Slide 5: Culture and Philosophy
Culture and Philosophy Decentralised cost conscious profit centres Federal structure providing for autonomy and accountability Motivated management teams Grafton Group plc Interim Results 2003 -Supported by lean centre Profitable growth philosophy Sound financing and conservative accountin
Slide 6: Strengths
Strengths Prominent market positions in the UK and Ireland Proven strategic record Unique acquisition / integration skills Grafton Group plc Interim Results 2003 Strong balance sheet Highly cash generative and profitable businesses 6
Slide 7: Trading Locations
Trading Locations Builders Merchants Jacksons Builders Merchants Grafton Group plc Interim Results 2003 Plumbers Merchants Manufacturing DIY Retailing 7
Slide 8: Financial Highlights
Financial Highlights Interim Interim % Change 2003 2002 Turnover €706.5 m €534.8 m ↑ up 32 % Operating profit €53.4 m €38.2 m ↑ up 40 % Pretax profit €41.7 m €31.6 m ↑ up 32 % Grafton Group plc Interim Results 2003 EBITDA €67.5 m €49.5 m ↑ up 36 % Adjusted E.P.S. 19.63 c *15.68 c ↑ up 25 % Share red
Slide 9: Group Turnover – UK and Ireland
Group Turnover – UK and Ireland 2003: €707 m 2002: €535 m 8% 2% 9% 3% Grafton Group plc Interim Results 2003 16% 19% 74% 69% UK Operations Irish Merchanting Irish DIY Retailing Irish Manufacturing 9
Slide 10: Group Operating Profit
Group Operating Profit 2003: €53.4 m 2002: €38.2 m 33% 39% Grafton Group plc Interim Results 2003 61% 67% UK Operating margin 6.8% UK Operating margin 6.3% ROI Operating margin 9.7% ROI Operating margin 9.1% UK Ireland 10
Slide 11: Financial Statistics
Financial Statistics 2003 2002 Interest Cover - EBITA 6.3 6.8 Gearing 75% 73% Tax Rate 15% 13% Grafton Group plc Interim Results 2003 Return avg. cap employed 16.5% 16.9% Return avg. equity (after tax) 20.4% 21.7% 11
Slide 12: Components of Profit Growth
Components of Profit Growth € million 2002 Operating profit 38.2 Organic growth – UK 6.4 Organic growth – Ireland 2.4 UK 2002 acquisitions – incremental 4.3 Grafton Group plc Interim Results 2003 UK 2003 acquisitions 4.9 2002 New branches – incremental 0.4 2003 New branches (0.9) Exchange effects
Slide 13: Cash Generation
Cash Generation 2003 2002 € million € million Total operating cash inflow 71.3 52.1 Share issues 68.4 0.6 Working capital movement* (19.7) (16.1) Capital expenditure** (37.9) (35.6) Grafton Group plc Interim Results 2003 Acquisitions & Investments (148.0) (19.9) Share redemption, interes
Slide 14: Group Performance to December 2002
Group Performance to December 2002 Average per annum compound growth 5 Year 10 Year Since 1987 Turnover 29% 25% 21% Grafton Group plc Interim Results 2003 Adjusted EPS 26% 32% 28% Share redemption / 26% 27% 23% dividend per share 14
Slide 15: Irish Performance
Irish Performance Turnover €184 million + 12% Operating profit €17.8 million + 19% Grafton Group plc Interim Results 2003 Operating margin 9.7% (2002: 9.1%) Buoyant market sustaining strong first half growth 15
Slide 16: UK Performance
UK Performance 74% of turnover / 67% of operating profit Turnover ↑ up 41% to €522.5 m Profits ↑ up 54% to €35.6 m Margins ↑ up to 6.8% from 6.3% Grafton Group plc Interim Results 2003 Excluding acquisitions merchanting sales grew by 6% 4 acquisitions / cost €148 million 28 additional
Slide 17: UK Year Performance 1997 / 2002
UK 5 Year Performance 1997 / 2002 800 60 a se c re e d in eas 600 f l o incr e r 6 old 40 o v 0f r n 1 400 Tu rofit P 20 Grafton Group plc Interim Results 2003 200 0 1997 1998 1999 2000 2001 2002 0 Turnover 122.6 187.3 344.4 520.0 657.2 808.5 Op. Profit 5.2 5.7 16.6 29.2 40.0 53.7 Op. Profit Margin
Slide 18: UK Merchanting Outlets
UK Merchanting Outlets 254 25 5 227 20 5 178 155 15 5 122 10 5 83 55 Grafton Group plc Interim Results 2003 38 5 -4 5 97 98 99 00 01 02 Jul-03 Builders Merchants 8 43 59 67 85 114 137 Plum bers Merchants 30 40 63 88 93 113 117 18
Slide 19: UK Residential Completions
UK Residential Completions ’000 P ublic s ec tor c ompletions at a his toric al low (000s ) 250 Average private c ompletions : 153,000 200 150 Grafton Group plc Interim Results 2003 100 Average public c ompletions : 37,000 50 0 Mar-81 Mar-83 Mar-85 Mar-87 Mar-89 Mar-91 Mar-93 Mar-95 Mar-97 Mar-99 Ma
Slide 20: Jacksons Building Centres
Jacksons Building Centres Important and valuable strategic move Acquired 3rd March 2003 Cost at completion €131.3 m Turnover 2002 €213 m Operating Profit 2002 €11 m Grafton Group plc Interim Results 2003 An even better business than originally thought prior to acquisition Gives Grafton
Slide 21: Geographic Fit
Geographic Fit Plumbase Buildbase Grafton Group plc Interim Results 2003 Jacksons 21
Slide 22: Jacksons Strategic Fit
Jacksons Strategic Fit Consistent with Grafton’s strategy and record Significant landmark in Grafton’s expansion Grows Grafton’s market share from 6% to 8% Grafton Group plc Interim Results 2003 Consolidates Grafton’s top four market position Creates stronger platform for growth Now only
Slide 23: UK Merchanting Super League Table
UK Merchanting Super League Table Market Shares Jewson 18.0% Fastest Wolseley 17.5% Growing Travis Perkins 15.5% Merchant Grafton Group plc Interim Results 2003 Grafton Group 8.0% 23
Slide 24: Outlook 2003 - Ireland
Outlook 2003 - Ireland Construction sector may weaken Residential new build market to moderate / decline RMI market – single digit growth Grafton Group plc Interim Results 2003 DIY market – single digit growth Woodie’s – Cavan new store opened successfully Aug ’03 More Woodie’s stores in
Slide 25: Outlook 2003 - UK
Outlook 2003 - UK UK operations will be driver of Group growth Main UK merchanting exposure to RMI market Jacksons to drive UK T/O to over €1 billion Grafton Group plc Interim Results 2003 Buying and full acquisition contributions in 2nd half to benefit More bolt on acquisitions to follow
Slide 26: Top Fund Managers Holding in Grafton
Top Fund Managers Holding in Grafton (Early July 2003) Bank of Ireland Asset Management 12.8% Director and Related Holdings 10.9% Citibank Global Asset Management 5.9% Goodbody Stockbrokers 4.1% Grafton Group plc Interim Results 2003 KBC Asset Management 3.1% AIB/BNY Fund Management 3.1%
Slide 27: Research Coverage
Research Coverage Robert Eason +353 1 641 9462 Aynsley Lammin Mark Hake 0044 20 7986 4092 0044 20 7996 1194 Grafton Group plc Interim Results 2003 Daragh Horgan 0044 20 7155 8208 Sylvia Cordeiro 0044 207 678 0473 Florence O’Donoghue +353 1 614 8997 John Mattimoe John Sheehan +353 1 240 4256 +353 1 6
Slide 28: Grafton Group Outlook
Grafton Group Outlook A further year of development and profitable growth for the enlarged Group Grafton Group plc Interim Results 2003 28
Slide 29: For further information
For further information Michael Chadwick Chairman Colm ó Nualláin Finance Director Address: Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18 Grafton Group plc Interim Results 2003 Telephone: 353 1 216 0600 Fax: 353 1 295 4470 Email: email@graftonplc.com Web: www.graftonplc.com 29