Grafton Group PLC · LSE:GFTU

Grafton — FY2004 Earnings Presentation

34 slides from Grafton's earnings presentation, 2005

  1. Slide 1: Grafton Group plc Final Results 2004

    Grafton Group plc Final Results 2004 0

  2. Slide 2: Profile

    Profile „ UK and Ireland based Building Materials Group „ Principal activities Î Builders and Plumbers Merchanting Î DIY Retailing Grafton Group plc Final Results 2004 Î Dry Mortar Manufacturing „ Market leader or strong market positions „ 2004 turnover to exceed €1.87 billion, 2005 to be well over

  3. Slide 3: Strategy

    Strategy „ Consistent - Focused „ To achieve above average long-term returns for shareholders by :- Î Building on strong positions in businesses Grafton Group plc Final Results 2004 serving the UK and Irish construction markets Î Developing in other Irish markets Î Growing outside Ireland in busines

  4. Slide 4: Principal Brands - UK

    Principal Brands - UK Grafton Group plc Final Results 2004 Builders Merchanting Significant Market positions Plumbers Merchanting Significant Market position Silo Mortar Manufacturing Market Leader 3

  5. Slide 5: Principal Brands – Ireland

    Grafton Group plc Final Results 2004 Principal Brands – Ireland 4

  6. Slide 6: Group Strengths

    Group Strengths „ Profitable growth philosophy „ Prominent market positions in the UK and Ireland „ Motivated management teams Grafton Group plc Final Results 2004 „ Proven strategic record „ Unique acquisition / integration skills „ Strong balance sheet „ Highly cash generative and profitable busin

  7. Slide 7: Trading Locations 2004

    Grafton Group plc Final Results 2004 Trading Locations 2004 6

  8. Slide 8: Group Financial Highlights

    Group Financial Highlights % 2004 2003 Change Turnover €1,872 m €1,496 m + 25% Operating profit before goodwill €157.4 m €123.3 m + 28% Pretax profit €131.9 m €102.0 m + 29% Grafton Group plc Final Results 2004 EBITDA €200.7 m €156.8 m + 28% Property profits €7.5 m €3.4 m Adjusted E.P.S.* 55.64 c 45

  9. Slide 9: Group Turnover – UK and Ireland

    Group Turnover – UK and Ireland 2004: €1,872 m 2003: €1,496 m Grafton Group plc Final Results 2004 2% 8% 2% 7% 15% 16% 74% 76% UK Operations Irish Merchanting Irish DIY Retailing Irish Manufacturing 8

  10. Slide 10: Group Operating Profit

    Group Operating Profit* 2004: €157 m 2003: €123 m 31% 36% Grafton Group plc Final Results 2004 69% 64% UK Operating margin 7.6% UK Operating margin 7.1% ROI Operating margin 10.9% ROI Operating margin 11.6% UK Ireland * Before goodwill and property development profit 9

  11. Slide 11: Financial Statistics

    Financial Statistics 2004 2003 Interest Cover - EBITA 7.6 7.5 Gearing 63% 69% Grafton Group plc Final Results 2004 Tax Rate 15% 15% Return avg. cap employed 17.3% 17.1% Return avg. equity (after tax) 21.3% 21.0% 10

  12. Slide 12: Components of Profit Growth

    Components of Profit Growth + 27.7% €157.4 m 180 160 €123.3 m 140 Acquisitions 13.5% Grafton Group plc Final Results 2004 120 Organic Growth 12.9% 100 80 Currency 1.3% 60 40 20 0 2003 2004 11

  13. Slide 13: Components of Profit Growth

    Components of Profit Growth € million „ 2003 Operating profit before goodwill 123.3 Organic growth – UK 13.8 Organic growth – Ireland 1.9 2003 acquisitions – incremental 12.1 Grafton Group plc Final Results 2004 2004 acquisitions 4.5 New branches 2003 & 2004 (0.1) Discontinued 0.3 Exchange effects 1

  14. Slide 14: Cash Generation

    Cash Generation 2004 2003 € million € million „ Operating profit 151.3 114.0 Disposals, property & investment income 25.6 31.0 Depreciation & amortisation 47.0 37.5 Shares issued 1.3 69.2 Total cash inflows 225.2 251.7 Grafton Group plc Final Results 2004 Working capital movement* (19.1) (20.1) Capi

  15. Slide 15: Group Performance to December 2004

    Group Performance to December 2004 Average per annum compound growth 5 Year 10 Year Since 1987 Turnover 25% 27% 22% Grafton Group plc Final Results 2004 Adjusted EPS 23% 28% 28% Share Purchase / 24% 29% 23% dividend per share 14

  16. Slide 16: Irish Performance

    Irish Performance „ Turnover €452 m + 17% „ Operating profit €49.0 m + 9.5% „ Grafton Group plc Final Results 2004 Operating margin 10.9% (2003: 11.6%) „ Buoyant market sustaining strong growth „ Cycle must be at the top „ Competitive margins in DIY and Manufacturing 15

  17. Slide 17: UK Performance

    UK Performance „ 76% of turnover / 69% of operating profit* „ Turnover ↑ up 28% to €1,421m „ Operating profit ↑ up 38% to €108m Grafton Group plc Final Results 2004 „ Operating margin ↑ up to 7.6% from 7.1% „ Like for like merchanting sales increased by 7% „ 17 acquisitions – cost €71.7m „ 35 additi

  18. Slide 18: UK Performance 1999 / 2004

    UK Performance 1999 / 2004 600% - Turnover & Operating Profit 450% - % Increase Since 1999 300% - 150% - Grafton Group plc Final Results 2004 0% - 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 Turnover 344.4 16.6 344.4 529.0 25.1 520.0 657.2 31.7 657.2 808.5 39.0 808.5 1,111.5 53.6 1,1

  19. Slide 19: Irish Merchanting 2004

    Irish Merchanting 2004 Overview of the Year: „ Strong sales & PBIT FY’04 +/- vs’03 % Group growth Sales €m 286 +19% 15% „ Merchanting sales up Grafton Group plc Final Results 2004 19% „ Like for like sales up 7% + No.1 „ Growing share of RMI 23 Locations 25 Locations market 8 Locations Paddy Power C

  20. Slide 20: Irish Retailing 2004

    Irish Retailing 2004 Overview of the Year: „ Continued PBIT growth FY’04 +/- vs’03 % Group „ Woodies sales + 18% Sales €m 130 +18% 7% „ Like for like sales + 2% „ Grafton Group plc Final Results 2004 Strong focus on margins „ Strong product innovation + „ More competition from new stores No. 1 – som

  21. Slide 21: UK Merchanting 2004

    UK Merchanting 2004 Overview of the Year: „ Continued like for like growth FY’04 +/- vs’03 % Group +7% Sales €m 1,360 +28% 73% „ Integration benefits continue to accumulate Grafton Group plc Final Results 2004 Builders 143 Investments in: merchants Locations „ 17 Bolt on Acquisitions Builders 20 „ 1

  22. Slide 22: UK & Irish Manufacturing 2004

    UK & Irish Manufacturing 2004 Overview of the Year: „ 7th Dry Mortar plant FY’04 +/- vs’03 % Group commissioned in Southampton Sales €m 96 +12% 5% „ Increased competition as expected on UK Mortar sales and Dry Mortar No.1 Grafton Group plc Final Results 2004 some price pressure in the Plants 8 Locat

  23. Slide 23: Recommended Offer: Heiton acquisition

    „ RECOMMENDED OFFER: Î Acquisition totally unconditional on 7th January Î Net investment by Grafton €400m* Î Enterprise value €448m** including debt of €67m at acquisition Î Multiples 2004: Sales 0.80x EBITA 11.6x „ THE BUSINESS: Î Group Turnover April 2004 €503m; EBITA 2004 €34m Î No.1 Irish Builde

  24. Slide 24: Overview of Enlarged Group

    Overview of Enlarged Group „ Sales: UK 63% - Ireland 37% Group Turnover > € 2.3 billion. „ Market leader in Irish Merchanting and DIY markets „ Strong No. 4 in UK Merchanting market – over 300 branches „ 19% of Irish Merchanting market – over 50 branches Grafton Group plc Final Results 2004 „ 15% of

  25. Slide 25: Enlarged Group Locations

    Grafton Group plc Final Results 2004 g Enlarged Group Locations 24

  26. Slide 26: UK Housing Outlook

    UK Housing Outlook „ UK housing completions remain low relative to average household size decreases and population growth 300,000 250,000 Grafton Group plc Final Results 2004 200,000 150,000 100,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Completions Population Growth Relative Avge Househo

  27. Slide 27: UK Merchanting Super League Table

    UK Merchanting Super League Table Market Shares 2005* „ Jewson 20% „ Wolseley 19% „ Fastest Grafton Group plc Final Results 2004 Travis Perkins (Excl. Wickes) 17% Growing Merchant „ Grafton Group 9% *Based on AMA Research and BMJ estimates, Jan 2005 26

  28. Slide 28: Outlook 2005 - Ireland

    Outlook 2005 - Ireland „ Construction sector peaking „ Residential new build market to moderate in 2005 „ RMI and DIY market to continue to show single digit growth „ Heiton Acquisition successfully completed Grafton Group plc Final Results 2004 „ Integration of Heiton businesses with Grafton activi

  29. Slide 29: Outlook 2005 - UK

    Outlook 2005 - UK „ Outlook for UK economy is positive „ Main UK merchanting exposure to RMI market „ Continued single digit growth expected in RMI market „ Full year acquisition and buying benefits being realised on 2004 Grafton Group plc Final Results 2004 acquisitions „ 17 bolt-on acquisitions co

  30. Slide 30: International Financial Reporting Standards

    International Financial Reporting Standards „ First IFRS results June 2005 „ Comparative Year Restated Grafton Group plc Final Results 2004 „ IFRS Opening Balance Sheet 1 January 2004 „ Restated figures for 2004 to be released in the 2nd quarter 2005 29

  31. Slide 31: Principal Policy Changes for Grafton

    Principal Policy Changes for Grafton „ Goodwill IFRS 3 „ Intangibles IAS 38 „ Pensions IAS 19 „ Deferred Tax IAS 12 Grafton Group plc Final Results 2004 „ Financial Instruments IAS 39 „ Share Based Payments IFRS 2 (Black Scholes model) 30

  32. Slide 32: Comparison of IFRS and GAAP

    Comparison of IFRS and GAAP Initial Pro Forma Comparison GAAP IFRS % +/- Based on 2004 figures Operating Profit €151m €164 m +9% Grafton Group plc Final Results 2004 Profit After Tax €112m €125 m +12% Adjusted EPS 55.6 c 55.7 c Negligible Net Assets €536 m €500 m -7% 31

  33. Slide 33: Research Coverage

    Research Coverage Mark Hake Aynsley Lammin Robert Eason 0044 20 7996 1194 0044 20 7986 4092 +353 1 641 9462 Grafton Group plc Final Results 2004 Liam Boggan 0044 207 6093758 Florence O’Donoghue John Mattimoe +353 1 614 8997 +353 1 240 4256 Howard Seymour John Sheehan 0044 20 70033501 +353 1 611 5912

  34. Slide 34: For Further Information

    For Further Information Michael Chadwick Chairman Colm ó Nualláin Finance Director Leo Martin Director Charles Rinn Group Financial Controller Address: Grafton Group plc, Grafton Group plc Final Results 2004 Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18 Telephone: 353 1 2160600 Fa

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