Grafton Group Plc · LSE:GFTU
Grafton — H1 2022 Earnings Presentation
42 slides from Grafton's earnings presentation, August 2022
Slide 1: Grafton Group plc Half Year Results
Grafton Group plc Half Year Results FOR THE SIX MONTHS ENDED 30 JUNE 2022
Slide 2: Cautionary statement & notes
Cautionary statement & notes Cautionary statement Notes Certain statements made in this presentation are forward-looking The term “Adjusted” means before exceptional items and acquisition statements. Such statements are based on current expectations and related items (see Appendix 1). are subject to
Slide 3: Gavin Slark and David Arnold
Gavin Slark David Arnold Chief Executive Officer Chief Financial Officer Grafton Group plc – Interim Results 2022 3
Slide 4: Introduction & highlights
Introduction & highlights GAVIN SLARK, CEO
Slide 5: 2022 First Half Review
2022 First Half Review •Strength of overall performance benefitted from geographic diversification •Excellent performance in distribution businesses in Ireland and the Netherlands •Profitability in Selco and Woodie's lower relative to last year's exceptional performances as trading normalised •Good
Slide 6: Financial highlights
2022 Financial highlights H1 2022 H1 2021 Change (Restated)1 Revenue £1,153m £1,028m +12.2% Adjusted operating profit £151.1m £158.0m (4.4%) Adjusted earnings per share 49.5p 50.5p (1.9%) Dividend 9.25p 8.50p +8.8% Net cash (before IFRS 16 leases) £520.5m £198.7m +£321.8m Adjusted operating profit m
Slide 7: Sustainability update
Sustainability update Implementing our sustainability agenda • Rosie Howells, our New Group Head of Sustainability, joins the business in September • Completed our second Carbon Disclosure Project (CDP) Climate Change submission for 2021 • Continuing to develop our sustainability systems • CPI Morta
Slide 8: Financial review
Financial review DAVID ARNOLD, CFO
Slide 9: Income statement Continuing operations
Income statement Continuing operations £m 2022 20212 Change Revenue 1,152.8 1,027.8 +12.2% Adjusted operating profit pre property profit 132.6 142.6 (7.0%) Property profit/(loss) 18.5 15.4 Adjusted operating profit 151.1 158.0 (4.4%) Amortisation1 and acquisition related items (11.0) (5.9) Statutory
Slide 10: Revenue bridge
Revenue bridge 1,153 1,028 Grafton Group plc – Interim Results 2022 10
Slide 11: Analysis of organic movement in revenue (constant currency)
Analysis of organic movement in revenue (constant currency) Like for like business Distribution Grafton Group plc – Interim Results 2022 11
Slide 12: Adjusted operating profit – bridge H1 2021 to H1 2022 (IFRS 16)
Adjusted operating profit – bridge H1 2021 to H1 2022 (IFRS 16) 157.8 158.0 151.1 Grafton Group plc – Interim Results 2022 12
Slide 13: Analysis of movement in operating profit in like-for-like business
Analysis of movement in operating profit in like-for-like business Distribution Grafton Group plc – Interim Results 2022 13
Slide 14: UK Distribution
UK Distribution Revenue £m H1 2022 H1 2021 Change 429.0 414.1 (restated) Revenue 429.0 414.1 +3.6% £’m Adjusted operating profit pre property 47.2 55.2 (14.5%) Adjusted operating margin pre property 11.0% 13.3% (230bps) H1 2022 H1 2021 Adjusted operating profit pre property • High product price infl
Slide 15: Irish Distribution
Irish Distribution Revenue £m H1 2022 H1 2021 Change 309.1 258.7 Revenue 309.1 258.7 +19.5% £’m Adjusted operating profit pre property 38.5 30.1 +27.8% Adjusted operating margin pre property 12.4% 11.6% +80bps H1 2022 H1 2021 Adjusted operating profit before property • Severe Covid restrictions on c
Slide 16: Netherlands Distribution
Netherlands Distribution Revenue £m H1 2022 H1 2021 Change 168.7 147.5 Revenue 168.7 147.5 +14.4% £’m Adjusted operating profit pre property 21.2 16.0 +32.2% Adjusted operating margin pre property 12.5% 10.8% +170bps H1 2022 H1 2021 • The Netherlands business performed consistently well during 2020/
Slide 17: Finland Distribution
Finland Distribution £m H1 2022 Revenue 67.7 Operating profit pre property 8.9 Operating margin pre property 13.2% • IKH acquired on 1 July 21 at a cost of €199m on a cash and debt free basis • The business has integrated well during first year under Grafton ownership • Good platform in the Nordics
Slide 18: Retailing
Retailing Revenue £m H1 2022 H1 2021 Change 158.4 118.9 Revenue 118.9 158.4 (24.9%) £’m Operating profit pre property 13.9 34.2 (59.4%) Operating margin pre property 11.7% 21.6% (990bps) H1 2022 H1 2021 Operating profit before property profit • Good first half performance - trading returned to more
Slide 19: Manufacturing
Manufacturing Revenue £m H1 2022 H1 2021 Change 59.4 49.1 Revenue 59.4 49.1 +21.1% £’m Operating profit pre property 12.1 12.7 (4.5%) Operating margin pre property 20.4% 25.9% (550bps) H1 2022 H1 2021 CPI EuroMix StairBox Operating profit before property profit • Revenue growth of 18.4% • Strong gro
Slide 20: Balance Sheet
Balance Sheet 30 June 31 December 2022 2021 Goodwill and intangible assets 784.0 744.1 Right-of-use assets 418.1 421.3 Tangible assets 359.2 351.9 Working capital 206.2 158.5 Other assets/(liabilities) (93.0) (83.8) Pension surplus/(deficit) 7.7 (11.5) 1,682.2 1,580.6 Net cash including IFRS 16 leas
Slide 21: Balance Sheet
Balance Sheet 30 June 31 December 2022 2021 Goodwill and intangible assets 784.0 744.1 Right-of-use assets 418.1 421.3 30 June 31 December Tangible assets 359.2 351.9 2022 2021 Working capital 206.2 158.5 Inventories 399.2 344.2 Other assets/(liabilities) (93.0) (83.8) Trade debtors 287.1 233.5 Tr
Slide 22: Cash from operations
Cash from operations £m H1 2022 H1 2021 Profit before taxation from continuing operations 132.4 142.9 Profit before taxation from discontinued operations - 124.8 Profit on disposal of Group businesses - (107.2) Net finance costs 7.7 10.5 Operating profit (post impact of profit on disposals) 140.1 17
Slide 23: Cash flow
Cash flow £m H1 2022 H1 2021 Cash from operations 137.9 255.3 Interest and tax (29.9) (35.1) Replacement capex net of asset disposals 13.7 5.1 Free cash flow 121.7 225.4 Development capex (12.0) (5.7) Dividends (52.7) (64.6) Share (repurchase)/issue (49.8) 1.5 Acquisitions & business disposals (incl
Slide 24: 2022 Technical guidance
2022 Technical guidance Material property transactions completed in H1 - no additional property profit currently anticipated in H2 Depreciation and amortisation c.£90m - £95m in total (c.£40m on a pre IFRS 16 basis) 2022 gross capex spend (ex acquisitions and asset disposals) – replacement spend ant
Slide 25: Strategic Update & Outlook
Strategic Update & Outlook GAVIN SLARK, CEO 25
Slide 26: Financial highlights compared to 2019
2022 Financial highlights compared to 2019 H1 2022 H1 2019 Change Reported1 Total revenue £1,153m £1,483m (22.3%) Adjusted operating profit pre property profit £132.6m £99.2m +33.7% Adjusted earnings per share 49.5p 31.4p +57.6% Dividend 9.25p 6.50p +42.3% Net cash/(debt) £73.5m (£540.5m) +£614.0m A
Slide 27: Importance of Geographical Diversity - Revenue by Geography
Importance of Geographical Diversity - Revenue by Geography H1 22 Finland H1 21 6% Netherlands 14% Netherlands 15% UK UK 42% 45% Ireland Ireland 41% 37% UK Ireland Netherlands Finland UK Ireland Netherlands Grafton Group plc – Interim Results 2022 27
Slide 28: Importance of Geographical Diversity - Operating Profit by Geography
Importance of Geographical Diversity - Operating Profit by Geography H1 22 Finland Netherlands H1 21 6% 11% Netherlands 15% UK UK 41% 45% Ireland Ireland 38% 44% UK Ireland Netherlands Finland UK Ireland Netherlands Grafton Group plc – Interim Results 2022 28
Slide 29: Strong Cash Generation and Balance Sheet Provides Optionality
Strong Cash Generation and Balance Sheet Provides Optionality Continuing to follow our disciplined capital allocation policy H1 2022 £m Acquisitions 45.8 Activity reviewing potential acquisitions continues at a healthy level Dividend 52.7 Dividend cover policy of 2-3x Share buyback 43.9 Funded by 20
Slide 30: Future Group Development
Future Group Development Organic development • Continued investment in expanding the branch footprints of Selco, Leyland SDM, the Netherlands and Finland • Investment into future growth of StairBox with lease of additional premises Acquisitions • Acquisitions completed in the first half of Sitetech
Slide 31: Current trading
Current trading Average daily like-for-like revenue growth 1 July 2022 – H1 2022 14 August 2022 Distribution UK (0.2%) (5.2%) Ireland +19.5% +1.5% Distribution businesses have seen a slightly weaker trading period than anticipated in July and August – Netherlands +7.5% +1.8% impacted by hot weather
Slide 32: Summary and Outlook
Summary and Outlook • Good trading performance in the first half from diversified earnings base • Outlook for all our markets is weaker now than when we came into the year given prevailing headwinds • We are on track to deliver full year expectations though this remains dependent on the usual season
Slide 33: Summary and Outlook
Summary and Outlook • Good trading performance in the first half from diversified earnings base • Outlook for all our markets is weaker now than when we came into the year given prevailing headwinds • We are on track to deliver full year expectations though this remains dependent on the usual season
Slide 34: Questions
Grafton Group pic Questions 35
Slide 35: Appendices
Grafton G Group pic Appe ~=«€©8 —e
Slide 36: Appendix 1 Notes & Definitions
Appendix 1 Notes & Definitions Notes Definitions • Adjusted earnings per share is earnings before exceptional items, As amounts are reflected in £’m some non- acquisition related items, intangible asset amortisation arising on material rounding differences may arise. acquisitions and before profit/l
Slide 37: Appendix 2 Revenue Growth – H1 2022 v H1 2021
Appendix 2 Revenue Growth – H1 2022 v H1 2021 Average Daily Like-for-Like Revenue Growth - Continuing Total Six months Revenue 1 to 30 June Jan – 30 Qtr 1 Qtr 2 2022 June 2022 Actual Distribution (Sterling) UK 4.6% (4.0%) (0.2%) 3.6% Ireland 41.9% 4.3% 19.5% 19.4% Netherlands 8.2% 7.0% 7.5% 14.4% Re
Slide 38: Appendix 3 Revenue bridge 3 Year (H1 19 - H1 22)
Appendix 3 Revenue bridge 3 Year (H1 19 - H1 22) Grafton Group plc – Interim Results 2022 38
Slide 39: Appendix 4 Analysis of organic movement in 3 Year revenue
Appendix 4 Analysis of organic movement in 3 Year revenue (H1 19 – H1 22) (constant currency) Like for like business Distribution Grafton Group plc – Interim Results 2022 39
Slide 40: Appendix 5 Adjusted operating profit – 3 Year bridge
Appendix 5 Adjusted operating profit – 3 Year bridge (H1 19 to H1 22) Grafton Group plc – Interim Results 2022 40
Slide 41: Appendix 6 Analysis of movement in operating profit 3 Year Bridge
Appendix 6 Analysis of movement in operating profit in like-for-like Business 3 Year Bridge (H1 19 – H1 22) Distribution Grafton Group plc – Interim Results 2022 41
Slide 42: Appendix 7 Revenue Growth – H1 2022 v H1 2019
Appendix 7 Revenue Growth – H1 2022 v H1 2019 Average Daily Like-for-Like Revenue Growth - Continuing Total Six months Revenue 1 to 30 June Jan – 30 Qtr 1 Qtr 2 2022 June 2022 Actual Distribution (Sterling) UK 17.3% 15.3% 16.2% 24.5% Ireland 32.5% 34.2% 33.3% 36.7% Netherlands 9.9% 13.6% 11.7% 108.5