Slide 1: Interim Results 2018
Interim Results 2018
Slide 2: Cautionary Statement and Notes
Cautionary Statement and Notes Cautionary Statement Certain statements made in this presentation are forward-looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially fro
Slide 3: Introduction & Highlights
Introduction & Highlights Gavin Slark CEO 3 Grafton Group plc - Interim Results 2018
Slide 4: Group Financial Highlights
Group Financial Highlights Revenue Adjusted operating profit Adjusted EPS up 9% to £1.45bn (8% in pre property profit up 19% constant currency) up 14% to £88.0m Dividend Adjusted operating profit ROCE up 14% margin up 80bps to 14.0% up 50bps to 6.4% 4 Grafton Group plc - Interim Results 2018
Slide 5: Continued Group Progress
Continued Group Progress Strong set of Further Diversified Continued to Pleased with results with all progress business model generate good acquisition and segments towards delivering cash flow which progress of reporting medium term benefits enabled us to Leyland SDM growth financial targets reinve
Slide 6: Operating Profit Margin and ROCE
Operating Profit Margin and ROCE 13.6% 14.0% 14.0% 13.0% 12.5% 12.2% 12.0% 11.1% 11.0% 10.0% 9.0% 7.8% 8.0% 7.0% 6.1% 6.1% 5.6% 5.8% 6.0% 5.2% 5.5% 5.0% 4.6% 4.0% 4.0% 3.4% 2.7% 3.0% 2.0% 1.0% 0.0% FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 H1 18 ROCE Adjusted operating margin pre property profit 6 G
Slide 7: Financial Review
Financial Review David Arnold CFO 7 Grafton Group plc - Interim Results 2018
Slide 8: Income Statement
Income Statement Movement Constant £m 2018 2017 Reported Currency Revenue* 1,448 1,333 +9% +8% Adjusted operating profit pre property profits 88.0 77.0 +14% Property profit 4.5 2.0 Adjusted operating profit 92.5 79.1 +17% Amortisation (2.4) (1.4) Statutory operating profit 90.1 77.7 Net finance cost
Slide 9: Operating Margin Progression
Operating Margin Progression H1 2017 operating margin pre property profits 5.8% Increase in Group gross margin 0.2% Improvement in operating expense efficiency 0.1% H1 2018 operating margin pre property profits 6.1% Property profits 0.3% H1 2018 operating margin 6.4% • Improvement in gross margin a
Slide 10: Revenue Growth Analysis
Revenue Growth Analysis £’m 1,500 9 1,448 1,450 26 80 1,400 Revenue 1,350 1,333 1,300 1,250 1,200 H1 2017 Organic Growth Acquisitions FX H1 2018 10 Grafton Group plc - Interim Results 2018
Slide 11: Incremental Revenue from Organic Growth
Incremental Revenue from Organic Growth (Constant Currency) £’m 90 34 80 80 (5) 70 60 7 Revenue 50 12 40 5 30 12 (2) 20 17 10 0 UK Ireland Netherlands Belgium Retail Manufacturing Growth 2017 Branch Organic Growth Initiatives Closures Merchanting LFL Business 11 Grafton Group plc - Interim Results 2
Slide 12: Adjusted Operating Profit Analysis
Adjusted Operating Profit Analysis £’m 95 2.4 0.3 92.5 90 1.9 0.4 8.5 (0.1) Adjusted EBITA 85 80 79.1 75 70 2017 Like-for-Like Growth Initiatives Branch Acquisitions Property FX 2018 Business Consolidations Disposals 12 Grafton Group plc - Interim Results 2018
Slide 13: Incremental Operating Profit Drop Through Analysis
Incremental Operating Profit Drop Through Analysis £’m 10.0 9.0 2.4 8.0 (0.2) 7.0 Group 2.5 8.5 6.0 5.0 1.2 4.0 (0.3) 3.0 1.1 2.0 1.8 1.0 0.0 Like for Like UK Ireland Netherlands Belgium Retail Manufacturing Central Business Merchanting 13 Grafton Group plc - Interim Results 2018
Slide 14: Incremental Operating Profit Drop Through Analysis
Incremental Operating Profit Drop Through Analysis £’m 10.0 34% 9.0 8.0 7.0 22% Group 6.0 17% 5.0 26% 4.0 9% 3.0 10% 2.0 1.0 0.0 Like for Like UK Ireland Netherlands Belgium Retail Manufacturing Central Business Merchanting 14 Grafton Group plc - Interim Results 2018
Slide 15: UK Merchanting
UK Merchanting £m 2018 2017 Movement Revenue 976.0 914.3 +6.7% Adjusted operating profit pre property profit 53.7 50.1 +7.1% Adjusted operating margin pre property profit 5.5% 5.5% - • Average daily like-for-like revenue growth of 1.8% – price inflation of c.3% more than offset anticipated modest vo
Slide 16: Irish Merchanting
Irish Merchanting Movement Constant £m 2018 2017 Reported Currency Revenue 212.1 192.8 +10.0% +7.6% Operating profit pre property profit 17.1 15.4 +10.7% +8.7% Operating margin pre property profit 8.1% 8.0% +10bps • Average daily like-for-like revenue growth of 6.3% - 3 new branches opened last year
Slide 17: Netherlands Merchanting
Netherlands Merchanting Movement Constant £m 2018 2017 Reported Currency Revenue 76.8 63.3 +21.4% +18.8% Adjusted operating profit 8.1 6.6 +23.0% +20.5% Adjusted operating margin 10.5% 10.4% +10bps • Average daily like-for-like revenue growth of 7.9% with good expansion of activity with national key
Slide 18: Belgium Merchanting
Belgium Merchanting Movement Constant £m 2018 2017 Reported Currency Revenue 45.2 45.5 (0.8%) (2.9%) Operating profit 0.1 0.4 (81.2%) (79.9%) Operating margin 0.2% 0.9% (70 bps) • After promising start to the year, the business experienced weakened demand in housebuilding sector • Focus on continuin
Slide 19: Retailing
Retailing Movement Constant £m 2018 2017 Reported Currency Revenue 97.8 84.4 +15.8% +13.4% Operating profit 7.3 4.7 +55.0% +52.8% Operating margin 7.5% 5.6% +190 bps • Average daily like-for-like revenue growth of 13.4% - broadly split between transactions and average transaction value • Seasonal pr
Slide 20: Manufacturing
Manufacturing £m 2018 2017 Movement Revenue 39.9 32.9 +21.1% Operating profit 9.4 7.0 +33.7% Operating margin 23.5% 21.3% +220 bps • Another outstanding performance from CPI Euromix, the UK’s market leading dry silo mortars business • Volume growth and operational improvements increased the operatin
Slide 21: Balance Sheet
Balance Sheet June Dec June £m 2018 2017 2017 Intangible assets 727.0 646.1 640.2 Tangible assets 547.1 531.5 514.5 Working capital 172.6 169.5 152.7 Other assets/(liabilities) (97.5) (86.1) (85.6) Pension deficit (15.3) (23.5) (20.2) 1,333.9 1,237.5 1,201.6 Net debt (101.7) (62.9) (80.2) Equity 1,2
Slide 22: Cash Flow
Cash Flow June June £m 2018 2017 Cash from operations 109.7 117.9 Interest and tax (12.4) (10.2) Replacement capex net of disposals (8.2) (8.1) Free cash flow 89.1 99.6 Development capex (26.0) (25.1) Dividends (24.3) (21.3) Share issue 1.3 0.1 Acquisitions (incl. debt acquired) (79.7) (30.7) Net ca
Slide 23: Full Year Guidance
Full Year Guidance • Full year property profits not expected to be materially different from H1 (£4.5m) • Depreciation currently anticipated to be c.£43m in 2018 • Total 2018 capex currently anticipated to be c.2x depreciation – split equally between development and replacement capex (note excludes
Slide 24: IFRS 16 – New Lease Standard
IFRS 16 – New Lease Standard • New lease accounting standard (IFRS 16) effective from 1 Jan 2019 • Modified retrospective approach will be adopted which brings all leases onto balance sheet from the date of transition with no restatement of comparatives • Balance sheet liability based on current lea
Slide 25: Group Development, Current Trading & Outlook
Group Development, Current Trading & Outlook Gavin Slark CEO 25 Grafton Group plc - Interim Results 2018
Slide 26: Development Investment Since Jan 2015
Development Investment Since 1 Jan 2015 UK Traditional Other Merchanting - IT 2% 8% Netherlands • Invested c. £370m since 1 Jan 2015 27% into the business, split c. 38% on UK Traditional organic investments and c. 62% on Merchanting acquisitions 11% Woodie's • Almost three quarters of development 2%
Slide 27: Group Development - UK
Group Development - UK Opened 7 new Selco performing c. 4 new Selco Leyland SDM Selco stores to date. well – H1 operating stores planned for performing in line Plans well profit down slightly 2019 – consistent with expectations. advanced to due to significant with medium term Now actively relocate m
Slide 28: Group Development cont.
Group Development cont. Investment in Netherlands - Continuing to invest Pipeline of Ireland focused on opportunities for in new distribution opportunities to maximising strong further acquisitive and e-commerce expand further the competitive position and organic growth capabilities in the Group’s o
Slide 29: Current Trading – July 2018
Current Trading – 1 July 2018 to 31 July 2018 Average Daily Like-for-Like Revenue Growth H1 2018 July 18 Merchanting UK 1.8% 2.6% Ireland 6.3% 8.1% Netherlands 7.9% 5.3% Belgium (3.9%) (1.7%) Retailing 13.4% (3.2%) Manufacturing 21.0% 18.5% Total Group 3.8% 3.3% 29 Grafton Group plc - Interim Result
Slide 30: Outlook
Outlook UK Ireland The Netherlands and • Continuing competitive • Economic outlook remains Belgium market backdrop favourable • Continue to benefit in The • Price inflation should help • Like-for-like growth rate in Netherlands from to offset any risk to Merchanting could be increasing scale of volu
Slide 31: Summary – Strong Performance
Summary – Strong Performance Growth in Further progress Ongoing focus on Balance sheet in profitability across towards medium growth initiatives excellent shape to all segments term financial invest in further targets growth 31 Grafton Group plc - Interim Results 2018
Slide 32: Questions
Questions 32 Grafton Group plc - Interim Results 2018
Slide 33: Appendices
Appendices 33 Grafton Group plc - Interim Results 2018
Slide 34: Appendix 1 - Notes & Definitions
Appendix 1 - Notes & Definitions Notes • As amounts are reflected in £’m some non-material rounding differences may arise. Definitions • Adjusted earnings per share is earnings before intangible asset amortisation arising on acquisitions • Adjusted operating profit is earnings before amortisation of
Slide 35: Appendix 2 - Operating Profit Bridge – Statutory to Adjusted
Appendix 2 - Operating Profit Bridge – Statutory to Adjusted H1 2018 H1 2017 Change £’m £’m £’m Revenue* 1,447.7 1,333.2 +114.5 Statutory operating profit 90.1 77.7 +12.4 Amortisation of intangible assets arising on acquisitions 2.4 1.4 +1.0 Adjusted operating profit 92.5 79.1 +13.4 Property profit
Slide 36: Appendix 3 - Operating Margin Analysis
Appendix 3 - Operating Margin Analysis* H1 H2 H1 H2 H1 2018 2017 2017 2016 2016 UK Merchanting 5.5% 5.5% 5.5% 5.4% 5.3% Irish Merchanting 8.1% 9.0% 8.0% 8.6% 6.8% Netherlands Merchanting 10.5% 8.9% 10.4% 9.5% 11.3% Belgium Merchanting 0.2% 1.1% 0.9% (1.3%) (0.3%) Total Merchanting 6.0% 6.1% 6.0% 5.8
Slide 37: Appendix 4 - Revenue Growth
Appendix 4 - Revenue Growth Average Daily Like-for-Like Revenue Growth H1 2018 2017 2018 Q3 Q4 Q1 Q2 H1 Total Revenue Constant Merchanting Reported Currency UK 6.3% 3.0% (0.4%) 3.8% 1.8% 6.7% 6.7% Ireland 10.6% 5.1% 3.7% 8.6% 6.3% 7.6% 10.0% Netherlands 6.8% 5.8% 7.6% 8.3% 7.9% 18.8% 21.4% Belgium (