Grafton Group Plc · LSE:GFTU
Grafton — H1 2004 Earnings Presentation
28 slides from Grafton's earnings presentation, 2004
Slide 1: Grafton Group plc Interim Results 2004
Grafton Group plc Interim Results 2004 0
Slide 2: Disclaimer
Disclaimer This document, which has been prepared by Grafton Group plc (the “Company”) comprises slides for a presentation concerning the Company’s Interim Results Announcement 2004. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of
Slide 3: Profile
Profile UK and Ireland based Building Materials Group Principal activities Î Builders and Plumbers Merchanting Î DIY Retailing Î Dry Mortar Manufacturing Grafton Group plc Interim Results 2004 Market leader or strong market positions 2004 half year turnover exceeds €0.9 billion Trading fro
Slide 4: Principal Brands / Activities
Principal Brands / Activities Builders Merchanting Significant Market positions Plumbers Merchanting Significant Market U.K. position Grafton Group plc Interim Results 2004 Silo Mortar Manufacturing Market Leader Builders Merchanting Market Leader Ireland DIY Retailing Market Leader Silo Mortar Manu
Slide 5: Strategy
Strategy Consistent - Focused To achieve above average long-term returns for shareholders by :- Î Building on strong positions in businesses serving the UK and Irish construction markets Grafton Group plc Interim Results 2004 Î Developing in other Irish markets Î Growing outside Ireland in busin
Slide 6: 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 2004 - Supported by lean centre Profitable growth philosophy Sound financing and conservative accounti
Slide 7: Strengths
Strengths Prominent market positions in the UK and Ireland Proven strategic record Unique acquisition / integration skills Grafton Group plc Interim Results 2004 Strong balance sheet Highly cash generative and profitable businesses 6
Slide 8: Trading Locations
Grafton Group plc Interim Results 2004 Trading Locations 7
Slide 9: Financial Highlights
Financial Highlights % H1 2004 H1 2003 Change Turnover €911.4 m €706.5 m + 29% Operating profit before goodwill €69.9 m €53.4 m + 31% Grafton Group plc Interim Results 2004 Pretax profit €61.9 m €41.7 m + 48% EBITDA €95.4 m €67.5 m + 41% Property profit €7.5 m - Adjusted E.P.S.* 24.6 c 19.6 c + 25%
Slide 10: Group Turnover – UK and Ireland
Group Turnover – UK and Ireland H1 2004: €911 m H1 2003: €707 m Grafton Group plc Interim Results 2004 2% 8% 2% 7% 15% 16% 74% 76% UK Operations Irish Merchanting Irish DIY Retailing Irish Manufacturing 9
Slide 11: Group Operating Profit
Group Operating Profit H1 2004: €69.9 m H1 2003: €53.4 m Grafton Group plc Interim Results 2004 28% 33% 72% 67% UK Ireland 10
Slide 12: Financial Statistics
Financial Statistics H1 2004 H1 2003 Interest Cover - EBITDA 8.1 7.8 Gearing 74% 75% Grafton Group plc Interim Results 2004 Tax Rate 15% 15% Return avg. cap employed 16.4% 16.5% Return avg. equity (after tax) 20.4% 20.4% 11
Slide 13: Components of Profit Growth
Components of Profit Growth €69.9 m 80 70 €53.4 m Grafton Group plc Interim Results 2004 60 Acquisitions 15.2% 50 Organic Growth 14.6% 40 Currency 1.1% 30 20 10 0 2003 2004 12
Slide 14: Components of Profit Growth
Components of Profit Growth € million H1 2003 Operating profit before goodwill 53.4 Organic growth – UK 5.9 Organic growth – Ireland 1.3 Grafton Group plc Interim Results 2004 2003 acquisitions – incremental 6.6 2004 acquisitions 1.5 2003 New branches – incremental 0.8 2004 New branches - Disconti
Slide 15: Cash Generation
Cash Generation H1 2004 H1 2003 € million € million Operating profit 63.7 49.4 Disposals, property & investment income 22.6 17.1 Depreciation & amortisation 13.1 4.8 Shares issued 0.1 68.4 Grafton Group plc Interim Results 2004 Total cash inflows 99.5 139.7 Working capital movement* 1.0 (19.7) Cap
Slide 16: Group Performance to December 2003
Group Performance to December 2003 Average per annum compound growth 5 Year 10 Year Since 1987 Grafton Group plc Interim Results 2004 Turnover 28% 27% 22% Adjusted EPS 26% 33% 28% Share redemption / 26% 28% 23% dividend per share 15
Slide 17: Irish Performance
Irish Performance Turnover €221.3 m + 20% Operating profit €19.7 m + 11% Grafton Group plc Interim Results 2004 Operating margin 8.9% (2003: 9.7%) Buoyant market sustaining strong growth 16
Slide 18: Heiton Transaction
Heiton Transaction RECOMMENDED OFFER: ÎOffer subject to Shareholder and Competition Authority approval ÎNet investment by Grafton €339m* ÎEnterprise value €379m** including debt of €43m as at 30 April 2004 ÎMultiples 2004: Sales 0.7x EBITA 10x THE BUSINESS: Grafton Group plc Interim Results 2004
Slide 19: Overview of Enlarged Group
Overview of Enlarged Group Sales: UK 61% - Ireland 39% Market leader in Irish Merchanting and DIY markets Strong No. 4 in UK Merchanting market Grafton Group plc Interim Results 2004 19% of Irish Merchanting market – over 50 branches 15% of Irish DIY market – 31 stores 9% of UK Merchanti
Slide 20: UK Performance
UK Performance 76% of turnover / 72% of operating profit Turnover ↑ up 32% to €690 m Operating profit ↑ up 41% to €50.2 m Grafton Group plc Interim Results 2004 Operating margin ↑ up to 7.3% from 6.8% Like for like merchanting sales grew by 6.8% Six acquisitions – cost €32 m 14 additio
Slide 21: UK Performance 1998 / 2003
UK Performance 1998 / 2003 e c reas rease 80 n c fold i old in 1000 v er: 6 st 14 f no o Tur fit: Alm 60 800 Pro 600 Grafton Group plc Interim Results 2004 40 400 20 200 0 0 1998 1999 2000 2001 2002 2003 Turnover 187.3 344.4 520.0 657.2 808.5 1,111.5 Op. Profit 5.7 16.6 29.2 40.0 53.7 78.6 Op Profit
Slide 22: UK Merchanting Outlets
UK Merchanting Outlets 290 300 276 250 227 178 200 155 Grafton Group plc Interim Results 2004 150 122 83 100 38 50 0 97 98 99 00 01 02 03 Jun-04 Builders Merchants 8 43 59 67 85 114 139 150 Plumbers Merchants 30 40 63 88 93 113 137 140 21
Slide 23: UK Housing Outlook
UK Housing Outlook UK housing completions remain low relative to average household size decreases and population growth 250,000 200,000 Grafton Group plc Interim Results 2004 150,000 100,000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Completions Population Growth Relative Avge Household Siz
Slide 24: UK Merchanting Super League Table
UK Merchanting Super League Table Market Shares Dec 2003 Jewson 18% Fastest Wolseley 18% Growing Grafton Group plc Interim Results 2004 Travis Perkins 16% Merchant Grafton Group 8% 23
Slide 25: Outlook 2004 - Ireland
Outlook 2004 - Ireland Construction sector peaking Residential new build market to moderate / decline in 2005 RMI and DIY market – favourable environment Grafton Group plc Interim Results 2004 Woodie’s – Naas Road and Clonmel stores opened and trading successfully; now trading from 18 branch
Slide 26: Outlook 2004 - UK
Outlook 2004 - UK Outlook for UK economy is positive Main UK merchanting exposure to RMI market Continued growth expected in RMI market Grafton Group plc Interim Results 2004 Full year acquisition and buying benefits being realised on 2003 acquisitions 6 bolt on acquisitions completed to J
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 2004 Thomas Heidstra 0044 20 75882828 Liam Boggan 0044 207 6093758 Florence O’Donoghue +353 1 614 8997 John Mattimoe John Sheehan +353 1 240 4256 +353 1 611 5
Slide 28: For Further Information
For Further Information Michael Chadwick Chairman Colm ó Nualláin Finance Director Address: Grafton Group plc, Heron House, Corrig Road, Grafton Group plc Interim Results 2004 Sandyford Industrial Estate, Dublin 18 Telephone: 353 1 2160600 Fax: 353 1 2954470 Email: email@graftonplc.com Web: www.graf