Slide 1: Final Results 2015
Final Results 2015 Financial year ended 31 December 2015
Slide 2: Introduction & Highlights - Gavin Slark
Gavin Slark Group CEO Introduction & Highlights
Slide 3: Agenda
Agenda Introduction & Highlights - Gavin Slark Highlight Highlight Highlight 3 5 1 Financial Review - David Arnold Highlight 4 Strategic Progress & Outlook - Gavin Slark Questions 3
Slide 4: Delivering on our plans
Delivering on our plans Good progress against our medium term plans Opportunities for ongoing earnings growth through self help, organic developments and acquisition initiatives Expanding Selco footprint More Buildbase branches through acquisitions Meaningful and growing presence in electrical and i
Slide 5: Group Financial Highlights
Group Financial Highlights Adjusted operating profit* up 15% to £126.8m Adjusted operating margin* of 5.7% and ROCE of 12.2% Highlight Highlight Highlight 3 5 1Adjusted basic earnings per share* up 19% to 41.0p Full year dividend increased by 16.3% to 12.5p Highlight Excellent cash generation of £13
Slide 6: Group Operational Highlights
Group Operational Highlights UK merchanting business continued to generate good revenue and profit growth Selco performed particularly strongly Highlight Highlight Highlight 3 5 1Continuing significant profit improvement in Irish merchanting business DIY business in Ireland back on a growth path Hig
Slide 7: Financial Review - David Arnold
David Arnold Group CFO Financial Review
Slide 8: Income Statement
Income Statement Increase £m Constant 2015 2014 Reported currency Revenue 2,212.0 2,081.7 6.3% 8.9% Adjusted operating profit* 126.8 110.1 15.2% 16.5% Net finance cost (7.9) (8.9) Adjusted profit before tax 118.9 101.2 17.4% 18.3% Operating margin* 5.7% 5.3% +40 bps Operating margin pre property pro
Slide 9: Revenue Growth
Revenue Growth 2015 Like-for-like 2015 Q1 Q2 Q3 Q4 FY Total Revenue Constant Reported currency Merchanting UK 3.5%. 5.1% 3.8%. 3.3%) 3.9%) 8.9% 8.9%. Ireland 16.4%. 11.1% 6.2%. 7.9%) 10.1%) 10.9% (0.1%) Belgium (2.0%) 3.1% (0.2%) (3.9%) (0.3%) 0.4% (9.6%) Irish Retailing 3.0%) 1.1% 5.4%) 7.9%) 4.4%)
Slide 10: Revenue Growth Analysis
Revenue Growth Analysis 2,400 59 122 2,200 (51) 2,212 2,000 2,082 1,800 £’m 1,600 1,400 1,200 1,000 2014 Organic Acquisitions FX 2015 Growth 10
Slide 11: Organic Revenue Growth Analysis
Organic Revenue Growth Analysis 140 31.3 120 (8.7) 122.4 6.2 2.7 100 23.4 80 (0.2) £’m 60 67.7 40 20 0 UK Ireland Belgium Retail Manufacturing Growth Branch Organic Merchanting Merchanting Merchanting Initiatives Consolidations/ Growth Disposals LFL Constant currency 11
Slide 12: Adjusted Operating Profit Analysis
Adjusted Operating Profit Analysis 150 4.5 126.8 130 5.4 8.1 (0.9) 110.1 110 (0.4) £’m 90 70 50 30 2014 Trading Growth Acquisitions Property FX *Adjusted Like for Like Initiatives Disposals operating * Before pension credit and Belgium impairment charge (see Appendix 1) profit 12
Slide 13: Like for Like Operating Profit Analysis
Like for Like Operating Profit Analysis 10.0 2.1 9.0 8.0 1.3 (1.3) Group 7.0 4.3 8.1 6.0 £’m (0.7) 5.0 4.0 3.0 2.4 2.0 1.0 0.0 UK Irish Belgium * Retail Manufacturing Central Like for Like Merchanting Merchanting Merchanting Operating Profit *Adjusted for inventory provision 13
Slide 14: Like for Like Operating Profit Analysis
Like for Like Operating Profit Analysis 10.0 78% 1.9 9.0 8% 22% 8.0 18% (1.3) Group 7.0 6.0 £’m 5.0 4.0 3.0 4% 2.0 1.0 0.0 UK Irish Belgium * Retail Manufacturing Central Like for Like Merchanting Merchanting Merchanting Operating Profit *Adjusted for inventory provision 14
Slide 15: Like for Like Operating Profit Analysis
Like for Like Operating Profit Analysis 10.0 78% Drop 1.9 13% 9.0 Through ex Plumbase 10% 22% 8.0 18% (1.3) Group 7.0 6.0 £’m 5.0 4.0 3.0 10% 2.0 1.0 0.0 UK Irish Belgium * Retail Manufacturing Central Like for Like Merchanting Merchanting Merchanting Operating Profit *Adjusted for inventory provisi
Slide 16: UK Merchanting
UK Merchanting £m 2015 2014 Increase Revenue 1,662.0 1,525.6 8.9% Operating profit* 105.6 92.8 13.8% Operating margin* 6.4% 6.1% +30 bps Operating margin pre property profit and pension credit 6.0% 6.0% Trading Growth in average daily like-for-like turnover of 3.9% Gross margin advanced by 10 basis
Slide 17: Irish Merchanting
Irish Merchanting Increase £m Constant 2015 2014 Reported currency Revenue 257.3 257.5 -0.1% 10.9% Operating profit 18.6 16.4 13.2% 25.7% Operating margin 7.2% 6.4% +80 bps Trading Strong competitive position delivered like-for-like turnover growth of 10.1% Gross margin recovery in H2 – benefit of p
Slide 18: Belgium Merchanting
Belgium Merchanting Increase/(Decrease) £m Constant 2015 2014 Reported currency Revenue 82.8 91.6 -9.6% 0.4% Operating profit* (0.3) 0.8 -137.5% -138.0% Operating margin (0.4%) 0.9% -130 bps Trading Disposal of non-core and capital intensive readymix business completed Continued focus on implementin
Slide 19: Retailing
Retailing Increase £m Constant 2015 2014 Reported currency Revenue 148.6 158.2 -6.1% 4.4% Operating profit 3.5 2.4 46.1% 62.2% Operating margin 2.3% 1.5% +80 bps Trading Revenue up by 4.4% per cent in like-for-like stores Recovery in retail sales extended into the DIY sector Good progress on improvi
Slide 20: Manufacturing
Manufacturing £m 2015 2014 Increase Revenue 52.8 48.7 8.5% Operating profit 9.8 7.9 23.3% Operating margin 18.5% 16.2% +230 bps Trading Pace of revenue growth moderated to +8.5% for 2015 Pricing and gross margin gains during 2014 continued in 2015 Acquisition of Carlton completed in July 2015 - incr
Slide 21: Balance Sheet
Balance Sheet £m Dec Dec 2015 2014 Intangible assets 554.2 485.9 Tangible assets 458.7 453.5 Working capital 166.1 127.1 Other assets/(liabilities) (59.8) (51.9) Pension deficit (16.6) (33.0) 1,102.6 981.6 Net debt (113.6) (75.3) Equity 989.0 906.3 Adjusted ROCE* 12.2% 11.1% +110 bps Net debt/EBITDA
Slide 22: Balance Sheet
Balance Sheet £m Dec Dec 2015 2014 Intangible assets 554.2 485.9 Increase Tangible assets 458.7 453.5 principally driven Working capital 166.1 127.1 by acquisitions Other assets/(liabilities) (59.8) (51.9) Pension deficit (16.6) (33.0) 1,102.6 981.6 Net debt (113.6) (75.3) Equity 989.0 906.3 Adjuste
Slide 23: Balance Sheet
Balance Sheet £m Dec Dec 2015 2014 Intangible assets 554.2 485.9 Tangible assets 458.7 453.5 Maturity of bank facilities Working capital 166.1 127.1 extended at Other assets/(liabilities) (59.8) (51.9) reduced cost Pension deficit (16.6) (33.0) 1,102.6 981.6 Net debt (113.6) (75.3) Equity 989.0 906.
Slide 24: Free Cash Flow
Free Cash Flow 180 33.1 161.3 160 140 (8.2) 128.2 (13.8) 120 11.3 104.7 £’m 100 (25.7) 80 (20.2) 60 40 20 0 Statutory Depreciation EBITDA Other non Working Interest and Replacement Property and Free cash operating and cash items capital tax capex asset sales flow profit amortisation 24
Slide 25: Free Cash Flow
Free Cash Flow 180 82% of 33.1 161.3 statutory 160 operating 140 (8.2) profit 128.2 (13.8) 120 11.3 104.7 £’m 100 (25.7) 80 (20.2) 60 40 20 0 Statutory Depreciation EBITDA Other non Working Interest and Replacement Property and Free cash operating and cash items capital tax capex asset sales flow pr
Slide 26: Movement in Net Debt
Movement in Net Debt 140 26.8 120 100 31.4 (11.1) 113.6 80 (104.7) 95.9 60 75.3 £’m 40 20 0 -20 -40 Net Debt Free cash flow Acquisitions Development Dividends F/x / shares Net Debt Dec 2014 net of capex issued etc Dec 2015 disposals 26
Slide 27: Strategic Progress & Outlook - Gavin Slark
Gavin Slark Group CEO Strategic Progress & Outlook
Slide 28: Grafton's Strategic Pillars
Grafton’s Strategic Pillars Revenue Operating Capital £2.08bn Margin Turn 5.7% 2.1x 2014 2014 2014 28
Slide 29: Grafton's Strategic Pillars
Grafton’s Strategic Pillars Adjusted Revenue Operating Capital £2.21bn Margin* Turn 5.7% 2.1x +6.3% +40 bps 2015 2015 2015 * Before pension credit and Belgium impairment charge (see Appendix 1) 29
Slide 30: Good Progress on Growth Initiatives
Good Progress on Growth Initiatives 5 new Selco openings: Redhill, Coventry, New Southgate, Weybridge and Southampton 40 Selco stores open at year end Selco Direct and Click & Collect launched 80 Electricbases, 130 Hirebases and 27 Selco Hires £39m revenue in industrial M&E segment (Plumbase Industr
Slide 31: Acquisitions Growth
Acquisitions Growth TG Lynes and Parkes Services complement Plumbase Industrial in industrial M&E sector Addition of Carlton to UK Mortar business General Merchanting adds Wollens in the South West Two South East based businesses acquired since year end to expand general merchanting Isero marks succ
Slide 32: Isero
Isero A SPECIALIST DISTRIBUTOR OF TOOLS AND FIXINGS Trades with four brands from 38 branches & 1 distribution centre 32 32
Slide 33: Isero – Highlights & Strategic Rationale
Isero – Highlights & Strategic Rationale Strong leader in the Randstad area of the Netherlands which is the region with the highest economic activity and a population of over 12m Leading market position in the Netherlands – estimated c.9% Differentiated scalable ‘small box’ format Branch network off
Slide 34: Current Trading – Two months to end February 2016
Current Trading – Two months to end February 2016 Like-for-like daily revenue Q4 2015 2 months to Feb 2016 Merchanting UK 3.3% 5.8% Ireland 7.9% 11.5% Belgium (3.9%) 1.5% Netherlands* - 6.1% Irish Retailing 7.9% 7.1% Manufacturing (2.3%) 13.0% Total Group 3.8% 6.6% Total revenue growth 2 months to e
Slide 35: Outlook - UK
Outlook - UK Generally positive for 2016 with pace of economic growth dependent on trends in global economy, financial markets and UK EU membership Activity in the new housing market supported by good underlying demand and low mortgage rates Group’s development activity providing a platform for grow
Slide 36: Outlook - Ireland
Outlook - Ireland Recovery well established and looks set to continue at a more sustainable level for 2016 notwithstanding inconclusive election result Consumer spending and investment expected to be key drivers of growth Recovery in house building expected to continue and non residential activity e
Slide 37: Summary
Summary Positive full year performance – results reflect success of strategy pursued in recent years Good pipeline of growth opportunities Overall outlook is positive and we are confident of further progress during 2016 On track for medium term target of 7% operating margin and 15% ROCE 37
Slide 38: Questions
Questions
Slide 39: Appendices
Appendices G Grafton Group ple
Slide 40: Operating Profit Bridge – Statutory to Adjusted
Appendix 1 Operating Profit Bridge – Statutory to Adjusted 2015 2014 Change £’m £’m £’m Revenue 2,212.0 2,081.7 130.3 Statutory operating profit 128.2 110.1 18.1 Defined benefit pension scheme past service credit (2.9). - (2.9) Asset impairment – Belgium 1.5. - 1.5 Adjusted operating profit 126.8 11
Slide 41: Operating Margin Analysis
Appendix 2 Operating Margin Analysis* H2 H1 H2 H1 H2 H1 H2 H1 2015 2015 2014 2014 2013 2013 2012 2012 UK Merchanting 6.2% 6.5% 6.1% 6.1% 5.9% 5.0% 4.9% 4.8% Irish Merchanting 8.4% 6.0% 8.0% 4.6% 2.9% 1.3% 1.7% 0.7% Belgium Merchanting (1.7%) 0.8% 0.4% 1.5% 1.3% 0.9% 1.7% 3.1% Netherlands Merchanting
Slide 42: UK Housing Transactions 2007 - 2015
Appendix 3 UK Housing Transactions 2007 - 2015 ‘000 500 450 400 350 300 250 200 150 100 50 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 •Quarterly Seasonally Adjusted Source: HM Revenue & Customs UK Property Transactions Count 42
Slide 43: Housing Starts & Completions – England: 1999 - 2015
Appendix 4 Housing Starts & Completions – England: 1999 - 2015 ‘000 Starts Completions 200 180 160 140 120 100 80 60 40 20 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: UK Department for Communities & Local Government on a rolling 12 month basis 43
Slide 44: UK Mortgage Approvals UK: 2008 - 2015
0 10 20 30 40 50 60 70 80 90 '000 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Source: Bank of England Appendix 5 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 UK Mortgage Approvals UK: 2008 - 2015 Jun-14 Sep-14 Dec-
Slide 45: House Completions – Ireland 1993 - 2015
Appendix 6 House Completions – Ireland 1993 - 2015 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Source: Department of the Environment, Community & Local Government - (DoELG) on a rolling 12 month basis 45
Slide 46: Mortgages Approvals in Ireland: 2002 - 2015
Appendix 7 Mortgages Approvals in Ireland: 2002 - 2015 Value Value Volume Volume €bn ‘000 45 250 40 35 200 30 150 25 20 100 15 10 50 5 - - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: IBF on a rolling 12 month basis 46
Slide 47: Cautionary Statement
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 from those expressed or implied by