Slide 1: Interim Results 2011
~ r INTERIM RESULTS 2011 ~, ‘ ™ 2 Pe _—, Yes BRERG, | yt Ne ‘SEnnaeY RN NN NNN
Slide 2: Profile
Profile Predominantly UK and Ireland based Building Materials Group JV operation in Belgium growing Principal activities Builders Merchanting (No. 3 in UK, No. 1 in ROI) Plumbers Merchanting (No. 4 in UK, No. 1 in ROI) DIY Retailing in Ireland (No. 1 in ROI) Dry Mortar Manufacturing (N
Slide 3: Group Irish & UK Trading Locations
Group Irish & UK Trading Locations g Builders Merchanting Plumbers Merchanting Manufacturing DIY Retailing 2 2
Slide 4: Group Poland & Belgium Trading Locations
Group Poland & Belgium Trading Locations Belgium Branches at 30th June 2011 Poland Branches at 30th June 2011 Menen (2 branches) Torun Lauwe Bydgoszcz Gullegem Grudziadz Ieper Mouscron Builders Merchanting Comines 3
Slide 5: 2011 H1 Results – Key Points
2011 H1 Results – Key Points Acquisitions continue – Sustained modest Belgian JV turnover now Strong profit recovery up to circa €50m turnover growth +3% continued annualised Well placed to benefit from cyclical growth and Group operating profit development opportunities as they arise. H1 up over 40
Slide 6: Grafton Group
Grafton Group Positioned for recovery – reduced cost base – focused strategy Strong position in UK Merchanting market (>70% of Group Turnover) Profit recovery which began in 2010 continued into 2011 Consistent focus on margin improvement & market share – further self help planned Further increa
Slide 7: Interim Financial Highlights - 2011
Interim Financial Highlights - 2011 H1 2011 H1 2010 % Growth Turnover €1,008m €979m 3.0% EBITDA €47.3m €40.9m 15.5% Adjusted operating profit * €26.2m €18.7m 39.8% Operating profit €21.1m €14.8m 43.3% Profit before tax €15.1m €13.4m 12.5% Basic EPS 5.4c 5.6c (4.1%) Adjusted EPS* 7.2c 7.0c 2.9% Free
Slide 8: Financial Highlights 2011 – To date
Financial Highlights 2011 – To date Group Turnover up 3% on 2010 Positive group like-for-like sales trends maintained since Q2 2010. Group adjusted operating profit up 40% on H1 2010. Dividend increased by 0.25 cent (+10%) Free cash flow of €35m Continued focus on controlling the control
Slide 9: Segmental Turnover Analysis H1 2011 v H1 2010
Segmental Turnover Analysis H1 2011 v H1 2010 Group H1 Revenue up 3% to Euro Turnover €’millions €1.008 bn. Merchanting Revenue up 4% on Total Group H1 2010. Manufacturing Growth, which returned to UK DIY merchanting business in 2010, continued in 2011. Merchanting Irish Merchanting 15% of G
Slide 10: Geographical Analysis: 72% UK Based Turnover
Geographical Analysis 72% UK Based Turnover Geographical Analysis 800 €729.5m €693.4m 72% of Group turnover generated in the UK 700 (2010:71%) 600 UK turnover up 5% (5% 500 UK H1 2010) 400 €285.3m Republic of Ireland down €267.7m ROI 6%. (-14 % H1 2010) 300 Belgium JV Belgium turnover up 7%
Slide 11: Group Operating Result – H1 2011
Group Operating Result– H1 2011 Year H1 2011 H1 2010 €m €m Adjusted operating profit 26.2 18.7 Restructuring costs (4.0) (2.8) Intangible amortisation (1.1) (1.1) Operating profit per income statement 21.1 14.8 Significant improvement in operating results continues. – adjusted operating profit up 40
Slide 12: Components of Change
Components of Change Turnover Operating profit / (loss) €’million €’million 2010 979 15 Organic change - Merchanting – UK 26 5 Organic change - Merchanting - Ireland (9) 1 Organic change - DIY (6) 1 Organic change - Manufacturing 1 1 2010 acquisitions - Merchanting UK 1 - 2011 acquisitions -Merchant
Slide 13: Operating Result by Segment H1 2011 v H1 2010
Operating Result by Segment H1 2011 v H1 2010 Period Half One Segment Merchanting Retail Manufacturing 2011 2010 2011 2010 2011 2010 €’m €’m €’m €’m €’m €’m Segment operating profit / (loss) 33.4 27.4 (0.4) (1.2) (0.9) (2.3) Movement H1 11 v 10 22% - 64% - 61% - Restructuring costs (2.4) (2.9) (1.5)
Slide 14: Cash Generation
H1 2011 FY 2010 Cash Generation € million € million Segment operating profit (before restructuring costs & amortisation) 32 61 Central costs (6) (10) Adjusted operating profit 26 51 Depreciation & other non-cash items 22 49 Restructuring costs (4) (5) Proceeds on asset disposals 4 4 Total cash inflo
Slide 15: An Improving Picture
An Improving Picture Segment Results H1 2011 H1 2010 H1 2009 H1 2008 €000 €000 €000 €000 Merchanting * 33,436 27,403 6,785 79,478 Retail (431) (1,198) (618) 6,119 Manufacturing (925) (2,345) (4,063) 318 Segment operating profit 32,080 23,860 2,104 85,915 Turnover 1,008,075 978,685 989,946 1,437,842
Slide 16: Reducing Net Debt
Reducing Net Debt € 584m € 551m € 550m Agreement in Net Debt €436m principle to refinance debt to 2014 & 2016 €322m with core banking €255m €246m partners. Sustained reduction in gearing & net debt Good liquidity, positive free cash flow and cash deposits 2005 2006 2007 2008 2009 2010 2011 H1
Slide 17: Working Capital Trends
Working Capital Trends 2007 2008 2009 2010 H1 2011 €’m €’m €’m €’m €’m Stock 386 331 265 272 290 Debtors 536 354 307 306 350 Creditors (490) (417) (387) (400) (468) Total 432 268 185 178 172 164 83 7 6 Currency & other items (56) 11 2 0 108 94 9 6 Year on year reduction 3 ½ Yr Total Reduction to Jun
Slide 18: Management Initiatives for 2011
Management Initiatives for 2011 Customer retention & growth – focus on key target & growth areas Further “self help” initiatives in progress Maintain the positive operating improvements achieved in 2010 going forward Focus on margin improvement Working capital management & cash conversion Continued
Slide 19: Improving Trends
Improving Trends 72% of Group turnover in UK in H1 2011. Belgium 1% of Group UK merchanting and UK manufacturing continue to show like for like sales growth. Irish merchanting profitable Continued strong cash generation Free cash flow of €35m for the half year Bank re-financing agreed in
Slide 20: Benefits of Cost Reduction Initiatives Reflected in Results
Benefits of Cost Reduction Initiatives Reflected in Results Total headcount reduction since 1st January 2008 is approx 3,000 employees Almost €100m in annual cost reductions achieved from rationalisation measures Tight overhead & margin management Return to profit growth Business well posi
Slide 21: Rationalisation Costs and Benefits
Rationalisation Costs and Benefits Restructuring Cost Benefit Staff Reductions – 42 months to June 42 months to June 2011 per annum 2011 €’ millions €’ millions Employee Changes Payroll Savings per annum Numbers € millions UK 11 51 -1,570 43 Ireland 30 42 -1,450 41 41 93 -3,020 84 Almost €100m in An
Slide 22: Margin Recovery Continues
Operating Margin History (Core – before central costs) Year UK ROI Group 2000 5.9% 12.7% 8.4% 2001 6.3% 13.1% 8.6% 2002 7.0% 12.2% 8.5% 2003 7.3% 13.0% 8.7% Margin 2004 7.8% 13.1% 9.1% 2005 6.9% 10.7% 8.4% Recovery 2006 6.7% 11.3% 8.6% Continues 2007 7.3% 10.8% 8.7% 2008 4.5% 5.5% 4.9% 2009 3.2% -1.
Slide 23: Limited Debt Repayments until 2013
Limited Debt Repayments until 2013 June 2011 Dec 2010 Debt Maturity € million €’million at 30 June 2011 Gross debt 458 489 300 €'Millions Cash (212) (234) 225 Net debt 246 255 150 Gearing 26% 75 26% 0 Gross debt maturities – calender year * 2011 56 147 2012 85 84 2013 284 224 2014-2016 33 34 Total 4
Slide 24: 2011 Outlook
2011 Outlook Group Improved trends in turnover evident during H2 2010 continued in 2011 Further growth in profitability expected in 2011 – H1 2011 segment operating profits up 34% on H1 2010. Group well positioned with latent capacity High operational leverage UK Overall outlook in UK cont
Slide 25: Group Focus for 2011
Group Focus for 2011 Gain Improve Working Grow direct Increased operating Continue to sourcing and shareholder market profit drive cost capital supply chain value and share reduction management margin management returns 24
Slide 26: Principal Brands – UK and Northern Ireland
Principal Brands – UK and Northern Ireland 25
Slide 27: Principal Brands – Irish Merchanting and Manufacturing
Principal Brands – Irish Merchanting and Manufacturing 26
Slide 28: Irish Merchanting
*Heiton Buckley CHADWICKS BUILDERS MERCHANTS Irish Merchanting
Slide 29: Irish DIY Retail Brands
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Slide 30: Irish DIY Retail Brands
Wiloodie’s DIY ABS bE IS Irish DIY Retail Brands 29
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Slide 32: CPI
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Slide 33: Estimated UK Merchanting League Table
Estimated UK Merchanting League Table Circa 2,000 independents 10% 3rd Largest Builders 30% Grafton Merchant 18% 23% 19% Jewson Wolseley Travis Perkins (excluding Wickes) Sector Turnover £12 billion plus Independents Independents £4.6 billion plus 32
Slide 34: Top 10 Debtors in UK and Ireland
Top 10 Debtors in UK and Ireland Ire Ire UK UK Total in June June June June Euro 2011 2010 2011 2010 €’000 €’000 £’000 £’000 1 590 887 1,309 1,190 2 584 807 841 521 3 429 722 592 449 4 370 631 457 411 5 306 488 419 401 Only one account 6 235 391 410 370 exceeds €1m across the Group 7 233 382 385 339
Slide 35: Gross Margin Remains Consistent
Gross Margin Remains Consistent. Gross Margin Management Financial 2005 2006 2007 2008 2009 2010 H1 2011 Year Gross 31.5% 32.3% 32.7% 32.3% 31.6% 31.8% 31.8% Margin 34
Slide 36: Bank Covenants
Bank Covenants Bank Covenants Actual Net worth as defined €788m €1,131m Gearing * 85% 22% Current Liabilities : Current Assets 120% 70% Debt €’Million Minimum EBITDA / Interest Ratio Bank Debt 379 Period Actual Covenant 12 Mths to: US Loan Notes & other 79 Yr to 11:3 1:1 30/6/11 31/12/10 Cash (212)
Slide 37: Comparison of DIY Store Sizes in the Republic of Ireland
Comparison of DIY Store Sizes in the Republic of Ireland 1,800,000 Total 2.6m sq ft Total 2.6 m sq ft. Total 2.5 m sq. ft. Total 2.6 m sq ft. Total 2.4 m sq. ft. Total 2.6 m sq ft. 1,600,000 Total 2.2 m sq. ft. 1,400,000 Total 1.5 m 1,200,000 sq. ft. Total 1.2 m sq. ft. 1,000,000 800,000 600,000 400
Slide 38: For Further Information
For Further Information Gavin Slark Chief Executive Officer Colm ó Nualláin Finance Director Leo Martin Chief Operating Officer Charles Rinn Group Financial Controller / Secretary Address: Grafton Group plc, Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18 Telephone: 353 1 216 0600 F