Grafton Group Plc · LSE:GFTU
Grafton — FY2003 Earnings Presentation
27 slides from Grafton's earnings presentation, 2004
Slide 1: Grafton Group Plc Final Results 2003
(eeaeeae aaa eres la, ton aan “ y Comme Grafton Group Plc FINAL RESULTS 2003
Slide 2: Profile
Profile UK and Ireland based Building Materials Group Principal activities Builders and Plumbers Merchanting DIY Retailing Dry Mortar Manufacturing Grafton Group plc Final Results 2003 Market leader or strong market positions 2003 Turnover €1.5 billion Trading from more than 330 loca
Slide 3: Principal Brands / Activities
Principal Brands / Activities Builders Merchanting Significant Market positions Plumbers Merchanting Significant Market U.K. position Silo Mortar Manufacturing Market Leader Grafton Group plc Final Results 2003 Builders Merchanting Market Leader Ireland DIY Retailing Market Leader Silo Mortar Manufa
Slide 4: Strategy
Strategy Consistent - Focused To achieve above average long-term returns for shareholders by :- Building on strong positions in businesses serving the UK and Irish construction markets Grafton Group plc Final Results 2003 Developing in other Irish markets Growing outside Ireland in busines
Slide 5: Culture and Philosophy
Culture and Philosophy Decentralised cost conscious profit centres Federal structure providing for autonomy and accountability Motivated management teams Grafton Group plc Final Results 2003 - Supported by lean centre Profitable growth philosophy Sound financing and conservative accounting
Slide 6: Strengths
Strengths Prominent market positions in the UK and Ireland Proven strategic record Unique acquisition / integration skills Strong balance sheet Grafton Group plc Final Results 2003 Highly cash generative and profitable businesses 6
Slide 7: Trading Locations
Grafton Group plc Final Results 2003 Trading Locations 7
Slide 8: Financial Highlights
Financial Highlights % 2003 2002 Change Turnover €1,496.0m €1,152.4m + 30% Operating profit before goodwill € 123.3m € 92.3m + 34% Pretax profit €102.0m €80.2m + 27% Grafton Group plc Final Results 2003 EBITDA €156.8m €120.1m + 31% Property profit €3.4m €3.7m Adjusted E.P.S.** 45.07c *36.99c + 22% S
Slide 9: Group Turnover – UK and Ireland
Group Turnover – UK and Ireland 2003: €1,496m 2002: €1,152m Grafton Group plc Final Results 2003 8% 2% 9% 3% 16% 19% 74% 69% UK Operations Irish Merchanting Irish DIY Retailing Irish Manufacturing 9
Slide 10: Group Operating Profit
Group Operating Profit 2003: €123.3m 2002: €92.3m Grafton Group plc Final Results 2003 36% 42% 64% 58% UK Operating margin 7.1% UK Operating margin 6.6% ROI Operating margin 11.6% ROI Operating margin 11.2% UK Ireland 10
Slide 11: Financial Statistics
Financial Statistics 2003 2002 Interest Cover - EBITA 7.5 7.4 Gearing 69% 75% Grafton Group plc Final Results 2003 Tax Rate 15% 15% Return avg. cap employed 17.1% 17.0% Return avg. equity (after tax) 21.0% 21.2% 11
Slide 12: Components of Profit Growth
Components of Profit Growth €m €123.3 m New Branches 02 0.6 130 110 €92.30 m Acquisitions 03 16.0 Grafton Group plc Final Results 2003 90 Acquisitions 02 7.5 70 Organic Growth 4.8 Ireland 50 Organic Growth 8.5 UK 30 10 New Branches 03 -1.2 Currency -5.2 -10 2002 2003 12
Slide 13: Cash Generation
Cash Generation 2003 2002 € million € million Operating profit 114.0 88.1 Depreciation & amortisation 37.5 26.6 Disposals & investment income 31.0 14.4 Shares issued 69.2 0.9 Total cash inflows 251.7 130.0 Grafton Group plc Final Results 2003 Working capital movement* (20.1) (3.6) Capi
Slide 14: Group Performance to December 2003
Group Performance to December 2003 Average per annum compound growth 5 Year 10 Year Since 1987 Turnover 28% 27% 22% Grafton Group plc Final Results 2003 Adjusted EPS 26% 33% 28% Share redemption / 26% 28% 23% dividend per share 14
Slide 15: Irish Performance
Irish Performance Turnover €384.5m + 12% Operating profit €44.8m + 16% Grafton Group plc Final Results 2003 Operating margin 11.6% (2002: 11.2%) Buoyant market sustaining strong growth 15
Slide 16: UK Performance
UK Performance 74% of turnover / 64% of operating profit Turnover ↑ up 37% to €1.1 billion Operating profit ↑ up 46% to €78.6m Operating margin ↑ up to 7.1% from 6.6% Grafton Group plc Final Results 2003 Like for like merchanting sales grew by 5.4% Nine acquisitions (including Jacksons €
Slide 17: UK Performance 1998 / 2003
UK Performance 1998 / 2003 e c reas rease 80 n c fold i old in 10 0 0 v er: 6 st 14 f no o Tur fit: Alm 60 800 Pro 600 40 Grafton Group plc Final Results 2003 400 20 200 0 0 19 9 8 19 9 9 2000 2001 2002 2003 Turno v e r 18 7 . 3 3 4 4 .4 52 0 .0 6 57.2 8 0 8 .5 1, 111. 5 Op . P ro f it 5.7 16 . 6 2
Slide 18: UK Merchanting Outlets
UK Merchanting Outlets 276 280 227 178 180 155 122 Grafton Group plc Final Results 2003 83 80 38 -20 97 98 99 00 01 02 03 Builders Merchants 8 43 59 67 85 114 139 Plumbers Merchants 30 40 63 88 93 113 137 18
Slide 19: UK Housing Completions
UK Housing Completions UK Hous ing C ompletions (R olling 12-Mth Total) 250000 200000 150000 Grafton Group plc Final Results 2003 100000 50000 0 Q Q Q Q Q Q Q Q Q Q Q 1 2 3 4 1 2 3 4 1 2 3 19 19 19 19 19 19 19 19 20 20 20 91 92 93 94 96 97 98 99 01 02 03 S ocial Reg Private Total 19
Slide 20: Jackson Building Centres
Jackson Building Centres Important and valuable strategic move Acquired 3rd March 2003 Cost at completion Stg£88.75m Turnover 2003 Stg£142.6m (Turnover 2002 - Stg£134m) Op. profit 2003 Stg£9.3m (Op. profit 2002 - Stg£6.7m) Grafton Group plc Final Results 2003 An even better business than
Slide 21: 2003 UK Acquisitions
2003 UK Acquisitions Nine acquisitions in the year Consistent with Grafton’s strategy and record Significant landmark year in Grafton’s expansion (Jacksons) Grows Grafton’s market share from 6% to 8% Grafton Group plc Final Results 2003 Consolidates Grafton’s top four market position Cre
Slide 22: UK Merchanting Super League Table
UK Merchanting Super League Table Market Shares Jewson 18% Fastest Wolseley 18% Growing Grafton Group plc Final Results 2003 Travis Perkins 16% Merchant Grafton Group 8% 22
Slide 23: Outlook 2004 - Ireland
Outlook 2004 - Ireland Construction sector may weaken Residential new build market to moderate / decline RMI market – single digit growth Telfords full year benefit Grafton Group plc Final Results 2003 DIY market – single digit growth Woodie’s – Cavan and Carlow stores trading successful
Slide 24: Outlook 2004 - UK
Outlook 2004 - UK UK operations will be driver of Group growth Main UK merchanting exposure to RMI market 2003 acquisitions will drive UK Turnover to well over €1.2 billion Grafton Group plc Final Results 2003 Full year acquisition and buying benefits to be realised on 2003 acquisitions Mo
Slide 25: 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 Final Results 2003 Daragh Horgan 0044 20 7155 8208 Sylvia Cordeiro 0044 207 678 0473 Florence O’Donoghue +353 1 614 8997 John Mattimoe John Sheehan +353 1 240 4256 +353 1 611
Slide 26: For further information
For further information Michael Chadwick Chairman Colm ó Nualláin Finance Director Address: Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18 Grafton Group plc Final Results 2003 Telephone: 353 1 2160600 Fax: 353 1 2954470 Email: email@graftonplc.com Web: www.graftonplc.com 26
Slide 27: Components of Profit Growth
Components of Profit Growth € million 2002 Operating profit 92.3 Organic growth – UK 8.5 Organic growth – Ireland 4.8 UK 2002 acquisitions – incremental 7.5 Grafton Group plc Final Results 2003 2003 acquisitions 16.0 2002 New branches – incremental 0.6 2003 New branches (1.2) Discontinued (0.3) Ex