Final Results

WOLSELEY PLC 28 September 1999 Wolseley announces record results for the year ended 31 July 1999 Sales up £745 million (15.7%) Trading profit (before exceptional costs and goodwill amortisation) up £48.5 million (17.2%) Acquisition spend £310 million ============================================================================== 1999 1998 Change Sales £5,505m £4,760m +15.7% Trading profit ______________________ - before exceptional costs & goodwill amortisation* £330.2m £281.7m +17.2% - exceptional costs £(11.6)m £(4.3)m - goodwill amortisation* £(5.5)m £ - m ______________________ Total £313.1m £277.4m +12.9% Exceptional loss on disposal of operations £(3.1)m £(5.3)m ______________________ Profit before interest £310.0m £272.1m +13.9% Interest £(3.6)m £2.1m ______________________ Profit before tax ______________________ - before exceptionals & goodwill amortisation* £326.6m £283.8m +15.1% - exceptionals & goodwill amortisation* £(20.2)m £(9.6)m ______________________ Total £306.4m £274.2m +11.7% Earnings per share - before exceptionals & goodwill amortisation* 38.08p 32.70p +16.5% - exceptionals and goodwill amortisation* (3.39)p (1.90)p ______________________ Total 34.69p 30.80p +12.6% Dividend per share 13.75p 12.50p +10.0% Net borrowings £309.0m £41.6m Gearing 28.2% 4.4% ============================================================================== * Goodwill amortisation arises on acquisitions since 1 August 1998 in accordance with FRS10. - Group sales up £745 million (15.7%). Trading profits (before exceptional costs and goodwill amortisation) up £48.5 million (17.2%). - Organic growth in sales of 5.5%. - Earnings per share, before exceptionals and goodwill amortisation of 38.08 pence up by 16.5%. - Total dividends for the year of 13.75 pence up 10.0%, reflecting confidence in the future. - Record spend on acquisitions £310 million (£97.9 million). A further £68 million spent since the year end. Branch network extended by 370 branches (22.8%) to 1,992 at 31 July 1999. 'I am delighted that once again the group has reported record results and outstanding growth. We face the future with confidence which enables us to increase total dividend payments by 10%. These results are a testimony to the success of our strategy and the hard work of our people.' Richard Ireland Chairman 'I am pleased with the progress made by the group this year, particularly the organic growth and the record level of acquisition spend. We are achieving increasing benefits from the scale of our operations and from the significant investments we are making. We are optimistic about our future prospects.' John Young Group Chief Executive ______________________________________________________________________________ FOR FURTHER INFORMATION PLEASE CONTACT: John Young - Group Chief Executive ) c/o London Underwriting Centre ) until 2 pm Steve Webster - Group Finance Director ) Telephone 0171 617 5101 After 2 pm (0802) 913485 (Mobile) ) Tony Knox - Financial Dynamics (Telephone 0171 831 3113) Announcement of Preliminary Results Year to 31 July 1999 GROUP RESULTS We are delighted to report another record set of results for the group, reflecting particularly strong performances in our US and UK distribution businesses, underlining our position as the world's largest distributor of plumbing and heating equipment to the professional contractor. Group sales increased by £745 million (15.7%) from £4,760 million to £5,505 million. The organic growth in sales was 5.5%. We increased our market share in each principal area of our building materials' distribution activities. Group trading profit before exceptionals and goodwill amortisation was £330.2 million. This represents an increase of £48.5 million (17.2%) from the previous year's comparable trading profit of £281.7 million. The group trading margin before exceptionals and goodwill amortisation increased from 5.9% to 6.0%. Our US distribution businesses produced another excellent performance in a favourable market, recording increases in sales and trading profits of 17.7% and 27.6%, respectively. The European distribution division reported increases in sales and trading profits (before one-off costs of acquisitions) of 19.4% and 13.1% respectively. The UK businesses achieved strong profit growth in a market which is experiencing some improvement. Underlying trading profits of the Manufacturing division were marginally down against the background of generally difficult market conditions. Exceptional costs relating to the integration of the acquisitions of Hall & Co and British Fittings Group PLC in the UK and Porcher Distribution in France amounting to £11.6 million have been incurred (1998 £4.3 million in relation to the integration of Familian Corp and Ferguson). In addition, an exceptional loss of £3.1 million (1998 £5.3 million) arose on the disposal of subsidiaries. Following the adoption of FRS 10 on 1 August 1998, goodwill amortisation of £5.5 million (1998 £nil) has been charged in respect of acquisitions completed in the financial year. Net interest payable of £3.6 million compares to net interest receivable of £2.1 million in the previous year. Excluding exceptionals and goodwill amortisation, profit before tax increased by 15.1% from £283.8 million to £326.6 million, giving earnings per share of 38.08 pence compared to 32.70 pence, an increase of 16.5%. After exceptionals and goodwill amortisation, earnings per share were 12.6% higher. Currency translation had little effect on the group results for the year. Notes 5 and 6 to this announcement show the effect of exchange differences on sales and trading profits, respectively, during the year. DIVIDENDS The board is recommending a final dividend of 10.00 pence (1998 - 9.00 pence) per share, an increase of 11.1%. With the interim dividend of 3.75 pence already paid, total dividends for the year will amount to 13.75 pence per share, an increase of 10.0% over dividends declared in respect of last year. The dividend reinvestment plan, introduced last year, will continue to be available to shareholders. The board intends to maintain its progressive dividend policy, reflecting its confidence in the future. BUSINESS DEVELOPMENT We continue to pursue sustainable, profitable growth by building on our core capabilities in building materials' distribution. We continue to develop our international presence by entering new markets where we believe we can secure a leading position and introduce operational efficiencies. Today, more than 75% of our building distribution sales are outside the UK. Organic growth this year has been achieved by widening the product offering, increasing market share and extending the branch network. The record acquisition spend during the year, amounting to £310 million including debt assumed, plus a further £68 million since the year end demonstrates our ability to identify and complete suitable acquisitions to supplement organic growth. Details of acquisitions are set out in note 7. Branch numbers have been expanded by 370 (22.8%) during the year to a total of 1,992 at 31 July 1999. In the UK, the acquisition of Hall & Co added a further 92 branches which has helped Builder Center to establish itself as a leading national heavyside merchant. The acquisition of British Fittings Group PLC has significantly expanded our presence in the commercial and industrial market. In France, the acquisition of Porcher Distribution added 56 branches and allowed Brossette to strengthen its national coverage. The acquisitions during the year and since the year end in the US plumbing supplies and industrial equipment distribution businesses have increased our capabilities in certain specialist areas such as pipe, valves and fittings ('PVF') and increased our presence in the upper midwest states and in Texas. The acquisitions of US lumber distribution businesses have extended our geographic coverage in Delaware and Illinois. In addition they have added to our truss and panel manufacturing and assembly operations which enable us to supply a wider range of services and product to US housebuilders. We have also entered two new countries during the year. In January, we acquired Heatmerchants Limited, a distributor of heating and plumbing products and ceramic tiles, with 20 branches throughout the Republic of Ireland. In July we acquired Manzardo, a leading distributor of plumbing, heating and sanitary ware, operating from seven outlets in Northern Italy. We would expect to play a full part in the consolidation of the Italian market through further acquisitions and organic development. The increasing critical mass of our operations in Europe and North America, together with the ongoing investments in IT and distribution centres, allow us to improve operational efficiency, provide an improved service and product range to the customer and maintain an edge in an increasingly competitive world. The strength of our balance sheet and the cash generating capabilities of our operations creates ample scope for further development of our businesses through branch openings, investment and acquisitions. REVIEW OF OPERATIONS Building Distribution - Europe The division produced 35.4% (1998 34.4%) of the group's turnover and 36.4% (1998 38.6%) of the group's trading profit before exceptionals and goodwill amortisation. Sales for the division increased by 19.4% and trading profits before exceptionals by 13.1%. UK sales increased by 24.5%, of which 4.3% was organic growth, in a market which was generally flat but showed more encouraging signs of improvement in the run up to the end of the financial year. Deflationary pressures on the prices of boilers, radiators and copper resulted in some overall deflationary effect on our lightside operations. There was some product price inflation on heavyside products but the overall effect on Builder Center was not significant. An increased number of housing transactions and improved consumer confidence led to higher RMI spending. Wolseley Centers continued its branch opening programme with the net addition of 38 satellites, helping Plumb Center and Drainage Center to increase market share. Builder Center also increased market share and achieved a further improvement in its trading margin. The integration of Hall & Co with Builder Center is now complete and the anticipated benefits from improved purchasing and cost reductions are being achieved. The trading profit contribution from Hall & Co (before one- off costs) was earnings enhancing. UK trading profits, before one-off costs, increased by 23.2%. Both the added value percentage and the underlying trading margin of the UK distribution businesses improved. Profits from acquisitions are on an improving trend and in line with expectations but are not yet producing a contribution in line with the overall UK margin. This resulted in a slight reduction in the trading margin to 7.1%. Brossette, including a nine month contribution from Porcher Distribution, increased its sales by 18.2% and significantly outperformed the French market. This was generally flat throughout the financial year although there were positive signs of an upturn in the summer months. Brossette's sales growth reflected a 7.2% organic increase in sales, partly driven by a sales incentive programme, which ends in November 1999. It continued with its programme of opening satellites to extend its national coverage and to get closer to the customer, adding a further 17 outlets and doubling its penetration in the Paris region. Brossette's local currency trading profits (before one-off costs) increased marginally, after incorporating the expected first time trading loss from Porcher Distribution. The underlying business of Brossette maintained its trading margin percentage. A contribution to profits from Porcher Distribution is expected in the current financial year. OAG's local currency sales and profits were down in a difficult Austrian market and a competitive trading environment. The benefits of a cost reduction programme implemented during 1999 should be seen in the current financial year. Building Distribution - USA The division produced 57.8% (1998 56.8%) of the group's turnover and 53.8% (1998 48.7%) of the group's trading profit before exceptionals and goodwill amortisation. The plumbing, heating and PVF distribution companies in the USA increased sales by 11.8% and trading profits by 25.4%. The trading margin improved from 4.8% to 5.4% of sales. The organic growth in sales was 5.8%. Each of the companies improved its added value percentage through a combination of improved purchasing, increased operational efficiency and a more favourable product mix. The product pricing environment improved in the second half such that, for the financial year as a whole, price movements had little overall effect. Ferguson enjoyed a strong period of trading in the Spring and Summer months and its results further benefited from the integration of a higher level of acquisitions than it has made in recent years. Total sales were up 16.9% over the previous year and the trading margin percentage improved. The continuing investments in distribution centres and IT have played an important part in this achievement. The Ferguson and Familian Corp management teams combined effectively, following the integration of Familian Corp into Ferguson in June 1998, to produce a substantial improvement in Familian Corp's performance. Under Ferguson's leadership Familian achieved a trading margin of 3% of sales which is a significant improvement on last year's result. We expect further trading margin enhancement. The markets in California, Texas and Nevada were strong although certain of Familian's other markets were less buoyant. Familian Northwest also benefited from an improved product pricing environment and increased its trading margin, assisted by strong cost control. The pulp and paper and mining industries, two of Familian Northwest's principal market segments, were relatively weak for most of the financial year as was the commercial market. The growing waterworks business is an increasingly important contributor to its expanding product offering. Boosted by acquisitions, Carolina Holdings produced a 28.4% increase in sales and a 35.2% increase in trading profits. Whilst there was lumber price deflation during the first half, prices increased throughout the second half. This had the effect of increasing Carolina's sales by about 4% for the year as a whole. Housing starts remained strong throughout the year. The geographical expansion of Carolina's operations continued. The trading margin improved from 6.0% to 6.3% of sales, with the value adding truss and panel plant operations making an increasingly important contribution. Carolina's construction loan programme, which continues to generate a worthwhile contribution to earnings, has been expanded during the year in newer territories, particularly Colorado and Georgia. Manufacturing and Other Activities The division contributed 6.8% (1998 8.8%) of group turnover and 9.7% (1998 12.7%) of group trading profit before exceptionals and goodwill amortisation. There has been a particular focus during the year on rationalising individual business units into groupings that promote synergies and opportunities for sales growth. Sales and trading profits on continuing activities were marginally down overall, principally due to continued weak markets. The energy companies generally experienced weak markets especially in Germany and Switzerland but managed to maintain a similar level of sales due to new products and export performance. Combined profits were lower but investments during the year in factories, training and IT should pave the way for improved results in the future as market conditions improve. Against the background of possibly the worst conditions in the agricultural industry worldwide for sixty years, the agricultural spares distribution companies reported lower sales and profits. The sales trend improved in the last quarter of the financial year. The companies continue to focus on cost minimisation, measures to reduce working capital investment and increasing the product portfolio to counteract the poor market conditions. The photographic companies recorded higher trading profits on increased sales, continuing the improving performance trend. The trend towards digital photography continues. The photographic companies are well placed to take advantage of current trends in the marketplace through specialist digital centres and the availability of an internet trading facility. Amongst the other manufacturing companies, there were some good performances. Synergies identified in the newly formed electric motors and cable management divisions should provide further improvements next year. FINANCIAL Before exceptionals and goodwill amortisation, the increase in earnings per share was 16.5% from 32.7 pence to 38.08 pence. Total earnings per share increased by 12.6% from 30.80 pence to 34.69 pence. The average number of shares in issue during the year was 573.3 million (1998 571.3 million). Net interest payable of £3.6 million (1998 net interest receivable of £2.1 million) reflects the higher level of acquisition spend. Net interest receivable on construction loans amounted to £6.0 million (1998 £5.0 million). For the seventh year in succession, the overall effective tax rate for the group is 33% (on profit before exceptionals and goodwill amortisation). It is expected to remain at this rate for the current financial year, providing the geographical contributions to group profits remain broadly the same and there are no significant changes to tax rates in individual territories. The cost of dividends paid and proposed in respect of the financial year is £78.9 million (1998 £71.7 million). The dividend cover is unchanged from the previous year at 2.5 times. Based on pre-exceptional earnings, the cover would be 2.7 times. Shareholders' funds increased by £136.2 million from £958.3 (as restated for FRS 12) to £1,094.5 million. The group adopted FRS 12 (Provisions, contingent liabilities and contingent assets) during the year. As a result, provisions for liabilities and charges as at 31 July 1998 were reduced by £24.1 million and reserves increased by £21.9 million. There is no impact on the profit and loss account for either the current or previous period. Net borrowings, excluding construction loan borrowings, increased by approximately £267 million to £309.0 million, giving year-end gearing of 28.2%. Construction loan borrowings relating to our US building distribution activities amounted to £157.7 million (1998 £147.3 million) and are offset by secured construction loans receivable of £158.0 million (1998 £148.1 million). The cash flow from operating activities was strong at £338.6 million (1998 £313.3 million), increasing by approximately 8%. Working capital increased by £41.9 million (1998 £18.5 million). The increased level of capital expenditure from £72.7 million to £104.2 million reflects additional investment in IT and distribution centres in the USA. Return on gross capital employed, including goodwill, is 17.0%, well ahead of the group's weighted average cost of capital. The group has adopted FRS 10 (goodwill and intangible assets) with effect from 1 August 1998. Goodwill arising on acquisitions from that date has been capitalised in the balance sheet and will be amortised over 20 years unless a shorter period is appropriate. Goodwill on acquisitions prior to that date has not been capitalised. The unamortised balance of goodwill in the balance sheet as at 31 July 1999 is £179 million. OUTLOOK Our UK building materials distribution businesses have experienced a gradual improvement in their marketplaces since the Spring. We would expect this improvement to continue into next year in the absence of any significant increases in UK interest rates which might impair consumer confidence. The business environment in France also showed signs of an upturn towards the end of the financial year and this more favourable trend is likely to continue over the coming months. Any progress in Austria is likely to arise from the benefits of the recent cost reduction exercise rather than any improvement in the Austrian housing and construction market. Our US businesses continue to enjoy strong markets and an improved product pricing environment. Housing starts and industrial activity are expected to remain at levels which present opportunities for our businesses to continue to grow, although some slowing in the rate of sales growth may arise compared to the extremely high levels achieved over the last two financial years. Further operational efficiencies should arise through investments in IT and distribution centres. However, pressure on labour costs continues. We will continue to focus on achieving cost reductions and deriving synergies within the manufacturing division to counteract the effects of the difficult business conditions. Increasing benefits should arise over the next financial year from the rationalisation of business units . The record level of acquisitions during the last year will bring benefits to sales and profits in the coming year and should help to create new market opportunities over the medium term. Wolseley will continue to leverage the scale of its activities and its unique position in the distribution of building materials in markets in Europe and North America. 28 September 1999 GROUP PROFIT AND LOSS ACCOUNT Year ended 31 July 1999 ____________________________________________________________ Before goodwill Year to amortisation & Goodwill 31 July exceptionals amortisation Exceptionals Total 1998 £m £m £m £m £m Turnover Continuing operations 5,174.3 - - 5,174.3 4,684.5 Acquisitions 330.7 - - 330.7 75.0 ________________________________________________________ 5,505.0 - - 5,505.0 4,759.5 ________________________________________________________ Trading profit (note 3) Continuing operations 314.0 - - 314.0 272.0 Acquisitions 16.2 (5.5) (11.6) (0.9) 5.4 ________________________________________________________ 330.2 (5.5) (11.6) 313.1 277.4 Loss on disposal of operations (note 4) - - (3.1) (3.1) (5.3) ________________________________________________________ Profit on ordinary activities before interest 330.2 (5.5) (14.7) 310.0 272.1 Net interest (payable)/ receivable (3.6) - - (3.6) 2.1 ________________________________________________________ Profit on ordinary activities before tax 326.6 (5.5) (14.7) 306.4 274.2 ________________________________________________________ Taxation Ordinary activities (107.7) - - (107.7) (92.2) Exceptional item - - 0.7 0.7 (5.6) ________________________________________________________ (107.7) - 0.7 (107.0) (97.8) ________________________________________________________ Profit after tax 218.9 (5.5) (14.0) 199.4 176.4 Minority interests (0.5) - - (0.5) (0.4) ________________________________________________________ Profit for the year attributable to ordinary shareholders 218.4 (5.5) (14.0) 198.9 176.0 Dividends (78.9) - - (78.9) (71.7) _________________________________________________________ Profit retained 139.5 (5.5) (14.0) 120.0 104.3 ========================================================= Earnings per share Before exceptionals and goodwill amortisation 38.08p - - 38.08p 32.70p Goodwill amortisation - (0.96p) - (0.96)p - Exceptionals - - (2.43)p (2.43)p (1.90)p _________________________________________________________ 38.08p (0.96)p (2.43)p 34.69p 30.80p _________________________________________________________ Diluted earnings per share 34.65p 30.72p Dividend per share 13.75p 12.50p _________________________________________________________ Translation rates US Dollars 1.6360 1.6496 French Francs 9.6942 9.9326 Austrian Schillings 20.3666 20.8389 _________________________________________________________ STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES £m £m Profit for the year 198.9 176.0 Currency translation difference on foreign investments 6.1 (0.3) _____________ Total recognised gains and losses for the year 205.0 175.7 ============= GROUP BALANCE SHEET AT 31 JULY 1999 Restated* 1999 1998 Total Total _____________________________ £m £m FIXED ASSETS Intangible assets 179.0 - Tangible assets 417.0 316.2 ______________________________ 596.0 316.2 ______________________________ CURRENT ASSETS Stocks 826.9 700.0 Debtors and property awaiting disposal 1,022.2 867.4 Construction loans receivable (secured) 158.0 148.1 Investments 2.4 2.6 Cash at bank, in hand and on deposit 207.7 363.9 ______________________________ 2,217.2 2,082.0 ______________________________ CREDITORS: amounts falling due within one year Bank loans, overdrafts and other loans 327.8 220.0 Construction loan borrowings (unsecured) 157.7 147.3 Corporation tax 49.2 65.6 Proposed dividend 57.4 51.6 Other 865.8 696.0 ______________________________ 1,457.9 1,180.5 ______________________________ NET CURRENT ASSETS 759.3 901.5 ______________________________ TOTAL ASSETS LESS CURRENT LIABILITIES 1,355.3 1,217.7 ______________________________ CREDITORS: amounts falling due after one year Borrowings 191.3 188.1 PROVISIONS FOR LIABILITIES AND CHARGES 66.4 68.6 ______________________________ 257.7 256.7 ______________________________ 1,097.6 961.0 CAPITAL AND RESERVES Called up share capital 143.5 143.2 Share premium account 154.3 150.6 Profit and loss account (note 8) 796.7 664.5 _____________________________ SHAREHOLDERS' FUNDS 1,094.5 958.3 Minority interests 3.1 2.7 _____________________________ 1,097.6 961.0 ============================= Translation rates: US Dollars 1.6200 1.6360 French Francs 9.9287 9.7503 Austrian Schillings 20.8279 20.4729 * The prior year comparatives have been restated in accordance with FRS 12 (note 1). SUMMARISED GROUP CASH FLOW STATEMENT Year to Year to 31 July 31 July 1999 1998 ___________________________ £m £m CASH FLOW FROM OPERATING ACTIVITIES* 338.6 313.3 Returns on investments and servicing of finance 2.4 (1.6) Taxation paid (130.4) (92.7) Capital expenditure and financial investment (104.2) (72.7) Acquisitions (297.4) (113.3) Disposals 7.3 56.9 Equity dividends paid (73.1) (60.3) Financing - Issue of shares 3.2 4.9 _____________________________ CHANGE IN NET DEBT RESULTING FROM CASH FLOWS (253.6) 34.5 New loans and finance leases (11.3) (5.9) Translation difference (2.5) (4.4) Movement in net debt in period (267.4) 24.2 Opening net debt (41.6) (65.8) ______________________________ Closing net debt (309.0) (41.6) * RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS Year to Year to 31 July 31 July 1999 1998 _______________________________ £m £m Operating profit 313.1 277.4 Depreciation charges 61.9 54.4 Goodwill amortisation 5.5 - Increase in stocks (49.7) (9.2) Increase in debtors (59.4) (51.8) Increase in creditors & provisions 66.8 42.2 Decrease in net construction loans 0.4 0.3 _______________________________ Net cash flow from operating activities 338.6 313.3 =============================== NOTES ON THE ATTACHED PROFIT AND LOSS ACCOUNT AND BALANCE SHEET 1 These accounts have been prepared on the basis of the accounting policies set out in the group's 1998 Annual Report and Accounts, except for the changes noted below. Following the publication of Financial Reporting Standard 10 (Goodwill and Intangible Assets), a revised policy for accounting for goodwill has been adopted for the year ended 31 July 1999. Goodwill arising on acquisitions prior to 1 August 1998 will remain written off against reserves. Goodwill arising on acquisitions since 31 July 1998 is capitalised in the year in which it arises and amortised on a straight line basis over its useful economic life, generally a maximum of 20 years. The requirements of Financial Reporting Standard 12 (Provisions, Contingent Liabilities and Contingent Assets) have been implemented in the current year and have been reflected in the accounts for the year ended 31 July 1999. Provisions for liabilities and charges as at 31 July 1998 have been reduced by £24.1 million and reserves have been increased by £21.9 million (note 8). The balance of £2.2 million is an adjustment to corporation tax. There is no impact on the profit and loss account for either the current or previous period. 2 The financial information set out above is extracted from the group's full accounts for the years ended 31 July 1998 and 31 July 1999. Statutory accounts for 1998 have been delivered to the Registrar of Companies, and those for 1999 will be delivered following the Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. 3 Trading profit 1999 1998 £m £m Before one-off costs 330.2 281.7 One-off integration costs (11.6) (4.3) _________________________ 318.6 277.4 Goodwill amortisation (5.5) - _________________________ 313.1 277.4 ========================= The 1999 one-off costs of £11.6 million relate to the integration of the acquisitions of Hall & Co, British Fittings Group PLC and Porcher Distribution in the European Distribution division. The 1998 one-off costs of £4.3 million relates to the integration of Familian Corp and Ferguson in the USA. 4 Loss on disposal of operations The loss relates to the disposal of subsidiaries and is after charging goodwill of £1.4 million, previously written off to reserves. 5 Analysis of change in sales Acquis Movement New itions in Sales Acquis Increm in Discon Excha itions ent tinued Organic 1998 nge 1999 1998 Operations Change 1999 £m £m £m £m £m £m % £m Building Distribution Europe 1,629.8 16.5 212.9 17.6 - 69.9 4.2 1,946.7 USA 2,701.9 22.5 117.2 143.3 - 196.0 7.2 3,180.9 Manufacturing & other activities 374.4 0.7 0.6 2.1 - (4.1)(1.1) 373.7 _________________________________________________________________ 4,706.1 39.7 330.7 163.0 - 261.8 5.5 5,501.3 Discontinued Operations 53.4 - - - (49.7) - - 3.7 ________________________________________________________________ 4,759.5 39.7 330.7 163.0 (49.7) 261.8 - 5,505.0 ________________________________________________________________ 6 Analysis of change in trading profit Acquis Movement New itions in Profit Acquis Increm in Discon Excha itions ent tinued Organic 1998 nge 1999 1998 Operations Change 1999 £m £m £m £m £m £m % £m Building Distribution Europe 106.3 0.9 8.5 0.6 - 3.9 3.6 120.2 USA 139.4 1.2 7.7 12.6 - 16.9 12.0 177.8 Manufacturing & other activities 34.3 0.1 - 0.1 - (2.2)(6.4) 32.3 ________________________________________________________________ 280.0 2.2 16.2 13.3 - 18.6 6.6 330.3 One-off costs (note 3) (4.3) - (11.6) - - 4.3 - (11.6) Discontinued Operations 1.7 - - - (1.8) - - (0.1) ________________________________________________________________ 277.4 2.2 4.6 13.3 (1.8) 22.9 - 318.6 ________________________________________________________________ The above analysis excludes goodwill amortisation. 7 Summary of acquisitions Effective date Company Division Consideration of acquisition £m 31 August 1998 Delaware Lumber US Distribution 3.3 2 October 1998 Hall & Co European Distribution 118.4 30 October 1998 L&H Plumbing US Distribution 19.9 2 November 1998 Carolina/Florence Truss US Distribution 3.9 13 November 1998 Porcher Distribution European Distribution 4.3 29 December 1998 Fields & Co of Lubbock US Distribution 17.3 21 January 1999 Heatmerchants European Distribution 16.5 1 February 1999 Wolohan Lumber US Distribution 6.5 8 February 1999 Charles C Loose & Sons US Distribution 4.2 10 February 1999 Broughtons European Distribution 8.6 30 March 1999 Alamo Plumbing Supply US Distribution 3.7 12 April 1999 Hastings Catering Spares European Distribution 2.8 4 June 1999 Midwest Pipe & Supply US Distribution 4.5 14 June 1999 Summit Structures US Distribution 16.8 14 June 1999 British Fittings European Distribution 50.9 30 June 1999 Firstbase Timber European Distribution 4.8 23 July 1999 Manzardo European Distribution 20.9 Other 3.0 ____ 310.3 An analysis of the consideration, including debt, and the expected contribution to turnover in a full year is as follows: Full year contribution to Consideration turnover Division £m £m Building Distribution - Europe 228 421 Building Distribution - USA 81 203 Manufacturing and other activities 1 3 _____ ____ 310 627 ===== ==== Since 31 July 1999 the following acquisitions have been signed or completed: Effective date Company Division Consideration of acquisition £m 2 August 1999 BAS Division of Circuit US Distribution 2.2 City Stores 2 August 1999 Plumbers Supply Company US Distribution 16.1 2 August 1999 Thrall Distribution US Distribution 20.8 30 August 1999 The Gage Company US Distribution 20.5 15 September Baker Pipe & Supply US Distribution 1.0 1999 17 September Greenhow & Welch European Distribution 7.8 1999 _____ 68.4 ===== These acquisitions are expected to contribute a further £165 million to group turnover in a full year. In certain of the above acquisitions, the consideration is subject to adjustment. 8 Prior year adjustment As referred to in note 1, the group has adopted FRS 12 and has released certain provisions as a prior year adjustment. The effect on opening reserves is shown below. 31 July 1998 £m Profit and loss reserves as previously stated 642.6 Prior year adjustment (note 1) 21.9 _____ 664.5 ===== TIMETABLE FOR AGM AND DIVIDENDS 1999 10 December Annual General Meeting followed by Extraordinary General Meeting 2000 4 January Shares quoted ex dividend 10 January Record date for dividend 31 January Dividend paid

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