Preliminary Announcement
Grafton Group PLC
15 March 2006
Grafton Group plc
2005 Final Results
Record Sales, Profits and Earnings
Grafton Group plc, the builders merchants and DIY Group with operations in the
UK and Ireland, announces its final results for the year ended 31 December 2005.
Financial Highlights
2005 2004 Change
Revenue €2.63 Bn €1.87 Bn UP 40%
Operating profit * €215.9 m €159.5 m UP 35%
Profit before tax €192.2 m €145.8 m UP 32%
Basic earnings per share 70.3 59.1 UP 19%
Earnings per share before amortisation 67.8c 56.1c UP 21%
of intangibles and property profit
Share purchase / redemption 15.75c 13.0c UP 21%
Cash flow per share 91.6c 75.4c UP 21%
*Before property profit and amortisation of intangibles
Operating Highlights
Irish merchanting traded strongly aided by positive market conditions
Heitons performed comfortably ahead of pre-acquisition expectations
UK profitability maintained in a challenging market
Store openings increase competition in Irish DIY market
Record acquisition and development activity in 2005
Commenting on the results today, Michael Chadwick, Chairman said:
'Profits advanced significantly in Ireland with out-performance by Heitons and
strong organic growth in merchanting. Trading conditions in the UK weakened
during the second half and the overall UK profit outcome was in line with the
previous year. In Ireland the market outlook continues to be strong, although
conditions remain very competitive especially in the DIY sector. Recent
economic data in the UK is encouraging with improving consumer confidence and a
gradual recovery in the RMI market is forecast for the second half of 2006. The
Group expects to benefit from a healthy pipeline of acquisition and organic
growth opportunities.'
For further information please contact:
Grafton Group plc + 353 1 216 0600 Murray Consultants + 353 1 498 0300
Michael Chadwick, Executive Chairman Joe Murray
Colm O Nuallain, Finance Director
Citigate Dewe Rogerson + 44 207 282 2945
Ginny Pulbrook
Grafton Group plc reports strong growth in sales, profits and earnings for 2005.
This was the Group's fourteenth consecutive year of record results and also
marked completion of the Heitons acquisition, a significant strategic move and
the Group's largest acquisition to date.
Highlights
• Sales were up 40 per cent to €2.63 billion (2004: €1.87 billion).
• Operating profit increased by 35 per cent to €215.9 million (2004: €159.5
million).
• Adjusted earnings per share increased by 21 per cent to 67.8 cent (2004:
56.1 cent).
• Basic earnings per share increased by 19 per cent to 70.3 cent (2004: 59.1
cent).
• Cash generated from operations was up 26 per cent to €224 million (2004:
€178 million).
• Heiton Group plc, acquired in January 2005, contributed €48.8 million to
Group operating profit for 2005.
There was a significant advance in Irish profit for 2005 due to the Heiton
acquisition and strong organic growth in the Group's established Irish
merchanting operations. Trading conditions in the UK weakened as the second
half developed and overall UK profit for the year was in line with 2004.
The results for 2005 demonstrate the benefit to our shareholders of rebalancing
of the Group's operations between the UK and Ireland with stronger profits in
Ireland compensating for the slow down in the UK market. The Group's consistent
strategy of broadening its earnings base and developing strong market positions
and brands in the UK and Ireland enabled the achievement of new record levels of
sales, profits and earnings in 2005.
Completion of the acquisition of Heiton Group plc on 7 January 2005
substantially increased the scale of the Group's operations with Irish turnover
more than doubling to exceed €1 billion. The acquisition consolidated the
Group's market leadership position in the Irish builders merchanting and DIY
markets. Heitons performed strongly in 2005 comfortably outperforming
pre-acquisition expectations. The Group absorbed the Heiton businesses with a
smooth transition on change of ownership to Grafton.
In the Republic of Ireland, the economy grew strongly and provided a very
positive backdrop for record levels of residential construction and RMI
activity. Irish turnover increased by 129 per cent to €1,033 million (2004:
€452 million) and operating profit increased by 110 per cent to €107.7 million
(2004: €51.4 million). An almost full year contribution from Heitons, strong
like for like sales growth in the established merchanting business and new store
openings in the DIY business resulted in a significant increase in Irish sales
and operating profit compared to 2004. The Irish businesses accounted for 39
per cent (2004: 24 per cent) of Group turnover and half (2004: 32 per cent) of
Group operating profit for the year.
After a good start to the year, the performance of our UK business was
influenced by a slowing UK economy. Despite a more difficult economic
background, which led to more subdued demand in the repair, maintenance and
improvement market, sales increased by 12 per cent to €1.60 billion (2004: €1.42
billion) and operating profit of €108.2 million matched the record level
achieved in 2004.
Development
To date the Group's successful acquisition strategy has been primarily based on
the completion of small and medium sized bolt-on transactions. The successful
acquisition of Heitons, a business turning over €608 million from 67 branches,
demonstrated the Group's ability to undertake large transactions which are a
good strategic fit and deliver shareholder value. The Group continued to
benefit from a steady flow of bolt-on acquisitions in recent years completing
sixteen transactions in 2005. In the UK, the Group acquired fourteen builders
and plumbers merchanting businesses trading from nineteen branches with annual
sales of €85 million. These transactions primarily improve our market coverage
in the North West and South East. In Ireland, in addition to the Heiton
transaction, the Group acquired two businesses, trading from three branches with
annual sales of €47 million, which provided the Group with a significant
opportunity to expand its product portfolio and geographic coverage in the
builders and plumbers merchanting market.
The Group continued its strategy of developing organically completing nineteen
projects with the opening of fourteen merchanting branches and a new dry mortar
plant in the UK and four DIY stores in Ireland.
The 2005 acquisition program together with organic developments substantially
increased the scale of the Group's operations, improved our market positions and
provided a sound platform for the continued long term development of the Group.
In January 2006 the Group acquired the remaining shares in Heiton's Polish
business.
The Group used its healthy cashflow from operations and strong balance sheet to
fund its record spend of €571.4 million (2004: €173.80 million) on acquisitions
and capital projects while retaining financial strength and balance sheet
flexibility to continue to implement the Group's ongoing development strategy.
Share Purchase
The Company purchased one A ordinary share per Grafton unit for a cash
consideration of 7.25 cent paid on 7 October 2005. The Board has decided to
purchase a further A ordinary share per Grafton unit for a cash consideration of
8.5 cent payable on 31 March 2006.
The total share purchase payments to shareholders for 2005 amount to15.75 cent
per Grafton Unit, an increase of 21 per cent on total share purchase /
redemption payments for 2004 of 13 cent per Grafton Unit.
Board
The Board is pleased to announce the appointment of Roderick Ryan (49) as a
non-executive Director. Mr. Ryan is a Chartered Accountant by profession and
Group Executive Director of Glen Dimplex. He was formerly Managing Partner of
Arthur Andersen in Ireland and, as a member of the European Executive Committee,
he directed the industry section of Andersen's practice in the European Area.
The Board is at an advanced stage in the appointment of a further non-executive
Director.
International Financial Reporting Standards
The results for 2005 have been prepared in accordance with the Group's policies
under International Financial Reporting Standards (IFRS). The transition date
for implementation of IFRS by the Group was 1 January 2004. The financial
statements for the year ended 31 December 2004, which were prepared in
accordance with accounting practices generally accepted in the Republic of
Ireland, have been restated under IFRS with effect from the transition date.
Full details of the accounting policies adopted by the Group on implementation
of IFRS were published on 6 July 2005 and are available on the Group's website
www.graftonplc.com.
Operations Review - United Kingdom
UK sales increased by 12 per cent to €1.60 billion (2004: €1.42 billion) and
operating profit was in line with last year's record level of €108.2 million.
The operating margin declined to 6.8 per cent (2004: 7.6 per cent).
The UK has been a very favourable trading and operating environment since the
mid 1990s enabling the Group to develop leading positions in the merchanting and
mortar markets. The performance of the UK economy has been impressive over this
period. Growth slowed however to 1.7 per cent in 2005 which, although below
trend in the toughest year for the economy since the mid 1990's, was higher than
growth in both the Euro area and European Union.
A series of interest rate rises, at a time of historically high household debt,
and a slow down in the housing market weakened consumer confidence and the pace
of consumer spending slowed. There was also a fall in the volume of property
transactions and a drop in mortgage equity withdrawal. The combined effect of
these factors reduced activity in the RMI market particularly during the second
half of the year. This is the principal end-use market for the Group's
merchanting sales.
The Group's like for like UK merchanting sales were flat in 2005 compared to an
increase of 6.5 per cent in 2004. The increase in first half like for like
sales was reversed in the second half in a weaker market. The increase in
overall UK sales in 2005 was derived from acquisitions and branch openings in
2004 and 2005. In a more difficult trading environment the Group successfully
maintained UK operating profit in line with the previous year.
Consolidation in the UK merchanting market continued in 2005 and the Group
actively participated in that process acquiring fourteen builders and plumbers
merchanting businesses trading from nineteen branches. Our presence in the UK
merchanting market was further strengthened by Heiton's UK business, a six
branch specialist drainage and ground engineering business, and the opening of
fourteen greenfield branches. The UK merchanting network ended the year trading
from 349 locations.
UK Builders Merchanting
The UK Builders merchanting division had a satisfactory year increasing sales
and operating profit with the benefit of acquisitions. Sales in the second half
of the year trended lower in line with weakening conditions in the RMI market
Seven single branch merchants were acquired and a further six branches were
added from the Heiton deal. Six greenfield branches were opened increasing the
divisions trading locations to 182 by the year end.
Buildbase increased sales and profit in a less buoyant and more competitive
market place. The impact of lower volumes was partly mitigated by successfully
implementing cost reduction and efficiency measures. At the end of its tenth
year of trading Buildbase is now a key player in the UK merchanting market
having successfully developed primarily through acquisition. More recently
Buildbase has in addition grown its network by greenfield developments including
four branch openings in 2005. Tool and equipment hire centres, trading as
Hirebase, were added to eight branches.
Jacksons, one of the UK's leading regional merchanting brands with a major
presence in the East Midlands market, had a successful second full year as part
of the Group.
In Northern Ireland, Macnaughton Blair, the leading merchant in the province
where it trades from thirteen branches, increased sales and operating profit.
Market conditions in the province continued to be favourable. The builders
merchanting branch in Coleraine, acquired in 2004, was relocated to a new
purpose built facility in the town. Macnaughton Blair acquired MFBP, a leading
builders merchanting business on the Isle of Man and Houtman, a long established
scaffolding business based in Belfast.
UK Plumbers Merchanting
Plumbase is the fourth largest plumbers merchanting chain in the UK with a
strong branch presence in the South East, West Country, Midlands, East Anglia
and Scotland. Market conditions were demanding for the business in 2005. Like
for like sales were down for the year but our confidence in the longer term
prospects for the business was demonstrated with the acquisition of seven
plumbers merchanting businesses trading from twelve locations and the opening of
eight greenfield branches increasing the network to 167 locations by the year
end. Cost saving measures and margin improvement partially offset the impact on
profit of lower volumes in the established branch network. Plumbase bathroom
showrooms and the non-trade element of the business were more exposed to the
slowdown in retail sales as consumer demand for housing and RMI related products
weakened.
UK Mortar
EuroMix, the market leader in the supply of dry mortar trades from a network of
eight dry mortar manufacturing plants, produces a range of quality mortars for
use in block and brick-laying. EuroMix supplies the major national and
regional building and construction companies involved in residential and
commercial construction projects across England and Scotland. During the year
the business expanded its range of value added products including bagged
products and sprayed renders.
The business had to contend with lower activity in the new housing market,
higher raw materials and transport costs and a more competitive trading
environment. EuroMix increased sales due to a strong performance in the Harlow
and Southampton plants, both of which continue to develop their market position,
and the opening of a plant near Bristol in July to service demand in the West
Country. The business reported a small decline in operating profit due to a
more competitive market and higher input costs.
Operations Review - Republic of Ireland
Irish turnover increased by 129 per cent to €1,033 million (2004: €452 million).
Operating profit increased by 110 per cent to €107.7 million (2004: €51.4
million). The operating profit margin was 10.4 per cent (2004: 11.4 per cent).
The overall reduction in margin reflected an increased margin in the established
merchanting business and margin dilution arising from integration of the lower
margin, heavy end market emphasis of the Heiton business.
The Irish economy has been one of the fastest growing economies in the developed
world for well over a decade. In recent years the rate of growth has moderated
in line with the economy's long term growth potential estimated at 4/5 per cent
but is still significantly ahead of the average growth rate in the Euro area and
EU. The growth profile of the economy changed in 2005 with strong growth in
exports, a pick up in consumer spending and greater infrastructure and business
investment. Consumer spending is believed to have been the principal source of
economic growth in the year increasing by more than 5 per cent and supported by
solid growth in incomes and employment. Job creation was at record levels with
total employment reaching 2 million due to strong immigration from the new EU
member states.
The construction sector in Ireland continued to be very buoyant in 2005. The
rate of growth in residential construction slowed, as widely anticipated, to
around 5 per cent with house completions for the year at a record 81,000 units
(2004: 77,000 units). The strong increase in employment and the population has
created a new stream of demand in the residential property market.
Irish Merchanting
2005 was an excellent year for the Group's Irish builders merchanting division
with sales up 141 per cent to €690.5 million (2004: €286.1 million). The
acquisition of Heiton's in January 2005 substantially strengthened the Group's
builders merchanting interests in Ireland and consolidated Chadwicks and Heitons
position as the largest builders merchanting business in the Irish market.
The Heiton Buckley network of 25 branches is a unique fit with Chadwicks 31
branches with limited overlap and provides the Group with a presence in towns
and cities across the country where Chadwicks was not previously represented
including Cork City and along the Western Seaboard. Heitons Irish merchanting
operations also incorporate Heiton Steel, Ireland's largest steel stockholding
business, and Sam Hire, the leading player in the small plant and tool hire
business trading from 14 branches.
The Irish residential construction and repair and maintenance markets performed
strongly throughout 2005 aided by low interest rates, high levels of job
creation and strong growth in real
disposable incomes. This very positive macro economic background was strongly
supportive of sales and profit growth in the Irish merchanting business.
Heitons merchanting business performed strongly making an operating profit
contribution well ahead of pre-acquisition expectations. Chadwicks the Group's
core merchanting business also had an exceptional year. Like for like sales in
the Heiton Buckley and Chadwicks merchanting branches were up 7 per cent for the
year. While both merchants enjoyed good volume growth, there was vigorous
competition in the market from the national chains and independents.
Cork Builders Providers and Telfords, two strong regional merchants, produced
excellent results for the year increasing sales and operating profit strongly.
The performance of Heiton Steel in 2005 was influenced by a fall in steel prices
internationally. The business successfully managed its response to the fall in
prices achieving very solid profitability in line with its long term trend
performance.
Heitons Sam Hire business achieved significant profit improvement due primarily
to operating cost reductions. The business opened its fourteenth branch at
Santry, Dublin and relocated its Naas Road, Dublin branch to Tallaght during
2005. Three further branch openings in Dublin, Mullingar and Tullamore are
planned for 2006.
The Heiton and Chadwicks management teams worked closely and successfully to
realise substantial purchasing and overhead efficiencies in 2005 which will
benefit the Group on an ongoing basis.
The Group acquired Davies plumbing, heating and drainage business and Garvey's
builders merchants on 1 December 2005. The acquisition of Davies, which trades
from 2 branches in the greater Dublin area, enables the division to broaden its
product portfolio into an area which offers strong growth opportunities while
Garvey's provides the Group with a strong merchanting presence in Roscommon, an
important Midlands town.
Irish Retailing
The scale of the Group's Irish retailing operations increased substantially
during 2005 due principally to the acquisition of Heitons retailing business
which trades under the Atlantic Homecare and In House at the Panelling Centre
brands. At the time of acquisition the Atlantic Homecare DIY chain traded from
15 stores and In-house at the Panelling Centre, which markets a range of high
quality kitchen and bedroom panelling products to trade and retail customers,
traded from four stores.
Sales in the division were up 110 per cent to €272.6 million (2004:€129.8
million). The division's operating profit increased strongly, particularly
during the second half, with contributions from the Atlantic Homecare, and In
House at the Panelling Centre businesses and a good performance from Woodie's
2004 and 2005 store openings. Like for like sales in the Atlantic Homecare and
Woodie's stores were down 2 per cent for the year reflecting an improvement in
trading in the second half.
Growth in consumer spending picked up in 2004. This trend continued throughout
2005 with the benefit of income tax reductions, income growth and an increase in
employment and the population and record levels of new house building. While
this was an ideal economic background for retailing, there was also a
significant increase in retail capacity across the country with the opening of
new retail centres. There has been a particularly marked increase in the retail
area devoted to DIY superstores with an increase in capacity of 83 per cent over
the past two years.
Woodie's had its most active year ever on the development front with the opening
of three stores in Naas, County Kildare in the first half and Carrickmines,
South Dublin and Drogheda, County Louth in the second half. The Cork and Bray,
County Wicklow stores were relocated in order to substantially expand the
capacity of both stores to support a wider product offering and to provide
greater choice for customers. The Woodie's stores opened in 2004 and 2005 and
the two relocated stores performed strongly. Sales in a number of Woodie's
established branches were lower due to the more competitive market place.
Atlantic Homecare increased its store network to sixteen with the opening of a
new store in Limerick and prior to the year end extended the Mullingar store.
Woodie's Castlebar will officially open on 16th March 2006. Construction of
stores in Navan and Nenagh is well advanced with openings expected from Spring
2006.
In House at the Panelling Centre increased sales and profits strongly. Plans
are well advanced to continue the growth of this business with the opening of a
fifth store in Galway and relocation of the Dun Laoghaire store to a larger
facility in Spring 2006.
Irish Manufacturing
CPI's EuroMix division benefited from a buoyant residential construction market
growing dry mortar volumes in the greater Dublin area.
Wright, a business engaged in the manufacture and installation of uPVC,
aluminium and timber, windows and external doors, was also a beneficiary of the
strong housing market increasing sales and profit for the year.
Finance
Cashflow from operating activities increased to €224.5 from €178.2 million
principally due to higher operating profit.
The cost of acquisitions completed during the year including acquired debt was
€470.9 million (2004: €84.9 million). This included expenditure of €359.0
million to acquire the remaining 71 per cent of the shares in Heiton's not
already owned by the Group and €111.9 million on sixteen bolt-on acquisitions.
Deferred consideration paid in the year on prior year acquisitions amounted to
€6.8 million (2004: €3.7million). The total consideration paid for Heiton's of
€359.0 million comprised the issue of 21.4 million Grafton Units valued at
€173.6 million to shareholders in Heiton's, the payment of €100.2 million in
cash under the cash element of the offer, debt acquired at completion of €75.2
million and expenses of €10 million associated with the offer.
The Group issued a total of 24 million Grafton Units during the year comprising
the Units issued in connection with the Heiton offer, 1.2 million Units issued
to UK employees under the Grafton Group (UK) plc Savings Related Share Option
Scheme and 1.4 million Units issued under the Group's executive share schemes.
Capital expenditure increased to €100.6 million from €88.9 million in 2004
reflecting routine replacement expenditure of €44.3 million and expenditure of
€56.3 million on continued investment in the enlarged business including the
opening of 19 new branches and various development initiatives supporting the
continued profitable growth of the Group.
The Group realised a profit of €9.6 million mainly on the sale of surplus Irish
and UK properties. The proceeds on disposal of these properties amounted to
€23.2 million.
Net interest payable of €31.2 million (2004: €22.8 million) includes the cost of
servicing increased debt associated with the acquisition of Heiton's. Interest
cover was 7.2 times (2004: 7.4 times).
Net borrowings at 31 December 2005 were €584.2 million compared to €349.2
million at 31 December 2004 giving gearing of 72 per cent compared to 70 per
cent at 31 December 2004.
In June 2005, the Group raised $325 million through a private placement of seven
year and ten year Senior Notes with a group of US investors. The proceeds were
converted into Sterling and used partly to re-finance existing borrowings with
the remainder held for general corporate purposes. This competitively priced
source of funds has strengthened the Group's balance sheet and improved the
maturity profile of Group debt.
Outlook
In Ireland, the fundamental factors which have driven strong growth in recent
years remain favourable with the economy expected to perform strongly in 2006.
The positive medium term outlook is based on subdued inflation pressure, a
modest increase in the Euro interest rate, continued job growth and impressive
growth in domestic demand helped by maturing SSIA accounts.
The prospects of the Irish housing market are also positive. The trend in
housing registrations and planning permissions, leading indicators of housing
completions, are supportive of a continuation of strong residential construction
activity supported by both increased employment and immigration.
We expect that the favourable macro economic background in Ireland should lead
to positive trading conditions for the Heiton Buckley and Chadwicks businesses
and that both merchants should be beneficiaries of strong levels of activity
anticipated in both the residential construction and RMI markets throughout
2006.
Consumer spending is expected to be a key driver of economic growth in 2006 and
should be supportive of good demand in the Irish DIY market. We expect the
sector to continue to be very competitive as the impact of additional capacity
added in recent years unfolds and development of the market moves towards
maturity.
In the UK, the economy grew below trend in 2005 due to weaker consumer spending,
a key component of growth in recent years. Recent economic data is encouraging
with a strong recovery in housing transactions and mortgage approvals. Improving
consumer confidence should support a gradual recovery in the RMI market but we
continue to expect lower first half like for like sales in our merchanting
business compared to the strong performance in the first half of 2005. The UK
dry mortar market is expected to remain competitive due to the increased
capacity in the sector. In a more difficult market, the UK business continues
to focus on cost control and scale related synergies throughout the merchanting
network. The Group also expects to benefit from its healthy pipeline of
potential acquisition and organic growth opportunities.
The Group's strong financial position and substantial cashflows leave it well
placed to continue to pursue its successful strategy.
Analyst Meeting
There will be an analyst meeting today at 08.45 (BST) in Dublin. A dial-in
facility will be available for this meeting:
Ireland: +353 1 439 0433
UK: +44 207 769 6433
Other: +353 1 439 0433
A copy of this statement is also available on our website www.graftonplc.com
Grafton Group plc
Group Income Statement
For the year ended 31 December 2005
Twelve months Twelve months
to 31 Dec 2005 to 31 Dec 2004
(Audited) (Audited)
€'000 €'000
Revenue 2,629,464 1,872,346
Operating costs (2,415,694) (1,712,802)
_________ _________
Operating profit before property profit 213,770 159,544
Property profit 9,640 7,521
Operating profit 223,410 167,065
Income from financial assets - 1,541
Interest expense (48,803) (33,339)
Interest income 17,574 10,559
Profit before tax 192,181 145,826
Income tax expense (26,102) (19,936)
Profit after tax for the financial year 166,079 125,890
Profit attributable to:
Equity holders of the Company 166,079 125,890
Basic earnings per share 70.26c 59.14c
Adjusted earnings per share 67.80c 56.11c
Diluted earnings per share 68.80c 57.69c
Group Statement of Recognised Income and Expense
For the year ended 31 December 2005
2005 2004
€'000 €'000
Items of income and expense recognised directly within equity:
Currency translation effects
- on foreign currency net investments 7,999 (2,176)
- on foreign currency borrowings (811) 20
Actuarial loss on Group defined benefit pension schemes (8,946) (11,760)
Deferred tax asset on Group defined benefit pension schemes 1,944 1,186
Fair value movement on cash flow hedges (1,332) -
Deferred tax on cash flow hedge 167
-
Net expense recognised directly in equity (979) (12,730)
Profit after tax for the financial year 166,079 125,890
Total recognised income and expense for the financial year 165,100 113,160
Attributable to:
Equity holders of the Company 165,100 113,160
Effect of Change in accounting policy
Effect of adoption of IAS 32 and IAS 39 on 1 January 2005 (with 2004 not
restated) on:
Fair value reserve 53,974 -
Cash flow hedge reserve 1,450 -
Deferred tax on cash flow hedge reserve (207)
-
55,424
-
Movement on Group Profit and Loss Account 2005 2004
€'000 €'000
At 1 January 347,044 257,155
Retained profit for the financial year 166,079 125,890
Redemption of redeemable shares - (23,392)
Purchase of A ordinary shares (33,751) (2,131)
Actuarial loss on pensions (net of tax) (7,002) (10,574)
Dividends - (266)
Deferred tax on share based payments 157 123
Transfer from revaluation reserve 2,853 239
At 31 December 475,380 347,044
Group Statement of Changes in Equity 2005 2004
€'000 €'000
At beginning of period 495,538 405,651
Impact of adoption of IAS 32 & IAS 39 55,424
-
At beginning of period as adjusted 550,962 405,651
Elimination of fair value reserve arising on acquisition of Heiton (49,535) -
Group plc
Issue of Grafton Units (net of issue expenses) 178,658 1,501
Adjustment for share based payments expense 2,220 892
Deferred tax on share based payments 157 123
Dividends - (266)
Redemption of redeemable shares - (23,392)
Purchase of A ordinary shares (33,751) (2,131)
Total recognised gains and losses for the year 165,100 113,160
Closing shareholders' funds - equity 813,811 495,538
Grafton Group plc
Group Balance Sheet As At 31 December 2005
2005 2004
(Audited) (Audited)
€'000 €'000
ASSETS
Non-current assets
Property, plant and equipment 623,228 406,207
Goodwill 532,323 247,155
Intangible assets 15,519 -
Financial assets 256 47,019
Deferred tax assets 25,980 14,313
Total non-current assets 1,197,306 714,694
Current assets
Inventories 356,647 237,680
Trade and other receivables 499,308 318,165
Derivative and other financial instruments 5,708 -
Cash and cash equivalents 334,023 135,868
Total current assets 1,195,686 691,713
Total assets 2,392,992 1,406,407
EQUITY
Capital and reserves attributable to the Company's equity holders
Equity share capital 12,037 10,864
Share premium account 281,038 103,600
Capital redemption reserve 274 227
Revaluation reserve 36,574 34,988
Other reserve - shares to be issued 3,191 971
Cash flow hedge reserve 285 -
Foreign currency translation reserve 5,032 (2,156)
Retained earnings 475,380 347,044
_______ _______
Total equity 813,811 495,538
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings 713,712 378,401
Deferred tax liabilities 42,932 27,968
Retirement benefit obligations 59,032 35,597
Provisions 500 1,552
Total non-current liabilities 816,176 443,518
Current liabilities
Interest-bearing loans and borrowings 209,278 106,696
Trade and other payables 498,717 310,786
Current income tax liabilities 50,610 45,436
Derivative financial instruments 923 -
Provisions 3,477 4,433
Total current liabilities 763,005 467,351
________ _______
Total liabilities 1,579,181 910,869
Total equity and liabilities 2,392,992 1,406,407
Grafton Group plc
Group Cash Flow Statement For the year ended 31 December 2005
2005 2004
€'000 €'000
Operating profit 213,770 159,544
Property development profit - 6,729
Depreciation 48,248 34,626
Intangible amortisation 2,176 -
Share based payments charge 2,220 892
Profit on sale of plant and equipment (2,564) (2,179)
Contributions to pension schemes in excess of IAS 19 charge (10,888) (1,791)
Increase in working capital (28,485) (19,641)
Cash generated from operations 224,477 178,180
Interest paid (39,233) (27,111)
Income taxes paid (15,227) (7,301)
_______ _______
Cash flows from operating activities 170,017 143,768
Investing activities
Inflows
Proceeds from sale of property, plant and equipment 32,793 25,437
Interest received 7,738 4,849
Dividends received - 2,364
40,531 32,650
Outflows
Acquisition of subsidiary undertakings and businesses (395,451) (61,805)
Net cash/(debt) acquired with subsidiary undertakings 22,897 718
Deferred acquisition consideration (6,844) (3,750)
Purchase of property, plant and equipment (100,559) (88,917)
Purchase of financial assets (13,351)
-
(479,957) (167,105)
Cash flows from investing activities (439,426) (134,455)
Financing activities
Inflows
Proceeds from the issue of share capital 178,659 1,288
Proceeds from long term borrowings 373,078 69,843
551,737 71,131
Outflows
Repayments of long term borrowings (35,673) (5,673)
Redemption of redeemable shares - (23,392)
Purchase of A ordinary shares (33,751) (2,131)
Payment of finance lease liabilities (2,061) (23,834)
Redemption of loan notes payable (25,237) (24,758)
Dividend paid (53)
-
(96,722) (79,841)
Cash flows from financing activities 455,015 (8,710)
Net increase in cash and cash equivalents 185,606 603
Cash and cash equivalents at 1 January 105,822 106,557
Effect of exchange rate fluctuations on cash held 416 (1,338)
______ ______
Cash and cash equivalents at 31 December 291,844 105,822
1. Revenue and Operating Profit by Geographic Segment
The amount of revenue by geographic segment is as follows:
Twelve months to Twelve months to
31 Dec 2005 31 Dec 2004
€'000 €'000
Revenue
Republic of Ireland 1,032,899 451,742
United Kingdom 1,596,565 1,420,604
____________ ___________
2,629,464 1,872,346
Operating profit before property profit and intangible
amortisation
Ireland 107,702 51,360
United Kingdom 108,244 108,184
Operating profit before property profit and intangible 215,946 159,544
amortisation
Intangible amortisation - Republic of Ireland 2,176 -
___________ ___________
213,770 159,544
Operating profit before property profit
Ireland 105,526 51,360
United Kingdom 108,244 108,184
____________ ___________
213,770 159,544
Property profit
Ireland 7,963 6,729
United Kingdom 1,677 792
________ ________
9,640 7,521
Operating Profit
Ireland 113,489 58,089
United Kingdom 109,921 108,976
____________ ___________
223,410 167,065
Income from financial assets - 1,541
Finance costs (net) (31,229) (22,780)
____________ ____________
Profit before tax 192,181 145,826
2. Analysis of Revenue by Business Segment
Twelve months Twelve months to
31 Dec 2004
31 Dec 2005
€'000
€'000
Revenue
UK merchanting 1,533,700 1,359,923
Irish merchanting 690,549 286,126
Irish DIY 272,589 129,783
Irish and UK manufacturing 132,626 96,514
______________ ______________
2,629,464 1,872,346
3. Reconciliation of Net Cash Flow to Movement in Net Debt
2005 2004
For the year ended 31 December 2005 €'000 €'000
Net increase in cash and cash equivalents 185,606 603
Cashflow from increase in debt and lease financing (310,107) (15,578)
Change in net debt resulting from cash flows (124,501) (14,975)
Loan notes issued on acquisition of subsidiary undertakings (867) (9,085)
Finance leases acquired with subsidiary undertakings (7,934) (1,388)
Bank loans and loan notes acquired with subsidiary undertakings (89,519) -
Translation adjustment (12,457) (578)
Net movement in derivative financial instruments (1,332) -
Movement in net debt in the year (236,610) (26,026)
Net debt at 1 January 2005 (349,229) (323,203)
IAS 32/39 adjustment at 1 January 2005 1,657 -
Net debt restated at 1 January 2005 (347,572) (323,203)
Net debt at 31 December 2005 (584,182) (349,229)
4. Earnings per Share
The computation of basic and diluted earnings per share is set 2005 2004
out below: €'000 €'000
Numerator for basic, adjusted and diluted earnings per share
Profit on ordinary activities after taxation 166,079 125,890
Numerator for basic and diluted earnings per share 166,079 125,890
Property profit after tax (7,731) (6,442)
Intangible amortisation after tax 1,904 -
Numerator for adjusted earnings per share 160,252 119,448
Denominator for basic and adjusted earnings per share:
Weighted average number of Grafton Units in issue 236,371,547 212,875,181
Effect of potential dilutive Grafton Units 5,023,349 5,329,373
Denominator for diluted earnings per share 241,394,896 218,204,554
Adjusted earnings per share (cent)
- Basic 67.80 56.11
Earnings per share (cent)
- Basic 70.26 59.14
- Diluted 68.80 57.69
5. Share Purchase
The Board has approved the purchase of one A ordinary share per Grafton Unit for
a cash consideration of 8.5 cent. The purchase of the A ordinary share will
take effect in respect of Grafton Units on the register at close of business 24
March 2006 (record date) and the cash consideration will be paid on 31 March
2006.
6. Exchange Rates
The results and cash flows of the Group's United Kingdom subsidiaries have been
translated into Euro using the average exchange rate. The related balance
sheets of the Group's United Kingdom subsidiaries at 31 December 2005 and 31
December 2004 have been translated at the rate of exchange ruling at the balance
sheet date.
The average Euro / Sterling rate of exchange for the year ended 31 December 2005
was Stg68.38p (year ended 31 December 2004: 67.86p). The Euro / Sterling
exchange rate at 31 December 2005 was Stg68.53 (31 December 2004: Stg70.51p).
Grafton Group plc
Financial Overview 2005
2005 2004 Change
Revenue (€ million) 2,629.5 1,872.3 +40%
EBITDA (€ million) 273.8 203.2 +35%
Operating profit before amortisation of intangibles and property
profit (€ million) 215.9 159.5 +35%
Profit before taxation (€ million) 192.2 145.8 +32%
EPS - Basic 70.3c 59.1c +19%
EPS before amortisation of intangibles and property profit 67.8c 56.1c +21%
Share purchase / redemption 15.75c 13.0c +21%
Share purchase / redemption cover (times) 4.3 4.3
Interest cover (times) 7.2 7.4
Cash flow per share 91.6c 75.4c +21%
Net assets per share 342.8c 232.2c +48%
Net debt to shareholders' funds 72% 70%
Depreciation charge (€ million) 48.2 34.6
Intangible amortisation (€ million) 2.2 -
Acquisition and investment expenditure (€ million) 470.9 84.9
Capital expenditure (€ million) 100.6 88.9
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 17th May 2024
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