Grafton Group PLC · LSE:GFTU
Grafton — H1 2009 Earnings Presentation
31 slides from Grafton's earnings presentation, 2009
Slide 1: Interim Results 2009
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Slide 2: Profile
Profile UK and Ireland based Building Materials Group Principal activities Builders and Plumbers Merchanting DIY Retailing in Ireland Dry Mortar Manufacturing Annualised turnover circa €2 billion Market leader or strong market positions Trading from over 585 locations in the UK and I
Slide 3: Group Locations
Group Locations 585 Trading Locations Builders Merchanting g Plumbers Merchanting Manufacturing DIY Retailing 2
Slide 4: Interim Financial Highlights - 2009
Interim Financial Highlights - 2009 H1 2009 H2 2008 Turnover €990 m €1,438 m Operating (loss)/profit (€8.3 m) €71.8 m Profit before tax €3.7 m €53.4 m Basic EPS 1.5 c 20.2 c Free cash flow €90.7 m €112.7 m Rationalisation costs €9.1 m €2.0 m Annual cost savings achieved €70 m 3
Slide 5: Components of Change
Components of Change Turnover Operating (loss)/ profit* €’million €’million H1 2008 1,438 79.6 Organic change - Merchanting (291) (63.5) Organic change - DIY (27) (8.1) Organic change - Manufacturing (23) (4.1) 2008 acquisitions - Merchanting 7 0.1 New branches 08&09 & discontinued - Merchanting 7 (
Slide 6: Cash Generation
H1 2009 H1 2008 Cash Generation € million € million Operating profit (before restructuring costs) 0.8 78.5 Restructuring costs (9.1) (6.7) Operating (loss)/profit (8.3) 71.8 Depreciation, amortisation & other 21.0 32.4 Investment profit realised in cash 22.1 - Proceeds on asset disposals 2.2 9.4 Tot
Slide 7: Weathering the Storm and Well positioned for the Recovery
Weathering the Storm and Well positioned for the Recovery A cash generative business – high level of operational leverage Free Cash Flow of €90.7 million in the half year Annualised savings now implemented yielding circa €70 million €270 million in available cash to finance operations and loan repay
Slide 8: Cost Reduction Initiatives
Cost Reduction Initiatives • Incremental cost savings of €35m anticipated in H2 2009. • Total headcount reduced from 10,400 at December 2008 to 9,800 at June 2009 Launched Completed Savings €’m Phase I 2008 Q4 2008 45 Headcount reductions Phase II 2009 Q2 2009 25 Headcount reductions Overhead c
Slide 9: Action taken to improve cash position
Action taken to improve cash position 1st Half 1st Half Year 2009 2008 2008 Working capital reduction €68.2m €43.0m €109.2m Capital expenditure €7.2m €62.0m €78.6m Acquisition/investment spend €3.7m €25.3m €28.1m Share purchase / dividend €5.8m €23.0m €34.5m 8
Slide 10: Reducing Net Debt
Reducing Net Debt € 584m € 551m € 550m Strengthened balance €436m sheet €380m Sustained reduction in gearing & net debt Good liquidity, positive free cash flow and high cash deposits 2005 2006 2007 2008 Jun-09 Net Debt 9
Slide 11: Net Debt Position and Maturity
Net Debt Position and Maturity €’million Debt Maturity Gross Debt 650 Cash (270) 350 Net Debt 380 300 250 Gearing 41% 200 Gross Debt Maturities 150 100 2009 31 50 €'Millions 2010 87 0 2009 2010 2011 2012 2013-2015 2011 335 2012 150 2013 - 2015 47 Total 650 No Interest cover covenants and no EBITDA
Slide 12: Banking Covenants
Banking Covenants Actual Bank Headroom Headroom Covenant 2009 Dec 2008 Minimum Net Worth as €1,075m €775m €300m* €109m defined Net Debt at 30 June €380m €930m €550m €433m 2009 * Excluding revolving loan facilities 11
Slide 13: Rationalisation measures - continue
Rationalisation measures - continue Employee base reduced in both Ireland and UK Cost reduction initiatives progressed with significant results 10 locations consolidated or closed and six new locations added Credit terms from suppliers renegotiated Debtors managed tightly with significant
Slide 14: Rationalisation costs and benefits
Rationalisation costs and benefits Restructuring Cost Benefit Staff Reductions – 18 months to June 09 18 months to June 2009 per annum €’m €’m Employee Changes Payroll Savings per annum Numbers € millions -1,148 €31m UK €5m €38m -1,063 €30m Ireland €16m €32m €21m €70m -2,211 €61m 13
Slide 15: Capital Expenditure and Acquisitions
Capital Expenditure and Acquisitions 250 2009 Acquisition & Investment Spend 100 200 €3.7 million Development Asset 150 Purchases €5.4 million 50 Replacement Asset 100 Purchases €1.8 million 0 H1 H2 H1 50 2008 2008 2009 Acquisition & Investment Spend Development Asset Purchases 0 Replacement Asset P
Slide 16: Segmental Turnover Analysis – First Half
Segmental Turnover Analysis – First Half 2009 2008 Group €0.99 billion Group €1.44 billion 13% 2% 11% 3% 86% 85% Merchanting DIY Retail Manufacturing Strategically poised to benefit from a UK recovery 15
Slide 17: UK Sales and Operating Profit Performance 2000 to 2009
UK Sales and Operating Profit Performance 2000 to 2009 2000 2001 2002 2003 2004 2005 2006 2007 2008 H12009 Turnover 520.0 657.2 808.5 1,111.5 1,420.6 1,596.6 1,733.3 1,977.7 1,687.3 659.9 Operating Profit 29.2 40 53.7 78.6 108.2 108.2 114.6 142.1 74.1 11.6 Operating Profit Margin 5.6% 6.1% 6.6% 7.1%
Slide 18: Economic Background
Economic Background UK Macro Economic Indicators slowly improving in the UK Mortgage lending increasing from low base Housing starts rising from low base House prices stabilising / increasing UK & ROI Interest rates at historical lows RMI demand continues Underlying demand for housing
Slide 19: Group Strengths
Group Strengths Highly cash generative streamlined businesses Significant cash deposits ensures liquidity No P&L Banking Covenants - protection from exchange fluctuations now in banking agreements Strong balance sheet – modest gearing 41% No material refinancing required before 2011 67%
Slide 20: Top 10 Debtors in UK and Ireland
Top 10 Debtors in UK and Ireland Ireland Ireland UK UK Total in Euro 27 Aug 09 Dec 08 27 Aug 09 Dec 08 €’000 €’000 £’000 £’000 1 1,750 1,567 831 982 2 991 1,169 603 678 3 850 590 491 626 4 610 494 341 619 5 581 393 339 615 6 540 340 333 588 7 461 335 319 562 8 439 310 305 541 9 310 303 302 443 10 30
Slide 21: Turnover Trend Analysis Year on Year
Turnover Trend Analysis Year on Year 20
Slide 22: Principal Brands – UK and Northern Ireland
Principal Brands – UK and Northern Ireland 21
Slide 23: Principal Brands – Irish Merchanting and Manufacturing
Principal Brands – Irish Merchanting and Manufacturing 22
Slide 24: Irish Retail Brands
Grafton Group plc Interim Results 2009 Irish Retail Brands inhouse There’s no better buy in DIY ift}hOUse AT THE PANELLING CENTRE 23
Slide 25: Heiton Buckley, Chadwicks Builders Merchants
7Heiton Buckley CHADWICKS BUILDERS MERCHANTS
Slide 26: Woodie's DIY, Atlantic
Vioodie’s DIY BS ATLANTIC
Slide 27: Slide 27
Slide 28: EuroMix
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Slide 29: UK Merchanting League Table
UK Merchanting League Table Circa 2,000 independents to be consolidated Grafton 10% 18% 39% Jewson 15% 19% Wolseley Sector Turnover £12 billion plus Travis Perkins Unconsolidated £4.6 billion plus (excluding Wickes) 28
Slide 30: Comparison of DIY Store Sizes in the Republic of Ireland
Comparison of DIY Store Sizes in the Republic of Ireland 1,800,000 Total 2.57 m sq ft Total 2.57 m sq ft. Total 2.4 m sq. ft. Total 2.5 m sq. ft. 1,600,000 Total 2.2 m sq. ft. 1,400,000 1,200,000 Total 1.5 m sq. ft. Total 1.2 m 1,000,000 sq. ft. 800,000 600,000 400,000 200,000 0 2003 2004 2005 2006
Slide 31: For Further Information
For Further Information Michael Chadwick Executive Chairman 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