Grafton Group PLC · LSE:GFTU
Grafton — FY2008 Earnings Presentation
31 slides from Grafton's earnings presentation, February 2009
Slide 1: Buildbase
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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 Annual turnover €2.7 billion Market leader or strong market positions Trading from over 589 locations in the UK and Ireland
Slide 3: Group Locations
Group Locations 589 Trading Locations Builders Merchanting g Plumbers Merchanting Manufacturing DIY Retailing 2
Slide 4: Principal Brands – UK and Northern Ireland
Principal Brands – UK and Northern Ireland 3
Slide 5: Principal Brands – Irish Merchanting and Manufacturing
Principal Brands – Irish Merchanting and Manufacturing 4
Slide 6: Irish Retail Brands
Irish Retail Brands There’s no better buy in DIY Seagggaaga. Saeegeuaas. at Aaa me Grafton Group plc Final Results 2008 ie imthnouse fthOUSe AT THE PANELLING CENTRE
Slide 7: Best placed to weather the storm
Best placed to weather the storm Reasons: A profitable and cash generative business. Adjusted operating profit of €118.6m in 2008 Free Cash Flow of €206m in 2008 A cash conversion ratio of 207% in 2008 (90% in 2007) €225 million in available cash deposits to finance operations and loan repayments Mo
Slide 8: 2008 Financial Highlights
2008 Financial Highlights Turnover €2,673 million -17% Operating Profit * €118.6 million -55% Operating Margin * 4.4% - Profit before Tax €64.1 million -73% Adjusted EPS * 32.2 cent -62% Basic EPS 25.1 cent -71% Free Cash Flow €206 million -13% Rationalisation + Pension costs €17.2 million Annual co
Slide 9: Cash Generation
2008 2007 Cash Generation € million € million Operating profit (before restructuring costs) 116.4 263.5 Restructuring costs (17.2) - Operating profit 99.2 263.5 Depreciation, amortisation & other 54.5 63.6 Asset disposals 6.3 33.3 Total cash inflow 160.0 360.4 Replacement capital expenditure (27.7)
Slide 10: Action taken to improve cash position
Action taken to improve cash position 1st Half 2nd Half Year Working capital reduction €45.5m €66.2m €111.7m Capital expenditure €62.0m €16.6m €78.6m Acquisition spend €25.3m €2.8m €28.1m Dividends €23.0m €11.5m €34.5m 9
Slide 11: Net Debt Position and Maturity
Net Debt Position and Maturity €’million Gross Debt 661 Cash + Cash Equivalent (225) Net Debt 436 Gearing 50% Gross Debt Maturities 2009 109 2010 43 2011 319 2012 146 2013 - 2015 44 Total 661 Undrawn Committed Bank facilities of €67.4 million No Interest cover covenants and no EBITDA ratio covenants
Slide 12: Funding Structure - Type of Gross Debt
Funding Structure - Type of Gross Debt € 918m € 782m € 755m € 661m 2005 2006 2007 2008 Overdraft / Leases Bank loans US Private Placement 11
Slide 13: Top 10 Debtors in UK and Ireland
Top 10 Debtors in UK and Ireland Ireland €’000 UK £’000 Total in Euro - 95.25p. 1 1,567 982 2 1,169 678 3 590 626 4 494 619 5 393 615 6 340 588 7 335 562 8 310 541 9 303 443 10 225 394 €5,726 £ 6,048 €12,076 Insurance + Provisions €4,457 £ 2,866 €7,466 Net €1,269 £ 3,182 €4,610 Total Group Total tra
Slide 14: Banking Covenants
Banking Covenants Actual Bank Capacity Covenant 100% Net Debt 50% 100% 50% Minimum Net Worth as defined €882m €773m €109m Net Debt at December 2008 €436m €869m €433m Headroom ranges up to €400 million depending on loan provider 13
Slide 15: Accelerated Group Integration
Accelerated Group Integration Grafton Merchanting GB: • Merchanting GB formed successfully • Buildbase • Plumbase • Jackson Grafton Merchanting ROI: • Heiton Buckley and Chadwicks Head Offices integrated • Regional structure changed 14
Slide 16: Rationalisation measures
Rationalisation measures Employee base reduced in both Ireland and UK Cost reduction initiatives progressed with significant results - Internet based tendering - Chinese facility established Small number of stores closed Credit terms from suppliers renegotiated Debtors managed tightly with
Slide 17: Rationalisation costs and benefits
Rationalisation costs and benefits Cost Benefit Staff Reductions €’m €’m per annum Employee Changes Payroll Savings per annum Numbers € millions UK €3m €25m -806 €22m -692 €19m Ireland €9m €20m €12m €45m -1,498 €41m 16
Slide 18: Capital Expenditure and Acquisitions
Capital Expenditure and Acquisitions 250 2008 Acquisition & Investment Spend 200 €28.1 million 100 Development Asset 150 Purchases €50.9 million 50 Replacement Asset 100 Purchases €27.7 million 0 50 H1 H2 Acquisition & Investment Spend 0 Development Asset Purchases 2006 2007 2008 Replacement Asset P
Slide 19: Segmental Turnover Analysis – Full Year
Segmental Turnover Analysis – Full Year 2008 2007 Group €2.67 billion Group €3.2 billion 11% 3% 24% 4% 11% 26% 59% Irish Merchanting 62% UK Merchanting DIY Retail Irish & UK Manufacturing Now UK business with an Irish tail 18
Slide 20: UK Sales and Operating Profit Performance 2000 to 2008
UK Sales and Operating Profit Performance 2000 to 2008 2000 2001 2002 2003 2004 2005 2006 2007 2008 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 Operating Profit 29.2 40 53.7 78.6 108.2 108.2 114.6 142.1 74.1 Operating Profit Margin 5.6% 6.1% 6.6% 7.1% 7.6% 6.8% 6.6% 7.
Slide 21: UK & Irish Operating Margins
UK & Irish Operating Margins UK 37% Ireland 63% 2008 2007 UK operating margin * 4.4% 7.2% ROI operating margin * 4.5% 10.1% Group operating margin * 4.4% 8.3% * before intangible amortisation and restructuring costs 20
Slide 22: Components of Change
Components of Change Turnover Operating Profit* €’million €’million 2007 3,205 265.8 Organic growth - Ireland (249) (78.9) Organic growth - UK (120) (48.7) 2008 acquisitions - UK 29 1.9 2007 acquisitions - UK 47 4.3 - Ireland 2 (0.1) New branches 2007 & 2008 and discontinued 37 (5.7) Restructuring c
Slide 23: Economic Background
Economic Background Global Credit crunch seriously restricting liquidity to fund house buyers, RMI projects and commercial building RMI demand continues House completions still falling – although underlying demand remains Positive demographics in both Ireland and the UK to keep the pressure
Slide 24: Group Strengths
Group Strengths Highly cash generative and profitable businesses - free cash flow €206 million in 2008 Deposits ensure continued access to cash. No P&L Banking Covenants Strong balance sheet – modest gearing 50% No material refinancing required before 2011 63% of turnover in UK Promine
Slide 25: Heiton Buckley / Chadwicks Builders Merchants
*Heiton Buckley CHADWICKS BUILDERS MERCHANTS
Slide 26: Woodie's DIY / Atlantic Homecare
Wiloodie" s DIY ATLANTIC p GARDEN CENTREs HOMECARE a eemctere
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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 Total 2.57 m sq ft +100% 1,800,000 Total 2.5 m sq. ft. Total 2.4 m sq. ft. 1,600,000 Total 2.2 m sq. ft. 1,400,000 Total 1.5 m sq. ft. 1,200,000 +4 % 1,000,000 Total 1.2 m sq. ft. +9 % +6 % 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