RNS No 5479d
GRAFTON GROUP PLC
26 August 1999
Grafton Group plc
Interim Results for the Six Months
Ended 30 June 1999
Highlights
- Group pre-tax profits up 33% to Euro 15.4 million
- Adjusted earnings per share up 40% to 84.4c
- Interim dividend increased by 40% to 18.7c
- Turnover grew by 46% to Euro 285 million
- Strong performances in all Irish and UK divisions
- UK turnover exceeds Irish turnover for the first time
- UK operating profit increased by 191%
Grafton Group Plc
Announcement of Interim Results
Six Months Ended 30 June 1999
Grafton Group reports pre-tax profits of Euro 15.4 million for
the half-year ended June 30, 1999, a growth of 33% on profits
of Euro 11.6 million in the first half of 1998.
Earnings per share, before goodwill amortisation, ("adjusted
earnings per share") increased by 40% to 84.40c compared to
60.44c in 1998.
An interim dividend of 18.70c has been declared, representing
an increase of 40% on the 1998 interim dividend of 13.33c.
Turnover for the half-year grew by 46% to Euro 285.1 million
(1998: Euro 195.9).
Operating profit rose by 44% to Euro 19.4 million compared to
Euro 13.5 million in first half 1998.
These strong results reflect positive performances across all
the Group's Irish and UK divisions.
The following table highlights the result of the Group's
strategy in terms of operating profit performance, before
goodwill amortisation, and the significant improvement in
operating profits being achieved in the UK.
The Group turnover in the UK exceeded that recorded in the
Republic of Ireland for the first time during the period.
Six Months Six Months Percentage
to to Improvement
30 June 99 30 June 98
(unaudited) (unaudited)
Euro Euro
millions millions
Turnover
Republic of
Ireland 131.3 115.3 14%
Great
Britain & 153.8 80.6 91%
Northern
Ireland
------- ------ -------
Total 285.1 195.9 46%
======= ======= ======
Operating
profit
Republic of
Ireland 12.7 11.1 15%
Great
Britain & 7.1 2.4 191%
Nth. Ireland
------- ------- -------
Total 19.8 13.5 47%
======= ======= =======
Operations - Republic of Ireland
The Group's Irish divisions increased turnover by 14% to Euro
131.3 million, reflecting market leadership positions in a
positive construction environment. Operating profit grew by
15% to Euro 12.7 million in highly competitive markets at a
consistent margin of 9.6%. These strong results in the first
half, would have been even better but for the effects of the
scaffolders strike in the second quarter.
Irish merchanting and wholesaling turnover increased by 15% to
Euro 92.4 million with the Chadwicks branches in Limerick and
Walkinstown which opened in 1998 contributing for the full six
month period. A powered access division has recently been
launched, complementing Chadwicks existing contract scaffold
and direct hire services.
The Irish manufacturing division's turnover was broadly in
line with 1998 at Euro 11.8 million, with improved profits.
CPI, the Group's Dublin based concrete business, performed
well in the first quarter. Its results were adversely
affected in the second quarter by the scaffolders strike which
closed down a number of construction sites in the normally
busy months of April and May. MFP, specialising in plastic
products for the building industry, recorded increased
volumes, particularly in its Eavemaster range, and profits
were ahead of last year.
Woodie's DIY capitalised on its clear market leadership
position, increasing its turnover by 16% to Euro 27.2 million,
with strong performances across all 10 stores. Woodie's
ongoing investment programme included the major refurbishment
of the Dunlaoire, Cork and Galway stores, resulting in growth
in sales per square foot and profitability. Woodie's is a
successful and significant contributor to both the Group's
profitability and cash flow, and continues to seek potential
sites for its ongoing expansion.
Operations - United Kingdom
UK turnover was Euro 153.8 million (Stg#101.0 million) for the
half-year compared to Euro 80.6 million in the same period
last year, an increase of 91%. The virtual doubling of scale
resulted from our aggressive acquisition programme and
substantial like-for-like sales growth. More importantly,
operating profit almost trebled by 191% to Euro 7.1 million
leading to an improved margin of 4.6% (1998: 3.0%).
The Group's UK builders merchanting business now spans 49
branches, following substantial acquisition activity of 1998,
and the six-branch network of the Niall Bailey merchanting
business acquired in April 1999. The phased integration of
acquired businesses into Buildbase is progressing
satisfactorily and the planned operational benefits are being
realised.
Plumbase, the Group's UK plumbing and heating business,
trading from 41 branches, continued to increase sales and
profitability, and is now established as the most significant
regional player in the South East.
Belfast based builders merchants, Macnaughton Blair
successfully integrated its 1998 acquisitions in Antrim and
Coleraine and recorded increased profits.
Your Group is an active participant in the consolidation of
the UK merchanting market and is now ranked fourth in terms of
sales. The acquisition multiples now being paid for
merchanting chains underline the value created for our
shareholders. We remain determined to continue to grow in
this core market.
The Group's three UK silo mortar plants traded strongly during
the period with all plants performing profitably and ahead of
expectations. The construction of a fourth mortar plant in
Beaconsfield, west of London, is well advanced with
commissioning planned for later this year. Given the proven
success of EuroMix silo mortar in both the Irish and UK
markets, the Group intends to establish additional
manufacturing plants in strategic locations in the UK.
Finance
The Group's operations continued to be strongly cash
generative during the six months, with net cash from operating
activity increasing to Euro 15.7 million, up 44% on the Euro
10.9 million achieved in the same period last year.
As in previous periods the Group's acquisitions, investments,
and capital expenditure programme continued at high levels
with Euro 20.0 million, Euro 15.3 million and Euro 12.1
million being invested respectively. The acquisition of Niall
Bailey Building Supplies, the Group's investment in Heiton
Holdings plc, at an average share price of Euro 2.67, the
development of the EuroMix mortar operations and the ongoing
refurbishment of the acquired companies account for the
majority of the combined expenditure of Euro 47.4 million.
Shareholders' funds at 30th June were Euro 165.9 million and
net debt amounted to Euro 89 million representing a net debt
to equity ratio of 54%, following the Euro 15.5 million
successfully raised when the Group placed 800,000 ordinary
shares with existing shareholders in June 1999.
The Group's strong balance sheet and healthy cash flow leaves
it well placed to finance further expansion opportunities.
Outlook
The strong momentum achieved in the first half throughout the
Group has been maintained into the second half and we look
forward with confidence.
In Ireland the combination of a continuing strong local
economy, a buoyant construction market and strong market
positioning of our core businesses provides the solid
background for further growth opportunities.
In the UK, Buildbase and Plumbase will continue to consolidate
and benefit from the integration of earlier acquisitions as
the market shows signs of improvement. We seek to identify
bolt-on opportunities and continue to focus on acquiring and
building regional leadership positions in selected market
areas. EuroMix dry mortar is expected to expand its
operations further.
The Group continues to actively seek opportunities for
profitable growth across its markets.
For reference: For reference:
Michael Chadwick Joe Murray
Executive Chairman Murray Consultants
Grafton Group plc Telephone: (++353) (01) 661 4666
Telephone: (++353) (01) 216 0600
Ginny Pulbrook
Citigate Dewe Rogerson
Telephone: (++44) (0171) 282 2945
This statement is also available on our web site
www.graftonplc.com
Grafton Group Plc
Group Profit & Loss Account
For the Half Year Ended 30 June 1999
Twelve Six Six
Months Months to Months to
to 31 30 June 30 June
Dec 98 99 98
(audited) (unaudited) (unaudited)
Euro '000 Euro '000 Euro '000
Turnover
378,099 Continuing 275,005 195,882
operations
49,499 Acquisitions 10,106 -
------- ------- -------
427,598 Total turnover 285,111 195,882
======= ======= =======
Operating profit
33,779 Continuing 18,556 13,494
operations
(719) Acquisitions 813 -
------ ------ ------
33,060 Total operating 19,369 13,494
profit
4,864 Interest payable 3,959 1,910
------ ------ ------
28,196 Profit on ordinary
activities before 15,410 11,584
taxation
3,948 Taxation 2,003 1,740
------ ------ ------
Profit on ordinary
activities after
24,248 taxation 13,407 9,844
5,714 Dividend 3,207 2,170
------ ------ ------
18,534 Profit retained 10,200 7,674
====== ====== ======
149.7c Earnings per share 81.87c 60.44c
Adjusted earnings
150.15c per share 84.40c 60.44c
35.0c Dividend per share 18.70c 13.33c
Grafton Group Plc
Consolidated Balance Sheet
As at 30 June 1999
31 Dec 30 June 30 June
98 99 98
(audited) (unaudited) (unaudited)
Euro '000 Euro '000 Euro '000
Fixed assets
Intangible assets -
9,763 goodwill 20,570 617
140,660 Tangible assets 157,135 97,705
212 Financial assets 15,533 1,406
------- ------- -------
150,635 193,238 99,728
------- ------- -------
Current assets
67,371 Stock 79,226 61,586
87,981 Debtors 109,985 82,181
- Financial assets - 8,375
Cash at bank and
67,407 in hand 58,318 66,287
------- ------- -------
222,759 247,529 218,429
------- ------- -------
Creditors (amounts
falling due within
133,392 one year) 176,341 122,585
------- ------- -------
89,367 Net current assets 71,188 95,844
------- ------- -------
Total assets less
240,002 current liabilities 264,426 195,572
------- ------- -------
Creditors (amounts
falling due after
93,005 more than one year) 91,147 100,487
Provision for
liabilities and
7,189 charges 7,314 2,734
------- ------- -------
100,194 98,461 103,221
------- ------- -------
139,808 165,965 92,351
======= ======= =======
Capital and
reserves
5,225 Share capital 8,488 5,204
17,388 Share premium 32,641 16,109
account
43,504 Revaluation reserve 43,504 8,134
Profit and loss
73,691 account 81,332 62,904
------- ------- -------
Shareholders'
139,808 funds - equity 165,965 92,351
======= ======= =======
Grafton Group Plc
Group Cash Flow Statement
For the Half Year Ended 30 June 1999
Twelve Six Months Six Months
Months
To 31 To 30 June To 30 June
Dec 98 99 98
(audited) (unaudited) (unaudited)
Euro '000 Euro '000 Euro '000
Net cash inflow
from operating
28,023 activities 15,709 10,870
Servicing of
(4,114) finance (4,546) (1,219)
(2,473) Taxation (1,417) (1,268)
Capital
expenditure and
financial
investment
Purchase of
tangible fixed
(20,621) assets (12,105) (9,934)
15 New finance leases 0 0
------- ------- -------
(20,606) (12,105) (9,934)
Sale of tangible
3,525 fixed assets 3,411 1,539
Purchase of
(67) financial fixed (15,305) (67)
assets
------- ------- -------
(17,148) (23,999) (8,462)
Acquisitions and
disposals
Acquisition of
subsidiary
(45,275) undertakings (22,168) (33,905)
Net cash acquired
with subsidiary
387 undertakings 2,176 5,250
Disposal of
7,573 business held for 0 0
resale
------- ------- -------
(37,315) (19,992) (28,655)
Equity dividends
(5,018) paid (3,540) (2,844)
Cash outflow
before
use of liquid
(38,045) resources and (37,785) (31,578)
financing
Management of
liquid resources
Decrease/(Increase)
(1,352) in short term 212 (14,165)
deposits
Redemption of loan
2,481 notes receivable 0 2,653
----- ------ ------
1,129 212 (11,512)
Financing
Issue of ordinary
34 share capital 15,511 33
41,932 Increase in term 14,138 42,515
debt
Capital element of
finance leases
(622) repaid (305) (292)
Redemption on loan
(188) notes payable (255) (183)
------ ------ ------
(Decrease)/increase
4,240 in cash in the (8,484) (1,017)
===== period ======= =======
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase
4,240 in cash in the period (8,484) (1,017)
Cash inflow from
increase in debt and
(41,122) lease financing (13,578) (42,040)
Cash flow from
management
(1,129) of liquid resources (212) 11,512
------- ------- -------
Change in net debt
resulting from cash
(38,011) flows (22,274) (31,545)
Loan notes issued on
acquisition of
(1,091) subsidiary undertakings (72) (1,036)
Liquid resources
acquired
2,481 with subsidiary 0 2,653
undertaking
Finance leases acquired
with subsidiary
(1,092) undertakings (13) (185)
(15) New finance leases 0 0
2,948 Translation adjustment (7,950) (3,179)
------ ------- -------
Movement in net debt
(34,780) in the period (30,309) (33,292)
(23,934) Net debt at 1 January (58,714) (23,934)
-------- -------- --------
(58,714) Net debt at 30 June (89,023) (57,226)
======= ======= =======
Notes
1. Movements in Group Shareholders' Funds
Twelve Six Six
Months Months Months
To 31 Dec To 30 To 30
98 June 99 June 98
(audited) (unaudited) (unaudited)
Euro '000 Euro '000 Euro '000
Profit on ordinary
activities after
24,248 taxation 13,407 9,844
5,714 Dividends 3,207 2,170
------ ------ ------
18,534 10,200 7,674
Issue of ordinary
7,364 share capital 15,511 6,064
Currency translation
adjustment
- on foreign
currency net
(1,534) investments 3,949 1,814
- on foreign
1,492 currency borrowings (3,503) (1,783)
Revaluation of
tangible
35,370 fixed assets 0 0
------ ------ ------
Net movement on
61,226 shareholders' funds 26,157 13,769
Opening
78,582 shareholders' funds 139,808 78,582
------ ------ -------
Closing
139,808 shareholders' funds 165,965 92,351
====== ====== ======
2. Dividends
An interim dividend at the rate of 18.70c per ordinary share
(1998: 13.33c) is payable on 24 September 1999 to shareholders
on the register at the close of business on 10 September 1999.
3. Earnings per share
The calculation of earnings per ordinary share is based on the
profit on ordinary activities after taxation. The weighted
average number of ordinary shares in issue during the period
amounted to 16,376,881 (1998: 16,288,724). Adjusted earnings
per share is calculated on the same basis but excluding
amortisation of goodwill.
4. Exchange rates
Financial statements of the Group's United Kingdom
subsidiaries are translated at the rate of exchange prevailing
at the balance sheet date. The Euro / Sterling exchange rate
at 30 June 1999 was Stg65.63p (30 June 1998: Stg66.15p and 31
December 1998: Stg70.54p)
5. Year 2000 compliance
Many computer systems which express dates using only the last
two digits of the year may malfunction due to the date change
to the Year 2000. This risk to the business relates not only
to the Group's computer systems, but also to some degree on
those of our customers and suppliers.
The Group has conducted a Year 2000 review of its business
systems at all locations and has established a formal Year
2000 project to modify or replace all the non-compliant
systems. Many of the non-compliant systems identified were
due to be replaced or upgraded, for operational and functional
reasons unconnected with the Year 2000 issue. The incremental
cost of Year 2000 compliance is not material to the Group.
Work on all business critical systems is at an advanced stage
and in line with the Group's implementation plan.
6. Turnover
The amount of turnover by class of activity is as follows:
Twelve Six Six
Months Months Months
To 31 To 30 To 30
Dec 98 June 99 June 98
(audited) (unaudited) (unaudited)
Euro Euro Euro
'000 '000 '000
Irish merchanting
167,872 and wholesaling 92,370 80,158
Irish manufacturing
and related
23,170 activities 11,755 11,701
49,224 DIY retailing 27,171 23,404
------- ------- -------
Total turnover for
240,266 Irish activities 131,296 115,263
UK merchanting and
187,332 other activities 153,815 80,619
------- ------- -------
427,598 285,111 195,882
======= ======= =======
7. Operating Profit
Twelve Six Six
Months Months Months
To 31 To 30 To 30
Dec 98 June 99 June 98
(audited) (unaudited) (unaudited)
Euro Euro Euro '000
'000 '000
27,386 Republic of Ireland 12,663 11,056
Great Britain and
5,749 Northern Ireland 7,121 2,444
------ ------ -------
33,135 19,784 13,500
(75) Goodwill amortisation (415) (6)
------ ------ -----
33,060 19,369 13,494
====== ===== =====
8. Interim statement
The interim figures for the half year to 30 June 1999 and the
comparative figures for the half year to 30 June 1998 are
unaudited. The figures shown for the year ended 31 December
1998 have been extracted from the full accounts for the year.
A copy of these accounts, on which the Auditors have issued an
unqualified report, has been delivered to the registrar of
companies.
This statement will be sent by post to all registered
shareholders. Non shareholders may obtain copies from the
company's registered office at Heron House, Corrig Road,
Sandyford Industrial Estate, Dublin 18.
Independent Review Report to Grafton Group plc
Introduction
We have been instructed by the company to review the financial
information set out on pages 4-7 and we have read the other
information contained in the interim report and considered
whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information
contained therein, is the responsibility of, and has been
approved by the directors. The Listing Rules of the Irish
Stock Exchange require that the accounting policies and
presentation applied to the interim figures should be
consistent with those applied in preparing the preceding
annual accounts except where any changes, and the reasons for
them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained
in Bulletin 1999/4 issued by the Auditing Practices Board. A
review consists principally of making enquiries of Group
management and applying analytical procedures to the
financial information and underlying financial data and based
thereon, assessing whether the accounting policies and
presentation have been consistently applied unless otherwise
disclosed. A review excludes audit procedures such as tests
of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit
performed in accordance with Auditing Standards and therefore
provides a lower level of assurance than an audit.
Accordingly we do not express and audit opinion on the
financial information.
Review conclusion
On the basis of our review we are not aware of any material
modifications that should be made to the financial information
as presented for the six months ended 30 June 1999.
KPMG
Chartered Accountants
Registered Auditors
Dublin
25 August 1999
END
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