2008 Final Results
Released: 27/02/2009
Highlights
Grafton Group plc announces its final results for the twelve months ended 31 December 2008. Grafton is a major operator in the UK builders merchant market and the leading merchant and DIY business in Ireland. In the year under review 63 per cent of turnover was generated in the UK and 37 per cent in Ireland.
| 2008 | 2007 | Change |
| Revenue | 2.67bn | 3.21bn | (16.6%) |
| Operating profit per income statement | 99.2m | 270.8m | (63.4%) |
| Operating profit (adjusted)* | 118.6m | 265.8m | (55.4%) |
| Profit before tax | 64.1m | 235.8m | (72.8%) |
| Adjusted earnings per share* | 32.2c | 84.3c | (61.8%) |
| Basic earnings per share | 25.09c | 86.16c | (70.9%) |
| Share purchase | 15.0c | 22.0c | (31.8%) |
| Cash flow per share** | 49.5c | 110.8c | (55.3%) |
| * Before intangible amortisation and restructuring costs | | | |
| ** Based on profit after tax, plus depreciation and intangible amortisation | | | |
Financial Highlights
- Cash flow optimised in challenging conditions
- Cash conservation prioritised over development and acquisition spend
- Working capital reduced by 112 million or 27%
- Strong cash flow from operations of 253m
- Good liquidity retained with cash balances totalling 225m at year end
- Net debt reduced by 114.8m to 435.6m
- Strong balance sheet with 50% gearing underpinned by secure funding position and significant property portfolio
- Turnover declined by 17% to 2.67bn in euro terms and by 8% in constant currency terms
- Operating profit before rationalisation and other non-recurring costs fell by 55% to 118.6m
- Sterling devalued 23% during the year significantly impacting the value of UK assets on translation
- Adjusted earnings per share were down by 62% to 32.2 cent.
- A Ordinary share purchase reduced to 5.0 cent (2007: 12.0 cent)
- Total A Ordinary share purchases of 15.0 cent (2007: 22.0 cent)
Operational Highlights
- Greater branch network efficiencies to respond to declining volumes
- New initiatives to deliver significant procurement benefits
- Continued focus on cost reduction, scale-related benefits, closer integration, branch consolidation and brand synergies
- Cost base reduced by annualised 45m
- New investment focused on projects offering exceptional value and strategic positioning for the future
- UK operations accounted for 63% of turnover and 67% of operating profit
- UK turnover of £1.34bn (2007: £1.35bn) fell by 1% and by 15% in euro
- Demand slowed substantially from mid-year
- UK operating profit declined by 52% to 68.0m (2007: 142.1m) and by 44% in sterling terms
- In Ireland, turnover declined by 20% to 986m (2007: 1.23bn)
- First half merchanting turnover fell 16% and 27% in second half
- Increased emphasis on RMI and on energy saving materials
- Like for like DIY sales down 11%
- Closer management integration and significant cost reductions to offset impact of declining turnover
Outlook
Commenting on the outlook, Michael Chadwick, Executive Chairman said:
We are operating in difficult economic circumstances and management is continually reassessing its response to changing conditions. We are taking actions proportionate to the challenges faced in the UK and Irish markets. In the current year, we will maintain our focus on cost control, operational efficiencies and cash generation and implement deeper cuts to overheads where demand continues to contract.
Trading in January and February continued to decline, made worse by the heavy snowfall. We expect to continue generating strong cash flow, retain good liquidity and maintain our secure funding position. The Group will also benefit from ongoing working capital management and a lower interest rate environment. We have the benefit of a strong balance sheet and moderate gearing.
Graftons businesses have strong market positions and brands in the UK and Ireland and expect to emerge from the current market downturn as more efficient enterprises well placed to take advantage of growth opportunities. While conditions in the financial and credit markets make the timing and nature of any recovery uncertain, both economies have been resilient to past economic shocks and will eventually recover from the current downturn.
Conference Call
Grafton will host an Analysts conference call today at 8.30am (Irish Time) to discuss this announcement. The dial-in numbers are:
| Ireland: | + 353 | 1 436 4265 |
| UK: | + 44 | 208 817 9301 |
| US: | +1 718 | 354 1226 |
| Other: | +353 | 1 436 4265 |
A replay of the conference call will be available from 11.30am (Irish Time). To access the recording, the dial-in numbers are:
| Ireland: | + 353 | 1 436 4267 |
| UK: | + 44 | 207 7696425 |
| US: | +1 | 630 6523111 |
| Other: | +353 | 1 436 4267 |
The digital replay security code is: 1582071#
View the full 2008 Final Results in PDF format.
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