RNS No 4090h
GRAFTON GROUP PLC
3rd September 1998
PART 1
Grafton Group plc
Interim Results for the Six Months
Ended 30 June 1998
Highlights
- Group pre-tax profits up by 28% to IR#9.1 million.*
- Earnings per share up 26% to IR47.6p
- Interim dividend increased by 24 % to IR10.5p
- Turnover grew by 32% to IR#154 million.
- Strong performance in all Irish divisions.
- Continued profitable expansion of U.K. operations.
- Successful acquisition of British Dredging plc.
*After provision of IR#500,000 for reorganisation and
integration costs in British Dredging.
Grafton Group Plc
Announcement of Interim Results
Six Months Ended 30 June 1998
Grafton Group announces pre-tax profits of IR#9.123 million
for the half-year ended June 30, 1998, an increase of 28% on
profits of IR#7.112 million in the corresponding period in
1997.
Earnings per share grew by 26% to IR47.6p. (1997: IR37.7p)
An interim dividend of IR10.5p has been declared by the Board.
This represents an increase of 24% on the 1997 interim
dividend.
Group turnover for the half year increased by 32% to IR#154.3
million, compared to IR#116.8 million in 1997, reflecting a
combination of strong like for like growth, organic
developments and acquisitions.
Operating profit increased by 37% to IR#10.6 million. (1997:
IR#7.7 million)
These results flow from the Group's focused strategy which
continues to strengthen its market leadership in Ireland and
develop a sound platform for further profitable expansion in
the U.K.
Operations - Republic of Ireland
The Group's Irish operations capitalised on a buoyant economic
environment, strong market positions and the Group's ongoing
investment programmes. Irish turnover rose by 18% to IR#90.8
million. Operating profit grew by 39% to IR#8.7million, at
an improved margin of 9.6%. (1997: 8.2%)
Merchanting and wholesaling turnover grew by 22% to
IR#63.1million. Chadwicks, the flagship in Irish merchanting,
grew its turnover strongly and added to its national network
by opening new builder centres in Limerick and Walkinstown,
Dublin, bringing its total number of locations to 22.
Circle/Multy Products, the Group's wholesale business,
recorded improved profits.
Manufacturing turnover was IR#9.2 million compared to IR#9.6
million last year. This reflects growth in sales from CPI and
MFP and the closure of the Group's paint manufacturing
operations which have now been replaced by a long-term sub-
contract arrangement.
CPI grew its turnover and further strengthened its position in
the Greater Dublin area for Euromix Dry Mortar. MFP
experienced strong growth in turnover nationally and continued
to invest in new technology.
Woodie's, the DIY market leader with 10 stores, continued to
outperform the market growing its sales per sq.ft. , gaining
market share and increased its turnover by 21% to IR#18.4
million. Woodie's Waterford store, opened in October '97,
performed well.
Operations - United Kingdom
UK turnover was IR#63.5 million for the half year compared to
IR#40.2 million in the same period last year, an increase of
58%. The Group continued to build its presence in the UK with
the acquisition of British Dredging which adds a further 26
merchanting locations. Operating profits increased by 63% to
IR#2.4 million before providing #500,000 for re-organisation
and integration costs relating to British Dredging. The U.K.
sales and profit figures in Irish pounds have benefited from a
change in the exchange rate used for conversion purposes.
(IR#1 = STG#0.84 at 30 June 1998, IR#1 = STG#0.91 at 30 June
1997.)
Plumbase, the Group's U.K. plumbing and heating business,
which operates 31 branches increased sales and profitability.
A new branch at Coventry was opened in April.
The Group's U.K. builders merchanting business, Buildbase,
comprising seven branches, improved sales and profitability.
Substantial investment was made in the Group's largest branch
at Oxford which improved customer service, internal
efficiencies and extended the product range. The Peckham,
London, branch was enlarged with the purchase of an adjoining
site which has facilitated the extension of the product range.
Macnaughton Blair continued its expansion in Northern Ireland
with the acquisition of Antrim Builders & Plumbers Suppliers
located in Antrim town. Macnaughton Blair now trades from 3
locations in Northern Ireland.
The Group's first U.K. EuroMix dry mortar plant commenced
trading during the period. It is located at Northfleet, East
of London. As planned, start-up losses (which are expected to
continue into 1999) were incurred. In August 1998, the Group
acquired its third U.K. silo mortar manufacturing location in
Manchester when the trade and assets of Whisby Mortars were
purchased.
British Dredging
The Group acquired British Dredging plc ("BD") with effect
from 18 May 1998. 29.9% of its shares were purchased at
UK145p per share in 1997 at a cost of UK#7.6 million and an
offer for the remainder at UK193.6p per share was made. The
total cost, including fees, amounted to UK#33.9 million.
This amount was paid largely in cash with, to-date, UK#4.1
million of the consideration having been met through the issue
of 256,769 Grafton shares and UK#708,000 in loan notes. The
value of the net assets acquired, following positive fair
value adjustments of UK#7.7 million, amounted to UK#34.1
million. When acquired, BD had UK#5.4 million in cash and
investments and in August, in addition, the sale of BD's share
of its dredging joint venture was completed for UK#5.75
million. Amongst BD's assets are properties which are or
could be surplus to trading requirements with a book value of
UK# 9.5 million.
BD's merchanting operations which trade as J T Edwards, Selco
Trade Centres and Smiths Plumbing Supplies, had a turnover of
UK#40.7 million and recorded profits of UK#1.4 million in
1997. The 18 Edwards branches are being incorporated within
the Group's Buildbase and Plumbase chains. A provision of
IR#500,000 has been charged in the profit & loss account to
cover certain reorganisation and integration expenses and it
is anticipated that a further provision will be charged in the
second half of the year. Although significant investment in
Edwards may be required, the Group is confident that its
performance can be improved as part of Grafton.
Finance
The Group was strongly cash generative during the six months
with a cashflow of IR#8.6 million from operating activities
after funding a working capital requirement of IR#4 million.
The net cash outflow arising from acquisitions during the half
year amounted to IR#22.6 million. This related to the
acquisition of 70% of the share capital in British Dredging
not already owned by the Group together with the acquisition
of Antrim Builders and Plumbers Suppliers.
Capital expenditure of IR#7.8 million compares to IR#4.4
million in the corresponding period last year. The increase
reflects both the expansion of the Group and expenditure on
organic developments.
In May the Group completed a US$55 million (IR#38 million)
debt funding in the US Private Placement Market for the
purpose of improving the maturity profile of the Group's debt
and broadening the sources of debt finance available to the
Group. The US dollar proceeds were swapped into sterling and
provide the Group with long term funding at an attractive
margin.
Shareholders funds at 30 June 1998 were IR#72.7 million and
net debt amounted to IR#45.1 million representing a debt to
equity ratio of sixty two per cent. Since the end of June the
Group has sold its joint venture interest in British Dredging
Aggregates for IR#6.9 million. The proceeds of this disposal
together with cashflow from operations over the remainder of
the year is expected, in the absence of further acquisitions,
to lead to a significant reduction in net borrowings.
The Group's strong balance sheet, healthy cash generation and
sound financing leave it well positioned to continue to pursue
development opportunities available to our businesses.
Outlook
The Group's Irish operations are expected to benefit from a
favourable trading environment for the remainder of 1998.
In a less buoyant economy in the UK, the Group's concentration
will be on integrating its enlarged business activities and
continuing to develop its operations as opportunities present
themselves.
The Group believes that, subject to unforeseen circumstances,
profitability in the second half of the year will be ahead of
1997 levels.
The Group continues to be positive about its future prospects
and seeks to develop its activities organically and by
acquisition in both Ireland and the UK.
For reference: Michael Chadwick
Executive Chairman
Grafton Group plc
Telephone: (++353) (01) 295 3377
Joe Murray
Murray Consultants
Telephone: (++353) (01) 6614666
Ginny Pulbrook
Citigate
(++44) (0171) 282 8000
Grafton Group Plc
Group Profit And Loss Account
For the Half Year Ended 30 June 1998
Twelve Six Six
Months to Months to Months to
31 Dec 97 30 June 98 30 June 97
(audited) (unaudited) (unaudited)
IR#000 IR#000 IR#000
Turnover
224,699 Continuing operations 147,529 116,847
33,319 Acquisitions 6,741 -
______ _______ _______
258,018 Total turnover 154,270 116,847
======= ====== ======
Operating profit
18,758 Continuing operations 10,882 7,746
1,408 Acquisitions (255) -
_______ _______ _______
20,166 Total operating profit 10,627 7,746
1,894 Interest payable 1,504 634
______ _______ _______
Profit on ordinary
activities before
18,272 interest 9,123 7,112
2,732 Taxation 1,370 1,069
______ _______ _______
Profit on ordinary
15,540 activities after taxation 7,753 6,043
3,595 Dividend 1,709 1,354
______ _______ _______
11,945 Profit retained 6,044 4,689
===== ====== ======
IR96.9p Earnings per share IR47.6p IR37.7p
IR22.5p Dividend per share IR10.5p IR8.5p
Grafton Group Plc
Group Balance Sheet
As at 30 June 1998
31 Dec 97 30 June 98 30 June 97
(audited) (unaudited) (unaudited)
IR#000 IR#000 IR#000
Fixed assets
48,631 Tangible assets 76,949 43,784
Intangible assets
- - goodwill 486 -
9,868 Financial assets 1,107 7,525
______ ______ _______
58,499 78,542 51,309
______ ______ _______
Current assets
35,164 Stock 48,503 33,829
50,463 Debtors 64,723 50,238
- Financial assets 6,596 -
Cash at bank and
46,763 in hand 52,205 34,335
______ ______ _______
132,390 172,027 118,402
Creditors (amounts
falling due within
88,053 one year) 96,544 77,716
______ ______ _______
44,337 Net current assets 75,483 40,686
______ ______ _______
Total assets less
102,836 current liabilities 154,025 91,995
_______ ______ _______
Creditors (amounts falling
due after more than
39,999 one year) 79,140 36,240
Provision for
949 liabilities and charges 2,153 916
______ ______ _______
40,948 81,293 37,156
______ ______ _______
61,888 72,732 54,839
===== ===== ======
Capital and reserves
4,029 Share capital 4,098 4,009
7,980 Share premium account 12,687 7,645
6,406 Revaluation reserve 6,406 6,406
43,473 Profit and loss account 49,541 36,779
_____ ______ ______
Shareholders' funds
61,888 - equity 72,732 54,839
===== ===== ======
* Group Cash Flow Statement
* Notes pages to follow on separate transmission
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