TIDMGFTU
RNS Number : 5953R
Grafton Group PLC
02 March 2023
Final Results
For the Year Ended 31 December 2022
Grafton Group plc
Final Results for Year Ended 31 December 2022
Strong Trading Performance from Diversified Earnings Base
Grafton Group plc ("Grafton"), the international building
materials distributor and DIY retailer is pleased to announce its
final results for the year ended 31 December 2022.
Continuing Operations(1) 2022 2021(2) Change
Revenue GBP2,301m GBP2,110m +9.1%
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Adjusted(3) operating profit GBP285.9m GBP288.0m (0.7%)
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Adjusted operating profit before
property profit(3) GBP260.5m GBP271.2m (4.0%)
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Adjusted operating profit margin
before property profit 11.3% 12.9% (160bps)
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Adjusted profit before tax(3) GBP273.3m GBP268.6m +1.7%
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Adjusted earnings per share(3) 96.6p 93.0p +3.9%
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Dividend 33.0p 30.5p +8.2%
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Adjusted return on capital employed
(ROCE) (3) 17.2% 19.4% (220bps)
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Net cash (before IFRS 16 leases) GBP458.2m GBP588.0m (GBP129.8m)
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Net cash - (including IFRS 16 leases) GBP8.9m GBP139.0m (GBP130.1m)
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Statutory Results - Continuing 2022 2021 Change
Operations
---------- ---------- ------------
Operating profit GBP264.3m GBP269.2m (1.8%)
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Profit before tax GBP251.7m GBP249.8m +0.8%
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Basic earnings per share 89.3p 86.4p +3.4%
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(1) Supplementary financial information in relation to
Alternative Performance Measures (APMs) is set out on pages 42 to
47.
(2) The 2021 results do not include the traditional merchanting
business in Great Britain that was divested in 2021 and classified
as discontinued operations.
(3) The term "Adjusted" means before exceptional items,
amortisation of intangible assets arising on acquisitions and
acquisition related items in both years.
Operational Highlights
-- Excellent performance in distribution businesses in Ireland and the Netherlands
-- Volumes and profitability lower in Selco against a strong
comparative period and softer backdrop
-- Good profit contribution from IKH in Finland
-- Revenue and profitability normalised in Woodie's DIY, Home and Garden retail business
-- UK Manufacturing businesses performed well
-- Further progress made against sustainability targets
-- Diversified revenue base with over half generated in Ireland, the Netherlands and Finland
Financial Highlights
-- 11.3% operating profit margin before property profit
-- Adjusted return on capital employed of 17.2%
-- Slight decline in adjusted operating profit (before property
profit) to GBP260.5 million as expected
-- Double digit/high single digit operating profit margin in all
businesses (before property profit)
-- High cash conversion with cashflow of GBP278.8 million from operations
-- GBP208.9 million returned to shareholders during year through share buybacks and dividends
-- Net cash at 31 December 2022 of GBP458.2 million (before IFRS 16 lease liabilities)
-- Annual dividend per share growth of 8.2%
Eric Born, Chief Executive Officer Commented :
" In my first set of results as Chief Executive, I am pleased to
report a strong performance by the Group which is ahead of market
expectations. This is a great achievement by my new colleagues
across the business and is testament to their dedication and
professionalism. It has also confirmed the qualities of the
business which attracted me to join Grafton.
"We still face many of the external challenges that we faced in
2022, but I am encouraged by the quality of the Group's portfolio
of higher margin businesses that are sensibly positioned with both
market leading brands and geographic diversity. We now have more
than half of our revenues coming from outside the UK in Ireland,
Finland and the Netherlands.
"Importantly, with a very strong balance sheet, Grafton is well
positioned to invest in future growth opportunities and we look
forward with confidence."
Presentation and Webcast Details
A highlights video and a copy of the results presentation
document are available at 7:00am today via the home page of the
Company's website www.graftonplc.com .
A presentation for analysts and investors will be hosted by Eric
Born and David Arnold at 10:15am tod ay. A live webcast of the
presentation including Q&A will be available via the Company's
website at www.graftonplc.com or by clicking on the following link:
https://brrmedia.news/Grafton_fy_results .
Analysts will be invited to raise questions during the
presentation. Should investors wish to submit a question in
advance, they can do so before 9.00am today by sending an email to
ir@graftonplc.com . A recording of the webcast will be available on
the Company's website later today.
Enquiries:
Grafton Group plc + 353 1 216 0600
Eric Born, Chief Executive Officer
David Arnold, Chief Financial Officer
Murray + 353 1 498 0300 / +353 (0)87 2269345
Pat Walsh
MHP Communications + 44 20 3128 8100
Tim Rowntree/ Eleni Menikou
Cautionary Statement
Certain statements made in this announcement are forward-looking
statements. Such statements are based on current expectations and
are subject to a number of risks and uncertainties that could cause
actual events or results to differ materially from those expressed
or implied by these forward-looking statements. They appear in a
number of places throughout this announcement and include
statements regarding the intentions, beliefs or current
expectations of Directors and senior management concerning, amongst
other things, the results of operations, financial condition,
liquidity, prospects, growth, strategies and the businesses
operated by the Group. The Directors do not undertake any
obligation to update or revise any forward-looking statements,
whether because of new information, future developments or
otherwise.
Final Results for the Year Ended 31 December 2022
Group Results - Trading Summary, Cashflow, Dividend and
Outlook
Grafton had a successful year and is reporting a strong
financial result ahead of market expectations. Despite
macro-economic challenges in its markets, the Group continued to
perform well with operating profit close to last year's record
result against a less favourable market backdrop.
Trading returned to more normal levels following the exceptional
rise in spending on the home during the pandemic and supply chain
pressures eased considerably. Building materials prices rose
sharply for the second successive year as the market absorbed
increases in the cost of producing energy intensive products.
Certain product categories including timber and steel experienced
price deflation following a period of soaring prices caused by a
spike in global demand.
Across all geographies, volumes were generally down in
residential repair, maintenance and improvement ("RMI") markets as
households reduced discretionary spending on the home under
pressure from declines in real disposable incomes and rising
interest rates. Activity in RMI markets was also affected by the
increased cost of building materials and rising labour costs which
reduced affordability.
We remained focused on delivering a strong performance and these
results show the strength of our businesses, brands and market
positions. In particular, they demonstrate the benefits of the
Group's spread of operations across multiple geographic markets and
sectors that has helped to create a more diversified and resilient
earnings base.
Distribution
Ireland
Chadwicks, the market leader in the distribution of building
materials in Ireland and the Group's most profitable business,
delivered a very strong performance. Revenue growth reflects both
building materials price inflation and the impact of acquisitions.
Operating profit grew strongly supported by an operating profit
margin of 11.4 per cent.
Demand was underpinned by residential RMI spending, the
construction of scheme and one-off houses and non-residential
construction projects.
The specialist Sitetech business acquired in February 2022, a
leader in the adjacent construction accessories new build market,
made an excellent contribution to profit.
UK
Volumes in the UK RMI market were down compared to the prior
year when there was a record level of spending on the home during
the pandemic and lower spending in other areas of the economy.
During 2022 households under pressure from increased energy and
food prices quickly reduced discretionary spending on smaller value
home improvements as the economy weakened and consumer sentiment
declined. Revenue in the like-for-like business ended the year only
marginally lower as a decline in volumes was largely offset by
double digit materials price inflation.
Operating profit was down when benchmarked against a strong
prior year result and the operating margin of 9.8 per cent
reflected gross margin pressure in a competitive market and the
operational gearing impact of lower volumes. Selco, which accounted
for almost three quarters of UK distribution revenue, continued to
invest in its business and branch network increasing it to 74.
The Netherlands
Isero, the market leading specialist ironmongery, tools and
fixings business, achieved excellent results for the year, in
broadly favourable markets. A strong underlying performance was
complemented by a good contribution from acquisitions and benefits
realised from implementing performance improvement measures. The
operating profit margin increased by 70 basis points to 11.2 per
cent. Market coverage expanded into the Northeast of the
Netherlands with the acquisition in January of the five branch
Regts business in Friesland which made a very good contribution to
profit and increased the overall branch network to 123.
Finland
IKH, the workwear, personal protective equipment, tools and
spare parts wholesaler acquired in July 2021, had a good first full
year under Grafton ownership delivering an operating profit
contribution that was in line with pre-acquisition expectations
despite more challenging market conditions. Revenue in the early
months of the year was down, on the pre-acquisition comparative
period, due to lower demand for a number of weather sensitive
product categories and weaker consumer sentiment following the
invasion of Ukraine but recovered in the second
half and ended the year strongly. The operating profit margin for the year was 14.2 per cent.
Retailing
Woodie's, the market leading DIY, Home and Garden business in
Ireland successfully navigated a unique set of trading conditions
in 2022 as exceptional pandemic related spending in the prior year
unwound and there was also pressure on volumes from the decline in
real disposable incomes and a sharp drop in consumer confidence.
Operating profit normalised to a level that was 43.9 per cent
higher than the pre-pandemic result for 2019. The operating profit
margin for 2022 was 13.3 per cent.
Manufacturing
CPI EuroMix, the market leader in the manufacture of mortar in
Great Britain, reported growth in revenue and a good increase in
operating profit. Volumes were softer in the final months of the
year as activity in the new housing market moderated and were
marginally down for the year.
StairBox, the market leading manufacturer of bespoke staircases
primarily for the secondary housing market, experienced record
demand from trade customers across Great Britain and increased
revenue and profitability.
The operating profit margin in the manufacturing segment was
22.7 per cent.
Cash Flow
The Group's cashflow from operations was GBP278.8 million of
which GBP208.9 million was returned to shareholders in dividend
payments and share buybacks (excluding the buyback on LTIP
awards).
Investment in capital expenditure and acquisitions amounted to
GBP103.8 million.
The Group had net cash (before IFRS 16 lease liabilities) of
GBP458.2 million at the year end, a decline of GBP129.8 million
from GBP588.0 million at 31 December 2021. Net cash including IFRS
16 lease liabilities was GBP8.9 million (31 December 2021: GBP139.0
million).
Property
The Group recognised property profits of GBP25.4 million (2021:
GBP16.7 million) in the year. A significant proportion of this
profit arose from a small number of freehold properties that were
retained following the sale in 2021 of the traditional merchanting
business in Great Britain. Disposal of three of these properties
generated cash proceeds of GBP26.2 million and realised a profit of
GBP19.9 million. In addition, a fair value gain of GBP5.0 million
was recognised on the remeasurement of a number of investment
properties to fair value under International Financial Reporting
Standards as adopted by the European Union ("IFRS").
Dividend
The Board is recommending a final dividend for 2022 of 23.75p
per ordinary share in line with its progressive dividend policy. An
interim dividend of 9.25p per share was paid on 7 October 2022. The
total dividend for the year is 33.0p per share, an increase of 8.2
per cent on dividends of 30.5p paid for 2021.
The total dividend for 2022 of 33.0p is 2.9 times (2021: 3.0
times) covered by adjusted earnings per share of 96.6p and is in
line with guidance for cover of between two and three times. This
reflects the Group's very strong balance sheet, profitability and
cashflow from operations for the year.
The Group's cash outflow on dividends paid during the year was
GBP73.9 million. A liability has not been recognised at 31 December
2022 for the final dividend as there was no payment obligation at
the year end.
The final dividend will be paid on 11 May 2023 to shareholders
on the Register of Members at the close of business on 14 April
2023, the record date. The ex-dividend date is 13 April 2023. The
final dividend is subject to approval by shareholders at the Annual
General Meeting to be held on 4 May 2023.
Share Buyback
In line with the Group's disciplined approach to capital
allocation and supported by its strong financial position , 12.28
million ordinary shares in the Company were repurchased on the
London Stock Exchange for cancellation between 9 May 2022 and 12
September 2022 at a total cost of GBP100 million, excluding
transaction costs, and an average price of GBP8.14 per share. This
represented 5.1 per cent of the issued share capital of the Company
(excluding treasury shares) when the programme commenced. A second
share buyback programme for a maximum consideration of up to GBP100
million, subject to the limitations of the shareholders authority
granted at the AGM of the Company in April 2022, was launched on 10
November 2022. Between 10 November 2022 and 31 December 2022, 4.4
million shares were repurchased for cancellation at a total cost of
GBP35.0 million , excluding transaction costs . Since the year end
and up to and including 28 February 2023, the number of shares
repurchased in the second buyback programme increased by 3.0
million shares at a total cost of GBP27.5 million.
Allocation of Capital
Acquisitions have been an important part of the Grafton growth
story supporting entry into new markets and diversifying its
earnings base as well as increasing its presence in existing
markets. The Group has a long history of identifying, acquiring and
integrating businesses and a skilled and experienced acquisition
team to complete transactions.
Following receipt of the proceeds from the disposal of our
traditional merchanting business in Great Britain in December 2021,
we recognise that our balance sheet is very strongly positioned
with pre IFRS 16 net cash of GBP458.2 million at the year end. In
the medium term we are targeting to return to a more appropriate
level of financial leverage rather than holding net cash. We have
demonstrated over many years a disciplined approach to capital
allocation and our priority remains on deploying surplus capital
into generating acquisitive growth providing it makes good
strategic and financial sense. In 2022, the decline in valuations
in the public equity markets was not matched by a similar decline
in vendor expectations for businesses in private ownership and, as
a consequence, our acquisition activity was limited to three
bolt-on transactions costing GBP46.0m. We continue to actively
evaluate acquisition opportunities in our preferred geographies and
market segments that meet the Group's target rates of return over
the medium term.
With the decline in public equity valuations seen in 2022, the
Board felt that relative to other opportunities our own equity
represented an attractive investment rather than simply a return of
capital and, as noted above, it initiated a share buyback
programme. The size and timing of the programme was appropriate for
the delivery of value for shareholders whilst at the same time
leaving plenty of scope for acquisition opportunities. This buyback
programme, together with our progressive dividend policy, saw
GBP208.9 million returned to shareholders during the year. The
Board will continue to keep the allocation of capital under review
including share buybacks.
Implementing Our Sustainability Strategy
Sustainability remained a key priority on the Grafton Board
Agenda during the year. Rosie Howells joined the business in
September as the new Group Head of Sustainability to support
implementation of the sustainability strategy and to work with the
Group's businesses to drive continuing progress against key
sustainability objectives. We have today published our second
Sustainability Report which sets out in more detail our strategy
and achievements in 2022.
The strategy, Building a More Sustainable Future, is structured
on five priority areas: Planet, Customer & Product, People,
Community and Ethics. While there is still much to do, the
businesses demonstrated strong progress during 2022.
Planet
-- Achieved an 11 per cent reduction in Scope 1 and 2 CO2e per
GBP million of revenue. This was equivalent to a 3 per cent
reduction in absolute emissions.
-- Achieved 17 per cent reduction in operational waste relative
to revenue vs 2021 with 97 per cent diversion from landfill.
-- Progressed Scope 3 carbon assessment which will also be a priority in 2023.
Customer & Product
-- Rental, refurbishment and recycling offerings are available in a number of businesses.
-- Responsible timber sourcing is an important area of focus for
our distributor businesses and over 98 per cent of Selco's building
timber was FSC or PEFC certified.
People
-- Our Diversity and inclusion working group continued to
support our businesses to encourage an inclusive culture that
promotes diversity. Over 90 per cent of our colleagues in the UK
and Ireland completed the voluntary diversity information
questionnaire and 77 per cent answered all questions.
-- Woodie's is the first retailer to be accredited as a gold
investor in Diversity by the Irish Centre for Diversity following a
three year partnership. It recently achieved gender balance and is
now also reflective of national demographics on ethnicity, age and
LGBTQI+ status.
-- Our belief that 'there is nothing we do that is so urgent we
cannot do it safely' drove our health and safety programme across
our business and resulted in a reduction in the lost time incident
frequency rate by 8 per cent and a reduction in the severity rate
by 21 per cent.
Community
-- Grafton invested over GBP1.0 million in communities through
cash, volunteering and in-kind products and services including a
donation of over GBP250,000 to the Red Cross to support the Ukraine
appeal.
Ethics
-- A strong focus was placed on ethical business training
programmes and there was 92 per cent compliance with the business
conduct and ethics programme.
-- The Group's businesses continued to embed a supply chain
management system in partnership with an expert risk management
company.
Grafton's sustainability agenda is based on focusing on those
areas that are most material to the business and deliver tangible
results and outcomes that will make a real difference to its
stakeholders. The Group's sustainability programme informs both
longer term strategic investment decisions and day to day
operational decisions and recognises the positive connection
between sustainability and financial performance.
Colleagues
The Board would like to express its appreciation to colleagues
across the Group for their exceptional support and commitment to
customers and to each other. Their hard work, skill, and dedication
were essential to achieving a strong outturn in challenging
markets.
Outlook
The Group's portfolio of higher margin businesses is well
positioned to withstand short-term market conditions that may
impact demand in the year ahead. Grafton has an excellent position
with both market leading brands and geographic diversity as more
than half of revenues are now coming from outside the UK in
Ireland, Finland and the Netherlands.
Importantly, with a very strong balance sheet and net cash
before IFRS 16 leases, the Group is extremely well placed to invest
in future growth opportunities.
The fall in real disposable incomes will continue to weigh on
activity in the RMI market and project affordability will be
impacted by higher materials and labour costs. Interest rate
increases are expected to lead to a cooling of demand in new
housing markets as affordability reduces. These common themes are
likely to impact demand to varying degrees in individual
markets.
Despite these headwinds, we expect some important factors to
help mitigate some of the adverse effects on household spending and
the current economic outlook appears brighter than many feared in
the second half of last year. Strong labour markets with low levels
of unemployment and declining energy prices and inflation should
have a positive impact on consumer spending.
In the UK, housing RMI activity is expected to remain weak as
discretionary spending remains under pressure. House building is
also likely to slow as house builders respond to the cooling market
by reducing starts in response to lower demand.
In Ireland, the economy has proven resilient and is forecast to
grow at a more moderate pace which should support a good level of
consumer spending in the RMI and DIY markets. House completions are
expected to be held back by the decline in commencements and
concerns about the viability of new developments.
In the Netherlands, growth and volumes are expected to be
subdued with the housing market likely to remain softer due to
higher mortgage rates.
In Finland, IKH's exposure to a range of end use markets is
expected to help shield it from some of the effects of a mild
economic downturn and anticipated fall in house building, following
a period of strong growth.
2023 has commenced in line with our expectations. In general,
volumes are slightly lower than the same period last year and price
inflation is moderating.
Average daily like-for-like Group revenue increased by 0.7 per
cent in the period from 1 January 2023 to 19 February 2023. Average
daily like-for-like revenue declined by 1.6 per cent in the UK
Distribution business and by 0.1 per cent in the Ireland
distribution business. There was growth of 0.4 per cent in the
Netherlands and 6.3 per cent in Finland. Retailing grew average
daily like-for-like revenue by 2.4 per cent and Manufacturing by
12.6 per cent.
Notwithstanding the current economic conditions, the strength of
Grafton's businesses, its geographic diversity and balance sheet
leaves it well placed to continue to execute its strategy and to
respond to opportunities that emerge. The Group's objective is to
outperform in its chosen markets through the cycle. We will
allocate organic development capital appropriately to ensure that
the Group's brands can continue to support their customers and
strengthen their existing market positions . In addition, we aim to
further enhance our business portfolio in selective geographies to
support earnings progress and deliver sustainable returns for our
shareholders.
Operating Review - Continuing Operations
The Distribution businesses in the UK, Ireland, the Netherlands
and Finland contributed 84.2 per cent of Group revenue (2021: 81.9
per cent), Retailing 10.6 per cent (2021: 13.4 cent) and
Manufacturing 5.2 per cent (2021: 4.7 per cent).
The UK businesses contributed 41.4 per cent (2021: 43.4 per
cent) of Group revenue, Ireland 37.8 per cent (2021: 39.5 per
cent), the Netherlands 14.6 per cent (2021: 13.8 per cent) and
Finland 6.2 per cent (2021: 3.3%).
Distribution Segment
(84.2% of Group Revenue, 2021: 81.9%)
2022 2021**
GBP'm GBP'm Change*
Revenue 1,936.8 1,727.6 12.1%
Adjusted operating profit before property
profit 210.3 209.8 0.2%
Adjusted operating profit margin before
property profit 10.9% 12.1% (120bps)
Adjusted operating profit 235.6 221.8 6.3%
Adjusted operating profit margin 12.2% 12.8% (60bps)
------------------------------------------- -------- -------- ---------
*Change represents the movement between 2022 v 2021 and is based
on unrounded numbers
** The 2021 results for the distribution segment do not include
the traditional merchanting business in Great Britain that was
divested in 2021 and classified as discontinued operations.
UK Distribution generated 36.5 per cent (2021: 39.0 per cent) of
Group revenue, Irish Distribution 26.9 per cent (2021: 25.8 per
cent), Netherlands Distribution 14.6 per cent (2021: 13.8 per cent)
and Finnish Distribution 6.2 per cent (2021: 3.3 per cent).
UK Distribution
(36.5% of Group Revenue, 2021: 39.0%)
2022 2021**
GBP'm GBP'm Change*
Revenue 838.6 821.9 2.0%
Adjusted operating profit before property
profit 81.8 102.5 (20.2%)
Adjusted operating profit margin before
property profit 9.8% 12.5% (270bps)
Adjusted operating profit 106.2 113.0 (6.0%)
Adjusted operating profit margin 12.7% 13.7% (100bps)
------------------------------------------- ------ ------- ---------
*Change represents the movement between 2022 v 2021 and is based
on unrounded numbers
** The 2021 results for the UK distribution business do not
include the traditional merchanting business in Great Britain that
was divested in 2021 and classified as discontinued operations.
Revenue growth of 2.0 per cent comprises a decline of 2.0 per
cent in the like-for-like business and growth of 4.0 per cent from
acquisitions and new branch openings. Average daily like-for-like
revenue declined by 1.2 per cent.
New Selco and Leyland SDM branches contributed revenue of
GBP15.9 million and the acquisitions in Northern Ireland of the P.
McDermott & Sons branch in Omagh, acquired in 2021, and
Woodfloor Warehouse, acquired in 2022, contributed incremental
revenue in the year of GBP17.4 million.
Gross margin was down by 200 basis points reflecting a
normalisation of trading as the businesses reverted to a more
traditional trade and retail mix as well as the impact of
non-recurring inflation related stock gains realised in the prior
year, a more competitive trading environment with greater product
availability (compared to supply chain pressures in 2021 that
resulted in a shortage of core building materials) and investment
by Selco in pricing in a competitive market.
Adjusted operating profit before property profit declined to
GBP81.8 million (2021: GBP102.5 million) and the adjusted operating
profit margin, before property profit of 9.8 per cent, was 270
basis points lower than in 2021 due to the small decline in
like-for-like revenue, normalisation of the gross margin and
increased operating costs.
Selco Builders Warehouse ("Selco")
Revenue declined by a net 1.7 per cent comprising growth of 2.2
per cent from new branches (which are treated as part of
like-for-like operations on the first anniversary of opening) and a
decline of 3.9 per cent in the like-for-like branch network.
Revenue trends in 2022 developed against the backdrop of a
pandemic related surge in activity and record trading levels in the
first half of the prior year. Trading normalised in the second half
of 2021 as the high level of demand for building materials and
supply chain pressures gradually eased.
Significant price increases continued to come through from
suppliers as they passed on higher energy, commodity and raw
materials prices.
Average daily like-for-like revenue declined by 1.4 per cent in
the first half following the exceptional growth in the first half
of the prior year. Building materials' cost price inflation
averaged circa 17.0 per cent year-on-year in the first half. The
decline in first half volumes was circa 18.4 per cent. Average
daily like-for-like revenue declined by 4.9 per cent in the second
half. Building materials price inflation eased to 7.0 per cent and
the decline in volumes moderated to 11.9 per cent in the second
half. Average daily like-for-like revenue for the year was down by
3.1 per cent and volumes fell by 15.1 per cent.
Housing RMI volumes fell sharply as the economy weakened,
inflation climbed to the highest rate for 40 years, consumer
confidence remained weak and interest rates rose. Households were
also forced to change their spending patterns as they struggled to
adapt to soaring energy costs in the face of reduced real
disposable incomes and they cut back on discretionary spending.
Selco's trade customers are primarily engaged on small residential
RMI projects and volumes were also affected by the very sharp
increase in the cost of building materials for the second
successive year that reduced affordability and discretionary
spending on the home.
Demand was also affected by a post-pandemic shift away from
spending on improving indoor and outdoor living space, that drove
the rise in RMI activity in 2021, to spending on recreational,
travel and leisure activities. Households were less inclined to
spend on their homes with house price growth significantly
moderating and interest rates rising. Non-essential RMI spending on
the home was the part of the Selco market that was most exposed to
cutbacks on spending as homeowners opted to defer expenditure until
visibility on the prospects for the economy and for their personal
finances improved. Branches in London and the South East performed
more strongly than those in the regions.
Gross margin was down by 200 basis points on the prior year,
which had benefitted from a more favourable customer and product
mix and inventory gains during a period of rising prices and supply
chain pressures. Selco invested in price on core products in a more
competitive market that struggled to immediately absorb the
combined effect of high building materials price inflation being
passed on to customers and falling volumes.
Overall costs were very tightly controlled notwithstanding
inflationary pressure on payroll costs in a very tight labour
market and increased rents on a number of branch properties that
were subject to five yearly reviews.
Operating profit was down on the record result achieved in the
prior year due to the sharp decline in volumes, that were partly
offset by inflation, and contraction in the gross margin in a very
competitive market.
The branches that were opened in 2021 in Canning Town and
Rochester substantially outperformed plan. Selco's long-established
presence in the South West, where it trades from two branches in
Bristol, was extended with the opening of a branch in Exeter in
April and one in Cheltenham in December that increased the estate
to 74 branches. A new branch in Peterborough will open in April
2023. Given the weaker growth outlook for the UK economy and the
difficulties experienced by developers in funding new projects we
have reassessed Selco's plans for the rollout of its new stores
which had targeted an increase in the estate to 100 by 2026. Our
current plans envisage a store estate of approximately 80-90 stores
over the medium term.
Selco provides a flexible omni-channel offering to trade
customers who can enjoy the benefits of a wide range of products in
stock, excellent customer service and competitive trade pricing.
Stores are at the heart of the omni-channel experience and serve as
a competitive advantage for how the majority of our customers want
to shop today. Selco is engaged in an ongoing store upgrade
programme that delivers a better experience for customers and
colleagues and ensures that the overall estate is maintained to a
good standard. During the year it completed major upgrades to the
Kingsbury, Cardiff and Baguley stores and mini upgrades to nine
other stores.
Selco made a significant investment in recent years upgrading
its online platform and website and continued its digital journey
with the recent launch of a new App that provides further
flexibility, improved functionality and new features that enable
customers to more easily purchase building materials. Digital sales
accounted for 5.1 per cent of revenue and approximately 80 per cent
of on-line orders were fulfilled through deliveries from branches
and delivery hubs.
Preparatory work was completed on upgrading the Microsoft
Dynamics 365 finance and operations ERP system to a version that
incorporates the latest technology. The upgrade was successfully
tested and trialled in three branches before the year end and
deployment in the Corporate Office and remainder of the branch
network has commenced.
Selco implemented a range of initiatives in recent years to
enhance the colleague experience and work environment for its 3,000
colleagues and was recognised as one of the best places to work in
the UK and ranked in 17(th) position in the large company category
by colleagues who participated in the Best Companies engagement
survey.
An initiative to offset Selco's carbon footprint was launched
with the planting of more than 100,000 trees near Jedburgh in the
Scottish Borders in 2021 and as part of Selco's ongoing commitment
to create a sustainable business it joined with the landowner and a
key timber supplier in the planting of 160,000 trees on 60 hectares
of land located near Llandrindod Wells in Wales. In another move to
reduce carbon emissions, the process to transition the entire fleet
of over 300 forklift trucks (as they come up for replacement over
the coming years) commenced with the purchase of 28 electrically
powered forklift trucks.
A new gas management system to optimise energy usage and reduce
carbon emissions was implemented across the branch estate. Selco is
also exploring energy generation opportunities across the estate
and completed a successful trial of solar panels on the roof of the
Barking branch. In addition, seven Compressed Natural Gas (CNG)
vehicles are currently in operation with plans to introduce a
further three in the new delivery hub in Birmingham. All delivery
vehicles in the two delivery hubs are now fuelled by lower carbon
emission HVO rather than diesel.
Leyland SDM
Footfall in Leyland SDM, London's largest specialist decorators'
and DIY business, started to gradually recover in the early months
of the year as visitors and workers began to return to the city.
These groups are key drivers of RMI activity in the leisure and
office sectors. Average daily like-for-like revenue grew by 2.0 per
cent in the first half and picked up as the year developed
exceeding 10.0 per cent in the fourth quarter driven by inflation
and a return to volume growth.
Revenue in the Clapham Junction, Dulwich and Bayswater stores
that were opened last year was in line with plan.
A decline in the gross margin and increased costs contributed to
a decline in operating profit.
MacBlair
The MacBlair distribution business in Northern Ireland operated
at a more normalised level of activity following a record result in
the prior year that benefitted from exceptional pandemic related
spending on housing RMI.
Building materials' price inflation offset a decline in volumes
and average daily like-for-like revenue was flat for the year.
Transactions with retail customers declined from the exceptional
level in the prior year which saw record spending by households on
home and garden improvement and maintenance projects. The decline
in RMI revenue was offset by an increase in house building, a
market that was subdued in the early months of the prior year
before gradually recovering. Self-build customers, developers of
small housing schemes and timber frame house manufacturers
generated good growth in revenue.
There was a decline in the gross margin in the like-for-like
business because of the fall in higher margin collected
transactions with retail customers and an increase in the volume of
core building materials delivered to house builders' sites.
The branch in Omagh acquired in December 2021 was integrated
into the MacBlair branch network and procurement arrangements were
aligned. In February 2022, MacBlair acquired Woodfloor Warehouse, a
leading on-line distributor of timber flooring in Great Britain,
Northern Ireland and the Republic of Ireland. It also operates
branches in Bangor, Belfast and Warrington. Revenue was down on the
pre-acquisition level because of a decline in on-line revenue
transactions with retail customers in Great Britain, in a weaker
RMI market, that accounts for a significant proportion of
activity.
Operating profit was down on the prior year including
contributions from the two acquisitions and a high single digit
operating profit margin was reported for the enlarged business.
TG Lynes
TG Lynes, a leading distributor of commercial pipes and fittings
principally in London, performed very strongly in what was a record
year for the business with excellent growth in revenue and
operating profit. Operating profit saw a continuation of a trend of
strong growth since the business was acquired by Grafton in
2015.
TG Lynes continued to improve its market position, increasing
volumes with subcontractors to the national housebuilders. Volumes
were also higher from the post pandemic recovery in the upgrading
of schools and hospitals. Investment also increased in the hotel,
leisure, retail and office sub-sectors of the market. New build
projects with long lead times account for two-thirds of revenue and
were not immediately impacted by the downturn in the economy.
Voice picking technology was successfully trialled in the
warehouse in Enfield and will go live in the first quarter of this
year. It will provide an optimal path for picking orders, reducing
errors and increasing warehouse efficiency.
The installation of solar panels in the prior year reduced the
carbon footprint by generating the equivalent of two thirds of the
electricity required to operate the business and lowered demand for
energy from the national grid.
Irish Distribution
(26.9% of Group Revenue, 2021: 25.8%)
Constant
2022 2021 Currency
GBP'm GBP'm Change* Change*
Revenue 618.3 544.3 13.6% 14.4%
Adjusted operating profit before property
profit 70.5 66.8 5.5% 5.7%
Adjusted operating profit margin before
property profit 11.4% 12.3% (90bps) -
Adjusted operating profit 71.5 68.2 4.7% 0.6%
Adjusted operating profit margin 11.6% 12.5% (90bps) -
------------------------------------------- ------ ------ ---------- ----------
*Change represents the movement between 2022 v 2021 and is based
on unrounded numbers
Chadwicks' distribution business in Ireland produced a very
strong performance for the year as trading returned to more normal
levels following the pandemic. Revenue growth was driven by
building materials' price inflation and a significant contribution
from acquisitions. Volumes declined in the second half as increased
costs of materials and labour alongside subdued demand led
construction businesses to scale back activity.
Supply chain pressures eased in line with activity levels, but
the rate of inflation remained elevated for core building materials
including insulation, plasterboard, cement and plastic products
driven by higher raw materials and energy prices. A fall in steel
and timber prices, partly reversed prior year increases due to the
post pandemic spike in demand internationally. Building materials
cost price inflation averaged 14.7 per cent for the year.
Average daily like-for-like revenue growth of 41.9 per cent in
the first quarter was very strong even adjusting for weaker trading
in the first quarter of the prior year when branches remained open
albeit at a time when much of the construction sector was not
operating due to pandemic related restrictions. The rate of average
daily like-for-like growth eased in the second quarter to 4.3 per
cent against a very strong prior year performance that benefitted
from the rapid recovery in activity and pent-up demand following
the lifting of restrictions. Overall growth in average daily
like-for-like revenue was 19.5 per cent in the first half. Very
strong activity in the first half gave way to a slowdown in second
half trading with average daily like-for-like growth easing to 2.1
per cent and averaging 10.3 per cent for the year.
Volumes of core building materials recovered from reduced levels
caused by the closure of house building sites in the first quarter
of the prior year. Demand for hardware products, landscaping
materials and paint were lower following exceptional demand from
retail customers undertaking housing RMI projects during the
pandemic.
The gross margin was down on the prior year due to changes in
the mix of revenue including a lower proportion of revenue from RMI
transactions with retail customers and an increase in the
proportion of revenue delivered to trade customers. There was also
a time lag in the recovery of materials price increases due to
competitive pressure in the market. The sharp fall in steel and
timber prices reduced margins on inventory, partly reversing the
gains made in the prior year when prices were rising sharply.
Housing transaction volumes are estimated to have increased by
circa six per cent in 2022 to 63,000 representing almost three per
cent of the housing stock in a market that was very illiquid by
international standards. New house completions contributed to
growth in transactions increasing to an estimated 29,900 units, up
from 20,400 in 2021 when output was reduced by Covid 19
restrictions. There was a major increase in apartment completions
which rose by 79 per cent to account for half of total completions.
Growth in housing scheme units was 42 per cent and the number of
one-off house completions increased by 17 per cent, both of which
are significant markets for Chadwicks.
The number of housing units on which construction commenced
slowed during the year with the decline in apartment construction
impacted by the increase in construction costs, planning
constraints and securing project finance. The availability of land
and construction capacity contributed to a fall in the commencement
of housing schemes and increased costs also weighed on the
construction of one-off houses that are typically constructed in
non-urban areas.
The Proline Architectural Hardware ("Proline") business acquired
in February 2021 outperformed plan and produced an excellent result
for its first full year under Chadwicks ownership that was
complemented by introducing a range of Proline products in 28
Chadwicks branches.
The Sitetech construction accessories business acquired at the
end of February 2022, traded well ahead of expectations, and made
an excellent profit contribution in the ten months post
acquisition, in addition to providing Chadwicks with a strong
presence in a complementary segment of a market where Sitetech is
the market leader. Sitetech collaborated with Chadwicks and
provided access to complementary products and the expertise and
colleague training required to generate incremental revenue.
Chadwicks completed major upgrades to its Bray, Coolock and
Kilkenny branches that facilitated the introduction of a number of
new product ranges. ECO Centres were opened in 10 branches that
supply a range of energy efficient products including insulation,
airtightness, ventilation systems, heat pumps and controls, solar
energy and water-saving products. This initiative takes a
sustainability first approach to creating better buildings and
helps support the grant-aided retrofit programme in Ireland that
targets energy upgrades to a quarter of the national housing
stock.
Chadwicks new transactional website offers over 10,000 products
to trade and retail customers with delivery and collection options
from 37 locations nationwide. The new website has increased
customer engagement and provided the flexibility and convenience to
trade on-line combined with the knowledge and expertise they
receive dealing with their local Chadwicks branch.
Chadwicks digital strategy has created greater mobility for
colleagues so they can operate digitally throughout branches while
delivering greater flexibility in how they engage with customers.
The rollout of a delivery transport system has created efficiencies
from improving transport planning, route optimisation, customer
service and communications.
Netherlands Distribution
(14.6% of Group Revenue, 2021: 13.8%)
Constant
Currency
2022 2021 Change*
GBP'm GBP'm Change*
Revenue 336.7 290.5 15.9% 16.8%
Adjusted operating profit 37.6 30.5 23.2% 24.3%
Adjusted operating profit margin 11.2% 10.5% +70bps -
---------------------------------- ------ ------ -------- ----------
*Change represents the movement between 2022 v 2021 and is based
on unrounded numbers
Isero produced excellent results for the year, in broadly
favourable markets, that included a good contribution from
acquisitions and benefits realised from implementing performance
improvement measures.
The business has steadily grown in recent years to become the
clear market leader in the ironmongery, tools and fixings
distribution market in the Netherlands. It has acquired 82 branches
and opened seven in the period since Grafton acquired Isero in late
2015 and now trades from 123 branches.
Year-on-year revenue trends were not impacted by the pandemic as
the business was treated as an essential distributor and remained
open throughout 2021. First half volumes were flat and with
inflation contributing growth of 7.5 per cent in average daily
like-for-like revenue. Second half average daily like-for-like
revenue growth of 10.4 per cent included a small increase in
volumes.
Revenue increased from key account customers engaged on large
commercial construction projects, including apartment building and
the maintenance of public sector housing. Isero also improved its
market position in the supply of hinges and locks to timber
factories where its end-to-end service proposition is a
differentiator. Transaction numbers with smaller customers engaged
in housing RMI projects were lower. This segment of the market
performed strongly last year as households increased spending on
home improvement projects during the pandemic. Revenue also
increased from value added solutions that use technology to
efficiently replenish inventory levels in containers located on the
sites of customers engaged on large construction projects and in
the vans used by Housing Corporations for maintenance services.
There was a strong advance in operating profit from growth in
like-for-like revenue and a higher gross margin that reflected
inflation related inventory gains and improved procurement
arrangements. These growth components helped deliver an improvement
in the operating profit margin of 70 basis points. Payroll costs
also increased in a tight labour market.
The number of transactions in existing homes dropped for the
second successive year as affordability, that was already stretched
by average house prices increasing by almost a third since early
2020, deteriorated further. The new housing market was also under
pressure as forward sales declined and the number of building
permits issued continued to fall.
Organic revenue growth was complemented by a significant
contribution from acquisitions that increased overall constant
currency revenue by 16.8 per cent. The five branch Regts B.V.
("Regts") business in Friesland acquired in January 2022 extended
Isero's coverage into the Northeast region of the Netherlands and
outperformed plan. Good progress was made harmonising its portfolio
of products and aligning procurement arrangements.
The two branches in Rotterdam that we relocated last year to
higher profile locations and the new branch in Lelystad, a growth
city in the centre of the Netherlands, performed well. The new
branch that was opened in Zaandam, just north of Amsterdam, also
got off to a strong start. The branch in Gouda was relocated and
five branches were upgraded including three of the four Govers
branches acquired in April 2021. Further automation measures were
implemented in the Waddinxveen distribution centre to improve
handling efficiency.
Isero continued to implement solutions to reduce carbon
emissions focusing on the installation of LED light fittings in
several branches as part of an ongoing upgrade programme and, with
the cooperation of landlords, solar panels and heat pumps were
installed in six branches. A new circular model was trialled to
extend the lifetime of colleague and customer PPE and certain other
products through repair and reuse.
Finland Distribution
(6.2% of Group Revenue, 2021: 3.3%)
Constant
Currency
2022 2021 Change*
GBP'm GBP'm Change*
Revenue 143.2 70.8 102.2% 101.7%
Operating profit 20.3 10.0 104.2% 103.7%
Operating profit margin 14.2% 14.1% +10bps -
------------------------- ------ ------ -------- ----------
*Change represents the movement between 2022 v 2021 and is based
on unrounded numbers.
IKH, one of Finland's largest workwear and personal protective
equipment ("PPE"), tools and spare parts wholesalers, operates in
an attractive segment of the technical trades' distribution market
in Finland. It was acquired by Grafton on 1 July 2021 and performed
in line with expectations in its first full year as part of the
Group.
First half revenue was down on the pre-acquisition level in the
prior year as milder than normal weather conditions in the early
months of the year reduced demand for a number of seasonally
sensitive product categories and trading was also affected by the
sharp drop in consumer confidence following the invasion of Ukraine
by Russia which shares a long land border with Finland. Trading
improved in May and June following the slow start to the year.
Average daily like-for-like revenue increased by 5.4 per cent in
the second half as a recovery in demand that developed in the third
quarter gained further impetus in the final months of the year
supported by generally resilient activity.
IKH products are distributed through a network of independently
operated IKH partner stores, the strategic cornerstone of the
model, third party distributors and owned stores operated from
complementary locations. These three routes to market provide a
balanced channel exposure and are good touchpoints to support
customers operating in the construction, renovation, industrial,
agricultural and spares end markets. These channels were
strengthened with the appointment of new partners in Joensuu,
Finland's 12(th) largest city, and in the towns of Raahe and Jamsa.
The three new partners will enable IKH to increase geographic
coverage of the market in the central region of Finland. Exports to
Estonia increased and IKH's partner in the country will open a new
store in Tallinn in March 2023.
The new IKH store in Hämeenlinna, a city located 100 kilometres
north of Helsinki, that opened at the end of 2021 started to build
market share. In November, IKH opened its 12(th) own store in
Rovaniemi, the capital city of Lapland in Northern Finland.
The new housing market has been strong in recent years in
response to good demand from consumers and investors. There was a
record number of housing starts in 2021 and construction work
continued on these projects and house building had a good year with
a significant increase in investment. The number of building
permits issued for new homes dropped considerably as mortgage rates
and construction costs increased and the housing market started to
return to more normal levels of activity. Residential RMI activity
was underpinned by good demand for building services renovations
and increased energy related projects in apartment buildings and
single housing units. The weakening economy, higher costs, lower
yields and uncertainty slowed new non-residential construction
projects.
IKH participated in the Great Place to Work colleague engagement
survey for the first time and exceeded the threshold for
recognition as a Great Place to Work in Finland.
Retail Segment
(10.6% of Group Revenue, 2021: 13.4%)
Constant
Currency
2022 2021 Change*
GBP'm GBP'm Change*
Revenue 244.0 282.8 (13.7%) (13.0%)
Operating profit 32.6 50.9 (35.9%) (35.5%)
Operating profit margin 13.3% 18.0% (470bps) -
------------------------- ------ ------ --------- ----------
*Change represents the movement between 2022 v 2021 and is based
on unrounded numbers
Revenue in Woodie's DIY, Home and Garden business in Ireland
normalised, as expected, following exceptional pandemic related
constant currency growth of 19.4 per cent in 2021 when Woodie's was
treated as an essential retailer and continued to trade during the
early months of the year while the country was in lockdown. The
normalisation of trading was concentrated over the first half which
saw revenue decline by 22.8 per cent.
Revenue trends were broadly stable in the second half despite
weak consumer sentiment as cost-of-living pressures caused
households to increase spending on essentials including energy and
to cut back on discretionary spending. Consumers also continued to
spend more on leisure activities and experiences and less on other
areas, including DIY, home and garden, that boomed during the
pandemic.
Woodie's had to navigate a unique set of trading conditions in
2022 as exceptional spending in the prior year unwound and real
disposable incomes declined as inflation reached its highest level
in almost four decades. The business was resilient and as market
leader Woodie's was well placed to leverage its competitive
advantage to support customers engaged in a broad range of DIY,
home and garden projects.
A significant proportion of the revenue gains made in the prior
year were maintained and there has been a step change in the
performance of Woodie's since 2019. Revenue increased by 18.7 per
cent from GBP205.5 million in 2019 and operating profit by 43.9 per
cent from GBP22.6 million. This is a better gauge of Woodie's
performance and of the progress made from a clear and consistent
focus on colleagues, customers and products.
Woodie's provides on-line and in-store channels for its
customers while differentiating the service and experience of
shopping in its stores. On-line was 3.4 per cent of revenue (2021:
2.9 per cent). The Woodie's website is also used as a powerful
opportunity to engage with customers and enable them to locate and
research products that they purchase in-store. Woodie's has a
strong presence on several social media platforms that are becoming
the primary channels to communicate with customers and increase
brand visibility.
Woodie's was recognised as A Great Place to Work for the seventh
consecutive year. It was ranked 11th in Ireland's and 41st in
Europe's Best Workplaces benchmarked against the largest
international and domestic employers. Putting people first has been
central to Woodie's success in recent years and it continued to
measure and improve colleague engagement against a range of
metrics. Woodie's became the first retailer and the eighth
organisation to ever achieve a Gold Investors in Diversity
accreditation from the Irish Centre for Diversity
The number of transactions declined by 12.2 per cent and the
combined net effect of investment in pricing in certain categories,
changes in the average basket value from customers purchasing fewer
higher value seasonal products and inflation reduced revenue by 0.8
per cent. Revenue declined across all categories except gardening
which performed very strongly.
Gross margin trends that developed in the first half of the year
continued through the second half with changes in product mix,
increased promotional activity, particularly for seasonal ranges,
and higher shipping and freight costs contributing to a
decline.
There was upward pressure on energy and property costs, but the
overall cost base was tightly controlled and was down on the prior
year as some of the additional capacity put in place to support
exceptional customer demand in 2021 was withdrawn.
Energy usage declined by 14 per cent following the upgrade of
store lighting, the implementation of new digital controls and a
colleague education programme on energy efficiency .
Woodie's continued its engagement with communities in Ireland
raising over EUR400,000 for four charities through its annual
Heroes campaign that has raised almost EUR3.0 million over the past
eight years.
Manufacturing Segment
(5.2% of Group Revenue, 2021: 4.7%)
Constant
Currency
2022 2021 Change*
GBP'm GBP'm Change*
Revenue 120.6 99.6 21.1% 21.2%
Operating profit 27.4 24.0 13.9% 13.9%
Operating profit margin 22.7% 24.1% (140bps) -
------------------------- ------ ------ --------- ----------
*Change represents the movement between 2022 v 2021 and is based
on unrounded numbers
The CPI EuroMix business that mainly supplies mortars to
national, regional and local house builders and plastering
contractors from ten plants in Great Britain performed strongly
with revenue growth of 22.3 per cent driven by a surge in the price
of raw materials and other input costs. Volumes for the year were
very marginally down as low single digit growth in silo mortar,
that accounted for 90 per cent of output, was offset by a decline
in the sale of bagged mortar products supplied to the residential
RMI market.
Silo mortar volumes recovered strongly in the first quarter with
double digit growth on the prior year when house building was
disrupted by the pandemic. Second quarter silo mortar volumes were
marginally lower against a very strong comparator that benefitted
from an increase in house building as restrictions were lifted.
First half volumes in a few plants were also impacted by supply
chain disruption from shortages of cement, sand and limestone and
scheduled works to replace or upgrade production equipment.
Overall, second half silo mortar volumes were flat as third
quarter growth was offset by a decline in the fourth quarter. House
building slowed in the final months of the year as house builders
began to scale back activity in response to a drop in weekly sales
rates, a rise in cancellations and lower forward sales. Demand for
new houses was affected by interest rate rises.
Demand was well down for ready-to-use bagged mortars and
concrete supplied to the housing RMI market compared to the
exceptional pandemic related demand in the prior year. Destocking
by customers and increased pressure on discretionary spending on
the home by end customers as the year progressed also weighed on
volumes.
There was a good advance in operating profit on the prior year
following the recovery of materials price inflation in the second
half and the operating margin was maintained at 20.0 per cent.
CPI EuroMix is at an advanced stage in planning for the
implementation later this year of a new ERP system that will
support all areas of the business, increase visibility of its daily
operations and provide real-time information and increased
functionality that should allow it to better support the needs of
all of its stakeholders.
The number of locations using lower carbon cement was increased
to seven plants from three in 2021 and we continued to engage with
a partner on even lower carbon cement alternatives that are in the
very early stages of research and development. Solar panels were
installed at four locations to reduce energy demand from the
national grid. A trial was conducted at one plant on fuelling
vehicles with HVO (Hydrotreated Vegetable Oils) instead of fossil
fuels. The business is also engaged on an ongoing research project
with its vehicle manufacturer concerning electric powered tractor
units used to refill silos on customers sites with dry mortar
materials. Carbon emissions from mortar delivery vehicles were
offset through the planting and maintenance of 30 hectares of
woodland with 80,000 trees in Dumfries, Scotland which is
accredited and registered under the Carbon Code.
StairBox, the market leading manufacturer of bespoke staircases
primarily for the secondary housing market, reported revenue growth
of 18.9 per cent to GBP31.3 million (2021: GBP26.3 million). The
increase in revenue was sustained by volume growth of 7.4 per cent
and raw materials price increases. Despite the decline in activity
in the residential RMI market, StairBox experienced record demand
from trade customers across Great Britain. Operating profit
increased by 9.2 per cent to GBP9.8 million (2021: GBP9.0 million),
an operating margin of 31.3 per cent (2021: 34.2 per cent).
StairBox continued to develop its state-of-the-art staircase
manufacturing technology including a major update to its factory
management software that improved the efficiency of the
manufacturing and assembly processes. The StairBuilder on-line
stairs designer software was updated to include further design
features that were well received by customers. These developments
helped StairBox to continue to win a very high level of customer
trust and confidence in the quality of its bespoke staircases and
service.
StairBox successfully relocated its assembly operations to a
nearby leased property that provides additional capacity for the
overall operation following exceptional growth in volumes in recent
years and secures the future of its manufacturing capability in
Stoke-on-Trent.
Financial Review
Revenue
Group revenue from continuing operations increased by 9.1 per
cent to GBP2.30 billion from GBP2.11 billion in 2021.
Revenue in the like-for-like business increased by 2.4 per cent
(GBP48.3 million) on the prior year.
The acquisition of IKH in Finland in July 2021 and a number of
bolt-on transactions in Ireland, the UK and the Netherlands,
contributed revenue of GBP134.4 million. New Selco and Leyland SDM
branches in the UK, one new branch in the Netherlands and two new
branches in Finland contributed an additional GBP17.8 million of
revenue in the year.
Currency translation reduced revenue by GBP7.9 million and the
closure of a single branch in Ireland on expiry of a lease reduced
revenue by GBP1.1 million.
Adjusted Operating Profit
Adjusted operating profit from continuing operations of GBP285.9
million was down marginally from GBP288.0 million last year. This
included a non-recurring pension scheme curtailment gain of GBP3.7
million.
Adjusted operating profit before property profit and before the
pension scheme curtailment gains was GBP256.8 million, down by 5.3
per cent from last year's record result of GBP271.2 million. The
adjusted operating profit margin before property profit and the
pension scheme gain declined by 170 basis points to 11.2 per
cent.
Net Finance Income and Expense
The net finance expense declined to GBP12.6 million (2021:
GBP19.4 million). This charge includes an interest charge of
GBP14.9 million (2021: GBP14.6 million) on lease liabilities
recognised under IFRS 16.
Interest income on cash deposits amounted to GBP8.7 million
(2021: GBP0.2 million). The Group had cash deposits of GBP467.0
million at the year-end that were denominated in sterling. Returns
on these deposits increased as the year developed to reflect the
eight occasions that the Bank of England raised rates from 0.25 per
cent at the start of the year to 3.5 per cent at the year end.
Interest payable on bank borrowings denominated in euros and US
Private Placement Senior Unsecured Notes fell to GBP5.6 million
(2021: GBP6.2 million). The decline was due to lower average debt
and a lower interest rate payable on part of the bank debt borrowed
under the ECB's Targeted Longer-Term Refinancing Operations. This
was partly offset by a higher interest rate payable on the
remainder of the bank debt following four increases by the European
Central Bank in its key interest rate from zero per cent to 2.5 per
cent in the second half of the year.
The net finance expense included a foreign exchange translation
loss of GBP0.7 million which compares to a gain of GBP1.7 million
in the prior year.
Taxation
The income tax expense of GBP43.1 million (2021: GBP43.0
million) is equivalent to an effective tax rate of 17.1 per cent of
profit before tax (2021: 17.2 per cent). This is a blended rate of
corporation tax on profits in the four countries where the Group
operates.
Certain items of expenditure charged in arriving at profit
before tax, including depreciation on buildings, are not eligible
for a tax deduction. This factor increased the rate of tax payable
on profits above the headline rates.
The tax rate is expected to increase to 20.1 per cent in 2023
and in the medium term, based on expectations of the balance of
profitability across the Group and tax rates, is anticipated to
increase to a little over 22 per cent.
Cashflow
Cash generated from operations for the year was GBP278.8 million
(2021: GBP303.2 million). There was an investment of GBP71.3
million into working capital. The increase in stock was a
reflection of both inflation and our trading strategy to increase
product availability for customers during the year at a time of
rising prices. Similarly, the increase in trade debtors reflects
inflation as well as an increasing proportion of trade customers
relative to cash customers as activity normalised during 2022.
Interest paid amounted to GBP21.9 million (2021: GBP20.5
million) which included IFRS 16 lease interest of GBP14.9 million
(2021: GBP14.6 million). Taxation paid was GBP39.5 million (2021:
GBP43.7 million). Cashflow from operations after interest and
taxation payments was GBP217.3 million (2021: GBP239.0
million).
There was a cash outflow of GBP46.0 million on completion of the
Sitetech acquisition in Ireland, the Woodfloor Warehouse
acquisition in Northern Ireland and the Regts acquisition in the
Netherlands. The outlay on capital expenditure and computer
software was GBP57.8 million (2021: GBP44.4 million).
The cash outflow on the dividend payment (GBP73.9 million) and
buyback of shares (GBP135.0 million) amounted to GBP208.9 million
(2021: GBP84.9 million).
Capital Expenditure and Investment in Intangible Assets
Grafton continued to maintain tight control over capital
expenditure which amounted to GBP55.3 million (2021: GBP43.6
million). Expenditure of GBP2.5 million (2021: GBP0.8 million) was
incurred on computer software that is classified as intangible
assets.
Asset replacement capital expenditure of GBP33.2 million (2021:
GBP24.6 million) compares to the depreciation charge on property,
plant and equipment of GBP34.2 million (2021: GBP38.3 million).
This related principally to the replacement of fixtures and
fittings, plant and machinery, forklifts, plant and tools for hire
by customers and other assets required to operate the Group's
branch network.
Development capital expenditure of GBP22.1 million (2021:
GBP19.0 million) was incurred on a range of initiatives that
provide a platform for future growth including new branches in
Selco, Isero and IKH; upgrades to Chadwicks and Isero branches; as
well as investment in IT hardware.
The proceeds from the disposal of property, plant and equipment
increased to GBP28.5 million (2021: GBP22.2 million). The disposal
of three freehold properties retained following the sale of the
traditional merchanting business in Great Britain generated cash
proceeds of GBP26.2 million and realised a profit of GBP19.9
million.
Pensions
The IAS 19 defined benefit pension schemes had a net deficit of
GBP10.5 million at the year end, down by GBP1.0 million on the net
deficit of GBP11.5 million on 31 December 2021.
Changes to financial assumptions reduced scheme liabilities by
GBP98.1 million reflecting the net impact of a gain from the
increase in discount rates and a loss from the increase in
inflation expectations. Changes in demographic assumptions
increased scheme liabilities by GBP2.9 million and experience
variations increased liabilities by GBP2.4 million. The net impact
was a reduction in the liabilities of the schemes by GBP92.8
million.
The increase in discount rates used to discount scheme
liabilities moved in line with increases in corporate bond rates.
The rate used to discount UK liabilities increased by 290 basis
points to 4.8 per cent and the rate used to discount Irish
liabilities increased by 255 basis points to 3.7 per cent. These
movements reduced scheme liabilities by GBP108.0 million.
Inflation rates increased, particularly in relation to the Irish
schemes, over the past year and this impacted the value of
liabilities as future benefit payments from the pension plans are
directly or indirectly linked to future inflation. This was
particularly relevant to the UK scheme where inflation both in the
period up to and after retirement increases the projected growth in
benefits. In Ireland, pensions are fixed at the date members retire
with inflation increasing liabilities only up to that date.
There was a loss on plan assets of GBP97.8 million due to the
fall in the values of liability driven investments, bonds and
equities that was almost matched by the reduction in
liabilities.
Asset experience losses in the UK scheme were greater than the
reduction in liabilities and this was the main contributor to the
scheme deficit increasing from GBP0.7 million to GBP14.2 million.
In Ireland, asset experience losses were materially less than gains
from the reduction in liabilities resulting in a significant
improvement in the financial position of the schemes. There was
also a once-off gain of GBP3.7 million (before costs) from closing
one of the schemes to future accrual. These factors mainly
contributed to the schemes in Ireland moving from a deficit of
GBP9.9 million to a surplus of GBP4.6 million.
There was a scheme deficit of GBP0.8 million (31 December 2021:
GBP0.8 million) related to the Netherlands business.
Following divestment of the traditional distribution business in
Great Britain, Grafton retained responsibility for the UK defined
benefit pension scheme which was closed to future accrual at the
end of 2020 when alternative arrangements were put in place.
Net Cash/Debt
Net cash (including IFRS 16 lease obligations) at 31 December
2022 was GBP8.9 million which compares to GBP139.0 million at 31
December 2021. The proceeds on the sale of the Traditional
Merchanting Business in Great Britain for an enterprise value of
GBP520.0 million were received on 31 December 2021.
The Group's net cash position, before recognising IFRS 16 lease
liabilities, was GBP458.2 million, down from GBP588.0 million at 31
December 2021.
The Group's policy is to maintain its investment grade credit
rating while investing in organic developments and acquisition
opportunities. The Group has a progressive dividend policy with an
objective of maintaining dividend cover at between two and three
times earnings.
Liquidity
Grafton ended the year in a very strong financial position with
excellent liquidity, net cash before IFRS 16 lease liabilities and
a robust balance sheet.
The Group had liquidity of GBP934.6 million at 31 December 2022
(31 December 2021: GBP1,235.4 million). As shown in the analysis of
liquidity on page 46, accessible cash amounted to GBP707.7 million
(31 December 2021: GBP840.7 million) and there were undrawn
revolving bank facilities of GBP226.9 million (31 December 2021:
GBP394.7 million).
The Group had bilateral loan facilities of GBP340.7 million at
the year end (31 December 2021: GBP433.7 million) with four
relationship banks and debt obligations of GBP141.9 million (31
December 2021: GBP134.4 million) from the issue of unsecured senior
notes in the US Private Placement market.
In August 2022, the Group completed a refinancing of its
bilateral loan facilities that were due to expire in March 2023.
These revolving loan facilities for GBP340.7 million were agreed
with four established relationship banks for a term of five years
to August 2027. The arrangements include two one-year extension
options exercisable at the discretion of Grafton and the four
banks. These new facilities provide certainty of finance over a
longer period on improved terms and replaced facilities of GBP380.7
million. This is sustainability linked debt funding and includes an
incentive connected to the achievement of carbon emissions,
workforce diversity and community support targets that are fully
aligned to the Group's sustainability strategy.
A one-year facility for GBP86.0 million put in place in December
2021 and facilitated by one of the Group's relationship banks under
the ECB's Targeted Longer-Term Refinancing Operations was repaid in
December 2022. This facility was used to temporarily replace
drawings on existing facilities on more attractive terms.
The average maturity of the committed bank facilities and
unsecured senior notes at 31 December 2022 was 5.2 years.
The Group's key financing objective continues to be to ensure
that it has the necessary liquidity and resources to support the
short, medium and long-term funding requirements of the business.
These resources, together with strong cash flow from operations,
provide good liquidity and the capacity to fund investment in
working capital, routine capital expenditure and development
activity including acquisitions.
The Group's gross debt is drawn in euros and provides a hedge
against exchange rate risk on euro assets in the businesses in
Ireland, the Netherlands and Finland.
IFRS 16 Leases
Leases that are recorded on the balance sheet principally relate
to properties, cars and distribution vehicles.
IFRS 16 increased operating profit by GBP13.2 million (2021:
GBP13.0 million) and the finance (interest) expense by GBP14.9
million (2021: GBP14.6 million) in the period. Profit before tax
was reduced by GBP1.7 million (2021: reduced by GBP1.6 million) and
profit after tax reduced by GBP1.3 million (2021: reduced by GBP1.4
million) because of IFRS 16.
The right-of-use asset in the balance sheet at 31 December 2022
was GBP420.1 million (31 December 2021: GBP421.3 million) and lease
liabilities were GBP449.3 million (31 December 2021: GBP449.0
million).
IFRS 16 does not alter the overall cashflows or the economic
effect of the leases to which the Group is a party. Similarly,
there is no effect on Grafton's banking covenants.
Shareholders' Equity
The Group's balance sheet strengthened further in the year with
shareholders' equity up by GBP26.0 million to GBP1.75 billion.
Profit after tax increased shareholders' equity by GBP208.6 million
and there was a gain of GBP30.7 million on translation of euro
denominated net assets to sterling. Shareholders' equity was
reduced for a remeasurement loss (net of tax) of GBP2.5 million on
pension schemes, for dividends paid of GBP73.9 million and by
GBP143.0 million for the buyback of shares. Other changes increased
equity by GBP6.0 million.
Return on Capital Employed
Return on Capital Employed in continuing operations declined by
220 basis points to 17.2 per cent (2021: 19.4 per cent) including
leased assets.
Principal Risks and Uncertainties
The primary risks and uncertainties affecting the Group are set
out on pages 70 to 75 of the 2022 Annual Report and Accounts. These
risks refer to Macro Economic Conditions in the UK, Ireland, the
Netherlands and Finland; Cyber Security and Data Protection;
Acquisition and Integration of New Businesses; Supply Chain;
Colleagues; Competition in Distribution, Retailing and
Manufacturing Markets; Information Technology Systems and
Infrastructure; Health and Safety; Sustainability and Climate
Change; Internal Controls and Fraud and Pandemic Risk.
Grafton Group plc
Group Income Statement
For the year ended 31 December 2022
Notes
2022 2021
GBP'000 GBP'000
Revenue 2 2,301,482 2,109,909
Operating costs (2,062,597) (1,857,487)
Property profits 3 25,381 16,740
------------ ------------
Operating profit 264,266 269,162
Finance expense 4 (21,273) (21,269)
Finance income 4 8,690 1,904
------------ ------------
Profit before tax 251,683 249,797
Income tax expense 17 (43,065) (42,952)
------------ ------------
Profit after tax for the financial
year from continuing operations 208,618 206,845
Profit after tax from discontinued
operations 14 - 134,422
Profit after tax for the financial
year 208,618 341,267
Profit attributable to:
Owners of the Company 208,618 341,267
Profit attributable to:
Continuing operations 208,618 206,845
Discontinued operations - 134,422
Earnings per ordinary share (continuing
operations) - basic 5 89.3p 86.4p
Earnings per ordinary share (continuing
operations) - diluted 5 89.2p 86.3p
Earnings per ordinary share (discontinued
operations) - basic 5 - 56.2p
Earnings per ordinary share (discontinued
operations) - diluted 5 - 56.1p
Earnings per ordinary share (total)
- basic 5 89.3p 142.6p
Earnings per ordinary share (total)
- diluted 5 89.2p 142.3p
Grafton Group plc
Group Statement of Comprehensive Income
For the year ended 31 December 2022
Notes 2022 2021
GBP'000 GBP'000
Profit after tax for the financial
year 208,618 341,267
--------- ---------
Other comprehensive income
Items that are or may be reclassified
subsequently to the income statement
Currency translation effects:
- on foreign currency net investments 30,741 (25,168)
Fair value movement on cash flow
hedges:
- effective portion of changes in
fair value of cash flow hedges (29) 57
30,712 (25,111)
--------- ---------
Items that will not be reclassified
to the income statement
Remeasurement (loss)/gain on Group
defined benefit pension schemes 13 (5,040) 14,886
Deferred tax on Group defined benefit
pension schemes 2,558 (3,212)
--------- ---------
(2,482) 11,674
--------- ---------
Total other comprehensive income/(expense) 28,230 (13,437)
--------- ---------
Total comprehensive income for
the financial year 236,848 327,830
--------- ---------
Total comprehensive income attributable
to:
Owners of the Company 236,848 327,830
Total comprehensive income for
the financial year 236,848 327,830
========= =========
Grafton Group plc - Group Balance Sheet as at 31 December
2022
Notes 31 Dec 2022 31 Dec 2021
ASSETS GBP'000 GBP'000
Non-current assets
Goodwill 15 635,751 599,810
Intangible assets 16 153,712 144,327
Property, plant and equipment 9 354,402 319,295
Right-of-use asset 8 420,115 421,254
Investment properties 9 26,084 26,527
Deferred tax assets 17 8,063 8,793
Lease receivable 453 881
Retirement benefit assets 13 4,584 3,596
Other financial assets 129 126
------------ ------------
Total non-current assets 1,603,293 1,524,609
------------ ------------
Current assets
Properties held for sale 9 4,364 6,125
Inventories 10 399,565 344,172
Trade and other receivables 10 267,694 233,486
Lease receivable 196 212
Cash and cash equivalents 11 711,721 844,663
Total current assets 1,383,540 1,428,658
------------ ------------
Total assets 2,986,833 2,953,267
============ ============
EQUITY
Equity share capital 7,870 8,570
Share premium account 221,975 219,447
Capital redemption reserve 1,389 643
Revaluation reserve 12,375 12,519
Shares to be issued reserve 8,647 11,837
Cash flow hedge reserve (37) (8)
Foreign currency translation reserve 87,492 56,751
Retained earnings 1,411,053 1,413,737
Treasury shares held (5,185) (3,897)
------------ ------------
Equity attributable to owners of
the Parent 1,745,579 1,719,599
Total equity 1,745,579 1,719,599
------------ ------------
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings 11 253,502 172,601
Lease liabilities 11 389,198 396,070
Provisions 15,189 14,862
Retirement benefit obligations 13 15,068 15,067
Deferred tax liabilities 17 61,011 56,402
------------ ------------
Total non-current liabilities 733,968 655,002
------------ ------------
Current liabilities
Interest-bearing loans and borrowings 11 - 84,030
Lease liabilities 11 60,105 52,924
Trade and other payables 10 420,653 419,111
Current income tax liabilities 20,595 15,956
Derivative financial instruments 11 29 8
Provisions 5,904 6,637
------------ ------------
Total current liabilities 507,286 578,666
------------ ------------
Total liabilities 1,241,254 1,233,668
------------ ------------
Total equity and liabilities 2,986,833 2,953,267
============ ============
Grafton Group plc - Group Cash Flow Statement
For the year ended 31 December 2022 Notes
31 Dec 2022 31 Dec 2021
GBP'000 GBP'000
Profit before taxation from continuing
operations 251,683 249,797
Profit before taxation from discontinued
operations 14 - 143,846
-------------- --------------
Profit before taxation 251,683 393,643
Finance income (8,690) (1,904)
Finance expense 4,14 21,273 22,512
-------------- --------------
Operating profit 264,266 414,251
Depreciation 8,9 94,313 97,894
Amortisation of intangible assets 16 20,295 17,184
Share-based payments charge 4,719 5,601
Movement in provisions (1,316) (1,950)
(Profit)/loss on sale of property, plant
and equipment 9 (248) 522
Property profits - continuing operations 9 (20,383) (6,890)
Property profits - discontinued operations 9 - (396)
Fair value gains recognised as property
profits 9 (4,998) (9,850)
Asset impairment and fair value losses 9 - 248
Profit on disposal of Group businesses 14 - (125,116)
Gain on derecognition of leases (475) (500)
Contributions to pension schemes in excess
of IAS 19 charge (6,150) (23,650)
Increase in working capital 10 (71,273) (64,129)
Cash generated from operations 278,750 303,219
Interest paid (21,879) (20,464)
Income taxes paid (39,529) (43,722)
-------------- --------------
Cash flows from operating activities 217,342 239,033
-------------- --------------
Investing activities
Inflows
Proceeds from sale of property, plant
and equipment 9 845 2,611
Proceeds from sale of properties held
for sale 9 4,238 18,881
Proceeds from sale of investment properties 9 23,463 756
Proceeds from sale of Group businesses
(net of cash disposed) 14 - 498,530
Interest received 8,690 193
37,236 520,971
-------------- --------------
Outflows
Acquisition of subsidiary undertakings
(net of cash acquired) 14 (45,978) (123,309)
Deferred acquisition consideration paid 10 (4,000) -
Investment in intangible asset - computer
software 16 (2,522) (827)
Purchase of property, plant and equipment 9 (55,318) (43,616)
(107,818) (167,752)
-------------- --------------
Cash flows from investing activities (70,582) 353,219
-------------- --------------
Financing activities
Inflows
Proceeds from the issue of share capital 2,574 2,974
Proceeds from borrowings 141,722 96,897
-------------- --------------
144,296 99,871
-------------- --------------
Outflows
Repayment of borrowings (158,909) (152,004)
Dividends paid 6 (73,868) (84,921)
Treasury shares purchased 20 (142,981) -
Payment of lease liabilities (58,078) (56,043)
(433,836) (292,968)
-------------- --------------
Cash flows from financing activities (289,540) (193,097)
-------------- --------------
Net (decrease)/increase in cash and
cash equivalents (142,780) 399,155
Cash and cash equivalents at 1 January 844,663 456,028
Effect of exchange rate fluctuations
on cash held 9,838 (10,520)
-------------- --------------
Cash and cash equivalents at the end
of the year 711,721 844,663
============== ==============
Cash and cash equivalents are broken
down as follows:
-------------- --------------
Cash at bank and short-term deposits 711,721 844,663
============== ==============
Grafton Group plc
Group Statement of Changes in Equity
Shares Cash Foreign
Equity Share Capital to be flow currency
share premium redemption Revaluation issued hedge translation Retained Treasury Total
capital account reserve reserve reserve reserve reserve earnings shares equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year to 31
December
2022
At 1 January
2022 8,570 219,447 643 12,519 11,837 (8) 56,751 1,413,737 (3,897) 1,719,599
Profit after
tax
for the
financial
year - - - - - - - 208,618 - 208,618
------- ------- ---------- ----------- ------- ------- ----------- --------- --------- ---------
Total other
comprehensive
income
Remeasurement
(loss)
on pensions
(net
of tax) - - - - - - - (2,482) - (2,482)
Movement in
cash
flow hedge
reserve
(net of tax) - - - - - (29) - - - (29)
Currency
translation
effect on
foreign
currency net
investments - - - - - - 30,741 - - 30,741
Total other
comprehensive
expense - - - - - (29) 30,741 (2,482) - 28,230
------- ------- ---------- ----------- ------- ------- ----------- --------- --------- ---------
Total
comprehensive
income - - - - - (29) 30,741 206,136 - 236,848
------- ------- ---------- ----------- ------- ------- ----------- --------- --------- ---------
Transactions
with
owners of the
Company
recognised
directly
in equity
Dividends paid - - - - - - - (73,868) - (73,868)
Issue of
Grafton
Units 46 2,528 - - - - - - - 2,574
Purchase of
treasury
shares (Note
20) - - - - - - - - (142,981) (142,981)
Cancellation
of treasury
shares (746) - 746 - - - - (141,693) 141,693 -
Share based
payments
charge - - - - 4,719 - - - - 4,719
Tax on share
based
payments - - - - (1,312) - - - - (1,312)
Transfer from
shares
to be issued
reserve - - - - (6,597) - - 6,597 - -
Transfer from
revaluation
reserve - - - (144) - - - 144 - -
------- ------- ---------- ----------- ------- ------- ----------- --------- --------- ---------
(700) 2,528 746 (144) (3,190) - - (208,820) (1,288) (210,868)
------- ------- ---------- ----------- ------- ------- ----------- --------- --------- ---------
At 31 December
2022 7,870 221,975 1,389 12,375 8,647 (37) 87,492 1,411,053 (5,185) 1,745,579
======= ======= ========== =========== ======= ======= =========== ========= ========= =========
Shares Cash Foreign
Equity Share Capital to be flow currency
share premium redemption Revaluation issued hedge translation Retained Treasury Total
capital account reserve reserve reserve reserve reserve earnings shares equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year to 31
December
2021
At 1 January
2021 8,569 216,496 621 12,733 6,714 (65) 81,919 1,143,933 (3,897) 1,467,023
------- ------- ---------- ----------- ------- ------- ----------- --------- -------- ---------
Profit after
tax
for the
financial
year - - - - - - - 341,267 - 341,267
------- ------- ---------- ----------- ------- ------- ----------- --------- -------- ---------
Total other
comprehensive
income
Remeasurement
gain
on pensions
(net
of tax) - - - - - - - 11,674 - 11,674
Movement in
cash
flow hedge
reserve
(net of tax) - - - - - 57 - - - 57
Currency
translation
effect on
foreign
currency net
investments - - - - - - (25,168) - - (25,168)
Total other
comprehensive
expense - - - - - 57 (25,168) 11,674 - (13,437)
------- ------- ---------- ----------- ------- ------- ----------- --------- -------- ---------
Total
comprehensive
income - - - - - 57 (25,168) 352,941 - 327,830
------- ------- ---------- ----------- ------- ------- ----------- --------- -------- ---------
Transactions
with
owners of the
Company
recognised
directly
in equity
Dividends paid - - - - - - - (84,921) - (84,921)
Issue of
Grafton
Units 23 2,951 - - - - - - - 2,974
Cancellation
of A
Shares (22) - 22 - - - - - - -
Share based
payments
charge - - - - 5,601 - - - - 5,601
Tax on share
based
payments - - - - 1,092 - - - - 1,092
Transfer from
shares
to be issued
reserve - - - - (1,570) - - 1,570 - -
Transfer from
revaluation
reserve - - - (214) - - - 214 - -
------- ------- ---------- ----------- ------- ------- ----------- --------- -------- ---------
1 2,951 22 (214) 5,123 - - (83,137) - (75,254)
------- ------- ---------- ----------- ------- ------- ----------- --------- -------- ---------
At 31 December
2021 8,570 219,447 643 12,519 11,837 (8) 56,751 1,413,737 (3,897) 1,719,599
======= ======= ========== =========== ======= ======= =========== ========= ======== =========
Grafton Group plc
Notes to Final Results for the year ended 31 December 2022
1. General Information
Grafton Group plc ("Grafton" or "the Group") is an international
distributor of building materials to trade customers who are
primarily engaged in residential repair, maintenance and
improvement projects and house building.
The Group has leading regional or national market positions in
the distribution markets in the UK, Ireland, the Netherlands and
Finland. Grafton is also the market leader in the DIY retailing
market in Ireland and is the largest manufacturer of dry mortar in
Great Britain where it also operates a staircase manufacturing
business.
The Group's origins are in Ireland where it is headquartered,
managed and controlled. It has been a publicly quoted company since
1965 and its Units (shares) are quoted on the London Stock Exchange
where it is a constituent of the FTSE 250 Index and the FTSE
All-Share Index.
Basis of Preparation, Accounting Policies and Estimates
(a) Basis of Preparation and Accounting Policies
The financial information presented in this Final Results
Announcement has been extracted from the audited Annual Report and
Accounts of Grafton Group plc for the financial year ended 31
December 2022. The financial information set out in this document
does not constitute full statutory financial statements for the
financial years ended 31 December 2022 or 2021 but it is derived
from same. The Final Results Announcement was approved by the Board
of Directors. The Annual Report and Accounts has been approved by
the Board of Directors and reported on by the auditors. The
auditors' report was unqualified. The Annual Report and Accounts
for the year ended 31 December 2022 is available on the Group's
website and will be filed with the Irish Registrar of Companies in
due course.
The consolidated financial information of the Group has been
prepared in accordance with the Transparency Rules of the Financial
Conduct Authority ('FCA') and in accordance with International
Financial Reporting Standards ('IFRS') issued by the International
Accounting Standards Board ('IASB') as adopted by the European
Union ('EU'); and those parts of the Companies Act 2014 applicable
to companies reporting under IFRS. They do not include all the
information and disclosures necessary for a complete set of
financial statements prepared in accordance with IFRS.
The financial information in this report has been prepared in
accordance with the Group's accounting policies. Full details of
the accounting policies adopted by the Group are contained in the
consolidated financial statements included in the Group's Annual
Report and Accounts for the year ended 31 December 2022 which is
available on the Group's website; www.graftonplc.com .
The accounting policies and methods of computation and
presentation adopted in the preparation of the Group financial
information are consistent with those described and applied in the
Annual Report and Accounts for the year ended 31 December 2022. The
financial information includes all adjustments that management
considers necessary for a fair presentation of such financial
information. All such adjustments are of a normal recurring nature.
Certain tables in the financial information may not add precisely
due to rounding.
Going Concern
The Group's net cash position, before recognising lease
liabilities, was GBP458.2 million at 31 December 2022 (31 December
2021: GBP588.0 million). The Group had liquidity of GBP934.6
million at 31 December 2022 (GBP1,235.4 million at 31 December
2021) of which GBP707.7 million (2021: GBP840.7 million) was held
in accessible cash and GBP226.9 million (2021: GBP394.7 million) in
undrawn revolving bank facilities. No refinancing of debt is due
until August 2027, the Group does not have a leverage (net
debt/EBITDA) covenant in its financing arrangements and its assets
are unsecured.
1. General Information (continued)
Basis of Preparation, Accounting Policies and Estimates
(continued)
Going Concern (continued)
Having made appropriate enquiries and regard to the above
information, the Directors have a reasonable expectation that
Grafton Group plc, and the Group as a whole, have adequate
resources to continue in operational existence for the foreseeable
future, being 12 months from the date of approval of the Annual
Report. Having reassessed the principal risks, as detailed on page
19, and based on expected cashflows, the strong liquidity position
of the Group, the directors considered it appropriate to adopt the
going concern basis of accounting in preparing its financial
information.
The consolidated financial information is presented in sterling.
Items included in the financial information of each of the Group's
entities are measured using its functional currency, being the
currency of the primary economic environment in which the entity
operates, which is primarily euro and sterling.
Climate Change
In preparing the financial information, the Directors have
considered the impact of climate change. These considerations did
not have a material impact on the financial reporting judgements
and estimates in the current year, specifically in the impairment
and going concern analysis. The Group's analysis of the impact of
climate change continues to evolve with Grafton committed to
reducing its carbon impact.
The financial information includes all adjustments that
management considers necessary for a fair presentation of such
financial information. All such adjustments are of a normal
recurring nature.
(b) Critical accounting estimate and judgements
The preparation of the Group consolidated financial statements
requires management to make certain estimations, assumptions and
judgements that affect the reported profits, assets and
liabilities. Estimates and underlying assumptions are reviewed on
an ongoing basis. Changes in accounting estimates may be necessary
if there are changes in the circumstances on which the estimate was
based or as a result of new information or more experience. Such
changes are recognised in the period in which the estimate is
revised. In particular, information about significant areas of
estimation and judgement that have the most significant effect on
the amounts recognised in the consolidated financial statements are
described in the respective notes to the consolidated financial
statements.
New Standards and Interpretations
Certain new and revised accounting standards and interpretations
have been issued. The Group intends to adopt the relevant new and
revised standards when they become effective and the Group's
assessment of the impact of these standards and interpretations is
set out below:
The following Standards and Interpretations are effective for
the Group in 2022 but do not have a material effect on the results
or financial position of the Group:
-- IAS 16 (Amendments) Property, Plant & Equipment (Effective 1 January 2022)
-- IAS 37 (Amendments) Provisions, Contingent Liabilities &
Contingent Assets (Effective 1 January 2022)
-- IFRS 9 (Amendments) Financial Instruments (Effective 1 January 2022)
-- IFRS 3 (Amendments) Business Combinations (Effective 1 January 2022)
The following Standards and Interpretations are not yet
effective for the Group and are not expected to have a material
effect on the results or financial position of the Group:
-- IAS 1 (Amendments) Presentation of Financial Statements
(Effective 1 January 2023)
-- IAS 8 (Amendments) Accounting Policies, Changes in Accounting
Estimates & Errors (Effective 1 January 2023)
-- IAS 12 (Amendments) Income Taxes (Effective 1 January 2023)
-- IFRS 16 (Amendments) Leases (Effective 1 January 2023)
-- IFRS 17 Insurance Contracts (Effective 1 January 2023)
2. Segmental Analysis
The amount of revenue and operating profit under the Group's
reportable segments of Distribution, Retailing and Manufacturing is
shown below. Segment profit measure is operating profit before
exceptional items, amortisation of intangible assets arising on
acquisitions and other acquisition related items.
2022 2021
GBP'000 GBP'000
Revenue
UK distribution 838,644 821,923
Ireland distribution 618,297 544,289
Netherlands distribution 336,703 290,540
Finland distribution 143,197 70,810
----------
Total distribution - continuing 1,936,841 1,727,562
Retailing 244,021 282,756
Manufacturing 133,805 112,436
Less: inter-segment revenue - manufacturing (13,185) (12,845)
----------
Total revenue from continuing operations 2,301,482 2,109,909
----------
Segmental operating profit before
exceptional items, intangible amortisation
arising on acquisitions and other
acquisition related items
UK distribution 81,826 102,523
Ireland distribution 70,474 66,792
Netherlands distribution 37,641 30,544
Finland distribution 20,321 9,952
----------
Total distribution - continuing 210,262 209,811
Retailing 32,575 50,858
Manufacturing 27,403 24,049
---------- ----------
270,240 284,718
Reconciliation to consolidated operating
profit
Central activities (13,453) (13,479)
---------- ----------
256,787 271,239
Property profits 25,381 16,740
---------- ----------
Operating profit before non-recurring
items, intangible amortisation arising
on acquisitions and other acquisition
related items 282,168 287,979
Non-recurring items* 3,690 -
---------- ----------
Operating profit before intangible
amortisation arising on acquisitions
and other acquisition related items 285,858 287,979
Acquisition related items (2,306) (4,129)
Amortisation of intangible assets
arising on acquisitions (19,286) (14,688)
---------- ----------
Operating profit 264,266 269,162
Finance expense (21,273) (21,269)
Finance income 8,690 1,904
---------- ----------
Profit before tax 251,683 249,797
Income tax expense (43,065) (42,952)
---------- ----------
Profit after tax for the financial
year from continuing operations 208,618 206,845
Profit after tax from discontinued
operations - 134,422
---------- ----------
Profit after tax for the financial
year 208,618 341,267
---------- ----------
* A non-recurring curtailment gain of GBP3.7 million arose on
closure to future accrual of a defined benefit pension scheme in
Ireland (Note 13).
2. Segmental Analysis (continued)
The amount of revenue by geographic area is as follows:
2022 2021
GBP'000 GBP'000
Revenue*
United Kingdom 951,557 914,971
Ireland 870,025 833,588
Netherlands 336,703 290,540
Finland 143,197 70,810
---------- ----------
Total revenue - continuing operations 2,301,482 2,109,909
========== ==========
*Service revenue, which is recognised over time, amounted to
GBP9.4 million for the year (2021: GBP8.7 million)
31 Dec 2022 31 Dec 2021
GBP'000 GBP'000
Segment assets
Distribution 1,952,691 1,782,973
Retailing 198,295 210,400
Manufacturing 111,350 102,716
------------ ------------
2,262,336 2,096,089
Unallocated assets
Deferred tax assets 8,063 8,793
Retirement benefit assets 4,584 3,596
Other financial assets 129 126
Cash and cash equivalents 711,721 844,663
Total assets 2,986,833 2,953,267
============ ============
31 Dec 2022 31 Dec 2021
GBP'000 GBP'000
Segment liabilities
Distribution 667,579 658,122
Retailing 189,925 201,147
Manufacturing 33,545 30,335
------------ ------------
891,049 889,604
Unallocated liabilities
Interest bearing loans and borrowings (current
and non-current) 253,502 256,631
Retirement benefit obligations 15,068 15,067
Deferred tax liabilities 61,011 56,402
Current income tax liabilities 20,595 15,956
Derivative financial instruments (current) 29 8
Total liabilities 1,241,254 1,233,668
============ ============
3. Operating Profit & Non-Recurring Items
The property profit of GBP25.4 million (2021: GBP16.7 million)
relates to profit on property disposals of GBP20.4 million (2021:
GBP6.8 million) and fair value gains of GBP5.0 million (2021:
GBP9.9 million).
In 2022, the Group disposed of six UK properties and one Irish
property (2021: one UK property, one Irish property and six
properties in Belgium).
The fair value gain of GBP5.0 million in 2022 relates to three
investment properties in the UK and three investment properties in
Ireland.
The fair value gain of GBP9.9 million recognised in 2021 related
to four properties which were transferred to investment properties
during the year. These were properties which were retained by the
Group following the disposal of the Traditional Merchanting
business in Great Britain.
Non-Recurring Items
A non-recurring curtailment gain of GBP3.7 million arose on
closure to future accrual of a defined benefit pension scheme in
Ireland (Note 13).
4. Finance Expense and Finance Income
2022 2021
GBP'000 GBP'000
Finance expense
Interest on bank loans, US senior notes
and overdrafts 5,591 * 6,249 *
Interest on lease liabilities 14,919 * 14,637 *
Net finance cost on pension scheme obligations 108 383
Foreign exchange loss 655 -
21,273 21,269
========== ========
Finance income
Interest income on bank deposits (8,690) * (193) *
Foreign exchange gain - (1,711)
(8,690) (1,904)
========== ========
Net finance expense 12,583 19,365
---------- --------
* Net bank and US senior note interest income of GBP3.1 million
(2021: GBP6.1 million expense). Including interest on lease
liabilities, this amounts to GBP11.8 million expense (2021: GBP20.7
million expense)
5. Earnings per Share
The computation of basic, diluted and underlying earnings per
share is set out below:
Year ended Year Ended
31 Dec 2022 31
GBP'000 Dec 2021
GBP'000
Numerator for basic, adjusted and diluted
earnings per share:
Profit after tax for the financial year
from continuing operations 208,618 206,845
Profit after tax for the financial year
from discontinued operations - 134,422
Numerator for basic and diluted earnings
per share 208,618 341,267
------------- ------------
Profit after tax for the financial year
from continuing operations 208,618 206,845
Amortisation of intangible assets arising
on acquisitions 19,286 14,688
Tax relating to amortisation of intangible
assets arising on acquisitions (4,329) (3,151)
Acquisition related items 2,306 4,129
Tax on acquisition related items (235) (74)
Numerator for adjusted earnings per share 225,646 222,437
------------- ------------
Number Number of
of Grafton Grafton
Units Units
Denominator for basic and adjusted earnings
per share:
Weighted average number of Grafton Units
in issue 233,517,016 239,294,286
Dilutive effect of options and awards 423,503 478,708
Denominator for diluted earnings per share 233,940,519 239,772,994
------------- ------------
Earnings per share (pence) - from total
operations
- Basic 89.3 142.6
- Diluted 89.2 142.3
Earnings per share (pence) - from continuing
operations
- Basic 89.3 86.4
- Diluted 89.2 86.3
Earnings per share (pence) - from discontinued
operations
- Basic - 56.2
- Diluted - 56.1
Adjusted earnings per share (pence) - from
continuing operations
- Basic 96.6 93.0
- Diluted 96.5 92.8
6. Dividends
The payment in 2022 of a second interim dividend for 2021 of
22.00 pence amounted to GBP52.7 million (2021: second interim
dividend for 2019 of GBP29.9 million and final dividend for 2020 of
GBP34.7 million).
An interim dividend for 2022 of 9.25p per share was paid on 7
October 2022 in the amount of GBP21.1 million.
A final dividend for 2022 of 23.75p per share will be paid to
all holders of Grafton Units on the Company's Register of Members
at the close of business on 14 April 2023 (the 'Record Date'). The
Ex-dividend date is 13 April 2023. The dividend will be paid on 11
May 2023. A liability in respect of the final dividend has not been
recognised at 31 December 2022, as there was no obligation to pay
any dividends at the end of the year.
7. Exchange Rates
The results and cash flows of subsidiaries with euro functional
currencies have been translated into sterling using the average
exchange rate for the year. The balance sheets of subsidiaries with
euro functional currencies have been translated into sterling at
the rate of exchange ruling at the balance sheet date.
The average sterling/euro rate of exchange for the year ended 31
December was Stg85.28p (2021: Stg85.96p). The sterling/euro
exchange rate at 31 December 2022 was Stg88.69p (2021:
Stg84.03p).
8. Right-Of-Use Asset
Right-of-use
asset
GBP'000
Recognised at 1 January 2022 421,254
Additions* 31,971
Disposals (2,309)
Depreciation (60,142)
Remeasurements* 15,678
Arising on acquisition (Note 14) 2,745
Currency translation adjustment 10,918
-------------
As at 31 December 2022 420,115
-------------
*Right-of-use asset additions relate to new lease contracts
entered into during the year and mainly arise due to leases entered
into for new store locations, a new warehouse and new lease
contracts agreed for existing stores. Right-of-use asset
remeasurements have mainly arisen due to the finalisation of rent
reviews and the reassessment of extension options available to the
Group on a number of property leases that will not be
exercised.
9. Property, Plant and Equipment, Properties Held for Sale and Investment Properties
Property, Properties Investment
plant and held for properties
equipment sale
Net Book Value GBP'000 GBP'000 GBP'000
As at 1 January 2022 319,295 6,125 26,527
Additions 55,318 - -
Depreciation (34,171) - -
Disposals (597) (1,549) (5,769)
Fair value gains - - 4,998
Transfer to property, plant and equipment 423 (423) -
Arising on acquisition (Note 14) 4,659 - -
Currency translation adjustment 9,475 211 328
----------- ----------- ------------
As at 31 December 2022 354,402 4,364 26,084
----------- ----------- ------------
10. Movement in Working Capital
Trade Trade
and other and other
Inventories receivables payables Total
Current GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2022 344,172 233,486 (419,111) 158,547
Currency translation adjustment 13,168 8,709 (14,548) 7,329
Deferred acquisition consideration
(Note 14) - - (5,197) (5,197)
Deferred acquisition consideration
paid - - 4,000 4,000
Arising on acquisition (Note 14) 7,561 8,788 (5,695) 10,654
Working capital movement in 2022 34,664 16,711 19,898 71,273
At 31 December 2022 399,565 267,694 (420,653) 246,606
============== ============= =========== ========
11. Interest-Bearing Loans, Borrowings and Net (Cash)/Debt
31 Dec 31 Dec
2022 2021
GBP'000 GBP'000
Interest-bearing loans and borrowings
Bank loans (current) - 84,030
Bank loans (non-current) 112,108 38,699
US senior notes 141,394 133,902
Total interest-bearing loans and borrowings 253,502 256,631
------------ ------------
Leases
Included in non-current liabilities 389,198 396,070
Included in current liabilities 60,105 52,924
------------ ------------
Total leases 449,303 448,994
------------ ------------
Derivatives
Included in current liabilities 29 8
Total derivatives 29 8
------------ ------------
Cash and cash equivalents (711,721) (844,663)
Net (cash) (8,887) (139,030)
------------ ------------
Net (cash) before leases (458,190) (588,024)
============ ============
In August 2022, the Group completed a refinancing of its loan
facilities that were due to expire in March 2023. Bilateral
revolving loan facilities for GBP340.7 million were agreed with
four established relationship banks for a term of five years to
August 2027. The arrangements include two one-year extension
options exercisable at the discretion of Grafton and the banks.
These new facilities replace existing facilities of GBP380.7
million. This is sustainability linked debt funding and includes an
incentive connected to the achievement of carbon emissions,
workforce diversity and community support targets that are fully
aligned to the Group's sustainability strategy.
11. Interest-Bearing Loans, Borrowings and Net Debt
(continued)
The following table shows the fair value of financial assets and
liabilities, all of which are within level 2 of the fair value
hierarchy. It does not include fair value information for financial
assets and liabilities not measured at fair value if the carrying
amount is a reasonable approximation of fair value.
31 Dec 31 Dec 2021
2022
GBP'000 GBP'000
Liabilities measured and recognised at fair value
Designated as hedging instruments
Other derivatives 29 8
---------------- ------------------
Fair value measurement of liabilities carried at amortised cost
US senior notes 126,605 134,448
---------------- ------------------
The fair value of financial assets and liabilities recognised at
amortised cost
It is considered that the carrying amounts of other financial
assets and liabilities including trade payables, trade receivables
and bank loans, which are recognised at amortised cost in the
financial information approximate to fair value. The fixed rate US
senior notes denominated in euro are disclosed above at fair value
and reflect the differential between the fixed interest rates on
these notes and market rates at 31 December 2022.
Financial assets and liabilities carried at fair value
All the Group's financial assets and liabilities which are
carried at fair value are classified as Level 2 in the fair value
hierarchy and deferred consideration is classified as Level 3.
There have been no transfers between levels in the current period.
Fair value measurements are categorised into different levels in
the fair value hierarchy based on the inputs to valuation
techniques used. The fair values of other derivatives are
calculated as the present value of the estimated future cash flows
based on the terms and maturity of each contract and using forward
currency rates and market interest rates as applicable for a
similar instrument at the measurement date. Fair values reflect the
credit risk of the instrument and include adjustments to take
account of the credit risk of the Group entity and counterparty
where appropriate. The fair value of deferred consideration is
calculated assuming a probability of payout, which will be based on
achievement of EBITDA targets, and discounted to present value
using market derived discount rates. The fair value assumes
achievement of targets but is sensitive to change in the assessed
probability of achieving targets.
12. Reconciliation of Net Cash Flow to Movement in Net Cash
31 Dec 31 Dec 2021
2022 GBP'000
GBP'000
Net (decrease)/increase in cash and cash
equivalents (142,780) 399,155
Net movement in derivative financial instruments (21) 57
Bank loans and loan notes acquired with
subsidiaries - (55,647)
Lease liabilities acquired (Note 14) (2,745) (24,192)
Lease liabilities disposed (Note 14) - 67,100
Movement in debt and lease financing 30,981 84,863
Change in net (debt)/cash resulting from
cash flows (114,565) 471,336
Currency translation adjustment (15,578) 22,695
Movement in net (debt)/cash in the year (130,143) 494,031
Net cash/(debt) at 1 January 139,030 (355,001)
---------- ------------
Net cash at end of the year 8,887 139,030
========== ============
13. Retirement Benefits
The principal financial assumptions employed in the valuation of
the Group's defined benefit scheme liabilities for the current and
prior year were as follows:
Irish Schemes UK Schemes
At 31 At 31 Dec At 31 At 31 Dec
Dec 2022 2021 Dec 2022 2021
Rate of increase in salaries* 3.80% 3.30% N/A N/A
Rate of increase of pensions
in payment - - 3.10% 3.10%
Discount rate 3.70% 1.15% 4.80% 1.90%
Inflation 2.60% 2.10% 2.60%/3.20% ** 2.70%/3.30% **
* Following the closure to accrual of the UK scheme and one of
the Irish schemes, benefits in those schemes are no longer linked
to final salary. Instead, accrued benefits up to the date of
closure revalue in line with inflation, subject to certain caps.
The assumption for the rate of increase in salaries shown at 31
December 2022 for the Irish Schemes only applies to the schemes
that were still open to accrual at that date.
** The inflation assumption shown for the UK is based on both
the Consumer Price Index (CPI) and the Retail Price Index (RPI)
The following table provides a reconciliation of the scheme
assets (at bid value) and the actuarial value of scheme
liabilities:
Assets Liabilities Net asset/(deficit)
Year to Year Year Year Year to Year
31 to 31 to 31 to 31 31 to 31
Dec 2022 Dec 2021 Dec 2022 Dec 2021 Dec 2022 Dec 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 283,705 263,604 (295,176) (314,188) (11,471) (50,584)
Interest income on
plan assets 4,519 2,836 - - 4,519 2,836
Contributions by employer 4,413 24,082 - - 4,413 24,082
Contributions by members 458 469 (458) (469) - -
Benefit payments (8,812) (9,128) 8,812 9,128 - -
Current service cost - - (1,962) (2,359) (1,962) (2,359)
Past service credit
- discontinued - - - 2,500 - 2,500
Curtailment gain -
non-recurring - - 3,690 - 3,690 -
Other long-term benefit
credit/(expense) - - 9 (191) 9 (191)
Interest cost on scheme
liabilities - - (4,627) (3,219) (4,627) (3,219)
Administration costs - (382) - - - (382)
Remeasurements
Actuarial (loss)/gains
from:
-experience variations - - (2,369) 1,131 (2,369) 1,131
-financial assumptions - - 98,087 1,992 98,087 1,992
-demographic assumptions - - (2,910) 846 (2,910) 846
Return on plan assets
excluding interest
income (97,848) 10,917 - - (97,848) 10,917
Translation adjustment 5,863 (8,693) (5,878) 9,653 (15) 960
At 31 December 192,298 283,705 (202,782) (295,176) (10,484) (11,471)
========== ========== ========== ==========
Related deferred tax
asset (net) 3,201 1,636
---------- ----------
Net pension liability (7,283) (9,835)
========== ==========
At 31 December 2022, a non-recurring curtailment gain of GBP3.7
million arose on closure to future accrual of a defined benefit
pension scheme in Ireland.
The net pension scheme deficit of GBP10.5 million (31 December
2021: deficit of GBP11.5 million) is shown in the Group balance
sheet as (i) retirement benefit obligations (non-current
liabilities) of GBP15.1 million (31 December 2021: GBP15.1 million)
and (ii) retirement benefit assets (non-current assets) of GBP4.6
million (31 December 2021: GBP3.6 million.
13. Retirement Benefits (continued)
At 31 December 2022, the retirement benefit asset of GBP4.6
million relates to three schemes in Ireland. The surplus has been
recognised in accordance with IFRIC 14 'The Limit on a Defined
Benefit Asset, Minimum Funding Requirements and their Interaction'
as it has been determined that the Group has an unconditional right
to a refund of the surplus assets if the schemes are run off until
the last member has left the scheme. The retirement benefit
obligation of GBP15.1 million relates to one scheme in the UK
(GBP14.3 million) and one scheme in the Netherlands (GBP0.8
million).
At 31 December 2021, GBP3.6 million of the retirement benefit
asset relates to one scheme in Ireland. The GBP15.1m retirement
benefit obligation relates to one scheme in the UK (GBP0.7 million)
and schemes in Ireland and the Netherlands (GBP14.4 million).
14. Acquisitions and Discontinued Operations
Acquisitions
On 11 January 2022, the Group acquired the entire share capital
of Regts B.V. ("Regts"). Regts is a distributor of tools,
ironmongery and fixings in the Netherlands with a strong market
position in the province of Friesland where it trades from five
branches. The acquisition is incorporated in the Netherlands
Distribution segment.
On 14 February 2022, Woodfloor Warehouse Limited ("Woodfloor")
was acquired. Woodfloor is a leading in-store and online timber
flooring distributor trading from two branches in Northern Ireland
and from one branch in the UK. The acquisition is incorporated in
the UK Distribution segment.
On 28 February 2022, the Group completed the acquisition of
Sitetech Building Products Limited ("Sitetech"), a distributor of
specialist construction accessories in Ireland where the business
trades from two locations in Dublin and Cork. The acquisition is
incorporated in the Irish Distribution segment.
None of these acquisitions were individually material for
separate disclosure under IFRS3.
The fair value of assets and liabilities acquired in 2022 are
set out below:
Total
GBP'000
Property, plant and equipment 4,659
Right-of-use asset 2,745
Intangible assets - trade names 2,889
Intangible assets - customer relationships 17,705
Inventories 7,561
Trade and other receivables 8,788
Trade and other payables (5,695)
Lease liability (2,745)
Corporation tax liability (105)
Deferred tax liability (3,592)
Cash acquired 5,879
Net assets acquired 38,089
Goodwill 18,965
Consideration 57,054
=========
Satisfied by:
Cash paid 51,857
Deferred consideration (Note 10) 5,197
---------
57,054
---------
Net cash outflow - arising on acquisitions
Cash consideration 51,857
Less: cash and cash equivalents acquired (5,879)
45,978
---------
Goodwill on these acquisitions reflects the anticipated
cashflows to be realised as part of the enlarged Group. There were
no adjustments made to provisional fair values in the year relating
to the IKH and Proline acquisitions completed in the prior
year.
14. Acquisitions and Discontinued Operations (continued)
Acquisitions contributed revenue of GBP53.6 million and
operating profit of GBP8.4 million for the period from the date of
acquisition to 31 December 2022. If all three acquisitions had
occurred on 1 January 2022, they would have contributed revenue of
GBP59.4 million (unaudited) and operating profit of GBP9.5 million
(unaudited) in the year. The Group incurred acquisition related
costs of GBP2.3 million in 2022 (2021: GBP4.1 million) which are
included in operating costs in the Group Income Statement.
Deferred consideration is payable within 3 years from the date
of acquisition and is not contingent. In addition to this deferred
consideration, the Group has an agreement for two of the
acquisitions to make further payments to certain selling
shareholders who, as part of the agreement, are required to remain
in employment with the Group for the deferred period.
Discontinued Operations - Traditional Merchanting Business in
the UK - 31 December 2021
On 30 June 2021, the Group entered into an agreement to divest
its Traditional Merchanting Business in Great Britain ("the
Business") for an enterprise value of GBP520.0 million to Huws
Gray, one of the UK's largest independent builders' merchants, that
is controlled by equity funds managed by Blackstone. The Group
retained freehold properties with development potential that had a
market value of circa GBP25 million.
The Share Purchase Agreement was signed on 30 June 2021 and from
that date Grafton ceased to have rights to variable returns from
its shareholdings in the entities being divested and instead
received an agreed daily amount up to the date of completion. IFRS
required that the business being divested be treated as
discontinued operations and as a deemed disposal at 30 June
2021.
The enterprise value agreed with the purchaser was based on the
balance sheet as at 30 April 2021 and all cashflow generated after
that date was for the benefit of the purchaser. Grafton received a
daily ticker rate for the period from 1 May 2021 to 31 December
2021 that compensated the Group for the loss of profits over this
period.
The transaction completed on 31 December 2021 and the proceeds,
which amounted to GBP602.3 million, were received on that date.
These included GBP116.0 million in respect of intercompany balances
which were due to Grafton Group at 30 June 2021.
The carrying value of assets and liabilities disposed at 31
December 2021 were as follows:
Total
GBP'000
Goodwill 126,291
Intangible assets 29,827
Property, plant and equipment 177,515
Right-of-use assets 60,613
Finance lease receivable 1,931
Deferred tax asset 1,729
Inventory 99,253
Trade and other receivables 216,013
Cash 103,778
Trade and other payables (242,467)
Provisions (5,339)
Lease liabilities (current and non-current) (67,100)
Deferred tax liability (18,691)
Income tax liability (6,161)
Net assets of disposed business 477,192
Cash consideration received and settlement of intercompany
balances (602,308)
Net profit on disposal of Group businesses, before disposal
costs (125,116)
==========
Net cash inflow on disposals
GBP'000
Cash consideration received 602,308
Cash disposed with Group businesses (103,778)
Proceeds from disposal - net of cash disposed 498,530
----------
14. Acquisitions and Discontinued Operations (continued)
Amounts recognised in the year to 31 December 2021 within
discontinued operations
GBP'000
Gross profit on disposal 125,116
Disposal costs* (11,945)
---------
Profit on disposal, net of disposal costs 113,171
Result for the period from discontinued operations 21,251
Total amount recognised in discontinued operations 134,422
---------
* Disposal costs include professional fees of GBP4.9 million,
legal fees of GBP1.0 million, vendor financial, tax & IT due
diligence fees of GBP0.9 million, property related costs of GBP0.3
million and GBP4.8 million of other costs related to the divestment
of the business.
Profit before taxation from discontinued operations
GBP'000
Results from discontinued operations 30,675
Profit on disposal of Group businesses, net of disposal
costs 113,171
Profit before taxation from discontinued operations 143,846
--------
Cash flows from discontinued operations
31 December
2021
GBP'000
Net cash flow from operating activities 36,592
Net cash flow from investing activities (3,346)
Net cash flow from financing activities (4,794)
------------
Net cash flow from discontinued operations 28,452
------------
Results from discontinued operations
31 December
2021
GBP'000
Revenue 522,895
Operating costs (493,873)
------------
Operating profit before property profits 29,022
Property profits 396
Operating profit pre-exceptional items 29,418
Exceptional items* 2,500
------------
Operating profit 31,918
Net finance costs (1,243)
------------
Profit before tax 30,675
Income tax (9,424)
------------
Profit after tax for the financial year 21,251
------------
* Exceptional items for 31 December 2021 relates to an IAS 19
past service credit against other costs originally booked in
2020.
14. Acquisitions and Discontinued Operations (continued)
The trading results for the year ended December 2021 is set out
below.
Trading results for the year ended 31 December 2021
2021 2021 2021
Continuing Discontinued Total
GBP'000 GBP'000 GBP'000
Revenue 2,109,909 522,895 2,632,804
Operating costs (1,857,487) (493,873) (2,351,360)
------------- --------------- ------------
Operating profit before property
profits 252,422 29,022 281,444
Property profits 16,740 396 17,136
------------- --------------- ------------
Operating profit before exceptional
items 269,162 29,418 298,580
Exceptional items - 2,500 2,500
------------- --------------- ------------
Operating profit 269,162 31,918 301,080
Finance expense (21,269) (1,243) (22,512)
Finance income 1,904 - 1,904
------------- --------------- ------------
Profit before tax 249,797 30,675 280,472
Income tax expense (42,952) (9,424) (52,376)
------------- --------------- ------------
Profit after tax for the financial
year 206,845 21,251 228,096
------------- --------------- ------------
15. Goodwill
Goodwill is subject to impairment testing on an annual basis at
31 December and additionally during the year if an indicator of
impairment is considered to exist. The impairment review conducted
by the Group, as required by IFRS, concluded that the carrying
amount of all Cash Generating Units ("CGU's) exceeded their
recoverable amount and that there was no impairment (2021:
GBPNil).
Goodwill
GBP'000
Net Book Value
As at 1 January 2022 599,810
Arising on acquisition (Note 14) 18,965
Currency translation adjustment 16,976
As at 31 December 2022 635,751
---------
16. Intangible Assets
Customer
Computer Relationships
Software Trade Names & Technology Total
GBP'000 GBP'000 GBP'000 GBP'000
Net Book Value
As at 1 January 2022 4,001 30,415 109,911 144,327
Additions 2,522 - - 2,522
Amortisation (1,009) (3,562) (15,724) (20,295)
Arising on acquisition (Note
14) - 2,889 17,705 20,594
Currency translation adjustment 151 1,286 5,127 6,564
As at 31 December 2022 5,665 31,028 117,019 153,712
---------- ------------ --------------- ---------
The amortisation expense of GBP20.3 million (2021: GBP17.2
million) has been charged in 'operating costs' in the income
statement. Amortisation of intangible assets arising on
acquisitions amounted to GBP19.3 million (2021: GBP14.7
million).
17. Taxation
The income tax expense of GBP43.1 million (2021: GBP43.0
million) is equivalent to an effective tax rate of 17.1 per cent on
profit from continuing operations (2021: 17.2 per cent). This is a
blended rate of corporation tax on profits in the four
jurisdictions where the Group operates.
Certain items of expenditure charged in arriving at profit
before tax, including depreciation on buildings, are not eligible
for a tax deduction. This factor increased the rate of tax payable
on profits above the headline rates that apply in the UK, Ireland,
the Netherlands and Finland.
The liability shown for current taxation includes a liability
for tax uncertainties and is based on the Directors' estimate of
(i) the most likely amount; or (ii) the expected value of the
probable outflow of economic resources that will be required. As
with all estimates, the actual outcome may be different to the
current estimate.
Accounting estimates and judgements
Management is required to make judgements and estimates in
relation to taxation provisions and exposures. In the ordinary
course of business, the Group is party to transactions for which
the ultimate tax determination may be uncertain. As the Group is
subject to taxation in a number of jurisdictions, an open dialogue
is maintained with Revenue Authorities with a view to the timely
agreement of tax returns. The amounts provided/recognised for tax
are based on management's estimate having taken appropriate
professional advice.
If the final determination of these matters is different from
the amounts that were initially recorded such differences could
materially impact the income tax and deferred tax liabilities and
assets in the period in which the determination was made.
Deferred tax
At 31 December 2022, the deferred tax asset was GBP8.1 million
(2021: GBP8.8 million) and the deferred tax liability was GBP61.0
million (2021: GBP56.4 million). There were unrecognised deferred
tax assets in relation to capital losses of GBP0.7 million (2021:
GBP3.1 million), trading losses of GBP1.1 million (2021: GBP1.1
million) and deductible temporary differences of GBP6.9 million
(2021: GBP8.5 million).
Deferred tax assets were not recognised in respect of certain
capital losses as they can only be recovered against certain
classes of taxable profits. The Directors believe that it is not
probable that such profits will arise in the foreseeable future.
The trading losses arose in entities that have incurred historic
losses and the Directors believe that it is not probable there will
be sufficient taxable profits in the entities against which they
can be utilised. Separately, the Directors believe that it is not
probable the deductible temporary differences will be utilised.
18. Related Party Transactions
There were no changes in related parties from those described in
the 2021 Annual Report, other than those arising through
acquisitions and the appointment and resignation of directors.
There has been no change in transactions with related parties that
materially affect the financial position or the performance of the
Group during the year to 31 December 2022.
19. Grafton Group plc Long Term Incentive Plan (LTIP)
LTIP awards were made over 706,305 Grafton Units on 1 April
2022. The fair value of the awards of GBP6.0 million, which are
subject to vesting conditions, will be charged to the income
statement over the vesting period of three years. On 29 November
2022, LTIP awards were made over 37,251 Grafton Units to Eric Born
on his appointment as CEO. The fair value of the awards of GBP0.2
million, which are subject to vesting conditions, will be charged
to the income statement over the vesting period of three years. The
2022 Annual Report and Accounts discloses details of the LTIP
scheme.
20. Share Buyback and Treasury Shares
On 28 April 2022, the Group announced its intention to introduce
a share buyback programme. On 9 May 2022, the Group entered into
non-discretionary arrangements with Goodbody Stockbrokers UC
(acting as agent) and Numis Securities Limited (acting as
principal) to conduct the programme and to buy back ordinary shares
(the "Shares") on the Group's behalf for a maximum aggregate
consideration of up to GBP100 million and to make trading decisions
under the programme independently of the Group in accordance with
certain pre-set parameters (the "Buyback"). The Buyback commenced
on 9 May 2022 and ended on 12 September 2022. At 31 December 2022,
the Group had purchased 12,282,711 shares in aggregate for
cancellation at a total cost of GBP100.3 million, including
transaction costs. All shares were cancelled by 31 December
2022.
Following completion of the first share buyback programme the
Group announced on 10 November 2022 its intention to commence a
second share buyback programme and to buy back ordinary shares (the
"Shares") on the Group's behalf for a maximum aggregate
consideration of up to GBP100 million and to make trading decisions
under the programme independently of the Group in accordance with
certain pre-set parameters (the "Buyback"). The Buyback commenced
on 10 November 2022 and will end no later than 30 April 2023. At 31
December 2022, the Group had purchased 4,417,706 shares in
aggregate for cancellation at a total cost of GBP35.1 million
through the second buyback programme, including transaction costs.
However, due to timing, only 4,302,597 were cancelled at 31
December 2022 and the remaining 115,109 shares purchased for GBP0.9
million were cancelled in early January 2023. Details of shares
bought back since 31 December 2022 are included in Note 22
below.
In addition to the above, on 3 May 2022 and 4 May 2022, the
Group purchased and cancelled 796,902 Grafton Units to offset the
dilutive effect of issuing new shares to satisfy share award
obligations under the Company's Long Term Incentive Plan. The total
consideration was GBP7.6 million, including transaction costs.
Purchase
Purchase of Treasury Cancellation
of Treasury Transaction Shares of Treasury Total
Shares Costs * Shares Movement
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Buyback Programme 1 100,000 284 100,284 (100,000) 284
Buyback Programme 2 35,046 72 35,118 (34,130) 988
------------- ------------ ------------- ------------- ----------
Total 135,046 356 135,402 (134,130) 1,272
LTIP Awards 7,563 16 7,579 (7,563) 16
As at 31 December 2022 142,609 372 142,981 (141,693) 1,288
------------- ------------ ------------- ------------- ----------
* Including transaction costs.
21. Issue of Shares
During the year 796,902 Grafton Units were issued under the 2011
Grafton Group Long Term Incentive Plan (LTIP) on the vesting of the
2019 grants (2021: 82,675 Grafton Units). A further 414,711 Grafton
Units were issued under the Group's Savings Related Share Option
Scheme (SAYE) to eligible UK employees (2021: 453,388 Grafton
Units).
22. Events after the Balance Sheet Date
The Company bought back, for cancellation, 2,966,284 shares at a
cost of GBP27.5 million between 1 January 2023 and 28 February
2023.
There have been no other material events subsequent to 31
December 2022 that would require adjustment to or disclosure in
this report.
23. Board Approval
This announcement was approved by the Board of Grafton Group plc
on 1 March 2023.
Supplementary Financial Information
Alternative Performance Measures
Certain financial information set out in this consolidated
financial information is not defined under IFRS. These key
Alternative Performance Measures ("APMs") represent additional
measures in assessing performance and for reporting both internally
and to shareholders and other external users. The Group believes
that the presentation of these APMs provides useful supplemental
information which, when viewed in conjunction with IFRS financial
information, provides readers with a more meaningful understanding
of the underlying financial and operating performance of the
Group.
None of these APMs should be considered as an alternative to
financial measures drawn up in accordance with IFRS.
The key Alternative Performance Measures ("APMs") of the Group
are set out below. As amounts are reflected in GBP'm some
non-material rounding differences may arise. Numbers that refer to
2021 are available in the 2021 Annual Report, subject to
restatement for discontinued operations and acquisition related
items.
The term "Adjusted" means before exceptional items and
acquisition related items. These items do not relate to the
underlying operating performance of the business and therefore to
enhance comparability between reporting periods and businesses,
management do not take these items into account when assessing the
underlying profitability of the Group.
Acquisition related items comprise deferred consideration
payments relating to the retention of former owners of businesses
acquired, transaction costs and expenses, professional fees,
adjustments to previously estimated earn outs and customer
relationships asset impairment charges. Customer relationships,
technology and brands amortisation, acquisition related items and
any associated tax are considered by management to form part of the
total spend on acquisitions or are non-cash items resulting from
acquisitions and therefore are also included as adjusting
items.
Note: The Traditional Merchanting Business in Great Britain is
classified as discontinued operations for the year ended 31
December 2021. In the computation of APMs below for 2021, the
revenue and operating profit of the disposed business are excluded
from the Group. Revenue and the operating result are reflected in
the profit/(loss) after tax from discontinued operations.
APM Description
Adjusted operating Profit before acquisition related items, exceptional
profit/EBITA items, net finance expense and income tax expense.
Operating profit margin Profit before net finance expense and income
tax expense as a percentage of revenue.
Adjusted operating Profit before profit on the disposal of Group
profit/EBITA before properties, acquisition related items, exceptional
property profit items, net finance expense and income tax expense.
Adjusted operating Adjusted operating profit/EBITA before property
profit/EBITA margin profit as a percentage of revenue.
before property profit
Adjusted profit before Profit before acquisition related items, exceptional
tax items and income tax expense.
Adjusted profit after Profit before acquisition related items and
tax exceptional items but after deducting the income
tax expense.
Capital Turn Revenue for the previous 12 months divided
by average capital employed (where capital
employed is the sum of total equity and net
debt/(cash) at each period end).
Constant Currency Constant currency reporting is used by the
Group to eliminate the translational effect
of foreign exchange on the Group's results.
To arrive at the constant currency change,
the results for the prior period are retranslated
using the average exchange rates for the current
period and compared to the current period reported
numbers.
EBITDA Profit before exceptional items, net finance
expense, income tax expense, depreciation and
acquisition related items.
EBITDA Interest Cover EBITDA divided by net bank/loan note interest.
Gearing The Group net (cash)/debt divided by the total
equity attributable to owners of the Parent
times 100, expressed as a percentage.
Like-for-like revenue Changes in like-for-like revenue is a measure
of underlying revenue performance for a selected
period. Branches contribute to like-for-like
revenue once they have been trading for more
than twelve months. Acquisitions contribute
to like-for-like revenue once they have been
part of the Group for more than 12 months.
When branches close, or where a business is
disposed of, revenue from the date of closure,
for a period of 12 months, is excluded from
the prior year result.
Return on Capital Operating profit divided by average capital
Employed employed (where capital employed is the sum
of total equity and net debt/(cash) at each
period end) times 100, expressed as a percentage.
Adjusted Earnings A measure of underlying profitability of the
Per Share Group. Adjusted profit after tax is divided
by the weighted average number of Grafton Units
in issue, excluding treasury shares.
Adjusted Operating Profit/EBITA before
Property Profit and Margin
2022 2021
GBP'm GBP'm
Revenue - continuing 2,301.5 2,109.9
Operating profit 264.3 269.2
Property profit/loss (25.4) (16.7)
Amortisation of intangible assets arising
on acquisitions 19.3 14.7
Other acquisition related items 2.3 4.1
-------- --------
Adjusted operating profit/EBITA before property
profit 260.5 271.2
-------- --------
Adjusted operating profit/EBITA margin before
property profit 11.3% 12.9%
-------- --------
Operating Profit Margin
2022 2021
GBP'm GBP'm
Revenue - continuing 2,301.5 2,109.9
Operating profit 264.3 269.2
Operating profit/EBITA margin 11.5% 12.8%
-------- --------
Adjusted Operating Profit/EBITA and Margin
2022 2021
GBP'm GBP'm
Revenue - continuing 2,301.5 2,109.9
Operating profit 264.3 269.2
Amortisation of intangible assets arising
on acquisitions 19.3 14.7
Other acquisition related items 2.3 4.1
-------- ---------
Adjusted operating profit/EBITA 285.9 288.0
-------- ---------
Adjusted operating profit/EBITA margin 12.4% 13.6%
-------- ---------
Adjusted Profit before Tax
2022 2021
GBP'm GBP'm
Profit before tax 251.7 249.8
Amortisation of intangible assets arising
on acquisitions 19.3 14.7
Other acquisition related items 2.3 4.1
--------
Adjusted profit before tax 273.3 268.6
-------- --------
Adjusted Profit after Tax
2022 2021
GBP'm GBP'm
Profit after tax 208.6 206.8
Amortisation of intangible assets arising
on acquisitions 19.3 14.7
Related tax on amortisation of intangible
assets arising on acquisitions (4.3) (3.2)
Other acquisition related items 2.3 4.1
Tax on other acquisition related items (0.2) (0.1)
-------- -----------
Adjusted profit after tax 225.6 222.4
-------- -----------
Reconciliation of Profit to EBITDA - Continuing
Operations
2022 2021
GBP'm GBP'm
Profit after tax 208.6 206.8
Other acquisition related items 2.3 4.1
Net finance expense 12.6 19.4
Income tax expense 43.1 43.0
Depreciation 94.3 84.8
Intangible asset amortisation 20.3 15.3
------------ -----------
EBITDA - continuing operations 381.2 373.4
------------ -----------
EBITDA Interest Cover (including interest
on lease liabilities)
2022 2021
GBP'm GBP'm
EBITDA 381.2 373.4
Net bank/loan note interest including interest
on lease liabilities 11.8 20.7
-------- --------
EBITDA interest cover - times 32.2 18.0
-------- --------
EBITDA Interest Cover (excluding interest
on lease liabilities)
2022 2021
GBP'm GBP'm
EBITDA 381.2 373.4
Net bank/loan note interest excluding interest
on lease liabilities (3.1) 6.1
-------- --------
EBITDA interest cover - times (123.0) 61.7
-------- --------
Dividend Cover 2022 2021
Group adjusted EPS - basic (pence) 96.6 93.0
Group dividend (pence) 33.0 30.5
--------- --------
Dividend cover - times 2.9 3.0
--------- --------
Return on Capital Employed - Continuing
Operations 2022 2021
GBP'm GBP'm
Operating profit 264.3 269.2
Other acquisition related items 2.3 4.1
Amortisation of intangible assets arising
on acquisitions - continuing 19.3 14.4
Adjusted operating profit 285.9 287.7
-------- --------
Total equity - current period end 1,745.6 1,719.6
Net (cash) current period end (8.9) (139.0)
Capital employed - current period end 1,736.7 1,580.6
-------- --------
Total equity - prior period end 1,719.6 1,467.0
Disposal of Group businesses adjustment - 115.4
Net (cash)/debt - prior period end (139.0) 355.0
Disposal of Group businesses adjustment - (545.0)
-------- --------
Capital employed - prior period end 1,580.6 1,392.4
-------- --------
Average capital employed 1,658.6 1,486.5
Return on capital employed 17.2% 19.4%
-------- --------
Capital Turn
2022 2021
GBP'm GBP'm
Revenue 2,301.5 2,109.9
Average capital employed 1,658.6 1,486.5
--------- --------
Capital turn - times 1.4 1.4
--------- --------
Liquidity
2022 2021
GBP'm GBP'm
Cash and cash equivalents 711.7 844.7
Less: cash held against letter of
credit* (4.0) (4.0)
Accessible cash 707.7 840.7
Undrawn revolving bank facilities 226.9 394.7
-------- --------
Liquidity 934.6 1,235.4
-------- --------
* At 31 December 2022, cash of GBP4.0 million (2021: GBP4.0
million) was reserved to cover the risk of an event of default by
the Group on a letter of credit. This arrangement can be replaced
at any time.
Net Cash - before IFRS 16 Leases
2022 2021
GBP'm GBP'm
Net cash - after IFRS 16 Leases 8.9 139.0
IFRS 16 Lease Liability 449.3 449.0
Net cash - before IFRS 16 Leases 458.2 588.0
-------- --------
Like-for-Like Revenue
2022 2021
GBP'm GBP'm
2021/2020 revenue (restated) 2,109.9 1,679.2
Organic growth 47.2 337.8
Organic growth - new branches 17.8 9.0
-------- --------
Total organic growth 65.0 346.8
Acquisitions 134.4 120.9
Foreign exchange (7.8) (37.0)
2022/2021 revenue 2,301.5 2,109.9
-------- --------
Like-for-like movement (organic growth,
excluding new branches, as % of prior
year revenue) 2.2% 20.1%
-------- --------
The Impact of IFRS 16 "Leases" on APM's
Reconciliation of Profit to EBITDA - pre-IFRS
16 (Continuing)
2022 2021
GBP'm GBP'm
Profit after tax 208.6 206.8
Loss after tax (IFRS 16) 1.3 1.4
-------- --------
Profit after tax (pre-IFRS 16) 209.9 208.2
Acquisition related items 2.3 4.1
Net finance (credit)/expense (2.3) 4.7
Income tax expense 43.4 43.2
Depreciation 34.2 30.3
Intangible asset amortisation 20.3 15.3
-------- --------
EBITDA 307.8 305.8
-------- --------
EBITDA Interest Cover - pre-IFRS 16 (excluding
interest on lease liabilities)
2022 2021
GBP'm GBP'm
EBITDA 307.8 305.8
Net bank/loan note interest excluding interest
on lease liabilities (3.1) 6.1
-------- ----------
EBITDA interest cover - times (99.3) 50.5
-------- ----------
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