Final
Results
For the Year Ended 31
December 2023
Grafton Group
plc
Final Results for Year Ended
31 December 2023
Strong Performance in
Challenging Markets
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 2023.
Financial Highlights
· Full
year adjusted operating profit of £205.5 million, above the top end
of Analysts' forecasts1
· Strong free cashflow of £205.6 million (2022: £163.3
million)
· £228.3 million (2022: £208.9 million) returned to
shareholders in dividend payments and share buybacks during the
year
· Fourth share buyback programme increased from £50 million to
£100 million in December 2023
· Dividend growth for the full year of 9.1% per share,
benefitting from lower number of shares in issue following
buybacks
· Net
cash at 31 December 2023 of £379.7 million (before IFRS 16 lease
liabilities) remains very healthy (31 December 2022: £458.2
million) after returning £228.3 million to shareholders
Operational
Highlights
· Underlying demand fundamentals for the Group's RMI and new
housing markets remain strong
· Benefited from the Group's geographic diversification and
cost reduction measures
· Resilient performance despite lower volumes in challenging
Distribution markets
· Woodie's DIY, Home and Garden retail business performed
well
· Strong performance by UK Manufacturing businesses despite
volume declines
· Invested £49.3 million on acquisitions and development
capital expenditure
· Significant progress advancing the Group's sustainability
agenda including submission of net zero targets to SBTi and
completion of Double Materiality Exercise
Total Operations2
|
2023
|
2022
|
Change
|
Revenue
|
£2,319m
|
£2,301m
|
+0.8%
|
Adjusted3 operating
profit
|
£205.5m
|
£285.9m
|
(28.1%)
|
Adjusted3 operating
profit before property profit
|
£204.2m
|
£260.5m
|
(21.6%)
|
Adjusted operating profit margin
before property profit
|
8.8%
|
11.3%
|
(250bps)
|
Adjusted3 profit before
tax
|
£205.9m
|
£273.3m
|
(24.6%)
|
Adjusted3 earnings per
share
|
77.9p
|
96.6p
|
(19.4%)
|
Final dividend
|
36.0p
|
33.0p
|
+9.1%
|
Adjusted3 return on
capital employed (ROCE)
|
11.9%
|
17.2%
|
(530bps)
|
Net (debt)/cash (including IFRS 16
leases)
|
(£49.3m)
|
£8.9m
|
(£58.2m)
|
Net cash (before IFRS 16
leases)
|
£379.7m
|
£458.2m
|
(£78.5m)
|
|
|
|
|
Statutory Results
|
2023
|
2022
|
Change
|
Operating profit
|
£183.1m
|
£264.3m
|
(30.7%)
|
Profit before tax
|
£183.5m
|
£251.7m
|
(27.1%)
|
Basic earnings per share
|
69.6p
|
89.3p
|
(22.1%)
|
1 Grafton compiled consensus
Analysts' forecasts for 2023 show operating profit of circa £200.7
million and a range of £194.0 million to £203.9
million.
2 Supplementary financial
information in relation to Alternative Performance Measures (APMs)
is set out on pages 45 to 51.
3 The term "Adjusted" means
before exceptional items, amortisation of intangible assets arising
on acquisitions and acquisition related items in both
years.
Eric Born, Chief Executive Officer
Commented:
"Despite challenging market conditions, Grafton has succeeded
in delivering full year adjusted operating profit above the top end
of Analysts' forecasts. This is testament to our resilient market
leading positions, responsive management teams and portfolio of
high-returning businesses.
"We generated excellent free cashflow of £205.6 million from
operations and returned £228.3 million to shareholders during the
year in the form of share buybacks and dividends, making a total of
£437.2 million which we have returned to shareholders over the past
two years.
"Looking ahead, we expect to continue to benefit from the
spread of the Group's operations across four geographies and
exposure to a broad range of end-markets. Our strong balance sheet
and record of cash generation will stand us in good stead. We will
allocate capital as required to ensure that the Group's brands
continue to support their customers and strengthen their market
positions. In parallel, we will continue to evaluate opportunities
in existing markets and new geographies, building on the progress
we have made, with a view to progressing possible growth
opportunities that can create enduring value for our
shareholders.
"While trading conditions are expected to remain challenging,
demand fundamentals are supported by a structural under supply of
new homes and an aging housing stock that requires upgrading
including energy conservation measures. With a somewhat
improving economic backdrop, we are confident that Grafton is
exceptionally well positioned to benefit as the cycle turns,
markets normalise and consumer confidence
improves."
Webcast and Conference Call 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
8.30am today. 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/GFTU__FY23.
Analysts will be invited to raise
questions during the presentation. Should investors wish to
submit a question in advance, they can do so before 8.00am today by
sending an email to ir@graftonplc.com.
A recording of the webcast will be available on the Company's
website later today.
Investors
|
Media
|
|
|
|
|
Grafton Group plc
|
+353 1 216 0600
|
Murrays
|
pwalsh@murraygroup.ie
+353 1 498 0300/+353 87 226 9345
|
Eric Born
|
Chief Executive Officer
|
Pat Walsh
|
|
David Arnold
|
Chief Financial Officer
|
|
|
|
|
Buchanan
Helen Tarbet
Toto Berger
|
GraftonGroup@buchanancomms.co.uk
+44
(0) 7872 604 453
+44
(0) 7880 680 403
|
|
|
|
|
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
2023
Group Results - Trading Summary, Cashflow, Dividend, Current
Trading & Outlook
Grafton delivered a resilient set
of results in challenging markets and measured against what was a
strong comparative performance in the prior year. These results
were supported by relatively stronger trading in Ireland and the
Netherlands compared to the UK and Finland. They also benefitted
from the timely implementation of cost reduction measures that
enabled us to deliver full year adjusted operating profit
consistent with the raised guidance in January
2024.
The quality of the Group's
portfolio of high returning, cash generative businesses and an
effective response from our management teams to evolving macro
conditions were important factors in delivering this resilient
performance in markets that experienced volume, margin and cost
pressures. These results also
demonstrate the benefits of the spread of the Group's operations
across four geographies and exposure to a broad range of
end-markets.
Cost-of-living pressures driven by
high inflation and interest rate rises led to reduced spending by
households on home improvements and weakened demand for new homes
as affordability became stretched. Volumes in the
distribution businesses were therefore lower in these weaker
markets. Building materials price inflation gradually declined
before turning to deflation in the closing months of the
year.
There were sharp falls in steel
and timber prices from record highs, partly reversing the post
pandemic spike. Lower timber prices resulted in reduced
revenue and gross profit in the Distribution businesses in Ireland
and the UK. The Distribution business in Ireland was also impacted
by lower revenue and gross profit on steel, a product category
where we hold higher levels of inventory compared to other building
materials because of the relatively long lead times between order
and delivery.
Payroll inflation across the Group
increased at the fastest rate in decades in tight and competitive
labour markets. We responded to the weaker market conditions and
cost pressures by implementing targeted reductions in payroll
costs, mainly through normal rates of attrition, and discretionary
overheads.
The medium and long-term
underlying demand fundamentals of the Group's markets remain strong
and Grafton is well positioned to benefit from favourable
structural trends as its markets recover and demand
normalises. Upgrading and deep retrofitting an aging housing
stock to reduce carbon emissions and improve energy efficiency are
positive drivers of medium-term activity in the housing Repair,
Maintenance and Improvement ("RMI") market. House building
volumes are well supported by demographic trends and a prolonged
period of under supply that has created pent-up demand.
Distribution
Ireland
Chadwicks, Ireland's leading
building materials distribution business, responded well to
evolving market conditions and managed to contend with significant
steel and timber price deflation, competitive pricing pressure in
flat markets and operating cost inflation. Profitability
declined in the first half and the business operated in line with
the prior year in the second half.
UK
Selco, the UK's leading fixed
price trade only builders' merchant, is almost entirely exposed to
the UK residential RMI market, a segment of the construction sector
that has been hardest hit in the current cyclical downturn that
started in the first quarter of 2022. The rate of decline in
volumes moderated from 6.0 per cent in the first half to 2.3 per
cent in the second half.
Selco responded to these tougher
market conditions and invested in pricing on core products,
balancing volume and margin to optimise profitability.
There was a sharp decline in operating
profit for the year but cost reduction measures implemented to
align volumes and operating costs generated material savings in the
second half of the year. These helped mitigate some of
the impact of the decline in volumes and gross margin.
Leyland SDM, one of the most
recognisable decorating and DIY brands in Central London, performed
well, increasing revenue and operating profit and opened a new
store in Hammersmith in February 2023. TG Lynes, the commercial pipes and fittings
distribution business in London, delivered a good result in a
weaker housing market almost matching the record profitability
achieved in the prior year.
MacBlair, the market leader in
Northern Ireland, encountered weak trading conditions in a
competitive market that reduced revenue and profitability. Market
coverage was extended with the acquisition of branches in
Portglenone, County Antrim and Strabane, County
Tyrone.
The Netherlands
Trading in Isero, the market
leading specialist distributor of ironmongery, tools and fixings,
held up well in a weaker housing market. Revenue growth with key
account customers engaged on large commercial construction projects
and the supply of large access control
systems more than offset lower sales to
timber factories and smaller customers who are typically sole trader businesses operating in construction
and other industries. Profitability was reduced by margin and cost
pressures.
Finland
IKH, the leading specialist
distributor of workwear, PPE, tools and spare parts, saw the
Finnish economy and construction sector progressively weaken as the
year developed leading to a softening of demand across the IKH
Partner network and owned stores and a decline in revenue and
profitability.
Retailing
Woodie's market leading DIY, Home
and Garden business in Ireland increased revenue despite the most
challenging economic conditions encountered by customers for some
time and sustained a slight dip in profitability.
Manufacturing
CPI Mortars, the market leading
manufacturer of dry mortars in Great Britain, maintained
profitability at close to the prior year level despite experiencing
a sharp decline in volumes as multiple interest rate rises led
housebuilders to scale back supply in response to weaker demand for
new houses.
StairBox, the on-line market
leading manufacturer of bespoke staircases in Great Britain that
has a pioneering focus on the use of technology, experienced good
demand in a challenging housing RMI market and increased
profitability on slightly lower volumes.
Property
A property profit of £1.3 million
(2022: £25.4 million) was realised in the year on
disposal of three surplus properties that
generated proceeds of £2.2 million.
Cashflow
The Group's cashflow from
operations of £334.3 million (2022: £278.8 million) highlights its
exceptional track record of cash generation. Similarly, free
cashflow of £205.6 million (£163.3 million) was very strong.
Free cashflow benefitted from a reduction in working capital by
£29.5 million that incorporated a planned reduction in inventory of
£37.8 million in response to an improvement supply
chains.
Cash returned to shareholders in
dividend payments and share buybacks amounted to £228.3 million
(2022: £208.9 million), excluding transaction costs. This
brought the amount of cash returned to shareholders in 2022 and
2023 to £437.2 million.
The Group had net cash of £379.7
million before IFRS 16 lease liabilities at 31 December 2023, a
decline of £78.5 million from £458.2 million at 31 December
2022. Net debt at 31 December 2023, including IFRS 16 lease
liabilities, was £49.3 million which compares to net cash of £8.9
million at 31 December 2022.
Returns to Shareholders
Dividends
The Board is recommending a final
dividend for 2023 of 26.0p (2022: 23.75p) per ordinary share in
line with its progressive dividend policy. An interim
dividend of 10.0p (2022: 9.25p) per share was paid on 20 October
2023. The total dividend for the year is 36.0p per share, an
increase of 9.1 per cent on dividends of 33.0p paid for
2022.
The cash outflow on this year's
final dividend is based on the cash outflow of £51.6 million on
last year's final dividend. Notwithstanding the reduction in
profitability, the Board has decided to maintain the same level of
cash payment for the final dividend for 2023 to allow shareholders
to benefit from the lower number of shares in issue following the
buyback of shares. The actual amount of the cash outflow on
the 2023 final dividend is dependent on the number of shares in
issue on the dividend record date. This is consistent with
the approach adopted in respect of the interim dividend for
2023.
The total dividend for 2023 of
36.0p is 2.2 times (2022: 2.9 times) covered by adjusted earnings
per share of 77.9p (2022: 96.6p) and is at the lower end of
guidance for cover of between two and three times. This
reflects Board confidence in the Group's prospects, very strong
balance sheet, profitability and cashflow from operations for the
year.
The Group's cash outflow on
dividends paid during the year was £72.6 million (2022: £73.9
million). A liability for the final dividend has not been
recognised at 31 December 2023 as there was no payment obligation
at that date.
The final dividend will be paid on
9 May 2024 to shareholders on the Register of Members at the close
of business on 12 April 2024, the record date. The
ex-dividend date is 11 April 2024. The final dividend is
subject to approval by shareholders at the Annual General Meeting
to be held on 2 May 2024.
Share Buybacks
In line with its disciplined
approach to capital allocation, Grafton has completed three share
buyback programmes since May 2022 supported by its exceptionally
strong financial position. These three
programmes involved the repurchase of a total of 29.18 million
ordinary shares at a total cost of £243.3 million and an average
share price of £8.34. The closing share price on 29 December 2023
was £9.11. The shares bought back
represented 12.7 per cent of the ordinary share capital.
The fourth share buyback programme
launched on 31 August 2023 was extended to 31 May 2024 and the
maximum aggregate consideration increased from £50 million to £100
million. The Group had completed £47.5 million of this
buyback programme by 31 December 2023 and £81.4 million by 5 March
2024.
A total of £290.8 million was
returned to shareholders through share buybacks between 9 May 2022
and 31 December 2023 reflecting confidence
in the Group's trading prospects, its strong balance sheet and cash
generative operations while significant capacity was retained to
invest in strategic growth opportunities.
Allocation of Capital
Grafton has developed historically
through both organic growth and acquisitions and the Board will
continue to allocate capital to existing markets that are
structurally attractive through the cycle and to brands that have
headroom for growth. The Group believes it has the
opportunity to play a leading role in the consolidation of building
materials distribution markets in existing and new geographies in
Europe, leveraging off the extensive experience in general builders
merchanting that originated in its home market in Ireland and which
has seen it develop brand leading businesses in new territories
over the last thirty years. Acquisitions will be focused on
enhancing positions in existing markets, exploiting appropriate
opportunities in adjacent markets, and developing new growth
platforms in new geographies.
Our corporate development team is
focused on opportunities to build market leading positions and has
made encouraging progress in developing a pipeline of opportunities
by engaging with potential vendors of platform acquisitions in
fragmented segments of the European building materials and
construction related products distribution market. The
acquisition search in Europe was widened at the start of 2023, both
geographically and by product segment, to include a larger set of
potential value creation opportunities. The rate at
which capital will be allocated for platform acquisitions is
dependent on the timing of divestment decisions by business owners
and agreeing terms that are mutually acceptable.
Net cash before IFRS 16 leases was
£379.7 million at 31 December 2023 (31 December 2022: £458.2
million) and as previously reported the Group is targeting over the
medium-term to return to a more optimum capital structure with an
appropriate level of financial leverage rather than continuing to
hold net cash. Grafton has an investment grade credit rating
and recognises the importance of maintaining debt at an appropriate
level given the cyclical nature of its markets. Our objective
is to allocate capital to opportunities that meet or exceed our
defined hurdle rates of return and to manage the balance sheet and
liquidity of the Group to ensure stability over the long term
regardless of economic or financial market conditions.
The Board prioritises growing
Grafton over the medium to long-term through value adding organic
and acquisitive growth opportunities. It may also decide from
time-to-time to return surplus cash to shareholders where it forms
the view that this represents an attractive financial investment
relative to other opportunities and is appropriate for the delivery
of value for shareholders while at same time retaining the
financial capacity to invest in strategic growth opportunities. As
noted above, the Group returned £155.7 million to shareholders
through share buybacks during the year (2022: £135.0 million) and
£290.8 million in the two years to the end of
2023.
Implementing Our Sustainability Strategy
Sustainability is at the core of
how we conduct business and we took a number of major steps in
implementing our sustainability strategy during 2023. Given the
strategic importance of sustainability to our businesses, we
established an Executive Sustainability Committee chaired by our
Group CEO and whose membership includes the Group CFO, Group Head
of Sustainability and the CEOs of our largest businesses. The
purpose of the Committee is to develop and implement the Group's
sustainability strategy subject to approval and ultimate oversight
by the Board. It will also ensure that sustainability
considerations are appropriately embedded into the wider business
strategy and commercial decision-making process.
In preparation for the new EU
Corporate Sustainability Reporting Directive ("CSRD"), we completed
a Double Materiality Exercise and undertook extensive stakeholder
engagement as part of the process. Stakeholder engagement is a
central part of our preparation for the implementation of the CSRD
and included reaching out to major shareholders as part of the
consultation process. This engagement contributed to our 'double
materiality' assessment which looks at sustainability issues
through two lenses, the impact that a business has on society and
the environment as well as the financial impact an issue may have
on the business's performance. It also helped inform the
future development of our ESG strategy and reporting
plans.
Grafton is committed to delivering
net zero no later than the end of 2050. We take our climate change
responsibilities very seriously. We completed the calculation
of Scope 3 emissions and submitted net zero targets to the Science
Based Targets Initiative ("SBTi") for validation prior to the
year-end which was one year ahead of our target date. This was a
clear priority for the stakeholders that we engaged with during the
year.
Scope 3 Greenhouse Gas ("GHG")
emissions are estimated to account for 98 per cent of the Group's
total GHG emissions and one of the Group's areas of focus is on
achieving targeted reductions in GHG emissions by working
increasingly more closely with manufacturers, suppliers and other
stakeholders who have committed to set GHG emissions reduction
targets through SBTi. We developed a transition plan that
shows how these targets will be achieved, how progress will be
monitored and the estimated financial impact of
implementation.
Today we are publishing an
assessment and update on our 2023 sustainability performance which
is integrated within our 2023 Annual Report and Accounts. This
covers five priority areas to build a more sustainable future
being: Planet, Customer & Product, People, Community and
Ethics. While there is still much to do, our overall Group and
individual businesses have demonstrated very strong progress during
2023 as shown below:
Planet
· Achieved a 12.2 per cent reduction in Scope 1 and 2 tCO2e per
£'million of revenue. This was equivalent to an 11.5 per cent
reduction in absolute emissions.
· Achieved a 98 per cent diversion of operational waste from
landfill.
· Continued investment in building energy management systems
and solar PV and alternative fuels to drive reductions in energy
usage and our Scope 1 and 2 GHG.
· Calculated Scope 3 GHG emissions and submitted net zero
targets for validation.
Customer & Product
· Hire, refurbishment and recycling offerings are available in
a number of our businesses.
· Responsible timber sourcing is an important area of focus for
our distribution businesses and we began to
further strengthen our due diligence to meet forthcoming European
legislation.
People
· Our
Diversity and inclusion working groups continued to support our
businesses to encourage an inclusive culture that promotes
diversity. Whilst the overall number of females across the Group
declined slightly year on year, we are delighted that five of our
businesses, CPI Euromix, TG Lynes, MacBlair, IKH and Isero,
increased their gender diversity in 2023.
· Woodie's was one of only three organisations to be listed as
a Best Workplace for Women for five consecutive years in
Ireland. CPI EuroMix became a platinum member of Women into
Construction and Chadwicks achieved silver status in Diversity from
the Irish Centre for Diversity.
· Our
conviction that 'there is nothing we do that is so urgent we cannot
do it safely' drove our health and safety programme across the
Group. All businesses have maintained their focus on reducing risk
across all operations from supplier deliveries through store
operations to ultimate delivery to customers which resulted in a
further seven per cent reduction in the Lost Time Injury Frequency
Rate against 2022 and a 20 per cent overall reduction against the
base year of 2018.
Community
· Grafton invested £830,000 in its communities through cash
contributions, volunteering and in-kind products and services which
was in line with our commitment to spend 0.4 per cent of our
operating profit on good causes. In
addition, £780,000 was raised through colleague and customer
fundraising. The Group's commitment to community investment
will increase to 0.6 per cent of operating profit in
2024.
Ethics
· A
strong focus was placed on ethical business training programmes and
there was 86 per cent compliance with the business conduct and
ethics programme.
· A
new information security training and awareness programme was
launched across the Group during the year. By the year end,
78 per cent of Group colleagues had completed IT and cybersecurity
training.
· The
Group's businesses continued to embed a supply chain management
system in partnership with an expert risk management company and
the supplier response rate increased to 81 per cent from 67 per
cent in the prior year.
Grafton's sustainability agenda is
focused on those areas that are most material to the business and
deliver tangible results and outcomes that will make a real
difference to all its stakeholders. The Group's sustainability
programme also informs capital allocation and day to day
operational decisions and recognises the positive connection
between sustainable business practices and financial
performance.
Current Trading & Outlook
While trading conditions are
expected to remain challenging during 2024, the backdrop has
improved with inflation easing and markets starting to anticipate
interest rate reductions that will ease pressure on mortgage
holders and improve affordability. In recent months income
growth has outpaced the rise in inflation in tight labour markets
and households have seen a real increase in disposable
incomes.
While we remain cautious about the
near-term prospects for our markets, we are confident that the
commitment and hard work of our 9,000 colleagues and the agility
and resolve of our management teams in our market leading brands
will continue to deliver a strong proposition for our
customers.
Demand fundamentals in the Group's
markets are underpinned by an under supply of new homes to meet
demand over a prolonged period and an aging housing stock requiring
investment to upgrade including energy conservation
measures.
Grafton has a portfolio of cash
generative businesses and exited 2023 in an excellent financial
position that provides a strong platform for the future growth and
development of our Group.
Whilst uncertainties remain in the
short term, we are confident that Grafton is exceptionally well
positioned to benefit as the cycle turns, markets normalise and
consumer confidence improves.
In Ireland, the economy is now
entering a period of more moderate growth as the pace of job
creation slows and investment eases. We expect resilient
demand in the residential RMI and DIY markets. House
completions should continue to increase on the back of strong
underlying demand and the allocation of €5.1 billion by the
Government of Ireland to investment in housing.
In the UK, while we remain
cautious on the near-term outlook for discretionary spending on
home improvements by households there are signs that consumer
confidence is improving with inflation falling, real take home pay
rising and the housing market starting to recover on the prospect
of interest rates being cut. The rise in interest rates has
made new homes less affordable for many households and we expect
housing supply and the build-out rate of new developments to slow
in response to the fall experienced last year in reservation
rates.
In the Netherlands, declining
inflation and strong growth in real incomes is expected to support
household spending. There are some early indications that the
downturn in the housing market has bottomed out and that
transactions for existing and new homes should start to
increase.
In Finland, the economy is in a
mild recession and the recovery is expected to be slow.
Residential and non-residential construction is expected to
decline further in the near term.
Taking the individual markets into
account, we currently expect overall like-for-like revenue for the
financial year to be relatively flat, with the first half activity
levels likely to be weaker than the prior year comparator but with
more reasons for optimism that we could start to see signs of
improvement emerge in the second half. As with the last
financial year, operating profit will face the headwind of
operating cost inflation, largely attributable to the impact of
statutory employment cost increases and collective labour
agreements. The Group will remain focused on operating as
efficiently as possible without compromising its market leading
customer propositions or the longer terms prospects of its
brands.
Group average daily like-for-like
revenue in the period from 1 January 2024 to 29 February was 5.3
per cent lower than the same period last year. Average daily
like-for-like revenue in the UK Distribution business was 9.0 per
cent down on the prior year. There was a reduction of 1.0 per cent
in the Distribution business in Ireland, 2.2 per cent in the
Netherlands and 10.7 per cent in Finland. Retailing average daily
like-for-like revenue grew by 4.2 per cent while Manufacturing was
down by 22.6 per cent.
Price deflation and wet weather,
particularly in the UK, contributed to weaker than anticipated
revenue in January and February. Woodie's had a good start to the
year with consumer spending in Ireland showing resilience.
Profitability in the first two months was in line with our
expectations.
We will continue to allocate
organic development capital as required to ensure
that the Group's brands continue to support their
customers and strengthen their market positions. In parallel, we will continue to evaluate and progress
possible acquisition opportunities and engage with potential
vendors in our chosen market segments across
Europe.
Operating Review
The Distribution businesses in the
UK, Ireland, the Netherlands and Finland contributed 83.7 per cent
of Group revenue (2022: 84.2 per cent), Retailing 11.1 per cent
(2022: 10.6 per cent) and Manufacturing 5.2 per cent (2022: 5.2 per
cent).
Distribution Segment (83.7% of Group Revenue,
2022: 84.2%)
|
2023
|
2022
|
|
£'m
|
£'m
|
Change*
|
Revenue
|
1,940.4
|
1,936.8
|
0.2%
|
Adjusted operating profit before
property profit
|
155.8
|
210.3
|
(25.9%)
|
Adjusted operating profit margin
before property profit
|
8.0%
|
10.9%
|
(290bps)
|
Adjusted operating profit
|
157.1
|
235.6
|
(33.4%)
|
Adjusted operating profit
margin
|
8.1%
|
12.2%
|
(410bps)
|
*Change represents the movement between 2023 v 2022 and is
based on unrounded numbers
Ireland Distribution generated
27.2 per cent (2022: 26.9 per cent) of Group revenue, UK
Distribution 35.3 per cent (2022: 36.5 per cent), Netherlands
Distribution 15.2 per cent (2022: 14.6 per cent) and Finland
Distribution 6.0 per cent (2022: 6.2 per cent).
Ireland Distribution (27.2% of Group Revenue,
2022: 26.9%)
|
2023
|
2022
|
|
Constant
Currency
|
£'m
|
£'m
|
Change*
|
Change*
|
Revenue
|
631.0
|
618.3
|
2.1%
|
0.1%
|
Adjusted operating profit before
property profit
|
60.9
|
70.5
|
(13.5%)
|
(14.8%)
|
Adjusted operating profit margin
before property profit
|
9.7%
|
11.4%
|
(170bps)
|
-
|
Adjusted operating profit
|
61.7
|
71.5
|
(13.6%)
|
(10.2%)
|
Adjusted operating profit
margin
|
9.8%
|
11.6%
|
(180bps)
|
-
|
*Change represents the movement between 2023 v 2022 and is
based on unrounded numbers
Chadwicks responded well to
evolving market conditions and contended with significant steel and
timber price deflation, competitive pricing pressure in flat
markets and pressure on costs to report a solid set of
results. The decline in operating profit occurred in the
first half and the business operated in line with the prior year in
the second half.
A decline in average daily
like-for-like revenue of 1.2 per cent was concentrated in the first
half with trading in that period impacted by a dampening in demand
for materials used in residential RMI projects in a tight market
for skilled labour and by significant timber and steel price
deflation. We had anticipated some moderation in spending on
home improvement projects as households cut back on discretionary
spending on the home due to cost-of-living pressures and a
preference for spending more on leisure activities and
experiences.
While the rise in interest rates
exerted some downward pressure on activity in the housing market,
underlying demand was strong.
There was a resumption of growth
in average daily like-for-like revenue in the second half against
the backdrop of firmer demand in the residential RMI and new build
markets and Chadwicks benefitted from an improving trend in
activity in the run-up to the year end. Chadwicks was
well-positioned to leverage its distinctive brand and market
leadership position to capitalise on growth opportunities in a
relatively flat market.
Downward pricing pressure on
steel, which contributed 9.6 per cent (2022: 11.5 per cent) of
revenue, continued through the year with the price of reinforced
steel and steel mesh, products that are used in a wide range of
construction applications, falling by 30 per cent. Demand for steel
was down across construction and other sectors internationally with
overcapacity in international mills and destocking by distributors
also contributing to the decline in prices. There was
also a post-pandemic normalisation of prices for timber and
engineered wood products used in construction and RMI projects as
prices fell from record levels due to weaker demand in
Europe. Price deflation averaged 18 per cent on steel and 14
per cent on timber.
The fall in steel and timber
prices reduced revenue and gross profit. In addition, the
gross margin on steel fell as inventory levels procured at higher
prices were run-down. The decline in gross profit on steel
was £7.0 million (€8.0 million). Lower volumes led to intense
competitive pressure that delayed the recovery of price increases
in certain product categories. The combined effect of steel
and timber price deflation and inflation in other product
categories reduced average selling prices by 1.75 per
cent.
Overheads were very tightly
controlled despite inflationary pressures which decelerated over
the course of the year. Payroll growth picked up in response to
inflation and tight labour markets and Chadwicks invested to
support colleagues and ease pressure on their finances from
cost-of-living increases. Chadwicks has a workforce of experienced,
committed and dedicated colleagues and the strength of their
engagement was recognised with a ranking of 23rd in the
Great Place to Work Best Workplaces survey of large organisations
in Ireland. Growth in overheads was partly offset by the
successful recovery of bad debts written-off in prior
years.
Housing demand was estimated at
35,000 to 40,000 units between 2017 and 2021 although completions
were only half that level which created an annual shortfall of
circa 20,000 units. The shortfall between supply and demand
narrowed significantly with the construction of 29,700 units in
2022 and 32,695 units in 2023, an increase of 10 per
cent. Demographic trends indicate annual demand
of at least 30,000 units although a much higher level of supply is
required to address the pent-up demand that developed over more
than a decade.
Housing scheme developments, the
primary segment of the new build market supplied by Chadwicks,
accounted for 47.4 per cent of units completed in Ireland in the
year. The number of units completed increased by 2.4
per cent. Single home completions, a core market for
Chadwicks provincial branches, rose by 0.9 per cent to 5,548
units. The number of apartments completed in 2023 grew by
28.0 per cent to 11,642 units. Dublin accounted for 38.6 per cent
(12,634) of units completed nationally of which 71.9 per cent
(9,081) were apartments. In view of the nature of the
physical structure and materials used in construction, apartments
generate a much smaller proportion of materials through Chadwicks
and other general distributors than other forms of residential
construction.
Forward indicators of new housing
supply gained momentum in the second half and were running at
31,000 units in the year to October 2023 while the number of units
granted planning consent increased by 13 per cent in the nine
months to September 2023. A shortage of skilled labour, increased
building materials costs, delays securing planning consents, higher
interest rates and the availability of funding to developers and
mortgages to households pose ongoing challenges to increasing the
level of housing supply to meet ongoing and latent
demand.
In September, Chadwicks partnered
with YourRetrofit.ie to help homeowners navigate the challenges of
retrofitting their homes. This platform provides households
with tailored advice on home upgrade options that match their
budgets including estimates of project materials supplied by
Chadwicks and grants available. These energy efficient
projects typically cover attic insulation, energy efficient
lighting, external wall insulation heat pumps and solar
panels.
Sitetech, the market leading
distributor of construction accessories acquired at the end of
February 2022, outperformed the pre-acquisition investment case in
its first full year under Chadwicks' ownership. The acquisition of
Rooney's, a distributor of building materials and DIY products from
a single location in Kells, County Meath, was completed at the end
of October following approval of the transaction by the Competition
and Consumer Protection Commission.
Chadwicks strengthened its
national distribution network and market leading position with the
reopening of a larger branch at East Wall Road to support existing
and planned housing and commercial and civils projects in Dublin
city centre and the Docklands area. Upgrades were completed to the
Kilkenny, Clonmel, Dundalk, Waterford, Wexford, Mallow and
Robinhood Road branches.
Chadwicks' on-line platform was
upgraded to improve the service offering to customers through a
market leading self-service and account management portal that
incorporates a full transaction history, invoice payment and
querying, viewing and downloading of statements, invoices and proof
of delivery together with account management tools including credit
limit and account ageing review. We introduced a software
solution to digitise our steel cut and bend production. This
solution digitises the process from order receipt to production and
invoice generation. It provides greater visibility on production
across our six facilities nationwide and ensures that customers
receive the necessary certification with their deliveries. We also
improved our business intelligence capabilities, enhanced data
insights on the business and trialled a number of Artificial
Intelligence initiatives.
Chadwicks is committed to being an
industry leading distributor of sustainable building materials and
to working with partners across the supply chain in supporting its
customers to reduce carbon emissions by using the most
environmentally efficient materials and products on the
market. ECO Centres that promote sustainable building
products including external wall and internal insulation,
airtightness, ventilation systems, heat pumps and controls, solar
energy and water-saving products have been rolled-out in 21
branches.
UK Distribution (35.3% of Group Revenue,
2022: 36.5%)
|
2023
|
2022
|
|
£'m
|
£'m
|
Change*
|
Revenue
|
818.1
|
838.6
|
(2.4%)
|
Adjusted operating profit before
property profit
|
47.3
|
81.8
|
(42.3%)
|
Adjusted operating profit margin
before property profit
|
5.8%
|
9.8%
|
(400bps)
|
Adjusted operating profit
|
47.7
|
106.2
|
(55.1%)
|
Adjusted operating profit
margin
|
5.8%
|
12.7%
|
(690bps)
|
*Change represents the movement between 2023 v 2022 and is
based on unrounded numbers
Average daily like-for-like
revenue in the UK Distribution business was down by 3.2 per cent in
the year. The rate of decline increased from 2.3 per cent in
the first half to 4.1 per cent in the second half due to building
materials price deflation.
Acquisitions and new branches
contributed revenue of £10.3 million.
Gross margin was 160 basis points
lower following significant investment in pricing to deliver even
better value for customers on core ranges, maintain competitiveness
and drive volume in a weak market. Changes in mix also
contributed to the decline.
Adjusted operating profit before
property profit declined to £47.3 million (2022: £81.8 million) and
the adjusted operating profit margin, before property profit, was
400 basis points lower than last year reflecting the decline in
like-for-like revenue, investment in pricing, mix changes and
higher operating costs in a high inflation
environment.
Selco Builders Warehouse
Selco is almost entirely exposed
to the residential RMI market, a segment of the construction sector
that has been hardest hit in a prolonged cyclical downturn that
started in the first quarter of 2022.
Volumes continued to trend
downward, but the rate of decline moderated from 6.0 per cent in
the first half to 2.3 per cent in the second half and averaged 4.1
per cent for the year following a decline of 15.0 per cent in the
prior year. The drop in first half volumes was reflected in a
decline in average daily like-for-like revenue of 3.9 per cent and
price inflation of 2.1 per cent. Second half average daily
like-for-like revenue declined by 4.3 per cent and price deflation
was 2.0 per cent. Average daily like-for-like revenue for the
year was down by 4.1 per cent and inflation was relatively
flat.
Building materials price deflation
started to take hold in May and continued through to the year
end. The key drivers of the decline were timber and sheet
materials which accounted for 30 per cent of revenue. Average
transaction values were lower driven by the fall in timber prices
and changes in mix. The volume of building materials used in
structural home improvement projects was materially lower and sales
of landscaping materials were also down. The volume of energy
saving insulation products was up and demand was firmer for
bathrooms, kitchens and decorating materials.
The housing RMI market was
vulnerable to cost-of-living pressures, the decline in real
disposable incomes, interest rate rises and weakened sentiment
which combined to lead households to cut back on discretionary
spending on home improvements. The sharp increase in the
price of building materials and labour increased project costs and
reduced affordability for already stretched households. Households
were also reluctant to invest in the home during a period of
property price declines that saw prices 4.5 per cent lower in
December 2023 than in the summer of 2022.
Property transactions in Great
Britain were 19.0 per cent lower in 2023 than in 2022 and 31.0 per
cent lower than in 2021, a year that saw a temporary spike due to
the stamp duty holiday and delayed transactions from 2020 when the
housing market was in lockdown. The fall in property
transactions led to a decline in RMI activity as house buyers
typically tend to undertake improvement projects within six months
to a year of moving into a property. The decline in planning
applications for extensions and loft conversions also pointed to
reduced investment in the home and some planned home improvement
projects were put on hold or completed in stages.
Volumes were under pressure and
Selco responded by investing in price on core products in a very
competitive market that had struggled to absorb the scale of price
rises over the past two years. The pricing environment was
made more challenging by price deflation on timber products,
following price growth of 27 per cent in the prior year.
Pricing also turned negative across other product categories that
had experienced prior year growth of 16 per
cent.
Selco maintained very tight cost
discipline in an inflationary environment and contained growth in
like-for-like overheads to a low single digit figure.
Investment in payroll was a priority to support colleagues through
the cost-of-living crises in a tight labour market. There
were also cost pressures from five yearly rent reviews on a number
of branch properties. Selco's operating model has a mainly
fixed cost base and measures were implemented on a timely basis to
align operating costs more closely with lower volumes. These
measures contributed material savings to the cost base in the
second half which mitigated some of the impact of the decline in
volume and gross margin. There will be an incremental impact from
these cost savings in the first half of 2024.
Operating profit and the operating
profit margin were materially down on the prior year due mainly to
the fall in volumes and decline in the gross margin from both
investing in price in a competitive market and building materials
price deflation. The impact of cost increases was less marked
on the result for the year.
Selco operates from a network of
well-invested and well-located branches that offer customers an
attractive value and service proposition. Branches carry a
broad range of best-in-class products that are in-stock and
available when customers need them. The medium to longer-term
fundamentals of the residential RMI market are underpinned by an
aging housing stock and under-investment in recent years. Selco has
the capacity and capability to increase volumes when the
macro-economic conditions that have created the current cyclical
downturn subside and the recovery takes hold.
Selco is engaged in an ongoing
store upgrade programme that aims to deliver a better experience
for customers and colleagues while ensuring that the overall estate
is updated on a rolling basis and maintained to a good
standard. Mini upgrades were completed on two branches during
the year as part of this programme.
Branches that were opened in 2021
in Liverpool, Canning Town and Rochester and last year in Exeter
and Cheltenham, continued to grow revenue in a more challenging
market than contemplated at the planning stage. A new
branch in Peterborough, Selco's first in Cambridgeshire, opened in
April 2023 and increased the estate to 75 branches.
While we continue to progress the
search for new branch locations, as previously noted, we reassessed
plans for the rollout of new Selco stores and concluded that,
subject to finding suitable properties in priority locations, an
estate of approximately 90 stores was a realistic medium-term
target. Our assessment was based on the near-term outlook for the
UK economy and the impact of interest rate rises on the capacity of
developers to fund new projects.
Selco successfully completed a
major upgrade to its finance and operations ERP system following
significant planning and preparatory work in the prior year and
extensive testing and trialling of the new system before rollout
commenced. The upgrade was successfully deployed across the entire
branch network and Support Centre in Wythall, Birmingham. This
modern software package has a high degree of "out of the box"
functionality, offers ongoing version upgrades and provides greater
operational flexibility and efficiency.
Selco completed a successful trial
and commenced the rollout of retail floor planning software that
provides data driven insights to optimise the use of floor space in
branches, improve on-shelf availability and reduce
inventory.
Prior to the year end, Selco
launched a trial HSS Hire satellite tool and equipment hire service
in four of its branches. This development complements Selco's
building materials distribution business by offering its trade
customers a hire service, with good circular economy credentials,
under one roof.
Earlier this year, Selco launched
a trial of a Magnet kitchens showroom in three of its branches and
plans to expand the concept if the pilot is successful. Trade
customers will have access to more choice, an enhanced range of
quality products and a full design and quote service supported by
design specialists.
Brick matching implants were
trialled in four branches to complement Selco's brick matching
service that helps customers to find the right size, shape, colour
and brick strength for home extensions and renovation
projects.
Selco continued its support for
communities raising £200,000 for Cancer Research
UK.
Selco has taken significant
strides over recent years to reduce carbon emissions across the
branch estate ranging from the introduction of LED light fittings
to a new gas management system. Over 300,000 trees have been
planted in Scotland and Wales including 45,000 this year under the
"Selco Forest" initiative to sequester carbon from the Earth's
atmosphere. These trees will sequester 15,000 tonnes of carbon
during their life cycle which is equivalent to carbon emissions on
customer deliveries over a period of four years.
Selco extended a trial of solar
panels on the roof of the Barking branch with the roll-out of this
energy generation initiative in a further three branches.
Meanwhile, the process to transition the entire fleet of over 300
forklift trucks to electric, as they come up for replacement,
continued and by the year end 49 electric forklift trucks were
operational and orders placed for a further 66.
Ten Compressed Natural Gas (CNG)
vehicles are operational in the delivery hubs in London and
Birmingham and Selco reduced carbon emissions by up to 90 per cent
from switching part of its fleet to HVO (Hydrotreated Vegetable
Oil) from fossil fuel. All delivery vehicles in the two
delivery hubs in London and Birmingham are fuelled by either HVO or
natural gas. An electric dropside van with a potential range
of 230km is being trialled at the delivery hub in
Birmingham.
Leyland SDM
Leyland SDM, one of the most
recognisable decorating and DIY brands in Central London, performed
well increasing operating profit for the year despite challenging
trading conditions in the RMI market.
Average daily like-for-like
revenue growth slowed from 15.5 per cent in the first half to 3.3
per cent in second half and increased by 9.0 per cent for the year
driven by inflation and volume growth. The comparator performance
showed growth of 2.0 per cent in the first half and 11.0 per cent
in the second half as the business made post pandemic gains in the
prior year following the return of workers and visitors to the City
and pick-up in RMI activity. While the City continued to
benefit from growth in international tourism and leisure activity,
there were headwinds facing domestic spending in response to the
cost-of-living squeeze and the rising cost of debt that were
reflected in a contraction in average daily like-for-like revenue
in the final months of the year.
Leyland SDM operates a unique
portfolio of convenience-led, mainly high street stores that are
situated in some of London's most prominent areas to support trade
and retail customers who prioritise location, service, convenience
and access to product knowledge and advice. We improved our
category management, availability, ranging and merchandising as
well as simplifying some of our operating procedures and augmenting
others.
We invested in our people by
increasing pay for frontline hourly paid colleagues to reward them
for providing excellent everyday customer service. This
investment was recognised in a significant improvement in colleague
retention and engagement.
The operating and financial
performance of Leyland SDM showed a marked improvement in the year
and good foundations were laid on which to make further progress as
trading conditions improve.
MacBlair
The MacBlair distribution business
in Northern Ireland encountered difficult trading conditions and
pressure on gross margins resulting in a sharp decline in operating
profit.
Average daily like-for-like
revenue was down by 6.3 per cent for the year. Revenue from
house building declined sharply as interest rate rises reduced
affordability and house builders scaled back output in response to
weaker demand. Housing starts and completions in the
province were down by 22 per cent in the nine months to the end of
September. Housing RMI revenue was flat and volumes were
lower reflecting a decline in housing transactions in Northern
Ireland by 16.0 per cent for the second successive year. The
commercial and civils segments, which account for one-fifth of
revenue, showed modest growth. Competition was intense in
quieter markets and there was downward pressure on gross margins in
all end-markets.
MacBlair extended market coverage
in the province with the acquisition in June 2023 of Clady Timber,
a distributor of timber and building materials from a single branch
in Portglenone, County Antrim. In July 2023, B. MacNamee, a
distributor of building materials, timber, hardware, power tools,
plumbing and electrical products from a single branch in Strabane,
County Tyrone, was acquired, increasing the number of MacBlair
branches to 23.
TG Lynes
The London based TG Lynes
commercial pipes and fittings distribution business delivered an
operating profit that was just slightly lower than the record prior
year performance despite more challenging market conditions.
This result continued a track record of market outperformance since
it was acquired by Grafton in 2015.
Revenue growth was attributed to
product price inflation as volumes were flat.
Demand from subcontractors to
national housebuilders was softer, as anticipated, but
non-residential new build projects with long lead times that
account for a high proportion of revenue in the hotel, leisure,
data centre, retail and office sectors held up. Public sector
funded upgrades to schools, hospitals and universities were also
resilient.
Netherlands Distribution (15.2% of Group Revenue,
2022: 14.6%)
|
2023
|
2022
|
|
Constant Currency
Change*
|
£'m
|
£'m
|
Change*
|
Revenue
|
351.5
|
336.7
|
4.4%
|
2.3%
|
Adjusted operating profit
|
33.4
|
37.6
|
(11.2%)
|
(13.2%)
|
Adjusted operating profit
margin
|
9.5%
|
11.2%
|
(170bps)
|
-
|
*Change represents the movement between 2023 v 2022 and is
based on unrounded numbers
The Isero ironmongery, tools and
fixings distribution business delivered a solid performance in a
market that softened as the year developed.
Isero performed strongly in the
first quarter increasing average daily like-for-like revenue by 4.8
per cent despite a decline in existing housing transactions and
slowdown in new home construction. Collected branch revenue
increased as customers transferred from new build to repair and
maintenance projects. Revenue from key account customers engaged on
large commercial construction projects also grew. Average
daily like-for-like revenue growth slowed to 2.6 per cent in the
second quarter, a rate mainly driven by product price
inflation.
Average daily like-for-like
revenue growth slowed further in the third quarter with key account
customers continuing to more than offset lower sales to smaller
customers and timber factories. Average daily like-for-like
revenue turned marginally negative in the final months of the year
as the rate of materials price inflation eased considerably.
Volumes were flat for the year and inflation was the primary driver
of growth in average daily like-for-like revenue by 2.3 per
cent.
Overall revenue growth in the year
benefitted from increased volumes with new and established key
account customers engaged on large commercial construction
projects, including apartment building and the maintenance of
public sector housing. Strong growth in project revenue was
driven by the supply of large access control systems. Revenue
was lower from the supply of hinges and locks to timber factories
caused by the decline in house building but started to recover in
the fourth quarter. Transaction numbers
with smaller customers who are typically sole trader businesses
engaged on housing RMI projects and other sectors of industry were
weaker reflecting the pressure on household spending from higher
interest rates and the downturn in the economy.
The gross margin was in line with
the prior year in the first half but was slightly down for the
year. The change in product mix and end-markets supplied,
lower gains from tactical procurement as materials price inflation
edged down and competitive pressure had an adverse effect on
margins.
Operating costs, while tightly
controlled, were pushed up by inflation related increases in
employment and estate costs and energy costs were also higher. In a
tight labour market, with the rate of unemployment running at less
than four per cent and a high rate of inflation, payroll
increases negotiated between employers'
representatives and unions under collective labour agreements
(CLA's) rose at the highest level in the Netherlands for over 40
years.
The drop-through effect of flat
volumes, gross margin compression and higher operating costs
reduced operating profit and the operating
margin.
The Netherlands' economy
contracted in each of the first three quarters of the year under
the pressure of high interest rates and elevated inflation.
Although consumer sentiment remained weak, inflation passed its
peak and started to fall, while wage-growth remained high and house
prices showed early signs of recovery. Real disposable
incomes rose as pay increases outpaced inflation.
The number of transactions in
existing homes declined for the third successive year with the
number of homes for sale falling year on year in the fourth quarter
by 26 per cent to 25,000 which compares to the long-term average of
73,000. The decline in transactions and tightness in the
housing market was mainly due to a deterioration in affordability
caused by the sharp rise in interest rates which saw sellers and
buyers pull out of the market. Transactions in newly built
homes dropped sharply as affordability was stretched by higher
interest rates on mortgages. House builders responded to the
fall in demand and low levels of pre-construction sales by delaying
new phases of housing developments.
The five branch Regts business
acquired in January 2022 continued to trade ahead of plan, building
on the excellent progress made in the prior year. The branch in
Zaandam, in the province of North Holland, that was opened in the
first half of last year performed well and made good progress
establishing a market position in the city. A second branch in the
same province, in the city of Alkmaar, that was opened in May
traded in line with plan and Isero ended the year trading from 124
branches.
Isero's sustainability journey
focused on its commitment to a more circular economy that involves
keeping products that it sells in use for as long as possible,
minimising waste and promoting resource efficiency. Boxes
were placed at branches to collect workwear and Personal Protective
Equipment ("PPE") that is returned by customers and then reused in
the manufacture of new products. A pilot scheme was launched
in five branches to promote the return of old sanitaryware that is
then refurbished by suppliers and resold. A new policy was
introduced in early 2024 that will move all cars to EV or hybrid
models and should significantly reduce vehicle
emissions.
Finland Distribution (6.0% of Group Revenue,
2022: 6.2%)
|
2023
|
2022
|
|
Constant Currency
Change*
|
£'m
|
£'m
|
Change*
|
Revenue
|
139.8
|
143.2
|
(2.4%)
|
(4.2%)
|
Operating profit
|
14.2
|
20.3
|
(30.1%)
|
(31.4%)
|
Operating profit margin
|
10.2%
|
14.2%
|
(400bps)
|
-
|
*Change represents the movement between 2023 v 2022 and is
based on unrounded numbers.
IKH is a leading distributor of
workwear and PPE, tools and spare parts in Finland where its
products are distributed through a network of independently
operated IKH Partner stores, third party distributors and owned
stores. These routes to market support customers operating in the
construction, renovation, industrial, agricultural and spares end
markets.
There was slight softening in
demand across the Partner network and owned stores in the first
half. Trading conditions became increasingly more challenging
as the second half progressed and average daily like-for-like
revenue was down by 5.6 per cent for the year.
Revenue was down across the
Partner network, third-party distributors and owned stores in
Finland driven by a decline in residential and non-residential
construction. Revenue increased with Partner stores in
Estonia and in Sweden where the business is in the early stages of
building a network of Partner stores and
distributors.
The Finnish economy was in a mild
recession in 2023 as the rise in interest rates and weaker exports
weighted on activity. Finish mortgages are mainly variable
rate and the rise in rates had a material impact on servicing costs
and the disposable incomes of 30 per cent of households who have a
mortgage. Housing starts almost halved due to the fall in
demand from owner occupiers and investors. Increased
construction costs and a decline in prices in the secondary housing
market affected the sale of new homes and housing starts. The
volume of house completions was also lower but supported by the
high level of starts in the prior year.
There was a modest decline in RMI
activity which generates half of the volume of spending on
residential activity. While strong underlying demand was
underpinned by the condition of the housing stock and demand for
energy upgrades, the uncertain economic outlook, pressure on
disposable incomes from inflation and interest rate rises and
increased cost of materials and labour led households to defer
projects to upgrade their homes.
Despite the decline in project
starts, non-residential construction held up well supported by
public sector, commercial and industrial projects that were started
in recent years. Overall construction output is estimated to
have declined by circa 10 per cent.
The owned store that was opened in
Rovaniemi, the capital city of Lapland in Northern Finland, started
to grow market share in the city. IKH opened a store in
Lielahti, a suburb of the city of Tampere, Southern Finland, in May
2023. In July 2023, IKH acquired a store from its former
partner in Kouvolan, a city in southeastern Finland and since the
year end has opened its 15th store in Roihupelto, a
suburb of Helsinki which increases its own store network to four in
the capital.
Retail Segment (11.1% of Group Revenue,
2022: 10.6%)
|
2023
|
2022
|
|
Constant Currency
Change*
|
£'m
|
£'m
|
Change*
|
Revenue
|
258.2
|
244.0
|
5.8%
|
3.9%
|
Operating profit
|
32.7
|
32.6
|
0.5%
|
(1.2%)
|
Operating profit margin
|
12.7%
|
13.3%
|
(60bps)
|
-
|
*Change represents the movement between 2023 v 2022 and is
based on unrounded numbers
Woodie's market leading DIY, Home
& Garden retail business in Ireland consolidated its market
position with revenue growth of 3.9 per cent. This very solid
trading performance was achieved despite the most challenging
economic conditions encountered by customers for some time and
reflected the unique heritage of the Woodie's brand in the retail
market in Ireland. Woodie's continued to leverage its
competitive advantage via its network of 35 stores nationally
supported by committed colleagues, its on-line channel and high
brand recognition that is synonymous with DIY, Home and
Garden.
There was a recovery in confidence
in Ireland following a marked weakening in the prior year, but
consumers remained concerned about their financial circumstances
and sentiment ended the year well below its long-term
average. The improvement in sentiment from a low base was
prompted by an easing of cost-of-living pressures and an
expectation of lower inflation and interest rates.
Revenue growth of 6.3 per cent in
the first half comprised a decline of 4.0 per cent in the first
quarter because of weak demand for seasonal products caused by poor
weather conditions and growth of 14.1 per cent in the second
quarter as the weather improved leading to strong performance in
May and June with growth led by demand for seasonal ranges. Trading
patterns in the second half were mixed with weak demand for
seasonal products in July and a strong performance in final months
of the year.
The number of customer
transactions increased by 1.3 per cent to over 8.5 million and the
average transaction value by 2.6 per cent including category and
product mix changes. The strongest performing categories were
Decorative, DIY and Building Materials.
A fall in shipping and freight
costs, a lower level of promotional activity and change in mix
contributed to a recovery in gross margin while enabling Woodie's
to deliver competitive prices and value for money.
Overheads although tightly
controlled were higher. Woodie's recognised the role played
by colleagues in the long-term success of the business and
continued to invest in pay and achieved higher retention
rates.
Woodie's digital revenue increased
by 12.0 per cent to 3.6 per cent of total revenue as investment in
digital technology created a more integrated on-line experience for
customers. The journey for Woodie's customers is a blend of
digital, using a web browser or mobile app, and the physical stores
which are often interconnected through product and project research
on-line and in-store or on-line transactions.
A new Click & Collect In-Store app was
launched for colleagues to create a seamless and fully integrated
digital experience for picking and packing and in-store collection
by customers. Woodie's continued to refine its on-line
offering by rolling out click-and-collect hubs across the store
network.
Woodie's colleagues continued to
deliver for customers and each other and the business retained its
Great Place to Work status for the eighth
successive year with a ranking of 16th place in
Ireland's Best Workplaces for large companies. Woodie's was
ranked 37th among the Best Workplaces in Europe and was
recognised as a Great Place to Work for Women in Ireland.
Colleagues continued to complete a wide range of
educational and skills programmes which are important to delivering
a superior service and an exceptional shopping experience for
customers.
Woodie's plays an active role in
the communities where its stores are located and raised over
€400,000 for four charities through its annual "Heroes"
campaign. This was the 9th year of Woodie's
"Heroes" which has raised well over €3 million to date for
charities in Ireland.
Woodie's new "Larry the Ladder"
summer TV and social media ad campaign that told the story of how
borrowing a simple everyday household object can inspire people to
extend an act of friendship to their neighbours captured the public
imagination and received millions of views in
Ireland.
Investment projects included the
rollout across part of the network of steel canopy structures over
outdoor garden centres to provide protection to customers and
products from bad weather conditions, the trialling of a new
Homeware and Homestyle concept in two stores that has received a
favourable response from customers and a new store format upgrade
to the Blanchardstown and Tallaght stores.
The phased rollout of a building
management system contributed to a significant reduction in energy
costs. This computer-based system monitors energy usage and
provides valuable insights on optimising energy consumption in
stores.
Following the successful trial of
roof mounted solar panels at the Sallynoggin branch, Woodie's has
signed an agreement to rollout solar panels at four more stores in
a project that demonstrates its ongoing commitment to reducing
carbon emissions by investing in lower cost renewable
electricity.
Manufacturing Segment (5.2% of Group Revenue,
2022: 5.2%)
|
2023
|
2022
|
|
Constant Currency
Change*
|
£'m
|
£'m
|
Change*
|
Revenue
|
120.6
|
120.6
|
0.0%
|
(0.1%)
|
Operating profit
|
30.3
|
27.4
|
10.5%
|
10.5%
|
Operating profit margin
|
25.1%
|
22.7%
|
240bps
|
-
|
*Change represents the movement between 2023 v 2022 and is
based on unrounded numbers
CPI Mortars delivered a very
good performance in a challenging market for house building.
Revenue declined by 1.9 per cent in the ten manufacturing plants
that supply dry mortar to national, regional and local house
builders and plastering contractors in Great
Britain.
The business improved its margins
as it recovered the impact of the sharp rise in the cost of raw
materials, labour, energy and fuel experienced in the prior
year.
Despite the decline in volumes and
cost pressures from higher energy, payroll and software maintenance
costs, operating profit ended the year only marginally behind the
outturn for the prior year.
Mortar volumes were flat in the
first quarter and weakened slightly in the second quarter as house
builders started to scale back activity. The rate of decline
intensified over the second half with quarter three and quarter
four volumes down by 15 per cent and 25 per cent
respectively. Volumes declined by 20 per cent in the second
half and by 10 per cent for the year. Multiple interest rate rises reduced affordability and led to
a significant fall in demand for new houses particularly from first
time buyers who were also impacted by expiry of the Help-to-Buy
scheme in March 2023. Demand for new
homes from existing homeowners was more resilient albeit lower in
response to the re-pricing of mortgage products. While there
are strong fundamentals underpinning demand for new homes, house
builders responded to the industry wide downturn by reducing the
volume of new homes constructed to align with the reduction in
order books and reservation rates.
The number of silos on customers'
sites declined in line with volumes from a record level in the
prior year as housing starts slowed and the number of outlets
operated by house builders reduced.
Packaged ready-to-use mortar
products supplied to the residential RMI market for outdoor
applications, that accounts for 10 per cent of revenue, were down
by 31 per cent for the year. The rate of decline eased
considerably in the seasonally quieter second half of the
year.
A new integrated ERP solution that
controls the entire business, has been successfully rolled out,
replacing a legacy system. It is a comprehensive business
management tool designed for a modern business and offers diverse
functionality and more robust security.
StairBox, the on-line market
leading manufacturer of bespoke staircases, experienced good demand
from trade customers across Great Britain despite challenging
trading conditions in the residential RMI market. A decline in full
year volumes by four per cent reflected growth of three per cent in
the first half and a deterioration in trading conditions in the
second half leading to volume decline of 11 per cent. Revenue
was unchanged and an increase in operating profit was supported by
an improvement in the gross margin.
In December 2023, StairBox
acquired Wooden Windows, a manufacturer of bespoke high performance
timber windows and doors based in Stoke-on-Trent.
Wooden Windows was formerly a sister company of StairBox and uses a
similar dynamic software solution that
allows customers to accurately design and price windows and doors
on its website. It supplies trade customers operating in the
residential RMI market across Great Britain and has a reputation
for quality, value and exceptional customer service. This
acquisition offers an opportunity to realise significant synergies
across the enlarged business.
MFP, a Dublin based
manufacturer of drainage, ducting and roofline systems that are
distributed through Group companies and independent merchants to
diverse end user markets of housing, renewable energy, data
centres, transport and infrastructure, performed strongly with a
doubling of operating profit. The result benefitted from raw
materials procurement gains and the supply of ducting to
infrastructure projects. The highly recognisable MFP brand
became the first manufacturer in Ireland to achieve Kitemark
certification of its electrical duct pipe range.
Financial Review
Revenue
Group revenue increased by 0.8 per
cent to £2.32 billion from £2.30 billion in 2022.
Group revenue in the like-for-like
business declined by 1.4 per cent (£32.3 million) on the prior
year. The decline in average daily like-for-like revenue was
1.1 per cent.
Incremental revenue from the
Sitetech, Woodfloor Warehouse and Regts acquisitions that were
completed in January and February 2022 and the Clady Timber, B
McNamee (Northern Ireland), Wooden Windows (England), Rooney's
(Ireland) and Kouvolan (Finland) acquisitions that were completed
during the year increased revenue by £11.3 million. The
incremental effect of branches opened in the prior year and new
branches opened during the year contributed revenue of £12.1
million.
Currency translation of revenue in
the euro denominated businesses to sterling increased revenue by
£26.6 million. The average
Sterling/Euro rate of exchange for the year ended 31 December 2023
was Stg86.98p compared to Stg85.28p in the prior year.
Adjusted Operating Profit
Adjusted operating profit of
£205.5 million was down from £285.9 million last year. The
result for the year included property profit of £1.3 million (2022:
£25.4 million).
Adjusted operating profit, before
property profit, of £204.2 million was down from £260.5 million
last year, a decline of 21.6 per cent. The adjusted operating
profit margin, before property profit, declined by 250 basis points
to 8.8 per cent from 11.3 per cent.
Net Finance Income and Expense
Net finance income was £0.4
million (2022: net expense of £12.6 million). Net finance
income incorporates an interest charge of £15.6 million (2022:
£14.9 million) on lease liabilities recognised under IFRS
16.
Interest income on cash deposits
amounted to £24.2 million (2022: £8.7 million). The Group had
cash resources of £583.9 million at the end of the year (31
December 2022: £711.7million). Returns on deposits and
account balances were higher, reflecting the increase in the Bank
of England base rate from 0.25 per cent at the start of 2022 to
5.25 per cent at the end of December 2023 (1 January 2023: 3.5 per
cent).
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. Interest payable on bank borrowings denominated in
euros and US Private Placement Senior Unsecured Notes increased to
£8.3 million (2022: £5.6 million). The increase was due to a
lower interest rate payable in the prior year period on part of the
bank debt borrowed under the ECB's Targeted Longer-Term Refinancing
Operations which was repaid on 10 December 2022. The interest rate
payable on bank debt also increased following increases by the
European Central Bank to its refinancing rate from zero per cent in
January 2022 to 4.5 per cent on 31 December 2023.
Net finance income included a
foreign exchange translation gain of £0.5 million which compares to
a loss of £0.7 million in the prior year. The net finance
cost on pension scheme obligations was £0.4 million (2022: £0.1
million).
Taxation
The income tax expense of £34.8
million (2022: £43.1 million) is equivalent to an effective tax
rate of 19.0 per cent of profit before tax (2022: 17.1 per
cent). This is a blended rate of corporation tax on profits
in the four countries where the Group operates. The increase
in the effective rate reflected an increase in the UK rate of
corporation tax to 25 per cent with effect from 1 April 2023 from
the 19 per cent rate that prevailed prior to that date. It is
anticipated that the Group's effective rate of corporation tax will
increase to 21.0 per cent in 2024.
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.
Cashflow
Cash generated from operations for
the year of £334.3 million (2022: £278.8 million) was very strong
and benefitted from a reduction in working capital by £29.5 million
that reversed part of the increase in working capital of £71.3
million in the prior year.
Interest paid amounted to £23.1
million (2022: £21.9 million) which included interest of £15.6
million on IFRS 16 lease liabilities (2022: £14.9 million).
Taxation paid was £38.4 million (2022: £39.5 million). Net
interest received was £1.1 million (2022: net interest paid of
£13.2 million). Cashflow from operations after net interest
received and taxation was £297.0 million (2022: £226.0
million).
The cash outflow on the dividend
payment was £72.6 million (2022: £73.9 million) and £155.7 million
(2022: £135.0 million) was spent on the buyback of shares.
The total cash outflow on the dividend payment and buyback of
shares was £228.3 million (2022: £208.9 million), excluding
transaction costs.
Capital Expenditure and Investment in Intangible
Assets
We continued to maintain
appropriate control over capital expenditure which amounted to
£48.8 million (2022: £55.3 million). There was also
expenditure of £4.0 million (2022: £2.5 million) on software that
is classified as intangible assets.
Asset replacement capital
expenditure of £27.4 million (2022: £33.2 million) compares to the
depreciation charge (before IFRS 16) of £39.0 million (2022: £34.25
million) on property, plant and equipment ("PPE") and related
principally to the replacement of plant and machinery, plant and
tools for hire by customers, IT hardware and other assets required
to operate the Group's branch network.
The Group incurred development
capital expenditure of £21.4 million (2022: £22.1 million) on a
range of developments including new branches in Chadwicks, Selco,
Leyland, Isero and IKH, branch upgrades in Chadwicks, Selco,
Woodie's and Isero and investment in IT hardware.
The proceeds received from the
disposal of PPE and properties held for sale was £3.6 million
(2022: £28.5 million including investment properties). The
amount spent on capital expenditure and software development net of
the proceeds received on asset disposals was £49.1
million.
Pensions
The Group operates four legacy
defined benefit schemes (one in the UK and three in Ireland), all
of which are closed to future accrual. These schemes had an
accounting deficit of £5.8 million at the year-end which was down
by £4.7 million from a deficit of £10.5 million on 31 December
2022.
Changes to financial assumptions
increased scheme liabilities by £7.4 million reflecting the net
impact from the decrease in discount rates and gain from the fall
in inflation expectations. Changes in demographic assumptions
decreased scheme liabilities by £4.5 million and experience
variations increased liabilities by £1.0 million.
The decrease in discount rates
used to discount scheme liabilities moved in line with the decline
in corporate bond rates. The rate used to discount UK liabilities
declined by 30 basis points to 4.50 per cent and the rate used to
discount Irish liabilities fell by 55 basis points to 3.15 per
cent.
Inflation rates increased over the
past year and this impacted the value of liabilities as future
benefit payments are directly or indirectly linked to future rates
of inflation. In the UK scheme, inflation in the period up to
and after retirement increases the projected growth in benefits. In
Ireland, pensions are fixed at the date members retire and
inflation only increases liabilities up to that date.
The average value of opening and
closing plan assets was £193.7 million (2022: £238.0
million). The return on plan assets was
£14.4 million (£13.1 million after deducting the
effect of the buy-in referred to below). (2022: loss of £93.3
million due to the fall in the values of liability driven
investments, bonds and equities that was
almost matched by the reduction in liabilities).
The deficit on the UK scheme
increased marginally from £14.2 million to £14.6
million. The surplus for the three
Irish schemes increased from £4.6 million to £9.5 million over the
year.
In December 2023, the Trustees of
the three Irish defined benefit pension schemes purchased annuities
from one of Ireland's leading life insurance companies to match the
benefits being paid to existing pensioners. Under these contracts
the insurer will reimburse the schemes for payments to these
pensioners into the future. These insurance contracts are
held by the trustees of the three schemes and represent assets of
the schemes. This transaction has reduced the Company's exposure to
pension risk by removing the longevity and investment risk
associated with this portion of the Company's Defined Benefit
liabilities. In future years' reporting, the value of the
liabilities relating to these pensioners will exactly match the
value of the associated annuity contracts. The cost of
purchasing the annuities was €44.7 million. This compares to the
value of the pensions on the transaction date of €43.3 million,
determined in accordance with the IAS19 accounting standard. The
difference between these two values has been allowed for in the
Remeasurement item relating to the "Return on assets excluding
interest income".
There was a scheme deficit of £0.8
million (31 December 2022: £0.8 million) related to the Netherlands
business.
Net Cash/Debt
Net debt (including lease
obligations) at 31 December 2023 was £49.3 million which compares
to net cash of £8.9 million at 31 December 2022.
The Group's net cash position
before recognising lease liabilities was £379.7 million, down from
£458.2 million at 31 December 2022.
The Group's policy is to maintain
its investment grade credit rating while investing in organic
developments and acquisition opportunities.
Liquidity
Grafton was in a very strong
financial position at the end of the year with excellent liquidity,
significant net cash before IFRS 16 lease liabilities and a robust
balance sheet.
The Group had liquidity of £849.6
million at 31 December 2023 (31 December 2022: £934.6
million). As shown in the analysis of liquidity on page 50,
accessible cash amounted to £579.9 million (31 December 2022:
£707.7 million) and there were undrawn revolving bank facilities of
£269.7 million (31 December 2022: £226.9 million).
The Group had bilateral loan
facilities of £336.9 million at 31 December 2023 (31 December 2022:
£340.7 million) with four relationship banks and debt obligations
of £139.1 million (31 December 2022: £141.9 million) from the issue
of unsecured senior notes in the US Private Placement
market.
The revolving loan facilities of
£336.9 million with four established relationship banks were put in
place in 2022 for a term of five years to August 2027. The
arrangements included two one-year extension options exercisable at
the discretion of Grafton and the four banks. The first
one-year extension was agreed and exercised during the year and
these facilities are now repayable in August 2028. 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.
The average maturity of the
committed bank facilities and unsecured senior notes was 4.9 years
at 31 December 2023.
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 partial hedge against exchange rate risk on
euro assets in the businesses in Ireland, the Netherlands and
Finland.
Shareholders' Equity
Shareholders' equity declined by
£89.8 million to £1.66 billion at 31 December 2023 from £1.75
billion at 31 December 2022. Profit after tax increased
shareholders' equity by £148.7 million. There was a loss of
£12.2 million on retranslation of euro denominated net assets to
sterling at the period end rate of exchange. Shareholders'
equity was reduced for dividends paid of £72.6 million and by
£159.5 million for the buyback of shares. Other changes increased
equity by £5.7 million.
Return on Capital Employed
Return on Capital Employed in
continuing operations declined by 530 basis points to 11.9 per cent
(2022: 17.2 per cent) including leased assets.
Principal Risks and Uncertainties
The principal risks affecting the
Group are set out on pages 68 to 75 of the 2023 Annual Report and
Accounts.
Grafton Group plc
Group Condensed Income Statement
For the year ended 31 December
2023
|
Notes
|
|
2023
£'000
|
|
2022
£'000
|
Revenue
|
2
|
|
2,319,242
|
|
2,301,482
|
Operating costs
|
|
|
(2,137,414)
|
|
(2,062,597)
|
Property profits
|
3
|
|
1,261
|
|
25,381
|
Operating profit
|
|
|
183,089
|
|
264,266
|
Finance expense
|
4
|
|
(24,292)
|
|
(21,273)
|
Finance income
|
4
|
|
24,715
|
|
8,690
|
Profit before tax
|
|
|
183,512
|
|
251,683
|
Income tax expense
|
17
|
|
(34,789)
|
|
(43,065)
|
Profit after tax for the financial year
|
|
|
148,723
|
|
208,618
|
|
|
|
|
|
|
Profit attributable
to:
|
|
|
|
|
|
Owners of the Company
|
|
|
148,723
|
|
208,618
|
|
|
|
|
|
|
Earnings per ordinary share - basic
|
5
|
|
69.6p
|
|
89.3p
|
Earnings per ordinary share - diluted
|
5
|
|
69.6p
|
|
89.2p
|
Grafton Group plc
Group Statement of Comprehensive Income
For the year ended 31 December
2023
|
Notes
|
|
2023
£'000
|
|
2022
£'000
|
Profit after tax for the financial
year
|
|
|
148,723
|
|
208,618
|
Other comprehensive income
|
|
|
|
|
|
Items that are or may be reclassified subsequently to the
income statement
|
|
|
|
|
|
Currency translation effects:
|
|
|
|
|
|
- on foreign currency net
investments
|
|
|
(12,210)
|
|
30,741
|
Fair value movement on cash flow hedges:
|
|
|
|
|
|
- effective portion of changes in
fair value of cash flow hedges
|
|
|
31
|
|
(29)
|
|
|
|
(12,179)
|
|
30,712
|
Items that will not be reclassified to the income
statement
|
|
|
|
|
|
Remeasurement gain/(loss) on Group
defined benefit pension schemes
|
15
|
|
1,320
|
|
(5,040)
|
Deferred tax on Group defined
benefit pension schemes
|
|
|
(3)
|
|
2,558
|
|
|
|
1,317
|
|
(2,482)
|
Total other comprehensive (expense)/income
|
|
|
(10,862)
|
|
28,230
|
Total comprehensive income for the financial
year
|
|
|
137,861
|
|
236,848
|
Total comprehensive income attributable to:
|
|
|
|
|
|
Owners of the Company
|
|
|
137,861
|
|
236,848
|
Total comprehensive income for the financial
year
|
|
|
137,861
|
|
236,848
|
Grafton Group plc - Group Balance Sheet as at 31
December 2023
|
Notes
|
|
31 Dec
2023
|
|
31 Dec
2022
|
ASSETS
|
|
|
£'000
|
|
£'000
|
Non-current assets
|
|
|
|
|
|
Goodwill
|
8
|
|
645,062
|
|
635,751
|
Intangible assets
|
9
|
|
138,901
|
|
153,712
|
Property, plant and
equipment
|
10
|
|
367,266
|
|
354,402
|
Right-of-use asset
|
11
|
|
401,298
|
|
420,115
|
Investment properties
|
10
|
|
24,609
|
|
26,084
|
Deferred tax assets
|
17
|
|
6,665
|
|
8,063
|
Lease receivable
|
|
|
264
|
|
453
|
Retirement benefit assets
|
15
|
|
9,536
|
|
4,584
|
Other financial assets
|
|
|
127
|
|
129
|
Total non-current assets
|
|
|
1,593,728
|
|
1,603,293
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Properties held for sale
|
10
|
|
4,291
|
|
4,364
|
Inventories
|
12
|
|
361,598
|
|
399,565
|
Trade and other
receivables
|
12
|
|
262,763
|
|
267,694
|
Lease receivable
|
|
|
195
|
|
196
|
Fixed term cash deposits
|
13
|
|
200,000
|
|
-
|
Cash and cash equivalents
|
13
|
|
383,939
|
|
711,721
|
Total current assets
|
|
|
1,212,786
|
|
1,383,540
|
Total assets
|
|
|
2,806,514
|
|
2,986,833
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Equity share capital
|
|
|
7,094
|
|
7,870
|
Share premium account
|
|
|
223,861
|
|
221,975
|
Capital redemption
reserve
|
|
|
2,195
|
|
1,389
|
Revaluation reserve
|
|
|
12,186
|
|
12,375
|
Shares to be issued
reserve
|
|
|
6,562
|
|
8,647
|
Cash flow hedge reserve
|
|
|
(6)
|
|
(37)
|
Foreign currency translation
reserve
|
|
|
75,282
|
|
87,492
|
Retained earnings
|
|
|
1,332,992
|
|
1,411,053
|
Treasury shares held
|
|
|
(4,365)
|
|
(5,185)
|
Equity attributable to owners of the Parent
|
|
|
1,655,801
|
|
1,745,579
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Interest-bearing loans and
borrowings
|
13
|
|
204,219
|
|
253,502
|
Lease liabilities
|
13
|
|
364,090
|
|
389,198
|
Provisions
|
|
|
13,851
|
|
15,189
|
Retirement benefit
obligations
|
15
|
|
15,363
|
|
15,068
|
Deferred tax liabilities
|
17
|
|
60,234
|
|
61,011
|
Total non-current liabilities
|
|
|
657,757
|
|
733,968
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Lease liabilities
|
13
|
|
64,888
|
|
60,105
|
Derivative financial
instruments
|
13
|
|
5
|
|
29
|
Trade and other payables
|
12
|
|
405,141
|
|
420,653
|
Current income tax
liabilities
|
|
|
17,541
|
|
20,595
|
Provisions
|
|
|
5,381
|
|
5,904
|
Total current liabilities
|
|
|
492,956
|
|
507,286
|
Total liabilities
|
|
|
1,150,713
|
|
1,241,254
|
|
|
|
|
|
|
Total equity and liabilities
|
|
|
2,806,514
|
|
2,986,833
|
Grafton Group plc - Group Cash Flow
Statement
For the year ended 31 December
2023
|
Notes
|
31 Dec
2023
£'000
|
31 Dec
2022
£'000
|
Profit before taxation
|
|
|
183,512
|
|
251,683
|
Finance income
|
4
|
|
(24,715)
|
|
(8,690)
|
Finance expense
|
4
|
|
24,292
|
|
21,273
|
Operating profit
|
|
|
183,089
|
|
264,266
|
Depreciation
|
10,11
|
|
104,700
|
|
94,313
|
Amortisation of intangible
assets
|
9
|
|
21,287
|
|
20,295
|
Share-based payments
charge
|
|
|
2,127
|
|
4,719
|
Movement in provisions
|
|
|
(1,523)
|
|
(1,316)
|
Profit on sale of property, plant
and equipment
|
|
|
(475)
|
|
(248)
|
Property profits
|
|
|
(861)
|
|
(20,383)
|
Fair value gains recognised as
property profits
|
|
|
-
|
|
(4,998)
|
Loss/(gain) on derecognition of
leases
|
|
|
234
|
|
(475)
|
Contributions to pension schemes
in excess of IAS 19 charge
|
|
|
(3,826)
|
|
(6,150)
|
Decrease/(increase) in working
capital
|
12
|
|
29,529
|
|
(71,273)
|
Cash generated from operations
|
|
|
334,281
|
|
278,750
|
Interest paid
|
|
|
(23,073)
|
|
(21,879)
|
Income taxes paid
|
|
|
(38,391)
|
|
(39,529)
|
Cash flows from operating activities
|
|
|
272,817
|
|
217,342
|
Investing activities
|
|
|
|
|
|
Inflows
|
|
|
|
|
|
Proceeds from sale of property,
plant and equipment
|
|
|
1,429
|
|
845
|
Proceeds from sale of properties
held for sale
|
|
|
2,209
|
|
4,238
|
Proceeds from sale of investment
properties
|
|
|
-
|
|
23,463
|
Maturity of fixed term cash
deposits
|
13
|
|
350,000
|
|
-
|
Interest received
|
|
|
24,199
|
|
8,690
|
|
|
|
377,837
|
|
37,236
|
Outflows
|
|
|
|
|
|
Acquisition of subsidiary
undertakings (net of cash acquired)
|
16
|
|
(27,908)
|
|
(45,978)
|
Purchase of fixed term cash
deposits
|
13
|
|
(550,000)
|
|
-
|
Deferred acquisition consideration
paid
|
12
|
|
(2,586)
|
|
(4,000)
|
Investment in intangible assets -
computer software
|
9
|
|
(3,963)
|
|
(2,522)
|
Purchase of property, plant and
equipment
|
10
|
|
(48,816)
|
|
(55,318)
|
|
|
|
(633,273)
|
|
(107,818)
|
Cash flows from investing activities
|
|
|
(255,436)
|
|
(70,582)
|
Financing activities
|
|
|
|
|
|
Inflows
|
|
|
|
|
|
Proceeds from the issue of share
capital
|
|
|
1,916
|
|
2,574
|
Proceeds from
borrowings
|
|
|
-
|
|
141,722
|
|
|
|
1,916
|
|
144,296
|
Outflows
|
|
|
|
|
|
Repayment of borrowings
|
|
|
(44,494)
|
|
(158,909)
|
Dividends paid
|
6
|
|
(72,569)
|
|
(73,868)
|
Treasury shares purchased (share
buyback)
|
20
|
|
(159,458)
|
|
(142,981)
|
Payment on lease
liabilities
|
|
|
(67,680)
|
|
(58,078)
|
|
|
|
(344,201)
|
|
(433,836)
|
Cash flows from financing activities
|
|
|
(342,285)
|
|
(289,540)
|
|
|
|
|
|
|
Net (decrease) in cash and cash equivalents
|
|
|
(324,904)
|
|
(142,780)
|
Cash and cash equivalents at 1
January
|
|
|
711,721
|
|
844,663
|
Effect of exchange rate
fluctuations on cash held
|
|
|
(2,878)
|
|
9,838
|
Cash and cash equivalents at the end of the
year
|
|
|
383,939
|
|
711,721
|
Grafton Group plc
Notes to Final Results for the year ended 31 December
2023
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 2023. The financial
information set out in this document does not constitute full
statutory financial statements for the financial years ended 31
December 2023 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 2023
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 2023 which is available on the Group's
website; www.graftonplc.com.
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 £379.7 million at 31
December 2023 (31 December 2022: £458.2 million). The Group
had liquidity of £849.6 million at 31 December 2023 (£934.6 million
at 31 December 2022) of which £579.9 million (2022: £707.7 million)
was held in accessible cash and £269.7 million (2022: £226.9
million) in undrawn revolving bank facilities. No refinancing of
debt is due until August 2028, 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,
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 at least 12
months from the date of approval of these financial statements.
Having reassessed the principal risks, as set out on pages 68
to 75 of the 2023 Annual Report and Accounts, and based on expected
cashflows and 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. The Group's analysis of the impact of climate change
continues to evolve with Grafton committed to delivering net zero
carbon emissions no later than the end of 2050.
(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 because of new
information or more experience. Such changes are recognised in the
period in which the estimate is revised. 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 for periods beginning after 1 January 2024 but do not
have a material effect on the results or financial position of the
Group:
·
IAS 1 (Amendments)
Presentation of Financial Statements (Effective 1 January
2024)
·
IAS 7 (Amendments)
Statement of Cash Flows (Effective 1 January 2024)
·
IFRS 7 (Amendments)
Financial Instruments (Effective 1 January 2024)
·
IFRS 16 (Amendments)
Leases
(Effective 1 January 2024)
·
IAS 21 (Amendments)
The Effects of Changes in Foreign Exchange Rates (Effective 1
January 2025)
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 acquisition related
items.
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Revenue
|
|
|
|
|
|
UK distribution
|
|
818,112
|
|
838,644
|
|
Ireland distribution
|
|
631,034
|
|
618,297
|
|
Netherlands distribution
|
|
351,474
|
|
336,703
|
|
Finland distribution
|
|
139,783
|
|
143,197
|
|
Total distribution
|
|
1,940,403
|
|
1,936,841
|
|
Retailing
|
|
258,197
|
|
244,021
|
|
Manufacturing
|
|
135,298
|
|
133,805
|
|
Less: inter-segment revenue -
manufacturing
|
|
(14,656)
|
|
(13,185)
|
|
Total revenue
|
|
2,319,242
|
|
2,301,482
|
|
|
|
|
|
|
|
Segmental operating profit before exceptional items,
intangible amortisation arising on acquisitions and acquisition
related items
|
|
|
|
|
|
UK distribution
|
|
47,251
|
|
81,826
|
|
Ireland distribution
|
|
60,930
|
|
70,474
|
|
Netherlands distribution
|
|
33,416
|
|
37,641
|
|
Finland distribution
|
|
14,196
|
|
20,321
|
|
Total distribution
|
|
155,793
|
|
210,262
|
|
Retailing
|
|
32,728
|
|
32,575
|
|
Manufacturing
|
|
30,269
|
|
27,403
|
|
|
|
218,790
|
|
270,240
|
|
Reconciliation to consolidated operating
profit
|
|
|
|
|
|
Central activities
|
|
(14,541)
|
|
(13,453)
|
|
|
|
204,249
|
|
256,787
|
|
Property profits
|
|
1,261
|
|
25,381
|
|
Operating profit before non-recurring items, intangible
amortisation arising on acquisitions and acquisition related
items
|
|
205,510
|
|
282,168
|
|
Non-recurring items*
|
|
-
|
|
3,690
|
|
Operating profit before intangible amortisation arising on
acquisitions and acquisition related items
|
|
205,510
|
|
285,858
|
|
Acquisition related
items**
|
|
(2,730)
|
|
(2,306)
|
|
Amortisation of intangible assets
arising on acquisitions
|
|
(19,691)
|
|
(19,286)
|
|
Operating profit
|
|
183,089
|
|
264,266
|
|
Finance expense
|
|
(24,292)
|
|
(21,273)
|
|
Finance income
|
|
24,715
|
|
8,690
|
|
Profit before tax
|
|
183,512
|
|
251,683
|
|
Income tax expense
|
|
(34,789)
|
|
(43,065)
|
|
Profit after tax for the financial year
|
|
148,723
|
|
208,618
|
|
|
|
|
|
|
|
|
* In 2022, a non-recurring curtailment gain of £3.7 million
arose on closure to future accrual of a defined benefit pension
scheme in Ireland (Note 15).
** 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.
2. Segmental Analysis
(continued)
The amount of revenue by geographic
area is as follows:
|
2023
£'000
|
2022
£'000
|
Revenue*
|
|
|
United Kingdom
|
|
929,821
|
|
951,557
|
Ireland
|
|
898,164
|
|
870,025
|
Netherlands
|
|
351,474
|
|
336,703
|
Finland
|
|
139,783
|
|
143,197
|
Total revenue
|
|
2,319,242
|
|
2,301,482
|
*Service revenue, which relates to plant and equipment hire
and is recognised over time, amounted to £11.5 million for the year
(2022: £9.4 million)
|
31 Dec
2023
£'000
|
31 Dec
2022
£'000
|
Segment assets
|
|
|
|
|
Distribution
|
|
1,914,204
|
|
1,952,691
|
Retailing
|
|
169,342
|
|
198,295
|
Manufacturing
|
|
122,701
|
|
111,350
|
|
|
2,206,247
|
|
2,262,336
|
Unallocated assets
|
|
|
|
|
Deferred tax assets
|
|
6,665
|
|
8,063
|
Retirement benefit assets
|
|
9,536
|
|
4,584
|
Other financial assets
|
|
127
|
|
129
|
Fixed term cash deposits
|
|
200,000
|
|
-
|
Cash and cash equivalents
|
|
383,939
|
|
711,721
|
Total assets
|
|
2,806,514
|
|
2,986,833
|
|
31 Dec
2023
£'000
|
31 Dec
2022
£'000
|
Segment liabilities
|
|
|
|
|
Distribution
|
|
648,830
|
|
667,579
|
Retailing
|
|
174,020
|
|
189,925
|
Manufacturing
|
|
30,501
|
|
33,545
|
|
|
853,351
|
|
891,049
|
Unallocated liabilities
|
|
|
|
|
Interest bearing loans and
borrowings (non-current)
|
|
204,219
|
|
253,502
|
Retirement benefit
obligations
|
|
15,363
|
|
15,068
|
Deferred tax liabilities
|
|
60,234
|
|
61,011
|
Current income tax
liabilities
|
|
17,541
|
|
20,595
|
Derivative financial instruments
(current)
|
|
5
|
|
29
|
Total liabilities
|
|
1,150,713
|
|
1,241,254
|
3. Property Profits & Non-Recurring
Items
The property profit of £1.3
million relates to profit on property disposals of £0.9 million.
The property profit realised in 2023 also includes £0.4
million which was the recovery of an amount which had been provided
against in the previous year.
In 2023, the Group disposed of two
Irish properties and one UK property (2022: six UK properties and
one Irish property).
The property profit in 2022 of
£25.4 million relates to profit on property disposals of £20.4
million and fair value gains of £5.0 million.
The fair value gain of £5.0
million in 2022 related to three investment properties in Ireland
and three investment properties in the UK.
Non-Recurring Items
A non-recurring curtailment gain
of £3.7 million arose in 2022 on closure to future accrual of a
defined benefit pension scheme in Ireland (Note 15).
4. Finance Expense and Finance
Income
|
2023
£'000
|
2022
£'000
|
|
Finance expense
|
|
|
|
|
|
Interest on bank loans, US senior
notes and overdrafts
|
|
8,331
|
*
|
5,591
|
*
|
Interest on lease
liabilities
|
|
15,563
|
*
|
14,919
|
*
|
Net finance cost on pension scheme
obligations
|
|
398
|
|
108
|
|
Foreign exchange loss
|
|
-
|
|
655
|
|
|
|
24,292
|
|
21,273
|
|
|
|
|
|
|
|
Finance income
|
|
|
|
|
|
Interest income on bank
deposits
|
|
(24,199)
|
*
|
(8,690)
|
*
|
Foreign exchange gain
|
|
(516)
|
|
-
|
|
|
|
(24,715)
|
|
(8,690)
|
|
|
|
|
|
|
|
Net finance
(income)/expense
|
|
(423)
|
|
12,583
|
|
*
Net bank and US senior note interest income of £15.9 million (2022:
£3.1 million interest income). Including interest on lease
liabilities, net interest income was £0.3 million (2022: £11.8
million net interest expense).
5. Earnings per Share
The computation of basic, diluted
and underlying earnings per share is set out below:
|
Year ended 31 Dec
2023
£'000
|
Year
Ended 31
Dec
2022
£'000
|
Numerator for basic, adjusted and diluted earnings per
share:
|
|
|
|
|
|
|
|
|
|
Profit after tax for the financial
year
|
|
148,723
|
|
208,618
|
|
|
|
|
|
Numerator for basic and diluted earnings per
share
|
|
148,723
|
|
208,618
|
|
|
|
|
|
|
|
|
|
|
Profit after tax for the financial
year
|
|
148,723
|
|
208,618
|
Amortisation of intangible assets
arising on acquisitions
|
|
19,691
|
|
19,286
|
Tax relating to amortisation of
intangible assets arising on acquisitions
|
|
(4,415)
|
|
(4,329)
|
Acquisition related items
|
|
2,730
|
|
2,306
|
Tax on acquisition related
items
|
|
(229)
|
|
(235)
|
Numerator for adjusted earnings per share
|
|
166,500
|
|
225,646
|
|
|
|
|
|
|
|
Number of Grafton
Units
|
|
Number
of Grafton Units
|
Denominator for basic and adjusted earnings per
share:
|
|
|
|
|
|
|
|
|
|
Weighted average number of Grafton
Units in issue
|
|
213,802,819
|
|
233,517,016
|
|
|
|
|
|
Dilutive effect of options and
awards
|
|
24,688
|
|
423,503
|
|
|
|
|
|
Denominator for diluted earnings per share
|
|
213,827,507
|
|
233,940,519
|
|
|
|
|
|
Earnings per share (pence)
|
|
|
|
|
- Basic
|
|
69.6
|
|
89.3
|
- Diluted
|
|
69.6
|
|
89.2
|
|
|
|
|
|
Adjusted earnings per share (pence)*
|
|
|
|
|
- Basic
|
|
77.9
|
|
96.6
|
- Diluted
|
|
77.9
|
|
96.5
|
|
|
|
|
|
* The term "Adjusted" means before exceptional items,
amortisation of intangible assets arising on acquisitions and
acquisition related items.
6. Dividends
The payment in 2023 of a final
dividend for 2022 of 23.75 pence amounted to £51.6 million (2022:
final dividend for 2021 of 22.0p amounted to £52.7
million).
An interim dividend for 2023 of
10.0 pence per share was paid on 20 October 2023 in the amount of
£21.0 million.
A final dividend for 2023 of 26.0p
per share will be paid to all holders of Grafton Units on the
Company's Register of Members at the close of business on 12 April
2024 (the 'Record Date'). The Ex-dividend date is 11 April 2024.
The dividend will be paid on 9 May 2024.
A liability in respect of the
final dividend has not been recognised in the balance sheet at 31
December 2023, as there was no present obligation to pay the
dividend 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 2023 was Stg86.98p (2022:
Stg85.28p). The sterling/euro exchange rate at 31 December
2023 was Stg86.91p (2022: Stg88.69p).
8. 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 recoverable amount of each cash generating unit is
determined based on value-in-use calculations. The carrying value
of each cash generating unit was compared to its estimated
value-in-use. There were no impairments during the year (2022:
£Nil).
|
Goodwill
£'000
|
Net Book Value
|
|
As
at 1 January 2023
|
635,751
|
Arising on acquisition (Note
16)
|
15,786
|
Currency translation
adjustment
|
(6,475)
|
As
at 31 December 2023
|
645,062
|
9.
Intangible Assets
|
Computer
Software
£'000
|
Trade
Names
£'000
|
Customer Relationships &
Technology
£'000
|
Total
£'000
|
Net Book Value
|
|
|
|
|
As
at 1 January 2023
|
5,665
|
31,028
|
117,019
|
153,712
|
Additions
|
3,963
|
-
|
-
|
3,963
|
Arising on acquisition (Note
16)
|
-
|
691
|
4,199
|
4,890
|
Amortisation
|
(1,596)
|
(3,843)
|
(15,848)
|
(21,287)
|
Currency translation
adjustment
|
(62)
|
(471)
|
(1,844)
|
(2,377)
|
As
at 31 December 2023
|
7,970
|
27,405
|
103,526
|
138,901
|
The amortisation expense of £21.3
million (2022: £20.3 million) has been charged in 'operating costs'
in the income statement. Amortisation of intangible assets arising
on acquisitions in prior periods amounted to £19.7 million (2022:
£19.3 million).
10. Property, Plant and Equipment, Properties Held for Sale
and Investment Properties
|
Property, plant and
equipment
|
Properties
held for
sale
|
Investment
properties
|
Net Book Value
|
£'000
|
£'000
|
£'000
|
As
at 1 January 2023
|
354,402
|
4,364
|
26,084
|
Additions
|
48,816
|
-
|
-
|
Depreciation
|
(38,981)
|
-
|
-
|
Disposals
|
(954)
|
(1,348)
|
-
|
Transfer from investment
properties
|
-
|
1,348
|
(1,348)
|
Transfer from right-of-use assets
(Note 11)
|
750
|
-
|
-
|
Arising on acquisition (Note
16)
|
6,952
|
-
|
-
|
Currency translation
adjustment
|
(3,719)
|
(73)
|
(127)
|
As
at 31 December 2023
|
367,266
|
4,291
|
24,609
|
11. Right-Of-Use Asset
|
Right-of-use
asset
|
|
£'000
|
As
at 1 January 2023
|
420,115
|
Additions*
|
13,353
|
Arising on acquisition (Note
16)
|
820
|
Disposals
|
(2,433)
|
Transfer to property, plant and
equipment** (Note 10)
|
(750)
|
Depreciation
|
(65,719)
|
Remeasurements*
|
39,950
|
Currency translation
adjustment
|
(4,038)
|
As
at 31 December 2023
|
401,298
|
* Right-of-use asset additions relate to new lease contracts
entered into during the year and mainly arise due to leases entered
into for replacement vehicle leases, new store locations 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 now be
exercised.
**The right-of-use asset transfer to property, plant and
equipment (Note 10) relates to one property for which a purchase
option was exercised during the year.
12. Movement in Working Capital
|
Inventories
|
Trade
and other
receivables
|
Trade and
other
payables
|
Total
|
Current
|
£'000
|
£'000
|
£'000
|
£'000
|
As
at 1 January 2023
|
399,565
|
267,694
|
(420,653)
|
246,606
|
Currency translation
adjustment
|
(5,511)
|
(3,549)
|
5,705
|
(3,355)
|
Deferred acquisition consideration
(Note 16)
|
-
|
-
|
(2,323)
|
(2,323)
|
Deferred acquisition consideration
paid
|
-
|
-
|
2,586
|
2,586
|
Arising on acquisition (Note
16)
|
5,365
|
2,840
|
(2,970)
|
5,235
|
Working capital movement in
2023
|
(37,821)
|
(4,222)
|
12,514
|
(29,529)
|
As
at 31 December 2023
|
361,598
|
262,763
|
(405,141)
|
219,220
|
13. Interest-Bearing Loans, Borrowings and Net
Debt/(Cash)
|
|
31 Dec
2023
£'000
|
|
31 Dec
2022
£'000
|
Interest-bearing loans and borrowings
|
|
|
|
|
Bank loans
(non-current)
|
|
65,597
|
|
112,108
|
US senior notes
(non-current)
|
|
138,622
|
|
141,394
|
Total interest-bearing loans and borrowings
|
|
204,219
|
|
253,502
|
|
|
|
|
|
Leases
|
|
|
|
|
Included in non-current
liabilities
|
|
364,090
|
|
389,198
|
Included in current
liabilities
|
|
64,888
|
|
60,105
|
Total leases
|
|
428,978
|
|
449,303
|
|
|
|
|
|
Derivatives
|
|
|
|
|
Included in current
liabilities
|
|
5
|
|
29
|
Total derivatives
|
|
5
|
|
29
|
|
|
|
|
|
Fixed term cash deposits*
|
|
|
|
|
Included in current
assets
|
|
(200,000)
|
|
-
|
Total fixed term cash deposits
|
|
(200,000)
|
|
-
|
|
|
|
|
|
Cash and cash equivalents
|
|
(383,939)
|
|
(711,721)
|
|
|
|
|
|
Net debt/(cash)
|
|
49,263
|
|
(8,887)
|
|
|
|
|
|
|
|
|
|
|
Net (cash) before leases
|
|
(379,715)
|
|
(458,190)
|
* Fixed term cash deposits have a
maturity date greater than three months at inception but less than
three months at the balance sheet date.
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
£336.9 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. The first one-year
extension has been agreed and these facilities are now repayable in
August 2028. 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.
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
|
|
2023
|
|
2022
|
Liabilities measured and recognised at fair
value
|
£'000
|
|
£'000
|
Designated as hedging instruments
|
Other derivative
instruments
|
(5)
|
|
(29)
|
Fair value measurement of liabilities carried at amortised
cost
|
|
|
|
|
US senior notes
|
(129,686)
|
|
(126,605)
|
13. Interest-Bearing Loans, Borrowings and Net Debt/(Cash)
(continued)
The following table shows the fair
value of financial assets and liabilities, all of which are within
level 3 of the fair value hierarchy.
|
31 Dec
|
|
31
Dec
|
|
2023
|
|
2022
|
Liabilities measured and recognised at fair
value
|
£'000
|
|
£'000
|
Deferred consideration on
acquisition of businesses
|
(4,890)
|
|
(5,229)
|
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 (excluding deferred consideration), 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 2023.
Financial assets and liabilities carried at fair
value
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.
14. Reconciliation of Net Cash Flow to Movement in Net
(Debt)/Cash
|
|
31 Dec
2023
£'000
|
|
31 Dec
2022
£'000
|
|
|
|
|
|
Net (decrease) in cash and cash
equivalents
|
|
(324,904)
|
|
(142,780)
|
Net movement in fixed term cash
deposits
|
|
200,000
|
|
-
|
Net movement in derivative
financial instruments
|
|
24
|
|
(21)
|
Lease liabilities acquired (Note
16)
|
|
(820)
|
|
(2,745)
|
Movement in debt and lease
financing
|
|
61,260
|
|
30,981
|
Change in net cash resulting from cash
flows
|
|
(64,440)
|
|
(114,565)
|
Currency translation
adjustment
|
|
6,290
|
|
(15,578)
|
Movement in net cash in the year
|
|
(58,150)
|
|
(130,143)
|
Net cash at 1 January
|
|
8,887
|
|
139,030
|
Net (debt)/cash at end of the year
|
|
(49,263)
|
|
8,887
|
|
|
|
|
|
15. Retirement Benefits
The principal financial assumptions
employed in the valuation of the Group's defined benefit scheme
liabilities for the current year and prior year were as
follows:
|
Irish
Schemes
|
UK Schemes
|
|
At 31 Dec
2023
|
|
At 31
Dec 2022
|
|
At 31 Dec
2023
|
|
At 31
Dec 2022
|
|
|
|
Rate of increase in
salaries*
|
N/A
|
|
3.80%
|
|
N/A
|
|
N/A
|
|
Rate of increase of pensions in
payment
|
-
|
|
-
|
|
2.90%
|
|
3.10%
|
|
Discount rate
|
3.15%
|
|
3.70%
|
|
4.50%
|
|
4.80%
|
|
Inflation rate increase
|
2.05%
|
|
2.60%
|
|
2.40%/3.00%
|
**
|
2.60%/3.20%
|
**
|
* Following the closure to accrual
of the Irish schemes and the UK scheme, 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 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 31 Dec
2023
|
Year to
31 Dec 2022
|
Year
to 31 Dec
2023
|
Year to
31 Dec
2022
|
Year
to 31 Dec
2023
|
Year to
31 Dec
2022
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
At
1 January
|
192,298
|
283,705
|
(202,782)
|
(295,176)
|
(10,484)
|
(11,471)
|
Interest income on plan
assets
|
7,917
|
4,519
|
-
|
-
|
7,917
|
4,519
|
Contributions by employer
|
3,574
|
4,413
|
-
|
-
|
3,574
|
4,413
|
Contributions by members
|
23
|
458
|
(23)
|
(458)
|
-
|
-
|
Benefit payments
|
(11,773)
|
(8,812)
|
11,773
|
8,812
|
-
|
-
|
Current service cost
|
-
|
-
|
(57)
|
(1,962)
|
(57)
|
(1,962)
|
Curtailment gain
|
-
|
-
|
403
|
-
|
403
|
-
|
Curtailment gain -
non-recurring
|
-
|
-
|
-
|
3,690
|
-
|
3,690
|
Administration costs
|
(53)
|
-
|
-
|
-
|
(53)
|
-
|
Other long-term benefit
(expense)/credit
|
-
|
-
|
(41)
|
9
|
(41)
|
9
|
Interest cost on scheme
liabilities
|
-
|
-
|
(8,315)
|
(4,627)
|
(8,315)
|
(4,627)
|
Remeasurements
|
|
|
|
|
|
|
Actuarial (loss)/gains
from:
|
|
|
|
|
|
|
-experience variations
|
-
|
-
|
(978)
|
(2,369)
|
(978)
|
(2,369)
|
-financial assumptions
|
-
|
-
|
(7,432)
|
98,087
|
(7,432)
|
98,087
|
-demographic assumptions
|
-
|
-
|
4,532
|
(2,910)
|
4,532
|
(2,910)
|
Return on plan assets excluding
interest income
|
5,198
|
(97,848)
|
-
|
-
|
5,198
|
(97,848)
|
Translation adjustment
|
(2,080)
|
5,863
|
1,989
|
(5,878)
|
(91)
|
(15)
|
At
31 December
|
195,104
|
192,298
|
(200,931)
|
(202,782)
|
(5,827)
|
(10,484)
|
Related deferred tax asset
(net)
|
|
|
|
|
2,655
|
3,201
|
Net
pension liability
|
|
|
|
|
(3,172)
|
(7,283)
|
15. Retirement Benefits (continued)
During 2023, a curtailment gain of
£0.4 million, which is included in
'operating costs' in the income statement, arose on closure to future accrual of a defined benefit
pension scheme in Ireland (31 December 2022: a non-recurring
curtailment gain of £3.7 million arose on closure to future accrual
of another defined benefit pension scheme in Ireland).
The net pension scheme deficit of
£5.8 million (31 December 2022: deficit of £10.5 million) is shown
in the Group balance sheet as (i) retirement benefit obligations
(non-current liabilities) of £15.4 million (31 December 2022: £15.1
million) and (ii) retirement benefit assets (non-current assets) of
£9.5 million (31 December 2022: £4.6 million).
At 31 December 2023, the
retirement benefit asset of £9.5 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 £15.4
million relates to one scheme in the UK (£14.6 million) and one
scheme in the Netherlands (£0.8 million).
At 31 December 2022, the
retirement benefit asset of £4.6 million related to three schemes
in Ireland. The retirement benefit obligation of £15.1
million related to one scheme in the UK (£14.3 million) and one
scheme in the Netherlands (£0.8 million).
The return on plan assets was
£14.4 million (£13.1 million after deducting the effect of the
buy-in referred to below). (2022: loss of £93.3 million due to the
fall in the values of liability driven investments, bonds and
equities that was almost matched by the reduction in
liabilities).
In December 2023, the Trustees of
the three Irish defined benefit pension schemes purchased annuities
from one of Ireland's leading life insurance companies to match the
benefits being paid to existing pensioners. Under these contracts
the insurer will reimburse the schemes for payments to these
pensioners into the future. These insurance contracts are
held by the trustees of the three schemes and represent assets of
the schemes. This transaction has reduced the Company's exposure to
pension risk by removing the longevity and investment risk
associated with this portion of the Company's Defined Benefit
liabilities. In future years' reporting, the value of the
liabilities relating to these pensioners will exactly match the
value of the associated annuity contracts. The cost of
purchasing the annuities was €44.7 million. This compares to
the value of the pensions on the transaction date of €43.3 million,
determined in accordance with the IAS19 accounting standard. The
difference between these two values has been allowed for in the
remeasurement item relating to the "Return on assets excluding
interest income".
|
|
31 Dec
2023
£'000
|
|
31
Dec
2022
£'000
|
Return on plan assets
|
|
|
|
|
Return on plan asset excluding
interest income
|
|
6,450
|
|
(97,848)
|
Interest income on plan
assets
|
|
7,917
|
|
4,519
|
|
|
14,367
|
|
(93,329)
|
Less: effect of annuity buy-in
(2023: €1.4 million)
|
|
(1,252)
|
|
-
|
Return on plan assets after deducting effect of
buy-in
|
|
13,115
|
|
(93,329)
|
16. Acquisitions
On 12 June 2023, the
Group acquired the trade and certain assets of Clady Timber Limited
("Clady Timber"), a distributor of timber
and building materials operating from a single branch in
Portglenone, County Antrim. This acquisition is incorporated in the UK Distribution segment and
extends market coverage for MacBlair in
Northern Ireland.
16. Acquisitions
(continued)
On 3 July 2023, the Group acquired B. MacNamee, a distributor of
building materials, timber, hardware, power tools, plumbing and
electrical products from a single branch in Strabane, County
Tyrone. This acquisition is incorporated in
the UK Distribution segment and further extends market coverage for MacBlair in Northern Ireland.
On 19 July 2023, Grafton Group plc acquired an IKH Partner store in
Kouvolan, a city in southeastern Finland.
This acquisition is incorporated in the
Finland Distribution segment.
On 31 October 2023, the Group acquired Rooney's Homevalue Limited
("Rooney's"), a distributor of building materials and DIY products
from a single location in Kells, County Meath. This acquisition
will extend geographic coverage of the fragmented building
materials distribution market into an important town within the
Dublin commuter belt. It
is incorporated in the Ireland Distribution
segment.
On 4 December 2023, the Group acquired TA Windows Limited, trading
as Wooden Windows, a business which produces high performance
timber windows and doors from a single unit in Stoke-on-Trent in
the UK. This acquisition is incorporated in the UK Manufacturing
segment and will further enhance the StairBox offering.
None of these acquisitions were
individually material for separate disclosure under
IFRS3.
The fair value of assets and liabilities acquired in 2023 are
set out below:
|
Total
£'000
|
Property, plant and
equipment
|
6,952
|
Right-of-use asset
|
820
|
Intangible assets -
technology
|
4,199
|
Intangible assets - trade
names
|
691
|
Inventories
|
5,365
|
Trade and other
receivables
|
2,840
|
Trade and other payables
|
(2,970)
|
Lease liability
|
(820)
|
Corporation tax liability
|
(701)
|
Deferred tax liability
|
(1,931)
|
Cash acquired
|
8,253
|
Net assets acquired
|
22,698
|
Goodwill
|
15,786
|
Consideration
|
38,484
|
|
|
Satisfied by:
|
|
Cash paid
|
36,161
|
Deferred consideration (Note
12)
|
2,323
|
|
38,484
|
Net
cash outflow - arising on acquisitions
|
|
Cash consideration
|
36,161
|
Less: cash and cash equivalents
acquired
|
(8,253)
|
|
27,908
|
The fair value of the net assets
acquired have been determined on a provisional basis.
Goodwill on the acquisition reflects the anticipated
cashflows to be realised as part of the enlarged Group.
16. Acquisitions
(continued)
Any adjustments to provisional
fair value of assets and liabilities including recognition of any
newly identified assets and liabilities, will be made within 12
months of respective acquisition dates. There were no
adjustments made to provisional fair values in the period relating
any acquisitions completed in the prior year.
Acquisitions contributed revenue
of £6.2 million and operating profit of £0.3 million for the period
from the date of acquisition to 31 December 2023. If these
acquisitions had occurred on 1 January 2023, it is estimated that
they would have contributed revenue of £23.8 million and operating
profit of £2.1 million in the period. The Group incurred
acquisition related costs of £0.9 million in 2023 (2022: £0.4
million) which are included in operating costs in the Group Income
Statement.
17. Taxation
The income tax expense of £34.8
million (2022: £43.1 million) is equivalent to an effective tax
rate of 19.0 per cent on profit from continuing operations (2022:
17.1 per cent). This is a blended rate of corporation tax on
profits in the four countries where the Group operates. The
increase in the effective rate reflects an increase in the UK rate
of corporation tax to 25 per cent with effect from 1 April 2023
from the 19 per cent rate that prevailed prior to that
date.
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 2023, the deferred
tax asset was £6.7 million (2022: £8.1 million) and the deferred
tax liability was £60.2 million (2022: £61.0 million). There
were unrecognised deferred tax assets in relation to capital losses
of £0.7 million (2022: £0.7 million), trading losses of £1.1
million (2022: £1.1 million) and deductible temporary differences
of £5.2 million (2022: £6.9 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
The principal related party
transactions are disclosed on page 260 of the Annual Report and
Accounts for the year ended 31 December 2023.
19. Grafton Group plc Long Term
Incentive Plan (LTIP)
LTIP awards were made over 807,889
Grafton Units on 31 March 2023. The fair value of the awards of
£6.1 million, which are subject to vesting conditions, will be
charged to the income statement over the vesting period of three
years. The Annual Report and Accounts for the year ended 31
December 2023 discloses details of the LTIP scheme.
20. Share Buyback and Treasury
Shares
|
Purchase of
Treasury
Shares
£'000
|
Transaction
Costs
£'000
|
Purchase of
Treasury
Shares *
£'000
|
Cancellation of
Treasury
Shares
£'000
|
Transfer from
Treasury
Shares **
£'000
|
Total
Movement
£'000
|
Buyback Programme 1
|
100,000
|
284
|
100,284
|
(100,000)
|
(284)
|
-
|
LTIP Awards 2022
|
7,563
|
16
|
7,579
|
(7,563)
|
(16)
|
-
|
Buyback Programme 2
|
93,316
|
187
|
93,503
|
(93,316)
|
(187)
|
-
|
Buyback Programme 3
|
50,000
|
100
|
50,100
|
(50,000)
|
(100)
|
-
|
LTIP Awards 2023
|
3,408
|
7
|
3,415
|
(3,408)
|
(7)
|
-
|
Buyback Programme 4
|
47,465
|
93
|
47,558
|
(46,997)
|
(93)
|
468
|
Total
|
301,752
|
687
|
302,439
|
(301,284)
|
(687)
|
468
|
Year
ended 31 December 2022
|
142,609
|
372
|
142,981
|
(141,693)
|
-
|
1,288
|
Year
ended 31 December 2023
|
159,143
|
315
|
159,458
|
(159,591)
|
(687)
|
(820)
|
Total
|
301,752
|
687
|
302,439
|
(301,284)
|
(687)
|
468
|
* Including transaction
costs.
** At 31 December 2023, the share
buyback programmes 1, 2 and 3, and the LTIP purchase and
cancellation, were fully completed and the related transactions
costs have been transferred from treasury shares to retained
earnings, totalling £0.7 million.
Share buyback programme 1
On 28 April 2022, the Group
announced its intention to introduce a share buyback programme for
a maximum aggregate consideration of up to £100 million. 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 £100.3
million, including transaction costs. All shares were cancelled by
31 December 2022.
LTIP purchase and cancellation 2022
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 £7.6 million, including
transaction costs.
Share buyback programme 2
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 £100 million. The
Buyback commenced on 10 November 2022 and ended on 18 April 2023.
20. Share Buyback and Treasury
Shares (continued)
Share buyback programme 2 (continued)
At 31 December 2022, the Group had
purchased 4,417,706 shares in aggregate for cancellation at a total
cost of £35.1 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 £0.9 million were cancelled in early January 2023.
In 2023, the Group purchased an additional 6,472,681 shares
for cancellation at a total cost of £58.4 million, including
transaction costs. The total aggregate consideration, including
transaction costs, for the second buyback programme was £93.5
million.
Share buyback programme 3
The Group announced on 4 May 2023
its intention to commence a third share buyback programme and to
buy back ordinary shares (the "Shares") on the Group's behalf for a
maximum aggregate consideration of up to £50 million. The
Buyback commenced on 12 May 2023 and ended on 30 August 2023. The
Group purchased 6,004,286 shares in aggregate for cancellation at a
total cost of £50.1 million, including transaction costs.
LTIP purchase and cancellation 2023
On 12 September 2023, the Group
purchased and cancelled 377,688 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 £3.4 million, including transaction
costs.
Share buyback programme 4
The Group announced on 31 August
2023 its intention to commence a fourth share buyback programme and
to buy back ordinary shares (the "Shares") on the Group's behalf
for a maximum aggregate consideration of up to £50 million.
The Buyback commenced on the same day. At 31 December 2023,
the Group had purchased 5,619,269 shares in aggregate for
cancellation at a total cost of £47.6 million, including
transaction costs. However, due to timing, only 5,569,269
were cancelled at 31 December 2023 and the remaining 50,000 shares
purchased for £0.5 million were cancelled in January 2024. On
8 December 2023, the Group announced an extension of this programme
and to increase the maximum aggregate consideration by a further
£50 million to a total of £100 million. Details of shares
bought back since 31 December 2023 are included in Note 22
below.
21. Issue of
Shares
During the year, 377,688 Grafton
Units were issued under the 2021 Grafton Group Long Term Incentive
Plan (LTIP) on the vesting of the 2020 grants.
A further 321,284 Grafton Units
were issued under the Group's Savings Related Share Option Scheme
(SAYE) to eligible UK employees.
22. Events after the Balance Sheet
Date
The Company bought back, for
cancellation, 3.6 million shares at a cost of £33.9 million between
1 January 2024 and 5 March 2024.
There have been no other material
events after 31 December 2023 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 6 March 2024.