14th Aug 2007 07:01
Grafton Group PLC14 August 2007 Grafton Group plc 2007 Interim Results For further information please contact:Grafton Group plc + 353 1 216 0600 Murray Consultants + 353 1 498 0300Michael Chadwick, Executive Chairman Joe MurrayColm O Nuallain, Finance Director Citigate Dewe Rogerson + 44 207 282 2945 Ginny Pulbrook 14 August 2007 Record Sales, Profits and Earnings Grafton Group plc, the builders merchants and DIY Group with operations in theUK and Ireland, announces its interim results for the six months ended 30 June2007. Financial Highlights 2007 2006 ChangeRevenue €1.61 bn €1.43 bn UP 13%Operating profit* €124.4 m €106.9 m UP 16%Profit before tax and property profit €106.4 m €90.2 m UP 18%Adjusted earnings per share * 39.1 c 33.0 c UP 18%Basic earnings per share # 38.7 c 42.8 cShare purchase 10.0 c 8.25 c UP 21%Cash flow per share 50.4c 43.5 c UP 16%* Before property profit and amortisation # Includes property profit in 2006 Operating Highlights UK merchanting traded strongly - 28 per cent increase in operating profit Solid performance by Irish merchanting business Significant gains in Irish DIY business Operations strongly cash generative Commenting on the results today, Michael Chadwick, Executive Chairman said: "The growth in sales, profits and earnings derives from a strong performance inthe UK business and solid profit growth in Ireland. In the UK this wassupported by good underlying demand in the RMI market and contributions fromacquisitions. The Irish economy provided a positive trading background for theDIY business through the half year while Irish merchanting performed solidly.The Group is confident in the quality of its brands and businesses and believesit is well placed to respond to changing market conditions." Grafton Group plc Interim Results For the six months ended 30 June 2007 As previously announced, these Interim Results were originally scheduled forrelease on 11 September 2007 and the release date has been brought forward inthe light of market uncertainty. Today's announcement confirms the Group'sstrong performance in the first half, gives shareholders an update on currenttrading and takes the Group out of a close period so that the Company, at thediscretion of the Board, would have the flexibility to make market purchases ofGrafton Units. Highlights • Sales were up 13 per cent to €1.61 billion (2006: €1.43 billion). • Profit before tax, excluding property profit, increased by 18 per cent to €106.4 million (2006: €90.2 million). • Operating profit increased by 16 per cent to €124.4 million (2006: €106.9 million). • Adjusted earnings per share increased by 18 per cent to 39.1 cent (2006: 33.0 cent). Grafton Group plc reports a very positive outcome for the first half and theachievement of strong growth in sales, profits and earnings with a strongperformance in the UK business and solid profit growth in Ireland. The UK business delivered a strong increase in profit helped by good underlyingdemand in the residential repair, maintenance and improvement market andcontributions from acquisitions. The Irish economy provided a positive tradingbackground for the DIY business through the half year while Irish merchantingperformed solidly. These results endorse the strength of the Group's market position and brands inthe UK merchanting and mortar markets and in the Irish merchanting and DIYmarkets. They also reflect the benefit to shareholders of the investments madeover recent years to take advantage of acquisition and organic growthopportunities in the development of our UK and Irish businesses. The UK business increased turnover by 17 per cent to €979.4 million (2006:€836.5 million) and operating profit increased by 28 per cent to €63.8 million(2006: €49.8 million). The UK operating profit margin increased to 6.5 per cent(2006: 6.0 per cent). Irish turnover increased by six per cent to €628.8 million(2006: €590.7 million) and operating profit increased by six per cent to €60.6million (2006: €57.1 million). The Irish operating profit margin was unchangedat 9.7 per cent. A Ordinary Share The Board has agreed the purchase of one A Ordinary Share per Grafton unit for acash consideration of 10.0 cent per share on 24 August 2007 (record date). Thecash consideration will be paid on 3 October 2007. This represents an increaseof 21 per cent on the share purchase payment of 8.25 cent made on 18 October2006 reflecting both the positive trading results for the half year and strongfinancial position of the Group. Grafton Units Today's announcement takes the Group out of a close period so that the Company,at the discretion of the Board, would have the flexibility to make marketpurchases of Grafton Units. The Group's highly cash generative trading operations, high interest cover andlow gearing provide the financial strength to accommodate a selective approachto share buy backs while also continuing to take full advantage of acquisitionand development opportunities which are a good strategic fit and have thepotential to achieve acceptable long term returns for shareholders on investedcapital. Development The Group continued to progress its long term development strategy of growththrough acquisitions and organic branch developments. Five UK merchanting businesses trading from 21 branches and a single branchmerchanting business in Ireland were acquired in the half year. These longestablished operations with annual sales of €60 million expand geographic andproduct coverage in the UK and Irish merchanting markets. Organic development initiatives completed in the half year involved the openingof eight merchanting branches in the UK and two in Ireland. The addition of 32trading branches in the half year is important to the continuing growth of theGroup over the coming years. The total spend on acquisitions and developmentprojects in the half year was €73.4 million (2006: €65.4 million). Operations Review - United Kingdom UK sales increased by 17 per cent to €979.4 million (2006: €836.5 million) andoperating profit increased by 28 per cent to €63.8 million (2006: €49.8million). The UK operating margin increased to 6.5 per cent from 6.0 per cent. The UK economy grew a little above its long term trend rate in the half yearmarking 60 consecutive quarters of growth. The merchanting and mortarbusinesses benefited from the generally positive economic background. Therecovery in consumer spending and the RMI market that was underway in the secondhalf of 2006 was sustained over the half year. The strong RMI market led to robust demand and like for like merchanting salesincreased by five per cent following growth of almost two per cent in the secondhalf of 2006. Profitability in the overall UK business benefited from improved marketconditions. This together with a focus on margin improvement through volumerelated purchasing gains and the benefit of cost reduction measures taken lastyear resulted in a substantial improvement in operating profit. There was alsoa good level of incremental contribution from acquisitions completed in 2006. UK Builders Merchanting Buildbase performed particularly strongly building on the progress of recentyears. Substantial like for like sales growth, an improved trading margin dueto more favourable purchasing arrangements and a sustained focus on cost controlcontributed to the strong results. The business enjoyed better trading and astable pricing environment across the entire network with branches in theMidlands and South of England particularly benefiting from more positive marketconditions. The Buildbase Civils and Lintels division established in 2006 metexpectations and increased profit. The seven branch Scottish based Fleming business acquired in 2006 wassuccessfully integrated into the Buildbase network and achieved a good level ofprofitability having traded at break-even prior to acquisition. Three singlebranch acquisitions completed in 2006 made good profit contributions. Twoacquisitions in the half year gave the business a presence in Dover, Kent andHigh Wycombe, Buckinghamshire. Three new Buildbase branches were opened inMelksham, Wiltshire; Yeovil, Somerset and Stowmarket, Suffolk. Jacksons, the leading merchanting business in the East Midlands market,delivered good growth in sales and profits despite the competitive tradingenvironment due to an increase in merchanting capacity in the region. Jacksonsalso expanded its presence in the region with the opening of a second branch inLincoln and the acquisition of a specialist ironmongery business in Leeds. Macnaughton Blair, the leading Northern Ireland merchant, reported a significantimprovement in sales and operating profit due to positive market conditionssupported by an improving local economy and strong housing market. Selco, a trade only warehouse formula which combines traditional merchantingwith a modern self service environment, benefited from good levels of demandrelated to small RMI projects. The five stores opened during 2006 made solidprogress and three further stores were opened in the London area increasing thenetwork to twenty stores. UK Plumbers Merchanting The plumbers merchanting division had a good half year. Increased sales andoperating profit were achieved through significant contributions from the sixbusinesses acquired during 2006. The division completed the acquisition ofProgress Group in June 2007. Progress is a seventeen branch boiler heatingspares business with a strong position in this specialist market. Plumbaseextended its market coverage with the opening of two branches. UK Mortar EuroMix, the market leader in the UK dry mortar market where it trades from nineplants, had a healthy increase in volume due to strong residential, commercialand public sector demand. Despite higher input costs and strong competition,due to the significant increase in capacity in the sector in recent years, thebusiness successfully reported unchanged operating profit for the half year. TheLeeds plant which opened in July 2006 traded in line with expectations. Operations Review - Republic of Ireland Irish turnover increased by six per cent to €628.8 million (2006: €590.7million) and operating profit increased by six per cent to €60.6 million (2006:€57.1 million). The operating profit margin was unchanged at 9.7 per cent. The Irish economy continued to grow strongly in the first half of the yearsupporting good levels of demand in the Group's merchanting and DIY businesses.Domestic demand was a key driver of growth due to increased disposable incomesand generally positive labour market conditions. Robust growth in the labourforce principally reflected net inward migration. Although there has been moderation in the level of new residential construction,house completions in the half year were maintained at similar levels to lastyear. House price pressures eased following a sharp rise in the first half of2006. Residential repair, maintenance and improvement expenditure was strong,supported by the good momentum in the economy generally and maturing SSIA funds. Non-residential orientated construction activity prospered due to infrastructurespending under The National Development Plan combined with buoyant commercialand civils markets. Irish Merchanting Sales increased by four per cent to €424.2 million (2006: €407.6 million). While the half year saw new residential construction activity reasonably in linewith the first half of 2006, the division showed solid growth in sales andprofit due to the combined strength of the residential RMI market and goodgrowth in the non-residential, commercial and infrastructure constructionmarkets which form a major component of the overall Irish merchanting business. The sixty two branch national merchanting business trading mainly under theChadwicks and Heiton Buckley brands, grew like for like sales by three per centin a competitive trading environment. Chadwicks delivered good organic sales growth due in part to changing thebusiness emphasis to service more positive demand conditions in the RMI market.The performance of the business benefited from a continuing focus on margins,cost cutting and operational efficiencies. The Athlone branch was successfullyrelocated to a high profile out of town facility continuing the programme ofbranch relocations designed to increase capacity and improve customer service. Heiton Buckley delivered another set of record results with good growth in salesand operating profit. An overall improvement in volumes, pricing and sourcinggains and prudent cost control led to higher operating profit. Geographically,the branches located along the West coast and North West performed strongly,benefiting from a greater exposure to the RMI and one-off house constructionmarkets. Trading to date in the Mullingar branch which opened in August 2006 has exceededexpectations and is becoming established as a key operator in the Midlandsmarket. The relocation of the successful Tullamore branch to a facility with anexpanded product offering including plumbing and drainage products furtherconsolidated the branches market leading position in the region. The opening ofa new Heiton Buckley South Dublin city branch provides the business with avaluable presence within a catchment area which is subject to significantexisting and planned development together with an RMI exposure in the South andNorth Dublin city established residential coastal belt. Cork Builders Providers had record results reflecting a moderation in largescheme housing related demand which was more than compensated for by growth inthe one-off housing, RMI and civils markets. Davies, the Dublin based specialist plumbing, heating and drainage merchantperformed well with the benefit of exposure to the civils market. The businessintroduced a range of specialist drainage products into a number of HeitonBuckley branches, an initiative that offers the prospect of greater exposure tothis growth segment of the merchanting market. The acquisition of Market Hardware, provides the Group with a strong merchantingpresence in Ennis, a rapidly expanding town in the Mid West. Heiton Steel traded well in a positive pricing environment and benefited fromthe end use diversity of its product offering. The business experienced strongdemand in the civils, general contracting and agricultural sectors. Irish Manufacturing Wrights window and door manufacturing business experienced robust demand andfocused on cost and operational efficiencies following the commissioning of anew timber window manufacturing plant at the end of last year to meet strongdemand. CPI's EuroMix division continued to develop its value added product rangebuilding on its strong position in the dry mortar market. Irish Retailing Sales increased by 14.4 per cent to €168.2 million (2006: €147.0 million). TheIrish retailing business trading under the Woodie's DIY, Atlantic Homecare andIn-House at the Panelling Centre brands, achieved record results with stronggrowth in sales and operating profit. Market conditions were very positive with good volume growth in retail salesagainst a background of growth in real incomes, positive labour marketconditions and the impact of maturing SSIA accounts. The opening of DIY storeshas eased following a period of significant capacity expansion in the sector. Good volume growth in a strong market resulted in a nine per cent increase inlike for like sales. Stores opened last year in Castlebar, Co. Mayo; Navan, Co. Meath and Nenagh, Co.Tipperary traded ahead of expectations. A new store in Limerick which opened inJuly 2007 traded well. The Woodie's and Atlantic Homecare support offices were merged during the halfyear. The five store In-House at the Panelling Centre business performed particularlywell in a strong market. The business, which markets a range of quality kitchenand bedroom panelling products to trade and retail customers, achieved goodsales and profit growth. The four established stores performed strongly and theGalway store, which opened in mid 2006, performed in line with expectations.Expansion of the format is planned for later this year. Finance Cash generated by the Group's businesses remained strong and interest cover wasvery comfortable in the half year at 7.4 times. Shareholders' funds increased by €89.5 million exceeding €1.1 billion at 30 June2007. Net debt at 30 June 2007 was €586.5 million equivalent to gearing of 53 per cent(30 June 2006: 60 per cent). The total cash outflow on acquisitions and capital expenditure in the half yearwas €98.1 million. Six bolt-on acquisitions were made at a cost of €41.2million to expand the Group's position in the UK and Irish merchanting markets.Capital expenditure of €56.9 million reflected routine asset replacementexpenditure of €24.7 million and an investment of €32.2 million in organicdevelopment initiatives including the opening of ten merchanting branches andbranch relocations. The Group bought back 500,000 Grafton units on 6 June 2007 at a total cost of€5.75 million. The units purchased will be used to partially cover the Group'sobligations under the Grafton Group employee share schemes. The Group had a small surplus on its defined benefit pension schemes at 30 June2007. This arose from an increase in discount rates used to value liabilitiesand good investment returns which were partially offset by increased lifeexpectancy. Outlook Trading in July has been satisfactory with continued growth in sales and profitalbeit at a lower rate than in the first half. In Ireland, the overall outlook for the economy remains favourable with aneasing of growth expected to continue to levels which should remain strong byinternational standards. Despite lower growth, consumer spending is forecast tobe strong over the remainder of the year due to continued growth in realincomes, positive conditions in the labour market and the impact of maturingSSIA accounts. Irish new housing, accounting for an estimated one eighth of Group turnover, isexpected to continue to decline over the remainder of the year. RMIexpenditure, which traditionally is less cyclical, is expected to remain strongdue to the strength of domestic demand. The non-residential market is expectedto continue to perform strongly due to the significant capital provided forinvestment in infrastructure and public sector non-residential buildings inaddition to a strong pipeline of planning permissions for private commercial,industrial and agricultural buildings. The Irish merchanting business should benefit from a continuation of strongactivity in the RMI and non-residential construction markets. Strong consumerspending should be supportive of continued good demand in the Irish DIYbusiness. The UK economy is in positive shape and is forecast to continue growing ataround its long term trend rate. This economic background should be supportiveof RMI activity, although the recent round of interest rate increases may leadto some moderation in demand. Strong cash generation and a healthy financial position at the end of the halfyear leaves the Group well positioned to take advantage of suitable acquisitionand organic development opportunities. The Group is confident in the quality ofits brands and businesses and believes it is well placed to respond to changingmarket conditions. Conference Call Grafton will host an Analysts' conference call today at 8.30am (Irish Time) todiscuss this announcement. The dial-in numbers are: Ireland: + 353 1 436 4265UK: + 44 208 817 9301US: +1 718 354 1226Other: +353 1 436 4265 A replay of the conference call will be available from 11.30am (Irish Time). Toaccess the recording, the dial in numbers are: Ireland: +353 1 436 4267UK: +44 207 7696425US: +1 630 6523111Other: +353 1 436 4267 The digital replay security code is: 994168 # A copy of this statement is also available on our website www.graftonplc.com Grafton Group plc Group Income StatementFor the six months ended 30 June 2007 Six months Six months Twelve months to 30 June 2007 to 30 June 2006 to 31 Dec 2006 (Unaudited) (Unaudited) (Audited) •'000 •'000 •'000 Revenue 1,608,221 1,427,158 2,933,937 Operating costs (1,484,923) (1,321,334) (2,691,206) Operating profit before property profit 123,298 105,824 242,731 Property profit - 28,123 37,989 Operating profit 123,298 133,947 280,720 Finance expense (28,984) (27,123) (52,886) Finance income 12,112 11,450 21,522 Profit before tax 106,426 118,274 249,356 Income tax expense (13,837) (16,558) (32,418) Profit after tax for the financial period 92,589 101,716 216,938 Profit attributable to:Equity holders of the company 92,589 101,716 216,938 Basic earnings per share 38.69c 42.77c 91.03c Adjusted earnings per share 39.09c 33.00c 77.97c Diluted earnings per share 37.90c 41.90c 89.34c Group Statement of Recognised Income and ExpenseFor the six months ended 30 June 2007 Six months to Six months Twelve 30 June 2007 to 30 June months to 31 2006 Dec 2006 •'000 •'000 •'000Items of income and expense recognised directly withinequity:Currency translation effects - on foreign currency net investments (1,634) (3,815) 8,584 - on foreign currency borrowings 36 189 (396)Actuarial gain on Group defined benefit pension schemes 33,595 12,378 4,939Deferred tax on Group defined benefit pension schemes (6,426) (2,219) (44)Fair value movement in cash flow hedges:- Fair value gains/(losses) 514 1,152 1,875- Included in finance costs (706) (100) (353)Deferred tax on cash flow hedge 24 (132) (191)Net income recognised directly in equity 25,403 7,453 14,414 Profit after tax for the financial period 92,589 101,716 216,938 Total recognised income and expense for the period 117,992 109,169 231,352 Attributable to: Equity holders of the company 117,992 109,169 231,352 Movement on Group Retained Earnings 30 June 30 June 2006 31 Dec 2007 •'000 2006 •'000 •'000 At 1 January 662,726 475,380 475,380Retained profit for the financial period 92,589 101,716 216,938Purchase of 'A' ordinary shares (25,129) (20,204) (39,920)Actuarial gain on pensions (net of tax) 27,169 10,159 4,895Deferred tax on share based payments (1,102) 258 1,832Transfer from revaluation reserve 102 3,530 3,601At end of period 756,355 570,839 662,726 Group Statement of Changes in Equity 30 June 30 June 2006 31 Dec 2007 •'000 2006 •'000 •'000 At beginning of period 1,014,339 813,811 813,811Issue of Grafton Units (net of issue expenses) 1,214 2,011 4,000Adjustment for share based payments expense 2,268 1,807 3,264Deferred tax on share based payments (1,102) 258 1,832Purchase of 'A' ordinary shares (25,129) (20,204) (39,920)Treasury shares acquired (5,746) - -Total recognised income and expense for the period 117,992 109,169 231,352Closing shareholders' funds - equity 1,103,836 906,852 1,014,339 Grafton Group plcGroup Balance Sheet as at 30 June 2007 30 June 2007 30 June 2006 31 Dec 2006 (Unaudited) Unaudited) (Audited) •'000 •'000 •'000 ASSETSNon-current assetsGoodwill 607,353 543,258 582,861Intangible assets 12,210 14,422 13,307Property, plant and equipment 720,007 629,388 686,165Deferred tax assets 22,176 27,567 34,865Retirement benefit assets 2,901 - -Financial assets 411 267 414Total non-current assets 1,365,058 1,214,902 1,317,612 Current assetsInventories 415,044 370,473 390,400Trade and other receivables 627,758 564,325 542,110Derivative and other financial instruments 1,655 1,377 1,847Cash and cash equivalents 218,387 255,250 231,519Total current assets 1,262,844 1,191,425 1,165,876 Total assets 2,627,902 2,406,327 2,483,488 EQUITYCapital and reserves attributable to the equity holdersEquity share capital 12,078 12,061 12,082Share premium account 286,139 283,001 284,945Capital redemption reserve 346 298 322Revaluation reserve 32,871 33,044 32,973Other reserve - shares to be issued 8,723 4,998 6,455Cash flow hedge reserve 1,448 1,205 1,616Foreign currency translation reserve 11,622 1,406 13,220Retained earnings 756,355 570,839 662,726Treasury shares held (5,746) - -Total equity 1,103,836 906,852 1,014,339 LIABILITIESNon-current liabilitiesInterest-bearing loans and borrowings 490,813 548,315 671,617Provisions 8,902 500 4,468Retirement benefit obligations - 44,973 34,163Derivative financial instruments 22,657 15,081 22,126Deferred tax liabilities 50,443 44,708 49,408Total non-current liabilities 572,815 653,577 781,782 Current liabilitiesInterest-bearing loans and borrowings 286,586 235,959 88,585Trade and other payables 580,794 552,291 521,265Current tax liabilities 61,842 55,252 52,393Derivative financial instruments 6,506 1,211 1,898Provisions 15,523 1,185 23,226Total current liabilities 951,251 845,898 687,367 Total liabilities 1,524,066 1,499,475 1,469,149 Total equity and liabilities 2,627,902 2,406,327 2,483,488 Grafton Group plcGroup Cash Flow StatementFor the six months ended 30 June 2007 Six Months to 30 Six Months to Twelve months to June 2007 30 June 2006 31 Dec 2006 (Unaudited) (Unaudited) (Audited) •'000 •'000 •'000 Operating profit 123,298 133,947 280,720Depreciation 26,911 24,742 53,163Intangible amortisation 1,097 1,097 2,212Goodwill write-off on termination - - 243Share based payments charge 2,268 1,807 3,264Property profit - (28,123) (37,989)Net profit on sale of plant and equipment (1,603) (1,382) (3,401)Contributions to pension schemes in excess of IAS 19 (3,403) (1,526) (20,249)chargeIncrease in working capital (42,685) (26,025) (26,111)Cash generated from operations 105,883 104,537 251,852 Interest paid (22,863) (22,055) (43,224)Income taxes paid (2,073) (2,462) (14,594)Cash flows from operating activities 80,947 80,020 194,034Investing activitiesInflowsProceeds from sale of property, plant and equipment 6,366 57,972 77,664Interest received 6,148 6,451 12,216 12,514 64,423 89,880OutflowsAcquisition of subsidiary undertakings and businesses (35,266) (39,908) (70,621)Net cash acquired with subsidiary undertakings 1,887 2,329 777Deferred acquisition consideration (7,623) (2,284) (11,958)Purchase of property, plant and equipment (56,882) (48,230) (124,401)Purchase of financial asset - - (90) (97,884) (88,093) (206,293) Cash flows from investing activities (85,370) (23,670) (116,413) Financing activitiesInflowsProceeds from the issue of share capital 1,214 2,011 4,000Proceeds from term borrowings 21,601 - - 22,815 2,011 4,000OutflowsRepayment of long term borrowings - (109,115) (117,170)Purchase of 'A' ordinary shares (25,129) (20,204) (39,920)Treasury shares purchased (5,746) - -Payment of finance lease liabilities (879) (1,103) (1,850)Redemption of loan notes payable (16,100) (9,842) (18,087) (47,854) (140,264) (177,027) Cash flows from financing activities (25,039) (138,253) (173,027) Net (decrease) in cash and cash equivalents (29,462) (81,903) (95,406)Cash and cash equivalents at 1 January 201,764 291,844 291,844Effect of exchange rate fluctuations on cash held (540) (2,655) 5,326Cash and cash equivalents at the end of the period 171,762 207,286 201,764Cash and cash equivalents are broken down as follows:Cash at bank and short term deposits 218,387 255,250 231,519Overdrafts (46,625) (47,964) (29,755) 171,762 207,286 201,764 Grafton Group plcNotes to interim results for the half year ended 30 June 2007 1. General Information and Accounting Policies The interim Financial Statements have been prepared in accordance with theGroup's accounting policies under International Financial Reporting Standards(IFRS) as set out in the Group's 2006 Annual Report. 2. Revenue and Operating Profit by Geographic Segment The amount of revenue by geographic segment is as follows: Six months to Six months to Twelve months to 30 June 2007 30 June 2006 31 Dec 2006 (Unaudited) (Unaudited) (Audited) •'000 •'000 •'000RevenueIreland 628,811 590,654 1,200,639 United Kingdom 979,410 836,504 1,733,298 1,608,221 1,427,158 2,933,937 Operating profit before property profit and intangibleamortisationIreland 60,636 57,106 130,371 United Kingdom 63,759 49,815 114,572 Operating profit before property profit and intangibleamortisation 124,395 106,921 244,943 Intangible amortisation - Ireland (1,097) (1,097) (2,212) 123,298 105,824 242,731 Operating profit before property profitIreland 59,539 56,009 128,159 United Kingdom 63,759 49,815 114,572 123,298 105,824 242,731 Property profitIreland - 24,104 30,056 United Kingdom - 4,019 7,933 - 28,123 37,989Operating profitIreland 59,539 80,113 158,215 United Kingdom 63,759 53,834 122,505 123,298 133,947 280,720 Finance costs (net) (16,872) (15,673) (31,364)Profit before tax 106,426 118,274 249,356 3. Analysis of Revenue by Business Segment Six months to Six months to Twelve months to 30 June 2007 30 June 2006 31 Dec 2006 (Unaudited) (Unaudited) (Audited) •'000 •'000 •'000 Revenue UK merchanting 941,868 803,121 1,664,856 Irish merchanting 424,157 407,604 816,602 Irish DIY 168,182 147,007 311,680 Irish and UK manufacturing 74,014 69,426 140,799 1,608,221 1,427,158 2,933,937 4. Reconciliation of Net Cash Flow to Movement in Net Debt For the six months ended 30 June 2007 30 June 30 June 31 Dec 2007 2006 2006 •'000 •'000 •'000 Net (decrease) in cash and cash equivalents (29,462) (81,903) (95,406)Cash-flow from movement in debt and lease financing (4,622) 120,060 141,317Change in net debt resulting from cash flows (34,084) 38,157 45,911 Loan notes issued on acquisition of subsidiary (81) - (1,653)undertakingsFinances leases acquired with subsidiary undertakings (173) (87) (95)Bank loans and loan notes acquired with subsidiaries (2,701) (2,926) (3,579)Translation adjustment 1,571 4,047 (8,784)Net movement in derivative financial instruments (192) 1,052 1,522 Movement in net debt in the period (35,660) 40,243 33,322 Net debt at 1 January (550,860) (584,182) (584,182) Net debt at end of the period (586,520) (543,939) (550,860) 5. Earnings per Share The computation of basic, diluted and adjusted earnings per share is set outbelow. Half Year Half Year Year Ended 30 June 2007 30 June 2006 31 Dec 2006 •'000 •'000 •'000Numerator for basic, adjusted and diluted earnings per share: Profit after tax for the financial period 92,589 101,716 216,938 Numerator for basic and diluted earnings per share 92,589 101,716 216,938 Property profit after tax - (24,186) (33,051)Intangible amortisation after tax 960 960 1,935 Numerator for adjusted earnings per share 93,549 78,490 185,822 Number of Number of Grafton Number of Grafton Units Units Grafton UnitsDenominator for basic and adjusted earnings per share: Weighted average number of Grafton Units in issue 239,337,546 237,841,649 238,324,290 Effect of potential dilutive Grafton Units 4,957,535 4,913,765 4,505,408 Denominator for diluted earnings per share 244,295,081 242,755,414 242,829,698 Earnings per share (cent)- Basic 38.69 42.77 91.03- Diluted 37.90 41.90 89.34 Adjusted earnings per share (cent)- Basic 39.09 33.00 77.97 6. Share Purchase The Board has approved the purchase of one 'A' ordinary share per Grafton Unitfor a cash consideration of 10.0 cent. The purchase of the 'A' ordinary sharewill take effect in respect of Grafton Units on the register at close ofbusiness on 24 August 2007 (record date) and the cash consideration will be paidon 3 October 2007. 7. Exchange Rates The results and cash flows of the Group's United Kingdom subsidiaries have beentranslated into Euro using the average exchange rate. The related balancesheets of the Group's United Kingdom subsidiaries at 30 June 2007 and 30 June2006 have been translated at the rate of exchange ruling at the balance sheetdate. The average Euro / Sterling rate of exchange for the six months ended 30 June2007 was Stg67.46p (six months to 30 June 2006: Stg68.70p and twelve months to31 December 2006: Stg68.17p). The Euro / Sterling exchange rate at 30 June 2007was Stg67.40p (30 June 2006: Stg69.21p and 31 December 2006: Stg67.15p). Independent review report to Grafton Group plc Introduction We have been engaged by the Company to review the interim financial informationfor the six months ended 30 June 2007 which comprises the Group Interim IncomeStatement, Group Interim Balance Sheet, Group Interim Statement of RecognisedIncome and Expense, Group Interim Cash Flow Statement and related notes. We haveread the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the ListingRules of the Irish Stock Exchange and the UK Financial Services Authority. Ourreview has been undertaken so that we might state to the Company those matterswe are required to state to it in this report and for no other purpose. To thefullest extent permitted by law, we do not accept or assume responsibility toanyone other than the Company, for our review work, for this report, or for theconclusions we have reached. Directors' responsibilities This interim report, including the financial information contained therein, isthe responsibility of and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules which require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual financial statements except where any changes, and the reasonsfor them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4Review of interim financial information issued by the Auditing Practices Boardfor use in Ireland and the United Kingdom. A review consists principally ofmaking enquiries of Group management and applying analytical procedures to thefinancial information and underlying financial data and, based thereon,assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review excludes auditprocedures such as tests of controls and verification of assets, liabilities andtransactions. A review is substantially less in scope than an audit performedin accordance with Auditing Standards and therefore provides a lower level ofassurance than an audit. Accordingly, we do not express an audit opinion on thefinancial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. KPMGChartered AccountantsDublin13 August 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Grafton Group