REG - Grafton Group PLC - Final Results
06/03/2025 07:15
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RNS Number : 5464Z Grafton Group PLC 06 March 2025
Final Results
For the Year Ended 31 December 2024
Grafton Group plc
Final Results for Year Ended 31 December 2024
Full year adjusted operating profit slightly ahead of analysts' expectations
Grafton Group plc ("Grafton" or "the Group"), the international building
materials distributor and DIY retailer is pleased to announce its final
results for the year ended 31 December 2024.
Financial Highlights
▪ Full year adjusted operating profit of £177.5 million (2023: £205.5 million)
with trading slightly ahead of analysts' expectations(1) and higher reported
property profit
▪ The Group's diversification and strong operational focus enabled it to
navigate challenging markets
▪ Strong free cash flow of £178.2 million (2023: £203.0 million), a 100%
conversion rate (2023: 99%) from adjusted operating profit
▪ Platform acquisition of Salvador Escoda executed for €128.0 million(2)
providing a strong base for future Iberian growth
▪ £154.1 million (2023: £228.3 million) returned to shareholders in share
buybacks and dividend payments in 2024
▪ Strong balance sheet of £272.1 million net cash (before lease liabilities)
providing firepower for organic and inorganic development opportunities
▪ Reflecting Board's confidence, full year dividend increased by 2.8 per cent
and an incremental £30.0 million share buyback to commence funded by strong
free cash flow generated in 2024
▪ Adjusted return on capital employed of 10.3% (2023: 11.9%)
Operational Highlights
▪ Strong performance in Ireland while the rate of decline continues to ease in
the UK
▪ Group returned to average daily like-for-like sales growth against easier
comparators in the final quarter of the year
▪ Overall Group gross margin broadly unchanged and overheads continued to be
tightly controlled
▪ Moderation of product price deflation accelerated in the second half of the
year
▪ Integration of Salvador Escoda is progressing well
Total Operations(3) 2024 2023 Change
Revenue £2,282m £2,319m (1.6%)
Adjusted(4) operating profit £177.5m £205.5m (13.6%)
Adjusted operating profit before property profit £173.5m £204.2m (15.0%)
Adjusted operating profit margin before property profit 7.6% 8.8% (120bps)
Adjusted profit before tax £178.9m £205.9m (13.1%)
Adjusted earnings per share 71.8p 77.9p (7.8%)
Full year dividend 37.0p 36.0p +2.8%
Adjusted return on capital employed (ROCE) 10.3% 11.9% (160bps)
Net (debt) (including IFRS 16 leases) (£131.7m) (£49.3m) (£82.4m)
Net cash (before IFRS 16 leases) £272.1m £379.7m (£107.7m)
Statutory Results 2024 2023 Change
Operating profit £152.6m £183.1m (16.6%)
Profit before tax £152.5m £183.5m (16.9%)
Basic earnings per share 60.9p 69.6p (12.5%)
(1) Grafton compiled consensus Analysts' forecasts for 2024 show adjusted
operating profit of circa £169.1 million
(2) Calculated on a cash and debt free basis before leases
(3) Supplementary financial information in relation to Alternative Performance
Measures (APMs) is set out on pages 41 to 46.
(4) The term "Adjusted" means before exceptional items, amortisation of
intangible assets arising on acquisitions and acquisition related items in
both periods, which are defined on page 41
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Eric Born, Chief Executive Officer Commented:
"We are pleased to have successfully navigated challenging market conditions
in 2024 to deliver adjusted operating profit slightly ahead of analysts'
expectations. This resilient performance was supported by our exposure to
different geographies, our diversified customer base and the active management
of gross margin and costs.
"Highlights in the period included the strong performance of our Irish
businesses and completion of the platform acquisition of Salvador Escoda,
whilst also returning £154.1 million to shareholders through share buybacks
and dividends.
"The integration of Salvador Escoda continues to progress well, extending our
geographic diversification and exposure to a new growth market, presenting an
attractive opportunity to build further scale across the Iberian Peninsula in
due course.
"Whilst the timing of recovery in certain geographies remains uncertain, the
medium term outlook is positive. We will continue to strengthen our
positions in existing markets and are excited by the development opportunities
ahead."
Webcast and Conference Call Details
A copy of the results presentation document will be available at 7:00am on 6
March 2025 via the home page of the Company's website www.graftonplc.com
(http://www.graftonplc.com) .
A presentation for analysts and investors will be hosted by Eric Born and
David Arnold at 9:00am on 6 March 2025. A live webcast of the presentation
including Q&A will be available to view via the Company's website at
www.graftonplc.com (https://www.graftonplc.com/) or by clicking here
(https://stream.brrmedia.co.uk/broadcast/67a0e50cda34b6c1a6f62120) .
Analysts will be invited to raise questions during the presentation. Should
investors wish to submit a question in advance, they can do so before 8.15am
on 6 March by sending an email to ir@graftonplc.com (mailto:ir@graftonplc.com)
. A recording of the webcast will be made available on the Company's
website.
Investors Media
Grafton Group plc +353 1 216 0600 Murray pwalsh@murraygroup.ie (mailto:pwalsh@murraygroup.ie)
Eric Born Chief Executive Officer Pat Walsh +353 1 498 0300/+353 87 226 9345
David Arnold Chief Financial Officer
Burson GraftonGroup@buchanancomms.co.uk
Buchanan
Helen Tarbet +44 (0) 7872 604 453
Simon Compton +44 (0) 7979 497 324
Toto Berger +44 (0) 7880 680 403
Forward-looking statements
This announcement may include forward-looking statements. These
forward-looking statements can be identified by the use of forward-looking
terminology, including the terms "outlook," "believe(s),"expect(s),"
"potential," "continue(s)," "may," "will," "should," "could," "would,"
"seek(s)," "predict(s)," "intend(s)," "trends," "plan(s)," "estimate(s),"
"anticipates," "projection," "goal," "target," "aspire," "will likely result"
and other words and terms of similar meaning or the negative versions of such
words or other comparable words of a future or forward-looking nature. These
forward-looking statements include all matters that are not historical facts
and include statements regarding Grafton's or its affiliates' intentions,
beliefs or current expectations concerning, among other things, Grafton's or
its affiliates' results of operations, financial condition, liquidity,
prospects, growth, strategies and the industries in which they operate. By
their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not
occur in the future. Readers are cautioned that forward-looking statements are
not guarantees of future performance and that Grafton's or its affiliates'
actual results of operations, financial condition and liquidity, and the
development of the industries in which they operate may differ materially from
those made in or suggested by the forward-looking statements contained in this
press release. In addition, even if Grafton's or its affiliates' results of
operations, financial condition and liquidity, and the development of the
industries in which they operate are consistent with the forward-looking
statements contained in this press release, those results or developments may
not be indicative of results or developments in subsequent periods. 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 2024
Business Review
Grafton delivered a resilient performance in 2024 despite the impact of price
deflation in Ireland and the UK on product pricing and the squeeze on
operating margin which arose from operating cost increases despite mitigating
actions to offset these pressures. Labour cost increases were affected
across our geographies, principally as a result of substantial national
minimum wage increases or local collective labour agreements. Property lease
costs also continued to rise at above inflation levels as a result of demand
for industrial units in particular. The benefits of our geographic
diversification and a range of self-help initiatives to actively manage our
cost base and gross margin resulted in the Group delivering an adjusted
operating profit slightly ahead of analysts' expectations.
Continuing strong cash generation and a healthy balance sheet supported the
Group's platform acquisition of Salvador Escoda S.A.U. ("Salvador Escoda") for
€128.0 million calculated on a cash and debt free basis (before leases) in
the growing and fragmented Spanish market. This was achieved whilst also
returning £154.1 million of cash to shareholders through share buybacks and
dividends.
Though most markets remained challenging, overall trading conditions did
improve slightly in the final quarter of 2024 compared with the same period
last year, with the Group returning to average daily like-for-like sales
growth in this period. We were pleased with the performance of our Ireland
Distribution and Retailing businesses, both of which achieved strong volume
increases in 2024 supported by a pick-up in activity in the second half of the
year. Chadwicks delivered higher trading profitability in the year largely
due to higher sales and gross margin growth in a construction market that was
broadly flat. This improvement was delivered despite housing completions in
the year being lower than 2023 and with Repair, Maintenance and Improvement
("RMI") demand remaining subdued. Woodie's delivered a strong performance in
the year, supported by the growth of the Irish economy and its market-leading
customer proposition.
Our UK Distribution business saw a continuing decline in profitability as RMI
demand and consumer confidence remained at historically low levels. Relative
to easier comparators in the second half of last year, the decline in volumes
continued to moderate approaching year end, whilst the negative effects of
product price deflation also reduced as the year progressed. Conversely,
pass-through of inflationary cost pressure on overheads, particularly labour
and property related costs, was difficult in what remains a competitive,
value-focused market at this point in the cycle.
In the Netherlands, trading profitability declined in the year due to a
decline in sales, as the RMI market remained weak, and higher overheads,
primarily driven by collective wage agreements. Our Finland Distribution
business, IKH, reported a decline in trading profitability due to challenging
market conditions and a contracting Finnish economy.
On 30 October 2024, Grafton acquired Salvador Escoda which provides the Group
with a new platform further extending our geographical diversification and
providing exposure to a new growth market. Salvador Escoda is one of Spain's
leading distributors of heating, ventilation, air conditioning, water and
renewable products serving professional installers across the residential,
commercial and industrial sectors. Salvador Escoda is a high-quality
business with a strong market position and an experienced management team.
The business is differentiated by its extensive own-brand offering and
provides an excellent base for further development, both organically and
inorganically, into the attractive and fragmented Iberian market.
Integration of the business into the Group is progressing well.
In our manufacturing segment, CPI EuroMix delivered a resilient performance
with active cost management partially offsetting UK housing market volume
declines. StairBox, while negatively impacted by the weak RMI market in the
UK, delivered improved profitability largely due to good margin management and
the positive impact of its Wooden Windows acquisition.
The Group's overall gross margin was broadly maintained against the backdrop
of a competitive market environment whilst the increase in overheads in the
like-for-like business was contained following the implementation of active
cost management measures across the Group. Cost reduction actions continued
across our businesses, including headcount reductions primarily in UK and
Finland Distribution, as the market recovery has not materialised as initially
expected.
Our proven operating model of a lean central management team supports the
strategic development of the businesses and continues to develop our pipeline
of investment and acquisition opportunities. The team drives best practice and
leverages economies of scale as appropriate across the businesses, whilst
keeping firm control of costs. These Group functions are actively supporting
the integration of Salvador Escoda and connecting our new colleagues with
other businesses across the Group to identify additional opportunities for
synergies.
Our balance sheet remains strong, supported by robust cash generation by our
businesses in the year, which benefitted from a further year on year reduction
in net working capital.
We continue to actively pursue opportunities for bolt-on investments to
further strengthen our market positions in existing geographies whilst
continuing to explore opportunities for further platform acquisitions.
Returns to Shareholders
Dividends
The Board is recommending a final dividend for 2024 of 26.5p (2023: 26.0p) per
ordinary share in line with its progressive dividend policy. An interim
dividend of 10.5p (2023: 10.0p) per share was paid on 11 October 2024. The
total dividend for the year is 37.0p per share, an increase of 2.8 per cent on
dividends of 36.0p paid for 2023.
The total dividend for 2024 of 37.0p is 1.9 times (2023: 2.2 times) covered by
adjusted earnings per share of 71.8p (2023: 77.9p) and is slightly below the
lower end of the Board's medium-term dividend cover policy of between
two-times and three-times adjusted earnings. Given the Group's strong
balance sheet and cash flow and recognising the Board's confidence in the
medium and long-term growth prospects for the Group, it was deemed appropriate
to incur a slightly lower dividend cover ratio in the current year.
The Group's cash outflow on dividends paid during the year was £73.2 million
(2023: £72.6 million). A liability for the final dividend has not been
recognised at 31 December 2024 as there was no payment obligation at that
date.
The final dividend will be paid on 15 May 2025 to shareholders on the Register
of Members at the close of business on 22 April 2025, the record date. The
ex-dividend date is 17 April 2025. The final dividend is subject to approval
by shareholders at the Annual General Meeting to be held on 8 May 2025.
Share Buybacks
Consistent with its disciplined approach to capital allocation, Grafton has
completed five share buyback programmes since May 2022 supported by its strong
financial position. In total, cash of £371.7 million has been returned to
shareholders through share buybacks completed between 9 May 2022 and 31
December 2024 reflecting the repurchase of 43.08 million ordinary shares at an
average price of £8.63 per share. The number of shares bought back by the end
of the year amounted to 17.9 per cent of the shares in issue when the first
share buyback programme commenced on 9 May 2022.
The fourth share buyback programme, which launched on 31 August 2023, was
extended to 31 May 2024 and the maximum aggregate consideration increased from
£50 million to £100 million. This programme completed on 30 April 2024 and
involved the repurchase of 11.1 million ordinary shares. A fifth programme
was launched on 29 August 2024 for an aggregate consideration of up to £30
million. The Group had purchased £28.39 million of ordinary shares by the
close of business on 31 December 2024. The fifth programme completed shortly
after year end on 8 January 2025.
Given the strong cash generation of the Group and free cash flow exceeding
expectations in 2024, a new buyback programme for £30 million is announced
today which will commence on 6 March 2025. By funding the return of capital
to shareholders through free cash flow generation in 2024, the Group has
maintained its capacity to support future development activities.
Progress on Sustainability
Today we are publishing our sustainability progress and performance statement
for 2024. This covers the five areas of our strategy: Planet, Customer and
Product, People and Community and Ethics.
The sustainability legislative landscape is evolving at pace and a number of
sessions have been held with the Board and the Executive Sustainability
Committee throughout the course of the year to ensure that they are aware of
the requirements and are satisfied with our strategy, process and
progress.
On climate change, we have committed to reach net-zero greenhouse gas
emissions across the value chain by 2050 at the latest and we were pleased to
have received validation by the Science Based Targets initiative ("SBTi") for
this and our associated near (by end 2030) and long-term targets (by end
2050), the detail of which can be found here
(https://www.graftonplc.com/esg/planet/approved-net-zero-science-based-targets)
. In setting these targets, the Group has modelled the transition required
to achieve the 2030 targets through business efficiencies, renewable energy
and alternative fuels to reduce Scope 1 and 2 emissions and extensive
engagement through the supply chain to reduce Scope 3 emissions. Scope 3
emissions account for over 98 per cent of the Group's greenhouse gas emissions
and positive and proactive engagement with our supply chain is central to
achieving these targets.
On supplier due diligence, we have selected EcoVadis to support us in the risk
assessment of suppliers, the rating of their sustainability programmes and to
drive improvements over time. In the second half of 2024 we prepared for the
transition to this provider and have started the training sessions with
commercial teams across the Group in January 2025.
On People, the Executive Sustainability Committee has established a new
Wellness at Work Policy building on all the good work taking place across the
Group to ensure colleagues' health and wellness is integrated into daily
work.
We were also pleased to demonstrate the following progress over the year*:
● 38.6% reduction in absolute market-based Greenhouse Gas emissions in 2024 vs
the 2021 base year for scope 1 and 2 and a 13.7% reduction in Scope 3
Greenhouse Gas emissions in 2023 vs the 2021 base year** reflecting emission
reduction initiatives as well as market related decline in activity levels
● 99.3% diversion of operational waste from landfill
● Increase in the number of women in leadership roles from 13.0% in 2023 to
15.0% in 2024. This progress highlights the actions we have taken to ensure
we access a broader and more diverse talent pool through the recruitment
process as well as initiatives to tailor our benefits packages to attract and
retain more women in leadership roles.
● Over £1.2 million donated to charities and good causes through cash, in kind
or volunteering which equates to 0.71% of our adjusted operating profit before
property profit for the year
*Data points exclude Salvador Escoda.
**Our latest Scope 3 data is for 2023.
Outlook
Positive trading conditions are expected to continue in Ireland and Spain,
however, in our other geographies, markets are anticipated to remain
challenging in 2025. While inflation is expected to continue to moderate and
interest rate cuts to follow, significant levels of macroeconomic and
political uncertainty remain across the global economy. It is not yet known
what impact the new US administration will have on trade with potential scope
for new tariffs.
We remain cautious on the timing of a broader recovery in the near term with
increased global uncertainties and consistent with our prior commentary, we
are not anticipating a significant increase in volumes this year. While
product deflation has largely subsided, growth in product pricing is expected
to be very modest and likely lower than the general level of cost inflation
experienced by the business, most notably labour costs. Manufacturers remain
reluctant to push significant price increases to the market in advance of
volume recovery.
Our experienced management teams will continue to actively manage both gross
margin and the cost base appropriate to this period of the cycle. With our
strong market positions and market leading brands, the Group is well
positioned to grow revenue as volumes increase in line with a general recovery
in our markets.
The Irish economy is expected to grow in 2025 on the back of momentum from the
second half of 2024 supported by real income growth and strong consumer
spending and job creation. The outlook for growth in the construction market
in Ireland remains positive. Housing completions are expected to increase in
2025 after a significant number of recorded commencements in 2024. RMI demand
is expected to improve supported by greater cost certainty as inflation
continues to stabilise, interest rates decline and as household finances
improve.
In the UK, we remain cautious on the near-term outlook for a recovery in RMI
demand as consumer confidence remains weak due to economic uncertainty and
forecasts for growth weaken. The recovery in housebuilding in the UK is
expected to be slow with any meaningful acceleration of output expected to be
very gradual and reliant on supply-side improvements from the Government.
In the Netherlands, the outlook for construction in 2025 is improving as the
first signs of recovery are visible however recovery is likely to be gradual
as the pipeline of large construction projects will come on stream over the
next couple of years.
In Finland, there are increasing signs that the bottom of the construction
cycle has been reached. The Finnish economy is expected to return to modest
growth in 2025 as it slowly emerges from recession and as consumer and
business confidence improves.
The Spanish economy, which was the fastest growing economy in the Eurozone in
2024, is expected to continue to grow in 2025. The outlook for construction
growth in Spain remains positive supported by population growth and a general
housing shortage.
Notwithstanding the potential macroeconomic challenges in 2025, the
medium-term fundamentals continue to remain positive. Housing shortages across
all of our geographies and the natural investment cycle in RMI is likely to
become increasingly supportive as the over-investment made by consumers in
2020 and 2021 starts to require further upgrading.
Group average daily like-for-like revenue in the period from 1 January 2025 to
28 February 2025 was 0.1 per cent behind the same period last year.
Unfavourable weather conditions had a negative impact on trading in the early
part of the year as our businesses in Ireland and the UK were disrupted by
Storm Éowyn while in Finland mild winter conditions reduced sales of seasonal
products. Trading activity did recover in February however as weather patterns
in Ireland and UK improved. Woodie's had a good start to the year as consumer
spending in Ireland remains resilient. Our business in the Netherlands
performed strongly supported by strong demand from key accounts and access
control related project sales in addition to favourable timing of holidays.
Average Daily Like-for-Like Revenue Change in Constant Currency
Q4 2024 1 Jan 2025 - 28 Feb 2025
Distribution
Ireland +5.0% +0.3%
UK (2.9%) (4.1%)
Netherlands (2.3%) +5.0%
Finland (2.5%) (2.8%)
Retailing +5.3% +4.0%
Manufacturing +2.3% +3.3%
Total Group +0.5% (0.1%)
Grafton demonstrated the strength of its portfolio of businesses with a high
rate of conversion of profit into cash in 2024. This has been achieved while
the Group continued to upgrade and improve its branch network, open new
locations and invest in IT infrastructure to enhance customers' experience.
The Group ends the year in a strong financial position, with a healthy balance
sheet, and remains well positioned to continue to invest in organic and
inorganic opportunities to support future growth and development. Whilst
uncertainties remain in the short term, we are confident that Grafton is
exceptionally well positioned to benefit as conditions improve.
Segmental Review
The Distribution businesses in Ireland, the UK, the Netherlands, Finland and
Spain contributed 83.8 per cent of Group revenue (2023: 83.7 per cent),
Retailing 11.4 per cent (2023: 11.1 per cent) and Manufacturing 4.8 per cent
(2023: 5.2 per cent).
Businesses in Ireland contributed 39.5 per cent (2023: 38.7 per cent) of Group
revenue, UK 38.6 per cent (2023: 40.1 per cent), the Netherlands 14.8 per cent
(2023: 15.2 per cent), Finland 5.8 per cent (2023: 6.0 per cent) and Spain 1.3
per cent (2023: N/A).
Distribution Segment (83.8% of Group Revenue, 2023: 83.7%)
2024 2023
£'m £'m Change*
Revenue 1,912.6 1,940.4 (1.4%)
Adjusted operating profit before property profit 129.6 155.8 (16.8%)
Adjusted operating profit margin before property profit 6.8% 8.0% (120bps)
*Change represents the movement between 2024 v 2023 and is based on unrounded
numbers
Ireland Distribution (27.7% of Group Revenue, 2023: 27.2%)
2024 2023 Constant
Currency
£'m £'m Change* Change*
Revenue 632.8 631.0 0.3% 3.0%
Adjusted operating profit before property profit 61.5 60.9 1.0% 3.6%
Adjusted operating profit margin before property profit 9.7% 9.7% - -
*Change represents the movement between 2024 v 2023 and is based on unrounded
numbers
Our Ireland Distribution business, Chadwicks, delivered a positive trading
performance in the year with overall average daily like-for-like revenue up
1.6 per cent and volumes up 4.6 per cent supported by its excellent market
position and strong offering. Following modest growth of 0.5 per cent in
average daily like-for-like revenue in the first half of the year, where
trading was impacted by wet weather, growth accelerated to 2.8 per cent in the
second half of the year.
Overall construction market growth in Ireland in 2024 was broadly flat due to
challenges around skills shortages, financing and planning. Infrastructure
spend declined in the year with many projects related to road, rail or water
infrastructure being postponed or delayed. RMI demand remained subdued due to
a lack of confidence about final costs of projects, a shortage of tradespeople
and over-investment during the pandemic period. Momentum in the market however
picked up in the final quarter of the year helped by unseasonably mild weather
and an uptick in RMI activity.
Despite concerted efforts by the Government to support new residential
housing, overall housing completions of 30,330 units in 2024 declined by 6.7
per cent in comparison to 2023. The mix of new housing units has changed with
a lower percentage of apartments being built due to difficulties obtaining
planning permission for large scale developments and the decline in investment
in 'build-to-rent' schemes. The proportion of social and affordable housing
supported by government funding and new developments from the large-scale
homebuilders aimed at the 'first time buyer' market has increased. Smaller
scale developments and medium to large sized home schemes, which present a
more favourable customer dynamic to Chadwicks, have continued to decline as a
share of the overall housing market in Ireland.
The business reported materials price deflation of 3.0 per cent in 2024 as the
deflationary pressures in timber and steel moderated over the course of the
year. Moderation of price deflation, particularly in steel, together with
active price management initiatives and sell through of aged inventory
supported strong gross margin growth of 140 basis points in the year.
Though overheads increased in the year as upward pressure on labour costs
persisted, management continued to tightly control discretionary costs.
Adjusted operating profit before property profit increased to £61.5 million
(2023: £60.9 million) and adjusted operating profit margin before property
profit was in line with prior year at 9.7 per cent.
The overall outlook for growth remains positive for construction in Ireland
given the chronic shortage of housing and political imperative to increase
housing supply. The new Government has committed to delivering 300,000 new
homes by 2030 including an average of 12,000 new social homes per annum over
the lifetime of the government. The pipeline for infrastructure projects
remains strong given historic under-investment and a rising population. RMI
activity is expected to increase in 2025, particularly in the second half, due
to falling interest rates and a more stable inflationary environment.
Chadwicks remains well positioned to leverage its strong brand and market
leadership position to capitalise on growth opportunities in the coming years.
Significant progress was made on several initiatives across the business in
2024, including:
● The bulk distribution centre in East Wall Road in Dublin completed its first
full year in operation. Significant volumes were processed from our large
customer accounts on certain bulk volume lines improving efficiency, reducing
emissions and freeing up capacity in several Chadwicks branches to allow them
to focus on local trade customers.
● Implementation of a Warehouse Management System for our central plumbing
distribution warehouse to optimise the operations of fulfilment, shipping and
receiving tasks in the distribution centre and improve product availability
and accuracy, optimise pick-up efficiency and accelerate goods in-take across
our branch network
● Streamlining of customers' journey in-store by replacing all printers in the
branches, taking significant steps to optimise printed documentation for
customers and related wastage/energy consumption
● Commenced multi-year programme to upgrade the ERP solution and migrated recent
acquisitions (Sitetech and Rooneys) onto Chadwick's core IT ecosystem
● Successful integration of the Rooneys business completed with significant
investments made to improve the health & safety and efficiency of the yard
and warehouse operations
● Strong growth of cross-selling of specialist products from Proline and
Sitetech via the Chadwicks' branch network, unlocking further synergies from
these bolt-on acquisitions
● Continued refurbishment programme of the branch network with the completion of
extensive upgrades of the Chadwicks branches in Wexford and Midleton and the
Panelling Centre branch in Walkinstown
● Chadwicks launched the 'How's the Head' campaign to support the charity
'Aware' to raise awareness and encourage tradespeople to talk more openly
about mental health issues and continued to support its partnership with the
Irish Wheelchair Association
UK Distribution (34.2% of Group Revenue, 2023: 35.3%)
2024 2023
£'m £'m Change*
Revenue 780.8 818.1 (4.6%)
Adjusted operating profit before property profit 32.4 47.3 (31.3%)
Adjusted operating profit margin before property profit 4.2% 5.8% (160bps)
*Change represents the movement between 2024 v 2023 and is based on unrounded
numbers
Average daily like-for-like revenue in the UK Distribution business was down
5.9 per cent in the year due to continued weak demand in the RMI market
together with the effects of price deflation. The rate of decline of average
daily like-for-like revenue moderated from 7.7 per cent in the first half to
3.9 per cent in the second half, in part driven by easier comparatives.
Price deflation continued to moderate over the course of the year. Total
revenue was 4.6 per cent lower than 2023 with prior year acquisitions in
Northern Ireland and new branches opened in Selco and Leyland SDM contributing
revenue of £4.8 million in the year.
The RMI market in the UK continued to decline in 2024 as consumer confidence
remained at historically low levels and higher interest rates impacted
consumers' ability to finance home improvement projects. This impact was more
pronounced in the Greater London area where consumers' discretionary spending
was disproportionately affected due to the higher cost of living and larger
mortgage repayments. Furthermore, lower levels of demand across the wider
construction sector, particularly in new housebuilding, led to the RMI sector
becoming more price competitive.
UK Distribution's gross margin was down 30 basis points in 2024 which
reflected the weak volume backdrop and competitive market conditions. Our
businesses have continued to maintain a strong value proposition for our
customers as they favour value for money over convenience at this point in the
cycle.
Overheads were higher in comparison to the prior year due to inflationary
pressure across the cost base. Despite significant cost pressures on labour
and property related costs, like-for-like operating expense increases have
been contained to 2.0 per cent through rigorous cost management across all of
our businesses.
Adjusted operating profit before property profit declined to £32.4 million
(2023: £47.3 million) and the adjusted operating profit margin before
property profit was 160 basis points lower at 4.2 per cent largely reflecting
the decline in like-for-like revenue and impact of lower volumes on the
operating leverage of the business.
The long-awaited recovery in the UK market is likely to be modest in 2025 and
we are not anticipating a significant pick-up in volumes given insipid
economic growth in the wider economy. While interest rate cuts and moderation
of inflation are likely to continue, consumer confidence continues to be
weighed down by economic uncertainty and concerns about government debt and
borrowing costs. Higher National Insurance costs imposed on businesses is
expected to limit investment in new employment across the UK economy in the
short term until a wider recovery materialises. The increase in National
Insurance is expected to increase labour costs in the Group by £3.5 million
on an annualised basis.
Notwithstanding the potential macroeconomic challenges this year, the
medium-term fundamentals continue to remain positive in the UK with strong
government support to increase housing supply given population growth and a
supply deficit. Household savings increased and wage growth outpaced
inflation throughout 2024 which should support future investment in home
improvement projects as consumer confidence improves.
Frank Elkins, who was appointed as the new CEO of Selco and GB Distribution in
August 2024, is driving business improvements across each of our businesses.
Frank has extensive experience in the UK building materials distribution
sector, most recently being the Group Chief Operating Officer of Travis
Perkins plc.
Selco, which trades from 75 branches, including 32 in London, is the UK's
leading Cash and Carry trade only builders' merchant. Selco focuses almost
exclusively on the RMI segment of the construction market.
While average daily like-for-like revenue declined by 4.9 per cent in the
year, the rate of decline reduced from 7.7 per cent in the first half to 1.9
per cent in the second half. Price deflation has continued to moderate with
deflation of 1.0 per cent in the second half and notably timber prices trended
positive in December 2024 for the first time since April 2023. Volumes were
negatively impacted by lower demand with customers proportionately taking on
smaller jobs in the weaker market.
Selco invested in pricing on key products to remain competitive in the market,
which was partially offset by targeted price increases elsewhere, contributing
to a decline in gross margin in the year.
Overheads continue to be very tightly controlled in response to the weaker
trading environment with headcount 12.3 per cent lower (c. 350 employees) at
the end of the year in comparison to the start of 2023. Adjusted operating
profit before property profit declined in the year, largely due to lower sales
and gross margin, reflecting the challenging market conditions.
The current Selco estate consists of 75 branches and subject to finding
suitable properties in priority locations, an estate of approximately 90
branches is a realistic objective. With the medium to longer-term fundamentals
of the RMI market remaining positive, and with its high operating leverage,
Selco is well positioned with its compelling customer proposition and branch
network to deliver value for customers and enhance gross margin when the
market recovers.
Selco continued to make progress on several initiatives in the year,
including:
● A successful major upgrade to the latest version of a new operations ERP
system across its business
● As part of its programme of continuous improvement and maintaining a
high-quality experience for its customers, Selco completed mini upgrades to
five branches in 2024
● Completed the implementation of a new demand planning solution which has
improved availability and supported a reduction in inventory of £8.6 million
in 2024
● The 'Selco Forest' initiative has continued into 2024 with the latest forest
to be developed covering 21 hectares and featuring more than 54,000 trees
● Completed a project to add solar panels to all freehold branches
● Named 11(th) 'Best Big Company To Work For' in the UK in the 'Best Companies'
survey
In our MacBlair business in Northern Ireland, average daily like-for-like
revenue declined by 7.9 per cent in the year. Though the RMI segment remains
very weak, the housing market showed signs of improvement with completions
ahead of 2023 largely due to an increase in student accommodation units.
Competition in the market has been intense as competitors seek to maintain
market share with particular focus on pricing in timber and insulation
products. The restoration of the Northern Ireland Executive will support
further investment in infrastructure over time.
Gross margin strongly improved in the year through various initiatives to
achieve better commercial terms with suppliers and improved pricing and stock
controls. These actions, together with disciplined control of costs, delivered
growth in adjusted operating profit in comparison with 2023.
The acquisition of Clady Timber and B. McNamee in Portglenone and Strabane,
which were completed in 2023, have strengthened MacBlair's position in
Northern Ireland and increased its branch network to 23 branches.
Leyland SDM, one of the best-known decorating and DIY brands with 35 stores in
the Greater London area, experienced challenging trading conditions in the RMI
market as consumers cut back on discretionary spend and delayed large
decorating projects. Average daily like-for-like revenue declined by 8.7 per
cent in the year. Gross margin improved in the year, despite lower volumes,
largely due to good pricing controls and negotiation of higher rebates and
support from suppliers. Overheads were tightly controlled but, as a result of
lower sales, adjusted operating profit was lower than prior year.
Leyland SDM opened new stores in South Kensington and Belsize Park in the
second half of the year representing its ninth and tenth store opening in the
last three years. Both stores performed ahead of initial expectations. A full
refurbishment of the High St. Kensington store was also completed in 2024
improving the customer experience with an enhanced product range and store
layout.
Our TG Lynes business in London specialises in the distribution of commercial
pipes and fittings and, consistent with our other UK businesses, encountered a
difficult trading landscape as average daily like-for-like revenue declined by
9.7 per cent in 2024. The weaker London residential market has seen demand,
from sub-contractors to national housebuilders, soften and there has been
reduced government spending on public sector funded upgrades to schools,
hospitals and universities which are important end customers for TG Lynes.
In addition to market challenges, continued delay of projects in 2024 has
negatively impacted volumes.
Competition has intensified with downward pressure on pricing resulting in
lower gross margin in the business as competitors take on projects at very low
margins. Lower sales primarily drove an overall decline in adjusted operating
profit in 2024.
Netherlands Distribution (14.8% of Group Revenue, 2023: 15.2%)
2024 2023 Constant Currency Change*
£'m £'m Change*
Revenue 337.6 351.5 (4.0%) (1.3%)
Adjusted operating profit before property profit 26.4 33.4 (21.0%) (18.7%)
Adjusted operating profit margin before property profit 7.8% 9.5% (170bps) -
*Change represents the movement between 2024 v 2023 and is based on unrounded
numbers
Our business in the Netherlands is the market leader in the distribution of
ironmongery, tools and fixings products. The business has grown to 125
branches via acquisitions and new branch openings since Grafton acquired Isero
in 2015. The branch network has good coverage in the west, central, north and
south of the Netherlands, particularly in large population centres, with room
for further expansion in the eastern part of the country.
Average daily like-for-like revenue was down 2.0 per cent in the year with an
improved second half rate of decline of 1.2 per cent compared to the first
half which was down 2.7 per cent. As a result of the weaker RMI market,
branch revenue decreased in almost all regions across the country in the
year. Strong growth in the sale of access control products however,
especially to government supported affordable housing developments, helped
partially offset challenges elsewhere.
Market conditions remain challenging in the Netherlands as planning objections
and bottlenecks in the electricity grid are delaying the start-up of new
projects. In the contracting market, competitive pressure increased in the
year as competitors competed to maintain market share. Housing permits and
housing sales continued to recover, in comparison with prior year, albeit from
a low base. In a constrained market, housing under-supply continues to support
increasing house prices.
Gross margin declined by 40 basis points in the year due to intense
competitive pressure on trade counter pricing, unfavourable mix as a result of
larger, lower margin construction project sales and discounted prices to
sell-through aged inventory.
Overheads were higher in comparison to prior year. This was partially due to
new branch openings, with continued cost pressure due to wage inflation driven
by high collective labour agreements. These salary increases are negotiated at
an industry level between employers' representatives against a backdrop of a
very tight labour market.
Adjusted operating profit declined to £26.4 million (2023: £33.4 million)
and adjusted operating profit margin was 170 basis points lower at 7.8 per
cent largely reflecting the decline in sales and higher overheads.
The outlook for construction in 2025 and beyond is improving as the first
signs of recovery are visible with large construction contractors having a
good pipeline of projects to execute in the coming years. The structural
shortage of housing in the Netherlands remains acute and an acceleration of
housebuilding will be required in the coming years to meet demand.
Initiatives in the period in our Netherlands Distribution businesses included:
● Four new branches were opened in Zwaag, Drachten, Groningen and Zwolle to
expand the coverage of the business, aligned with its growth-oriented strategy
and focus on providing excellent service to local customers. The new
branches overall have performed well since opening.
● The business completed nine branch refurbishments as part of its continuing
branch refurbishment programme
● Following the successful installation of roof mounted solar panels in the
Amsterdam Noord branch, the business' sustainability journey has continued
with a further 13 electric vehicles added to the van fleet in the year
● Online sales grew from 7.8 per cent of sales in 2023 to 8.8 per cent of sales
in 2024, on a like-for-like basis, supported by continuous investment in its
eCommerce platform and active promotion of online ordering at branch level
Finland Distribution (5.8% of Group Revenue, 2023: 6.0%)
2024 2023 Constant Currency Change*
£'m £'m Change*
Revenue 131.8 139.8 (5.7%) (3.1%)
Adjusted operating profit before property profit 8.9 14.2 (37.0%) (35.2%)
Adjusted operating profit margin before property profit 6.8% 10.2% (340bps) -
*Change represents the movement between 2024 v 2023 and is based on unrounded
numbers.
IKH is a leading distributor of workwear and PPE, tools, spare parts and
accessories in Finland. The business, which has a number two market position
in its core tools and PPE segment, distributes its products through a network
of independently operated IKH partner stores, third party distributors and 15
owned-stores. The business also generates sales in Sweden and Estonia
primarily via its network of local partner stores. IKH is focused on
supporting customers operating in the construction, renovation, industrial,
agricultural and spares end markets.
Average daily like-for-like revenue was 5.2 per cent lower compared to prior
year as a result of a further contraction in the construction sector following
a double-digit decline in 2023 and continued weakness in the domestic economy
and export markets. Given soft demand and intense competition, IKH has
performed well against the broader Finnish market. The rate of decline
moderated in the second half of the year with average daily like-for-like
revenue 2.6 per cent lower. This moderation was driven by strong seasonal
sales of winter related products, sell through of aged inventory and higher
sales in the partner stores in Estonia.
The Finnish economy has slowly emerged from recession with a return to modest
growth in the third quarter of 2024, albeit latest economists' forecasts
expect an overall contraction for the full year.
Gross margin declined by 370 basis points in comparison to prior year due to
competitive pricing pressure, sell through of aged inventory at discounted
prices and unfavourable product mix.
Overheads, which were broadly in line with prior year despite inflationary
pressure, were very tightly controlled. In response to the weaker trading
environment management undertook a number of cost reduction measures, reducing
headcount and discretionary expenditure.
Adjusted operating profit declined to £8.9 million (2023: £14.2 million) and
adjusted operating profit margin was 340 basis points lower at 6.8 per cent
largely reflecting the decline in sales and gross margin.
There is increasing confidence that the bottom of the construction cycle has
been reached, and the outlook is for a return to modest economic growth in
2025 as consumer and business confidence improves. IKH is well positioned to
capitalise on the recovery given its strong market position and operating
leverage.
Mika Salokangas, who was appointed Executive Chairman of IKH in 2023, has now
assumed operational responsibility for IKH. Mika was previously CEO of
Ahlsell's Finnish operations and is highly experienced in the technical
distribution field.
Initiatives in the year in our Finland Distribution business included:
● IKH opened its 15(th) owned store in Roihupelto, a suburb of Helsinki, in
January 2024. As a result, IKH now has four stores in the Finnish capital
region as it continues to grow its market share in the city.
● IKH continued to invest in its store network with refurbishment of its owned
Pori store and expansion of its owned Kouvola store during the year
● A net working capital optimisation initiative reduced investment in stock by
€12.3m in the year. This multi-year project, which initially focused on
inventory, will continue to drive improvements in 2025 including optimising
trade receivables and trade payables in the business.
Spain Distribution (1.3% of Group Revenue, 2023: 0.0%)
2024
£'m
Revenue 29.7
Adjusted operating profit before property profit 0.3
Adjusted operating profit margin before property profit 1.1%
The Group's results include two months of trading from Salvador Escoda which
was acquired on 30 October 2024. Salvador Escoda is one of Spain's leading
distributors of heating, ventilation, air conditioning, water and renewable
products serving professional installers across the residential, commercial
and industrial sectors. The business, which was founded in 1974 by Mr.
Salvador Escoda Forés, creates a new platform further extending the
geographical diversification of the Group and providing exposure to a new
growth market. It has grown to scale, after 50 years of sustainable organic
growth, to develop a strong position in the Iberian market.
Salvador Escoda is headquartered in Barcelona with over 750 employees across
all locations throughout Spain. The business has grown to offer a broad
suite of over 100,000 products principally supplying the professional
installer market with both appliances and ancillary products, with a
particular focus on the Heating, Ventilation and Air Conditioning ("HVAC")
market. The business also has some limited export sales, primarily to service
projects of existing customers in Spain, to neighbouring countries.
Salvador Escoda is a high-quality business with a strong market position and
an experienced management team. The business is differentiated by its
extensive own-brand offering with over 60 per cent of its sales in 2024 from
high quality private label brands such as MundoClima in air conditioning,
Escogas in air conditioning gas and MundoFan in ventilation. There is an
increasing demand for energy efficient products within the HVAC sector driven
by regulatory mandates for residential energy upgrades and rising temperatures
across the region.
The business operates from 92 strategically located branches throughout Spain
which are supported by four distribution centres located in Barcelona, Madrid,
Seville and Valencia. The geographical footprint of the branch network extends
to most regions of Spain but with a stronger presence in regions with a warmer
climate such as Catalonia, Valencia, Andalusia and Madrid.
Over 90 per cent of the product portfolio consists of technical products
required for installations, therefore, the main customers of the business are
installation companies, technicians and smaller warehouses that distribute in
the same market. Dedicated teams leverage sales leads generated by the sales
force across the branch network and manage tender processes for large
construction contractors and larger projects across the residential,
commercial and industrial sectors.
Salvador Escoda provides an excellent market entry point into the attractive
and fragmented Iberian market. The business has historically grown
organically, and Grafton management is supporting the existing management team
to capitalise on ongoing organic expansion, and in due course, the execution
of inorganic opportunities.
Spain, which is the fourth largest construction market in the EU, has a
positive macroeconomic environment and outlook. The underlying demand in the
construction market is expected to be positive in the coming years with
increasing demand for renovation due to energy efficiency regulations. It is
estimated that more than 80 per cent of buildings in Spain do not meet new EU
energy efficiency regulations. This is expected to deliver strong growth
across the HVAC segment of the construction market.
The existing management team, supported by Mr. Salvador Escoda Forés as
Honorary Chair, has remained with the business. The integration is
progressing well with Grafton management supporting the Salvador Escoda team
to execute a detailed integration and growth plan.
Sales and operating profit in the post-acquisition trading period were
impacted by some disruption related to flooding in the Valencia region in
November and lower volumes in December which traditionally is a loss-making
month for the business.
As previously disclosed, Salvador Escoda reported revenue of €231.8 million
(unaudited) and an adjusted operating profit of €17.6 million (unaudited) in
2023 on a post-IFRS 16 (leases) basis. On a comparable basis, the business
reported revenue of €233.1 million (unaudited) and adjusted operating profit
of €15.0 million (unaudited) for the full year in 2024 with profitability
impacted by an investment in overheads via additional resources and
infrastructure to drive future growth.
After delivering the strongest economic growth rate in the Eurozone in 2024,
the Spanish economy is expected to continue to grow in 2025. The outlook for
construction growth in Spain is positive supported by population growth and a
structural shortage of housing.
Retail Segment (11.4% of Group Revenue, 2023: 11.1%)
2024 2023 Constant Currency Change*
£'m £'m Change*
Revenue 261.1 258.2 1.1% 3.9%
Operating profit before property profit 34.7 32.7 6.0% 8.9%
Operating profit margin before property profit 13.3% 12.7% 60bps -
*Change represents the movement between 2024 v 2023 and is based on unrounded
numbers
The Woodie's DIY, Home and Garden business in Ireland delivered a strong
trading performance underpinned by a favourable macroeconomic environment.
Despite increasing competition, Woodie's continued to maintain strong market
share across its product categories via its strong customer proposition
serviced by a network of 35 stores and growing online presence.
Average daily like-for-like sales were up 3.6 per cent in the year with
stronger growth of 5.8 per cent in the second half in comparison with growth
of 1.4 per cent in the first half of the year when poor weather impacted
demand.
Revenue growth of 3.9 per cent, in constant currency, in the year was
supported by an increase of 4.0 per cent in the number of transactions to 8.9
million but was offset by a marginal decline of 0.1 per cent in average
transaction value. The second half of the year saw a strong recovery in
sales of gardening and outdoor related products helped by mild weather. The
business had a strong end of year resulting in the busiest December on record
for Woodie's as consumer confidence was boosted by favourable budgetary
measures. Decorative products, homeware products and gardening were the
strongest performing categories overall in the year.
Gross margin improved by 50 basis points in 2024 largely due to good
management of rebate and commercial income from suppliers and control of aged
inventory.
Overheads were higher than prior year reflecting a further increase in the
National Minimum Wage and general inflationary pressures. Operating costs
however were tightly controlled by focused efforts to streamline processes and
utilise technology to extract efficiencies in its stores.
Adjusted operating profit increased to £34.7 million (2023: £32.7 million)
and adjusted operating profit margin was 60 basis points higher at 13.3 per
cent as higher sales and gross margin more than offset significant cost
challenges.
The outlook for 2025 is positive as the Irish economy is expected to grow
strongly on the back of momentum from the second half of 2024 supported by
real income growth and strong consumer spending and job creation.
Woodie's made further progress on several initiatives in the year, including:
● Growing online sales - online revenue increased by 10.5 per cent in 2024 and
represents 3.8 per cent of total sales. Growth in 2024 was largely driven by
strong performance in the 'Click & Collect' channel leveraging the
coverage provided by the store network across Ireland.
● Completed rollout of the Building Management System across all the store
network and support office which has contributed to a reduction in energy
costs and more sustainable energy management
● Following the successful launch of the 'Home Shop in Shop' concept in two
stores in 2023, a further nine stores were rolled out in 2024 to enhance
customers' experience within the home category
● Woodie's was ranked 15(th), the highest placed retail business in Ireland, in
the 'Great Place to Work' index and was ranked 53(rd) in the 'Best Workplaces
in Europe' in 2024
● The business continues to invest in developing talent as it launched a 'Shadow
Board' in the year to develop leadership through training, mentoring and
strategic exposure
● Stores in Glasnevin and Naas Road in Dublin and Headford Road in Galway had
solar panels installed in 2024 demonstrating the commitment of the business to
reducing carbon emissions following a successful trial in the Sallynoggin
store in Dublin
● The 'Woodie's Heroes' campaign, which had its ten-year anniversary in July
2024, continued to raise vital funds for four Irish charities. The campaign
has raised €4.1 million on a cumulative basis since inception.
Manufacturing Segment (4.8% of Group Revenue, 2023: 5.2%)
2024 2023 Constant Currency Change*
£'m £'m Change*
Revenue 108.6 120.6 (10.0%) (9.8%)
Adjusted operating profit before property profit 24.3 30.3 (19.7%) (19.4%)
Adjusted operating profit margin before property profit 22.4% 25.1% (270bps) -
*Change represents the movement between 2024 v 2023 and is based on unrounded
numbers
CPI EuroMix supplies dry mortar to national, regional and local house builders
and their sub-contractors in Great Britain from its ten manufacturing
plants. Packaged ready-to-use mortar products, which are largely supplied to
the residential RMI market to be utilised for outdoor applications, accounts
for approximately 10.0 per cent of revenue with bulk products accounting for
all remaining revenue.
The business was impacted by the continued fall in demand, which commenced in
the second half of 2023, in new residential house building activity. Total
volumes for the year declined by 18.0 per cent, albeit with the pace of
decline reducing significantly from 25.8 per cent in the first half to 7.0 per
cent in the second half, helped by easier comparators. Some modest growth
was evident in the final two months of the year as the new housing sector
began to slowly recover. The number of silos on customers' sites has
continued to decline in line with volumes reflecting a lack of new site starts
with total silos approximately 5.1 per cent lower at the end of 2024 in
comparison with the prior year. In contrast to the overall trends in the
market, sales of packaged ready-to-use mortar products grew by 6.6 per cent in
the year largely due to capture of additional market share.
Gross margin showed just a slight decline in the year despite the significant
drop in volumes, competitive price pressure and cost headwinds across labour,
raw materials and fuel costs. The newly integrated ERP solution, which was
fully rolled out across the business in 2023, has facilitated improved cost
management. Labour and fleet capacity have been proactively managed with a
specific focus on fleet utilisation whilst also applying stringent cost
control around discretionary spend. The development of a central laboratory
covering all plants has further supported product mix optimisation.
Despite inflationary pressure, tight cost management helped lower overheads in
comparison to prior year mitigating the drop in adjusted operating profit as a
result of lower volumes relative to 2023.
The recovery in housebuilding in the UK is expected to be slow and steady,
supported by the Government's commitment to increasing housebuilding, with any
meaningful acceleration of growth not expected until the second half of 2025.
The medium-term growth prospects for the market remain positive due to the
historical undersupply of houses combined with robust underlying demand
supported by population growth and positive sentiment around planning reforms.
CPI EuroMix made progress on several initiatives in the year including:
● Solar panels now installed at four sites to help reduce the carbon footprint
of the business
● Full year of HVO conversion of the fleet at two sites with a third site added
in 2024
● Building Bridges Network established by CPI EuroMix which brings together
leading construction industry companies to champion best practices for
equality, equity, diversity and inclusion in the industry. The network is
focused on common industry challenges regarding the lack of diversity and
ongoing skills shortages.
StairBox, the market leading manufacturer of bespoke timber staircases and
wooden windows and doors, continued to experience a challenging RMI market in
the UK which has adversely impacted volumes. Consumers in the UK continued to
delay or reduce the scope of discretionary home improvement projects due to
economic uncertainty and cost of living challenges. Volumes of bespoke
staircases were down 12.3 per cent in the year with declines moderating to 7.9
per cent in the second half from 16.0 per cent in the first half, as the
market stabilised. The recovery in the market in 2025 is expected to be slow
as consumer sentiment remains weak.
Growth in gross margin resulting from good management of deflationary pricing
trends in raw materials and tight cost control more than offset lower sales of
bespoke timber staircases to deliver slightly higher adjusted operating profit
in its pre-existing business. The beneficial impact of the acquisition of TA
Windows in December 2023, which trades as Wooden Windows, resulted in strong
growth in profitability in the business overall compared to the prior year.
The integration of the Wooden Windows business has continued to progress with
the successful relocation of manufacturing facilities to the StairBox site in
Stoke-on-Trent in November 2024. The combined site is expected to enable
further efficiencies across both businesses. Wooden Windows also transitioned
onto the same ERP system as StairBox in the second half of the year.
Financial Review
Revenue
Group revenue was down 1.6 per cent to £2.28 billion from £2.32 billion in
2023.
Group revenue in the like-for-like business declined by 2.3 per cent (£52.5
million) on the prior year. The decline in average daily like-for-like
revenue was 2.7 per cent.
Incremental revenue from the Clady Timber and B. McNamee acquisitions in
Northern Ireland, Rooneys in Ireland, the Kouvola acquisition in Finland and
TA Windows acquisition in the UK, which were completed throughout 2023,
increased revenue by £17.5 million.
New branches opened in the prior year and current year in The Netherlands
(five), Finland Distribution (two), Ireland Distribution (two) and UK
Distribution (four) contributed incremental revenue of £5.5 million in 2024.
The recent acquisition of Salvador Escoda, incorporating 92 branches,
contributed revenue of £29.7 million since its acquisition on 30 October
2024.
Currency translation of revenue in the euro denominated businesses to sterling
decreased revenue by £37.1 million as a weaker euro slightly reduced the
level of reported results as compared to the prior year. The average
Sterling/Euro rate of exchange for the year ended 31 December 2024 was
Stg84.66p compared to Stg86.98p for the year ended 31 December 2023.
Adjusted Operating Profit
Adjusted operating profit of £177.5 million was down from £205.5 million
last year, a decline of £28.0 million. This result for the year included
property profit of £4.0 million (2023: £1.3 million) which relates to profit
on property disposals of £0.8 million and a fair value gain of £0.5 million
on one investment property in Ireland and an additional fair value gain of
£2.7 million on one investment property in the UK.
Adjusted operating profit before property profit of £173.5 million was down
from £204.2 million last year, a decline of 15.0 per cent. The adjusted
operating profit margin before property profit declined by 120 basis points to
7.6 per cent.
Net Finance Income and Expense
The net finance expense was £0.1 million which compares to net finance income
of £0.4 million for the year ended 31 December 2023. This incorporates an
interest charge of £15.0 million (2023: £15.6 million) on lease liabilities
recognised under IFRS 16. Interest income on cash deposits amounted to £23.4
million (2023: £24.2 million).
Returns on deposits and account balances decreased in the full year and
reflected lower Bank of England and European Central Bank base rates in the
second half of the year compared to the prior year and lower cash balances
following the Group's Spanish acquisition on 30 October 2024.
The Group's gross debt is drawn in euro and provides a hedge against exchange
rate risk on euro assets in the businesses in Ireland, the Netherlands,
Finland, and Spain. Interest payable on bank borrowings denominated in euro
and US Private Placement Senior Unsecured Notes was £8.3 million (2023: £8.3
million). This reflects a combination of higher bank debt acquired with the
Salvador Escoda acquisition offset by lower interest rates payable on bank
debt as the European Central bank rates reduced in the second half of the
year.
The net finance expense included a foreign exchange translation gain of £1.6
million which compares to a gain of £0.5 million in the prior year.
Taxation
The income tax expense of £30.5 million (2023: £34.8 million) is equivalent
to an effective tax rate of 20.0 per cent of profit before tax (2023: 19.0 per
cent). The rate is as anticipated and reflects the blend of the Group's
corporation tax on profits in the five 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 (2023: 23.5%
blended rate) and the introduction of the global minimum top up tax.
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.
Cash flow
Cash generated from operations for the year of £298.3 million (2023: £334.3
million) was strong and benefitted from a reduction in working capital by
£14.9 million (2023: reduction of £29.5 million). Working capital and
inventory is a critical component of our customer proposition; maintaining
high levels of stock availability is a key focus for all Grafton's
businesses. The reduction in working capital was achieved without
compromising availability.
Interest paid in the year amounted to £22.5 million (2023: £23.1 million)
which included interest of £15.0 million on IFRS 16 lease liabilities (2023:
£15.6 million). Taxation paid was £29.0 million (2023: £38.4 million).
Cash flow from operations after the payment of interest and taxation was
£246.8 million (2023: £272.8 million).
The cash outflow on the dividend payment was £73.2 million (2023: £72.6
million) and £80.9 million (2023: £155.7 million) was spent on the buyback
of shares, excluding transaction costs. The total cash outflow on the
dividend payment and buyback of shares was £154.1 million (2023: £228.3
million), excluding transaction costs.
Free cash flow of £178.2 million was generated in the year which represents a
100% conversion to cash of adjusted operating profit.
Capital Expenditure and Investment in Intangible Assets
We continued to maintain appropriate control over capital expenditure which
amounted to £39.6 million (2023: £48.8 million). There was also
expenditure of £7.3 million (2023: £4.0 million) on software that is
classified as intangible assets.
Asset replacement capital expenditure of £23.9 million (2023: £27.4 million)
compares to the depreciation charge (before IFRS 16) on property, plant and
equipment ("PPE") of £42.8 million (2023: £39.0 million) and related
principally to the replacement of distribution vehicles, plant and tools for
hire by customers, fixtures and office equipment, racking, forklifts and other
assets required to operate the Group's branch network.
The Group incurred development capital expenditure of £15.7 million (2023:
£21.4 million) on a range of organic development initiatives including new
branches, investment in IT software, and upgrades and refurbishments in
Chadwicks, Woodie's and the Netherlands and investment in land and buildings
in Chadwicks.
The proceeds received from the disposal of PPE, properties held for sale and
investment properties was £5.7 million (2023: £3.6 million). The amount
spent on capital expenditure and software development, net of the proceeds
received on asset disposals, was £41.1 million (2023: £49.1 million).
Pensions
The Group operates four legacy defined benefit schemes (one in the UK and
three in Ireland), all of which are now closed to future accrual. The
defined benefit pension schemes had an accounting surplus of £1.3 million at
the year end, an improvement of £7.1 million from a deficit of £5.8 million
at 31 December 2023.
The deficit on the UK scheme reduced by £5.7 million to £8.8 million and the
surplus on the schemes in Ireland increased by £1.4 million to £10.9
million.
There was a scheme deficit of £0.8 million (31 December 2023: £0.8 million)
related to the Netherlands business.
Net Debt/Cash
Net debt (including lease obligations) at 31 December 2024 was £131.7 million
(31 Dec 2023: £49.3 million).
Our net cash position, before recognising lease liabilities, was £272.1
million (31 Dec 2023: £379.7 million).
The Group's policy is to maintain its investment grade credit rating while
investing in organic developments and acquisition opportunities. The Group has
a progressive dividend policy with a long-term objective of maintaining
dividend cover at between two and three-times earnings although it is
anticipated that dividend cover for the full year will drop modestly beneath
this.
Liquidity
Grafton was in a very strong financial position at the end of the year with
excellent liquidity, net cash before IFRS 16 lease liabilities and a robust
balance sheet.
The Group had liquidity of £776.2 million at 31 December 2024 (31 December
2023: £849.6 million). As shown in the analysis of liquidity on page 46,
accessible cash and deposits amounted to £505.4 million (31 December 2023:
£579.9 million) and there were undrawn revolving bank facilities of £270.8
million (31 December 2023: £269.7 million).
At 31 December 2024, the Group had bilateral loan facilities of £328.3
million (2023: £336.9 million) with four relationship banks, which all mature
in August 2029 and debt obligations of £132.7 million (31 December 2023:
£139.1 million) from the issue of unsecured senior notes in the US Private
Placement market.
The revolving loan facilities of £328.3 million were put in place in August
2022 for a term of five years to August 2027. The arrangements included two
one-year extension options exercisable at the discretion of the Group and the
four banks. The second one-year extension option was agreed in July 2024 and
these facilities are now repayable in August 2029. 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 4.6 years at 31 December 2024 (2023: 4.9 years).
The Group's key financing objective continues to be to ensure that it has the
necessary liquidity and resources to support the short, medium and long-term
funding requirements of the business. These resources, together with strong
cash flow from operations, provide good liquidity and the capacity to fund
investment in working capital, routine capital expenditure and development
activity including acquisitions.
The Group's gross debt is drawn in euro and provides a hedge against exchange
rate risk on euro assets in the businesses in Ireland, the Netherlands,
Finland and Spain.
Shareholders' Equity
Shareholders' equity declined by £59.6 million to £1.60 billion at 31
December 2024 from £1.66 billion at 31 December 2023. Profit after tax
increased shareholders' equity by £122.0 million. There was a loss of
£33.1 million on retranslation of euro denominated net assets to sterling at
the year-end rate of exchange. Shareholders' equity was increased for a
remeasurement gain (net of tax) of £4.4 million on the pension schemes and
was reduced for dividends paid of £73.2 million and by £81.1 million for the
buyback of shares. Other changes increased equity by £1.4 million.
Return on Capital Employed
Adjusted Return on Capital Employed declined by 160 basis points to 10.3 per
cent (2023: 11.9 per cent).
Principal Risks and Uncertainties
The principal risks affecting the Group are set out on pages 43 to 51 of the
2024 Annual Report and Accounts.
Grafton Group plc
Group Condensed Income Statement
For the year ended 31 December 2024
Notes 2024 2023
£'000 £'000
Revenue 2 2,282,252 2,319,242
Operating costs (2,133,626) (2,137,414)
Property profit 3 3,999 1,261
Operating profit 152,625 183,089
Finance expense 4 (25,077) (24,292)
Finance income 4 24,968 24,715
Profit before tax 152,516 183,512
Income tax expense 17 (30,503) (34,789)
Profit after tax for the financial year 122,013 148,723
Profit attributable to:
Owners of the Company 122,013 148,723
Earnings per ordinary share - basic 6 60.89p 69.56p
Earnings per ordinary share - diluted 6 60.86p 69.55p
Grafton Group plc
Group Condensed Statement of Comprehensive Income
For the year ended 31 December 2024
Notes 2024 2023
£'000 £'000
Profit after tax for the financial year 122,013 148,723
Other comprehensive income
Items that are or may be reclassified subsequently to the income statement
Currency translation effects:
- on foreign currency net investments (33,099) (12,210)
Fair value movement on cash flow hedges:
- effective portion of changes in fair value of cash flow hedges - 31
(33,099) (12,179)
Items that will not be reclassified to the income statement
Remeasurement gain on Group defined benefit pension schemes 15 5,439 1,320
Deferred tax on Group defined benefit pension schemes (1,081) (3)
4,358 1,317
Total other comprehensive (expense) (28,741) (10,862)
Total comprehensive income for the financial year 93,272 137,861
Total comprehensive income attributable to:
Owners of the Company 93,272 137,861
Total comprehensive income for the financial year 93,272 137,861
Grafton Group plc - Group Condensed Balance Sheet as at 31 December 2024
Notes 31 Dec 2024 31 Dec 2023
ASSETS £'000 £'000
Non-current assets
Goodwill 8 634,301 645,062
Intangible assets 9 134,911 138,901
Property, plant and equipment 10 367,354 367,266
Right-of-use asset 11 377,726 401,298
Investment properties 10 27,325 24,609
Deferred tax assets 17 7,453 6,665
Lease receivable - 264
Retirement benefit assets 15 10,932 9,536
Other financial assets 125 127
Total non-current assets 1,560,127 1,593,728
Current assets
Properties held for sale 10 763 4,291
Inventories 12 381,803 361,598
Trade and other receivables 12 300,020 262,763
Lease receivable 98 195
Fixed term cash deposits 13 150,000 200,000
Cash and cash equivalents (excluding bank overdrafts) 13 359,430 383,939
Total current assets 1,192,114 1,212,786
Total assets 2,752,241 2,806,514
EQUITY
Equity share capital 6,744 7,094
Share premium account 224,141 223,861
Capital redemption reserve 2,548 2,195
Revaluation reserve 12,037 12,186
Shares to be issued reserve 6,802 6,562
Cash flow hedge reserve (6) (6)
Foreign currency translation reserve 42,183 75,282
Retained earnings 1,305,649 1,332,992
Treasury shares held (3,897) (4,365)
Equity attributable to owners of the Parent 1,596,201 1,655,801
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings 13 188,372 204,219
Lease liabilities 13 331,572 364,090
Provisions 13,042 13,851
Retirement benefit obligations 15 9,591 15,363
Deferred tax liabilities 17 62,040 60,234
Deferred consideration 16 599 3,289
Total non-current liabilities 605,216 661,046
Current liabilities
Interest-bearing loans and borrowings 13 49,000 -
Lease liabilities 13 72,156 64,888
Derivative financial instruments 13 5 5
Trade and other payables 12 401,142 400,251
Current income tax liabilities 20,138 17,541
Deferred consideration 16 3,537 1,601
Provisions 4,846 5,381
Total current liabilities 550,824 489,667
Total liabilities 1,156,040 1,150,713
Total equity and liabilities 2,752,241 2,806,514
Grafton Group plc - Group Condensed Cash Flow Statement
For the year ended 31 December
2024
Notes 31 Dec 2024 31 Dec 2023
£'000 £'000
Profit before taxation 152,516 183,512
Finance income 4 (24,968) (24,715)
Finance expense 4 25,077 24,292
Operating profit 152,625 183,089
Depreciation 10,11 112,416 104,700
Amortisation of intangible assets 9 22,322 21,287
Share-based payments charge 1,162 2,127
Movement in provisions (677) (1,523)
Loss/(profit) on sale of property, plant and equipment 570 (475)
Property profit (808) (861)
Fair value gains recognised as property profit 3 (3,191) -
Gain on derecognition of leases 186 234
Other non-cash items 1,308 -
Contributions to pension schemes in excess of IAS 19 charge (2,476) (3,826)
Decrease in working capital 12 14,868 29,529
Cash generated from operations 298,305 334,281
Interest paid (22,462) (23,073)
Income taxes paid (29,027) (38,391)
Cash flows from operating activities 246,816 272,817
Investing activities
Inflows
Proceeds from sale of property, plant and equipment 1,273 1,429
Proceeds from sale of properties held for sale 4,120 2,209
Proceeds from sale of investment properties 305 -
Maturity of fixed term cash deposits 13 400,000 350,000
Interest received 23,441 24,199
429,139 377,837
Outflows
Acquisition of subsidiary undertakings (net of cash/overdraft acquired) 16 (67,245) (27,908)
Investment in fixed term cash deposits 13 (350,000) (550,000)
Deferred acquisition consideration paid 16 (2,145) (2,586)
Investment in intangible assets - computer software 9 (7,275) (3,963)
Purchase of property, plant and equipment 10 (39,571) (48,816)
(466,236) (633,273)
Cash flows from investing activities (37,097) (255,436)
Financing activities
Inflows
Proceeds from the issue of share capital 283 1,916
283 1,916
Outflows
Repayment of borrowings (8,156) (44,494)
Dividends paid 5 (73,190) (72,569)
Treasury shares purchased (share buyback) 20 (81,085) (159,458)
Payment on lease liabilities (71,640) (67,680)
(234,071) (344,201)
Cash flows from financing activities (233,788) (342,285)
Net (decrease) in cash and cash equivalents (24,069) (324,904)
Cash and cash equivalents at 1 January 383,939 711,721
Effect of exchange rate fluctuations on cash held (8,815) (2,878)
Cash and cash equivalents at the end of the year 351,055 383,939
Cash and cash equivalents are broken down as follows:
Cash at bank and short-term deposits 20 359,430 383,939
Bank overdrafts 20 (8,375) -
Cash and cash equivalents at the end of the year 351,055 383,939
Grafton Group plc
Group Condensed Statement of Changes in Equity
Equity share capital Share premium account Capital redemption reserve Revaluation reserve Shares to be issued reserve Cash flow hedge reserve Foreign currency translation reserve Retained earnings Treasury shares Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Year to 31 December 2024
At 1 January 2024 7,094 223,861 2,195 12,186 6,562 (6) 75,282 1,332,992 (4,365) 1,655,801
Profit after tax for the financial year - - - - - - - 122,013 - 122,013
Total other comprehensive income
Remeasurement gain on pensions (net of tax) - - - - - - - 4,358 - 4,358
Movement in cash flow hedge reserve (net of tax) - - - - - - - - - -
Currency translation effect on foreign currency net investments - - - - - - (33,099) - - (33,099)
Total other comprehensive expense - - - - - - (33,099) 4,358 - (28,741)
Total comprehensive income - - - - - - (33,099) 126,371 - 93,272
Transactions with owners of the Company recognised directly in equity
Dividends paid - - - - - - - (73,190) - (73,190)
Issue of Grafton Units 3 280 - - - - - - - 283
Purchase of treasury shares (Note 20) - - - - - - - - (81,085) (81,085)
Cancellation of treasury shares (Note 20) (353) - 353 - - - - (81,391) 81,391 -
Transfer from treasury shares (Note 20) - - - - - - - (162) 162 -
Share based payments charge - - - - 1,162 - - - - 1,162
Tax on share-based payments - - - - (42) - - - - (42)
Transfer from shares to be issued reserve - - - - (880) - - 880 - -
Transfer from revaluation reserve - - - (149) - - - 149 - -
(350) 280 353 (149) 240 - - (153,714) 468 (152,872)
At 31 December 2024 6,744 224,141 2,548 12,037 6,802 (6) 42,183 1,305,649 (3,897) 1,596,201
Equity share capital Share premium account Capital redemption reserve Revaluation reserve Shares to be issued reserve Cash flow hedge reserve Foreign currency translation reserve Retained earnings Treasury shares Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Year to 31 December 2023
At 1 January 2023 7,870 221,975 1,389 12,375 8,647 (37) 87,492 1,411,053 (5,185) 1,745,579
Profit after tax for the financial year - - - - - - - 148,723 - 148,723
Total other comprehensive income
Remeasurement gain on pensions (net of tax) - - - - - - - 1,317 - 1,317
Movement in cash flow hedge reserve (net of tax) - - - - - 31 - - - 31
Currency translation effect on foreign currency net investments - - - - - - (12,210) - - (12,210)
Total other comprehensive expense - - - - - 31 (12,210) 1,317 - (10,862)
Total comprehensive income - - - - - 31 (12,210) 150,040 - 137,861
Transactions with owners of the Company recognised directly in equity
Dividends paid - - - - - - - (72,569) - (72,569)
Issue of Grafton Units 30 1,886 - - - - - - - 1,916
Purchase of treasury shares (Note 20) - - - - - - - - (159,458) (159,458)
Cancellation of treasury shares (Note 20) (806) - 806 - - - - (159,591) 159,591 -
Transfer from treasury shares (Note 20) - - - - - - - (687) 687 -
Share-based payments charge - - - - 2,127 - - - - 2,127
Tax on share-based payments - - - - 345 - - - - 345
Transfer from shares to be issued reserve - - - - (4,557) - - 4,557 - -
Transfer from revaluation reserve - - - (189) - - - 189 - -
(776) 1,886 806 (189) (2,085) - - (228,101) 820 (227,639)
At 31 December 2023 7,094 223,861 2,195 12,186 6,562 (6) 75,282 1,332,992 (4,365) 1,655,801
Grafton Group plc
Notes to Final Results for the Year Ended 31 December 2024
1. General Information
Grafton Group plc ("Grafton" or "the Group") is an international business
operating in the distribution, manufacturing and DIY retail sectors of the
building materials industry.
The Group operates leading distribution formats for building materials and
construction related products in Ireland, the UK, the Netherlands, Finland and
Spain. The Group also operate the largest consumer focused DIY retailer in
Ireland which is complementary to our Irish distribution business and we
manufacture and distribute mortar and timber windows and staircases in the UK.
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 2024. The financial information
set out in this document does not constitute full statutory financial
statements for the financial years ended 31 December 2024 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
2024 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 2024 which is available on the Group's website; www.graftonplc.com
(http://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
£272.1 million at 31 December 2024 (31 December 2023: £379.7 million). Net
debt including lease obligations was £131.7 million at 31 December 2024
(2023: £49.3 million). The Group had liquidity of £776.2 million at 31
December 2024 (2023: £849.6 million) of which £505.4 million (2023: £579.9
million) was held in accessible cash and deposits and £270.8 million (2023:
£269.7 million) in undrawn revolving bank facilities.
No refinancing of debt is due until September 2028, the Group does not have a
leverage (net debt/EBITDA) covenant in its financing arrangements and its
assets (other than right-of-use assets) are unsecured.
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 43 to 51 of the 2024
Annual Report and Accounts, and based on expected cash flows 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.
1. General Information (continued)
Basis of Preparation, Accounting Policies and Estimates (continued)
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
period. 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.
Revised 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 2025 but do not have a material effect on
the results or financial position of the Group:
● IAS21 (Amendments) Lack of Exchangeability (Effective 1 January 2025)
● IFRS 9 / IFRS 7 (Amendments) Classification and Measurement of Financial Instruments (Effective 1 January
2026)
● IFRS 18 Presentation and Disclosure in Financial Statements (Effective 1 January 2027)
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.
2024 2023
£'000 £'000
Revenue
UK distribution 780,778 818,112
Ireland distribution 632,807 631,034
Netherlands distribution 337,581 351,474
Finland distribution 131,758 139,783
Spain distribution 29,664 -
Total distribution 1,912,588 1,940,403
Retailing 261,055 258,197
Manufacturing 122,157 135,298
Less: inter-segment revenue - manufacturing (13,548) (14,656)
Total revenue 2,282,252 2,319,242
Segmental operating profit before intangible amortisation arising on
acquisitions and acquisition related items
UK distribution 32,438 47,251
Ireland distribution 61,533 60,930
Netherlands distribution 26,394 33,416
Finland distribution 8,948 14,196
Spain distribution 322 -
Total distribution 129,635 155,793
Retailing 34,676 32,728
Manufacturing 24,306 30,269
188,617 218,790
Reconciliation to consolidated operating profit
Central activities (15,087) (14,541)
173,530 204,249
Property profit 3,999 1,261
Operating profit before intangible amortisation arising on acquisitions and 177,529 205,510
acquisition related items
Acquisition related items* (4,633) (2,730)
Amortisation of intangible assets arising on acquisitions (20,271) (19,691)
Operating profit 152,625 183,089
Finance expense (25,077) (24,292)
Finance income 24,968 24,715
Profit before tax 152,516 183,512
Income tax expense (30,503) (34,789)
Profit after tax for the financial year 122,013 148,723
* Acquisition related items comprise deferred consideration payments relating
to the retention of former owners of businesses acquired, transaction costs
and expenses, professional fees for new and target acquisitions, 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:
2024 2023
£'000 £'000
Revenue*
United Kingdom 881,907 929,821
Ireland 901,342 898,164
Netherlands 337,581 351,474
Finland 131,758 139,783
Spain 29,664 -
Total revenue 2,282,252 2,319,242
*Service revenue, which relates to plant and equipment hire and is recognised
over time, amounted to £12.3 million for the year (2023: £11.5 million).
31 Dec 2024 31 Dec 2023
£'000 £'000
Segment assets
Distribution 1,953,724 1,914,204
Retailing 152,934 169,342
Manufacturing 117,643 122,701
2,224,301 2,206,247
Unallocated assets
Deferred tax assets 7,453 6,665
Retirement benefit assets 10,932 9,536
Other financial assets 125 127
Fixed term cash deposits 150,000 200,000
Cash and cash equivalents 359,430 383,939
Total assets 2,752,241 2,806,514
31 Dec 2024 31 Dec 2023
£'000 £'000
Segment liabilities
Distribution 641,253 648,830
Retailing 152,576 174,020
Manufacturing 33,065 30,501
826,894 853,351
Unallocated liabilities
Interest bearing loans and borrowings (current and non-current) 237,372 204,219
Retirement benefit obligations 9,591 15,363
Deferred tax liabilities 62,040 60,234
Current income tax liabilities 20,138 17,541
Derivative financial instruments (current) 5 5
Total liabilities 1,156,040 1,150,713
3. Property Profit
The property profit in 2024 of £4.0 million relates to profit on property
disposals of £0.8 million and a fair value gain of £0.5 million on one
investment property in Ireland and an additional fair value gain of £2.7
million on one investment property in the UK.
In 2024, the Group disposed of two Irish properties (2023: one UK property and
two Irish properties).
The property profit in 2023 of £1.3 million relates to profit on property
disposals of £0.9 million and the property profit realised in 2023 of £0.4
million which was the recovery of an amount which had been provided against in
the previous year.
4. Finance Expense and Finance Income
2024 2023
£'000 £'000
Finance expense
Interest on bank loans, US senior notes and overdrafts** 8,270 * 8,331 *
Interest on lease liabilities 15,026 * 15,563 *
Net finance cost on pension scheme obligations 305 398
Unwinding of discount applicable to deferred consideration (Note 16) 1,476 -
25,077 24,292
Finance income
Interest income on bank deposits (23,355) * (24,199) *
Foreign exchange gain (1,613) (516)
(24,968) (24,715)
Net finance expense/(income) 109 (423)
* Net bank and US senior note interest income of £15.1 million (2023: £15.9
million interest income). Including interest on lease liabilities, net
interest income was £0.1 million (2023: £0.3 million net interest income).
**Where overdrafts exist and there is a master netting agreement in place that
grants the Group the legal right to set-off and management has intention to
settle on a net basis with each bank, bank overdrafts are off-set against cash
and cash equivalents.
5. Dividends
The payment in 2024 of a final dividend for 2023 of 26.00 pence amounted to
£52.2 million (2023: final dividend for 2022 of 23.75 pence amounted to
£51.6 million).
An interim dividend for 2024 of 10.50 pence per share was paid on 11 October
2024 in the amount of £21.0 million.
A final dividend for 2024 of 26.50 pence per share will be paid on 15 May 2025
by Grafton Group plc to shareholders on the Register of Members at the close
of business on 22 April 2025 (the 'Record Date'). The ex-dividend date is 17
April 2025.
A liability in respect of the final dividend has not been recognised in the
balance sheet at 31 December 2024, as there was no present obligation to pay
the dividend at the end of the year.
6. Earnings per Share
The computation of basic, diluted and underlying earnings per share is set out
below:
Year ended 31 Year ended 31
Dec 2024 Dec 2023
£'000 £'000
Numerator for basic, adjusted and diluted earnings per share:
Profit after tax for the financial year 122,013 148,723
Numerator for basic and diluted earnings per share 122,013 148,723
Profit after tax for the financial year 122,013 148,723
Amortisation of intangible assets arising on acquisitions 20,271 19,691
Tax relating to amortisation of intangible assets arising on acquisitions (4,573) (4,415)
Acquisition related items 4,633 2,730
Tax on acquisition related items - (229)
Unwinding of discount applicable to deferred consideration 1,476 -
Numerator for adjusted earnings per share 143,820 166,500
Number of Grafton Units Number of Grafton Units
Denominator for basic and adjusted earnings per share:
Weighted average number of Grafton Units in issue 200,367,922 213,802,819
Dilutive effect of options and awards 101,676 24,688
Denominator for diluted earnings per share 200,469,598 213,827,507
Earnings per share (pence)
- Basic 60.89 69.56
- Diluted 60.86 69.55
Adjusted earnings per share (pence)*
- Basic 71.78 77.88
- Diluted 71.74 77.87
* The term "Adjusted" means before exceptional items, amortisation of
intangible assets arising on acquisitions, the impact of unwinding acquisition
related deferred consideration to present value and acquisition related items.
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 2024
was Stg84.66p (2023: Stg86.98p). The sterling/euro exchange rate at 31
December 2024 was Stg82.92p (2023: Stg86.91p).
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, as was the case for two of the Group's CGU's at 30 June 2024. 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 (2023: £Nil).
Goodwill
£'000
Net Book Value
As at 1 January 2024 645,062
Arising on acquisition (Note 16) 3,863
Currency translation adjustment (14,624)
As at 31 December 2024 634,301
9. Intangible Assets
Computer Software Trade Names Customer Relationships & Technology Total
£'000 £'000 £'000 £'000
Net Book Value
As at 1 January 2024 7,970 27,405 103,526 138,901
Additions 7,275 - - 7,275
Arising on acquisition (Note 16) 161 8,259 7,258 15,678
Amortisation (2,051) (3,999) (16,272) (22,322)
Currency translation adjustment (275) (918) (3,428) (4,621)
As at 31 December 2024 13,080 30,747 91,084 134,911
The amortisation expense of £22.3 million (2023: £21.3 million) has been
charged in 'operating costs' in the income statement. Amortisation of
intangible assets arising on acquisitions in prior periods amounted to £20.3
million (2023: £19.7 million).
10. Property, Plant and Equipment, Properties Held for Sale and Investment
Properties
Property, plant and equipment Properties Investment properties
held for sale
Net Book Value £'000 £'000 £'000
As at 1 January 2024 367,266 4,291 24,609
Additions 39,571 - -
Depreciation (42,765) - -
Disposals (1,843) (3,366) (251)
Fair value gains - - 3,191
Arising on acquisition (Note 16) 14,218 - -
Currency translation adjustment (9,093) (162) (224)
As at 31 December 2024 367,354 763 27,325
11. Right-Of-Use Asset
Right-of-use asset
£'000
As at 1 January 2024 401,298
Additions* 15,154
Arising on acquisition (Note 16) 24,413
Disposals (790)
Depreciation (69,651)
Remeasurements* 15,934
Currency translation adjustment (8,632)
As at 31 December 2024 377,726
* Right-of-use asset additions relate to new lease contracts entered into
during the year and mainly arise due to leases entered into for new store
locations, new lease contracts agreed for existing stores and replacement
vehicle leases. 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.
12. Movement in Working Capital
Trade Trade and other
and other receivables payables
Inventories Total
Current £'000 £'000 £'000 £'000
As at 1 January 2024 361,598 262,763 (400,251) 224,110
Currency translation adjustment (11,427) (8,174) 12,511 (7,090)
Interest accruals* - (87) (834) (921)
Arising on acquisition (Note 16) 60,206 39,764 (20,520) 79,450
Working capital movement in 2024 (28,574) 5,754 7,952 (14,868)
As at 31 December 2024 381,803 300,020 (401,142) 280,681
* Interest accruals on long term borrowings are included separately in other
payables as accrued interest is paid within 12 months.
The working capital movement for the year ended 31 December 2023 is shown
below:
Trade Trade and other
and other receivables payables
Inventories Total
£'000 £'000 £'000 £'000
Working capital movement in 2023 (37,821) (4,222) 12,514 (29,529)
13. Interest-Bearing Loans, Borrowings and Net Debt
31 Dec 31 Dec
2024 2023
£'000 £'000
Interest-bearing loans and borrowings
Bank overdrafts* 8,375 -
Bank credit facilities (current)* 40,625 -
Bank loans (non-current) 56,053 65,597
US senior notes (non-current) 132,319 138,622
Total interest-bearing loans and borrowings 237,372 204,219
Leases
Included in non-current liabilities 331,572 364,090
Included in current liabilities 72,156 64,888
Total leases 403,728 428,978
Derivatives
Included in current liabilities 5 5
Total derivatives 5 5
Fixed term cash deposits**
Included in current assets (150,000) (200,000)
Total fixed term cash deposits (150,000) (200,000)
Cash and cash equivalents (359,430) (383,939)
Net debt 131,675 49,263
Net (cash) before leases (272,053) (379,715)
*The bank overdrafts of £8.4 million (2023: £Nil) and euro bank credit
facilities of £40.6 million at 31 December 2024 (2023: £Nil) relate to
short-term debt in Salvador Escoda in Spain which the Group acquired on 30
October 2024. The Salvador Escoda bank credit facilities of £40.6 million
include debt related to discounting effects on debtors and credit facilities
covering import lines of credit with five Spanish banking partners.
** Fixed term cash deposits have a maturity date greater than three months at
inception but less than three months at the balance sheet date.
At 31 December 2024, the Group had bilateral loan facilities of £328.3
million (2023: £336.9 million) with four relationship banks, which all mature
in August 2029.
The revolving loan facilities of £328.3 million were put in place in August
2022 for a term of five years to August 2027. The arrangements included two
one-year extension options exercisable at the discretion of the Group and the
four banks. The second one-year extension option was agreed in July 2024 and
these facilities are now repayable in August 2029. 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.
13. Interest-Bearing Loans, Borrowings and Net Debt (continued)
31 Dec 2024 31 Dec
2024 2023
£'000 £'000
Assets/(liabilities) measured and recognised at fair value
Designated as hedging instruments
Other derivative instruments (5) (5)
Fair value measurement of liabilities carried at amortised cost
US senior notes (125,397) (129,686)
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
2024 2023
£'000 £'000
Liabilities measured and recognised at fair value
Deferred consideration on acquisition of businesses (Note 16) (4,136) (4,890)
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), cash
and cash equivalents, fixed term deposits, 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 2024.
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 EBITA/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 2024 31 Dec 2023
£'000 £'000
Net (decrease) in cash and cash equivalents (24,069) (324,904)
Net movement in fixed term cash deposits (50,000) 200,000
Net movement in derivative financial instruments - 24
Bank loans acquired with subsidiaries (Note 16) (42,330) -
Lease liabilities acquired (Note 16) (24,413) (820)
Movement in debt and lease financing 49,531 61,260
Change in net (debt) resulting from cash flows (91,281) (64,440)
Currency translation adjustment 8,869 6,290
Movement in net (debt) in the period (82,412) (58,150)
Net (debt)/cash at 1 January (49,263) 8,887
Net (debt) at end of the period (131,675) (49,263)
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 2024 At 31 Dec 2023 At 31 Dec 2024 At 31 Dec 2023
Rate of increase in salaries* N/A N/A N/A N/A
Rate of increase of pensions in payment - - 3.00% 2.90%
Discount rate 3.45% 3.15% 5.50% 4.50%
Inflation rate increase 1.85% 2.05% 2.60%/3.10% ** 2.40%/3.00% **
* 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)
15. Retirement Benefits (continued)
The following table provides a reconciliation of the scheme assets (at bid
value) and the actuarial value of scheme liabilities:
Assets Liabilities Net asset/(deficit)
Year to Year to 31 Dec 2023 Year to Year to 31 Dec Year to Year to 31 Dec
31 Dec 31 Dec 2023 31 Dec 2023
2024 2024 2024
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 195,104 192,298 (200,931) (202,782) (5,827) (10,484)
Interest income on plan assets 7,151 7,917 - - 7,151 7,917
Contributions by employer 2,604 3,574 - - 2,604 3,574
Contributions by members - 23 - (23) - -
Benefit payments (11,976) (11,773) 11,976 11,773 - -
Current service cost - - - (57) - (57)
Curtailment gain - - - 403 - 403
Administration costs (37) (53) - - (37) (53)
Other long-term benefit (expense) - - (91) (41) (91) (41)
Interest cost on scheme liabilities - - (7,456) (8,315) (7,456) (8,315)
Remeasurements
Actuarial (loss)/gains from:
-experience variations - - 1,369 (978) 1,369 (978)
-financial assumptions - - 14,637 (7,432) 14,637 (7,432)
-demographic assumptions - - (814) 4,532 (814) 4,532
Return on plan assets excluding interest income (9,753) 5,198 - - (9,753) 5,198
Translation adjustment (4,718) (2,080) 4,276 1,989 (442) (91)
At 31 December 178,375 195,104 (177,034) (200,931) 1,341 (5,827)
Related deferred tax asset (net) 1,037 2,655
Net pension asset/(liability) 2,378 (3,172)
The net pension scheme asset before tax of £1.3 million (31 December 2023:
deficit of £5.8 million) is shown in the Group balance sheet as (i)
retirement benefit obligations (non-current liabilities) of £9.6 million (31
December 2023: £15.4 million) and (ii) retirement benefit assets (non-current
assets) of £10.9 million (31 December 2023: £9.5 million).
At 31 December 2024, the retirement benefit asset of £10.9 million (Dec 2023:
£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 £9.6 million (Dec 2023: £15.4 million)
relates to one scheme in the UK (£8.8 million, Dec 2023: £14.6 million) and
one scheme in the Netherlands (£0.8 million, Dec 2023: £0.8 million).
The loss on plan assets was £2.6 million. (31 December 2023: return on plan
assets of £13.1 million).
For the year ended 31 December 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.
In 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.
15. Retirement Benefits (continued)
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.
31 Dec 31 Dec
2024 2023
£'000 £'000
Return on plan assets
Return on plan asset excluding interest income (9,753) 6,450
Interest income on plan assets 7,151 7,917
(2,602) 14,367
Less: effect of annuity buy-in - (1,252)
Return on plan assets after deducting effect of buy-in (2,602) 13,115
16. Acquisitions and Acquisition Related Liabilities
Acquisitions
On 30 October 2024, the Group acquired Salvador Escoda, one
of Spain's leading distributors of air conditioning, ventilation, heating,
water and renewable products serving professional installers across the
residential, commercial and industrial sectors. Salvador Escoda, headquartered
in Barcelona, operates from 92 strategically located branches throughout Spain
which are supported by four distribution centres, including a new 18,000
square metre facility in Seville which opened in March 2024. The acquisition
of Salvador Escoda is consistent with Grafton's strategy of acquiring platform
businesses with strong and unique propositions offering exciting growth
opportunities and which operate in fragmented markets with strong underlying
fundamentals. This acquisition is incorporated
in the Spanish Distribution segment.
The fair value of assets and liabilities acquired in 2024 are set out below:
Total
£'000
Property, plant and equipment 14,218
Right-of-use asset 24,413
Intangible assets - computer software 161
Intangible assets - trade names 8,259
Intangible assets - customer relationships 7,258
Inventories 60,206
Trade and other receivables 39,764
Trade and other payables (20,520)
Lease liability (24,413)
Corporation tax liability (2,467)
Deferred tax liability (3,879)
Deferred tax asset 2,712
Cash acquired 1,614
Bank overdraft acquired (4,541)
Bank loans acquired (42,330)
Net assets acquired 60,455
Goodwill 3,863
Consideration 64,318
Satisfied by:
Cash paid 64,318
Net cash outflow - arising on acquisitions
Cash consideration 64,318
Add: bank overdraft acquired 4,541
Less: cash and cash equivalents acquired (1,614)
67,245
16. Acquisitions and Acquisition Related Liabilities (continued)
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.
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 material
adjustments made to provisional fair values in the period relating to any
acquisitions completed in the prior year.
The acquisition contributed revenue of £29.7 million and operating profit of
£0.3 million for the period from the date of acquisition to 31 December
2024. If this acquisition had occurred on 1 January 2024, it is estimated
that it would have contributed revenue of £197.4 million (unaudited) and
adjusted operating profit of £12.7 million (unaudited) in the year.
The Group incurred acquisition costs of £3.0 million in 2024 (2023: £0.9
million), relating to actual and target acquisitions, which are included in
operating costs in the Group Income Statement.
Acquisition related liabilities
The following table shows the analysis of deferred consideration on the
acquisition of businesses:
Deferred Consideration
£'000
As at 1 January 2024 (4,890)
Currency translation adjustment 85
Deferred acquisition consideration paid in the year 2,145
Unwinding of discount applicable to deferred consideration (Note 4) (1,476)
As at 31 December 2024 (4,136)
Split of deferred consideration £'000
Non-current (599)
Current (3,537)
(4,136)
17. Taxation
The income tax expense of £30.5 million (2023: £34.8 million) is equivalent
to an effective tax rate of 20.0 per cent on profit from continuing operations
(2023: 19.0 per cent). This is a blended rate of corporation tax on profits in
the five jurisdictions 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 (2023: 23.5% blended rate) and the introduction
of the global minimum top up tax.
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, Finland and Spain.
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.
17. Taxation (continued)
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.
Pillar Two - Global Minimum Top-Up Tax
The Group is subject to the global minimum top‐up tax under
Pillar Two tax legislation. Pillar Two legislation has been enacted or
substantively enacted in Ireland and several other jurisdictions in which the
Group operates effective from 1 January 2024. Under the legislation, the Group
is liable to pay a top‐up tax for the difference between the Pillar Two
effective tax rate per jurisdiction and the 15 per cent minimum rate. Specific
adjustments envisaged in the Pillar Two legislation can give rise to different
effective tax rates compared to those calculated for IFRS purposes. The
Group has applied a temporary mandatory relief from deferred tax accounting
for the impacts of the top‐up tax and will account for it as a current tax
when it is incurred.
The Group has recognised an immaterial Pillar Two current tax
expense of £0.5 million for 2024 and expects to avail of transitional safe
harbour reliefs in respect of a number of its jurisdictions for the financial
year. The Group will continue to monitor changes in law and guidance as they
apply to Grafton Group plc and its subsidiaries.
Deferred tax
At 31 December 2024, the deferred tax asset was £7.5 million
(31 December 2023: £6.7 million) and the deferred tax liability was £62.0
million (31 December 2023: £60.2 million). At 31 December 2024, there were
unrecognised deferred tax assets in relation to capital losses of £0.7
million (31 December 2023: £0.7 million), trading losses of £1.3 million (31
December 2023: £1.1 million) and deductible temporary differences of £5.2
million (31 December 2023: £5.2 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 particular
entities against which they can be utilised. Separately, the Directors
believe that it is not probable the deductible temporary differences will be
utilised.
18. Related Party Transactions
There were no changes in related parties from those described in the Annual
Report and Accounts for the year ended 31 December 2023 that materially
affected the financial position or the performance of the Group during the
year ended 31 December 2024.
19. Grafton Group plc Long Term Incentive Plan (LTIP)
LTIP awards were made over 637,662 Grafton Units on 20 March 2024 (March 2023:
807,889). The fair value of the awards of £4.6 million (March 2023: £6.1
million), which are subject to vesting conditions, will be charged to the
income statement over the vesting period of three years (March 2023: three
years). In addition to the above, LTIP awards were made over 23,524 Grafton
Units on 8 October 2024 and 4,802 Grafton Units on 28 November 2024. The
fair value of these awards totalled £0.2 million, which are subject to
vesting conditions and 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 2024 discloses details of the LTIP scheme.
20. Share Buyback and Treasury Shares
Purchase of Treasury Transaction Costs Purchase of Treasury Cancellation of Treasury Transfer from Treasury Total Movement
Shares £'000 Shares * Shares Shares ** £'000
£'000 £'000 £'000 £'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 4 100,000 198 100,198 (100,000) (198) -
Buyback programme 5 28,388 57 28,445 (28,388) (57)
Total 382,675 849 383,524 (382,675) (849) -
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)
Year ended 31 December 2024 80,923 162 81,085 (81,391) (162) (468)
Total 382,675 849 383,524 (382,675) (849) -
* Including transaction costs.
** At 31 December 2024, the share buyback programmes 1, 2, 3 and 4, and the
LTIP purchase and cancellation, were fully completed and the related
transactions costs have been transferred from treasury shares to retained
earnings, totalling £0.8 million.
Since the first buyback commenced on 9 May 2022 and up to 31 December 2024,
the Group has purchased a total of 43.08 million ordinary shares which
represents 17.9 per cent of the issued share capital on the date of
commencement. It acquired them at an average price of £8.63 per share.
Excluding shares re-purchased to offset the impact of LTIPS awards vesting in
2022 and 2023, cash of £371.7 million has been returned to shareholders
through all completed and ongoing share buybacks.
Share buyback programme 4 (completed 30 April 2024)
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. This completed on 30 April 2024.
At 31 December 2024, the Group had purchased 11,090,190 shares in aggregate
for cancellation at a total cost of £100.2 million, including transaction
costs. All shares were cancelled by 31 December 2024.
Share buyback programme 5 (completed 8 January 2025)
The Board announced a fifth programme, commencing 29 August 2024, to buy back
ordinary shares in the Company for an aggregate consideration of up to £30.0
million which will end no later than 31 January 2025, subject to market
conditions. At 31 December 2024, the Group had purchased 2,810,108 shares in
aggregate for cancellation at a total cost of £28.4 million, including
transaction costs. These shares were all cancelled by 31 December 2024. This
programme completed on 8 January 2025.
21. Issue of Shares
During the year, 48,147 Grafton Units were issued under the Group's Savings
Related Share Option Scheme (SAYE) to eligible UK employees.
In addition, 24,686 Grafton Units were issued under the 2021 Grafton Group
Long Term Incentive Plan (LTIP), on the vesting of Awards granted in 2021, as
the conditions for Total Shareholder Return ("TSR") targets were met. No
other Grafton Units were issued on the vesting of Awards granted in 2021, as
the performance conditions for Earnings Per Share ("EPS") targets were not
met.
22. Events after the Balance Sheet Date
The Company bought back, for cancellation, 0.2 million shares at a cost of
£1.6 million between 1 January 2025 and 5 March 2025.
On 13 February 2025, the Group entered into an agreement, which is subject to
approval from the Competition and Consumer Protection Commission (CCPC), for
the sale of the MFP business to a subsidiary of Wienerberger AG which mainly
operates through Pipelife Ireland Solutions Limited in Ireland.
In addition, the Board has today announced a sixth programme, commencing 6
March 2025, to buy back ordinary shares in the Company for an aggregate
consideration of up to £30.0 million. The sixth share buyback programme
will end no later than 31 August 2025, subject to market conditions.
There have been no other material events subsequent to 31 December 2024 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 5 March
2025.
Supplementary Financial Information
Alternative Performance Measures
Certain financial information set out in this consolidated financial information is not defined under IFRS. These key Alternative Performance Measures ("APMs") represent additional measures in assessing performance and for reporting both internally and to shareholders and other external users. The Group believes that the presentation of these APMs provides useful supplemental information which, when viewed in conjunction with IFRS financial information, provides readers with a more meaningful understanding of the underlying financial and operating performance of the Group.
None of these APMs should be considered as an alternative to financial measures drawn up in accordance with IFRS.
The key Alternative Performance Measures ("APMs") of the Group are set out below. As amounts are reflected in £'m some non-material rounding differences may arise. Numbers that refer to 2023 are available in the 2023 Annual Report and Accounts.
The term "Adjusted" means before exceptional items and acquisition related items. These items do not relate to the underlying operating performance of the business and therefore to enhance comparability between reporting periods and businesses, management do not take these items into account when assessing the underlying profitability of the Group.
Acquisition related items comprise deferred consideration payments relating to the retention of former owners of businesses acquired, transaction costs and expenses, professional fees for new and target acquisitions, adjustments to previously estimated earn outs, impairment charges related to intangible assets recognised on acquisition of businesses and goodwill impairment charges. Customer relationships, technology and brands amortisation, the impact of unwinding acquisition related deferred consideration to present value and any associated tax are considered by management to form part of the total spend on acquisitions or are non-cash items resulting from acquisitions and therefore are also included as adjusting items.
APM Description
Adjusted operating profit/EBITA Profit before amortisation of intangible assets arising on acquisitions,
acquisition related items, exceptional items, net finance expense and income
tax expense.
Operating profit margin Profit before net finance expense and income tax expense as a percentage of
revenue.
Adjusted operating profit/EBITA before property profit Profit before profit on the disposal of Group properties, amortisation of
intangible assets arising on acquisitions, acquisition related items,
exceptional items, net finance expense and income tax expense.
Adjusted operating profit/EBITA margin before property profit Adjusted operating profit/EBITA before property profit as a percentage of
revenue.
Adjusted profit before tax Profit before amortisation of intangible assets arising on acquisitions,
acquisition related items, exceptional items and income tax expense.
Adjusted profit after tax Profit before amortisation of intangible assets arising on acquisitions,
acquisition related items and exceptional items but after deducting the income
tax expense.
Capital Turn Revenue for the previous 12 months divided by average capital employed (where
capital employed is the sum of total equity and net debt/(cash) at each period
end).
Constant Currency Constant currency reporting is used by the Group to eliminate the
translational effect of foreign exchange on the Group's results. To arrive at
the constant currency change, the results for the prior period are
retranslated using the average exchange rates for the current period and
compared to the current period reported numbers.
Dividend Cover Group earnings per share divided by the total dividend per share for the
Group.
EBITDA Earnings before exceptional items, acquisition related items, net finance
expense, income tax expense, depreciation and intangible assets amortisation.
EBITDA (rolling 12 months) is EBITDA for the previous 12 months.
EBITDA Interest Cover EBITDA divided by net bank/loan note interest.
Free Cash Conversion Free cash flow as a percentage of adjusted operating profit.
Free Cash Flow Cash generated from operations less replacement capital expenditure (net of
disposal proceeds), less interest paid (net), income taxes paid and payment of
lease liabilities. In the current year the definition has been refined to also
deduct payment of deferred acquisition consideration, and the prior year has
been restated to reflect this.
Gearing The Group net (cash)/debt divided by the total equity attributable to owners
of the Parent times 100, expressed as a percentage.
Liquidity The Group's accessible cash, including any undrawn revolving bank facilities.
Like-for-like revenue Changes in like-for-like revenue is a measure of underlying revenue
performance for a selected period. Branches contribute to like-for-like
revenue once they have been trading for more than twelve months.
Acquisitions contribute to like-for-like revenue once they have been part of
the Group for more than 12 months. When branches close, or where a business is
disposed of, revenue from the date of closure, for a period of 12 months, is
excluded from the prior period result.
Net (Debt)/Cash Net (debt)/cash comprises current and non-current interest-bearing loans and
borrowings, lease liabilities, fixed term cash deposits, cash and cash
equivalents and current and non-current derivative financial instruments.
Return on Capital Employed Adjusted operating profit divided by average capital employed (where capital
employed is the sum of total equity and net debt/(cash) at each period end)
times 100, expressed as a percentage.
Adjusted Earnings Per Share A measure of underlying profitability of the Group. Adjusted profit after tax
is divided by the weighted average number of Grafton Units in issue, excluding
treasury shares.
Adjusted Operating Profit/EBITA before Property
Profit
2024 2023
£'m £'m
Revenue 2,282.3 2,319.2
Operating profit 152.6 183.1
Property profit (4.0) (1.3)
Acquisition related items 4.6 2.7
Amortisation of intangible assets arising on acquisitions 20.3 19.7
Adjusted operating profit/EBITA before property profit 173.5 204.2
Adjusted operating profit/EBITA margin before property profit 7.6% 8.8%
Operating Profit Margin
2024 2023
£'m £'m
Revenue 2,282.3 2,319.2
Operating profit 152.6 183.1
Operating profit margin 6.7% 7.9%
Adjusted Operating Profit/EBITA
2024 2023
£'m £'m
Revenue 2,282.3 2,319.2
Operating profit 152.6 183.1
Acquisition related items 4.6 2.7
Amortisation of intangible assets arising on acquisitions 20.3 19.7
Adjusted operating profit/EBITA 177.5 205.5
Adjusted operating profit/EBITA margin 7.8% 8.9%
Adjusted Profit before Tax
2024 2023
£'m £'m
Profit before tax 152.5 183.5
Amortisation of intangible assets arising on acquisitions 20.3 19.7
Acquisition related items 4.6 2.7
Unwinding of discount applicable to deferred consideration 1.5 -
Adjusted profit before tax 178.9 205.9
Adjusted Profit after Tax
2024 2023
£'m £'m
Profit after tax 122.0 148.7
Acquisition related items 4.6 2.7
Tax on acquisition related items - (0.2)
Amortisation of intangible assets arising on acquisitions 20.3 19.7
Tax on amortisation of intangible assets arising on acquisitions (4.6) (4.4)
Unwinding of discount applicable to deferred consideration 1.5 -
Adjusted profit after tax 143.8 166.5
Reconciliation of Profit to EBITDA
2024 2023
£'m £'m
Profit after tax 122.0 148.7
Net finance expense/(income) 0.1 (0.4)
Income tax expense 30.5 34.8
Depreciation 112.4 104.7
Acquisition related items 4.6 2.7
Intangible asset amortisation 22.3 21.3
EBITDA 292.0 311.8
Net (Debt) 31 Dec
31 Dec 2023
2024 £'m
£'m
Cash and cash equivalents 359.4 383.9
Interest-bearing loans (non-current) (188.4) (204.2)
Interest-bearing loans (current) (40.6) -
Bank overdrafts (8.4) -
Lease liabilities (non-current) (331.6) (364.1)
Lease liabilities (current) (72.2) (64.9)
Derivatives (0.0) (0.0)
Fixed term cash deposits 150.0 200.0
Net (Debt) (131.7) (49.3)
Net Debt to EBITDA
31 Dec 31 Dec
2024 2023
£'m £'m
EBITDA (rolling 12 months) 292.0 311.8
Net debt 131.7 49.3
Net debt to EBITDA - times 0.45 0.16
EBITDA Interest Cover (including interest on lease
liabilities)
2024 2023
£'m £'m
EBITDA 292.0 311.8
Net bank/loan note interest (income) (0.1) (0.3)
EBITDA interest cover - times n/a n/a
Free Cash Flow
2024 2023
£'m £'m
Cash generated from operations 298.3 334.3
Replacement capital expenditure (23.9) (27.4)
Proceeds on sale of property, plant and equipment 1.3 1.4
Proceeds on sale of held for sale/investment properties 4.4 2.2
Interest received 23.4 24.2
Interest paid (22.5) (23.1)
Payment of lease liabilities (71.6) (67.7)
Deferred acquisition consideration paid (2.1) (2.6)
Income taxes paid (29.0) (38.4)
Free cash flow 178.2 203.0
Adjusted Return on Capital Employed
31 Dec 31 Dec
2024 2023
£'m £'m
Operating profit 152.6 183.1
Acquisition related items 4.6 2.7
Amortisation of intangible assets arising on acquisitions 20.3 19.7
Adjusted operating profit 177.5 205.5
Total equity - current period end 1,596.2 1,655.8
Net debt 131.7 49.3
Capital employed - current period end 1,727.9 1,705.1
Total equity - prior period end 1,655.8 1,745.6
Net debt/(cash) 49.3 (8.9)
Capital employed - prior period end 1,705.1 1,736.7
Average capital employed 1,716.5 1,720.9
Adjusted return on capital employed 10.3% 11.9%
Capital Turn
31 Dec 31 Dec
2024 2023
£'m £'m
Total revenue for previous 12 months 2,282.3 2,319.2
Average capital employed 1,716.5 1,720.9
Capital turn - times 1.3 1.3
Free Cash Conversion
2024 2023
£'m £'m
Free cash flow 178.2 203.0
Adjusted operating profit 177.5 205.5
Free cash conversion 100% 99%
Gearing 31 Dec 31 Dec
2024 2023
£'m £'m
Total equity attributable to owners of the Parent 1,596.2 1,655.8
Group net debt 131.7 49.3
Gearing 8.2% 3.0%
Dividend Cover 31 Dec 31 Dec
2024 2023
£'m £'m
Group adjusted EPS - basic (pence) 71.78 77.88
Group dividend (pence) 37.0 36.0
Group dividend cover - times 1.9 2.2
Liquidity 31 Dec 31 Dec
2024 2023
£'m £'m
Cash and cash equivalents 359.4 383.9
Fixed term cash deposits 150.0 200.0
Less: cash held against letter of credit* (4.0) (4.0)
Accessible cash 505.4 579.9
Undrawn revolving bank facilities 270.8 269.7
Liquidity 776.2 849.6
*At 31 December 2024, cash of £4.0 million (2023: £4.0 million) was reserved
to cover the risk of an event of default by the Group on a letter of credit.
This arrangement can be replaced at any time.
Net Cash - before Leases 31 Dec 31 Dec
2024 2023
£'m £'m
Net (debt) - after leases (131.7) (49.3)
Lease liability 403.7 429.0
Net cash - before leases 272.1 379.7
Like-for-Like Revenue
2024 2023
£'m £'m
2023/2022 revenue 2,319.2 2,301.5
Organic growth (52.5) (32.3)
Organic growth - new branches 5.5 11.3
Total organic growth (47.0) (21.0)
Acquisitions 47.2 12.1
Foreign exchange (37.1) 26.6
2024/2023 revenue 2,282.3 2,319.2
Like-for-like movement (organic growth, excluding new branches, as % of prior (2.3%) (1.4%)
period revenue)
Cash Outflow on Dividends and Share Buyback, excluding transaction costs 2024 2023
£'m £'m
Dividend payment 73.2 72.6
Purchase of treasury shares (Note 20) 80.9 159.1
Exclude LTIP share purchase (Note 20) - (3.4)
Cash outflow on dividends and share buyback, excluding transaction costs 154.1 228.3
Technical Guidance for 2025 Financial Year (unaudited)
● Interest costs: c.£9-£10 million but dependent on rate of reduction of
interest rates by Central Banks together with impact of corporate development
activity
● Effective tax rate: c.20.4% and trend likely to be upwards toward 21.5% in
subsequent years
● Depreciation and asset amortization (pre IFRS 16): c.£50 million
● Depreciation and amortisation including right of use assets (leases) and
acquired intangibles: c.£150 million
● Gross replacement capital expenditure: c.£30 - £35 million
● Organic development capital expenditure: c.£30 million
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