Grafton Group plc has described a “positive end to the financial year” in its Trading Update issued for the year ended 31 December 2021, ahead of announcing its Final Results on 24 February 2022.
The bulletin notes that the positive second half revenue trends were sustained to the end of the year whilst the “strong performance” from the Group’s portfolio of businesses means that adjusted operating profit for the year is now expected to be “at the top end of expectations”. In addition, the proceeds received at year end on divestment of its Traditional Merchanting business in Great Britain (now with full regulatory confirmation) “enhances Group’s strong financial position”.
Gavin Slark, Chief Executive Officer of Grafton Group plc, commented: “I would like to again express my sincere thanks to colleagues across our Group for their exceptional response throughout the Covid 19 pandemic and for safely supporting the record levels of activity in our branches, stores and manufacturing operations.
“The Group’s portfolio of high returning businesses performed strongly leading to a record outcome for the year. 2021 was also a year of significant strategic change for Grafton with the sale of the traditional merchanting business in Great Britain and the acquisition of IKH in Finland. The overall outlook remains positive and we look to the future with confidence given the strength of our businesses, strong balance sheet and good pipeline of investment opportunities.”
Highlights taken directly from the report (with a focus on its remaining UK merchant operations) include:
Trading Performance
The positive revenue growth trends reported for the four months to the end of October continued through to the year end driven by the Group’s strong brands and market positions against the backdrop of generally favourable trading conditions. While supply chain pressures moderated, building materials price inflation continued to be a key component of revenue growth in the distribution businesses particularly in the UK and Ireland.
Group total revenue from continuing operations (which excludes the traditional merchanting business in Great Britain, the divestment of which completed on 31 December 2021) increased by 25.7% to £2.11 billion in 2021 from £1.68 billion in 2020 and by 28.4% from £1.64 billion in 2019.
Segment Trading
The table below shows both the changes in average daily like-for-like revenue for the two months to the end of December and in total revenue in 2021 compared to 2020 and 2019 for continuing operations:
| Segment | Average Daily Like-for-Like
Constant Currency Revenue Growth
|
Total Revenue | ||
| Sterling | Sterling | |||
| Two Months to 31 December | 12 Months to 31 December | |||
|
2021 vs 2020 |
2021 vs 2019 |
2021 vs 2020 |
2021 vs 2019 |
|
| Distribution | ||||
| – UK | 3.1% | 18.2% | 30.3% | 20.5% |
| – Ireland | 8.0% | 19.7% | 17.3% | 17.1% |
| – Netherlands | 9.5% | 7.7% | 5.1% | 37.2% |
| Retailing | (3.9%) | 21.6% | 14.7% | 37.6% |
| Manufacturing | 15.1% | 0.6% | 62.4% | 25.2% |
| Group | 4.6% | 16.7% | 25.7% | 28.4% |
UK Distribution
Selco continued to experience good demand in its market with average daily like-for-like revenue growth of 2.2% in the final two months of the year measured against exceptional growth of 18.1% in the same period in the previous year. Selco opened its 72nd branch in Rochester in December, having opened a branch in Canning Town in November.
MacBlair performed strongly and expanded its coverage of the Northern Ireland market with the acquisition in December of P. McDermott & Sons (Omagh) Ltd., a single branch builders’ distribution business located in Omagh, County Tyrone.
Completion of Divestment of Traditional Merchanting Business in Great Britain
As previously announced, the disposal of the traditional merchanting business in Great Britain completed on 31 December 2021 and the proceeds were received in full on that date. As a result, the net cash position at the year end was materially ahead of the prior year which leaves the Group with a strengthened balance sheet and considerable investment capacity.
The divested business was treated as a deemed disposal at 30 June 2021 and classified as discontinued operations in line with International Financial Reporting Standards.
