Grafton Group (GFTU) 2004年年度報告「LSE」.pdf

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1、Grafton Group plc Annual Report 2004Grafton Group plcHeron House,Corrig Road,Sandyford Industrial Estate,Dublin 18,Ireland.Telephone:+353 1 216 0600Fax:+353 1 295 4470Email:Web:Grafton Group plcAnnual Report 2004Group Profile 1Financial Highlights 2Regions and Divisions 4Trading Locations 5Chairmans

2、 Statement 6Group Finance Review 16Principal Brands 18Board of Directors 19Financial Review 1987 to 2004 20Report of the Directors 22Corporate Social Responsibility 24Corporate Governance 25Directors Report on Remuneration 31Statement of Directors Responsibilities 35Independent Auditors Report 36Gro

3、up Profit and Loss Account 38Other Statements 39Group Balance Sheet 40Group Cash Flow Statement 41Company Balance Sheet 42Accounting Policies 43Notes to the Financial Statements 45Principal Operating Subsidiary Undertakings 67Corporate Information and Financial Calendar 67ContentsGrafton Group plc i

4、s an independent,profit growth oriented company,operating in the UK and Ireland whose main activities are builders and plumbers merchanting,DIY retailing and mortar manufacturing.The Group aims to achieve above average returns for its shareholders.Graftons strategy is to build on strong positions in

5、 businesses serving the UK and Irish construction sectors,to develop in related markets,and to grow in businesses with which it is familiar.In the UK,Graftons merchanting operations are the fourth largest in the market.These comprise 147 plumbers merchanting branches trading under the Plumbase brand

6、,and 163 builders merchanting branches trading principally under the Buildbase and Jackson brands.In Northern Ireland,Macnaughton Blair is one of the leading builders merchants trading from 12 locations.EuroMix is the UK market leader in dry mortar with 7 plants.In the Republic of Ireland,the Group

7、is the largest builders and plumbers merchanting business trading from 31 branches nationally principally under the Chadwicks brand and from 25 branches nationally under the Heiton Buckley brand.The Group is the clear leader in Irish DIY retailing with 19 Woodies and 15 Atlantic Homecare stores nati

8、onally and,amongst other activities,has manufacturing plants in plastics and concrete products,including EuroMix dry mortar.Since becoming an independent Public Limited Company in 1987,Grafton has increased its adjusted earnings per share at an average annual rate of 28%.Grafton Group plc shares are

9、 listed on the Irish and London Stock Exchanges.1Annual Report 2004Group Profile 2004 2003 ChangeTurnover(million)1,872 1,496+25%EBITDA(million)201 157+28%Operating profit before goodwill(million)#157 123+28%Profit before taxation(million)132 102+29%EPS 52.6c 41.9c+25%Adjusted EPS(before goodwill am

10、ortisation&property profit)55.6c 45.1c+23%Adjusted diluted EPS 54.2c 44.2c+23%Share purchase/share redemption per Grafton Unit 13.0c 10.5c+24%Share purchase/share redemption cover(times)4.3 4.3 Interest cover(times)7.6 7.5 Cash flow per share*75c 60c+24%Net assets per share 251c 212c+19%Net debt to

11、shareholders funds 63%69%Depreciation charge(million)34.2 28.2 Goodwill amortisation(million)12.8 9.4 Acquisition and investment expenditure(million)85 220 Capital expenditure(million)89 69#Before property profit.*Based on profit after tax plus depreciation and goodwill amortisation.Financial Highli

12、ghts2Grafton Group plc3Annual Report 2004TURNOVER(million)2,00001,0005001,50020031,49620041,872PROFIT BEFORE TAX(million)1400200320044080120102132ADJUSTED EARNINGS PER SHARE(cent)60030200345.1200455.6SHARE PURCHASE/SHARE REDEMPTIONPER GRAFTON UNIT(cent)14020032004481210.513.0100206026101,7507502501,

13、25050204010Regions and Divisions4Grafton Group plc Builders Merchanting Plumbers Merchanting Manufacturing DIY RetailingBuilders Merchants 163 23 186Plumbers Merchants 147 8 155Manufacturing Plants 8 3 11DIY -19 19Total 318 53 371 UK Ireland Total“The Groups consistent strategy has enabled developme

14、nt of builders merchanting,DIY and mortar manufacturing businesses in the UK and Ireland with strong regional and national market positions.”1,872m157.4m1,496m123.3mDivisional Turnover UK Operations Irish Merchanting Irish DIY Retailing Irish ManufacturingOperating ProfitBefore Goodwill and Property

15、 Development Profit UK Ireland20042003200420035Annual Report 2004Trading Locations Builders Merchanting Plumbers Merchanting Manufacturing DIY Retailing Heiton Locations“The Groups consistent strategy has enabled development of builders merchanting,DIY and mortar manufacturing businesses in the UK a

16、nd Ireland with strong regional and national market positions.These businesses and brands have given the Group a solid platform for continued profitable growth and development as well as diversifying its earnings base between the UK and Ireland and across the construction sector and related markets.

17、”Grafton Group plc is pleased to report that 2004 has been another year of excellent progress and that record sales,profits and earnings have been achieved.This was the Groups thirteenth year of uninterrupted profit growth.Highlights Sales were up 25 per cent to 1.9 billion(2003:1.5 billion).Operati

18、ng profit before goodwill increased by 28 per cent to 157.4 million(2003:123.3 million).Profit before tax increased by 29 per cent to 131.9 million(2003:102.0 million).Earnings per share before goodwill and property profit increased by 23 per cent to 55.64 cent (2003:45.07 cent).Cash generated from

19、operations was up 36 per cent to 177 million(2003:129.8 million).All of the Groups operations performed strongly in 2004 aided by good market conditions in the UK and Ireland and the benefit of acquisitions completed during 2003.The Groups consistent strategy has enabled development of builders merc

20、hanting,DIY and mortar manufacturing businesses in the UK and Ireland with strong regional and national market positions.These businesses and brands have given the Group a solid platform for continued profitable growth and development as well as diversifying its earnings base between the UK and Irel

21、and and across the construction sector and related markets.It was another year of significant progress for the UK businesses.Favourable economic conditions continued to support strong demand in the repair,maintenance and improvement sector.The completion of a significant acquisition and development

22、programme in 2003 and the related integration and scale opportunities resulted in a substantial increase in sales and operating profit.UK turnover grew by 28 per cent to 1.4 billion(2003:1.1 billion).UK operating profit increased by 38 per cent to 108.4 million(2003:78.6 million).As anticipated,the

23、UK operating profit margin increased,for the sixth consecutive year,to 7.6 per cent(2003:7.1 per cent).The UK accounted for 76 per cent of Group turnover(2003:74 per cent)and 69 per cent(2003:64 per cent)of Group operating profit.The Group was also active on the development front in the UK during 20

24、04 with a continuing successful bolt-on strategy which involved completion of 17 acquisitions.The businesses acquired trade from 22 branches with annual sales of 120 million.These businesses enhance coverage of the UK merchanting market and strengthen our position in the North West region where half

25、 of the acquired branches are located.The Group also improved coverage of the UK merchanting market with the greenfield development of 12 branches.EuroMix strengthened its leadership position in the UK dry mortar market with the opening of its seventh plant in Southampton.Chairmans Statement6Grafton

26、 Group plcIn the Republic of Ireland,a gradual economic recovery as the year developed and record levels of activity in the residential construction market provided a favourable background for good growth in turnover and operating profit.Irish turnover increased by 17 per cent to 451.7 million(2003:

27、384.5 million)and operating profit was up 10 per cent to 49.0 million(2003:44.8 million).Irish merchanting sales increased by 19 per cent due to the Telfords acquisition and good like for like growth.Incremental sales from Woodies Cavan and Carlow stores which opened during 2003 and the opening of a

28、 further three stores in Clonmel,Naas Road,Dublin and Kilkenny together with like for like sales growth enabled Woodies to increase turnover by 18 per cent.The Group used its strong operating cash flows and balance sheet strength to fund a significant acquisition and development programme during the

29、 year.A record cash flow of 177 million from operations in 2004 enabled the Group to continue to implement its development strategy and provide a sound basis for the future profitable growth of the Group.Share Purchase/RedemptionsThe Board redeemed the remaining six redeemable shares per Grafton Uni

30、t for a cash consideration of 5 cent payable on 26 March 2004.Following restructuring of the Groups share capital in June 2004,the Board approved the purchase of one A Ordinary Share per Grafton Unit for 1 cent and payment was made on 1 October 2004.The Board has decided to purchase a further A Ordi

31、nary Share per Grafton Unit for a cash consideration of 7 cent payable on 29 March 2005.Total redemption/share purchase payments to shareholders for 2004 of 13 cent per Grafton Unit represents an increase of 24 per cent on redemptions of 10.5 cent per Grafton Unit for 2003.7Annual Report 2004Heiton

32、Group plcOn 7 January 2005,following clearance from the Competition Authority in Ireland,the Group completed the acquisition of Heiton Group plc for a total consideration of approximately 398 million including estimated debt assumed and the cost of the Groups 29 per cent investment in the business h

33、eld prior to the offer.The consideration payable includes the issue of 21.4 million shares by Grafton to Heiton Group shareholders.Heiton Group operations,which are located primarily in Ireland,comprises both builders merchanting and DIY activities.The Irish builders merchanting business trades main

34、ly under the Heiton Buckley name and is the largest builders merchanting business in Ireland operating nationally from 25 branches including Cork Builders Providers.The business also incorporates Heiton Steel,the largest steel stockholding business in Ireland,and a 14 branch small plant and tool hir

35、e business trading under the Sam Hire brand.The retail operations of Heiton Group trade from 15 branches under the Atlantic Homecare DIY brand and,from 4 stores,under the In-House at the Panelling Centre brand.Heiton Group also operates a small specialist drainage and ground engineering merchanting

36、business from 6 branches in the UK.Heitons Irish merchanting and DIY businesses are a good strategic fit with Graftons existing operations and consolidates the position of Grafton as the leading player in the Irish merchanting and DIY markets.The acquisition of Heiton Group provides opportunities fo

37、r scale benefits from two complementary businesses.Operations Review-United KingdomUK sales increased by 28 per cent to 1.4 billion(2003:1.1 billion)and operating profit increased by 38 per cent to 108.4 million(2003:78.6 million).The operating profit margin increased to 7.6 per cent(2003:7.1 per ce

38、nt),a rate of improvement consistent with that achieved in each of the previous three years.In 2004 the UK economy continued a long period of stability and growth.The economy slowed from above trend growth rates as the year progressed in response to a tightening of interest rates aimed at slowing gr

39、owth and the rate of increase in house prices.It was a very good year for the labour market as the unemployment rate edged down to 4.7 per cent.The UK repair,maintenance and improvement market,which is the principle end user market for the Groups merchants sales,put in another solid performance in 2

40、004 with industry estimates indicating volume growth of 3.5 per cent.The excellent results achieved by the UK businesses reflects strong profit growth in the established merchanting businesses,incremental profit from the businesses acquired during 2003 and contributions from the seventeen businesses

41、 acquired during 2004.Like for like merchanting sales growth of 6.5 per cent,margin improvement as a result of purchasing synergies and trading initiatives and benefits of integrating acquisitions contributed to the substantial operating profit improvement in the like for like businesses.The Jackson

42、 and Plumbline acquisitions completed in 2003 joined the Group with very good market positions and performed strongly during 2004.8Grafton Group plcChairmans Statement continuedDevelopment of the UK businesses continued during 2004 with the acquisition of seventeen businesses trading from twenty two

43、 branches and thirteen greenfield developments increasing the number of trading locations to 318.Acquisitions made during the year included Keel Supply and Hall and Rogers,two specialist insulation and dry-lining businesses trading from four branches in the North West.These businesses,which traded s

44、trongly post acquisition,add critical mass over a narrow product group and offer potential growth opportunities.Greenfield developments comprised eight plumbers merchanting branches,four builders merchanting and a new mortar plant.Two Scottish builders merchanting branches at East Kilbride and Glasg

45、ow successfully relocated to new purpose built facilities.UK Builders MerchantingThe UK Builders merchanting division had an excellent year with sales and operating profit substantially ahead of 2003.The strong improvement in profit came from good like for like sales growth in the established branch

46、 network,incremental profit from acquisitions made during 2003 and contributions from current year acquisitions.The results reflect the full year benefit of revised purchasing and sourcing arrangements put in place following the Jacksons acquisition and the continued successful integration of the 61

47、 branches acquired in 2002 and 2003.9Annual Report 2004Regional coverage was strengthened with further geographic expansion during 2004.Completion of 15 small acquisitions added twenty branches and a further four greenfield branches were opened increasing the UK builders merchanting network to 163 b

48、ranches at the year end.Buildbase achieved another year of excellent sales and profit growth.Good like for like sales growth,margin improvement through improved purchasing terms and tight control over overheads delivered profit improvement in the like for like business.This combined with incremental

49、 contributions from acquisitions made in 2003 resulted in a significant improvement in operating profit.Buildbase continued with the successful integration of businesses acquired during 2003 and 2004 taking advantage of synergy and product growth opportunities while maintaining the ethos of these sm

50、all chain and single branch merchants with a long established presence in their local markets.Buildbase continued to consolidate and expand its strong position in the UK builders merchanting market where the brand is now firmly established.Jacksons,the UKs largest regional independent merchanting bu

51、siness prior to acquisition in March 2003,achieved an excellent result in its first full year as part of the Group.The strong advance in operating profit on 2003 levels reflected good like for like sales growth,tight overhead control and scale related purchasing synergies.The Jackson acquisition cre

52、ated a market leadership position for the Group in the East Midlands builders merchanting market and complements the Buildbase branch network which is concentrated in the South East and West Midlands.The strong results for 2004 mean that the financial benefits of the acquisition for the enlarged Gro

53、up were realised in 2004,the first full year of ownership and well ahead of the 2006 time frame anticipated in the original acquisition announcement.Buildbase acquired nine businesses trading from twelve branches during 2004 and opened two branches in Stratford E15 and Cirencester.Developments compl

54、eted by Jacksons during the year included the opening of a greenfield branch in Louth,replacement of the Swinton,South Yorkshire branch with a new purpose built facility and a small bolt-on acquisition which provides a platform for further growth in the Lincolnshire market.In Northern Ireland,Macnau

55、ghton Blair strengthened its leading market position in the province with the acquisition of two builders merchanting businesses trading from branches in Bangor and Coleraine.These acquisitions provide the business with a wider geographic coverage in the province and increase the branch network to 1

56、2.The strong trading performance of Macnaughton Blair in recent years continued into 2004 and the business experienced very good like for like sales and operating profit growth with contributions from the Bangor and Coleraine acquisitions.UK Plumbers MerchantingPlumbase,a plumbing heating and sanita

57、ry ware merchanting business,with 147 branches has strong regional market positions in England and Scotland.The business further strengthened its market position during 2004 through the acquisition of two single branch merchants and the opening of eight new branches.10Grafton Group plcChairmans Stat

58、ement continuedPlumbase achieved growth in sales and operating profit.Purchasing synergies and increased sales enabled a good advance in profit in the like for like Plumbase business.The results of the division were significantly boosted by a full year contribution from the Plumbline business acquir

59、ed in September 2003.Plumbline,a leading regional plumbers merchanting chain trading from seventeen branches provided Plumbase with an important initial presence in the Scottish plumbers merchanting market.The business performed ahead of pre-acquisition expectations as sales growth,purchasing benefi

60、ts and the continued development of a number of branches in the chain which opened in the years prior to acquisition contributed to the increase in profit.11Annual Report 2004UK MortarThe EuroMix mortar business continued to trade well increasing sales and operating profit in a more competitive mark

61、et.EuroMix,the market leader in the supply of dry mortar,has transformed a traditional market by pioneering the use on-site of dry mortar silo technology to produce a range of quality mortars for the use in block laying and bricklaying.The EuroMix business operates from a network of seven strategica

62、lly located plants and provides mortar to key national and regional building and construction companies for use in residential and non-residential construction projects.The distinctive red and white EuroMix silos are now an established feature on construction sites throughout the country.The plant a

63、t Harlow,which commenced production in May 2003,traded strongly and the opening of a plant in Southampton in July provides coverage to house builders,developers and contractors throughout the South of England.Market leadership will be further enhanced with the opening of the eighth dry mortar plant

64、at Severnside,near Bristol.This plant is currently under construction and will provide market coverage in the West Country.Operations Review-Republic of IrelandIrish turnover increased by 17 per cent to 451.7 million(2003:384.5 million)and operating profit increased by 9.5 per cent to 49.0 million(2

65、003:44.8 million).The operating profit margin declined to 10.9 per cent from 11.6 per cent.This reflected flat operating profit margins in the established merchanting and DIY businesses,costs associated with Woodies three new stores,an anticipated lower margin in the acquired merchanting business an

66、d a more competitive trading environment with increased competition in the DIY and manufacturing businesses.The Irish economy delivered an impressive growth performance in 2004 following two years of below trend growth.The economy steadily gathered pace as the year developed and exceeded growth expe

67、ctations for the year as a whole.The employment market performed strongly with high employment creation and the inflation environment was benign with the slowest annual growth rate for five years.The construction market grew by an estimated 9 per cent in 2004 reflecting very strong activity in the r

68、esidential sector,strong infrastructure demand and unchanged volumes in the commercial and industrial sectors.House completions for 2004 were a record 77,000 units.Record levels of house completions have been influenced by a prolonged period of low interests rates,strong employment creation,net inwa

69、rd migration,demand for second homes and demand from investors in the buy-to-let market.Irish MerchantingThe Irish Merchanting division increased sales by 19 per cent to 286.1 million(2003:239.8 million)including like for like growth of 6.8 per cent.Chadwicks builders and plumbers merchanting busine

70、ss had a busy year due to record demand in the residential construction market and good levels of activity in the repair,maintenance and improvement market.While the merchanting market enjoyed good volume growth,there was strong competition in the sector from both the national chains and independent

71、 operators.12Grafton Group plcChairmans Statement continuedChadwicks Wexford branch,which relocated to a modern out of town purpose built facility at the end of 2003,traded successfully in 2004 and the two Chadwicks Plumb Centre branches in Galway and North Dublin which opened last year made good pr

72、ogress growing market share.Telfords,the three branch builders merchanting business acquired in October 2003,traded ahead of pre-acquisition expectations benefiting from strong sales growth and purchasing synergies.This long established merchant provides the Group with an important presence in the M

73、idlands market.Irish RetailingWoodies,the leading player in the Irish DIY market,achieved another year of sales and profit growth.Sales increased by 18 per cent to 129.8 million(2003:110.3 million).Like for like sales growth of 2 per cent for the year reflected good first half demand,influenced by s

74、trong sales of seasonal products,and the softening of demand in the DIY Superstore sector generally in the second half of the year in an increasingly competitive market.13Annual Report 2004The Cavan and Carlow stores which opened in 2003 traded ahead of expectations in 2004.Woodies continued to cons

75、olidate its market leadership position with the opening of stores in Clonmel and Naas Road,Dublin in the first half of 2004 and in Kilkenny in the second half bringing the total network to nineteen.Development plans for 2005 will involve relocating the Cork and Bray stores and opening new stores in

76、Naas and Carrickmines.Further store openings in Drogheda and Navan are planned for 2006.Irish ManufacturingCPIs EuroMix business strengthened its position in the dry mortar market in the greater Dublin area,but its block and readymix divisions suffered from intense competition.MFP,the plastics manuf

77、acturing business,experienced difficult market conditions due to increased raw materials prices and intense competition in the sector.BoardMr.Leo Martin,Chief Executive of Heiton Group plc,was appointed to the Board of Grafton on completion of the acquisition.As previously announced,the Board is in

78、the process of appointing two additional non-executive directors whose appointment will reflect the scale and geographical spread of the Groups interests.Mr.Norman Kilroy retired as Managing Director on 30 April 2004 and will retire from the Board on 31 August 2005.Management and StaffOn behalf of t

79、he Board and our shareholders,we are pleased to acknowledge the very important contribution of the management and staff in the UK and Irish businesses to another set of record results for the Group.We also warmly welcome our new colleagues from Heiton Group plc who joined us on the 7 January 2005.Ou

80、tlookThe Groups cash generative businesses combined with a strong balance sheet following completion of the Heiton acquisition and high interest cover leave it well placed to continue to pursue its successful strategy.Growth in the UK economy is expected to ease back to its long term sustainable rat

81、e in response to a tightening of monetary policy during 2004 and should continue to be supportive of growth in the repair,maintenance and improvement sector,our principle end user market.The Group will focus on realising integration benefits from acquisitions made during 2004 and also in the wider U

82、K merchanting business.We expect to further strengthen our position in the UK merchanting market by completing further acquisitions and through new developments.The UK mortar business is expected to build on its market leadership position with the opening of its eighth plant later this year.14Grafto

83、n Group plcChairmans Statement continued21The Irish economy has consistently outperformed the European economy over the past decade and growth forecasts for 2005 are also very good.Low inflation,a strong employment market and reasonable growth in incomes are expected to lead to stronger consumer spe

84、nding which should be supportive of RMI growth in the Heiton Buckley and Chadwicks merchanting businesses.We expect the number of house completions in Ireland to gradually moderate to long term sustainable levels which will be more heavily influenced by population and household formations as demand

85、for second homes and rented properties reduce.The Woodies and Atlantic Homecare DIY businesses are both well placed to benefit from increased retail spending and should also benefit in 2005 from contributions from the five stores opened during 2004.We look forward to further progress in 2005 confide

86、nt in the success of our strategy and proven track record of profitable growth in the enlarged Group.On behalf of the BoardMichael Chadwick Chairman15Annual Report 2004ResultsThe Group achieved new records for sales,profits and earnings in 2004.The scale of progress and development in recent years i

87、s reflected in an almost doubling of sales over the past three years and a trebling of sales over the past five years.The rate of growth in pre-tax profit doubled in the past three years and increased by 3.5 times over the past five years.Shareholders FundsShareholders funds increased by 86 million

88、to 535.8 million(31 December 2003:449.8 million).Profit after taxation amounted to 112.1 million(2003:86.7 million)and share redemption/purchase payments to shareholders were 25.5 million(2003:18.8 million).The issue of shares under the Group share schemes increased shareholders funds by 1.3 million

89、.Sterling weakness between the end of 2003 and the end of 2004 reduced the euro amount on translation of net assets in the UK businesses by 1.8 million.Components of Operating Profit GrowthOperating profit before goodwill increased by 34.1 million to 157.4 million from 123.3 million in 2003.Operatin

90、g profit growth in the Groups like for like UK and Irish businesses amounted to 15.7 million.The incremental effect of acquisitions undertaken during 2003 increased operating profit by 12.1 million while the operating profit contribution from 17 acquisitions completed during 2004 was 4.5 million.The

91、 average sterling/euro exchange rate was 2%stronger during 2004 and accounted for a positive translation impact of 1.6 million to operating profit for the year.The incremental result of branch openings in 2003,new branches opened in 2004 and branch consolidations increased operating profit by 200,00

92、0.Measures of Financial PerformanceInterest cover,an influential measure of the Groups capacity to service its debt obligations,continued to be very comfortable at 7.6 times(2003:7.5 times)benefiting from the fixing of interest rates during 2003 on a substantial element of the Groups debt which is d

93、enominated in Sterling.Net debt at 31 December 2004 was 338.2 million(31 December 2003:311.7 million)giving a debt to equity ratio of 63%(31 December 2003:69%).Return on average capital employed,an important measure in the assessment of acquisitions and developments,was 17.3%(2003:17.1%).The return

94、on average equity of 21.3%for 2004(2003:21.0%)reflects the benefit of the Group continuing to utilise its debt capacity to part fund its acquisition and development programme during a prolonged low interest rate environment.The reduction in the Groups working capital intensity to 12.7%(2003:13.4%)wa

95、s due to tighter control of stocks and debtors.Cash FlowThe generation of strong operating cash flows has traditionally provided the Group with the financial strength to fund a consistent acquisition and development programme.Cash flow from operating activities was up 36%to a record 177.0 million(20

96、03:129.8 million).The cash flow from operating activities included an investment of 19.1 million(2003:20.1 million)in working capital to support substantial growth in like for like sales and branch openings.The Group also generated cash flows of 25.4 million(2003:31.0 million)from asset disposals an

97、d 1.3 million(2003:69.2 million)from the issue of shares.Total cash flow from operating activities,asset disposals and the issue of shares amounted to 203.8 million(2003:229.9 million).AcquisitionsThe Group continued to make bolt-on acquisitions during 2004 completing 17 transactions.The 17 business

98、es trade from 22 branches with annual sales of 120 million.The Group completed 42 acquisitions over the past three years.The businesses concerned trade from 113 branches with annualised turnover in excess of 600 million at the time of acquisition.The 17 acquisitions made during 2004 cost 71.7 millio

99、n including debt acquired and the Groups acquisition spend in the three years to 2004 was 380.5 million.16Grafton Group plcGroup Finance Review21The Group plans to continue growing its UK merchanting divisions through the acquisition of businesses which are a good fit with the existing branch networ

100、k and which present an opportunity for the Group to realise its hurdle rate of return on investments.Capital Expenditure and Asset DisposalsCapital expenditure during 2004 of 88.9 million(2003:69.3 million)comprised routine replacement expenditure of 39.9 million(2003:33.0 million)and expenditure of

101、 49 million(2003:36.3 million)on development projects.Routine asset replacement expenditure of 39.9 million compares to the Groups depreciation charge of 34.2 million.Expenditure on development projects included the greenfield development of 12 merchanting branches in the UK,3 Woodies branches in th

102、e Republic of Ireland and a new dry mortar plant in the UK.Development expenditure also includes the cost of acquiring a property in Navan,Co.Meath,which when redeveloped will incorporate a new Woodies DIY store.The Group also redeveloped a number of its UK merchanting branches during 2004.A profit

103、of 6.7 million was realised on development of the new Woodies store on the Naas Road,Dublin.The Group funds ongoing development principally from operating cash flows and utilising its strong balance sheet to support bank borrowings.The Group also historically holds significant short term cash deposi

104、ts.At 31 December 2004 cash on hand and short term deposits,with a maturity profile of six months or less,amounted to 135.9 million(31 December 2003:139.0 million).The Group had gross debt of 474 million at 31 December 2004.Almost two thirds of gross debt is repayable after more that two years from

105、the balance sheet date.The Groups debt is denominated in Sterling and was mainly drawn for the purpose of funding the Groups UK acquisition and development programme.The Group had un-drawn committed bank facilities of 91.9 million at 31 December 2004.PensionsThe Group operates a number of defined co

106、ntribution and defined benefit pension schemes.Grafton continues to account for pension costs on the basis of the requirements of SSAP 24 and provides the disclosures regarding the FRS 17 valuation of defined benefit scheme net assets and liabilities.The FRS 17 valuation of the defined benefit schem

107、es showed a deficit,net of deferred tax,of 28.6 million(31 December 2003:19.5 million).The increased deficit arose due to lower corporate bond rates in 2004,increased life expectancy and higher than anticipated salary increases.The company has substantially increased the funding rates for these sche

108、mes to eliminate the deficit over time following actuarial reviews and agreement with the Irish Pensions Board.International Financial Reporting Standards(IFRS)The results for 2004 are reported under Irish/UK GAAP.Restated interim and full year results for 2004 under IFRS will be made available duri

109、ng the second quarter of 2005.SummaryThe Group has an excellent track record for generating profitable growth and strong cash flows.The Groups balance sheet was further strengthened with the acquisition in January 2005 of Heiton Group.This acquisition was part funded through the issue of 21.4 millio

110、n shares and resulted in only a small increase in gearing.The Groups healthy cash flow from operations and strong balance sheet leave it well positioned to finance ongoing acquisition and development opportunities.Colm Nuallin Finance Director17Annual Report 2004Group Finance ReviewPrincipal Brands1

111、8Grafton Group plcBuilders MerchantingThe UK builders merchants division trades principally under the Buildbase brand from 143 branches and has a strong presence in the South East,Midlands and North of England.Builders MerchantingJacksons trade from 20 branches in the East Midlands where it is the l

112、eading builders merchant.Plumbers MerchantingThe UK plumbers merchanting division,trading under the Plumbase brand from 147 branches,has a strong presence in the South East,Midlands,East Anglia,West Country and Scotland.Mortar ManufacturingEuroMix,the UKs largest manufacturer of silo based mortar,fo

113、r use in a range of construction projects,trades from 7 plants which provide an almost nationwide coverage.EuroMix is the leading dry mortar brand in the UK and Ireland.DIY RetailingWoodies DIY is the market leader in DIY retailing in the Republic of Ireland,trading from 19 stores nationally.Atlanti

114、c Homecare trades from 15 branches nationally.Builders MerchantingIn the Republic of Ireland,the Groups leading builders and plumbers merchanting businesses trade from 31 branches nationally under the Chadwicks brand and from 25 branches nationally under the Heiton Buckley brand.19Annual Report 2004

115、Board of Directors EXECUTIVE CHAIRMANMichael Chadwick(53)joined the Group in 1975 and was appointed to the Board in 1979.He was appointed Executive Chairman in 1985.EXECUTIVE DIRECTORFergus Malone(62)joined the Groups Plastics division in 1972,having previously worked as an engineer in various indus

116、tries.He was appointed to the Board in 1978 and is responsible for the Groups manufacturing businesses in the UK and Ireland.DEPUTY CHAIRMAN-NON-EXECUTIVEAnthony Collins(65)became a non-executive Director in 1988 and was appointed Deputy Chairman in 1995.He is the Senior Independent Director.A forme

117、r President of the Law Society of Ireland,he is Senior Partner of Eugene F.Collins,Solicitors,Chairman of the Advisory Board of the Automobile Association Ireland,Deputy Chairman of The Leinster Leader Ltd and a Director of the Institute of Directors in Ireland Ltd.NON-EXECUTIVE DIRECTORRichard Jews

118、on(60)joined the Board in 1995.He is Chairman of Archant Ltd and a Director of Temple Bar Investment Trust plc and PFI Infrastructure plc.He was previously Chairman of Savills plc,Queens Moat House plc and Meyer International plc.GROUP FINANCIAL CONTROLLER AND SECRETARYMichael Chadwick BA,MScEXECUTI

119、VE DIRECTORLeo Martin(53)was appointed to the Board in January 2005 following the acquisition of Heiton Group plc.He was Chief Executive of Heiton Group plc,having joined Heiton and the Board as Finance Director in 1986.Prior to joining Heiton he was a Director of the Switzer Group in Ireland with r

120、esponsibility for finance and the catalogue export business.Leo Martin BBS,FCAFergus Malone BE,MBAAnthony E.Collins MA,B Comm,SolicitorRichard W.Jewson(UK)MACharles Rinn MBA,FCCAAudit R.W.Jewson(Chairman),G.Bowler,A.E.CollinsRemuneration G.Bowler(Chairman),A.E.Collins,R.W.JewsonNomination A.E.Collin

121、s(Chairman),G.Bowler,M.Chadwick,R.W.JewsonFinance M.Chadwick(Chairman),C.Nuallin,C.RinnBoard Committees FINANCE DIRECTORColm Nuallin(51)joined the Group as Financial Controller in 1989 and was appointed Finance Director in 1990.He previously held senior financial positions in a number of public and

122、semi-state companies.Colm Nuallin B Comm,FCANON-EXECUTIVE DIRECTORGillian Bowler(52)joined the Board in 1995.She is Chairman of Budget Travel Ltd and of Irish Life&Permanent plc and a Director of the VHI.She is also Chairman of Filte Ireland.She formerly served as Chairman of The Irish Museum of Mod

123、ern Art,as a member of the Independent Radio and Television Commission and is Past President of the Institute of Directors in Ireland Ltd.Gillian Bowler(UK)NON-EXECUTIVE DIRECTORNorman D.Kilroy(65)retired as Managing Director on 30 April 2004 having held this position since 1990.He retires as a non-

124、executive Director on 31 August 2005.He is a Director of Banque Nationale de Paris in Ireland and PEI Surgical and Medical Supplies Ltd.He previously served as an Authority Member of the IDA and as a member of the Irish Trade Board.He is a past President and a Fellow of the Irish Management Institut

125、e.Norman D.Kilroy FCAProfit and Loss Accounts20042003200220012000199919981997mmmmmmmmTurnover1,872.31,496.01,152.4988.8830.5620.2427.6327.6Operating profit*146.2115.889.777.364.646.333.125.6Exceptional profit7.53.43.72.3-Interest payable(net)(21.8)(17.2)(13.2)(12.4)(11.8)(8.1)(4.9)(2.4)Profit before

126、 taxation131.9102.080.267.252.838.228.223.2Taxation(19.8)(15.3)(12.0)(8.7)(6.9)(4.6)(4.0)(3.5)Profit after taxation112.186.768.258.545.933.624.219.7Balance Sheets20042003200220012000199919981997mmmmmmmmCapital employedGoodwill234.3210.8100.462.551.731.79.8-Tangible fixed assets396.9346.8302.3251.520

127、9.6175.9140.761.8Financial fixed assets47.033.733.633.618.919.00.212.5Net current assets#231.2198.5144.3129.5106.576.260.229.4Other liabilities(35.4)(28.3)(18.0)(17.7)(16.1)(14.1)(12.4)(1.2)874.0761.5562.6459.4370.6288.7198.5102.5Financed as follows:Shareholders funds equity535.8449.8322.0264.5216.5

128、181.3139.878.6Net debt/(cash)338.2311.7240.6194.9154.1107.458.723.9874.0761.5562.6459.4370.6288.7198.5102.5Other InformationAcquisition&investment expenditure85.0220.188.861.856.663.653.429.7Purchase of tangible fixed assets88.969.368.042.043.229.520.614.6Total capital&investment expenditure173.9289

129、.4156.8103.899.893.174.044.3Depreciation and goodwill amortisation47.037.626.621.916.512.67.25.4Financial Highlights20042003200220012000199919981997Earnings per share before goodwill&exceptional profit(cent)55.645.137.032.125.919.514.211.6Share purchase/dividend per share(cent)13.010.58.57.56.14.53.

130、32.7Cashflow per share(cent)74.760.153.946.236.227.519.415.7Net assets per share(cent)251.0211.5181.6150.2124.3104.984.948.8Interest cover(times)7.67.57.46.75.75.86.810.6Share purchase/dividend cover(times)4.34.34.44.34.34.34.34.3Net debt to shareholders funds63%69%75%74%71%59%42%30%*After deducting

131、 goodwill amortisation and excluding property profit#Excluding cash and debtFinancial Review20Grafton Group plc1996199519941993199219911990198919881987mmmmmmmmmm244.0195.7169.0133.2122.4119.9109.587.867.662.819.114.211.36.16.56.17.35.73.32.21.80.8-(1.3)(1.1)(1.2)(0.9)(1.6)(1.6)(0.7)(0.8)(0.5)(0.6)19

132、.613.910.15.24.94.56.64.92.81.6(2.9)(2.5)(2.1)(1.1)(1.2)(1.1)(2.1)(1.8)(0.7)(0.4)16.711.48.04.13.73.44.53.12.11.21996199519941993199219911990198919881987mmmmmmmmmm-48.543.240.135.933.033.730.621.219.418.10.1-1.23.41.01.91.3-0.421.421.518.217.918.418.618.716.111.19.3(1.1)(1.1)(1.1)(1.1)(1.0)(1.0)(1.0

133、)(0.6)(0.5)(0.2)68.963.658.456.151.453.249.636.730.027.670.657.749.945.742.240.738.736.025.123.9(1.7)5.98.510.49.212.510.90.74.93.768.963.658.456.151.453.249.636.730.027.68.01.45.82.7-1.27.80.11.6-7.67.75.75.22.45.97.83.52.71.315.69.111.57.92.47.115.63.64.31.34.23.63.02.62.12.11.41.00.91.11996199519

134、9419931992199119901989198819879.06.54.82.52.22.02.72.31.60.92.11.51.00.90.80.70.70.60.50.413.19.57.04.33.73.53.83.32.41.844.236.631.729.327.026.224.923.120.219.415.413.19.87.04.13.810.26.96.73.84.34.34.72.92.92.73.83.83.32.4-10%17%23%22%31%28%2%19%16%21Annual Report 2004Report of the Directors22Graf

135、ton Group plcThe Directors present their report to the shareholders,together with the audited financial statements forthe year ended 31 December 2004.Group ResultsGroup turnover of 1,872 million was 25 per cent higher than Group turnover of 1,496 million in 2003.Group profit before taxation amounted

136、 to 131.9 million compared with 102.0 million in the previousyear,an increase of 29 per cent.Earnings per share amounted to 52.64c compared with 41.95c in theprevious year,an increase of 25 per cent.Adjusted earnings per share(before goodwill amortisation,property development profit and profit on di

137、sposal of property)increased by 23 per cent to 55.64ccompared to 45.07c in 2003.After deducting taxation of 19.8 million and dividends of 0.3 million,the retained profit of 111.8 million has been transferred to reserves.The cost of redeeming shares on 19 March 2004 and the A share purchase on 24 Sep

138、tember 2004 in the amounts of 23.4 million and2.1 million respectively have been charged to the profit and loss reserve in 2004.The financial statementsfor the year ended 31 December 2004 are set out in detail on pages 38 to 66.Special Dividend and New“A”Ordinary sharesThe company declared a special

139、 dividend of 0.125 cent per ordinary share payable on 14 June 2004 whichwas used as subscription proceeds for the issue of ten A ordinary shares per Grafton unit.Share Redemption/Share PurchaseFollowing the redemption of the remaining six redeemable shares per Grafton Unit for a cash considerationof

140、 5 cent per share on 19 March 2004 and the purchase of one A ordinary share per Grafton Unit for a cash consideration of 1 cent on 24 September 2004,the Board has decided to purchase a further Aordinary share per Grafton Unit for a cash consideration of 7.0 cent,giving total payments for the year of

141、 13.0 cent.This represents an increase of 24 per cent on redemptions of 10.5 cent paid for 2003.Thepurchase of the A ordinary share will take effect in respect of Grafton Units on the register at the close of business on 18 March 2005 and the cash consideration will be paid on 29 March 2005.Review o

142、f the BusinessShareholders are referred to the Chairmans Statement and Group Finance Review which contain a reviewof operations,the financial performance of the Group,recent events and the outlook for 2005.Board of DirectorsMr.A.E.Collins and Mr.J.F.Malone retire from the Board by rotation and,being

143、 eligible,offer themselvesfor re-election.Ms.G.Bowler and Mr R.W.Jewson have served on the Board for more than nine years and,in accordance with Board Policy,they resign and offer themselves for re-election.The Directors seeking re-election do not have service contracts with the Company.Mr Leo Marti

144、n was appointed to the Board on 7 January 2005 and,in accordance with the Articles ofAssociation,holds office until the Annual General Meeting and,being eligible,offers himself for re-election.Share CapitalAt 31 December 2004,a Grafton Unit comprised of one ordinary share of 5 cent and nine A ordina

145、ryshares of 0.01 cent each in Grafton Group plc and one C ordinary share of Stg0.0001p in Grafton Group(UK)plc.Substantial HoldingsSo far as the Company is aware,in addition to the Chairman,Mr.Michael Chadwick,whose holding of19,098,900 ordinary shares represents 8.1 per cent of the shares in issue,

146、the following held sharesrepresenting three per cent or more of its ordinary share capital at 8 March 2005.NameHolding%Bank of Ireland Asset Management Limited*25,241,13010.7Bank of Ireland Nominees Ltd NRI Account#23,482,1669.9Bank of Ireland Nominees Ltd NRS Account16,611,9457.0Citibank Nominees(I

147、reland)Ltd Exempt Account13,132,2585.6Goodbody Stockbrokers Nominees Ltd GSCLT Account10,927,9114.6*This nominee shareholder has informed the company that this shareholding relates to 143 differentholdings.#This nominee shareholder has informed the company that this shareholding relates to 81 differ

148、entholdings.The Directors and Secretarys interests in the share capital of the Company are set out in the DirectorsReport on Remuneration.Accounting RecordsThe Directors are responsible for ensuring that proper books and accounting records are kept by theCompany as required by Section 202 of the Com

149、panies Act,1990.The Directors believe that they havecomplied with this requirement by providing adequate resources to maintain proper books and accountingrecords throughout the Group including the appointment of personnel with appropriate qualifications,experience and expertise.The books and account

150、ing records of the Company are maintained at HeronHouse,Corrig Road,Sandyford Industrial Estate,Dublin 18.Companies(Auditing and Accountancy)Act 2003The Directors note that the Companies(Auditing and Accountancy)Act 2003 has been issued and areassessing its implications for the Group.Health and Safe

151、tyThe Safety,Health and Welfare at Work Act,1989 imposes certain obligations on employers and therelevant Group Companies have taken appropriate action to ensure that health and safety standards are complied with at all relevant locations and that all relevant Group Companies meet the requirements o

152、f the Act.SubsidiariesThe Groups principal operating subsidiary undertakings are set out on page 67.Post Balance Sheet EventOn 7 January 2005,following clearance from the Competition Authority in Ireland,the Group completedthe acquisition of Heiton Group plc for a total consideration of approximatel

153、y 398 million includingestimated debt assumed and the cost of the Groups 29 per cent investment in the business held prior to the offer.AuditorsIn accordance with Section 160(2)of the Companies Act,1963,the Auditors,KPMG,CharteredAccountants are willing to continue in office.Annual General MeetingTh

154、e Annual General Meeting of the Company will be held at the Burlington Hotel,Upper Leeson Street,Dublin 4 on 9 May 2005 at 12.00pm and your attention is drawn to the circular enclosed with this reportwhich sets out details of the matters to be considered at the Annual General Meeting.On behalf of th

155、e BoardM.ChadwickC.Nuallin Directors8 March 2005Report of the Directors23Annual Report 2004The Group has long recognised the importance of conducting its business in a socially responsible manner.This isdemonstrated in the way we deal with our employees,customers,suppliers and the communities where

156、we dobusiness.The Group considers that corporate social responsibility is an integral element of good business management.The EnvironmentGroup companies are committed to reducing the amount of waste they produce and to limiting the impactwhich our businesses have on the environment.The Groups Irish

157、Businesses are members of Repak and our UKbusinesses are members of Biffpack.Continued improvement in environmental performance is sought throughvarious initiatives including reducing waste going to landfill through the use of bailers for recycling packaging.Health and SafetyThe Group is committed t

158、o achieving the best practicable standards of health and safety for our employees,customers and visitors to our trading locations.We consider health and safety to be an important element in theoverall management of our businesses.Group companies actively work to identify and minimise health and safe

159、tyrisks.They insure that all reasonable precautions are taken to provide and maintain conditions for employees,customers and visitors alike which are safe and healthy and in compliance with statutory requirements.Accidentsare monitored so that corrective action may be taken where considered necessar

160、y and in order to reduce thenumber of incidents and the associated cost of claims from employees and customers.Human ResourcesThe success of the Group over a long period is due to the exceptional contribution and commitment of itsmanagement and staff.The Groups decentralised culture,which is well su

161、pported at Group level,givesmanagement and staff the autonomy to use their expertise,skills and talents both for their own careerdevelopment and for the success of the Group.The Group and its businesses are committed to high standards of employment practice and are recognised asgood employers in the

162、 UK and Ireland.We aim to reward management and staff fairly by reference to skills,performance,peers and local market conditions.We provide incentives to management and staff throughremuneration policies which promote commitment and reward achievement.It is Group policy that all employeesreceive fa

163、ir and equal treatment regardless of gender,age,ethnic origin,nationality,religion or disablilty.We are committed to offering equal opportunities to all individuals in their recruitment,training and careerdevelopment,having regard to their particular aptitudes and abilities.Training and development

164、programsare important to the growth and prosperity of our business.Significant attention and resources are devotedto this area.Training programs directly organised by Group businesses,include the Plumbase Academy,andin conjunction with external bodies,such as the Builders Merchant Federation in the

165、UK,cover a range ofissues including sales development,customer service,product training,health and safety and leadershipskills.These programs help to ensure that we develop,retain and attract the best talent at all levels in ourbusiness.We aim to fill vacancies through internal promotions and comple

166、ment internal appointments withrecruitment from outside the organisation.We have Revenue approved share schemes in place in the UK and Ireland which enable employees to sharein the success and future growth of the Group.The majority of our employees in Ireland are members ofthe Groups Share Particip

167、ation Scheme which has enabled them to benefit from acquiring shares in theGroup tax efficiently.Following a highly successful SAYE scheme which was launched in 2001 and maturedearlier this year,the Group will shortly announce the launch of an invitation to almost 5,000 eligible UKemployees to acqui

168、re attractively discounted shares under the scheme.CommunityWe recognise our responsibility as a member of the communities where our branches/plants are located andwhere we do business.We are committed to developing close relationships with those communities throughlocal management supporting a rang

169、e of initiatives covering health,welfare,sport,education and communityprojects.We also support a range of charitable causes,mainly at local level,by giving donations.In Ireland,Woodies DIY are sponsor of the senior track and field championships,an important event in the Irish sporting calendar featu

170、ring the best athletes in Ireland across almost thirty disciplines of athletics.Oxford,the location of the first Buildbase branch acquired in 1996 and head office to the business,is alsohome to Oxford United Football Club who are sponsored by Buildbase.Jacksons are sponsor to the Lincoln10 kilometre

171、 race,an important sporting event in the Lincoln area.Employees also take part in differentfundraising activities.Staff at Buildbase raised over 100,000 for Macmillan Cancer Relief and staff atJacksons raised funds for the Lincolnshire and Nottinghamshire Air Ambulance.Corporate Social Responsibilit

172、y 24Grafton Group plcCompliance with the Combined CodeThe Board is committed to and has long recognised the importance of high standards of Corporate Governance.The Board is accountable to the companys shareholders for good governance and this statement describes how the Board applies the principles

173、 of good governance set out in the Combined Code(as appended to the Listing Rules of the Financial Services Authority)and the revised Combined Code(“2003 Combined Code”)that has applied to the Company with effect from 1 January 2004.The BoardAs at 31 December 2004,the Board of Directors was made up

174、of 7 members comprising the Executive Chairman,two executive Directors and four non-executive Directors,who have been collectively responsible for the success ofthe Group.Mr.Anthony Collins,Deputy Chairman,is Senior Independent Director.Directors biographical details are set out on page 19.The Direc

175、tors of the Group have extensive knowledge of the builders merchanting,DIY andmortar manufacturing businesses which are operated by the Group in the UK and Ireland.The Board routinely meets six times a year and additionally as required by time critical business needs.There is alsocontact with the Bo

176、ard between meetings as required in order to progress the Groups business.The Board takes the major decisions while allowing management sufficient scope to run the business within a centralised reportingframework.The Board has a formal schedule of matters specifically reserved for its decision.This

177、covers the key areas of the Groups business including financial statements,budgets,acquisitions,major items of capital expenditureand the development of the Group.The Boards responsibilities also include ensuring that appropriate management,development and succession plans are in place;reviewing the

178、 environmental,health and safety performance of theGroup;approving appointments to the Board and the Company Secretary;approving policies relating to Directorsremuneration and the severance of Directors contracts and insuring that satisfactory dialogue takes place withshareholders.Directors have acc

179、ess to the advice and services of the Company Secretary who is responsible for advising the Boardthrough the Chairman on all governance matters.The Companys Articles of Association and Schedule of Mattersreserved for the Board for decision provide that the appointment or removal of the Company Secre

180、tary is a matterfor the full Board.Directors have full and timely access to all relevant information in a form appropriate to enable them to dischargetheir duties.Reports and papers are circulated to Directors in preparation for Board and committee meetings.Thenon-executive Directors,together with t

181、he executive Directors,also receive monthly management accounts,reportsand information which enables them to review the performance of the Group on an ongoing basis.Directors have access to independent professional advice at the Groups expense where they consider that advice is necessary to enable t

182、hem to discharge their responsibilities as Directors.The Board also periodically holds meetings at Group locations and periodically meets senior management of theGroups businesses in order to help the Board gain a deeper understanding of the Groups operations and markets.The Board continues to hold

183、the view that there remains a compelling commercial benefit to the Group and itsshareholders in the combining of the role of Chairman and Chief Executive,and the holding of that combined officeby Mr.Michael Chadwick.The combination of the roles are balanced from a governance point of view by the str

184、onginput of the non-executive Directors on the Board and the Boards committee structure.Directors Independence and Board BalanceIt is Board policy that the Board should include a balance of executive and non-executive Directors such that noindividual or small group of individuals can dominate the Bo

185、ards decision making.One non-executive Director,Mr.Norman Kilroy,is a former Managing Director of the Group.Three non-executiveDirectors,Mr.Anthony Collins,Ms.Gillian Bowler and Mr.Richard Jewson are considered by the Board to beindependent of management and free from any relationship which could ma

186、terially interfere with the exercise of their independent judgement.The Board has therefore determined all three Directors to be independent.Corporate Governance25Annual Report 2004Mr.Collins was appointed to the Board in 1988 and both Ms.Bowler and Mr.Jewson were appointed to the Board in 1995.The

187、length of their service on the Board exceeds nine years and the 2003 Combined Code provides that an explanation be made to shareholders concerning their continued independence.The Board considers that theintegrity and independence of these Directors are beyond doubt.All three Directors are financial

188、ly independent ofthe company and have other significant commercial commitments.Over the past ten years Grafton Group plc hasgrown from its small mainly Irish base to being the leading player in the Irish merchanting and DIY markets and the fourth largest builders merchanting business in the UK marke

189、t.The three non-executive Directors have made avaluable and unique contribution to the Board during this period of growth.Each of these non-executive Directorsbrings her/his own senior level experience gained in their own field of international business and professionalpractice.Their experience and

190、long-term perspective on the Groups business provides the Board with stability and an invaluable resource during a time of significant development and opportunity following completion of the Heiton transaction,the Groups largest ever acquisition,earlier this year.The Companys Articles of Association

191、 provide that one third of the Directors retire by rotation each year and that each Director seek re-election at the Annual General Meeting every three years.Additionally,new Directors are subject to election by shareholders at the first opportunity after their appointment.It is the Boards policy th

192、atnon-executive Directors are normally appointed for an initial period of three years,which is then reviewed.It is Board Policy that non-executive Directors who have served on the Board for more than nine years will retireannually and will offer himself/herself for re-election in cases where it is p

193、roposed to exceed nine years.Mr.Collins retires by rotation at the AGM on 9 May 2005 and will seek re-election.Ms.Bowler and Mr.Jewson will resign and offer themselves for re-election at the AGM on 9 May 2005 in accordance with Board policy.The Board recognises that the number of independent non-exe

194、cutive Directors is less than half of the members of the Board.Mr.Leo Martin,former Chief Executive of Heiton Group plc,was appointed to the Board as anexecutive Director on 7 January 2005 on completion of the acquisition of Heiton Group plc.The overall balance of the Board is currently under review

195、 and,as already announced,the Board is in the process of appointing twoadditional non-executive Directors.These appointments will reflect the scale and geographical spread of the Groups interests.Mr.Norman Kilroy,who retired as Managing Director in April 2004,is a non-executive Director and will ret

196、ire fromthe Board on 31 August 2005.The Board will manage the orderly succession of non-executive Directors over thecoming years to sustain the effectiveness of the Board and its committees.Induction and TrainingIt is the policy of the Board that formal induction is offered to all Directors appointe

197、d to the Board.This includes on-site visits and briefings from executive Directors and the Company Secretary.Induction covers matters such as the operations of the Group,the role of the Board and matters reserved for its decision,powers delegated to Boardcommittees,corporate governance policies and

198、the latest financial information about the Group.Directors areadvised on appointment of their legal and other duties and obligations as Directors of a listed company.Corporate Governance26Grafton Group plcEvaluation of BoardThe Board has put in place procedures which will involve the conduct of an a

199、nnual evaluation process to periodicallyassess its performance,the performance of Board committees and individual Directors and to identify areas in whichthe effectiveness of the Board might be improved.This is achieved through annual discussion between each Directorand the Senior Independent Direct

200、or.The results of the evaluation process is presented to the Board for considerationof the issues identified.Succession PlanningThe Board plans for succession with the assistance of the nomination committee.The Board believes that it isnecessary to have appropriate executive Director representation

201、on the Board and sufficient non-executive Directorrepresentation to reflect the scale and geographic spread of the Groups operations.Communication with ShareholdersThe Company recognises the importance of communication with shareholders.Presentations are made to bothexisting and prospective institut

202、ional shareholders principally after the release of interim and annual results.In addition to the annual and interim results,the Group issues development updates twice yearly and a trading update at the Annual General Meeting.Major acquisitions are also notified to the market and the Companys presen

203、ts information about the Group including interim and annual results and otherannouncements.The Chairman gives feedback to the Board on contacts with institutional shareholders and brokersreports on the Group are circulated to all Directors.non-executive Directors are offered the opportunity to atten

204、dmeetings with major shareholders.The Annual General Meeting is normally attended by all Directors and shareholdersare invited to ask questions during the meeting and to meet with Directors after the formal proceedings have ended.The Senior Independent Director is available to meet with shareholders

205、 if they have concerns which have not beenresolved through the normal channels of Chairman or Finance Director or where such contacts are not appropriate.Board CommitteesThe number of full Board meetings and committee meetings attended by each Director during 2004 was as follows:BoardAuditFinanceRem

206、unerationNominationNumber of Meetings833865M.Chadwick8-37-5C.ONuaillain8-36-J.F.Malone7-A.E.Collins83-65G.Bowler73-65R.W.Jewson73-64N.D.Kilroy6-Mr.C.Rinn was appointed to the Finance Committee in March 2004 and attended all 28 meetings of theCommittee following his appointment.The Independent non-ex

207、ecutive Directors met during the year both with and without the Chairman present toevaluate his performance.The Board is assisted by committees of Board members which focus on specific aspects of its responsibilities.The terms of reference of the Audit Committee,Remuneration Committee and Nomination

208、Committee were approved by the Board and comply with the 2003 Combined Code and are available from theCompany Secretary and can also be found on the companys website at .Membership of the various committees is shown on page 19.The Company Secretary was recently appointed as secretary to all three Bo

209、ard Committees.Corporate Governance27Annual Report 2004Audit CommitteeDuring the year the Audit Committee comprised Richard W.Jewson,who chairs the committee,Gillian Bowler andAnthony Collins.All members of the committee are determined by the Board to be Independent non-executiveDirectors.The Audit

210、Committee met three times during the year.Mr.Richard Jewson brings to the Committee recent and relevant financial experience.The Board is satisfied that theDirectors bring a wide range of experience to the Committee as outlined in the biographical details on page 19.Under its terms of reference,the

211、Audit Committee monitors the integrity of the Groups financial statements and any formal announcement relating to the Groups performance.The committee is responsible for monitoring the effectiveness of the external audit process and making recommendations to the Board in relation to theappointment,r

212、eappointment and remuneration of the external auditor.It is responsible for ensuring that anappropriate relationship between the Group and the external auditors is maintained,including reviewing non-auditservices and fees.It also conducts twice yearly reviews of the Groups systems of internal contro

213、l and the processesfor monitoring and evaluating the risks facing the Group.The committee reviews the effectiveness of the internalaudit function and approves the appointment and removal of the Head of the Internal Audit function.Only members of the committee have a right to attend committee meeting

214、s.However other individuals such as the Executive Chairman,Finance Director and other Directors are invited to meet with the Audit Committee asappropriate.The committee also meets with both the external and internal auditors.The committees terms ofreference are available from the Company Secretary a

215、nd are displayed on the Groups website .In 2004 the Audit Committee discharged its responsibilities by:Reviewing the Groups draft Financial Statements and draft Interim Result Statement prior to Board approvaland reviewing the external Auditors detailed reports thereon;Reviewing the Groups developme

216、nt and trading updates prior to release;Reviewing the Internal Audit work program and all reports prepared by Group Internal Audit during the yearincluding a review of the effectiveness of internal control;Reviewing the appropriateness of the Groups accounting policies;Reviewing the External Auditor

217、s plan for the audit of the Group.This included an assessment of the scope of the Audit work and confirmation of auditor independence;Reviewing Performance Improvement Observation Reports on internal controls in the Groups businessesprepared by the Auditors as part of the Groups external audit proce

218、ss;Reviewing risks associated with the business;Reviewing impact for the Group of compliance with International Financial Reporting Standards.The committee also monitored implementation of the Groups Whistleblowing procedures,ensuring that appropriatearrangements were being put in place for employee

219、s to be able to raise matters of possible impropriety inconfidence,with suitable follow up action.The Audit Committee monitors regularly the non-audit services provided to the Group by the External Auditors inorder to check that this does not impair their independence and objectivity.Corporate Gover

220、nance28Grafton Group plcRemuneration CommitteeThe committee comprises Ms.Gillian Bowler,who chairs the committee,Mr.Anthony Collins and Mr.Richard Jewsonall of whom are determined by the Board to be independent.The committee met 6 times during the year and theDirectors attendance at each meeting is

221、shown in the table on page 27.The committee is responsible for makingrecommendations on remuneration to the Board.The committee reviewed its terms of reference and submittedrevised terms of reference to the Board for its approval.Copies of the revised terms of reference are available fromthe Company

222、 Secretary or on the Companys website at .The Chairman of the RemunerationCommittee is available at the Annual General Meeting to respond to any shareholder questions concerning thecommittees activities.The committees principal responsibilities are:Setting,reviewing and recommending to the Board for

223、 approval the Groups overall remuneration policy andstrategy;Setting,reviewing and approving individual remuneration packages for executive Directors,the ExecutiveChairman and Company Secretary including terms and conditions of employment and any changes to theirpackages;Reviewing the salary structu

224、re and terms,conditions and benefits of employment of other members of theexecutive management as it is designated to consider;Approving the rules of any Group share,share option or cash based incentive scheme and approving the grant,award,allocation or issue of shares,share options or payments unde

225、r such schemes.Nomination CommitteeDuring the year the Nomination Committee comprised Mr.Anthony Collins,who chairs the committee,Mr.MichaelChadwick,Ms.Gillian Bowler,and Mr.Richard Jewson.The Nomination Committee meets at least once a year,andadditionally if required,to consider the Boards membersh

226、ip,to identify any additional skills or experience whichmight benefit the Boards performance,to interview candidates and recommend appointments to or,wherenecessary,removals from the Board.The Committee also reviews the performance of any Director seeking re-electionat the forthcoming Annual General

227、 Meeting.During the year the Board initiated the search for two Independent non-executive Directors.The Board began theprocess by identifying the core competencies required of the candidates to carry out that role.The NominationCommittee has employed a professional search firm to oversee the initial

228、 selection process and present thecommittee with candidates for interview.The Nomination Committees terms of reference were recently revised and the revised terms of reference can befound on the Groups website at .Copies can be obtained from the Company Secretary.Finance CommitteeThe Finance Committ

229、ee comprises the Executive Chairman,the Finance Director and the Group Financial Controller.The Committee deals with capital expenditure and treasury activities within prescribed limits and other managementissues.Corporate Governance29Annual Report 2004Internal ControlThe Directors acknowledge that

230、they have overall responsibility for the Groups system of internal control and forreviewing its effectiveness.The Directors recognise that such a system is designed to manage rather than eliminatethe risk of failure to achieve business objectives and can only provide reasonable but not absolute assu

231、rance againstmaterial mis-statement or loss.A process for identifying,evaluating and managing significant risks faced by the Group,in accordance with theGuidance for Directors on the 2003 Combined Code,has been in place throughout the accounting period and up to the date the financial statements wer

232、e approved.Group management are responsible for implementing strategy and for the continued development of the Groupsbusinesses within parameters set down by the Board.Similarly,day to day management of the Groups businesses is devolved to operational management within clearly defined authority limi

233、ts and subject to very tight reporting of financial performance.Group and operating company management are responsible for internal control includingthe identification and evaluation of significant risks and for the implementation of appropriate internal controls tomanage risk.Group management repor

234、t to the Board on key risks and internal control issues including the way inwhich these are managed.The key features of the Groups system of internal control include:A clear focus on implementing the Groups strategy.Defined structures and authority limits for the operational and financial management

235、 of the Group and itsbusinesses.A comprehensive system of reporting on trading,operational issues and financial performance incorporatingresults and cash flows,working capital management,return on capital employed and other relevant measuresof performance.Board approval of capital expenditure and ac

236、quisition proposals.The internal audit function focuses on areas of greatest risk to the Group,monitors compliance and considers theeffectiveness of internal control throughout the Group.The audit committee receives reports and meets with internaland external auditors in order to satisfy itself on t

237、he adequacy of the Groups internal control system.The Chairmanof the audit committee reports to the Board on significant matters considered by the committee.The Directors confirm that they have reviewed the effectiveness of internal control.In particular,they have consideredthe significant risks aff

238、ecting the business and the way in which these risks are managed,controlled and monitored.Going ConcernThe Directors,having made enquiries,believe that the Group has adequate resources to continue in operationalexistence for the foreseeable future and,on this basis,they continue to adopt the going c

239、oncern basis in preparingthe financial statements.Compliance Statement The company applied the principles set out in section 1 of the 2003 Combined Code for the period under reviewand has complied with the provisions of the 2003 Combined Code except that the roles of Chairman and ChiefExecutive are

240、held by the same person and the number of independent non-executive Directors is less than half of the Board.The Board is in the process of appointing two additional non-executive Directors.During the year the Senior Independent Director has not attended meetings with major shareholders but has been

241、 available to meet shareholders.No meetings were requested by shareholders with the Senior Independent Director.Corporate Governance30Grafton Group plcThe Remuneration Committee,which comprises Gillian Bowler(Committee Chairman),Anthony E.Collins and Richard W.Jewson,all of whom are non-executive Di

242、rectors with no personal financial interest other than as shareholders in the matters to be decided by Committee,no potential conflicts of interest arising from cross-directorships and no day to day involvement in the running of the business.The Committee is responsible for the formulation of the Gr

243、oups policy on remuneration in relation to all executive Directors.The remuneration of the non-executive Directors is determined by the Board within the limits set out in the Articles of Association.Remuneration PolicyIn making its recommendations the Remuneration Committee has given consideration t

244、o the provisions of the 2003Combined Code and the Irish Stock Exchanges requirements on Directors remuneration.The remuneration policyadopted by the Group is to reward its executive Directors competitively having regard to comparable companies andthe need to attract,retain and motivate executives of

245、 appropriate calibre.The Executive Chairman is fully consultedabout remuneration proposals and outside advice is sought by the Remuneration Committee when necessary.Theelements of the remuneration package for executive Directors are basic salary and benefits,performance relatedbonus,pension and the

246、ability to participate in the 1999 Grafton Group Share Scheme and the Grafton GroupEmployee Share Participation Scheme.Service ContractsNo service contract exists for any Director.Basic Salary and BenefitsThe basic salaries of executive Directors are reviewed annually having regard to personal perfo

247、rmance,companyperformance and competitive market practice.Performance Related BonusThe level of performance bonus is determined for each individual executive Director.The level earned in any one yeardepends on the Remuneration Committees assessment of each individuals performance for that year and a

248、lso on anassessment of the overall performance of the Group.PensionsExecutive Directors participate in either a defined contribution scheme or a Group defined benefit scheme.Pensionsare calculated on basic salary only in the case of the defined contribution scheme and in the case of the definedbenef

249、it scheme on basic salary and bonus which is limited to a pre-determined maximum percentage of basic salary.The calculation of pensions under the defined benefit scheme is consistent with the calculation of pension benefitsfor certain senior executives in the Group except that pensions are calculate

250、d on basic pay and full bonus for certainsenior executives.Share SchemeIt is the practice of the Group to enable key executives throughout the Group to acquire shares in the Group so as to provide an incentive to perform strongly over an extended period and to align their interests with those ofshar

251、eholders.Under the terms of the 1999 Grafton Group Share Scheme,two types of shares may be acquired byconversion subject to the conditions set out below:(i)Basic shares which cannot be acquired before the expiration of five years,unless the Remuneration Committee agrees to a shorter period which sha

252、ll not be less than three years,and provided the Companys earnings pershare has grown at not less than the rate of growth in the Consumer Price Index plus 5 per cent compoundedduring that period.(ii)Second tier shares which cannot be acquired before the expiration of five years and only if over a pe

253、riod of atleast five years the growth in the Groups earnings per share would place it in the top 25 per cent of thecompanies listed on the Irish Stock Exchange Index over the same period and provided that such shares shall beacquired only if the Companys earnings per share growth over the relevant p

254、eriod is greater,by not less than10 per cent on an annualised basis,than the increase in the Consumer Price Index over that period.Directors Report on Remuneration31Annual Report 2004The share scheme has a ten year life and the percentage of share capital which may be issued under the scheme andindi

255、vidual entitlement limits comply with Institutional Guidelines.Share Participation SchemeThe Grafton Group Employee Share Participation Scheme is open to all Irish based employees who have at leasteighteen months continuous service and executive Directors are entitled to participate in the scheme on

256、 the samebasis as all other employees.Directors Remuneration and Pension EntitlementsThe following table sets out the remuneration of the Directors in accordance with the Irish Stock Exchange ListingRules.Remuneration for 2004Basic PerformanceOthersalaryrelated bonusbenefitsTotalTotal200420042004200

257、42003000000000000000Executive DirectorsM.Chadwick43929837774712N.D.Kilroy-352C.Nuallin35023731618567J.F.Malone230150304103991,019685981,8022,030OtherremunerationFeesTotalTotal2004200420042003000000000000Non-Executive DirectorsA.E.Collins-505047G.Bowler-404038R.W.Jewson-505049 N.D.Kilroy354075-351802

258、15134 Sub-total2,0172,164Pension contribution onbehalf of executive Directors1,776806Total3,7932,970A payment of 79,000 was made to Eugene F.Collins Solicitors for Board Committee work undertaken by AnthonyCollins in 2004.Directors Report on Remuneration32Grafton Group plcDirectors PensionsThe pensi

259、on contribution shown on page 32 includes a contribution of 221,000(2003:105,000)to a definedcontribution pension scheme on behalf of Mr.Norman Kilroy,of which 200,000 was a special contribution on his retirement as Managing Director.Pension benefits earned by Directors who are members of a defined

260、benefit pension scheme were as follows:Increase in accruedAccumulated totalTransfer value of thepension during the yearaccrued pension increase in accumulated at year endaccrued benefitsat year end000000000M.Chadwick32341446C.Nuallin 24189240J.F.Malone318956Directors and Secretarys InterestsThe bene

261、ficial interests of the Directors in the share capital of the Company were as follows:Director31 December31 December 20042003Grafton Units*Grafton Units M.Chadwick19,098,90019,097,022A.E.Collins390,000390,000N.D.Kilroy65,23065,230J.F.Malone520,972519,014C.Nuallin 658,176656,298G.Bowler132,000132,000

262、R.W.Jewson42,20442,204Mr.M.Chadwick also holds a non-beneficial interest in 2,986,560(2003:2,986,560)Grafton Units in his capacity as a Trustee of a family trust.Mr.M.Chadwick and Mr.C.Nuallin have a non-beneficial interest in 985,032(2003:1,323,521)Grafton Units in their capacities as Trustees of t

263、he Grafton Group plc Share Participation Scheme.Mr.Fergus Malone had a beneficial interest in 80 ordinary shares in Tribiani Limited,a subsidiary undertaking at 31 December 2004(31 December 2003:Nil).This represented 5 per cent of the issued ordinary shares of thecompany.Mr.Norman Kilroy had a benef

264、icial interest in 80 ordinary shares in Tribiani Limited,a subsidiaryundertaking at 31 December 2004(31 December 2003:76 shares).This also represented 5 per cent of the issuedordinary shares of the company.Mr.Malone and Mr.Kilroy therefore have entitlements on retirement to have theoption to invest

265、in an Approved Retirement Fund(ARF).The registered number of the company is 316401.There have been no changes in the interests of the Directors between 31 December 2004 and the date of this report.Mr.C.Rinn,Secretary,had an interest in 27,760 Grafton Units at 31 December 2004(2003:25,882).*At 31 Dec

266、ember 2004 a Grafton Unit comprised of one ordinary share of 5 cent each,nine A ordinary shares of0.01 cent each in Grafton Group plc and one C ordinary share of Stg0.0001p in Grafton Group(UK)plc.Directors Report on Remuneration33Annual Report 2004Directors and Secretarys Interests under the Grafto

267、n Group Share SchemesThe interests of the Directors granted in accordance with the Grafton Group Share Schemes,to acquire Grafton Units are shown below:Number of Units1 January31 December BasicSecondPricePeriod over which20042004TierGrafton Unitsmay be acquiredN.D.Kilroy72,37972,37972,379-0.65April

268、2000April 2005C.Nuallin74,19274,19274,192-2.21June 2003May 2008159,192159,19290,20968,9831.81July 2004July 2009159,192159,19284,90274,2902.07May 2005April 2010159,192159,1925,306153,8862.83May 2006April 2011127,354127,35431,83995,5154.00April 2007March 2012160,000160,00080,00080,0005.45Nov 2008Oct 2

269、013-160,000#80,00080,0006.20May 2009April 2014839,122999,122446,448552,674J.F.Malone159,192159,192159,192-2.21June 2003May 2008159,192159,19290,20968,9831.81July 2004July 2009159,192159,19284,90274,2902.07May 2005April 2010477,576477,576334,303 143,273#Entitlement by conversion issued on 5 May 2004T

270、he mid-market price of a Grafton Unit at 31 December 2004 was 8.00 and the price range during the year was between 5.50 and 8.25.Mr.C.Rinn had an interest to acquire 451,852 Grafton Units at 31 December 2004(31 December 2003:371,852)inaccordance with the Grafton Group plc Share Schemes including an

271、interest to acquire 80,000 Grafton Units granted on 5 May 2004 at 6.20 per unit.There has not been any contract or arrangement with the Company or any subsidiary undertaking during the year in which a Director of the Company was materially interested and which was significant in relation to the Comp

272、anys business.Directors Report on Remuneration34Grafton Group plcIrish Company law requires the Directors to prepare financial statements for each financial year which,in accordancewith applicable Irish law and accounting standards,give a true and fair view of the state of affairs of the Companyand

273、of the Group as at the end of the financial year and of the profit or loss of the Group for that year.In preparingthose financial statements,the Directors are required to:select suitable accounting policies and then apply them consistently;make judgements and estimates that are reasonable and pruden

274、t;comply with applicable accounting standards,subject to any material departures disclosed and explained in the financial statements;prepare the financial statements on the going concern basis unless it is inappropriate to presume that theCompany and the Group will continue in business.The Directors

275、 are responsible for keeping proper books of account which disclose with reasonable accuracy at anytime the financial position of the Company and of the Group and which enable them to ensure that the financialstatements comply with the Companies Acts,1963 to 2003 and all Regulations to be construed

276、as one with thoseActs.They are also responsible for safeguarding the assets of the Company and of the Group and hence for takingreasonable steps for the prevention and detection of fraud and other irregularities.On behalf of the BoardM.Chadwick C.NuallinStatement of Directors Responsibilities35Annua

277、l Report 2004We have audited the financial statements on pages 38 to 66.This report is made solely to the Companys members,as a body,in accordance with Section 193 of the CompaniesAct,1990.Our audit work has been undertaken so that we might state to the Companys members those matterswe are required

278、to state to them in an auditors report and for no other purpose.To the fullest extent permitted bylaw,we do not accept or assume responsibility to anyone other than the Company and the Companys members as a body,for our audit work,for this report,or for the opinions we have formed.Respective Respons

279、ibilities of Directors and Auditors in relation to the Annual ReportThe Directors are responsible for preparing the Annual Report including,as described on page 35 the financialstatements in accordance with applicable Irish law and accounting standards.Our responsibilities,as independentauditors,are

280、 established by statute,the Auditing Practices Board,the Listing Rules of the Irish Stock Exchange and by our professions ethical guidance.We report to you our opinion as to whether the financial statements give a true and fair view and are properlyprepared in accordance with the Companies Acts.As a

281、lso required by the Acts,we state whether we have obtainedall the information and explanations we require for our audit,whether the financial statements agree with the booksof account and report to you our opinion as to whetherthe Company has kept proper books of account;the Report of the Directors

282、is consistent with the financial statements;at the balance sheet date a financial situation existed that may require the Company to hold an extraordinarygeneral meeting,on the grounds that the net assets of the Company,as shown in the financial statements,are less than half of its share capital.We a

283、lso report to you if,in our opinion,information specified by law or the Listing Rules regarding Directorsremuneration and transactions with the Company is not disclosed.We review whether the Corporate Governancestatement on pages 25 to 30 reflects the Companys compliance with the nine provisions of

284、the 2003 CombinedCode on Corporate Governance specified for our review by the Irish Stock Exchange Listing Rules,and we report if it does not.We are not required to consider whether the Boards statements on internal control cover all risks andcontrols,or form an opinion on the effectiveness of the C

285、ompanys corporate governance procedures or its risk and control procedures.We read the other information contained in the Annual Report,including the corporate governance statement,and consider whether it is consistent with the audited financial statements.We consider the implications for ourreport

286、if we become aware of any apparent misstatements or material inconsistencies with the financial statements.Basis of OpinionWe conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board.An auditincludes examination,on a test basis,of evidence relevant to the amou

287、nts and disclosures in the financial statements.It also includes an assessment of the significant estimates and judgements made by the Directors in the preparationof the financial statements,and of whether the accounting policies are appropriate to the Groups circumstances,consistently applied and a

288、dequately disclosed.Independent Auditors ReportTo the Members of Grafton Group plc36Grafton Group plcWe planned and performed our audit so as to obtain all the information and explanations which we considerednecessary in order to provide us with sufficient evidence to give reasonable assurance that

289、the financial statements are free from material misstatement,whether caused by fraud or other irregularity or error.In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.OpinionIn our opinion,the financial statements give a true

290、and fair view of the state of affairs of the Company and theGroup as at 31 December 2004 and of the profit and cash flows of the Group for the year then ended and havebeen properly prepared in accordance with the Companies Acts,1963 to 2003 and all Regulations to be construed as one with those Acts.

291、We have obtained all the information and explanations we considered necessary for the purposes of our audit.In our opinion,proper books of account have been kept by the Company.The Companys balance sheet is inagreement with the books of account.In our opinion,the information given in the Report of t

292、he Directors on pages 22 and 23 is consistent with the financial statements.The net assets of the Company,as stated in the balance sheet on page 42,are more than half of the amount of its called up share capital and,in our opinion,on that basis there did not exist at 31 December 2004 a financialsitu

293、ation which,under Section 40(1)of the Companies(Amendment)Act,1983,would require the convening of an extraordinary general meeting of the Company.KPMGChartered AccountantsRegistered AuditorsDublin8 March 2005Independent Auditors ReportTo the Members of Grafton Group plc37Annual Report 200420042003No

294、te000000TurnoverContinuing operations1,809,0521,496,018Acquisitions63,294-Total turnover11,872,3461,496,018Operating profit before goodwill amortisation and2property development profitContinuing operations152,861123,323Acquisitions4,540-157,401123,323Property development profit3(a)6,729-Goodwill amo

295、rtisation1112,8209,358Operating profit151,310113,965Profit on disposal of property3(b)7923,437Trading profit2152,102117,402Income from financial assets 1,5411,788Interest payable(net)621,79217,169Profit on ordinary activities before taxation131,851102,021Tax on profit on ordinary activities819,78815

296、,320Profit for the financial year112,06386,701Dividends on ordinary shares9266-Profit retained for the financial year26111,79786,701Earnings per share1052.64c41.95cAdjusted earnings per share1055.64c45.07cDiluted earnings per share1051.29c41.15cAdjusted diluted earnings per share 1054.21c44.20cOn be

297、half of the BoardM.ChadwickC.NuallinDirectors 8 March 2005Group Profit and Loss AccountFor the year ended 31 December 200438Grafton Group plcStatement of Total Recognised Gains and Losses20042003000000Profit for the financial year attributable to ordinary shareholders112,06386,701Currency translatio

298、n adjustment on foreign currency net investments(1,815)(13,095)on foreign currency borrowings203,908Total recognised gains and losses for the year110,26877,514Historical Cost Profits and Losses20042003000000Profit on ordinary activities before taxation131,851102,021Difference between historical cost

299、 depreciation charge and actual depreciation charge for the year calculated on the revalued amount273273Historical cost profit on ordinary activities before taxation132,124102,294Historical cost profit retained for the financial year112,07086,974Movements on Group Profit and Loss Account200420030000

300、00At 1 January296,391236,934Retained profit for the financial year 111,79786,701Redemption of redeemable shares(23,392)(18,816)Purchase of A ordinary shares(2,131)-Currency translation adjustment(1,795)(9,187)Re-issue of treasury shares-486Transfer from revaluation reserve273273At 31 December381,143

301、296,391The profit and loss account reserve is analysed as follows:Parent company63,62249,756Subsidiary undertakings317,521246,635381,143296,391Reconciliation of Movements in Group Shareholders Funds 20042003Note000000Total recognised gains and losses for the year110,26877,514Dividends9(266)-Redempti

302、on of redeemable shares9(23,392)(18,816)Purchase of A ordinary shares9(2,131)-Issue of ordinary and A ordinary shares(net of issue expenses)22/231,50168,684Re-issue of treasury shares-486Net addition to shareholders funds85,980127,868Opening shareholders funds449,841321,973Closing shareholders funds

303、 equity535,821449,841Other StatementsFor the year ended 31 December 200439Annual Report 200420042003Note000000Fixed assetsGoodwill11234,309210,840Tangible assets12396,886346,812Financial assets1347,01933,665678,214591,317Current assetsStock14237,680194,436Debtors15322,838272,797Cash and short term b

304、ank deposits31135,868138,956696,386606,189Creditors(amounts falling due within one year)16435,559354,798Net current assets260,827251,391Total assets less current liabilities939,041842,708Creditors(amounts falling due after more than one year)18369,325369,926Provisions for liabilities and charges2133

305、,89522,941403,220392,867 Net Assets535,821449,841Capital and reservesShare capital2210,86410,781Share premium account23103,600102,352Capital redemption reserve2422757Revaluation reserve2539,98740,260Profit and loss account26381,143296,391Shareholders funds equity535,821449,841On behalf of the BoardM

306、.ChadwickC.NuallinDirectors8 March 2005Group Balance SheetAs at 31 December 200440Grafton Group plc20042003Note000000Net cash inflow from operating activities27177,049129,793Returns on investments and servicing of finance29(19,197)(15,824)Taxation(7,301)(7,057)150,551106,912Capital expenditure and f

307、inancial investmentPurchase of tangible fixed assets(88,917)(69,267)Disposal of tangible fixed assets25,43730,951(63,480)(38,316)Purchase of financial fixed assets(13,351)-(76,831)(38,316)Acquisitions Acquisition of subsidiary undertakings and businesses30(61,805)(187,497)Net cash/(debt)acquired wit

308、h subsidiary undertakings 30718(1,912)Deferred acquisition consideration(3,750)(1,342)(64,837)(190,751)Dividends/redemption of shares/share purchaseEquity dividends paid9(53)-Redemption of redeemable shares(23,392)(18,816)Purchase of A ordinary shares(2,131)-(25,576)(18,816)Cash outflow before use o

309、f liquid resources and financing(16,693)(140,971)Cash inflow/(outflow)from movement in liquid resources31506(40,312)FinancingIssue of ordinary share capital1,28869,170Increase in term debt64,17078,889Redemption of loan notes payable(24,758)(11,240)Capital element of finance leases repaid(23,404)(1,0

310、80)Financing from lease and leaseback-22,50117,296158,240Increase/(decrease)in cash in the year 311,109(23,043)Reconciliation of Net Cash Flow to Movement in Net Debt 20042003000000Increase/(decrease)in cash in the year1,109(23,043)Cash inflow from increase in debt and lease financing(16,008)(89,070

311、)Cash flow from management of liquid resources(506)40,312Change in net debt resulting from cash flows(15,405)(71,801)Loan notes issued on acquisition of subsidiary undertakings(9,085)(24,567)Finance leases acquired with subsidiary undertakings(1,388)(478)Translation adjustment(578)25,775Movement in

312、net debt in the year31(26,456)(71,071)Net debt at 1 January(311,715)(240,644)Net debt at 31 December 31/32(338,171)(311,715)Group Cash Flow StatementFor the year ended 31 December 200441Annual Report 200420042003Note000000Fixed assetsTangible assets12334400Financial assets1319,47718,40719,81118,807C

313、urrent assetsDebtors15295,894277,244Cash at bank and in hand2,0871,505297,981278,749Creditors(amounts falling due within one year)16101,71397,153Net current assets196,268181,596Total assets less current liabilities216,079200,403Creditors(amounts falling due after more than one year)1837,25837,457Pro

314、vision for liabilities and charges21508-37,76637,457Net assets178,313162,946Capital and reservesShare capital2210,86410,781Share premium account23103,600102,352Capital redemption reserve2422757Profit and loss account2663,62249,756Shareholders funds equity178,313162,946On behalf of the BoardM.Chadwic

315、kC.NuallinDirectors8 March 2005Company Balance SheetAs at 31 December 200442Grafton Group plcA summary of the principal Group accounting policies are set out below which have been applied consistentlythroughout the year and the preceding year.Basis of accountingThe financial statements are prepared

316、under the historical cost convention,as modified by the revaluation of certaintangible fixed assets,and comply with the accounting standards applicable in the Republic of Ireland and the UnitedKingdom.Basis of consolidationThe consolidated financial statements comprise the financial statements of th

317、e parent undertaking and its subsidiaryundertakings all of which are made up to 31 December 2004.The results of companies acquired are dealt with in the profit and loss account from the date on which control passes.Rationalisation and integration costs relating toacquisitions are charged to the prof

318、it and loss account in the year in which they are incurred.GoodwillPurchased goodwill in respect of acquisitions before 1 January 1998 was charged directly to reserves in the year ofacquisition.Goodwill arising on acquisitions since 1 January 1998,being the excess of the cost of acquisition overthe

319、fair value of the net assets acquired,is included within fixed assets and amortised over its expected usefuleconomic life of 20 years.Euro and Foreign currenciesThe results and cashflows of non-euro subsidiary undertakings are translated into euro using the average exchangerate and related balance s

320、heets have been translated at the rates of exchange ruling at the balance sheet date.Exchange rate differences arising on translation of results of non-euro subsidiary undertakings and on therestatement of opening net assets are dealt with through retained profit net of differences on related foreig

321、ncurrency borrowings.Foreign currency transactions during the year have been converted at the rate of exchange ruling at the date of thetransaction.Assets and liabilities denominated in foreign currencies are translated into euro at the rates of exchangeruling at the balance sheet date.The resulting

322、 profits or losses are dealt with in the profit and loss account.TurnoverTurnover represents the fair value of goods,excluding value added tax,delivered to/collected by third partycustomers in the year.Goods are deemed to have been delivered to customers,when the customer has access to the significa

323、nt benefits inherent in the goods and exposure to the risks inherent in those benefits.Tangible fixed assets and depreciationTangible fixed assets are stated at historical cost less accumulated depreciation except for certain freehold andleasehold properties which are carried at revalued amounts les

324、s accumulated depreciation.The Group is availing of the transitional provisions of FRS 15,Tangible Fixed Assets,in continuing to carry such property assets at theirpreviously revalued amount,which is not being updated for subsequent changes in value,but is adjusted forsubsequent additions,disposals,

325、depreciation and impairment as applicable.Land is not depreciated.Depreciation is calculated to write-off the cost or valuation of other tangible fixed assets over their estimated useful lives in equal annual instalments as follows:Buildings50 to 100 yearsPlant and machinery 5 to 20 yearsMotor vehic

326、les 5 yearsPlant hire equipment4 to 8 yearsThe carrying value of tangible assets is reviewed for impairment if events or changed circumstances indicate that the carrying value in the financial statements may not be recoverable.Accounting Policies43Annual Report 2004Financial fixed assetsThe investme

327、nt in subsidiary undertakings in the Company balance sheet and other listed investments are shown atcost less provision for any impairment in value where applicable.Dividends from listed securities are accrued oncethey are declared.StocksStocks are valued at the lower of cost and net realisable valu

328、e.In the case of finished goods and work in progress,cost includes direct materials,direct labour and attributable overheads.Net realisable value is based on estimatedselling price less any further costs expected to be incurred.Deferred taxationDeferred tax is recognised in respect of all timing dif

329、ferences that have originated but not reversed at the balancesheet date.Provision is made at the rates expected to apply when the timing differences reverse.Timing differencesare differences between the Groups taxable profits and its results as stated in the financial statements that arise fromthe i

330、nclusion of gains and losses in taxable profits in periods different from those in which they are recognised in thefinancial statements.A net deferred tax asset is regarded as recoverable and therefore recognised only when,on the basis of all availableevidence,it can be regarded as more likely than

331、not that there will be suitable taxable profits from which the futurereversal of the underlying timing differences can be deducted.Liquid resourcesLiquid resources represent bank deposits of less than one year.Pension costsPension costs are recognised on a systematic basis so that the costs of provi

332、ding retirement benefits to employees are evenly matched,so far as is possible,to the service lives of the employees concerned.Any excess or deficiency ofthe actuarial value of assets over the actuarial value of liabilities of the pension scheme is allocated over the averageremaining service lives o

333、f the relevant current employees.Leased assetsAssets held under leasing arrangements that transfer substantially all the risks and rewards of ownership to theGroup are capitalised.Amounts payable under such leases are shown,net of finance charges,as short or mediumterm obligations,as appropriate.The interest element of the lease obligations is charged to the profit and lossaccount annually on the