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Final Results

For the Year Ended 31 December 2020

Grafton Group plc

Final Results for the Year Ended 31 December 2020

Resilient performance - progressing strategic initiatives

Grafton Group plc ("Grafton"), the building materials distributor and DIY retailer with operations in the UK, Ireland and the Netherlands, is pleased to announce its final results for the year ended 31 December 2020.

Continuing Operations	2020	2019	Change
Revenue	£2,509m	£2,672m	-6.1%
Adjusted operating profit	£193.3m	£204.8m	-5.6%
Adjusted operating profit before property profit	£190.7m	£197.9m	-3.6%
Adjusted profit before tax	£166.4m	£179.6m	-7.4%
Adjusted earnings per share	56.7p	62.8p	-9.8%
Dividend	14.5p	19.0p	-23.7%
Net cash (before IFRS 16 leases)	£181.9m	£7.8m	+£174.1m
Net (debt) - reported	(£355.0m)	(£533.8m)	+£178.8m

Statutory Results - Continuing Operations	2020	2019	Change
Operating profit	£159.7m	£197.8m	-19.3%
Profit before tax	£132.7m	£172.6m	-23.1%
Basic earnings per share	45.1p	60.5p	-25.4%

• 1 Supplementary financial information in relation to Alternative Performance Measures (APMs) is set out on pages 39 to 49.

• 2 A bridge between the pre IFRS 16 and the related IFRS impact is set out within the APM's.

• 3 The term "Adjusted" means before exceptional items and amortisation of intangible assets arising on acquisitions in both years.

Financial Highlights

• • Revenue in continuing operations down 6% to £2.5 billion, reflecting the impact of first half branch closures in response to the pandemic

• • Operating profit in continuing operations down 6% to £193.3 million and 4% before property profit, exceeding management expectations outlined in January trading update

• • Strong recovery in profitability in second half with adjusted operating profit up 47%, reflecting robust residential repair, maintenance and improvement markets in the UK and Ireland:

  • o Exceptional performance by Woodie's DIY, Home and Garden business in Ireland

  • o Particularly strong second half recovery by Chadwicks in Ireland and Selco in the UK

  • o Strong second half recovery in Buildbase aided by increased margin and cost control

• • Netherlands business traded successfully through the pandemic and Polvo acquisition increased scale and profitability

• • Over 90% of Group profit derived from businesses with reported operating margin in excess of Group's 7% target

• • Record cash generated from operations of £377.7 million included the benefit of strong day-to-day management of working capital

Operational Highlights

• • Safe trading environment maintained in branches and stores for customers and colleagues

• • Accelerated our investment into e-commerce capabilities

• • Three acquisitions completed in the second half of 2020 and another two this year, in line with our strategy of acquiring specialist high quality businesses with attractive returns

• • Good progress advancing sustainability agenda

Gavin Slark, Chief Executive Officer of Grafton Group plc commented:

"Grafton today is a stronger, more resilient, more digitally and sustainability savvy business than it was before the outset of the Covid-19 pandemic. That evolution reflects not just the commitment and hard work of our colleagues and the agility and resolve of our businesses in a challenging year, but also our multi-year transformation and investment journey principally targeting the more resilient construction sectors of repair, maintenance and improvement, underpinned by an improved customer proposition across all of our businesses.

We are very encouraged by the Group's strong performance through the second half of last year and while we remain cautious about first half revenue trends in our markets in light of Covid uncertainty, we expect to make further progress in the current year and are confident that our 11,000 colleagues will continue to deliver for our customers. We finished last year in an excellent financial position that provides a strong platform for the future growth and development of our Group."

Webcast Details

A pre-recorded results presentation and a copy of the results presentation document are available at 7:00am today via the home page of the Company's websitewww.graftonplc.com.

A live audio conference call for analysts and investors will be hosted by Gavin Slark and David Arnold at 10:00am today. If investors would like to listen to the conference call, they can do so via the "Live Audio Conference Call" webcast link on the home page of the Company's websitewww.graftonplc.com.

Analysts will be invited to raise questions on the call. Should investors wish to submit a question in advance, they can do so before 9.15am today by sending an email [e-mail].A recording of the call will be available on the Company's website later today.

Grafton Group plc

+ 353 1 216 0600

Gavin Slark, Chief Executive Officer David Arnold, Chief Financial OfficerMurray Pat Walsh

+ 353 1 498 0300

MHP Communications + 44 20 3128 8549

Tim Rowntree / Rachel Mann

Cautionary Statement

Certain statements made in this announcement are forward-looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied by these forward looking statements. They appear in a number of places throughout this announcement and include statements regarding the intentions, beliefs or current expectations of Directors and senior management concerning, amongst other things, the results of operations, financial condition, liquidity, prospects, growth, strategies and the businesses operated by the Group. The Directors do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

Final Results

For the Year Ended 31 December 2020

Introduction from Gavin Slark, Chief Executive Officer

An extraordinary performance by our colleagues

As we all know too acutely, things didn't turn out as anyone had planned for 2020 and Covid-19 swept across the globe causing much pain, disruption and damage in the process. For Grafton to emerge as a better business at the end of the year, is testament to the tremendous fortitude, resilience, resourcefulness and sheer hard work of all of our 11,000 colleagues; we are very grateful to all our colleagues for their exceptional support and commitment.

Health and safety was our priority

From the very start of the pandemic our focus has been on the health and safety of our colleagues, customers and suppliers. At the end of March 2020, we responded quickly and decisively to the rapidly changing situation. In Ireland and the UK we closed all of our locations except those required to provide emergency supplies and our estate was not fully reopened for normal trading until the middle of June. In the Netherlands, our business was categorised as an essential service and remained open.

Benefit of our strategic focus

Inevitably the trading performance of the Group suffered in the first half, refected in reported adjusted operating profit that was 61 per cent lower than the prior year at £39.4m.

Our strategic growth focus over several years has been to invest into higher returning businesses where we have or can achieve good market positions and provide a differentiated offering to our customers. Many of these businesses are principally targeting the more resilient construction sectors of repair, maintenance and improvement and we saw the benefits of our investment focus in the recovery. As a result, when trading resumed after the first wave of the pandemic and the UK and Irish economies gradually reopened, we were able to benefit from strong underlying market growth in the second half that helped to drive a recovery in trading across our businesses and to report adjusted operating profit for the year of £193.3m, only 6% lower than 2019.

Over 90 per cent of profit was derived from businesses reporting operating margins in excess of 7 per cent

When we look at the relative financial performance of the Group's businesses during 2020, it is notable that our businesses which have strong market positions and have been the focus for ongoing reinvestment in recent years have performed the most strongly. Included in this category are Chadwicks, Woodie's and MacBlair on the island of Ireland, Selco and CPI Mortars in Great Britain and businesses that were more recently acquired and grown, namely the Netherlands business, Leyland SDM and TG Lynes. Collectively, these businesses were the foundation of the Group's financial returns for 2020, contributing over 90 per cent of adjusted operating profit at an operating margin greater than the Group's target of 7 per cent. They accounted for just over two thirds of Group revenue.

Strong cash performance

The Group's net cash position (pre leases) significantly improved from £7.8m at the start of the year to £181.9m at the year end. This demonstrates the continued strong cash conversion and our discipline of reducing working capital when activity levels turn down. This a very robust position to be in and one which provides a very strong platform to invest in further growth. The pandemic restricted opportunities to evaluate acquisitions and our transaction spend was lower than anticipated at the start of the year.

Excellent progress advancing strategic and operational objectives

Our original financial plan for 2020 targeted a continued increase in the level of Group profitability, with further expansion of the Group through acquisitions of good businesses and with a firm eye on our long term Group financial objectives to deliver a 7 per cent operating margin and 15 per cent return on capital employed (both on a pre IFRS 16 basis).