Good morning, welcome to the half year results for the Grafton Group plc for the six months ended the 30th of June 2020. I am Gavin Slark. I am the group CEO, and I am joined today by David Arnold, who is our chief financial officer. The program for this presentation will be that I will take you through a short introduction and some highlights. I'll pass you over to David, who will take you through the detail of the numbers, and then I will come back at the end and take you through an operational and strategic update and also a view of our outlook for the second half of the year. Our first half overview. We believe that the Grafton Group is emerging from the COVID crisis in an excellent position, and that is both financially and operationally.
We have seen a very strong recovery in our RMI-focused businesses, and you'll see that in Selco, in Woodie's and in Chadwicks, where the performance after reopening has been particularly strong. In our Dutch business and Leyland SDM, we've traded continuously through the COVID-19 crisis, and these two businesses have played a really important part in our first half performance. We have transformed the digital capability in both Selco and in Buildbase, and that is through investment in new platforms, which has resulted in our digital turnover in the first half of the year, more than trebling over the same period last year. We have maintained our strategic and operational progress, kept the business moving forward and continuing to grow and evolve the business. Our cash generation and liquidity has been very, very robust during the first half.
At the half year, our total liquidity was some GBP 693 million. On a pre IFRS 16 basis, we had net cash of GBP 58 million at the half year. We're very conscious that dividend remains an important consideration for many shareholders and for Grafton as a business. You'll be aware that we suspended payment of the second interim dividend for 2019. We're not proposing to pay the first dividend for 2020. However, we will consider the scope for payment of both dividends as part of the overall review of the full year. At that point, I will pass you over to David.
Thank you, Gavin. Good morning, ladies and gentlemen. Before we look back at how the COVID-19 crisis has impacted the first half financial results, it is worth pausing to consider how our strategic plan to improve the quality of Grafton's financial performance over a number of years has supported us in the last six months. If you recall, our medium-term financial objective was to get the group to a 7% operating margin, and just as importantly, a 15% return on capital employed target, and that's on an old money pre IFRS 16 basis, in particular by focusing on investing in higher returning businesses. This chart shows our progress since 2011 towards these financial objectives.
What is notable in the context of our strategy is that our more recent significant acquisitions, our entry into the Netherlands in 2015 and the purchase of Leyland SDM in 2018, both continued to trade very successfully through the lockdown. It's also of note, but perhaps more of academic interest, that notwithstanding the pandemic in the first six months of this year, that our adjusted operating margin and our return on capital employed were higher, or at the same level as that which we delivered back in 2012. We came into the COVID-19 crisis with the balance sheet in good shape. With the strong cash generation of the business, net debt has declined in recent years, notwithstanding the investment into organic and acquisition growth. As at the 31st of December 2019, we had net cash of GBP 7.8 million on a pre IFRS 16 basis.
We continued to generate cash over the last six months, with net cash increasing to GBP 58.6 million as at the 30th of June. All things considered, we entered the second half of the financial year in excellent shape, and I'd like to think that's the principal headline you take away, rather than perhaps focusing too long on the first half impact of COVID-19. Turning to the income statement, group revenue was down 19% to GBP 1.058 billion. Adjusted operating profit before property profits was 59% down at GBP 39.1 million. With a negligible contribution for property profits compared to last year, adjusted operating profit was 61% lower at GBP 39.4 million.
You may recall that at the start of the pandemic, we prudently drew down our bank facilities to ensure we protected our liquidity, and as a result of this, together with the impact of GBP 1.3 million of foreign exchange movements, the finance charge was almost GBP 2 million higher at GBP 14.6 million. This figure of GBP 14.6 million includes a charge of GBP 9.3 million in respect of the IFRS 16 impact of leases. It's worth noting that we have since repaid the excess drawings on our facilities, given the liquidity and trading position of the group. This slide sets out the first half revenue bridge.
You will recall that we sold Plumbase in the second half of last year, and our results have been restated for this. In the first half, we saw a reduction of GBP 315 million in revenue as a result of the COVID crisis.
The acquisition of Polvo in July last year and a single branch acquisition later in the year added GBP 58 million to revenue. This slide analyzes the reduction of GBP 315 million in revenue, which we saw in the first half. You can see how over 80% of the reduction was attributable to our U.K. distribution businesses. The greater impact that we saw in the U.K., compared to either our Irish or Dutch distribution businesses, was purely a function that the business was closed for a longer period and did not fully return back to normalized operations until towards the end of June. Turning to the movement in reported adjusted operating profit, this slide bridges from the restated post-Plumbase profit figure of GBP 99.8 million in the first half of the year to the GBP 39.4 million reported for the first half of this.
61.8 million of this reduction was in our like-for-like business. We had a very small increase in Selco store opening costs, and we were delighted with the incremental profit contribution of GBP 5.1 million from the acquisition of Polvo, which was consistent with the acquisition plan, notwithstanding the broader COVID-related challenges of the first half. I've already mentioned that the like-for-like profit reduced by GBP 61.8 million, and the overwhelming majority of that reduction, GBP 53.3 million, was felt in U.K. distribution. Given its high operating margin, the temporary closure of Selco in particular accounted for roughly half of that movement. By the same token, the very strong returns and high operating leverage in manufacturing saw a GBP 5.6 million reduction in profit off a GBP 15 million reduction in revenue.
Of real positive note are the performances of both the Netherlands and retail like-for-like businesses, which were each just GBP 0.2 million lower in constant currency profit terms despite the impact of COVID-19. We'll come on to look at this in more detail shortly. In U.K. distribution, the majority of our branches temporarily closed on the 24th of March and were not fully operational until the 22nd of June. Leyland SDM traded successfully throughout the period, having been categorized as an essential store, which did a great job serving local communities with essential repair and maintenance supplies in and around Central London. Following reopening, we saw a good recovery in the private housing RMI market, and Selco in particular, saw strong revenue and gross margin growth in June. New house build in commercial markets have been slower to recover.
U.K. average daily like-for-like revenue growth in June recovered to -10.8% against the same period last year, despite our businesses not being fully open for the whole month. In Ireland, our Chadwicks branches temporarily closed from the 28th of March to the 18th of May. Although a number continued to provide deliveries throughout this period to support essential services. Following full reopening and consistent with our experience in the U.K., we saw a strong recovery in housing RMI, with new house build slower to recover. Daily like-for-like revenue growth increased strongly by 7.3% in June. In the Netherlands, our operations continued to trade as they were categorized as an essential business. Notwithstanding the operational challenges, particularly in the early days of the crisis, the Dutch team did a terrific job, and amazingly, we saw only a marginal decline in average daily like-for-like revenue and Isero for the first half.
Overall revenue was up 70% on the prior year as a consequence of the Polvo acquisition, and adjusted operating profit increased by 56% to GBP 14.1 million, at an operating margin of 10.2%. The theme of stronger demand in housing RMI that was seen in the U.K. and Ireland was replicated in the Netherlands, and we saw a slight shift in the mix of business as a result. Woodie's were temporarily closed for 51 days from the 28th of March through to the 18th of May, except for online sales. Incredibly, the impact of that closure was largely offset by tremendous growth in like-for-like revenue immediately after opening, which saw exceptional demand for decorating and outdoor products.
The Woodie's team delivered a fantastic job in the face of the exceptional customer demand, and the operating profit of GBP 9.7 million was at a slightly higher operating margin of 9.8% in the first half. Finally, our manufacturing business was temporarily closed from the 24th of March with a phased reopening in late April, early May. Our Scottish plant did not come back on stream until late June as a result of the impact of COVID rules on construction north of the border. Volumes have been on a recovering trend. We were one-third of their prior year level in May, and by June, this had recovered to 70%. This business remains supported by the strong underlying demand for housing in the U.K. in the medium term.
Turning now to the balance sheet and a few points here. Intangible assets increased to GBP 776 million, with a key driver being the acquisition of Polvo in the Netherlands in July last year. Net working capital reduced to GBP 174 million over the last six months, modestly lower than the position 12 months previous. Trade debtors and creditors fell by roughly similar amounts in the first half, with the value of stock reducing by GBP 24 million in response to lower levels of activity. It is also worth noting that we did not make use of any extended payment opportunities on PAYE or VAT beyond the end of June. That normal trading terms applied to suppliers.
The pension deficit increased to GBP 45 million from GBP 21 million, and this was mainly a result of a reduction of 60 basis points in the discount rate used to calculate the value of liabilities in our U.K. defined benefit schemes. Net debt on an IFRS 16 basis, which includes liabilities, reduced to GBP 479 million and represented 1.9x net debt to EBITDA, slightly lower than in June 2019. We have an investment-grade credit rating, which was confirmed in June, and our possession of that rating enabled us to move very quickly in securing access to the Bank of England's COVID facility. We were granted access to GBP 300 million, and whilst we have no current intention of drawing down on this facility, it is always good to have access to it as an absolute backstop if required. Strong cash generation remains an integral strength of Grafton's businesses.
The reduction in sales led to cash being generated from a reduction in stock, and overall, cash generated from operations was GBP 121.5 million. Free cash flow of GBP 91.6 million represented 232% of adjusted operating profit. Net replacement and development CapEx were kept at very modest levels relative to depreciation. As Gavin has mentioned, we suspended the payment of the second interim dividend in respect of the 2019 results, which as a consequence benefited the net cash flow by GBP 30 million. Overall, net cash flow of GBP 85 million was identical to the first half of 2019. Finally, just a few elements of technical guidance. We currently expect full-year property profits to be approximately GBP 3 million.
We're currently forecasting that depreciation will be approximately GBP 50 million on a pre IFRS 16 basis and approximately GBP 100 million-GBP 110 million on a post IFRS 16 basis, with some of the variable being around lease renewals and extensions. Our current view on gross CapEx spend is approximately GBP 40 million in total, split between replacement spend of approximately GBP 25 million and development spend of circa GBP 15 million. We expect the net finance charge to be roughly double the first half charge at approximately GBP 28 million. Finally, the tax rate will be slightly higher this year than our previous guidance at approximately 22%.
This is because of the impact on deferred tax of the U.K. not reducing the rate of corporation tax as previously planned, together with tax disallowables being a higher proportion of our projected pre-tax profit for the year as a result of the first half results. On that note, I'll hand you back to Gavin.
Thank you, David. In terms of our strategic focus, our focus remains very much on investing in the higher margin growth businesses that have strong market positions and further development potential. If you look at recent acquisitions such as Isero, Polvo, Leyland SDM, and TG Lynes, they really underline that strategy. The acquisition pipeline remains encouraging, and we continue to progress small bolt-on acquisitions. In recent weeks, we have completed the acquisition of a single-site builders merchant in Ireland and also the GDC decorating merchant chain in London, which will bolt onto Leyland SDM. We continue to retain our disciplined approach to the allocation of capital, and each business that we look at has to jump both financial and non-financial hurdles to be considered as an acquisition target.
The strong balance sheet and excellent liquidity that have been a virtue of Grafton throughout lockdown provide a really strong platform for those growth initiatives. That financial strength really underpins our confidence in the future of the business. It was appropriate at this point to have a look at the cost base of the business and make sure that we had right-sized the cost base throughout the group. It's important to say that we don't believe that any major restructuring is necessary. We have reviewed the cost base of the U.K. business in the light of the potential downside risk, particularly in the new build businesses. That does mean we'll be closing a small number of unprofitable branches, 15 in total, in the U.K. traditional merchanting business, predominantly in the Buildbase brand and with a couple of closures in The Timber Group and Plumbase Industrial.
Overall, in the second half, we see that restructuring cost to be around about GBP 16 million. After releasing working capital and a property disposal, the cash impact of that being GBP 6 million, and therefore giving us a cash payback period on that restructuring charge of less than one year. This really is about us maintaining a clear view on having an efficient business going forward. In terms of the operational milestones that we've achieved in the current year, if we start with Selco, we've upgraded the website platform significantly to increase our digital capability and really drive digital revenue. We moved to the Magento 2 platform, and what we've now got is the Click & Collect and Click & Deliver business is running very close to GBP 1 million a week in Selco.
During the first half, we opened our 68th branch in Orpington, during the second half, we'll be opening number 69, which is in Salford, which will be during the third week in October, and also relocating one of our Bristol branches to a new location before the end of the year. In January, we opened our new distribution center in Oxford, that gives us a huge simplification of the inventory management processes in Selco, reducing the number of deliveries in store significantly and really improving the efficiency of the movement of inventory throughout the business. In Buildbase, we've continued to focus on business improvement, modernizing the offer and making sure that Buildbase stays relevant to the modern customer. We've continued with the rollout of the Microsoft AX system, we've now got nine branches live on that new IT platform.
We'll continue to roll that out now at a rate of around about two branches per week. It's also worth remembering that all of the back office functions were done prior to this year, so putting the branches live on the AX system really is the last piece of the jigsaw. As with Selco, we upgraded the website, significantly increased the digital capability, and our ability to take online orders in Buildbase. In fact, during the first half of this year, our online orders in Buildbase were around about GBP 5 million, and that compares to around about GBP 500,000 in the same period last year. As I mentioned a moment ago, in Leyland SDM, we completed the acquisition in July of GDC Paints, a five-branch decorators merchant business with some great locations in London, in places like Greenford, Acton, Tooting, Cricklewood, and Fulham.
The combined business now has a total of 28 branches across London. We'll continue to look for both greenfield possibilities and bolt-on acquisitions for that business. We still see further opportunities in that business for growth. One of the things that we'll be doing during the autumn of this year is switching on the next generation of e-commerce platforms within Leyland SDM to make sure that we are at the forefront of digital trading in that business, too. Moving into Ireland and looking at our Chadwicks Merchanting business, we also made an acquisition in this business in July too, with a well-established single-site business in Dundalk that really just fills a geographic gap that we had in Ireland, and it's actually the first builders merchant acquisition that we've made in Ireland since 2008.
Following a successful trial in Dublin, we've opened our second fixing center in Cork, and Cork continues to perform very well. As with Buildbase, we've continued to modernize our estate, with three branches significantly upgraded and rebranded during the first half. As David mentioned earlier, even with the temporary shutdown, this business produced an 8% operating margin in the first half of the year. In our DIY business, Woodie's, all of the branches have now been upgraded to the new version of the Microsoft Navision ERP system, which gives us many years of operation on that system going forward. We've also commenced the next phase of digital development with investment in expert resources and moving towards the Magento 2 platform, as we have done in Selco.
That is because of the recognition that even though e-commerce performed well during the lockdown, we need more capacity in e-commerce and Woodie's to help us for the future and to help us maintain that very good operating margin, which in the first half was very close to 10%. In Isero, our Netherlands business, yet another major systems project completed, with the Gunters en Meuser branches now successfully migrated onto the Isero Microsoft AX ERP platform. That means that not only have we now got Isero and Gunters operating on one platform, but all of the Gunters en Meuser branches are now linked in to our new DC that we opened last year in Waddinxveen. In total, the Dutch business is now 113 branches.
We've continued with the integration of Polvo by transitioning the Polvo business into the Isero buying group, which along with the closer alignment of the Polvo and Isero private label brands, really helps us to protect the margins that we have in that business, also to drive efficiency in supply chain and in sourcing. In terms of current trading and the outlook, it's worthy of note that obviously during the first half of the year, we've seen some significant reductions in turnover due to the closures that David outlined earlier on. What we've put on this slide for you is the total performance for the first half of the year, and then the performance for the first section of the second half from July the 1st through to the 16th of August.
In U.K. distribution, you'll see that the first half of the year revenue was down by a little over 30%, but during the first period of the second half, which is a combination of businesses that both operate in RMI and in new build, revenue down by just 0.7%. In Ireland in the first half, revenue was down by 16.7%, and at the beginning of the second half, a significant increase in revenue of 11.6%. In the Dutch business, which traded all the way through the global pandemic, 0.7% reduction in the first half of the year, with a reduction of just 1.3% in the first period of the second half.
Obviously one of the most significant businesses we have, being the retail business in Ireland, reduction of just 2% in the first half of the year, taking into account it was closed for 51 days, and an increase in the first sector of the second half of over 35%. Our manufacturing business, which is heavily reliant on new build residential in the U.K., was down by 38% in the first half of the year and down by 12.3%, which is absolutely in line with what we're seeing with the new build businesses having a slower recovery than those that are more focused on RMI. Across the whole of the group, revenue in the first half of the year declined by 24.3%, with the first period of the second half seeing an increase of 3.8%.
Our performance in any of our geographies will be influenced by our capacity to continue to trade and avoid COVID-19 related lockdowns, whether they be of a local or national basis. It is positive to say that the local lockdowns we have seen in the U.K. have had a very minimal impact on recent business. We continue to be pleased with the strength of the repair, maintenance, and improvement market in all of the geographies in which we operate. I'm pleased to say that based on current trends, we anticipate that we should be able to deliver a level of adjusted operating profit in the second half of this year, similar to the same period last year. In summary, we believe we've weathered COVID-19 well.
We emerged strongly from that crisis, that really is a testament to the commitment and quality of the colleagues that we have within the business. We have worked very hard on doing the right thing for our colleagues, for our customers, and the communities in which we operate. As we entered the temporary close down in March, we got very strong buy-in from our colleagues for doing the right thing. We've also tried very hard with significant investment, both in physical and in PPE barriers within the stores, to make the reopening process as positive a process as we possibly can, as our colleagues have to adjust to new processes and new protocols in virtually all of our working environments. Our core businesses have continued to build on strong market positions, they emerge in an excellent position to support the RMI market growth that we are seeing.
We're continuing to progress the strategic and operational initiatives and that enhanced digital capability, as we outlined earlier in the presentation. In particular, we see digital playing a really important part in the business going forward. Our balance sheet remains in great shape, and that has been a long-term feature of the Grafton Group, and we will maintain that pattern of careful, disciplined allocation of capital as we go forward. We still see opportunities for both organic and acquisitive development in the COVID world, and I think it's fair to say that we are confident of the future, but not complacent about the situation that we're currently operating in. At that point, I would just like to say thank you for your attention and for your interest in Grafton. Thank you very much.