GRAFTON GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE Pretax profits up 32 per cent to 41.7m ( 31.6m)

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1 GRAFTON GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003 Pretax profits up 32 per cent to 41.7m ( 31.6m) Adjusted EPS increased 25 per cent to 19.63c (15.68c) Operating profit before goodwill up 40 per cent to 53.4m ( 38.2m) Increase of 27 per cent in redemption of Redeemable Shares Operating cash flow 45 per cent higher at 45.8m Acquisition spend of 148m in first half EBITA interest cover 6.3 times and debt equity ratio 75 per cent UK contributes 67 per cent of operating profit and 74 per cent of turnover Jacksons acquisition performs ahead of expectations Five additional UK acquisitions completed since 1 st January 7 New merchanting stores takes UK network to 254 Irish operating profit up 19 per cent Woodie s DIY to increase network to twenty stores Commenting on the interim results, Michael Chadwick, Chairman said: We are confident of continued profitable growth through organic development and acquisition and expect profitability and earnings in the second half to be ahead of last year. The Group is well funded to continue its acquisition programme and has a healthy pipeline of attractive acquisition and development opportunities going forward. The major Jackson acquisition has already proved successful and has performed ahead of expectations since acquisition.

2 GRAFTON GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003 Grafton Group plc is pleased to report on a period of significant progress for the Group and the achievement of record sales, profits and earnings for the six months to 30 June Sales for the six months were up 32 per cent to million (2002: million). Profit before tax increased by 32 per cent to 41.7 million (2002: 31.6 million). Earnings per share before goodwill amortisation (adjusted earnings per share) increased by 25 per cent to 19.63c (2002: 15.68c). Operating profit before goodwill amortisation was up 40 per cent to 53.4 million (2002: 38.2 million) at an improved margin of 7.6 per cent (2002: 7.1 per cent). The Board has decided to redeem one redeemable share per Grafton Unit for a cash consideration of 4.50 cent. This represents an increase of 27 per cent on the equivalent share redemption paid in September Following the one for five rights issue in March 2003, the weighted average number of shares in issue increased by 14 per cent to million (2002: million). The comparative interim and full year earnings per share and redemption per share amounts for 2002 have been adjusted for the bonus element of the rights issue (see note 3). In the UK, the Group s most important market, turnover grew by 41 per cent to 523 million and represented 74 per cent of Group turnover (2002: 69 per cent). UK operating profit, before goodwill amortisation, increased by 54 per cent to 35.6 million contributing 67 per cent of Group operating profit (2002: 61 per cent). The strategy of growing the Group s earnings base by developing a profitable business of scale in the UK is proving successful. The acquisition of Jacksons in March 2003 was a significant milestone for the Group and strengthened its position as the UK's fourth largest merchant with a market share of circa 8 per cent. In addition to Jacksons, the Group acquired three single branch merchanting businesses during the half year and opened seven greenfield merchanting branches in the UK. Since June, the acquisition of a further two merchanting businesses was completed increasing the number of UK builders merchanting branches to 137.

3 EuroMix, the Group's dry mortar business, had an excellent half year and opened its sixth plant at Harlow, Essex in May. A continuation of the strong trading performance of the Group s Irish businesses experienced in the second half of 2002 is reflected in a 12 per cent increase in Irish turnover to 184 million with operating profit increasing by 19 per cent to 17.8 million. While the macro economic environment in Ireland continued to weaken, strong residential housing and RMI activity continued for the first half of Irish merchanting sales were up 10 per cent on a like for like business base when compared to a slower first half experienced last year. The Irish retail environment showed only modest volume growth in the half year however Woodie's DIY increased sales by 16 per cent including strong like for like growth of 6 per cent. Turnover and Operating Profit - UK & Ireland Six months to 30 June 2003 (unaudited) Six months to 30 June 2002 (unaudited) '000 '000 Increase Turnover Great Britain and Northern % Ireland Republic of Ireland % Total % Operating profit Great Britain and Northern % Ireland Republic of Ireland % Total % The UK results are converted at the average Euro / Sterling rate of exchange for the half year. Sterling was on average 9 per cent weaker in the first half of 2003 compared to the first half of 2002 and accordingly the underlying increase in Grafton s UK activities was better when expressed in Sterling.

4 OPERATIONS REVIEW United Kingdom UK sales increased by 41 per cent to million (2002: million) and operating profit increased by 54 per cent to 35.6 million (2002: 23.2 million). The operating margin increased to 6.81 per cent from 6.25 per cent. All divisions reported good sales and profit growth. Excluding acquisitions, merchanting sales grew by 6 per cent. The repair, maintenance and improvement market, to which the Group's merchanting business is primarily exposed, was strong in the half year against a positive background of low interest rates and high employment. The results benefited from like for like sales growth and a strong performance by the Jacksons business in the four months since acquisition. The profitable integration and ongoing development of prior year acquisitions boosted the effect of an active acquisition programme in 2002, which involved the completion of fifteen transactions and added forty one branches to the UK network. The acquisition of Jacksons and the completion of a further five acquisitions, including two since the end of June, increased the UK merchanting network by twenty four branches. Greenfield developments added a further seven branches and the Group now trades from two hundred and fifty four merchanting locations in the UK. These developments further underline the Group s ability to successfully integrate acquisition opportunities and enhance its regional presence in the UK merchanting market. UK Builders Merchanting: The Group's UK builders merchanting division, trading principally under the Buildbase and Jackson brands had a very good half year substantially increasing sales and operating profit, both in total and like for like businesses. The acquisition of Jacksons, the UK's largest regional independent merchanting business previously ranked seventh in the BMF s league table of merchants, was completed on 3 March Jacksons has materially increased the size of the UK Builders Merchanting division, enabling the Group to widen its geographic coverage and gain a valuable presence in the East Midlands market. The business trades from eighteen branches and turnover was million in 2002 ( million). The trading performance since acquisition has been ahead of expectations. It is anticipated that the annual synergies and cost saving for the enlarged Group will be comfortably ahead of the acquisition announcement time frame. Jacksons is a well managed and reputable merchanting business with high visibility branding and a quality branch network which enjoys a leading market position in the East Midlands. It is an ideal geographic fit with the Group's strong

5 builders merchanting presence in the South East, Midlands and North of England. Buildbase, now an established brand and leading business in the UK merchanting market, increased sales and profits strongly in the half year. The results benefited from like for like sales growth, integration benefits from prior year acquisitions and the incremental effect of acquisitions made during In Northern Ireland, Macnaughton Blair, the Group's ten branch merchanting business, had a successful half year. Increased profitability was derived from good like for like sales growth, the redevelopment of two branches carried out during 2002 and the first half contribution from the acquisition in October 2002 of Peter Woods, a significant single branch business in Belfast. UK Plumbers Merchanting: Plumbase, one of the UK's largest plumbers merchanting chains with a strong presence in the South and Midlands, continued to perform strongly increasing both sales and operating profit. Good like for like branch sales growth was achieved and the overall growth of the division was enhanced by the incremental effect of the JKS and B J White acquisitions made at the end of Both businesses were integrated into the Plumbase network and traded successfully in the half year. Plumbase continued to expand its branch network with the opening of four branches. UK Mortar: EuroMix, a provider of a range of factory produced mortars for use in blocklaying and bricklaying, traded successfully in the half year increasing sales and operating profits strongly. The division, which has developed a quality product offering of dry mortar based products in the UK, has gained a strong market position and continues to grow volumes and consolidate its market leadership. In May, a new plant was opened in Harlow, Essex bringing the number of dry mortar plants operated by EuroMix in the UK to six. Republic of Ireland The strong performance reported by the Group's Irish businesses for the second half of 2002 continued during the half year despite a slowing economy. Solid growth in sales and operating profit was achieved in the half year. Sales increased by 12 per cent to 184 million (2002: million) and operating profit rose by 19 per cent to 17.8 million (2002: 15 million) resulting in an increase in Irish margins to 9.7 per cent from 9.1 per cent in Irish Merchanting: Following a continuation of high levels of new build activity in the residential housing market and a strong RMI market, the Group's Irish merchanting business increased sales by 10 per cent to million (2002: million). The division achieved good operating profit growth in the half year, benefiting from

6 volume growth, cost control and tight credit management. During the half year, Chadwicks opened a new Plumb Centre in Galway and work commenced on the construction of a new branch premises in Wexford to provide for the re-location from the existing town centre branch to a high profile purpose built out of town site in early Irish Retailing: Woodie's enhanced its market leadership in the Irish DIY market with turnover growth of 16 per cent to 53.1 million (2002: 45.8 million). Like for like sales increased 6 per cent. Woodie's turnover during the period benefited from the contribution of new stores opened in Tralee and Newbridge during Both stores traded successfully. Underlying profit levels continued to improve on the back of better buying terms and tight cost control. In August 2003, Woodie's opened its fifteenth store in Cavan and has announced plans to open a further five stores over the next two years in Carlow, Clonmel, Limerick, Kilkenny and the Naas Road, Dublin to take its network of DIY stores in Ireland to twenty. Irish Manufacturing: Manufacturing turnover increased by 12 per cent to 16.8 million (2002: 15 million) benefiting in particular from strong growth in EuroMix silo mortar turnover in the Greater Dublin area. Finance The Group produced strong cashflows in the half year generating 45.8 million (2002: 31.6 million) from operating activities. Cash outflow on acquisitions including acquired debt was 148 million (2002: 19.9 million). Capital expenditure amounted to 37.9 million (2002: 35.6 million) including a spend of 22.0 million on development initiatives. The total cash outflow in the half year on acquisitions and capital expenditure was million (2002: 55.5 million). The Group raised 68.4 million net of expenses in a one for five Rights Issue completed in March 2003 to part fund the acquisition of Jacksons and to enable the Group to continue to finance its acquisition and development programme. EBITA interest cover was 6.3 times (2002: 6.8 times). Earlier this year, the Group took advantage of historically low long term Sterling interest rates to increase its fixed interest rate debt to half of total debt. Shareholders funds were million (30 June 2002: million) and net debt amounted to million (30 June 2002: 212 million) giving a debt to equity ratio of 75 per cent (30 June 2002: 73 per cent). The Rights Issue and strong operating cash flow has enabled Grafton to fund a major capital programme in the half year and leaves the Group with the balance sheet strength and high levels of interest

7 cover to pursue a healthy pipeline of attractive acquisition and development opportunities going forward. Outlook The Board expects that the Group's strategy of diversifying its earnings base across the UK and Ireland by building strong brands and market positions through organic development and acquisitions will continue to provide a sound basis for profitable growth. In the UK, the Group anticipates benefits from the integration of prior year acquisitions, further bolt-on acquisitions in a consolidating market and like for like sales growth. Although in Ireland current trading continues to show like for like sales growth, the Group expects the weakening macro economic background to be reflected in an eventual slowdown in the level of new house building. The effects of this slow down should be offset to some extent by stronger performance from the more resilient RMI sector and the continuation of sales growth in the Woodie s DIY business. Overall, the Group remains optimistic about its trading prospects and expects profitability and earnings in the second half to be ahead of last year. Ends 8 th September 2003 For reference: Michael Chadwick Executive Chairman Grafton Group plc Telephone: (++353) (01) Joe Murray Murray Consultants Telephone: (++353) (01) Colm Ó Nualláin Finance Director Grafton Group plc Telephone: (++353) (01) Ginny Pulbrook Citigate (++44) (0207)

8 GRAFTON GROUP PLC GROUP PROFIT & LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30 JUNE 2003 Twelve Months To 31 Dec 02 Six Months To 30 June 03 Six Months To 30 June 02 (audited) (unaudited) (unaudited) Turnover 1,087,375 Continuing operations 633, ,754 64,983 Acquisitions 73,319-1,152,358 Total turnover 706, ,754 ======= ======= ======= Operating profit before goodwill amortisation 91,387 Continuing operations 48,450 38, Acquisitions 4,938-92,311 53,388 38,175 4,195 Goodwill amortisation 3,997 1,774 88,116 Operating profit 49,391 36,401 3,711 Profit on disposal of property ,827 Trading profit 49,391 36,401 1,611 Income from financial assets ,219 Interest payable (net) 8,636 5,730 80,219 Profit on ordinary activities before taxation 41,719 31,553 12,048 Taxation 6,258 4,102 68,171 Profit on ordinary activities after taxation 35,461 27,451

9 9 Dividend ,162 Profit retained 35,461 27,442 ======= ======= ======= 36.51c Earnings per share 17.64c 14.73c 36.99c Adjusted earnings per share 19.63c 15.68c 35.71c Diluted earnings per share 17.33c 14.36c 36.18c Adjusted diluted earnings per share 19.29c 15.29c 8.48c Share redemption 4.50c 3.53c

10 GRAFTON GROUP PLC CONSOLIDATED BALANCE SHEET AS AT 30 JUNE Dec June June 02 (audited) (unaudited) (unaudited) Fixed assets 100,443 Intangible assets goodwill 172,415 63, ,336 Tangible assets 342, ,155 33,579 Financial assets 33,646 33, , , ,786 Current assets 159,345 Stock 183, , ,276 Debtors 267, , ,108 Cash and short term bank deposits 170,128 75, , , , ,015 Creditors (amounts falling due within 428, ,017 one year) 189,714 Net current assets 193, , ,072 Total assets less current liabilities 742, , ,083 Creditors (amounts falling due after 318, ,394 more than one year) 16,016 Provision for liabilities and 12,919 16,592 charges 304, , , , , ,465 ======= ======= ======= Capital and reserves 9,023 Share capital 10,764 8,852 35, Share premium account Capital redemption reserve 101, ,435-40,533 Revaluation reserve 40,396 41, ,934 Profit and loss account 257, , ,973 Shareholders funds equity 410, ,465 ======= ======= =======

11 GRAFTON GROUP PLC GROUP CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2003

12 Twelve Six Months Six Months Months To 31 Dec 02 To 30 June 03 To 30 June 02 (audited) (unaudited) (unaudited) ,259 Net cash inflow from operating 45,763 31,582 activities (9,424) Returns on investments and servicing of (8,367) (4,042) finance (5,213) Taxation (3,089) (2,191) 94,622 34,307 25,349 Capital expenditure and financial investment (68,007) Purchase of tangible fixed assets (37,901) (35,607) 14,656 Disposal of tangible fixed assets 5,209 3,703 (53,351) (32,692) (31,904) Acquisitions (76,379) Acquisition of subsidiary undertakings and (118,510) (17,417) businesses 5,250 (3,728) Net (debt) / cash acquired with subsidiary undertakings (7,006) (962) (1,600) (313) Deferred acquisition consideration (74,857) (126,478) (19,330) (8,330) (6,610) (14,940) Redemption of shares / dividends Equity dividends paid Redemption of redeemable shares - (9,260) (9,260) (8,330) (8,330) (48,526) Cash outflow before use of liquid (134,123) (34,215) resources and financing 7,272 Cash (outflow) / inflow from (78,451) 12,379 movement in liquid resources Financing 866 Issue of ordinary share capital 68, ,329 Increase in term debt 100,260 43,090 (1,723) Capital element of finance leases repaid (187) (920) (18,627) Redemption of loan notes payable (747) (17,905) 75, ,703 24,912 34,591 (Decrease) / increase in cash in the (44,871) 3,076 period ======= ======= ======= RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 34,591 (Decrease) / increase in cash in the (44,871) 3,076 period (74,979) Cash inflow from increase in debt and (99,326) (24,265) lease financing (7,272) Cash flow from management of liquid 78,451 (12,379) resources

13 (47,660) Change in net debt resulting from cash flows (65,746) (33,568) (14,473) Loan notes issued on acquisition of (21,475) - subsidiary undertakings (744) Finance leases acquired with subsidiary (87) (567) undertakings 17,138 Translation adjustment 20,610 17,053 (45,739) Movement in net debt in the period (66,698) (17,082) (194,905) Net debt at 1 January (240,644) (194,905) (240,644) Net debt at 30 June (307,342) (211,987)

14 NOTES MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS Twelve Six Months Six Months Months To 31 Dec 02 To 30 June 03 To 30 June 02 (audited) (unaudited) (unaudited) ,171 Profit on ordinary activities after 35,461 27,451 taxation (9) (6,610) Dividends Redemption of redeemable shares - (9,260) (9) - 61,552 26,201 27, Issue of ordinary share capital 68, (8,415) Currency translation adjustment - on foreign currency net investments (8,899) (7,540) 3,503 - on foreign currency borrowings 3,125 3,449 57,506 Net addition to shareholders funds 88,804 23, ,467 Opening shareholders funds 321, , ,973 Closing shareholders funds 410, ,465 ======= ======= ======= REDEEMABLE SHARES THE BOARD HAS DECIDED TO REDEEM ONE REDEEMABLE SHARE PER GRAFTON UNIT FOR A CASH CONSIDERATION OF 4.50 CENT PER SHARE. ACCORDINGLY, NO INTERIM DIVIDEND HAS BEEN DECLARED. REDEMPTION WILL TAKE EFFECT IN RESPECT OF GRAFTON UNITS ON THE REGISTER AT THE CLOSE OF BUSINESS ON 3 OCTOBER 2003 AND THE CASH CONSIDERATION OF 4.50 CENT PER SHARE WILL BE PAID ON 10 OCTOBER FOLLOWING REDEMPTION OF ONE REDEEMABLE SHARE PER GRAFTON UNIT ON 3 OCTOBER 2003, A GRAFTON UNIT WILL COMPRISE ONE ORDINARY SHARE OF 0.05 CENT EACH IN GRAFTON GROUP PLC, SEVEN REDEEMABLE SHARES OF 0.01 CENT EACH IN GRAFTON GROUP PLC AND ONE C ORDINARY SHARE OF STG0.0001P IN GRAFTON GROUP (UK) PLC. 3. RIGHTS ISSUE AND EARNINGS PER SHARE In March 2003 the Group raised 68.4 million, net of expenses, by the issue of 35,276,228 New Grafton Units at a price of 2.00 per New Grafton Unit by way of a 1 for 5 rights issue. This is reflected in a 14 per cent increase in the weighted average number of shares in issue to million compared to the weighted average number of shares in issue of million in the first half of 2002.

15 The actual cum rights issue price on 28 February 2003, the last day of quotation cum rights, was 3.06 and the theoretical ex-rights price for a Grafton Unit was therefore per Grafton Unit. The 2002 per share amounts are adjusted for the bonus element of the rights issue by applying the factor (3.06 / ). Earnings per share is based on the profit on ordinary activities after taxation and adjusted earnings per share is calculated on the same basis but excluding goodwill amortisation and property profit. 4. EXCHANGE RATES The results and cash flows of the Group s United Kingdom subsidiaries have been translated into Euro using the average exchange rate. The related balance sheets of the Group s United Kingdom subsidiaries at 30 June 2003 and 30 June 2002 have been translated at the rate of exchange ruling at the balance sheet date. The average Euro / Sterling rate of exchange for the six months ended 30 June 2003 was Stg68.55p (six months to 30 June 2002: Stg62.17p and twelve months to 31 December 2002: Stg62.88p). The Euro / Sterling exchange rate at 30 June 2003 was Stg69.32p (30 June 2002: Stg64.98p and 31 December 2002: Stg65.05p) TURNOVER The amount of turnover by class of activity is as follows: Twelve Six Months Six Months Months To 31 Dec 02 To 30 June 03 To 30 June 02 (audited) (unaudited) (unaudited) ,037 Irish merchanting and wholesaling 114, ,477 98,117 DIY retailing 53,102 45,751 30,665 Irish manufacturing and related 16,760 14,989 activities 343,819 Total turnover from Irish activities 184, , ,539 UK merchanting and other activities 522, ,537 1,152, , ,754 ======= ======= =======

16 6. OPERATING PROFIT Twelve Six Months Six Months Months To 31 Dec 02 To 30 June 03 To 30 June 02 (audited) (unaudited) (unaudited) ,596 Republic of Ireland 17,808 15,001 53,715 Great Britain and Northern Ireland 35,580 23,174 92,311 Operating profit before goodwill amortisation 53,388 38,175 (4,195) Goodwill amortised (3,997) (1,774) 3,711 Profit on disposal of property ,827 Trading profit 49,391 36,401 1,611 Income from financial assets ,438 50,355 37,283 ======= ======= ======= 7. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES Twelve Months To 31 Dec 02 Six Months To 30 June 03 Six Months To 30 June 02 (audited) (unaudited) (unaudited) ,116 Operating profit 49,391 36,401 22,439 Depreciation 13,105 10,405 4,195 Goodwill amortisation 3,997 1,774 (1,839) Profit on disposal of plant and motor (1,083) (873) vehicles (3,652) Increase in working capital (19,647) (16,125) 109,259 Net cash inflow from operating 45,763 31,582 activities ======= ======= ======= 8. INTERIM STATEMENT The interim figures for the half-year to 30 June 2003 and the comparative figures for the half-year to 30 June 2002 are unaudited. The figures shown for the year ended 31 December 2002 have been extracted from the Financial Statements for the year. A copy of these Financial Statements, on which the Auditors have issued an unqualified report, has been delivered to the Registrar of Companies.

17 This statement will be sent by post to all registered shareholders. Non shareholders may obtain copies from the company s registered office at Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18.

18 INDEPENDENT REVIEW REPORT TO GRAFTON GROUP PLC INTRODUCTION We have been instructed by the company to review the financial information set out on pages 7 to 12 and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. DIRECTORS RESPONSIBILITIES The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The Listing Rules of the Irish and London Stock Exchanges require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. REVIEW WORK PERFORMED We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. REVIEW CONCLUSION On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June KPMG Chartered Accountants Dublin 5 September 2003

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