Interim Results

Grafton Group PLC
29 August 2001

                              Grafton Group plc

                      Interim Results for the Six Months

                              Ended 30 June 2001

                                  Highlights

Pre-tax Profits, excluding property gains, increased by 32 per cent to Euro
27.1 million

Adjusted EPS increased by 28 per cent to 14.27 c

Interim dividend up 32 per cent to 3.25 c

EBITDA grew by 33 per cent to Euro45.6 million

UK operating profit up 35 per cent to Euro16.5 million - Now 49 per cent of
Group operating profit

Irish Operating Profit up 18 per cent to Euro17.3 million

Turnover grew by 20 per cent to Euro470 million

Operating margin up to 7.2 per cent (2000: 6.9 per cent)



Commenting on the results, Michael Chadwick, Executive Chairman said:

'The success of our major UK investment programme is increasingly apparent
with the UK now accounting for 65 per cent of Group turnover and 49 per cent
of Group operating profit. Our Irish operations have again produced strong
results. These results reflect the success of our strategy of focussing on
profitable growth through organic developments and acquisitions based on our
diversified earnings base across the UK and Ireland. We expect to see further
growth in the second half of the year.'

                              Grafton Group plc

                       Announcement of Interim Results

                        Six Months Ended 30 June 2001

Grafton Group plc announces an increase in pre-tax profits of 32 per cent to
Euro27.1 million for the half year ended June 30th 2001 compared with Euro20.6
million in the first six months of 2000. EPS was up 28 per cent to 14.27
cents, before goodwill amortisation. These figures exclude a profit from the
sale of surplus property of Euro2.3 million. EBITDA grew by 33 per cent to
Euro45.6 million. The interim dividend has been increased by 32 per cent to
3.25c.

The Group experienced strong profit growth in both its Irish and UK
operations. First half turnover increased by 20 per cent to Euro470.0 million.
Operating profit before goodwill amortisation and property profit was up 26
per cent to Euro33.8 million, at an improved operating margin of 7.2 per cent
compared to 6.9 per cent in the first half of 2000.

The substantial UK acquisition and development programme has given the Group
scale and momentum in that market, positioning Grafton as the fourth largest
builders and plumbers merchants in the UK. The success of this investment
programme is increasingly apparent with UK turnover growing by 27 per cent to
Euro303.5 million, now accounting for 65 per cent of Group turnover. UK
operating profit increased by 35 per cent to Euro16.5 million contributing 49
per cent of the Group's operating profit.

The Group's operations in the Republic of Ireland again produced a strong
performance with turnover increasing by 8 per cent to Euro166.4 million and
operating profit growing by 18 per cent to Euro17.3 million, before goodwill
amortisation.

The Group's strategy of building profitable businesses and diversified
earnings across the UK and Ireland through both organic development and
acquisitions provides a solid platform for further growth. The Group is
positive about future prospects and, in the absence of unforeseen events,
expects profitability in the second half to be ahead of last year.

                  GEOGRAPHIC BREAKDOWN OF FINANCIAL RESULTS

                                 Six Months to     Six Months to     Percentage
                                    30 June 01        30 June 00    Improvement
                                   (unaudited)       (unaudited)
                                 Euro millions     Euro millions
Turnover
Republic of Ireland                      166.4             153.4             8%
Great Britain & Northern Ireland         303.5             238.5            27%
Total                                    469.9             391.9            20%
Operating profit
Republic of Ireland                       17.3              14.7            18%
Great Britain & Northern Ireland          16.5              12.2            35%
Total                                     33.8              26.9            26%

                             Review of Operations

United Kingdom

UK turnover grew by 27 per cent to Euro303.5 million, with 6 per cent growth
accounted for by like-for-like sales growth from existing businesses. UK
operating profit improved by 35 per cent to Euro16.5 million, building on the
strong gains made last year. Operating margins increased from 5.1 per cent to
5.5 per cent as a result of improved efficiencies and the integration benefits
from acquisitions.

The Group's UK builders merchanting division increased its turnover
significantly by acquisitions and organic sales growth, while at the same time
improving its trading margins. A further four UK builders merchants with a
combined annual turnover of Euro63m were acquired for a total consideration of
Euro35 million, adding an additional 12 trading locations to the UK builders
merchanting operations. Grafton will continue to pursue development
opportunities for its Buildbase brand in the consolidation process underway in
the UK builders merchanting market.

In Northern Ireland, the Group's builders merchanting business trading from
eight branches enjoyed strong growth in turnover and profits at improved
trading margins. At the half-year the Group was trading from over 80 builders
merchanting locations in Great Britain and Northern Ireland.

Plumbase, the Group's UK plumbers merchanting business, showed growth in sales
and profits. The acquisitions made in the first half of 2000 continued to be
integrated and contributed significantly to the division's strong performance.
Plumbase opened one new location during the half year, and since then has
acquired two branches and opened three further branches, and is now trading
from over 90 locations in the UK.

In CPI Mortars, the Group's silo mortar division, EuroMix reinforced its
position as market leader in dry mortar technology, enjoying strong sales
growth. During the period the division opened its fifth dry mortar plant at
Bilston, near Birmingham. Turnover and operating profit both increased
significantly.

Republic of Ireland

In the construction sector, residential completions grew by 3.4 per cent in
the first quarter. Homebond registrations for the first six months to June
declined by 23 per cent. The RMI (Repairs, Maintenance and Improvements) and
DIY markets, in which the Group has a significant presence, remain buoyant.
Irish turnover moved ahead by 8 per cent to Euro166.4 million, with stronger
growth of 18 per cent in operating profit before goodwill amortisation to Euro
17.3 million. Irish margins increased from 9.6 per cent to 10.4 per cent. As
part of its relocation programme, Chadwicks also benefited from a property
profit of Euro2.3 million on the sale of a site in Kilkenny.

Led by Chadwicks, Irish merchanting and wholesaling turnover increased by 4
per cent to Euro109.7 million, the same rate of growth as in the second half
of 2000. As a result of management's focus on the RMI market, profitable
growth and Group buying synergies, operating profit grew significantly at
higher margins, and contributed to the strong performance of the Irish
business. During the period, a new Chadwicks Plumb Centre at Navan was opened,
and work continues on the relocation of the Clonmel Builder Centre and the
Kilkenny Builder Centre in 2002.

Woodie's DIY continues to lead the market, growing turnover by 24 per cent to
Euro41.5 million, with strong like-for-like sales growth of 17 per cent.
Operating profit grew significantly and margins were further improved. The two
new stores which opened in Athlone and Bray in 2000 performed well, and
contributed to Woodie's strong profit growth. During the period, Woodie's
refurbished its Lucan and Swords stores, increased the size of its trading
operations in Waterford and Cork and increased its product offering to the
public. Woodie's E Store (www.woodiesdiy.com) was launched in March and is
performing as expected. Woodie's expansion plans include the opening of new
stores in Tralee and Newbridge.

Manufacturing turnover moved ahead by 9 per cent in the first half to Euro15.3
million. CPI, the Group's Dublin based concrete business, grew its EuroMix
turnover strongly, strengthening its market leadership position in silo
mortar. MFP's plastics business grew its turnover in line with the market,
with Eavemaster roofline products again performing well.

Finance

The increased profits and cashflows in the half year enabled the Group advance
its strategy through an active programme of acquisitions and organic
developments. A further Euro35.0 million was invested in four acquisitions and
Euro22 million in capital projects. The Group's depreciation charge rose to
Euro8.9 million for the six months, up from Euro6.9 million in 2000.
Investment of Euro16.7 million in working capital financed increased sales
from both existing operations and greenfield developments.

Shareholders' funds at 30th June 2001 were Euro238.3 million and net debt
amounted to Euro206.2 million representing seasonally higher debt / equity
ratio of 87 per cent (30 June 2000: 80 per cent). EBITDA interest cover for
the half year improved to 7.7 (2000: 6.1). Strong cashflow and high interest
cover are expected to continue to underpin the financing of bolt-on
acquisitions and organic development opportunities.

Given the significant movements in the value of Sterling during 2001 the Group
has adopted the policy of converting the UK results at the average rate of
exchange for the period rather than the period end rate as in previous years.
Accordingly, the UK results for the six months ended 30 June 2001 have been
converted at the average rate of exchange of Stg62.37p to the Euro. Had the
previous policy been maintained and UK earnings were converted at the closing
rate the UK operating profit reported would have been c. Euro0.6 million or
3.4 per cent higher and Group profit before tax would have been c. Euro0.3
million higher. The Euro / Sterling exchange rate at 30 June 2001 was
Stg60.31p (30 June 2000 Stg63.23p and 31 December 2000 Stg62.41p).

Outlook

In the UK, the improvement in trading conditions in the second quarter is
expected to continue. This provides Buildbase and Plumbase with a platform for
continuing sales and profit growth. These businesses will also benefit from
integration and buying benefits as they unfold. Grafton will continue its
successful acquisition program and further drive consolidation of the market.
EuroMix will continue to penetrate the mortar market and to strengthen its
market position.

In Ireland, residential completions in 2001 will be lower than in previous
years. However, despite this we are confident of growth in the RMI and DIY
markets and Irish turnover and profitability is anticipated to be ahead of
last year.

The Group remains committed to achieving above average long-term returns for
its shareholders. The Group's strategic focus has created a diversified
earnings base geographically across the UK and Ireland, which provides a sound
platform for further growth. The Group is positive about its future prospects
and, in the absence of unforeseen events, expects profitability in the second
half to be ahead of last year's levels.

Ends. 29 August 2001

Michael Chadwick
Executive Chairman
Grafton Group plc
Telephone: (++353) [phone]

Joe Murray
Murray Consultants Telephone:(++353) [phone]

Ginny Pulbrook
Citigate Dewe Rogerson
Telephone: (++44) [phone]



                              Grafton Group plc
                         Group Profit & Loss Account
                    For the Six Months Ended 30 June 2001
   Twelve                                                 Six Months Six Months
   Months                                                 To 30 June To 30 June
To 31 Dec                                                         01         00
       00
(audited)                                                (unaudited) (unaudited)
 Euro'000                                                   Euro'000   Euro'000
          Turnover
  722,360 Continuing operations                              462,953    391,872
  108,096 Acquisitions                                         7,006    ______-

  830,456 Total turnover                                     469,959    391,872

          Operating profit before goodwill amortisation
   60,374 Continuing operations                               33,618     26,923
    5,958 Acquisitions                                           218    ______-

   66,332                                                     33,836     26,923

    2,495 Goodwill amortisation                                1,431      1,084

   63,837 Operating profit                                    32,405     25,839

      768 Income from financial assets                           634        365
  ______- Profit on disposal of property                       2,262    ______-

   64,605 Trading profit                                      35,301     26,204
   11,825 Interest payable (net)                               5,920      5,620

   52,780 Profit on ordinary activities before taxation       29,381     20,584

    6,889 Taxation                                             4,114      2,470

   45,891 Profit on ordinary activities after taxation        25,267     18,114

   11,266 Dividend                                             5,673      4,289

   34,625 Profit retained                                     19,594     13,825

   26.61c Earnings per share                                  14.57c     10.52c

   27.46c Earnings per share before goodwill amortisation     14.27c     11.15c
          and property profit

     6.5c Dividend per share                                   3.25c      2.47c


                              Grafton Group plc
                          Consolidated Balance Sheet
                              As at 30 June 2001
31 Dec 00                                                 30 June 01 30 June 00
       
(audited)                                                 (unaudited)(unaudited)
Euro'000                                                    Euro'000   Euro'000
         Fixed assets
  51,671 Intangible assets - goodwill                         59,895     51,905
 209,580 Tangible assets                                     239,846    190,203
  18,949 Financial assets                                     27,331     18,953

 280,200                                                     327,072    261,061

         Current assets
 115,248 Stock                                               133,542    105,881
 158,512 Debtors                                             192,588    165,590
  79,071 Cash and short term bank deposits                    73,647     60,899

 352,831                                                     399,777    332,370

 234,763 Creditors (amounts falling due within one year)     289,824    225,151

 118,068 Net current assets                                  109,953    107,219

 398,268 Total assets less current liabilities               437,025    368,280

 166,823 Creditors (amounts falling due after more than      183,547    159,028
         one year)
  14,948 Provision for liabilities and charges                15,149     13,947

 181,771                                                     198,696    172,975

 216,497                                                     238,329    195,305

         Capital and reserves
   8,711 Share capital                                         8,762      8,690
  32,982 Share premium account                                33,720     32,786
  42,938 Revaluation reserve                                  41,674     43,079
 131,866 Profit and loss account                             154,173    110,750

 216,497 Shareholders' funds - equity                        238,329    195,305


                              Grafton Group plc
                          Group Cash Flow Statement
                    For the Six Months Ended 30 June 2001
Twelve                                                    Six Months Six Months
Months
To 31 Dec                                                 To 30 June To 30 June
       00                                                         01         00
(audited)                                                (unaudited) (unaudited)
 Euro'000                                                   Euro'000   Euro'000

   66,392 Net cash inflow from operating activities           25,636     23,112
 (11,527) Servicing of finance                               (4,454)    (5,559)
  (2,782) Taxation                                           (2,593)    (1,919)

   52,083                                                     18,589     15,634

          Capital expenditure and financial investment
 (43,151) Purchase of tangible fixed assets                 (21,956)   (17,613)
    6,379 Disposal of tangible fixed assets                    7,535      3,404
 (36,772)                                                   (14,421)   (14,209)
   _____- (Purchase)/sale of financial fixed assets          (8,039)          1

 (36,772)                                                   (22,460)   (14,208)

          Acquisitions
 (41,779) Acquisition of subsidiary undertakings and        (18,292)   (37,499)
          businesses
  (3,311) Net debt acquired with subsidiary undertakings     (4,167)    (3,331)

    (402) Deferred acquisition consideration                 ______-    ______-

 (45,492)                                                   (22,459)   (40,830)

  (9,323) Equity dividends paid                              (6,989)    (5,056)
 (39,504) Cash outflow before use of liquid resources and   (33,319)   (44,460)
          financing
          Cash (outflow)/inflow from (increase)/decrease
 (17,027) in liquid resources                                  1,823        630
                                                       

          Financing
      625 Issue of ordinary share capital                        789        408
   46,280 Increase in term debt                               23,781     30,173
    (643) Capital element of finance leases repaid             (357)      (215)
    (324) Redemption of loan notes payable                     (602)      (259)

   45,938                                                     23,611     30,107

 (10,593) (Decrease)/increase in cash in the period          (7,885)   (13,723)


           Reconciliation of net cash flow to movement in net debt
 (10,593) (Decrease)/increase in cash in the period          (7,885) (13,723)
 (45,313) Cash inflow from increase in debt and lease       (22,822) (29,699)
          financing
   17,027 Cash flow from management of liquid resources      (1,823)    (630)
 (38,879) Change in net debt resulting from cash flows      (32,530) (44,052)
 (10,413) Loan notes issued on acquisition of subsidiary    (11,671) (10,413)
          undertakings
    (598) Finance leases acquired with subsidiary              (834)    (589)
          undertakings
    3,142 Translation adjustment                             (7,089)    5,643

 (46,748) Movement in net debt in the period                (52,124) (49,411)
(107,360) Net debt at 1 January                            (154,108)(107,360)
(154,108) Net debt at 30 June                              (206,232)(156,771)



                                    Notes

 1. Movements in Group Shareholders' Funds

   Twelve                                                 Six Months Six Months
   Months                                                 To 30 June To 30 June
To 31 Dec                                                         01         00
       00
(audited)                                                (unaudited) (unaudited)
 Euro'000                                                   Euro'000   Euro'000

   45,891 Profit on ordinary activities after               25,267       18,114
          taxation
   11,266 Dividends                                          5,673        4,289

   34,625                                                   19,594       13,825

      625 Issue of ordinary share capital                      789          408

    (307) Currency translation adjustment                    3,310      (1,159)
            - on foreign currency net investments
      215   - on foreign currency borrowings               (1,861)          892


   35,158 Net addition to shareholders' funds               21,832       13,966

  181,339 Opening shareholders' funds                      216,497      181,339

  216,497 Closing shareholders' funds                      238,329      195,305


 2. 10 for 1 Share Split

    The share split approved at the AGM in April 2001 took effect in May 2001
    and the number of Grafton shares in issue increased proportionally. All
    figures expressed in relation to shares have been adjusted accordingly.

 3. Dividends

    An interim dividend at the rate of 3.25c per ordinary share (2000: 2.47c)
    is payable on 21 September 2001 to shareholders on the register at the
    close of business on 7 September 2001.

 4. Earnings per share

    The calculation of earnings per ordinary share is based on the profit on
    ordinary activities after taxation. The weighted average number of
    ordinary shares in issue during the period amounted to 173,427,480 (2000:
    172,156,960). Adjusted earnings per share is calculated on the same basis
    but excluding amortisation of goodwill and property profit.

 5. Exchange rates

    The results and cash flows of the Group's United Kingdom subsidiaries
    have, for the first time, been translated into Euros using the average
    exchange rate. The comparative results and cashflows were translated at
    the rate of exchange ruling at the balance sheet date. Adoption of the
    average exchange rate to translate the comparative results and cashflows
    of the United Kingdom subsidiaries would not give rise to a material
    adjustment to the results and cashflows of the Group for the six months
    ended 30 June 2000. The related balance sheets of the Group's United
    Kingdom subsidiaries at 30 June 2001 and 30 June 2000 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 2001 was Stg62.37p (six months to 30 June 2000: Stg61.24p). The Euro
    / Sterling exchange rate at 30 June 2001 was Stg60.31p (30 June 2000:
    Stg63.23p and 31 December 2000: Stg62.41p).

 6. Changeover To The Euro

    Plans have been put in place to ensure a smooth changeover to the Euro on
    1st January 2002.

 7. Turnover

    The amount of turnover by class of activity is as follows:

   Twelve                                               Six Months   Six Months
   Months                                               To 30 June   To 30 June
To 31 Dec                                                       01           00
       00
(audited)                                              (unaudited)   (unaudited)
 Euro'000                                                 Euro'000     Euro'000

  211,451 Irish merchanting and wholesaling                109,661      105,857
   71,589 DIY retailing                                     41,514       33,512
   27,386 Irish manufacturing and related                   15,256       14,047
           activities

  310,426 Total turnover from Irish activities             166,431      153,416

  520,030 UK merchanting and other activities              303,528      238,456

  830,456                                                  469,959      391,872


 8. Operating Profit

   Twelve                                               Six Months   Six Months
   Months                                               To 30 June   To 30 June
To 31 Dec                                                       01           00
       00
(audited)                                              (unaudited)   (unaudited)
 Euro'000                                                 Euro'000     Euro'000

   36,092 Republic of Ireland                              17,274        14,690
   29,213 Great Britain and Northern Ireland               16,562        12,233

   65,305                                                  33,836        26,923

  (2,495) Goodwill amortised                              (1,431)       (1,084)

      768 Income from financial assets                        634           365

    1,027 Property profit                                   2,262        _____-

   64,605                                                  35,301        26,204



 9. Reconciliation of trading profit to net cash inflow from operating
    activities

   Twelve                                               Six Months   Six Months
   Months                                               To 30 June   To 30 June
To 31 Dec                                                       01           00
       00
(audited)                                              (unaudited)   (unaudited)
 Euro'000                                                 Euro'000     Euro'000

   64,605 Trading profit                                   35,301        26,204
   14,008 Depreciation                                      8,912         6,871

        6 Investment impairment                                 -             -

    2,495 Goodwill amortisation                             1,431         1,084

  (1,460) Profit on disposal of fixed assets              (3,267)         (936)

 (13,262) Increase in working capital                    (16,741)      (10,111)

   66,392 Net cash inflow from operation                   25,636        23,112
           activities



10. Interim statement

    The interim figures for the half-year to 30 June 2001 and the comparative
    figures for the half-year to 30 June 2000 are unaudited. The figures shown
    for the year ended 31 December 2000 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.

    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.



                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 2001.

KPMG
Chartered Accountants
Dublin

28 August 2001