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Grafton Group secures 460m credit facility

Grafton Group has agreed a £460m (€565m) five-year credit facility with its main lenders, which is expected to see it benefit from around £3m in annualised savings.

The Dublin-headquartered builders merchanting and retail DIY group — which switched its share listing to London last year — said the bilateral multi-currency facilities have a maturity date of May 2019 and take advantage of improved lending conditions.

The company added the move should lead to yearly finance charge savings, based on current drawings, of approximately £3m.

Grafton’s existing lending arrangements saw it due to repay debt in 2016.

Yesterday’s news was welcomed by analysts — Davy Stockbrokers suggesting that the annual savings could add more than 1p to Grafton’s full-year earnings per share.

“At the end of full-year 2013, Grafton had net debt of £134m — split £151m cash and £285m gross debt.

“Therefore, the new facility gives the company significant scope to grow both organically and/or through acquisitions,” said Robert Eason of Goodbody Stockbrokers.

Tom Holmes, of Investec, said the move will further strengthen Grafton’s balance sheet, and “with headroom of around £100m at its disposal, Grafton remains well-placed to capitalise on acquisition opportunities as they arise.”

“As highlighted in its recent IMS, Grafton has had a strong start to the year, driven by a combination of favourable weather conditions, improving underlying trends and continued progress on the group’s estate optimisation initiatives.

“In terms of the outlook, management will look to build on what was a strong start to the year through a combination of volume growth, estate optimisation and internal efficiencies.”

Earlier this month, Grafton reported year-on-year revenue growth of 13.5%, to £656m, for the first four months of this year, with growth seen across its main UK merchanting division, the same unit in Ireland, and the Woodie’s DIY retail arm.

Source : Geoff Percival - Irish Examiner

20 May 2014
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