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TWST: Can we start with a quick =ntroduction to Grafton (London: GFTU.L) and your core =arkets?

Mr. Kilroy: Grafton Group is a public company =uoted on the Dublin and London Stock Exchanges. Our main activities =re builders and plumbers merchanting and DIY retailing and =anufacturing, with builders and plumbers merchanting in both Ireland =nd UK whereas DIY retailing is purely in Ireland. We are a business =hich was founded many years ago, and have been a PLC for over 30 years. =1987 was an important benchmark because 51 percent of the company’s =uoted shares, which were held by the UK publicly quoted company called =arley, were placed in the market and we thus became an independent PLC =rom then on, free to act in whatever way we saw right. That represented =eally the start of the modern Grafton Group and since that period we =ave enjoyed unprecedented growth with compound EPS growth per annum of =8 percent each year since 1987, a fifteen year run.. What really has =parked that growth has been our move into the UK, which is now the =argest part of our business and the principal driver of =rowth.

TWST: Putting all of this together, if you would, can =ou give an indication of the main objectives you’ll be aiming for =ver the next 12 to 18 months?

Mr. Kilroy: The first thing =e’d always say is that we live in very uncertain times. Ireland has =lowed down considerably in terms of its buoyant economic growth, which =ad been based very much on foreign direct investment, particularly =merican investment. The Irish economy grew by one or two percent last =ear, probably much the same this coming year, and a lot depends really =n what’s going to happen in Iraq and what’s going to happen to =usiness confidence. So we would see Ireland over the next 18 months as =eing fairly flat. We’d see the kind of levels of profits that we =njoy in Ireland continuing. We wouldn’t see any significant growth, =ut because we’re a mature business in Ireland we get exceptionally =ood returns on capital employed and very high levels of cash =eneration. We have tended not to be acquisitive in Ireland over =he second half of the 90s because expectations would’ve been high in = very high growth economy. We prefer to grow organically or by branch =penings. In the UK however, where we are a smaller player at number =our with about 8 percent of a very big market, we have wonderful room =o continue to grow in terms of geographic coverage, in terms of =ontinuing acquisitions in the merchanting business, continuing =enetration of the mortar business. So I would expect 18 months out, =rovided the world economies have not dealt everybody a severe blow and =ssuming a level playing field and being no more affected by war than =nybody else, I would expect to see us continue to acquire companies in =he UK, continue to be growing in the UK, and continuing overall as a =roup to be growing our earnings per share. Although we wouldn’t see =he 28 percent compound growth per annum we’ve enjoyed in the past =ontinuing because that included the very high growth period of the =eltic Tiger, I would be very surprised if we were not able to continue =o grow our profits and earnings per share by something in excess of 10 =ercent per annum.

TWST: What is the summary statement, the =wo or three compelling reasons why an investor might take a good look =t the company?

Mr. Kilroy: We’d like to remind them =irst of all that we keep our promise. We’d like to say when we do =ur road shows I’ve never been in a position where I went back and =asn’t able to say we did what we said we’d do. We like to remind =ur shareholders that we are a very conservative company. Our =ccounting standards are very, very tight. We have very =ell-provisioned accounts. We write off all costs as they occur; store =pening costs, we write off in year one; there’s no pressure of =arrying anything forward. We’d like to remind our shareholders that =he chief executive Michael Chadwick and the Board are not going to be =oing things that are not in shareholders’ interest. And we’d like =o remind people that we are a growth-oriented company; we have a strong =alance sheet; we have very strong brands; and we have a diversified =arnings base now across UK and Ireland and across our divisions, which =ive us considerable protection. We also have established, strong and =xperienced management teams in all the operations. We’d like to say =e’ll be back to see you again in six months time and we’ll be =iving you more good news. If any of your audience or your people =re ever in Ireland or the UK and would like to see any of the =perations, we would be delighted. We’re always very proud that people =ee them and talk to the operating managers and see who the guys are =hat really make the money for them.