Grafton’s decision to close its listing on the Irish Stock Exchange comes as no surprise, despite the fact that chief executive Gavin Slark denied it was a done deal as recently as late August.
It makes complete sense that this company, like United Drug, DCC, food group Greencore and CRH before it, should move its listing to London.
Its revenue source alone makes a clear-cut case for the move. Three quarters of its sales and 90pc of profits are made in the UK, where it has chains of builders and plumbers merchanting outlets. Thus it is important that the company’s be listed in Sterling, and have its annual results in the currency. Until now, reporting in euros has made it vulnerable to currency fluctuations. Changes to the Sterling/euro exchange rate have previously resulted in differences been reported results and actual results.
From March 2014 dividends will also be declared in sterling, though shareholders will continue to have the option to receive them in euros.
When listed on the ISE, attracting shareholders was also an issue. The company said its shareholder profile has changed significantly and the majority of its shares are now held by institutional investors located outside of Ireland. Thus building its profile in the UK is in its interests.
Arguably the biggest loser in today’s decision is the ISE. Grafton alone accounts for about 2.3pc of the ISEQ Index. Its move casts fresh doubt on the sustainability of this peripheral exchange.