Blow for ISE as Grafton moves its listing to UK
THE Irish Stock Exchange (ISE) suffered another blow yesterday as Grafton Group joined the long list of heavy-hitters who are moving their listings overseas.
Calculations by the Irish Independent suggest that companies representing about one-third of the value of the exchange at today's prices have cancelled their primary listings to shift to exchanges elsewhere.
Elan, which was once the biggest company on the exchange, is expected to quit by the end of the year following a takeover. Others to cancel their main listing in Dublin include clinical-trials company Icon, which moved to the US. Drug distributor United Drug, energy conglomerate DCC and food group Greencore all moved to the UK.
Grafton, the owner of Woodies and Homebase, has given its 20 days' notice and will trade solely on the London Stock Exchange from October 15.
Analysts said there were several clear motivations behind the move. Three-quarters of all Grafton's sales and 90pc of its profits come from the UK, where it has a chain of building and plumbers' merchanting outlets. The company generated €1.07bn (€1.27bn) in sales in the first six months of 2013, a 5pc increase on the year before.
Under its current listing these were converted to euro, which left the company open to currency volatility. Changes to the sterling/euro exchange rate have also previously resulted in differences between reported results and actual results.
The new UK listing will see its upcoming annual results reported in sterling rather than euro.
"The board believes that this change will help to provide a clearer understanding of the group's financial performance by reflecting the functional currency of the majority of the group's operations, and that it will reduce the impact of currency movements on reported results," said a company statement.
The company also pointed out that its shareholder profile has changed significantly. The majority of its shares are now held by institutional investors located outside of Ireland; just 5pc of its institutional investors are based in Ireland.
Many of the British institutional investors that it wants to attract are limited to investing in companies listed on the FTSE. The company's primary listing on the ISE prevents it from being eligible for inclusion in the FTSE UK Index Series, but this will change once its primary listing is based in London. It is expected to join the FTSE Index on December 20.
"The group also remains fully committed to its Irish operations" said the company, which employs 2,000 people in Ireland and will remain headquartered, domiciled and tax resident in this country.
Shares in Grafton closed up 2.3pc at €6.90 yesterday after gaining as much as 4.7pc during trading.