Grafton hopeful of rescue plan for subsidiary

GRAFTON IS optimistic that a rescue plan for its subsidiary, Atlantic Homecare, will be in place by the time the troubled business emerges from High Court protection on September 14th.

DIY and builders merchant group Grafton yesterday reported that pretax profits rose 13 per cent in the first six months of the year to €17 million from €15.1 million during the same period in 2011.

On June 7th, one of the group’s two DIY chains, the 13-store Atlantic Homecare, was placed under High Court protection from its creditors. Declan McDonald of PricewaterhouseCoopers was appointed examiner to the business, which had accumulated losses of €21 million over the the last five years.

Grafton chief executive Gavin Slark said yesterday the examinership period was due to end on September 14th, but the group was optimistic its rescue plan would be ready to put to the High Court, which must approve it, by then.

“We are hopeful, but it’s very much under the control of the examiner,” Mr Slark said.

The plan will involve the closure of five stores and an investment from fellow Grafton subsidiary, Woodie’s DIY, in the business.

It is also likely to involve the repudiation and renegotiation of leases on Atlantic outlets, which had been agreed during a period of rapid growth and high consumer spending but which were now deemed unsustainable. Mr Slark said the group put Atlantic in examinership in order to deal with issues, such as excessively high rents. Talks with a number of its landlords were continuing.

Grafton reports that revenues in the first six months of the year grew 5 per cent to €1.05 billion from €1 billion during the same period in 2011. Operating profits grew by more than 16 per cent to €24.5 million from €21.1 million. Earnings per share rose 11.6 per cent to 8.1 cents. Its operations generated almost €55 million in cash.

The UK accounted for 76 per cent of turnover and virtually all of the group’s profits, Mr Slark said.

Its UK builders merchants operations was the strongest performer, delivering a 9.5 per cent increase in sales to €780.5 million. Operating profits rose 18 per cent to €37.5 million. Sales in its Irish builders merchants business fell by almost 9 per cent to €136.4 million, while operating profits fell to €900,000, a fall of 18 per cent.

Retail operations Woodie’s and Atlantic lost €3.5 million; sales fell 12 per cent to €98.2 million.