Trading Update

Grafton Group PLC
04 January 2008



                                                               4 January 2008

                                Grafton Group plc
                                        
                                 Trading Update
                                        
Grafton Group plc, the builders merchants and DIY Group with operations in the
UK and Ireland, issues this pre-close period trading update for the year ended
31 December 2007. The Final Results for 2007 will be announced on 10 March 2008.

Turnover for the year exceeded €3.2 billion, an increase of 10 per cent on 2006.

The Group expects to report growth in adjusted earnings per share in line with
or a little below the consensus market forecast of 86 cent (2006: 78 cent).

In Ireland, the economy performed well supported by sound demographic, job
creation and income growth fundamentals although the pace of expansion softened
in the second half as growth returned to more sustainable long-term levels. The
Irish new housing market experienced a decline in activity and is currently in a
period of transition to a more stable pricing and supply environment following a
prolonged period of strong growth.

The Irish Merchanting business encountered more challenging trading conditions
reporting a small decline in like-for-like sales in the second half. The
business performed well against this background due to its significant exposure
to the more stable RMI and non-residential markets. The Irish DIY business
continued to grow like for like turnover supported by increased consumer
spending and strong brands.

The UK economy performed strongly in 2007 although there are some signs that
growth slowed in the final quarter. The generally positive economic background
and strong market position enabled the first half improvement in like for like
sales and operating margin in the UK business to continue.

Increased interbank interest rates and the expiry of low fixed interest rate
swaps have resulted in an increase in the full year interest charge for 2007.

The Group had an active year on the development front with the completion of
fourteen acquisitions. The businesses acquired have annual sales of over €100
million and trade from thirty two branches in the UK and one in Ireland. These
acquisitions were completed at a total cost of €74 million. Organic developments
during 2007 included the opening of thirteen branches in the UK and three in
Ireland.

The Interim Results announcement on 14 August 2007 noted that the strong
financial position of the Group could accommodate a selective approach to
earnings enhancing share buybacks while also continuing to grow the Group
through acquisitions and organic developments. Since then the Group has bought
back 10 million Grafton Group Units (c. 4.2 per cent) at a total cost of €67.1
million.

Looking ahead, the long term growth and stability of the UK economy place it in
a strong position to cope with an expected slowdown and it should continue to be
a market which presents sound growth and development opportunities in the
merchanting sector. In Ireland, new residential construction is expected to
continue to weaken in the first half. However, strength in the rental market
points to continuing good underlying demand which should lead to an improvement
in housing starts. The residential RMI and non-residential construction markets
in Ireland are expected to be positive this year. Overall, the Group believes
recent market estimates of EPS for 2008 in the range of 73 cent to 76 cent to be
reasonable.

Conference Call

Grafton will host an Analysts' conference call today at 8.00am GMT to discuss
this announcement. The dial-in numbers are:

Ireland:     + 353 1 436 4265
UK:          + 44 208 817 9301
US:          [phone]
Other:       [phone]


A replay of the conference call will be available from 11.00am GMT. To access
the recording, the dial in numbers are:

Ireland:     [phone]
UK:          [phone]
US:          [phone]
Other:       [phone]

The digital replay security code is: 1128697 #


A copy of this statement is also available on our website www.graftonplc.com


For further information please contact:

Grafton Group plc + 353 1 216 0600
Michael Chadwick, Executive Chairman
Colm O Nuallain, Finance Director


Murray Consultants + 353 1 498 0300
Joe Murray


Citigate Dewe Rogerson + 44 207 282 2945
Ginny Pulbrook






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