Grainger : Annual Results

17 November 2022

Grainger plc

Full year financial results

for the twelve months ended 30 September 2022

Record performance

with four years of growth locked-in, funded and de-risked

• Net Rental Income up +22%
• Adjusted Earnings up +12%
• Like-for-likerental growth up +4.7%
• Record occupancy continues at 98% (PRS)
• EPRA Net Tangible Asset ('NTA') up +7%
• Total dividend per share up +16%

Grainger plc, the UK's largest listed residential landlord with a £3.2bn operational portfolio of 9,669 rental homes and, £1.8bn build-to-rent pipeline of 6,838 homes, today announces record performance for its financial year to the end of September 2022.

Helen Gordon, Chief Executive, said:

"I am pleased to report a very successful year for Grainger, in which we delivered record net rental income growth of 22%, driven by record occupancy, rental growth and lease up of our new schemes. Adjusted earnings for the year up 12%, EPRA NTA up 7% and dividend up 16%.

"Our £953m committed pipeline of 3,658 new build-to-rent homes is locked-in,fully-funded and de-risked with fixed construction costs, providing visibility on earnings growth for the next four years. On top of this we have the option to proceed with a further £241m of 769 homes in our secured pipeline and we have £599m in our planning and legal pipeline, comprising 2,411 homes. In total, our build-to-rent pipeline stands at £1.8bn and 6,838 new homes.

"We have a strong financial footing with a robust balance sheet. Our debt is 97% hedged with average debt maturities of six and a half years and we have no significant refinancing requirements until 2027. All of this puts Grainger in a position of strength to take advantage of the increasing demand for renting homes in the UK.

"Whilst we are mindful of the wider macro-economic environment, we are well positioned for the challenges ahead and our market benefits from positive long-term structural trends. Demand for renting continues to grow, supply remains constrained as many small landlords exit the rental market, and we benefit from a resilient customer base. The inflation-linked characteristics of our asset class, coupled with our high-quality,energy-efficient and well-located properties, scalable operating platform and unrivalled data, insight and analytics gives us confidence for our continued strong operational performance."

Highlights

• +22% growth delivered in Net Rental Income1 to £86.3m (FY21: £70.6m)
• +12% growth in Adjusted Earnings2 to £93.5m (FY21: £83.5m)
• Total dividend up +16% to 5.97p per share
• +4.7% like-for-like rental growth3 across our total portfolio (FY21: 1.0%), with +3.5% growth in H1 and +5.5% growth in H2

1. +4.8% like-for-like rental growth in our PRS portfolio (FY21: 0.3%), with +3.5% in H1, +5.5% in H2 and maintained in October post year end
2. • +5.6% like-for-like rental growth on new lets in our PRS portfolio
   • +4.1% like-for-like rental growth on renewals in our PRS portfolio

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• 1. +4.6% like-for-like rental growth in our regulated tenancy portfolio (FY21: 3.6%), with 3.7% in H1 and 5.7% in H2
• Record occupancy of 98% in our PRS portfolio
• Total Property Return for the year of 7.5% due to strong valuation growth of +£157m driven by strong performance on lettings and rental growth
• EPRA NTA up +7% to 317pps (FY21: 297pps)
• Debt 97% hedged with an average cost of debt 3.1% expected to rise marginally by +20bps in FY23, a weighted average debt maturity of six and a half years and no significant refinancing requirements until 2027
• PRS Customer Net Promoter Score up +16pts to 34pts and 90% PRS customer satisfaction
• 26% reduction in Scope 1 & 2 emissions per £m assets under management (market-based methodology)
• 87% of PRS properties have EPC ratings A-C

Financial Highlights
Income returns	FY21	FY22	Change
Rental growth (like-for-like)	1.0%	4.7%	+372 bps
PRS rental growth (like-for-like)	0.3%	4.8%	+450 bps
Regulated tenancy rental growth (like-for-like, annualised)	3.6%	4.6%	+102 bps
Net rental income (Note 5)	£70.6m	£86.3m	+22%
Adjusted earnings (Note 2)	£83.5m	£93.5m	+12%
Profit before tax (Note 2)4	£152.1m	£298.6m	+96%
Earnings per share (diluted, after tax) (Note 9)4	16.1p	30.9p	+92%
Dividend per share (Note 10)5	5.15p	5.97p	+16%

Capital returns	FY21	FY22	Change
Total Property Return6	7.5%	7.5%	+2 bps
Total Accounting Return (Note 3)	5.5%	8.8%	+330 bps
EPRA NTA per share (Note 3)	297p	317p	+7%
Net debt	£1,042m	£1,262m	+21%
Group LTV	30.4%	33.4%	+304 bps
Cost of debt (average)	3.1%	3.1%	+1 bps
Reversionary surplus	£265m	£248m	(6)%

Secured build-to-rent pipeline	Investment	Homes
Secured & committed	£953m	3,658
Secured but not yet committed	£241m	769
Total investment value	£1,194m	4,427

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ESG benchmark performance

FTSE4Good	since 2010
ISS ESG	Prime Rating
MSCI ESG	'AA'
Sustainalytics ESG Risk Rating	Low Risk
EPRA Sustainability Best Practice Reporting	Gold Award
CDP (formerly the Carbon Disclosure Project)	'B' Rating
Workforce Disclosure Initiative	85%
GRESB Public Disclosure	'A' Rating
Future reporting dates
2023
AGM & Trading update	8 February
Half year results	11 May
Trading update	September
Full year results	22 November

1. Refer to Note 5 for net rental income calculation.
2. Refer to Note 2 for profit before tax and adjusted earnings reconciliation.
3. Rental growth is the average increase in rent charged across our portfolio on a like-for-like basis.
4. Profit before tax includes an £81.2m valuation uplift from one-off transfers from trading property to investment property in FY22. The transfer does not impact the market value of properties reflected in EPRA measures, but does increase EPRA NTA by 3pps following the reclassification of £20.3m deferred and contingent tax.
5. Dividends - Subject to approval at the AGM, the final dividend of 3.89p per share (gross) amounting to £28.8m will be paid on 14 February 2023 to Shareholders on the register at the close of business on 31 December 2022. Shareholders will again be offered the option to participate in a dividend reinvestment plan and the last day for election is 24 January 2023. An interim dividend of 2.08p per share amounting to a total of £15.4m was paid to Shareholders on 1 July 2022 - refer also to Note 10.
6. Total Property Return (TPR) represents the change in gross asset value, net of capital expenditure incurred, plus net income, expressed as a percentage of gross asset value.

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Results presentation

Grainger plc will be holding a presentation of the results at 08:30am(UK time) today, 17 November 2022, which can be accessed via webcast and a telephone dial-in facility (details below), which will be followed by a live Q&A session for sell side analysts and shareholders.

Webcast details:

To view the webcast, please go to the following URL link. Registration is required.

https://stream.brrmedia.co.uk/broadcast/633424dee019f405f294d272

The webcast will be available for six months from the date of the presentation.

Conference call details:

Call: [phone]

Confirmation Code: Quote Graingerwhen prompted by the operator

A copy of the presentation slides will also be available to download on Grainger's website (http://corporate.graingerplc.co.uk/) from 08:00am (UK time).

For further information, please contact:
Investor relations
Kurt Mueller, Grainger plc:	+44 (0)	20 7940 9500
Media
Ginny Pulbrook / Geoffrey Pelham-Lane, Camarco:	+44 (0)	20 3757 4992 / 4985

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Forward-looking statements disclaimer

This publication contains certain forward-looking statements. Any statement in this publication that is not a statement of historical fact including, without limitation, those regarding Grainger plc's future financial condition, business, operations, financial performance and other future events or developments involving Grainger, is a forward-looking statement. Such statements may, but not always, be identified by words such as 'expect', 'estimate', 'project', 'anticipate', 'believe', 'should', 'intend', 'plan', 'could', 'probability', 'risk', 'target', 'goal', 'objective', 'may', 'endeavour', 'outlook', 'optimistic', 'prospects' and similar expressions or variations on these expressions. By their nature, forward-looking statements involve inherent risks, assumptions and uncertainties as they relate to events which occur in the future and depend on circumstances which may or may not occur and go beyond Grainger's ability to control. Actual outcomes or results may differ materially from the outcomes or results expressed or implied by these forward-looking statements. Factors which may give rise to such differences include (but are not limited to) changing economic, financial, business, regulatory, legal, political, industry and market trends, house prices, competition, natural disasters, terrorism or other social, political or market conditions.

Grainger's principal risks are described in more detail in its Annual Report and Accounts, set out in the Risk Management report on pages 54- 57 of the 2022 Annual Report and Accounts.

A number of risks faced by the Group are not directly within our control such as the wider economic and political environment.

In line with our risk management approach detailed on pages 52-54 of the 2022 Annual Report and Accounts, the key risks to the business are under regular review by the Board and management, applying Grainger's risk management framework. The war in Ukraine, as well as the devastating human impact, has substantially increased the geopolitical uncertainty in Europe and beyond. This has led to wider economic ramifications for society and business, with the duration and depth of the impact of the conflict being unclear. This lack of clarity is in the pre- existing context of inflationary pressures and, more recently, rising interest rates. Specifically in relation to Grainger, it is currently considered that the principal risks previously reported remain our principal risks. However, it is recognised that the Ukrainian war, the prevailing economic context and future uncertainty in that regard have arguably increased the likelihood of such risks being accelerated or becoming more acute. This would include, but is not limited to, market, development, regulatory and supplier risks. The risks to Grainger will continue to be monitored closely as well as the potential controls and mitigants that may be applied during this volatile and uncertain period.

These risks and other factors could adversely affect the outcome and financial effects of the events specified in this publication. The forward- looking statements reflect knowledge and information available at the date they are made and Grainger plc does not intend to update on the forward-looking statements contained in this publication.

This publication is for information purposes only and no reliance may be placed upon it. No representative or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained in this publication. Past performance of securities in Grainger plc cannot be relied upon as a guide to the future performance of such securities.

This publication does not constitute an offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities of Grainger plc.

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