Grainger increases 2013 interim dividend by 5.5%

DividendMax Ltd.

Grainger increases 2013 interim dividend by 5.5%

Positive momentum across the management platform

New strategic alliances with key partners created, positioning Grainger for future growth, while reducing requirement for capital investment

Proportion of profit generated from rent and fees increased

Gross fee income from the group's management contracts with JV and other partnerships increased by 35.4% to £6.8m (March 2012: £5.0m), demonstrating potential of the management platform to deliver significant and sustainable recurring revenue streams

Group well positioned to take advantage of changes in the UK housing market and private rented sector, against a background of growing Government and institutional interest and support.

Strong financial performance

Triple net asset value per share up 6.6% to 167p (September 2012: 157p), outperforming the broader UK housing market

Gross net asset value per share up 0.6% to 224p (September 2012: 223p)

Net debt of £1.15bn at 31 March 2013, reduced further to £1.08bn by 13 May (September 2012: £1.19bn). Commitment to  reduce net debt to £1bn target by end of 2013 remains

Group loan to value reduced to 54% at 31 March 2013 (September 2012: 55%), further reduced to an estimated 52% by 13 May 2013

Pre-tax profit of £11.0m (March 2012: £15.1m)

Reversionary surplus of £524m, 126 pence per share (September 2012: £544m, 131 pence per share)

Interim dividend increased by 5.5% to 0.58p per ordinary share (March 2012: 0.55p)


Good progress on valuation and sales

Continued valuation outperformance, with a 3.0% increase in our UK residential portfolios compared to an average 1.6% increase in Nationwide and Halifax measures, reflecting the strength of our asset management platform and geographical bias of our portfolio to London and the South East

Valuation supported by sales results - vacant sales achieved, on average, 5% above September 2012 vacant possession values

Margins on normal trading sales increased to 44.7% (March 2012: 42.4%).

Robin Broadhurst, Chairman of Grainger plc, commented:

"The market value of our properties, supported by the evidence of NAV enhancing sales, has once again outperformed the general market indices. We continue to make progress in reducing group debt to our target of £1bn by the end of 2013.

"Since the year end we have created three new strategic alliances with APG, Heitman and Dorrington, comprising a combined total of £661m of assets and reinforcing our position as a partner of choice in the residential market. Furthermore, these transactions underpin our objective to improve shareholders' return on capital, through successfully growing our business, whilst at the same time reducing net debt, thereby positioning Grainger for long term, sustainable growth."

Andrew Cunningham, Chief Executive, said:

"We have made good progress against our strategic objectives in this period. Alongside reducing our debt, our reversionary assets, whose liquidity and value are continuously validated by sales, continue to generate cash and profit. This allows targeted investment in new activities as well as allowing us to move to an appropriately lower level of gearing. At the same time we are increasing the proportion of our profits derived from fees and rental income. We will also continue to focus on increasing our net asset values and outperforming the general residential market.

"We have implemented a number of key initiatives during the half year, demonstrating that, as a result of our scale, skills and flexibility, we are well-positioned to take advantage of the opportunities arising in the changing UK housing market and particularly the private rented sector.  Furthermore, we believe we can continue to build on our strong track record of partnerships, offering our expertise and robust operational platform to third parties, thereby further enhancing our fee income. These opportunities align with our overall strategic direction and we are confident in our ability to take further advantage of such opportunities as they arise."

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