Grainger plc Regulatory News (GRI)

11 October 2016

Grainger plc

Trading Statement

Strong trading performance and further strategic progress

Grainger plc, the UK's largest residential property owner and manager listed on the London Stock Exchange, today provides an update on trading for the year ended 30 September 2016 ahead of its full year results announcement on 1 December, and comments on recent strategic progress.

Financial performance

Since our trading update on 11 August, good rental growth has continued, our sales performance has remained strong and benefits are being seen from the actions taken to reduce financing costs. We expect recurring profit for the year ended 30 September to be above £50m, at the higher end of management expectations.

Our year end valuation process is underway. Following a strong first half, we expect to report modest growth in the market value of our property assets in the second half of the year, despite changes in stamp duty legislation and market concerns after the EU referendum. This will be offset in EPRA NAV by the swap re-coupon (as noted in the August trading update), and recent movements in the bond markets have had an adverse impact on NNNAV from the mark to market of fixed rate debt.

Overall, we expect to report high single digit year-on-year growth in NNNAV for the full year.

Continued progress growing rental income

In addition to our recent announcement of the c.£40m PRS deal in Leeds, we have successfully achieved planning consent and purchased the land for Apex House, a PRS, build-to-rent development scheme in London.

Apex House, located in Seven Sisters, North London, will deliver 163 new homes (104 private rented, 59 affordable at discounted market rents). Construction is expected to start in 2017, the scheme is estimated to cost c.£60m and once fully let in 2020, we are targeting an initial gross yield around 6.5% and net rental income of approaching £3m per annum. Apex House is adjacent to Grainger's Seven Sisters Regeneration scheme, which has planning consent and will deliver a further 196 rental homes, following a Compulsory Purchase Order process which is currently being undertaken by the London Borough of Haringey.

Simplifying the business

Since setting out the strategy in January, we have now completed the majority of our non-core disposals.

This includes the recent successful disposal of Grainger's joint venture in the Czech Republic, which was located in Prague. We are pleased to report that the disposal will generate a profit before tax of c.£9m which will be treated as a non-recurring item.

We remain on target to deliver 24% cost savings in FY17.

Commenting on the trading update, Helen Gordon, Chief Executive said:

"We are pleased with the significant progress made and the way the business is responding to our strategy of growing net rental income, improving operational efficiency and simplifying the business, with the ultimate aim of improving value for all our shareholders and partners.

"We have seen a strong and resilient performance despite the changes to stamp duty legislation and the EU referendum, and we look forward to providing further details on strategic progress at our full year results in December."

-ENDS-

For further information:

Grainger plc

Helen Gordon/ Vanessa Simms/ Kurt Mueller

London Office Tel: +44 (0) 20 7940 9500

Newcastle Office Tel: +44 (0) 191 261 1819

Camarco

Ginny Pulbrook / Geoffrey Pelham-Lane

Tel: +44 (0) 20 3757 4992/4985