Slide 1: Preliminary Results for the year ended 30 September 2015
Preliminary Results for the year ended 30 September 2015 19 November 2015
Slide 2: Agenda
Agenda 1. Welcome Baroness Ford 2. Overview Andrew Cunningham 3. Financial highlights Mark Greenwood 4. Operational highlights Nick Jopling 5. Summary Andrew Cunningham 2
Slide 3: Grainger overview
Grainger overview • A market leading residential property owner and manager • Robust income from reversionary portfolio to grow private rented sector (PRS) business • Highly cash generative business model • A high quality, national portfolio • Well placed to develop a leading PRS portfolio Wellesley
Slide 4: Overview
Overview Simplifying the business Accelerating growth in PRS • Sale of Sovereign JV • Successful launch of Abbeville Apartments • Disposal of German wholly owned assets • Acquisition of 927 tenanted PRS units underway during the period • Sale of German JV • Pipeline of over 1,500 PRS units Reduced f
Slide 5: Financial highlights
Financial highlights Gross NAV NNNAV Total dividend (EPRA NAV) (EPRA NNNAV) +9.7% +8.8% +10.0% 319p 263p 2.75p (FY14: 291p) (FY14: 242p) (FY14: 2.50p) FY Results 2015 5
Slide 6: Operational highlights
Operational highlights Reversionary PRS Business Business Trading performance Rental performance Pipeline Profit on vacant reversionary +2.4% on renewals • Abbeville launch – c.10% above sales up at £68.4m original ERV (FY14: £60.6m) • 927 tenanted PRS units acquired during the period • Pipeline of
Slide 7: Valuations
Valuations Long term outperformance Robust trading 150.0 140.0 • Normal vacant sales achieved prices 9.1% above last year’s vacant possession value 130.0 120.0 • Sales velocity: 110.0 Keys to cash in 100 days 100.0 90.0 2009 2010 2011 2012 2013 2014 2015 • Current trading very robust: Nationwide Hal
Slide 8: Housing market commentary
Housing market commentary • On-going signs of improvement and house • Strong underlying fundamentals, price inflation in the English regions supporting longer term HPI • Population growth • Economic growth • Slower rate of inflation in London • Supply demand imbalance • Political support for housing
Slide 9: Grainger’s portfolio
Grainger’s portfolio • Grainger’s portfolio is resilient due to: • Asset type and property conditions • Low average value • Location • Purchaser characteristics: i.e. low levels of mortgage dependence • Increasing market demand has driven the narrowing of the discount applied to vacant possession va
Slide 10: Agenda
Agenda 1. Welcome Baroness Ford 2. Overview Andrew Cunningham 3. Financial highlights Mark Greenwood 4. Operational highlights Nick Jopling 5. Summary Andrew Cunningham 10
Slide 11: 2015 financial highlights: Balance sheet
2015 financial highlights: Balance sheet Gross NAV NNNAV (EPRA NAV) +9.7% +8.8% 319p 263p (FY14: 291p) (FY14: 242p) Group LTV Cost of debt* -100bps -80bps 45.5% 4.6% (FY14: 46.5%) (FY14: 5.4%) * At balance sheet date, including costs but excluding commitment fees FY Results 2015 11
Slide 12: Movement in NNNAV
Movement in NNNAV NNNAV up by 21p per share (+8.8%) since 30 Sept 2014 £m 1300 1250 £155m £(66)m 1200 £(30)m 1150 £1,138m £(18)m £(19)m £1,101m 1100 £67m 1050 £1,012m 1000 950 900 Change in discount from VP to IV £53m or 13p 850 800 30 September Profit after tax Growth in Elimination of Contigent ta
Slide 13: Income statement highlights
Income statement highlights Recurring profit Profit before tax £41.2m £50.0m (FY14: £47.1m) (FY14: £81.1m) Movement in recurring profit £m £47.1m £(1.4)m 50 £(7.9)m 45 £2.2m £41.2m £7.8m 40 £(4.6)m 35 £(2.0)m 30 25 20 15 10 5 0 2014 recurring Overheads Tenanted and Fees Other Sales on CHARM 2015 rec
Slide 14: Debt position
Debt position Reduced funding costs Pro forma** Capital structure FY15 FY15 FY14 highlights Net Debt £1,104m £1,138m £1,044m Consolidated Loan to Value 44.5% 45.5% 46.5% • Syndicate refinance Average maturity of drawn facilities 5.7 yrs 5.2 yrs 4.8 yrs Headroom £217m £142m £297m • Reduction in avera
Slide 15: Agenda
Agenda 1. Welcome Baroness Ford 2. Overview Andrew Cunningham 3. Financial highlights Mark Greenwood 4. Operational highlights Nick Jopling 5. Summary Andrew Cunningham 15
Slide 16: Operational highlights
Operational highlights • Abbeville Apartments, Barking • Recent PRS acquisitions • Overview of PRS business Argo Apartments, Canning Town (GRIP w Bouygues) FY Results 2015 16
Slide 17: Abbeville Apartments, Barking
Abbeville Apartments, Barking • Build to Rent, first of its kind • Excellent launch and performance • Fully let in under two months • Leased up at £1.47m per annum, compared to original ERV of £1.34m • Gross yield on cost of c.10% FY Results 2015 17
Slide 18: Recent acquisitions
Recent acquisitions Stabilised PRS Assets Year ended 30 Sept 2015 Units Purchase Gross rent Portfolio Location (circa) price (£m) (£m) Circle Portfolio Northern regions 172 9.9 0.7 Spectrum Building Liverpool 28 2.7 0.2 Bristol Road Birmingham 28 1.9 0.2 Resi Portfolio Northern regions 593 56.0 4.1
Slide 19: Overview of our PRS business
Overview of our PRS business Existing portfolio Market value (£m) Units Wholly owned assets 399 1,739 Assets under management (co-investment) 625 1,914 Total PRS units as at 30 Sept 2015 1,024 3,653 Acquisitions this year Units Completed in twelve months to 30 Sept 2015 927 Secured pipeline Units Be
Slide 20: Agenda
Agenda 1. Welcome Baroness Ford 2. Overview Andrew Cunningham 3. Financial highlights Mark Greenwood 4. Operational highlights Nick Jopling 5. Summary Andrew Cunningham 20
Slide 21: Summary and outlook
Summary and outlook CONTINUED GROWTH SIMPLIFICATION Gross NAV NNNAV Disposal of Sale of German JV German wholly +9.7% +8.8% owned assets underway GROWTH IN PRS REDUCED FUNDING COSTS Acquired over 1,500 Build to Syndicate 900 PRS units Rent PRS units in refinance pipeline FY Results 2015 21
Slide 22: Thank you
grainger plc
Slide 23: Appendices
grainger plc Appendices
Slide 24: Build to rent: routes to market
Routes to market Our delivery model in PRS Low Model Activities Pipeline Examples: Land assembly, planning, construction of infrastructure, construction costs of PRS Berewood and Wellesley Strategic land homes, rental values, opex and capital value Build to rent Examples: Speed to income Land assemb
Slide 25: Portfolio summary (wholly owned)
Portfolio summary (wholly owned) No. of Market VP Reversionary Gross Gross sales Profit on units Value Value surplus IV/VP rent proceeds sale £m £m £m % £m £m £m Reversionary Assets Regulated 3,631 1,167 1,435 268 81% 28 11 2 Vacant 331 76 76 - 100% - 92 52 RS Reversion 3,514 318 496 179 64% 2 35 16
Slide 26: Valuation methodology
Valuation methodology • Market value of our portfolio enhanced by a Regulated AST reduction in the discount applied to the IV Discount % IV Discount % vacant possession value of tenanted IPD Region 2014 2015 2014 2015 properties 1-3 London 77.5% 80.0% 90.0% 95.0% • Based on advice from independent v
Slide 27: Grainger’s portfolio
Grainger’s portfolio Wholly owned Asset type by units Asset type by market value (£m) 4% 24% Market rented assets 36% Market rented assets Reversionary Reversionary Development 64% assets 72% Annualised No. of Market VP Reversionary running gross units Value Value surplus IV/VP rent £m £m £m % £m Re
Slide 28: Our UK geographical exposure (wholly owned)
Our UK geographical exposure (wholly owned) Vacant % by Possession % by Avg VP* IPD region No of units units Value (£m) VP (£k) 1 London (Total) 2,346 24% 1,351 53% 587 2 South East 1,422 14% 290 11% 245 3 South West 1,359 14% 264 10% 221 4 East 922 9% 150 6% 200 5 East Midlands 563 6% 58 2% 129 6 W
Slide 29: Portfolio summary by division / Asset performance
Portfolio summary by Asset performance division £m FY 2015 FY 2014 FY 2015 FY 2014 Vacant Vacant Vacant Vacant Possession Market Possession Market Possession Market Possession Market Value value Value value Value Value Value Value UK Residential 1,920 1,622 1,793 1,448 Grainger’s UK 5.6% 10.2% 14.6%
Slide 30: JV & Associates
JV & Associates Asset overview Joint Ventures Associates Prague/ Hammersmith Curzon Walworth Heitman GRIP Total Zizkov Park £m Property assets 23 11 35 190 193 517 969 Other assets 1 1 - 7 35 37 81 Total assets 24 12 35 197 228 554 1,050 External debt (7) - - (60) (99) (196) (362) Loans to/(from) Gr
Slide 31: Profit summary
Profit summary FY 2015 FY 2014 £m £m FY FY Non-Recurring 2015 2014 Profit on sale of assets* 86.3 88.6 £m £m Profit on disposal of subsidiary/JV 4.4 0.8 Net rents 37.9 37.0 ERIL - impairment of receivable (11.4) - Management fees 8.2 12.8 ERIL – impairment due to mark to (6.8) - CHARM 8.8 6.4 market
Slide 32: Property sales and profits
Property sales and profits FY 2015 FY 2014 Gross sales Profit Gross sales Profit No. of units No. of units value (£m) (£m) value (£m) (£m) Trading sales on vacancy UK Residential 310 92.0 52.8 287 78.1 42.9 Retirement Solutions 321 43.4 15.6 364 45.2 17.7 631 135.4 68.4 651 123.3 60.6 Tenanted and o
Slide 33: Regular, resilient cashflows
Regular, resilient cashflows £m 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Gross rents UK Residential 47 44 51 58 51 39 41 42 39 47 Retirement Solutions 2 2 4 5 5 6 6 6 2 - Development - - - - - 1 1 1 2 1 Germany 10 11 16 27 30 30 30 22 10 5 Total 59 57 71 90 86 76 78 71 53 53 Property Sales
Slide 34: Movement in PBT
Movement in PBT £m 90 £81.1m £(2.3)m £(1.4)m 80 £(2.2)m £(9.2)m* 70 £(16.0)m 60 £50.0m 50 40 30 20 10 0 PBT FY14 Profit on sales Decrease in profit Net rents, fees, Valuation Non-recurring PBT FY15 from JV/Assoc CHARM, movements items, incl ERIL re- overheads, including acquisition expenses and net
Slide 35: NAV measures reconciliation
NAV measures reconciliation* Add back Fair Adj IAS 39 re value of fixed rate loan Add back derivative and derivative Deferred and NNNAV Statutory Market Value Market value Def Tax on financial financial Contingent Balance Grainger NAV Grainger Balance Sheet Adjustments Balance Sheet property instrum
Slide 36: Movement in NAV
Movement in NAV NAV up 28p per share since 30 September 2014 £m £1,450 £53m £(66)m £1,400 £102m £(10)m £(13)m £10m £1,334m £1,350 £1,300 £43m £1,250 £1,215m £1,200 £1,150 £1,100 £1,050 £1,000 NAV 30 Sept PAT incl Revaluation Reduction on Elimination of Dividend Swap break Other NAV 30 Sept 2014 inco
Slide 37: Look through debt
Look through debt Group 3rd Party Total 3rd Party Group Counterparty Debt Heitman WIP GRIP Other Debt Debt Share Share (£m) 25% 50% 25% 50% (£m) (£m) (£m) (£m) Syndicate 483 483 483 Corporate Bond 275 275 275 M&G 100 100 100 Core Total 858 858 858 Bilateral 129 129 129 HCA funding 26 26 26 Insurance
Slide 38: Tax
Tax • The Group has an overall tax charge of 2015 £7.3m for the year (2014: £6.4m), £m comprising a £7.4m UK tax charge and a Pre-tax profit for the year 50.0 £0.1m overseas tax credit. Expected tax charge at 20.5% 10.2 Prior period tax credit (4.7) • The Group has made corporation tax payments tota
Slide 39: Disclaimer
Disclaimer This presentation contains certain forward-looking statements. Any statement in this presentation 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 futu