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Profits up during strong six months for Newcastle's Grainger plc; UK's largest residential landlord says it has made good progress against strategic targets, including improving operational performance.

Byline: Robert Gibson

Newcastle property giant Grainger plc has reported a strong half-year performance during which it made significant progress against strategic targets.

In the six months ended March 31, 2016, the group - the UK's largest residential landlord - saw recurring profit from continuing operations rise 13% to hit [pounds sterling]25.4m.

Prices on the sale of vacant properties likewise averaged 6.8% above September 2015 valuations, delivering revenue of [pounds sterling]66.2m and profit of [pounds sterling]29.7m, compared to [pounds sterling]50.6m and [pounds sterling]27.8m respectively in the first half of the previous financial year.

The figures were boosted by high levels of activity and volumes ahead of the changes to stamp duty land tax (SDLT).

Development sales were also ahead of expectations, with revenue of [pounds sterling]13m and profit of [pounds sterling]4m.

Profit before tax on continuing operations, meanwhile, increased from [pounds sterling]21.1m in the first half of 2015 to [pounds sterling]36.6m, supported by positive movements on valuations and derivatives.

During the period, Grainger, which has been working to simplify its business, also saw net rental income rise by 13% overall to hit [pounds sterling]25.4m.

It's private rented sector pipeline was also ahead of plan, with [pounds sterling]268m of its [pounds sterling]850m investment target secured.

Operating cost savings of [pounds sterling]8.6m were also identified and will be fully realised in the 2017 financial year.

A new dividend policy link to net rental income, meanwhile, was introduced.

An interim dividend of 1.45p per share will be paid, compared to 0.64p in the first half of 2015, with the estimated total dividend for the year being around 4p, up from 2.75p the previous year.

Grainger CEO Helen Gordon said: "Grainger has performed strongly in the first six months of the year.

"Good progress has been made against our key strategic targets of growing rental income, simplifying and focusing the business and improving operational performance.

"In the past six months, we have secured [pounds sterling]268m of investment into the private rented sector, nearly a third of [pounds sterling]850m target, with a further [pounds sterling]398m in advanced stages.

"We have identified cost savings that will reduce our overheads by almost a quarter and will be realised fully in our next financial year.

"The board is pleased to announce our new dividend policy which is aligned to growing net rental income and will materially increase distributions to our shareholders."

A report accompanying the interim results said: "Market conditions have been strong in the first half.

"The market value of our assets grew by 4.7%, once again outperforming the combined average of the Nationwide and Halifax house price indices (4.1%), and sales from our continuing operations, both our regulated tenancy sales on vacancy and development, have been very strong.

"The second half has started well, helped by [pounds sterling]5.8m of profit from a development land sale in Basingstoke, in line with our strategy to exit non-core development assets.

"Although sales on vacancy are expected to be first half weighted due to high levels of activity before the SDLT changes on April 1, we expect recurring profit for the full year to be ahead of management expectations.

"The significant cash generated through strategic disposals increases the pace at which we can transform the shape of the business to deliver improved and sustainable, rental income led, shareholder returns.

"We are actively considering, bidding on, and securing a number of compelling PRS investment opportunities, and will provide updates on these opportunities as they are secured."



Helen Gordon, CEO of Grainger plc
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Title Annotation:Business
Publication:The Chronicle (Newscastle upon Tyne, England)
Article Type:Financial report
Date:May 19, 2016
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