Grainger’s shares (GRI) leapt 7 per cent on an expectation-busting set of annual results. The housing recovery helped boost the company’s gross book value - which marks trading assets to market and strips out liabilities for deferred tax and the fair value of interest-rate swaps - by 9 per cent to 242p per share. "In a benign market it’s a bit easier for us to make money," says chief executive Andrew Cunningham.
The company’s residential portfolios outperformed the national indices, as they have throughout the recession. They were marked up 6.4 per cent, compared with 5.6 per cent for the Nationwide and Halifax indices, with the equity-release business dragging down the better-located private-rented and regulated-tenancy portfolios.
Management’s top priority for the year was to reduce debt below £1bn. This project is now complete: net debt stood at £959m at the end of September, giving a loan-to-value ratio of 48 per cent. Mr Cunningham reckons this is a suitable level and is now turning his attention to improving the profile of the debt - at 5.7 per cent, its current average cost of debt is high.
So-called ‘recurring profits’ rose from £34.6m to £37m as the saving on interest payments more than made up for reductions in rental income. But Mr Cunningham admits this is a confusing term, including income from one-off portfolio sales. Brokerage Peel Hunt expects gross NAV - a more meaningful figure - to rise to 263p by next September.
GRAINGER (GRI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 207p | MARKET VALUE: | £859m | |
| TOUCH: | 206.6-207.4p | 12-MONTH HIGH: | 209p | LOW: 111p |
| DIVIDEND YIELD: | 1.0% | TRADING PROP: | £950m | |
| PREMIUM TO NAV: | 6% | |||
| INVESTMENT PROP: | £500m | NET DEBT*: | 118% | |
| Year to 30 Jun | Net asset value* (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 141 | -170.0 | -29.5 | 1.30 |
| 2010 | 140 | -20.8 | -2.9 | 1.70 |
| 2011 | 153 | 26.1 | 9.5 | 1.80 |
| 2012 | 157 | -1.7 | 0.1 | 1.92 |
| 2013 | 195 | 64.3 | 13.1 | 2.04 |
| % change | +24 | - | - | +6 |
Ex-div: 18 Dec Payment: 7 Feb *Trading properties marked to market value | ||||
