Residential specialist Grainger has made a healthy return to profit at its half-year results, benefiting from the upswing in the housing market.
Underlying operating profits increased 16 per cent to £48m in the six-month period, boosted by increased volumes of residential sales from its huge tenanted portfolio (£79m, up from £55m last year). The average sales margin grew to 42 per cent (up from 37 per cent in 2009) with units being sold for 6 per cent above September's vacant possession values, outstripping the Halifax and Nationwide house price indices, which increased by 3 per cent. The total sales pipeline, including units in solicitor's hands, stands at an impressive £121m.
Grainger's 202p-a-share offer for Aim-traded equity release outfit Sovereign Reversions has been recommended by the board, valuing the business at £34m. Providing due diligence is satisfactorily completed, offer documents should be out within a month. Already the market leader in equity release through its Bridgewater brand, business has slowed with the housing market, but Grainger's chief executive Andrew Cunningham says offering new sales initiatives to independent financial advisers has doubled application volumes.
Broker KBC Peel Hunt forecasts full year net asset value (NAV) of 198p.
| GRAINGER (GRI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 115p | MARKET VALUE: | £479m | |
| TOUCH: | 114-115p | 12-MONTH HIGH: | 195p | LOW: 79p |
| DIVIDEND YIELD: | 2.4% | TRADING STOCK: | £1bn | |
| DISCOUNT TO NAV: | 40% | |||
| INVESTMENT PROPERTIES: | £639m | NET DEBT: | 362% | |
| Half year to 31 Mar | Net asset value (p)* | Pre-tax profit (£m) | Earnings per share (p)* | Dividend per share (p)* |
|---|---|---|---|---|
| 2009 | 194* | -143.0 | -43.50 | nil |
| 2010 | 191 | 3.5 | 0.75 | 0.5 |
| % change | -2 | - | - | - |
Ex-div:0 2 Jun Payment: 2 Jul *NAV at 30 Sep 2009 as no interim valuation carried out. Restated to reflect rights issue in December 2009. | ||||
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