Annual Report
and Accounts 2024
Renting
great
homes
Strategic report
Our year in review
02
Chair’s statement
04
Chief Executive’s statement
05
Great renting
09
The shape and strength of our business
18
Our market
24
Our business model
26
Key performance indicators ('KPIs')
28
Non-financial and ESG KPIs
30
Financial review
31
ESG introduction
37
Great people
39
Great assets
44
Great environment
46
Task force on Climate-related Financial
Disclosures
48
Stakeholder engagement - section 172
reporting
55
Risk management
56
Principal risks and uncertainties
58
Viability statement
64
Governance
Chair's introduction to governance
66
Leadership and purpose
68
Division of responsibility
78
Composition, succession and evaluation
80
Responsible business
84
Audit, risk and internal controls
86
Remuneration
91
Statement of Director's responsibilities
110
Directors’ report
110
Financial statements
Independent auditor’s report
116
Consolidated income statement
123
Consolidated statement
of comprehensive income
124
Consolidated statement
of financial position
125
Consolidated statement
of changes in equity
126
Consolidated statement
of cash flows
127
Notes to the financial statements
128
Parent company statement
of financial position
165
Parent company statement
of changes in equity
165
Notes to the parent company
financial statements
166
EPRA performance measures
(unaudited)
171
Five-year record (unaudited)
175
Other information
Alternative performance measures
176
Shareholders’ information
177
Glossary of terms
178
Advisers
179
p05
Chief Executive’s
statement
p31
Chief Financial Officer’s review
p04
Chair’s statement
Forward-looking statements
This Report may contain forward-looking
statements with respect to certain plans
and current goals and expectations relating
to the future financial condition, business
performance and results of Grainger plc.
Further information about forward-looking
statements can be found in the Shareholders'
Information section on page 177.
We are changing the way people think
about renting. We are creating great
rental homes that meet the needs
of renters.
As one of the UK’s largest professional
landlords we are providing homes to
help alleviate the UK’s housing shortage
and delivering homes that are great
value, in great locations, whilst providing
a great customer service and creating
great communities.
Read more about our
great rental offer.
p09
Millwrights Place, Bristol
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
1
Our newest build-to-rent schemes
We have delivered four exciting new schemes this year and continued
to develop our cluster strategy in key UK cities.
The Copper Works, Cardiff
Millwrights Place, Bristol
A great performance
Consistently delivering
outperformance and growth
Grainger delivered another great performance across the
business this year. With the delivery of four new schemes and
the purchase of the stabilised asset, The Astley in Manchester,
we have added 1,236 new homes to our portfolio and continue
to see our pipeline developing well.
The outlook for Grainger is excellent. Our market leadership
in the growing build-to-rent sector with the UK's largest
portfolio, largest pipeline and best-in-class operating platform,
is delivering compounding growth for Shareholders, whilst
providing a brilliant service and rental experience
to our customers.
Highlights
Total operational portfolio size
11,069
Total portfolio value
£3.4bn
New homes added
1,236
Schemes added
5
Windlass Apartments Phase 2,
North London
The Astley, Manchester (acquired)
The Silver Yard, Birmingham
Our year in review
Grainger plc
Annual Report and Accounts 2024
2
Key facts
A platform that consistently delivers excellent
operational performance.
Net rental income
The successful lease up of new launches, supported by our
high-quality product and service offering has delivered
double digit growth in net rental income.
Like-for-like rental growth
(PRS)
Great performance driven by our best-in-class operational
platform and high demand for our product.
+6.3%
+14%
2019
2020
2021
2022
2023
2024
2
4
6
8
10
0
PRS rental growth
(%)
2019
2020
2021
2022
2023
2024
70
80
90
100
110
120
0
Net rental income
(£m)
Occupancy
97.4%
Customer retention
63%
Average length of stay (PRS)
31 months
Rent paid on time
99%
Customer satisfaction (NPS)
+48
Energy Efficient Properties
EPC A-C (PRS)
94%
Millwrights Place, Bristol
The Silver Yard, Birmingham
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
3
Chair’s statement
“Grainger has delivered another
year of strong performance."
Dear Shareholders,
I am pleased to say that Grainger
has delivered another year of strong
performance with a significant step
up in net rental income, further
dividend growth and excellent
customer satisfaction scores, despite
a challenging external environment.
In the last 12 months Grainger has
successfully delivered over 1,200 new
homes in Cardiff, Birmingham, Bristol and
London. The strategy to grow the business
remains a priority and is supported by a
substantial pipeline of schemes, a robust
operating platform and great people
across the whole organisation.
Delivering for customers remains a key area
for the Board and great progress has been
made through the delivery of our Customer
Experience Programme which has, once
again, resulted in further improvements in
customer satisfaction levels and therefore
customer advocacy. This is key to driving
both customer retention levels and new
customer enquiries. There continues to
be a focus on how the use of data and AI
will enable us to continue to make strides
in delivering for our customers as well as
improving the efficiency of everything we do.
The Board was pleased to see the
Company’s continued success of its
ESG strategy and progress toward its ESG
commitments, including further reducing
its carbon emissions on an intensity basis.
It was also good to hear the positive
comments from colleagues in Grainger’s
new energy-efficient London office.
As the market leader, we continue to
take the initiative on health and safety
matters. We know that with over 25,000
residents staying in our properties every
night, we must go above and beyond
to keep them safe.
Our commitment to this is evidenced
through our Live.Safe programme, with
the results of our annual health and safety
survey showing our Live.Safe culture is
firmly embedded across the business and
ahead of our peer group. In light of the
Grenfell report this year, it is reassuring
that a key focus for Grainger has been
fire safety, where the Company is taking
measures to be at the forefront
of building safety.
One of the highlights of the year was the
Board’s visit to two of Grainger’s newest
communities in Nottingham and Derby,
meeting colleagues and residents. It is
always an uplifting experience hearing
the enthusiasm of colleagues who have
delivered these schemes as well as those
on site delivering great service to our
customers every day.
The Board closely reviewed and discussed
people matters over the year including
wellbeing, reward and recognition,
diversity and inclusion and I am pleased to
report some significant achievements in
this area too. This year Grainger achieved
the UK’s leading recognition for equality,
diversity and inclusion, the National
Equality Standard. Grainger was also
recognised as a Top 100 Employer by Best
Companies as a result of the Company’s
bi-annual employee engagement survey.
Finally, Grainger ranked highly in the FTSE
Women Leaders review at 19th position
out of the FTSE 250.
During the year, Grainger’s Company
Secretary, Adam McGhin, left the business
after 13 years and I would like to thank
him for his important contribution to the
business and the support he provided to
the Board over that time. I would also like
to welcome our new Company Secretary
and General Counsel, Sapna FitzGerald, to
Grainger. The Board and I look forward to
working closely with her.
The past year saw significant political
change take place in the UK. The Board
regularly reviewed Grainger’s engagement
with UK Government ministers and
officials and the three main political
parties, ensuring that Grainger’s
perspective and expertise helps inform
policy making. We were pleased that the
new Labour Government has publicly
rejected the introduction of rent controls,
recognising that it would harm housing
supply and investment.
Reflecting the Company’s strong
performance and our commitment to
deliver a progressive dividend, the Board
is pleased to propose a final dividend per
share of 5.01p, in line with our policy to
distribute the equivalent of 50% of net
rental income. This will result in a total
dividend of 7.55p per share, an increase
of 14% from last year.
Grainger is well positioned to continue
to deliver significant earnings growth for
years to come as it completes the existing
schemes in its pipeline and new schemes
it secures. One of the key areas of focus
for the Board continues to be how quickly
the Company can grow the pipeline into
the future given the serious mismatch that
exists in this country between the demand
for homes and current supply. Given the
size of the opportunity the Board remains
confident that the Company can deliver
further substantial value for Shareholders
and customers alike going forward.
Mark Clare
Chair
20 November 2024
Positioned
to deliver
Grainger plc
Annual Report and Accounts 2024
4
Chief Executive’s statement
It is my pleasure to report another
year of continuing accelerated growth
for your Company and a very strong
growth outlook.
Building on last year’s record delivery
of new homes, we have had another year
of strong delivery, adding 1,236 new
homes to our expanding portfolio.
We added four new communities to our
existing clusters in Birmingham, Bristol,
London, and Manchester and building on
our national footprint of carefully selected
locations, we are now building meaningful
scale in these cities.
One of these was the acquisition
of an existing BTR asset, The Astley,
demonstrating the potential of stabilised
acquisitions as a route to growth.
We also opened our first scheme
in Wales in Cardiff.
These new homes together with like-for-
like rental growth of 6.3% have meant we
have once again delivered double digit
income growth at 14%, ahead of last year’s
12% growth. For our Shareholders this
also means a 14% growth in our dividend.
Our portfolio returned to valuation
growth in the second half with a 1.1%
increase which offset the decline in the
first half related to the one-off impact
of tax changes (the removal of multiple
dwellings relief, MDR). Over the whole year
valuation declined by 0.8% (FY23: (2.4)%)
including this one off impact; excluding
MDR underlying valuations increased
0.8% during the year.
Over the past two years, due to rising
interest rates, we’ve experienced yield
expansion yet our portfolio value’s
decline was successfully largely offset
by rental growth due to the resilience
of our assets and the strength
of our operating platform.
“We have a substantial opportunity
to accelerate growth.”
Excellent
Performance
Delivering homes
The Silver Yard —
Birmingham
In June 2024 we launched
our second scheme
in Birmingham.
Homes375
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
5
Chief Executive’s statement continued
Our proactive asset recycling programme
drives continued growth, which also
preserves the strength of our balance
sheet. This year we disposed of a recent
record number of non-core assets
generating £274m of gross revenue from
these lower yielding assets. We are then
reinvesting this capital into higher-yielding,
modern, purpose-built, energy efficient,
attractive homes. This, together with our
high level of asset recycling last year is
leading to the continued high quality and
strong potential of our portfolio.
The investment and focus we have placed
on creating the UK’s leading build-to-rent
(‘BTR’) operating platform means that we
can leverage our planned growth using
our central platform and deliver significant
margin gains, with our EBITDA margin set
to grow by six percentage points to over
60% by FY29, a compounding effect on
our earnings growth.
The strategic transformation we have
undergone since setting out our strategy
in 2016 is enabling us to convert to a REIT
in October 2025, made possible by the
fact that the business will be majority
BTR homes, focused on investment and
growing net rental income and no longer
reliant on trading profits. Our BTR/PRS
portfolio now represents 83% of our
operational portfolio given the success of
both our pipeline delivery and recycling of
our regulated tenancy portfolio.
High customer satisfaction and
healthy customer affordability
We are committed to delivering great
homes and a great service to our
customers. Satisfied customers deliver the
most robust returns for our Shareholders.
Our investment in customer experience,
including deeper customer insight, our
CONNECT technology platform and our
Company-wide customer service training
programme, has led to year-on-year
improvements in customer metrics.
Our key metric for customer satisfaction,
the Net Promoter Score (NPS), has
increased even further this year following
last year’s exceptional score, and is now
+48, significantly ahead of industry peers
and many other industry market leaders.
Customer retention is high at 63%.
On average, our customers stay with
Grainger for nearly three years.
In addition to our customers telling us that
they are happy renting with Grainger, we
closely monitor the financial health of our
customers and their rental affordability.
It is generally accepted that housing
costs should be no more than a third of a
household’s gross income.
I am pleased to report that Grainger’s
customer affordability remains healthy
at 28%.
Operational excellence
We have successfully been leasing our four
new schemes well ahead of underwriting,
which typically assumes 12-18 months to
fully lease up a new building.
In Cardiff, at the Coppers Works (307
homes), in Bristol at Millwrights Place
(231 homes), in Birmingham at The Silver
Yard (375 homes), and in London, our
second phase of Windlass Apartments (65
homes), our newly completed buildings
are all leasing exceptionally well, ahead
of underwriting.
We continue to reap the benefits of scale
as we grow. Operating expenses continue
to be improved with our ‘gross to net’
leakage down from 25.5% to 25%, a 75%
gross rental margin.
This margin is after refresh and
refurbishment costs which are included in
the 25%.
In addition, with scale we have created
efficiencies in our procurement and
supply chain. Good examples of this
were our consolidation of our repairs and
maintenance supplier in the South of
England and our consolidation of national
furniture suppliers this year, both enabling
us to drive savings and, importantly,
further enhance customer experience.
Our fully integrated and fully digitised
customer journey, combined with our
CONNECT technology platform, enables
Our customers
Affordability
ratio28%
of household income paid on rent
on average in a Grainger home.
Grainger plc
Annual Report and Accounts 2024
6
us to benefit from the significant data
and insight we have at our fingertips, a
benefit of operating all our own properties
directly. CONNECT, along with our data,
enables us to readily utilise AI and analytics
across the business, such as lettings,
customer experience, building operations,
asset management, development and our
core corporate functions too.
We also launched a new website
improving our leasing journey for those
wishing to rent with Grainger.
Leading the way on sustainability
and responsibility
We continue to demonstrate
our leadership in sustainability
and responsibility.
94% of our properties are compliant
with future energy efficiency standards
expected to come into force in 2030
(BTR/PRS portfolio, EPC ratings A-C).
We continue to make good progress
against our target to be net zero carbon
for our operations by 2030 with our
Scope 1 & 2 emissions reducing again
year on year by 8%.
Our focus to reduce Scope 3 emissions,
particularly our customer emissions,
supported by our consumer campaign,
Living a Greener Life, continues to bear
fruit, with operational Scope 1-3 emissions
per m2 reducing by 9% year on year on
the PRS portfolio.
Through targeted initiatives, we have
successfully established a robust baseline
of customer emissions data, which has
enabled us to apply for our established
carbon targets to be recognised as
science-based targets, an important step
on our net zero carbon pathway.
Safety remains a core focus for Grainger.
All housing businesses have a responsibility
to keep their residents safe.
Most of our BTR properties were built post
Grenfell. This year, with the publication
of the report on Grenfell, we have further
invested in keeping safety at the front
of all Grainger employees’ minds, a
commitment that runs from the Board
all the way through the organisation.
Our Live.Safe programme continues
to successfully engender a safety-first
culture. With the enactment of the
Building Safety Act, we have been at
the forefront of the industry, getting
ahead of new building safety regulations
and going beyond the new minimum
safety standards.
Political and regulatory landscape
During the year we have worked with
both Governments on their proposals
for reforming the rental housing market,
which have been broadly similar.
The UK now has a Labour Government
with a notable majority. The Labour
manifesto focused on driving economic
Our customers
High Customer
Satisfaction
We have continued to increase
our net promoter score for
customer satisfaction.
+48nps
Delivering homes
+231homes
Millwrights Place
— Bristol
Millwrights Place, the second
of three Grainger developments
in Bristol. By creating an
operational cluster we are
investing £275 million in the local
Bristol community and providing
a total of 893 new, high-quality,
energy-efficient homes.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
7
Chief Executive’s statement continued
growth through stimulating the supply
side, particularly through the delivery
of 1.5 million new homes over this
Parliament. At the same time, the Labour
Government also committed to raising
standards in the private rented sector.
We have been heavily engaged in dialogue
with policy makers, including the Labour
Party, both before the election and now
they are in government, to ensure our
perspective is understood and that policy
and regulation continues to encourage
investment into private rented homes,
which is being met positively.
We were pleased to see that the Labour
Government publicly ruled out any form
of rent controls in favour of stimulating
housing supply and raising standards.
Proposals to raise rental standards have
been consistently informed by Grainger
over the years. We will continue to
engage with Government and policy
makers to ensure such changes protect
future investment and housing delivery.
Our ambition is to lead in the quality of
homes and services our customers enjoy.
The Labour Government’s commitment
to reforming the planning system to
stimulate housing delivery is also welcome
and aligns to our growth strategy.
We will continue to engage with policy
makers and the UK Government
in the shaping of future legislation
and regulation.
A great place to work
We know Grainger is a great place to
work because our colleagues tell us it is.
The number one reason is because
of the people.
I am very proud to announce that
Grainger this year achieved the UK’s
leading benchmark for Equality, Diversity
and Inclusion (ED&I), the National Equality
Standard, which entailed an in-depth
and comprehensive assessment of our
ED&I programme and supportive culture
and policies.
I am also proud that this year Grainger
was recognised as a leading FTSE business
for women in business, ranking 19th out
of the FTSE250 in the FTSE Women
Leaders review.
It is also pleasing to report that our
colleague engagement scores remain
high, achieving a ‘Very Good’ rating in our
annual survey administered independently
by Best Companies. Grainger is now in
the Top 100 Employers according
to Best Companies.
Outlook of compounding growth
and market momentum
FY24 marked another year of very strong
growth in net rental income and EPRA
earnings as our operating platform and
excellent pipeline continue to deliver
compounding growth. With earnings
guidance increased for the next two
years and a sizable opportunity for
further additional growth beyond, we are
accelerating our growth and delivering
on our strategy.
The market opportunity for the UK BTR
sector is substantial and Grainger, as
market leader with a proven track record
of successfully launching and operating
new BTR homes, is best placed to continue
to accelerate and grow in this sector.
Rental growth for the year ahead is
expected to remain above the long-term
historical average of 3.5% as well as above
our underwriting assumptions.
Our pipeline for growth is impressive
at c.50% of our current BTR portfolio.
This growth in our core cities will be
delivered with our strengthening
relations with partners including public
sector landowners.
Our asset recycling programme will
continue to support our growth ambitions
whilst allowing us to maintain a strong
balance sheet.
Structural undersupply combined with
a pipeline for growth, our expertise and
leading operating platform means we are
perfectly positioned to continue to grow
rapidly. The benefits of scale will enhance
returns and deliver compound earnings
growth for our Shareholders as well as
providing a great experience for renters.
I am proud to lead a great team whose
purpose is to enrich people’s lives by
the homes we create and the service
we deliver. I want to thank the Grainger
team, our Board and our Shareholders for
continuing to support us in this endeavour.
Helen Gordon
Chief Executive Officer
20 November 2024
Engaged
Workforce
Colleague engagement remains
high with Grainger now in the
Top 100 best companies in the
independently administered
survey by Best Companies.
Our colleagues
Grainger plc
Annual Report and Accounts 2024
8
Grainger provides high quality, mid-
market homes to rent in vibrant, well-
connected locations across the UK.
We are working alongside and creating
exciting communities with teams
that go above and beyond to provide
exceptional customer service.
A good home is the foundation for
a great life, if you Rent Well then you
can Live Well.
Great customer
service
p14
Great communities
p16
Great value
p10
Great locations
p12
Great
Renting
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
9
Great
value
Co-working spaces included
With hybrid working as important as ever, we provide a
variety of flexible co-working spaces within our amenity
offering, including individual working pods, co-working
lounges and bookable meeting rooms, all with free Wi-Fi.
On-site support
Grainger prides itself on great
customer service, and by directly
employing Resident Services
Teams, who are located within our
buildings, we ensure the highest
quality service. We provide in-house
customer service training to all our
employees ensuring consistency
across the business.
Included in your rent
Wi-Fi included
Co-working spaces
24hr Gym
Jonathan Pitt,
Director of Lettings &
Residential Marketing
Renting with Grainger is
more than just a home
When you rent with Grainger you get more than
a place to live. We provide a home in which you
can put down roots and grow. We offer flexible
long-term tenancies and rents that are affordable
to a wide range of households.
Our buildings and homes are designed with
people at the heart, with a variety of amenities
available to all customers at no extra cost,
including 24-hour gyms so residents can exercise
at a time convenient for them, free Wi-Fi in our
homes and amenity spaces so customers are
connected from day one and co-working spaces
for hybrid and flexible workers.
Our Resident Services teams are on hand to help
with any queries or just to be a friendly face, from
taking deliveries, arranging repairs to organising
social events.
“Our affordable and
flexible tenancies
provide exceptional
value for residents.”
Grainger plc
Annual Report and Accounts 2024
10
Proportion of
household income
spent on rent 28%
Grainger customer
affordability ratio
34.2%
England's average private
rental affordability ratio
Gym at The Copper Works, Cardiff
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
11
locations
Tom Grounds
Head of Research
Disciplined and
research-led
decision-making
Millwrights Place,
Bristol
Part of our Bristol
cluster, Millwrights Place
is Grainger’s second of
three BTR developments
in the city. By creating
an operational cluster,
we generate operational
efficiencies and can
further invest in the
customer experience.
Providing 833 homes in
Bristol .
New Launch –
The Silver Yard,
Birmingham
Providing 375 high quality,
one- and two-bedroom
rental homes in the heart
of the city, bringing our
regional offering up to
533 homes.
Great
Grainger plc
Annual Report and Accounts 2024
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Q: How does Grainger identify its
‘Great Locations’?
We identify our great locations
through a rigorous investment and
research-led process. Through this
process we have scored all cities and
major towns throughout the UK and
identified the locations with the greatest
rental demand and greatest growth
prospects. Once identified we can then
look to allocate capital in line with our
strict investment criteria. We create
operational clusters, building scale
and opportunities for operational and
management efficiencies, and enhanced
customer service.
Q: What key criteria do great
locations require?
Our locations of focus are typically
built-up areas, mostly in cities, where
we see large numbers of 20- to 40-year-
old private renters, strong employment
easily accessible by public transport,
walking and cycling, as well as a
strong local amenity offering including
GPs, supermarkets, and cultural and
recreational facilities.
Q: How many homes do Grainger
typically build in their target
locations?
Grainger typically targets building sizes
of 150 to 300 homes, depending on
the market. We look to create clusters
of multiple buildings, totalling between
500 to 1,500 homes in a city or region,
varying dependent on the city size.
Q: Why does Grainger create
operational clusters?
By creating clusters and building scale
in our target locations we can drive
efficiencies across the cluster, from a
single building management team who
provide a consistent service across the
network of buildings in that location, to
using local suppliers and contractors to
service the cluster, therefore providing
cost savings and enhanced service.
88/100*
* As measured by Walk Score
Average
Connectivity Score
View of Bristol from Millwrights Place
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Strategic report
Grainger plc
Annual Report and Accounts 2024
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customer
service
Reception at The Copper Works, Cardiff
2022
+34
2023
+43
2024
+48
NPS score
Great
Grainger plc
Annual Report and Accounts 2024
14
Jenny Lorimer
Director of Customer Experience
Delivering a great
experience to customers
Our people are the leading reason customers recommend
living in a Grainger home. By providing consistently great
customer service, we aim to attract and retain high-value
customers. Through a customer experience programme
that is insight led we are delivering on our purpose of
renting homes, enriching lives.
Over the past three years we have developed and
implemented a series of targeted service initiatives from
improving all customer communications and providing
customer service training to all colleagues to developing
the MyGrainger customer app and launching a user-
friendly leasing website. Through these initiatives we have
repeatedly increased customer engagement levels
and satisfaction scores.
Building insight into our Customer
Experience strategy
Leveraging data to inform our decision-making
is the foundation to successfully delivering our
Customer Experience strategy. By measuring
Grainger's performance at every stage of the
customer journey we can collect and analyse
this data to inform and shape our service
delivery and continuously improve the service
we provide.
Customer website
In August, Grainger
launched a new
customer- facing,
leasing website. The site
showcases and advertises
Grainger’s available
homes in real-time and
provides users with a
step-by-step guide to
renting with Grainger,
allowing them to
easily find their new
Grainger home.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
15
598
Community events
communities
Residents Lounge at The Copper Works, Cardiff
Great
16
Grainger plc
Annual Report and Accounts 2024
Wellesley children’s play
area opening
This summer, our
development in Wellesley,
Aldershot proudly opened
its inclusive children’s play
area. It was designed in
collaboration with young
Wellesley resident, Dylan,
who inspired, informed and
fed back on the design to
provide a welcoming and
inclusive space for all.
Samantha Lancaster
Senior Resident Services Manager
Making a positive impact in
our local communities
During 2024, we established our community engagement
programme to create positive social connections with the
wider communities around our buildings and in our clusters.
As part of the programme, each building or cluster has
identified three separate local stakeholder community
partners including a charity, local police liaison and school
or community project to connect and work with through
events, donations and volunteering.
From food bank donations, to volunteering in a charity
shop, litter picking and coffee mornings with the local
police, we have already seen our residents and local
communities come together to establish a wider evolving
community and we are already recognising the positive
impact the continued connections are building for the
longer term.
An active Community
Engagement Programme
Over the past year Grainger’s
Resident Services teams have held
over 598 events with residents,
creating a strong sense of
community within our schemes.
Financial statements
Governance
Strategic report
17
Grainger plc
Annual Report and Accounts 2024
BTR/PRS
Regulated tenancy
1.
Post pipeline includes committed and secured schemes and those going through planning and legals.
Our strategic transition to BTR (investment value)
PRS homes
9,443
Occupancy
97.4%
Portfolio valuation
£2.7bn
Like-for-like rental growth
+6.3%
Purpose built private
rental homes
We own over 9,000 private rental, predominantly build-to-rent (BTR),
homes across the UK, with a further 4,730 in our pipeline. Our portfolio
offers a mix of apartment buildings to suburban housing, all in great
locations and leased at mid-market rents. We build all our new homes
to high standards and technical specifications and manage them in-
house to ensure the best customer service.
Regulated tenancy homes
We own and manage 1,472 regulated tenancy homes across the
UK. These historical tenancy agreements were created before 1989
and the tenant has the right to reside for life. Rents are set at levels
below the open market by independent local rent officers, but the
capital gain on the eventual sale is significant. When these properties
are vacated, we typically sell them, generating significant cash flow
each year, providing funding for growth in our BTR portfolio.
Portfolio value
£648m
of portfolio
sold following
vacancy
7.1%
Average sales price
achieved against
valuation
(2.0)%
£4.1bn1
£0.4bn
£2.7bn
2015
2024
Post-
pipeline
delivery
23%
81%
87%
of our market leading business
We are the UK’s leading publicly listed provider of private rental homes.
We develop, own and operate rental homes across the country.
Years in operation
112
Customers
Operational homes
11,069
Pipeline homes
4,730
The shape and strength
25,000+
Grainger plc
Annual Report and Accounts 2024
18
Pipeline of growth
We have a significant £1.4bn investment pipeline which will deliver 4,730 homes and an estimated 75% growth in net rental
income when delivered and leased.
11,069 homes
Operational*
4,730 homes
PRS pipeline £1.4bn
£3.4bn
*Including Vesta co-investment, 154 homes at Millet Place.
£379m
Planning/Legals
1,391 homes
£541m
Secured
2,009 homes
£481m
Committed
1,330 homes
£2,781m
PRS portfolio
9,597 homes
£648m
Regulated
tenancies
1,472 homes
No material refinancing
requirement until 2028
Strong liquidity
with our pipeline fully fundable
through existing resources
Cost of debt fixed in
mid 3%s for c.4 years
Strong cash flows
of £200m+ per annum from operating
activities and sales proceeds
Strong financials and balance sheet
Net rental income
+14%
FY24: £110.1m
FY23: £96.5m
Dividend
+14%
FY24: 7.55p
FY23: 6.66p
Like-for-like rental growth
+6.3%
(141)bps
FY23: 7.7%
EPRA earnings
£48.0m
+21%
FY23: £39.8m
Adjusted earnings
£91.6m
(6)%
FY23: £97.6m
EPRA NTA
298pps
(2)%
Sep-23: 305p
Strategic report
Grainger plc
Annual Report and Accounts 2024
19
Financial statements
Governance
The shape and strength of our business continued
Exciting opportunities in
the UK rental market
As demand continues to outstrip supply, Grainger can
play a vital role in providing much needed homes across
the country.
20% cumulative growth in PRS households forecast
BTR market share chart
2.1%
BTR units as a
proportion of the
5.7m UK private
rental households
4.3m
homes shortfall1
5.7m
Private rental
homes
Research-led
investment decisions
Our investment process begins with
comprehensive research by our in-house research
team using macro and micro-level data to identify
the cities and locations we want to invest in.
At the macro-level, we assess cities on their demographic,
economic and real estate fundamentals.
At the micro-level, we build a full understanding of the
surroundings, including local amenities, transport links and
access to employment centres.
We can then target the right locations that will deliver
growing customer demand and rental growth and allocate
our capital in line with our discerning investment criteria.
Read more about our 'Great locations' on page 12
Growth strategy to
continue to deliver
B
u
i
l
d
o
n
o
u
r
e
x
p
e
r
i
e
n
c
e
S
i
m
p
l
i
f
y
a
n
d
f
o
c
u
s
G
r
o
w
r
e
n
t
s
Additional net rent from committed pipeline
£38m
Upgraded near term FY26 EPRA Earnings
£60m
Sustainable Total Accounting Return
8%
EBITDA margin by FY29 as pipeline delivers
54% to over 60%
1
2
3
4
5
6
Analysed 329 local authorities
Analysed 58 cities
Targeting top ranking cities
Ranked on six success factors
Underpinned by 22 economic data sets
Detailed demographic
and rental market analysis
Scope for growth
Our strategy:
1.
Centre for Cities, February 2023: The-housebuilding-crisis-February-2023.pdf
(centreforcities.org)
BTR homes
Private rental homes
1200
1000
800
600
400
200
0
-200
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
all 16-34
all 35-54
all 55+
Source: Savills Research using English Housing Survey
Grainger plc
Annual Report and Accounts 2024
20
Best-in-class operating
platform powered by our
Through our technology platform, CONNECT, we have
invested in the business, creating a digital solution that
puts the entire rental process online and an app that
enables customers to easily connect with our teams.
Behind the scenes, technology is enabling ever
increasing efficiency across all business functions, linking
everything from marketing to payment processing,
giving more control and greater efficiency, and,
importantly, supporting the delivery of great
customer service.
CO ECT
technology
A leading approach to ESG
Our commitment to being a responsible business, from being a best-in-class
employer, to delivering the best customer service, providing sustainable homes
that enhance wellbeing and creating social value for our customers and
communities, is embedded throughout the business.
People
We put people at the heart of
everything we do and are committed to
being a great employer, a great landlord,
and to delivering long-term social value
to communities.
Assets
We design and create quality homes
with high standards of sustainability
that attract and retain customers and
helps to deliver long-term value to
our stakeholders.
Environment
We are committed to reducing our
environmental impact and protecting
the long-term future of our business,
including our commitment to being net
zero carbon in operations by 2030.
Read more about our people
Page 39
Read more about our assets
Page 44
Read more about environmental
impact Page 46
NN
Strategic report
Grainger plc
Annual Report and Accounts 2024
21
Financial statements
Governance
Manchester
Bristol
Milton Keynes
Newbury
Derby
Birmingham
Leeds
Nottingham
Cardiff
Oxford
Exeter
Guildford
London
Southampton
Liverpool
Newcastle
Sheffield
North West
(Manchester & Liverpool)
1,900 Operational homes
The Astley, Manchester
North East (Newcastle)
344
Operational homes
Yorkshire
(Leeds, Sheffield)
1,035 Operational homes
East & Midlands
(Birmingham, Derby, Nottingham)
1,332 Operational homes
Silver Yard, Birmingham
South West & Wales
(Bristol, Cardiff, Exeter)
1,216 Operational homes
The Copper Works, Cardiff
Millwrights Place, Bristol
468
Glasshouse Sq, Redcliff, Bristol
230
Exmouth Junction, Exeter
London (See overleaf)
3,053
Operational homes
Windlass Apt Ph2, Tottenham
2,312
Pipeline homes
South East
(Guildford, Southampton)
2,189 Operational homes
150
West Way Sq, Oxford
179
Guildford Phase 2
National rental portfolio
We have a national portfolio, specifically targeted at
locations with the highest demand, most significant
housing shortages, and the strongest growth prospects.
Geographic breakdown of our total
operational portfolio by number of homes
Central London
16%
Outer London
12%
South East
16%
South West
8%
East & Midlands
16%
North West
17%
Other regions
15%
11,069
Operational homes1
4,730
Pipeline homes
£3.4bn
Portfolio value
£1.4bn
Pipeline
The shape and strength of our business continued
1.
Includes London Portfolio
Key
Operational BTR cluster
FY24 homes added
Pipeline BTR schemes
Grainger plc
Annual Report and Accounts 2024
22
Battersea Park
Waterloo
Oval
Kew Gardens
Peckham Rye
New Cross
Woolwich Arsenal
Barking
Arnos Grove
Clapham Junction
Canning Town
Seven Sisters
Dalston Junction
Angel
Old Street
Liverpool Street
North London
61
Operational homes
162
Arnos Grove (CLL)
North East London
349
Operational homes
Windlass Apts Ph2, London
East London
706
Operational homes
132
Seraphina Apts, Fortunes Dock,
Canning Town
London City Fringe
413
Operational homes
South East London
344
Operational homes
324
Besson Street, Lewisham
Inner London
430
Operational homes
215
Waterloo Estate, Waterloo
139
Montford Place,
Kennington (CLL)
479
Nine Elms (CLL)
West London
292
Operational homes
401
Merrick Place, Southall
460
Southall Sidings (CLL)
South West London
458
Operational homes
London rental portfolio
We continue to invest in new homes through capital allocation and
partnerships with private and public sector organisations including
Transport for London.
3,053
Operational homes1
2,312
Pipeline homes
£1.5bn
Portfolio value1
£0.7bn
Pipeline
1.
Included in the
national portfolio figures
Key
Operational BTR cluster
FY24 homes added
Pipeline BTR schemes
Connected Living
London schemes (TfL)
Strategic report
Grainger plc
Annual Report and Accounts 2024
23
Financial statements
Governance
Our market
Strong income growth
and a resilient asset class
An 'all weather' asset class
Over the past five years the UK has experienced several
political, public health and economic challenges, not
dissimilar to many other parts of the world.
However, what has been true throughout all of this is
the resilience of housing demand, with the official UK
Government statistics (ONS) recording positive rental growth
despite these challenges - see chart below.
Indeed, private rental growth remained positive throughout
Covid, before accelerating in the aftermath. In contrast,
commercial property rents have tended to show notable
volatility in response to shifts in the economic outlook.
The residential asset class’s resilience reflects the sector’s
status as a 'need' rather than 'want' based real estate sector.
Residential rents are less volatile than commercial rents
Source: ONS, CBRE
“A 'need' rather than 'want'
based real estate sector.”
Tom Grounds
Head of Research
Jan - 11
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
-2.00%
-4.00%
Jun - 11
Nov - 11
Apr - 12
Sep - 12
Feb - 13
Jul - 13
Dec - 13
May - 14
Oct - 14
Mar - 15
Aug - 15
Jan - 16
Jun - 16
Nov - 16
Apr - 17
Sep - 17
Feb - 18
Jul - 18
Dec - 18
May - 19
Oct - 19
Mar - 20
Aug - 20
Jan - 21
Jun - 21
Nov - 21
Apr - 22
Sep - 22
Feb - 23
Jul - 23
Dec - 23
May - 24
Private Residential Rent Index (ONS)
Commercial Rental Value Index (CBRE)
Millwrights Place, Bristol
Grainger plc
Annual Report and Accounts 2024
24
Source: Department for Levelling Up,
Housing and Communities
Private landlords purchases less sales
BTR completions
Indicators of new housing supply
Source: Hamptons, ONS, BPF, Savills
Council Tax net increase
Net additional dwellings
Building control completions
New dwelling EPCs
Strong market fundamentals, defined by growing rental
demand and chronic undersupply that is set to remain
The UK has for many years delivered fewer new homes
than is required. In 2019/2020 housing delivery in England
peaked at circa 250,000 net additional homes - short of the
Government’s target of 370,000 homes per annum.
The latest available data suggests that net additional
dwellings in 2023/24 was circa 230,000- see chart below.
It is unlikely that any supply-side stimulus will sufficiently
boost new housing numbers to meet demand in the
short term due to the structural constraints within the
housebuilding and construction industries.
Savills estimates that demand for renting will increase by
a further one million households by 2031, a 20% increase.
The proposed changes to the planning system are welcome
and a step in the right direction, supporting Grainger’s
growth plans, but it will take time for some of the positive
measures to work their way through the system and the
gap to fill is significant, estimated to be a 4.3 million homes
shortfall by the Centre for Cities thinktank.
The BTR sector is growing and maturing, but small landlords
are exiting, offsetting new BTR supply in the rental market
Aside from the overall challenges with housing supply, the
private-rented sector is facing its own supply-side challenges.
The BTR sector now represents an estimated 120,000
completed homes out of the UK rental market which
represents 5.7 million homes. Industry estimates point to
the BTR sector delivering up to 30,000 homes per annum,
subject to a continued supportive regulatory environment.
The new supply from the BTR sector, however, is not
sufficient to offset the exit from the sector of small private
landlords – see chart below.
Since 2016, private landlords have been net sellers, on the
back of the restriction of mortgage interest tax relief to
20% (the basic rate of income tax), the 3% surcharge on
additional residential property purchases, amongst other
tax and regulatory changes. Higher tax measures affecting
small landlords were also announced in the UK Government
Budget in October 2024.
Moreover, the proposed reform of the private rented sector,
while aligned to Grainger’s own operational model, will be
challenging for many smaller, private landlords. The likely
result is that an increasing number of these small landlords
will sell their properties and they are lost to the rental
market, further exacerbating undersupply.
The numbers of landlords looking to exit the market has
accelerated in the latter half of 2024.
Small private landlords exiting versus BTR supply
2010
2011
2015
2013
2012
2014
2018
2016
2017
2019
2022
2023
2024 (f)
2021
2020
100,000
80,000
60,000
40,000
20,000
0
-20,000
-40,000
-60,000
0
100,000
50,000
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
150,000
200,000
250,000
300,000
350,000
400,000
Former government target
New government target
New
government
target
370k
Former
government
target
300k
Strategic report
Grainger plc
Annual Report and Accounts 2024
25
Financial statements
Governance
Our operating platform:
market leading, fully integrated, scalable
Our people
Technology
Data insight and knowledge
People are at the heart of everything we
do, from colleagues to customers. We are
committed to delivering great homes and
excellent service.
Leading the way through our CONNECT
technology platform, supporting our
sustainable growth and enhancing our
customer experience.
Driven by in-house research we have a wealth
of data, expertise and knowledge, enabling us
to maintain our market leading position.
See page 39
See page 21
See page 20
Our relationships
Financial capital
Building direct, positive relationships with our
residents, suppliers and partners to deliver
long-term, sustainable value.
With a portfolio of 11,069 operational rental
homes and a pipeline of 4,730 rental homes
in the strongest cities and towns, we have the
UK’s leading rental housing portfolio.
A strong balance sheet, robust capital
structure and disciplined approach to
investment, we are in a position of resilience
to ensure sustainable returns.
See page 47
See page 22
See page 31
Customers
Local communities
Suppliers
Benefit from safe, sustainable high quality
homes with great facilities and service.
+48 pts
Net Promoter Score (NPS)
We are committed to supporting the local
communities where we invest and operate to
ensure we make a positive impact.
598 events
We work closely with our suppliers,
acting with integrity and always
ensuring we are fair and responsible.
70%
Spent locally
Shareholders
Colleagues
Government
We generate attractive, long-term, and risk-
adjusted sustainable returns for our investors
and deliver on our ESG commitments.
7.55p
dividend per share
We offer a place where individuals can be part
of a caring team, reach their full potential and
enjoy a fair and welcoming workplace.
'Very good'
employee survey score
We are helping support the
Government’s aim of increasing
housing supply, improving standards
in the rental housing market and
progressing towards net zero.
1,236
new homes added
Our portfolio
and pipeline
Outputs that benefit our key stakeholders
The inputs to our business
Our business model
See page 31
Grainger plc
Annual Report and Accounts 2024
26
I
n
v
e
s
t
O
r
i
g
i
n
a
t
e
O
p
e
r
a
t
e
Rent well,
live well
How we create value
Our fully integrated business model and operating platform ensures we
are investing in, designing and operating the best possible homes while
providing excellent service. Great homes and great service means higher
customer satisfaction, higher occupancy, better rental growth and better
valuations, enabling us to deliver market leading, sustainable returns for
our Shareholders, and creating value for all our stakeholders.
Invest
Research-backed
investing
Allocating capital in the strongest
locations and best assets
Originate
Planning, design
and delivery
Controlling the delivery and quality
of our pipeline of new homes
Operate
Scalable platform
Through technology, our market leading
operating platform is scalable to support
our continued growth
See page 20
See page 22
See page 21
Strategic report
Grainger plc
Annual Report and Accounts 2024
27
Financial statements
Governance
Link to strategy
Grow rents
Simplify and focus
Build on our experience
Gross rental income
after deducting property
operating expenses.
Like-for-like average
growth of rents across our
PRS portfolio.
Property operating costs
expressed as a percentage
of gross rental income.
Profit before tax,
valuation movements on
investment assets and
derivatives, and other
adjustments, which do not
form part of the normal
ongoing revenue or costs
of the business.
Profit before tax is a
statutory IFRS measure
as presented in the
Group’s consolidated
income statement
(including valuation
movements).
Increase of 14% due to
a combination of strong
delivery of pipeline
schemes launches
(£10.9m), strong like-for-
like rental growth (£6.1m)
reflecting strong demand
for our product, offset by
disposals (£3.4m).
6.3% like-for-like growth
in our PRS rental income
driven by our strong
leasing performance, with
strong growth in new
lets (5.6%) and renewals
(6.8%).
Gross to net for our
stabilised portfolio
improved 50bps to 25.0%
as we continue to deliver
efficiency benefits as we
build out our clusters.
Decreased by 6% as sales
profits were lower than
prior years as we continue
to shrink our regulated
tenancy portfolio in line
with our strategy.
Increase of 48% driven
by stronger property
valuation performance
than the prior year.
See Note 6 to the
financial statements.
See Glossary on page
178 for definition and
calculation basis.
See Note 6 to the
financial statements.
See Note 3 to the
financial statements
for explanation and
for reconciliation to
statutory measures.
See Consolidated income
statement on page 123.
KPIs
Driving income returns
Our key performance indicators (‘KPIs’) are aligned to the business strategy. These measures are used by the Board
and senior management to actively monitor business performance.
Net rental income
(£m)
20
21
22
86.3
70.6
73.6
23
96.5
24
110.1
PRS rental growth
(%)
20
2.5
21
0.3
22
4.8
23
8.0
24
6.3
Property operating cost
(gross to net) (%)
20
25.9
21
27.6
22
28.9
23
27.8
24
28.9
Adjusted earnings
(£m)
20
81.8
21
83.5
22
93.5
23
97.6
24
91.6
Profit before tax
(£m)
20
99.1
21
152.1
22
298.6
23
27.4
24
40.6
KPI definition
Comment
Link to strategy
Notes
Grainger plc
Annual Report and Accounts 2024
28
Link to strategy
Grow rents
Simplify and focus
Build on our experience
EPRA NTA (Net Tangible
Assets) is the market
value of property assets
after deducting deferred
tax on trading assets,
excluding intangible
assets and derivatives.
EPRA NDV (Net Disposal
Value) is EPRA NTA after
deducting deferred tax
on investment property
revaluations and including
market value adjustments
of debt and derivatives.
TPR is the change in
gross asset value (net
of capital expenditure),
plus property related net
income, expressed as a
percentage of opening
gross asset value.
Ratio of net debt to
the market value
of properties on a
consolidated Group basis.
Average cost of debt for
the year including costs
and commitment fees.
Decreased by 2% to 298p
per share reflecting the
impact during the first
half of the removal of
multiple dwellings relief
(MDR) equating to 8p
per share.
19p reduction in the
year reflecting valuation
performance, as well
as market movements
in fixed rate debt
and derivatives.
Returns of 1.9%
demonstrating
strong operational
performance offset
by property valuation
declines including the
one-off impact of the
Government's withdrawal
of MDR.
LTV is up marginally on
the prior year at 38.2%,
however it is down from
the half year of 39.1%.
Average cost of debt at
3.2% as we have locked
into rates in the mid
3% range for the next
four years.
See page 34 for further
detail on EPRA NTA
and page 171 for EPRA
performance measures.
See Note 4 to the
financial statements for
reconciliation to statutory
measures and EPRA
performance measures
from page 171.
See Alternative
Performance
Measures on page 176
for calculation.
See Alternative
Performance
Measures on page 176
for calculation.
See Note 27 to the
financial statements
for further detail
regarding capital
risk management.
Delivering capital returns
EPRA NTA
(pps)
EPRA NDV
(pps)
Total Property
Return (‘TPR’) (%)
Loan to value
(‘LTV’) (%)
Cost of debt
(average) (%)
20
285
21
297
22
317
23
305
24
298
20
273
5.4
21
284
7.5
22
334
7.5
23
314
0.4
24
295
1.9
20
21
22
23
24
20
21
22
23
24
20
21
22
23
24
Strategic report
KPI definition
Comment
Link to strategy
Notes
33.4
30.4
33.4
36.8 38.2
3.1
3.1
3.1
3.3
3.2
Strategic report
Grainger plc
Annual Report and Accounts 2024
29
Financial statements
Governance
Non-financial and ESG KPIs
Our customers
and communities
Our people
Our impact on
the environment
We continue to invest in our
Customer Experience Programme
and customer service training,
enhancing our offer to our
customers and communities.
We are committed to creating
thriving communities that help
attract and retain customers and
benefit those living and working in
the areas close to our schemes.
We are committed to putting
‘people at the heart’, aligning to
our focus on positive colleague
engagement. We continue to invest
in the wellbeing and development
of our people.
Our independent colleague
engagement survey confirms that
we have a highly engaged workforce
which is reflected in the high levels
of participation.
We have made great progress in
measuring and reducing our carbon
emissions in alignment with our net
zero carbon pathway. This year we
continued to implement our Living a
Greener Life customer engagement
campaign and commenced a
supplier engagement programme
to enhance measurement and
reduction of Scope 3 emissions.
+48pts
Customer Net Promoter Score
Very Good
rating by colleagues in our annual
survey by Best Companies
-48%
reduction in Scope 1-2 carbon
emissions per m2 (market based)
31 months
average length of stay for PRS
customers
86%
response rate to our employee
engagement survey
-23%
reduction in Scope 1-3
carbon emissions per m2
598
resident and community events
84%
ED&I colleague data coverage
demonstrating high levels of
engagement
94%
EPC ratings 'C' and above
(for PRS properties)
Grainger plc
Annual Report and Accounts 2024
30
The 14% growth in our net rents
has been achieved by the continuing
delivery of our high quality
pipeline and excellent operational
performance with like-for-like rental
growth of 6.3% and occupancy
of 97.4%.
The demand for our homes continues
to grow as consumers’ awareness of
the benefits of our offering increases.
This strong revenue growth is magnified
by the operational leverage generated
through our CONNECT platform, scale
efficiencies and continued cost control to
deliver even stronger earnings growth with
EPRA earnings up 21% in the year.
It was also an exceptional year for sales
with a record £274m of sales delivered
during the year.
Financial review
Financial review
“FY24 has been another
year of substantial growth
in the business driving
continuing compounding
growth in EPRA earnings.”
Strong
Growth
This higher level of asset recycling ensures
that our property level returns are
optimised while also providing capital for
further investment and managing our net
debt in line with our plans.
The second half of the year saw a return
to valuation growth. Over the year we
saw a continuation of the theme of strong
ERV growth of 5.2% offsetting yield shift
of c.20bps, but with yields stabilising the
balance of these two components should
prove more positive going forward.
Our balance sheet remains in great shape
with strong liquidity and a strong hedging
profile giving us minimal exposure to
interest rate rises for the next four years.
Both net debt and LTV have decreased
from the half year levels demonstrating
our ability to flex our capital structure
through the strong liquidity in our
asset base.
Our dividend per share continues its strong
growth trajectory, increasing by 14% to
7.55p on a per share basis (FY23: 6.65p).
This year’s strong growth looks set to
continue with similar levels of absolute
growth in net rents expected next year
as well as a dividend that will continue to
grow strongly as we convert to a REIT.
We also upgrade our EPRA earnings
guidance for FY26 by £5m to £60m, the
second upgrade over the last 12 months,
with the potential to deliver 50% EPRA
earnings growth from the delivery
of our committed pipeline over the
medium term.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
31
Income statement
The business continues to deliver very
strong growth in EPRA earnings, up 21%
to £48.0m (FY23: £39.8m) with the strong
growth in net rents of 14% driving even
stronger earnings growth as a result of the
strong operational leverage inherent in
our business.
Adjusted earnings decreased by 6% to
£91.6m (FY23: £97.6m) as sales profits
were lower than prior years as we continue
to shrink our regulated tenancy portfolio in
line with our strategy. Other adjustments
include hedge ineffectiveness of £6.6m
and a £5.0m fire safety provision. See Note
3 of the financial statements on page
135 for a reconciliation between adjusted
earnings and IFRS profit before tax.
Highlights
Income returns
FY24
FY23
Change
Rental growth (like-for-like)
6.3%
7.7%
-141 bps
- PRS
6.3%
8.0%
-167 bps
- Regulated tenancies (annualised)
6.6%
5.9%
+74 bps
Net rental income (Note 6)
£110.1m
£96.5m
+14%
Adjusted earnings (Note 3)
£91.6m
£97.6m
(6%)
EPRA earnings (Note 4)
£48.0m
£39.8m
+21%
IFRS profit before tax (Note 3)
£40.6m
£27.4m
+48%
Earnings per share (diluted,
after tax) (Note 15)
4.2p
3.5p
+20%
Dividend per share (Note 14)
7.55p
6.65p
+14%
Capital returns
FY24
FY23
Change
Total Property Return
1.9%
0.4%
+153 bps
Total Accounting Return (NTA basis) (Note 4)
0.3%
(1.8)%
+207 bps
EPRA NTA per share (Note 4)
298p
305p
(2%)
Net debt
£1,453m
£1,416m
+3%
Group LTV
38.2%
36.8%
+135 bps
Cost of debt (average)
3.2%
3.3%
13 bps
Reversionary surplus
£147m
£213m
(31%)
Financial review continued
Income statement (£m)
FY24
FY23
Change
Net rental income
110.1
96.5
+14%
Mortgage income (CHARM)
4.6
4.7
(3)%
Management fees and other income1
8.1
5.0
+59%
Overheads
(35.3)
(33.5)
(5)%
Pre-contract costs
(1.0)
(1.2)
+20%
Net finance costs
(38.8)
(31.8)
(21)%
Joint ventures
0.3
0.1
+193%
EPRA Earnings
48.0
39.8
+21%
EPRA EPS
6.5p
5.4p
+21%
Profit from sales
43.6
57.8
(24)%
Adjusted earnings
91.6
97.6
(6)%
Adjusted EPS (diluted, after tax)2
9.3p
10.3p
(10)%
Valuation movements3
(39.4)
(70.2)
+44%
Other adjustments
(11.6)
-
(100%)
IFRS profit before tax
40.6
27.4
+48%
Earnings per share (diluted, after tax)
4.2p
3.5p
+20%
1.
Including LADs: “liquidated and ascertained damages” which provide financial compensation for the loss of rental income
caused by delays to the practical completion of our schemes.
2.
Adjusted earnings per share includes tax of £22.9m (FY23: £21.5m) in line with Corporation Tax of 25% (FY23: 22%).
3.
Including £(59)m in H1 due to the removal of MDR; excluding this, underlying valuation movement was +£20m in FY24.
The Silver Yard, Birmingham
Grainger plc
Annual Report and Accounts 2024
32
Rental income
Net rental income increased by 14% to
£110.1m (FY23: £96.5m), as we continue
our trajectory of recurring double-digit
growth. The substantial £13.6m increase
was driven by a combination of strong
delivery of pipeline scheme launches
which contributed £10.9m along with
another year of good rental growth
reflecting strong demand for our product.
Overall like-for-like rental growth was
+6.3% (FY23: +7.7%) with the PRS
portfolio continuing to deliver strong
growth at +6.3% (FY23: +8.0%), with
rental growth on renewals of +6.8% (FY23:
+7.2%) and +5.6% (FY23: +9.2%) on new
lets. Our regulated tenancy portfolio
also delivered strong rental growth at
+6.6% (FY23: +5.9%). Looking forward
we see rental growth in the coming year
continuing above the long-run average of
3 -3.5%.
Gross to net for our stabilised portfolio
improved to 25.0% (FY23: 25.5%) as we
continue to deliver efficiency benefits as
we build out our clusters.
We expect FY25 to deliver similar levels of
absolute growth in net rent.
£96.5m
+£110.1m
+£10.9m
£(3.4)m
+£6.1m
FY23
Net rental
income
Disposals
Rental
growth and
occupancy
BTR
investment
FY24
Net rental
income
120
110
100
90
80
70
60
50
Total L4L
6.3%
PRS L4L
6.3%
- New lets
5.6%
- Renewals
6.8%
Regs L4L
6.6%
+14%
Rental income
(£m)
The Copper Works, Cardiff
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
33
Financial review continued
Balance sheet
Our PRS portfolio now represents 81%
of our operational portfolio given the
success of both our pipeline delivery and
regulated tenancy recycling, putting us
in the position to convert to a REIT in
October 2025.
LTV is up marginally on the prior year
at 38.2% (FY23: 36.8%) reflecting
investment, however it is down from the
half year of 39.1%, reflecting accelerated
sales in the second half. Looking forward,
in the higher interest rate environment,
we will be using our strong operating cash
flows to reduce debt and LTV over the
medium term.
EPRA NTA decreased by 2% to 298p per
share (FY23: 305p per share) reflecting
the impact during the first half of the
removal of multiple dwellings relief (MDR)
equating to 8p per share; excluding this
one-off impact NTA would be marginally
up. EPRA NTA was up 4p (1.4%) on the half
year position of 294p.
Sales
FY24 was an exceptional year for sales.
As we had previously guided we stepped
up asset recycling in the year in order
to maintain our balance sheet and
create further capacity for investment.
Delivery on this strategy has been very
strong with overall sales revenue of
£274.3m, a 42% increase on the prior year
(FY23: £193.7m) with £147.6m of sales
revenue coming from PRS recycling.
Sales profits were lower at £43.6m
(FY23: £57.8m) as expected reflecting a
smaller regulated tenancy portfolio from
which sales profits are generated whereas
profits from PRS recycling are based on
valuation and therefore have much lower
profit margins.
FY24
FY23
Sales (£m)
Units sold
Revenue
£m
Profit
£m
Units sold
Revenue
£m
Profit
£m
Residential sales on vacancy
132
54.9
25.4
148
70.1
34.1
Tenanted and other sales
868
194.0
15.6
389
88.1
19.4
Residential sales total
1000
248.9
41.0
537
158.2
53.5
Development sales
25.4
2.6
35.5
4.3
Overall sales
1000
274.3
43.6
537
193.7
57.8
Vacant property sales profits in the
period were down 26% as expected,
delivering £25.4m (FY23: £34.1m) due to
the reducing regulated tenancy portfolio
size and a strong end to the prior years’
sales. Vacancy rates were flat at 7.1%
(FY23: 7.8%) with margins similar to the
prior year. Pricing achieved remained
robust with sales values within 2.0% of
vacant possession values.
Sales of tenanted and other properties
delivered £15.6m of profit (FY23: £19.4m)
from £194.0m of revenue (FY23: £88.1m)
with the increased revenues driven by the
higher PRS recycling.
Margins on the regulated tenancy sales
which make up the balance and deliver the
profit were broadly in line with prior years.
Development profits in the period were
£2.6m which relates to the sale of two
land plots at our Berewood location.
Overheads
Overheads increased by 5% in the period
to £35.3m (FY23: £33.5m) as a result of
wage growth across our employee base.
Market value balance sheet (£m)
FY24
FY23
Residential – PRS
2,708
2,423
Residential – regulated tenancies
591
693
Residential – mortgages (CHARM)
57
67
Forward funded – PRS work in progress
266
441
Development work in progress
84
126
Investment in JVs/associates
91
91
Total investments
3,797
3,841
Net debt
(1,453)
(1,416)
Other liabilities
(48)
(66)
EPRA NRV
2,296
2,359
Deferred and contingent tax – trading assets
(76)
(91)
Exclude: intangible assets
(2)
(1)
EPRA NTA
2,218
2,267
Add back: intangible assets
2
1
Deferred and contingent tax – investment assets
(113)
(106)
Fair value of fixed rate debt and derivatives
88
171
EPRA NDV
2,195
2,333
EPRA NRV pence per share
309
318
EPRA NTA pence per share
298
305
EPRA NDV pence per share
295
314
Grainger plc
Annual Report and Accounts 2024
34
Property portfolio performance
Our portfolio returned to valuation growth
in the second half with a 1.1% increase
offsetting the 1.9% decline in the first half
(of which 1.6% related to the one-off £59m
impact of the removal of MDR).
Over the whole year valuation declined by
0.8% (FY23: (2.4%)) including this one-off
impact; excluding MDR the underlying
valuation increase was 0.8% during
the year.
305p
(8)p
297p
17p
(10)p
2p
(8)p
298p
FY23 EPRA
NTA
FY24 EPRA
NTA
MDR
Net rents, fees
& income
Overheads &
finance costs
Dividends, tax
& other
Valuation
320
310
300
290
280
270
260
(2)%
Portfolio
Region
Capital value
Total valuation movement
(£m)
£m
%
PRS
London & SE
1,277
(31)
(2.5%)
Regions
1,431
6
(0.4%)
Regulated tenancies
PRS total
2,708
(25)
(0.9%)
London & SE
512
(2)
(0.4%)
Regions
79
1
0.9%
Regulated tenancy total
591
(1)
(0.2%)
Operational portfolio
3,299
(26)
(0.8%)
PRS development
350
(5)
(1.3%)
Total portfolio1
3,649
(31)
(0.8%)
1.
Excluding CHARM and Vesta.
Our PRS portfolio saw strong ERV
growth of 5.2% which more than offset
the c.20bps outward yield movement in
the period. Our regional PRS portfolio
outperformed London as the capital saw
a larger outward yield shift. Valuations in
the regulated portfolio were largely flat in
the year.
EPRA net tangible assets (NTA)
Pence per share
Windlass Apartments, Tottenham Hale
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
35
Financial review continued
Financing and capital structure
Net debt increased slightly during the year
to £1,453m (FY23: £1,416m), however it
was down from the half year position of
£1,497m. The significant investment in
our pipeline of £270m was offset by the
step up in our sales programme which
generated £269m of net sales proceeds.
We maintained a strong level of liquidity
with £509m of headroom in our facilities
with an average debt maturity of 4.7
years including extension options.
Refinancing risk is minimal with no
material refinancing required until 2028.
We continue to benefit from a very
strong hedging profile, with four years
remaining and with our average cost of
debt remaining relatively flat at 3.2%
(FY23: 3.3%).
FY24
FY23
Net debt
£1,453m
£1,416m
Loan to value
38.2%
36.8%
Cost of debt (average)
3.2%
3.3%
Headroom
£509m
£519m
Weighted average facility maturity (incl. extension options)
4.7
5.5
Hedging
95%
95%
Summary and outlook
FY24 marked another year of very strong
growth in net rents and EPRA earnings
as our operating platform and excellent
pipeline continue to deliver compounding
growth. With earnings guidance increased
for the next two years and a sizeable
opportunity to deliver further additional
growth beyond, we are accelerating our
growth and delivering on our strategy.
Rob Hudson
Chief Financial Officer
20 November 2024
The Copper Works, Cardiff
The Astley, Manchester
Grainger plc
Annual Report and Accounts 2024
36
Grainger's approach to sustainability
38
Great people
39
Great assets
44
Great environment
46
is embedded
through the
business
Sustainability
Grainger's Berewood
development is on track to achieve
20% biodiversity net gain
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
37
Being a responsible business is core to Grainger’s
purpose to enrich people’s lives by providing high-quality
rental homes. We are committed to delivering positive
impacts for our customers, colleagues and communities
and for the environments in which we operate.
Positive
outcomes
Strategy
Sustainability is fully integrated into Grainger’s business
strategy and informs our key decision-making through the
inclusion of sustainability requirements in our key policies and
processes, including our asset hierarchy and specification for
new developments. This year we have invested in developing
asset level transition strategies informed by net zero
audits. All customer-facing colleagues have been trained in
sustainability and we have appointed champions across different
teams to ensure our approach is consistently delivered across
our portfolio.
See page 50
Metrics and targets
Building on the successful implementation of our strategy to
measure Scope 3 emissions, we have committed to set a science-
based target which is currently in the process of validation by
the Science-Based Targets initiative. This target covers our key
emissions sources including development and our customers
using energy in their homes. We are making good progress on
the implementation of our embodied carbon roadmap and our
operational carbon LTIP metric.
See page 54
Governance
The delivery of our sustainability programme is monitored with
strong oversight from Grainger’s Board through our dedicated
Responsible Business Committee, our Executive Committee
and internal management committees including our Operations
and Development Boards. This year we updated our policy
framework, including the Human Rights Policy, to ensure all
our stakeholders act in alignment with Grainger’s values and
our commitments to support and respect the human rights
of everyone affected by our business. We are proud to have
achieved the National Equality Standard reflecting our best-in
class approach to ED&I.
See page 86
Risk management
Climate change and other sustainability-related risks are
considered within Grainger’s corporate risk framework.
Physical and transition risks and environmental impacts and
opportunities are assessed on our existing portfolio and pipeline
assets. This analysis informs our investment, asset management
and refurbishment decisions and ensures we retain a resilient
and highly energy efficient portfolio.
See page 53
Grainger's approach to sustainability
Assets
• Deliver enhanced investment
decisions through incorporating
ESG considerations including
risks, costs and returns.
Environment
• Achieve net zero carbon for
our operations by 2030.
People
• Measure and deliver positive
social value contribution
to our customers and
local communities
• Ensure Grainger's workforce is
reflective of society.
Our commitments
Grainger plc
Annual Report and Accounts 2024
38
19th
FTSE Women Leaders
1
250
Creating inclusive
communities for colleagues
and customers
Our leading approach to ED&I contributes to
making Grainger workplaces a great place for
our colleagues to develop and progress. We are
committed to creating communities around
our homes that help our customers put down
roots and provide opportunities for colleagues
to give back.
people
Great
Grainger achieved 19th
out of 250 companies in
the FTSE Women Leaders
review, an independent
evaluation against
gender-focused targets.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
39
Sustainability continued
84%
of colleagues completed our
Workforce Diversity Tracking
questionnaire
People Strategy
Our People Strategy is at the heart of
everything we do, and this includes
prioritising ED&I, as an inclusive employer,
and also reflecting the communities that
we serve.
Listening and acting on feedback
Our colleague-centric approach to
sharing insight and listening to colleague
feedback, is supported by multiple
routes for colleagues to contribute their
ideas and suggestions. We have a well-
established approach, through two-way
communication and co-creation of people-
focused initiatives to ensure that the
colleague experience is at the forefront
of our initiatives. We have embraced
feedback which has helped shape our
people processes and policies, with
colleague experience at the centre.
An inclusive workplace
Achieving the National Equality
Standard
We are proud to have achieved the
National Equality Standard, the UK’s
leading benchmark in ED&I. Our approach
was informed by our People Strategy and
listening to colleague feedback as to what
matters most to them. ED&I remains
at the forefront of our People Strategy
and reflects the high standard of our
inclusive practices.
We continue to participate in the
Workforce Disclosure Initiative (WDI),
delivering year on year improvements.
This year, we achieved the highest
score yet at 98%, a score placing
Grainger amongst a very small
number of organisations, leading
on workforce disclosures.
We have broadened our ED&I training with
the delivery of Unconscious Bias training
for all colleagues and Mental Health
Awareness for People Managers, through
e-learning modules, by ENEI.
Our Company values were also reviewed
and refreshed, and now include ED&I in
each of the four values, which reflects our
core purpose and organisational culture.
Our ED&I Steering Committee, working
alongside our employee-led ED&I
Network, continue to work collaboratively
to support the delivery of a range of
initiatives and events, to create a culture
which is inclusive and where everyone
can bring their whole self to work. Our
well-developed programme of awareness-
raising activity and campaigns for both
colleagues and residents has been
expanded, listening to feedback to cover
a broader selection of topics.
This was the third year we have issued the
ED&I questionnaire, which was voluntarily
completed by 84% of our colleagues.
This information helps us to understand
the diversity of characteristics within
our workforce and to tailor our People
Strategy accordingly. During the year,
we have taken the following steps
to support colleagues:
• We are members of Carers UK
which provides support, guidance
and resources to colleagues via an
external platform.
• We celebrated Carers Week with a
colleague lunch and learn delivered
by Carers UK.
• The ED&I Network have established
a Working Parents Group.
• For office based colleagues, we have a
hybrid working policy with core office
days and flexibility around days worked
from home.
We are proud to have sponsored a
Bursary student through the Worshipful
Company of Chartered Surveyors (WCCS)
to achieve a first-class honours degree in
Building Surveying. Our commitment to
careers in real estate is supported by our
active engagement with the WCCS as
we continue our partnership and support
students into the sector on an
ongoing basis.
Wellbeing
Since the implementation of our
Wellbeing Strategy, we have continued
to further build our approach to
supporting colleague wellbeing.
Our specially dedicated Hub supports
the delivery of our Wellbeing Strategy
with guidance, information, an events
calendar and mental health champions.
Key programmes include access to a range
of resources and wellness campaigns,
promoting a healthy work life balance.
By prioritising our colleagues' overall
wellbeing, we are committed to fostering a
supportive and resilient workplace, where
everyone can thrive.
Investing in colleague development
and skills
We have continued to invest in colleague
development and our established career
framework is embedded within our
operations BTR teams. Due to the success
of the framework, we have developed this
further into other operations teams and
into non-operations areas.
We continue to sustainably develop our
colleagues by creating opportunities for
internal mobility, development and growth,
which supports our retention strategy as
well as building succession for the future.
Great colleagues:
Ensuring Grainger’s
workforce is engaged
and reflective of society
With people at the heart of
everything we do, we are
committed to colleague
wellbeing and development, as
well as leading the way in ED&I.
Grainger plc
Annual Report and Accounts 2024
40
Gender split
Ethnicity split
We have supported more secondments
and promotions this year than ever
before, contributing to developing careers
at Grainger.
Our approach to investing in colleague
learning and manager development has
been further enhanced with bite sized,
module training including Effective
Recruitment, Induction & Onboarding
and Performance Reviews.
We have continued to utilise the
Apprentice Levy and have supported
colleagues to achieve apprenticeships on
Data and CMI Management qualifications.
In addition we have supported other
formal qualifications to assist colleagues
in their roles.
We launched our Grainger Mentoring
Programme for the third year, based on
the positive feedback from both mentors
and mentees who had completed the
scheme. The value this brings to our
colleagues has supported a range of
development areas including technical
expertise, management development
and soft skills. The programme supports
cross-collaboration between different
departments and sites, to help bring the
sharing of diversity of knowledge.
Achieved National
Equality Standard
This year Grainger are proud to have achieved the UK’s
leading benchmark for ED&I. Achieving the accreditation
recognises our inclusive best practices and our
commitment to excellence in ED&I.
This data is derived from our voluntary workforce diversity data tracking questionnaire,
which is undertaken annually, and this year we achieved an 84% response rate.
This diversity data ensures that we can better understand the make-up of our workforce
and support our colleagues. Our workforce diversity aspiration is to reflect the
communities in which we operate, and by capturing this data we are able to assess how
our workforce compares to our local communities and develop action plans accordingly.
By comparing our data to the 2021 Census data, we have identified that in the North
East, one of our major places of employment, our colleague diversity is in line with
regional ethnicity demographics. In London and the South East, our other major places
of employment, whilst our workforce is broadly reflective of the regional population, we
are looking at how we can improve ethnic diversity as part of our ongoing commitment
to support increased diversity across the business including in our senior management.
For reporting on Board and senior management diversity, please see further reporting
included in our Governance report on page 82.
White
Asian or
Asian British
Black or
Black British
Mixed or
Multiple Ethnic
Prefer to self
describe
Prefer not
to say
Any other
1
1
7
3
14
8
55
56
28
42
21
41
59
80.99%
7.54%
4.59%
3.93%
1.64%
0.98%
0.33%
31
Executive
Directors
(Main Board)
Executive
Committee
Senior
Managers
Managers
Associate
Support
Onsite
367
Total employees
210
Female
157
Male
81.7%
9.3%
4.0%
2.9%
2.1%
All colleagues
England and Wales 2021 census
World Cuisine Day event led by our colleague ED&I Network
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
41
Our values
Our values help us fulfil our purpose. They direct how we make choices and perform at our best.
They set us apart for our customers, employees, investors and partners.
Leading
the way
We are ambitious about giving people the
best renting experience and never stop finding
smart and creative ways to help them enjoy
renting with us.
• We find new and better ways to put the joy
into renting.
• We harness technology.
• We encourage collaboration, two-way
communication and innovation.
• We set big ambitions for how we manage our
environmental and social impacts.
• We recruit, develop and retain colleagues with
diverse backgrounds, experiences and ideas.
Every home
matters
We’re passionate about providing every customer
with a great place to rent that they can make
their home.
• We set the bar for professionalism in the
rental sector.
• We give people more reasons to choose renting.
• We create communities and cultivate a culture of
diversity and inclusion.
• We improve the housing landscape in the UK.
Exceeding
expectations
People at
the heart
We want our colleagues and customers to feel
safe, secure and happy at work and in their homes.
• We offer high levels of comfort, service, flexibility
and choice.
• We respect individuals and individuality.
• We celebrate diversity and treat our colleagues,
customers and suppliers with respect.
• We treat everyone with equal friendliness
and decency.
• We make our customers’ lives easier.
Renting homes,
enriching lives
With over 100 years’ experience, we know what
we’re doing and what our customers need to enjoy
their homes. We go beyond expectations.
• We strive to meet our customers’ needs with the
best possible service.
• We proactively seek feedback to ensure we never
rest on our laurels.
• We embrace a culture of equality and inclusion
and create an environment where all colleagues
are given the opportunity to thrive.
Sustainability continued
Our purpose
Grainger plc
Annual Report and Accounts 2024
42
598
resident events held across
our national portfolio.
82 activities involved local
stakeholder partners,
including charities
Communities
Delivering enhanced community
engagement for colleagues and
customers
This year we built on the success of our
Community Engagement Blueprint by
developing local community engagement
plans. Designed to help foster relationships
between our customers and their local
communities, all BTR sites identified
three local community stakeholders and
partnered with them to deliver initiatives
and events for our residents:
Food banks – All sites partnered with a
local food bank to collect donations from
Grainger colleagues and residents to help
local families in need. In addition to food
donations, we held fundraising initiatives
at our residents' social events, raising
over £3,000 across our sites for local
charities. Many of the charities attended
our sites to meet with residents and to
raise awareness of their work and how
they are helping the communities around
our buildings.
Community policing teams – Security
is a priority for Grainger’s customers
and so we provided opportunities for
our residents to meet with their local
community policing teams and receive
personalised safety advice at ‘cops and
coffee’ events.
Other relevant stakeholders – sites
chose one additional stakeholders
group that was relevant to their resident
demographic. For example, at properties
with a high proportion of families,
we partnered with local schools and
Grainger colleagues helped deliver
learning programmes and reading
support. Some sites opted to partner
with local voluntary groups and charities,
contributing their time to activities from
litter picks to sorting donations, and over
120 volunteering hours were contributed.
Our Birmingham sites partnered with
Birmingham City University on a local
community arts project where students
were asked to create artwork representing
what Birmingham means to them, with
the winning pieces now on display in
Grainger’s newly opened building The
Silver Yard.
The charitable activities conducted
as part of our operational community
engagement contributed to high levels
of charitable investment, with 13% of
Grainger colleagues volunteering across
23 activities and over £130,000 including
donations, time and in-kind invested. This
included charitable donations worth over
£32,000 made to the local charity partners
Grainger has been supporting across our
key cluster locations where the funds are
helping increase service provision in the
areas around our buildings, and to our
corporate charity partner LandAid where
the funds are contributing to the charity’s
ambitious new strategy to support 10,000
young people over the next five years.
Grainger also continued to use our homes
to support those who need them the
most, by continuing to house Ukrainian
refugee families at a discounted rent
and through supporting the launch of
LandAid’s Pathfinder programme with our
pledge of three homes to house young
people at risk of homelessness. The homes
are leased to local charities who manage
the tenancies and we have already
welcomed our first residents who benefit
from all the building’s amenities, residents
events programme and Grainger’s
Resident Services Team alongside all
our residents.
Grainger is a founding partner of LandAid’s new BTR Pathfinder initiative to
provide tenure-blind homes to young people facing homelessness, helping
them take their first step to living independently.
Great communities:
Delivering a
positive social value
contribution to
our customers and
local communities
Creating a sense of community
in our buildings helps our
residents put down roots in an
area and helps maintain high
levels of customer satisfaction
and retention. Our community
engagement programme is
creating important connections
between our customers and
local community stakeholders.
'Sip & Paint' event at The Copper Works, Cardiff
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Annual Report and Accounts 2024
43
Kew Bridge Court, London
One of our long-term hold assets for which we have
developed a detailed net zero carbon asset plan
94%
BTR properties with
EPC rating of A to C
47%
market average
Great
assets
Incorporating ESG
considerations including
risks, costs and returns
Grainger continues to optimise the energy
efficiency of our long-term hold portfolio through
our asset management and refurbishment
strategies. Informed by external audits of asset
performance, we are developing plans to ensure
our portfolio is fossil-fuel free and aligned to the
net zero transition.
Sustainability continued
Grainger plc
Annual Report and Accounts 2024
44
To ensure our BTR properties continue
to meet the highest standards of energy
and carbon performance, we completed
a thorough review of our specification for
new developments, ensuring opportunities
to reduce operational and embodied
carbon requirements are integrated
throughout. These include expanding our
requirement for embodied carbon to be
measured on all projects and ensuring we
procure energy efficient appliances.
Alongside developing new energy
efficient BTR buildings, Grainger has a
core portfolio of long-term hold assets.
These assets have been assessed through
our bespoke asset hierarchy review which
includes ESG related criteria and identifies
which assets offer opportunities for
renovation and repositioning to align them
with the high quality standards of our new
build portfolio.
We have commenced a programme to
develop net zero asset management
plans for all assets we plan to retain as
long-term holds. These plans are informed
by a detailed site audit undertaken by
a third-party expert which identifies
improvements that can be made to the
communal areas and the apartments
in the building. The recommendations
include lighting upgrades, installation of
efficient ventilation systems (MVHR) and
replacing gas boilers with heat pumps.
The identified actions are incorporated into
our long-term capital investment plans.
Major refurbishments continue to be
implemented at key assets to upgrade
the building fabric and lighting and
enhance the apartment interiors.
Improvement works are designed to
maximise resident comfort and energy
efficiency and following refurbishments,
we typically see improved EPC ratings.
At sites with communal heating systems,
we have undertaken third-party
assessments to optimise the system
performance, reducing the energy
required to power the system and the
energy used by our customers for their
heating and hot water. We continue to
focus on electrifying our portfolio to align
with a fossil-fuel free transition, and all
future schemes are designed to have low-
carbon heating and hot water systems
supplied by heat pumps or low-carbon
district heat networks.
Reducing Grainger’s corporate emissions
is a key element of our net zero transition.
All Grainger’s permanent offices now
meet our desired energy efficiency
standards following the opening of
our new Birmingham and London
offices during the year. The fit-out of
these offices was designed to support
colleague wellbeing and align to our net
zero commitments, achieving energy
efficiency B ratings and significant energy
consumption reductions.
Offices fit for the future
Our new Birmingham office is located in a
listed building which is part of our Gilders
Yard scheme. The office was designed
to maximise the building’s heritage as a
former jewellery factory, with the original
staircase and key features including the
jewellery display cases, stained glass,
herringbone flooring and original tiling
retained. Unlike our previous office it
is fossil-fuel free, reducing our
Scope 1 emissions.
Our move to a new office allowed us to
hand over our old office in Harborne,
the final part of the community facilities
on the Moor Pool Estate' to Moor
Pool Heritage Trust for the benefit
of local residents.
To celebrate our enhanced presence in
Birmingham following the opening of
the office and The Silver Yard, our second
scheme in the city, Grainger made a
donation through LandAid to support the
completion of St Basils Live and Work
accommodation, providing affordable
homes to young people.
Sustainability criteria was integrated
into every stage of our London office
move, from the brief for our search for
a new space, to the design and materials
used in the fit-out. Natural light, energy
efficiency, safety, inclusivity and access
to local amenities were priorities to create
a workplace that is flexible and fit
for the future.
Our new London office is in a multi-
tenanted building and we worked closely
with the landlord to deliver a fit-out
which consumes 5% less energy than our
previous office following a full retrofit of
the lighting. Where possible we retained
existing fixtures and the furniture
from our old office was reused to save
embodied carbon.
All colleagues contributed to the
development of the office layout
and design, through consultations
with each team and workshops held
with our architects. The fit-out uses
natural materials including Forestry
Stewardship Council (FSC) certified wood
and the carpet is made from recycled
plastic bottles.
We have also incorporated more planting
with air quality in mind and Verkada
Environmental Sensors will enable us
to monitor the office environment and
comfort levels. The office is designed to
be inclusive, encourage collaboration
and provide flexible spaces with a large
colleague hub and a multipurpose faith
and quiet room.
Feedback from colleagues following
the office move has been positive, with
colleagues rating the new office feel,
layout, colleague hub and meeting
provision 9/10 on our feedback survey.
“Simply wonderful.
Space reflects
who we are now
- cutting edge,
modern, well
located and fits
the culture.”
Grainger colleague about our
new London office
Net zero asset
plans with
potential savings
of 500 tonnes
of CO2e.
Asset management plans are
being developed for all long-
term hold assets which identify
improvements to communal
areas and homes, informing
our net zero transition plans.
Grainger's new London office reception
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Annual Report and Accounts 2024
45
Great
environment
Achieve net zero carbon for
our operations by 2030
Involving our key stakeholders is fundamental to delivering
on our net zero transition plan. This year Grainger colleagues
continued our engagement programmes with our customers,
suppliers and our industry to ensure we are making collective
progress towards net zero.
23%
reduction in Scope 1-3
emissions per m2
Sustainability continued
The Filaments, Manchester
Grainger plc
Annual Report and Accounts 2024
46
Grainger’s award-winning Living a Greener
Life programme was enhanced to ensure
we consider opportunities to help our
customers live greener at each stage
of the customer journey.
Our Lettings Teams showcase the
buildings' environmental credentials at
property viewings and when our residents
move in they receive a comprehensive
induction which includes bespoke tips and
guidance to operate their home efficiently.
Our residents events programme includes
green themed events and campaigns
including a Living a Greener Life Week
held across our portfolio, where residents
experienced activities from sustainable
fashion shows to community gardening.
Colleagues from key operational teams
have supported the delivery of the
programme in our buildings and shared
learnings through our champions network.
Grainger’s Resident Services Teams
conduct regular building walkarounds to
look for energy saving opportunities and
at inspections check that our customers
know how to use their appliances and
share our greener living guide. At move-
out our customers are encouraged to
donate unwanted clothing in our recycling
bins and to share furniture with fellow
residents on our Grainger marketplace.
Partnering with our suppliers to
reduce our carbon footprint
Grainger’s supply chain related emissions
are currently measured through spend
data. To improve the accuracy of our
data we are partnering with our top 15
highest emitting suppliers in key spend
categories to measure actual emissions
associated with the products and
services they are supplying to Grainger.
Included in the scope of our programme
is our new repairs and maintenance
partnership which is the most significant
Supporting our customers to live greener
Touchpoints where we have integrated Living a Greener Life on the customer journey:
contributor to our operational supply
chain emissions. ESG criteria were included
in the tender process and informed the
appointment of the new partner and we
have implemented quarterly emissions
reporting as part of the partnership.
Other key categories contributing
to our emissions are furniture and
IT infrastructure.
We continue to measure embodied
carbon emissions for our development
projects in alignment with our embodied
carbon roadmap and have introduced a
mandatory requirement for embodied
carbon to be measured on major
refurbishment projects.
Engaging with our industry to
further best practice
Grainger colleagues informed the
development of the British Property
Federation’s carbon manifesto for our
sector which sets out policy proposals.
We are actively engaging with the
new Government on energy efficiency
and carbon standards for buildings.
Access to data is a key challenge in
measuring progress towards net zero, and
Grainger participated in some industry
research to identify opportunities to
overcome data barriers which has been
shared with Government.
Grainger has also supported the
development of a new best practice
standard, the Net Zero Carbon Buildings
Standard, through attending industry
workshops on the standard’s scope and
content, responding to consultations
on the proposals and reviewing the
potential embodied and operational
carbon performance standards
for residential buildings.
50+
customer-facing colleagues
trained in Grainger's Living
a Greener Life
top 15
suppliers,
covering
36%
Our supplier carbon engagement
programme is focused on our
of our operational supply chain
emissions and designed to enhance
carbon measurement and identify
reduction opportunities.
Lettings
Move In
Occupation
Move Out
Bolon recycled flooring is used throughout our portfolio
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Strategic report
Grainger plc
Annual Report and Accounts 2024
47
Grainger has complied with the Financial Conduct Authority
Listing Rules and confirms that:
1. Our climate-related financial disclosures for the year
ended 30 September 2024 are consistent with the Task
Force on Climate-related Financial Disclosures (‘TCFD’)
Recommendations and Recommended Disclosures (as defined
in Appendix 1 of the Financial Conduct Authority Listing Rules).
2. The detail of these climate-related financial disclosures is
conveyed in a decision-useful format to the users of this
report and that these disclosures provide sufficient detail to
enable users to assess Grainger’s exposure to and approach to
addressing climate-related issues.
In drafting this report, Grainger has considered the requirements
of the IFRS S2 Sustainability Disclosure Standard for Climate-
related Disclosures.
Grainger is committed to providing comprehensive and
transparent disclosure on climate-related risks and opportunities
and in addition to this report, Grainger makes the following
public disclosures:
Grainger’s net zero carbon pathway which provides a summary
of our net zero transition plan is available on Grainger’s
website at: https://corporate.graingerplc.co.uk/investors/
investor-downloads. Disclosure on the recommended topics
and metrics for Grainger’s real estate portfolio are reported
in the EPRA Sustainability Report published at the same
link. Grainger responds annually to the CDP Climate Change
Programme and our responses are publicly available at:
https://www.cdp.net/en/responses
The following table signposts where further relevant information
is provided in this Report.
Task Force on Climate-related Financial Disclosure
TCFD recommendations
Description
Section
Governance
1.
Board oversight of
climate-related risks
and opportunities
Grainger’s Board has oversight of the Company’s sustainability strategy including
climate-related matters. Grainger’s Audit Committee undertakes a twice-yearly
review of the Company’s principal risks including climate-related risks. The
Responsible Business Committee reviews climate-related risks and opportunities,
strategic implications and our net zero transition plan
Audit Committee
report page 86
Responsible
Business
Committee report
page 84
2.
Management's role in
assessing and managing
climate-related risks
and opportunities
Grainger's Executive Committee assesses and manages climate-related risks and
opportunities through applying the Company's risk management framework and
'three lines of defence' model
Risk management
page 56
Strategy
3.
Climate-related risks
and opportunities over
the short, medium,
and longterm
Climate-related risks are reported within principal risks. Material risks and
opportunities affecting the business over the short term include increasing
regulation and flood risk and over the medium to longterm include chronic
temperature change and impacts on customer and investor demand
Principal risks page
63
4.
Impact of climate-related
risks and opportunities
on the organisation's
businesses, strategy and
financial planning
The potential impacts of climate-related risks and opportunities on Grainger's
business strategy and financial planning include increasing investment in
energy efficiency and electrification of our assets, meeting higher stakeholder
expectations and enhanced access to capital
Principal risks page
63
5.
Resilience of the
organisation's strategy
taking into consideration
different scenarios
Grainger has assessed our property portfolio for transition risks and physical risks
under two scenarios and believes our strategic focus on investing in high quality,
energy efficient rental homes supports the Company to be resilient in the short,
medium and longterm
TCFD Report page
48
Risk management
6.
Processes for identifying,
and assessing climate-
related risks
Climate-related risks are identified through a range of channels including our
involvement in industry bodies, stakeholder engagement and asset level due
diligence. Risks are assessed through our risk scoring tool in alignment with all
material risks as reported on page 56
Risk management
page 56
7.
Processes for managing
climate-related risks
Climate-related risks are managed through applying Grainger's 'three lines of
defence' model including through regular reviews by internal management
committees
Risk management
page 57
8.
How processes for
identifying, assessing, and
managing climate-related
risks are integrated into
overall risk management
Climate-related risks are integrated into Grainger’s risk management framework
which is applied to all principal risks and is detailed on page 56
Risk management
page 56
Grainger plc
Annual Report and Accounts 2024
48
Governance
Board oversight of climate-related risks
and opportunities
Grainger’s Responsible Business Committee and Audit
Committee have oversight of climate-related risks and
opportunities and this responsibility is reflected in the Terms
of Reference for these Committees. All Board members
attend these Committees which are informed about climate-
related risks and opportunities as a formal agenda item every
six months. Grainger’s Board includes multiple Directors
with climate-related expertise and Grainger’s Nominations
Committee conducts regular reviews of Board effectiveness and
ensures the balance of skills and experience is appropriate to
oversee the business’s strategies including those in response
to climate-related risks and opportunities.
Grainger’s Responsible Business Committee meets twice a
year and receives an update on our net zero transition plan and
associated actions and workstreams, a regulatory update and
an overview of stakeholder engagement activity for climate-
related matters. It oversees the setting of climate-related
targets including approving the science-based target which is
currently in process of validation by SBTi and the carbon metrics
incorporated in the LTIP for Executive Directors, as reported in
the Remuneration Committee report on page 102. A progress
update on these targets and other related objectives is provided
as a standing agenda item at all meetings.
Grainger’s Board considers climate-related risks and
opportunities in scheduled reviews of the organisation’s
strategy. Where applicable, the environmental impacts of
potential transactions and associated trade-offs are recorded
in all Investment Committee papers, ensuring climate-related
risks and opportunities are considered in all major transactions.
Grainger’s Audit Committee reviews the company’s principal
risks, which include climate change, twice a year and considers if
the appropriate management processes and controls are in place
as part of this review.
Management’s role in assessing and managing
climate-related risks and opportunities
The Board has assigned responsibility for management of
climate-related issues to the Chief Executive and Executive
Committee. The climate-related updates that are provided to
the Board are shared with the Executive Committee, and the
Committee monitors progress against the Company’s climate-
related targets and objectives.
The Company’s principal risks, which include climate change,
are reviewed at Executive Committee meetings every six
months. They are also considered at meetings of various
sub-committees which report into the Executive Committee,
including the Investment Committee which considers climate-
related risks and opportunities related to property acquisitions
and the Development Board which considers environmental
risks and opportunities on development projects. This ensures
the controls and procedures to manage climate-related risks
and opportunities are integrated with other business functions.
The CEO and CFO attend meetings of these sub-committees.
Grainger’s CFO has oversight of the sustainability function
and the day-to-day management of climate-related risks and
opportunities. Progress is monitored through quarterly KPI
reviews. Grainger’s internal audit programme includes regular
audits of the sustainability function and key climate-related
processes and controls.
Metrics and targets
1.
Metrics to manage
climate-related risks and
opportunities
The Key Performance Indicators used to manage climate-related risks and
opportunities are reported on page 30
KPIs page 30
2.
Disclosure of Scope 1, 2
and 3 GHG emissions
Grainger reports Scope 1, 2 and 3 GHG emissions in our Streamlined Energy and
Carbon Report
SECR Statement
page 110
3.
Targets used by the
organisation to manage
climate-related risks
and opportunities and
performance against
targets
Grainger has committed to set a science-based target which is currently in process
of validation by SBTi. Grainger has operational and embodied carbon LTIP targets
and progress against actions contributing to these targets is reported throughout
the sustainability section of this report.
Sustainability page
54
LTIP page 102
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Annual Report and Accounts 2024
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Strategy
Climate-related risks and opportunities Grainger has identified over the short, medium, and longterm
Grainger uses the following time horizons for evaluating climate-related risks:
• Short-term risks are forward-looking to 2030, aligned to the time horizon used for the Company’s strategy, financial planning and asset
hierarchy planning.
• Medium-term risks are forward-looking to 2050, aligned to the UK Government’s net zero target and the timeline used for Grainger’s
net zero transition plan.
• Long-term risks are looking beyond 2050 and are open-ended to reflect Grainger’s full asset lifecycle, which can extend to 100 years
or beyond.
The potential climate-related risks and opportunities we have identified that could have a material financial impact on the Company are:
Category
Risk / opportunity
Timeline
Company response
Transition
Costs and technology implications of new legislation
such as the Future Homes Standard
Short-term
(<2030)
– Specification for new developments aligned to
Future Homes Standard
– Technology strategy reviewed through an ESG lens
Potential for stranded assets if properties do not comply
with Minimum Energy Efficiency Standards
Short-term
(<2030)
– Refurbishments programme to increase
energy efficiency
Increased revenues from development opportunities
meeting the increased demand for energy efficient
homes in response to climate-related changes in
customer expectations
Short-term
(<2030)
– Grainger’s ESG approach including climate-related
strategies is integrated into bid documentation
for potential developments and in reporting to
development partners
Increased access to capital from responsible investors
Short-term
(<2030)
– Sustainable Finance Framework
– Extensive ESG disclosure to investors
Increasing energy costs and energy security issues,
resulting from climate-related changes to the UK’s
energy sources
Short-term
(<2030)
– Energy broker partnership and central energy
contracts for Grainger procured energy
– Refurbishments programme to increase energy
efficiency
– Investing in energy efficient buildings and reducing our
customers’ energy bills
– Reducing reliance on energy networks operated by
third parties and exploring alternative energy supplies
for new developments
Investor demand for non-compliant assets may be
impacted by the investor community’s own response to
climate-related issues
Short-term
(<2030)
– Climate-related criteria integrated into asset
investment and recycling strategies
– Strategy to enhance the energy efficiency of our
assets and ensure compliance
Impacts of changing weather patterns and
energy efficiency on customer demand
Long-term
(>2050)
– Due diligence of acquisitions and existing assets
includes climate risks and energy efficiency
– Refurbishments programme to increase energy
efficiency
– Customer awareness campaigns to influence
behaviour
Physical
Increased risk of flooding
Short-term
(<2030)
– Due diligence of acquisitions and existing assets
includes flood risk
– Mitigation strategies including flood management
plans in operation at assets with identified potential
risk
Increased severity and frequency of extreme weather
events
Medium-term
(<2050)
– Comprehensive Business Continuity Programme in
place
– Due diligence of acquisitions and existing assets
includes physical climate risks
– Mitigation strategies in operation at assets with
identified potential risk
Task Force on Climate-related Financial Disclosure continued
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Annual Report and Accounts 2024
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Impact of climate-related risks and opportunities on
Grainger’s business, strategy, and financial planning
Grainger’s purpose and business model is to invest in high
quality, energy efficient rental homes which we plan to hold
for the longterm. Climate-related risks and opportunities have
been considered in reviews of Grainger’s business strategies for
development, acquisitions, refurbishment and asset recycling.
Changes made in response to potential climate-related risks
and opportunities include enhanced asset due diligence for
acquisitions, integrating standards for energy efficiency and
fossil-fuel free heating into our bespoke specification for new
developments, incorporation of energy and carbon criteria into
our asset hierarchy and increased investment in refurbishments
to enhance the energy efficiency of assets.
We therefore consider the current effects of climate-related
risks and opportunities on the Company’s business model to be
limited. Transition risks largely affect the non-core assets which
Grainger plans to sell in line with our business strategy. In the
longterm, transition risks related to development activity and
the associated embodied carbon it generates may impact on
our business model for new development. Growth is expected
to continue through a combination of new development and
acquisition of existing buildings.
Although we have not yet experienced climate-related risks
and opportunities affecting customer decision-making on
where to rent, we are seeing increased interest in this area
from our customers and expect that in the longterm our
portfolio will be responsive to changing customer demands
due to the focus of our asset management strategy on energy
efficiency and customer satisfaction. We believe our business
model is well placed to benefit in the future in the event that
customer decision-making does end up being based on climate-
related factors.
Physical risks are concentrated in the Company’s BTR portfolio
where, due to the scale of these buildings and our cluster
strategy, a higher proportion of customers could be affected
by acute risks such as a major flood event affecting multiple
assets. Chronic risks are concentrated in our London & South
East portfolio where scenario analysis has identified a greater
proportion of assets vulnerable to risks such as heat stress
and drought in a higher warming scenario. Transition risks are
concentrated in the PRS portfolio where assets will require
capital expenditure to meet higher standards of energy efficiency
and to decarbonise heating in alignment with future regulation.
Climate-related opportunities are concentrated in the business’s
BTR portfolio and in repositioning long-term hold assets to meet
future customer demand for properties that are highly energy
efficient and resilient to increasing temperatures.
Grainger’s strategy to achieve our climate-related targets is to:
• Increase the energy efficiency of our portfolio;
• Decarbonise heating in our homes;
• Procure renewable energy for all Grainger purchased
energy; and
• Measure and reduce embodied carbon through the design,
construction and operation of our buildings.
To deliver these targets, Grainger has made the following
strategy and resource allocation decisions:
1. Dedicated budgets to improve energy efficiency of
our portfolio and achieve EPC C rating or above on all
PRS properties.
2. Investment in research and development to pilot low-carbon
heating systems in our buildings.
3. Development of net zero asset plans for long-term hold assets
with associated refurbishment plans.
4. Reviewed our specification for new developments ensuring it is
aligned to our energy and GHG targets.
Grainger has a net zero transition plan, which is summarised in
the net zero carbon pathway published on our website at https://
corporate.graingerplc.co.uk/investors/investor-downloads.
This transition plan has been developed and disclosed with
consideration of the UK’s commitment to be a net zero
economy by 2050. Grainger supports this commitment and
our transition plan is aligned to the UK Government’s target.
Government policies have informed the actions and timelines
set out in Grainger’s transition plan. The key assumptions
and dependencies that inform the plan are the timeline for
decarbonisation of the UK electricity grid, and the Government’s
policy for decarbonising heating in homes including equalising
running costs of heat pumps to gas boilers and the introduction
of mandatory emissions thresholds for heat networks.
Grainger recognises that engaging with our key stakeholders
is critical to delivering our net zero transition plan. We have
implemented a comprehensive programme of engagement with
our customers, suppliers and our industry, which is summarised
in our net zero carbon pathway and a progress update is provided
in this Report on page 47.
The potential impacts on the Company’s financial position and
financial performance include:
• Changes in costs related to insurance, energy procurement,
investment in adaptation measures and compliance
with regulation;
• Changes in revenues from rental income and sales for assets
that have undergone energy efficiency improvements;
• Changes in the value of existing properties following
improvements to energy efficiency and increased investment
in new developments;
• Potential for decreased asset values or early retirement of
assets due to physical climate-related risks or any potential
non-compliance with climate regulation; and
• Increased access to capital from responsible lenders
and investors.
Grainger’s financial planning processes reflect the climate-
related risks and opportunities we have identified, prioritising
any requirements necessary to maintain regulatory compliance,
deliver the Company’s net zero transition plan and maintain
high levels of customer satisfaction. The one-year budget
and the five-year business plan both include estimates of the
costs required to improve the energy efficiency and carbon
performance of our assets. Grainger does not currently use a
bespoke internal carbon price, however in London we refer to an
external carbon price in our decision-making, which is the £95
per tonne price set by the Greater London Authority for carbon
offset funds which Grainger pays into on its developments
in London.
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Annual Report and Accounts 2024
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The effects of climate-related risks and opportunities on the
Company’s financial position, performance and cash flows in
the reporting period have been minimal. Grainger has secured
additional finance of £50m through upsizing our Sustainably
Linked RCF Facility. Capital expenditure related to energy
efficiency improvements to our properties remains high.
The scale of this investment is within Grainger’s normal levels
of capital expenditure and the climate-related improvements
usually form part of wider packages of asset improvements and
so we do not consider it possible to quantify the impact of these
considerations on the financial position or financial performance
of the Company. Climate-related considerations form part
of discussions with the external valuers of Grainger’s assets,
however we have not yet seen the energy efficiency performance
of our assets reflected in our valuations. We consider that there is
no significant risk of material adjustments within the next annual
reporting period arising from this.
In the shortterm we anticipate a continuation of capital
expenditures as we upgrade the energy efficiency of existing
properties and decarbonise heating systems in new development
projects. We anticipate securing additional sustainability-linked
finance from credit facilities and bonds to fund the acquisition
of new energy efficient homes.
The impacts of climate-related risks and opportunities on
demand for our assets and future investment market have also
been considered. In the mediumterm, we expect to see customer
demand for energy efficient properties to increase which may
increase revenues from rental income. Given renters spend on
average 8% of the cost of their rent on energy bills, we have
conservatively estimated that our customers may be willing to
pay a rental uplift of 5% for a more efficient property. When
determining which energy efficiency improvements to make
to our buildings, we factor in the potential effects on running
costs for customers and associated impacts on affordability,
satisfaction and retention. For example, we are planning to
commence a replacement programme for gas boilers once the
costs of heat pumps achieve parity in line with the Government’s
Heat and Buildings Strategy. We intend to replace commercial
scale and individual boilers when they reach the end of their
useful life from 2030 onwards and we expect to incur capital
expenditure to fund this programme between 2030 and 2040.
Resilience of Grainger’s strategy, taking into consideration
different climate-related scenarios
Grainger is supportive of the Government’s target to transition
to a net zero carbon economy consistent with the Paris
Agreement goal to limit warming to well below 2°C and pursue
efforts towards 1.5°C. We have considered the resilience of our
strategy to this transition through considering the climate-
related scenarios used by the Government to develop its
climate-related policies. We consider these scenarios relevant to
assess the resilience of Grainger’s business because they identify
implications for residential properties and inform the policies
that sit as assumptions behind Grainger’s transition plan. The key
assumptions are that heat pumps will be the preferred strategy
for heating new homes, the rate of decarbonisation of the UK
electricity grid and the extent of customer behaviour change.
This analysis is reviewed on an annual basis and considers short-
and medium-term timelines up to 2050 in alignment with the
Government’s net zero target deadline.
This analysis demonstrated that our strategy to sell non-core
assets and invest in highly energy-efficient new homes is resilient
in the face of increasing regulatory risk. We have enhanced
our asset management strategies, introduced policies to align
to future climate-related regulation such as minimum energy
efficiency standards and made a commitment to transition our
portfolio away from fossil fuel heating.
We have considered the potential impact of two climate
Representative Concentration Pathways (RCP) scenarios
published by the Intergovernmental Panel for Climate Change
on the vulnerability of our real estate portfolio and pipeline to
physical climate risks:
• RCP 2.6 which aims to keep global warming at +1.5°C (below
2°C) above pre-industrial temperatures. This scenario aligns
to the Paris Agreement and requires prompt and significant
reduction of GHG emissions.
• RCP 8.5 which assumes minimal abatement of GHG and
associated global warming of 4°C over the longer term.
Task Force on Climate-related Financial Disclosure continued
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Annual Report and Accounts 2024
52
These scenarios were considered over three timelines: the
current position, short-term (2030) and medium to long-term
(2050 and beyond) and considered all current PRS assets and
pipeline assets. The assessment was undertaken in FY22 and will
be reviewed every three years. Our assessments indicate that our
portfolio would remain operational under both scenarios, albeit
with potentially higher levels of flood and drought risk, in line
with many urban areas.
The assessment identified some acute risk exposure to flood
and windstorm risks. Windstorm risk is typical for the UK and
could affect all assets with moderate (medium) intensity.
The Company’s strategy to invest in urban locations results in
some exposure to flood risk in locations such as Bristol, Leeds
and London and one asset in Southampton is exposed to storm
surge. Affected assets have appropriate mitigations incorporated
into their design and operation.
Under a high emissions scenario from 2050, drought stress
and heat stress increase and become a medium risk which
could impact water scarcity and customer wellbeing, however
in the short-term or under a low emissions scenario, these
risks are rated low or very low risk. We undertake overheating
assessments for all new developments and ensure passive
measures to minimise overheating risk are incorporated into
building design. Subsidence conditions also increase beyond
2050 under both scenarios. We will continue to assess potential
risks in due diligence for future acquisitions and to make
appropriate adaptations where required.
This analysis focuses on the vulnerability of the locations of our
portfolio and pipeline assets to climate change and does not take
into account specific asset mitigation measures. We consider
that it is not possible to quantify an isolated impact from these
scenarios on our financial performance and position at this time.
To ensure the business remains resilient, we have the following
capacity to adapt our strategy:
• Flexibility to deploy capital to asset improvements that
safeguard against transition and physical risks;
• Regular reviews of our asset hierarchy with the ability to retain
and refurbish additional assets;
• Option to pursue growth through new acquisitions; and
• Capacity to meet short-term costs if one or more assets are
affected by an acute climate event.
Risk management
Processes for identifying, assessing and managing
climate-related risks and opportunities
Climate change is considered to be a principal risk affecting
the business’s strategy and is included in our corporate risk
management framework (see page 63). Risks are considered
in relation to all business operations and the Company’s full
operational real estate portfolio and pipeline.
Corporate and portfolio level risks and opportunities are
identified through periodic sustainability materiality reviews,
regular monitoring of current and emerging regulation and
ongoing stakeholder engagement. Grainger works closely with
industry bodies, partners and advisers to identify, understand
and respond to risks and opportunities affecting Grainger
and our sector.
Asset level risks and opportunities for existing assets are
identified and reviewed through the Company’s annual asset
hierarchy assessment, quarterly asset reviews and scenario
analysis undertaken annually for transition risks and every three
years for physical risks. These assessments are informed by data
on our properties which is obtained from a range of sources
including site inspections, audits and insurance reviews. Risks for
new acquisitions are identified through due diligence undertaken
pre-acquisition and reviewed through the Investment Committee
process. Where a risk is identified, appropriate mitigation
methods are incorporated into the building design.
Risks are prioritised through an assessment of the nature,
likelihood and magnitude of the effects using a quantitative
scoring matrix including thresholds to assess financial impact
and a qualitative review of the impact on Grainger’s business
strategy. Risks are considered in line with the methodology used
to assess all principal risks and inform the Company’s overall risk
management process which is reported on page 56. This process
has not changed since the last reporting period.
Climate-related risks are monitored through quarterly risk
reviews undertaken by the Management Committee in addition
to the Finance Committee, Development Board and Operations
Board, which inform the principal risk reviews undertaken by the
Executive Committee and Grainger’s Board every six months.
Climate-related risks are incorporated into Grainger’s internal
controls and audit programme.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
53
Metrics and targets
Climate-related metrics
Grainger’s greenhouse gas emissions for Scopes 1, 2 and 3 are reported in the SECR statement on pages 110 to 113 of this report.
Emissions have been calculated in alignment with the GHG Protocol Corporate Standard and all Scope 1 and 2 emissions and
material Scope 3 categories have been externally verified to a limited assurance standard.
Metrics related to the real estate sector sustainability disclosure topics of energy and water management, management of tenant
sustainability impacts and climate change adaptation are provided in the Company’s annual EPRA Sustainability Reports, available
on the Company’s website at: https://corporate.graingerplc.co.uk/investors/investor-downloads
The following cross-industry metrics and sector-specific metrics are aligned to Grainger’s net zero transition plan and provide an
overview of the Company’s exposure to climate-related risks and opportunities:
Metric category
Metric
FY23
FY24
GHG emissions
GHG emissions (Scope 1 and 2)
1,911 tonnes CO2e
1,757 tonnes CO2e
GHG emissions
GHG emissions (Scope 3)
91,430 tonnes CO2e
78,330 tonnes CO2e
GHG emissions
GHG emissions per unit (based on emissions
reported on EPC certificates)
1.9 tonnes CO2 per unit
1.6 tonnes CO2 per unit
GHG emissions
GHG emissions intensity for PRS
properties per m2
23 kg CO2e per m2
21 kg CO2e per m2
Transition risks
% of PRS assets rated EPC A-C
91% rated A-C
94% rated A-C
Transition risks
% of BTR assets with low-carbon heating
(properties with non-gas heating)
62% of BTR properties
69% of BTR properties
Transition risks
Energy consumption in MWh
% renewable electricity
15,360 MWh
90% renewable
16,407 MWh
95% renewable
Physical risks
Value of PRS assets vulnerable to flood risk
(in locations with medium or high flood risk)
£650 million
£796 million
Climate-related
opportunities
Value and % of PRS assets rated EPC B and
above and associated revenues
£1.3 billion; 58.5% by value
49.8 % of revenue
£1.6 billion; 65.7% by value
57.7% of revenue
Capital deployment
Capital expenditure deployed towards
energy efficiency
£9.1 million
£10.8 million
Internal carbon prices
Carbon price used in Grainger’s decision-
making
Grainger does not currently have a
bespoke internal carbon price, but
refers to an external carbon price
of £95 per tonne in our decision-
making
Grainger does not currently have a
bespoke internal carbon price, but
refers to an external carbon price of
£95 per tonne in our decision-making
Remuneration
Proportion of Executive remuneration
linked to climate considerations
7% of the 2023 annual bonus
opportunity.
10% of the 2023 LTIP
10% of the 2024 LTIP
Climate-related targets
Grainger is currently in the process of setting a science-based target validated by the Science-Based Targets initiative. This target
will cover Grainger’s Scope 1 and 2 emissions and key Scope 3 emissions categories.
Once validated, this target will replace our previous target to achieve net zero for our Scope 1 and 2 emissions by 2030. This target
is an absolute target applying to all Scope 1 and 2 emissions measured vs a 2020 baseline. We have continued to reduce our
emissions, with a 42% reduction in our Scope 1 and 2 market-based footprint and 8% reduction in our location-based footprint
between 2023 and 2024.
Grainger also has an embodied carbon reduction target to achieve a 40% reduction in the intensity of Scope 3 emissions from direct
development projects in design by 2030. This target applies to direct development projects only, because we have more control
over the design and are able to influence emissions reductions whereas this is not the case on our forward funded portfolio. It is
an intensity target measuring kg CO2e per m2 of development gross internal area, measured vs the baseline for each development
scheme which is established at the initial design stage. Grainger’s direct developments in scope of this target are currently in the
design stage and so there is no progress update in the reporting period. Grainger is not currently planning to use offsets to achieve
these targets.
Grainger’s net zero carbon pathway sets out our key objectives and actions towards achieving our targets, including ensuring 100%
of PRS properties achieve EPC Rating C or above and purchasing 100% renewable energy for all eligible supplies. For our embodied
carbon target, we intend to achieve half the targeted reduction through lean design and half the reduction through lower-carbon
construction methods and materials choices. Both Grainger’s current targets support climate mitigation and are aligned to our net
zero transition plan. Progress towards our targets is reviewed through quarterly assessments of key performance indicators and
annual progress reviews.
Task Force on Climate-related Financial Disclosure continued
Grainger plc
Annual Report and Accounts 2024
54
Engagement with stakeholders - section 172 reporting
Engagement with our stakeholders
The Board takes its responsibilities to all stakeholders seriously,
and has acted consistently to promote the long-term success of
the Company for the benefit of Shareholders, whilst having due
regard to the matters set out in section 172(1)(a) to (f)
of the Companies Act 2006.
An overview of the key channels and processes used for
engagement with our stakeholders and outcomes from this
engagement during the year are set out on page 73. A summary
of the Board’s activity and how matters raised through
engagement have been considered in key decisions taken
during the year is provided on pages 75 to 77.
Section 172 matter
Overview
FY24 comment
Relevant disclosures
(a) the likely consequences of
the decision in the long term
Grainger is committed to being a
long-term investor in homes and
communities, and delivering long-
term success to our Shareholders.
The Board undertook a
comprehensive review and
update of the business’s long-term
strategy during the year.
Business model
pages 26 and 27.
(b) the interests of the
Company's employees
Employees are at the heart of our
business and our People Strategy
focuses on delivering the highest
levels of learning and development,
wellbeing and inclusion, including
via our established colleague
ED&I Forum.
The Responsible Business
Committee oversees employee
engagement and consultation.
This year we gained National
Equality Standard accreditation.
Our people
pages 39 to 43.
(c) the need to foster
the Company's business
relationships with suppliers,
customers and others
The relationships with our key
partners and suppliers are critical to
our ability to deliver and maintain
high-quality rental homes. Strong
relationships with our customers, built
by our property managers and on-site
teams, supports retention and creates
a community within our buildings.
The Board considered reports on the
increased focus on decarbonisation
and human rights issues within our
supply chain.
Suppliers
page 73.
(d) the impact of the
Company's operations
on the community
and the environment
We consider communities to
encompass those created within
our buildings as well as those around
them, and we actively seek ways
to promote thriving communities
and to minimise our impact
on the environment.
The Responsible Business
Committee oversees community
and environmental matters and
biannual updates on progress
against Grainger’s long-term
ESG commitments, its approach
to net zero carbon and charity
were provided.
Sustainability
pages 37 and 38.
Responsible Business
Committee report
pages 84 and 85.
(e) the desirability of the
Company maintaining a
reputation for high standards
of business conduct
Grainger is proud to be a FTSE4Good
business and adheres to the highest
standards of business conduct in
interactions with all our stakeholders.
Our values set the standards of
conduct for all involved in our
organisation and our values were
a key feature in our refreshed
Company-wide customer service
style training programme.
Our values
page 42.
Governance
pages 66 to 114.
(f) the need to act fairly
as between members
of the Company
We conduct regular direct
engagement with our Shareholders
through a range of channels, and
ensure key issues raised are factored
into strategic decision-making,
facilitated by our investor
relations team.
This year we continued our extensive
programme of investor engagement
which included over 460 meetings,
15 conferences and conducted tours
of our sites with investors.
Shareholder
engagement
page 74.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
55
Risk management approach
Risk management is fundamental to
meeting our operational and strategic
objectives. The markets we operate in
require effective decision-making, ensuring
we properly assess risks, apply controls
and balance risk with returns. We continue
to closely monitor the external
environment accepting that our influence
over external factors can be limited, and
we have built resilience to risks by focusing
on internal controls and mitigants.
Risk and resilience are important concepts
to us that relate to our ability to absorb,
recover, adapt, and transform in the face
of stresses, change and uncertainty.
Our forward-looking risk management
ethos drives a stronger focus on emerging
risks that have the potential to rapidly
become a challenge to our business
including the transition to net zero.
Our approach is to give appropriate
balance to being responsive, forward-
looking, consistent and accountable.
At Grainger, we seek to do this by applying
and reinforcing our risk management
culture in the way we do business and by
adopting a ‘three lines of defence’ model
throughout the business (see diagram on
page 57). Managing risks and maximising
opportunities supports our growth and
risk-based decision-making has provided
a proactive approach to anticipate threats
before they occur.
We continue to learn and evolve our
mature risk management framework
which has shown its in-built flexibility
and is capable of adapting to a swiftly
changing environment. The economic
challenges facing the UK housing market
have remained throughout 2024 and
our focus towards a mid-market rental
product, coupled with the demand for new
rental homes has proven resilient.
Rigorous risk assessment
During the year we considered a range of
risk categories, including strategic, market,
financial, legal and regulatory, operational,
IT, project and people. We identify
individual risks using both a ‘bottom-up’
and a ‘top-down’ approach.
We determine the potential probability
and impact of each risk and give it
a gross (before mitigation) and net
(after mitigation) score. This identifies
which risks depend heavily on internal
mitigating controls, and those that require
further treatment.
We use a risk-scoring matrix to ensure we
take a consistent approach when assessing
their overall impact. We have expanded
key impact criteria to other categories of
risk helping to enhance and further embed
risk appetite.
For risks in operational areas, we base
their likelihood on how often they occur
in a rolling 12-month period. We record
their impact and likelihood scores in
departmental risk registers. These risk
registers are regularly reviewed, reflecting
our adaptability where required.
The appropriate internal committee
reviews these registers at least quarterly.
We also collate a Group top risk report for
consideration by the Executive Committee
and Audit Committee.
This process has identified ten principal
risks which we monitor (see pages 59
to 63). Two of the principal risks have
decreased in their likelihood assessment,
whilst eight remain unchanged from the
2023 assessment. We have not identified
any new risks which are material enough
to be considered a principal risk for the
business. We have reached this prudent
assessment after considering external
factors and key influences, including a
structural supply demand imbalance,
supported by a more stable political
backdrop, and our ability to secure
investment opportunities from a variety
of sources. The diagram below illustrates
this assessment.
Effective risk management contributing
to delivering sustainable growth
Our risk management framework is designed to identify the principal risks to our business and ensure
that they are being appropriately monitored, suitable controls are in place and the required actions
have clear ownership and accountability.
Mapping our key risks and movement
Current principal risk areas
1 Market and transactional
2 Financial
3 Political and regulatory
4 People
5 Supplier
6 Health and safety
7 Development
8 Cyber and information security
9 Customers
10 Climate change
Indicates risk movement from last year
Likelihood
Impact
3
7
2
6
10
5
8
9
1
4
Risk management
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Annual Report and Accounts 2024
56
Risk control framework, three lines of defence model
Board and Audit Committee
External Audit
Executive Committee
Management and
financial controls
Policy, procedure and RACMs
Understanding of
risk management
First
line of defence
Second
line of defence
Third
line of defence
Risk management and compliance
Executive deep dives
Key performance indicators
Internal audit
Risk-based review/audit
Specialist third-party reviews
Oversight by
management committees
We have a structured approach to the
identification and assessment of emerging
risks. Our internal committees are tasked
with identifying risks on the horizon which
may develop or already exist but are
difficult to quantify. We use a ‘risk radar’ to
capture these risks which are monitored
continuously and reviewed regularly.
We believe tackling emerging risks enables
us to build and maintain resilience to
ensure we can thrive in uncertain times.
Risk control framework and appetite
The Board has ultimate responsibility for
Grainger’s risk management and internal
control systems, and for determining
the Group’s risk appetite. As part of
the risk management framework, the
structure of risk appetite statements
align to our principal risks. This year we
have validated our assessment of risk
appetite for our principal risks with the
Audit Committee, including through risk
deep dives. The Board adopts a generally
low tolerance for risk, particularly for
regulatory and reputational matters.
Regarding development risk, a medium
risk appetite is tolerated by the Board
in order to continue to capitalise on
the substantial opportunity within the
residential real estate sector.
The Executive Committee develops and
submits the risk management framework
to the Board for review, consideration,
approval and adoption. This year we have
developed a long-term plan focused
on strengthening risk management
and internal controls going beyond
compliance to create a risk and controls-
focused culture. The benefits will help us
to enhance the quality of our reporting,
support better decision-making and
protect Shareholder value. Our internal
governance structure complements our
‘three lines of defence’ model, with a view
to having clear divisions between each
line. This framework includes various
management committees, with dedicated
risk registers, overseeing key investment,
operational and corporate functions.
The oversight committees and the
Executive Committee examine the
identified risks, reported controls,
mitigation and the principal risk report.
The Audit Committee supports the Board
by monitoring and reviewing the control
environment and risk process. This process
ensures we regularly reconsider the
principal risks. We monitor the internal
control framework for these risks through
the Internal Audit monitoring plan and the
resulting audit outcomes.
For more information on internal controls,
please refer to page 89.
Assurance on risk controls is provided
by internal management information,
internal audits, external audits and Board
oversight. We also hold assurance maps
for our principal and operational risks.
Our risk culture promotes open
communication and we support this
by operating an externally supported
whistleblowing hotline that our colleagues
can use anonymously if they do not
wish to use our other processes for
raising concerns.
The data protection activities of the
business form part of Grainger’s business
as usual processes overseen by the Data
Protection Committee, consisting of senior
people from across the key areas of the
business. The Board and Audit Committee
are updated regularly on matters arising
and activities undertaken to develop
our data protection compliance regime.
Our health and safety initiative, Live.Safe,
which embeds a culture that puts health
and safety at the heart of everything that
we do, has remained a priority. This year
we have completed our sixth safety
climate survey.
Looking forward to 2025, we will
continue to closely monitor the external
environment, managing risks and
maximising opportunities and paying
particular attention to emerging
risks. The application of a robust risk
management framework and controls will
continue to be fundamentally important,
as well as having the flexibility to adapt
to changing external conditions.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
57
Cultural link to values:
Every home matters
People at the heart
Leading the way
Exceeding expectations
Principal risks and uncertainties
The Directors have systematically assessed the Group’s
principal risks. They have considered them across four
years, which aligns with our viability assessment - see the
statement on page 64.
Principal risks, uncertainties and opportunities
Risks and uncertainties are considered by the Board as
an intrinsic part of strategy setting and consideration of
new opportunities.
UK outlook
There is an ongoing structural imbalance in the supply and
demand for housing. This has led to an expansion of the PRS
market as more people turn to renting. Investors are increasingly
entering the rental market, often seeking shorter-term profits
compared to traditional landlords, which is changing the
dynamics of the market. Regulatory change such as the Renter’s
Rights Bill, tax reforms and the Government implementing
new regulations to protect tenants is shaping the market. All of
these factors are presenting exciting acquisition opportunities
as we pursue multiple routes for future growth and secure
investment opportunities.
The start of the economic recovery, with reducing inflation which
has facilitated a first cut in interest rates, could set a more stable
interest rate environment which will offer a greater degree of
pricing certainty. The reduced level of construction cost inflation
will also improve the viability of development opportunities.
Managing our principal risks and uncertainties
During the remainder of 2024 through to 2025, we expect the
focus on building safety to intensify, and it is indeed a critical
concern for us. Planning will remain a key challenge which will
require careful consideration and adaptability.
As the market leader in the PRS, we are strongly positioned for
the future. Our research delivers granular understanding of
customer affordability and ensures that our high-quality, energy
efficient homes achieve the desired mid-market position.
Going forward, we continue to scrutinise those risks most likely
to impact our business model and disrupt operations.
“Risks and uncertainties are
an intrinsic part of strategy
setting and consideration of
new opportunities.”
Justin Read
Chair of Audit Committee
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Annual Report and Accounts 2024
58
Unchanged
Risk description
Macro, market, or borrower specific issues could result in the inability
to obtain sufficient finance at acceptable prices and/or increase the
cost of any existing floating rate debt.
Impact on strategy
Lack of availability from credit markets; breach of loan and bond
covenants; adverse movement in interest rates could have an
unacceptable impact on the cost of new debt and existing unhedged
debt adversely impacting delivery of the growth strategy and our
ability to maintain a strong capital structure.
Key mitigants
We successfully extended and upsized our bank lending, with some
additional extension options, locking in interest rates and increasing
our weighted average debt maturity. Our debt is very highly hedged
giving good protection against rising rates.
We conduct our business within Board-approved capital operating
guidelines and an interest rate hedging policy.
We closely monitor our banking covenants and our performance
against credit rating criteria and use this information to drive
decision-making.
We have a diversity of financing sources and strong relationships with
lenders. We engage early with lenders prior to funding requirements
in order to mitigate against refinancing risk.
Due to our close monitoring of the transactional pipeline, we can
control the timing and number of new acquisitions, to reduce cash
outflows if needed.
Our strategic focus is to increase income to provide greater interest
cover. We have optionality over multiple sources of funding including
recycling of regulated tenancies, debt and equity (equity markets
permitting) with the ability to flex between sources.
We carry out detailed financial viability sensitivity testing and
develop clear mitigation and contingency plans.
Unchanged
Risk description
The current UK economy remains uncertain. While inflation and
wage growth are currently moderating, tax rises and higher public
spending could see inflation return and interest rates rise.
Impact on strategy
Constrained rental growth caused by increased pressures on
affordability. Constrained growth in the capital valuation of our
property assets.
Constrained sales activity driven by relatively high interest rates and
associated affordability issues.
Reduced viability of new development driven by increased costs and
constrained valuations.
Reduced consumer and investor confidence.
More limited availability of debt financing and tighter financial terms.
Insufficient time and resources to satisfy our growth strategy.
Key mitigants
Focus on mid-market product with relatively high affordability
metrics and greater capacity for rental growth.
Demand for new rental homes continues to rise.
Demand for rented housing is typically high during uncertain
economic periods, and rental growth has historically tracked wage
growth providing a hedge against inflation.
An ongoing structural undersupply of housing in the UK supports our
growth opportunity.
We have the ability to secure investment opportunities from a variety
of sources, such as acquiring stabilised assets which bring immediate
income and control the timeframes of delivery.
Whilst low yielding, our regulated tenancies provide resilient income.
Our regulated tenancies are appealing to purchasers given the
inherent discount to vacant possession value and opportunities to
add value on securing vacant possession.
We have a high proportion of liquid and diverse assets to
enable sales where necessary, as was shown clearly in the last
economic downturn.
To support capital growth, performance has been driven by income
return, placing the focus on active asset management in our target
towns and cities for future investment.
Impact on our business model:
Originate
Operate
Invest
Impact on our strategy:
Grow rents
Simplify and focus
Build on our experience
Financial
Market and transactional
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
59
Unchanged
Risk description
Failure to attract, retain, and develop an inclusive and diverse
workforce to ensure we drive business transformation at a time of
business growth.
Failure to recognise our talented colleagues by providing
development opportunities, workplace flexibility, a sense of purpose
and remuneration.
Impact on strategy
Reduced ability to achieve business plan and strategy.
Reduced control and inability to grow market share in the PRS.
Failure to innovate and evolve to maintain competitiveness in a
customer-driven market.
Damage to reputation, increased colleague turnover and lower
retention. Failure to recruit a diverse workforce; increased costs
for recruitment.
Key mitigants
We have a strong strategic resourcing approach and People Strategy
which includes our build-to-rent sites, which has lowered churn.
We listen to our colleagues’ views and opinions by undertaking six-
monthly engagement surveys and act upon the findings.
We have a talent identification process and have succession plans for
key colleagues.
We have a programme of learning and development for colleagues.
We carry out regular performance reviews with colleagues to
identify opportunities to develop, and for internal career progression.
We undertake regular reviews of our benefit structure against the
external market to ensure we remain competitive.
We are committed to raising awareness and encouraging diversity
amongst the workforce through a diversity network initiative.
We have Board oversight and a member with specific responsibilities
on colleague engagement.
Decreased
Risk description
Introduction of an unfavourable political or policy landscape that
is unsupportive towards housing investment, development and
build-to-rent. Introduction of regulatory changes to key legislation
including, but not limited to:
• Tax reforms
• Building safety
• Renters rights
• Economic crime and Corporate Transparency Act
Impact on strategy
New regulation affecting our revenue streams and profitability,
increasing the cost of compliance through greater administrative
burdens or development costs. Risk of reduced rental income,
reduced certainty of returns or profitability; risk of fines, penalties,
and sanctions.
In case of non-compliance; damage to reputation; loss of operational
efficiency and competitiveness; increased costs; reduction in market
opportunities; impact on ability to finance opportunities; inability to
build competitive PRS portfolio; attracting adverse publicity.
Key mitigants
We have increased focus and resourcing within our Corporate
Affairs function to provide oversight on political developments and
policy direction.
Proactively, we have close involvement with leading industry bodies
and engagement with the relevant government and political parties.
Where required we retain specialist public affairs consultants
to support our outreach, engagement and influencing on
policy matters.
Our corporate governance structure ensures we have the framework
and oversight to assess our obligations.
We have an ongoing programme of management and colleague
training which covers key regulatory developments.
To react to an evolving landscape, we have invested in established
specialist legal, compliance and corporate affairs teams which
monitor and advise internally, and review the regulatory horizon.
We have well-established relationships with expert law firms and
other professional services organisations who keep us updated about
forthcoming changes to the regulatory framework.
We have strict asset management controls and compliance
processes which can also adapt to change.
Our position as the UK’s foremost PRS provider brings a cultural
ethos of leadership and best practice.
People
Political and regulatory
Cultural link to values:
Every home matters
People at the heart
Leading the way
Exceeding expectations
Principal risks and uncertainties continued
Grainger plc
Annual Report and Accounts 2024
60
Unchanged
Risk description
A significant health and safety incident, in particular a fire or
gas safety incident owing to inadequate or inappropriately
implemented procedures.
Our reputation as a leading landlord impacted by not fulfilling
our responsibility to understand and follow health and safety,
fire safety and building control requirements to protect our
residents. Ensuring the performance of our portfolio aligns to our
Environmental, Social and Governance standards.
Impact on strategy
Harm to customers, colleagues, contractors, or visitors;
possible legal action or fine; subsequent reputational damage.
Reduced investor interest.
Key mitigants
We have clear governance structures in place for health and safety.
The Board, supported by the Health and Safety Committee, sets
the direction, monitors and reviews performance and delegates
responsibility to the senior management team for ensuring a positive
health and safety culture.
Fire safety and the ongoing changes in this field received substantial
focus from the Board and across the business.
Our health and safety management system is supported by
Live.Safe, our initiative to promote a positive health and safety
culture. All colleagues are invited to undertake a Safety Climate
survey annually.
Our technology platform delivers efficient recording and reporting.
We have planned and reactive maintenance measures in
place, which address gas, electrical, water, asbestos, fire and
mechanical requirements.
We employ a dedicated Head of Building Safety, Director of
Health and Safety, as well as experienced and qualified health and
safety professionals.
Decreased
Risk description
Financial or operational factors creating increased risk of contractor
failure, destabilising the commercial environment and impacting on
logistics and supply chain activities leading to a significant failure
within, or by, a key third-party supplier or contractor.
Impact on strategy
Reputational damage; increased costs; inability to achieve
performance objectives; legal action and regulatory sanctions;
customer dissatisfaction; a restriction on ability to grow platform;
negative impact on growth plans; increased Grainger workload to
reschedule supplier delivered activities in a timely manner.
Key mitigants
We have greater buying power demonstrated by our ability to
implement a national furniture contract and a new repairs and
maintenance supplier.
Our procurement approach and policy promotes a balanced, risk-
based selection process to encourage appropriate supplier selection.
Our procurement approach and policy sets our intent towards
internal controls and management systems regarding contractors/
suppliers, which include counterparty reviews, and covenant strength
assessments are well developed.
The approach ensures that key relationships are highlighted and are
managed to a high standard. We work closely with a number of legal
specialists appointed on their experience and understanding of our
business and ability to provide appropriate advice.
Our finance team supports in completing the financial due diligence
of our supply chain through regular dialogue and reviews.
We work closely with our supply chains to understand their
risk profile.
Impact on our business model:
Originate
Operate
Invest
Impact on our strategy:
Grow rents
Simplify and focus
Build on our experience
Health and safety
Supplier
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
61
Unchanged
Risk description
The breach of confidential data or technology disruption due to an
internal or external attack on our information systems and data or by
internal security control failure.
Impact on strategy
Financial loss; fines; reputational damage; operational and business
disruption; loss of customers; loss of colleagues; share price
devaluation; inability to serve our customers, manage our properties
and conduct our business; competitive disadvantage; inability to
meet contractual obligations.
Key mitigants
We employ an experienced and qualified IT team with the
knowledge to defend our networks and deliver our strategy.
We engage external security expertise to carry out regular
penetration testing to ensure our systems are robust.
We have a mandatory online cyber security training and awareness
system for all colleagues.
We operate a Security Information Event Management system which
uses artificial intelligence to baseline normal digital behaviour and
identify anomalies through advanced analytics, alert detection, and
threat visibility.
We continue to evolve our suite of Information Security and Data
Protection policies which provide guidance to colleagues and align to
best practice standard ISO 27001.
We have a Cloud Security partner responsible for our security
improvement programme and to ensure our technology platform is
well understood, resilient and protected now and in the future.
Unchanged
Risk description
We allocate a portion of our capital to development activities which
may be complex and potentially bring multiple related risks.
Increased costs including build cost inflation, labour and
material shortages.
Reduction in value through economic climate.
Impact on strategy
Exposure to risk of cost overrun, cost inflation, income shortfall and
yield expansion, affecting achievement of the strategy and returns in
developing build-to-rent schemes.
Key mitigants
We monitor the capital we deploy to development matters carefully,
following capital allocation guidelines and updating hurdle rates to
reflect prevailing economic conditions.
We carry out thorough due diligence and in-depth research before
committing to a scheme, ensuring we have a good understanding of
the context, the contractor and its supply chain.
We proactively monitor cost inflation, rents and yields to allow us to
identify trends and understand any negative risk impact.
We enter into fixed price contracts with our supply chain
for construction.
On our direct development schemes we control when we commit to
start investing and developing.
We employ an experienced team with specialist development
skills and have established relationships with expert advisers and
development partners.
We have well-established governance structures which provide
strong oversight to our development schemes, applying the skills
of our in-house development management experts, together with
qualified external consultants and professionals.
As part of our PRS strategy, the portfolio of development schemes
now focuses on build-to-rent assets and does not seek speculative
returns from investing in development that is solely for sale.
Cyber and information security
Development
Cultural link to values:
Every home matters
People at the heart
Leading the way
Exceeding expectations
Principal risks and uncertainties continued
Grainger plc
Annual Report and Accounts 2024
62
Unchanged
Risk description
The impacts of climate change on our business and operations;
including: an extreme weather event; adaptation to changes in
weather patterns; compliance with increased climate-related
regulation; energy security and price volatility; the cost and
technology implications of transitioning to a zero-carbon economy;
customer and investor preference for more energy efficient
properties and growing stakeholder expectations.
Impact on strategy
Business disruption; infrastructure damage; communication network
damage; increased insurance costs; reputational damage; increased
wear and tear on buildings; cost of investment adaptation measures.
Decreased asset value; asset impairment or early retirement of
existing assets.
Additional capital expenditure to adapt buildings, increased
disclosure requirements, tougher building standards.
Risk to Company brand and reputation and associated impact on
securing and maintaining investment.
Key mitigants
We work closely with Government bodies to influence and stay
abreast of regulatory developments.
We are members of leading industry bodies who influence policy on
energy efficiency and emerging building standards.
Due diligence of acquisitions and existing assets includes physical
risks and transition risks such as flood and EPC risks.
We invest in improvements to our properties to mitigate and adapt
to climate change.
We are a responsible business with a strong commitment to
minimising our impact on climate change and comprehensive
disclosure on our performance in alignment with TCFD.
We have a detailed net zero carbon strategy and pathway, with clear
objectives and actions to achieve net zero carbon for our operations
by 2030.
Climate-related metrics are integrated into Executive remuneration.
Unchanged
Risk description
Our ability to successfully retain our customers caused by a failure to
demonstrate our value and/or fulfil our customer proposition and our
service standards, amidst a backdrop of cost of living challenges.
Impact on strategy
Negative publicity; increased complaints; poor customer experience;
reputational damage; loss of customers; lower rental increases; rent
arrears and higher voids.
Key mitigants
The UK rental market continues to have a hugely attractive outlook
that favours the professional, large-scale landlord.
We provide high quality modern homes with lower running costs.
We embed our Environmental, Social and Governance strategy
across our business and throughout the customer experience.
Throughout a customer’s journey, we track and record interactions
which feed into our insight platform and informs our decision-
making.
We continue to manage and support individual circumstances arising
from the economic uncertainties.
We have a leading operating platform with substantial experience
in managing a substantial portfolio of assets and of meeting the
requirements of our residential customers.
Our operating model is designed to provide a platform for optimising
a customer-focused strategy.
Our proactive asset management means we can gather greater asset
and customer knowledge.
We understand what is important to our customers by carrying out
customer service-focused reviews measuring customer preferences
and satisfaction levels.
We monitor customer feedback through several channels, such as
tracking our Net Promoter Score and Google reviews and have a clear
and transparent complaints process.
Our colleagues receive customer service training, and their
performance is measured against key metrics.
Impact on our business model:
Originate
Operate
Invest
Impact on our strategy:
Grow rents
Simplify and focus
Build on our experience
Climate change
Customer satisfaction
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
63
Viability statement
In accordance with the 2018 UK Corporate Governance Code,
the Board has assessed the prospects of the Group over what
it considers to be an appropriate period. In doing so, the Board
considered the Group’s financial position, strategic plan and
refinancing requirements in light of the current economic
environment, the potential impact of our principal risks and the
future prospects of the Group.
The strategic plan is reviewed and approved by the Board each
year, with year one forming the budget for the next financial
year. This plan is regularly reviewed to ensure it remains reflective
of current operating and macro-economic environment, and
provides a basis for setting all detailed financial budgets and
strategic priorities that are subsequently used by the Board to
measure and monitor performance and by the Remuneration
Committee to set targets for the annual incentive plans.
The Board has reviewed the strategic plan in detail and believes
that a viability assessment period to September 2028 is
appropriate, given this covers the period of the detailed strategy
and incorporates the timescales for the significant majority
of investments currently considered as being secured and
committed. Additionally, it covers the Group’s next material
refinancing in March 2028.
The Group’s business model has proven to be strong and resilient
throughout economic cycles, even with higher levels of gearing,
consistently demonstrating its ability to sell assets and let vacant
properties to provide stable income returns and cash generation,
even during challenging market conditions. Currently the Group
directly owns £3.5bn of residential property assets, many of
which are of a relatively granular nature which are attractive to
investors and therefore relatively liquid, as proven throughout
previous property cycles.
The Group would remain viable even in the event of severe and
sustained house price deflation as it would be able to accelerate
the natural conversion of our assets to cash including the sale
of tenanted assets and reduce or suspend development and
acquisition activity. Given this flexibility, only an unprecedented
and continued long-term decline in residential property
valuations, involving a significant reduction in rental income
and a lack of liquidity in UK residential property markets would
represent a material threat to the Group. In this situation, the
Group has the option to continue to let assets to generate
income and protect overall asset value.
The financing risks of the Group are also considered to have
an impact on the Group’s financial viability. The two principal
financing risks for the Group are the Group’s ability to replace
expiring debt facilities and adverse movements in interest
rates. The Group has been successful in securing longer-term
funding to deliver the secured PRS pipeline and has prepared
the strategic plan on this basis. The Group currently has total
facilities of c£2.0bn with an average maturity of 4.7 years
including extension options. At 30 September 2024, £1,608
was drawn, demonstrating the significant headroom available.
During the period of this review, £75m is due to mature in July
2026, £75m is due to mature in October 2027 and £350m in
March 2028. In addition, the Group continues to manage its
interest rate risk exposure through fixed rate borrowing and
with interest rate hedging closely matching our forecast drawn
debt. The fixed rate/hedge percentage at 30 September 2024
was 95%.
The viability assessment was made with the Group strategic
plan forming the base case and updated to create scenarios
reflecting the potential impact the Group’s principal risks could
have on the future performance of the Company. The viability
analysis process incorporates severe but plausible scenario
planning, reflecting the amalgamation of multiple risks, including
sensitivities to rental level, asset valuations, financing and costs
to assess the impact on the longer-term viability of the Company.
The sensitivity analysis involved a severe but plausible downside
scenario which incorporated the following assumptions:
• Reduced rental income through lower PRS occupancy (-10%),
lower growth (-100bps) and 3-month delays to practical
completion and leasing up of our pipeline impacting both
income and property valuations;
• Reduced HPI growth of -800bps, lowering both property
valuations and sales revenue;
• Reductions to property valuations of 10% in FY25 (including
the effect of rental income and HPI assumptions);
• Cost inflation on construction and operating costs of 10%; and
• Interest rates increase by 2% for the duration of the review
period and our credit rating is downgraded causing the coupon
rates of our two corporate bonds to each step up by 1.25%.
The amalgamation of these downside assumptions leads to an
overall reduction in asset value of c.17% by the end of the review
period. Even at these levels and before any mitigating actions,
LTV remains compliant with banking covenants through the
period of this review.
Throughout this downside scenario, the Group had sufficient
resources to remain in operation and compliant with its banking
covenants. This scenario testing, together with the Group’s
strong financial position, current rent collection and lettings
evidence, and mitigating actions available including selling assets
and deferring non-committed capital expenditure, support the
assessment that the Group will have the ability to continue to
meet its liabilities as they fall due.
The Group has also modelled a reverse stress test scenario
in which the Group would be able to withstand a 45% decline
in property valuations from September 2024 levels before
breaching the Group’s core LTV covenant in the period under
review. Such a scenario is considered to be a remote risk and is
before reflecting any mitigating actions available to the Group.
Based on the Board’s assessment, the Directors have a
reasonable expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due over the four-
year period to September 2028.
Rob Hudson
Chief Financial Officer
Grainger plc
Annual Report and Accounts 2024
64
Chair's introduction to governance
66
Leadership and purpose
68
Division of responsibility
78
Composition, succession and evaluation
80
Responsible business
84
Audit, risk and control
86
Remuneration
91
Directors’ report
110
focused on
long-term
success
Strong Governance
The Silver Yard, Birmingham
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
65
The Board believes that good leadership,
culture and governance are essential to our
continuing success and benefit all
of our stakeholders
In this report
Leadership and purpose
The Board’s primary function is to promote the long-term
sustainable success of the Company. It does this by leading
by example, promoting the culture of the business and
ensuring effective engagement with, and considering the
interests of, stakeholders. More information can be found
on pages 68 to 77.
Division of responsibility
The Board ensures that the Company has the correct
balance of Executive and Non-Executive Directors in order
to lead the Company effectively, with clear definition of the
respective responsibilities of the Board and the executive
leadership of the Company. Please see pages 78 and 79
for more details.
Composition, succession and evaluation
The Nominations Committee ensures that the Board
maintains an appropriate balance of diversity, skills,
experience and knowledge to ensure that it can effectively
lead and govern the Company. Effective evaluation of
Board performance and succession planning are crucial
in this. To find out more please see pages 80 to 84.
Responsible business
The Board provides oversight of the delivery of the
Company’s ESG strategy including its net zero transition
plan, diversity and inclusion activities and employee
engagement programme. Please see pages 85 and 86
for more details of our actions in this arena.
Audit, risk and internal controls
The Board sets the Company’s strategy, taking account of
the need to balance risk and reward. With the oversight of
the Board, the Audit Committee has established formal
and transparent processes to oversee the independence
and effectiveness of internal and external audit functions
and risk management approach. Pages 87 to 98 provide
details of these activities.
Remuneration
Our Remuneration Policy aims to ensure that the Executive
Directors, senior management and the wider workforce
are appropriately and fairly incentivised, and aligned
with long-term, sustainable strategic execution. We also
monitor wider colleague remuneration across the business.
More information is available at pages 91 to 109.
Chair's introduction to governance
Dear Shareholders,
The Directors and I are committed to applying effective
corporate governance and promoting the highest
standards of behaviour and values throughout
the Company.
I am therefore pleased to introduce this year’s Governance
report, in which we describe our corporate governance
arrangements, the operation of the Board and its Committees,
and how the Board and its Committees or the Directors
discharged their responsibilities.
The Company has delivered another strong operating
performance in a macro environment that included a period
of political and economic instability and uncertainty, but
ended with a change in government and the expectation of a
period of political stability. We have continued to build on our
market leadership in the growing build-to-rent ('BTR') sector.
We have the UK’s largest portfolio, largest pipeline and best-in-
class operating platform, delivering compounding growth for
Shareholders, whilst providing an excellent service and rental
experience to our growing number of customers. Our extensive
dialogue with all the main political parties provides them with
an insight into market dynamics to inform progress of the new
regulation from the current administration. The imperative for
the delivery of new housing across the country is entirely in line
with our strategic approach.
The Board is able to provide strong support to the management
team. We have considered and debated various challenging
scenarios, taking into account the interests of all the
Company’s stakeholders.
The coming year presents exciting opportunities for the
Company to grow our pipeline and enhance our customer
service offering.
The Board considered the implications of the proposed
conversion of the Company to a Real Estate Investment Trust
('REIT') carefully and comprehensively. We determined that
the conversion was in the best interests of Shareholders
and other stakeholders.
The Board has continued to focus on the Company’s ESG
activities. We have overseen the development of a net zero
transition plan, have submitted science based targets to the
Science Based Targets Initiative ('SBTi') for approval, and
have received advice on setting longer-term targets, to 2050
and beyond.
Having provided oversight and support to the Company’s
application process for National Equality Standard (‘NES’)
accreditation, the Board was delighted to see Grainger gain
accreditation this year.
Grainger plc
Annual Report and Accounts 2024
66
The Board conducted an assessment of the Company’s strategy
in June of this year. We looked at options for funding growth,
the increasing number of stabilised assets now coming onto the
market and potential consolidation in the sector. We continue
to believe that our growth strategy is the correct one for
the Company.
Good governance also means ensuring we have rigorous risk
management and controls in place and we have reviewed
and strengthened our approach in this area. The application
of the skills and experience of the Directors, coupled with the
wide-ranging work of the Audit Committee, provides strong
governance for the benefit of all our stakeholders. To learn
more about our Board activity in 2024, please see page 72.
Mark Clare
Chair
20 November 2024
“Grainger continues to increase
the scale of its PRS business
and deliver operational
excellence through its culture,
people and investment
in technology.”
Highlights
1. Oversight and leadership of the response to the
changing macroeconomic environment, including a
change of government.
2. Compliance with the Corporate Governance Code during
the year.
3. Reviewed and considered proposed conversion to a REIT.
4. Enhancement of our ESG regime.
5. Board review and reaffirmation of strategy.
6. The Board visited our assets and met our team in
the regions.
7. Focus on the wellbeing of staff and customers.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
67
Leadership and purpose
Board
of directors
2. Helen Gordon
Chief Executive
Appointment
Appointed to the Board
in November 2015
Skills, competence and experience
Helen is a highly experienced, proven and
well regarded real estate investor. She has
significant experience working across a wide
range of real estate asset classes, including
residential property. This is combined with an
extensive knowledge of the City. Helen is the
senior independent non-executive director of
Derwent London plc, a non-executive director
of BusinessLDN, vice chair of EPRA, a member
of the New Towns Taskforce and a board
member of the British Property Federation.
She is a chartered surveyor and before joining
Grainger was global head of Real Estate Asset
Management of Royal Bank of Scotland plc.
She previously held senior property positions
at Legal & General Investment Management,
Railtrack and John Laing Developments.
Tenure
8 years and 10 months
1. Mark Clare
Non-Executive Chair
Appointment
Appointed Chair
in February 2017
Skills, competence and experience
Mark has wide-ranging experience in a
number of sectors and extensive knowledge
of the residential property market. He has
substantial plc-level experience and is chair
of Ricardo plc, senior independent director
of Wickes Group plc and a non-executive
director of Premier Marinas Holdings
Limited. Mark was chief executive of Barratt
Developments plc from 2006 to 2015, and
is a former trustee of the Building Research
Establishment and the UK Green Building
Council. Prior to joining Barratt, he was an
executive director of Centrica plc and held a
number of senior roles within both Centrica
plc and British Gas. Mark has also been a
non-executive director of United Utilities
Group plc, Ladbrokes Coral Group plc and
BAA plc, the airports operator.
Tenure
7 years and 7 months
N R B
E
4. Justin Read
Non-Executive Director
Appointment
Appointed to the Board in February 2017 and
appointed as Senior Independent Director in
February 2022
Skills, competence and experience
Justin has substantial experience in real
estate and corporate finance. Justin is a non-
executive director of Ibstock plc, Affinity Water
Limited and Marshall of Cambridge (Holdings)
Limited, chairing the audit committee of
all three companies and being the senior
independent non-executive director of Affinity.
Justin is a Patron of Real Estate Balance and
an independent member of the Investment
Committee of the Logistis pan-European real
estate fund. He was group finance director of
SEGRO plc from August 2011 to December
2016. Between 2008 and 2011, Justin was
group finance director at Speedy Hire plc.
Tenure
7 years and 7 months
A N R B
3. Robert Hudson
Chief Financial Officer
Appointment
Appointed to the Board in August 2021
Skills, competence and experience
Rob has 30 years’ experience in finance.
Rob was previously the chief finance
and operations officer and interim chief
executive of St Modwen plc, where he
worked from 2015 to 2021. Prior to that,
Rob was the group financial controller
at British Land plc from 2011 to 2015.
Rob joined PricewaterhouseCoopers on
graduation, then moved to Experian plc
in 2000 where he held a number of senior
financial roles, including global finance
director of its Decision Analytics business
and UK finance director. Rob is a qualified
chartered accountant.
Tenure
3 years and 2 months
E
5. Janette Bell
Non-Executive Director
Appointment
Appointed to the Board in February 2019
Skills, competence and experience
Janette is the managing director of FirstBus,
part of FirstGroup plc. She is a director of
the Confederation of Passenger Transport.
Janette held the position of chief executive
officer at P&O Ferries from January 2018 to
September 2020. Janette is an experienced
board director, with a breadth of operational
experience in customer centric organisations.
She was sales & marketing director for
Hammerson plc and has also worked in senior
customer strategy and marketing positions at
PwC, Tesco and Centrica, where she was sales
and marketing director of British Gas Services.
Tenure
5 years and 9 months
A N R B
Grainger plc
Annual Report and Accounts 2024
68
E
Executive Committee
A
Audit Committee
R
Remuneration Committee
N
Nominations Committee
B
Responsible Business Committee
Committee Chair
Key:
Balance of Directors
(as at the date of this report)
Chair
Executive Directors
Non-Executive Directors
58%
Male
42%
Female
6. Carol Hui OBE
Non-Executive Director
Appointment
Appointed to the Board in October 2021
Skills, competence and experience
Carol has substantial non-executive experience
in a wide range of sectors and has particular
expertise in law, sustainability and infrastructure.
Carol is a non-executive director of Breedon
Group plc, where she is the chair of the
sustainability committee. Carol is also a non-
executive director of the Lord Chamberlain’s
Committee in the Royal Household and a board
trustee of Christian Aid. Carol was the non-
executive chair of Robert Walters plc until 2020.
In an executive capacity, Carol’s most recent
role was as chief of staff and general counsel
at Heathrow Airport, stepping down in August
2021. Carol has served in senior positions in oil
and gas, logistics and infrastructure companies.
She was also a corporate finance lawyer at
Slaughter and May.
Tenure
3 years
A N R B
7. Michael Brodtman
Non-Executive Director
Appointment
Appointed to the Board in January 2023
Skills, competence and experience
Michael was Chairman of the UK advisory
arm of CBRE, having spent a 40-year career
at the agency. Michael led its valuation
and operational real estate departments,
growing specialist teams in emerging sectors
and internationally. He moved into the role
of chairman in January 2020 and retired on
30 June 2022.
Michael is a non-executive director of Target
Healthcare REIT, Chair of the Industrial
Dwelling Society and a strategic adviser to
the Unite Student Accommodation Fund.
He is a Fellow of the Royal Institution of
Chartered Surveyors and a Trustee of Jewish
Care, the health and social welfare charity
serving London’s Jewish community.
Tenure
1 year and 9 months
A N R B
1
2
7
6
3
4
5
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
69
Purpose
Grainger’s purpose is renting homes and enriching lives by
providing high-quality rental homes and great customer service.
The Board keeps this purpose in mind when considering all
decisions it takes.
Culture
The Board believes that the culture of a business, in conjunction
with its values, is vitally important to its successful long-
term performance and is integral to all that we do, including
governance. How the Board members, particularly the
Executive team, conduct themselves sets the culture within
the Company.
The Board assesses and monitors the culture of the business
to ensure that policy, practices and behaviour throughout are
aligned with the Company’s purpose, values and strategy.
Each November, the Board receives a detailed presentation from
the CPO on culture and engagement and how it supports our
strategy. The Board is informed of our employee engagement
survey results, highlighting what we do well and the areas
where the Company and its senior management can improve.
The Board monitors activities to increase diversity and inclusion,
including setting targets for ethnic diversity in the senior
management of the Company. The Responsible Business
Committee provided details of our employee engagement plans
to the Board and updates us on the activities in relation to the
Employee Voice undertaken by the Chair of the RBC, for more
details see page 84.
We report further details on our culture and employee
engagement on page 85. During the year, the Board and I have
also spent time with our colleagues from across the business,
on-site visits and took these opportunities to gauge their views
on the business, the strategy and its implementation. The Board
received the results of a review from the Chair of the RBC on
employee engagement activities.
The Board oversaw and received reports on the progression of
the People Strategy, which was significantly refreshed during
the year, our ongoing mentorship scheme and our diverse
talent and future leaders programmes and our Talent Forum.
The Company achieved accreditation with the National Equality
Standard, recognising our commitment to ED&I, involving
interviews with many of our colleagues and a comprehensive
review of our processes and practices. To read more about this
please go to page 85.
From our engagement with colleagues and the reports received,
we firmly believe that the culture of the Company is strong
and has enabled us to perform well in the current market
conditions. Our NPS increased this year to +48 which we consider
to be a reflection of the strength of our culture. Our people
understand and support the strategic direction of the business
and are focused on delivering it.
Stakeholder engagement
The Board believes that good engagement with investors and
other stakeholders is crucial to understanding their views.
We are also supportive of the emphasis the Code puts on the
wider stakeholder group, particularly the Director’s duty under
section 172 of the Companies Act 2006. In order to achieve our
aim of being the UK’s leading residential landlord, we keep in
contact with our people, customers, suppliers, government and
investors to ensure that we harness their views and communicate
the Company’s progress. Please see page 55 for our section
172 Statement, the box below for our well-received Summer
Property Tours and page 73 for examples of our work with our
stakeholder groups. Specifically, regarding our investors, Helen
Gordon and Rob Hudson had over 460 engagements with the
Company’s Shareholders and analysts throughout the year.
Summer Property Tours
Over spring/ summer 2024, the
Grainger executive team hosted
a series of property tours to 20
investors at our East London cluster,
Fortunes Dock in Canning Town.
During the tour investors were shown
around both Argo and Nautilus
Apartments where they were able to
see the amenity spaces on offer to
residents as well as a show apartment.
During the tour the executive team
discussed Grainger’s investment
and clustering strategy and how
this enables us to create operational
efficiencies across our portfolio.
Leadership and purpose continued
Grainger plc
Annual Report and Accounts 2024
70
Compliance with the 2018 Corporate Governance Code
The governance rules applying to all UK companies on the
Official List of the UK Listing Authority are set out in the Code,
published by the Financial Reporting Council (‘FRC’). Copies of
the Code can be obtained from www.frc.org.uk. The Board fully
supports the principles set out in the Code and confirms we
have complied with all its provisions throughout the financial
year ended 30 September 2024. The Board is cognisant of the
requirements of the 2024 Code and preparations for compliance
with it are underway.
This report sets out Grainger’s governance policies and
practices and includes details of how the Company applies
the principles and complies with the provisions of the Code.
As required by the Code, this Report describes our activities
and key achievements during the year, giving Shareholders
and stakeholders the necessary information to evaluate how
the Code’s Principles have been applied.
Information flow
The Chair, Executive Directors and the Company Secretary
ensure the Directors receive clear, timely information on all
relevant matters. Board papers are circulated in advance of
meetings to ensure there is adequate time for them to be read
and to facilitate robust and informed discussion.
The papers contain the CEO’s review, Finance review, reports
on each business area, key figures and papers on specific
topics of interest to the Board. Minutes of the Executive
Committee meetings and detailed financial and other
supporting information are also provided. The Board receives
presentations throughout the year from various departments
across the business and from external advisers on subjects
including financing, regulatory issues for listed companies,
business valuation, ESG and customer feedback. The papers
also contain information on how stakeholder interests have
been taken into account when considering decisions taken
by the Company.
The CEO also provides ad hoc updates to the Board on any
significant matters between scheduled meetings.
Effectiveness
The standard Board schedule sets six meetings throughout the
year, one of which is an off-site session over two days specifically
focused on a review of the Company’s longer-term strategy.
Additional meetings can be added if required.
The Board has a list of matters reserved to it, and a rolling
annual plan of items for discussion, agreed between the Chair
and the CEO. They review the list of reserved matters and
annual plan regularly, to ensure they are properly covered,
together with other key issues as required. At each Board
meeting, the CEO provides a review of the business, setting
out how it has been progressing against strategic objectives
and details of any issues arising. In addition, items that require
formal Board approval are circulated in advance with all
supporting paperwork to aid appropriate decisions.
During the year, members of the Board spent time visiting our
buildings at the Condor in Derby and the Barnum in Nottingham.
Board members met staff at these sites, providing valuable
insight into the operation of the Company and engagement
with colleagues.
The Board activity table below shows examples of the subjects
and matters the Board debated and considered throughout
the year.
Attendance table to 30 September 2024
Executive Directors
Meetings
attended
Meetings eligible
to attend
Helen Gordon
6
6
Rob Hudson
6
6
Non-Executive Directors
Meetings
attended
Meetings eligible
to attend
Mark Clare
6
6
Justin Read
6
6
Janette Bell
6
6
Carol Hui
6
6
Michael Brodtman
6
6
October
April
November
May
December
June
January
July
February
August
March
September
Board meeting
Site visit
Board meetings 2023/24
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
71
Transactions 15%
• Reviewed reports on the progress of our
development schemes proceeding in
partnership with TfL.
• Considered material transactions and
business opportunities including, among
others, our BTR schemes in Bristol and
Milton Keynes.
• Received reports on the progression of
our existing development projects in
the UK.
• Considered the ESG impact of
prospective transactions.
Strategic 25%
• Carried out an in-depth review of
Grainger’s strategy. It considered further
opportunities for growth in the current
PRS market, including the acquisition
of stabilised stock and potential
consolidation in the PRS market.
• Received market update reports and
presentations from JPMC and Numis
regarding performance in relation to the
market and peer group companies.
• Considered competitor activity in the
PRS sector.
• Monitored the economic, legislative and
geopolitical landscape and received and
considered papers on the impact of the
new Labour Government.
• Considered the ESG strategy for the
business, including our ‘net zero carbon
pathway’, which is now an integral part of
our business, considered setting longer-
term targets, received a presentation
from PwC on this and reviewed progress
reports throughout the year.
• Received a presentation from our brokers
on our share price performance and the
factors which may be impacting it.
• Considered the implications of the
conversion of the Company to a REIT.
People and culture 15%
• Received reports on the activities to
increase the diversity of the business
including the activities of the Employee
Equality, Diversity & Inclusion Network.
• Received reports on roundtables
with employees.
• Reviewed the culture of the business and
employee engagement. This included the
Chief People Officer presenting the results
of the annual employee engagement
survey to the Board.
• Reviewed reports and updates on the
health, safety and wellbeing of our people
and customers.
• Received reports on progress of the
Company's People Strategy.
Governance and Compliance 10%
• Undertook and considered an internal
evaluation of the Board’s effectiveness.
• Received briefings on regulatory and
governance issues.
• Considered health and safety matters.
• Considered Shareholder relations, in
particular the feedback from investors
and analysts in connection with the
2023 full year results and the 2024
interim results.
• Received reports on development of the
ESG strategy and our activities in this
area, particularly the ‘net zero carbon
pathway’ plan and SBTi submission.
• Received reports from the Nominations,
Audit, Remuneration and Responsible
Business Committees.
Financial 20%
• Reviewed the Company’s debt and
capital structure.
• Reviewed the Company’s financing plans
including approval of the annual budget.
• Considered the Group’s financial
performance throughout the year.
• Agreed the continued application of the
dividend policy.
• Monitored performance of the agreed
KPIs for the business.
• Received reports on interaction
with the credit ratings agencies and
insurance providers.
Operations 15%
• Considered management of our suppliers,
and alternative supplier arrangements,
including the oversight of the significant
project to replace our main repairs
and maintenance supplier with an
alternative organisation.
• Received reports from consultants on our
customer service performance and other
operational KPIs.
• Oversaw the successful completion of
Grainger’s National Equality Standard
accreditation project.
Board activity: How the Board spent its time
15%
People
and culture
15%
Operations
25%
Strategic
10%
Governance and
Compliance
20%
Financial
15%
Transactions
Leadership and purpose continued
Grainger plc
Annual Report and Accounts 2024
72
How the Board understands and responds to
the needs of our stakeholders
The Board takes the interests of stakeholders into
account when making decisions. The relevance of
each stakeholder group may increase or decrease by
reference to the issue in question, so the Board seeks to
understand the needs and priorities of each group during
its deliberations.
This, together with the combination of the consideration of long-
term consequences of decisions and the maintenance of our
reputation for high standards of business conduct, is integral to
the way the Board operates.
We have continued to embed stakeholder interests into the
culture and operating model of our business. Papers presented
to decision-making committees include a section on
stakeholders’ interests.
One of the key areas of focus for the Board during the year was
the changes in both national and local government. The Board
was kept abreast of our comprehensive efforts to help the
new Government to understand the influence of BTR on the
housing sector which is a key focus for the new administration.
Management was tasked with engaging meaningfully with local
authority partners.
Customers
Received reports on customer insight
programme outputs.
Reviewed and fed back on plans to improve
customer service.
Oversaw ESG initiatives, including setting longer-
term targets for carbon emissions reduction.
More detail on how Grainger delivered for its
customers is included on page 75.
Shareholders
Reviewed and considered reports of
meetings with investors.
Considered questions and comments
from analysts.
Met with the Company’s brokers to
understand investor sentiment.
More detail on Grainger’s engagement
with Shareholders is included on page 75.
Colleagues
Monitored employee engagement survey results.
Chair of RBC met with colleagues in a series of
roundtable meetings to canvas employee views.
Received updates on the Company’s
successful application for National Equality
Standard accreditation.
Considered the gender pay gap for the business and
means to address it.
Engagement with employees at office and site visits.
Received reports on the activity of the ED&I Network.
More detail on Grainger’s engagement with
employees is included on page 76.
Suppliers
Considered reports on change of suppliers in key
repairs and maintenance workstreams.
Increased supply chain focus on issues like
decarbonisation, human rights and modern slavery.
More detail on Grainger’s engagement with suppliers
is included on page 77.
Government
Considered reports on Grainger’s
contributions to Government matters.
Oversaw Grainger’s relationships with key
local authority partners.
Reviewed reports on meetings with
Government, shadow government,
party civil servants in key
Government departments.
Grainger plc
Board
Local communities
Reviewed reports on Grainger’s engagement
with local communities.
Considered schemes in which Grainger
participated at development sites.
Reviewed community engagement plans.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
73
Substantial shareholdings
At 30 September 2024 and 18 November 2024 (being the latest
practicable date prior to the date of this report), the Company
is aware, from analysts' reports and replies received from
Shareholders, of the following interests amounting to 3% or
more in the Company’s shares.
30 September 2024
18 November 2024
Holding
m
Holding
%
Holding
m
Holding
%
BlackRock Inc
80.0
10.8
79.1
10.7
Norges Bank Investment
Management
70.2
9.5
68.4
9.2
The Vanguard Group Inc
41.5
5.6
42.0
5.7
MFS Investment
Management
30.5
4.1
32.5
4.4
Dimensional Fund Advisers
27.9
3.8
27.7
3.7
Man Group
26.5
3.6
28.0
3.8
Legal & General Investment
Management
26.5
3.6
24.2
3.3
FMR LLC
26.2
3.5
25.6
3.5
Franklin Resources Inc
22.6
3.1
22.7
3.1
Cohen & Steers Inc
21.3
2.9
24.6
3.3
Relations with Shareholders
The Group’s website includes a comprehensive investor relations
section, containing all announcements issued via the Regulatory
News Service (‘RNS’), share price information, annual documents
available for download and similar materials.
We send out the Notice of Meeting and Annual Report and
Accounts at least 20 working days before the meeting. We hold
separate votes for each proposed resolution. A proxy count
is given in each case. Grainger includes, as standard, a ‘vote
withheld’ category, in line with best practice. Shareholders can
also lodge their votes through the CREST system.
The Board believes that understanding the views of its
Shareholders is a fundamental principle of good corporate
governance. Strong engagement with stakeholders, including
investors, is key to achieving this.
Our investor relations activities are tailored to the financial
reporting calendar, with additional engagement when considered
beneficial to the Company. During the year, we have held
over 460 meetings with Shareholders, analysts and potential
investors in the year. Helen Gordon, Rob Hudson and other
senior managers attend the vast majority of these meetings
and manage the Group’s investor relations programme with the
Director of Corporate Affairs. We always seek feedback at these
meetings and present it to the Board. In addition, the Company
Secretary engaged with a combination of fund managers
and corporate governance officers of the Company’s major
Shareholders before the 2024 AGM. We anticipate a similar pre-
AGM engagement process will take place in 2025.
Presented to over 460 investors
Attendance at investor meetings
Chief Executive
91%
Chief Financial Officer
88%
Senior executive
97%
November 2023
• Company Results
Presentation and Company
Results Roadshow
• UBS Global Real Estate
Conference (London)
April 2024
• Closed period
May 2024
• HY Results Roadshow
• Kempen Conference
(Amsterdam)
January 2024
• Barclays Conference
(London)
• EPRA Insight Panel
June 2024
• Morgan Stanley Conference
(London)
• Peel Hunt Conference
(London)
• EPRA Corporate Access
Conference (London)
• EPRA Asia Week (virtual)
July 2024
• Edinburgh Roadshow
• Summer Property Tours
September 2024
• Bank of America Conference
(US)
• Goldman Sachs Conference
(London)
• EPRA Conference (Berlin)
• Closed period
• Post close update
October 2023
• Citi Conference (US)
• Kempen Conference (US)
• Berenberg Conference (UK)
• Bank of America Conference
(London)
• FMR Conference (London)
March 2024
February 2024
• AGM (Newcastle)
• Trading update
• Citi REIT Call
Key Shareholder events 2023/24
An ongoing dialogue with our Shareholders is fundamental to
ensuring that there is an understanding of the strategy and
governance of the business, and that the Board is aware of the
issues and concerns of our investors. In this section of the report,
we highlight the key activities of our Shareholder engagement
programme throughout the year.
Shareholder by region
UK
North America
Europe
Rest of the world
Leadership and purpose continued
43%
6%
20%
31%
Grainger plc
Annual Report and Accounts 2024
74
How the business understands and responds
to the needs of our stakeholders continued
Stakeholder expectations
How we engage
Outcomes & examples
Customers
For Grainger to provide safe, high-quality
homes and good service, whilst responding
to their needs promptly.
Understanding our customers and their needs, and
communicating effectively with them, is essential to providing
the great homes and service that we aim to deliver.
Our customer insight programme provides us with this essential
knowledge and is factored into the decisions we take, the
buildings we create and how we operate.
We use multiple communication channels and methods
to reflect the wide range of customers we have.
Our far-reaching Customer Experience Programme is designed
to continually enhance and improve the Grainger rental
experience for our customers. It includes bespoke customer
service training for the entire business including our Executives.
• We are using AI to review our customer feedback to give us a
holistic and consistent understanding over all of our feedback.
We can drill down to actionable insights in minutes, see what
our biggest customer issues are, and prioritise them
• Delivered 1,236 new homes
• PRS Customer Net Promoter Scores increased by 12%
• PRS average length of stay of 31 months
Shareholders
For Grainger to generate long-term,
sustainable, attractive total returns and
to meet ESG expectations.
We have a comprehensive investor relations programme, which
we build upon and extend each year. Activities include investor
roadshows, conferences, trading updates and property tours.
Key engagement events are reported on page 74. We ensure that
we are both accessible and approachable and that we respond
promptly to all queries.
We respond annually to a range of ESG benchmarks, as reported
on page 54.
• We have held over 460 investors, analysts and potential investors
meetings this year
• We have spoken at two panel events with a combined
attendance of over 50 investors
• We have met with 8 sales teams
• Received 33 pieces of analyst coverage, with 11 analysts
covering Grainger
• Attended 15 investor conferences/events
• Hosted two investor roadshows, and nine property tours
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
75
How the business understands and responds
to the needs of our stakeholders continued
Stakeholder expectations
How we engage
Outcomes & examples
Local communities
For Grainger to act responsibly and make
a positive impact on the local area while
listening to and taking onboard local views,
preferences and concerns.
Grainger seeks to develop thriving communities both within and
around our buildings. We conduct extensive local engagement
and consultation around our assets and developments via
events, meetings, and direct communications.
Supporting local is one of the goals of our Customer Experience
Programme and our Living a Greener Life engagement
campaign. We engage with local authorities and create
partnerships to support local businesses and charities.
Our Residents Events Committee ensures our residents feel at
home in their community through organising local activities and
events and building relationships with the local community.
• The Board set the Company a target to engage with three key
stakeholders in their locality, including the police, food banks
and local schools
• Supported local charity partners including The People’s
Kitchen in Newcastle upon Tyne, Salford Food Bank in Salford
and Emmaus in Leeds
• Continued to provide five homes at discounted rent to refugee
families from Ukraine
• Pledged three homes for young people at risk of homelessness
through the LandAid BTR Pathfinder
• 598 residents and community events held throughout the year
• Further enhanced and embedded Living a Greener Life
customer and colleague engagement programme
Colleagues
For work to be fulfilling and rewarding. To be
fairly treated, recognised and remunerated. To
operate in a safe and comfortable environment,
with learning and development opportunities.
Our colleagues' experience of working at Grainger is critical to
our ongoing success. We actively seek feedback and listen to our
colleagues and base our activity programme upon that feedback.
Our internal engagement programme includes surveys, Company-
wide calls hosted by our CEO, our internal newsletter and our
intranet. We organise a range of events for colleagues, including
campaigns from our colleague-led ED&I Network and charity
fundraising events.
Carol Hui, an independent Non-Executive Director and Chair of the
Responsible Business Committee, is responsible for the Voice of the
Colleague and workforce engagement.
• Extended the long service holiday accumulation rights to apply
to onsite staff
• Achieved ‘Very Good’ rating in our annual employee survey, run
by Best Companies and listed in UK's Best 100 Large Companies
to Work for 2024
• High levels of colleague engagement evidenced by above
average, high response rates to feedback surveys
• Colleague-led internal roundtable events on a variety of topics
• Achieved NES accreditation
• Regular all-staff calls led by our CEO, Helen Gordon and
involving briefings from different business areas
Leadership and purpose continued
Grainger plc
Annual Report and Accounts 2024
76
Suppliers
For us to act with integrity and professionalism,
pay promptly and ensure that we are protecting
the rights of all those employed through our
supply chain.
Our key suppliers and partners are carefully managed to deliver
agreed service levels and positive customer outcomes.
Our supplier selection process is supported by ConstructionLine and
incorporates our CONNECT system, including Risk Radar services.
Proactive contractor management ensures regulatory, health
and safety and modern slavery compliance.
• Considered reports on change of suppliers in key repairs and
maintenance workstreams
• Increased supply chain focus on issues including decarbonisation,
human rights and modern slavery
• Consistently paying suppliers within our standard 30 day terms
• Regular supplier health and safety audits completed, with six
audits undertaken within the year
Government
For Grainger to lead the sector as a responsible
employer and housing provider. To support
Government in delivering its objectives such as
increasing provision of high-quality homes and
meeting its net zero carbon ambitions.
As the UK’s leading landlord, we take a front-footed, proactive
approach to engagement with the Government, and the main
opposition parties and other relevant public bodies, such as Homes
England, Greater Manchester Combined Authority and the Greater
London Authority.
We respond to relevant Government consultations and meet with
Ministers, officials and politicians on important topics affecting our
sector. We take a thought leadership role and actively participate and
contribute to our industry trade associations, the British Property
Federation, Business London and others.
• Regular Board reports, updates and discussions re political
engagement and the General Election
• Helen Gordon appointed to HM Government’s New
Towns Taskforce
• Engaged heavily with policy makers, Members of Parliament,
Government Ministers and Government Officials on reform of the
private rented sector
• Provided insight to ministers and regulators in consultations on the
planning system
• Provided policy makers with expert insight on how to stimulating
housing supply and investment, and on areas impacting our
business such as Selective Licensing, Building Safety Levy, Second
Staircases, Rental Affordability and other proposed legislation
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
77
Governance framework
Audit
Committee
Responsible for overseeing
the Company’s financial
statements and reporting.
Reviews the work of
internal and external
auditors and matters of
significant judgement by
management. It reviews the
risk management framework
and the integrity of the risk
management and internal
control systems.
Nominations
Committee
Reviews the structure, size
and composition of the
Board and its Committees.
Oversees succession planning
for Directors and Executive
Committee members. It leads
the process for appointing
Board Directors.
Executive Committee
This Committee operates under the direction and authority of
the Chief Executive. It makes key decisions on matters to ensure
achievement of strategic plans, reviews strategic initiatives,
ratifies executive decisions and considers the key business risks.
It is supported by sub-committees, each focusing on an area of
the business.
Remuneration
Committee
Responsible for determining
Remuneration Policy and
level of reward for the
Executive Directors and
senior managers to align
their interests with those of
the Shareholders.
Responsible Business
Committee
Oversees the development
and implementation of
strategies and policies in all
areas of responsible business
including climate change,
environmental, social,
sustainability, employee
engagement and diversity
and inclusion.
Management
Committee
Responsible for
the day-to-day
management
of the business
and ensuring all
senior leaders
are briefed on
business activity
and priorities.
Investment
Committee
Reviews and
approves material
transactions,
allocates
investment capital
and proposes
investment
hurdle rates for
Board approval.
Finance and
IT Committee
Responsible for
financial and IT
matters across
the Group,
which include
accounting,
financial
reporting,
tax, treasury,
corporate and
commercial
finance,
procurement
and IT issues for
the business.
Operations
Board
Responsible
for executing
operations
strategy,
performance
management, risk
management and
governance across
the operating
business.
Development
Board
Responsible for
the strategy
implementation,
performance
management,
risk management
and governance
in relation to
the development
business.
Health
and Safety
Committee
Responsible for
overseeing and
executing health
and safety
compliance
activities across
the business.
Data
Protection
Committee
Responsible
for overseeing
and executing
data protection
compliance
activities across
the business.
Division of responsibility
Grainger plc Board
Responsible to the Company’s
Shareholders for the long-term success
of the Group, its strategy, its values and
its governance. Provides leadership of
the Group and, either directly or by the
operation of Board Committees, applies
independent judgement on matters
of strategy, performance, resources
(including key appointments), the overall
approach to risk management and
internal control, culture and standards
of behaviour.
Grainger plc
Annual Report and Accounts 2024
78
Roles and responsibilities of Directors
Role
Responsibilities
Chair
Responsible for running the Board and ensuring its effectiveness. The Chief Executive reports to the
Chair, as does the Company Secretary, on matters of corporate governance. The Chair is the guardian
of the Board’s decision-making process and is responsible for ensuring a constructive relationship
between Executive and Non-Executive Directors and for fostering open debate with an appropriate
balance of challenge and support. In accordance with the Code, the posts of Chair and Chief Executive
are separate, with their roles and responsibilities clearly established, set out in writing and agreed
by the Board.
Chief Executive
Responsible for running the business and implementing the Board’s decisions. She recommends the
strategy to the Board and is responsible for implementing it. She chairs a regular meeting with the
Chief Financial Officer and the additional members of the Executive Committee.
Chief Financial Officer
Responsible for the financial stewardship of the Group’s resources through compliance and good
judgement. He provides financial leadership in the implementation of the strategic business plan
and alignment with financial objectives.
Non-Executive Directors
Responsible for bringing independent and objective judgement and
scrutiny to all matters before the Board and its committees, using their
substantial and wide-ranging skills, competence and experience. The key
responsibilities of Non-Executive Directors are set out in their letters
of appointment and include requirements to:
• challenge and contribute to the development of the
Company’s strategy;
• scrutinise the performance of management in meeting agreed goals
and objectives, and monitor the reporting of performance;
• satisfy themselves that financial information is accurate, and that
financial controls and systems of risk management are rigorous and
secure; and
• oversee the Company’s ESG, non-financial KPIs and employee voice
programmes via the Responsible Business Committee.
A copy of the letter of appointment and service contracts for all Non-
Executive Directors is available from the Company Secretary and at the
AGM. During the year, the Non-Executive Directors meet periodically
without the Executive Directors present and also without the Chair.
Senior Independent Director
Acts as a sounding board for the Chair and serves as an intermediary for the other Directors where necessary.
The Senior Independent Director will meet Shareholders if they have concerns, and where contact through
the normal channels has not resolved the issue or is inappropriate. The Senior Independent Director leads the
annual performance review of the Chair.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
79
40%
25%
20%
15%
Composition, succession and evaluation
The Nominations Committee report
Dear Shareholders,
I am pleased to present the Nominations Committee
report for 2024 which details the main activities
we undertook during the year.
The Nominations Committee plays a fundamental role in
ensuring we select and recommend strong candidates for
appointment to the Board. The Committee monitors the balance
of skills, experience, independence, knowledge and diversity of
the Board and its Committees, with any changes recommended
to the Board for its review and decision. The Committee is
also responsible for succession planning, and monitors talent
development at senior management level.
Key responsibilities
The key responsibilities of the Committee are to:
• review the size, balance and constitution of the Board,
including the diversity and balance of skills, knowledge and
experience of the Non-Executive Directors, considering length
of service of the Board as a whole and looking for membership
to be regularly refreshed;
• maintain an effective succession plan for Board
and senior management;
• identify and nominate, for the approval of the Board,
candidates to fill Board vacancies, and ensure that
appointments to the Board are subject to a formal,
rigorous and transparent procedure;
• ensure that both appointments and succession plans are
based on merit and objective criteria and promote diversity
of gender, social and ethnic backgrounds and cognitive and
personal strengths and work closely with the Responsible
Business Committee with regard to the wider diversity and
inclusion strategy and agenda;
• review annually the time commitment required of
Non-Executive Directors;
• make recommendations to the Board, in consultation with the
respective committee Chairs, regarding membership of the
four Board committees; and
• conduct an annual evaluation of the Board, considering its
composition, diversity and how effectively members work
together to achieve objectives and whether each Director
continues to contribute effectively.
Process for Board appointments
Before making an appointment, the Nominations Committee
will evaluate the balance of skills, knowledge, diversity and
experience currently on the Board. Following this, a specification
of the personal attributes, experience and capabilities
required to perform the relevant appointment is produced.
In circumstances where external recruitment or benchmarking
of an internal candidate is appropriate, an independent external
search consultancy will be engaged to support the process.
A recommendation is then made to the Board concerning the
appointment of any Director. The Committee also supports
the Board in the appointment of the Company Secretary.
There were no appointments to, or departures from, the Board
in the year covered by this report.
Attendance table
Non-Executive
Directors
Member
since
Meetings
eligible to
attend
Meetings
attended
Mark Clare
(Committee Chair)
February 2017
2
2
Justin Read
March 2017
2
2
Janette Bell
February 2019
2
2
Carol Hui
October 2021
2
2
Michael Brodtman
January 2023
2
2
“The Nominations Committee ensures
that the Board has the right balance
of skills, experience and knowledge
to guide the Company.”
Mark Clare
Chair of the Nominations Committee
Non-Executive Director
succession
Executive and senior
management succession
Committee composition
Governance
How the committee spent its time
Grainger plc
Annual Report and Accounts 2024
80
Board composition and independence
In accordance with the Code, all current Directors will stand for
re-election at the 2025 Annual General Meeting (‘AGM’).
Main activities of the Committee during the year
The Committee met on two occasions during the year to
30 September 2024, supplemented by other discussions to
support the work of the Committee. At the scheduled meetings
the Committee considered a number of standing agenda items
relating to its key responsibilities detailed above. In applying
those responsibilities, the Committee made decisions on a range
of matters during the year, the most significant of which are
referenced in this Report.
Invitations to attend Committee meetings extend to the CEO,
Chief People Officer (‘CPO’) and others as necessary and
appropriate. Details of the Directors are set out on pages 68
and 69 together with a summary of their experience and skills.
The Board reviews Non-Executive Director independence
annually, and takes into account each individual’s professional
characteristics, their behaviour at Board meetings, and their
contribution to unbiased and independent debate. The Board
agreed that I was independent on my appointment as Chair.
The Board considers all the Non-Executive Directors
to be independent.
Board performance evaluation
An external review having been undertaken last year, this year
the evaluation of Board effectiveness was carried out internally.
We issued detailed questionnaires to all Board members,
collated the feedback and created an action list
of suggested improvements.
The review concluded that the Board and its committees
were operating effectively. A selection of the key findings
and recommendations are set out below.
Year 1
2024 External
Year 2
2025 Internal
Year 3
2026 Internal
Year 4
2027 External
Findings
The Board’s role is well understood, with good clarity between the role
of the Non-Executives and Executives.
The quality and comprehensiveness of Board papers remains reassuringly
high. Board meetings have a good level of contribution and the range
of guests has added value to the meetings.
There is good engagement with investors and other stakeholders.
There is appropriate visibility and oversight of risk.
All Board committees are working effectively, including the RBC which is
now well established.
The Chair leads the Board well; he encourages contributions from Board
members. The Chair has good working relationships with the senior
management team.
Principal recommendations
Time to be factored into Board meetings
for general discussion.
There is good exposure to senior
management there could also be more
opportunities for exposure to rising or
emerging talent.
While the quality of Board papers is very
high, they could be reduced in length.
Greater visibility of the operational change
programme would be welcome given
the level of change and restructuring
envisaged in future.
The Board has developed an action plan to address the recommendations arising from the Board review.
Progress will be monitored regularly.
Governance
Grainger plc
Annual Report and Accounts 2024
81
Strategic report
Financial statements
Induction and professional development
The Board is updated on a range of matters throughout the
year. Subjects include the business of the Group, legal and
regulatory responsibilities of the Company (including updates
to the legislative landscape) and changes to accounting
requirements. This takes the form of presentations by Grainger
senior management, external and internal auditors and other
professional advisers, and Board papers and briefing materials.
New Board members are provided with a comprehensive
induction programme. There were no new appointments
this year.
We also expect individual Directors to identify their own training
needs, and to ensure they are adequately informed about the
Group and their responsibilities as a Director.
The formal evaluation process and empirical observation
provides the Board with confidence that all its members have
the knowledge, ability and experience to perform the functions
required of a director of a listed company.
Committee changes
It is our policy to have all Non-Executive Directors as members
of all of the Board committees, as we have a small Board and we
consider that this arrangement gives good visibility across
the Company’s activities.
Diversity
The Directors are committed to having a diverse group of
employees. This starts with having a balanced Board which
includes diversity of perspectives, skills, knowledge and
background. For gender diversity specifically, the Board
continues to support the aspiration of the Hampton-Alexander
Review to promote greater female representation on listed
company boards.
We have instructed our recruitment agents to provide us with
a diverse range of candidates. We make all appointments
to the Grainger Board on merit, and within this context the
Directors will continue to follow best practice on the issue
of diversity as it develops further. At the date of this report,
female representation at Board level was at 43%. The current
level exceeds the 33% level recommended by the Hampton-
Alexander Review.
The objective for the Board and the Committee is to consistently
have at least one-third of the Board being female Directors.
The Board is also mindful of the Parker Review regarding
ethnic diversity on UK boards that was published in 2017.
The Review recommends that each FTSE 250 board should
have at least one director of colour by 2024. The Board meets
the recommendation of the Parker Review.
The responsibility for diversity and inclusion across Grainger’s
wider employee basis is now within the remit of the Responsible
Business Committee. For details on the activities in this area,
please see pages 84 and 85.
Composition, succession and evaluation
The Nominations Committee report continued
Gender diversity and ethnic origin
Board
Senior positions on the Board1
Executive Committee
Number
%
Number
%
Number
%
Gender
Men
4
57
3
75
7
70
Women
3
43
1
25
3
30
Other
Not specified/prefer not to say
Ethnicity
White British/White Other
6
86
4
100
8
80
Mixed/Multiple Ethnic Group
Asian/Asian British
1
14
2
20
Black/African/Caribbean/
Black British
Other Ethnic Group
Not specified/prefer not to say
Total
7
4
10
1.
CEO, CFO, Chair, SID
Grainger plc
Annual Report and Accounts 2024
82
Succession planning
The Committee received a detailed presentation from the CPO
in relation to our succession plans for key people in the business
and related retention strategies for them. Specifically with
regard to succession planning of senior executives, a number of
senior appointments were made during the year, including Sapna
FitzGerald as Group General Counsel and Company Secretary,
who was appointed after a thorough recruitment process
involving specialist recruitment consultants. Sapna brings
significant legal and company secretarial experience gained in
a plc environment. She replaces Adam McGhin, who departed
after 13 years at Grainger, including ten years as Company
Secretary. The Board wishes to thank Adam for his service
to the Company.
The Committee is cognisant of the fact that Mark Clare and
Justin Read are approaching their nine-year term limit and
consideration is being given to their succession.
The Committee also received presentations from the CPO in
relation to the Company’s talent management initiative, which
seeks to identify and prepare future leaders of the business and
support them in developing and progressing their careers at
Grainger. This includes putting in place learning opportunities
and interventions which add the most value, including
external coaching.
Time commitment
The Board, supported by the Nominations Committee, carefully
considered the external commitments of the Chair and each of
the Non-Executive Directors. The Board is satisfied that each
Director committed enough time to be able to fulfil their duties
and has capacity to continue doing so.
Re-election of Directors
We continue to adopt the recommendations of the Code that
all Directors offer themselves for re-election annually, even
though the Company’s Articles of Association only require this
every three years. Therefore, all current Directors will stand
for re-election at the 2025 AGM.
In light of the performance evaluation, the Board recommends
that all Directors proposed are re-elected.
Access to independent advice
All Directors have access to the advice and services of the Group
General Counsel and Company Secretary, who ensures we
follow Board processes and maintain high corporate governance
standards. Any Director who considers it appropriate may take
independent, professional advice at the Company’s expense.
Balance of knowledge, skills and experience
The Directors have wide-ranging experience as senior business
people. The Board has particular expertise in finance, property,
operations, development and the listed company environment.
Mark Clare
Chair of the Nominations Committee
20 November 2024
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
83
The Silver Yard, Birmingham
Dear Shareholders,
I am pleased to present Grainger’s Responsible Business
Committee report. Established in 2022, the Committee
oversees a broad remit of responsible business topics
including climate change, environmental, biodiversity,
community engagement, social impact, colleague
engagement and ED&I. This report summarises the main
activities undertaken during the year.
Key focus areas during 2024
During the year, the Committee reviewed reports from
management and received updates from colleagues across
Grainger’s business on topics including progress towards
Grainger’s net zero carbon commitments and science-
based target-setting, community engagement strategy and
developing our approach to ED&I (which was recognised with
the achievement of the NES). The Committee also received my
report on the roundtables that I conducted to gather feedback
from colleagues.
The Committee had the opportunity to meet Grainger
colleagues and to experience our ED&I, Living a Greener Life
and community engagement initiatives in action at a site visit to
The Barnum in Nottingham. The Board also visited Grainger’s
new London office which was refurbished to a strong ESG brief.
We met with colleagues and saw first hand how the energy
efficient space has been designed to support colleague inclusivity
and wellbeing.
Key responsibilities
The key responsibilities of the Committee include:
• Agreeing and measuring progress against the Company’s
sustainability strategy, commitments and targets
• Overseeing and monitoring the development and
implementation of the Company’s net zero carbon
transition plan
• Monitoring the areas and activities likely to impact Grainger’s
performance and reputation as a responsible business
• Reviewing and approving responsible business-related policies
and disclosures
• Monitoring stakeholder engagement on relevant issues
• Gathering and considering the views of the workforce through
our Voice of the Colleague
• Monitoring the development and implementation of the
Company’s ED&I Strategy, plans and commitments
• Monitoring charitable and colleague volunteering activities
• Supporting the Audit Committee in reviewing responsible
business-related risks and controls and the Remuneration
Committee in setting responsible business-related Group
objectives and approving the LTIP scoring in relation to these.
The full terms of reference for the Committee are available
on Grainger’s website at: https://corporate.graingerplc.co.uk/
investors/governance/board-committees?tab=responsible-
business-committee.
“The Responsible Business Committee
has enabled the Board to allocate more
time to focus on strategic ESG issues.”
Carol Hui
Chair of the Responsible Business Committee
How the committee spent its time
Attendance table
Non-Executive
Directors
Member
since
Meetings
eligible to
attend
Meetings
attended
Carol Hui
(Committee Chair)
March 2022
2
2
Janette Bell
March 2022
2
2
Mark Clare
March 2022
2
2
Justin Read
March 2022
2
2
Michael Brodtman
January 2023
2
2
Net zero carbon
ESG progress
People
Community and social
Governance
Responsible Business
Responsible Business Committee
5%
5%
25%
40%
25%
Grainger plc
Annual Report and Accounts 2024
84
The existence of the Committee has enabled the Directors
to allocate more time to discuss strategic ESG topics.
For more information on ESG topics, please refer
to pages 37 to 54.
ESG progress
The Committee assessed progress against the Group 2024 ESG
objectives reported on page 102 in the Directors’ Remuneration
report and workstreams in support of the business’s long-
term ESG commitments, reported on pages 50 to 54 in the
Sustainability section. The Committee received regular reports
on stakeholder engagement activities, more detail on which is
provided on page 73 of the report.
Net zero transition
The Committee approved the Company setting a science-
based target and was pleased to see the progress made
with the target currently subject to validation by SBTi and
expected to be confirmed in early 2025. Potential approaches
to carbon offsetting were reviewed and the agreed strategy
remains to focus on carbon reduction initiatives before
considering offsets. Updates on the actions taken on the
operational portfolio to deliver carbon reduction and support
the achievement of the LTIP carbon metrics were presented.
The Committee was pleased to see continued progress in
measuring Scope 3 GHG emissions through the successful
implementation of the customer emissions strategy and supplier
engagement programme.
Community and social impact
Following the review of charitable investment which the Board
considered previously, the progress made in both the operational
and corporate charity programmes was a key focus during the
year. The Committee enjoyed hearing about the charity and
community engagement activities implemented by Grainger’s
Resident Services Teams with both colleagues and customers
and were pleased to see examples of the positive social
impact generated for local community partners and charities.
The Committee approved Grainger’s pledge of homes to the
LandAid Pathfinder programme, to help house young people
at risk of homelessness.
Human rights
The Committee reviewed and approved a Human Rights
Policy which translates Grainger’s strong social purpose and
commitments to being a responsible landlord, employer
and partner into a public statement available on the
Company’s website.
Equality, Diversity and Inclusion
Our continued focus on ED&I remains integral to our People
Strategy and we are committed to creating an inclusive culture
where diversity is recognised and celebrated. We are proud to
have achieved the leading external benchmark, the NES this year,
with significant contribution by the ED&I Network, ED&I Steering
Committee and multiple enhancements to our ED&I practices.
The progress and achievement of NES was overseen by the
Committee with detailed reporting on the actions and initiatives
that were implemented. Our colleague-led ED&I Network,
delivered a range of events and awareness raising sessions such
as World Cuisine Day and colleague led panel events, and also
included new topics such as celebrating Neurodiversity Month,
taking onboard colleague feedback. Celebrating diversity
and inclusion were also integrated into our Residents Events
Committee calendar for our customers.
Following the launch of our first ED&I data questionnaire, we
have since issued it for a third year and we now hold diversity
data for 84% of our colleagues.
Due to the success of our mentoring programme which launched
in 2022, we were delighted to open it up for a third round
following feedback from mentors and mentees on the value the
programme brings to colleagues.
Voice of the Colleague
Our Voice of the Colleague activities have been led by me as
Grainger’s designated Non-Executive Director for workforce
engagement. Our approach to support colleague engagement is
designed to enable colleagues to speak up, share their feedback
and contribute views on what they are experiencing from an
engagement perspective. During 2024, I held two roundtable
events, which were held in person and remotely.
Colleagues who participated in the focus groups were from a
range of roles and based in different locations. Through their
feedback, we gathered a variety of perspectives and helpful
suggestions. By actively listening to colleague insight, a number
of initiatives have been rolled out to enhance engagement
and embed our culture. For more details see page 40 of the
people section.
A deep dive into our colleague survey engagement results was
delivered by our CPO which gave further insight into our culture
across the Grainger teams and will continue to be shared with
the Committee at both full engagement and pulse survey points.
Analysis and colleague feedback from the survey resulted in
action plans being devised for each area of the business including
supporting colleague wellbeing, learning & development and
enhancing our approach to ED&I.
Looking ahead
The Committee’s key activities for 2025 will include further
monitoring and challenging progress against ESG objectives,
the LTIP carbon metrics and science-based target, reviewing the
Company’s Net Zero Transition Plan and associated investment
required to deliver it, continuing to deliver our enhanced
approach to ED&I and monitoring our social impact across our
community and charitable programmes.
Carol Hui OBE
Chair of the Responsible Business Committee
20 November 2024
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
85
Audit, risk and internal controls
Audit Committee report
Dear Shareholders,
I am pleased to present the Audit Committee report for
the year ended 30 September 2024.
The Company and its business has proved to be highly resilient
in a changeable economic environment. The Committee’s
role within the Company’s governance framework, including
supporting the Board in risk management, internal control and
financial reporting remains of fundamental importance.
This report provides an overview of the significant issues the
Committee considered, and its assessment of this Report as a
whole, including how we have reviewed the narrative reporting
to ensure it is an accurate reflection of the financial statements.
Governance
As a matter of course, the Committee considers its terms of
reference each year, taking into account changes to Grainger and
to external governance requirements, including the Code. In this
regard, we have during the course of the year been mindful of
the evolving requirements of the Government’s reform agenda
for the corporate governance regime, and notwithstanding a
level of uncertainty over the details of this reform, the Company
has been developing its audit and assurance regime.
Risk and controls
A key responsibility of the Committee is ensuring that
the Company operates an effective risk assessment and
management process and has an appropriately robust control
framework in place. We were helped by the Internal Audit team
at PwC, which reported directly to us, and which worked to an
agreed plan to ensure controls were effective. This year we have
spent time reviewing our risk appetite and tolerance across our
principal risks.
The Committee has also supported the Board in considering
the principal risks of the Company. We undertook a thorough
review of the control environment during this period and it
was determined to be robust. We provide details of the risk
management framework, principal risks and key mitigants
on pages 56 to 63.
Financial statements
One of the Committee’s other key responsibilities which we
carried out during the year is ensuring the Group’s published
financial statements show a true and fair view and are
consistent with accounting and governance requirements.
We also considered the viability statement closely, having
regard to the continued progress of the implementation of
our rental market strategy, the overall strategic horizon and
the current uncertainties of the UK and global economic and
political environments. This included interrogating the financial
models and related sensitivity analysis of various economic
scenarios and amalgamations of these scenarios. In addition,
we have concentrated on the fair, balanced and understandable
requirements for the Report.
In this regard, we are helped by receiving a number of
appropriate papers from the CFO and his team, and by the
independent work of our Internal and External Auditors.
Attendance table
Non-Executive
Directors
Member
since
Meetings
eligible to
attend
Meetings
attended
Justin Read
March 2017
4
4
Janette Bell
February 2019
4
4
Carol Hui
October 2021
4
4
Michael Brodtman
January 2023
4
4
“The Audit Committee oversees the
Board's financial reporting, internal
controls and risk management
frameworks.”
Justin Read
Chair of the Audit Committee
10%
30%
35%
25%
Financial reporting
Internal control and audit
Risk management
Governance
How the committee spent its time
Grainger plc
Annual Report and Accounts 2024
86
As well as our planned work programme, we respond to
key matters as they arise. This included briefings on the UK
Corporate Governance Code.
This year, the Committee closely followed the evolution of the
Government's Restoring Trust Reform Agenda that culminated
in the publication of the UK Corporate Governance Code 2024
in January 2024. The new Code will generally be applicable to
the Company's 2027 Annual Report and Accounts, with changes
to Provision 29 around internal controls applicable from 2028.
The Committee is cognisant of the Board's existing obligations in
respect of internal controls under the 2018 Code and, in addition
to completing the regular annual review of the effectiveness
of the internal control environment, received reporting on
Grainger's long-standing programme of work to evolve the
internal control environment and ensure that it provides a robust
basis for the declarations that will be required under the 2024
version of the Code.
The Committee was also briefed on and considered the Pereira
Gray Review and the effects on the valuation process of assets
for investment purposes. The Company will be adapting its
procedures accordingly.
Auditors
The standard of auditing is of crucial importance to Grainger and
the Committee has received briefings and carefully considered
the further developments in this area in the last 12 months.
I believe the regular constructive challenge and engagement
with management, the external auditor and the internal audit
team, together with the timely receipt of high-quality reports
and information from them, has enabled the Committee to
discharge its duties and responsibilities effectively.
Justin Read
Chair of the Audit Committee
20 November 2024
Significant matters relating to the Group’s 2024
financial statements
The most significant matters considered by the Committee
and discussed with the external auditor in relation to the
Group’s 2024 financial statements were as follows:
1 Property valuations
Property valuation continues to be the most significant
matter for consideration. In this respect, we received reports
and presentations directly from the valuers and management
on the assumptions utilised in valuing the Group’s property
assets, the suggested discount rates for reversionary assets
and the valuations. We considered the prevailing valuation
methodology and process.
We were content, after close scrutiny and debate, with the
assumptions and judgements applied to the valuations.
We also considered that the external valuers were sufficiently
independent and capable and required that they present
directly to the Committee. KPMG also independently reviews
the valuation process and results. The results of the valuations
form the basis of management’s assessment to support the
carrying value of investments in subsidiary companies
by the parent Company.
2 Recoverability of inventories
Management utilise the valuation information referred
to above to perform an assessment of recoverability of
inventories. Inventories comprise mainly residential trading
property held for-sale in the normal course of business.
The valuations include references to comparable market
evidence of similar transactions along with the Group’s own
evidence and experience in sales of similar assets. Along with
our assessment of property valuations, we have considered
management’s assessment of recoverability of inventories
and are satisfied that the approach adopted, and results,
are appropriate.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
87
Audit, risk and internal controls
Audit Committee report continued
Invitations to attend meetings
There is a standing invitation to the Chair of the Board and the
Executive Directors, who in turn attended all of the Committee’s
meetings during the year. The Director of Group Finance and
representatives of the internal and external auditors also
attended meetings of the Committee, and both sets of auditors
met privately with the Committee during the year. Our valuers
attend Committee meetings to explain their methodology,
processes and conclusions directly.
Role, responsibilities and experience
The Committee’s role and responsibilities are concerned with
financial reporting, narrative reporting, whistleblowing and fraud,
internal control and risk management systems, internal audit
and external audit.
The Board has determined that Justin Read has recent
and relevant financial experience as required by the Code.
The Committee as a whole has the competence relevant to
the sector in which it operates. Please refer to pages 68 and 69
for skills and experience of the Directors and page 80 for the
Nominations Committee report.
Terms of reference
The Committee’s terms of reference are approved by the
Board. We confirmed during the year that they continued to be
appropriate. We propose to continue our annual review of the
terms of reference going forward. The Committee’s terms of
reference comply with the Code and they can be found on the
Group’s website. The terms of reference will be reviewed to take
into account the requirements of the 2024 Code.
Objectives
The Board has delegated authority to the Committee to oversee
and review the:
• Group’s financial reporting process, including the classification
of other adjustments;
• system of internal control and management of business risks;
• whistleblowing;
• internal audit process;
• external audit process and relationship with the external
auditor; and
• Company’s process for monitoring compliance with applicable
laws and external regulations.
Final responsibility for financial reporting, compliance with laws
and regulations and risk management rests with the Board, to
which the Committee reports regularly.
Meetings
The Committee’s main work follows a structured programme of
activity agreed at the start of the year. As well as its main work,
the Committee undertakes additional work in response to the
evolving audit landscape. Page 90 shows a non-exhaustive list
highlighting the Committee’s work during the year under review.
Fair, balanced and understandable
The Committee has undertaken a detailed review in assessing
whether this Report is fair, balanced and understandable, and
whether it provides the necessary information to Shareholders
to assess the Group’s position and performance, business model
and strategy. The Committee reviewed and made suggestions
about the processes put in place by management to provide
the necessary assurance that they have made the appropriate
disclosures. The Committee considered management’s
assessment of items included in the financial statements and
the prominence given to those items. This review also included
receiving a final draft of this Report in advance of the November
2024 Committee meeting. This was accompanied by a reminder
of the areas the Committee should focus on having regard to the
Audit Committee Institute guidance, and how it can be applied to
the draft Report. The Committee, and subsequently the Board,
were satisfied that, taken as a whole, the Report is fair, balanced
and understandable.
Going concern and financial viability
The Committee reviewed the appropriateness of adopting
the going concern basis of accounting in preparing the full
year financial statements and assessed whether the business
was viable in accordance with the requirements of the Code.
The assessment included a review of the principal risks facing
the Group, their financial impact, how they were managed,
the availability of finance and covenant compliance, together
with a discussion as to the appropriate period for assessment.
The Group’s viability statement is on page 64.
External auditor objectivity and independence
The objectivity and independence of the external auditor are
critical to the integrity of the Group’s audit. During the year, the
Committee reviewed the external auditor’s own policies and
procedures for safeguarding its objectivity and independence.
There are no contractual restrictions on the Group appointing
an external auditor. On three occasions during the year the audit
engagement partner made representations to the Committee
as to the external auditor’s independence. This also confirmed
that KPMG’s reward and remuneration structure includes no
incentives for the audit partner to cross-sell non-audit services to
audit clients. KPMG duly applies the requirement to rotate audit
partners every five years. This will be the first audit conducted
under Craig Steven-Jennings as the audit partner.
The Committee appraised KPMG’s performance by assessing
its audit plan, the quality and consistency of its team and
reports received and discussions held with the Committee.
The Committee considered the FRC’s Guidance for Audit
Committees and noted the steps taken by KPMG in this regard
which include having a separate Audit Board. In addition, we
received feedback from the finance team. We also considered
the tone of KPMG’s relationship with the Executive Directors,
which we assessed as constructive and professional yet
independent and robust.
Grainger plc
Annual Report and Accounts 2024
88
In respect of KPMG’s independence, the Committee applies its
policy for the use of external auditors for non-audit services.
This policy substantially restricts the types of non-audit services
that can be rendered and specifies the limited circumstances in
which an engagement can be made.
Services the external auditor is prohibited from providing to the
Group include, amongst others:
• bookkeeping and preparing financial information;
• the design, supply or implementation of financial
information systems;
• appraisal or valuation services;
• internal audit services; and
• actuarial services.
Regarding potentially permitted non-audit services, key criteria
that must be evidenced to the Committee’s satisfaction is that
the external auditor is best suited to undertake the relevant
services and that the engagement will not jeopardise external
auditor independence.
The engagement of KPMG for the provision of non-audit services
requires prior approval from the Audit Committee Chair.
The non-audit services provided by KPMG, set out in the table
below, related primarily to their review of our half year reporting.
This was approved by the Committee in September 2024.
In making their decision, the Committee was duly satisfied
that the:
• key criteria noted above had been satisfied;
• non-audit services policy had been applied; and
• appointments were in the best interests of the Company
and its stakeholders.
The Committee considered the FRC Revised Ethical Standard
2019 and noted that this activity is permitted. The Committee
was also satisfied that the overall levels of audit-related and non-
audit fees were not of a material level relative to the income of
the external auditor firm as a whole.
External auditor tenure
The Company confirms that it has complied with the
Competition and Markets Authority’s Order for the year.
Following this year’s audit, KPMG will have been the Group’s
auditor for ten years. A tender process was undertaken last
year, which as detailed in the 2023 Annual Report and Accounts,
resulted in the re-appointment of KPMG for a further term.
The Committee monitors the performance of the external
auditor, providing an in-depth evaluation of its performance
following the external audit, and then makes a recommendation
to the Board. When considering the appropriateness of the
re-appointment of KPMG, we considered in our review, the ratio
of audit to non-audit fees and the effectiveness of the audit
process, together with other relevant review processes. We were
satisfied that we should recommend the re-appointment
of KPMG.
Internal controls
The Board, assisted by the Audit Committee, is responsible for
reviewing the operation and effectiveness of the Group’s internal
controls. This internal control system is designed to manage
risks as far as possible, acknowledging that no system can
eliminate the risk of failure to achieve business objectives entirely.
The Board did not identify any significant failings or weaknesses
in the year.
The Board is also responsible for ensuring that appropriate
systems are in place to enable it to identify, assess and manage
key risks. The preparation of financial statements and the wider
financial reporting process and control system are monitored
by the adoption of an internal control framework to address
principal financial reporting risks. In accordance with the Code we
have carried out a robust assessment of emerging risks as well as
principal risks, explain in the Report what procedures are in place
to identify emerging risks and explain how these risks are being
managed or mitigated. Please see pages 56 to 63 for details
of how we addressed the requirements.
The effectiveness of the internal controls is evaluated by a
combination of review by all of the Grainger management
committees and boards, and the internal and external auditors.
The performance of the Committee is reviewed as part of the
Board effectiveness review, more information on which can be
found at page 81.
Internal Audit
PwC is appointed by the Company as Internal Auditor, working
with our internal audit resource in a co-sourced model.
Internal Audit focuses on the areas of greatest risk to the
Company. Audits are considered during an annual audit planning
cycle. This is informed by the results of current and previous
audit testing, the Company’s strategy, performance and the risk
management process. Additional audits may be identified during
the year in response to changing priorities and requirements.
The Committee approves the plan and monitors progress
accordingly. All Internal Audit findings are graded, appropriate
remedial actions agreed, and progress monitored and reported
to the Committee.
Schedule of fees paid to KPMG
Year ended
30 September 2024
£
Statutory audit of Grainger Group
612,725
Total audit fees
612,725
Half year review
67,000
Total non-audit fees
67,000
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
89
Audit, risk and internal controls
Audit Committee report continued
• Considered the 2024 draft viability statement and related analysis.
• Considered KPMG’s audit strategy memorandum and engagement
regarding the audit for the full year 2024.
• Considered and approved the forward Internal Audit plan.
• Reviewed the timetable for production of the Annual Report
and Accounts.
• Received Internal Audit reports on:
– lease extensions;
– customer experience;
– cyber attack prevention;
– site audits for The Condor and Clippers Quay; and
– progress of completing actions from previous internal audits.
• Reviewed reports on Risk and Internal Controls including:
– principal and emerging risks, including climate change risk;
– political and regulatory risk deep dive;
– internal control framework; and
– legal and regulatory compliance.
Key activities
Internal Audit has a direct reporting line to the Chair of the
Audit Committee. We assess the effectiveness of Internal Audit
by reviewing its reports, feedback from the Chief Financial
Officer, and through meetings with the Internal Auditor without
management being present.
The Internal Audit programme for 2024 included reviews of:
• Customer experience
• Block management
• Fraud
• Cyber security
• Procurement and contract management
• Health and safety
• Lease extensions
• Business continuity
• The rolling programme of site audits
The Internal Audit plan for 2025 has a particular focus on:
• Procurement and contract management
• IT general controls
• Sustainability reporting
• Grainger Trust
• Building Safety Act
• Health and Safety
Looking ahead
The Committee looks forward to providing continuing support
to the Board and Company in the coming year, and will be
focusing on further strengthening the Company’s reporting, risk
management and assurance activities.
• Received Internal Audit reports on payroll and our direct
development process.
• In respect of risk, considered:
– a compliance update; and
– risk management training.
• Reviewed the Company’s Modern Slavery Statement.
• Received a report on internal controls.
• Considered KPMG’s plan for its review of the 2024 half year results.
• Reviewed and approved the Committee’s terms of reference.
• Carried out a detailed evaluation of the performance of the
external auditors. Considered it to be effective and also identified
certain areas for future improvement.
February 2024
May 2024
• Considered issues regarding the 2024 half year results, including:
– the draft half year financial statements and announcement;
– management’s judgements and assessment;
– KPMG’s half year review report; and
– feedback from the valuer half year reports.
• Received a risk deep dive on the finance functions.
• Received a report on the RICS valuation reforms.
• Considered the FRC audit quality review of KPMG's work on the
30 September 2023 financial statements.
• Received Internal Audit reports on:
– lettings;
– site audits.
• Received a presentation from the independent external valuers of
Grainger’s reversionary and market rented assets.
• Considered and received matters relating to the 2023 full year,
including:
– management’s summary of the accounting positions;
– KPMG’s year end audit report;
– going concern and viability review of the business; and
– the draft Annual Report and Accounts.
• Considered KPMG’s independence and recommended to the Board
KPMG’s re-appointment.
• Received a report on corporate governance reforms.
• Received an audit plan update and Internal Audit reports on:
– refurbishments; and
– site audits of Solstice Apartments.
November 2023
September 2024
Grainger plc
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90
Remuneration
Directors’ Remuneration report
“Our focus this year has been on
implementing our Shareholder-approved
Policy to ensure pay outcomes
are appropriately aligned with the
delivery of our strategy and
Company performance.”
Janette Bell
Chair of the Remuneration Committee
Contents
Annual Statement
91
Directors’ Remuneration Policy
94
Single total figure of remuneration for each Director
100
Annual bonus awards – performance assessment
for 2024
101
LTIP awards – performance assessment for 2024
102
Share awards granted during the year
103
Payments for loss of office and to past Directors
103
Directors’ shareholdings and share interests
104
Performance graph
105
Chief Executive single figure
105
Percentage change in remuneration of Chief Executive
and employees
106
Chief Executive pay ratio
106
Relative importance of spend on pay
107
Statement of implementation of Remuneration Policy
for 2025
107
Directors’ service agreements and letters of
appointment
109
Details of the Remuneration Committee and advisers to
the Committee and their fees
109
Statement of voting at general meeting
109
Dear Shareholders,
I am pleased to present on behalf of the Board the
Directors’ remuneration report for the year ended 30
September 2024. As in previous years, the report has
been divided into the following three sections:
1. This Annual Statement, which summarises the remuneration
outcomes for the year ended 30 September 2024, the key
decisions taken by the Remuneration Committee during the
year and how the Directors’ Remuneration Policy (‘Policy’) will
be operated in the following financial year;
2. The Policy, which sets out the remuneration policy for
Executive and Non-Executive Directors and was approved by
Shareholders at the 2023 AGM; and
3. The Annual Report on Remuneration, which discloses how
the Policy was implemented in the year ended 30 September
2024 and how the Policy will be operated in the year ending
30 September 2025.
We were delighted to receive strong support from Shareholders
for our Directors’ Remuneration report with c.97% of shares
cast in favour at the 2024 AGM. I set out below a summary of
business performance during the year, incentive outcomes for
2024 and our approach for 2025. I confirm that preparations
are underway for compliance with the 2024 UK Corporate
Governance Code.
Annual Statement
2024 business context
2024 has been another successful year for Grainger.
The management team delivered an exceptional operating
performance across all areas of the business and have
continued to build on our market leadership in the growing BTR
sector. This has included strong rental growth and successful
delivery and lease up of our new schemes. An exceptional
sales performance in the year resulted from strong execution,
valuations continuing to demonstrate resilience and returning
to growth in the second half of the year, and our balance sheet
remaining strong.
Net rental income was up by 14% in the period reflecting the
strong delivery and lease up of over 1,200 new homes over
the course of the year. Whilst keeping a close eye on customer
affordability levels, we delivered 6.3% growth in like-for-like
PRS net rental income. Current leasing at our recently opened
schemes is exceeding both underwriting and estimated rental
values. Occupancy has remained strong at 97.4%. Our measure
of customer satisfaction (NPS) has increased by 12% to 48 and
colleague engagement has remained high. The NPS increase
is a significant improvement through the delivery of our
Customer Experience Programme and the successful roll-out
of our customer facing technology improvements with our new
customer website launch during the year and new customer
MyGrainger app capabilities.
An exceptional sales performance of £274m was delivered in the
year reflecting the delivery of a stretch plan to provide strong
balance sheet liquidity together with investment for the ongoing
delivery of our PRS pipeline. Whilst sales profits were down on
last year, this was in line with our plan and reflects the impact
of having a smaller regulated tenancy portfolio from which to
generate sales profits, the ongoing reduction of this non- core
element of the business, and a higher proportion of sales from
our PRS portfolio both of which were at values broadly in line
with vacant possession value and book respectively.
Financial statements
Governance
Strategic report
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Annual Report and Accounts 2024
91
Remuneration
Directors’ Remuneration report continued
As a result of this reducing regulated tenancy portfolio, our
adjusted earnings were down on last year by 6%, as expected.
A continued focus from the team on driving scale efficiencies
from our operating model and platform have meant that our
gross to net costs have improved by 50bps as we build out
clusters, and our EPRA earnings were up by 20%, reflecting
the ongoing focus on repositioning the business to a recurring
rent model.
Our strong operational performance is coupled with a robust
balance sheet, positioning us well in the current market. We have
fixed the cost of our debt in the mid 3% range for the next four
years. Our asset recycling programme continues at an elevated
level in line with our previously reported plans.
We have made strong progress in the launch of, and
advancement along, our net zero carbon pathway and we
are progressing associated action plans, as well as driving
strong community stakeholder engagement at all of our BTR
sites across the UK. The team are proud to have achieved the
National Equality Standard accreditation this year, one of the
leading standards available on ED&I. In line with our approach
to support our front-line, onsite colleagues, this year we have
extended the provision of increasing annual leave entitlement
to recognise long service. This provision is now consistent
throughout Grainger.
2024 incentive outcomes
The 2024 annual bonus comprised a combination of PRS net
rental income (35%), adjusted earnings (35%), and strategic
targets (30%). These measures, consistent with those used
in prior years, ensured there remained a continued focus on
improving profit and rental income growth whilst focusing on
key non-financial deliverables (including ESG) which underpin
our strategy.
Stretching targets were set in the context of a period of
continued macro uncertainty and continued higher inflation
and interest rates. The earnings targets also took into account
a smaller profit contribution from our diminishing regulated
tenancy portfolio, particularly following an exceptional year of
regulated sales in the previous year.
The leadership team put in place an outperformance plan
which delivered a 14% growth in net rental income (£110.1m)
and Adjusted Earnings of £91.6m, down on last year by 6%,
reflecting lower sales profits, as the business repositions itself
towards recurring rental income. Both outcomes were above
the maximum targets set by the Committee.
This outperformance plan was achieved through the in-
house teams’ focus on speed of lease up, efficiency of void
management, cost savings and increased sales volume into
a more challenging market. The resulting outperformance
was despite the headwinds of scheme delays by third-party
developers, cost inflation and higher interest rates impacting
on sales and is considered by the Committee to be an
outstanding performance.
The Committee considered whether the financial bonus outcome
was a fair representation of Company and management
performance during the year and concluded that no adjustment
was required. In doing so, the Committee was mindful of the
level of customers’ affordability, noting that like-for-like rental
growth across the portfolio moved broadly in line with national
wage inflation and occupancy was at strong levels of 97.4%.
In addition, customer satisfaction as measured by NPS improved
by 12%.
When combined with performance against the strategic targets,
annual bonus was calculated at 99% of the maximum available.
The LTIP award granted to the CEO and CFO in December
2021 will vest on 16 December 2024 based on three equally
weighted performance metrics being relative Total Shareholder
Return (‘TSR’), absolute Total Property Return (‘TPR’) and
Secured PRS Investment targets over the three years ended
30 September 2024.
While the threshold TPR target was not achieved, TSR was
between threshold and maximum and the Secured PRS
Investment targets were met in full resulting in an overall vesting
of 44.7%. the Committee recognises the challenges facing
all real estate businesses that have lead to lower returns over
the period.
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Annual Report and Accounts 2024
92
Committee considerations
Consistent with the six factors set out in Provision 40 of the
2018 UK Corporate Governance Code, when determining
Executive Director Remuneration Policy and practices, the
Committee has continued to address the following:
Clarity – the current Policy is well understood by our
Directors and has been clearly articulated to Shareholders
and proxy voting agencies.
Simplicity – the current market standard remuneration
structure is simple and well understood. We have
purposefully avoided any complex structures which have
the potential to deliver unintended outcomes.
Risk – our Policy and approach to target setting seek to
discourage inappropriate risk-taking. Measures are a blend
of shareholder return, financial and non-financial objectives
and the targets are appropriately stretching. Malus and
clawback provisions apply.
Predictability – executives’ incentive arrangements are
subject to individual participation caps.
Proportionality – there is a clear link between
individual awards, delivery of strategy and our long-
term performance.
Alignment to culture – pay and policies cascade down the
organisation and are fully aligned to Grainger’s culture.
How the Committee spent its time
However, given Grainger’s strong operational performance and
returns generated relative to the sector, the Committee believes
the below target vesting outcome reflects performance over the
three year period.
The Committee believes these bonus and expected LTIP
outcomes are appropriate and reflect the outstanding
performance of the business over the relevant performance
periods. Therefore, no discretion has been applied to the
formulaic outcomes.
Applying the Policy in 2024/25
Details of the Committee’s proposed implementation of the
Policy in respect of the year ending 30 September 2025 are set
out below.
Executive Director base salary levels
Executive Director base salaries will be increased by 3.5%
effective 1 January 2025 which is aligned to the workforce
average. As announced in the October 2024 Budget, the
National Minimum Wage will increase from 1 April 2025.
The hourly rate of our lowest paid colleagues will be increased
from 1 January 2025 to meet this requirement and is above the
3.5% increase applying to the rest of the workforce.
Annual bonus
Annual bonus potential will remain at 140% of salary for the CEO
and CFO. For both Directors, 75% of any bonus earned will be
payable in cash and 25% deferred into shares.
70% of the bonus will continue to be based on adjusted
earnings and PRS net rental income targets weighted equally.
The remaining 30% will be split with 7% based solely on ESG-
related targets and 23% will be based on a number of key
strategic and operational measures based on business resilience,
customer satisfaction, funding and investment. The targets, and
the performance against them, will be disclosed in next year’s
Directors’ Remuneration report.
Long Term Incentive Plan
It is expected that LTIP awards will continue to be granted over
shares equal in value of up to 200% of salary for the CEO and
175% of salary for the CFO with the next award granted in
December 2024. TSR, total property income return and carbon
reduction targets will continue to be operated for 30%, 30%
and 10% of LTIP awards respectively (as per the December 2023
award). This year, reflecting the importance of measuring the
delivery of operational leverage and in driving higher returns,
EBITDA margin will be introduced as a new Company KPI.
The Committee would like to incentivise margin improvement
and therefore has agreed to replace the Secured PRS Investment
measure with an EBITDA Margin measure (30% weighting)
for the award expected to be granted in December 2024.
Further details of the targets are set out the Annual Report
on Remuneration.
We look forward to your support on the resolution relating to
remuneration at the AGM on 5 February 2025.
Janette Bell
Chair of the Remuneration Committee
20 November 2024
Governance and reporting
Investor communication
Executive share plans
Performance monitoring
and review
Senior management
remuneration and
retention
Implementation of the
Remuneration Policy
Wider employee
remuneration and cost
of living
15%
15%
10%
10%
10%
20%
20%
Financial statements
Governance
Strategic report
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Annual Report and Accounts 2024
93
Remuneration
Directors’ Remuneration report continued
Directors’ Remuneration Policy
This part of the Directors’ remuneration report sets out a summary of the Policy which was approved by Shareholders at the 2023
AGM and took effect from the date of that meeting. The full Shareholder approved Policy can be found in the 2022 Annual Report.
The following table summarises the main elements of the Policy, the key features of each element, their purpose and linkage to our
strategy. Details of the remuneration arrangements for the Non-Executive Directors are set out on page 108.
Base salary
Purpose and link
to strategy
To enable the recruitment and retention of individuals of the necessary calibre to execute the Company’s
business strategy.
Operation
Reviewed annually and typically effective from 1 January. Changes to salary levels will take into account the:
• role, experience, responsibilities and personal performance;
• average change in total workforce salary;
• total organisational salary budgets; and
• Company performance and other economic or market conditions.
Salaries are benchmarked periodically and are set by reference to companies of a similar size and complexity.
Opportunity
Salaries will be eligible for increases during the three-year period that the Policy operates.
During this time, salaries may be increased each year (in percentage of salary terms) and will take into account increases
granted to the wider workforce.
Increases beyond those granted to the wider workforce (in percentage of salary terms) may be awarded in certain
circumstances such as where there is a change in responsibility, experience or a significant increase in the scale of the role
and/or size, value and/or complexity of the Company.
Where new joiners or recent promotions have been placed on a below market rate of pay initially, a series of increases
above those granted to the wider workforce (in percentage of salary terms) may be given over the following few years’
subject to individual performance and development in the role.
Framework to
assess performance
The Committee considers individual salaries at the appropriate Committee meeting each year after having due regard to
the factors noted in operating the Policy.
Benefits
Purpose and link
to strategy
To enable the recruitment and retention of individuals of the necessary calibre to execute the Company’s
business strategy.
Operation
Executive Directors receive a benefits package which includes a car allowance, private medical insurance, life assurance, ill
health income protection, travel insurance and health check-up.
Other ancillary benefits (including relocation expenses) may be offered, as required.
Opportunity
There is no maximum as the value of benefits may vary from year-to-year depending on the cost to the Company from
third-party providers.
Framework to
assess performance
N/A
Pension
Purpose and link
to strategy
To aid recruitment and retention of high-quality executives and enable long-term savings through pension provision.
Operation
The Company may contribute directly into an occupational pension scheme (an Executive Director’s personal pension) or
pay a salary supplement in lieu of pension. If appropriate, a salary sacrifice arrangement can apply.
Opportunity
10% of salary (workforce aligned).
Framework to
assess performance
N/A
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Annual Report and Accounts 2024
94
Annual bonus
Purpose and link
to strategy
To reward and incentivise the achievement of annual targets linked to the delivery of the Company’s strategic priorities
for the year.
Operation
Bonus measures and targets are reviewed annually and any payout is determined by the Committee after the end of the
financial year, based on performance against targets set for the financial period.
Up to 75% of any bonus that becomes payable is normally paid in cash with the remainder deferred into shares for three
years. Deferred bonus share awards typically vest subject to continued employment.
Individuals may be able to receive a dividend equivalent payment on deferred bonus shares at the time of vesting equal
to the value of dividends which would have accrued during the vesting period. The dividend equivalent payment may
assume the reinvestment of dividends on a cumulative basis.
Opportunity
140% of salary.
Framework to
assess performance
Bonus performance measures are set annually and will be predominantly based on challenging financial targets set in
line with the Group’s strategic priorities and tailored to each individual role as appropriate, for example, targets relating
to adjusted earnings. For a portion of the bonus, strategic and operational and/or ESG objectives may operate.
The Committee has the discretion to vary the performance measures used from year to year depending on the economic
conditions and strategic priorities at the start of each year. Details of the performance measures used for the current
year and targets set for the year under review and performance against them will be provided in the Annual Report
on Remuneration.
For financial targets, and where practicable in respect of strategic and operational targets, bonus starts to accrue once
the threshold target is met (0% payable) rising on a graduated scale to 100% for stretch performance.
The Committee may adjust bonus outcomes, based on the application of the bonus formula set at the start of the
relevant year, if it considers the quantum to be inconsistent with the performance of the Company, business or individual
during the year. For the avoidance of doubt this can be to zero and bonuses may not exceed the maximum levels detailed
above. Any use of such discretion would be detailed in the Annual Report on Remuneration.
In the event that there was (i) a misstatement of the Company’s results; (ii) a miscalculation or an assessment of any
performance conditions that was based on incorrect information; (iii) misconduct on behalf of an individual, (iv) the
occurrence of an insolvency or administration event; (v) reputational damage; or (vi) serious health and safety events;
malus and/or clawback provisions may apply (to the extent to which the Committee considers that the relevant individual
was involved (directly or through oversight) in such events) for three years from the date of payment of any bonus or the
grant of any deferred bonus share award (which may be extended by the Remuneration Committee for a further two
years to allow an investigation to take place).
Long Term Incentive Plan (‘LTIP’)
Purpose and link
to strategy
To incentivise and reward the delivery of strategic priorities and sustained performance over the longer term.
To provide greater alignment with Shareholders’ interests.
Operation
The LTIP provides for awards of free shares (i.e. either conditional shares or nil-cost options) normally on an annual
basis which are eligible to vest after three years subject to continued service and the achievement of challenging
performance conditions.
Vested awards are subject to a two-year post-vesting holding period. In exceptional circumstances such as due to
regulatory or legal reasons, vested awards may also be settled in cash.
Dividend equivalent payments may be made on vested LTIP awards and may assume the reinvestment of dividends,
on a cumulative basis.
Opportunity
200% of salary for the Chief Executive; and
175% of basic salary for other Executive Directors.
Framework to
assess performance
The Committee may set such performance conditions on LTIP awards as it considers appropriate (whether financial or
non-financial (including ESG)). The choice of measures and their weightings will be determined prior to each grant.
25% of awards will vest for threshold performance with full vesting taking place for equalling, or exceeding, the maximum
performance targets. No awards vest for performance below threshold. A graduated vesting scale operates between
threshold and maximum performance levels.
The Committee may adjust LTIP vesting outcomes, based on the result of testing the performance condition, if it
considers the quantum to be inconsistent with the performance of the Company, business or individual during the three-
year performance period. For the avoidance of doubt, this can be to zero percent. Any use of such discretion would be
detailed in the Annual Report on Remuneration.
In the event that there was (i) a misstatement of the Company’s results; (ii) a miscalculation or an assessment of any
performance conditions based on incorrect information; (iii) misconduct on behalf of an individual, (iv) the occurrence
of an insolvency or administration event, (v) reputational damage, or (vi) serious health and safety events, malus and/or
clawback provisions may apply (to the extent to which the Committee considers that the relevant individual was involved
(directly or through oversight) in such events) for three years from an award becoming eligible to vest (which may be
extended by the Committee for a further two years to allow an investigation to take place).
Financial statements
Governance
Strategic report
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Annual Report and Accounts 2024
95
Remuneration
Directors’ Remuneration report continued
Savings related share schemes
Purpose and link
to strategy
To encourage employees to make a long-term investment in the Company’s shares.
Operation
All employees, including the Executive Directors, are eligible to participate on the same terms in the Company’s Save
As You Earn (‘SAYE’) scheme and Share Incentive Plan (‘SIP’), both of which are approved by HMRC and subject to the
limits prescribed.
Opportunity
SAYE: Participants may save up to £500 per month (or such other amount as may be permitted by HMRC from time to
time) for three or five-year periods in order to purchase shares at the end of the contractual period at a discount of up to
20% to the market price of the shares at the commencement of the saving period.
SIP: Participants can invest up to £150 per month (or such other amount as may be permitted by HMRC from time to
time) in shares in the Company, and the Company may then, subject to certain limits, double that investment.
The Company may also allocate free shares annually on a percentage of basic pay, subject to a maximum of £3,600 (or
such other amount as may be permitted by HMRC from time to time).
Dividend payments on SIP shares are reinvested and must be held in trust for three years.
Framework to
assess performance
N/A
Shareholding guidelines
Under the shareholding guidelines, Executive Directors are expected to build up over time a shareholding equivalent to 200% of
their base salary. Executive Directors are required to retain all the after-tax number of vested LTIP and deferred bonus awards to
satisfy the guidelines. In addition, the Committee’s general expectation is that the guidelines will be met within five years of its
introduction, or when an Executive Director commences employment, although the Committee reserves the right to take into
account vesting levels and personal circumstances when assessing progress against the guidelines.
A post cessation shareholding guideline operates. Executive Directors are expected to retain the lower of actual shares held and
shares equal to 200% of salary for two years post cessation in respect of shares which vest from grants of deferred bonus and LTIP
awards made since the approval of the 2020 Policy at the 2020 AGM. Buyout awards and own shares purchased are excluded from
this. See table 8 for details of current Director shareholdings.
Notes to the Policy for Executive Directors
Choice of performance measures and approach to target setting
The annual bonus measures are selected to provide direct alignment with the short-term operational targets of the Company.
Care is taken to ensure that the short-term performance measures are always supportive of the long-term objectives. This is
especially important in a business which has a long-term investment horizon. The LTIP performance measures are selected to
ensure that the Executive Directors are encouraged in, and appropriately rewarded for, delivering against the Company’s key long-
term strategic goals so as to ensure a clear and transparent alignment of interests between Executive Directors and Shareholders
and the generation of long-term sustainable returns. The performance metrics that are used for annual bonus and long-term
incentive plans are normally a sub-set of the Group’s KPIs.
Discretion
The Committee operates the annual bonus plan, LTIP and all-employee plans according to their respective rules and in accordance
with the relevant Listing Rules and HMRC rules consistent with market practice. The Committee retains discretion, within
the confines and opportunity detailed above, in a number of respects with the operation and administration of these plans.
These include:
• the individual(s) participating in the plans;
• the timing of grant of award and/or payment;
• the size of an award and/or payment;
• the determination of vesting;
• dealing with a change of control (e.g. the timing of testing performance targets) or restructuring;
• determination of a ‘good/bad leaver’ for incentive plan purposes based on the rules of each plan and the appropriate
treatment chosen;
• adjustments required in certain circumstances (e.g. rights issues, corporate restructuring and special dividends);
• the annual review of performance conditions for the annual bonus plan and LTIP; and
• the ability to adjust incentive outcomes, based on the result of testing the performance condition, if it considers the quantum
to be inconsistent with the performance of the Company, business or individual.
The Committee also retains the ability to adjust the targets, and/or set different measures and alter weightings for the annual
bonus plan and to adjust targets for the LTIP if events occur (e.g. material divestment of a Group business) which cause it to
determine that the conditions are no longer appropriate and the amendment is required so that the conditions achieve their original
purpose and are not materially less difficult to satisfy.
Grainger plc
Annual Report and Accounts 2024
96
Peer group
In assessing Grainger’s pay practices, including structure, quantum and performance metrics and remuneration policies, the
Committee’s primary reference points were the following FTSE 350 Real Estate companies: Assura plc, British Land Company plc,
Big Yellow Group PLC, Capital & Regional plc, CLS Holdings plc, Derwent London plc, Great Portland Estates plc, Hammerson plc,
Land Securities Group PLC, LondonMetric Property Plc, Safestore Holdings plc, SEGRO plc, Shaftesbury PLC, Sirius Real Estate
Limited, The Unite Group plc and Workspace Group PLC.
How the Executive Directors’ Remuneration Policy relates to the wider Group
The Policy provides an overview of the structure that operates for the Executive Directors and senior executive population.
However, it is highlighted that there are differences in quantum within this determined by the size and scope of individual positions.
The Committee is made aware of pay structures across the Group when setting the Policy for Executive Directors. The key
difference is that, overall, the Policy for Executive Directors is more heavily weighted towards variable pay than for other employees.
Base salaries are operated under the same Policy as detailed in the Policy table with any comparator groups used as a reference
point. The Committee considers the general basic salary increase for the broader Company (if any) when determining the annual
salary review for the Executive Directors.
The LTIP is operated at the most senior tiers of executives, as this arrangement is reserved for those anticipated as having the
greatest potential to influence Company-level performance.
However, the Committee believes in wider employee share ownership and promotes this through the operation of the HMRC tax
approved all-employee share schemes which are open to all UK employees.
How the views of employees are taken into account
The Committee takes due account of remuneration structures elsewhere in the Group when setting pay for the Executive
Directors. For example, consideration is given to the overall salary increase budget and the incentive structures that operate across
the Company.
The CEO regularly holds ‘all-employee’ conference calls to give our people an overview of Company strategy and provide our
colleagues with the opportunity to ask any questions. In addition, the CEO and Board members regularly visit offices and meet
with our people to gauge overall opinions. Carol Hui, the designated Non-Executive Director for workforce engagement, holds
independent roundtable meetings to listen directly to employee views.
The CEO has regular meetings with our people including breakfast meetings with new employees. Annual employee engagement
surveys and half year interim annual pulse surveys are carried out, the results of which are presented to the Board by the CPO.
The issue of pay ratios, including Executive Director pay, was discussed at our colleague roundtable sessions.
In addition, the Board’s Responsible Business Committee provides oversight of the delivery of the Company’s ESG strategy and its
ED&I plans and reports to the Board.
How the views of Shareholders are taken into account
The Committee considers Shareholder feedback received in relation to the AGM each year and guidance from Shareholder
representative bodies more generally. This feedback, plus any additional feedback received during any meetings held with
Shareholders from time to time, is then considered as part of the Committee’s ongoing review of the Policy (as was the case in
relation to the most recent Policy renewal in 2023).
Major Shareholders and the main representative bodies were consulted on the proposed changes to the Remuneration Policy in
advance of the 2023 AGM and its future implementation and it was clear that there were strong levels of support for the proposals.
No changes were required to the original proposals and this was reflected in the voting outcome.
Approach to recruitment remuneration
When setting the remuneration package for a new Executive Director, the Committee will apply the same principles and implement
the Policy as set out in the Policy table.
Base salary will be set at a level appropriate to the role and the experience of the Executive Director being appointed. In certain
cases, this may include setting a salary below the market rate but with an agreement on future increases up to the market
rate, in line with increased experience and/or responsibilities, subject to good performance, where it is considered appropriate.
Pension provision, in percentage of salary terms, will be aligned to the general workforce level.
The maximum level of variable remuneration which may be granted (excluding buyout awards as referred to below) is an annual
bonus of 140% of salary and LTIP award of 200% of salary (as per the limits in the Policy table).
In relation to external appointments, the Committee may offer compensation that it considers appropriate to take account of
awards and benefits that will or may be forfeited on resignation from a previous position. Such compensation would reflect the
performance requirements, timing and such other specific matters as the Committee considers relevant. This may take the form of
cash and/or share awards. The Policy is that the maximum payment under any such arrangements (which may be in addition to the
normal variable remuneration) should be no more than the Committee considers is required to provide reasonable compensation
to the incoming Executive Director. If the Executive Director will be required to relocate in order to take up the position, it is the
Company’s policy to allow reasonable relocation, travel and subsistence payments. Any such payments will be at the discretion of
the Committee.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
97
Remuneration
Directors’ Remuneration report continued
In the case of an employee who is promoted to the position of Executive Director, the Policy set out above would apply from
the date of promotion but there would be no retrospective application of the Policy in relation to existing incentive awards or
remuneration arrangements. Accordingly, prevailing elements of the remuneration package for an existing employee would be
honoured and form part of the ongoing remuneration of the employee. These would be disclosed to Shareholders in the following
year’s Annual Report on Remuneration.
Non-Executive Director appointments will be through letters of appointment. Non-Executive Directors’ base fees, including those
of the Chair, will be set at a competitive market level, reflecting experience, responsibility and time commitment. Additional fees are
payable for the chairing of the Audit, Remuneration and Responsible Business Committees and for the additional responsibilities of
the Senior Independent Director and the designated Non-Executive Director for Workforce Engagement.
Directors’ service contracts and provision on payment for loss of office
Executive Directors’ service contracts are terminable by the Company on up to one year’s notice and by the Director on at least six
months’ notice.
If an Executive Director’s employment is to be terminated, the Committee’s policy in respect of the contract of employment,
in the absence of a breach of the service agreement by the Executive Director, is to agree a termination payment based on the
value of base salary and contractual pension amounts and benefits that would have accrued to the Executive Director during the
contractual notice period. The policy is that, as is considered appropriate at the time, the departing Executive Director may work,
or be placed on garden leave, for all or part of their notice period, or receive a payment in lieu of notice in accordance with the
service agreement. The Committee will also seek to apply the principle of mitigation where possible so as to reduce any termination
payment to a leaving Executive Director, having had regard to the circumstances.
In addition, the Committee may also make payments in relation to any statutory entitlements, to settle any claim against the
Company (e.g. in relation to breach of statutory employment rights or wrongful dismissal) or make a modest provision in respect of
legal costs or outplacement fees.
The Company has an enhanced redundancy policy allowing redundancy amounts to be calculated by reference to actual basic
weekly salary and the policy may be extended to Executive Directors where relevant.
With regard to annual bonus for a departing Executive Director, if employment ends by reason of redundancy, retirement with the
agreement of the Company, ill health or disability or death, or any other reason as determined by the Committee (i.e. the individual
is a ‘good leaver’), the Executive Director may be considered for a bonus payment. If the termination is for any other reason, any
entitlement to bonus would normally lapse. Under any circumstance, it is the Committee’s policy to ensure that any bonus payment
reflects the departing Executive Director’s performance and behaviour towards the Company.
Any bonus payment will normally be delayed until the performance conditions have been determined for the relevant period and be
subject to a pro rata reduction for the portion of the relevant bonus year that the individual was employed.
The treatment for share-based incentives granted to an Executive Director will be determined based on the relevant plan rules.
The default treatment will be for outstanding awards to lapse on cessation of employment. In relation to awards granted under the
Company’s long-term incentive plans, in certain prescribed circumstances, such as death, injury or disability, redundancy, transfer
or sale of the employing company, retirement with the Company’s agreement or other circumstances at the discretion of the
Committee (reflecting the circumstances that prevail at the time), ‘good leaver’ status may be applied.
If treated as a good leaver, awards will be eligible to vest subject to performance conditions, which will be measured over the
original performance period (unless the Committee elected to test performance to the date of cessation of employment), and be
subject to a pro rata reduction (unless the Committee considered it inappropriate to do so) to reflect the proportion of the vesting
period actually served. Where awards vest within two years of cessation, the post-vesting holding period will continue to apply until
the second anniversary of cessation. There will be no holding period for awards vesting more than two years after cessation.
Any LTIP awards which vest pre-cessation but which are still subject to the two-year holding period will need to be retained by the
individual (either on a post-tax basis or as unexercised awards) post cessation, until the relevant two-year holding period has expired.
With regard to the deferral of annual bonus, deferred share bonus awards will normally lapse on cessation of employment other
than where an Executive Director is a ‘good leaver’ (as detailed above) with awards then vesting on the normal vesting date.
It is the Company’s policy to honour pre-existing award commitments in accordance with their terms.
Where the Executive Director participates in one or more of the Company’s HMRC approved share plans, awards may vest or be
exercisable on or following termination of employment in certain good leaver circumstances, where permissible, in accordance with
the rules of the plan and relevant legislation.
External appointments
Executive Directors are permitted to accept external non-executive appointments with the prior approval of the Board. It is normal
practice for Executive Directors to retain fees provided for non-executive appointments.
Non-Executive Directors’ letters of appointment
The Chair and Non-Executive Directors have letters of appointment for an initial fixed term of three years subject to earlier
termination by either party on written notice. In each case, this term can be extended by mutual agreement. Non-Executive
Directors have no entitlement to contractual termination payments. The dates of the initial appointments of the Non-Executive
Directors are set out in the Annual Report on Remuneration.
Grainger plc
Annual Report and Accounts 2024
98
Non-Executive Directors’ Fees
The policy on Non-Executive Directors’ fees is set out below:
Non-Executive Directors
Purpose and link
to strategy
To provide a competitive fee which will attract those high-calibre individuals who, through their experience, can further
the interests of the Group through their stewardship and contribution to strategic development.
Operation
The fees for Non-Executive Directors (including the Chair) are typically reviewed every second year or more frequently
if required.
Fee levels are set by reference to the expected time commitment and responsibility and are periodically benchmarked
against relevant market comparators as appropriate, reflecting the size and nature of the role.
The Chair and Non-Executive Directors are paid an annual fee which is paid at least monthly in cash and do not participate
in any of the Company’s incentive arrangements or receive any pension provision.
The Non-Executive Directors receive a basic Board fee, with additional fees payable for chairing of the Company’s Board
Committees and for performing the Senior Independent Director role.
All Non-Executive Directors are reimbursed for travel and related business expenses reasonably incurred in performing
their duties.
The Committee recommends the remuneration of the Chairman to the Board.
The Chair’s fee is determined by the Committee (during which the Chair has no part in discussions) and recommended by
it to the Board. The Non-Executive Directors’ fees are determined by the Chair and the Executive Directors.
Opportunity
Fee levels will be eligible for increases during the period that the Remuneration Policy operates to ensure that they
continue to appropriately recognise the time commitment of the role, increases to fee levels for Non-Executive Directors
in general and fee levels in companies of a similar size and complexity.
Framework to
assess performance
N/A
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
99
Remuneration
Annual Report on Remuneration
This Annual Report on Remuneration sets out details of how the Company’s Policy for Directors was implemented during the
financial year ended 30 September 2024. This report has been prepared in accordance with the provisions of the Companies Act
2006 and related Regulations. An advisory resolution to approve this report (and the Annual Statement) will be put to Shareholders
at the AGM on 5 February 2025.
1. Single total figure of remuneration for each Director
The remuneration of Directors showing the breakdown between components with comparative figures for 2023 is set out below.
This table and the details set out in Notes 1 to 7 on pages 100 to 105 of this report have been audited by KPMG LLP.
2024
Salary
and fees1
£’000
Taxable
benefits2
£’000
Share
incentive
plan
£’000
Annual
bonus3
£’000
LTIP
awards4
£’000
Pension
benefits5
£’000
Total
£’000
Total Fixed
Remuneration6
£’000
Total Variable
Remuneration7
£’000
Executive Directors
Helen Gordon
583
16
2
808
351
58
1,818
659
1,159
Rob Hudson
456
16
2
631
251
46
1,402
519
883
1,039
32
4
1,439
602
104
3,220
1,178
2,042
Non-Executive Directors8
Mark Clare
193
–
–
–
–
–
193
193
–
Justin Read
75
–
–
–
–
–
75
75
–
Janette Bell
66
–
–
–
–
–
66
66
–
Carol Hui
66
–
–
–
–
–
66
66
–
Michael Brodtman
55
–
–
–
–
–
55
55
–
455
–
–
–
–
–
455
455
–
Totals
1,494
32
4
1,439
602
104
3,675
1,633
2,042
1.
From 1 January 2024, the CEO’s salary was increased by 6% (to £591,000) and the CFO’s salary was increased by 5% (to £461,066).
2.
Taxable benefits comprised of a car allowance and private medical insurance.
3.
In line with the Policy, 25% of the bonus is deferred into shares for three years.
4.
See Note 5 on page 103 for information in respect of the LTIP awards that are due to vest in December 2024.
5.
The amounts shown under pension benefits represent a salary supplement paid to the Directors in lieu of Company pension contributions.
6.
Comprises the aggregate of total salary and fees, taxable benefits, share incentive plan awards and pension benefits.
7.
Comprises the aggregate of annual bonus and LTIP awards.
8.
The fees for Non-Executive Directors reflect payments in relation to any chairmanship roles (as applicable during the year under review or the preceding year and pro-rated where
appropriate). See Note 12 on page 108 in relation to the fees as at 1 January 2024 and 1 January 2025.
2023
Salary
and fees1
£’000
Taxable
benefits2
£’000
Share
incentive
plan
£’000
Annual
bonus3
£’000
LTIP
awards4
£’000
Pension
benefits5
£’000
Total
£’000
Total Fixed
Remuneration6
£’000
Total Variable
Remuneration7
£’000
Executive Directors
Helen Gordon
546
16
2
749
309
61
1,683
625
1,058
Rob Hudson
434
16
2
510
238
43
1,243
495
748
980
32
4
1,259
547
104
2,926
1,120
1,806
Non-Executive Directors8
Mark Clare
183
–
–
–
–
–
183
183
–
Justin Read
72
–
–
–
–
–
72
72
–
Janette Bell
63
–
–
–
–
–
63
63
–
Rob Wilkinson
18
–
–
–
–
–
18
18
–
Carol Hui
63
–
–
–
–
–
63
63
–
Michael Brodtman
40
–
–
–
–
–
40
40
–
439
–
–
–
–
–
439
439
–
Totals
1,419
32
4
1,259
547
104
3,365
1,559
1,806
1.
The CEO’s salary increased by 9% and the CFO’s salary by 5% from 1 January 2023. At 1 January 2023, Helen Gordon’s base salary was £557,500 and Rob Hudson’s base salary was
£439,110.
2.
Taxable benefits comprised of a car allowance and private medical insurance.
3.
In line with the Policy, 25% of the bonus is deferred into shares for three years.
4.
The vesting values of the LTIP awards in last year’s report were estimated as the TSR performance period had not ended and the share price on the vesting date was not known. While the
actual vesting percentage was consistent with the estimate disclosed in last year’s report, these values have been updated to reflect the share prices on the date of vesting being 261.6p for
the CEO’s LTIP awards and 270.8p for the CFO’s recruitment award and include the value of dividend equivalents. Further details are provided in Note 3.
5.
The amounts shown under pension benefits represent a salary supplement paid to the Directors in lieu of Company pension contributions.
6.
Comprises the aggregate of total salary and fees, taxable benefits, share incentive plan awards and pension benefits.
7.
Comprises the aggregate of annual bonus and LTIP awards.
8.
The fees for Non-Executive Directors reflect payments in relation to any chairmanship roles (as applicable during the year under review or the preceding year and pro-rated
where appropriate).
Grainger plc
Annual Report and Accounts 2024
100
2. Annual bonus awards – performance assessment for 2024
In determining the bonus outcomes for 2024, the Committee took into account the Company’s financial performance and
achievements against key strategic and operational objectives established at the beginning of the year. 70% of the bonus was
based on adjusted earnings and PRS NRI performance (with equal weightings) with the remainder based on achievement against
strategic objectives. The targets applying to each financial measure and performance against the targets for 2024 are set out in the
table below.
Financial performance (70% of the 2024 annual bonus opportunity)
Measure
Weighting
Threshold
(0% out-turn)
Target
(60% out-turn)
Maximum
(100% out-turn)
2024
performance
Out-turn (% of
max element)
Bonus
Adjusted earnings
35%
£68.2m
£75.8m
£83.4m
£91.6m
100%
PRS NRI
35%
£85.5m
£90m
£94.5m
£97.7m
100%
The 2024 annual bonus comprised a combination of PRS net rental income (35%), adjusted earnings (35%), and strategic targets
(30%). These measures, consistent with those used in prior years, ensured there remained a continued focus on improving profit and
rental income growth whilst focusing on key non-financial deliverables (including ESG) which underpin our strategy.
The key components of adjusted earnings are sales from our regulated portfolio and growth in net rental income. As our regulated
tenancy portfolio reduces over time (and given the exceptional level of sales in the previous year) the expected contribution from
sales in 2024 was forecast to be lower, partly offset by higher net rental income.
Stretching targets were set against this backdrop in the context of a period of continued macro uncertainty, higher inflation and
interest rates. The leadership team put in place an outperformance plan which delivered a 14% growth in net rental income
(£110.1m) and adjusted earnings of £91.6m, down on last year by 6% reflecting lower expected sales profits. Both outcomes are
above the maximum targets set by the Committee.
The outperformance plan was achieved through the in-house teams’ focus on speed of lease up, efficiency of void management,
cost savings and increased sales volume into a more challenging market. The resulting outperformance was despite the headwinds
of scheme delays by third-party developers, cost inflation and higher interest rates impacting on sales, and is considered to be an
outstanding performance.
The Committee considered whether the financial bonus outcome was a fair representation of Company and management
performance during the year and concluded that no adjustment was required. In doing so, the Committee was mindful of the level
of customers’ affordability, noting that rental growth across the portfolio moved broadly in line with national wage inflation and
occupancy was at strong levels of 97.4%. In addition, customer satisfaction as measured by NPS improved by 12%.
When combined with performance against the strategic targets, annual bonus was calculated at 99% of the maximum available.
Non-financial performance (30% of the 2024 annual bonus opportunity)
In respect of the strategic targets set for the Executive Directors, the targets and Committee’s assessment of performance against
the targets was as follows.
Objective
Measure
Performance assessment
1. Customer
Satisfaction
(6%)
Maintain NPS score at
+43 = 1%, increase to +47 = 2%
Achieved in full (2%) with NPS score increased
to +48, c.12% increase
Increase customer responses to feedback surveys at
1,650 = 1%, increase to 1,750 = 2%
Achieved in full (2%) with response at 5,878
Complete 2024 Phase of the Customer Experience Programme
Achieved delivery of the key deliverables in full
including the website launch (2%)
2. Business
Resilience
(6%)
Deliver 50bp improvement on stabilised gross to net
Achieved in full - with 50bp improvement
delivered (3%)
Deliver successful repairs and maintenance supply chain tender including
reorganisation to drive efficiencies
Achieved in part - new supplier appointed,
but the contract is still bedding in. Efficiencies
in the customer service team delivered and
customer satisfaction has improved (1%)
3. Funding and
Investment
(8%)
Prepare sales plan to deliver £150m to £250m (for between 0.5% and 8%
pro-rata) of sales to achieve balance sheet resilience
Achieved in full – delivered £274m of sales (8%)
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
101
Objective
Measure
Performance assessment
4. Community,
Environment,
Governance
and People
(inc. Health
and Safety)
(10%)
Implement Fire Safety remediation work plan 2024 to achieve progress across
all schemes measured as a % of completion versus the full plan
Achieved in full (2%)
Retain and improve safety climate survey
Achieved in full. A further upgrade ahead of all
industry and Real Estate (2%)
D&I – Complete required actions in line with plan and resubmission of
assessment for National Equality Standard by end of year
Achieved in full. Delivered and NES
accreditation achieved (2%)
Introduce Wellbeing Programme in all BTR sites and Grainger offices for
customers and colleagues
Achieved in full (2%)
Using Community Blue Print, each BTR scheme to engage with three
stakeholder groups
Achieved in full (2%)
Pursuant to the above assessment the Committee determined that 29% of the maximum 30% of this part of the bonus would be
payable and was appropriate in the circumstances.
When combined with performance against the strategic targets, annual bonus was calculated at 99% of the maximum available.
It is the Committee’s approach to view the performance in the round at the end of the year. The Committee determined a total
bonus of 99% of the maximum bonus opportunity is representative of outstanding performance during the year.
Bonus opportunity
2024
bonus payable
(out of 100%
maximum)
Bonus earned –
payable
in cash
Bonus earned
– deferred
in shares for
three years1
Helen Gordon
140% of salary
99%
£605,639
£201,880
Rob Hudson
140% of salary
99%
£473,572
£157,857
1.
The deferred bonus share awards will be granted after the announcement of annual results.
3. LTIP awards performance assessment for 2024
LTIP awards vesting in December 2024
The LTIP award granted to Helen Gordon and Rob Hudson on 15 December 2021 are due to vest on 16 December 2024. These
awards are based on a relative TSR condition, a TPR condition and a Secured PRS condition, each weighted equally and measured
over a three-year period. Performance against the targets can be summarised as follows:
Measure
Weighting
Threshold
(25% vesting)
Maximum
(100% vesting)
Actual
performance
Out-turn
(% of max
element)
Relative TSR1
33.3%
Median
ranking
Upper quintile
ranking
TSR of -16.7%
places Grainger
between median
and upper
quintile
34.2%
TPR (annual average growth)2
33.3%
5% p.a.
8% p.a.
3.4% p.a.
0%
Secured PRS3
33.3%
£650m
£750m
£817m
100.0%
Total vesting
100%
44.7%
1.
Versus a bespoke group of real estate peers The TSR peer group comprises Assura, Big Yellow Group, CLS Holdings, Derwent London, Great Portland Estates, Hammerson, LondonMetric
Property, Primary Health Properties, Safestore, SEGRO, Shaftesbury Capital, Sirius Real Estate, Tritax Big Box REIT, Tritax Eurobox, UNITE Group and Workspace Group.
2.
The average TPR over three-year period was 3.4% (2022: 7.5%, 2023 0.4%, 2024 2.3%). This resulted in performance below the threshold target.
3.
The Secured PRS Investment metric is effectively a measure of the value of the Company’s pipeline of future development opportunities and provides a clear focus on driving growth
in the long-term . The metric and targets were agreed at the time of grant on a cumulative threshold target of £650m and a maximum target of £750m for the three-year period ended
30 September 2024. The actual value of investment secured during the period was £817m and was made up of:
• £252m in FY22 (Exmouth Junction, Exeter; Redcliff Quarter, Bristol; and West Way Square, Oxford)
• £427m in FY23 (Merrick Place, Southall; Southall (TfL, 51% share); Montford Place (TfL, 51% share); Arnos Grove (TfL, 51% share); and Nine Elms (TfL, 51% share)
• £138m in FY24 (Guildford Station; Hale Wharf 2, London; The Astley, Manchester)
The Committee evaluated the quality of investments in determining the PRS Investment vesting outcome. Firstly, the Committee considered the extent to which there was any material
unapproved variation from the basis upon which any individual scheme was initially approved. Secondly, a post-investment review for stabilised assets was undertaken with regular
monitoring of schemes to ensure that investments remained of sufficient quality in light of market conditions.
The vesting of the LTIP awards granted on 16 December 2021 is 44.7% of the total award. The estimated vesting value of these
awards shown in the single figure table are as follows:
Executive Director
Shares granted
Number of
shares
expected
to lapse
Number of
shares
expected
to vest
Estimated value
of shares
vesting1
£’000
Face value of
shares expected
to vest2
£’000
Impact of
share price
at vesting3
£’000
Helen Gordon
325,665
180,028
145,637
351
445
93
Rob Hudson
233,045
128,827
104,218
251
318
67
1.
Based on the average three-month share price to 30 September 2024 of 241p.
2.
Based on the prevailing share price at the relevant grant date.
3.
The difference between the value of the shares under awards vesting and the value of the shares at grant.
Vested awards are subject to a two-year post vesting holding period.
Remuneration
Annual Report on Remuneration continued
Grainger plc
Annual Report and Accounts 2024
102
LTIP and recruitment awards vested in December 2023 and February 2024
The awards made to Helen Gordon in December 2020 vested on 10 December 2023 and were based 50% on relative TSR
(estimated), 25% on TPR and 25% on Secured PRS Investment. A tranche of Rob Hudson’s recruitment award was based on the
same measures and targets and vested on 1 February 2024.
Consistent with the estimate disclosed in last year’s report, Grainger’s TSR ranked below median which resulted in 0% of this part
of the award vesting. TPR performance resulted in 27% of this part of the award vesting and the Secured PRS Investment measure
was achieved in full. In aggregate, 31.7% of the December 2020 LTIP award vested in line with the estimate set out in last year’s
report. The value of these awards shown in the revised 2022 single figure table included in this Annual Report and Accounts is
based on the share price at the date of relevant vesting dates (10 December 2023 (261.6p) and 1 February 2024 (270.8p)) and also
includes the value of dividend equivalents on vested awards.
4. Share awards granted during the year
The following LTIP and DBSP awards were granted to the CEO and CFO in the year ended 30 September 2024:
LTIP share awards
(11 December 2023)
DBSP share awards
(11 December 2023)
Number
Face value
£’000
Number
Face value
£’000
Helen Gordon
423,954
1,115
70,844
187
Rob Hudson
292,183
768
48,257
128
The face value of LTIP share awards for Helen Gordon (200% of salary) and Rob Hudson (175% of salary) is based on a price of
263p, being the average share price for the five business days immediately preceding the award being made on 12 December 2023.
The awards will vest three years after grant and a two-year holding period will apply.
The awards will be eligible to vest three years after grant, dependent upon continued employment and satisfying performance
criteria. As explained in last year’s report, four measures apply, a relative TSR condition measured against a group of real estate
companies (30% of awards), a Total Property Income Return condition (30% of awards), a Secured PRS Investment condition (30%
of awards) and an ESG condition (10% of awards).
The relative TSR performance condition requires Grainger’s three-year relative TSR performance versus the comparator group to be
at least at median for 25% of this part of the award to vest, with vesting then increasing on a straight-line basis to 100% for upper
quartile performance.
As explained in last year’s report, Total Property Income Return continued to be used in place of TPR due to the uncertainty
affecting capital values at the time the awards were granted. The targets are based on annual average like-for-like rental growth
over the three-year performance period. For this part of the award, threshold (25% vesting) has been set at 3.5% annual average
growth, and the maximum target at 5.0% annual average growth.
The targets for the Secured PRS Investment condition were agreed during a period of significant uncertainty which was expected
to impact the potential for raising equity to finance new acquisitions and increase the cost of raising debt to grow Secured PRS
Investment. The targets were set assuming funding solely from our ongoing asset recycling programme, operational cash flow
generation and with LTV in mind. The targets were also set on the proviso that should the equity markets reopen, and we generate
proceeds from debt or equity in the period, the related investments will either be excluded from the assessment of performance
against the original targets, or the target range would be increased to reflect the funding to ensure the targets remain at least as
stretching as the original ones.
The ESG targets were based on: (i) Operational carbon (5% weighting) whereby 25% of this part of the award will vest for a 6%
reduction in operational carbon per m2 for the PRS portfolio by 2026 (includes building-related emissions for Scopes 1, 2 and 3)
increasing pro-rata to 100% vesting for a 12% reduction; and (ii) Embodied carbon (5% weighting) whereby 25% of this part of the
award will vest for a 6% reduction in embodied carbon for direct development projects in design by 2026 increasing pro-rata to
100% vesting for a 12% reduction.
In relation to the Secured PRS Investment measure attached to the 11 December 2022 LTIP awards, two years of the three-year
performance period have completed and performance is on track for vesting at the upper end of the target range.
The deferred bonus share plan (‘DBSP’) awards relate to a 25% deferral of the FY2023 annual bonus into Company shares and is
based on a price of 264.33p, being the average share price for the three business days immediately preceding the award being made
on 11 December 2023. The awards will be eligible to vest after three years subject to continued employment.
5. Payments for loss of office and to past Directors
No payments for loss of office or payments to past Directors were made in the year ended 30 September 2024.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
103
6. Directors’ shareholdings and share interests
Past share awards
Awards
granted
Maximum
award
Number
Awards
vested
Number
Awards
lapsed
Number
Maximum
outstanding
awards at
30 Sep 2023
Number
Market price
at date of
vesting
(p)
Vesting
date
Helen Gordon
LTIP shares2
10-Dec-20
350,496
111,266
239,230
–
261.6
9-Dec-23
LTIP shares
16-Dec-21
325,665
–
–
325,665
–
15-Dec-24
LTIP shares
12-Dec-22
417,297
–
–
417,297
–
11-Dec-25
LTIP shares1
12-Dec-23
423,954
–
–
423,954
–
11-Dec-26
DBSP
10-Dec-19
16,429
16,429
–
–
247.0
9-Dec-22
DBSP
10-Dec-20
43,397
43,397
–
–
261.6
9-Dec-23
DBSP
16-Dec-21
38,238
–
–
38,238
–
15-Dec-24
DBSP
12-Dec-22
71,609
–
–
71,609
–
11-Dec-25
DBSP
11-Dec-23
70,844
–
–
70,844
–
10-Dec-26
Rob Hudson
LTIP shares2,3
11-Oct-21
271,987
86,343
185,644
–
260.8
01-Feb-24
LTIP shares
16-Dec-21
233,045
–
–
233,045
–
15-Dec-24
LTIP shares
12-Dec-22
298,616
–
–
298,616
–
11-Dec-25
LTIP shares1
12-Dec-23
292,183
–
–
292,183
–
10-Dec-26
DBSP
16-Dec-21
2,233
–
–
2,233
–
15-Dec-24
DBSP
12-Dec-22
50,197
–
–
50,197
–
11-Dec-25
DBSP
11-Dec-23
48,257
–
–
48,257
–
10-Dec-26
1.
Details of the December 2023 LTIP awards are set out in Note 4 (Share awards granted during the year) above.
2.
LTIP and DBSP share options vested but are unexercised at the date of this report. These will remain capable of exercise in accordance with the scheme rules.
3.
Recruitment awards granted in respect of awards forfeited by Rob Hudson on leaving his previous employer. Full details of the grants are set out in the September 2021 Directors’
Remuneration report.
All-employee share options under SAYE
Granted
in year
Lapsed
during
year
Exercised
during
year
Exercise
price
(p)
Market
price on
exercise
(p)
Gains on
exercise
of share
options
(£)
Share
options
at 30 Sep
2024
Exercise
price
(p)
Earliest
exercise
date
Latest
exercise
date
Share
options at
1 Oct
2023
Number
Grant
price
(p)
Number
Number
Helen
Gordon
SAYE
8,866
–
203.0
–
–
–
–
–
8,866
203.0
01-Sep-26 01-Mar-27
Rob
Hudson
SAYE
14,778
–
203.0
–
–
–
–
–
14,778
203.0
01-Sep-28 01-Mar-29
The closing trade share price on 30 September 2024 was 245.5p. The highest trade share price during the year was 274.8p and the
lowest was 220.2p.
All-employee share awards under the SIP
Ordinary shares of 5p each
30 Sept 2023
shares
30 Sept 20241
shares
Executive Directors
Helen Gordon
10,342
11,786
Rob Hudson
1,478
2,922
1.
Since 30 September 2024, Helen Gordon and Rob Hudson acquired shares in the Company through the Grainger Employee Share Incentive Scheme (272 ordinary 5p shares each).
Remuneration
Annual Report on Remuneration continued
Grainger plc
Annual Report and Accounts 2024
104
Shareholding at 30 September 2024
Directors’ share interests and shareholding requirements are set out below. In order that their interests are aligned with those of
Shareholders, Executive Directors are expected to build up and maintain a personal shareholding equal to 200% of basic salary in
the Company. The table below sets out the Directors’ interests in shares.
Owned shares at
30 Sep 20241
Vested but
unexercised
share awards
Unvested
share awards
Total interests
held at
30 Sep 20242
Total interests
held at
30 Sep 2023
Shareholding
as % of basic
salary3
Executive Directors
Helen Gordon
606,544
445,323
1,347,607
2,399,474
2,150,000
350.1
Rob Hudson
115,822
333,020
925,531
1,374,373
1,232,000
155.7
Non-Executive Directors
Mark Clare
161,333
–
–
161,333
161,333
N/A
Justin Read
20,534
–
–
20,534
20,534
N/A
Janette Bell
1,636
–
–
1,636
1,636
N/A
Carol Hui
5,000
–
–
5,000
5,000
N/A
Michael Brodtman
20,164
–
–
20,164
20,164
N/A
1.
Owned shares include shares as shown on the Company’s Register, beneficially owned shares including shares held in a nominee account and shares held in the SIP trust.
2.
The total interests include beneficially owned shares, shares held in the SIP trust, include Owned shares, vested but unexercised shares and unvested share awards.
3.
The value of shares held (calculated as at 30 September 2024 when the share price was 245.5p) includes Owned shares, vested but unexercised share awards (on a post-tax basis) and those
purchased under the SIP. If unvested DBSP awards (which vest subject to continued employment only) and the December 2021 LTIP due to vest in December 2024 for which performance
has already been tested) were to be included, the value of shares held (on a post-tax basis) would rise to 422% of basic salary in the case of Helen Gordon and 213.5% in the case of Rob
Hudson. The shareholding as % of basic salary is calculated using the total interests as at the year-end date and does not include SAYE related options which have not been exercised.
7. Performance graph
Total Shareholder Return
This graph shows the percentage change by 30 September 2024 of £100 invested in Grainger plc on 30 September 2014
compared with the value of £100 invested separately in both the FTSE 250 Index and the FTSE 350 Real Estate Supersector Index.
These indices have been chosen as Grainger is a constituent in each.
30/09/2022
30/09/2021
30/09/2023
30/09/2024
30/09/2020
30/09/2019
30/09/2018
30/09/2017
30/09/2016
30/09/2015
30/09/2014
Source: Datastream (a Refinitiv product)
0
50
100
200
300
250
Grainger plc
FTSE 250 Total Index
FTSE 350 Real Estate Supersector Index
8. Chief Executive single figure
Chief Executive
single figure of
total remuneration £’000
Annual variable element
award rates against
maximum opportunity
%
Long-term incentive vesting
rates against maximum
opportunity
%
2024
Helen Gordon1
1,818
99
45
2023
Helen Gordon2
1,683
98
32
2022
Helen Gordon
2,022
98
83
2021
Helen Gordon
1,631
67
48
2020
Helen Gordon
1,688
70
67
2019
Helen Gordon
1,185
27
36
2018
Helen Gordon
1,174
72
8
2017
Helen Gordon
985
61
N/A
20163
Helen Gordon (from 4 January 2016)
882
73
N/A
2016
Andrew Cunningham (to 4 January 2016)
376
–
–
2015
Andrew Cunningham
2,185
–
98
1.
The total remuneration and long-term incentive vesting figures for 2024 are estimated.
2.
The total remuneration for 2023 was restated following the update to the 2023 singe figure table.
3.
Helen Gordon’s single figure of total remuneration includes a period when she was Chief Executive designate, during which Andrew Cunningham was Chief Executive. Accordingly, there is an
element of double counting in her single figure of total remuneration for 2016.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
105
9. Percentage change in remuneration of Directors and employees
The annual percentage change in remuneration over the last five years, excluding LTIP and pension contributions, for the Chief
Executive, Chief Financial Officer, Non-Executive Directors and for the average of all other employees in the Group was as follows:
Executive Directors
Non-Executive Directors
Employee
Helen
Gordon
Vanessa
Simms1
Rob
Hudson2
Mark
Clare
Andrew
Carr-
Locke3
Justin
Read3
Janette
Bell3
Rob
Wilkinson4
Carol
Hui5
Michael
Brodtman6
Percentage change
2019-2020
Base salary
2.5%
2.5%
–
2.5%
2.5%
2.5%
2.5%
2.5%
N/A
N/A
2.8%
Taxable benefits
0.1%
0.1%
–
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0.8%
Annual bonus
162.3%
(100.0)% –
N/A
N/A
N/A
N/A
N/A
N/A
N/A
13.7%
Percentage change
2020-21
Base salary
1.5%
1.5%
–
1.5%
1.5%
1.5%
1.5%
1.5%
N/A
N/A
2.0%
Taxable benefits
(0.2)%
(43.1)%
–
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(0.7)%
Annual bonus
(3.6)%
–
–
N/A
N/A
N/A
N/A
N/A
N/A
N/A
33.3%
Percentage change
2021-2022
Base salary
2.0%
–
2.0%
2.0%
–
16.4%
10.8%
2.0%
N/A
N/A
2.5%
Taxable benefits
(0.2)%
–
(0.4)%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(0.8)%
Annual bonus
50.2%
–
50.2%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
4.6%
Percentage change
2022-2023
Base salary
9.0%
–
5.0%
6.0%
N/A
6.0%
6.0%
6.0%
6.0%
N/A
5.3%
Taxable benefits
(0.4)%
–
(0.9)%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(1.7)%
Annual bonus
6.8%
–
3.8%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2.6%
Percentage change
2023-2024
Base salary
6%
–
5.0%
5.0%
N/A
5.0%
5.0%
N/A
5.0%
5.0%
5.2%
Taxable benefits
0.53%
–
5%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(9.8)%
Annual bonus
7.9%
–
23.9%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
4.1%
1.
No bonus was payable to Vanessa Simms due to her resignation in October 2020.
2.
Rob Hudson joined Grainger on 31 August 2021. The growth rates for base salary, taxable benefits and annual bonus have been annualised to reflect changes on a like-for-like basis.
3.
Andrew Carr-Locke stepped down from the Board in February 2022. Justin Read was appointed Senior Independent Director and Chair of the Audit Committee, and Janette Bell has taken
over as Chair of the Remuneration Committee.
4.
Rob Wilkinson stepped down from the Board in February 2023.
5.
Carol Hui was appointed to the Board on 1 October 2021 and Chair of the Responsible Business Committee.
6.
Michael Brodtman joined the Board on 1 January 2023.
10. Chief Executive pay ratio
The table below compares the 2024 single total figure of remuneration for the CEO as shown in Note 1 on page 100 with the
Group’s employees paid at the 25th, 50th and 75th percentiles:
Financial year
Method
25th percentile
50th percentile (median)
75th percentile
2024
A
56:1
Total pay and benefits £32,299
Salary £25,542
37:1
Total pay and benefits £48,831
Salary £39,425
22:1
Total pay and benefits £83,331
Salary £66,779
2023
A
51:1
Total pay and benefits £31,830
Salary £26,882
33:1
Total pay and benefits £49,900
Salary £44,447
19:1
Total pay and benefits £85,792
Salary £63,495
2022
A
60:1
Total pay and benefits £31,831
Salary £25,241
40:1
Total pay and benefits £47,521
Salary £38,500
23:1
Total pay and benefits £81,690
Salary £72,116
2021
A
48:1
Total pay and benefits £32,711
Salary £25,000
33:1
Total pay and benefits £48,540
Salary £42,923
20:1
Total pay and benefits £80,586
Salary £64,720
2020
A
58:1
Total pay and benefits £29,968
Salary £27,708
39:1
Total pay and benefits £44,748
Salary £37,898
23:1
Total pay and benefits £76,196
Salary £63,338
Our calculations were made on 15 November 2024 using Option A as the most statistically accurate method.
Remuneration
Annual Report on Remuneration continued
Grainger plc
Annual Report and Accounts 2024
106
In undertaking our calculations, no adjustments were made to the figures other than determining the FTE remuneration for all
employees within the Group over the financial year. No non-salary employee remuneration components have been omitted. Joiners,
leavers, employees on a period of statutory leave (such as maternity, paternity and shared parental leave) and long-term absences
during the financial year were excluded.
Total FTE remuneration was calculated on the same basis as the CEO single figure table and includes annual base salary, taxable
benefits (private medical insurance, car allowance), matching shares under our Share Incentive Plan, annual bonus for performance
delivered in the financial year and paid in December 2024, employer pension contributions, and taxable share plans.
The Committee considers that the median CEO pay ratio is consistent with the pay, reward and progression policies available to
our employees. We operate an in-house service model, directly employing colleagues for onsite roles in our growing portfolio
of developments and our employee population at this level will continue to increase as we resource appropriately. It is therefore
difficult to compare our ratios with those in the property industry who do not operate under a similar model.
11. Relative importance of spend on pay
The difference in actual expenditure between 2023 and 2024 on remuneration for all employees, in comparison to profit before
tax and distributions to Shareholders by way of dividend, is set out in the charts below. Profit before tax is considered to be an
appropriate financial metric as it is not impacted by changes in tax rates which are outside of the direct control of the Company.
Profit before tax
£40.6m
+48%
(2023: £27.4m)
Dividend
£55.8m
+14%
(2023: £49.1m)
Total employee pay
£32.1m
+8%
(2023: £29.6m)
12. Statement of implementation of Remuneration Policy for 2025
Base salary
Executive Director base salaries will be increased by 3.5% effective 1 January 2025, aligned with the increase for the
general workforce.
Pension
A workforce aligned 10% of salary pension contribution will continue to be payable to the CEO and CFO.
Annual bonus
Annual bonus potential will continue to be capped at 140% of salary. The table below sets out the performance measures and their
respective weightings for 2025:
Metric
Weighting
Rationale and description
PRS NRI
35%
Rental income from PRS after property operating expenses incentivises management to focus on
growing income and reducing cost.
Adjusted earnings
35%
Incentivises operational success in achieving rental growth, income from sales and reduction in
operational and finance costs relative to a challenging budget. The targets for FY25 are challenging
and take into account our reducing size of our regulated tenancy portfolio and the impact of
scheme deliveries.
Strategic and Operational
objectives
23%
Specific objectives relating to Customer Satisfaction, Business Resilience and Funding and Investment
will apply. Due to matters of commercial sensitivity it would not be in the interests of the Company to
disclose the precise operational targets for the annual bonus at the date of production of this report.
Details of the objectives and the performance achieved will be disclosed retrospectively in the 2025
Annual Report.
ESG
7%
Incentivises delivery of Grainger’s corporate strategy and commitments in respect of Community,
Environment, Governance and People (including Health and Safety).
In line with our Policy, 25% of any bonus earned will be delivered as a deferred bonus share award which will vest after three years.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
107
LTIP
It is intended that the LTIP awards to be made to the Executive Directors in the year ending 30 September 2025 will be at the levels
detailed below and subject to a two-year holding period:
• Chief Executive: 200% of salary
• Chief Financial Officer: 175% of salary
The 2025 LTIP maintained the TSR performance criteria, slightly adjusting the TPIR income range reflecting a moderating, but
above long-term average, expectation for rental growth as wage inflation in the UK moderates and being mindful of preserving
customer affordability. Given the focus on delivering operational platform effectiveness as the business scales, the secured
investment criteria has been replaced with an EBITDA margin improvement target representing a significant uplift from current
levels of 54%.
The performance measures to apply for the next LTIP grant are expected to be as follows:
Metric
Weighting
Targets
Relative TSR
(versus a bespoke group of
real estate peers)
30%
Performance level
Ranking
Vesting (of this part of an award)
Below threshold
Below median
0%
Threshold
Median
25%
Maximum
Upper quartile
100%
Total Property Income
Return1
30%
TPIR is based on a sliding scale of annual average like-for-like rental growth over the three-year
performance period.
Performance level
TPIR
Vesting (of this part of an award)
Below threshold
Below 2.5%
0%
Threshold
2.5%
25%
Maximum
4.5%
100%
EBITDA
Margin2
30%
Based on the EBITDA Margin delivered in FY27.
Performance level
EBITDA Margin
Vesting (of this part of an award)
Below threshold
Below 56%
0%
Threshold
56%
25%
Maximum
58%
100%
ESG - Carbon3
10%
Operational carbon (5% weighting) - achieve a 8% (threshold) to 14% (max) reduction in operational
carbon per m2 for the PRS portfolio by 2027 (includes building-related emissions for Scopes 1, 2 and 3)
as compared with the 2023 baseline.
Embodied carbon (5% weighting) - achieve a 8% (threshold) to 14% (max) reduction in embodied
carbon for direct development projects in design by 2027.
1.
Given the uncertainty affecting capital values in the short term and the difficulty in setting a robust three-year TPR target range, the Committee has agreed to continue with a three-year
TPIR measure.
2.
EBITDA Margin is defined as earnings before interest, depreciation, amortisation and tax, excluding liquidated and ascertained damages, divided by Revenue
3.
The Operational and Embodied carbon targets include a number of assumptions, including in respect of Government policy and progress in decarbonisation of the grid. To the extent that
the underlying assumptions change materially, the Committee reserves the flexibility to revisit the performance metrics, weightings and targets to ensure that they remain appropriately
challenging and relevant to Grainger’s transition to Net Zero.
The Committee will retain the right to reduce overall pay outcomes if it considers the variable pay result does not reflect broader
Company performance over the relevant performance periods.
Non-Executive Directors’ fees
The Non-Executive Directors’ (‘NED’) fee levels will be increased in line with the typical employee population increase by 3.5% with
effect from 1 January 2025. Mark Clare joined Grainger in February 2017 and during his tenure the Company’s scale and reach has
broadened significantly, reflecting this, and his level of time commitment and experience, his fee will increase to £230,000 from
1 January 2025. Current fee levels and those which will apply from 1 January 2025 are as follows:
1 January
2025
1 January
2024
Basic Non-Executive Director fee
£57,455
£55,512
Additional fee for chairing Board committee
£11,614
£11,221
Additional fee for Senior Independent Director duties
£9,779
£9,448
Chairman’s fee
£230,000
£194,881
Remuneration
Annual Report on Remuneration continued
Grainger plc
Annual Report and Accounts 2024
108
13. Directors’ service agreements and letters of appointment
Executive Directors
Contract commencement date
Notice period
Helen Gordon
3 November 2015
12 months
Rob Hudson
31 August 2021
6 months
Non-Executive Directors
Date of initial appointment
Mark Clare
13 February 2017
3 months
Justin Read
13 February 2017
3 months
Janette Bell
7 February 2019
3 months
Carol Hui
1 October 2021
3 months
Michael Brodtman
1 January 2023
3 months
14. Details of the Remuneration Committee, advisers to the Committee and their fees
The Remuneration Committee currently comprises the Company Chair and four independent Non-Executive Directors. Details of
the Directors who were members of the Committee during the year are as follows:
Committee member
Member since
Meetings
attended
Meetings
eligible
to attend
Janette Bell (Committee Chair)
May 2019
4
4
Justin Read
May 2017
4
4
Mark Clare
May 2017
4
4
Carol Hui
November 2021
4
4
Michael Brodtman
January 2023
4
4
The Company Secretary, the CPO and other members of the senior management team may be invited to attend Committee
meetings as appropriate. No Directors are involved in deciding their own remuneration.
FIT Remuneration Consultants LLP were appointed by the Remuneration Committee to provide advice on executive remuneration
matters. Total fees paid or payable (as applicable) to FIT for services to the Committee during the 2024 financial year were £48,000
(2023: £64,833). FIT also provides share plan implementation services and related technical support. FIT are signatories to the
Remuneration Consultants’ Group Code of Conduct and any advice provided is governed by that code. The Committee reviews the
adviser relationship periodically and remains satisfied that the advice it receives from its advisers is independent and objective.
15. Statement of voting at general meeting
The votes received from Shareholders in respect of the Directors’ remuneration report for the year ended 30 September 2023 (2024
AGM) and the current Policy (2023 AGM) are set out below.
Directors’ Remuneration report (2024)
Remuneration Policy (2023)
Total number
of votes
% of
votes cast
Total number
of votes
% of
votes cast
For
575,308,382
96.81
599,740,550
95.06
Against
18,987,579
3.19
31,191,167
4.94
Total votes cast (for and against)
594,295,961
100
630,931,717
100
Votes withheld
24,062,221
3,667
NB Votes withheld are not counted.
Janette Bell
Chair of the Remuneration Committee
20 November 2024
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
109
Statement of Directors' responsibilities
Statement of Directors’ responsibilities in respect of
the Annual Report and the financial statements
The Directors are responsible for preparing the Annual Report
and Accounts 2024 including the Group and parent Company
financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare Group and parent
Company financial statements for each financial year. Under that
law they are required to prepare the Group financial statements
in accordance with UK-adopted international accounting
standards (IFRS) and applicable law and have elected to prepare
the parent Company financial statements in accordance with
UK accounting standards and applicable law, including FRS 101
Reduced Disclosure Framework.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and parent Company
and of the Group’s profit or loss for that period. In preparing each
of the Group and parent Company financial statements, the
Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are reasonable, relevant,
reliable and prudent;
• for the Group financial statements, state whether they have
been prepared in accordance with UK-adopted international
accounting standards (IFRS);
• for the parent Company financial statements, state whether
applicable UK accounting standards have been followed,
subject to any material departures disclosed and explained in
the parent Company financial statements;
• assess the Group and parent Company’s ability to continue as
a going concern, disclosing, as applicable, matters related to
going concern; and
• use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to
cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the parent Company and
enable them to ensure that its financial statements comply with
the Companies Act 2006. They are responsible for such internal
control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility for
taking such steps as are reasonably open to them to safeguard
the assets of the Group and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors’ Report,
Directors’ Remuneration Report and Corporate Governance
Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
The Company is required to include these financial statements in
an annual financial report prepared under Disclosure Guidance
and Transparency Rule 4.1.17R and 4.1.18R. The auditor's report
provides no assurance over whether the annual financial report
has been prepared in accordance with those requirements.
Responsibility statement of the Directors in respect of
the Annual Report and Accounts 2024 ('This Report')
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole; and
• the Strategic report includes a fair review of the development
and performance of the business and the position of the issuer
and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
We consider This Report taken as a whole, is fair, balanced and
understandable and provides the information necessary for
Shareholders to assess the Group’s position and performance,
business model and strategy.
By order of the Board.
Directors' Report
In accordance with the UK Financial Conduct Authority’s Listing
Rules (‘LR’), the information to be included in the Annual Report
and Accounts, where applicable under LR 6.6, is set out in Note
14 to the financial statements on page 142 in relation to the
dividend waiver arrangements.
Information incorporated by reference
The Corporate Governance Statement on pages 66 to 114
forms part of this Directors’ report and is incorporated into this
Directors’ report by reference.
Directors’ interests in significant contracts
No Directors were materially interested in any contract
of significance.
Financial risk management
Details are included in Note 27 to the financial statements.
Directors’ indemnities and insurance
The Company has in place contractual entitlements for
the Directors of the Company and its subsidiaries to claim
indemnification by the Company for certain liabilities they might
incur in the course of their duties. We have established these
arrangements, which constitute qualifying third-party indemnity
provision and qualifying pension scheme indemnity provision,
in compliance with the relevant provisions of the Companies
Act 2006. They include provision for the Company to fund the
costs incurred by Directors in defending certain claims against
them in relation to their duties. The Company also maintains an
appropriate level of Directors’ and officers’ liability insurance.
Sustainability
Comprehensive disclosure on the Company’s Environmental,
Social and Governance performance is available on our website
at www.graingerplc.co.uk/responsibility.
Grainger plc
Annual Report and Accounts 2024
110
Streamlined Energy and Carbon Reporting Disclosure
Scope 1 and 2 Global GHG emissions data for period 1 October 2023 to 30 September 2024.
Emissions (tonnes of CO2e) from
2023
location-
based
2024
location-
based
Trend
location-
based
2023
market-
based
2024
market-
based
Trend
market-
based
Scope 1 (Fuel combustion in vehicles and buildings)
754
434
-43%
754
434
-43%
Scope 2 (Electricity)
1,157
1,323
14%
181
111
-39%
Total footprint
1,911
1,757
-8%
935
545
-42%
Outside of Scopes (Biogenic emissions)
1,245
1,688
36%
1,245
1,688
36%
Company’s chosen intensity measurement:
Emissions reported above per m2 Gross Internal Area1
0.0026
0.0021
-17%
0.0013
0.0007
-48%
Emissions reported above per owned unit2
0.2043
0.1665
-19%
0.1000
0.0517
-48%
Emissions reported above per employee3
5.1371
4.7875
-7%
2.5152
1.4860
-41%
Scope 3 Global GHG emissions data for period 1 October 2023 to 30 September 2024.
Emissions (tonnes of CO2e) from
2023
2024
Trend
Purchased goods and services4
8,374
10,933
31%
Capital goods5
58,295
43,545
-25%
Fuel and energy-related activities6
689
670
-3%
Upstream transportation and distribution7
3.8
2.5
-33%
Waste generated in operations8
9.9
7.4
-25%
Business travel (air, rail, vehicles and hotels)9
155
153
-1%
Employee commuting10
460
458
0%
Upstream leased assets (office energy use)11
90
89
-1%
Use of sold products
262
307
17%
End-of-life treatment of sold products12
88
77
-13%
Downstream leased assets (customer energy use)13
PRS
12,630
13,552
7%
Regulated tenancies
8,697
6,631
-24%
Commercial
905
1,129
25%
Total
22,232
21,312
-4%
Investments (Residential – mortgages ‘CHARM’)14
771
776
1%
Total Scope 3 emissions15
91,430
78,330
-14%
1.
Gross Internal Area for Grainger’s residential portfolio.
2.
Number of owned units during the financial year, including units owned in Joint Ventures that are within Grainger’s operational control.
3.
Total number of employees of Grainger plc on the last day of the financial year.
4.
This has been calculated based on spend data using CEDA emissions factors and includes all operational expenditure.
5.
This has been calculated based on spend data using CEDA emissions factors and includes all capital expenditure.
6.
Includes WTT emissions from fuels and electricity transmission and distribution losses.
7.
Includes emissions for courier services calculated from spend data.
8.
Includes waste generated from two offices that Grainger leases from its landlords and estimated waste for other offices.
9.
Includes business travel emissions from air, rail and vehicles. Optional hotel stay emissions are excluded and are 13.8 tonnes.
10. Employee commuting has been estimated from an employee survey. Optional working from home emissions are excluded and are 83 tonnes.
11. Includes landlord-obtained emissions from two offices that Grainger leases from its landlords.
12. Sold products emissions include in-use and end-of-life emissions for properties sold in the year that Grainger developed for sale which for 2024 comprises 26 units at The Boathouse, Clippers
Quay, Young Street and shared ownership homes in the Grainger Trust portfolio.
13. Downstream leased assets – Includes estimated customer energy use for Grainger’s portfolio of leased residential and commercial buildings, which has been calculated from a combination
of actual meter readings, extrapolation of actual data and estimation from Energy Performance Certificates (‘EPCs’) and CIBSE benchmarks. 27% of data was calculated from actual
meter readings.
14. Emissions from the ‘CHARM’ portfolio of residential mortgages calculated using the PCAF methodology for Grainger’s equity share.
15. Emissions from categories 9 (Downstream transportation and distribution), 10 (Processing of sold products) and 14 (Franchises) are not relevant to Grainger.
Underlying global energy use data for period 1 October 2023 to 30 September 2024.
Energy use (kWh)
2023
2024
Trend
Electricity
5,562,999
6,379,932
15%
Natural gas
8,649,242
8,962,572
4%
District heating
25,539
10,826
-58%
Biomass
945,539
920,831
-3%
Transport fuel
176,647
133,022
-25%
Total energy use
15,359,966
16,407,183
7%
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
111
Directors' report continued
Summary
As a quoted company incorporated in the UK, Grainger complies
with the Companies Act 2006 (Strategic Report and Directors’
Report) Regulations 2013 and the Companies (Directors’
Report) and Limited Liability Partnerships (Energy and Carbon
Report) Regulations 2018. Grainger reports all material GHG
emissions using ‘tonnes of CO2 equivalent’ (‘tCO2e’) as the unit
of measurement and reports energy use in kWh. Our reporting
period is 1 October to 30 September and we report energy use
and emissions for the previous year to show trends.
We report on all energy use and GHG emissions for the
operations within the boundaries of our financial statements.
All energy use and emissions data relates to emissions in the UK
and offshore area.
Between 2023 and 2024, energy consumption from our property
portfolio has increased by 5%. Grainger’s total location-based
GHG emissions have decreased by 8% and market-based
emissions have decreased by 42%.
We are reporting all relevant Scope 3 categories using
methodologies in line with the GHG Protocol Corporate Value
Chain (Scope 3) Standard.
Trends
Energy: The overall increase in energy use can be largely
attributed to an increase in electricity use compared to the
previous year due to acquisitions which were not active during
the previous reporting period and contributed to 76% of the
consumption increase across the portfolio in 2024. On a like-
for-like basis, only considering properties which were fully
operational across the two years, consumption has remained
largely consistent, with a 1% increase. Natural gas use has
remained largely consistent, showing only a slight increase.
Energy associated with the use of biomass, district heating and
transport fuels have all decreased year-on-year.
Emissions: Our Scope 1 emissions have significantly decreased.
Over the last three years we have progressively moved sites
using natural gas onto a green gas tariff. In 2024, this coverage
was extended to 90% of gas meters and so Scope 1 emissions
have reduced. Location-based Scope 2 emissions have increased
from the previous year due to the increase in electricity
consumption. Market-based Scope 2 emissions have decreased.
This is due to the continued increase in coverage of renewable
electricity with 95% of our portfolio meters now covered by a
renewable electricity tariff.
Methodology
Grainger uses the GHG Protocol Corporate Standard (revised
edition), Government Environmental Reporting Guidelines
2019 and ISO 14064: Part 1 standard for its reporting, using the
operational control approach. We have used the UK Government
Conversion Factors for Company Reporting 2024 for emissions
calculations, including location-based Scope 2 reporting. For our
market-based emissions we have used contractual instruments
where there is data readily available and if unavailable, residual
mix emissions factors from the Association of Issuing Bodies
European Residual Mixes 2023 for market-based reporting for
2024. We used emissions factors from the same sources in
2023. We have reported on all energy use and emissions sources
required under the regulations. We purchase 100% renewable
electricity tariffs for 95% of our portfolio meters, which has
resulted in lower Scope 2 emissions using the market-based
approach compared to the location-based approach.
Scope 1 data
This includes landlord-obtained gas and biomass heating
consumed in common areas and by tenants on an unmetered
basis, gas consumed in Grainger’s offices, as well as fuel
consumption in vehicles owned or leased by Grainger.
Fugitive emissions are not included as they have been assessed
to be immaterial.
Scope 2 data
This includes landlord-obtained electricity and district heating
consumed in common areas and by tenants on an unmetered
basis as well as electricity consumed by Grainger in its offices.
Scope 3 data
This includes all relevant Scope 3 categories.
Emissions from purchased goods and services, capital goods and
upstream transportation and distribution are calculated from
spend data using CEDA emissions factors. The 2024 footprint
was calculated using CEDA factors for 2023, as the 2024
factors were released after the end of the reporting period and
finalisation of this calculation.
Fuel and energy related activities includes well-to-tank emissions
from fuels and electricity alongside emissions from the
transmission and distribution of electricity.
Waste generated from operations and upstream leased
assets emissions have been calculated from waste and energy
data provided by landlords for Grainger’s occupied offices.
Where waste data was unavailable it has been estimated using
available waste data and employee occupation figures.
Business travel emissions have been calculated from
actual mileage records and spend data. Optional hotel stay
emissions are calculated and are 13.8 tCO2e but are not
included in the reported figures to align to the GHG Protocol.
Employee commuting emissions have been estimated from an
employee survey and workforce data, whilst optional emissions
from employees working from home (83 tCO2e) are also
calculated but excluded from the reported figures.
Sold products consists of units developed by Grainger for sale
which include units at The Boathouse, Clippers Quay, Young
Street and shared ownership units on the Grainger Trust
portfolio. Use of sold products emissions have been estimated
from actual energy used in Grainger’s leased properties on the
same estate or from EPCs where no actual data is available. End-
of-life treatment of sold products emissions have been estimated
using data from whole life carbon assessments undertaken on
similar Grainger properties.
Downstream leased assets includes emissions from energy
used by Grainger’s customers in our buildings and uses a
combination of actual energy data, extrapolation of actual data
to fill gaps in data for the same asset, and proxy data for similar
assets. Where no actual data or suitable proxy was available,
emissions have been estimated using data from EPCs and
CIBSE benchmarks.
Investment includes emissions from a portfolio of residential
mortgages (‘CHARM’) calculated using the PCAF methodology,
and are reported for Grainger’s equity share.
Grainger plc
Annual Report and Accounts 2024
112
Energy use data
This includes purchased electricity, natural gas, biomass, district
heating and transport fuels (petrol and diesel, which have been
converted to kWh from mileage records using the Government
conversion factors). Grainger has solar photovoltaic panels
generating electricity on a number of properties, but the energy
generated is exported to the grid or used to supply building
communal areas and is unable to be reported.
Restatements and estimation
We have recalculated emissions for 2023 as we have been able to
obtain more accurate and complete data for Scope 1 and Scope
2 emissions from energy consumption in our property portfolios.
Properties which were completed in 2023 for which no data
was available for the prior year’s reporting have been included
and a small number of recently completed properties are
excluded from 2024 reporting because data is not yet available.
We will gather data in 2025 to include these properties in our
future reporting.
Where Grainger-obtained utility consumption data is partially
unavailable or unreliable for an asset, estimation has been
undertaken by extrapolating, first using data from the current
reporting period and if unavailable, data from the previous
reporting period. For 2024 5% of energy from fuels for Scope
1 emissions and 1% of electricity for Scope 2 emissions has
been estimated.
All Scope 3 emissions have been calculated using the same
methodology in 2023 and 2024. Scope 3 emissions have been
restated from previously reported figures where improved data
collection resulted in more accurate input data.
Intensity metrics
We have used three intensity metrics: emissions per residential
gross internal area (tCO2e/m2), emissions per the number
of owned units (tCO2e/owned unit) and emissions per
number of employees (tCO2e/employee) to align with our
financial reporting.
The floor area of our portfolio has increased between 2023
and 2024 due to acquisitions. This, coupled with the decrease in
combined Scope 1 and 2 market-based emissions, has caused
a decrease in the emissions per m2 of 48%. Our investment in
new energy efficient rental housing has increased the number of
homes in the portfolio whilst the efficiency of the portfolio has
improved, resulting in a reduction in emissions per owned unit
of 48%. There has been a decrease in the number of employees
but emissions reductions have resulted in a 41% decrease in
emissions per employee.
Energy efficiency measures
As part of our long-term asset management activities, we
undertake comprehensive refurbishments to the common parts
of our buildings and have a programme of rolling refurbishments
for units. These refurbishments include a number of energy
efficiency measures. For common parts a typical refurbishment
includes a lighting upgrade with installation of lighting controls,
and fabric upgrades where required. We have undertaken major
refurbishments to nine assets over the last two years, which
included lighting upgrades, window replacements and roof
insulation. These improvement works largely impacted our
Scope 3 emissions from Downstream leased assets over the
reporting period.
Refurbishments undertaken to individual units include many
energy efficiency improvements including window replacements,
installation of more efficient heating systems and insulation.
The resulting reductions in energy consumption are experienced
by our customers in their directly-purchased energy usage,
and are reflected in our Downstream leased assets emissions.
During the year Grainger relocated two offices to more
energy efficient spaces, delivering year-on-year reductions in
energy consumption.
Customers energy use and emissions
Grainger’s customers purchase their own energy and data
privacy laws make it challenging to obtain actual customer
energy data which can be used to calculate actual emissions
for downstream leased assets. Grainger has implemented
our Customer Emissions Strategy to improve data quality and
coverage of customer energy data. A green lease clause was
rolled out across Grainger’s PRS portfolio to enable customer
energy data to be collected and used for reporting purposes.
Meter readings have been taken when properties are void and
during property inspections where customers have provided
consent. The actual customer energy data that has been
collected has been extrapolated to similar properties in the same
estate or portfolio.
Where no data is available we have used estimated energy
consumption data off Energy Performance Certificates or CIBSE
benchmarks. These figures do not take into account actual
residents usage patterns and the actual data gathered from
Grainger’s portfolio suggests our properties are operating more
efficiently than predicted. The coverage of properties with actual
data is increasing over time which will enhance the accuracy of
our emissions reporting. Grainger has a customer engagement
campaign ‘Living a Greener Life’ which aims to engage our
customers on greener living and support them in reducing their
environmental impacts. For more information see page 47.
Supply chain emissions
Grainger reports supply chain emissions from purchased goods
and services and capital goods. These emissions are currently
calculated using spend data and CEDA emissions factors for
specific spend categories, however we have commenced a long-
term engagement programme with our key suppliers to measure
and report supplier specific emissions data. For more information
see page 47. In 2024 emissions from Purchased goods and
services have increased in line with increased operational
expenditure compared to 2023.
Capital goods include emissions from BTR development projects.
Grainger has consistently delivered strong growth with 1,236
units added this year and development therefore represents
a significant proportion of our emissions for this year. We are
undertaking whole life carbon assessments for all future pipeline
schemes which will enable us to more accurately measure
emissions from developments completing in future years.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
113
Third-party review
EcoAct has reviewed and analysed the data provided by Grainger
and has carried out calculations in line with best practice (see
Methodology section). A separate EcoAct team completed
verification of the following emissions categories using the ISO
14064-3 standard:
GHG emissions
2024 GHG emissions (tCO2e)
Scope 1 emissions
434
Scope 2 emissions (location-based)
1,323
Scope 2 emissions (market-based)
111
Total (location-based)
1,757
Total (market-based)
545
Scope 3 emissions Category 1
10,933
Scope 3 emissions Category 2
43,545
Scope 3 emissions Category 6
153
Scope 3 emissions Category 13
21,312
Total verified Scope 3 emissions
75,943
The full verification statement is available on Grainger’s website
at www.graingerplc.co.uk/responsibility.
A more detailed breakdown of our energy consumption
and carbon footprint for our property portfolios and the
methodology used is available in our EPRA Sustainability
Performance Measures Report, also available on our website.
Health and safety
Grainger has a well-developed health and safety management
system for the internal and external control of health and safety
risks, managed by the Health and Safety Team. This includes
using online risk management systems for identifying, mitigating
and reporting real-time health and safety management
information. The Health and Safety Committee is responsible
for overseeing health and safety management. It consists
of colleagues from across the organisation. The Committee
continues to monitor legal compliance in health and safety
through audit and implementation of improvements, to enable
the Group to become ‘best in class’. Further oversight is also
carried out by the Operations Board. In addition, a health and
safety report is provided to each meeting of the Board of
Directors, and the Health and Safety Director is invited to give a
presentation to the Board at least once a year.
Employment of disabled persons
The Company gives full and fair consideration to applications
for employment made by disabled persons, including those
with neurodiversity, having regard to their particular aptitudes
and abilities. In the event of a colleague becoming disabled,
every effort is made to ensure their employment within the
Company continues, and that we arrange appropriate training
where necessary. It is Company policy that the training, career
development and promotion of disabled persons should, as far
as possible, be identical to that of other employees.
Employee engagement
The Group places considerable value on the engagement of
its employees and has continued its practice of keeping them
informed on and involved in business and strategic matters,
for example through team meetings, presentations by senior
management and regular all-staff conference calls hosted by
the Executives. The Responsible Business Committee, chaired by
Carol Hui, the designated Non-Executive Director for workforce
engagement, has responsibility for the employee engagement
and Voice of the Colleague in the boardroom issues. For more
information on our people and the activities of the Responsible
Business Committee, see pages 84 and 85.
Independent auditor and disclosure of information to
auditor
As far as each Director is aware, there is no relevant audit
information of which the Company’s auditor is unaware.
Each Director has taken the steps they ought to have taken
as Directors, to make themselves aware of any relevant audit
information, and to establish that the Company’s auditor is
aware of that information.
Political donations
While we do not make any monetary contributions to political
campaigns or organisations, or other tax exempt groups we may
from time to time engage the services of lobbying organisations
in relation to a specific issue. We may also join trade associations
which may be involved in political or lobbying activities. We do
not consider that these activities amount to engagement in,
or contribution to, political activities. Therefore, in accordance
with the Company’s standard approach, we made no political
donations in 2024 (2023: £nil).
Takeover directive
On a change of control, the main bank facility (included in Note
26 to the financial statements) will become repayable should
alternative terms for continuing the facilities not be agreed
with the lenders within 45 days. In addition, the corporate bond
(also referred to in Note 26) may become repayable following a
change of control. There are no other material matters relating
to a change of control of the Company following a takeover bid.
The Directors have confirmed approval of the Directors’ report.
By order of the Board.
Sapna FitzGerald
Company Secretary
20 November 2024
Directors' report continued
Grainger plc
Annual Report and Accounts 2024
114
Financial
statements
Independent auditor’s report
116
Consolidated income statement
123
Consolidated statement
of comprehensive income
124
Consolidated statement
of financial position
125
Consolidated statement
of changes in equity
126
Consolidated statement of cash flows
127
Notes to the financial statements
128
Parent company statement
of financial position
165
Parent company statement of changes in equity
165
Notes to the parent company financial
statements
166
EPRA performance measures (unaudited)
171
Five year record (unaudited)
175
The Silver Yard, Birmingham
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
115
Independent auditor's report to the members of Grainger plc
1. Our opinion is unmodified
We have audited the financial statements of Grainger plc (“the Company”) for the year ended 30 September 2024 which comprise
the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of
Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows, the Parent
Company Statement of Financial Position, the Parent Company Statement of Changes in Equity, and the related notes, including
the accounting policies on pages 128 to 130 for the Group and pages 166 to 167 for the parent Company financial statements.
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at
30 September 2024 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;
• the parent Company financial statements have been properly prepared in accordance with UK accounting standards, including
FRS 101 Reduced Disclosure Framework; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for
our opinion. Our audit opinion is consistent with our report to the audit committee.
We were first appointed as auditor by the Shareholders on 5 February 2015. The period of total uninterrupted engagement is for
the ten financial years ended 30 September 2024. We have fulfilled our ethical responsibilities under, and we remain independent
of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest
entities. No non-audit services prohibited by that standard were provided.
Overview
Materiality:
Group financial statements as a whole
£34.0m (2023: £34.0m) 0.9% (2023: 0.9%) of total assets
Coverage
100% (2023: 100%) of Group total assets
Key audit matters
vs 2023
Recurring risks
Valuation of properties
Recoverability of parent company’s investment in subsidiaries
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing
the efforts of the engagement team. We summarise below the key audit matters (unchanged from 2023), in decreasing order of
audit significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as
required for public interest entities, our results from those procedures. These matters were addressed, and our results are based
on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and
in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on
these matters.
Grainger plc
Annual Report and Accounts 2024
116
The risk
Our response
Valuation of
properties
Investment properties,
including held for sale
assets held at fair
value: (£3,028.3m;
2023: £2,948.9m).
Market value of
trading properties, as
disclosed in note 2 to
the group financial
statements £620.1m;
2023: £734.3m).
Refer to page 87 (Audit
Committee Report),
pages 130-133 (critical
accounting estimates
and judgements)
and pages 143 and
146 (accounting
policies and financial
disclosures).
Subjective valuation:
The valuation approach adopted by the
directors varies between portfolios:
Investment properties, including held for
sale assets;
– For properties let into the private rental
market, and affordable housing properties,
the valuation is derived by applying a gross
initial yield to the estimated rental value
of the property. Yield is based on market
evidence and is an inherently judgemental
input. There is a risk that applying an
inappropriate yield could lead to a material
difference in the valuation. Where relevant,
valuations are reduced to reflect the
estimated costs of planned remedial works
relating to fire safety. There is a risk that not
all works are identified or that cost estimates
are insufficient.
– For properties under construction which
are to be let into the private rental market,
a consistent valuation methodology to
the one mentioned above, is adopted.
Additional adjustments are then made for
capital expenditure not yet incurred, and
development and stabilisation risk. There
is an additional risk that these adjustments
could be inappropriate and result in a
material difference in the valuation.
– For individual properties, the valuation
is determined by estimating a vacant
possession (“VP”) value and applying a
discount to reflect the fact that the property
is tenanted. The VP value and the discount
applied are estimated with reference to
comparable evidence, which in some cases
may be limited. This means the valuation
is inherently subjective and susceptible to
misstatement.
– For the Tricomm portfolio and shared
ownership affordable housing, the valuation
is based on a discounted cash flow model
produced by an external valuer. There is
a risk that the house price inflation (“HPI”)
and discount rate assumptions could be
inappropriate which could lead to a material
misstatement in valuation.
Trading properties;
– Residential trading properties is carried in the
statement of financial position at the lower
of cost and net realisable value. The Group
financial statements do, however, disclose
the market value of trading properties,
because it is an important disclosure to the
users of these financial statements. The
market value is derived using the same
valuation methods as set out above for the
corresponding property types. This means
the valuation is inherently subjective and
susceptible to misstatement in disclosure.
The effect of these matters is that, as part of
our risk assessment, we determined that the
valuation of investment properties held at
fair value and the disclosed market value of
trading properties disclosed in note 2 to the
group financial statements has a high degree
of estimation uncertainty, with a potential
range of outcomes greater than our materiality
for the financial statements as a whole, and
possibly many times that amount. The financial
statements note 2 disclose the sensitivity
estimated by the Group.
We performed the tests below rather than seeking to rely on any of the
Group’s controls because the nature of the balances are such that we
would expect to obtain audit evidence primarily through the detailed
procedures described.
Our procedures in respect of all property types identified included:
– Methodologies: with the assistance of our own property valuation
specialists, we challenged the methodologies used for the specific
portfolios with reference to market practice.
– Sensitivity analysis: we have performed sensitivity analysis over
the key assumptions and considered the outcomes with reference to
benchmarks to identify the key assumptions affecting the valuation.
– Assessing valuers’ credentials: we assessed the objectivity,
professional qualifications, independence and experience of the
external valuers engaged by the Group, through research, discussion
with them and by reading their valuation reports and terms of
engagement letter for fee arrangements and other incentive terms.
– Attendance at Group valuation meetings: we attended the
Group’s meetings with their external valuers and challenged the
market evidence presented by the valuers with the help of our own
property valuation specialists.
– Historical comparisons: we compared the 2023 year end valuation
with the sales price achieved for property sales in the current year.
Our additional procedures in respect of investment properties
included:
– Assessing transparency: we assessed whether the Group’s
disclosure about the sensitivity of fair value changes in key
assumptions reflected the uncertainties inherent in the property
valuations.
Our additional procedures in respect of private rental sector properties
and affordable housing properties included:
– Yield rates: with the assistance of our own property valuation
specialists, we challenged the yield rates applied using our
understanding of the nature of the assets and compared to available
market data.
– Fire safety works: we assessed the completeness of the list of
properties requiring remedial works with reference to the Group’s
records supporting compliance with the Building Safety Act,
including inspecting fire risk assessment reports. We inspected
correspondence with third parties in respect of responsibility
for the costs of remedial works and compared remediation cost
adjustments to third party evidence, including tenders received.
Our additional procedures in respect of properties under construction
which are to be let into the private rental market, included:
– Test of details: for a sample of properties, we agreed the
adjustments made for capital expenditure not yet incurred to the
latest third party supplier funding assessment.
– Our valuation expertise: using our property valuation specialists,
we critically assessed the adjustments made for development and
stabilisation risk with reference to sector practice.
Our additional procedures in respect of individual properties included:
– Comparing valuations: we challenged the inputs used in valuations
and compared valuations to recent comparable transactions.
Our additional procedures in respect of the Tricomm portfolio and the
shared ownership affordable housing properties included:
– Benchmarking assumptions: we compared the HPI assumption
included in the discounted cash flow model to market indices
and discount rates to market information including gilts and
benchmarked risk premiums.
Our Results
– We found the valuation of investment properties held at fair value
and the disclosed market value of trading properties in note 2 to the
group financial statements to be acceptable (2023: acceptable).
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
117
The risk
Our response
Recoverability of
parent company’s
investment in
subsidiaries
(£2,594.0m; 2023:
(£2,335.9m).
Refer to page 166
(accounting policy)
and page 167 (financial
disclosures).
Low risk, high value
The carrying amount of the parent Company’s
investment in subsidiaries represents 95%
(2023: 96%) of the parent Company’s total
assets.
Their recoverability is not at a high risk
of significant misstatement or subject to
significant judgement. However, due to
their materiality in the context of the parent
Company financial statements, this is
considered to be the area that had the greatest
effect on our overall parent Company audit.
We performed the tests below rather than seeking to rely on any of the
parent Company’s controls because the nature of the balance is such
that we would expect to obtain audit evidence primarily through the
detailed procedures described.
Our procedures included:
– Test of details: we compared the carrying amount of 100% of
investments with the relevant subsidiaries’ draft balance sheets
to identify whether their adjusted net assets (adjusted to measure
trading properties at fair value), being an approximation of their
recoverable amount, were in excess of their carrying amount.
– Assessing subsidiary audits: We considered the results of our work
on all of those subsidiaries’ profits and net assets.
Our results
We found the balance of the Company’s investments in subsidiaries to
be acceptable (2023: acceptable).
3. Our application of materiality and an overview of the scope of our audit
Materiality for the Group financial statements as a whole was set at £34.0m (2023: £34.0m), determined with reference to a
benchmark of total assets (of which it represents 0.9% (2023: 0.9%)).
Materiality for the parent Company financial statements as a whole was set at £30.0m (2023: £30.0m) determined with reference to
a benchmark of the parent Company’s net assets of which it represented 1.6% (2023: 1.9%).
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in
individual account balances add up to a material amount across the financial statements as a whole.
Performance materiality was set at 75% (2023: 75%) of materiality for the financial statements as a whole, which equates to £25.5m
(2023: £25.5m) for the Group and £22.5m (2023: £22.5m) for the parent Company. We applied this percentage in our determination
of performance materiality because we did not identify any factors indicating an elevated level of risk. We agreed to report to
the Audit Committee any corrected or uncorrected identified misstatements exceeding £1.7m (2023: £1.7m) in addition to other
identified misstatements that warranted reporting on qualitative grounds.
In addition, we applied a materiality of £3.5m (2023: £3.5m) and performance materiality of £2.6m (2023 £2.6m) to specific income
statement accounts, namely net rental income, profit on disposal of trading properties, profit on disposal of investment properties,
fees and other income and finance costs (2023: net rental income, profit on disposal of trading properties, profit on disposal of
investment properties, fees and other income and finance costs) for which we believe misstatement of a lesser amount than
materiality for the financial statements as a whole could be reasonably expected to influence the Company’s members’ assessment
of the financial performance of the Group. In relation to these balances, we agreed to report to the Audit Committee any corrected
or uncorrected identified misstatements exceeding £0.17m (2023: £0.17m), in addition to other identified misstatements that
warranted reporting on qualitative grounds.
The Group team performed the audit of the Group as if it were a single aggregated set of financial information. The Group team
performed the Parent Company audit. The audit was performed using the materiality levels set out above.
£34.0m
Total assets
£3,742.7m (2023: £3,722.3m)
Group Materiality
£34.0m (2023: £34.0m)
£1.7m
Misstatements reported
to the Audit Committee
(2023: £1.7m)
Group total assets
£3,742.7m
Group materiality £34.0m
Whole financial
statements materiality
(2023: £34.0m)
The scope of the audit work performed was predominately substantive as we placed limited reliance upon the Group’s internal
control over financial reporting.
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118
4. The impact of climate change on our audit
In planning our audit, we have considered the potential impacts of climate change on the Group’s business and its financial
statements. Climate change impacts the Group in a number of ways: through its own operations (including potential reputational
risk associated with the Group’s delivery of its climate related initiatives), through its portfolio of properties and the greater
emphasis on climate related narrative and disclosure in the Annual Report. The Group’s main potential exposure to climate change
in the financial statements is primarily through the carrying value of its properties as the estimated valuation may need to be
adjusted to the impact of climate transition risk related factors.
As part of our audit, we have made enquiries of directors and the Group’s Corporate Sustainability team to understand the extent
of the potential impact of climate change risk on the Group’s financial statements and the Group’s preparedness for this. We have
performed a risk assessment of how the impact of climate change may affect the financial statements and our audit, in particular
with respect to the valuation of properties. Given that these valuations are largely based on comparable market evidence we
assessed that the impact of climate change was not a significant risk for our audit, nor does it constitute a key audit matter.
We held discussions with our own climate change professionals to challenge our risk assessment.
We have also read the Group’s disclosure of climate related information in the front half of the Annual Report as set out on pages
38 to 47, and considered consistency with the financial statements and our audit knowledge. We have not been engaged to provide
assurance over the accuracy of these disclosures.
5. Going concern
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or the
parent Company or to cease their operations, and as they have concluded that the Group’s and the Company’s financial position
means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt
over their ability to continue as a going concern until at least 31 March 2026 (‘‘the going concern period’’).
We used our knowledge of the Group, its industry, and the general economic environment to identify the inherent risks to its
business model and analysed how those risks might affect the Group and parent Company’s financial resources or ability to
continue operations over the going concern period. The risks that we considered most likely to adversely affect the Group and
parent Company’s available financial resources over this period were:
• rising energy cost and cost of living crisis leading to reduced demand in the private rental sector;
• decline in the property market leading to reduced sales activity;
• declining valuation of property assets;
• significant cost inflation, increased interest rates;
• reduction in demand in the private rental sector, leading to reduced rent levels; and
• changes in the fiscal policy could impact the property market.
We considered whether these risks could plausibly affect the liquidity or covenant compliance in the going concern period by
comparing severe, but plausible downside scenarios that could arise from these risks individually and collectively against the level of
available financial resources and covenants thresholds indicated by the Group’s financial forecasts.
We also assessed the completeness of the going concern disclosure.
Our conclusions based on this work:
• we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements
is appropriate;
• we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events or
conditions that, individually or collectively, may cast significant doubt on the Group’s or parent Company's ability to continue as a
going concern for the going concern period;
• we have nothing material to add or draw attention to in relation to the directors’ statement in note 1 to the Group and parent
Company financial statements on the use of the going concern basis of accounting with no material uncertainties that may cast
significant doubt over the Group and parent Company’s use of that basis for the going concern period, and we found the going
concern disclosure in note 1 to the Group and parent Company financial statements to be acceptable; and
• the same statement is materially consistent with the financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the
Group or the parent Company will continue in operation.
Financial statements
Governance
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Annual Report and Accounts 2024
119
6. Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
• Enquiring of directors and the audit committee, as to the Group’s high-level policies and procedures to prevent and detect
fraud, including the Group’s channel for “whistle blowing”, as well as whether they have knowledge of any actual, suspected or
alleged fraud;
• Reading Board minutes and attending Group audit committee meetings;
• Considering remuneration incentive schemes and performance targets for directors and management including the adjusted
earnings and total property return; and
• Using analytical procedure to identify any unusual or unexpected relationships.
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout
the audit.
As required by auditing standards and taking into account possible pressures to meet profit targets, we perform procedures to
address the risk of management override of controls and the risk of fraudulent revenue recognition, in particular the risk that
disposals of trading property are recorded in the wrong accounting period and the risk that Group management may be in a
position to make inappropriate accounting entries and the risk of bias in accounting estimates and judgements such as significant
assumptions used in the valuation of investment properties, including estimated rental values and market based yields. On this
audit we do not believe there is a fraud risk related to revenue recognition, other than to the sales made close to the year end
as these could be recorded in the incorrect period, because of the relative simplicity of revenue streams. We did not identify any
additional fraud risks.
We also performed procedures including:
• Identifying journal entries to test using data analytical tools based on risk criteria and comparing the identified entries to supporting
documentation. These included those posted to unusual accounts and those posted by senior finance management; and
• Assessing whether the judgements made in making accounting estimates are indicative of a potential bias.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements
from our general commercial and sector experience, through discussion with the directors and other management (as required by
auditing standards), and from inspection of the Group’s regulatory and legal correspondence and discussed with the directors and
other management the policies and procedures regarding compliance with laws and regulations.
As the Group is regulated, our assessment of risks involved gaining an understanding of the control environment including the
entity’s procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting
legislation (including related companies’ legislation), distributable profits legislation and taxation legislation and we assessed the
extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a
material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation.
We identified the following areas as those most likely to have such an effect: health and safety, data protection laws, anti-bribery,
environmental and sustainability legislation, landlord and tenant legislation, fire safety legislation, property laws and building
legislations and certain aspects of company legislation recognising the nature of the Group’s activities and its legal form.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry
of the directors and other management and inspection of regulatory and legal correspondence, if any. Therefore, if a breach of
operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have properly planned and performed our audit in accordance
with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance
with all laws and regulations.
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7. We have nothing to report on the other information in the Annual Report
The directors are responsible for the other information presented in the Annual Report together with the financial statements.
Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion
or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on
that work we have not identified material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic report and the directors’ report;
• in our opinion the information given in those reports for the financial year is consistent with the financial statements; and
• in our opinion those reports have been prepared in accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks and longer-term viability
We are required to perform procedures to identify whether there is a material inconsistency between the directors’ disclosures in
respect of emerging and principal risks and the viability statement, and the financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw attention to in relation to:
• the directors’ confirmation within the viability statement on page 64 that they have carried out a robust assessment of the
emerging and principal risks facing the Group, including those that would threaten its business model, future performance,
solvency and liquidity;
• the Principal Risks and uncertainties disclosures describing these risks and how emerging risks are identified, and explaining how
they are being managed and mitigated; and
• the directors’ explanation in the viability statement of how they have assessed the prospects of the Group, over what period they
have done so and why they considered that period to be appropriate, and their statement as to whether they have a reasonable
expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their
assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.
We are also required to review the viability statement, set out on page 68 under the Listing Rules. Based on the above procedures,
we have concluded that the above disclosures are materially consistent with the financial statements and our audit knowledge.
Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit.
As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with
judgements that were reasonable at the time they were made, the absence of anything to report on these statements is not a
guarantee as to the Group’s and Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material inconsistency between the directors’ corporate
governance disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is materially consistent with the financial statements and
our audit knowledge:
• the directors’ statement that they consider that the annual report and financial statements taken as a whole is fair, balanced
and understandable, and provides the information necessary for shareholders to assess the Group’s position and performance,
business model and strategy;
• the section of the annual report describing the work of the Audit Committee, including the significant issues that the audit
committee considered in relation to the financial statements, and how these issues were addressed; and
• the section of the annual report that describes the review of the effectiveness of the Group’s risk management and internal
control systems.
We are required to review the part of the Corporate Governance Statement relating to the Group’s compliance with the provisions
of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in this respect.
Financial statements
Governance
Strategic report
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Annual Report and Accounts 2024
121
8. We have nothing to report on the other matters on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 110, the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing
the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern;
and using the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of
assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
In accordance with Disclosure Guidance and Transparency Rule (“DTR”) 4.1.16R, the financial statements will form part of the annual
financial report prepared under DTR 4.1.17R and 4.1.18R. This auditor’s report provides no assurance over whether the annual
financial report has been prepared in accordance with those requirements.
10. The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for
the opinions we have formed.
Craig Steven-Jennings (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square, Canary Wharf
London E14 5GL
20 November
Independent auditor's report to the members of Grainger plc continued
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Annual Report and Accounts 2024
122
Consolidated income statement
For the year ended 30 September
Notes
2024
£m
2023
£m
Group revenue
5
290.1
267.1
Net rental income
6
110.1
96.5
Profit on disposal of trading property
7
49.4
54.8
(Loss)/profit on disposal of investment property
8
(5.8)
3.3
(Expense)/income from financial interest in property assets
20
(1.3)
4.6
Fees and other income
9
8.1
5.0
Administrative expenses
(35.3)
(33.5)
Other expenses
(6.0)
(1.2)
Goodwill impairment
–
(0.1)
Impairment of inventories to net realisable value
22
(0.1)
(1.0)
Operating profit
119.1
128.4
Net valuation losses on investment property
16
(32.5)
(68.8)
Hedge ineffectiveness under IFRS 9
(6.6)
–
Finance costs
12
(41.8)
(34.0)
Finance income
12
3.0
2.2
Share of loss of associates after tax
18
(0.4)
(0.1)
Share of loss of joint ventures after tax
19
(0.2)
(0.3)
Profit before tax
11
40.6
27.4
Tax charge
13
(9.4)
(1.8)
Profit for the year attributable to the owners of the Company
31.2
25.6
Basic earnings per share
15
4.2p
3.5p
Diluted earnings per share
15
4.2p
3.5p
The notes on pages 128 to 164 form part of the financial statements.
Financial statements
Governance
Strategic report
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Annual Report and Accounts 2024
123
Consolidated statement of comprehensive income
For the year ended 30 September
Notes
2024
£m
2023
£m
Profit for the year
3
31.2
25.6
Items that will not be transferred to the consolidated income statement:
Remeasurement of BPT Limited defined benefit pension scheme
28
(3.1)
(1.1)
Items that may be or are reclassified to the consolidated income statement:
Changes in fair value of cash flow hedges
(20.8)
(16.1)
Other comprehensive income and expense for the year before tax
(23.9)
(17.2)
Tax relating to components of other comprehensive income:
Tax relating to items that will not be transferred to the consolidated income statement
13
0.8
0.3
Tax relating to items that may be or are reclassified to the consolidated income statement
13
5.2
4.0
Total tax relating to components of other comprehensive income
6.0
4.3
Other comprehensive income and expense for the year after tax
(17.9)
(12.9)
Total comprehensive income and expense for the year attributable to the owners
of the Company
13.3
12.7
The notes on pages 128 to 164 form part of the financial statements.
Grainger plc
Annual Report and Accounts 2024
124
Consolidated statement of financial position
As at 30 September
Notes
2024
£m
2023
£m
ASSETS
Non-current assets
Investment property
16
2,996.8
2,948.9
Property, plant and equipment
17
10.6
8.6
Investment in associates
18
14.9
15.8
Investment in joint ventures
19
76.4
75.2
Financial interest in property assets
20
57.4
67.0
Retirement benefits
28
6.5
9.6
Deferred tax assets
13
6.1
3.7
Intangible assets
21
1.8
1.0
3,170.5
3,129.8
Current assets
Inventories – trading property
22
331.6
392.2
Investment property - held for sale
16
31.5
–
Trade and other receivables
23
90.9
34.0
Derivative financial instruments
27
19.8
45.3
Current tax assets
5.2
–
Cash and cash equivalents
27
93.2
121.0
572.2
592.5
Total assets
3,742.7
3,722.3
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings
26
1,592.9
1,533.5
Trade and other payables
25
6.3
6.9
Provisions for other liabilities and charges
24
1.0
1.1
Deferred tax liabilities
13
121.5
122.3
1,721.7
1,663.8
Current liabilities
Trade and other payables
25
114.1
120.7
Provisions for other liabilities and charges
24
13.2
8.6
Current tax liabilities
–
0.6
127.3
129.9
Total liabilities
1,849.0
1,793.7
NET ASSETS
1,893.7
1,928.6
EQUITY
Issued share capital
29
37.2
37.2
Share premium account
817.9
817.8
Merger reserve
31
20.1
20.1
Capital redemption reserve
0.3
0.3
Cash flow hedge reserve
31
4.4
20.0
Retained earnings
32
1,013.8
1,033.2
TOTAL EQUITY
1,893.7
1,928.6
The financial statements on pages 123 to 164 were approved by the Board of Directors on 20 November 2024 and were signed on
their behalf by:
Helen Gordon
Rob Hudson
Director
Director
Company registration number: 125575
Financial statements
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Strategic report
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Annual Report and Accounts 2024
125
Consolidated statement of changes in equity
Notes
Issued
share
capital
£m
Share
premium
account
£m
Merger
reserve
£m
Capital
redemption
reserve
£m
Cash flow
hedge
reserve
£m
Retained
earnings
£m
Total
equity
£m
Balance as at 1 October 2022
37.1
817.6
20.1
0.3
32.1
1,059.6
1,966.8
Profit for the year
–
–
–
–
–
25.6
25.6
Other comprehensive loss for the year
–
–
–
–
(12.1)
(0.8)
(12.9)
Total comprehensive income
–
–
–
–
(12.1)
24.8
12.7
Award of SAYE shares
0.1
0.2
–
–
–
–
0.3
Purchase of own shares
–
–
–
–
–
(7.9)
(7.9)
Share-based payments charge
–
–
–
–
–
2.4
2.4
Dividends paid
–
–
–
–
–
(45.7)
(45.7)
Total transactions with owners recorded
directly in equity
0.1
0.2
–
–
–
(51.2)
(50.9)
Balance as at 30 September 2023
37.2
817.8
20.1
0.3
20.0
1,033.2
1,928.6
Profit for the year
3
–
–
–
–
–
31.2
31.2
Other comprehensive loss for the year
–
–
–
–
(15.6)
(2.3)
(17.9)
Total comprehensive income
–
–
–
–
(15.6)
28.9
13.3
Award of SAYE shares
29
–
0.1
–
–
–
–
0.1
Purchase of own shares
29
–
–
–
–
–
(0.1)
(0.1)
Share-based payments charge
30
–
–
–
–
–
2.8
2.8
Dividends paid
14
–
–
–
–
–
(51.0)
(51.0)
Total transactions with owners recorded
directly in equity
–
0.1
–
–
–
(48.3)
(48.2)
Balance as at 30 September 2024
37.2
817.9
20.1
0.3
4.4
1,013.8
1,893.7
The notes on pages 128 to 164 form part of the financial statements.
Grainger plc
Annual Report and Accounts 2024
126
Consolidated statement of cash flows
For the year ended 30 September
Notes
2024
£m
2023
£m
Cash flow from operating activities
Profit for the year
31.2
25.6
Depreciation and amortisation
11
1.5
1.1
Goodwill impairment
–
0.1
Net valuation losses on investment property
16
32.5
68.8
Net finance costs
12
38.8
31.8
Hedge ineffectiveness under IFRS 9
6.6
–
Share of loss of associates and joint ventures
18, 19
0.6
0.4
Loss/(profit) on disposal of investment property
8
5.8
(3.3)
Share-based payments charge
30
2.8
2.4
Expense/(income) from financial interest in property assets
20
1.3
(4.6)
Tax charge
13
9.4
1.8
Cash generated from operating activities before changes in working capital
130.5
124.1
(Increase)/decrease in trade and other receivables
(3.8)
6.5
increase in trade and other payables
9.9
37.0
Increase in provisions for liabilities and charges
4.5
–
Decrease in inventories
60.6
61.6
Cash generated from operating activities
201.7
229.2
Interest paid
(52.6)
(46.9)
Tax (paid)/received
(12.5)
2.7
Payments to defined benefit pension scheme
28
–
(0.3)
Net cash inflow from operating activities
136.6
184.7
Cash flow from investing activities
Proceeds from sale of investment property
90.2
63.5
Proceeds from financial interest in property assets
20
8.3
6.7
Dividends received from associates
18
0.5
0.8
Investment in joint ventures
19
–
(34.0)
Loans advanced to joint ventures
19
(1.4)
(3.0)
Acquisition of investment property
16
(261.0)
(302.0)
Acquisition of property, plant and equipment and intangible assets
(4.3)
(6.1)
Net cash outflow from investing activities
(167.7)
(274.1)
Cash flow from financing activities
Award of SAYE shares
29
0.1
0.3
Purchase of own shares
29
(0.1)
(7.9)
Proceeds from new borrowings
244.0
330.0
Payment of loan costs
(2.8)
(2.3)
Cash flows relating to new derivatives/settlement of derivatives
(1.9)
(4.9)
Repayment of borrowings
(185.0)
(155.0)
Dividends paid
14
(51.0)
(45.7)
Net cash inflow from financing activities
3.3
114.5
Net (decrease)/increase in cash and cash equivalents
(27.8)
25.1
Cash and cash equivalents at the beginning of the year
27
121.0
95.9
Cash and cash equivalents at the end of the year
27
93.2
121.0
The notes on pages 128 to 164 form part of the financial statements.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
127
1. Accounting policies
Accounting policies applicable throughout the financial statements are shown below. Accounting policies that are specific to a
component of the financial statements have been incorporated in the relevant note.
(a) Basis of preparation
Grainger plc is a company incorporated and domiciled in the UK. It is a public limited liability company listed on the London
Stock Exchange. The Group financial statements consolidate those of the Company and its subsidiaries, together referred to as
the ‘Group’, and equity account the Group’s interest in joint ventures and associates. The parent company financial statements
present information about the Company and not the Group.
The Group financial statements have been prepared under the historical cost convention except for the following assets and
liabilities, and corresponding income statement accounts, which are stated at their fair value: investment property; derivative
financial instruments; and financial interest in property assets.
The Group financial statements have been prepared and approved by the Directors in accordance with UK-adopted international
accounting standards (IFRS) and applicable law. The Company has elected to prepare its parent company financial statements in
accordance with FRS 101; these are presented on pages 165 to 170.
The Group and Company financial statements are presented in millions of Pounds Sterling (£m) because that is the currency of
the principal economic environment in which the Group operates.
In preparing the financial statements, management has considered the potential impacts, risks and opportunities of climate
change, taking into account the relevant disclosures in the Strategic report, including those made in accordance with TCFD, and
considered the impact of the issues identified to ensure they are appropriately reflected into the financial statements. The impact
of climate change and of climate change related changes in markets and regulation are considered in the valuation of investment
properties. These issues are also considered when projecting future cash flows of the Group and in sensitivity analysis.
Management feel that climate change related issues are appropriately considered in these financial statements.
Going concern
The Directors are required to make an assessment of the Group’s ability to continue to trade as a going concern for the
foreseeable future. Given the macro-economic conditions in which the Group is operating, the Directors have placed a particular
focus on the appropriateness of adopting the going concern basis in preparing the financial statements for the year ended
30 September 2024.
The financial position of the Group, including details of its financing and capital structure, is set out in the financial review on
pages 31 to 36. In making the going concern assessment, the Directors have considered the Group’s principal risks (see pages
56 to 63) and their impact on financial performance. The Directors have assessed the future funding commitments of the
Group and compared these to the level of committed loan facilities and cash resources over the medium term. In making this
assessment, consideration has bezen given to compliance with borrowing covenants along with the uncertainty inherent in
future financial forecasts and, where applicable, severe sensitivities have been applied to the key factors affecting financial
performance for the Group.
The going concern assessment is based on forecasts to the end of March 2026, which exceeds the required period of assessment
of at least 12 months in order to be aligned to the Group’s interim reporting date, and uses the same forecasts considered by the
Group for the purposes of the Viability Statement. The assessment considers a severe but plausible downside scenario, reflecting
the following key assumptions:
• Reducing PRS occupancy to 87.5% by 30 September 2026
• Rental growth reduced by 100bps to 2.5% in FY25
• Reducing property valuations by 10% by 30 September 2025, driven by rents yield expansion or house price deflation
• Operating and development cost inflation of 10% p.a.
• An increase in SONIA rate of 2% from 1 October 2024
The Group’s forecasts incorporate the likely impact of climate change and sustainability requirements including costs to deliver
our climate related targets. This includes EPC upgrades across the portfolio and investing in energy efficient solutions for central
heating systems.
No new financing is assumed in the assessment period, but existing facilities are assumed to remain available. Even in this severe
downside scenario, the Group has sufficient cash reserves, with the loan-to-value covenant remaining no higher than 48%
(facility maximum covenant ranges between 70% – 75%) and interest cover no lower than 3.62x (facility minimum covenant
ranges between 1.35x – 1.75x) for the period to March 2026 to align with reporting periods, which covers the required period of at
least 12 months from the date of authorisation of these financial statements.
Based on these considerations, together with available market information and the Directors’ experience of the Group’s property
portfolio and markets, the Directors continue to adopt the going concern basis in preparing the accounts for the year ended
30 September 2024.
Notes to the financial statements
Grainger plc
Annual Report and Accounts 2024
128
1. Accounting policies continued
(b) Basis of consolidation
i) Subsidiaries – Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group
is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the
date control ceases.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are
eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to
the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only
to the extent that there is no evidence of impairment. Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group.
ii) Joint ventures and associates – Joint ventures are those entities over whose activities the Group has joint control, established
by contractual agreement. Associates are all entities over which the Group has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights. Where the Group owns less than 50% of the voting
rights but acts as property and/or asset manager an assessment is made as to whether or not the Group has de facto control
over an investee. This includes a review of the Group’s rights relative to those of another investor or investors and the ability the
Group has to direct the investees’ relevant activities (further details are provided in Note 18 and Note 19).
Investments in joint ventures and associates are accounted for by the equity method of accounting and are initially recognised
at cost, and the carrying amount is increased or decreased to recognise the Group’s share of the profit or loss after the date of
acquisition. The joint venture and associate results for the 12 months to 30 September 2024 and the financial position as at that
date have been equity accounted in these financial statements.
The Group’s share of its joint ventures’ and associates’ post-acquisition profits or losses is recognised in the income statement,
and its share of post-acquisition movements in reserves is recognised in other comprehensive income. Where the Group’s interest
has been reduced to £nil, additional losses are provided for, and a liability is recognised, only to the extent that the Group has
incurred legal or constructive obligations or made payments on behalf of the joint venture or associate. The cumulative post-
acquisition movements are adjusted against the carrying amount of the investment.
Unrealised gains on transactions between the Group and its joint ventures and associates are eliminated to the extent of the
Group’s interest in joint ventures and associates. The accounting policies of joint ventures and associates have been changed
where necessary to ensure consistency with the policies adopted by the Group.
iii) Business combinations – At the time of acquisition, the Group considers whether each acquisition represents the acquisition of
a business or the acquisition of an asset. The Group accounts for an acquisition as a business combination where an integrated set
of activities are acquired in addition to the property. Consideration is also given to the concentration test permitted under IFRS 3
Business Combinations.
When the acquisition of a subsidiary does not represent a business, it is accounted for as an acquisition of assets and liabilities.
The cost of acquisition is allocated to the assets and liabilities acquired based on their fair values, and no goodwill or deferred tax
is recognised.
A business combination may also require the recognition of identifiable intangible assets by the Group. An intangible asset is
deemed to be identifiable if it is able to be separated or divided from the other assets acquired in the business combination and
sold, licensed or exchanged for something else of value, even if the intention to do so is not present on behalf of the Group.
Where an intangible asset is not individually separable, it may still meet the separability criterion if it is separable in combination
with a related contract, identifiable asset or liability.
Business combinations are accounted for using the acquisition method. The cost of the acquisition is measured as the fair value
of the assets given and equity instruments issued. Identifiable assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair values at the date of acquisition. Goodwill represents the excess of
the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets, including intangible assets, of the
acquired entity at the date of acquisition. If the cost of the acquisition is less than the fair value of the net assets of the subsidiary
acquired, the difference is recognised directly in the income statement. Costs attributable to an acquisition of a business are
expensed in the consolidated income statement under the heading ‘Other expenses’.
Goodwill on acquisition of subsidiaries is included within this caption in the consolidated statement of financial position.
Goodwill on acquisition of joint ventures and associates is included in investments in joint ventures and associates.
Goodwill is allocated to cash generating units for the purpose of impairment testing and is tested annually for impairment and
carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
129
(c) Adoption of new and revised International Financial Reporting Standards and interpretations
The following new standards and amendments to standards were issued and adopted in the year and have no material impact
on the financial statements:
• Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of accounting policies;
• Amendments to IAS 8 – Definition of Accounting Estimates;
• Amendments to IAS 12 – Deferred tax related to assets and liabilities arising from a single transaction;
• Amendments to IAS 12 – International tax reform – Pillar Two model rules;
• IFRS 17 – Insurance Contracts.
The following new standards and amendments to standards have been issued but are not yet effective for the Group and have
not been early adopted:
• Amendments to IAS 1 – Classification of liabilities as current or non-current;
• Amendments to IAS 1 – Non-current Liabilities with Covenants;
• Amendments to IAS 7 and IFRS 7 – Disclosures: Supplier finance arrangements;
• Amendments to IFRS 9 and IFRS 7: classification and measurement of financial instruments;
• Amendments to IFRS 16 – Lease liability in a sale and leaseback;
• Amendments to IAS 21 – Lack of exchangeability;
• IFRS 18 – Presentation and Disclosure in Financial Statements.
With the exception of IFRS 18, the application of these new standards and amendments are not expected to have a material
impact on the Group’s financial statements.
2. Critical accounting estimates and judgements
The Group’s significant accounting policies are stated in the relevant notes to the Group financial statements. The preparation of
financial statements requires management to exercise judgement in applying the Group’s accounting policies. It also requires the
use of estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Estimates and
assumptions, including those associated with climate change, are reviewed on an ongoing basis with revisions recognised in the
period in which the estimates are revised and in any future periods affected. The areas involving a higher degree of judgement or
complexity are set out below.
Estimates
1)
Valuation of property assets
Residential trading property is carried in the statement of financial position at the lower of cost and net realisable value and
investment property is carried at fair value. The Group does, however, in its principal non-GAAP net asset value measures, EPRA
NRV, EPRA NTA and EPRA NDV, include trading property at market value. The adjustment in the value of trading property is the
difference between the statutory book value and its market value as set out in Note 4. For investment property, market value is the
same as fair value. In respect of trading properties, market valuation is the key assumption in determining the net realisable value of
those properties.
The results and the basis of each valuation and their impact on both the statutory financial statements and market value for the
Group’s non-GAAP net asset value measures are set out below. This includes details of key estimates and assumptions, along with
which an independent professional adviser has been utilised to determine valuations for each asset category. In all cases, forming
these valuations inherently includes elements of judgement and subjectivity with regard to the selection of unobservable inputs.
The methodology for the year end valuation process for capitalised yield-based valuations is consistent with the prior year. This is
considered to be the most appropriate method for valuing assets that are likely to be held as long-term investments and represents
77% of our property assets relating primarily to PRS blocks, including new build PRS assets. The remaining 23% of property assets
are valued based on current house prices, reflecting the prevailing market conditions as at the reporting date.
Where appropriate, sustainability and environmental matters are an integral part of the valuation approach. ‘Sustainability’ is taken
to mean the consideration of such matters as environment and climate change, health and wellbeing and corporate responsibility
that can or do impact on the valuation of an asset. In a valuation context, sustainability encompasses a wide range of physical,
social, environmental, and economic factors that can affect value. The range of issues includes key environmental risks, such as
flooding, energy efficiency and climate, as well as matters of design, configuration, accessibility, legislation, management, and
fiscal consideration.
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
130
2. Critical accounting estimates and judgements continued
When determining property asset values, management have included an estimate for fire safety works where there is a legal or
constructive obligation or where required works affect the market value of the property. Property asset values reflect the best
estimate of the cost of the required works based on known costs and quotations where available. They do not take into account any
potential recovery of costs from third parties.
The net valuation loss of £33.4m (including joint ventures) for the year ended 30 September 2024 includes the one-off impact of
£58.8m following the Government’s removal of MDR.
Notes
PRS
£m
Reversionary
£m
Other
£m
Total
£m
Valuer
% of properties for
which external valuer
provides valuation
Trading property
4.3
305.8
21.5
331.6
Investment property1
3,011.9
16.4
–
3,028.3
Financial asset (CHARM)
–
57.4
–
57.4
Total statutory book value
3,016.2
379.6
21.5
3,417.3
Trading property
Residential
(i)
3.9
574.6
–
578.5
Allsop LLP
79%
Developments
(ii)
–
–
41.6
41.6
CBRE Limited
94%
Total trading property
3.9
574.6
41.6
620.1
Investment property
Residential
(i)
670.9
16.4
–
687.3
Allsop LLP /
CBRE Limited
100%
Developments
(ii)
42.1
–
–
42.1
CBRE Limited
83%
New build PRS
(iii)
1,936.7
–
–
1,936.7
CBRE Limited
100%
Affordable housing
(iv)
210.0
–
–
210.0
Allsop LLP
100%
Tricomm Housing
(v)
152.2
–
–
152.2
Allsop LLP
100%
Total investment property
3,011.9
16.4
–
3,028.3
Financial asset (CHARM)2
(vi)
–
57.4
–
57.4
Allsop LLP
100%
Total assets at market value
3,015.8
648.4
41.6
3,705.8
Statutory book value
3,016.2
379.6
21.5
3,417.3
Market value adjustment3
(0.4)
268.8
20.1
288.5
Total assets at market value
3,015.8
648.4
41.6
3,705.8
Net revaluation loss recognised in the income
statement for wholly-owned properties
(32.5)
Net revaluation loss relating to joint ventures
and associates4
(vii)
(0.9)
Net revaluation loss recognised in the year4
(33.4)
1.
Includes investment property - held for sale
2.
Allsop LLP provide vacant possession values used by the Directors to value the financial asset in accordance with the accounting policy set out in Note 20.
3.
The market value adjustment is the difference between the statutory book value and the market value of the Group’s properties. Refer to Note 4 for market value net asset measures.
4.
Includes the Group’s share of joint ventures and associates revaluation loss after tax.
i) Residential
Trading property: The Group’s own in-house qualified team provided a vacant possession value for the majority of the Group’s
residential properties as at 30 September 2024. A structured sample of these in-house valuations was reviewed by Allsop LLP,
an external independent valuer. Valuing the large number of properties in this portfolio is a significant task. For this reason it is
undertaken on an external inspection basis only. Invariably, when the in-house valuations are compared with those of the external
valuer, around 70% (2023: 78%) of the valuations are within a small acceptable tolerance. Where the difference is more significant,
this is discussed with the valuer to determine the reasons for the difference. Typically, the reasons vary, but it could be, for
example, that further or better information about internal condition is available or that respective valuers have placed a different
interpretation on comparable sales. Once such reasons have been identified, the Group and the valuer agree the appropriate
valuation that should be adopted as the Directors’ Valuation.
Allsop LLP has provided the Directors with the following opinion on the Directors’ Valuation:
Property held in the residential portfolio was valued as at 30 September 2024 by Grainger’s in-house surveyors. These valuations
were reviewed and approved by the Directors. Allsop LLP has undertaken a comprehensive review of the Directors’ Valuation
and they are satisfied with the process by which the in-house valuations were conducted. Allsop LLP valued approximately 86%
(2023: 84%) of the residential portfolio, independently of the Group. Based on the results of that review, Allsop LLP has concluded
that they have a high degree of confidence in those Directors’ Valuations.
Allsop LLP also recommends a discount to apply to the vacant possession valuations to establish the market value of each property,
with the discounts ranging from 5.0% to 17.5% (2023: 5.0% to 17.5%). The discounts are established by tenancy type and region and
are based on evidence gathered by Allsop LLP from recent transactional market evidence. The Directors have adopted the discounts
recommended by Allsop LLP.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
131
2. Critical accounting estimates and judgements continued
Investment property: PRS blocks are valued on an income capitalisation basis, having regard to prevailing market conditions
and evidence, and with close regard to the relativity between the market value and the aggregate vacant possession value.
The valuation has been prepared in accordance with RICS Professional Valuation Standards where fair value is the same as market
value. CBRE Limited valued 56% (2023: 73%) of residential investment property, with Allsop LLP valuing 9% (2023: 17%) on this
basis. Gross yields adopted in the valuations broadly range from 5.7% to 8.8% (2023: 4.9% to 8.5%).
The remaining 35% (2023: 10%) of residential property is valued in line with the trading property approach, with older properties
and groups of individual units valued by Allsop LLP on a discount to vacant possession value basis on the assumption these assets
would be sold individually. Residential reversionary assets discounts adopted ranged from 10% to 17.5% (2023: 10.0% to 17.5%),
whilst the residential PRS discount to vacant possession value was 5% (2023: 5%).
ii) Developments
Trading property: Development trading property of £41.6m (2023: £51.4m) relates to the Group’s legacy strategic land assets.
The current market value has been assessed by CBRE Limited. Their valuation, representing 94% (2023: 98%) of total value, is
on the basis of fair value as defined in the RICS Professional Valuation Standards where fair value is the same as market value.
The remaining 6% (2023: 2%) of the portfolio is a Directors’ Valuation.
Investment property: CBRE Limited assessed the fair value of the direct development schemes in the course of construction.
These schemes are valued on an income capitalisation basis, with gross yields adopted in the valuations ranging from 5.1% to
6.2% (2023: 4.7% to 6.1%). As the assets are under construction, the valuation takes into account estimated costs required to
reach completion.
iii) New build PRS – CBRE Limited assessed the fair value of the completed assets and assets in the course of construction.
The principal approach was to value the properties on an income capitalisation basis, having regard to prevailing market conditions
and evidence, and with close regard to the relativity between the market value and the aggregate vacant possession value.
Where applicable, estimated costs required to complete construction have been taken into account. The valuation has been
prepared in accordance with RICS Professional Valuation Standards where fair value is the same as market value.
The primary unobservable input within the valuation relates to assumptions for gross yields adopted with respect to comparable
market evidence, with gross yields ranging from 6.0% to 7.2% (2023: 5.3% to 6.3%) across the portfolio. For assets under
construction, a discount to market value to reflect stabilisation and construction risk in the remaining build process is applied on an
asset by asset basis depending on stage of completion.
iv) Affordable housing – For properties let on affordable rents, social rents or sold on shared ownership leases, Allsop LLP valued
the assets on the basis of Existing Use Value for Social Housing (‘EUV-SH’) in line with RICS Global Standards. Properties subject to
intermediate rents have been valued at market value as these assets are not restricted as social housing in perpetuity.
The primary unobservable input within the valuation relates to assumptions for the income capitalisation rate of net rent, which is
determined on a tenure basis. The gross yields adopted for 30 September 2024 valuations range from 4.5% to 5.6% (2023: 4.4% to
5.7%).
v) Tricomm Housing – Allsop LLP provided an investment valuation as at 30 September 2024 for the property assets owned by
the Group and let under a long-term lease arrangement with the Secretary of State for Defence under a PFI project agreement.
The investment valuation is in accordance with RICS Professional Valuation Standards, and is based on a discounted cash
flow model.
Significant unobservable inputs within the valuation relate to assumptions for house price inflation and the discount rates to apply
to the cash flows. The assumptions adopted for house price inflation are: -1.1% in 2025, 3.8% in 2026, and 2.75%-4.1% thereafter.
The discount rates applied to the cash flows range between 4.9% (2023: 5.0%) non-core MOD income and 7.5% (2023: 6.5%)
on reversion.
vi) Financial asset (CHARM) – The valuation methodology adopted for the CHARM asset is set out in Note 20 to the financial
statements. CHARM is valued using projected cash flows and applies key unobservable inputs being house price inflation and
discount rates.
As such it is classified as a level 3 asset (Note 27). The assumptions used to value the asset reflect an increase in house prices of
between 3.53% and 4.18% p.a. (2023: nil and 7.19%). A discount rate of 4.5% (2023: 4.5%) has been applied to the interest income
and a rate of 7.5% (2023: 6.5%) has been applied to the projected proceeds from sales of the underlying properties, reflecting the
risk profile of each individual income stream.
Credit risk arises from the credit exposure relating to cash receipts from the financial instrument. All of the cash receipts are payable
by the Church Commissioners, a counterparty considered to be low risk as they have no history of past due or impaired amounts
and there are no past due amounts outstanding at the year end.
vii) Joint ventures and associates – For Vesta LP, CBRE Limited valued the asset on the same basis described for completed new
build PRS assets. Property assets in other joint ventures including the Connected Living London Group and Lewisham Grainger
Holdings LLP are held at cost reflecting the current early stages of each development.
The Directors consider the valuations provided by external valuers to be representative of fair value.
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
132
2. Critical accounting estimates and judgements continued
As required by RICS Professional Valuation Standards, the external valuers in the UK mentioned above have made full disclosure
of the extent and duration of their work for, and fees earned by them from, the Group, which in all cases are less than 5% of their
total fees.
2) Net realisable value of trading property
The Group’s residential trading properties are carried in the consolidated statement of financial position at the lower of cost and net
realisable value.
Net realisable value is the net sales proceeds which the Group expects on sale of a property with vacant possession, with vacant
possession being determined in line with the approach detailed in Note 2.1i). The Group has a net realisable value provision
of £4.9m as at 30 September 2024 (2023: £4.8m). The provision includes specific properties which are vacant and properties
expected to become vacant in the future on the assumption of an average annual vacancy rate of c.8% over the next ten years.
Consideration has been given in respect of house price inflation, being the primary assumption relevant to this calculation, with the
provision for properties expected to become vacant in future assuming nil inflation over the next ten years.
Sensitivity analysis
Changes to key assumptions could impact both the income and financial position of the Group. The impact of changes to key
assumptions is considered for the valuation of property assets and the net realisable value of trading property using a range
of reasonable changes and have been applied to asset categories where sensitivities could have the largest impact. The Group
measures its market risk exposure internally by running various sensitivity analyses. The Directors consider that the range of
potential movements set out in the table below represent reasonably possible changes.
The table below sets out potential impacts that may result from changes to certain assumptions:
Increase
Decrease
Income
statement
impact
£m
Statement of
financial
position
impact
£m
Income
statement
impact
£m
Statement of
financial
position
impact
£m
Residential (trading property)
10.0% change in house prices
(NRV provision impact)
2.5
2.5
(3.6)
(3.6)
Residential (investment property)1
0.50% change in gross yield
(32.4)
(32.4)
37.9
37.9
Residential (investment property)1
5.0% change in net rental income
22.8
22.8
(22.8)
(22.8)
Developments (investment property)1
0.50% change in gross yield
(23.8)
(23.8)
28.5
28.5
Developments (investment property)1
5.0% change in net rental income
14.5
14.5
(14.5)
(14.5)
New build PRS
0.50% change in gross yield
(156.6)
(156.6)
183.7
183.7
New build PRS
5.0% change in net rental income
106.5
106.5
(106.5)
(106.5)
Affordable housing
0.50% change in gross yield
(20.3)
(20.3)
25.1
25.1
Affordable housing
5.0% change in net rental income
10.7
10.7
(10.7)
(10.7)
Joint ventures and associates2
0.50% change in gross yield
(1.1)
(1.1)
1.3
1.3
Joint ventures and associates2
5.0% change in net rental income
0.7
0.7
(0.7)
(0.7)
Tricomm Housing
10.0% change in house prices
13.1
13.1
(13.1)
(13.1)
Tricomm Housing
0.75% change in discount rate
(3.8)
(3.8)
3.9
3.9
Financial asset (CHARM)
10.0% change in house prices
4.7
4.7
(4.7)
(4.7)
Financial asset (CHARM)
0.75% change in discount rate
(2.3)
(2.3)
2.4
2.4
1.
Includes investment property - held for sale
2.
Joint ventures and associates includes the Group’s share of property revaluation movements.
Judgements
1) Distinction between investment and trading property
The Group considers the intention at the outset when each property is acquired in order to classify the property as either an
investment or a trading property. Where the intention is either to trade the property or where the property is held for immediate
sale upon receiving vacant possession within the ordinary course of business, the property is classified as trading property.
Where the intention is to hold the property for its long-term rental yield and/or capital appreciation, the property is classified as an
investment property. The classification of the Group’s properties is a significant judgement which directly impacts the statutory net
asset position, as trading properties are held at the lower of cost and net realisable value, whilst investment properties are held at
fair value, with gains or losses taken through the consolidated income statement.
The Group continually reviews properties for changes in use that could subsequently change the classification of properties.
A change in use occurs if property meets, or ceases to meet, the definition of investment property which is more than a change in
management’s intentions. The fact patterns associated with changes in the way in which properties are utilised are considered on a
case by case basis and to the extent that a change in use is established, property reclassifications are reflected appropriately.
There have been no property reclassifications in the year.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
133
3. Analysis of profit before tax
The table below details adjusted earnings, which is one of Grainger’s key performance indicators. The metric is utilised as a key
measure to aid understanding of the performance of the continuing business and excludes valuation movements and other
adjustments, that are one-off in nature, which do not form part of the normal ongoing revenue or costs of the business and, either
individually or in aggregate, are material to the reported Group results.
£m
2024
2023
Statutory
Valuation
Other
adjustments
Adjusted
earnings
Statutory
Valuation
Other
adjustments
Adjusted
earnings
Group revenue
290.1
–
–
290.1
267.1
–
–
267.1
Net rental income
110.1
–
–
110.1
96.5
–
–
96.5
Profit on disposal of trading property
49.4
–
–
49.4
54.8
(0.3)
–
54.5
(Loss)/profit on disposal of investment
property
(5.8)
–
–
(5.8)
3.3
–
–
3.3
(Expense)/income from financial interest
in property assets
(1.3)
5.9
–
4.6
4.6
0.1
–
4.7
Fees and other income
8.1
–
–
8.1
5.0
–
–
5.0
Administrative expenses
(35.3)
–
–
(35.3)
(33.5)
–
–
(33.5)
Other expenses
(6.0)
–
5.0
(1.0)
(1.2)
–
–
(1.2)
Goodwill impairment
–
–
–
–
(0.1)
0.1
–
–
Impairment of inventories
to net realisable value
(0.1)
0.1
–
–
(1.0)
1.0
–
–
Operating profit
119.1
6.0
5.0
130.1
128.4
0.9
–
129.3
Net valuation losses
on investment property
(32.5)
32.5
–
–
(68.8)
68.8
–
–
Hedge ineffectiveness under IFRS 9
(6.6)
–
6.6
–
–
–
–
–
Finance costs
(41.8)
–
–
(41.8)
(34.0)
–
–
(34.0)
Finance income
3.0
–
–
3.0
2.2
–
–
2.2
Share of loss of associates after tax
(0.4)
0.9
–
0.5
(0.1)
0.5
–
0.4
Share of loss of joint ventures after tax
(0.2)
–
–
(0.2)
(0.3)
–
–
(0.3)
Profit before tax
40.6
39.4
11.6
91.6
27.4
70.2
–
97.6
Tax charge
(9.4)
(1.8)
Profit for the year attributable
to the owners of the Company
31.2
25.6
Basic adjusted earnings per share
9.3p
10.3p
Diluted adjusted earnings per share
9.3p
10.3p
Profit before tax in the adjusted columns above of £91.6m (2023: £97.6m) is the adjusted earnings of the Group. Adjusted earnings
per share assumes tax of £22.9m (2023: £21.5m) in line with the standard rate of UK Corporation Tax 25.0% (2023: 22.0%), divided
by the weighted average number of shares as shown in Note 15. The Group’s IFRS statutory earnings per share is also detailed
in Note 15. The classification of amounts as other adjustments is a judgement made by management and is a matter referred to
the Audit Committee for approval prior to issuing the financial statements. Included in other adjustments are £5.0m of fire safety
provisions (2023: £nil) and hedge ineffectiveness under IFRS 9 of £6.6m (2023: £nil).
4. Segmental information
(a) Accounting policy
IFRS 8, Operating Segments requires operating segments to be identified based upon the Group’s internal reporting to the Chief
Operating Decision Maker (‘CODM’) so that the CODM can make decisions about resources to be allocated to segments and
assess their performance. The Group’s CODM are the Executive Directors.
The two significant segments for the Group are PRS and Reversionary. The PRS segment includes stabilised PRS assets as well
as PRS under construction due to direct development and forward funding arrangements, both for wholly-owned assets and the
Group’s interest in joint ventures and associates as relevant. The Reversionary segment includes regulated tenancies, as well as
CHARM. The Other segment includes legacy strategic land and development arrangements, along with administrative expenses.
The key operating performance measure of profit or loss used by the CODM is adjusted earnings before tax, valuation and
other adjustments.
The principal net asset value (‘NAV’) measure reviewed by the CODM is EPRA NTA which is considered to become the most relevant,
and therefore the primary NAV measure for the Group. EPRA NTA reflects the tax that will crystallise in relation to the trading
portfolio, whilst excluding the volatility of mark to market movements on fixed rate debt and derivatives which are unlikely to be
realised. Other NAV measures include EPRA NRV and EPRA NDV which we report alongside EPRA NTA. A full description and
reconciliation of these measures is included in the EPRA performance measures section on pages 171 to 174 of this report.
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
134
Information relating to the Group’s operating segments is set out in the tables below. The tables distinguish between adjusted
earnings on a segmental basis. Valuation and other adjustments are not reviewed by the CODM on a segmental basis and should be
read in conjunction with Note 3.
2024 Income statement
£m
PRS
Reversionary
Other
Total
Group revenue
150.3
112.5
27.3
290.1
Segment revenue – external
Net rental income
97.6
11.5
1.0
110.1
Profit on disposal of trading property
(1.3)
48.1
2.6
49.4
Loss on disposal of investment property
(5.9)
0.1
–
(5.8)
Income from financial interest in property assets
–
4.6
–
4.6
Fees and other income
7.5
–
0.6
8.1
Administrative expenses
–
–
(35.3)
(35.3)
Other expenses
(0.4)
–
(0.6)
(1.0)
Net finance costs
(31.3)
(6.6)
(0.9)
(38.8)
Share of trading profit of joint ventures and associates after tax
0.3
–
–
0.3
Adjusted earnings
66.5
57.7
(32.6)
91.6
Valuation movements
(33.5)
(5.9)
–
(39.4)
Other adjustments
(5.0)
–
(6.6)
(11.6)
Profit before tax
28.0
51.8
(39.2)
40.6
The 'Other' category incorporates non-core operating activity and the cost of support functions.
A reconciliation from adjusted earnings to EPRA earnings is detailed in the table below, with further details shown in the EPRA
performance measures on page 171:
£m
PRS
Reversionary
Other
Total
Adjusted earnings
66.5
57.7
(32.6)
91.6
Profit on disposal of trading property
1.3
(48.1)
(2.6)
(49.4)
Loss on disposal of investment property
5.9
(0.1)
–
5.8
EPRA earnings
73.7
9.5
(35.2)
48.0
2023 Income statement
£m
PRS
Reversionary
Other
Total
Group revenue
121.5
123.9
21.7
267.1
Segment revenue – external
Net rental income
82.2
13.4
0.9
96.5
Profit on disposal of trading property
(0.5)
54.2
0.8
54.5
Profit on disposal of investment property
3.3
–
–
3.3
Income from financial interest in property assets
–
4.7
–
4.7
Fees and other income
4.6
–
0.4
5.0
Administrative expenses
–
–
(33.5)
(33.5)
Other expenses
(1.2)
–
–
(1.2)
Net finance costs
(24.9)
(6.3)
(0.6)
(31.8)
Share of trading profit of joint ventures and associates after tax
0.1
–
–
0.1
Adjusted earnings
63.6
66.0
(32.0)
97.6
Valuation movements
(70.1)
(0.1)
–
(70.2)
Other adjustments
–
–
–
–
Profit before tax
(6.5)
65.9
(32.0)
27.4
A reconciliation from adjusted earnings to EPRA earnings is detailed in the table below:
£m
PRS
Reversionary
Other
Total
Adjusted earnings
63.6
66.0
(32.0)
97.6
Profit on disposal of trading property
0.5
(54.2)
(0.8)
(54.5)
Profit on disposal of investment property
(3.3)
–
–
(3.3)
EPRA earnings
60.8
11.8
(32.8)
39.8
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
135
4. Segmental information continued
Segmental assets
The net asset value measures reviewed by the CODM are EPRA NRV, EPRA NTA and EPRA NDV. These measures reflect the
current market value of trading property owned by the Group rather than the lower of historical cost and net realisable value.
These measures are considered to be a more relevant reflection of the value of the assets owned by the Group.
EPRA NRV is the Group’s statutory net assets plus the adjustment required to increase the value of trading stock from its statutory
accounts value of the lower of cost and net realisable value to its market value. In addition, the statutory statement of financial
position amounts for both deferred tax on property revaluations and derivative financial instruments net of deferred tax, including
those in joint ventures and associates, are added back to statutory net assets. Finally, the market value of Grainger plc shares owned
by the Group are added back to statutory net assets.
EPRA NTA assumes that entities buy and sell assets, thereby crystallising certain levels of deferred tax liabilities. For the Group,
deferred tax in relation to revaluations of its trading portfolio is taken into account by applying the expected rate of tax to the
adjustment that increases the value of trading stock from its statutory accounts value of the lower of cost and net realisable value,
to its market value. The measure also excludes all intangible assets on the statutory balance sheet, including goodwill.
EPRA NDV reverses some of the adjustments made between statutory net assets, EPRA NRV and EPRA NTA. All of the
adjustments for the value of derivative financial instruments net of deferred tax, including those in joint ventures and associates,
are reversed. The adjustment for the deferred tax on investment property revaluations excluded from EPRA NRV and EPRA NTA
are also reversed, as is the intangible adjustment in respect of EPRA NTA, except for goodwill which remains excluded. In addition,
adjustments are made to net assets to reflect the fair value, net of deferred tax, of the Group’s fixed rate debt.
Total Accounting Return (NTA basis) of 0.3% is calculated from the closing EPRA NTA of 298p per share plus the dividend of 7.55p
per share for the year, divided by the opening EPRA NTA of 305p per share.
These measures are set out below by segment along with a reconciliation to the summarised statutory statement of financial
position. Additional EPRA disclosures are included on pages 171 to 174.
2024 Segment net assets
£m
PRS
Reversionary
Other
Total
Pence per share
Total segment net assets (statutory)
1,757.6
117.5
18.6
1,893.7
255
Total segment net assets (EPRA NRV)
1,873.5
386.9
35.5
2,295.9
309
Total segment net assets (EPRA NTA)
1,870.3
319.1
28.7
2,218.1
298
Total segment net assets (EPRA NDV)
1,757.3
319.1
118.5
2,194.9
295
2024 Reconciliation of EPRA NAV measures
£m
Statutory
balance sheet
Adjustments to
market value,
deferred tax
and derivatives
EPRA NRV
balance sheet
Adjustments to
deferred and
contingent tax
and intangibles
EPRA NTA
balance sheet
Adjustments
to derivatives,
fixed rate debt
and intangibles
EPRA NDV
balance sheet
Investment property
3,028.3
–
3,028.3
–
3,028.3
–
3,028.3
Investment in joint ventures and
associates
91.3
–
91.3
–
91.3
–
91.3
Financial interest in property assets
57.4
–
57.4
–
57.4
–
57.4
Inventories – trading property
331.6
288.5
620.1
–
620.1
–
620.1
Cash and cash equivalents
93.2
–
93.2
–
93.2
–
93.2
Other assets
140.9
(3.2)
137.7
(1.8)
135.9
21.1
157.0
Total assets
3,742.7
285.3
4,028.0
(1.8)
4,026.2
21.1
4,047.3
Interest-bearing loans and borrowings
(1,592.9)
–
(1,592.9)
–
(1,592.9)
98.1
(1,494.8)
Deferred and contingent tax liabilities
(121.5)
116.9
(4.6)
(76.0)
(80.6)
(142.4)
(223.0)
Other liabilities
(134.6)
–
(134.6)
–
(134.6)
–
(134.6)
Total liabilities
(1,849.0)
116.9
(1,732.1)
(76.0)
(1,808.1)
(44.3)
(1,852.4)
Net assets
1,893.7
402.2
2,295.9
(77.8)
2,218.1
(23.2)
2,194.9
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
136
In order to provide further analysis, the following table sets out EPRA NTA by segment:
£m
PRS
Reversionary
Other
Total
EPRA NTA
Investment property1
3,011.9
16.4
–
3,028.3
Investment in joint ventures and associates
73.3
–
18.0
91.3
Financial interest in property assets
–
57.4
–
57.4
Inventories – trading property
3.9
574.6
41.6
620.1
Cash and cash equivalents
75.4
15.9
1.9
93.2
Other assets
67.2
6.7
62.0
135.9
Total segment EPRA NTA assets
3,231.7
671.0
123.5
4,026.2
Interest-bearing loans and borrowings
(1,287.5)
(271.2)
(34.2)
(1,592.9)
Deferred and contingent tax liabilities
(3.2)
(67.8)
(9.6)
(80.6)
Other liabilities
(70.7)
(12.9)
(51.0)
(134.6)
Total segment EPRA NTA liabilities
(1,361.4)
(351.9)
(94.8)
(1,808.1)
Net EPRA NTA assets
1,870.3
319.1
28.7
2,218.1
1.
Includes investment property - held for sale
2023 Segment net assets
£m
PRS
Reversionary
Other
Total
Pence per share
Total segment net assets (statutory)
1,729.8
151.7
47.1
1,928.6
260
Total segment net assets (EPRA NRV)
1,839.3
476.9
43.1
2,359.3
318
Total segment net assets (EPRA NTA)
1,835.1
395.0
37.4
2,267.5
305
Total segment net assets (EPRA NDV)
1,729.2
395.0
208.7
2,332.9
314
2023 Reconciliation of EPRA NAV measures
£m
Statutory
balance sheet
Adjustments to
market value,
deferred tax
and derivatives
EPRA NRV
balance sheet
Adjustments to
deferred and
contingent tax
and intangibles
EPRA NTA
balance sheet
Adjustments
to derivatives,
fixed rate debt
and intangibles
EPRA NDV
balance sheet
Investment property
2,948.9
–
2,948.9
–
2,948.9
–
2,948.9
Investment in joint ventures
and associates
91.0
–
91.0
–
91.0
–
91.0
Financial interest in property assets
67.0
–
67.0
–
67.0
–
67.0
Inventories – trading property
392.2
342.1
734.3
–
734.3
–
734.3
Cash and cash equivalents
121.0
–
121.0
–
121.0
–
121.0
Other assets
102.2
(33.7)
68.5
(1.0)
67.5
45.9
113.4
Total assets
3,722.3
308.4
4,030.7
(1.0)
4,029.7
45.9
4,075.6
Interest-bearing loans and borrowings
(1,533.5)
–
(1,533.5)
–
(1,533.5)
182.1
(1,351.4)
Deferred and contingent tax liabilities
(122.3)
122.3
–
(90.8)
(90.8)
(162.6)
(253.4)
Other liabilities
(137.9)
–
(137.9)
–
(137.9)
–
(137.9)
Total liabilities
(1,793.7)
122.3
(1,671.4)
(90.8)
(1,762.2)
19.5
(1,742.7)
Net assets
1,928.6
430.7
2,359.3
(91.8)
2,267.5
65.4
2,332.9
In order to provide further analysis, the following table sets out restated EPRA NTA by segment:
£m
PRS
Reversionary
Other
Total
EPRA NTA
Investment property
2,928.9
20.0
–
2,948.9
Investment in joint ventures and associates
72.8
–
18.2
91.0
Financial interest in property assets
–
67.0
–
67.0
Inventories – trading property
9.6
673.3
51.4
734.3
Cash and cash equivalents
94.8
23.9
2.3
121.0
Other assets
13.4
8.4
45.7
67.5
Total segment EPRA NTA assets
3,119.5
792.6
117.6
4,029.7
Interest-bearing loans and borrowings
(1,201.3)
(303.1)
(29.1)
(1,533.5)
Deferred and contingent tax liabilities
(4.2)
(81.9)
(4.7)
(90.8)
Other liabilities
(78.9)
(12.6)
(46.4)
(137.9)
Total segment EPRA NTA liabilities
(1,284.4)
(397.6)
(80.2)
(1,762.2)
Net EPRA NTA assets
1,835.1
395.0
37.4
2,267.5
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
137
5. Group revenue
Accounting policy
Revenue is measured at the fair value of the consideration received or receivable and is stated net of sales taxes and value added
taxes. Gross proceeds from disposal of trading property and fees and other income are recognised in accordance with IFRS 15.
Gross rental income is recognised in accordance with IFRS 16.
2024
£m
2023
£m
Gross rental income (Note 6)
154.8
133.7
Gross proceeds from disposal of trading property (Note 7)
127.2
128.4
Fees and other income (Note 9)
8.1
5.0
290.1
267.1
6. Net rental income
Accounting policy
Gross rental income is recognised on a straight-line basis over the lease term on an accruals basis. Directly attributable property
management, repair and maintenance costs are deducted from gross rental income to determine net rental income.
2024
£m
2023
£m
Gross rental income
154.8
133.7
Property operating expenses
(44.7)
(37.2)
110.1
96.5
Net rental income presented above reflects the total net rental income across all assets of the Group. Within this, gross rental
income of £140.8m and property operating expenses of £35.2m generating gross to net performance of 25.0% related to the
Group’s stabilised assets (2023: gross rental income of £129.8m and property operating expenses of £33.1m generating stabilised
gross to net performance of 25.5%).
7. Profit on disposal of trading property
Accounting policy
Property is regarded as sold when performance obligations have been met and control has been transferred to the buyer. This is
generally deemed to be on legal completion as at this point the buyer is able to determine the use of the property and has rights
to any cash inflows or outflows in respect of the property. Profits or losses are calculated by reference to the carrying value of
the property sold. For a development property, this is assessed through the use of a gross margin for the site as a whole or such
other basis that provides an appropriate allocation of costs.
Contract revenue and expenses are recognised over time in the consolidated income statement, with performance obligations
satisfied continually across the period in which the asset is created or enhanced. Control of the asset is transferred to the
customer across the construction period rather than upon completion of the asset in its entirety as, per the contract in place,
this is when the customer gains their residual interest. The input method used to measure progress is the value of work
completed, denoted by the costs incurred to date, and revenue is subsequently recognised at the margin stipulated in the
contract. This is also when the Group becomes entitled to the consideration arising from the contract. Revenues are recognised
as contract assets in trade and other receivables (Note 23) and are recovered on completion of the development.
2024
£m
2023
£m
Gross proceeds from disposal of trading property
127.2
128.4
Selling costs
(2.3)
(2.8)
Net proceeds from disposal of trading property
124.9
125.6
Carrying value of trading property sold (Note 22)
(75.5)
(70.8)
49.4
54.8
Nil contract revenue has been recognised in the period (2023: £nil).
8. (Loss)/profit on disposal of investment property
Accounting policy
Investment property is regarded as sold when the recipient obtains control of the property, which is generally deemed to be on
legal completion. Profits or losses are calculated by reference to the carrying value of the property sold.
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
138
8. (Loss)/profit on disposal of investment property continued
2024
£m
2023
£m
Gross proceeds from disposal of investment property
147.1
65.3
Selling costs
(3.8)
(1.8)
Net proceeds from disposal of investment property1
143.3
63.5
Carrying value of investment property sold (Note 16)
(149.1)
(60.2)
(5.8)
3.3
1.
Net proceeds from disposal of investment property include amounts held as restricted deposits at the reporting date. See note 23.
9. Fees and other income
2024
£m
2023
£m
Property and asset management fee income
2.6
3.2
Other sundry income
5.5
1.8
8.1
5.0
Included within other sundry income in the current year is £5.2m (2023: £1.6m) liquidated and ascertained damages (‘LADs’)
recorded to compensate the Group for lost rental income resulting from the delayed completion of construction contracts.
10. Employees
2024
£m
2023
£m
Wages and salaries
24.8
23.3
Social security costs
2.8
2.4
Other pension costs – defined contribution scheme (Note 28)
1.7
1.5
Share-based payments (Note 30)
2.8
2.4
32.1
29.6
The average monthly number of Group employees during the year (including Executive Directors) was:
2024
Number
2023
Number
Operations
248
235
Shared services
105
107
Group
13
15
366
357
Details of Directors’ remuneration, including pension costs, share options and interests in the LTIP, are provided in the audited
section of the Remuneration Committee report on pages 91 to 109.
Information about benefits of Directors
The following amounts are disclosed in accordance with Schedule 5 of the Large and Medium-Sized Companies and Groups
(Accounts and Reports) Regulations 2008.
2024
£’000
2023
£’000
Aggregate Directors’ remuneration
3,155
2,818
Aggregate amount of gains on exercise of share options
–
5
Aggregate amount of money or assets received or receivable under scheme interests
553
1,084
3,708
3,907
None of the Directors (2023: none) were members of the Group defined benefit scheme or the defined contribution scheme.
Key management compensation
2024
£m
2023
£m
Short-term employee benefits
8.3
7.8
Post-employment benefits
0.6
0.5
Share-based payments
2.6
2.1
11.5
10.4
Key management figures shown above include Executive and Non-Executive Directors and all internal Directors
of specific functions.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
139
11. Profit before tax
2024
£m
2023
£m
Profit before tax is stated after charging:
Depreciation of property, plant and equipment
1.5
1.1
Amortisation of IT software
0.1
–
Bad debt expense
0.6
0.9
Operating lease payments
0.1
0.2
Auditor’s remuneration (see below)
0.7
0.6
The remuneration paid to KPMG LLP, the Group’s auditor, is disclosed below:
Auditor’s remuneration
2024
£’000
2023
£’000
Services as auditor to the Company
363
323
Services as auditor to Group subsidiaries
250
223
Group audit fees
613
546
Audit related assurance services
67
58
Non-audit fees
67
58
Total fees
680
604
The relevant proportion of amounts paid to the auditor for the audit of the financial statements of joint ventures is £23,000
(2023: £20,500).
12. Finance costs and income
2024
£m
2023
£m
Finance costs
Bank loans and mortgages
18.6
17.3
Non-bank financial institution
8.4
8.4
Corporate bond
22.9
22.6
Interest capitalised under IAS 23
(11.6)
(17.5)
Other finance costs
3.5
3.2
41.8
34.0
Finance income
Interest receivable from joint ventures (Note 34)
(1.2)
(0.9)
Other interest receivable
(1.8)
(1.3)
(3.0)
(2.2)
Net finance costs
38.8
31.8
The weighted average interest rate applicable to capitalised interest is 3.59% (2023: 3.88%).
13. Tax
Accounting policy
The taxation charge for the year represents the sum of the tax currently payable and deferred tax. The charge is
recognised in the income statement and statement of comprehensive income according to the accounting treatment of the
related transaction.
Current tax payable or receivable is based on the taxable income for the period and any adjustment in respect of prior periods
and is calculated using tax rates that have been enacted or substantively enacted at the end of the reporting period.
Tax payable upon the realisation of revaluation gains recognised in prior periods is recorded as a current tax charge with a
release of the associated deferred tax. Deferred income tax is recognised, using the liability method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted at the end of the
reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax
liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that taxable profit will give rise
to a future tax liability against which the deferred tax assets can be recovered.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the
timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will
not reverse in the foreseeable future.
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
140
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same tax
authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
The tax charge for the year of £9.4m (2023: £1.8m) recognised in the consolidated income statement comprises:
2024
£m
2023
£m
Current tax
Corporation tax on profit
14.5
18.9
Adjustments relating to prior years
(7.8)
(4.3)
6.7
14.6
Deferred tax
Origination and reversal of temporary differences
(4.0)
(14.2)
Adjustments relating to prior years
6.7
1.4
2.7
(12.8)
Total tax charge for the year
9.4
1.8
The 2024 current tax adjustments relating to prior years reflect adjustments which have been included in submitted tax returns and
primarily represent movements between deferred and current tax in relation to investment properties and capital allowances.
The Group works in an open and transparent manner and maintains a regular dialogue with HM Revenue and Customs.
This approach is consistent with the 'low risk' rating we have been awarded by HM Revenue and Customs and to which the Group
is committed.
The tax charge for the year is lower (2023: lower) than the charge for the year derived by applying the standard rate of corporation
tax in the UK of 25.0% (2023: 22.0%) to the profit before tax. The differences, which lead to an effective tax rate of 23.2%
(2023: 6.6%) are explained below:
2024
£m
2023
£m
Profit before tax
40.6
27.4
Income tax at a rate of 25.0% (2023: 22.0%)
10.2
6.0
Expenses not deductible for tax purposes
0.2
0.3
Share of joint ventures and associates after tax
0.1
0.1
Effect of future tax rates over current tax rates
–
(1.7)
Adjustment in respect of prior periods
(1.1)
(2.9)
Amounts recognised in the income statement
9.4
1.8
In addition to the above, a deferred tax credit of £6.0m (2023: £4.3m) was recognised within other comprehensive
income comprising:
2024
£m
2023
£m
Remeasurement of BPT Limited defined benefit pension scheme
(0.8)
(0.3)
Fair value movement in cash flow hedges
(5.2)
(4.0)
Amounts recognised in other comprehensive income
(6.0)
(4.3)
Deferred tax balances comprise temporary differences attributable to:
2024
£m
2023
£m
Deferred tax assets
Short-term temporary differences
6.1
3.7
6.1
3.7
Deferred tax liabilities
Trading property uplift to fair value on business combinations
(3.9)
(5.2)
Investment property revaluation
(93.8)
(95.2)
Short-term temporary differences
(21.9)
(13.2)
Fair value movement in financial interest in property assets
(0.2)
(1.1)
Actuarial gain on BPT Limited defined benefit pension scheme
(0.2)
(0.9)
Fair value movement in derivative financial instruments
(1.5)
(6.7)
(121.5)
(122.3)
Total deferred tax
(115.4)
(118.6)
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
141
13. Tax continued
In addition to the tax amounts shown above, contingent tax based on EPRA market value measures, being tax on the difference
between the carrying value of trading properties in the statement of financial position and their market value, has not been
recognised by the Group. This contingent tax amounts to £72.1m, calculated at 25.0% (2023: £85.5m, calculated at 25.0%), and will
be realised as the properties are sold.
It is not possible for the Group to identify the timing of movements in deferred tax between those expected within one year and
those expected in a period greater than one year. This is because movements in the main balances, both assets and liabilities, will be
determined by factors outside the control of the Group, namely the vacation date of properties and interest yield curve movements.
However, given the long-term nature of our property ownership, we anticipate that the balance will predominantly be crystallised in
a period greater than one year.
14. Dividends
Accounting policy
Dividends are recognised through equity when approved by the Company’s Shareholders or on payment, whichever is earlier.
Dividends paid in the year are shown below:
2024
£m
2023
£m
Ordinary dividends on equity shares:
Final dividend for the year ended 30 September 2022 – 3.89p per share
–
28.8
Interim dividend for the year ended 30 September 2023 – 2.28p per share
–
16.9
Final dividend for the year ended 30 September 2023 – 4.37p per share
32.2
–
Interim dividend for the year ended 30 September 2024 – 2.54p per share
18.8
–
51.0
45.7
Subject to approval at the AGM, the final dividend of 5.01p per share (gross) amounting to £37.0m will be paid on 21 February
2025 to Shareholders on the register at the close of business on 17 January 2025. Shareholders will again be offered the option to
participate in a dividend reinvestment plan and the last day for election is 31 January 2025. An interim dividend of 2.54p per share
amounting to a total of £18.8m was paid to Shareholders on 5 July 2024.
15. Earnings per share
Accounting policy
Basic
Basic earnings per share is calculated by dividing the profit or loss attributable to the owners of the Company by the weighted
average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Group and held both in
Trust and as treasury shares to meet its obligations under the Long-Term Incentive Plan (‘LTIP’) and Deferred Bonus Plan (‘DBP’)
on which the dividends are being waived.
Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of shares in issue by the dilutive effect of
ordinary shares that the Company may potentially issue relating to its share option schemes and contingent share awards under
the LTIP and DBP, based upon the number of shares that would be issued if 30 September 2024 was the end of the contingency
period. Where the effect of the above adjustments is antidilutive, they are excluded from the calculation of diluted earnings
per share.
30 September 2024
30 September 2023
Profit for
the year
£m
Weighted
average
number of
shares
(millions)
Earnings
per share
(pence)
Profit for
the year
£m
Weighted
average
number of
shares
(millions)
Earnings
per share
(pence)
Basic earnings per share
Profit attributable to equity holders
31.2
738.2
4.2
25.6
739.9
3.5
Effect of potentially dilutive securities
Share options and contingent shares
–
3.3
–
–
2.5
–
Diluted earnings per share
Profit attributable to equity holders
31.2
741.5
4.2
25.6
742.4
3.5
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
142
16. Investment property
Accounting policy
Property that is held for long-term rental yields or for capital appreciation, or both, and that is not occupied by the companies
in the consolidated Group, is classified as investment property. Investment property is measured initially at its cost, including
related transaction costs.
After initial recognition, investment property is carried at fair value. Fair value is based on active market prices, adjusted, if
necessary, for any difference in the nature, location or condition of the specified asset. If this information is not available, the
Group uses alternative valuation methods such as recent prices on less active markets or discounted cash flow projections.
Investment property falls within Level 3 of the fair value hierarchy as defined by IFRS 13. Further details are given in Note 27.
Subsequent expenditure is included in the carrying amount of the property when it is probable that the future economic
benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repair and
maintenance costs are charged to the consolidated income statement during the financial period in which they are incurred.
Gains or losses arising from changes in the fair value of the Group’s investment properties are included in the consolidated
income statement of the period in which they arise.
When the Group begins to redevelop an existing trading property for continued future use as an investment property, the
property is transferred to investment property and held as a non-current asset. The property is remeasured to fair value as at
the date of the transfer with any gain or loss being taken to the income statement.
Accounting policy (Investment property - held for sale)
Where specific investment properties are expected to sell within the next 12 months, their fair value is shown under assets
classified as held for sale within current assets.
2024
£m
2023
£m
Opening balance
2,948.9
2,775.9
Acquisitions
85.9
9.8
Capital expenditure – completed assets
13.9
20.4
Capital expenditure – assets under construction
161.2
271.8
Total additions
261.0
302.0
Disposals (Note 8)
(149.1)
(60.2)
Net valuation losses on investment properties1
(32.5)
(68.8)
Reclassifications to investment property - held for sale
(31.5)
–
Closing balance
2,996.8
2,948.9
1.
Within the above are provisions for fire safety works. No potential recovery of these costs has been accounted for.
The basis of valuation of investment property, the use of external independent valuers, and the judgements and assumptions
adopted by management is set out in Note 2 ‘Critical accounting estimates and judgements’. The valuation of investment
property takes into account the prevailing market conditions as at the reporting date, including sustainability and climate related
considerations associated with the properties.
The historical cost of the Group’s investment property as at 30 September 2024 is £2,700.9m (2023: £2,549.1m). Direct repair and
maintenance costs arising from investment property that generated rental income during the year were £5.8m (2023: £5.3m).
Within investment property are a number of assets held for sale at the reporting date, valued at £31.5m. Held for sale properties are
those that are for sale, where solicitors have been instructed, or where contracts have been exchanged. All investment properties
which are held for sale are included within our PRS segment.
17. Property, plant and equipment
Accounting policy
Property, plant and equipment are stated at cost less residual value and depreciation and comprise office leases, fixtures, fittings
and equipment. Depreciation is charged to the income statement on a straight-line basis over the estimated useful life ranging
from 3–5 years, with office leases depreciated over the life of the lease.
18. Investment in associates
2024
£m
2023
£m
Opening balance
15.8
16.7
Share of loss for the year
(0.4)
(0.1)
Dividends paid in the year
(0.5)
(0.8)
Closing balance
14.9
15.8
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
143
18. Investment in associates continued
The closing balance comprises share of net assets of £0.4m (2023: £1.3m) and net loans due from associates of £14.5m
(2023: £14.5m). At the balance sheet date, there is no expectation of any material credit losses on loans due. As at 30 September
2024, the Group’s interest in active associates was as follows:
% of ordinary share
capital held
Country of incorporation
Accounting period end
Vesta LP
20.0
UK
30 September
In relation to the Group’s investment in associates, the aggregated assets, liabilities, revenues and profit or loss of associates is
shown below:
2024 Summarised income statement
£m
Vesta LP
Net rental income and other income
2.7
Administration and other expenses
(0.5)
Operating profit
2.2
Revaluation loss on investment property
(4.5)
Loss before tax
(2.3)
Tax
–
Loss after tax
(2.3)
2024 Summarised statement of financial position
£m
Vesta LP
Investment property
72.7
Current assets
3.2
Total assets
75.9
Current liabilities
(1.2)
Non-current liabilities
(72.5)
Total liabilities
(73.7)
Net assets
2.2
2023 Summarised income statement
£m
Vesta LP
Net rental income and other income
2.3
Administration and other expenses
(0.5)
Operating profit
1.8
Revaluation gains on investment property
(2.5)
Profit before tax
(0.7)
Tax
–
Profit after tax
(0.7)
2023 Summarised statement of financial position
£m
Vesta LP
Investment property
77.0
Current assets
3.0
Total assets
80.0
Current liabilities
(1.2)
Non-current liabilities
(72.5)
Total liabilities
(73.7)
Net assets
6.3
19. Investment in joint ventures
2024
£m
2023
£m
Opening balance
75.2
38.5
Share of loss for the year
(0.2)
(0.3)
Further investment1
–
34.0
Loans advanced to joint ventures
1.4
3.0
Closing balance
76.4
75.2
1.
Grainger invested £nil into Connected Living London (BTR) Limited in the year (2023: £34.0m).
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
144
The closing balance comprises share of net assets of £46.7m (2023: £46.9m) and net loans due from joint ventures of
£29.7m (2023: £28.3m). At the balance sheet date, there is no expectation of any material credit losses on loans due.
At 30 September 2024, the Group’s interest in active joint ventures was as follows:
% of ordinary share
capital held
Country of incorporation
Accounting period end
Connected Living London (BTR) Limited
51
UK
30 September
Curzon Park Limited
50
UK
31 March
Lewisham Grainger Holdings LLP
50
UK
30 September
In relation to the Group’s investment in joint ventures, the aggregated assets, liabilities, revenues and profit or loss are shown below:
2024 Summarised income statement
£m
Connected
Living London
(BTR) Limited
Curzon Park
Limited
Lewisham
Grainger
Holdings LLP
Total
Administration and other expenses
(0.2)
(0.1)
(0.1)
(0.4)
Loss before tax
(0.2)
(0.1)
(0.1)
(0.4)
Tax
–
–
–
–
Loss after tax
(0.2)
(0.1)
(0.1)
(0.4)
2024 Summarised statement of financial position
Investment property
90.5
–
11.8
102.3
Current assets
2.6
36.6
–
39.2
Total assets
93.1
36.6
11.8
141.5
Current liabilities
(0.8)
(36.8)
(12.1)
(49.7)
Net assets
92.3
(0.2)
(0.3)
91.8
2023 Summarised income statement
£m
Connected
Living London
(BTR) Limited
Curzon Park
Limited
Lewisham
Grainger
Holdings LLP
Total
Administration and other expenses
(0.4)
(0.1)
(0.1)
(0.6)
Loss before tax
(0.4)
(0.1)
(0.1)
(0.6)
Tax
–
–
–
–
Loss after tax
(0.4)
(0.1)
(0.1)
(0.6)
2023 Summarised statement of financial position
Investment property
88.5
–
10.2
98.7
Current assets
6.8
36.6
–
43.4
Total assets
95.3
36.6
10.2
142.1
Current liabilities
(2.8)
(36.6)
(10.5)
(49.9)
Net assets
92.5
–
(0.3)
92.2
20. Financial interest in property assets (‘CHARM’ portfolio)
Accounting policy
The CHARM portfolio is a financial interest in equity mortgages held by the Church of England Pensions Board as mortgagee.
It is accounted for under IFRS 9 and is measured at fair value through profit and loss.
It is initially recognised at fair value and subsequently carried at fair value. Subsequent to initial recognition, the net change in
value recorded is as follows: i) cash received from the instrument in the year is deducted from the carrying value of the assets;
and ii) the carrying value of the assets is revised to the net present value of the updated projected cash flows arising from the
instrument using a market discount rate at the reporting date. The change in value arising from ii) above is recorded through the
consolidated income statement and is shown on the line ‘Income from financial interest in property assets’.
2024
£m
2023
£m
Opening balance
67.0
69.1
Cash received from the instrument
(8.3)
(6.7)
Amounts taken to income statement
(1.3)
4.6
Closing balance
57.4
67.0
The CHARM portfolio is considered to be a Level 3 financial asset as defined by IFRS 13. The key assumptions used to value the
asset are set out within Note 2 ‘Critical accounting estimates and judgements’, and the financial asset is included within the fair
value hierarchy within Note 27.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
145
21. Intangible assets
Accounting policy
Intangible assets comprise computer software and goodwill.
Costs incurred in relation to computer software that the Group has exclusive right of use to are capitalised and amortised on
a straight-line basis over the estimated useful lives of the assets from the date they are available for use. The effective life is
assessed in accordance with the period that the Group expects benefits from its investment in technology to be consumed.
Amortisation is charged to the consolidated income statement.
Costs incurred in relation to computer software that the Group does not have exclusive right of use to, including its Software
as a Service (‘SaaS’) arrangements, are not accounted for as intangible assets. Configuration and customisation costs incurred
prior to receiving services are prepaid and expensed to the Consolidated income statement once the service is in use. All other
expenditure in relation to non-exclusive SaaS is expensed to the Consolidated income statement as incurred.
Goodwill is tested for impairment based on a value in use calculation at each reporting date.
22. Inventories – trading property
Accounting policy
Tenanted residential properties held-for-sale in the normal course of business within the PRS and Reversionary segments
are shown in the financial statements as a current asset at the lower of cost and net realisable value. Cost includes legal and
surveying charges and introducer fees incurred during acquisition together with improvement costs.
Legacy land and development property held within the Other segment of the business are shown in the financial statements at
the lower of cost and net realisable value.
Cost represents the acquisition price including legal and other professional costs associated with the acquisition together with
subsequent development costs net of amounts transferred to costs of sale.
Net realisable value is the expected sales proceeds that the Group expects on sale of a property or current market value net of
associated selling costs.
2024
£m
2023
£m
Opening balance
392.2
453.8
Additions
15.0
10.2
Disposals (Note 7)
(75.5)
(70.8)
Impairment of inventories to net realisable value
(0.1)
(1.0)
Closing balance
331.6
392.2
The closing balance above reflects the lower of historical cost and net realisable value of inventory owned by the Group rather than
the current market value. Market value is considered to be a more relevant reflection of the value of inventory owned by the Group.
The valuation of trading property in our EPRA NAV metrics take into account the prevailing market conditions as at the reporting
date, including sustainability and climate related considerations associated with the properties.
The segmental allocation of PRS, Reversionary and Development inventory, as well as additional information including their market
value is detailed in Note 4.
Information relating to the judgements and assumptions adopted by management in relation to inventories is set out in Note 2
‘Critical accounting estimates and judgements’. It is not possible for the Group to identify which properties will be sold within the
next 12 months. The size of the Group’s property portfolio does result in a relatively predictable vacancy rate. However, it is not
possible to predict in advance the specific properties that will become vacant. As the Group expects to realise trading property in
its ordinary operating cycle, it is shown as a current asset in the consolidated statement of financial position.
Amounts relating to inventories that have been recognised as an expense in the consolidated income statement are as follows:
2024
£m
2023
£m
Carrying value of trading property sold (Note 7)
75.5
70.8
Impairment of inventories to net realisable value
0.1
1.0
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
146
23. Trade and other receivables
Accounting policy
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment. A provision for impairment in trade receivables is established when there is an expectation
of cash shortfalls over the expected life of the amounts due. The movement in the provision is recognised in the consolidated
income statement.
2024
£m
2023
£m
Rent and other tenant receivables
4.8
3.0
Deduct: Provision for impairment
(1.5)
(1.5)
Rent and other tenant receivables – net
3.3
1.5
Restricted deposits
63.3
10.2
Other receivables
19.3
17.9
Prepayments
5.0
4.4
Closing balance
90.9
34.0
The Group’s assessment of expected credit losses involves estimation given its forward-looking nature. This is not considered to be
an area of significant judgement or estimation due to the balance of gross rent and other tenant receivables of £4.8m (2023: £3.0m).
Assumptions used in the forward-looking assessment are continually reviewed to take into account likely rent deferrals.
Restricted deposits arise from contracts with third parties that place restrictions on use of funds and cannot be accessed on
demand. These deposits are held in connection with facility arrangements and are released by the lender on a quarterly basis once
covenant compliance has been met.
The fair values of trade and other receivables are considered to be equal to their carrying amounts. The credit quality of
financial assets that are neither past due nor impaired is discussed in Note 27 ‘Financial risk management and derivative
financial instruments’.
24. Provisions for other liabilities and charges
Accounting policy
Provisions are recognised when: i) the Group has a present obligation as a result of a past event; ii) it is probable that an outflow
of resources will be required to settle the obligation; and iii) a reliable estimate can be made of the amount of the obligation.
2024
£m
2023
£m
Current provisions for other liabilities and charges
Opening balance
8.6
8.6
Additions
5.0
0.3
Utilisation
(0.4)
(0.3)
13.2
8.6
Non-current provisions for other liabilities and charges
Opening balance
1.1
1.1
Utilisation
(0.1)
–
1.0
1.1
Total provisions for other liabilities and charges
14.2
9.7
Current provisions of £13.2m (2023: £8.6m) have been provided for potential fire safety remediation costs relating to a small number
of legacy properties that Grainger historically had an involvement in developing and may require fire safety related remediation
works. Where appropriate, the Group is seeking recoveries from contractors and insurers which may reduce the
overall liability over time.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
147
25. Trade and other payables
Accounting policy
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method. Refer to Note 35 for accounting policy in relation to lease liabilities.
2024
£m
2023
£m
Current liabilities
Deposits received
12.8
10.7
Trade payables
19.0
15.9
Lease liabilities (Note 35)
0.7
0.2
Tax and social security costs
4.9
3.0
Accruals
64.5
81.9
Deferred income
12.2
9.0
114.1
120.7
Non-current liabilities
Lease liabilities (Note 35)
6.3
6.9
6.3
6.9
Total trade and other payables
120.4
127.6
Within accruals, £43.9m comprises accrued expenditure in respect of ongoing construction activities (2023: £60.2m).
26. Interest-bearing loans and borrowings
Accounting policy
Borrowings are initially recognised at the fair value of consideration received, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value
is recognised in the consolidated income statement over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at
least 12 months after the consolidated statement of financial position date.
2024
£m
2023
£m
Non-current liabilities
Bank loans – Pounds Sterling
548.2
490.1
Bank loans – Euros
0.8
0.9
Non-bank financial institution
347.9
347.3
Corporate bonds
696.0
695.2
1,592.9
1,533.5
Closing balance
1,592.9
1,533.5
(a) Bank loans
Sterling bank loans include variable rate loans bearing interest at rates between 1.5% and 1.8% above SONIA and Euro bank loans
include variable rate loans bearing interest at a rate of 1.6% above EURIBOR. Gross bank loans of £558.2m are due to mature in the
year ended 30 September 2029.
The weighted average variable interest rate on bank loans as at 30 September 2024 was 6.6% (2023: 6.8%). Bank loans are secured
by fixed and floating charges over specific property and other assets of the Group.
Unamortised costs in relation to bank loans of £9.2m (2023: £8.2m) will be amortised over the life of the loans to which they relate.
During the year the Group exercised options to extend the maturity dates on certain bank loans by one year. The extension of
maturity dates has been deemed to be a non-substantial modification.
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
148
(b) Non-bank financial institution
£350.0m is funded by fixed rates loans from Rothesay Life PLC across three tranches: £75.0m maturing July 2026, £75.0m maturing
October 2027 and £200.0m maturing July 2029.
The weighted average interest rate on non-bank loans as at 30 September 2024 was 2.4% (2023: 2.4%). Unamortised costs in
relation to these fixed rate loans of £2.1m (2023: £2.7m) will be amortised over the life of the loans to which they relate.
(c) Corporate bonds
In 2018, the Group issued a ten-year £350.0m corporate bond at 3.375% due April 2028. In 2020, the Group issued a ten-year
£350.0m corporate bond at 3.0% due July 2030.
As at 30 September 2024 unamortised costs in relation to the corporate bonds stood at £2.4m (2023: £2.9m), and the outstanding
discount was £1.6m (2023: £1.9m).
(d) Other loans and borrowings information
The above analyses of loans and borrowings are net of unamortised loan issue costs and the discount on issuance of the corporate
bonds. As at 30 September 2024, unamortised costs totalled £13.7m (2023: £13.8m) and the outstanding discount was £1.6m
(2023: £1.9m).
In accordance with IAS 7 Statement of Cash Flows, the Group is required to detail any changes in liabilities that arise from financing
activities throughout the year. These changes are detailed below.
£m
2024
2023
Derivatives used for
hedging the liabilities
from financing
activities
Derivatives used for
hedging the liabilities
from financing
activities
Loans and
borrowings
Interest
payable
Assets
Liabilities
Loans and
borrowings
Interest
payable
Assets
Liabilities
Opening balance
1,533.5
9.3
45.3
–
1,357.6
9.0
56.5
–
Changes from financing cash flows
Proceeds from loans and borrowings
244.0
–
–
–
330.0
–
–
–
Repayment of borrowings
(185.0)
–
–
–
(155.0)
–
–
–
Transaction costs related to loans,
borrowings and derivatives
(2.8)
–
1.9
–
(2.3)
–
4.9
–
Total changes from financing cash flows
56.2
–
1.9
–
172.7
–
4.9
–
Other changes
Gross interest accrued
–
52.7
–
–
–
47.2
–
–
Gross interest paid
–
(52.6)
–
–
–
(46.9)
–
–
Amortisation of borrowing costs net of premiums
3.2
–
–
–
3.2
–
–
–
Hedge ineffectiveness under IFRS 9
–
–
(6.6)
–
–
–
–
–
Changes in fair value of derivatives through
hedging reserve
–
–
(20.8)
–
–
–
(16.1)
–
Total other changes
3.2
0.1
(27.4)
–
3.2
0.3
(16.1)
–
Closing balance
1,592.9
9.4
19.8
–
1,533.5
9.3
45.3
–
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
149
27. Financial risk management and derivative financial instruments
Accounting policy
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments
with original maturities of three months or less. Demand deposits that cannot be accessed and have restrictions on use arising
from contracts with third parties are reflected in trade and other receivables.
Derivative financial instruments
The Group uses derivative instruments to help manage its interest rate risk. In accordance with its treasury policy, the Group does
not hold or issue derivatives for trading purposes. Derivatives are classified as current assets and current liabilities.
The derivatives are recognised initially at fair value. Subsequently, the gain or loss on re-measurement to fair value is recognised
immediately in the consolidated income statement, unless the derivatives qualify for cash flow hedge accounting, and have been
designated as such, in which case any gain or loss is taken to equity in a cash flow hedge reserve via other comprehensive income.
In order to qualify for hedge accounting, the Group is required to document in advance the relationship between the item being
hedged and the hedging instrument. The Group is also required to demonstrate that the hedge will be highly effective on an
ongoing basis. This effectiveness testing is re-performed at each period end to ensure that the hedge remains highly effective.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time is immediately transferred to the consolidated income statement.
Fair value estimation
The fair values of interest rate derivatives are based on a discounted cash flow model using market information.
Derecognition of financial assets and liabilities
Derecognition is the point at which the Group removes an asset or liability from its consolidated statement of financial position.
The Group’s policy is to derecognise financial assets only when the contractual right to the cash flows from the financial asset
expires. The Group also derecognises financial assets that it transfers to another party provided that the transfer of the asset
also transfers the right to receive cash flows from the financial asset. When the transfer does not result in the Group transferring
the right to receive cash flows from the financial asset but it does result in the Group assuming a corresponding obligation to pay
cash flows to another recipient, the financial asset is derecognised.
The Group derecognises financial liabilities only when its obligation is discharged, is cancelled or expires.
Financial assets classified as fair value through profit and loss (previously available-for-sale) are the financial interest in
property assets.
Derivative financial instruments not in hedge accounting relationships are classified as fair value through profit and loss.
Categories of financial instruments
A summary of the classifications of the financial assets and liabilities held by the Group is set out in the following table:
£m
2024
Loans and
receivables/
cash and
cash
equivalents
Assets at
fair value
through
profit and
loss
Derivatives
used for
hedging
Other financial
assets
Total book
value
Fair value
adjustment
Fair value
Non-current assets
Financial interest in property assets
–
57.4
–
–
57.4
–
57.4
Current assets
Trade and other receivables
excluding prepayments
85.9
–
–
–
85.9
–
85.9
Cash and cash equivalents
93.2
–
–
–
93.2
–
93.2
Derivative financial instruments
–
–
19.8
–
19.8
–
19.8
Total financial assets
179.1
57.4
19.8
–
256.3
–
256.3
£m
Loans and
receivables/
cash and
cash
equivalents
Liabilities at
fair value
through
profit and
loss
Derivatives
used for
hedging
Other financial
liabilities at
amortised
cost
Total book
value
Fair value
adjustment
Fair value
Non-current liabilities
Trade and other payables
–
–
–
6.3
6.3
–
6.3
Interest-bearing loans and borrowings
–
–
–
1,592.9
1,592.9
(98.1)
1,494.8
Current liabilities
Trade and other payables
–
–
–
114.1
114.1
–
114.1
Total financial liabilities
–
–
–
1,713.3
1,713.3
(98.1)
1,615.2
Net financial assets/(liabilities)
179.1
57.4
19.8
(1,713.3)
(1,457.0)
98.1
(1,358.9)
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
150
£m
2023
Loans and
receivables/
cash and
cash
equivalents
Assets at
fair value
through
profit and
loss
Derivatives
used for
hedging
Other
financial
assets
Total book
value
Fair value
adjustment
Fair value
Non-current assets
Financial interest in property assets
–
67.0
–
–
67.0
–
67.0
Current assets
Trade and other receivables
excluding prepayments
29.6
–
–
–
29.6
–
29.6
Cash and cash equivalents
121.0
–
–
–
121.0
–
121.0
Derivative financial instruments
–
–
45.3
–
45.3
–
45.3
Total financial assets
150.6
67.0
45.3
–
262.9
–
262.9
£m
Loans and
receivables/
cash and
cash
equivalents
Liabilities at
fair value
through
profit and
loss
Derivatives
used for
hedging
Other
financial
liabilities at
amortised
cost
Total book
value
Fair value
adjustment
Fair value
Non-current liabilities
Trade and other payables
–
–
–
6.9
6.9
–
6.9
Interest-bearing loans and borrowings
–
–
–
1,533.5
1,533.5
(182.1)
1,351.4
Current liabilities
Trade and other payables
–
–
–
120.7
120.7
–
120.7
Total financial liabilities
–
–
–
1,661.1
1,661.1
(182.1)
1,479.0
Net financial assets/(liabilities)
150.6
67.0
45.3
(1,661.1)
(1,398.2)
182.1
(1,216.1)
The fair value difference relates to the Group’s corporate bonds and the non-bank loans, which are stated at amortised cost in
the consolidated statement of financial position. The fair value of the bonds is calculated as £632.8m (2023: £576.4m) based on
quoted prices in traded markets. The fair value of the non-bank loans is calculated as £319.1m (2023: £291.6m) and is calculated by
independent financial advisers (Centrus Group) by reference to quoted iBoxx index rates. There is no requirement under IFRS 9 to
revalue these loans to fair value in the consolidated statement of financial position.
Included in cash above is £16.4m (2023: £12.8m) relating to cash held on behalf of tenants, leaseholders and clients comprising
service charge and sinking fund balances, tenant deposits and cash held on behalf of joint ventures. These cash amounts are held by
the Group in client bank accounts and are excluded from net debt. In addition, £4.9m (2023: £4.7m) of the cash balance is restricted
in use, either by underlying financing arrangements or other commercial agreements comprising either reserve fund amounts or
amounts where the release of cash is contingent upon proof of qualifying expenditure or quarterly cash waterfalls.
Financial risk management
The Group’s objectives for managing financial risk are to minimise the risk of adverse effects on performance and to ensure the
ability of the Group to continue as a going concern while securing access to cost effective finance and maintaining flexibility to
respond quickly to opportunities that arise.
The Group’s policies on financial risk management are approved by the Board of Directors and implemented by Group treasury.
Written policies and procedures cover interest rate risk, credit risk, the use of derivative and non-derivative financial instruments and
investment of excess liquidity. Group treasury regularly reports to the Audit Committee.
The Group uses derivative financial instruments to hedge its exposure to financial risk but does not take positions for
speculative purposes.
The sources of financial risk and the policies and activities used to mitigate each are discussed below and include credit risk, liquidity
risk and market risk, which includes interest rate risk, credit availability risk, house price risk in relation to the Tricomm Housing
portfolio and our financial interest in property assets, and capital risk.
Financial risk factors
1) Credit risk
Credit risk is the risk of financial loss due to a counterparty’s failure to honour its obligations. The Group’s principal financial assets
include its financial interest in property assets, bank balances and cash, trade and other receivables and derivative financial
instruments. The carrying amount of financial assets recorded in the financial statements represents the Group’s maximum
exposure to credit risk without taking account of the value of any collateral obtained.
The Group’s financial interest in property assets (CHARM) relates to a financial interest in equity mortgages held by the Church of
England Pensions Board. The Group’s cash receipts are payable by the Church Commissioners, a counterparty considered to be low
risk as they have no history of past due or impaired amounts and there are no past due amounts outstanding at the year end.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
151
27. Financial risk management and derivative financial instruments continued
The Group sometimes enters into land sales contracts under which a proportion of the consideration is deferred and recognised
within other receivables (Note 23). Each purchaser is subject to financial due diligence prior to sale. At 30 September 2024, £5.2m
(2023: £nil) was outstanding.
The Group also has credit risk relating to trade receivables. Under IFRS 9, the Group is required to provide for any expected credit
losses arising from trade receivables. For all assured shorthold tenancies, credit checks are performed prior to acceptance of
the tenant. Regulated tenants are incentivised through the benefit of their tenancy agreement to avoid default on their rent.
Lifetime tenancies are generally at low or zero rent and hence suffer minimal credit risk. Rent deposits and personal guarantees are
held in respect of some leases. Taking these factors into account, the risk to the Group of individual tenant default and the credit
risk of trade receivables are considered low, as is borne out by the low level of trade receivables written off both in this year and in
prior years.
Tenant deposits of £11.6m (2023: £9.4m) are held that provide some security against rental arrears and property dilapidations
caused by the tenant. The Group does not hold any other collateral as security. Of the net trade receivables balance of £3.3m, we
consider £nil to be not due and not impaired. All of the £19.3m other receivables balance are considered not due and not impaired.
As at 30 September 2024 tenant arrears of £1.5m within trade receivables were impaired and fully provided for (2023: £1.5m).
The impaired receivables are based on a review of expected credit losses, which is detailed in Note 23. Impaired receivables and
receivables not considered to be impaired are not material to the financial statements and, therefore, no further analysis is provided.
The credit risk on liquid funds and derivative financial instruments is managed through the Group’s policies of monitoring
counterparty exposure, monitoring the concentration of credit risk through the use of multiple counterparties and the use of
counterparties of good financial standing. At 30 September 2024, the fair value of all interest rate derivatives that had a positive
value was £19.8m (2023: £45.3m).
At 30 September 2024, the combined credit exposure arising from cash held at banks, money market deposits and interest rate
swaps was £133.0m (2023: £166.3m), which represents 3.0% (2023: 4.5%) of total assets. Deposits were placed with financial
institutions with A- or better credit ratings.
The Group has the following cash and cash equivalents:
2024
£m
2023
£m
Pounds Sterling
92.4
120.0
Euros
0.8
1.0
93.2
121.0
At the year end, £61.4m was placed on deposit (2023: £79.6m) at effective interest rates between 1.5% and 4.6% (2023: 1.5% and
4.6%). Remaining cash and cash equivalents are held as cash at bank or in hand. The Group has an overdraft facility of £1.0m as at
30 September 2024 (2023: £1.0m).
2) Liquidity risk
The Group ensures that it maintains continuity and flexibility through a spread of maturities.
Although the Group’s core funding is subject to covenants requiring certain levels of LTV with respect to the entities in the Group
of obligors, and to maintaining a certain level of interest cover at the Group level, the loans are not secured directly against any
property allowing operational flexibility.
The Group ensures that it maintains sufficient cash for operational requirements at all times. The Group also ensures that it
has sufficient undrawn committed borrowing facilities from a diverse range of banks and other sources to allow for operational
flexibility and to meet committed expenditure. The business is highly cash generative from its sales of vacant properties, gross
rents and management fees. In adverse trading conditions, tenanted and other sales can be increased and new acquisitions can be
stopped. Consequently, the Group is able to reduce gearing (‘LTV’) levels and improve liquidity quickly.
The Group’s credit rating is currently provided by Fitch and S&P. Fitch and S&P’s most recent assessments on the Group were issued
in February 2024. Fitch assigned the Group a long-term issuer default rating of ‘BBB-’ and the Group’s Corporate Bonds’ senior
secured issue ratings of ‘BBB’. S&P affirmed the Group’s long-term issuer default rating of ‘BB+’ and the Group’s Corporate Bonds’
senior secured issue ratings of ‘BBB-’. Both Fitch & S&P assigned the Group’s credit outlook as ‘Stable’. The Group’s stable credit
outlook suggests there is currently very little risk of a credit rating downgrade to the Group. The Group monitors rating agency
metrics to ensure we maintain or improve upon the Group’s current credit ratings.
In the event of a credit rating downgrade, there may be an increase in the coupon payable on the Group’s Corporate Bonds should
the senior secured issue rating fall below BBB-. This could result in an increase in the Group’s annual interest charge of £8.7m.
However, the coupon would revert to the original coupon payable should the credit rating recover to BBB- or higher. This increase in
interest costs would also affect the Group’s interest cover financial covenant. However, there is significant headroom on our facility
financial covenants and the Group has determined that we would remain compliant and retain significant covenant headroom
despite this increase in interest costs. No other debt facilities or financial covenants of the Group would be affected by a credit
rating downgrade.
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
152
Certain borrowings and facilities are structured as ESG funding comprising of either green loans or sustainability-linked finance.
As at the year end, £175m of the Group's facilities are linked to ESG requirements of which £50m are designated as green loans and
£125m are sustainability-linked finance. Green loan allocations are made on a use-of-proceeds basis where investment outcomes
are expected to achieve certain minimum EPC ratings. Sustainability-linked facilities include targets to achieve certain EPC targets
in the Group's PRS portfolio. As at the year end, the green loans were fully allocated, and all targets under the sustainability-linked
facilities are being met. Achieving these targets results in the Group receiving a margin benefit on borrowings under their respective
loans and facilities. In the event of not achieving a target, the Group may experience a similar margin penalty. As at the year end, the
maximum possible penalty for missing a target could result in a further finance charge of less than £0.1m.
The Group’s fixed rate borrowings are stated at amortised cost in the financial statements and there is currently no requirement
under IFRS 9 to revalue these borrowings in the financial statements of the Group. Therefore, there would be no impact to the
Group’s measurement of borrowings in the event of a credit rating downgrade.
In accordance with IFRS 13, the Group measures derivatives at fair value including the effect of counterparty credit risk.
Where derivatives have been designated in a cash flow hedge relationship, the Group carries out hedge effectiveness testing in
accordance with IFRS 9. In the event of a credit rating downgrade, there may be an impact on the fair value of the Group’s derivative
contracts as the credit quality of the Group decreases which may give rise to a requirement to recognise some hedge ineffectiveness
in the financial statements. However, in accordance with hedge effectiveness requirements under IFRS 9, credit valuation
adjustments included in the measurement of derivative fair values would need to dominate movements in fair value before creating
hedge ineffectiveness. The Group does not consider that a credit rating downgrade will impact derivative fair values and give rise to
a material level of hedge ineffectiveness.
The following table analyses the Group’s financial liabilities and net-settled derivative financial liabilities at the consolidated
statement of financial position date into relevant maturity groupings based on the remaining period to the contractual maturity
date. The amounts disclosed in the table are the contractual undiscounted cash flows using yield curves as at 30 September 2024.
£m
Less than
1 year
Between
1 and
2 years
Between
2 and
5 years
More than
5 years
Total
At 30 September 2024
Interest-bearing loans and borrowings (Note 26)
–
75.0
1,167.9
350.0
1,592.9
Interest on borrowings
64.1
58.9
151.0
10.5
284.5
Interest on derivatives
(11.3)
(5.2)
(5.6)
–
(22.1)
Trade and other payables
114.1
0.9
1.7
3.7
120.4
At 30 September 2023
Interest-bearing loans and borrowings (Note 26)
–
–
944.5
589.0
1,533.5
Interest on borrowings
66.2
63.6
172.7
25.2
327.7
Interest on derivatives
(20.9)
(11.6)
(18.5)
(0.2)
(51.2)
Trade and other payables
120.7
1.2
0.7
5.0
127.6
The Group’s undrawn committed borrowing facilities are monitored against projected cash flows.
Maturity of committed undrawn borrowing facilities
2024
£m
2023
£m
Expiring:
Between one and two years
–
–
Between two and five years
436.8
415.8
Over five years
–
–
436.8
415.8
3) Market risk
The Group is exposed to market risk through interest rates, the availability of credit and house price movements relating to the
Tricomm Housing portfolio and the CHARM portfolio. The approach the Group takes to each of these risks is set out below.
The Group is not significantly exposed to equity price risk or to commodity price risk.
Fair values
IFRS 13 sets out a three-tier hierarchy for financial assets and liabilities valued at fair value. These are as follows:
• Level 1 – quoted prices (unadjusted) in active markets for identical assets and liabilities;
• Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
or indirectly; and
• Level 3 – unobservable inputs for the asset or liability.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
153
27. Financial risk management and derivative financial instruments continued
The following table presents the Group’s assets and liabilities that are measured at fair value:
£m
2024
2023
Assets
Liabilities
Assets
Liabilities
Level 3
CHARM
57.4
–
67.0
–
Investment property1
3,028.3
–
2,948.9
–
3,085.7
–
3,015.9
–
Level 2
Interest rate swaps – in cash flow hedge accounting relationships
19.8
–
45.3
–
19.8
–
45.3
–
1.
Includes investment property - held for sale
The significant unobservable inputs affecting the carrying value of the CHARM portfolio are house price inflation and discount rates.
Assumptions used are detailed in Note 2 and reconciliation of movements and amounts recognised in the consolidated income
statement are detailed in Note 20.
The investment valuations provided by Allsop LLP and CBRE Limited are based on the RICS Professional Valuation Standards, but
include a number of unobservable inputs and other valuation assumptions and are detailed in Note 2.
The fair value of swaps and caps were valued in-house by a specialised treasury management system, using a discounted cash flow
model and market information. The fair value is derived from the present value of future cash flows discounted at rates obtained by
means of the current yield curve appropriate for those instruments. As all significant inputs required to value the swaps and caps
are observable, they all fall within Level 2.
Interest rate swaps and caps are all classified as either current assets or current liabilities.
The notional principal amount of the outstanding interest rate swap and cap contracts as at 30 September 2024 was
£476.6m (2023: £427.4m).
In accordance with IFRS 9, the Group has reviewed its interest rate hedges. In the absence of hedge accounting, movements
in fair value are taken directly to the consolidated income statement. However, where cash flow hedges have been viewed as
being effective, and have been designated as such, any gains or losses have been taken to the cash flow hedge reserve via other
comprehensive income.
The reconciliation between opening and closing balances for Level 3 is detailed in the table below:
Assets – Level 3
2024
£m
2023
£m
Opening balance
3,015.9
2,845.0
Amounts taken to income statement
(33.8)
(64.2)
Other movements
103.6
235.1
Closing balance
3,085.7
3,015.9
The following assets and liabilities are excluded from the above table as fair value is not the accounting basis for the Group’s
financial statements, but is the basis for the Group’s EPRA NRV, EPRA NTA and EPRA NDV measures:
2024
2023
£m
Accounting basis
Classification if fair valued
Book value
Fair value
Book value
Fair value
Inventories – trading property
Lower of cost and net
realisable value
Level 3
331.6
620.1
392.2
734.3
Corporate bonds
Amortised cost
Level 1
700.0
632.8
700.0
576.4
Non-bank loans
Amortised cost
Level 3
350.0
319.1
350.0
291.6
(a) Interest rate risk
The Group’s interest rate risk arises from the risk of fluctuations in interest charges on floating rate borrowings. The Group
mitigates this risk through the use of variable to fixed interest rate swaps and caps. This subjects the Group to fair value risk as the
value of the financial derivatives fluctuates in line with variations in interest rates. However, the Group seeks to cash flow hedge
account where applicable. The Group is, however, driven by commercial considerations when hedging its interest rate risk and is
not driven by the strict requirements of the hedge accounting rules under IFRS 9 if this is to the detriment of achieving the best
commercial arrangement.
Hedging activities are carried out under the terms of the Group’s hedging policies and are regularly reviewed by the Board to
ensure compliance with this policy. The Board reviews its policy on interest rate exposure regularly with a view to establishing that
it is still relevant in the prevailing and forecast economic environment. The current Group treasury policy is to maintain floating
rate exposure of no greater than 30% of expected borrowing. As at 30 September 2024, 95% (2023: 95%) of the Group’s gross
borrowings were economically hedged to fixed or capped rates.
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
154
Based on the Group’s interest rate profile at the statement of financial position date, a 1% rise in interest rates would decrease
annual profits by £0.6m (2023: £0.5m). Similarly, a 1% fall would increase annual profits by £0.6m (2023: £0.5m).
Based on the Group’s interest rate profile at the statement of financial position date, a 1% increase in interest rates would increase
the Group’s equity by £9.3m (2023: £11.3m). Similarly, a 1% fall would decrease the Group’s equity by £9.3m (2023: £11.2m).
Upward movements in medium and long-term interest rates, associated with higher interest rate expectation, increase the value
of the Group’s interest rate swaps that provide protection against such moves. The converse is true for downward movements
in the interest yield curve. Where the Group’s swaps qualify as effective hedges under IFRS 9, these movements in fair value are
recognised directly in other comprehensive income rather than the consolidated income statement.
As at 30 September 2024, the market value of derivatives designated as cash flow hedges under IFRS 9 is a net asset of £19.8m
(2023: £45.3m). £6.6m is recognised within the income statement for ineffectiveness of cash flow hedges (2023: £nil). The fair
value movement on derivatives not in hedge accounting relationships resulted in a charge of £nil (2023: £nil) in the consolidated
income statement.
At 30 September 2024, the market value of derivatives not designated as cash flow hedges under IFRS 9 is £nil (2023: £nil). The cash
flows occur and enter in the determination of profit and loss until the maturity of the hedged debt.
The table below summarises debt hedged:
Hedged debt
2024
£m
2023
£m
Hedged debt maturing:
Within one year
–
–
Between one and two years
–
–
Between two and five years
476.6
387.4
Over five years
–
40.0
476.6
427.4
Interest rate profile – including the effect of derivatives and amortisation of issue costs:
2024
2023
Weighted
average
interest
rate
%
Average
maturity
years1
Sterling
£m
Euros
£m
Gross debt
total
£m
Weighted
average
interest
rate
%
Average
maturity
years
Sterling
£m
Euros
£m
Gross debt
total
£m
Fixed rate
3.1
4.4
1,050.0
–
1,050.0
3.1
5.4
1,050.0
–
1,050.0
Hedged rate
3.2
4.8
476.6
–
476.6
2.8
4.9
427.4
–
427.4
Variable rate
6.9
4.8
80.7
0.8
81.5
7.2
4.9
70.9
0.9
71.8
3.3
4.5
1,607.3
0.8
1,608.1
3.2
5.2
1,548.3
0.9
1,549.2
1.
Average maturity years excluding extension options. Including extension options, with the extension to be mutually agreed between the Group and the lenders, the average maturity is 4.7
years (2023: 5.5 years).
At 30 September 2024, the fixed interest rates on the interest rate swap contracts vary from 1.00% to 2.30% (2023: 0.36% to
1.51%); the weighted average rates are shown in the table above.
(b) Credit availability risk
Credit availability risk relates to the Group’s ability to refinance its borrowings at the end of their terms or to secure additional
financing where necessary. The Group maintains relationships with a diverse range of lenders and maintains sufficient headroom
through cash and committed borrowings. On 30 September 2024, the Group had available headroom of £508.7m, with the next
debt maturity not until April 2026, although extension options are available to extend this by a further year.
(c) House price risk
The cash flows arising from the Group’s financial interest in property assets (CHARM) and the Tricomm Housing portfolio are
related to the movement in value of the underlying property assets and, therefore, are subject to movements in house prices.
However, consistent with the Group’s approach to house price risk across its portfolio of trading and investment properties, the
Group does not seek to eliminate this risk as it is a fundamental part of the Group’s business model.
(d) Capital risk management
The Board manages the Group’s capital through the regular review of: cash flow projections; the ability of the Group to meet
contractual commitments; covenant tests; dividend cover; and gearing (‘LTV’). The current capital structure of the Group comprises
a mix of debt and equity. Debt is typically both current and non-current interest-bearing loans and borrowings as set out in the
consolidated statement of financial position. Equity comprises issued share capital, reserves and retained earnings as set out in the
consolidated statement of changes in equity.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
155
27. Financial risk management and derivative financial instruments continued
Group loans and borrowings have associated covenant requirements with respect to LTV and ICR. The covenants operate
on a facility by facility basis, with maximum LTV ranges between 70% – 75% and minimum ICR cover of 1.35x – 1.75x. As at
30 September 2024, the minimum headroom based on individual facilities is a 10.6% increase in LTV and 44.1% reduction in ICR.
At the year end, Group LTV was 38.2% (see page 176 for calculation) and Group ICR was 3.4x.
The Board regularly reviews all current and projected future levels to monitor anticipated compliance and available headroom
against key thresholds. LTV is reviewed in the context of the Board’s view of markets, the prospects of, and risks relating to, the
portfolio and the recurring cash flows of the business. The Group deems a range of LTV of up to 45% to be appropriate in the
medium term.
The Group monitors its cost of debt and Weighted Average Cost of Capital (‘WACC’) on a regular basis. At 30 September 2024,
the weighted average cost of debt was 3.2% (2023: 3.3%). Investment and development opportunities are evaluated using a risk
adjusted WACC in order to ensure long-term Shareholder value is created.
28. Pension costs
Accounting policy
i) Defined contribution pension scheme – Obligations for contributions to defined contribution pension schemes are
recognised as an expense in the income statement in the period to which they relate.
ii) Defined benefit pension scheme – The Group currently contributes to a defined benefit pension scheme that was closed to
new members and future accrual of benefits in 2003. The full deficit in the scheme was recognised in the statement of financial
position as at 1 October 2004.
An actuarial valuation of the scheme is carried out every three years. The cost of providing benefits is determined using the
Projected Unit Credit Method, with actuarial valuations being carried out at each consolidated statement of financial position
date by a qualified actuary, for the purpose of determining the amounts to be reflected in the Group’s financial statements under
IAS 19.
The defined benefit obligation is valued by projecting the best estimate of future benefit outgoings (allowing for future salary
increases for active members, revaluation to retirement for deferred members and annual pension increases for all members)
and then discounting to the consolidated statement of financial position date.
The pension scheme assets comprise investments in bonds and cash, managed by Rathbones Investment Management Limited
and insurance policies managed by Friends Life. These assets are measured at fair value in the statement of financial position.
The amount shown in the statement of financial position is the net of the present value of the defined benefit obligation and the
fair value of the scheme assets. When there is a surplus the Group considers the requirements of IFRIC 14 and whether there
is economic benefit available as a refund of this surplus, or through a reduction in future contributions. When an unconditional
right to future economic benefit exists, there is no restriction on the amount of surplus recognised.
There are no current or past service costs as the scheme is closed to new members and future accrual. The net interest amount,
calculated by applying the discount rate to the net defined benefit liability, is reflected in the income statement each year.
Actuarial gains and losses net of deferred income tax are reflected in other comprehensive income each year.
(a) Defined contribution scheme
The Group operates a defined contribution pension scheme for its employees. The assets of the scheme are held separately
from those of the Group in independently administered funds. The Group has no legal or constructive obligations to pay further
contributions if the funds do not hold sufficient assets to pay all employees the benefits relating to employee service in the
current and prior periods. Pension arrangements for Directors are disclosed in the report of the Remuneration Committee and the
Directors’ Remuneration report on pages 91 to 109. The pension cost charge in these financial statements represents contributions
payable by the Group.
The charge of £1.7m (2023: £1.5m) is included within employee remuneration in Note 10.
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
156
(b) Defined benefit scheme
In addition to the above, the Group also operates a final salary defined benefit pension scheme, the BPT Retirement Benefits
Scheme. The assets of the scheme are held separately in funds administered by Trustees and are invested with Rathbones
Investment Management Limited, an independent investment manager. Pension benefits are linked to the members’ final
pensionable salaries and service at their retirement date (or date of leaving if earlier). The Trustees are responsible for running the
scheme in accordance with the scheme’s trust deed and rules, which sets out their powers. The Trustees of the scheme are required
to act in the best interests of the beneficiaries of the scheme. There is a requirement that at least one-third of the Trustees are
nominated by the members of the scheme.
There are three categories of pension scheme members:
• Active members: currently employed by the Group. No benefits have accrued since 30 June 2003, although active members
retain a final salary link.
• Deferred members: former employees of the Group.
• Pensioner members: in receipt of pension.
The defined benefit obligation is valued by projecting the best estimate of future benefit payments (allowing for future salary
increases for active members, revaluation to retirement for deferred members and annual pension increases for all members) and
then discounting to the statement of financial position date. In the period up to retirement, benefits receive increases linked to
Consumer Prices Index (‘CPI’) inflation (subject to a cap of no more than 5% p.a.). After retirement, benefits receive fixed increases of
5% p.a. The valuation method used is known as the Projected Unit Credit Method. The approximate overall duration of the scheme’s
defined benefit obligation as at 30 September 2024 was 13 years.
The IAS 19 calculations for disclosure purposes have been based upon the results of the actuarial valuation carried out as at 1 July
2022, updated to 30 September 2024, by a qualified independent actuary.
i) Principal actuarial assumptions under IAS 19 (p.a.)
2024
%
2023
%
Discount rate
5.0
5.6
Retail Price Index (‘RPI’) inflation
3.3
3.5
Consumer Prices Index (‘CPI’) inflation
2.6
2.8
Rate of increase of pensions in payment
5.0
5.0
ii) Demographic assumptions
2024
2023
Mortality tables for pensioners
S3PA base tables CMI 2023 mortality
projections 1.25% p.a. long-term rate
S3PA base tables CMI 2022 mortality projections
1.25% p.a. long-term rate
Mortality tables for non-pensioners
As for pensioners
As for pensioners
iii) Life expectancies
30 September 2024
30 September 2023
Male
Female
Male
Female
Life expectancy for a current 60-year-old (years)
86
89
86
89
Life expectancy at age 60 for an individual aged 45 (years)
87
90
87
90
Risks
During 2024 the Trustees have worked to de-risk the scheme from risks including changes in bond yields, asset volatility, credit
risk, inflation risk, and changes in life expectancy. To do so the Trustees have used scheme assets previously invested in bonds to
purchase an annuity policy that fully matches all previously uninsured liabilities.
Going forwards, 100% of scheme liabilities are matched by the scheme’s annuity policies and future fluctuations in the value of
those liabilities will be offset by the policies held as scheme assets. This arrangement is known as a pension buy-in.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
157
28. Pension costs continued
Market value of scheme assets
The assets of the scheme are invested in a diversified portfolio as follows:
30 September 2024
30 September 2023
Market value
£m
% of total
scheme assets
Market value
£m
% of total
scheme assets
Bonds
1.0
4
24.0
84
Cash
5.5
20
2.6
9
Insurance policies
20.5
76
2.0
7
Total value of assets
27.0
100
28.6
100
The actual return on assets over the year was:
0.2
0.7
The assets of the scheme are held with Rathbones Investment Management Limited in a managed fund. All of the assets listed have
a quoted market price in an active market with the exception of the insurance policy asset where its value has been set equal to the
secured pensioner liability.
The change in the market value of the scheme assets over the year was as follows:
2024
£m
2023
£m
Market value of scheme assets at the start of the year
28.6
28.8
Interest income
1.5
1.5
Employer contributions
–
0.3
Administration expenses paid
(0.5)
–
Actuarial return on assets less interest
(1.3)
(0.8)
Benefits paid
(1.3)
(1.2)
Market value of scheme assets at the end of the year
27.0
28.6
The change in value of the defined benefit obligation over the year was as follows:
2024
£m
2023
£m
Value of defined benefit obligation at the start of the year
19.0
19.0
Interest on pension scheme liabilities
1.0
0.9
Remeasurement of changes in financial assumptions
1.8
0.3
Benefits paid
(1.3)
(1.2)
Value of defined benefit obligation at the end of the year
20.5
19.0
Amounts recognised in the consolidated statement of comprehensive income:
2024
£m
2023
£m
Actuarial return on assets less interest
(1.3)
(0.8)
Remeasurement of defined benefit obligation
(1.8)
(0.3)
(3.1)
(1.1)
The loss shown in the above table of £3.1m (2023: £1.1m) has been included in the consolidated statement of comprehensive
income on page 124.
The surplus is recognised because the Group considers there is economic benefit available through a reduction in future
contributions or the eventual return of the surplus.
Future funding obligation
The Trustees are required to carry out an actuarial valuation every three years. The last actuarial valuation of the scheme was
performed by the Actuary for the Trustees as at 1 July 2022. This valuation revealed a funding shortfall of £nil and as a result of this
valuation, the Group agreed to cease the existing recovery plan and pay no additional contributions.
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
158
Sensitivity analysis
Set out below is an analysis of how the scheme deficit would vary with changes to the key actuarial assumptions:
Discount rate movement of 0.25% p.a.
Increase/(decrease) in deficit of £0.6m/(£0.6m)
Life expectancies movement of one year
Increase/(decrease) in deficit of £1.0m/(£0.9m)
29. Issued share capital
Accounting policy
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Acquisition of and investment in own shares
The Group acquires its own shares to enable it to meet its obligations under the various share schemes in operation. No gain or
loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own shares. The acquisition cost of
the shares is debited to an investment in own shares reserve within retained earnings.
Where the Group buys back its own shares as treasury shares it adopts the accounting as described above. Where it
subsequently cancels them, issued share capital is reduced by the nominal value of the shares cancelled and this same amount is
transferred to the capital redemption reserve.
Issue of share capital
2024
£m
2023
£m
Allotted, called-up and fully paid:
743,109,586 (2023: 743,042,056) ordinary shares of 5p each
37.2
37.2
During the year, The Grainger Employee Benefit Trust has acquired no shares at a cost of £nil (2023: 3,000,000 shares at a cost of
£7.8m). The Group paid £0.1m (2023: £0.1m) to the Share Incentive Plan during the year for the purchase of matching shares and
free shares in the scheme. The total cost of acquiring own shares of £0.1m (2023: £7.9m) has been deducted from retained earnings
within Shareholders’ equity.
As at 30 September 2024, share capital included 3,316,840 (2023: 3,440,348) shares held by The Grainger Employee Benefit
Trust and 1,506,300 (2023: 1,506,300) shares held by Grainger plc as treasury shares. The total of these shares is 4,823,140
(2023: 4,946,648) with a nominal value of £241,157 (2023: £247,332) and a market value as at 30 September 2024 of £11.8m
(2023: £11.6m).
Movements in issued share capital during the year and the previous year were as follows:
Number
Nominal value
£’000
At 30 September 2022
742,921,734
37,146
Options exercised under the SAYE scheme (Note 30)
120,322
6
At 30 September 2023
743,042,056
37,152
Options exercised under the SAYE scheme (Note 30)
67,530
3
At 30 September 2024
743,109,586
37,155
30. Share-based payments
Accounting policy
The Group operates a number of equity-settled, share-based compensation plans comprising awards under a Long-Term
Incentive Plan (‘LTIP’), a Deferred Bonus Plan (‘DBP’), a Share Incentive Plan (‘SIP’) and a Save As You Earn (‘SAYE’) scheme.
The fair value of the employee services received in exchange for the grant of shares and options is recognised as an employee
expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the shares
and options granted.
For market-based conditions, the probability of vesting is taken into account in the fair value calculation and no revision is made
to the number of shares or options expected to vest. For non-market conditions, each year the Group revises its estimate of the
number of options or shares that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the
consolidated income statement with a corresponding adjustment to equity.
Awards that are subject to a market-based performance condition are valued at fair value using the Monte Carlo simulation
model. Awards not subject to a market-based performance condition are valued at fair value using the Black-Scholes
valuation model.
When options are exercised the proceeds received, net of any directly attributable transaction costs, are credited to share capital
(nominal value) and share premium.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
159
30. Share-based payments continued
Share awards
LTIP
DBSP
DBP
EDBP
SAYE
Award date
11
December
2023
Market-
based
11
December
2023
Non-
market-
based
11
December
2023
11
December
2023
11
December
2023
28 June
2024
3-year
scheme
28 June
2024
5-year
scheme
Number of shares on grant
379,127
884,629
–
–
–
125,193
43,924
Exercise price (£)
–
–
–
–
–
2.00
2.00
Vesting period from date of grant (years)
3
3
3
1-3
1-5
3
5
Exercise period after vesting (years)
7
7
3
3
3
–
–
Share price at grant (£)
2.65
2.65
2.65
2.65
2.65
2.44
2.44
Expected risk free rate (%)
4.2
4.2
N/A
N/A
N/A
4.1
4.0
Expected dividend yield (%)
N/A
N/A
2.8
2.8
2.8
2.8
2.8
Expected volatility (%)
24.5
24.5
N/A
N/A
N/A
26.6
25.2
Fair value (£)
1.31
2.65
2.65
2.65
2.65
0.65
0.69
The expected volatility figures used in the valuation were calculated based on the historical volatility over a period equal to the
expected term from the date of grant.
The share-based payments charge recognised in the consolidated income statement is £2.8m (2023: £2.4m).
(a) LTIP scheme
For the LTIP awards granted in or after December 2023, the LTIP performance period is the three financial years commencing at
the beginning of the financial year in which the grant date fell (i.e the three year period up to 30 September 2026). Of these, 30%
are subject to an absolute Total Shareholder Return performance condition measured over the period, 30% are subject to annual
growth in Total Property Income Return measured over the period, 30% are subject to achieving Secured PRS Investment targets
measured over the period, and the final 10% are subject to achieving carbon emissions performance conditions measured over
the period.
For the awards granted in or after December 2022, the LTIP performance period is the three financial years commencing at the
beginning of the financial year in which the grant date fell (i.e the three year period up to 30 September 2025). Of these LTIP awards,
33% of the awards under the LTIP scheme are subject to an absolute Total Shareholder Return performance condition measured
over the period, 33% are subject to annual growth in Total Property Income Return measured over the period, and the final 33% are
subject to achieving Secured PRS Investment targets measured over the period.
For the awards granted in or after December 2021, the LTIP performance period was the three financial years commencing at the
beginning of the financial year in which the grant date fell (i.e the three year period up to 30 September 2024). Of these LTIP awards,
33% of the awards under the LTIP scheme were subject to an absolute Total Shareholder Return performance condition measured
over the period, 33% were subject to annual growth in Total Property Return measured over the period, and the final 33% were
subject to achieving Secured PRS Investment targets measured over the period.
The movement in LTIP awards during the year is as follows:
Awards
Opening
balance
Awards
granted
Awards
vested
Awards
lapsed
Closing
balance
LTIP
6 February 2020
274,231
–
–
–
274,231
10 December 2020
490,967
–
(16,885)
(335,108)
138,974
11 October 20211
518,664
–
–
(185,644)
333,020
16 December 2021
828,407
–
–
–
828,407
28 September 2022
61,712
–
–
–
61,712
12 December 2022
1,264,686
–
–
–
1,264,686
11 December 2023
–
1,263,756
–
–
1,263,756
Total
3,438,667
1,263,756
(16,885)
(520,752)
4,164,786
1.
The grant of LTIP awards on 11 October 2021 was made to Rob Hudson as replacement of awards made by his previous employer. The fair value of these awards is based on the assumptions
relating to previous LTIP awards. See Note 8 of the remuneration report on page 97 of the prior year Annual Report and Accounts for further details.
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
160
(b) DBP scheme
Awards granted under the DBSP relate to the compulsory deferral of 25% of any bonus paid to Executive Directors as described in
the Remuneration Committee report. Shares granted in this scheme have no further performance conditions other than continued
employment. There is a three-year vesting period from the date of grant, after which time participants can choose to exercise
their awards.
Awards granted under the DBP scheme have no specific performance conditions other than employees in the scheme continuing
to be employed. There is a three-year vesting period from the date of grant. One-third of the awards vest at the end of each year.
Participants can choose to exercise their awards on vesting or to retain their awards within the plan until the end of the third year at
which point a 50% matching element is added to their award entitlement.
In addition to the DBP scheme, an enhanced DBP scheme (‘EDBP’) is also provided. The enhanced scheme operates in exactly the
same way as the normal DBP scheme except that if participants retain their awards within the plan until the end of the fifth year, a
further additional 50% matching award is added to their award entitlement. Awards under the DBP/EDBP have been valued based
on the share price at the date of the award less the dividend yield at the award date as there is no entitlement to dividends during
the vesting period.
The movement in DBP/EDBP awards during the year is as follows:
Awards
Opening
balance
Awards
granted
Awards
exercised
Awards
lapsed
Closing
balance
DBSP
1 December 2019
16,429
–
–
–
16,429
10 December 2020
61,313
–
(17,916)
–
43,397
16 December 2021
95,314
–
–
–
95,314
12 December 2022
218,255
–
–
–
218,255
11 December 2023
–
231,858
–
–
231,858
DBP
10 December 2020
34,298
–
(32,303)
(1,995)
–
16 December 2021
40,800
–
(3,112)
(5,718)
31,970
12 December 2022
65,177
–
(2,244)
(10,914)
52,019
11 December 2023
–
62,939
–
(6,699)
56,240
EDBP
21 December 2017
8,218
–
–
–
8,218
17 December 2018
59,166
–
(52,136)
–
7,030
17 December 2019
42,700
–
–
–
42,700
10 December 2020
50,108
–
–
–
50,108
16 December 2021
17,864
–
–
–
17,864
12 December 2022
28,764
–
(884)
(4,420)
23,460
11 December 2023
–
29,422
–
(9,082)
20,340
Total
738,406
324,219
(108,595)
(38,828)
915,202
(c) SAYE share option scheme
Awards under the SAYE scheme have been valued at fair value using a Black-Scholes valuation model. The number of shares subject
to options as at 30 September 2024, the periods in which they were granted and the periods in which they may be exercised and the
movement during the year are given below:
Exercise price
(pence)1
Exercise
period
Opening
balance
Awards
granted
Awards
exercised
Awards
lapsed/
cancelled
Closing
balance
SAYE
2019
193.0
2022-25
40,413
–
(32,642)
–
7,771
2020
245.0
2023-26
92,993
–
(21,739)
(32,075)
39,179
2021
234.0
2024-27
70,646
–
(13,149)
(5,383)
52,114
2022
248.0
2025-28
93,624
–
–
(27,938)
65,686
2023
203.0
2026-29
516,667
–
–
(94,363)
422,304
2024
200.0
2027-29
–
169,117
–
–
169,117
814,343
169,117
(67,530)
(159,759)
756,171
Weighted average exercise price (pence per share)
215.2
203.0
217.7
220.3
210.4
1.
Exercise prices have been adjusted to reflect the impact of the 2019 rights issue.
For those share options exercised during the year, the weighted average share price at the date of exercise was 227.2p
(2023: 248.4p). For share options outstanding at the end of the year, the weighted average remaining contractual life was 2.1 years
(2023: 2.5 years). There were 47,065 (2023: 51,366) share options exercisable at the year end with a weighted average exercise price
of 246.2p (2023: 245.0p).
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
161
(d) SIP scheme
Awards under the SIP scheme have been based on the share price at the date of the award.
31. Changes in equity
The consolidated statement of changes in equity is shown on page 125. Further information relating to reserves is provided below.
Movements on the retained earnings reserve are set out in Note 32.
(a) Merger reserve
The merger reserve arose when the Company issued shares in partial consideration for the acquisition of City North Group plc in the
year ended 30 September 2005. The issue satisfied the provisions of Section 612 of the Companies Act 2006 (formerly Section 131
of the Companies Act 1985) and the premium relating to the shares issued was credited to a merger reserve.
(b) Cash flow hedge reserve
The fair value movements on those derivative financial instruments qualifying for hedge accounting under IFRS 9 are taken to this
reserve net of tax.
32. Movement in retained earnings
The retained earnings reserve comprises various elements, including:
Treasury shares bought back and cancelled
Included within retained earnings at 30 September 2024 is a balance of £7.8m (2023: £7.8m) relating to treasury shares bought back
and cancelled.
Investment in own shares
Included within retained earnings at 30 September 2024 is a balance of £0.6m (2023: £4.8m) relating to investments in own shares.
33. List of subsidiaries, joint ventures and associates
A full list of all subsidiaries, joint ventures, associates and other related undertakings as at 30 September 2024 is set out in the Notes
to the parent Company financial statements on pages 169 and 170.
The following subsidiaries will take advantage of the audit exemption set out within Section 479A of the Companies Act 2006 for
the year ended 30 September 2024.
Company
Companies House
registered number
Atlantic Metropolitan (U.K.) Limited
01628078
BPT (Bradford Property Trust) Limited
00252992
BPT (Residential Investments) Limited
00359346
BPT Limited
00229269
Bromley Property Holdings Limited
04132693
Bromley Property Investments Limited
04066391
Crossco (No. 103) Limited
02929000
Derwent Developments (Curzon) Limited
05887266
Derwent Developments Limited
01899218
Faside Estates Limited
SC019680
Globe Brothers Estates Limited
00242985
Grainger (Hallsville Block D1) Limited
12170837
Grainger (Hallsville Residential) Limited
14669820
Grainger (Hallsville) Limited
11834099
Grainger (Hornsey) Limited
04810257
Grainger Asset Management Limited
04417232
Grainger Bradley Limited
08324941
Grainger Development Management Limited
03146573
Grainger Developments Limited
06061419
Grainger Employees Limited
05019636
Grainger Europe Limited
05299283
Grainger Finance (Tricomm) Limited
08451352
Grainger Homes (Gateshead) Limited
05651808
Grainger Homes Limited
04125751
Company
Companies House
registered number
Grainger Housing & Developments Limited
02018842
Grainger Invest No.1 Limited Liability Partnership
OC312947
Grainger Invest No.2 Limited Liability Partnership
OC317919
Grainger Kensington & Chelsea Limited
08151345
Grainger Maidenhead Limited
03709575
Grainger Newbury Limited
03904336
Grainger OCCC Limited
07557656
Grainger Properties Limited
03910945
Grainger RAMP Limited
07560835
Grainger Real Estate Limited
04170173
Grainger Residential Management Limited
04974627
Grainger PRS Limited
05789357
Grainger Seven Sisters Limited
06111428
Grainger Treasury Property Investments Limited
Partnership
LP011846
Grainger Tribe Limited
11055318
Greit Limited
05788577
GRIP UK Property Developments Limited
10626824
Margrave Estates Limited
00332564
MREF III Newcastle Operations Limited
10606762
PHA Limited
06734419
Portland House Holdings Limited
02421236
Warren Court Limited
03109104
West Waterlooville Developments Limited
03047254
The parent Company has guaranteed the debts and liabilities of the above subsidiaries as at 30 September 2024 in accordance
with Section 479C of the Companies Act 2006. The parent company has assessed the probability of loss under the guarantees
as remote.
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
162
34. Related party transactions
During the year ended 30 September 2024, the Group transacted with its associates and joint ventures (details of which are set out
in Notes 18 and 19). The Group provides a number of services to its associates and joint ventures. These include property and asset
management services for which the Group receives fee income. The related party transactions recognised in the income statement
and statement of financial position are as follows:
2024
2023
£’000
Fees
recognised
Year end
balance
Fees
recognised
Year end
balance
Connected Living London (BTR) Limited
735
870
1,455
480
Lewisham Grainger Holdings LLP
226
513
307
368
Vesta LP
811
214
838
227
1,772
1,597
2,600
1,075
2024
2023
Interest
recognised
£’000
Year end
loan
balance
£m
Interest
rate
%
Interest
recognised
£’000
Year end
loan
balance
£m
Interest
rate
%
Curzon Park Limited
–
18.1
Nil
–
18.1
Nil
Lewisham Grainger Holdings LLP
1,196
11.5
11.0
871
10.2
11.2
Vesta LP
-
14.5
Nil
–
14.5
Nil
1,196
44.1
871
42.8
Details of the Group’s other related parties are provided in Note 10 in relation to key management compensation and Note 28 in
relation to the Group’s retirement benefit pension scheme.
35. Leases
Accounting policy
i) Group as lessor – Rental income from operating leases is recognised on a straight-line basis over the lease term. The net
present value of ground rents receivable is, in the opinion of the Directors, immaterial. Accordingly, ground rents receivable
are taken to the consolidated income statement on a straight-line basis over the period of the lease. Properties leased out to
tenants are included in the consolidated statement of financial position as either investment property or as trading property
under inventories.
ii) Group as lessee – The Group occupies a number of its offices as a lessee. The net present value of the lease liabilities is
recorded in the consolidated statement of financial position within trade and other payables. The leased office space is included
in the consolidated statement of financial position as a right-of-use asset in property, plant and equipment and depreciated over
the life of the lease.
(a) Group as lessor
The future aggregate undiscounted lease payments due to the Group under non-cancellable operating leases are as follows:
2024
£m
2023
£m
Operating lease payments due:
Not later than one year
42.4
32.2
Greater than one year but less than two years
3.4
2.4
Greater than two years but less than three years
2.8
2.0
Greater than three years but less than four years
2.4
1.7
Greater than four years but less than five years
1.8
1.4
Greater than five years
68.7
70.2
121.5
109.9
There are no contingent rents recognised within net rental income in 2024 or 2023 relating to properties where the Group acts as
a lessor of assets under operating leases. The Group’s non-cancellable operating leases exclude regulated tenancies. Under these
agreements, tenants have the right to remain in a property for the remainder of their lives. Should the tenant require the lease to
be cancelled for any reason, they are able to do so generally with immediate effect, in which case we take vacant possession for
subsequent disposal of the property. As such, regulated tenancies are excluded from the above analysis.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
163
35. Leases continued
(b) Group as lessee
The future aggregate lease payments payable by the Group under non-cancellable operating leases are as follows:
2024
£m
2023
£m
Operating lease payments due:
Not later than one year
0.7
0.2
Later than one year and not later than five years
2.5
1.9
Later than five years
3.8
5.0
7.0
7.1
Leases relating to office space used by the Group have initial terms of varying lengths, between one and ten years. Rent reviews
generally take place every five years.
36. Contingent liabilities
Properties in certain subsidiary companies form a ‘guarantee group’ with a market value of £2,351.9m and provide the security for
the Group’s core debt facility and Corporate Bonds.
Barclays Bank PLC and Lloyds Bank PLC have provided guarantees under performance bonds. As at 30 September 2024, total
guarantees amounted to £3.2m (2023: £3.2m).
37. Capital commitments
The Group has current commitments under a number of its PRS projects. The Group’s commitments, including its relevant share of
commitments to joint ventures and associates, are as follows:
2024
£m
2023
£m
Wholly-owned Group subsidiaries
303.7
397.8
303.7
397.8
Notes to the financial statements continued
Grainger plc
Annual Report and Accounts 2024
164
Notes
2024
£m
2023
£m
Fixed assets
Investments
2
2,594.0
2,335.9
Current assets
Trade and other receivables
3
88.4
23.8
Cash at bank and in hand
58.1
64.4
146.5
88.2
Creditors: amounts falling due within one year
4
(8.6)
(48.3)
Net current assets
137.9
39.9
Total assets less current liabilities
2,731.9
2,375.8
Creditors: amounts falling due after more than one year
Interest-bearing loans and borrowings
5
(832.5)
(832.6)
NET ASSETS
1,899.4
1,543.2
Capital and reserves
Issued share capital
6
37.2
37.2
Share premium account
817.9
817.8
Capital redemption reserve
0.3
0.3
Retained earnings
1,044.0
687.9
TOTAL EQUITY
1,899.4
1,543.2
The profit for the year for the Company was £404.4m (2023: £283.9m).
The financial statements on pages 165 to 170 were approved by the Board of Directors on 20 November 2024 and were signed on
their behalf by:
Helen Gordon
Rob Hudson
Director
Director
Parent company statement of changes in equity
Issued share
capital
£m
Share
premium
£m
Capital
redemption
reserve
£m
Retained
earnings
£m
Total
equity
£m
Balance as at 1 October 2022
37.1
817.6
0.3
455.2
1,310.2
Profit for the year
–
–
–
283.9
283.9
Award of SAYE shares
0.1
0.2
–
–
0.3
Purchase of own shares
–
–
–
(7.9)
(7.9)
Share-based payments charge
–
–
–
2.4
2.4
Dividends paid
–
–
–
(45.7)
(45.7)
Balance as at 30 September 2023
37.2
817.8
0.3
687.9
1,543.2
Profit for the year
–
–
–
404.4
404.4
Award of SAYE shares
–
0.1
–
–
0.1
Purchase of own shares
–
–
–
(0.1)
(0.1)
Share-based payments charge
–
–
–
2.8
2.8
Dividends paid
–
–
–
(51.0)
(51.0)
Balance as at 30 September 2024
37.2
817.9
0.3
1,044.0
1,899.4
The notes on pages 166 to 170 form part of the financial statements.
Parent company statement of financial position and statement of changes in equity
As at 30 September
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
165
1. Company accounting policies
(a) Basis of preparation
The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework (‘FRS 101’). The financial statements have been prepared on a going concern basis under the historical cost
convention, in accordance with the Companies Act 2006.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of
UK-adopted international accounting standards (IFRS), but makes amendments where necessary in order to comply with the
Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.
The exemptions that have been applied in the preparation of these financial statements are as follows:
• A cash flow statement and related notes have not been presented.
• Disclosures in respect of new standards and interpretations that have been issued but which are not yet effective have not
been provided.
• Disclosures in respect of transactions with wholly-owned subsidiaries have not been made.
• Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial Instruments:
Disclosures have not been made.
• Paragraphs 45(b) and 46 to 52 of IFRS 2 Share-based payment (details of the number and weighted average exercise prices of
share options, and how the fair value of goods or services received was determined).
• The requirements of paragraphs 17 and 18A of IAS 24 Related Party Disclosures to disclose key management
personnel compensation.
The Company has taken the exemption allowed under Section 408 of the Companies Act 2006 from the requirement to present
its own profit and loss account. The profit for the year was £404.4m (2023: £283.9m). These financial statements present
information about the Company as an individual undertaking and not about its Group.
The following accounting policies have been applied consistently in dealing with items that are considered material in relation to
the Company’s financial statements.
(b) Going concern
The financial statements have been prepared on a going concern basis which the Directors consider to be appropriate for the
following reasons.
The Company has net assets of £1,899.4m at 30 September 2024 and has generated a profit for the period then ended of
£404.4m. The Directors of Grainger plc manage the Group’s strategy and risks on a consolidated basis, rather than at an
individual entity level. Similarly, the financial and operating performance of the business is assessed at a Grainger plc operating
segment level. For these reasons, the Directors do not prepare cash flow forecasts at an individual entity level.
In making the going concern assessment, on a consolidated basis, the Directors have considered the Group’s principal risks
and their impact on financial performance. The Directors have assessed the future funding commitments of the Group and
compared these to the level of committed loan facilities and cash resources over the medium term. In making this assessment,
consideration has been given to compliance with borrowing covenants along with the uncertainty inherent in future financial
forecasts and, where applicable, severe sensitivities have been applied to the key factors affecting financial performance for
the Group.
Further details of the Group’s going concern assessment, including the key assumptions applied, is set out in Note 1(a) on
page 128.
Based on these considerations, the Directors continue to adopt a going concern basis in preparing the financial statements for
the year ended 30 September 2024.
(c) Investments
Investments in subsidiaries are carried at historical cost less provision for impairment based upon an assessment of the net
recoverable amount of each investment. The net recoverable amount is determined by the statutory net assets of the subsidiary,
adjusted for fair value movements relating to trading property which is held at cost, as well as an associated deferred tax charge
on the fair value adjustments. This approach provides the most relevant indication of the net recoverable amount of a subsidiary
as it provides a fair value net asset position as at the date of assessment. To the extent that the assessment of the recoverable
amount improves due to changes in economic conditions or estimates, impairment provisions are reversed, with all provision
movements recognised in profit and loss.
Notes to the parent company financial statements
Grainger plc
Annual Report and Accounts 2024
166
(d) Tax
Corporation tax is provided on taxable profits or losses at the current rate.
Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the end of the
reporting period, where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax
in the future have occurred at that date.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the temporary differences
are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the end of the
reporting period. Deferred tax is measured on a non-discounted basis.
(e) Own shares including treasury shares
Transactions of The Grainger Employee Benefit Trusts are included in the Company’s financial statements. The purchase of
shares in the Company by each trust and any treasury shares bought back by the Company are debited direct to equity.
(f) Share-based payments
Under the share-based compensation arrangements set out in Note 30 to the Group financial statements, employees
of Grainger Employees Limited have been awarded options and conditional shares in the Company. These share-based
arrangements have been treated as equity-settled in the consolidated financial statements. In the Company’s financial
statements, the share-based payment charge has been added to the cost of investment in subsidiaries with a corresponding
adjustment to equity.
(g) Borrowings
Borrowings are initially recognised at the fair value of consideration received, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value
is recognised in the income statement over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at
least 12 months after the statement of financial position date.
2. Investments
Cost of investment
2024
£m
2023
£m
At 1 October
3,758.6
2,750.0
Additions
482.8
1,032.3
Disposals
–
(23.7)
At 30 September
4,241.4
3,758.6
Impairment
2024
£m
2023
£m
At 1 October
1,422.7
965.4
Additional provisions
246.3
461.0
Reversal of impairment provisions
(21.6)
(3.7)
At 30 September
1,647.4
1,422.7
Net carrying value
2,594.0
2,335.9
The Directors believe that the carrying value of the investments is supported by their recoverable amount which reflects the fair
value of the property portfolio. The recoverable amount is not regarded as a significant estimate in itself as it is based on the
underlying valuation of the property portfolio. The impact of changes to key assumptions to the valuation of the property portfolio
is shown in Note 2 of the Group financial statements.
Additions during the year principally relate to ongoing internal restructuring of the Company’s subsidiary undertakings. After an
assessment of recoverable amounts a net impairment of £224.7m (2023: £457.3m) has been made. The most significant element of
the overall net impairment was an impairment of £178.3m which resulted from a reduction in the net assets of Bromley Property
Holdings Limited following distributions made in the year.
A list of the subsidiaries of the Company is contained within Note 9 on pages 169 and 170.
3. Trade and other receivables
2024
£m
2023
£m
Amounts owed by Group undertakings
88.2
23.3
Other receivables
0.2
0.5
88.4
23.8
Amounts due in both 2024 and 2023 are all due within one year. The Company’s assessment of expected credit losses on amounts
owed by Group undertakings is not considered to be an area of significant judgement or estimation due to sufficient liquidity in the
Group. As such, there is no expectation of any material credit losses at the balance sheet date.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
167
4. Creditors: amounts falling due within one year
2024
£m
2023
£m
Amounts owed to Group undertakings
–
39.7
Accruals and deferred income
8.6
8.6
8.6
48.3
5. Interest-bearing loans and borrowings
2024
£m
2023
£m
Variable rate – loans
140.0
140.0
Unamortised issue costs
(3.5)
(2.6)
136.5
137.4
Corporate bonds
700.0
700.0
Unamortised issue costs
(2.4)
(2.9)
697.6
697.1
Unamortised bond discount
(1.6)
(1.9)
Total interest-bearing loans and borrowings
832.5
832.6
The variable rate loans are secured by floating charges over the assets of the Group. The loans bear interest at rates between 1.5%
and 1.8% over SONIA.
In 2018, the Group issued a ten-year £350.0m corporate bond at 3.375% due April 2028. In 2020, the Group issued a ten-year
£350.0m corporate bond at 3.0% due July 2030.
As at 30 September 2024 unamortised costs in relation to the corporate bonds stood at £2.4m (2023: £2.9m), and the outstanding
discount was £1.6m (2023: £1.9m).
6. Issued share capital
2024
£m
2023
£m
Allotted, called-up and fully paid:
743,109,586 (2023: 743,042,056) ordinary shares of 5p each
37.2
37.2
Details of movements in issued share capital during the year and the previous year are provided in Note 29 to the Group financial
statements on page 159.
Details of share options and awards granted by the Company are provided in Note 30 to the Group financial statements on pages
159 to 162 and discussed within the Remuneration Committee’s report on pages 91 to 109.
7. Contingent liabilities
The Company has guaranteed the debts and liabilities of certain of its subsidiaries as at 30 September 2024 in accordance with
Section 479C of the Companies Act 2006 as detailed in Note 33 to the Group financial statements on page 162. The Company has
assessed the probability of loss under the guarantees as remote.
8. Other information
Dividends
The Company’s dividend policy is aligned to our strategy to grow rental income, with 50% of net rental income being distributed.
Around one-third of the payment is made through the interim dividend based on half year results, with the balance paid through
the final dividend, subject to approval at the AGM. The Company has distributable reserves of £1,004.2m to support this policy.
Information on dividends paid and declared is given in Note 14 to the Group financial statements on page 142.
Subject to approval at the AGM, the final dividend of 5.01p per share (gross) amounting to £37.0m will be paid on 21 February
2025 to Shareholders on the register at the close of business on 17 January 2025. Shareholders will again be offered the option to
participate in a dividend reinvestment plan and the last day for election is 31 January 2025. An interim dividend of 2.54 per share
amounting to a total of £18.8m was paid to Shareholders on 5 July 2024.
Auditor's remuneration
Amounts receivable by the Company’s auditor and its associates in respect of services to the Company and its associates, other
than the audit of the Company’s financial statements, have not been disclosed as the information is required instead to be disclosed
on a consolidated basis in the consolidated financial statements.
Directors’ share options and share awards
Details of the Directors’ share options and of their share awards are set out in the Remuneration Committee’s report.
Notes to the parent company financial statements continued
Grainger plc
Annual Report and Accounts 2024
168
9. List of subsidiaries, associates and joint ventures
A full list of the Group’s subsidiaries as at 30 September 2024 is set out below:
Company
% effective
holding
Direct/
Indirect
Broxden House, Lamberkine Drive, Perth, PH1 1RA
Faside Estates Limited
100%
Indirect
Citygate, St James’ Boulevard, Newcastle upon Tyne, NE1 4JE
19 Ifield Road Management Limited2
100%
Indirect
36 Finborough Road Management Limited2
100%
Indirect
45 Ifield Road Management Limited2
67%
Indirect
Atlantic Metropolitan (U.K.) Limited
100%
Direct
BPT (Assured Homes) Limited
100%
Indirect
BPT (Bradford Property Trust) Limited
100%
Indirect
BPT (Residential Investments) Limited
100%
Indirect
BPT Limited
100%
Direct
Berewood Estate Management Limited1,2
100%
Indirect
Brierley Green Management Company Limited2100%
Indirect
Bromley Property Holdings Limited
100%
Direct
Bromley Property Investments Limited
100%
Indirect
Cambridge Place Management Company
Limited2
100%
Indirect
Chrisdell Limited2
100%
Indirect
City North 5 Limited2
100%
Indirect
City North Group Limited2
100%
Direct
City North Properties Limited2
100%
Indirect
Connected Living London Limited
100%
Indirect
Crofton Estate Management Company Limited2 100%
Indirect
Crossco (No. 103) Limited
100%
Indirect
Derwent Developments (Curzon) Limited
100%
Indirect
Derwent Developments Limited
100%
Indirect
Frincon Holdings 1986 Limited2
100%
Indirect
GIP Limited
100%
Indirect
Globe Brothers Estates Limited
100%
Indirect
Grainger (Aldershot) Limited
100%
Indirect
Grainger (Brook Place 2) Limited
100%
Indirect
Grainger (Clapham) Limited
100%
Indirect
Grainger (Exmouth Junction) Limited2
100%
Indirect
Grainger (Hallsville) Limited
100%
Indirect
Grainger (Hallsville Block D1) Limited
100%
Indirect
Grainger (Hallsville Residential) Limited
100%
Indirect
Grainger (Hornsey) Limited
100%
Indirect
Grainger (London) Limited2
100%
Direct
Grainger (Octavia Hill) Limited
100%
Indirect
Grainger (Peachey) Limited2
100%
Indirect
Grainger Asset Management Limited
100%
Indirect
Grainger Bradley Limited
100%
Indirect
Grainger Development Management Limited
100%
Indirect
Grainger Developments Limited
100%
Indirect
Grainger Employees Limited
100%
Direct
Grainger Enfranchisement No. 1 (2012)
Limited2
100%
Indirect
Grainger Enfranchisement No. 2 (2012)
Limited2
100%
Indirect
Grainger Europe (No. 3) Limited2
100%
Indirect
Grainger Europe (No. 4) Limited
100%
Direct
Grainger Europe Limited2
100%
Direct
Grainger Finance (Tricomm) Limited
100%
Indirect
Grainger Finance Company Limited
100%
Direct
Grainger Homes (Gateshead) Limited2
100%
Indirect
Grainger Homes Limited2
100%
Indirect
Grainger Housing & Developments Limited2
100%
Indirect
Grainger Invest (No. 1 Holdco) Limited
100%
Indirect
Company
% effective
holding
Direct/
Indirect
Grainger Invest No.1
Limited Liability Partnership
100%
Indirect
Grainger Invest No.2
Limited Liability Partnership
100%
Indirect
Grainger Kensington & Chelsea Limited
100%
Direct
Grainger Land & Regeneration Limited
100%
Indirect
Grainger Maidenhead Limited
100%
Indirect
Grainger Newbury Limited
100%
Indirect
Grainger OCCC Limited
100%
Indirect
Grainger Pearl Holdings Limited
100%
Indirect
Grainger Pearl Limited
100%
Indirect
Grainger Pearl (Salford) Limited
100%
Indirect
Grainger Properties Limited
100%
Indirect
Grainger PRS Limited2
100%
Indirect
Grainger RAMP Limited
100%
Indirect
Grainger Real Estate Limited
100%
Indirect
Grainger REIT 1 Limited2
100%
Indirect
Grainger REIT 2 Limited2
100%
Indirect
Grainger REIT 3 Limited2
100%
Indirect
Grainger Residential Limited
100%
Indirect
Grainger Residential Management Limited
100%
Direct
Grainger Seven Sisters Limited
100%
Indirect
Grainger Southwark Limited
100%
Indirect
Grainger Treasury Property
Investments Limited Partnership
100%
Indirect
Grainger Treasury Property (2006)
Limited Liability Partnership
100%
Indirect
Grainger Tribe Limited
100%
Indirect
Grainger Trust Limited
100%
Indirect
Grainger Unitholder No 1 Limited2
100%
Direct
Greit Limited
100%
Direct
GRIP REIT PLC
100%
Indirect
GRIP UK Holdings Limited
100%
Indirect
GRIP UK Property Developments Limited
100%
Indirect
GRIP UK Property Investments Limited
100%
Indirect
H I Tricomm Holdings Limited2
100%
Indirect
Harborne Tenants Limited2
100%
Indirect
Infrastructure Investors Defence Housing
(Bristol) Limited2
100%
Indirect
Ingleby Court Management Limited2
100%
Indirect
Kings Dock Mill (Liverpool) Management
Company Limited1,2
100%
Indirect
Macaulay & Porteus Management
Company Limited1,2
100%
Indirect
Manor Court (Solihull) Management Limited2
100%
Indirect
Margrave Estates Limited
100%
Indirect
MREF III Newcastle Operations Limited
100%
Indirect
N & D London Investments2
100%
Indirect
N & D London Limited2
100%
Indirect
Northumberland & Durham
Property Trust Limited
100%
Indirect
PHA Limited
100%
Indirect
Portland House Holdings Limited
100%
Indirect
Residential Leases Limited2
100%
Indirect
Residential Tenancies Limited2
100%
Indirect
Rotation Finance Limited2
100%
Direct
Suburban Homes Limited2
100%
Indirect
The Bradford Property Trust Limited2
100%
Indirect
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
169
Company
% effective
holding
Direct/
Indirect
Citygate, St James’ Boulevard, Newcastle upon Tyne, NE1 4JE
The Sandwarren Management Company
Limited2
100%
Indirect
Tricomm Housing (Holdings) Limited
100%
Indirect
Tricomm Housing Limited
100%
Indirect
Victoria Court (Southport) Limited2
100%
Indirect
Warren Court Limited2
100%
Indirect
Company
% effective
holding
Direct/
Indirect
West Waterlooville Developments Limited
100%
Indirect
Eschersheimer Landstraße 14, 60322 Frankfurt am Main
Grainger FRM GmbH3
100%
Indirect
218 Finney Lane, Heald Green, Cheadle, SK8 3QA
Oakleigh House (Sale) Management
Company Limited
69%
Indirect
A full list of the Group’s associates as at 30 September 2024 is set out below:
Company
% effective
holding
Direct/
Indirect
8 Five Acres, Kings Langley, Hertfordshire, WD4 9JU
Trevor Square Garden
Management Company Limited
7%
Indirect
31 Radipole Road, Parsons Green, Fulham, London, SW6 5DN
Stagestar Limited2
25%
Indirect
33 Albert Square, London, SW8 1BZ
33 Albert Square Management
Company Limited
25%
Indirect
Company
% effective
holding
Direct/
Indirect
Citygate, St James’ Boulevard, Newcastle upon Tyne, NE1 4JE
Sixty-Two Stanhope Gardens Limited2
20%
Indirect
Vesta (General Partner) Limited
30%
Indirect
Vesta Limited Partnership
20%
Indirect
Portmill House, Portmill Lane, Hitchin, SG5 1DJ
Redoubt Close Management Limited2
3%
Indirect
A full list of the Group’s joint ventures as at 30 September 2024 is set out below:
Company
% effective
holding
Direct/
Indirect
100 Victoria Street, London, SW1E 5JL
Curzon Park Limited
50%
Indirect
16a Castlebar Road, London, W5 2DP
16 Castlebar Road Management
Company Limited2
50%
Indirect
Citygate, St James’ Boulevard, Newcastle upon Tyne, NE1 4JE
1 Ifield Road Management Limited2
50%
Indirect
31-37 Disbrowe Road Freehold Company Limited2 50%
Indirect
174 Bishops Road Limited1,2
50%
Indirect
Besson Street Limited Liability Partnership
50%
Indirect
Besson Street Second Member Limited2
50%
Indirect
Connected Living London (BTR) Limited
51%
Indirect
Connected Living London (RP) Limited
51%
Indirect
Connected Living London (Limmo) Limited2
51%
Indirect
Company
% effective
holding
Direct/
Indirect
Connected Living London (Southall) Limited
51%
Indirect
Connected Living London (OpCo) Limited2
51%
Indirect
Connected Living London (Nine Elms) Limited
51%
Indirect
Connected Living London
(Woolwich) Limited2
51%
Indirect
Connected Living London
(Arnos Grove) Limited
51%
Indirect
Connected Living London
(Cockfosters) Limited
51%
Indirect
Connected Living London
(Montford Place) Limited
51%
Indirect
Lewisham Grainger Holdings Limited
Liability Partnership2
50%
Indirect
Wellesley Residents Trust Limited1,2
50%
Indirect
All subsidiaries, associates and joint ventures are incorporated in the UK except where the registered office indicates otherwise.
1.
Company limited by guarantee.
2.
Company is non-active.
3.
In liquidation.
Notes to the parent company financial statements continued
Grainger plc
Annual Report and Accounts 2024
170
EPRA performance measures (unaudited)
1. Introduction
The European Public Real Estate Association (‘EPRA’) is the body that represents Europe’s listed property companies.
The association sets out guidelines and recommendations to facilitate consistency in listed real estate reporting, in turn allowing
stakeholders to compare companies on a like-for-like basis. As a member of EPRA, the Group is supportive of EPRA’s initiatives and
discloses measures in relation to the EPRA Best Practices Recommendations (‘EPRA BPR’) guidelines. The most recent guidelines,
updated in September 2024, have been adopted by the Group.
The EPRA performance measures and definitions are set out below:
Performance measure
Definition
1) EPRA Earnings
Recurring earnings from core operational activities. This is a key measure of a company’s underlying operating
results, providing an indication of the extent to which current dividend payments are supported by earnings.
2) EPRA NRV
Net asset value adjusted to include properties and other investment interests at fair value and to exclude
certain items not expected to crystallise in a long-term property business model.
3) EPRA NTA
EPRA NRV adjusted to include deferred tax on assets that may be sold by the business and exclude intangible
assets.
4) EPRA NDV
EPRA NRV adjusted to include the fair values of i) financial instruments, ii) debt and iii) deferred taxes. EPRA
NDV excludes goodwill recognised on a company’s statutory balance sheet.
5i) EPRA Net Initial Yield (‘NIY’)
Annualised rental income based on cash rents at the balance sheet date, less non-recoverable property
expenses, divided by the market value of the property, increased with (estimated) purchasers’ costs.
5ii) EPRA ‘topped-up’ NIY
This measure incorporates an adjustment to EPRA NIY in respect of the expiration of rent-free periods
(or other unexpired lease incentives, such as discounted rent periods and step rents).
6) EPRA Vacancy Rate
Estimated Market Rent Value (‘ERV’) of vacant space divided by ERV of the whole portfolio.
7) EPRA Cost Ratios
This measure includes all administrative and operating expenses including share of joint ventures’ overheads
and operating expenses, net of any service fees, all divided by gross rental income.
8) EPRA LTV
This measure includes all capital which is not equity as debt, irrespective of its IFRS classification, and is based
upon proportional consolidation, therefore including a company’s share in the net debt and net assets of joint
ventures and associates. Assets are included at fair value, net debt at nominal value.
Summary
2024
2023
EPRA Earnings
£48.0m
£39.8m
EPRA Earnings per share
4.9p
4.2p
EPRA NRV
£2,295.9m
£2,359.3m
EPRA NRV per share
309p
318p
EPRA NTA
£2,218.1m
£2,267.5m
EPRA NTA per share
298p
305p
EPRA NDV
£2,194.9m
£2,332.9m
EPRA NDV per share
295p
314p
EPRA Net Initial Yield (‘NIY’)
3.4%
3.1%
Adjusted EPRA NIY
3.9%
3.8%
EPRA Vacancy Rate
2.7%
1.6%
EPRA Cost Ratio (including direct vacancy costs)
36.5%
34.1%
EPRA Cost Ratio (excluding direct vacancy costs)
35.2%
32.9%
EPRA LTV
39.7%
40.0%
Capital Expenditure
£277.8m
£345.9m
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
171
2. EPRA Earnings
2024
2023
Earnings
£m
Shares
millions
Pence per
share
Earnings
£m
Shares
millions
Pence per
share
Earnings per IFRS income statement
40.6
738.2
5.5
27.4
739.9
3.7
Adjustments to calculate EPRA Earnings, exclude:
i)
Changes in value of investment properties,
development properties held for investment and
other interests
38.4
–
5.2
68.9
–
9.3
ii)
Profits or losses on disposal of investment properties,
development properties held for investment and
other interests
5.8
–
0.8
(3.3)
–
(0.4)
iii) Profits or losses on sales of trading properties including
impairment charges in respect of trading properties
(49.3)
–
(6.7)
(53.8)
–
(7.4)
iv) Tax on profits or losses on disposals
–
–
–
–
–
–
v) Negative goodwill/goodwill impairment
–
–
–
0.1
–
–
vi) Changes in fair value of financial instruments
and associated close-out costs
6.6
–
0.9
–
–
–
vii) Acquisition costs on share deals and non-controlling
joint venture interests
–
–
–
–
–
–
viii) Adjustments related to funding structure
–
–
–
–
–
–
ix) Adjustments related to non-operating and exceptional
items
5.0
–
0.7
–
–
–
x) Deferred tax in respect of EPRA adjustments
–
–
–
–
–
–
xi) Adjustments i) to viii) in respect of joint ventures
0.9
–
0.1
0.5
–
0.1
xii) Non-controlling interests in respect of the above
–
–
–
–
–
–
EPRA Earnings/Earnings per share
48.0
738.2
6.5
39.8
739.9
5.4
EPRA Earnings per share after tax
4.9
4.2
ix) Adjustments relate to fire safety provisions as outlined within the Group's consolidated income statement.
EPRA Earnings have been divided by the average number of shares shown in Note 15 to the Group financial statements to calculate
earnings per share. EPRA Earnings per share after tax is calculated using the standard rate of UK Corporation Tax of 25.0%
(2023: 22.0%).
3. EPRA NRV, EPRA NTA and EPRA NDV
2024
2023
EPRA NRV
£m
EPRA NTA
£m
EPRA NDV
£m
EPRA NRV
£m
EPRA NTA
£m
EPRA NDV
£m
IFRS Equity attributable to Shareholders
1,893.7
1,893.7
1,893.7
1,928.6
1,928.6
1,928.6
Include/Exclude:
i) Hybrid Instruments
–
–
–
–
–
–
Diluted NAV
1,893.7
1,893.7
1,893.7
1,928.6
1,928.6
1,928.6
Include:
ii.a) Revaluation of IP (if IAS 40 cost option is used)
–
–
–
–
–
–
ii.b) Revaluation of IPUC (if IAS 40 cost option is used)
–
–
–
–
–
–
ii.c) Revaluation of other non-current investments
11.8
11.8
11.8
11.6
11.6
11.6
iii) Revaluation of tenant leases held as finance leases
–
–
–
–
–
–
iv) Revaluation of trading properties
292.4
216.4
216.4
347.3
256.5
256.5
Diluted NAV at Fair Value
2,197.9
2,121.9
2,121.9
2,287.5
2,196.7
2,196.7
Exclude:
v) Deferred tax in relation to fair value gains of IP
112.9
112.9
–
105.8
105.8
–
vi) Fair value of financial instruments
(14.9)
(14.9)
–
(34.0)
(34.0)
–
vii) Goodwill as a result of deferred tax
–
–
–
–
–
–
viii.a) Goodwill as per the IFRS balance sheet
–
(0.4)
(0.4)
–
(0.4)
(0.4)
viii.b) Intangible as per the IFRS balance sheet
–
(1.4)
–
–
(0.6)
–
Include:
ix) Fair value of fixed interest rate debt
–
–
73.4
–
–
136.6
x) Revalue of intangibles to fair value
–
–
–
–
–
–
xi) Real estate transfer tax
–
–
–
–
–
–
NAV
2,295.9
2,218.1
2,194.9
2,359.3
2,267.5
2,332.9
Fully diluted number of shares
743.1
743.1
743.1
743.0
743.0
743.0
NAV pence per share
309
298
295
318
305
314
EPRA performance measures (unaudited) continued
Grainger plc
Annual Report and Accounts 2024
172
4. EPRA NIY
2024
£m
2023
£m
Investment property – wholly-owned
3,028.3
2,948.9
Investment property – share of JVs/Funds
66.5
65.6
Trading property (including share of JVs)
620.1
734.3
Less: developments
(401.7)
(617.1)
Completed property portfolio
3,313.2
3,131.7
Allowance for estimated purchasers' costs
180.5
125.2
Gross up completed property portfolio valuation
B
3,493.7
3,256.9
Annualised cash passing rental income
166.1
140.1
Property outgoings
(48.8)
(39.1)
Annualised net rents
A
117.3
101.0
Add: rent incentives
0.2
0.3
'Topped up' net annualised rent
C
117.5
101.3
EPRA NIY
A/B
3.4%
3.1%
EPRA 'topped up' NIY
C/B
3.4%
3.1%
Gross up completed property portfolio valuation
3,493.7
3,256.9
Adjustments to completed property portfolio in respect of regulated tenancies and share of
joint ventures
(634.5)
(740.9)
Adjusted gross up completed property portfolio valuation
b
2,859.2
2,516.0
Annualised net rents
117.3
101.0
Adjustments to annualised cash passing rental income in respect of newly completed
developments and refurbishment activity
8.3
11.2
Adjustments to property outgoings in respect of newly completed developments and
refurbishment activity
(2.4)
(3.2)
Adjustments to annualised cash passing rental income in respect of regulated tenancies
(15.0)
(17.0)
Adjustments to property outgoings in respect of regulated tenancies
4.5
4.7
Adjusted annualised net rents
a
112.7
96.7
Add: rent incentives
0.2
0.3
Adjusted EPRA 'topped up' NIY
c
112.9
97.0
Adjusted EPRA NIY
a/b
3.9%
3.8%
Adjusted EPRA 'topped up' NIY
c/b
3.9%
3.9%
5. EPRA Vacancy Rate
2024
£m
2023
£m
Estimated rental value of vacant space
A
3.3
1.8
Estimated rental value of the whole portfolio
B
122.9
112.7
EPRA Vacancy Rate
A/B
2.7%
1.6%
The vacancy rate reflects estimated rental values of the Group’s stabilised habitable PRS units as at the reporting date.
6. EPRA Cost Ratio
2024
£m
2023
£m
Administrative expenses
35.3
33.5
Property operating expenses
44.7
37.2
Share of joint ventures expenses
0.6
(0.1)
Management fees
(2.6)
(3.2)
Other operating income/recharges intended to cover overhead expenses
(5.5)
(1.8)
Exclude:
Investment property depreciation
–
–
Ground rent costs
(0.1)
(0.2)
EPRA Costs (including direct vacancy costs)
A
72.4
65.4
Direct vacancy costs
(2.4)
(2.2)
EPRA Costs (excluding direct vacancy costs)
B
70.0
63.2
Gross rental income
154.8
133.7
Less: ground rent income
(0.6)
(0.6)
Add: share of joint ventures (gross rental income less ground rents)
0.8
0.8
Add: adjustment in respect of profits or losses on sales of properties
43.6
58.1
Gross Rental Income and Trading Profits
C
198.6
192.0
Adjusted EPRA Cost Ratio (including direct vacancy costs)
A/C
36.5%
34.1%
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
173
EPRA performance measures (unaudited) continued
Adjusted EPRA Cost Ratio (excluding direct vacancy costs)
B/C
35.2%
32.9%
7. EPRA LTV
2024
£m
Group
Share of Joint
Ventures
Share of
Associates
Combined
Borrowings from Financial Institutions
908.2
–
–
908.2
Bond loans
700.0
–
–
700.0
Net payables
29.5
6.7
14.7
50.9
Exclude:
Cash and cash equivalents
(140.1)
(1.4)
(0.5)
(142.0)
Net debt
A
1,497.6
5.3
14.2
1,517.1
Investment properties at fair value
2,720.2
–
14.5
2,734.7
Investment properties under development
308.1
52.0
–
360.1
Properties held-for-sale
620.1
–
–
620.1
Financial assets
101.7
–
–
101.7
Total property value
B
3,750.1
52.0
14.5
3,816.6
EPRA LTV %
A/B
39.9%
10.1%
97.6%
39.7%
2023
£m
Group
Share of Joint
Ventures
Share of
Associates
Combined
Borrowings from Financial Institutions
849.2
–
–
849.2
Bond loans
700.0
–
–
700.0
Net payables
93.6
6.7
14.6
114.9
Exclude:
Cash and cash equivalents
(117.8)
(3.5)
(0.5)
(121.8)
Net debt
A
1,525.0
3.2
14.1
1,542.3
Investment properties at fair value
2,433.4
–
15.4
2,448.8
Investment properties under development
515.5
50.3
–
565.8
Properties held-for-sale
734.3
–
–
734.3
Financial assets
109.9
–
–
109.9
Total property value
B
3,793.1
50.3
15.4
3,858.8
EPRA LTV %
A/B
40.2%
6.4%
91.6%
40.0%
8. Capital Expenditure
2024
£m
Trading
Properties
Investment
Properties
Group
(excl Joint
Ventures)
Share of Joint
Ventures
Combined
Acquisitions
0.2
85.9
86.1
–
86.1
Development
11.0
149.6
160.6
1.2
161.8
Completed assets
– Incremental letting space
–
–
–
–
–
– No incremental letting space
3.8
13.9
17.7
–
17.7
- Tenant incentives
–
–
–
–
–
– Other material non-allocated types of expenditure
–
–
–
–
–
Capitalised interest
–
11.6
11.6
0.6
12.2
Total Capital Expenditure
15.0
261.0
276.0
1.8
277.8
2023
£m
Trading
Properties
Investment
Properties
Group
(excl Joint
Ventures)
Share of Joint
Ventures
Combined
Acquisitions
–
9.8
9.8
–
9.8
Development
5.9
255.9
261.8
33.3
295.1
Completed assets
– Incremental letting space
–
–
–
–
–
– No incremental letting space
2.7
20.4
23.1
–
23.1
- Tenant incentives
–
–
–
–
–
– Other material non-allocated types of expenditure
–
–
–
–
–
Capitalised interest
1.6
15.9
17.5
0.4
17.9
Total Capital Expenditure
10.2
302.0
312.2
33.7
345.9
Grainger plc
Annual Report and Accounts 2024
174
Five year record (unaudited)
For the year ended 30 September 2024
20201
£m
2021
£m
2022
£m
2023
£m
2024
£m
Group revenue
214.0
248.9
279.2
267.1
290.1
Gross proceeds from property sales
144.1
187.9
174.7
193.7
274.3
Gross rental income
99.3
97.4
121.4
133.7
154.8
Net rental income
73.6
70.6
86.3
96.5
110.1
Gross fee income
2.2
2.6
2.7
3.2
2.6
Adjusted earnings
81.8
83.5
93.5
97.6
91.6
Profit before tax
99.1
152.1
298.6
27.4
40.6
Profit after tax
82.8
109.5
229.4
25.6
31.2
Dividends paid
33.5
36.8
40.0
45.7
51.0
Pence
Pence
Pence
Pence
Pence
Basic earnings per share
12.8
16.2
31.0
3.5
4.2
Dividends per share
5.5
5.2
6.0
6.7
7.6
Pence
Pence
Pence
Pence
Pence
EPRA NRV per share
301.0
316.4
332.6
317.5
309.0
EPRA NTA per share
284.7
297.2
317.5
305.2
298.4
EPRA NDV per share
272.8
284.2
334.2
314.0
295.4
Share price at 30 September
297.2
305.0
229.4
233.6
245.5
%
%
%
%
%
Total Accounting Return – NTA basis
3.6
5.5
8.8
(1.8)
0.3
Total Property Return (‘TPR’)
5.4
7.5
7.5
0.4
1.9
1.
The 2020 results in the table above have been restated in order to be comparable with 2021 results following the April 2021 IFRS Interpretations Committee publication of accounting
guidance for configuration and customisation expenditure relating to Software as a Service arrangements . All other years are as previously reported and have not been restated.
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
175
Alternative performance measures
For the year ended 30 September 2024
Performance measure
Definition
Loan to Value (‘LTV’)
Ratio of net debt to the market value of properties and property related assets. This is a key metric for the
Group as part of measuring gearing at both an overall Group and individual facility level, linked to both our risk
appetite and individual facility covenants.
2024
£m
2023
£m
Gross debt
1,592.9
1,533.5
Cash (excluding client cash)
(140.1)
(117.8)
Net debt
1,452.8
1,415.7
Market value of properties
3,648.4
3,683.2
Other property related assets
152.5
161.5
Total market value of properties and property related assets
3,800.9
3,844.7
LTV
38.2%
36.8%
Total Property Return (‘TPR’)
A performance measure which represents the change in gross asset value, net of capital expenditure incurred,
plus property related net income, expressed as a percentage of opening gross asset value. This is a key metric
for the Group in measuring the overall performance of property returns on the Group’s property assets, with
LTIP conditions linked to the performance of this metric as outlined in the Directors’ Remuneration report.
2024
£m
2023
£m
Net rental income
110.1
96.5
Liquidated and ascertained damages ‘LADs’
5.2
1.6
Profit on disposal of trading property
49.4
54.8
Previously recognised profit through EPRA market value measures
(54.2)
(54.0)
Profit on disposal of investment property
(5.8)
3.3
Income from financial interest in property assets
(1.3)
4.6
Net valuation (losses)/gains on investment property
(32.5)
(68.8)
Net valuation gains on trading property
0.6
(24.2)
Property return
71.5
13.8
Investment property – opening balance
2,948.9
2,775.9
Financial interest in property assets – opening balance
67.0
69.1
Inventories – trading property – opening balance
734.3
873.0
Total opening gross assets
3,750.2
3,718.0
TPR
1.9%
0.4%
Grainger plc
Annual Report and Accounts 2024
176
Other information
Shareholders’ information
Financial calendar
AGM
5 February 2025
Payment of 2024 final dividend
21 February 2025
Announcement of 2025 interim results
22 May 2025
Announcement of 2025 final results
20 November 2025
Share price
During the year ended 30 September 2024, the range of the closing mid-market prices of the Company’s ordinary shares were:
Price at 30 September 2024
245.5p
Lowest price during the year
220.2p
Highest price during the year
274.8p
Daily information on the Company’s share price can be obtained on our website www.graingerplc.co.uk or by telephone from
FT Cityline on 09058 171 690. Please note that FT Cityline is a chargeable service.
Share listing
Grainger plc 5p ordinary are listed on the London Stock Exchange (equity shares - commercial companies) under
ISIN GB00B04V1276.
Capital gains tax
The market value of the Company’s shares for capital gains tax purposes at 31 March 1982 was 2.03p.
Website
Website address www.graingerplc.co.uk
Shareholders’ enquiries
All administrative enquiries relating to shareholdings (for example, notification of change of address, loss of share certificates,
dividend payments) should be addressed to the Company’s registrar at:
Link Group
Central Square, 10th Floor
29 Wellington Street
Leeds, LS1 4DL
Share dealing service
A share dealing service is available to existing Shareholders to buy or sell the Company’s shares via Link Share Dealing Services.
Online and telephone dealing facilities provide an easy to access and simple to use service.
For further information on this service, or to buy or sell shares, please contact: https://ww2.linkgroup.eu/share-deal/ – online
dealing +44 (0) 371 664 0445 (calls are charged at the standard geographical rate and will vary by provider. Calls outside the UK
are charged at the applicable international rate. Lines are open Monday to Friday, 8am to 4:30pm) – telephone dealing.
Please note that the Directors of the Company are not seeking to encourage Shareholders to either buy or sell their shares.
Shareholders in any doubt as to what action to take are recommended to seek financial advice from an independent financial
adviser authorised by the Financial Services and Markets Act 2000.
Forward-looking statements
This Report may contain certain statements that are forward-looking statements. They appear in a number of places throughout
this Report and include statements regarding Grainger’s intentions, beliefs or current expectations and those of its officers,
directors and employees concerning, amongst other things, Grainger’s results of operations, financial condition, liquidity, prospects,
growth, strategies and the business it operates. By their nature, these statements involve risks and uncertainty since future events
and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements
reflect knowledge and information available at the date of preparation of this Report and, unless otherwise required by applicable
law, Grainger undertakes no obligation to update or revise these forward-looking statements. Nothing in this Report should be
construed as a profit forecast. Grainger and its Directors accept no liability to third parties in respect of this update save as would
arise under English law. Information about the management of the Principal Risks and Uncertainties facing Grainger is set out
within the Report on pages 56 to 63. Any forward-looking statements in this Report speak only at the date of this Report and
Grainger undertakes no obligation to update publicly or review any forward-looking statement to reflect new information or events,
circumstances or developments after the date of this Report.
Company Secretary and registered office
Sapna FitzGerald
Grainger plc
Citygate
St James’ Boulevard
Newcastle upon Tyne NE1 4JE
Company registration number 125575
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
177
Other information
Glossary of terms
Adjusted earnings
Profit before tax before valuation
movements and other adjustments that
are considered to be one-off in nature,
which do not form part of the normal on-
going revenue or costs of the business.
Cap
Financial instrument which, in return for
a fee, guarantees an upper limit for the
interest rate on a loan.
CHARM
The CHARM portfolio is a financial
interest in equity mortgages held by
the Church of England Pensions Board
as mortgagee.
Contingent tax
The amount of tax that would be payable
should trading property be sold at the
market value shown in the market value
balance sheet.
Dividend cover
Earnings per share divided by dividends
per share.
Earnings Per Share (‘EPS’)
Profit after tax attributable to
Shareholders divided by the weighted
average number of shares in issue in
the year.
European Public Real Estate
Association (‘EPRA’)
A not-for-profit association with a
membership of Europe’s leading
property companies, investors and
consultants which strives to establish
best practices in accounting, reporting
and corporate governance and to provide
high-quality information to investors.
EPRA published its latest Best Practices
Recommendations in September 2024.
Further information, including definitions
and measures adopted by Grainger can
be found on pages 175 to 178.
Estimated Rental Value (‘ERV’)
The market rental value of lettable
space as determined by the Group’s
external valuers at the balance sheet
date. For properties which have not
yet reached practical completion,
ERV is determined by management’s
assessment of market rents.
Goodwill
On acquisition of a company, the
difference between the fair value of net
assets acquired and the fair value of the
purchase price paid.
Hedging
The use of financial instruments to
protect against interest rate movements.
Interest cover ratio (‘ICR’)
Profit on ordinary activities before
interest and tax divided by net
interest payable.
Investment value or market value
Open market value of a property subject
to relevant tenancy in place.
Loan to Value (‘LTV’)
Ratio of net debt to the market value of
properties and property related assets.
This is the primary gearing metric for
the Group.
Net Initial Yield (‘NIY’)
Annualised net passing rents as a
percentage of the property’s open
market value.
Net Rental Income (‘NRI’)
Gross rental income less property
operating expenses, ground rents paid
and service charge expenditure.
Net Asset Value (‘NAV’)
Net assets divided by the number of
ordinary shares in issue as at the balance
sheet date.
Net Tangible Assets (‘NTA’)
NTA is the market value of property
assets after deducting deferred tax on
trading assets, and excluding intangible
assets and derivatives.
Occupancy
The passing rent from PRS stabilised let
units as a proportion of PRS stabilised PRI
as at a specific point in time.
Passing rent
The annual rental income receivable on a
property as at the balance sheet date.
Potential Rental Income (‘PRI’)
Passing rent from let units plus ERV on
vacant units.
Private Rented Sector (‘PRS’)
Housing tenure classification that
relates to residential units owned by
the private sector to provide rental
accommodation. This excludes units
owned by Government authorities and
housing associations.
Regulated tenancy
Tenancy regulated under the 1977 Rent
Act. Rent (usually sub-market) is set
by the rent officer and the tenant has
security of tenure.
Stabilised
Classification of existing property, newly
completed property or property acquired
once it achieves 95% occupancy. Once an
asset is designated as stabilised the
classification is retained whilst it is held by
the Group for future rental income.
Swap
Financial instrument to protect against
interest rate movements.
Tenanted residential
Activity covering the acquisition, renting
out and subsequent sale (usually on
vacancy) of residential units subject to a
tenancy agreement.
Total Accounting Return/Return on
Shareholder Equity (‘ROSE’)
The growth in the net asset value of the
Group plus dividends paid in the year,
calculated as a percentage of the opening
net asset value.
Total Property Income Return
(‘TPIR’)/Like-for-like rental growth
(‘LFL’)
The change in gross rental income in a
period as a result of tenant renewals or
a change in tenant. Applies to changes
in gross rents on a comparable basis
and excludes the impact of acquisitions,
disposals and changes resulting from
refurbishments.
Total Property Return (‘TPR’)
A performance measure which
represents the change in gross asset
value, net of capital expenditure incurred,
plus property related net income,
expressed as a percentage of opening
gross asset value.
Total Shareholder Return (‘TSR’)
Return attributable to Shareholders
on the basis of share price growth with
dividends reinvested.
UK-adopted IFRS
International Financial Reporting
Standards, as adopted by the UK,
mandatory for UK-listed companies for
accounting periods ending on or after
1 January 2021.
Vacant Possession (‘VP’) value
Open market value of a property free
from any tenancy.
Weighted Average Cost of Capital
(‘WACC’)
The weighted average cost of funding the
Group’s activities through a combination
of Shareholders’ funds and debt.
Grainger plc
Annual Report and Accounts 2024
178
Other information
Advisers
Solicitors
Freshfields
100 Bishopsgate
London
EC2P 2SR
Financial public relations
Camarco
40 Strand
London
WC2N 5RW
Banking
Clearing Bank and Facility Agent
Barclays Bank PLC
Other bankers
Aareal Bank AG
AIB Group (UK) PLC
ABN Amro Bank N.V.
Handelsbanken PLC
HSBC Bank PLC
HSBC UK Bank PLC
National Westminster Bank PLC
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Santander UK PLC
Wells Fargo Bank NA
Independent auditor
KPMG LLP Chartered Accountants
15 Canada Square
Canary Wharf
London
E14 5GL
Stockbrokers
JP Morgan Cazenove Limited
25 Bank Street
London
E14 5JP
Numis Securities Limited
45 Gresham Street
London
EC2V 7BF
Registrars and transfer office
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Corporate addresses
Newcastle
Citygate
St James’ Boulevard
Newcastle upon Tyne
NE1 4JE
Tel: 0191 261 1819
London
3rd Floor
3 More London Riverside
London
SE1 2AQ
Tel: 020 7940 9500
Greater Manchester
5 & 6 Waterman Walk
Clippers Quay
Salford
M50 3BP
Aldershot
Smith Dorrien House
Queens Avenue
Wellesley
Aldershot
Hampshire
GU11 2BT
Birmingham
Gilders Yard
14 Great Hampton Street
Birmingham
B18 6ER
View our website
www.graingerplc.co.uk
Financial statements
Governance
Strategic report
Grainger plc
Annual Report and Accounts 2024
179
Notes
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Version 2.0 as published on 13 December 2024
Newcastle
Citygate
St James’ Boulevard
Newcastle upon Tyne
NE1 4JE
Tel: 0191 261 1819
London
3 More London Pl
3rd Floor
London
SE1 2AQ
Tel: 020 7940 9500
Greater Manchester
5 & 6 Waterman Walk
Clippers Quay
Salford
M50 3BP
Aldershot
Smith Dorrien House
Queens Avenue
Wellesley
Aldershot
Hampshire
GU11 2BT
Birmingham
Gilders Yard
Birmingham
B18 6ER
www.graingerplc.co.uk