Half-year Results

Outstanding performance; Accelerating growth;

Delivering shareholder value

§ EPRA Earnings up +23%

§ Net rental income growth of +15%

§ Strong like-for-like rental growth of +4.4%

§ Dividend up +12%

§ Strong demand and high occupancy at 96.0%

§ Property values increasing

§ Excellent outlook

Grainger plc, the UK's largest listed residential landlord and leader in the build-to-rent (BTR) sector, today announces another period of strong performance for the six months ended 31 March 2025.

Helen Gordon, Chief Executive, said:

"Grainger has delivered another period of outstanding performance and we are continuing to deliver growth year-on-year. Earnings1 are up 23% whilst net rental income grew 15% compared to this period last year, driven by our new openings, growth in underlying rents and our ability to leverage our central costs and operational platform. Our properties are in high demand and our portfolio remains fully let with occupancy at 96% with a strong customer demographic base and stable and healthy levels of affordability. The expansion of our BTR portfolio is accelerating our earnings growth.

"Residential, specifically private rented residential, has proven its resilience through the cycle compared to other real estate asset classes with excellent rental growth protecting valuations and we are seeing continued valuation growth. Investment activity in the build-to-rent sector is very buoyant with reports of more than £1bn of investment activity in Q1 this year. Our market is characterised by structural demand drivers, supply-constrained markets, strong customer demographics and a supportive regulatory and political backdrop which is aimed at stimulating investment activity.

"Through the delivery of the first part of our pipeline, our committed pipeline, we expect to deliver strong like-for-like rental growth and 50% earnings growth from FY24 to FY29 after fully absorbing the impact of higher interest costs. We have significant firepower from our non-core portfolio to fund growth beyond that for our remaining pipeline or additional stabilised acquisitions.

"Our business is designed to create shareholder value. We operate in a sector with strong structural tailwinds. Our asset class and specifically our portfolio and platform, deliver inflation-backed rental growth. Our sector leading operating platform is scalable and our EBITDA margins are growing substantially as we deliver our large pipeline. This shareholder value creation model creates excellent, risk-adjusted returns, with a commitment to delivering a continued progressive dividend. We are increasing our interim dividend 12%, reflecting our outstanding performance."

HIGHLIGHTS

Delivering excellent rental growth through our best-in-class operational platform

§ Increased net rental income by 15% to £61.3m (HY24: £53.2m)

§ Delivered 4.4% like-for-like rental growth (FY24: 6.3%) with BTR6 rental growth 4.2% (new lets 3.1% and renewals 4.9%), whilst regulated tenancy rental growth was 7.0%

§ Strong demand; achieved high occupancy at 96.0% (FY24: 97.4%)

§ Strong customer demographic base with 89% between ages 20-44 from a broad, robust employer base

Accelerating earnings growth, demonstrating our ability to leverage our operational platform

§ EPRA Earnings increased 23% to £30.2m (HY24: £24.5m)

§ Our committed pipeline, with only £166m remaining to invest, will grow FY24 EPRA Earnings by 25% to FY26 and 50% by FY29 even after absorbing higher interest costs over the period

§ Interim dividend increased 12% to 2.85p per share (HY24: 2.54pps)

Strong investment market and valuations growing

§ £1.1bn of BTR investment activity seen in Q17, forecast to be £6bn for 20258

§ Property valuations have continued to increase, with EPRA NTA up 1% to 300p

Self-funded growth

§ Significant firepower of £1.1bn of low-yielding, non-core assets to fund future growth

§ Adjusted Earnings grown by 13% to £50.1m, which includes sales profits (HY24: £44.4m)

§ Strong sales of regulated tenancies achieving vacant sales in line with valuations

Attractive market dynamics

§ Rental demand expected to grow by 20% between 2021 and 20319

§ Supply of rental housing remains constrained and expected to worsen

§ Opportunity to grow market share as BTR represents only 2.3% of total rental market10

§ Political support for BTR

Strong balance sheet to support growth

§ Fixed low debt cost with no material refinancing required until 2029

§ Highly cash generative business with c.£200m+ pa

§ LTV forecast to reduce over time

§ Ability to absorb future implied interest rates and continue to deliver earnings growth

REIT conversion on track for FY26

§ On track to convert to a REIT for FY26; enhancing total returns by c.50bps and delivering corporation tax savings of c.£15m in the first year and growing thereafter, whilst supporting our strategy and growth prospects

§ Commitment to deliver continued progressive dividend returns

Excellent outlook, delivering shareholder value

§ Strong underlying market conditions with ongoing undersupply as demand grows

§ Strong like-for-like rental growth expected to continue, supported by inflation

§ Sector-leading operating platform will drive further efficiencies to deliver EBITDA margin expansion from 54% to 60%

§ Continuing strong year-on-year compounding earnings growth

§ Buoyant investment activity in the BTR sector will continue to support property valuations

Our £1.3bn Build-to-Rent Pipeline

Committed pipeline

1 EPRA Earnings

2 Refer to Note 5 for net rental income calculation.

3 Refer to Note 2 for IFRS profit before tax and adjusted earnings reconciliation.

4 Dividend - The dividend of 2.85p per share (gross) amounting to £21.0m will be paid on 7 July 2025 to shareholders on the register at the close of business on 23 May 2025. Shareholders will again be offered the option to participate in a dividend re-investment plan and the last day for election is 9 June 2025 - refer also to Note 11.

6 Previously referred to as PRS

7 Knight Frank, BTR Market Update Q1 2025

8 LSH Built to Last report, 1 May 2025

9 Savills using English Housing Survey data

10 ONS, Northern Ireland Statistics & Research Agency, BPF, Savills

Future reporting dates

§ Trading Update - September 2025

§ Full year results - 20 November 2025

Half year results presentation

Grainger plc will be holding a presentation of the results at 9:00am (UK time) today, 15 May 2025, which can be accessed via webcast and a telephone dial-in facility (details below), which will be followed by a live Q&A session for sell side analysts and shareholders.

Webcast details:

To view the webcast, please go to the following URL link. Registration is required.

The webcast will be available for six months from the date of the presentation.

Conference call details:

Call: +44 (0) 33 0551 0200

Quote "Grainger Half Year" when prompted by the operator

*Please note that Live Questions can be submitted by analysts and investors via the webcast, but not via the conference call facility.

Presentation material:

Chief Executive's review

Outstanding performance; accelerating growth

We have again delivered an outstanding performance.

We increased net rental income by 15%, driven by new openings and like-for-like rental growth of 4.4%. By leveraging our central costs and our sector-leading operational platform, we accelerated EPRA Earnings by 23%, demonstrating the compounding nature of our business. We are increasing dividend 12%, reflecting our strong performance.

Our £413m committed pipeline of 1,180 homes, with £166m remaining left to spend, will increase FY24 EPRA Earnings by 50% to FY29 even after fully absorbing higher interest rates.

We have c.£1.1bn of low-yielding non-core assets to fund our continued growth through either our remaining pipeline of 4,565 homes or opportunistic opportunities.

We operate in one of the strongest and most resilient real estate markets in the UK. The private rental market in the UK faces growing demand, severe supply constraints, and political support for BTR as a means to deliver new homes and raise housing standards.

We have always espoused the resilience of UK residential and this was proven again during the past cycle where strong rental growth broadly offset yield expansion. We have now returned to growth and have seen our second consecutive period of valuation growth. EPRA net tangible assets were up 1% to 300pps. The BTR investment market is very buoyant with over £1bn of investment activity reported in Q1[1], supporting valuations.

Our sector-leading operational platform continues to deliver excellent performance and service

Our operational platform is designed for scale. As we grow, we will accelerate earnings growth and are able to further enhance our service to our customers. Our newly upgraded customer App, 'MyGrainger', is a great example. It provides customers with enhanced functionality enabling them to more efficiently and effectively enjoy their homes and live their lives.

Having great properties in great locations is essential for a successful property business, but the platform is what drives outperformance. Demand for our homes remains high and with occupancy at 96%, our portfolio remains fully let. We are seeing high levels of demand across all locations in our national portfolio. Customers want to stay with us, with a retention rate of 62% and an average length of stay of nearly three years. We retained strong like-for-like total rental growth over the past six months at 4.4%, whilst customer affordability remained healthy at 28% of gross income. The demographics of our target customer base underpins the resilience and strength of our rental income with 89% of our customers aged between 20-44 in good, reliable jobs who typically see above-average wage growth.

The nature of our fully-integrated platform allows us to harness data into actionable insights to enable us to continually improve efficiencies and customer service. Our CONNECT technology platform is a key differentiator, and we are increasingly utilising AI, most recently to monitor customer sentiment across our national portfolio in real time.

Self-funding our growth

We have £1.1bn of low-yielding, non-core assets which provide us firepower to reinvest into higher yielding BTR assets and continue to grow for years to come.

We continue to successfully work through our regulated tenancy portfolio. Vacant sales performance remains strong, with sales prices broadly in line with valuations at (0.1)%. We are able to accelerate this wind down through the sale of tenanted properties (investment sales), which we have increased over recent years as part of our accelerated asset recycling programme. These investment sales are equally performing well, albeit we are unable to capture the reversionary uplift on vacancy in these instances. Sales proceeds during the past six months totalled £79m, demonstrating the significant cash we are able to generate, typically in the order of c.£200m per annum.

A positive political and regulatory backdrop

The UK Labour Government is proving its commitment to supporting economic growth and investment, specifically by stimulating new housing delivery. We are heavily engaged in positive dialogue with policy makers and there is clear, strong support for BTR, recognising the important contribution businesses like Grainger can make to the UK housing market. Proposals to improve and speed up the planning process are welcome, as are proposals to strengthen recognition for BTR within the planning system.

The Renters' Rights Bill, entering its final stages of debate and scrutiny in the House of Lords, will professionalise the rental market and raise standards, something that Grainger has been forging the way forward for many years. Grainger, in the main, is already aligned to the new legislative landscape with our focus on high management standards, good quality customer service and high-quality, energy efficient properties. We are very well positioned to continue to perform strongly. That said, it is likely that many smaller, private individual landlords will find the new regime challenging and will therefore accelerate their exit from the market, further constraining supply.

As we have stated previously, we have fully provided for the very limited number of cladding remediation issues within our portfolio. The vast majority of our portfolio has been built post-Grenfell and the majority of the facades are brickwork. The timing of our pipeline projects means that we have been insulated from delays associated with the Building Safety Regulator approval process.

Clarity on the Renters Rights Bill, a resolute commitment from Government opposing rent controls, and support from Government for growing the BTR sector means Grainger is in a strong position to continue to grow.

Leading through responsibility

We continue to make great strides in our environmental and social impact.

95% of our BTR portfolio is now EPC rated A-C, in line with future minimum standards. Our energy efficient properties are not only better for the environment but, importantly, they support our customers' affordability by enabling them to keep their energy costs down.

Our environmental targets were approved by the Science Based Target Initiative (SBTi) during the period, confirming that they are robust and aligned to the 1.5 degree reduction pathway.

We were recognised once again for our commitment to diversity, equality and inclusion, building on our National Equality Standard accreditation, we were ranked 2nd place in the real estate sector in the FTSE Women Leaders Review, and 19th position overall in the FTSE250.

Exciting outlook, delivering shareholder value

We are on track and ready to convert to a REIT in September this year ready for FY26, a significant milestone in our strategy to reposition to a BTR rental investment business.

The BTR market continues to grow strongly supporting our growth ambitions, whilst consumer demand for renting accelerates. At the same time, housing supply remains well below demand and is set to remain so for many years to come.

Our growth ambitions remain unabated. Our platform which is designed for scale, our significant pipeline, our firepower from non-core assets and the strong levels of activity in the BTR investment market provides us with great confidence for delivering accelerated growth ahead.

Our committed pipeline alone will see us delivering earnings growth year-on-year, increasing by 25% from FY24 to FY26 and by 50% by FY29, even after fully absorbing higher interest rate costs. This excludes the projects in our remaining pipeline or any attractive stabilised acquisitions that may arise.

Our business is designed to create shareholder value. We operate in a sector with strong structural tailwinds. Our asset class and specifically our portfolio and platform, deliver inflation-backed rental growth. Our sector leading operating platform is scalable and our EBITDA margins are growing substantially as we deliver our large pipeline. EPRA Earnings are set to grow by 50% by FY29 even after absorbing higher interest rates. This is underpinned by our growth funding engine as we continue to dispose of our low-yielding regulated tenancy portfolio and non-core assets. This shareholder value creation model creates excellent, risk-adjusted returns, with a commitment to delivering a continued progressive dividend.

We are looking forward to welcoming many new customers to their new Grainger home as we open the doors at our new schemes in London and Bristol later this year.

Helen Gordon

Chief Executive

Financial review

The first six months of FY25 continued to deliver strong results on the back of our excellent performance as a business. Strong demand for our homes continues with fully let occupancy levels at 96.0% and total like-for-like rental growth remains at a healthy level of 4.4%. The strong occupational market combined with the opening of new schemes has resulted in a significant increase in net rents of 15%. The operating leverage in our business model, which is built for scale, means this revenue growth results in even higher earnings growth with EPRA earnings up 23%.

Valuations to 31 March 2025 have continued to grow, up 1% in the period despite the difficult current macro-economic conditions, with yields largely remaining flat.

Our balance sheet is well positioned and continues to reflect our strong liquidity position. Our committed pipeline is fully funded and fully hedged, giving us minimal exposure to interest rate rises for the next 3 ½ years. In line with the strong underlying performance of the business we increase our interim dividend per share to 2.85p on a per share basis (HY24: 2.54p), up 12% as we continue to deliver strong, sustainable dividend growth.

With new openings and our committed pipeline, we are seeing and have great visibility on net rental income growth. Our guidance is maintained based off our strong near-term earnings growth to deliver an EPRA earnings target of £60m by FY26. Beyond this, we will continue to deliver strong compounding earnings growth for years to come.

Highlights

Income statement

Strong increase in net rental income of £8.1m has resulted in improving adjusted earnings increasing by 13% to £50.1m (HY24: £44.4m). Profits from sales were in line with the prior year as we continue to divest from our regulated tenancy portfolio and focus on growing recurring net rental income. Overheads increased in line with wage inflation as we remain focused on cost control, whilst interest costs increased by £3.1m due to higher average debt levels during the period. EPRA earnings, which is an increasingly important metric for our business, continued to deliver very strong growth and was up 23% to £30.2m (HY24: £24.5m). The valuation movement was £28.7m with other adjustments of £4.8m including a derivative valuation movement of £2.9m and an additional £1.9m fire safety provision. This resulted in IFRS profits for the period of £74.0m.

Rental income

Net rental income increased by 15% to £61.3m (HY24: £53.2m), a continuation of the high levels of growth in recent years. The £8.1m increase was driven by continued high occupational demand for our homes resulting in both strong lettings of new launches and continued rental growth.

Overall like-for-like rental growth remains robust at +4.4%, with rental growth in our PRS portfolio continuing to deliver healthy growth at +4.2% (HY24: +8.1%), with rental growth on renewals of +4.9% and +3.1% on new lets. Our regulated tenancy portfolio also delivered strong rental growth at +7.0% (HY24: +7.1%). Gross to net for our stabilised portfolio has remained at a resilient level of 25.0% (FY24: 25.0%) as we continue to deliver the efficiency benefits of our scale and clustering model.

£m

Sales

Our disposals programme continued to deliver throughout the period with overall sales revenue of £79.0m exceeding the prior period (HY24: £71.1m). Sales profits were flat at £19.9m (HY24: £19.9m) as demand for our properties remains strong.

Residential sales

Vacant sales delivered £9.9m of profit (HY24: £10.6m). The 7% reduction in vacant property sales in the period reflects the reducing portfolio size of our regulated tenancy portfolio as part of our strategic divestment and recycling capital into higher yielding BTR assets. Vacancy rates within our regulated tenancy portfolio, driving sales, were 6.5% (HY24: 6.8%) with margins lower than in the prior year reflecting the mix of assets becoming vacant. Pricing achieved remained robust with sales values within 0.1% of previous vacant possession value.

Sales of tenanted and other properties delivered £10.0m of profit (HY24: £8.4m) from £50.4m of revenue (HY24: £49.2m). There were no development sales in the period (HY24: £0.9m) as we continue to work through sales of our remaining legacy land portfolio.

Sales

Balance sheet

Maintaining a strong balance sheet from which to execute our growth strategy remains an absolute priority, and we are in good shape. Our LTV is 38.5% (FY24: 38.2%) and liquidity is strong with cash and available facilities of £545m. Our committed pipeline is fully funded and our debt costs are fully hedged, meaning we have minimal exposure to potential interest rate rises.

EPRA NTA remained robust, increasing 1% from the year end to 300p per share (FY24: 298p per share). The 4p contribution from EPRA earnings was offset by the payment of our final dividend (5)p. EPRA NTA excludes the value of our reversionary surplus of £139m or 19p per share (FY24: £147m).

Property portfolio valuations

Our portfolio values increased by 0.8% (HY24: (0.3)%) over the six-month period. Our BTR portfolio saw strong ERV growth of 1.7% with yields remaining largely flat. Our regional PRS portfolio outperformed London marginally with stronger ERV growth of 1.9% compared to 1.6% in London. The regulated portfolio again proved its resilience with a 0.4% increase in the six month period.

1 Excluding CHARM and Vesta.

Financing and capital structure

Net debt increased to £1,475m (FY24: £1,453m) in line with plan as we invested £64m into our pipeline which was offset by £83m of sales in the period. Going forward we expect net debt to be broadly flat with sales offsetting our pipeline capex.

LTV now stands at 38.5% (FY24: 38.2%) with our average cost of debt marginally decreasing compared to the full year at 3.1% (FY24: 3.2%). We have an average debt maturity of over four years including extension options. Our refinancing risk is minimal with £545m in headroom and no material refinancing required until 2029.

We plan to reduce our debt and LTV over the medium term. We will manage the quantum of this deleveraging to ensure that we offset the impact of higher interest rates and continue to deliver strong, compounding earnings growth.

Summary and outlook

Our business continues to deliver resilient growth, once again evident in the period. Strong demand for our product combined with the delivery of new pipeline schemes drove growth in our net rental income. With the strong operational leverage in our business model this drives even larger growth in our EPRA Earnings which are set to grow strongly delivering compounding growth for many years to come. With our balance sheet in good shape and the strong operational cashflow that our business creates, we are well placed to take advantage of any opportunities to accelerate growth further.

Rob Hudson

Chief Financial Officer

Responsibility statement of the directors in respect of the half-yearly financial report

We confirm that to the best of our knowledge:

§ the interim management report includes a fair review of the information required by:

Helen Gordon Rob Hudson

Chief Executive Officer Chief Financial Officer

14 May 2025 14 May 2025

Independent Review Report to Grainger plc

Conclusion

We have been engaged by Grainger plc ("the Group") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2025 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Other Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated Statement of Changes in Equity, the Condensed Consolidated Statement of Cash Flows and the related explanatory notes.

Basis for conclusion

Conclusions relating to going concern

Directors' responsibilities

Our responsibility

The purpose of our review work and to whom we owe our responsibilities

Craig Steven-Jennings

for and on behalf of KPMG LLP

Chartered Accountants

15 Canada Square

Canary Wharf

London

E145GL

Consolidated income statement

Unaudited

Items that will not be transferred to the consolidated income statement:

Items that may be or are reclassified to the consolidated income statement:

Notes to the unaudited interim financial results

Accounting policies

1a Basis of preparation

These condensed interim financial statements are unaudited and do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. This condensed set of financial statements has been prepared using accounting policies consistent with UK-adopted international accounting standards, in accordance with IAS 34 Interim Financial Reporting, and in accordance with the Disclosure Guidance and Transparent Rules sourcebook of the United Kingdom's Financial Conduct Authority.

The current period financial information presented in this document has been reviewed, not audited.

The accounting policies used are consistent with those contained in the Group's last annual report and accounts for the year ended 30 September 2024 which is available on the Group's website (www.graingerplc.co.uk). The Grainger business is not judged to be highly seasonal, therefore comparatives used for the six month period ended 31 March 2025 Consolidated Income Statement are the six month period ended 31 March 2024 Consolidated Income Statement. It is therefore not necessary to disclose the Consolidated Income Statement for the full year ended 30 September 2024 (available in the last annual report).

The comparative figures for the financial year ended 30 September 2024 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

All property assets are subject to a Directors' valuation at the half year end, supported by an independent external valuation. External valuations at the half year are conducted by the Group's valuers, Allsop LLP and CBRE Limited. The valuation process is consistent with the approach set out on pages 131-132 of the 2024 Annual Report and Accounts, with the exception being the Group's Residential portfolio valued by Allsop LLP. At the half year, Allsop LLP inspected 14.1% of the Residential portfolio, with the movement extrapolated over the non-sampled assets to form 50% of the valuation movement for these portfolios. The remaining 50% is based on a blended rate arrived at by taking Halifax, Nationwide and Acadata indices (16.67% weighting each), applied on a regional Implicit Price Deflator 'IPD' basis.

The Group's financial derivatives were valued as at 31 March 2025 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.

1b Adoption of new and revised International Financial Reporting Standards and interpretations

New standards, amendments and interpretations in the period

The following new standards, amendments to standards and interpretations were effective for the Group in the period and have no material impact on the financial statements:

• 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 16 - Lease liability in a sale and leaseback;

Notes to the unaudited interim financial results continued

• Amendments to IAS 21 - Lack of exchangeability;
• Annual Improvements to IFRS Accounting Standards - Volume 11;
• Amendments to IFRS 9 and IFRS 7 - Contracts Referencing Nature-dependent Electricity;
• IFRS 18 - Presentation and Disclosure in Financial Statements;
• IFRS 19 - Subsidiaries without Public Accountability: Disclosures;

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.

1c Significant judgements and estimates

Full details of critical accounting estimates are given on pages 131-133 of the 2024 Annual Report and Accounts. This includes detail of the Group's approach to valuation of property assets and the use of external valuers in the process.

The valuations exercise is an extensive process which includes the use of historical experience, estimates and judgements. The Directors are satisfied that the valuations agreed with our external valuers are a reasonable representation of property values in the circumstances known and evidence available at the reporting date. Actual results may differ from these estimates. Estimates and assumptions are reviewed on an on-going basis with revisions recognised in the period in which the estimates are revised and in any future periods affected.

1d Group risk factors

The principal risks and uncertainties facing the Group are set out in the Risk Management report on pages 56-64 of the 2024 Annual Report and Accounts. A number of risks faced by the Group are not directly within our control such as the wider economic and political environment.

In line with our risk management approach detailed on pages 56-58 of the 2024 Annual Report and Accounts, the key risks to the business are under regular review by the Board and management,

applying Grainger's risk management framework. There have been no significant updates to risk, or failures of control, within the reporting period.

1e Going concern assessment

The Directors are required to make an assessment of the Group's ability to continue to trade as a going concern for a period of at least 12 months from the date of the financial statements. 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 interim financial statements for the period ended 31 March 2025.

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.

The going concern assessment is based on the first 18 months of the Group's five year forecast model, which exceeds the required period of assessment of at least 12 months in order to be aligned to the Group's financial year end, covering the period 1 April 2025 to 30 September 2026.

Notes to the unaudited interim financial results continued

The assessment considers a severe but plausible downside scenario, reflecting the following key assumptions:

• Reducing PRS occupancy to 93.0% by 30 September 2025 and to 86.0% by 30 September 2026
• Rental growth reduced to 2.5% in FY25 and FY26
• Reducing property valuations by 2.5% by 30 September 2025 and another 7.5% by 30 September 2026, driven by rents, yield expansion or house price deflation
• Operating and development cost inflation of 10% p.a.
• Delay of 3 months to the development sites completions and stabilisations
• Assumption of 75% of the regulated tenancies recycling target achieved
• An increase in SONIA rate of 2% from 1 April 2025
• Credit rating downgrade to increase coupon rates on corporate bonds by 1.25% from 1 April 2025

The Directors consider these assumptions appropriate given the majority of costs are incurred under fixed term price contracts, development agreements, or are under the Group's control.

No new financing is assumed in the assessment period and excluding the Rothesay GRIP 7yr facility of £75m reaching maturity in June 2026 the other existing facilities are assumed to remain available. Even in this severe but plausible 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 2.69x (facility minimum covenant ranges between 1.35x - 1.75x) for the 18 months to September 2026, 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 interim financial statements for the period ended 31 March 2025.

1f Forward-looking statement

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 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.

Notes to the unaudited interim financial results continued

Profit before tax in the adjusted columns above of £50.1m (2024: £44.4m) is the adjusted earnings of the Group. Adjusted earnings per share assumes tax of £12.5m (2024: £11.1m) in line with the standard rate of UK Corporation Tax of 25.0% (2024: 25.0%), divided by the weighted average number of shares as shown in Note 10. The Group's IFRS statutory earnings per share is also detailed in Note 10. The classification of amounts as other adjustments is a judgement made by management and is a matter referred to the Audit Committee for approval. Included in other adjustments are £1.9m for fire safety provisions (2024: £nil) and hedge ineffectiveness under IFRS9 of £2.9m (2024: £nil).

Notes to the unaudited interim financial results continued

Segmental Information

March 2025 Income statement (unaudited)

A reconciliation from adjusted earnings to EPRA earnings is detailed in the table below:

Segmental assets

Notes to the unaudited interim financial results continued

Total Accounting Return of 1.3% is calculated from the closing EPRA NTA of 300p per share plus the dividend of 2.85p per share for the half year, divided by the opening EPRA NTA of 298p per share.

March 2025 Segment net assets (unaudited)

1 Includes investment property - held for sale.

Notes to the unaudited interim financial results continued

September 2024 Segment net assets (audited)

Included within other sundry income in the current period is £3.5m (2024: £2.2m) liquidated and ascertained damages (LADs) recorded to compensate the Group for lost rental income resulting from the delayed completion of construction contracts.

Finance costs and income

Unaudited

Notes to the unaudited interim financial results continued

Earnings per share

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 period, 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 31 March 2025 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.

Unaudited

Dividends

The Company has announced an interim dividend of 2.85p (March 2024: 2.54p) per share which will return £21.0m (March 2024: £18.8m) of cash to shareholders. In the six months ended 31 March 2025, the final dividend for the year ended 30 September 2024 which amounted to £37.0m has been paid.

Investment property

Notes to the unaudited interim financial results continued

Within investment property are a number of assets held for sale at the reporting date, valued at £66.2m (September 2024: £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. Investment properties - held for sale are classified as current assets and are carried at fair value.

Inventories - trading property

The closing balance comprises share of net assets of £0.8m (September 2024: £0.4m) and net loans due from associates of £14.5m (September 2024: £14.5m). At the balance sheet date, there is no expectation of any material credit losses on loans due.

As at 31 March 2025, the Group's interest in active associates was as follows:

1 Grainger invested £1.4m into Connected Living London (BTR) Limited in the period (September 2024: £nil).

The closing balance comprises share of net assets of £48.1m (September 2024: £46.7m) and net loans due from joint ventures of £30.4m (September 2024: £29.7m). At the balance date, there is no expectation of any material credit losses on loans due.

Notes to the unaudited interim financial results continued

At 31 March 2025, the Group's interest in active joint ventures was as follows:

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 £4.6m (September 2024: £4.8m). Assumptions used in the forward-looking assessment are continually reviewed to take into account likely rent deferrals.

At the balance date, there is no expectation of any material credit losses on contract assets.

Restricted deposits arise from contracts with lenders that place restrictions on use of funds which cannot be accessed until the lender validates that covenant requirements continue to be met. They are made up of rental and sales income from assets linked to our non-bank facility. Funds are released by the lender once quarterly covenant compliance assessments have been completed.

Notes to the unaudited interim financial results continued

Trade and other payables

Within accruals, £34.8m comprises accrued expenditure in respect of ongoing construction activities (September 2024: £43.9m).

Provisions for other liabilities and charges

Following an extensive review of legacy development projects, £14.1m (September 2024: £13.2m) for potential fire safety remediation costs has been provided for, 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 liability over time.

Notes to the unaudited interim financial results continued

• Interest-bearing loans and borrowings and financial risk management

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 31 March 2025, unamortised costs totalled £14.0m (September 2024: £13.7m) and the outstanding discount was £1.4m (September 2024: £1.6m).

Categories of financial instrument

The Group holds financial instruments such as financial interest in property assets, trade and other receivables (excluding prepayments), derivatives, cash and cash equivalents. For all assets and liabilities excluding interest-bearing loans the book value was the same as the fair value as at 31 March 2025 and as at 30 September 2024.

As at 31 March 2025, the fair value of interest-bearing loans is lower than the book value by £84.4m (September 2024: £319.1m lower than book value), but there is no requirement under IFRS 9 to adjust the carrying value of loans, all of which are stated at unamortised cost in the consolidated statement of financial position.

Market risk

Fair values

Level 1 - quoted prices (unadjusted) in active markets for identical assets and liabilities;

Level 3 - unobservable inputs for the asset or liability.

Notes to the unaudited interim financial results continued

The following table presents the Group's assets and liabilities that are measured at fair value:

1 Includes investment property - held for sale

The investment valuations provided by Allsop LLP and CBRE Limited are based on RIC's Professional Valuation Standards, but include a number of unobservable inputs and other valuation assumptions.

The reconciliation between opening and closing balances for Level 3 is detailed in the table below:

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. Hedge ineffectiveness recognised in the period of £2.9m (2024: £nil).

Notes to the unaudited interim financial results continued

Tax

The tax charge for the period of £18.6m (2024: £9.2m credit) recognised in the consolidated income statement comprises:

Unaudited

The Group works in an open and transparent manner and maintains a regular dialogue with HM Revenue & Customs. This approach is consistent with the 'low risk' rating that has been reconfirmed by HM Revenue & Customs during the period and to which the Group is committed.

The Group's results for this period are taxed at the standard rate of 25.0% (2024: 25.0%).

In addition to the above, a deferred tax charge £0.1m (2024: credit £4.4m) was recognised within other comprehensive income comprising:

Unaudited

Deferred tax has been calculated at a rate of 25.0% (September 2024: 25.0%) in line with the enacted main rate of corporation tax. These calculations do not incorporate any impact of the Group's anticipated REIT conversion.

Notes to the unaudited interim financial results 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 consolidated statement of financial position and their market value has not been recognised by the Group. This contingent tax amounts to £66.4m, calculated at 25.0% (September 2024: £72.1m, calculated at 25.0%) and will be realised as the properties are sold.

Retirement benefits

The Group retirement benefit asset decreased by £0.1m to £6.4m in the six months ended 31 March 2025. This movement has arisen from a £1.5m reduction on plan assets offset by gains due to changes in assumptions of £1.4m (primarily market observable discount rates and inflationary expectations). The principal actuarial assumptions used to reflect market conditions as at 31 March 2025 are as follows:

Share-based payments

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 Scheme ('SAYE'). The share-based payments charge recognised in the consolidated income statement for the period is £1.2m (2024: £1.2m).

Related party transactions

During the period ended 31 March 2025, the Group transacted with its associates and joint ventures (details of which are set out in Notes 14 and 15). 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 consolidated income statement and consolidated statement of financial position are as follows:

Unaudited

EPRA Earnings have been divided by the average number of shares shown in Note 10 to these 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% (2024: 25.0%).

EPRA Performance Measures - Unaudited (continued)

EPRA NRV, EPRA NTA and EPRA NDV

[1] Knight Frank, BTR Market Update Q1 2025