RNS Number:0137T
Grainger Trust PLC
09 December 2003


For Immediate Release 
9 December 2003 07:00hrs

                              GRAINGER TRUST plc:

           PRELIMINARY RESULTS FOR THE YEAR ENDED 30th SEPTEMBER 2003

                                   HIGHLIGHTS


* Profit before tax and exceptional items up to #48.5m from #44.9m          +8%

* Earnings per share rise to 118.5p from 95.3p                             +24%

* NAV per share up to #21.94 from #17.24                                   +27%

* NNNAV per share up to #13.91 from #12.03                                 +16%

* "Grainger" NAV, presented for the first time at #18.40 per share         +28%

* Final dividend increased to 12.80p per share                             +15%

* 80% of debt hedged or fixed, average interest rate during the year only 5.6%

* Tenanted Residential Division

     * Overall operating profits increased by 19% to #39.3m.

     * 655 properties sold for #64m, generating 25% rise in
       trading profits to #29.2m.

     * Life tenancy portfolio increased to 2,291 units.

     * Investment value of portfolio #1,164m, vacant possession
       value #1,648m comprising 12,030 units.

* Bromley Joint Venture

     * Outstanding 50% share acquired from Deutsche Bank.

     * JV generated #10.8m of pre tax profits to Grainger.

     * Refinancing during the year to reduce debt cost and raise
       sufficient cash to pay dividend of #52m to each of the JV partners.

     * Development and trading

     * 16 acres of land sold at Kennel Farm to produce profit of #8.5m.

     * Townsend House sold for #8.2m, generating profit of #2.7m.

     * Selected by Islington Council for two mixed use regeneration schemes.

     * Focussing on residential and mixed use developments.

"We are delighted with the progress made on the business's objectives in the
year. We have doubled our asset base by acquiring the outstanding 50% share in
our Bromley joint venture, been active purchasers of tenanted residential stock,
particularly life tenancies and our development and trading activities have
produced good profits. We will continue to develop these key themes.


The future looks both exciting and rewarding"


Robert Dickinson, Chairman


                                     -more-

Contact

Grainger Trust plc

Rupert Dickinson,             Chief Executive                     020 7795 4700
Andrew Cunningham,            Deputy Chief Executive and 
                              Finance Director
                                                                  020 7795 4700/
                                                                  0191 261 1819
Baron Phillips Associates
Baron Phillips                                                    020 7920 3161



                              GRAINGER TRUST plc:
           PRELIMINARY RESULTS FOR THE YEAR ENDED 30th SEPTEMBER 2003


Chairman's Statement

We started the year with four key objectives:-

-  to maximise the benefits from Bromley, our joint venture company

-  to continue to focus on our core tenanted residential business and,
   in particular, to develop our life tenancy activities

-  to progress our development and trading business, realising profits
   where appropriate and creating effective relationships with partners

-  to develop our asset and property management capabilities so that we
   can offer a high quality, national service

We are delighted to have made significant progress in all of these areas, whilst
delivering record profitability and net asset value.

During the year we successfully refinanced our Bromley joint venture, comprising
the BPT portfolio, lowering borrowing costs and enabling a dividend of #52.0m to
be paid to each of the joint venture partners. BPT was further rationalised
during the year and now comprises a portfolio principally of core regulated
assets. Towards the year end we acquired Deutsche Bank's interest, to take full
control of the business. This is the major factor in the doubling of the Group's
asset base (market value at 30th September 2003 #1,388m, 2002, #691m) and has
been achieved without recourse to shareholder funding.

Our tenanted residential business has prospered during the year and we continued
to buy additional stock. In the year Grainger purchased a total of 1,736 units
for #112.2m, and at the year end our portfolio, including the BPT assets, stood
at 12,030 units with a market value of #1,164m and vacant possession value of
#1,648m. These acquisitions included 918 life tenancy units bought from NPI for
#40.5m taking our total life tenancy portfolio to 2,291 units with a market
value of #134.3m.

Our development and trading business has generated total profits of #14.6m and
we have several exciting opportunities in the pipeline. In particular, we
announced in June 2003 that we had been selected by Islington Council to develop
two key mixed-use sites in the Borough.

The acquisition of Bromley not only brings us complete ownership of a high
quality portfolio of residential assets but also provides us with a core of
experienced and efficient staff. This, combined with our longstanding network of
external managing agents, enables us to achieve high quality national coverage,
able to supply both asset and property management services.

Profit before tax and exceptional items has increased by 8% to #48.5m (2002: pre
exceptional item #44.9m). Grainger's own profit before tax and exceptional items
rose 20% to #37.7m from #31.4m, driven by a rise in profits from trading sales
in our tenanted residential division. We did not acquire the outstanding
interest in Bromley until our year end and so have only included a 50% share of
their results. As expected Bromley's pre tax profits were lower at #10.8m from
#13.5m last year because of the very significant #330m asset disposal programme
in 2002. The post tax contribution has, however, remained relatively constant
because the disposal programme produced a disproportionately high tax charge.
The increase in group post tax profitability has produced a rise of 24% in
earnings per share before exceptional items to 118.5p from 95.3p. Statutory
earnings per share increased by 40% to 118.5p from 84.6p.

Net asset value per share ("NAV") after adjusting for the market value of our
trading properties and investments has risen by 27% to #21.94 from #17.24.
NNNAV, which takes account of all deferred tax liabilities and adjustments for
the market value of our long term debt and financial instruments, has advanced
by 16% to #13.91 from #12.03. Net asset value on a statutory balance sheet basis
is #6.01 (2002: #4.89).

For the first time we are disclosing an alternative measure of NNNAV to take
into account the potential value of the reversionary surplus in our regulated
and life tenancy portfolios. This is the difference between the vacant
possession value of our properties and the investment or market value and
currently stands at #455m. We have calculated the anticipated timing of the
realisation of that surplus, discounted it back to present value and then
deducted tax. This produces a discounted post tax reversionary surplus amounting
to #111.2m or #4.49 per share. When added to NNNAV we obtain a "Grainger NAV" of
#18.40 per share. Full details of the calculation are given in the operating and
financial review.

Your directors are recommending a final dividend of 12.80p per share (2002:
11.13p), payable on 5th March 2004 to shareholders on the register at close of
business on 13th February 2004. This together with the interim dividend of 3.51p
per share (2002: 3.05p) amounts to a total of 16.31p per share (2002:14.18p), an
increase of 15% for the fifth consecutive year.

We are pleased with the progress made on the business's objectives in the year.
In particular, the acquisition of Bromley provides us with both the asset base
and core of skilled, experienced staff that enables us to deliver effective
residential asset and property management services on a national basis, not only
for our own activities, but also to third parties.

We will continue to develop our key themes; focusing on tenanted residential
activities, particularly the regulated sector but with the new challenge of
developing the life tenancy business, applying our property and asset management
skills to produce additional returns for the group and maintaining the momentum
in our development and trading division.

The future looks both exciting and rewarding.


Robert Dickinson
Chairman
9th December 2003



Chief Executive's Review

Our operating divisions have performed well this year with both tenanted
residential and development and trading delivering improved contributions.

Once again trading profits on residential sales have been very strong. The
housing market has remained robust throughout the year, particularly for our
core properties. Typically these are slightly below the average UK house price
value and may require some refurbishment by the purchaser. In London, where we
have approximately 43% of our portfolio by value we noticed some weakening of
the market in the early part of the year, particularly at the higher end, but it
has strengthened recently. In the regions we have seen consistent growth.
Overall Grainger's properties have achieved an average sale value of #110,000,
an increase of 26% from 2002.

We have continued to strengthen our position in the life tenancy market. We see
this sector as being an increasingly important component of the Grainger
business in the future, providing excellent reversionary opportunities and good
synergies with the existing core regulated activities. Given the appetite shown
by home owners to realise some or all of the equity in their properties, we,
among others, believe this market has potential for significant growth.

The development and trading division continues to make a significant
contribution, with good profits being made on sales of residential land at
Kennel Farm and Townsend House in Victoria. Since the year end we have sold a
further 10.9 acres for #12m at Kennel Farm completing the major residential land
sales on that site. Future revenue is expected to arise from overage payments,
the development of the B1 site and from the sale of some minor residential
areas. Over the last five years, total revenues from Kennel Farm have amounted
to #62m.

Our key strengths lie in our knowledge and experience of all sectors of the
residential market, including mixed-use developments, and our ability to trade
in those sectors. We will therefore concentrate on residential or mixed use
opportunities or on projects which have a residential bias. We are moving away
from pure commercial property investment, although we shall continue to be
involved in commercial property where we perceive residential opportunities.

Disposals from the commercial portfolio will reduce gearing and free up
resources for our core businesses. Over the next year we will continue to
purchase regulated assets and to maximise the returns that we can obtain by
selling on vacancy. We will grow our life tenancy portfolio and look for
structures enabling us to do this without putting undue strain on gearing.

The major event of the year, however, has been the acquisition of Bromley. This
confirms our position as the largest quoted residential investor in the UK and
enables a move from a joint venture business plan focussed on cash generation to
a platform from which we can take a long term view.

Following the acquisition we are restructuring the property management division
which will strengthen our ability to provide high quality asset and property
management services nationally. We believe that this ability will be of
paramount importance in raising equity funding should a REIT (Real Estate
Investment Trust) structure for tax transparent investment vehicles be
introduced in the UK.

Grainger has a valuable pool of talented and committed staff - with the enlarged
asset base now available to them we are confident of our ability to continue to
deliver excellent returns for our shareholders.

Rupert Dickinson
Chief Executive
9th December 2003


Operating and Financial Review

Performance

Tenanted Residential

During the year 655 properties were sold for a gross consideration of #64.0m.
(2002: 785 for #51.0m) and trading profits rose by 25% to #29.2m from #23.3m.
Gross rents fell slightly by 1% to #16.6m from #16.8m, reflecting the higher
proportion of life tenancy properties, which are non rent producing. This was
more than compensated for by savings in property expenses of #0.4m.

Tenanted Residential portfolio

                                    Vacant                                      Current      Estimated
                   No. of       Possession          % of       Investment         Gross         Market
              Residential            Value        Vacant            Value          Rent           Rent
               Properties               #m    Possession               #m            #m             #m
             ------------  ---------------  ------------  ---------------  ------------  -------------
Regulated           8,212            1,162            72              843            31             37
Assured   
tenancies           1,087              134            85              114             6              6
Vacant    
Properties            440               59            86               51             -              -
Life     
tenancies           2,291              263            51              134             -              -
Other
interests               -               30            73               22             1              1
             ------------  ---------------  ------------  ---------------  ------------  -------------
Total 30th
September
2003               12,030            1,648            71            1,164            38             44
             ------------  ---------------  ------------  ---------------  ------------  -------------
Total 30th          
September
2002                4,928              524            74              394            17             21
             ------------  ---------------  ------------  ---------------  ------------  -------------


The increase in portfolio size comes from the Bromley acquisition and from our
life tenancy acquisitions - these now represent 19% by unit number of properties
owned (2002: 4%).

Assuming sale on vacancy the reversion on our tenanted residential portfolio
(the difference between the vacant possession and investment values) now amounts
to #484m, before contingent tax, or #19.55 per share.

The average vacant possession value of our properties at 30th September 2003
rose by 40% to #144,000 (2002: #103,000) both as a result of house price rises
and of consolidating the higher average value BPT portfolio.

Bromley Joint Venture

The group acquired the balance of the Bromley joint venture at the end of its
financial year and so group profit and loss account includes our 50% share of
the joint venture's results. In future years, all of Bromley's results will be
consolidated with those of the Grainger group.

The cash consideration for the acquisition was #24.3m, with up to a maximum
additional amount of #10.0m payable in December 2004 if the Nationwide UK House
Price Index rises by more than 10% in the two year period to August 2004. We
have also agreed to purchase Deutsche Bank's outstanding loan stock and accrued
interest amounting to #15.7m later this month.

                                      -6-

The rationalisation of the portfolio continued with the sale of 1,519 units
raising gross revenues of #150.9m. The joint venture contributed trading profits
of #18.9m (2002: #26.6m) and net rents of #8.3m (2002: #13.6m). These decreases
were anticipated because of the very significant disposal programme in 2002. Our
share of administrative expenses fell from #7.3m to #3.9m, reflecting the
controlled scaling down of the business in line with the portfolio
rationalisation and cost saving measures put in place.

Development and trading

Including profits on sales of fixed assets and writebacks of valuation
provisions this division contributed #14.6m (2002: #13.6m).

We sold a total of 16.4 acres of development land at Kennel Farm and adjacent
sites, generating revenue of #15.5m and profits of #8.5m. Other major revenue
generators in the year have been Townsend House (19,000 sq.ft. office block in
Victoria sold for #8.2m, profit #2.7m) and Grainger Homes, our housebuilding
division which sold 68 units for a total of #6.0m, generating profit of #0.8m.
Contracts have been exchanged on 62 flats out of the total of 79 at the Pimlico
development site. We anticipate these to complete early next year at total sales
value in excess of #30m.

Administrative expenses

These have increased by 7% from #4.4m to #4.7m but at less than 4% of turnover
are lower proportionally than last year. The movement has arisen because of
inflation and an increase in staff numbers.

Net interest payable

Net interest payable, including our share of the joint venture charge, and
having taken account of last years exceptional charge of #3.8m has decreased to
#28.4m from #37.6m. The group has carried a lower average level of debt in the
year, the cash generated by the Bromley rationalisation being a major factor,
and our average interest payable has been lower at 5.6% (2002: 6.5%) The average
cost of the debt in Bromley fell to 6.2% from 7.6%. Group interest cost is
covered 2.7 times by profit before exceptional items, interest and taxation
(2002: 2.2 times).

Taxation

As noted in previous years our annual tax charge is significantly affected by
FRS 19, the accounting standard that prevents the provision of deferred tax on
revaluation gains when companies are acquired. This serves to increase our
effective tax rate which this year stands at 39.4% (2002: 49.2%); the equivalent
figure for Grainger alone is 31.5% (2002: 34.2%). Major items affecting the tax
charge, most of which relate to Bromley are:-

                                                                            #m
Group profit before tax                                                   48.5
                                                                         ------
Tax at 30%                                                                14.5
Adjusted for:
Additional tax on the difference between the book and tax value of         4.4
trading properties sales
Negative goodwill released (not taxable)                                  (1.5)
Tax on capital gains                                                       1.7
                                                                        ------
Actual tax charge                                                         19.1
                                                                        ------

                                      -7-

Earnings per share and dividends

Earnings per share before exceptional items have increased by 24% from 95.3p to
118.5p and we have increased our dividends by 15%. Dividends are covered 7.3
times by profit after taxation and minority interest (2002: 6.7 times on a like
for like basis).

Financial Position

General

The group balance sheet has changed significantly since 2002 as the acquisition
of the Bromley joint venture has resulted in its assets and liabilities being
consolidated for the first time.

Most of our properties are held as trading stock and are therefore shown in the
balance sheet at cost. This does not reflect the true worth of Grainger's assets
and we set out below a statement of our net assets with the properties restated
to market value.

Proforma Net Asset Statement

                                              30th September      30th September
                                                      2003                2002
                                                        #m                  #m
Properties at market value:
Tenanted residential                               1,163.9               393.6
Development and trading                              130.0               132.1
                                                   -------             ------- 
                                                   1,293.9               525.7
Investments                                           11.0               153.9
Other assets                                           0.9                 0.7
Cash                                                  81.7                10.5
                                                   -------             ------- 
Total assets                                       1,387.5               690.8
Borrowings                                          (761.2)             (233.7)
Net current liabilities                              (68.9)              (26.7)
Deferred tax/other liabilities                       (14.0)               (3.7)
                                                   -------             ------- 
Total liabilities                                   (844.1)             (264.1)
                                                   -------             ------- 
Market value net assets                              543.4               426.7
                                                   -------             ------- 


Fixed assets

Fixed assets in the statutory balance sheet have increased from #21.7m to
#109.1m, the major movements being the effect of the Bromley acquisition,
#84.7m, and surpluses on revaluation of #3.1m. Of the year end property value of
#108.1m, #84.4m relates to tenanted residential properties and #23.7m to
commercial investment properties.

Investments and intangible assets

Investment balances have decreased significantly because of the reclassification
of the investment in the Bromley joint venture on consolidation. Other
investments, being shares held in Grainger Trust plc for employee benefit
purposes and our investment in Schroders ResPUT, have increased in market value
by #1.1m to #11.0m. Book value of these investments is #9.2m (2002: #8.9m).

The negative intangible asset of #97.2m shown in the statutory balance sheet
principally reflects negative goodwill arising on the acquisition of Bromley. It
will be released to the profit and loss account in line with sales from the
Bromley portfolio.

                                      -8-

Trading properties

Our trading properties can be analysed as follows:-

                      Statutory Balance Sheet                  Market Value Balance Sheet
                      -----------------------                  --------------------------
                  30th September     30th September        30th September     30th September
                          2003               2002                  2003               2002
                            #m                 #m                    #m                 #m
Tenanted
residential              807.2              224.4               1,079.5              393.6
Development 
and trading               81.1               80.7                 106.3              111.1
                       -------            -------               -------            -------
Total                    888.3              305.1               1,185.8              504.7
                       -------            -------               -------            -------

The cost of our tenanted residential stock as shown in our statutory balance
sheet has increased from #224.4m to #807.2m. We acquired #112.2m of properties
in the year, had sales or write offs of #33.1m, improvement costs of #3.2m and
the balance of the movement, #500.5m, came from the consolidation of the Bromley
assets.

The market value figures also show a significant increase from #393.6m to
#1,079.5m, of which #572.9m arises from the Bromley consolidation. The remaining
movement is due to valuation surpluses of #48.3m and the net effect of sales,
acquisitions and transfers of #64.7m. The overall valuation increase in this
portfolio over the course of the year amounts to 9.4%. The total market value of
all our tenanted residential properties, including those classified as fixed
assets is #1,163.9m (2002: #393.6m).

The overall value of the group's development and trading assets remained
relatively constant over the year, the decrease in market value from #111.1m to
#106.3m is the result of the net effect of sales at Kennel Farm and Townsend
House and expenditure, mostly at Grainger Homes.

Other assets and liabilities

Other net liabilities, excluding current instalments due on borrowings and cash
balances have increased from #26.7m to #68.9m. This is largely due to the loan
stock and accrued interest due to be paid to Deutsche Bank later this month of
#15.7m and increases in sundry creditors and taxation payable as a result of
consolidating our joint venture interest.

Net assets

Net assets at market value, have increased from #426.7m to #543.4m. The major
movements are:-
                                      Reflected in  Not reflected
                                               the         in the
                                          Accounts       Accounts      Total
                                                #m             #m         #m
Net assets at 1st October 2002               121.1          305.6      426.7

Retained profits                              25.3              -       25.3
Revaluation surpluses:-
Grainger tenanted residential                    -           30.7       30.7
Development and trading                        6.2           (5.3)       0.9
Investments                                      -            0.8        0.8

Negative goodwill movements                      -           (4.7)      (4.7)
Effect of acquisition of Bromley              (2.9)          69.3       66.4
Other share capital and reserve movements     (0.8)          (1.9)      (2.7)
                                           -------        -------    -------
Net assets at 30th September 2003            148.9          394.5      543.4
                                           -------        -------    -------
Net assets per share #                        6.01          15.93      21.94
                                           -------        -------    -------

                                      -9-

Net assets per share have increased by #4.70 from #17.24 to #21.94, the increase
coming from retained earnings less negative goodwill of 83p, revaluation
surpluses of #1.31, a one-off increase coming from the acquisition of Bromley of
#2.68 and a decrease from sundry movements of 12p.

To obtain the figure of NNNAV per share, adjustments to the market value of long
term debt and derivatives and for contingent tax are made. These amount to 31p
and #7.72 per share respectively (2002: 48p and #4.73).

The analysis of our NAV and NNNAV is set out below:-

                                                             #m
                                               Market
                Statutory         Market        Value                                 NNNAV
                  Balance          Value      Balance                Contingent     Balance
                    Sheet    Adjustments        Sheet    FRS 13             Tax       Sheet

Properties          996.4          297.5      1,293.9         -               -     1,293.9
Investments/
other
assets               10.2            1.7         11.9         -               -        11.9
Negative 
goodwill            (97.2)          97.2            -         -               -           -
Cash                 81.7              -         81.7         -               -        81.7
                  -------        -------      -------   -------        -------      -------
Total  
assets              991.1          396.4      1,387.5         -               -     1,387.5
                  -------        -------      -------   -------        -------      -------
Borrowings         (761.2)             -       (761.2)    (11.0)              -      (772.2)
Net current         (68.1)          (0.8)       (68.9)        -               -       (68.9)
liabilities         (68.1)          (0.8)       (68.9)        -               -       (68.9)
Provisions/
contingent
tax                 (12.8)             -        (12.8)      3.3          (191.3)     (200.8)
Minority 
interest             (0.1)          (1.1)        (1.2)        -               -        (1.2)
                  -------        -------      -------   -------        -------      -------
Total      
liabilities        (842.2)          (1.9)      (844.1)     (7.7)         (191.3)   (1,043.1)
                  -------        -------      -------   -------        -------      -------
Net assets          148.9          394.5        543.4      (7.7)         (191.3)      344.4
                  -------        -------      -------   -------        -------      -------
2003 Net   
assets per
share #              6.01          15.93        21.94     (0.31)          (7.72)      13.91
                  -------        -------      -------   -------        -------      -------
2002 Net  
assets per
share #              4.89          12.35        17.24     (0.48)          (4.73)      12.03
                  -------        -------      -------   -------        -------      -------

We have also calculated a "Grainger NAV". This reflects our estimate of the
present value of the reversionary surplus in our regulated and life tenancy
portfolios being the difference between vacant possession value and market value
after tax. Using our knowledge of the age profile of these tenants we have
estimated the expected average timing of future vacancies and the subsequent
realisation of the reversionary surpluses. We have calculated the present value
of those surpluses net of tax using 8.9% (our weighted average cost of capital
plus a risk premium of three percentage points) as a discount rate. This
adjustment increases NNNAV by #4.49 per share to #18.40 per share (2002:
#14.43). Our calculation is based upon current house prices i.e no future house
price movement assumed.

Cash and debt

Cash balances at the year end amounted to #81.7m (2002: #10.5m) of which #53.8m,
(2002: #6.6m) is either held by lenders awaiting substitution of alternative
security, represents deposits received or acts as security for cash backed loan
notes.

Group borrowings have increased from #233.7m to #761.2m, as the Bromley debt is
now consolidated onto the Grainger balance sheet. This debt, amounting to
#493.7m, remains non-recourse to the rest of the Grainger group. New borrowings
in the year amounted to

#64.0m; (2002: #47.1m) these were used to finance the acquisition of the joint
venture and the NPI life tenancy portfolio. Loan repayments were #30.2m (2002:
#38.4m).

                                      -10-

Gearing on a revalued balance sheet basis has moved to 125% from 52%.

Cashflow

The significant elements in the group's cashflow were:-
                                                                            #m
                                                                    ----------
Receipts
--------

Net rents and other income                                                  13
Property sales                                                              95
Net new loans                                                               34
Cash acquired on acquisition of subsidiaries                                75
Dividends from JV                                                           52
                                                                    ----------
                                                                           269

Payments

Interest, tax and dividends                                                 26
Acquisition of subsidiaries                                                 26
Property acquisitions and capitalised expenditure                          139
Working capital movements/other costs                                        7
                                                                    ----------
                                                                           198
                                                                    ----------
Increase in cash in the year                                                71
                                                                    ==========

The Grainger business is by nature strongly cash generative. Net income from
rents and property sales amounted to #108m (2002: #96m).

Capital Management

The group finances its operations through a combination of shareholders funds
and borrowings and seeks to optimise its weighted average cost of capital
("WACC"). The estimated WACC of the group at 30th September 2003 was 5.89%
(2002: 6.34%).

The main source of borrowings are banks and building societies but the group
also has fixed rate institutional debt of #19.9m (2002: #20.5m). The group
protects its underlying profitability from treasury risk by managing both its
level and cost of debt.

The group does not take trading positions in financial instruments but holds
them to minimise the risk of exposure to fluctuating interest rates. The
majority of our debt is maintained at fixed rates of interest or is subject to
protective caps or collars. At 30th September 2003, #611.7m (80%)of the group
debt was either fixed to termination, or for over one year, or was protected by
financial instruments (2002: #185.5m, 79%).

A combination of interest rate swaps and financial caps are used to provide a
degree of certainty over future interest rates costs whilst enabling the group
to take advantage of any favourable short term rates. At 30th September 2003 the
group held #298.4m of swap contracts at an average rate of 5.4% maturing between
June 2006 and September 2013 (2002: #87.5m at an average rate of 5.3%). There
were also financial caps in place of #235.1m at an average pre margin rate of
6.1%, expiring between February 2004 and December 2009 (2002: #102.5m at an
average rate of 6.5%).

                                      -11-

A summary of our borrowings is:-

                                     Principal        Interest
                                            #m       Payable %   Repayable
Permanently fixed                         78.2             8.1   2004-2032
Hedged by swap contracts                 298.4             6.6   2006-2013
Hedged by financial caps                 235.1             5.0   2004-2009
Variable/fixed under one year            149.5             4.7   2004-2022
                                       -------         -------
Total debt                               761.2             5.9

Less: cash                               (81.7)
                                       -------
Net debt                                 679.5
                                       -------

The notional effect of the fair value adjustment of marking the group's fixed
rate debt and derivatives to current market rates ("FRS 13 adjustments") would
be to produce an additional 'liability' after tax of #7.7m or 31p per share
(2002: 48p). This adjustment represents approximately 1% of group gross
borrowings at 30th September 2003 and will not be recognised in the accounts
until the position matures or is terminated.

The group also maintains a range of borrowing maturities to enable it to balance
continuity of funding with flexibility. At 30th September 2003 the average
duration of the group's debt was 6.0 years (2002: 6.9 years).

Since the year end we have announced the repayment of the outstanding #2.5m
balance of our 2024 quoted debenture stock at an early redemption cost of #1.8m.
The administrative burden associated with this relatively small level of debt
exceeded the benefit which we obtained from it.


Andrew Cunningham
Deputy Chief Executive and Finance Director
9th December 2003

Grainger Trust plc
Citygate
St James' Boulevard
Newcastle upon Tyne
NE1 4JE

                              GRAINGER TRUST plc
                              ------------------
                    CONSOLIDATED PROFIT AND LOSS ACCOUNT
                    ------------------------------------
                   FOR THE YEAR ENDED 30th SEPTEMBER 2003
                   --------------------------------------

                                           Year Ended           Year Ended
                                           30.09.2003           30.09.2002
                                          (unaudited)            (audited)
                                                   #m                   #m

Turnover (including share of joint
venture)                                        173.6                213.8
Share of turnover of joint
venture                                             0                    0
                                            ---------            ---------
                                              173,583              213,847
Less: Share of turnover of joint
venture                                         (55.6)              (110.3)
                                            ---------            ---------
Group turnover                                  118.0                103.5
                                            ---------            ---------

Gross rentals                                    21.4                 22.0
Trading profits                                  38.8                 33.7
Other income                                      0.9                  0.4
                                            ---------            ---------
                                                 61.1                 56.1
Less:
Property expenses                                (9.1)                (9.7)
Administration expenses                          (4.7)                (4.4)
                                            ---------            ---------
Group operating profit                           47.3                 42.0
Share of operating profit of joint
venture
(after amortisation of goodwill of 
#35,000 (2002 : #97,000))                        23.6                 33.0
                                            ---------            ---------
Total operating profit : group and
share of joint venture                           70.9                 75.0

Net profit on disposal of &
provisions against fixed assets
- Group                                           1.9                  0.1
- Joint venture                                   4.1                  7.4
                                            ---------            ---------
                                                  6.0                  7.5
                                            ---------            ---------
Profit on ordinary activities
before interest and taxation                     76.9                 82.5

Net interest payable and similar
charges
- Group normal                                  (11.5)               (10.7)
- Group exceptional                                 -                 (3.8)
- Joint venture                                 (16.9)               (26.9)
                                            ---------            ---------
                                                (28.4)               (41.4)
                                            ---------            ---------
Profit on ordinary activities                    48.5                 41.1
before taxation

Tax on profit on ordinary
activities                                      (19.1)               (20.2)
                                            ---------            ---------
Profit on ordinary activities
after taxation                                   29.4                 20.9

Minority interest - equity                       (0.1)                   -
                                            ---------            ---------
Profit attributable to
shareholders                                     29.3                 20.9

Dividends                                        (4.0)                (3.5)
                                            ---------            ---------
Retained profit for the year                     25.3                 17.4
                                            ---------            ---------
Earnings per share                              118.5p                84.6p
                                            ---------            ---------
Diluted earnings per share                      118.0p                84.2p
                                            ---------            ---------
Earnings per share before
exceptional items                               118.5p                95.3p
                                            ---------            ---------
All results relate to continuing
operations.



                               GRAINGER TRUST plc
                               ------------------
              STATEMENT OF GROUP TOTAL RECOGNISED GAINS AND LOSSES
              ----------------------------------------------------
                     FOR THE YEAR ENDED 30th SEPTEMBER 2003
                     --------------------------------------

                                                        Year              Year
                                                       Ended             Ended
                                                    30.09.03          30.09.02
                                                 (unaudited)         (audited)
                                                          #m                #m

Profit attributable to shareholders                     29.3              20.9

Taxation on realisation of property revaluation
gains of previous years                                    -              (0.4)

Unrealised surplus on revaluation of
properties                                               3.1               0.4

Diminution transferred (to)/from revaluation
reserve (from)/to profit and loss account               (1.3)              0.1

Adjustment to reserves arising from
consolidation of joint venture                          (2.9)                -
                                                   ---------         ---------
Total gains and losses recognised - Group               28.2              21.0

Share of joint venture tax on realisation of
revaluation reserves                                    (0.9)                -

Unrealised surplus on revaluation of joint
venture properties                                       4.4               7.8
                                                   ---------         ---------
Total gains and losses recognised since the 
last annual report - Group and Joint Venture            31.7              28.8
                                                   ---------         ---------


                              GRAINGER TRUST plc
                              ------------------
                          CONSOLIDATED BALANCE SHEET
                          --------------------------
                            AT 30th SEPTEMBER 2003
                            ----------------------

                                                30.09.03              30.09.02
                                             (unaudited)             (audited)
                                                      #m                    #m

Fixed assets
Intangible assets                                  (97.2)                 (0.9)
Tangible assets                                    109.1                  21.7
Investments:
Investment in joint venture:
Share of gross assets                                  -                 307.0
Share of gross liabilities                             -                (281.1)
                                                 -------               -------
                                                       -                  25.9
Goodwill                                               -                   0.3
                                                 -------               -------
                                                       -                  26.2
Loan to Joint Venture                                  -                  13.7
                                                 -------               -------
                                                       -                  39.9
Other investments                                    9.2                   8.9
                                                 -------               -------
                                                     9.2                  48.8
                                                 -------               -------
                                                    21.1                  69.6
                                                 -------               -------
Current assets
Stocks                                             888.3                 305.1
Debtors: amounts falling due within one 
year                                                10.0                   3.5
Cash at bank and in hand                            81.7                  10.5
                                                 -------               -------
                                                   980.0                 319.1
                                                 -------               -------
Creditors: amounts falling due
within one year
Short term borrowings                               76.4                  22.2
Other creditors                                     78.1                  30.2
                                                 -------               -------
Net current assets                                 825.5                 266.7
                                                 -------               -------
Total assets less current                          846.6                 336.3
liabilities

Creditors: amounts falling due after
more than one year                                 684.8                 211.5

Provision for liabilities and
charges                                             12.8                   3.7
                                                 -------               -------
Net assets                                         149.0                 121.1
                                                 -------               -------

Capital and reserves
Called-up share capital                              6.2                   6.2
Share premium account                               21.4                  21.3
Revaluation reserve                                 14.7                  11.6
Capital redemption reserve                           0.2                   0.2
Profit and loss account                            106.4                  81.8
                                                 -------               -------
Equity shareholders' funds                         148.9                 121.1

Minority interests - equity                          0.1                     -
                                                 -------               -------
Total capital employed                             149.0                 121.1
                                                 -------               -------


                              GRAINGER TRUST plc
                              ------------------

                       CONSOLIDATED CASHFLOW STATEMENT
                       -------------------------------
                    FOR THE YEAR ENDED 30th SEPTEMBER 2003
                    --------------------------------------

                                                      Year Ended    Year Ended
                                                        30.09.03      30.09.02
                                                     (unaudited)     (audited)
                                                              #m            #m

Net cash outflow from operating activities                 (37.3)        (18.3)

Dividends from joint ventures and associates                52.0             -

Returns on investments and servicing of finance
Interest received                                            2.9           7.6
Interest paid - normal                                     (14.0)        (18.6)
              - exceptional                                    -          (3.8)
Dividends received                                           0.2             -
                                                         -------        -------
                                                           (10.9)        (14.8)
                                                         -------        -------
Taxation
UK corporation tax paid                                    (11.8)         (8.1)
                                                         -------        -------

Capital expenditure and financial investment
Purchase of fixed asset investments                         (1.4)         (8.1)
Purchase of tangible fixed assets                           (0.5)         (0.8)
Sale of fixed asset investments                                -           0.1
Sale of tangible fixed assets                                2.1           7.1
Repayment of loanstock                                         -          26.3
                                                         -------        -------
                                                             0.2          24.6
                                                         -------        -------

Acquisitions and disposals
Purchase of subsidiaries                                   (25.9)         (0.2)
Costs on purchase of subsidiaries                           (0.3)         (0.1)
Cash acquired on purchase of subsidiaries                   74.9             -
Sale of subsidiaries                                           -           0.2
Investment in Joint Venture                                    -          (1.6)
                                                         -------        -------
                                                            48.7          (1.7)
                                                         -------        -------
Equity dividends paid                                       (3.6)         (3.1)

Cash inflow/(outflow) before financing                      37.3         (21.4)
                                                         -------        -------
Financing
New loans raised                                            64.0          47.1
Repayment of loans                                         (30.2)        (38.4)
Issue of shares                                              0.1           0.1
                                                         -------        -------
Net cash inflow from financing                              33.9           8.8
                                                         -------        -------
Increase/(decrease) in cash in the year                     71.2         (12.6)
                                                         -------        -------

Reconciliation of operating profit to net cash
outflow from operating activities
                                                      Year Ended    Year Ended
                                                        30.09.03      30.09.02
                                                              #m            #m

Operating profit                                            47.3          42.0
Depreciation                                                 0.2           0.2
Amortisation of goodwill                                    (0.2)         (0.4)
(Increase)/decrease in debtors                              (1.6)          1.0
(Decrease)/increase in creditors                           (13.6)          7.9
Increase in stocks                                         (69.4)        (69.0)
                                                         -------       -------
Net cash outflow from operating activities                 (37.3)        (18.3)
                                                         -------       -------


NOTES TO THE RESULTS ANNOUNCEMENT

     
1.   Earnings Per Share

     The calculation of earnings per share is based on the following number of
     shares:

                     Year Ended 30.09.03              Year Ended 30.09.02
                     -------------------              -------------------
                   Profit   Average                Profit   Average
                  for the    Number   Earnings    for the    Number   Earnings
                     year        of        per       year        of        per
                             shares      share               shares      share
                       #m     000's      pence         #m     000's      pence
Basic earnings per share 

Profit               
attributable to
shareholders         29.3    24,745      118.5       20.9    26,682       84.6

Exceptional
interest
payable and
similar
charges                 -                    -        2.7                 10.7
                  -------              -------    -------              -------
Adjusted
earnings             29.3                118.5       23.6                 95.3
                  -------              -------    -------              -------

Diluted earnings per share

Profit          
attributable to
shareholders         29.3    24,862      118.0       20.9    24,808       84.2

Exceptional
interest    
payable and
similar
charges                 -                    -        2.7                 10.6
                  -------              -------    -------              -------
Adjusted
earnings             29.3                118.0       23.6                 94.8
                  -------              -------    -------              -------
     
2.   Taxation

     Tax on profit on ordinary activities:-
                                                  30.09.03            30.09.02
                                                        #m                  #m
Group:
Normal                                                11.9                10.6
Exceptional                                              -                (1.1)
                                                   -------             -------
                                                      11.9                 9,5
Share of joint venture                                 7.2                10.7
                                                   -------             -------
                                                      19.1                20.2
                                                   -------             -------
3.   Dividends

     Dividends on ordinary shares:-
                                                        30.09.03      30.09.02
                                                              #m            #m
Interim paid of 3.51p per share (2002:3.05p)                 0.8           0.7
Final proposed of 12.80p per share (2002:11.13p)             3.2           2.8
                                                         -------       -------
                                                             4.0           3.5
                                                         -------       -------
4.   Debtors

                                                    30.09.03          30.09.02
                                                          #m                #m
Trade debtors                                            2.6               1.7
Other debtors                                            0.6               0.6
Prepayment and accrued income                            4.0               1.2
Deferred tax                                             2.8                 -
                                                      --------          --------
                                                        10.0               3.5
                                                      --------          --------
     
5.   Creditors

                                                        30.09.03      30.09.02
                                                              #m            #m
Amounts falling due within one year:
Mortgages and other loans                                   11.7           0.4
Loan notes                                                  41.3           1.9
Bank loans                                                  23.4          19.9
Deposits received                                            1.0           0.6
Trade creditors                                              7.0           7.5
Corporation tax payable                                     24.9           8.3
Other taxation and social security                           2.0           1.6
Accruals and deferred income                                40.0           9.4
Dividends payable                                            3.2           2.8
                                                        --------      --------
                                                           154.5          52.4
                                                        --------      --------

Amounts falling due after more than one year:
Debenture stock                                              2.5           2.8
Mortgages and other loans                                  427.6          28.6
Loan notes                                                     -           0.8
Bank loans                                                 254.7         179.3
                                                        --------      --------
                                                           684.8         211.5
                                                        --------      --------

6.   This announcement does not constitute statutory accounts within the meaning 
     of Section 240 of the Companies Act 1985. Statutory accounts for the year 
     ended 30th September 2002 have been filed with the Registrar of Companies. 
     The auditors have reported on those accounts; their report was unqualified 
     and did not contain any statement under Section 237(2) or (3) of the 
     Companies Act 1985.
     
7.   Copies of this statement can be obtained from the Company's registered 
     office, Citygate, St. James' Boulevard, Newcastle upon Tyne. NE1 4JE. 
     Further details of this announcement can be found on our website, 
     www.graingertrust.co.uk.


8.   The Board of Directors approved this preliminary announcement on 9 
     December 2003.



                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
FR UWOBROKRURAA