Grainger : Notice of 2022 Annual General Meeting

Annual General Meeting

Notice of the one hundred and ninth Annual General Meeting of the Company, to be held at the registered office of Grainger plc, Citygate, St. James' Boulevard, Newcastle upon Tyne NE1 4JE on 9 February 2022 at 12.00 pm, is set out in this document.

Registered in England and Wales with registered number 125575

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to the action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other independent professional adviser authorised pursuant to the Financial Services and Markets Act 2000 immediately.

If you have sold or transferred all your ordinary shares in Grainger plc, please forward this document, together with the accompanying documents, as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee.

2	GRAINGER PLC

CONTENTS

Page 2 Definitions and Directors

Page 3 Letter from the Chairman

Page 6 Notice of Annual General Meeting

Page 9 General notes

DEFINITIONS

The following definitions apply throughout this document, unless the context requires otherwise:

'Act'	the Companies Act 2006 as amended;
'Annual General Meeting'	the Annual General Meeting of the Company
	to be held on 9 February 2022 at 12.00 pm at the
	registered office of the Company;
'Annual Report and Accounts'	the 2021 Annual Report and Accounts of the
	Company prepared in accordance the Act;
'Board' or 'Directors'	the Board of Directors of the Company
	(or a duly appointed committee thereof);
'Company'	Grainger plc;
'Directors'	the Directors' Remuneration report for the
Remuneration report'	year ended 30 September 2021 circulated
	to shareholders with this circular;
'FSMA'	the Financial Services and Markets Act 2000;
'London Stock Exchange'	London Stock Exchange Group plc;
'Notice'	the notice of the Annual General Meeting
	included in this circular;
'Official List'	the list maintained by the UKLA pursuant
	to Part VI of FSMA;
'PEG Principles'	the Pre-Emption Group's revised Statement
	of Principles, published on 12 March 2015;
'Shares'	ordinary shares in the capital of the Company;
'UK Corporate	the UK Corporate Governance Code (July 2018
Governance Code'	edition) published by the Financial Reporting
	Council; and
'UKLA' or 'UK	the Financial Conduct Authority, acting in its
Listing Authority'	capacity as the competent authority for the
	purposes of Part VI of FSMA.

DIRECTORS

Mark Clare* (Chairman)

Helen Gordon (Chief Executive)

Robert Hudson (Chief Financial Officer)

Andrew Carr-Locke*

Rob Wilkinson*

Justin Read*

Janette Bell*

Carol Hui*

* Non-Executive

Registered and Head Office

Citygate

St James' Boulevard

Newcastle upon Tyne

NE1 4JE

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Letter from the Chairman

14 December 2021

DEAR SHAREHOLDER

The next Annual General Meeting of the Company is to be held at the registered office of Grainger plc, Citygate, St. James' Boulevard, Newcastle upon Tyne NE1 4JE, on 9 February

2022. You will see from the Notice of Annual General Meeting, which is set out on page 6 of this document, that there are 18 resolutions which are proposed for approval, 12 of which relate to the ordinary business of the Annual General Meeting and 6 of which relate to special business.

Details of these resolutions are set out below and in the Notice. Resolutions 1 to 13 and 18 will be proposed as ordinary resolutions. Resolutions 14 to 17 will be proposed as special resolutions.

At the time of publication of this document, the Company expects that physical attendance at the Annual General Meeting will be possible and shareholders will be able to attend in person. In addition, as was the case for last year's annual general meeting, the Company will provide facilities so that shareholders can ask questions of the board remotely which will be answered and published on the Company's website in advance of the Annual General Meeting.

ORDINARY BUSINESS

Resolution 1 seeks approval of the Directors' report and the audited financial statements for the year ended 30 September 2021 which have been circulated to shareholders at the same time as this letter.

Resolution 2 seeks approval (on an advisory basis) of the Remuneration Committee Chairman's introductory letter (set out on pages 77 to 79 of the Annual Report and Accounts) and the Directors' Remuneration report (set out on pages 87 to 98 of the Annual Report and Accounts).

Resolution 3 relates to the proposed payment of a dividend of 3.32p per share to be paid on 14 February 2022 to all holders of 5p Shares on the register of members of the Company at the close of business on 31 December 2021 in respect of all Shares then registered in their names.

Resolutions 4 to 10 relate to the re-election and election of the Directors of the Company.

In accordance with the UK Corporate Governance Code, all of the Directors other than Andrew Carr-Locke are offering themselves for re-election or election at this Annual General Meeting. Andrew Carr-Locke will be retiring as a Director at the Annual General Meeting and I would very much like to thank Andrew for his valuable contribution as a member of the Board. It is considered by the Board that all of the Directors bring valuable skills and experience to the Board.

Biographies of all of the Directors standing for re-election or election can be found on pages 56 to 57 of the Annual Report and Accounts together with reasons why their contributions are, and continue to be, important to the Company's long-term sustainable success. Each of Robert Hudson and Carol Hui are standing for election as Directors for the first time at

the Annual General Meeting, as they were both appointed to the Board following last year's annual general meeting.

Resolutions 11 and 12 relate to the auditors of the Company. Ordinary resolutions are being proposed at this Annual General Meeting for their re-appointment as auditors and to authorise the Directors to approve their remuneration. An assessment of the effectiveness, independence and objectivity of the auditors has been undertaken by the audit committee which has recommended to the Board that the auditors of the Company be re-appointed as such.

SPECIAL BUSINESS

Resolution 13

This resolution, which will be proposed as an ordinary resolution, seeks shareholder approval for the Directors to be authorised to allot Shares.

Under the provisions of section 551 of the Act, the Directors are not permitted to allot shares unless authorised to do so by the shareholders. The Act provides for such authority to be granted either by the Company in general meeting or by the Articles of Association and, in both cases, such authority can only

last for five years. Notwithstanding the statutory provisions, institutional best practice indicates that this authority should be renewed annually. Accordingly, all unexercised previous authorities (including that obtained at the Company's previous annual general meeting) are revoked by this new authority and this authority will expire at the conclusion of the next annual general meeting of the Company or, if earlier, 15 months after the passing of the resolution except insofar as commitments to allot Shares have been entered into before that date.

In accordance with institutional guidelines, the Board considers it appropriate that the Directors be granted authority to allot Shares in the capital of the Company up to a maximum nominal amount of £24,462,026 representing the guideline limit of approximately two-thirds (ie 66.6%) of the Company's issued ordinary share capital (excluding treasury shares) as

at 1 December 2021 (being the latest practicable date prior to publication of this circular). Of this amount, £12,231,013 (representing approximately one- third (ie 33.3%) of the Company's issued ordinary share capital (excluding treasury shares) can only be allotted pursuant to a fully pre-emptive rights issue. The Board has no present intention of exercising this authority.

As at the date of this circular, the Company holds 1,506,300 treasury shares, being approximately 0.20% of the issued share capital of the Company (excluding treasury shares) as at 1 December 2021 (being the latest practicable date prior to publication of this circular).

Resolutions 14 and 15

These resolutions, which will be proposed as special resolutions, supplement the Directors' authority to allot Shares in the Company proposed by resolution 13, and will disapply statutory pre-emption rights in relation to allotment of a limited number of Shares in the Company.

4	GRAINGER PLC

Letter from the Chairman continued

Section 561 of the Act requires a company proposing to allot equity securities to offer them first to existing shareholders in proportion to their existing shareholdings. The allotment of equity securities includes Shares (the only class of share capital the Company has at present) and selling Shares held in treasury, but the requirement does not apply to Shares issued under employee share schemes. If these resolutions are passed, the requirement imposed by section 561 will not apply to allotments by the Directors in two cases:

1. in connection with a rights (or similar) issue, where application of the principle in section 561 could (for example) either result in fractional entitlements to Shares arising or require the issue of Shares where this would be impractical because of legal or regulatory requirements in any given overseas jurisdiction; and
2. allotments of Shares for cash up to a total nominal value of £3,706,368 (representing approximately
   10% of the Company's issued share capital (excluding treasury shares) as at 1 December 2021 (being the latest practicable date prior to publication of this circular)). This gives the Directors flexibility to take advantage of business opportunities as they arise, whilst the 10% limit ensures that existing shareholders' interests are protected in accordance with guidelines issued by institutional investors' bodies.

The authority to issue up to 10% of the Company's issued share capital (excluding treasury shares) is in accordance with the PEG Principles. These provide greater flexibility to undertake non-pre-emptive issuances in connection with acquisitions and specified capital investments. The Board confirms that it will only allot Shares with a nominal value of over £1,853,184 (representing 5% of its issued share capital (excluding treasury shares)) for cash if such allotment is in connection with an acquisition or specified capital investment, in line with the PEG Principles, which will be announced at the same time as the allotment or will have taken place in the preceding six- month period and will be disclosed in the announcement of the allotment. The Company may use this authority for the purposes of funding one or more specified capital investments in its development pipeline, meaning that the specific project funded by the allotment may be one (or more) of a number

of projects that have been identified and disclosed by the Company at the time of the relevant capital raising.

The Board also confirms its intention that equity securities equivalent to no more than 7.5% of the issued share capital of the Company (excluding treasury shares) will be allotted for cash on a non-pre-emptive basis during any rolling three-year period unless in connection with an acquisition or specified capital investment, again in line with institutional investor guidelines.

As in recent years, this authority will expire at the conclusion of the next annual general meeting or, if earlier, 15 months after the passing of the resolutions except in so far as commitments to allot Shares have been entered into before that date and resolutions to renew the authority will be produced at each future annual general meeting.

Resolution 16

This resolution, which will be proposed as a special resolution, seeks to renew the authority for the Company to purchase its own Shares in the market up to a maximum of 74,127,353 Shares (being approximately 10% of the Company's issued ordinary share capital as at 1 December 2021 (excluding treasury shares), being the last practicable date prior to the publication of this circular).

The proposed resolution sets out the maximum and minimum prices which the Company may pay for its Shares.

This authority will expire at the conclusion of next year's annual general meeting or, if earlier, 15 months after the passing of the resolution.

The Directors continually assess the Company's capital management position in accordance with its capital management framework. This authority gives the Company greater flexibility in managing its capital resources. The Board does not currently intend to exercise this authority during the year ahead. However, should it do so, it will only be following careful consideration, taking into account market conditions prevailing at the time, other investment opportunities, appropriate gearing levels, the overall position of the Company, the effects on earnings per share and the benefits for shareholders. Any purchase of Shares would be by means of market purchases. Any Shares purchased under the authority may be cancelled (and the number of the Shares in issue will be reduced accordingly) or may be held in treasury so as to be available to be sold at a later date, subject to the restrictions set out in resolution 13 or its equivalent in force at the time.

The extent of the authority sought is calculated in accordance with current governance practice.

In the 12 months prior to 1 December 2021, being the last practicable date prior to the publication of this circular, the Company had not exercised its right under its existing authority.

The total number of options or warrants to subscribe for Shares that were outstanding as at 1 December 2021, being the latest practicable date prior to publication of this circular, was 706,791, representing 0.10% of the issued ordinary share capital of the Company excluding treasury shares (0.11% of the issued share capital of the Company if the Company's full authority to purchase Shares, both existing and being sought, is used).

Resolution 17

The Companies (Shareholders' Rights) Regulations 2009 increased the notice period for all general meetings (including Annual General Meetings) of the Company, subject to any restrictions in its Articles of Association, to 21 days' notice. For general meetings other than Annual General Meetings, a company quoted on the Official List is allowed to hold such general meetings (but not Annual General Meetings) on 14 days' notice provided that two conditions are met.

The first condition is that the company offers facilities for shareholders to vote by electronic means. This condition is met if there is a facility offered by the company and accessible to all members to appoint a proxy by means of a website.

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The second condition is that there is an annual resolution of shareholders approving the reduction in the minimum notice period from 21 days to 14 days. The Board is therefore proposing this resolution as a special resolution to approve 14 days as the minimum notice period for all general meetings of the Company other than annual general meetings.

The approval will be effective until the Company's next annual general meeting, when it is intended that permission for the approval to be renewed will be sought. It is intended that the shorter notice period would not be used as a matter of routine for general meetings, but only where the flexibility is merited by the business of the meeting and is thought to be in the interests of shareholders as a whole.

Resolution 18

The Company has a policy that it does not make donations or incur expenditure on behalf of political parties. However, the Act contains restrictions on companies making political donations or incurring political expenditure and it defines these terms very widely, such that activities that form part of the normal relationship between the Company and bodies concerned with policy review may be included.

Such activities are not designed to support a particular political party.

The Company believes that the authority proposed under this resolution, which will be proposed as an ordinary resolution, is necessary to ensure that it does not commit any technical or inadvertent breach of the Act when carrying out activities in furtherance of its legitimate business interests.

The authority will lapse on the conclusion of the Company's next annual general meeting and will be limited to an aggregate amount of £50,000.

The Company neither made political donations nor incurred political expenditure in the financial year ended 30 September 2021.

ALTHOUGH, UNLIKE LAST YEAR, PHYSICAL ATTENDANCE AT THE ANNUAL GENERAL MEETING WILL AGAIN BE POSSIBLE, I STRONGLY URGE SHAREHOLDERS TO CAST THEIR VOTES BY PROXY IN ADVANCE OF THE ANNUAL GENERAL MEETING IN ORDER TO ENSURE THAT THEIR VOTES ARE COUNTED. ALL VOTES WILL BE HELD BY POLL SO THAT ALL PROXY VOTES ARE INCLUDED.

RECOMMENDATION

The Directors believe that all the proposals referred to above are in the best interests of the Company and its shareholders as a whole and are most likely to promote the success of the Company for the benefit of its shareholders as a whole. The Directors unanimously recommend that you vote in favour of all the proposed resolutions, as they intend to do in respect of their own beneficial shareholdings.

Yours sincerely

Mark Clare

Chairman