TIDMCLI
RNS Number : 7737V
CLS Holdings PLC
12 August 2015
Release date: 12 August 2015
Embargoed until: 07:00
CLS HOLDINGS PLC
("CLS", THE "COMPANY" OR THE "GROUP")
ANNOUNCES ITS HALF YEAR FINANCIAL REPORT
FOR THE 6 MONTHS TO 30 JUNE 2015
AN ACTIVE AND SUCCESSFUL PERIOD
CLS is a FTSE 250 property investment company with a GBP1.4
billion portfolio in the UK, Germany, France and Sweden offering
geographical diversification with local presence and knowledge.
FINANCIAL HIGHLIGHTS
-- EPRA net assets per share: up 7.9% to 1,914.3 pence (31 December 2014: 1,774.1 pence)
-- Profit after tax: up 10.6% to GBP68.6 million (2014: GBP62.0 million)
-- EPRA earnings per share: up 12.3% to 41.9 pence (2014: 37.3 pence)
-- Operating cash flow up 13.3% to GBP24.7 million (2014:
GBP21.8 million) driven by a healthy arbitrage between net initial
yield and cost of debt
-- Property portfolio value, including properties held for sale,
GBP1,365.9 million (31 December 2014: GBP1,310.1 million), up 4.0%
in local currencies
-- Weighted average cost of debt brought down to 3.46% (31 December 2014: 3.64%)
-- Interest cover remains comfortable at 3.1 times (2014: 3.6 times)
-- Proposed distribution to shareholders: up 5.1% to GBP5.7
million by way of tender offer buy-back: 1 in 162 at 2,190 pence,
equivalent to 13.52 pence per share
OPERATIONAL HIGHLIGHTS
Investment Property Portfolio:
-- Three acquisitions in the period in Bracknell, Vauxhall and Munich for GBP42.3 million
-- New income of GBP3.5 million in six months from completed developments
-- Vacancy rate remains low at 3.4% (31 December 2014: 3.0%)
despite the release of 4,421 sqm of new space from development
portfolio
Developments:
-- Strong rental growth at 405 Kennington Road, SE11 made it
more profitable to re-let the space as refurbished offices than to
implement our planning consent to change its use to residential
-- Completed developments at Spring Mews, SE11 and 138 Fetter
Lane, EC4 virtually fully let and trading very successfully
-- At Vauxhall Square, agreement with a specialist student
operator to build and manage the 454 room student building expected
to complete in the autumn, with development to start on site early
next year
Key Financing:
-- GBP97 million refinancing of Spring Gardens fixed for 6 years at 2.80%
-- EUR36.5 million refinancing of Bochum fixed for 7 years at 1.74%
-- EUR24 million acquisition financing of Schellerdamm fixed for 7 years at 1.91%
-- In July, EUR17.2 million acquisition financing of Tangentis fixed for 7 years at 1.44%
Sten Mortstedt, Executive Chairman of CLS, commented:
"We have continued to make good progress in what has been an
active first half. Our core business is performing well and we are
seeing the benefits of an improving economy in the UK and
Germany.
"With high occupancy levels and a low cost of debt, the Group
remains well positioned to generate cash. Our strong operations, a
solid balance sheet and a high level of liquid resources, together
with our flexible and opportunistic business approach, will enable
us to benefit from the challenges and opportunities which lie
ahead."
-ENDS-
For further information, please contact:
CLS Holdings plc +44 (0)20 7582 7766
www.clsholdings.com
Sten Mortstedt, Executive Chairman
Henry Klotz, Executive Vice Chairman
Fredrik Widlund, Chief Executive Officer
John Whiteley, Chief Financial Officer
Liberum Capital Limited +44 (0)20 3100 2222
Tom Fyson
Panmure Gordon (UK) Limited +44 (0)20 7886 2500
Mark Taylor
Russell Cook
Kinmont Limited +44 (0)20 7087 9100
Jonathan Gray
Smithfield Consultants (Financial PR) +44 (0)20 7360 4900
Alex Simmons
CLS will be presenting to analysts at 8.30am on Wednesday, 12
August 2015, at Smithfield Consultants, 10 Aldersgate Street,
London, EC1A 4HJ.
Conference call dial in numbers as follows:
Participant telephone number +44 (0)20 34271908
Confirmation code 8398120
Please dial in at least 5 minutes prior to the start of the
meeting and quote the above confirmation code when prompted.
CHAIRMAN'S STATEMENT
An active and
successful period
OVERVIEW
The first half of 2015 proved to be an active and successful
period, evidenced by strong earnings, substantial lettings,
opportunistic acquisitions and significant financing activity at
historically low interest rates.
The Group has made some notable progress since the beginning of
the year, including 12,356 sqm of lettings, acquisitions in
Bracknell, Vauxhall and Munich, and GBP141.4 million of new bank
loans. Strong operational earnings and a rise in property values
led to an 11.3% increase in EPRA net asset value in constant
currencies, but after reflecting the weakness of the euro and the
krona against our reporting currency of sterling, EPRA NAV grew by
a net 7.9% to 1,914.3 pence per share (31 December 2014: 1,774.1
pence).
The core fundamentals of the Group's business strategy remain
strong. The investment property portfolio contains a diverse base
of 550 occupiers across four markets generating rental income well
in excess of the Group's cost of debt. Approximately 44% of rents
are paid by governments and 22% by major corporations, and 52% of
rents are subject to indexation. The balance sheet is strong with
significant levels of cash and liquid resources and the Group's
funding is achieved from a diversified base of 24 banks, together
with other capital market funding sources.
RESULTS AND FINANCING
Profit before tax for the six months to 30 June 2015 was GBP80.2
million (2014: GBP72.6 million), significantly above that of last
year reflecting, in part, the higher uplift in property values, and
generated earnings per share of 160.2 pence (2014: 141.8 pence).
EPRA earnings per share, which exclude the effect of revaluations,
were 41.9 pence (2014: 37.3 pence), an increase over the last year
of 4.6 pence, which was principally from lower net financing costs
and an improved performance from associates.
Shareholders' funds rose by 7.7% to GBP703.2 million, net of
distributions to shareholders of GBP10.4 million.
Interest cover remained a comfortable 3.1 times (2014: 3.6
times). We took advantage of low medium-term swap rates to fix
recent financings at Spring Gardens (2.80%), Bochum (1.74%) and
Tangentis (1.44%) and the weighted average cost of debt fell to
3.46% (31 December 2014: 3.64%), remaining one of the lowest in the
real estate sector of the London Stock Exchange. At 30 June 2015,
net debt as a proportion of gross assets (excluding liquid
resources) was 40.6% (31 December 2014: 40.9%).
Net debt increased to GBP602.9 million (31 December 2014:
GBP584.0 million) reflecting our financing of the acquisition of
Schellerdamm, and refinancing of Spring Gardens and Bochum. Our
liquid resources, consisting of cash and corporate bonds of
GBP154.2 million, demonstrated the strength of the balance sheet
and our capacity to invest in the future. The corporate bond
portfolio, which we utilise as a cash management operation,
generated a total return of GBP2.2 million in the six months,
corresponding to an annualised 6.6% return on the invested
capital.
PROPERTY PORTFOLIO
The value of the property portfolio, including properties held
for sale, grew to GBP1.4 billion in the six months, principally
through GBP42.3 million of acquisitions and a 0.8% revaluation
uplift net of foreign exchange movements. The market for
acquisitions in London remains very competitive, but we were able
to acquire the Reflex building in Bracknell for GBP19.1 million at
an initial yield of 8%. We continue to see good investment
opportunities in Germany, where financing is more prevalent and
attractive, and in May we exchanged contracts on the acquisition of
Tangentis near Munich for EUR24.4 million at an initial yield of
7.9% and financed by a seven-year bank loan fixed at 1.44%. We also
acquired 109 and 111 Wandsworth Road, SW8, adjacent to the Vauxhall
Square site, for GBP3.3 million.
Net rental income in the period grew by 22% to GBP49.8 million
(2014: GBP40.8 million), and included the income generated by our
Spring Mews student and hotel development for the first time. Net
of an adverse foreign exchange variance from sterling's relative
strength against the euro (+9.5%) and Swedish krona (+7.0%) since
the year end, the sterling value of the portfolio rose by 0.8%. In
local currencies, the investment property portfolio's underlying
value rose by 4.0% in the six months, with uplifts across the whole
portfolio. The London portfolio grew by 4.6% and the Rest of the UK
by 9.3%, the French portfolio rose by 2.8% in local currency, the
German portfolio by 1.5%, and the Swedish portfolio by 5.0%.
Overall, the vacancy rate at 30 June 2015 was only 3.4% (31
December 2014: 3.0%), despite the release in January of 4,421 sqm
of new space from our development portfolio.
Across the portfolio, the average rent is now GBP155 per sqm
which is a very competitive level in the key European cities in
which we operate. The low level of new office construction is
expected to produce growth of office rents in suburban London areas
over the next few years, further to that already seen this year. At
405 Kennington Road, SE11 strong rental growth made it more
profitable to re-let the space as refurbished offices than to
implement our planning consent to change its use to residential
units.
Letting interest at our recently-completed developments at
Spring Mews, Vauxhall, SE11 and 138 Fetter Lane, EC4 has been very
strong and both schemes are virtually fully let and trading very
successfully.
At Vauxhall Square, SW8, the agreement with a specialist student
operator to build and manage the 454 room student building is
likely to complete in the autumn and development is expected to
start on site early next year, implementing the planning consent
for the whole Vauxhall Square site.
DISTRIBUTIONS
In April, the Group made a distribution to shareholders of
GBP10.4 million using our traditional tender offer buy-back
process. We propose to distribute a further GBP5.7 million by
similar means in September, offering 1 in 162 shares at 2,190 pence
per share, on which a Circular will be sent to shareholders in the
next few days. If approved, these two shareholder distributions
will correspond to an implied dividend yield of 2.15%, based on the
average market capitalisation during the first half of 2015.
BOARD CHANGES
Since 1 January, Jennica Mortstedt stepped down as a
Non-Executive Director, and was replaced by Philip Mortstedt. In
addition, Anna Seeley has joined the Board as a Non-Executive
Director.
OUTLOOK
The UK economy has continued to grow and the commercial property
market has continued to flourish in the first half of the year.
Within the Eurozone, however, continued strength in the German
economy contrasts with that of France, and a solid economic
recovery across Europe may still be some way off. As a consequence,
interest rates may remain low for the foreseeable future.
With high occupancy levels and a low cost of debt, the Group
remains well positioned to generate cash. Our strong operations, a
solid balance sheet and a high level of liquid resources, together
with our flexible and opportunistic business approach, will enable
us to benefit from the challenges and opportunities which lie
ahead.
Sten Mortstedt
Executive Chairman
12 August 2015
BUSINESS REVIEW
London has continued to be
An Attractive destination
INVESTMENT PROPERTY
LONDON
(57% of the Group's property investments) With the Bank of
England predicting GDP growth in the UK of 2.5% in 2015, and
inflation not rising to its target of 2.0% for a couple of years,
and with market consensus suggesting no rise in interest rates
until next year, London has continued to be an attractive
destination for real estate investors, both domestic and overseas.
In addition to this investor demand for South East offices,
occupancy demand has remained strong, and these factors have driven
the uplift in the value of the London portfolio of 4.6% in the
first half of the year.
We have continued actively to seek new investments and in June
we acquired Reflex, Cain Road, Bracknell for GBP19.1 million, on an
8% net initial yield. The building comprised 9,610 sqm of Grade A
offices let predominantly to Honda Motors. We also acquired two
town houses, 109 and 111 Wandsworth Road, SW8, adjacent to our
Vauxhall Square site, for GBP3.3 million in aggregate.
On average, new lettings and rent reviews were achieved at 7.1%
above ervs of 31 December 2014, with notable successes at 138
Fetter Lane, EC4, 405 Kennington Road, SE11, and Great West House,
Brentford. In the six months to 30 June 2015, ervs across the
London portfolio rose by 3.3%. The vacancy rate in London rose in
the six months to 4.9% (31 December 2014: 3.3%) due to the
completion of developments, with 2,683 sqm of space becoming
available at 138 Fetter Lane, EC4, and 1,126 sqm of offices at
Spring Mews, SE11. Occupational demand within the London investment
portfolio has been strong, with 6,016 sqm of space having been let
or renewed in the six months, whilst 5,604 sqm became vacant.
On the expiry of the office lease at 405 Kennington Road, SE11,
we had intended to redevelop the property as residential units in
accordance with the planning consent obtained in 2014. However,
rental levels had risen to such an extent that it was more
profitable to refurbish the property and let it as an office. Work
on the refurbishment is due to end later this year and we have
already pre-let the entire 1,380 sqm of office space for 12 years
at GBP42.50 per sq ft.
At our recently-completed development at Spring Mews, Vauxhall,
SE11, the Staybridge suite hotel opened for business in late
January and has achieved occupancy rates of over 94%, whilst the
student accommodation, which was 100% occupied in its first
academic year to August 2015, is already 90% pre-let for 2015/16 at
rates 9% higher than last year. 911 sqm of offices on the site have
been let and the remaining 215 sqm are under offer.
Following its comprehensive refurbishment, at 138 Fetter Lane,
EC4 we let 1,366 sqm of the 2,683 sqm of office space which came to
market at the beginning of the year and six of the eight
apartments, generating GBP1.0 million p.a. in aggregate, and the
remainder of the space is expected to be let this year.
The Vauxhall Nine Elms area continues to strengthen: there have
been two recent launches of new residential tower developments -
Aykon Tower and Keybridge House - and in the autumn others are
planned, including Embassy Gardens. The US and Dutch embassies
remain under construction, and piling has begun on One Nine Elms,
Vauxhall's first five-star hotel. At Vauxhall Square, SW8, the
agreement with a specialist student operator to build and manage
the 454 room student building is likely to complete in the autumn
and development is expected to start on site early next year,
implementing the planning consent for the whole Vauxhall Square
site.
REST OF UK
(8% of the Group's property investments) The growth in the UK's
GDP has permeated the regional property markets, and this has been
reflected in the performance of our Rest of UK portfolio, 99% of
which is let to 14 government departments. There were no
significant lease events in the six months, but ervs rose by 2.0%,
and yields tightened by around 100 basis points to achieve the
overall uplift in values of 9.3%.
GERMANY
(17% of the Group's property investments) Economic growth in
Germany, currently at around 1.8% p.a., is projected to strengthen,
driven by both domestic and external demand and, with low and
falling unemployment, it remains one of the most robust economies
in Europe.
The take-up of office space in the main German markets in the
six months to 30 June 2015 was around 1.0 million sqm, and the
national vacancy rate had fallen to 6.1%.
The vacancy rate in our German portfolio has fallen to 1.8% (31
December 2014: 2.6%), with strong occupational demand being
captured in significant lettings at Schellerdamm, Hamburg and
Maximilian Forum, Munich. In the six months to 30 June 2015, 1,421
sqm of space was let or renewed and only 1,109 sqm made vacant.
Rents were achieved on new lettings and lease extensions at 3.6%
above ervs at 31 December 2014.
There were EUR24 billion of commercial investment transactions
in Germany in the first half of 2015, 40% higher than the
comparable period last year. We continue to see good value in
selective opportunities in Germany and historically low debt costs.
In February, we completed the acquisition of Schellerdamm 2 and
Schellerdamm 16, two modern, multi-let office buildings in the
Harburg district of Hamburg providing 18,665 sqm of lettable space
and 287 car parking spaces. This EUR32.3 million purchase, which
was accounted for as an acquisition on exchange of contracts in
2014, generated a net initial yield of 6.4%, and was financed with
a seven-year loan from a local Sparkasse bank at a cost fixed at
less than 2% per annum. In May, we exchanged contracts to acquire
Tangentis, a high-quality, multi-let office building in the
Unterföehring district to the north of Munich, providing 14,630 sqm
of lettable space and 252 car parking spaces. Completion took place
in July at a price of EUR24.4 million plus costs, generating a net
initial yield of 7.9%, which we financed with a seven-year loan
from a local bank at a cost fixed at 1.44% per annum.
The value of the German portfolio increased by EUR4.8 million or
1.5% in local currency, driven by the fall in the vacancy rate and
a small tightening of yields; ervs in Germany rose by 0.2% in the
six months.
Since 1 July 2015, we have exchanged contracts on the sale of
Unterschleissheim in Munich for EUR3.8 million, which will
represent a slight loss to its value at 31 December 2014 after
foreign exchange variations.
FRANCE
(15% of the Group's property investments) French economic growth
is projected to gain momentum into 2016, but at less than 1.5% it
is unlikely to be enough to affect significantly a level of
unemployment of around 10%.
Against this background, it is unsurprising that letting
activity in the Paris region in the first half of 2015 was 20%
below the ten year average, and that the vacancy rate across Paris
was 7.5%. Likewise, the investment market recorded aggregate
transactions in the first half of 2015 38% down on the same period
last year.
Notwithstanding the economic backdrop against which it operates,
in the six months to 30 June 2015 the French team has reduced its
void rate still further to 4.6% (31 December 2014: 5.1%). During
the period occupiers vacated or leases expired on 8,072 sqm of
space, of which 3,698 sqm was transferred to development stock, but
we let or renewed 4,918 sqm. This is currently an occupier's market
and rents achieved in the French portfolio in the first six months
of the year have been 0.9% below December 2014's ervs.
The value of our French investment portfolio grew by 2.8% in
local currency since the beginning of the year, reflecting the fall
in voids; ervs were largely unchanged in the six months.
SWEDEN
(3% of the Group's property investments) Swedish GDP is expected
to grow by around 2.5% in 2015, driven by the international outlook
and domestic consumption, and CPI inflation is forecast to be 1.0%.
Negative interest rates and the Swedish government's bond buying
programme have helped to weaken the Swedish krona, which has
adversely affected the results of the Group.
In the six months to 30 June 2015, the Swedish portfolio rose by
5.0% in local currency, but through the weakness of the krona, fell
by 1.9% in sterling.
Catena AB, the Stockholm-listed real estate company in which the
Group owns a 13.5% shareholding, sold its development site at Haga
Norra, Stockholm for SEK 1.45 billion, to focus on its substantial
logistics property portfolio in southern Sweden. The Group received
from Catena a dividend of GBP0.8 million in the period, and
Catena's share price rose by 26.2% in the six months to June,
increasing the market value of the Group's stake to GBP35.6 million
(31 December 2014: GBP30.2 million).
First Camp Sverige Holding AB, an owner and operator of Swedish
camp sites and in which the Group owns a 58.0% interest, is a
seasonal business which is at its most active in the third quarter.
At 30 June, the Group's interest in First Camp was valued at GBP5.2
million (31 December 2014: GBP5.9 million).
RESULTS FOR THE PERIOD
HEADLINES
Profit after tax of GBP68.6 million (2014: GBP62.0 million)
generated basic earnings per share of 160.2 pence (2014: 141.8
pence), and EPRA earnings per share of 41.9 pence (2014: 37.3
pence). Gross property assets at 30 June 2015 including those held
for sale, rose to GBP1,365.9 million (31 December 2014: GBP1,310.1
million), net assets per share increased by 9.0% to 1,658.4 pence
(31 December 2014: 1,521.1 pence) and EPRA net assets per share by
7.9% to 1,914.3 pence (31 December 2014: 1,774.1 pence).
INCOME STATEMENT
We continue to increase the level of cash generated annually by
the Group, and rental income for the six months to 30 June 2015 of
GBP42.4 million (2014: GBP42.1 million) was higher than last year
by GBP0.3 million. Spring Mews's student accommodation generated
GBP2.2 million for the first time, and new acquisitions added
GBP0.6 million of rent, but the weakness of the euro and krona
dampened rents by GBP2.3 million. Other property-related income of
GBP8.7 million (2014: GBP0.8 million) included the revenue stream
from the Spring Mews hotel of GBP1.3 million and from First Camp in
Sweden for the first time.
Operating profit of GBP86.7 million (2014: GBP84.1 million)
included GBP53.9 million of net movements on revaluation of
investment properties (2014: GBP45.2 million), representing an
uplift in local currencies of 4.0% (2014: 4.0%).
Interest income of GBP2.8 million (2014: GBP3.9 million) was
lower than last year due to the lower average value of corporate
bonds held by the Group. Interest expense of GBP12.0 million (2014:
GBP14.7 million) was GBP1.0 million lower than in 2014 excluding
foreign exchange variances, because the effect of the fall in the
weighted average rate of interest was greater than the impact of
having more debt. With interest rate swaps at historically low
rates, we have chosen to fix the interest rate of recent
financings. We financed the Schellerdamm acquisition at 1.91% for
seven years, and the refinancing of Spring Gardens at 2.80% for six
years and of Bochum at 1.74% for seven years. As a consequence, the
weighted average cost of debt fell to 3.46% (31 December 2014:
3.64%). In July, we financed the acquisition of Tangentis at 1.44%
for seven years, which brought down the pro forma cost of debt by a
further 3 basis points.
EPRA NET ASSETS PER SHARE
EPRA net assets per share rose from 1,774.1 pence to 1,914.3
pence in the six months to 30 June 2015, an increase of 140.0 pence
per share, or 7.9%. The majority of this increase came from the
revaluations of the property portfolio and other financial
investments, which added 135.5 pence and 18.4 pence per share,
respectively. Other profits after tax, which were predominantly
cash-based, contributed 51.7 pence per share, but these were offset
by adverse foreign exchange movements of 59.7 pence per share
reflecting the relative strength of sterling.
CASH FLOW, NET DEBT AND GEARING
The Group's ability to generate cash was enhanced by
acquisitions and by the development at Spring Mews coming on stream
in 2015, with net cash flow from operating activities rising to
GBP24.7 million (2014: GBP21.8 million), GBP10.4 million of which
was distributed to shareholders. GBP49.4 million was paid to
acquire Schellerdamm, Hamburg and Reflex, Bracknell, financed in
part through GBP8.9 million raised from net disposals of corporate
bonds, and a net GBP37.0 million of new bank loans. At 30 June
2015, cash and cash equivalents of GBP100.4 million were broadly
unchanged from six months earlier.
In the six months to 30 June 2015, gross borrowings increased by
GBP11.0 million to GBP757.0 million (31 December 2014: GBP746.0
million), through a new loan on the recent Schellerdamm
acquisition, and refinancing of Spring Gardens and Bochum, whilst
other loans were reduced through amortisation and foreign exchange
movements. The Group's weighted average property loan to value was
49.7% (2014: 49.7%) and balance sheet loan to value was 42.7%
(2014: 43.4%).
PORTFOLIO STATISTICS(1)
Weighted
6 month average Contracted
ERV revaluation unexpired rent per
Contracted Contracted
rent rent Valuation(2) in local Net lease term let sqm
At 30 June initial Vacancy
2015 (GBPm) (GBPm) (GBPm) currency yield(3) by rent (years) (GBPm)
----------------- ------------ ---------- ------------ ------------ ---------- -------- ----------- ----------
London 42.1 38.7 795.8 4.6% 4.9% 4.9% 7.0 235
Rest of UK 9.9 13.3 107.0 9.3% 11.7% 0.9% 6.2 140
France 13.1 13.7 211.9 2.8% 5.8% 4.6% 5.4 161
Germany 16.3 17.4 236.5 1.5% 6.6% 1.8% 6.4 95
Sweden 3.5 5.5 46.2 5.0% 7.6% 0.8% 2.3 122
----------------- ------------ ---------- ------------
Total portfolio 84.9 88.6 1,397.4 4.0% 6.1% 3.4% 6.2 155
----------------- ------------ ---------- ------------
1 Data relates to investment properties and properties held for sale unless otherwise stated
2 Includes operational assets
3 Excludes developments
SHARE CAPITAL
In March, 15,000 shares were issued to the Chief Executive
Officer, Fredrik Widlund, from Treasury Shares in lieu of
incentives forfeited by him to join the Company, and in May,
536,738 shares were cancelled under the tender offer buy-back at
1,950 pence per share. At 30 June 2015, there were 42,402,323
shares in issue, and 2,888,103 Treasury Shares held by the
Company.
SUSTAINABILITY
On the back of the strong sustainability performance in 2014, we
have continued to make good progress through a range of initiatives
in 2015. With the completion of our sixth solar photovoltaic array
installation, we now generate 84,000kWh of green energy every year.
We have continued to roll out LED lighting across all common areas
which has supported our energy reduction targets. We also aim to
achieve the highest sustainability standards in our refurbishment
programmes. Currently four refurbishment projects in the UK are
undergoing assessments for SKA 'Silver' or 'Gold' certification and
two refurbishments in France are undergoing BREEAM 'Very Good' or
'Excellent' certification.
The CO(2) emissions of our managed assets in the UK for the six
months to 30 June were 1% less than those of last year. We are
focused on improving this performance further in the second half of
the year to ensure we meet occupier comfort requirements whilst
preventing any inefficiency in energy use.
We have also introduced additional internal sustainability
targets to support the Green Charter Pledge, made back in 2011.
These new targets (15 in total) are reviewed annually at country
level and reported back to the Group Sustainability Manager.
PRINCIPAL RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remaining six months of the financial year and could cause the
results for the year to differ materially from expected or
historical results. The Directors do not consider that the
principal risks and uncertainties have changed since the
publication of the annual report for the year ended 31 December
2014. A detailed explanation of the risks summarised below can be
found on pages 8 and 9 of the 2014 Annual Report, which is
available at www.clsholdings.com:
-- Underperformance of investment portfolio due to:
- Cyclical downturn in property market
- Inappropriate buy/sell/hold decisions
- Changes in supply of space and/or occupier demand
- Poor asset management
-- Economic downturn
-- Failure to secure planning permission
-- Contractor solvency and availability
-- Downturn in investment or occupational markets
-- Increasing building regulation and obsolescence
-- Climate change
-- Increasing energy costs and regulation
-- Unavailability of financing at acceptable prices
-- Adverse interest rate movements
-- Breach of borrowing covenants
-- Foreign currency exposure
-- Financial counterparty credit risk
-- Increases in tax rates or changes to the basis of taxation
-- Break-up of the Euro
-- Corporate bond investments:
- Underperformance of portfolio
- Insolvency of bond issuer
-- Inadequate working capital to remain a going concern for the next 12 months
GOING CONCERN
As stated in note 2 to the Condensed Group Financial Statements,
the Directors are satisfied that the Group has sufficient resources
to continue in operation for the foreseeable future, being a period
of not less than 12 months from the date of this Half-Yearly
Financial Report. Accordingly, they continue to adopt the going
concern basis in preparing the Condensed Group Financial
Statements.
Responsibility statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements, which has been
prepared in accordance with IAS 34 'Interim Financial Reporting',
gives a true and fair view of the assets, liabilities, financial
position and profit of the Group as required by DTR 4.2.4R;
(b) the Chairman's Statement and Business Review include a fair
review of the information required by DTR 4.2.7R (indication of
important events during the first six months and description of
principal risks and uncertainties for the remaining six months of
the year); and
(c) the Chairman's Statement and Business Review include a fair
review of the information required by DTR 4.2.8R (disclosure of
related party transactions and changes therein).
On behalf of the Board
Sten Mortstedt Henry Klotz
Executive Chairman Executive Vice Chairman
12 August 2015
INDEPENDENT REVIEW REPORT TO CLS HOLDINGS PLC
We have been engaged by the Company to review the condensed set
of financial statements in the Half-Yearly Financial Report for the
six months ended 30 June 2015 which comprises the Condensed Group
Income Statement, the Condensed Group Statement of Comprehensive
Income, the Condensed Group Balance Sheet, the Condensed Group
Statement of Changes in Equity, the Condensed Group Statement of
Cash Flows and related notes 1 to 15. We have read the other
information contained in the Half-Yearly Financial Report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The Half-Yearly Financial Report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the Half-Yearly Financial Report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this Half-Yearly Financial Report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the Half-Yearly
Financial Report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Half-Yearly Financial Report for the six months ended 30
June 2015 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
12 August 2015
CONDENSED GROUP income STATEMENT
for the six months ended 30 June 2015
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
GBPm GBPm GBPm
Notes (unaudited) (unaudited) (audited)
------------------------------------------------ ----- ------------ ------------ ------------
Continuing operations
Group revenue 58.6 49.8 99.6
------------------------------------------------ ----- ------------ ------------ ------------
Net rental income 3 49.8 40.8 82.2
Administration expenses (9.5) (6.2) (13.6)
Other expenses (7.5) (1.8) (4.9)
------------------------------------------------ ----- ------------ ------------ ------------
Group revenue less costs 32.8 32.8 63.7
Net movements on revaluation of investment
properties 9 53.9 45.2 186.0
Profit on sale of investment properties - 7.0 8.7
Net loss on sale of corporate bonds
and other financial investments - (0.9) -
Gain arising from acquisition - - 1.2
Fair value gain on reclassification
of an associate as a subsidiary - - 0.2
------------------------------------------------ ----- ------------ ------------ ------------
Operating profit 86.7 84.1 259.8
Finance income 4 5.5 4.6 7.7
Finance costs 5 (12.0) (14.7) (28.1)
Share of loss of associates after
tax - (1.4) (2.6)
------------------------------------------------ ----- ------------ ------------ ------------
Profit before tax 80.2 72.6 236.8
Taxation 6 (11.2) (10.6) (42.0)
------------------------------------------------ ----- ------------ ------------ ------------
Profit for the period 69.0 62.0 194.8
------------------------------------------------ ----- ------------ ------------ ------------
Attributed to
Owners of the Company 68.6 62.0 194.9
Non-controlling interests 0.4 - (0.1)
------------------------------------------------ ----- ------------ ------------ ------------
69.0 62.0 194.8
------------------------------------------------ ----- ------------ ------------ ------------
Earnings per share from continuing
operations attributable to the owners
of the Company during the period
(expressed in pence per share)
Basic and diluted 7 160.5p 141.8p 449.0p
------------------------------------------------ ----- ------------ ------------ ------------
CONDENSED GROUP statement of comprehensive income
for the six months ended 30 June 2015
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
GBPm GBPm GBPm
Notes (unaudited) (unaudited) (audited)
--------------------------------------------------- ----- ------------ ------------ ------------
Profit for the period 69.0 62.0 194.8
--------------------------------------------------- ----- ------------ ------------ ------------
Other comprehensive income
Items that will not be reclassified
to profit or loss
Foreign exchange differences (18.7) (6.1) (14.7)
--------------------------------------------------- ----- ------------ ------------ ------------
Items that may be reclassified to
profit or loss
Fair value gains on corporate bonds
and other financial investments 7.8 4.6 3.2
Fair value losses taken to net loss
on sale of corporate bonds and other
financial investments - 0.1 0.2
Revaluation of property, plant and
equipment 1.0 0.4 6.5
Deferred tax on net fair value losses/(gains) 6 0.6 (0.8) (1.3)
--------------------------------------------------- ----- ------------ ------------ ------------
Total items that may be reclassified
to profit or loss 9.4 4.3 8.6
--------------------------------------------------- ----- ------------ ------------ ------------
Total comprehensive income for the
period 59.7 60.2 188.7
--------------------------------------------------- ----- ------------ ------------ ------------
Attributed to
Owners of the Company 60.5 60.2 187.5
Non-controlling interests (0.8) - 1.2
--------------------------------------------------- ----- ------------ ------------ ------------
59.7 60.2 188.7
--------------------------------------------------- ----- ------------ ------------ ------------
CONDENSED GROUP BALANCE SHEET
at 30 June 2015
30 June 30 June 31 December
2015 2014 2014
GBPm GBPm GBPm
Notes (unaudited) (unaudited) (audited)
-------------------------------------- ----- ------------ ------------ -----------
Non-current assets
Investment properties 9 1,326.0 1,168.8 1,310.1
Property, plant and equipment 10 63.6 3.4 60.4
Goodwill 1.1 1.1 1.1
Investments in associates 1.4 6.5 1.5
Other financial investments 11 97.4 120.1 99.9
Derivative financial instruments - 0.1 -
Deferred tax 6 2.9 5.0 4.8
-------------------------------------- ----- ------------ ------------ -----------
1,492.4 1,305.0 1,477.8
-------------------------------------- ----- ------------ ------------ -----------
Current assets
Trade and other receivables 6.1 10.9 10.8
Properties held for sale 39.9 - -
Derivative financial instruments - 0.6 -
Cash and cash equivalents 100.4 69.4 100.2
-------------------------------------- ----- ------------ ------------ -----------
146.4 80.9 111.0
-------------------------------------- ----- ------------ ------------ -----------
Total assets 1,638.8 1,385.9 1,588.8
-------------------------------------- ----- ------------ ------------ -----------
Current liabilities
Trade and other payables (60.6) (37.1) (68.1)
Current tax 6 (6.5) (6.6) (7.7)
Borrowings 12 (237.0) (98.9) (192.8)
Derivative financial instruments (0.3) - (1.0)
-------------------------------------- ----- ------------ ------------ -----------
(304.4) (142.6) (269.6)
-------------------------------------- ----- ------------ ------------ -----------
Non-current liabilities
Deferred tax 6 (106.4) (78.5) (105.9)
Borrowings 12 (516.1) (628.2) (549.5)
Derivative financial instruments (4.9) (5.5) (6.3)
-------------------------------------- ----- ------------ ------------ -----------
(627.4) (712.2) (661.7)
-------------------------------------- ----- ------------ ------------ -----------
Total liabilities (931.8) (854.8) (931.3)
-------------------------------------- ----- ------------ ------------ -----------
Net assets 707.0 531.1 657.5
-------------------------------------- ----- ------------ ------------ -----------
Equity
Share capital 13 11.3 11.5 11.5
Share premium 83.1 82.9 82.9
Other reserves 80.9 94.4 88.8
Retained earnings 527.9 342.3 469.7
-------------------------------------- ----- ------------ ------------ -----------
Equity attributable to owners of the
Company 703.2 531.1 652.9
Non-controlling interests 3.8 - 4.6
-------------------------------------- ----- ------------ ------------ -----------
Total equity 707.0 531.1 657.5
-------------------------------------- ----- ------------ ------------ -----------
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2015
Non-
Share Share Other Retained controlling Total
capital premium reserves earnings Total interest equity
Unaudited GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- -------- -------- --------- --------- ------ ------------ -------
Arising in the six months
ended 30 June 2015:
Total comprehensive
income for the period - - (8.1) 68.6 60.5 (0.8) 59.7
Issue of shares - 0.2 - - 0.2 - 0.2
Purchase of own shares (0.2) - 0.2 (10.4) (10.4) - (10.4)
---------------------------- -------- -------- --------- --------- ------ ------------ -------
Total changes arising
in the period (0.2) 0.2 (7.9) 58.2 50.3 (0.8) 49.5
At 1 January 2015 11.5 82.9 88.8 469.7 652.9 4.6 657.5
---------------------------- -------- -------- --------- --------- ------ ------------ -------
At 30 June 2015 11.3 83.1 80.9 527.9 703.2 3.8 707.0
---------------------------- -------- -------- --------- --------- ------ ------------ -------
Non-
Share Share Other Retained controlling Total
capital premium reserves earnings Total interest equity
Unaudited GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- -------- -------- --------- --------- ------ ------------ -------
Arising in the six months
ended 30 June 2014:
Total comprehensive
income for the period - - (1.8) 62.0 60.2 - 60.2
Purchase of own shares (0.2) - 0.2 (10.0) (10.0) - (10.0)
---------------------------- -------- -------- --------- --------- ------ ------------ -------
Total changes arising
in the period (0.2) - (1.6) 52.0 50.2 - 50.2
At 1 January 2014 11.7 82.9 96.0 290.3 480.9 - 480.9
---------------------------- -------- -------- --------- --------- ------ ------------ -------
At 30 June 2014 11.5 82.9 94.4 342.3 531.1 - 531.1
---------------------------- -------- -------- --------- --------- ------ ------------ -------
Non-
Share Share Other Retained controlling Total
capital premium reserves earnings Total interest equity
Audited GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- -------- -------- --------- --------- ------ ------------ -------
Arising in the year
ended 31 December 2014:
Total comprehensive
income for the year - - (7.4) 194.9 187.5 1.2 188.7
Adjustment arising from
change in non-controlling
interest - - - - - 3.4 3.4
Purchase of own shares (0.2) - 0.2 (15.4) (15.4) - (15.4)
Expenses thereof - - - (0.1) (0.1) - (0.1)
-------------------------------- -------- -------- --------- --------- ------ ------------ -------
Total changes arising
in 2014 (0.2) - (7.2) 179.4 172.0 4.6 176.6
At 1 January 2014 11.7 82.9 96.0 290.3 480.9 - 480.9
-------------------------------- -------- -------- --------- --------- ------ ------------ -------
At 31 December 2014 11.5 82.9 88.8 469.7 652.9 4.6 657.5
-------------------------------- -------- -------- --------- --------- ------ ------------ -------
CONDENSED GROUP STATEMENT OF CASH FLOWS
for the six months ended 30 June 2015
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
GBPm GBPm GBPm
Notes (unaudited) (unaudited) (audited)
------------------------------------------------ ----- ------------ ------------ ------------
Cash flows from operating activities
Cash generated from operations 14 37.5 30.4 53.3
Interest received 3.1 4.4 8.1
Interest paid (11.6) (12.7) (24.4)
Income tax paid (4.3) (0.3) (2.5)
------------------------------------------------ ----- ------------ ------------ ------------
Net cash inflow from operating activities 24.7 21.8 34.5
------------------------------------------------ ----- ------------ ------------ ------------
Cash flows from investing activities
Purchase of investment property (49.4) (0.6) (4.2)
Capital expenditure on investment property (3.4) (30.5) (45.2)
Proceeds from sale of investment property - 29.3 37.1
Net cash (outflow)/inflow from business
acquisition (0.7) - 2.9
Purchase of corporate bonds (12.1) (58.3) (70.9)
Proceeds from sale of corporate bonds 21.0 44.5 82.9
Purchase of equity investments - (2.6) (5.1)
Dividends received from equity investments 1.0 0.7 0.7
Proceeds from sale of equity investments - 0.4 3.3
Loans made to associate undertakings - (1.1) (1.0)
Distributions received from associate
undertakings - 0.8 0.8
(Costs of)/income from foreign currency
transactions (1.8) 0.8 (0.9)
Purchases of property, plant and equipment (4.1) (0.3) (11.3)
------------------------------------------------ ----- ------------ ------------ ------------
Net cash outflow from investing activities (49.5) (16.9) (10.9)
------------------------------------------------ ----- ------------ ------------ ------------
Cash flows from financing activities
Purchase of own shares (10.4) (10.0) (15.5)
New loans 141.4 - 32.6
Issue costs of new loans (1.3) - (0.2)
Repayment of loans (103.1) (53.6) (65.0)
------------------------------------------------ ----- ------------ ------------ ------------
Net cash inflow/(outflow) from financing
activities 26.6 (63.6) (48.1)
------------------------------------------------ ----- ------------ ------------ ------------
Cash flow element of net increase/(decrease)
in cash and cash equivalents 1.8 (58.7) (24.5)
Foreign exchange loss (1.6) (1.7) (5.1)
------------------------------------------------ ----- ------------ ------------ ------------
Net increase/(decrease) in cash and
cash equivalents 0.2 (60.4) (29.6)
Cash and cash equivalents at the beginning
of the period 100.2 129.8 129.8
------------------------------------------------ ----- ------------ ------------ ------------
Cash and cash equivalents at the end
of the period 100.4 69.4 100.2
------------------------------------------------ ----- ------------ ------------ ------------
Interest received has been included in cash flows from operating
activities as the majority of it arises from corporate bonds, in
which the Group invests as a cash management operation. Previously,
interest received was disclosed in cash flows from investing
activities.
Notes to the CONDENSED GROUP Financial Statements
30 June 2015
1 Basis of preparation
The financial information contained in this Half-Yearly
Financial Report does not constitute statutory accounts as defined
in section 434 of the Companies Act 2006. The results for the year
ended 31 December 2014 are an abridged version of the full accounts
for that year, which received an unqualified report from the
auditor, did not contain a statement under section 498(2) or (3) of
the Companies Act 2006 or include a reference to any matter to
which the auditor drew attention by way of emphasis without
qualifying the auditor's report, and have been filed with the
Registrar of Companies. The annual financial statements of CLS
Holdings plc are prepared in accordance with IFRSs as adopted by
the European Union. The condensed financial statements included in
this Half-Yearly Financial Report have been prepared in accordance
with IAS 34 Interim Financial Reporting, as adopted by the European
Union. The same accounting policies, presentation and methods of
computation are followed in the condensed set of financial
statements as applied in the latest audited annual financial
statements, except as explained in the note below the Condensed
Group Statement of Cash Flows.
For the year ending 31 December 2015, the Company plans to
transition to reporting under FRS 101 as issued by the Financial
Reporting Council, and therefore take advantage of the disclosure
exemptions permitted by the standard, unless an objection is served
by any shareholder or shareholders holding in aggregate 5% or more
of the allotted shares. Objections may be served by writing to the
Company Secretary at the registered office, 86 Bondway, London, SW8
1SF, no later than 13 November 2015.
2 Going Concern
The Directors regularly stress-test the business model to ensure
that the Group has adequate working capital. They have reviewed the
current and projected financial position of the Group, taking into
account the repayment profile of the Group's loan portfolio, and
making reasonable assumptions about future trading performance. In
particular, the Directors are confident that loans expiring within
the next 12 months will be refinanced, and note that no further
loans expire in the United Kingdom between 2016 and 2018, and,
therefore, they have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future and, therefore, they continue to adopt the going
concern basis in preparing the Half-Yearly Financial Report.
3 Segment information
The Group has two operating divisions - Investment Property and
Other Investments. Other Investments comprise Spring Mews hotel,
corporate bonds, shares in Catena AB, Bulgarian Land Development
Plc, First Camp Sverige Holding AB and Cood Investments AB, and
other small corporate investments. The Group manages the Investment
Property division on a geographical basis due to its size and
geographical diversity. Consequently, the Group's principal
operating segments are:
Investment Property London
-
Rest of United Kingdom
France
Germany
Sweden
Other Investments
There are no transactions between the operating segments.
The Group's results for the six months ended 30 June 2015 by
operating segment were as follows:
Investment Property
---------------------------------------
Rest Other
London of UK France Germany Sweden Investments Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- ------ ------ ------ ------- ------ ------------ ------
Rental income 18.4 6.7 6.9 7.7 2.7 - 42.4
Other property-related income 0.5 - - - 0.4 7.8 8.7
Service charge income 3.4 - 2.3 1.6 0.2 - 7.5
Service charges and similar
expenses (3.3) (0.1) (2.4) (1.7) (1.3) - (8.8)
-------------------------------- ------ ------ ------ ------- ------ ------------ ------
Net rental income 19.0 6.6 6.8 7.6 2.0 7.8 49.8
Administration expenses (1.7) (0.1) (0.7) (0.6) (0.1) (2.4) (5.6)
Other expenses (1.5) (0.2) (0.4) (0.6) (0.1) (4.7) (7.5)
-------------------------------- ------ ------ ------ ------- ------ ------------ ------
Group revenue less costs 15.8 6.3 5.7 6.4 1.8 0.7 36.7
Net movements on revaluation
of investment properties 33.5 9.1 5.5 3.5 2.3 - 53.9
-------------------------------- ------ ------ ------ ------- ------ ------------ ------
Segment operating profit 49.3 15.4 11.2 9.9 4.1 0.7 90.6
Finance income - - - - - 5.5 5.5
Finance costs (5.4) (1.6) (1.2) (0.9) (0.2) (2.7) (12.0)
-------------------------------- ------ ------ ------ ------- ------ ------------ ------
Segment profit before tax 43.9 13.8 10.0 9.0 3.9 3.5 84.1
-------------------------------- ------ ------ ------ ------- ------ ------------
Central administration expenses (3.9)
-------------------------------- ------ ------ ------ ------- ------ ------------ ------
Profit before tax 80.2
-------------------------------- ------ ------ ------ ------- ------ ------------ ------
The Group's results for the six months ended 30 June 2014 by
operating segment were as follows:
Investment Property
---------------------------------------
Rest Other
London of UK France Germany Sweden Investments Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------- ------ ------ ------ ------- ------ ------------ ------
Rental income 15.5 6.6 9.0 7.8 3.2 - 42.1
Other property-related income 0.6 - 0.1 0.1 - - 0.8
Service charge income 2.8 - 2.7 1.3 0.1 - 6.9
Service charges and similar
expenses (3.5) - (3.0) (1.7) (0.8) - (9.0)
--------------------------------------- ------ ------ ------ ------- ------ ------------ ------
Net rental income 15.4 6.6 8.8 7.5 2.5 - 40.8
Administration expenses (1.3) (0.1) (0.7) (0.6) (0.2) (0.2) (3.1)
Other expenses (0.7) (0.2) (0.5) (0.4) - - (1.8)
--------------------------------------- ------ ------ ------ ------- ------ ------------ ------
Group revenue less costs 13.4 6.3 7.6 6.5 2.3 (0.2) 35.9
Profit on sale of investment
properties 6.8 - 0.2 - - - 7.0
Net loss on sale of corporate
bonds and other financial investments - - - - - (0.9) (0.9)
Net movements on revaluation
of investment properties 43.9 0.7 (2.6) 3.0 0.2 - 45.2
--------------------------------------- ------ ------ ------ ------- ------ ------------ ------
Segment operating profit/(loss) 64.1 7.0 5.2 9.5 2.5 (1.1) 87.2
Finance income - - - - - 4.6 4.6
Finance costs (5.2) (1.7) (1.6) (1.3) (0.5) (4.4) (14.7)
Share of loss of associates
after tax - - - - - (1.4) (1.4)
--------------------------------------- ------ ------ ------ ------- ------ ------------ ------
Segment profit/(loss) before
tax 58.9 5.3 3.6 8.2 2.0 (2.3) 75.7
--------------------------------------- ------ ------ ------ ------- ------ ------------
Central administration expenses (3.1)
--------------------------------------- ------ ------ ------ ------- ------ ------------ ------
Profit before tax 72.6
--------------------------------------- ------ ------ ------ ------- ------ ------------ ------
The Group's results for the year ended 31 December 2014 were as
follows:
Investment Property
---------------------------------------
Rest Other
London of UK France Germany Sweden Investments Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ ------ ------ ------ ------- ------ ------------ ------
Rental income 32.4 13.3 17.1 15.3 6.3 - 84.4
Other property-related income 1.0 - 0.3 - - 0.7 2.0
Service charge income 4.9 0.2 4.8 3.0 0.3 - 13.2
Service charges and similar
expenses (6.6) (0.2) (5.2) (3.4) (2.0) - (17.4)
------------------------------------ ------ ------ ------ ------- ------ ------------ ------
Net rental income 31.7 13.3 17.0 14.9 4.6 0.7 82.2
Administration expenses (3.2) (0.2) (1.6) (1.2) (0.2) (0.8) (7.2)
Other expenses (2.0) (0.4) (1.0) (1.1) (0.1) (0.3) (4.9)
------------------------------------ ------ ------ ------ ------- ------ ------------ ------
Group revenue less costs 26.5 12.7 14.4 12.6 4.3 (0.4) 70.1
Profit on sale of investment
property 6.8 - 1.9 - - - 8.7
Net movements on revaluation
of investment properties 185.1 (0.4) 3.4 7.0 (9.1) - 186.0
Gain arising from acquisition - - - - - 1.2 1.2
Fair value gain on reclassification
of an associate as a subsidiary - - - - - 0.2 0.2
------------------------------------ ------ ------ ------ ------- ------ ------------ ------
Segment operating profit/(loss) 218.4 12.3 19.7 19.6 (4.8) 1.0 266.2
Finance income - - - - - 7.7 7.7
Finance costs (10.1) (3.3) (3.0) (2.4) (0.9) (8.4) (28.1)
Share of loss of associates
after tax - - - - - (2.6) (2.6)
------------------------------------ ------ ------ ------ ------- ------ ------------ ------
Segment profit/(loss) before
tax 208.3 9.0 16.7 17.2 (5.7) (2.3) 243.2
------------------------------------ ------ ------ ------ ------- ------ ------------ ------
Central administration expenses (6.4)
------------------------------------ ------ ------ ------ ------- ------ ------------ ------
Profit before tax 236.8
------------------------------------ ------ ------ ------ ------- ------ ------------ ------
Segment assets and liabilities
Assets Liabilities
-------------------------------- ------------------------------
30 June 30 June 31 December 30 June 30 June 31 December
2015 2014 2014 2015 2014 2014
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- -------- -------- ------------ -------- ------- -----------
Investment Property
London 775.3 578.3 717.9 419.7 345.7 402.4
Rest of UK 108.5 99.5 100.2 81.5 81.4 81.8
France 215.6 235.6 229.8 168.0 196.0 184.7
Germany 241.0 214.9 239.5 163.4 140.1 160.2
Sweden 47.5 63.4 49.7 33.6 42.7 36.6
Other investments 250.9 194.2 251.7 65.6 48.9 65.6
--------------------- -------- -------- ------------ -------- ------- -----------
1,638.8 1,385.9 1,588.8 931.8 854.8 931.3
--------------------- -------- -------- ------------ -------- ------- -----------
Segment capital expenditure
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
GBPm GBPm GBPm
----------------------- ----------- ----------- -------------
Investment Property
London 25.7 29.1 45.5
Rest of UK 0.3 - -
France 0.8 1.3 2.3
Germany 18.7 0.5 29.4
Sweden 0.1 3.1 3.0
Other investments 5.4 - 30.1
----------------------- ----------- ----------- -------------
51.0 34.0 110.3
----------------------- ----------- ----------- -------------
4 FINANCE INCOME
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
GBPm GBPm GBPm
--------------------------- ---------- ---------- ------------
Interest income 2.8 3.9 7.0
Other finance income 1.0 0.7 0.7
Foreign exchange variances 1.7 - -
--------------------------- ---------- ---------- ------------
5.5 4.6 7.7
--------------------------- ---------- ---------- ------------
5 FINANCE costs
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
GBPm GBPm GBPm
------------------------------------------- ---------- ---------- ------------
Interest expense
Bank loans 6.5 7.0 13.3
Debenture loan 1.5 1.6 3.2
Zero-coupon note 0.6 0.7 1.3
Secured notes 1.6 1.7 3.2
Unsecured bonds 2.2 2.4 4.8
Amortisation of loan issue costs 1.2 0.9 1.9
------------------------------------------- ---------- ---------- ------------
Total interest costs 13.6 14.3 27.7
Less interest capitalised on development
projects (0.2) (1.3) (2.9)
------------------------------------------- ---------- ---------- ------------
13.4 13.0 24.8
Loss on partial redemption of zero
coupon note - - 1.3
Movement in fair value of derivative
financial instruments
Interest rate swaps: transactions not
qualifying as hedges (1.4) (0.3) 0.5
Interest rate caps: transactions not
qualifying as hedges - 0.3 0.4
Foreign exchange variances - 1.7 1.1
------------------------------------------- ---------- ---------- ------------
12.0 14.7 28.1
------------------------------------------- ---------- ---------- ------------
6 Taxation
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
GBPm GBPm GBPm
------------- ---------- ---------- ------------
Current tax 3.3 3.5 7.2
Deferred tax 7.9 7.1 34.8
------------- ---------- ---------- ------------
11.2 10.6 42.0
------------- ---------- ---------- ------------
The balance sheet movement in current and deferred tax since the
last reported balance sheet is as follows:
Deferred Deferred
Current tax tax tax Total Net
Liability Asset Liability Liability
GBPm GBPm GBPm GBPm
------------------------------------------ ----------- -------- ---------- ----------
At 1 January 2015 (7.7) 4.8 (105.9) (108.8)
Charged in arriving at profit after
tax (3.3) (1.8) (6.1) (11.2)
(Charged)/credited to other comprehensive
income - (0.1) 0.7 0.6
Net tax paid 4.3 - - 4.3
Deferred tax on acquisition - - (0.1) (0.1)
Foreign exchange variances 0.2 - 5.0 5.2
------------------------------------------ ----------- -------- ---------- ----------
At 30 June 2015 (6.5) 2.9 (106.4) (110.0)
------------------------------------------ ----------- -------- ---------- ----------
7 Earnings per share
Management has chosen to disclose the European Public Real
Estate Association (EPRA) measure of earnings per share, which has
been provided to give relevant information to investors on the
long-term performance of the Group's underlying business. The EPRA
measure excludes items which are non-recurring in nature such as
profits (net of related tax) on sale of investment properties and
of other non-current investments, and items which have no impact to
earnings over their life, such as the change in fair value of
derivative financial instruments and the net movement on
revaluation of investment properties, and the related deferred
taxation on these items.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Earnings GBPm GBPm GBPm
------------------------------------------ ---------- ---------- ------------
Profit for the period 68.6 62.0 194.9
Net movements on investment properties (53.9) (45.2) (186.0)
Change in fair value of derivative
financial instruments (1.4) - 0.9
Other gains and losses (2.9) - (1.2)
Profit on sale of investment property - (7.0) (8.7)
Net loss on sale of corporate bonds
and other financial investments - 0.9 -
Fair value gain on reclassification
of an associate as a subsidiary - - (0.2)
Impairment of carrying value of associate - - 2.2
Deferred tax relating to the above
adjustments 7.5 5.6 31.7
------------------------------------------ ---------- ---------- ------------
EPRA earnings 17.9 16.3 33.6
------------------------------------------ ---------- ---------- ------------
Six months Six months Year
ended ended ended
30 June 30 June 31 December
Weighted average number of ordinary shares in 2015 2014 2014
circulation Number Number Number
---------------------------------------------- ---------- ---------- ------------
Weighted average number of ordinary shares in
circulation 42,732,275 43,733,028 43,410,928
---------------------------------------------- ---------- ---------- ------------
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Earnings per Share Pence Pence Pence
------------------- ---------- ---------- ------------
Basic and diluted 160.5 141.8 449.0
EPRA 41.9 37.3 77.4
------------------- ---------- ---------- ------------
8 Net Assets per share
Management has chosen to disclose the two European Public Real
Estate Association (EPRA) measures of net assets per share: EPRA
net assets per share; and EPRA triple net assets per share. The
EPRA net assets per share measure highlights the fair value of
equity on a long-term basis, and so excludes items which have no
impact on the Group in the long term, such as fair value movements
of derivative financial instruments and deferred tax on the fair
value of investment properties. The EPRA triple net assets per
share measure discloses net assets per share on a true fair value
basis: all balance sheet items are included at their fair value in
arriving at this measure, including deferred tax, fixed rate loan
liabilities and any other balance sheet items not reported at fair
value.
30 June 30 June 31 December
2015 2014 2014
Net Assets GBPm GBPm GBPm
----------------------------------------------- ------- ------- -----------
Basic net assets attributable to owners of the
Company 703.2 531.1 652.9
Adjustment to increase fixed rate debt to fair
value, net of tax (33.3) (22.2) (29.2)
Goodwill as a result of deferred tax (1.1) (1.1) (1.1)
----------------------------------------------- ------- ------- -----------
EPRA triple net assets 668.8 507.8 622.6
Deferred tax on property and other non-current
assets 104.4 76.4 102.4
Fair value of derivative financial instruments 5.2 4.8 7.3
Adjustment to decrease fixed rate debt to book
value, net of tax 33.3 22.2 29.2
----------------------------------------------- ------- ------- -----------
EPRA net assets 811.7 611.2 761.5
----------------------------------------------- ------- ------- -----------
30 June 30 June 31 December
2015 2014 2014
Number of ordinary shares in circulation Number Number Number
----------------------------------------- ---------- ---------- -----------
Number of ordinary shares in circulation 42,402,323 43,287,824 42,924,061
----------------------------------------- ---------- ---------- -----------
30 June 30 June 31 December
2015 2014 2014
Net Assets per Share Pence Pence Pence
--------------------- ------- ------- -----------
Basic 1,658.4 1,226.9 1,521.1
EPRA 1,914.3 1,412.0 1,774.1
EPRA triple net 1,577.3 1,173.1 1,450.5
--------------------- ------- ------- -----------
9 Investment properties
30 June 30 June 31 December
2015 2014 2014
GBPm GBPm GBPm
----------- ------- ------- -----------
London 741.3 570.3 705.0
Rest of UK 99.6 98.7 97.6
France 205.4 230.8 225.1
Germany 233.5 209.9 235.5
Sweden 46.2 59.1 46.9
----------- ------- ------- -----------
1,326.0 1,168.8 1,310.1
----------- ------- ------- -----------
The movement in investment properties since the last reported
balance sheet was as follows:
London Rest of UK France Germany Sweden Total
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- ------ ---------- ------ ------- ------ -------
At 1 January 2015 705.0 97.6 225.1 235.5 46.9 1,310.1
Acquisitions 23.7 - - 18.6 - 42.3
Capital expenditure 2.0 0.3 0.8 0.1 0.1 3.3
Transfer to held for sale (23.0) (7.4) (6.5) (3.0) - (39.9)
Net movements on revaluation
of investment properties 33.5 9.1 5.5 3.5 2.3 53.9
Rent-free period debtor
adjustments 0.1 - 0.3 - - 0.4
Exchange rate variances - - (19.8) (21.2) (3.1) (44.1)
----------------------------- ------ ---------- ------ ------- ------ -------
At 30 June 2015 741.3 99.6 205.4 233.5 46.2 1,326.0
----------------------------- ------ ---------- ------ ------- ------ -------
The investment properties were revalued at 30 June 2015 to their
fair value. Valuations were based on current prices in an active
market for all properties. The property valuations were carried out
by external, professionally qualified valuers as follows:
London: DTZ; Knight Frank (30 June 2014: Lambert Smith Hampton;
Savills; Knight Frank)
Rest of UK: DTZ (30 June 2014: Savills; Lambert Smith
Hampton)
France: Jones Lang LaSalle
Germany: Colliers International
Sweden: CB Richard Ellis
Investment properties include leasehold properties with a
carrying value of GBP51.2 million (30 June 2014: GBP56.6 million;
31 December 2014: GBP49.6 million).
Where the Group leases out its investment property under
operating leases the duration is typically three years or more. No
contingent rents have been recognised in the current or comparative
years.
Substantially all investment properties are secured against
debt.
10 PROPERTY, PLANT AND EQUIPMENT
30 June 30 June 31 December
2015 2014 2014
GBPm GBPm GBPm
------------------------ ------- ------- -----------
Hotel 25.3 - 21.3
Land and buildings 30.4 - 32.1
Owner-occupied property 4.8 2.9 3.9
Fixtures and fittings 3.1 0.5 3.1
------------------------ ------- ------- -----------
Total 63.6 3.4 60.4
------------------------ ------- ------- -----------
The movement in property, plant and equipment since the last
reported balance sheet was as follows:
Owner- Fixtures
Land and occupied and
Hotel buildings property fittings Total
GBPm GBPm GBPm GBPm GBPm
---------------------------------------- ----- ---------- --------- --------- -----
At 1 January 2015 21.3 32.1 4.1 4.5 62.0
Additions - 3.7 - 0.4 4.1
Acquisitions arising from business
combinations - 1.3 - - 1.3
Exchange rate variances - (2.2) - - (2.2)
Revaluation 4.0 (3.9) 0.9 - 1.0
---------------------------------------- ----- ---------- --------- --------- -----
At 30 June 2015 25.3 31.0 5.0 4.9 66.2
---------------------------------------- ----- ---------- --------- --------- -----
Comprising:
At cost - - - 4.9 4.9
At valuation 30 June 2015 25.3 31.0 5.0 - 61.3
---------------------------------------- ----- ---------- --------- --------- -----
25.3 31.0 5.0 4.9 66.2
---------------------------------------- ----- ---------- --------- --------- -----
Accumulated depreciation and impairment
At 1 January 2015 - - (0.2) (1.4) (1.6)
Depreciation charge - (0.6) - (0.4) (1.0)
---------------------------------------- ----- ---------- --------- --------- -----
At 30 June 2015 - (0.6) (0.2) (1.8) (2.6)
---------------------------------------- ----- ---------- --------- --------- -----
Net book value
At 30 June 2015 25.3 30.4 4.8 3.1 63.6
---------------------------------------- ----- ---------- --------- --------- -----
At 31 December 2014 21.3 32.1 3.9 3.1 60.4
---------------------------------------- ----- ---------- --------- --------- -----
11 Other Financial investments
Destination 30 June 30 June 31 December
of 2015 2014 2014
Investment type Investment GBPm GBPm GBPm
----------------------- ------------------------- ------------ ------- ------- -----------
Available-for-sale
financial investments
carried at fair
value Listed corporate bonds UK 19.4 30.2 19.1
Eurozone 3.5 9.5 3.9
Other 30.9 44.6 38.8
-------------------------------------------------------------- ------- ------- -----------
53.8 84.3 61.8
Listed equity securities UK 0.2 0.2 0.2
Sweden 40.2 32.7 34.6
Unlisted investments Sweden 3.2 2.9 3.3
------------------------- ------------------------------------ ------- ------- -----------
97.4 120.1 99.9
-------------------------------------------------------------- ------- ------- -----------
The movement of other financial investments since the last
reported balance sheet, based on the methods used to measure their
fair value, is given below:
Level 1 Level 2 Level 3
Quoted Observable Other
market market valuation
price data methods* Total
GBPm GBPm GBPm GBPm
----------------------------------- ------- ----------- ---------- ------
At 1 January 2015 34.8 61.8 3.3 99.9
Additions - 12.1 - 12.1
Disposals - (18.3) - (18.3)
Fair value movements recognised
in reserves on available-for-sale
assets 8.2 (0.4) - 7.8
Exchange rate variations (2.6) (1.4) (0.1) (4.1)
----------------------------------- ------- ----------- ---------- ------
At 30 June 2015 40.4 53.8 3.2 97.4
----------------------------------- ------- ----------- ---------- ------
* Unlisted equity shares valued using multiples from comparable
listed organisations.
Corporate Bond Portfolio
At 30 June 2015
Banking and Leisure and Telecom
Sector Financials Insurance Travel and IT Other Total
-------------- ---------------- -------------- --------------- -------------- -------------- --------
Value GBP22.0m GBP5.7m GBP5.6m GBP9.5m GBP11.0m GBP53.8m
Running yield 7.7% 6.7% 6.2% 7.3% 8.3% 7.5%
-------------- ---------------- -------------- --------------- -------------- -------------- --------
Issuers Societe Generale Brit Insurance British Airways Telecom Italia Arcelor Mittal
Bank of Ireland Phoenix Life Stena CenturyLink Transocean
Deutsche Bank Old Mutual SAS T-Mobile Stora Enso
Credit Agricole Dell Seadrill
SNS Bank Findus
Unicredit Enel
Barclays
Investec
Lloyds
HSBC
RBS
-------------- ---------------- -------------- --------------- -------------- -------------- --------
12 BORROWINGS
Maturity profile
Zero
Bank Debenture coupon Unsecured Secured
loans loans note bonds notes Total
At 30 June 2015 GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ------- --------- ------- --------- ------- -------
Within one year or
on demand 209.3 1.7 - 23.0 4.2 238.2
More than one but not
more than two years 58.7 1.9 - - 4.2 64.8
More than two but not
more than five years 119.3 7.2 - 65.0 12.5 204.0
More than five years 168.0 17.4 11.8 - 52.8 250.0
-------------------------- ------- --------- ------- --------- ------- -------
555.3 28.2 11.8 88.0 73.7 757.0
Unamortised issue costs (2.4) - - (0.8) (0.7) (3.9)
-------------------------- ------- --------- ------- --------- ------- -------
Borrowings 552.9 28.2 11.8 87.2 73.0 753.1
Less amount due for
settlement within 12
months (208.5) (1.7) - (22.7) (4.1) (237.0)
-------------------------- ------- --------- ------- --------- ------- -------
Amount due for settlement
after 12 months 344.4 26.5 11.8 64.5 68.9 516.1
-------------------------- ------- --------- ------- --------- ------- -------
Zero
Bank Debenture coupon Unsecured Secured
loans loans note bonds notes Total
At 30 June 2014 GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ------ --------- ------- --------- ------- ------
Within one year or
on demand 94.8 1.6 - - 4.2 100.6
More than one but not
more than two years 221.5 1.7 - 26.2 4.2 253.6
More than two but not
more than five years 171.8 6.4 - - 12.5 190.7
More than five years 30.5 20.0 14.2 65.0 57.0 186.7
-------------------------- ------ --------- ------- --------- ------- ------
518.6 29.7 14.2 91.2 77.9 731.6
Unamortised issue costs (2.5) - - (1.1) (0.9) (4.5)
-------------------------- ------ --------- ------- --------- ------- ------
Borrowings 516.1 29.7 14.2 90.1 77.0 727.1
Less amount due for
settlement within 12
months (93.7) (1.6) - 0.4 (4.0) (98.9)
-------------------------- ------ --------- ------- --------- ------- ------
Amount due for settlement
after 12 months 422.4 28.1 14.2 90.5 73.0 628.2
-------------------------- ------ --------- ------- --------- ------- ------
Zero
Bank Debenture coupon Unsecured Secured
loans loans note bonds notes Total
At 31 December 2014 GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ------- --------- ------- --------- ------- -------
Within one year or
on demand 188.4 1.6 - - 4.2 194.2
More than one but not
more than two years 158.1 1.8 - 24.7 4.2 188.8
More than two but not
more than five years 153.4 6.8 - 65.0 12.5 237.7
More than five years 40.4 18.8 11.2 - 54.9 125.3
-------------------------- ------- --------- ------- --------- ------- -------
540.3 29.0 11.2 89.7 75.8 746.0
Unamortised issue costs (2.0) - - (0.9) (0.8) (3.7)
-------------------------- ------- --------- ------- --------- ------- -------
Borrowings 538.3 29.0 11.2 88.8 75.0 742.3
Less amount due for
settlement within 12
months (187.4) (1.6) - 0.3 (4.1) (192.8)
-------------------------- ------- --------- ------- --------- ------- -------
Amount due for settlement
after 12 months 350.9 27.4 11.2 89.1 70.9 549.5
-------------------------- ------- --------- ------- --------- ------- -------
Fair values
Carrying amounts Fair values
-------------------------------- ------------------------------
30 June 30 June 31 December 30 June 30 June 31 December
2015 2014 2014 2015 2014 2014
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ -------- -------- ------------ -------- ------- -----------
Current borrowings 237.0 98.9 192.8 237.0 98.9 192.8
Non-current borrowings 516.1 628.2 549.5 557.7 655.9 586.0
------------------------ -------- -------- ------------ -------- ------- -----------
753.1 727.1 742.3 794.7 754.8 778.8
------------------------ -------- -------- ------------ -------- ------- -----------
The fair value of borrowings represents the amount at which a
financial instrument could be exchanged in an arm's length
transaction between informed and willing parties, discounted at the
prevailing market rate, and excludes accrued interest.
13 Share capital
Number
--------------------------- -----------------------------------
Ordinary Total
Ordinary Total shares in Treasury ordinary
shares in Treasury ordinary circulation shares shares
circulation shares shares GBPm GBPm GBPm
--------------------------- ------------ --------- ---------- ------------ -------- ---------
At 1 January 2015 42,924,061 2,903,103 45,827,164 10.8 0.7 11.5
Issued 15,000 (15,000) - - - -
Cancelled following tender
offer(1) (536,738) - (536,738) (0.2) - (0.2)
--------------------------- ------------ --------- ---------- ------------ -------- ---------
At 30 June 2015 42,402,323 2,888,103 45,290,426 10.6 0.7 11.3
--------------------------- ------------ --------- ---------- ------------ -------- ---------
Number
-----------------------------------
Ordinary Total
Ordinary Total shares in Treasury ordinary
shares in Treasury ordinary circulation shares shares
circulation shares shares GBPm GBPm GBPm
--------------------------- ------------ --------- ---------- ------------ -------- ---------
At 1 January 2014 43,953,790 2,903,103 46,856,893 11.0 0.7 11.7
Cancelled following tender
offer(2) (665,966) - (665,966) (0.2) - (0.2)
--------------------------- ------------ --------- ---------- ------------ -------- ---------
At 30 June 2014 43,287,824 2,903,103 46,190,927 10.8 0.7 11.5
--------------------------- ------------ --------- ---------- ------------ -------- ---------
Number
------------------------------------
Ordinary Total
Ordinary Total shares in Treasury ordinary
shares in Treasury ordinary circulation shares shares
circulation shares shares GBPm GBPm GBPm
--------------------------- ------------ --------- ----------- ------------ -------- ---------
At 1 January 2014 43,953,790 2,903,103 46,856,893 11.0 0.7 11.7
Cancelled following tender
offer(2 & 3) (1,029,729) - (1,029,729) (0.2) - (0.2)
--------------------------- ------------ --------- ----------- ------------ -------- ---------
At 31 December 2014 42,924,061 2,903,103 45,827,164 10.8 0.7 11.5
--------------------------- ------------ --------- ----------- ------------ -------- ---------
1. A tender offer by way of a Circular dated 13 March 2015 for
the purchase of 1 in 80 shares at 1,950 pence per share was
completed in April 2015. It returned GBP10.4 million to
shareholders, equivalent to 24.38 pence per share.
2. A tender offer by way of a Circular dated 14 March 2014 for
the purchase of 1 in 66 shares at 1,495 pence per share was
completed in May 2014. It returned GBP10.0 million to shareholders,
equivalent to 22.65 pence per share.
3. A tender offer by way of a Circular dated 22 August 2014 for
the purchase of 1 in 119 shares at 1,500 pence per share was
completed in September 2014. It returned GBP5.5 million to
shareholders, equivalent to 12.61 pence per share.
14 Cash generated from operations
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
GBPm GBPm GBPm
------------------------------------------------ ---------- ---------- ------------
Operating profit 86.7 84.1 259.8
Adjustments for:
Net movements on revaluation of investment
properties (53.9) (45.2) (186.0)
Depreciation and amortisation 1.0 0.1 0.3
Non-cash rental income (0.4) (0.1) (0.5)
Recruitment costs paid as shares 0.2 - -
Profit on sale of investment property - (7.0) (8.7)
Net loss on sale of corporate bonds
and other financial investments - 0.9 -
Gain arising on acquisition - - (1.2)
Fair value gain on reclassification
of an associate as a subsidiary - - (0.2)
Changes in working capital:
Decrease/(increase) in debtors 4.4 0.6 (2.0)
Decrease in creditors (0.5) (3.0) (8.2)
------------------------------------------------ ---------- ---------- ------------
Cash generated from operations 37.5 30.4 53.3
------------------------------------------------ ---------- ---------- ------------
15 related party transactions
There have been no material changes in the related party
transactions described in the last annual report, other than those
disclosed elsewhere in this condensed set of financial
statements.
Glossary of Terms
ADJUSTED NET ASSETS or adjusted shareholders' funds
Net assets excluding the fair value of financial derivatives,
deferred tax on revaluations and goodwill arising as a result of
deferred tax
ADJUSTED NET GEARING
Net debt expressed as a percentage of adjusted net assets
ADJUSTED SOLIDITY
Adjusted net assets expressed as a percentage of adjusted total
assets
ADJUSTED TOTAL ASSETS
Total assets excluding deferred tax assets
Administration cost ratio
Recurring administration expenses of the Investment Property
operating segment expressed as a percentage of net rental
income
Balance sheet loan to value
Net debt expressed as a percentage of total assets less cash and
short-term deposits
CONTRACTED RENT
Annual contracted rental income after any rent-free periods have
expired
CORE PROFIT
Profit before tax and before net movements on revaluation of
investment properties, profit on sale of investment properties,
subsidiaries and corporate bonds, impairment of intangible assets
and goodwill, non-recurring costs, change in fair value of
derivatives and foreign exchange variances
DILUTED EARNINGS PER SHARE
Profit after tax divided by the diluted weighted average number
of ordinary shares
DILUTED NET ASSETS
Equity shareholders' funds increased by the potential proceeds
from issuing those shares issuable under employee share schemes
DILUTED NET ASSETS PER SHARE OR DILUTED NET ASSET VALUE
Diluted net assets divided by the diluted number of ordinary
shares
DILUTED NUMBER OF ORDINARY SHARES
Number of ordinary shares in circulation at the balance sheet
date adjusted to include the effect of potential dilutive shares
issuable under employee share schemes
DILUTED WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES
Weighted average number of ordinary shares in issue during the
period adjusted to include the effect of potential weighted average
dilutive shares issuable under employee share schemes
EARNINGS PER SHARE
Profit after tax divided by the weighted average number of
ordinary shares in issue in the period
EPRA
European Public Real Estate Association
EPRA EARNINGS PER SHARE
Profit after tax, but excluding net gains or losses from fair
value adjustments on investment properties, profits or losses on
disposal of investment properties and other non-current investment
interests, impairment of goodwill and intangible assets, movements
in fair value of derivative financial instruments and their related
current and deferred tax
EPRA NET ASSETS
Diluted net assets excluding the mark-to-market on effective
cash flow hedges and related debt adjustments, deferred tax on
revaluations and goodwill arising as a result of deferred tax
EPRA NET ASSETS PER SHARE
EPRA net assets divided by the diluted number of ordinary
shares
EPRA net initial yield
Annual passing rent less net service charge costs on investment
properties expressed as a percentage of the investment property
valuation after adding purchasers' costs
EPRA topped up net initial yield
Annual net rents on investment properties expressed as a
percentage of the investment property valuation after adding
purchasers' costs
EPRA TRIPLE NET ASSETS
EPRA net assets adjusted to reflect the fair value of debt and
derivatives and to include the fair value of deferred tax on
property revaluations
EPRA TRIPLE NET ASSETS PER SHARE
EPRA triple net assets divided by the diluted number of ordinary
shares
ERV (ESTIMATED RENTAL VALUE)
The market rental value of lettable space as estimated by the
Group's valuers
INTEREST COVER
The aggregate of group revenue less costs divided by the
aggregate of interest expense and amortisation of loan issue costs,
less interest income
Liquid resources
Cash and short-term deposits and listed corporate bonds
NET ASSETS PER SHARE OR NET ASSET VALUE (NAV)
Equity shareholders' funds divided by the number of ordinary
shares in circulation at the balance sheet date
NET DEBT
Total borrowings less liquid resources
NET GEARING
Net debt expressed as a percentage of net assets
NET INITIAL YIELD
Annual net rents on investment properties expressed as a
percentage of the investment property valuation
NET RENT
Contracted rent less net service charge costs
OCCUPANCY RATE
Contracted rent expressed as a percentage of the aggregate of
contracted rent and the ERV of vacant space
OVER-RENTED
The amount by which ERV falls short of the passing rent
PASSING RENT
Contracted rent before any rent-free periods have expired
Property LOAN TO VALUE
Property borrowings expressed as a percentage of the market
value of the property portfolio
RENT ROLL
Contracted rent
Reversionary
The amount by which the ERV exceeds the passing rent
SOLIDITY
Equity shareholders' funds expressed as a percentage of total
assets
TOTAL SHAREHOLDER RETURN
For a given number of shares, the aggregate of the proceeds from
tender offer buy-backs and change in the market value of the shares
during the year adjusted for cancellations occasioned by such
buy-backs, as a percentage of the market value of the shares at the
beginning of the year
True equivalent yield
The capitalisation rate applied to future cash flows to
calculate the gross property value, as determined by the Group's
external valuers
DIRECTORS, OFFICERS AND ADVISERS
Directors
Sten Mortstedt (Executive Chairman)
Henry Klotz (Executive Vice Chairman)
Fredrik Widlund (Chief Executive Officer)
John Whiteley (Chief Financial Officer)
Malcolm Cooper (* ++) (Non-Executive Director)
Joseph Crawley (Non-Executive Director)
Elizabeth Edwards (Non-Executive Director)
Christopher Jarvis (Non-Executive Director)
(++)
Thomas Lundqvist (Non-Executive Director)
Philip Mortstedt (Non-Executive Director)
Anna Seeley (Non-Executive Director)
Lennart Sten (Non-Executive Director)
* Senior Independent Director
member of Remuneration Committee
++ member of Audit Committee
Company Secretary
David Fuller BA, FCIS
Registered Office
86 Bondway
London
SW8 1SF
Registered Number
2714781
Registrars and Transfer Office
Computershare Investor Services Plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 7NH
Shareholder Helpline: 0870 889 3286
CLS Holdings plc online:
www.clsholdings.com
email:
enquiries@clsholdings.com
Clearing Bank
Royal Bank of Scotland Plc
24 Grosvenor Place
London
SW1X 7HP
Financial Advisers
Kinmont Limited
5 Clifford Street
London
W1S 2LJ
Stockbrokers
Liberum Capital
Ropemaker Place, Level 12
25 Ropemaker Street
London
EC2Y 9LY
Panmure Gordon (UK) Limited
One New Change
London
EC4M 9AF
Registered Auditor
Deloitte LLP
Chartered Accountants
2 New Street Square
London
EC4A 3BZ
Financial and Corporate Public Relations
Smithfield Consultants Limited
10 Aldersgate Street
London
EC1A 4HJ
This information is provided by RNS
The company news service from the London Stock Exchange
END
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