TIDMCLI
RNS Number : 3012R
CLS Holdings PLC
19 August 2010
19 August 2010
CLS HOLDINGS PLC
("CLS", THE "COMPANY" OR THE "GROUP")
ANNOUNCES ITS HALF YEARLY FINANCIAL REPORT FOR THE SIX MONTHS TO 30 JUNE 2010
A solid set of results demonstrating the success of CLS's secondary portfolio
and active property, financing and cash management
CLS is a property investment company with a diverse portfolio of GBP792 million
modern, well-let properties in the UK, France, Germany and Sweden. CLS's
properties have been selected for their potential to generate high returns on
capital investment through active asset management.
FINANCIAL HIGHLIGHTS
á Profit before tax up 113% to GBP28.1 million (2009: GBP13.2 million)
á Profit after tax up 137% to GBP24.7 million (2009: GBP10.4 million)
á Gain on sale of corporate bonds GBP10.6 million
á Earnings per share up 142% to 51.8 pence (2009: 21.4 pence)
á Adjusted earnings per share up 246% to 39.4 pence
á Underlying valuations up 0.8% overall in local currencies
á Portfolio value GBP792.3 million (31 December 2009: GBP813.0 million)
á Adjusted gearing down to 135.2% (31 December 2009: 141.7%)
á Proposed tender offer buy-back of 1 in 74 shares at 625 pence, equivalent
to 8.45 pence per share
OPERATIONAL HIGHLIGHTS
á A robust start to the year in challenging economic conditions
á Continued strong performance on lettings with average vacancy of 5%
á Weighted average cost of debt 4%, one of the lowest in the sector
á Net initial yield of 7.4%, 340 basis points above cost of debt
á Re-entered the UK property market with the acquisition of Apex Tower for
GBP20m in July
á Further progress made on redevelopment options
Sten Mortstedt, Executive Chairman of CLS, commented:
"The Group has had an encouraging first half of 2010, which demonstrates the
quality of our assets, the strength of our balance sheet and the benefits of
diversification into liquid corporate bonds generating a much higher return than
bank deposits.
"Our results have been achieved against a backdrop of tough economic and
political conditions. The period has seen a sovereign debt crisis, concern over
the stability of the Eurozone, further bank stress testing, a coalition
government in the UK, and anxiety over the durability of the economic recovery.
"The fundamentals of our business remain sound, we are heartened by the signs of
new tenant demand, we have a solid, diversified portfolio, and we have
substantial cash available for new investment. There are opportunities and
challenges ahead and we are well prepared to meet them both."
Copies of the half-yearly report are available for download from our website at
www.clsholdings.com. Hard copies can be requested via the website or by
contacting the company (email: enquiries@clsholdings.com or phone +44 (0)20 7582
7766).
Enquiries:
CLS Holdings plc 020 7582 7766
Sten Mortstedt, Executive Chairman
Henry Klotz, Chief Executive Officer
Richard Tice, Deputy Chief Executive Officer
Smithfield 020 7360
4900
Alex Simmons
Brewin Dolphin Limited
Mark Brady 0845 213
4729
Miriam Greenwood
Liberum Capital Limited 020 3100 2222
Chris Bowman
Tom Fyson
Kinmont 020 7087
9100
Jonathan Gray
www.clsholdings.com
CLS HOLDINGS PLC - HALF-YEARLY FINANCIAL REPORT 2010
FINANCIAL HIGHLIGHTS
> Profit before tax: up 113% to GBP28.1 million (2009: GBP13.2 million)
> Profit after tax: up 137% to GBP24.7 million (2009: GBP10.4 million)
> Core profit: up 48% to GBP19.8 million (2009: GBP13.4 million)
> GBP10.6 million gain realised on sale of corporate bonds
> Adjusted earnings per share: up 246% to 39.4 pence (2009: 11.4 pence)
> Adjusted net assets per share: 768.4 pence (31 December 2009: 767.5
pence)
> Proposed tender offer buy-back: 1 in 74 shares at 625 pence, equivalent
to 8.45 pence per share, and increasing pro forma adjusted net assets per share
to 770.3 pence
> Portfolio value: GBP792.3 million - underlying valuation movement up
0.8% overall in local currencies Ð up 0.5% in UK, 2.1% in France and 0.2% in
Germany, down 1.1% in Sweden
> Recurring interest cover: increased to 3.2 times (2009: 2.4 times)
> Weighted average cost of debt: 4.0% (31 December 2009: 4.0%) - one of
the lowest in the property sector
> GBP20.45 million acquisition of Apex Tower in New Malden exchanged in
July
OTHER KEY DATA
> Net assets per share: up to 655.3 pence (31 December 2009: 643.3 pence)
> Earnings per share: up 142% to 51.8 pence (2009: 21.4 pence)
> Liquid corporate bond portfolio: GBP58.7 million
> Cash resources: GBP64.0 million
> Property loan to value ratio: down to 65.0% (31 December 2009: 66.9%)
> Adjusted gearing: 135.2% (31 December 2009: 141.7%)
> Solidity: 31.3% (31 December 2009: 30.2%)
> Adjusted solidity: 37.2% (31 December 2009: 36.4%)
> Portfolio valuation: down 3.2%, comprising an underlying gain of 0.8%
and a fall of 4.0% from foreign exchange movements
> Weakness of euro and Swedish krona: reduced adjusted net assets per
share by 35.0 pence
> Movement in fair value of interest rate swaps: reduced adjusted net
assets per share by 14.4 pence
A glossary of terms is set out below
CHAIRMAN'S STATEMENT
OVERVIEW
The Group has had an encouraging first half to 2010, which demonstrates the
quality of our assets, the strength of our balance sheet and the benefits of
diversification into liquid corporate bonds generating a much higher return than
bank deposits.
Our results have been achieved against a backdrop of tough economic and
political conditions. The period has seen a sovereign debt crisis, concern over
the stability of the Eurozone, further bank stress testing, a coalition
government in the UK, and anxiety over the durability of the economic recovery.
Since the beginning of the year, property investment markets, particularly in
the UK, have displayed more rational characteristics than in late 2009. The
number of buyers has reduced and banks are showing clear preference only to lend
to strong companies like CLS.
PORTFOLIO
In local currency the investment property portfolio gained 0.8% in value, or
GBP6.3 million, on a like-for-like basis in the six months: the UK portfolio
rose by 0.5%, France by 2.1% and Germany by 0.2%, and Sweden fell by 1.1%. The
weakness of the euro against sterling meant gross property assets at 30 June
2010 fell to GBP792.3 million (31 December 2009: GBP813.0 million), or 3.2% on a
like-for-like basis. The net initial yield of 7.4% compares to our weighted
average cost of debt of 4.0%, a differential of some 340 basis points, which is
one of the highest in the property sector.
The letting markets in which we operate remain challenging and it is testament
to our team that the void rate across the Group of 5.0% at 30 June was well
below the average in our chosen sectors. There have been signs in the last two
months of tenant demand improving across our markets and, with leases signed or
agreed since 1 July, the vacancy rate has dropped back to 4.4%.
We concentrate on the well-proven virtues of active asset management and cash
flow focus, so our weighted average lease length remains at 8.4 years, or 7.3
years if calculated to the first break, and 42.3% of the Group's rent roll is
with Government tenants.
RESULTS
Profit after tax was GBP24.7 million (2009: GBP10.4 million), which included a
gain of GBP10.6 million on the disposal of corporate bonds. This generated basic
earnings per share of 51.8 pence (2009: 21.4 pence). After excluding the effect
of deferred tax and the movement on the revaluation of investment properties,
adjusted earnings per share were 39.4 pence (2009: 11.4 pence).
Adjusted net assets per share at 30 June 2010 were 768.4 pence (31 December
2009: 767.5 pence) a marginal rise, dampened by 35.0 pence per share through the
euro and krona having weakened against sterling in the six months, and by 14.4
pence per share through the movement in the fair value of derivative financial
instruments.
Net debt as a proportion of gross assets (less cash) was 53.1% (2009: 54.7%) and
the Group's property loan to value was 65.0% (2009: 66.9%). Our liquid resources
are healthy, with over GBP120 million of cash and corporate bonds at our
disposal, so the balance sheet is robust. We continue to enjoy strong banking
relationships with 19 lenders, and our financing is secure and effective; at 30
June our weighted average unexpired loan term was 6.1 years.
DISTRIBUTIONS
Following the exceptional GBP48.0 million returned to shareholders in January
2009, in April 2010 we restored our distribution policy and returned GBP6.0
million to shareholders through our traditional route of a tender offer
buy-back. We intend to distribute a further GBP4.0 million in September through
a tender offer buy-back of 1 in 74 shares at 625 pence per share. A circular
giving notice of a general meeting to consider this will be issued to
shareholders today.
APPOINTMENTS TO THE BOARD
On 11 May Richard Tice and Jennica Mortstedt joined the Board as Deputy Chief
Executive and Non-Executive Director, respectively, and Bengt Mortstedt retired
as a Non-Executive Director. I would like to reiterate my thanks to my brother,
Bengt, for his many years of service and wise counsel to the Group.
EVENTS AFTER THE BALANCE SHEET DATE
Earlier this month we took advantage of the current market opportunities when we
exchanged contracts on the acquisition of Apex Tower in New Malden for GBP20.45
million, representing a net initial yield of 8.66% from a ten year lease to a
FTSE 100 tenant. We anticipate that this will produce a return on capital
employed of over 16% per annum. We are seeing further interesting potential
acquisitions at attractive prices both in London and in Paris, which we will
look to exploit over the coming months.
CONCLUSION
The fundamentals of our business remain sound: our portfolio yields 340 basis
points over our weighted average cost of debt; more than 40% of our rent roll is
let to Government tenants; we believe in strong, in-house active management of
the portfolio; our void rate of 4.4% is low; we are heartened by the signs of
new tenant demand; we have a solid, diversified portfolio; and we have
substantial cash and liquid resources available for new investment. There are
opportunities and challenges ahead and we are well prepared to meet them both.
Sten Mortstedt
Executive Chairman
19 August 2010
BUSINESS REVIEW
INVESTMENT PROPERTY
UNITED KINGDOM At 30 June 2010, the UK accounted for 44.2% of the investment
portfolio at a value of GBP350.3 million, 0.5% higher than six months earlier on
a like-for-like basis. The UK portfolio has a strong tenant profile, with over
50% by rental value let to government tenants, and longevity of income, with a
weighted average lease term of over 10 years.
In the first half of 2010, the UK property investment market continued its
tentative improvement which began in 2009. As prime yields continued to fall the
gap between these and the yields of secondary assets widened. We believe that
there are now selective opportunities for CLS. The rush to buy commercial
property by institutional investors in late 2009 has subsided, leaving a more
sensible and settled market closer reflecting its fundamentals. Overseas
investors, though active, mainly target prime trophy assets outside our core
markets.
In April we acquired 100 Vauxhall Walk, SE11, for GBP1.8 million, thereby
completing the site assembly for our intended development of Spring Gardens III,
adjacent to our highly successful 19,387 sq m Spring Gardens development.
A number of leases across the 117,300 sq m UK portfolio expired in the period.
Whilst some have been restructured at current rental levels, we have taken
advantage of others, in particular at Westminster Tower, SE1, to refurbish and
improve tenant and common areas. Consequently, the UK void rate by rent
increased from 4.5% to 5.4% in the six months. The vacancies at Westminster
Tower, together with three further floors we plan to take back from tenants
before the end of the year, provide the opportunity for a significant
refurbishment to be undertaken later this year.
FRANCE Valued at GBP211.3 million, or 26.7% of the Group's total, the French
portfolio rose by 2.1% on a like-for-like basis in local currency, but fell by
5.7% in sterling. The rise reflected positive market sentiment towards good
quality, multi-let properties with strong cash flows.
The French investment market continued to exhibit a greater demand for good
quality office investments than supply, which continued to produce downward
pressure on yields. Following our GBP29.2 million acquisition of 7 rue Eugene et
Armand Peugeot in Rueil-Malmaison at the end of December, we have remained
selectively active in the Paris property market and expect to complete the
acquisition of a further property before the end of the year.
The Paris occupancy market in the six months has shown greater signs of demand
than in 2009 and, with a relatively restricted supply, the market vacancy rate
in Paris has dropped to 5.3%, and across France to 6.8%.
Of the Group's 85,800 sq m portfolio, 5,940 sq m was subject to lease
extensions. Expiries on 1,819 sq m exceeded new lettings on 1,650 sq m and,
consequently, the void rate by rent increased from 4.2% to 4.7%, well below the
national average.
GERMANY The German portfolio, 22.7% of the Group, was valued at GBP179.7 million
at 30 June 2010, a rise of 0.2% in local currency on a like-for-like basis, but
a fall of 7.7% in sterling after exchange rate movements.
In the first half of 2010 the German economy grew by 2.4%, whilst the commercial
investment property market was characterised by larger portfolio transactions
when compared to twelve months earlier. The occupational market showed marginal
signs of improvement, but demand remained below the ten year average.
Nevertheless, we have noticed a definitive improvement in enquiries and demand
in the last two months.
Of the 140,000 sq m in our German portfolio, 2,164 sq m were vacated in the half
year to 30 June, but lettings were achieved on 2,379 sq m, a notable
accomplishment in a difficult market, and consequently, the void rate remained
largely unchanged at 5.9% by rental value; the national average vacancy rate in
Germany is some 10%.
SWEDEN We treat our Swedish portfolio of adjacent buildings in Vanersborg, near
Gothenburg, collectively as one asset of 45,500 sq m called Vanerparken. At 30
June 2010 it was valued at GBP51.0 million, a fall of 1.1% on a like-for-like
basis in local currency, and of 1.7% after a small foreign exchange impact. It
represented 6.4% of our total portfolio.
97% of our Swedish rental income is from governmental tenants, subject to annual
indexation. The weighted average lease term is 6.5 years, and voids are 1.9% by
rental income.
The Swedish investment market in the first half of 2010 was SEK 43.3 billion,
200% higher than the equivalent period last year, and we remained vigilant for
well-priced investment opportunities, but have continued to see better value
elsewhere in Europe.
OTHER INVESTMENTS
We continue to hold, and closely monitor the performance of, corporate bonds
issued by well-known, large companies. In February, we disposed of around half
of the GBP70.0 million of bonds held at the beginning of the period, realising a
gain of GBP10.6 million on historical cost. GBP31.2 million of these proceeds
were subsequently and gradually reinvested and at 30 June the portfolio
comprised 29 bonds valued at GBP58.7 million. Overall, the portfolio fell in
value during the period by GBP2.2 million, of which GBP1.3 million was due to
adverse foreign exchange movements. Interest of GBP2.5 million generated from
corporate bonds in the six months represented an annualised return on cost of
8.95%. Since 1 July 2010, we have invested a further GBP3.9 million, and the
portfolio has risen by GBP7.2 million to GBP65.9 million.
Catena AB is a property investment company listed in Stockholm in which the
Group owns a 29.99% stake. In the six months to June, Catena enjoyed a strong
half year, contributing GBP5.2 million (2009: GBP0.9 million) to our profit
before tax.
Throughout the six months to 30 June 2010, the Group owned a 47.7% interest in
Bulgarian Land Development Plc, which was valued at GBP11.8 million at 30 June
2010. In July shareholders in BLD voted to delist the company from the AIM
market to save running costs, and, working closely with the other two major
shareholders, our aim is to maximise the value of our investment in BLD over the
short to medium term.
Wyatt Media Group AB, the third largest on-line media house in Scandinavia,
continues to perform well, exceeding budget in the period with a pre-tax profit
of GBP0.3 million.
RESULTS FOR THE PERIOD
HEADLINES Profit after tax of GBP24.7 million (2009: GBP10.4 million) generated
basic earnings per share of 51.8 pence (2009: 21.4 pence). After excluding the
effect of deferred tax and the movement on the revaluation of investment
properties, adjusted earnings per share were 39.4 pence (2009: 11.4 pence).
Gross property assets at 30 June 2010 fell to GBP792.3 million (31 December
2009: GBP813.0 million) after an adverse exchange rate movement of GBP32.7
million. Net assets per share were 655.3 pence (31 December 2009: 643.3 pence)
and adjusted net assets per share, which exclude deferred tax, were broadly
unchanged at 768.4 pence (31 December 2009: 767.5 pence).
Approximately 40% of the Group's business is conducted in the reporting currency
of sterling, and 8% in Swedish kronor, the exchange rate for which remained
largely unchanged against sterling. However, half of the Group's business is
conducted in euros, the rate of which weakened by 7.7% against sterling between
31 December 2009 and 30 June 2010, adversely impacting adjusted net assets per
share by around 4.4%, or 35 pence per share.
STATEMENT OF COMPREHENSIVE INCOME Rental income of GBP30.7 million was GBP1.7
million higher than the corresponding period in 2009 due largely to the
acquisition of 7 rue Eugne et Armand Peugeot in Rueil-Malmaison in December
(GBP1.1 million) and new rental income from recent developments at Bochum and
Landshut in Germany (GBP1.0 million).
The 0.8% uplift in local currency of the investment property portfolio generated
a gain of GBP6.3 million (2009: GBP5.2 million), and the sale of corporate bonds
in February realised an historical cost gain of GBP10.6 million on bonds which
had cost GBP30.8 million, and had been held on average for less than nine
months.
At 30 June 2010 the weighted average cost of debt was 4.0%, one of the lowest in
the listed property sector. Net finance costs of GBP17.6 million (2009: GBP14.5
million) included bank interest payable of GBP9.0 million, GBP1.1 million below
the comparable figure last year.
Our 29.9% interest in Catena AB generated GBP5.2 million (2009: GBP0.9 million)
of profits, and our share of profits of associates in aggregate was GBP4.6
million (2009: GBP0.4 million).
ADJUSTED NET ASSETS PER SHARE Although adjusted net assets per share at 30
June 2010 remained virtually unchanged from six months earlier at 768.4 pence
(2009: 767.5 pence), this masked a number of compensating elements. Profit after
tax, but before the effect of valuations and foreign exchange, added 38.4 pence
per share. The property revaluation added 13.3 pence per share, but adjusted net
assets per share were reduced by 14.4 pence on the revaluation of financial
derivatives, by 3.6 pence on the revaluation of corporate bonds and other
investments, and by 35.0 pence per share by the relative weakness of the euro
and krona to sterling. The tender offer buy-back and the issue of treasury
shares at market value added 2.2 pence per share.
During the period, 300,000 share options were granted, although they had no
dilutive effect on adjusted net assets per share at 30 June 2010.
CASH FLOW, NET DEBT AND GEARING Net cash flow from operating activities of
GBP14.3 million was GBP7.9 million higher than the corresponding period in 2009
due primarily to higher rental income and lower interest costs. Of the GBP41.4
million of proceeds from the disposal of corporate bonds, GBP31.2 million was
reinvested, and capital expenditure of GBP6.5 million was incurred. New bank
loans of GBP30.1 million were taken out and GBP47.0 million repaid. GBP6.0
million was returned to shareholders through the tender offer buy-back in April,
and overall cash balances fell marginally, by GBP6.3 million to GBP64.0 million.
At 30 June 2010, gross debt was GBP554.6 million (31 December 2009: GBP592.8
million) and net debt GBP490.6 million (2009: GBP522.5 million). The Group's
property loan to value was 65.0% (2009: 66.9%), balance sheet gearing was down
to 158.5% (2009: 169.1%) and adjusted gearing, excluding deferred tax, was
135.2% (2009: 141.7%).
At 30 June 2010, current liabilities exceeded current assets by GBP67.4 million.
Within current borrowings was a loan of GBP7.7 million which was refinanced in
July and a loan of GBP42.9 million due to expire in October, the refinancing of
which was well advanced. Further, in addition to cash and cash equivalents of
GBP64.0 million, at 30 June the Group had liquid corporate bonds of GBP58.7
million. None of the Group's borrowing covenants was in breach at 30 June 2010;
potential breaches could be rectified on the part-repayment of GBP1.6 million of
principal.
SHARE CAPITAL In March, 207,000 Treasury Shares were issued at market value,
and in April 1,004,817 shares were cancelled under the tender offer buy-back at
525 pence per share. At 30 June 2010, there were 47,226,439 shares in issue, and
4,793,000 Treasury Shares held by the Company. If taken up in full, the effect
of the proposed tender offer buy-back in September would be to reduce the number
of shares in issue to 46,588,244.
PRINCIPAL RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties which could have a
material impact on the Group's performance and could cause the results to differ
materially from expected or historical results. The management and mitigation of
these risks are the responsibility of the Board.
+---------------------------------------------------+---------------------------------------------------+
| Risk | Mitigation |
+---------------------------------------------------+---------------------------------------------------+
| Property investment risks | Senior management has detailed knowledge of core |
| Underperformance of investment portfolio | markets and experience gained through many market |
| impacting on financial performance due to: | cycles. This experience is supplemented by |
| - Cyclical downturn in property market | external advisors and financial models used in |
| - Inappropriate buy/sell/hold decisions | capital allocation decision-making. |
+---------------------------------------------------+---------------------------------------------------+
| - Changes in supply of space and/or tenant | The Group's property portfolio is diversified |
| demand affecting rents and vacancies | across four countries. The weighted-average |
| | unexpired lease term is 8.4 years and the Group's |
| | largest tenant concentration is with the |
| | Government sector (42.3 per cent). |
+---------------------------------------------------+---------------------------------------------------+
| - Poor asset management | Property teams proactively manage tenants to |
| | ensure changing needs are met, and review the |
| | current status of all properties weekly. Written |
| | reports are submitted bi-weekly to senior |
| | management on, inter alia, vacancies, lease |
| | expiry profiles and progress on rent reviews. |
+---------------------------------------------------+---------------------------------------------------+
| Other investment risks | In assessing potential investments, the Group |
| Underperformance of corporate bond portfolio | Treasury department undertakes research on the |
| | bond and its issuer, seeks third-party advice, |
| | and receives legal advice on the terms of the |
| | bond, where appropriate. The Treasury department |
| | receives updates on bond price movements and |
| | third party market analysis on a daily basis and |
| | reports on corporate bonds to the Board on a |
| | bi-weekly basis. |
+---------------------------------------------------+---------------------------------------------------+
| Funding risks | The Group has a dedicated Treasury department and |
| Unavailability of financing at acceptable prices | relationships are maintained with approximately |
| | 20 banks, thus reducing credit and liquidity |
| | risk. The exposure on re-financing debt is |
| | mitigated by the lack of concentration in |
| | maturities. |
+---------------------------------------------------+---------------------------------------------------+
| Adverse interest rate movements | The Group's exposure to changes in prevailing |
| | market rates is largely hedged on existing debt |
| | through interest rate swaps and caps, or by |
| | borrowing at fixed rates. |
+---------------------------------------------------+---------------------------------------------------+
| Breach of borrowing covenants | Financial covenants are closely monitored by the |
| | Group Treasury department and regularly reported |
| | to the Board. |
+---------------------------------------------------+---------------------------------------------------+
| Foreign currency exposure | Property investments are bank financed in |
| | matching currency. The difference between the |
| | value of the property and the amount of the |
| | financing is generally unhedged and monitored on |
| | an ongoing basis. |
+---------------------------------------------------+---------------------------------------------------+
| Taxation risks | The Group monitors legislative proposals and |
| The risk that there will be increases in tax | consults external advisors to understand and |
| rates or changes to the basis of taxation | mitigate the effects of any such change. |
+---------------------------------------------------+---------------------------------------------------+
| Going concern | See note 2 to the financial statements. |
| The risk that given the economic uncertainties | |
| the Group will not have adequate working capital | |
| to remain a going concern for the next 12 months | |
+---------------------------------------------------+---------------------------------------------------+
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting';
(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 Chief
Executive Officer
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
for the 6 months ended 30 June 2010
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | Notes | Six months | Six months | Year |
| | | ended | ended | ended |
| | | 30 June | 30 June | 31 December |
| | | 2010 | 2009 | 2009 |
| | | GBPm | GBPm | GBPm |
| | | (unaudited) | (unaudited) | (audited) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Continuing operations | |
+--------------------------------+----------------------------------------------------------------------+
| Group revenue | 3 | 38.4 | 36.1 | 76.3 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Costs | 3 | (14.2) | (13.2) | (30.3) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | | 24.2 | 22.9 | 46.0 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Net movements on | 8 | 6.3 | 5.2 | (6.7) |
| revaluation of | | | | |
| investment properties | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Profit on sale of | | - | - | 0.3 |
| investment properties | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Gain/(loss) on sale of | | 10.6 | (0.8) | 1.9 |
| corporate bonds | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Operating profit | | 41.1 | 27.3 | 41.5 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Net finance costs | 4 | (17.6) | (14.5) | (25.5) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Share of profit of | 9 | 4.6 | 0.4 | 2.5 |
| associates after tax | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Profit before tax | | 28.1 | 13.2 | 18.5 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Taxation | 5 | (3.4) | (2.8) | (1.1) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Profit for the period | | 24.7 | 10.4 | 17.4 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | |
+--------------------------------+----------------------------------------------------------------------+
| Other comprehensive income | |
+--------------------------------+----------------------------------------------------------------------+
| Foreign exchange | | (10.0) | (16.3) | (9.5) |
| differences | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Fair value (losses)/gains | | (1.7) | 6.0 | 12.5 |
| on corporate | | | | |
| bonds and other | | | | |
| investments | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Deferred tax thereon | | 0.7 | - | (3.2) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Fair value (gains)/losses | | (9.5) | - | 1.0 |
| | | | | |
| taken to the | | | | |
| income statement on | | | | |
| disposal of | | | | |
| corporate bonds | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Deferred tax thereon | | 2.6 | - | - |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Share of other | 9 | (1.3) | (1.0) | 0.4 |
| comprehensive | | | | |
| (loss)/income of | | | | |
| associates | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Total comprehensive | | 5.5 | (0.9) | 18.6 |
| income/(loss) for the period | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | |
+--------------------------------+----------------------------------------------------------------------+
| Profit/(loss) attributable to: | |
+--------------------------------+----------------------------------------------------------------------+
| Owners of the Company | | 24.7 | 10.4 | 17.5 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Non-controlling interests | | - | - | (0.1) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Profit for the period | | 24.7 | 10.4 | 17.4 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | |
+--------------------------------+----------------------------------------------------------------------+
| Total comprehensive | |
| income/(loss) attributable to: | |
+--------------------------------+----------------------------------------------------------------------+
| Owners of the Company | | 5.5 | (0.9) | 18.7 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Non-controlling interests | | - | - | (0.1) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Total comprehensive | | 5.5 | (0.9) | 18.6 |
| income/(loss) for the period | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | |
+--------------------------------+----------------------------------------------------------------------+
| Earnings per share from | |
| continuing operations | |
| attributable to the owners of | |
| the Company during the period | |
| (expressed in pence per share) | |
+--------------------------------+----------------------------------------------------------------------+
| Basic | 6 | 51.8 | 21.4 | 36.4 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Diluted | 6 | 51.8 | 21.4 | 36.4 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
CONDENSED GROUP BALANCE SHEET
at 30 June 2010
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | Notes | 30 June | 30 June | 31 December |
| | | 2010 | 2009 | 2009 |
| | | GBPm | GBPm | GBPm |
| | | (unaudited) | (unaudited) | (audited) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Non-current assets | |
+--------------------------------+----------------------------------------------------------------------+
| Investment properties | 8 | 792.3 | 767.1 | 813.0 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Property, plant and | | 2.6 | 2.5 | 2.5 |
| equipment | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Intangible assets | | 1.1 | 1.1 | 1.1 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Investments in | 9 | 42.4 | 36.0 | 40.9 |
| associates | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Other investments | 10 | 62.6 | 34.6 | 73.9 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Derivative financial | | 0.1 | 0.1 | 0.1 |
| instruments | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Deferred tax | 5 | 13.1 | 14.4 | 12.7 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | | 914.2 | 855.8 | 944.2 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Current assets | |
+--------------------------------+----------------------------------------------------------------------+
| Trade and other | | 9.5 | 11.7 | 10.4 |
| receivables | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Cash and cash | | 64.0 | 105.2 | 70.3 |
| equivalents | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | | 73.5 | 116.9 | 80.7 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Total assets | | 987.7 | 972.7 | 1,024.9 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | |
+--------------------------------+----------------------------------------------------------------------+
| Non-current liabilities | |
+--------------------------------+----------------------------------------------------------------------+
| Deferred tax | 5 | (66.5) | (70.1) | (72.3) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Derivative financial | | (22.4) | - | - |
| instruments | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Borrowings | 11 | (448.4) | (489.7) | (479.3) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | | (537.3) | (559.8) | (551.6) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Current liabilities | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Trade and other | | (29.3) | (27.5) | (30.1) |
| payables | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Current tax | 5 | (5.1) | (6.2) | (5.0) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Derivative financial | | (0.3) | (17.1) | (15.7) |
| instruments | | | | |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Borrowings | 11 | (106.2) | (72.4) | (113.5) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | | (140.9) | (123.2) | (164.3) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Total liabilities | | (678.2) | (683.0) | (715.9) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | |
+--------------------------------+----------------------------------------------------------------------+
| Net assets | | 309.5 | 289.7 | 309.0 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | |
+--------------------------------+----------------------------------------------------------------------+
| EQUITY | |
+--------------------------------+----------------------------------------------------------------------+
| Capital and reserves | |
| attributable to owners of the | |
| Company | |
+--------------------------------+----------------------------------------------------------------------+
| Share capital | 12 | 13.0 | 13.3 | 13.3 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Share premium | | 71.5 | 70.5 | 70.5 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Other reserves | | 86.1 | 92.5 | 105.0 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Retained earnings | | 140.2 | 114.6 | 121.5 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| | | 310.8 | 290.9 | 310.3 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Non-controlling interests | | (1.3) | (1.2) | (1.3) |
+--------------------------------+-------+--------------------+--------------------+--------------------+
| Total equity | | 309.5 | 289.7 | 309.0 |
+--------------------------------+-------+--------------------+--------------------+--------------------+
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
for the 6 months ended 30 June 2010
+-----------------------+------------+-----------+------------+------------+------------+------------+----------+------------+----------+
| Unaudited | Attributable to the owners of the Company | Non- | Total | |
| | | controlling | GBPm | |
| | | interest | | |
| | | GBPm | | |
+ + + + +----------+
| | | | | |
+ +---------------------------------------------------------------+ + +-----------------------+
| | Share | | | Share | Other | Retained | Total | |
| | capital | | | premium | reserves | earnings | GBPm | |
| | GBPm | | | GBPm | GBPm | GBPm | | |
+ + + + + + + + +------------+
| | | | | | | | | |
+ + + + + + + + +-----------------------+
| | | | | | | | | |
+ + + + + + + + +-----------------------+
| | | | | | | | | |
+-----------------------+-----------------------+-----------------------+------------+------------+-----------+------------+------------+-----------------------+
| At 1 January 2010 | 13.3 | 70.5 | 105.0 | 121.5 | 310.3 | (1.3) | 309.0 | |
+-----------------------+------------+-----------+------------+------------+------------+-----------------------+------------+----------+
| | | |
+-----------------------+----------------------------------------------------------------------------------------------------+----------+
| Arising in the six | | |
| months ended 30 June | | |
| 2010: | | |
+-----------------------+----------------------------------------------------------------------------------------------------+----------+
| Total | - | - | (19.2) | 24.7 | 5.5 | - | 5.5 | |
| comprehensive | | | | | | | | |
| income for the | | | | | | | | |
| period | | | | | | | | |
+-----------------------+------------+-----------+------------+------------+------------+------------+-----------------------+----------+
| Issue of treasury | - | 1.0 | - | - | 1.0 | - | 1.0 | |
| shares | | | | | | | | |
+-----------------------+------------+-----------+------------+------------+------------+------------+-----------------------+----------+
| Purchase of own | (0.3) | - | 0.3 | (6.0) | (6.0) | - | (6.0) | |
| shares | | | | | | | | |
+-----------------------+------------+-----------+------------+------------+------------+------------+-----------------------+----------+
| Total changes arising | (0.3) | 1.0 | (18.9) | 18.7 | 0.5 | - | 0.5 | |
| in the period | | | | | | | | |
+-----------------------+------------+-----------+------------+------------+------------+------------+-----------------------+----------+
| At 30 June 2010 | 13.0 | 71.5 | 86.1 | 140.2 | 310.8 | (1.3) | 309.5 | |
+-----------------------+------------+-----------+------------+------------+------------+------------+-----------------------+----------+
| | | | | | | | | | |
+-----------------------+------------+-----------+------------+------------+------------+------------+----------+------------+----------+
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
| Unaudited | Attributable to the owners of the Company | Non- | Total | |
| | | controlling | GBPm | |
| | | interest | | |
| | | GBPm | | |
+ + + + +-----------------------+
| | | | | |
+ +----------------------------------------------------------------------+ + +-----------------------+
| | Share | | | Share | Other | Retained | Total | |
| | capital | | | premium | reserves | earnings | GBPm | |
| | GBPm | | | GBPm | GBPm | | | |
| | | | | | | GBPm | | |
+ + + + + + + + +-----------------------+
| | | | | | | | | |
+ + + + + + + + +-----------------------+
| | | | | | | | | |
+ + + + + + + + +-----------------------+
| | | | | | | | | |
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
| At 1 January 2009 | 16.7 | 70.5 | 100.4 | 152.2 | 339.8 | (1.2) | 338.6 | |
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
| | | |
+-----------------------+-----------------------------------------------------------------------------------------------+-----------------------+
| Arising in the six | | |
| months ended 30 June | | |
| 2009: | | |
+-----------------------+-----------------------------------------------------------------------------------------------+-----------------------+
| Total | - | - | (11.3) | 10.4 | (0.9) | - | (0.9) | |
| comprehensive | | | | | | | | |
| income for the | | | | | | | | |
| period | | | | | | | | |
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
| Purchase of | (3.4) | - | 3.4 | (48.0) | (48.0) | - | (48.0) | |
| own shares | | | | | | | | |
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
| Total changes arising | (3.4) | - | (7.9) | (37.6) | (48.9) | - | (48.9) | |
| in the period | | | | | | | | |
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
| At 30 June 2009 | 13.3 | 70.5 | 92.5 | 114.6 | 290.9 | (1.2) | 289.7 | |
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
| Audited | Attributable to the owners of the Company | Non- | Total | |
| | | controlling | GBPm | |
| | | interest | | |
| | | GBPm | | |
+ + + + +-----------------------+
| | | | | |
+ +----------------------------------------------------------------------+ + +-----------------------+
| | Share | | | Share | Other | Retained | Total | |
| | capital | | | premium | reserves | earnings | GBPm | |
| | GBPm | | | GBPm | GBPm | | | |
| | | | | | | GBPm | | |
+ + + + + + + + +-----------------------+
| | | | | | | | | |
+ + + + + + + + +-----------------------+
| | | | | | | | | |
+ + + + + + + + +-----------------------+
| | | | | | | | | |
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
| At 1 January 2009 | 16.7 | 70.5 | 100.4 | 152.2 | 339.8 | (1.2) | 338.6 | |
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
| | | |
+-----------------------+-----------------------------------------------------------------------------------------------+-----------------------+
| Arising in the year | | |
| ended 31 December | | |
| 2009: | | |
+-----------------------+-----------------------------------------------------------------------------------------------+-----------------------+
| Total | - | - | 1.2 | 17.5 | 18.7 | (0.1) | 18.6 | |
| comprehensive | | | | | | | | |
| income for the | | | | | | | | |
| year | | | | | | | | |
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
| Purchase of own | (3.4) | - | 3.4 | (48.0) | (48.0) | - | (48.0) | |
| shares | | | | | | | | |
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
| Expenses | - | - | - | (0.2) | (0.2) | - | (0.2) | |
| thereof | | | | | | | | |
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
| Total changes arising | (3.4) | - | 4.6 | (30.7) | (29.5) | (0.1) | (29.6) | |
| in the year | | | | | | | | |
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
| At 31 December 2009 | 13.3 | 70.5 | 105.0 | 121.5 | 310.3 | (1.3) | 309.0 | |
+-----------------------+-----------------------+-------------+----------+----------+----------+-------------+----------+-----------------------+
CONDENSED GROUP STATEMENT OF CASH FLOWS
for the 6 months ended 30 June 2010
+-------------------------------+--------+--------------------+--------------------+--------------------+
| | Notes | Six months | Six months | Year |
| | | ended | ended | ended |
| | | 30 June | 30 June | 31 December |
| | | 2010 | 2009 | 2009 |
| | | GBPm | GBPm | GBPm |
| | | (unaudited) | (unaudited) | (audited) |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Cash flows from operating | |
| activities | |
+-------------------------------+-----------------------------------------------------------------------+
| Cash generated from | 13 | 25.5 | 21.0 | 45.7 |
| operations | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Interest received | | 2.3 | 3.0 | 4.8 |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Interest paid | | (11.3) | (15.7) | (30.1) |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Income tax paid | | (2.2) | (1.9) | (3.0) |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Net cash inflow from | | 14.3 | 6.4 | 17.4 |
| operating activities | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| | |
+-------------------------------+-----------------------------------------------------------------------+
| Cash flows from investing | |
| activities | |
+-------------------------------+-----------------------------------------------------------------------+
| Purchase of | | (1.8) | - | (29.2) |
| investment property | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Capital expenditure on | | (4.7) | (15.3) | (22.8) |
| investment | | | | |
| property | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Proceeds from sale of | | - | - | 2.2 |
| investment | | | | |
| property | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Purchase of corporate | | (31.2) | (20.2) | (70.8) |
| bonds | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Proceeds from sale of | | 41.4 | 3.3 | 24.9 |
| corporate | | | | |
| bonds | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Purchase of equity | | (1.0) | - | - |
| investments | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Proceeds from sale of | | 0.1 | - | 0.7 |
| equity | | | | |
| investments | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Purchase of interests | | (0.3) | (1.2) | (1.8) |
| in associate | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Dividend received | | 1.8 | 1.5 | 1.5 |
| from associate | | | | |
| undertaking | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Proceeds/(costs) on | | 0.2 | (1.6) | (4.2) |
| foreign currency | | | | |
| transactions | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Amounts expended in | | - | (0.4) | (1.0) |
| relation to | | | | |
| corporate disposals in | | | | |
| prior periods | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Purchases of property, | | (0.1) | - | (0.1) |
| plant and | | | | |
| equipment | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Net cash inflow/(outflow) | | 4.4 | (33.9) | (100.6) |
| from investing activities | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| | |
+-------------------------------+-----------------------------------------------------------------------+
| Cash flows from financing | |
| activities | |
+-------------------------------+-----------------------------------------------------------------------+
| Purchase of own | | (6.0) | (48.0) | (48.2) |
| shares | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| New share issues | | 1.0 | - | - |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| New loans | | 30.1 | 14.0 | 69.7 |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Issue costs of new | | Ð | (0.1) | (0.3) |
| loans | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Purchase of financial | | (0.1) | - | (0.1) |
| instruments | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Repayment of loans | | (47.0) | (17.4) | (57.4) |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Net cash outflow from | | (22.0) | (51.5) | (36.3) |
| financing activities | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| | |
+-------------------------------+-----------------------------------------------------------------------+
| Cash flow element of net | | (3.3) | (79.0) | (119.5) |
| decrease in cash and cash | | | | |
| equivalents | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Foreign exchange loss | | (3.0) | (11.1) | (5.5) |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Net decrease in cash and cash | | (6.3) | (90.1) | (125.0) |
| equivalents | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Cash and cash equivalents at | | 70.3 | 195.3 | 195.3 |
| the beginning of the period | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
| Cash and cash equivalents at | | 64.0 | 105.2 | 70.3 |
| the end of the period | | | | |
+-------------------------------+--------+--------------------+--------------------+--------------------+
NOTES TO THE CONDENSED GROUP FINANCIAL STATEMENTS
30 June 2010
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 2009 are an abridged version of
the full accounts for that year, which received an unqualified report from the
auditors, 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 auditors
drew attention by way of emphasis without qualifying their 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 set of financial statements included in this Half-Yearly
Financial Report has 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.
The following standards and interpretations have been issued since the last
annual report, none of which has a material impact on either the result or
financial position of the Group:
- Amendments to IFRS 2 - Group Cash-Settled Share-Based Payment
Transactions; effective for accounting periods starting on or after 1 January
2010
- IFRS 3 (revised) and IAS 27 (revised) - Business Combinations and
Consolidated and Separate Financial Statements; effective for accounting periods
starting on or after 1 July 2009
The adoption of these standards has no significant impact on these financial
statements.
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 as discussed in the Business Review, taking into
account the repayment profile of the Group's loan portfolio, and making
reasonable assumptions about future trading performance. The Directors 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 corporate bonds, shares in Catena AB,
Bulgarian Land Development Plc and Wyatt Media Group 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 - 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 2010 by operating segment
were as follows:
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| | Investment property | | | |
+ +---------------------------------------------------------+-------------+-------------+---------------+
| | United | France | Germany | Sweden | Other | Total | |
| | Kingdom | GBPm | GBPm | GBPm | Investments | GBPm | |
| | GBPm | | | | GBPm | | |
+ + + + + + + +---------------+
| | | | | | | | |
+ + + + + + + +---------------+
| | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Rental income | 12.0 | 8.9 | 7.2 | 2.6 | - | 30.7 | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Service | 1.8 | 1.9 | 1.4 | 0.1 | - | 5.2 | |
| charge income | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Other | 0.1 | - | - | - | - | 0.1 | |
| property-related | | | | | | | |
| income | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Income from | - | - | - | - | 2.4 | 2.4 | |
| non-property | | | | | | | |
| activities | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Group revenue | 13.9 | 10.8 | 8.6 | 2.7 | 2.4 | 38.4 | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Service | (2.9) | (2.0) | (1.4) | (0.7) | - | (7.0) | |
| charges and | | | | | | | |
| similar | | | | | | | |
| expenses | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Administration | (1.5) | (0.6) | (0.5) | (0.2) | (2.0) | (4.8) | |
| expenses | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Other | - | (0.2) | (0.6) | - | - | (0.8) | |
| expenses | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Costs | (4.4) | (2.8) | (2.5) | (0.9) | (2.0) | (12.6) | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Group revenue | 9.5 | 8.0 | 6.1 | 1.8 | 0.4 | 25.8 | |
| less costs | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| | | |
+------------------+-------------------------------------------------------------------------------------+---------------+
| Net movements | 1.7 | 4.7 | 0.5 | (0.6) | - | 6.3 | |
| on | | | | | | | |
| revaluation | | | | | | | |
| of investment | | | | | | | |
| properties | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Gain on sale | - | - | - | - | 10.6 | 10.6 | |
| of corporate | | | | | | | |
| bonds | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Segment | 11.2 | 12.7 | 6.6 | 1.2 | 11.0 | 42.7 | |
| operating | | | | | | | |
| profit | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Net finance | (12.2) | (1.6) | (4.2) | (0.1) | 0.5 | (17.6) | |
| costs | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Share of | - | - | - | - | 4.6 | 4.6 | |
| profit of | | | | | | | |
| associates | | | | | | | |
| after tax | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Segment | (1.0) | 11.1 | 2.4 | 1.1 | 16.1 | 29.7 | |
| (loss)/profit | | | | | | | |
| before tax | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Taxation | 2.0 | (3.8) | 0.5 | (0.1) | (2.0) | (3.4) | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Segment | 1.0 | 7.3 | 2.9 | 1.0 | 14.1 | 26.3 | |
| profit after | | | | | | | |
| tax | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Central | | | | | | (1.6) | |
| administration | | | | | | | |
| costs | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
| Profit for | | | | | | 24.7 | |
| the period | | | | | | | |
+------------------+---------------+-------------+-------------+-------------+-------------+-------------+---------------+
On the adoption of IFRS 8 - Operating Statements in 2009, certain items in the
segment analysis for June 2009 have been reclassified. Previously other
investments were shown within their respective geographical segment and central
administration costs were included within the UK segment and the deferred tax
charge was not allocated by segment. In the six months ended 30 June 2009,
results from associates (profit of GBP0.4 million) were shown within the Sweden
segment and are now shown within the Other Investments segment.
Available-for-sale investments of GBP34.6 million were shown in the assets of
the UK segment and investments in associates of GBP36.0 million were shown in
the Sweden segment; both are now shown within the Other Investments segment.
The Group's results for the six months ended 30 June 2009 by operating segment,
restated as explained above, were as follows:
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| | Investment property | | | |
+ +------------------------------------------------------------+--------------+--------------+---------------+
| | United | France | Germany | Sweden | Other | Total | |
| | Kingdom | GBPm | GBPm | GBPm | Investments | GBPm | |
| | GBPm | | | | GBPm | | |
+ + + + + + + +---------------+
| | | | | | | | |
+ + + + + + + +---------------+
| | | | | | | | |
+ + + + + + + +---------------+
| | | | | | | | |
+ + + + + + + +---------------+
| | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Rental income | 12.3 | 7.8 | 6.5 | 2.4 | - | 29.0 | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Service | 1.4 | 1.6 | 1.2 | 0.1 | - | 4.3 | |
| charge income | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Other | 0.1 | 0.2 | 0.2 | 0.1 | - | 0.6 | |
| property-related | | | | | | | |
| income | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Income from | - | - | - | - | 2.2 | 2.2 | |
| non-property | | | | | | | |
| activities | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Group revenue | 13.8 | 9.6 | 7.9 | 2.6 | 2.2 | 36.1 | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Service | (2.1) | (1.8) | (1.1) | (0.5) | - | (5.5) | |
| charges and | | | | | | | |
| similar | | | | | | | |
| expenses | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Administration | (0.9) | (0.7) | (0.5) | (0.2) | (2.4) | (4.7) | |
| expenses | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Other | (0.7) | (0.3) | (0.8) | (0.1) | - | (1.9) | |
| expenses | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Costs | (3.7) | (2.8) | (2.4) | (0.8) | (2.4) | (12.1) | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Group revenue | 10.1 | 6.8 | 5.5 | 1.8 | (0.2) | 24.0 | |
| less costs | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Net movements | 20.9 | (7.5) | (6.6) | (1.6) | - | 5.2 | |
| on | | | | | | | |
| revaluation | | | | | | | |
| of investment | | | | | | | |
| properties | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Loss on sale | - | - | - | - | (0.8) | (0.8) | |
| of corporate | | | | | | | |
| bonds | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Segment | 31.0 | (0.7) | (1.1) | 0.2 | (1.0) | 28.4 | |
| operating | | | | | | | |
| profit/(loss) | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Net finance | (0.4) | (2.2) | (3.8) | (0.3) | (7.8) | (14.5) | |
| costs | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Share of | - | - | - | - | 0.4 | 0.4 | |
| profit of | | | | | | | |
| associates | | | | | | | |
| after tax | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Segment | 30.6 | (2.9) | (4.9) | (0.1) | (8.4) | 14.3 | |
| profit/(loss) | | | | | | | |
| before tax | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Taxation | (3.8) | (0.7) | 0.2 | 1.5 | - | (2.8) | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Segment | 26.8 | (3.6) | (4.7) | 1.4 | (8.4) | 11.5 | |
| profit/(loss) | | | | | | | |
| after tax | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Central | | | | | | (1.1) | |
| administration | | | | | | | |
| costs | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Profit for | | | | | | 10.4 | |
| the period | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
The Group's results for the year ended 31 December 2009 were as follows:
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| | Investment property | | | |
+ +------------------------------------------------------------+--------------+--------------+---------------+
| | United | France | Germany | Sweden | Other | Total | |
| | Kingdom | GBPm | GBPm | GBPm | Investments | GBPm | |
| | GBPm | | | | GBPm | | |
+ + + + + + + +---------------+
| | | | | | | | |
+ + + + + + + +---------------+
| | | | | | | | |
+ + + + + + + +---------------+
| | | | | | | | |
+ + + + + + + +---------------+
| | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Rental income | 25.0 | 15.9 | 14.8 | 4.9 | - | 60.6 | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Service | 4.7 | 4.2 | 1.7 | 0.3 | - | 10.9 | |
| charge income | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Other | 0.4 | 0.3 | 0.3 | - | - | 1.0 | |
| property-related | | | | | | | |
| income | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Income from | - | - | - | - | 3.8 | 3.8 | |
| non-property | | | | | | | |
| activities | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Group revenue | 30.1 | 20.4 | 16.8 | 5.2 | 3.8 | 76.3 | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Service | (6.3) | (4.5) | (2.8) | (1.2) | - | (14.8) | |
| charges and | | | | | | | |
| similar | | | | | | | |
| expenses | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Administration | (2.6) | (1.5) | (1.1) | (0.5) | (3.7) | (9.4) | |
| expenses | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Other | (1.0) | (0.7) | (1.2) | (0.2) | (0.2) | (3.3) | |
| expenses | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Costs | (9.9) | (6.7) | (5.1) | (1.9) | (3.9) | (27.5) | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Group revenue | 20.2 | 13.7 | 11.7 | 3.3 | (0.1) | 48.8 | |
| less costs | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| | | |
+------------------+------------------------------------------------------------------------------------------+---------------+
| Net movements | 24.1 | (15.9) | (13.5) | (1.4) | - | (6.7) | |
| on | | | | | | | |
| revaluation | | | | | | | |
| of investment | | | | | | | |
| properties | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Profit on | 0.3 | - | - | - | - | 0.3 | |
| sale of | | | | | | | |
| investment | | | | | | | |
| properties | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Gain on sale | - | - | - | - | 1.9 | 1.9 | |
| of corporate | | | | | | | |
| bonds | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Segment | 44.6 | (2.2) | (1.8) | 1.9 | 1.8 | 44.3 | |
| operating | | | | | | | |
| profit/(loss) | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Net finance | (6.1) | (7.0) | (7.4) | (1.6) | (3.4) | (25.5) | |
| costs | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Share of | - | - | - | - | 2.5 | 2.5 | |
| profit of | | | | | | | |
| associates | | | | | | | |
| after tax | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Segment | 38.5 | (9.2) | (9.2) | 0.3 | 0.9 | 21.3 | |
| profit/(loss) | | | | | | | |
| before tax | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Taxation | (4.0) | 1.6 | 0.2 | 0.6 | 0.5 | (1.1) | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Segment | 34.5 | (7.6) | (9.0) | 0.9 | 1.4 | 20.2 | |
| profit/(loss) | | | | | | | |
| after tax | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Central | | | | | | (2.8) | |
| administration | | | | | | | |
| costs | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
| Profit for | | | | | | 17.4 | |
| the year | | | | | | | |
+------------------+---------------+--------------+--------------+--------------+--------------+--------------+---------------+
Segment assets and liabilities
+----------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | Assets | Liabilities |
+ +-----------------------------------------+-----------------------------------------+
| | 30 June | 30 June | 31 December | 30 June | 30 June | 31 December |
| | 2010 | 2009 | 2009 | 2010 | 2009 | 2009 |
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------+----------------+-------------+-------------+-------------+-------------+-------------+
| Investment | |
| Property | |
+----------------+-----------------------------------------------------------------------------------+
| United | 369.2 | 370.8 | 370.2 | 286.9 | 288.4 | 282.0 |
| Kingdom | | | | | | |
+----------------+-------------+-------------+-------------+-------------+-------------+-------------+
| France | 223.5 | 212.7 | 246.1 | 171.3 | 165.6 | 187.6 |
+----------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Germany | 187.7 | 193.4 | 200.0 | 148.5 | 149.9 | 158.8 |
+----------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Sweden | 56.3 | 51.7 | 58.6 | 28.0 | 47.7 | 30.7 |
+----------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Other | 151.0 | 144.1 | 150.0 | 43.5 | 31.4 | 56.8 |
| investments | | | | | | |
+----------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | 987.7 | 972.7 | 1,024.9 | 678.2 | 683.0 | 715.9 |
+----------------+-------------+-------------+-------------+-------------+-------------+-------------+
Segment capital expenditure
+---------------------------------------+-------------------+-------------------+-------------------+
| | Capital expenditure |
+ +-----------------------------------------------------------+
| | Six months | Six months | Year |
| | ended | ended | ended |
| | 30 June | 30 June | 31 December |
| | 2010 | 2009 | 2009 |
| | GBPm | GBPm | GBPm |
+---------------------------------------+---------------------------------------+-------------------+-------------------+
| Investment Property | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| United Kingdom | 1.8 | 0.9 | 1.3 |
+---------------------------------------+-------------------+-------------------+-------------------+
| France | 1.3 | 1.3 | 31.4 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Germany | 2.2 | 11.9 | 17.8 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Sweden | 0.5 | 1.1 | 2.2 |
+---------------------------------------+-------------------+-------------------+-------------------+
| | 5.8 | 15.2 | 52.7 |
+---------------------------------------+-------------------+-------------------+-------------------+
4 NET FINANCE COSTS
+--------------------------------------+------------------+------------------+--------------------+
| | Six months | Six months | Year |
| | ended | ended | ended |
| | 30 June | 30 June | 31 December |
| | 2010 | 2009 | 2009 |
| | GBPm | GBPm | GBPm |
+--------------------------------------+------------------+------------------+--------------------+
| Interest expense | | | |
+--------------------------------------+------------------+------------------+--------------------+
| Bank loans | 9.0 | 10.1 | 22.7 |
+--------------------------------------+------------------+------------------+--------------------+
| Debenture loans | 2.3 | 2.3 | 4.7 |
+--------------------------------------+------------------+------------------+--------------------+
| Other interest | 0.1 | 0.1 | 0.3 |
+--------------------------------------+------------------+------------------+--------------------+
| Amortisation of issue costs of loans | 0.4 | 0.4 | 0.8 |
+--------------------------------------+------------------+------------------+--------------------+
| Foreign exchange variances | 1.8 | 10.0 | 9.7 |
+--------------------------------------+------------------+------------------+--------------------+
| Movement in fair value of derivative | | | |
| financial instruments | | | |
+--------------------------------------+------------------+------------------+--------------------+
| Interest rate swaps: | 6.7 | (5.8) | (6.7) |
| transactions not qualifying | | | |
| as hedges | | | |
+--------------------------------------+------------------+------------------+--------------------+
| Interest rate caps, collars and | 0.1 | 0.4 | 0.4 |
| floors: transactions | | | |
| not qualifying as hedges | | | |
+--------------------------------------+------------------+------------------+--------------------+
| Interest income | (2.8) | (3.0) | (6.4) |
+--------------------------------------+------------------+------------------+--------------------+
| | 17.6 | 14.5 | 25.5 |
+--------------------------------------+------------------+------------------+--------------------+
5 TAXATION
+--------------------------------------+------------------+------------------+--------------------+
| | Six months | Six months | Year |
| | ended | ended | ended |
| | 30 June | 30 June | 31 December |
| | 2010 | 2009 | 2009 |
| | GBPm | GBPm | GBPm |
+--------------------------------------+------------------+------------------+--------------------+
| Current tax | 3.0 | 2.5 | 2.1 |
+--------------------------------------+------------------+------------------+--------------------+
| Deferred tax | 0.4 | 0.3 | (1.0) |
+--------------------------------------+------------------+------------------+--------------------+
| | 3.4 | 2.8 | 1.1 |
+--------------------------------------+------------------+------------------+--------------------+
The Balance Sheet movement in current and deferred tax since the last reported
balance sheet is as follows;
+-------------------+-------------------+-----------------+------------------+-----------------+
| | Current tax | Deferred tax | Deferred tax | Total Net |
| | Liability | Asset | Liability | Liability |
+-------------------+-------------------+-----------------+------------------+-----------------+
| At 1 January 2010 | (5.0) | 12.7 | (72.3) | (64.6) |
+-------------------+-------------------+-----------------+------------------+-----------------+
| Recognised | (3.0) | - | (0.4) | (3.4) |
| directly in | | | | |
| arriving at | | | | |
| profit after tax | | | | |
+-------------------+-------------------+-----------------+------------------+-----------------+
| Recognised | - | 0.5 | 2.8 | 3.3 |
| directly in | | | | |
| equity | | | | |
+-------------------+-------------------+-----------------+------------------+-----------------+
| Net tax paid | 2.2 | - | - | 2.2 |
+-------------------+-------------------+-----------------+------------------+-----------------+
| Other movements | 0.6 | - | - | 0.6 |
+-------------------+-------------------+-----------------+------------------+-----------------+
| Foreign exchange | 0.1 | (0.1) | 3.4 | 3.4 |
| movements | | | | |
+-------------------+-------------------+-----------------+------------------+-----------------+
| At 30 June 2010 | (5.1) | 13.1 | (66.5) | (58.5) |
+-------------------+-------------------+-----------------+------------------+-----------------+
6 EARNINGS PER SHARE
Management has chosen to disclose adjusted earnings per share from continuing
operations in order to provide an indication of the Group's underlying business
performance. Adjusted earnings per share exclude the effect of revaluations of
investment properties and deferred tax. Management has also chosen to disclose
the European Public Real Estate Association (EPRA) measure of earnings per
share. This 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 property, other non-current investments and items
that have no impact to earnings over their life such as the change in fair value
of derivative financial instruments and net movement on revaluation of
investment properties, and the related deferred taxation on these items.
+---------------------------------------+-------------------+-------------------+-------------------+
| Earnings | Six months | Six months | Year |
| | ended | ended | ended |
| | 30 June | 30 June | 31 December |
| | 2010 | 2009 | 2009 |
| | GBPm | GBPm | GBPm |
+---------------------------------------+-------------------+-------------------+-------------------+
| Profit for the period attributable to | 24.7 | 10.4 | 17.5 |
| the owners of the Company | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Revaluation (gains)/losses on | (6.3) | (5.2) | 6.7 |
| investment properties | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Total deferred tax charge/(credit) | 0.4 | 0.3 | (1.0) |
+---------------------------------------+-------------------+-------------------+-------------------+
| Adjusted Earnings | 18.8 | 5.5 | 23.2 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Profit on sale of investment | - | - | (0.3) |
| properties | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Change in fair value of derivative | 6.8 | (5.4) | (6.3) |
| financial instruments | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| (Gain)/loss on other investments | (10.6) | 0.8 | (1.9) |
+---------------------------------------+-------------------+-------------------+-------------------+
| Deferred tax relating items other | (1.8) | 4.1 | 1.6 |
| than revaluation gains/(losses) and | | | |
| changes in fair value of derivative | | | |
| financial instruments | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| EPRA Earnings | 13.2 | 5.0 | 16.3 |
+---------------------------------------+-------------------+-------------------+-------------------+
+---------------------------------------+-------------------+-------------------+-------------------+
| Weighted average number of ordinary | Six months | Six months | Year |
| shares | ended | ended | ended |
| | 30 June | 30 June | 31 December |
| | 2010 | 2009 | 2009 |
| | Number | Number | Number |
+---------------------------------------+-------------------+-------------------+-------------------+
| Weighted average number of ordinary | 47,719,329 | 48,481,630 | 48,249,810 |
| shares | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Dilutive share options1 | 8,678 | - | - |
+---------------------------------------+-------------------+-------------------+-------------------+
| Diluted weighted average number of | 47,728,007 | 48,481,630 | 48,249,810 |
| ordinary shares | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
+---------------------------------------+-------------------+-------------------+-------------------+
| Earnings per Share | Six months | Six months | Year |
| | ended | ended | ended |
| | 30 June | 30 June | 31 December |
| | 2010 | 2009 | 2009 |
| | Pence | Pence | Pence |
+---------------------------------------+-------------------+-------------------+-------------------+
| Basic | 51.8 | 21.4 | 36.4 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Diluted | 51.8 | 21.4 | 36.4 |
+---------------------------------------+-------------------+-------------------+-------------------+
| | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Adjusted | 39.4 | 11.4 | 48.2 |
+---------------------------------------+-------------------+-------------------+-------------------+
| | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| EPRA | 27.7 | 10.3 | 33.8 |
+---------------------------------------+-------------------+-------------------+-------------------+
1. 300,000 share options were granted on 11 March 2010 at an exercise price of
470 pence.
7 NET ASSETS PER SHARE
Management has chosen to disclose adjusted net assets per share, after the
exclusion of deferred tax, in order to provide an indication of the Group's
underlying balance sheet strength which is a key metric in the property sector.
Management has also 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 objective of the EPRA net assets per
share measure is to highlight the fair value of equity on a long-term basis.
Items which have no impact on the Group in the long term, such as fair value
movements of derivative financial instruments and movements on fair value of
investment properties and associated deferred tax, are excluded. The objective
of EPRA triple net assets per share is to disclose a net assets per share
measure on a true fair value basis. Accordingly 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.
+---------------------------------------+-------------------+-------------------+-------------------+
| Net Assets | 30 June | 30 June | 31 December |
| | 2010 | 2009 | 2009 |
| | GBPm | GBPm | GBPm |
+---------------------------------------+-------------------+-------------------+-------------------+
| Basic and Diluted Net Assets | 309.5 | 289.7 | 309.0 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Deferred tax | 53.4 | 55.7 | 59.6 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Adjusted Net Assets | 362.9 | 345.4 | 368.6 |
+---------------------------------------+-------------------+-------------------+-------------------+
+---------------------------------------+-------------------+-------------------+-------------------+
| Net Assets | 30 June | 30 June | 31 December |
| | 2010 | 2009 | 2009 |
| | GBPm | GBPm | GBPm |
+---------------------------------------+-------------------+-------------------+-------------------+
| Basic and Diluted Net Assets | 309.5 | 289.7 | 309.0 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Adjustment to increase fixed rate | (26.8) | (29.8) | (24.1) |
| debt to fair value | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| EPRA Triple Net Assets | 282.7 | 259.9 | 284.9 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Deferred tax on property and other | 58.8 | 65.1 | 66.8 |
| non-current investments | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Fair value of derivative financial | 22.6 | 17.0 | 15.6 |
| instruments | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Adjustment to reduce fixed rate debt | 26.8 | 29.8 | 24.1 |
| to book value | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| EPRA Net Assets | 390.9 | 371.8 | 391.4 |
+---------------------------------------+-------------------+-------------------+-------------------+
+---------------------------------------+-------------------+-------------------+-------------------+
| | 30 June | 30 June | 31 December |
| | 2010 | 2009 | 2009 |
| | Number | Number | Number |
+---------------------------------------+-------------------+-------------------+-------------------+
| Number of ordinary shares in | 47,226,439 | 48,024,256 | 48,024,256 |
| circulation | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
+---------------------------------------+-------------------+-------------------+-------------------+
| Net Assets Per Share | 30 June | 30 June | 31 December |
| | 2010 | 2009 | 2009 |
| | Pence | Pence | Pence |
+---------------------------------------+-------------------+-------------------+-------------------+
| Basic and Diluted | 655.3 | 603.2 | 643.3 |
+---------------------------------------+-------------------+-------------------+-------------------+
| | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Adjusted | 768.4 | 719.2 | 767.5 |
+---------------------------------------+-------------------+-------------------+-------------------+
| | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| EPRA | 827.7 | 774.2 | 815.0 |
+---------------------------------------+-------------------+-------------------+-------------------+
| EPRA Triple Net | 598.6 | 541.2 | 593.2 |
+---------------------------------------+-------------------+-------------------+-------------------+
8 INVESTMENT PROPERTIES
+---------------------------------------+-------------------+-------------------+-------------------+
| | 30 June | 30 June | 31 December |
| | 2010 | 2009 | 2009 |
| | GBPm | GBPm | GBPm |
+---------------------------------------+-------------------+-------------------+-------------------+
| United Kingdom | 350.3 | 344.7 | 346.8 |
+---------------------------------------+-------------------+-------------------+-------------------+
| France | 211.3 | 193.0 | 222.8 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Germany | 179.7 | 184.1 | 192.1 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Sweden | 51.0 | 45.3 | 51.3 |
+---------------------------------------+-------------------+-------------------+-------------------+
| | 792.3 | 767.1 | 813.0 |
+---------------------------------------+-------------------+-------------------+-------------------+
The movement in investment properties since the last reported balance sheet is
as follows:
+----------------+---------------+---------------+----------------+---------------+---------------+
| | United | France | Germany | Sweden | Total |
| | Kingdom | GBPm | GBPm | GBPm | GBPm |
| | GBPm | | | | |
+----------------+---------------+---------------+----------------+---------------+---------------+
| At 1 January | 346.8 | 222.8 | 192.1 | 51.3 | 813.0 |
| 2010 | | | | | |
+----------------+---------------+---------------+----------------+---------------+---------------+
| Acquisitions | 1.8 | - | - | - | 1.8 |
+----------------+---------------+---------------+----------------+---------------+---------------+
| Capital | - | 1.3 | 2.2 | 0.5 | 4.0 |
| expenditure | | | | | |
+----------------+---------------+---------------+----------------+---------------+---------------+
| Net movements | 1.7 | 4.7 | 0.5 | (0.6) | 6.3 |
| on revaluation | | | | | |
| of investment | | | | | |
| properties | | | | | |
+----------------+---------------+---------------+----------------+---------------+---------------+
| Rent-free | - | - | (0.2) | 0.1 | (0.1) |
| period debtor | | | | | |
| adjustments | | | | | |
+----------------+---------------+---------------+----------------+---------------+---------------+
| Exchange rate | - | (17.5) | (14.9) | (0.3) | (32.7) |
| variances | | | | | |
+----------------+---------------+---------------+----------------+---------------+---------------+
| At 30 June | 350.3 | 211.3 | 179.7 | 51.0 | 792.3 |
| 2010 | | | | | |
+----------------+---------------+---------------+----------------+---------------+---------------+
The investment properties were revalued at 30 June 2010 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:
UK : Lambert Smith Hampton
France 2009 : DTZ Debenham Tie Leung; France 2010 : DTZ Debenham Tie Leung or
Jones Lang LaSalle
Germany 2009 : DTZ Debenham Tie Leung; Germany 2010 : DTZ Debenham Tie Leung or
Colliers International
Sweden : CB Richard Ellis
Investment properties include leasehold properties with a carrying value of
GBP18.4 million (June 2009: GBP18.2 million; December 2009: GBP18.1 million).
Where the Group leases out its investment property under operating leases the
duration is typically 3 years or more. No contingent rents have been recognised
in the current or comparative years. Substantially all investment properties are
secured against debt. The Directors are satisfied that the external valuations
supplied are appropriate to adopt without adjustment.
9 INVESTMENTS IN ASSOCIATES
+---------------------------------------+-------------------+-------------------+-------------------+
| | 30 June | 30 June | 31 December |
| | 2010 | 2009 | 2009 |
| | GBPm | GBPm | GBPm |
+---------------------------------------+-------------------+-------------------+-------------------+
| Catena AB | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Interest in ordinary share capital: | | | |
| 29.9% (30 June 2009: 29.1%; 31 | | | |
| December 2009: 29.8%) | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Share of assets | 59.3 | 55.6 | 66.4 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Share of liabilities | (33.6) | (37.5) | (43.8) |
+---------------------------------------+-------------------+-------------------+-------------------+
| Goodwill | 4.8 | 4.3 | 4.8 |
+---------------------------------------+-------------------+-------------------+-------------------+
| | 30.5 | 22.4 | 27.4 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Bulgarian Land Development Plc | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Interest in ordinary share capital: | | | |
| 47.7% | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Share of assets | 25.4 | 24.9 | 27.4 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Share of liabilities | (13.6) | (11.3) | (13.9) |
+---------------------------------------+-------------------+-------------------+-------------------+
| | 11.8 | 13.6 | 13.5 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Flavour of the Month AB | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Interest in ordinary share capital: | | | |
| 40.0% | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Share of assets | 0.1 | - | - |
+---------------------------------------+-------------------+-------------------+-------------------+
| Share of liabilities | - | - | - |
+---------------------------------------+-------------------+-------------------+-------------------+
| | 0.1 | - | - |
+---------------------------------------+-------------------+-------------------+-------------------+
| Carrying value of investments in | 42.4 | 36.0 | 40.9 |
| associates | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
The movement in associates since the last reported balance sheet is as follows:
+---------------------------------------+-------------------+-------------------+-------------------+
| | Net assets | Goodwill | Total |
| | GBPm | GBPm | GBPm |
+---------------------------------------+-------------------+-------------------+-------------------+
| At 1 January 2010 | 36.1 | 4.8 | 40.9 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Additions | 0.2 | 0.1 | 0.3 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Share of profit of associates after | 4.6 | - | 4.6 |
| tax | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Dividends received | (1.8) | - | (1.8) |
+---------------------------------------+-------------------+-------------------+-------------------+
| Share of other comprehensive loss of | (1.3) | - | (1.3) |
| associates | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Exchange rate differences | (0.2) | (0.1) | (0.3) |
+---------------------------------------+-------------------+-------------------+-------------------+
| At 30 June 2010 | 37.6 | 4.8 | 42.4 |
+---------------------------------------+-------------------+-------------------+-------------------+
10 OTHER INVESTMENTS
+--------------------+----------------+----------------+---------------+---------------+----------------+
| | Investment | Destination of | 30 June | 30 June | 31 December |
| | type | | 2010 | 2009 | 2009 |
| | | Investment | GBPm | GBPm | GBPm |
+--------------------+----------------+----------------+---------------+---------------+----------------+
| Available-for-sale | Listed | UK | 30.1 | 3.7 | 17.1 |
| financial | corporate | | | | |
| investments | bonds | | | | |
| carried at fair | | | | | |
| value | | | | | |
+--------------------+----------------+----------------+---------------+---------------+----------------+
| | | Eurozone | 16.9 | 21.7 | 40.0 |
+--------------------+----------------+----------------+---------------+---------------+----------------+
| | | Other | 11.7 | 5.6 | 12.9 |
+--------------------+----------------+----------------+---------------+---------------+----------------+
| | Listed equity | UK | 0.6 | 0.5 | 0.6 |
| | securities | | | | |
+--------------------+----------------+----------------+---------------+---------------+----------------+
| | | Sweden | 2.5 | 2.3 | 2.5 |
+--------------------+----------------+----------------+---------------+---------------+----------------+
| | | Other | 0.1 | 0.1 | 0.1 |
+--------------------+----------------+----------------+---------------+---------------+----------------+
| | Unlisted | Sweden | 0.6 | 0.5 | 0.6 |
| | investments | | | | |
+--------------------+----------------+----------------+---------------+---------------+----------------+
| | Government | UK | 0.1 | 0.2 | 0.1 |
| | securities | | | | |
+--------------------+----------------+----------------+---------------+---------------+----------------+
| | | | 62.6 | 34.6 | 73.9 |
+--------------------+----------------+----------------+---------------+---------------+----------------+
The movement of other investments since the last reported balance sheet is
analysed below:
+---------------------------------------+-------------------+-------------------+-------------------+
| | Corporate | Other | Total |
| | Bonds | Investments | GBPm |
| | GBPm | GBPm | |
+---------------------------------------+-------------------+-------------------+-------------------+
| At 1 January 2010 | 70.0 | 3.9 | 73.9 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Additions | 31.2 | 1.0 | 32.2 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Disposals | (30.8) | (0.1) | (30.9) |
+---------------------------------------+-------------------+-------------------+-------------------+
| Fair value movements recognised in | (0.9) | (0.8) | (1.7) |
| reserves | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Fair value movements recognised in | (9.5) | - | (9.5) |
| profit before tax | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Exchange rate differences | (1.3) | (0.1) | (1.4) |
+---------------------------------------+-------------------+-------------------+-------------------+
| At 30 June 2010 | 58.7 | 3.9 | 62.6 |
+---------------------------------------+-------------------+-------------------+-------------------+
11 BORROWINGS
Maturity profile
+----------------+---------------+----------------+----------------+---------------+---------------+
| At 30 June | Bank | Debenture | Zero Coupon | Other | Total |
| 2010 | loans | loans | Note | loans | GBPm |
| | GBPm | GBPm | GBPm | GBPm | |
+----------------+---------------+----------------+----------------+---------------+---------------+
| Within one | 102.9 | 1.0 | - | 2.3 | 106.2 |
| year or on | | | | | |
| demand | | | | | |
+----------------+---------------+----------------+----------------+---------------+---------------+
| More than one | 38.8 | 1.1 | - | - | 39.9 |
| but not more | | | | | |
| than two years | | | | | |
+----------------+---------------+----------------+----------------+---------------+---------------+
| More than two | 203.9 | 4.2 | - | - | 208.1 |
| but not more | | | | | |
| than five | | | | | |
| years | | | | | |
+----------------+---------------+----------------+----------------+---------------+---------------+
| More than five | 162.9 | 28.2 | 9.3 | - | 200.4 |
| years | | | | | |
+----------------+---------------+----------------+----------------+---------------+---------------+
| | 508.5 | 34.5 | 9.3 | 2.3 | 554.6 |
+----------------+---------------+----------------+----------------+---------------+---------------+
+----------------+---------------+----------------+----------------+---------------+---------------+
| At 30 June | Bank | Debenture | Zero Coupon | Other | Total |
| 2009 | loans | loans | Note | loans | GBPm |
| | GBPm | GBPm | GBPm | GBPm | |
+----------------+---------------+----------------+----------------+---------------+---------------+
| Within one | 71.4 | 1.0 | - | - | 72.4 |
| year or on | | | | | |
| demand | | | | | |
+----------------+---------------+----------------+----------------+---------------+---------------+
| More than one | 63.8 | 1.0 | - | 2.3 | 67.1 |
| but not more | | | | | |
| than two years | | | | | |
+----------------+---------------+----------------+----------------+---------------+---------------+
| More than two | 211.9 | 3.8 | - | - | 215.7 |
| but not more | | | | | |
| than five | | | | | |
| years | | | | | |
+----------------+---------------+----------------+----------------+---------------+---------------+
| More than five | 168.9 | 29.7 | 8.3 | - | 206.9 |
| years | | | | | |
+----------------+---------------+----------------+----------------+---------------+---------------+
| | 516.0 | 35.5 | 8.3 | 2.3 | 562.1 |
+----------------+---------------+----------------+----------------+---------------+---------------+
+----------------+---------------+----------------+---------------+---------------+---------------+
| At 31 December | Bank | Debenture | Zero Coupon | Other | Total |
| 2009 | loans | loans | Note | loans | GBPm |
| | GBPm | GBPm | GBPm | GBPm | |
+----------------+---------------+----------------+---------------+---------------+---------------+
| Within one | 112.5 | 1.0 | - | - | 113.5 |
| year or on | | | | | |
| demand | | | | | |
+----------------+---------------+----------------+---------------+---------------+---------------+
| More than one | 26.7 | 1.1 | - | 2.3 | 30.1 |
| but not more | | | | | |
| than two years | | | | | |
+----------------+---------------+----------------+---------------+---------------+---------------+
| More than two | 199.7 | 4.0 | - | - | 203.7 |
| but not more | | | | | |
| than five | | | | | |
| years | | | | | |
+----------------+---------------+----------------+---------------+---------------+---------------+
| More than five | 207.7 | 29.0 | 8.8 | - | 245.5 |
| years | | | | | |
+----------------+---------------+----------------+---------------+---------------+---------------+
| | 546.6 | 35.1 | 8.8 | 2.3 | 592.8 |
+----------------+---------------+----------------+---------------+---------------+---------------+
Arrangement fees of GBP2.4 million (June 2009: GBP2.9 million; December 2009:
GBP2.9 million) have been offset in arriving at the balances in the above
tables.
Included in the above tables are non-property related loans of GBP39.9 million
(June 2009: GBP17.6 million; December 2009: GBP48.5 million).
Analysis
+---------------------------------------+-------------------+-------------------+-------------------+
| At 30 June 2010 | Fixed rate | Floating rate | Total |
| | financial | financial | GBPm |
| | liabilities | liabilities | |
| | GBPm | GBPm | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Sterling | 153.4 | 111.1 | 264.5 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Euro | 114.5 | 150.7 | 265.2 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Swedish kronor | - | 24.3 | 24.3 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Other | - | 0.6 | 0.6 |
+---------------------------------------+-------------------+-------------------+-------------------+
| | 267.9 | 286.7 | 554.6 |
+---------------------------------------+-------------------+-------------------+-------------------+
+---------------------------------------+-------------------+-------------------+-------------------+
| At 30 June 2009 | Fixed rate | Floating rate | Total |
| | financial | financial | GBPm |
| | liabilities | liabilities | |
| | GBPm | GBPm | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Sterling | 183.5 | 80.5 | 264.0 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Euro | 95.2 | 160.9 | 256.1 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Swedish kronor | 17.3 | 24.7 | 42.0 |
+---------------------------------------+-------------------+-------------------+-------------------+
| | 296.0 | 266.1 | 562.1 |
+---------------------------------------+-------------------+-------------------+-------------------+
+---------------------------------------+-------------------+-------------------+-------------------+
| At 31 December 2009 | Fixed rate | Floating rate | Total |
| | financial | financial | GBPm |
| | liabilities | liabilities | |
| | GBPm | GBPm | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Sterling | 154.2 | 115.4 | 269.6 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Euro | 123.8 | 165.1 | 288.9 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Swedish kronor | - | 34.3 | 34.3 |
+---------------------------------------+-------------------+-------------------+-------------------+
| | 278.0 | 314.8 | 592.8 |
+---------------------------------------+-------------------+-------------------+-------------------+
Fair values
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+----------+
| | Carrying amounts | Fair values | |
+ +-----------------------------------------+-----------------------------------------+----------+
| | June | June | December | June | June | December | |
| | 2010 | 2009 | 2009 | 2010 | 2009 | 2009 | |
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | |
+ + + + + + + +-------------+
| | | | | | | | |
+ + + + + + + +-------------+
| | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Current | 106.2 | 72.4 | 113.5 | 106.2 | 72.4 | 113.5 | |
| borrowings | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+----------+
| Non-current | 448.4 | 489.7 | 479.3 | 475.2 | 519.5 | 503.4 | |
| borrowings | | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+----------+
| | 554.6 | 562.1 | 592.8 | 581.4 | 591.9 | 616.9 | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+----------+
The fair value of non-current 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.
The fair value of current borrowings approximates to the carrying value because
of their short maturity.
12 SHARE CAPITAL
+-------------+-------------+-------------+--------------+-------------+-------------+-------------+
| | Number of | Number of | Total | Ordinary | Treasury | Total |
| | Ordinary | Treasury | number | shares in | shares | ordinary |
| | shares in | shares in | of shares | circulation | GBPm | shares |
| | circulation | circulation | | GBPm | | GBPm |
| | | | | | | |
+-------------+-------------+-------------+--------------+-------------+-------------+-------------+
| At 1 | 48,024,256 | 5,000,000 | 53,024,256 | 12.0 | 1.3 | 13.3 |
| January | | | | | | |
| 2010 | | | | | | |
+-------------+-------------+-------------+--------------+-------------+-------------+-------------+
| Ordinary | 207,000 | (207,000) | - | 0.1 | (0.1) | - |
| shares | | | | | | |
| issued from | | | | | | |
| Treasury | | | | | | |
| shares | | | | | | |
+-------------+-------------+-------------+--------------+-------------+-------------+-------------+
| Cancelled | (1,004,817) | - | (1,004,817) | (0.3) | - | (0.3) |
| following | | | | | | |
| tender | | | | | | |
| offer1 | | | | | | |
+-------------+-------------+-------------+--------------+-------------+-------------+-------------+
| At 30 June | 47,226,439 | 4,793,000 | 52,019,439 | 11.8 | 1.2 | 13.0 |
| 2010 | | | | | | |
+-------------+-------------+-------------+--------------+-------------+-------------+-------------+
+-------------+--------------+-------------+--------------+-------------+-------------+-------------+
| | Number of | Number of | Total | Ordinary | Treasury | Total |
| | Ordinary | Treasury | number | shares in | shares | ordinary |
| | shares in | shares in | of shares | circulation | GBPm | shares |
| | circulation | circulation | | GBPm | | GBPm |
| | | | | | | |
+-------------+--------------+-------------+--------------+-------------+-------------+-------------+
| At 1 | 61,745,471 | 5,000,000 | 66,745,471 | 15.4 | 1.3 | 16.7 |
| January | | | | | | |
| 2009 | | | | | | |
+-------------+--------------+-------------+--------------+-------------+-------------+-------------+
| Cancelled | (13,721,215) | - | (13,721,215) | (3.4) | - | (3.4) |
| following | | | | | | |
| tender | | | | | | |
| offer2 | | | | | | |
+-------------+--------------+-------------+--------------+-------------+-------------+-------------+
| At 30 June | 48,024,256 | 5,000,000 | 53,024,256 | 12.0 | 1.3 | 13.3 |
| 2009 | | | | | | |
+-------------+--------------+-------------+--------------+-------------+-------------+-------------+
+-------------+--------------+-------------+--------------+-------------+-------------+-------------+
| | Number of | Number of | Total | Ordinary | Treasury | Total |
| | Ordinary | Treasury | number | shares in | shares | ordinary |
| | shares in | shares in | of shares | circulation | GBPm | shares |
| | circulation | circulation | | GBPm | | GBPm |
| | | | | | | |
+-------------+--------------+-------------+--------------+-------------+-------------+-------------+
| At 1 | 61,745,471 | 5,000,000 | 66,745,471 | 15.4 | 1.3 | 16.7 |
| January | | | | | | |
| 2009 | | | | | | |
+-------------+--------------+-------------+--------------+-------------+-------------+-------------+
| Cancelled | (13,721,215) | - | (13,721,215) | (3.4) | - | (3.4) |
| following | | | | | | |
| tender | | | | | | |
| offer2 | | | | | | |
+-------------+--------------+-------------+--------------+-------------+-------------+-------------+
| At 31 | 48,024,256 | 5,000,000 | 53,024,256 | 12.0 | 1.3 | 13.3 |
| December | | | | | | |
| 2009 | | | | | | |
+-------------+--------------+-------------+--------------+-------------+-------------+-------------+
1. A tender offer by way of a Circular dated 23 March 2010 for the purchase
of 1 in 48 shares at 600 pence per share was completed in April 2010, returning
GBP6.0 million to shareholders.
2. A tender offer by way of a Circular dated 1 December 2008 for the purchase
of 2 in 9 shares at 350 pence per share was completed in January 2009, returning
GBP48.0 million to shareholders.
13 CASH GENERATED FROM OPERATIONS
+---------------------------------------+-------------------+-------------------+-------------------+
| | Six months | Six months | Year |
| | ended | ended | ended |
| | 30 June | 30 June | 31 December |
| | 2010 | 2009 | 2009 |
| | GBPm | GBPm | GBPm |
+---------------------------------------+-------------------+-------------------+-------------------+
| Operating profit from continuing | 41.1 | 27.3 | 41.5 |
| operations | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Adjustments for: | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Net movements on revaluation of | (6.3) | (5.2) | 6.7 |
| investment | | | |
| properties | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Depreciation | 0.1 | 0.3 | 0.5 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Profit on sale of investment | - | - | (0.3) |
| properties | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| (Gain)/loss on other investments | (10.6) | 0.8 | (2.1) |
+---------------------------------------+-------------------+-------------------+-------------------+
| Changes in working capital: | | | |
+---------------------------------------+-------------------+-------------------+-------------------+
| Decrease/(increase) in debtors | 1.5 | (0.6) | (0.7) |
+---------------------------------------+-------------------+-------------------+-------------------+
| (Decrease)/increase in creditors | (0.3) | (1.6) | 0.1 |
+---------------------------------------+-------------------+-------------------+-------------------+
| Cash generated from operations | 25.5 | 21.0 | 45.7 |
+---------------------------------------+-------------------+-------------------+-------------------+
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
2010 which comprises 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 13.
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 Services 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 2010 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 Services Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditors
London, United Kingdom
19 August 2010
GLOSSARY OF TERMS
ADJUSTED EARNINGS PER SHARE
Profit after tax, but excluding deferred tax and net gains or losses from fair
value adjustments on investment properties, divided by the diluted weighted
average number of ordinary shares
ADJUSTED NET ASSETS OR ADJUSTED SHAREHOLDERS' FUNDS
Net assets excluding deferred tax assets and deferred tax liabilities
ADJUSTED NET ASSETS PER SHARE OR ADJUSTED NET ASSET VALUE
Adjusted net assets divided by the diluted number of ordinary shares
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
CONTRACTED RENT
Annual contracted rental income
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 and
foreign exchange variances
DILUTED ADJUSTED NET ASSETS
Diluted net assets excluding deferred tax assets and deferred tax liabilities
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 taxation
EPRA NET ASSETS
Diluted net assets excluding the mark-to-market on effective cash flow hedges
and related debt adjustments and deferred taxation on revaluations
EPRA NET ASSETS PER SHARE
EPRA net assets divided by the diluted number of ordinary shares
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 taxation on property revaluations.
EPRA TRIPLE NET ASSETS PER SHARE
EPRA triple net assets divided by the diluted number of ordinary shares
ESTIMATED RENTAL VALUE (ERV)
The market rental value of lettable space as estimated by the Group's valuers
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 cash and short-term deposits
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 aggregate of passing rent and the ERV
of vacant space
PASSING RENT
Contracted rent after any rent-free periods have expired
PROPERTY LOAN TO VALUE
Property borrowings expressed as a percentage of the market value of the
property portfolio
RECURRING INTEREST COVER
The aggregate of group revenue less costs plus share of results of associates,
divided by the aggregate of interest expense and amortisation of issue costs of
debt, less interest income
RENT ROLL
Contracted rent
RETURN ON SHAREHOLDERS' EQUITY
The movement in the adjusted net assets in the period plus distributions as a
percentage of the adjusted net assets at the beginning of the period
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
DIRECTORS, OFFICERS AND ADVISERS
Directors
Sten Mortstedt (Executive Chairman)
Henry Klotz (Chief Executive Officer)
Richard Tice (Deputy Chief Executive Officer)
John Whiteley (Chief Financial Officer)
Thomas Lundqvist * | (Non-Executive Vice Chairman)
Malcolm Cooper || (Non-Executive Director)
Joseph Crawley * (Non-Executive Director)
Christopher Jarvis | (Non-Executive Director)
Jennica Mortstedt (Non-Executive Director)
Thomas Thomson (Non-Executive Director)
* member of Remuneration Committee
| member of Audit Committee
| senior independent Director
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 on line:
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
Joint Stockbrokers
Brewin Dolphin Limited
12 Smithfield Street
London
EC1A 9BD
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London
EC2Y 9LY
Registered Auditors
Deloitte LLP
Chartered Accountants
London
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
IR LLFITTAITLII
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