TIDMCLI
RNS Number : 4069C
CLS Holdings PLC
07 March 2011
Release date: 7 March 2011
Embargoed until: 07:00
CLS HOLDINGS PLC
("CLS", THE "COMPANY" OR THE "GROUP")
ANNOUNCES ITS AUDITED FULL YEAR RESULTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010
A very strong set of full year results demonstrating the success
of CLS's diversified high yielding office portfolio, active
property and cash management, and sound financing.
CLS Holdings plc is a property investment company with a diverse
portfolio of GBP877 million modern, well-let properties in London,
France, Germany and Sweden. The Company's properties have been
selected for their potential to generate high returns on capital
investment through active asset management and have performed well
during 2010.
FINANCIAL HIGHLIGHTS
-- Profit before tax: up 283% to GBP70.9 million (2009: GBP18.5
million)
-- Net assets: up 16% to GBP357.2 million (2009: GBP309.0
million)
-- Net assets per share: up 19% to 766.7 pence (2009: 643.3
pence)
-- Earnings per share: up 249% to 127.1 pence (2009: 36.4
pence)
-- EPRA net assets: up 13% to GBP441.6 million (2009: GBP390.2
million)
-- EPRA earnings per share: up 110% to 58.8 pence (2009: 28.0
pence)
-- EPRA net assets per share: up 16% to 941.8 pence (2009: 812.5
pence)
-- Proposed distribution to shareholders: GBP7.1 million (April
2010: GBP6.0 million) by way of tender offer buy-back: 1 in 46 at
700 pence, equivalent to 15.2 pence per share
-- Low weighted average cost of debt: 4.3% (2009: 4.0%)
-- Adjusted solidity: up 8% to 41.2% (2009: 38.3%)
-- Adjusted gearing 124% (2009: 135%)
-- Interest cover up 52% to 3.2 times (2009: 2.1 times)
KEY DATA
-- Top 3 performer in UK listed property sector total
shareholder return over 3 years and 10 years: 52% and 247%,
respectively
-- Portfolio value: GBP876.9 million: up 3.5% in local
currencies
-- Proportion of Government tenants: 40.8%
-- High occupancy rate: 95.7% up from 95.0% as at 30 June
2010
-- Liquid resources: GBP126.4 million
-- Excellent performance of Catena 29.9% shareholding: year end
market value GBP50.6 million, exceeds book value by GBP21.0
million. Market value as at 4 March 2011: GBP64.5 million, exceeds
book value by GBP34.9 million
-- Indexation applies to 66% of contracted rent
-- Acquisitions in London and Paris totalled GBP36.4 million in
2010
-- Progressing a number of development opportunities including a
110,000 sq m (1,184,030 sq ft) mixed use proposal, Vauxhall Square,
in London
-- Through our associate Catena, involved in a potential 150,000
sq m (1,614,586 sq ft) mixed use development in Solna,
Stockholm
-- Two pre-lets totalling 5,042 sq m (54,271 sq ft) in Germany
to start construction in 2011
Sten Mortstedt, Executive Chairman of CLS, commented:
"These excellent results in 2010 demonstrate how the Group
continues to benefit from its diversity of exposure to four
different markets. Our balance sheet is strong, so we intend to
exploit attractive acquisition opportunities as they arise and
benefit from some very interesting development opportunities both
in London and in Sweden"
-ends-
For further information please contact:
CLS Holdings plc +44 (0)20 7582 7766
www.clsholdings.com
Sten Mortstedt, Executive Chairman
Henry Klotz, Executive Vice Chairman
Richard Tice, Chief Executive Officer
Kinmont Advisory Limited +44 (0)20 7087 9100
Jonathan Gray
Smithfield Consultants Limited +44 (0)20 7360 4900
Alex Simmons
Liberum Capital Limited +44 (0)20 3100 2222
Chris Bowman
Tom Fyson
Brewin Dolphin Limited +44 (0)845 213 4729
Mark Brady
Miriam Greenwood
CLS will be presenting to analysts at 8.30am on Monday, 7 March
2011 at Smithfield Consultants, 10 Aldersgate Street, London, EC1A
4HJ. Conference Call dial in numbers as follows:
Participant Telephone Numbers: +44 (0)20 7806 1960 (UK Toll)
Confirmation Code: 2412006
Participants will have to quote the above code when dialling
into the conference.
CHAIRMAN'S STATEMENT
These excellent results demonstrate how the Group continues to
benefit from its diversity.
OVERVIEW
The Group delivered a strong financial and operating performance
overall in 2010, continuing the progress of the first half of the
year. Pre-tax profit rose by over 280% to GBP70.9 million, earnings
per share on an EPRA basis were 58.8 pence (2009: 28.0 pence) and
EPRA net asset value increased by 16% to 941.8 pence per share.
This has all been achieved despite difficult conditions
throughout the year, with a backdrop of austerity, a challenging
macro-economic and political situation and increasing uncertainty
over the sovereign debt of certain Eurozone economies.
We have used this period in the property cycle to start buying
property again. We have been successful in letting premises and
keeping the vacancy rate low, whilst beginning to progress a number
of short to medium-term development opportunities within our
portfolio. In addition, our property values are rising again across
our regions and we continue to raise finance competitively.
These excellent results demonstrate how the Group continues to
benefit from its diversity of exposure to four different economies,
three different currencies, some twenty different banks and 381
tenants. This diversification has proved to be a key element to our
success.
We constantly seek to manage down risk, whilst striving for
attractive returns for shareholders. The obvious success of our
policy is demonstrated by our total shareholder return of 52% over
the last three years and 247% over the last ten, which makes CLS a
top 3 performer in the UK listed property sector over both
periods.
PORTFOLIO
Overall, the portfolio performed solidly during 2010, with a
like-for-like valuation increase of 3.5% in local currency. The
benefit of our diversification across markets is self-evident: the
London portfolio increased by 1.3%, France by 7.5%, and Germany by
4.2%, whilst Sweden fell by 1.2%. Acquisitions during the year, in
London and in Paris, totalled GBP36.4 million and, after a negative
currency impact of GBP8.4 million, the total portfolio is now
valued at GBP876.9 million.
The portfolio consists of 71 properties totalling 407,700 sq m.
The average capital value is GBP2,151 per sq m and the average
income of leased space is GBP169 per sq m.
The net initial yield of 7.2% compares to a low average cost of
debt of 4.3%, a positive differential of 290 basis points which
continues to be amongst the highest in the property sector. It is a
further strength of our portfolio that 66% of our rents are subject
to indexation which will prove to be valuable in times of higher
inflation ahead.
The encouraging signs in the letting market which I indicated in
the interim report have continued, and the vacancy rate is 4.3% by
rental value (2009: 4.5%). This remains well below the average
vacancy for offices in our markets and is testament to the success
of our staff in proactively managing the properties, developing
good working relationships with tenants and responding to their
needs.
The rental income is diversified yet secure, with 41% being paid
by Government tenants and 28% by major corporations. Our weighted
average lease length is 8.4 years, or 7.3 years to first break.
During the second half we announced two substantial pre-lets of
developments totalling 5,042 sq m for existing tenants in Germany.
Construction is planned to start in 2011 and, when completed, these
will generate GBP0.5 million of new rent.
Our indirect investment in Swedish property, through our 29.9%
holding in listed property company Catena, performed exceptionally
well during the year. We received dividends of GBP9.9 million
whilst the share price increased by 104%. At 31 December 2010 our
holding in Catena had a market value of GBP50.6 million compared to
the carrying value in our accounts of GBP29.6 million, and at 4
March 2011 the value of our holding had risen by a further GBP14
million. The potential surplus value of GBP21 million equated to 45
pence per CLS share as at the year end, and has since risen to over
74 pence per share. Towards the end of 2010, Catena took advantage
of the high property prices in Sweden to sell a substantial part of
its property portfolio. From the proceeds, Catena has proposed,
subject to shareholder approval, to distribute SEK 59 per share in
April 2011, from which CLS would receive approximately GBP20
million in cash.
Catena's future focus is on the development of the remaining
properties in Stora Frosunda, Solna, where building rights for
housing, offices and commercial premises will be created when the
new zoning plan for the area is approved. Outline planning
permission is anticipated to be for approximately 150,000 sq m
comprising of 1,000 apartments and 50,000 sq m of commercial
area.
In February 2011, we launched a consultation for a major 110,000
sq m mixed use medium-term redevelopment at our HQ site in
Vauxhall. Further details can be found in the Business Review. We
are also working on redevelopment proposals for two other, smaller
sites in Vauxhall.
RESULTS
Profit after tax rose by 245% to GBP60.1 million (2009: GBP17.4
million). This includes gains of GBP10.7 million on the disposal of
corporate bonds. Basic earnings per share were 127.1 pence (2009:
36.4 pence).
Net assets rose to GBP357.2 million, an increase of GBP48.2
million, and EPRA net assets rose by GBP51.4 million to GBP441.6
million. Our basic net assets per share increased by 19% to 766.7
pence (2009: 643.3 pence).
Recurring interest cover for the year increased by 52% to 3.2
times (2009: 2.1 times). The Group's property loan to value ratio
was 63.5% and net debt as a proportion of adjusted net assets was
123.6%.
FINANCING
Our strategy of ring-fencing our debt on individual properties
and using some 20 different banks, continues to serve us well.
Despite the widely reported challenges in the banking sector, we
have successfully refinanced GBP80.3 million of debt and raised
GBP22.4 million of new debt and since 1 January 2011 we have agreed
the refinancing of a further GBP24.7 million of debt. In addition,
we have entered into GBP205.6 million of interest rate caps with
start dates between November 2010 and May 2011, of which GBP182
million have a strike rate of 2.5%. This will protect the Group
from the risk of interest rate rises in the next five years.
The weighted average loan length is 4.9 years. We generally
approach over ten banks for any financing and actively explore a
range of options to secure our ongoing finance requirements. We
enjoy strong relationships with our banks, to our mutual
benefit.
Our balance sheet is strong with adjusted solidity of 41.2% and
we have healthy liquid resources, with GBP126 million of cash and
investments available for deployment. We have continued to invest
surplus cash into corporate bonds as a cash management technique to
generate higher returns whilst maintaining liquidity. At the year
end, the Group held GBP78.1 million of bonds, which were generating
an annual coupon of 8.3% on average.
ENERGY EFFICIENCY
Energy efficient buildings are both commercially beneficial and
socially desirable. We continue to incorporate environmentally
efficient features in our developments and convert or modify
properties when possible. At Vanerparken in Sweden, for example, we
are installing a new energy facility which will produce heating,
cooling and hot water whilst decreasing CO2 and other emissions by
approximately 90%. In addition we are reviewing the performance of
our existing plants and systems across the portfolio to identify
further potential improvements. The short payback period on such
investments can lead to valuable cost savings for tenants and for
the Group.
DISTRIBUTIONS TO SHAREHOLDERS
In April 2010 we distributed GBP6.0 million by means of a tender
buy-back of shares, and in September a further GBP4.0 million. We
intend to continue our traditional tender buy-back method by
distributing GBP7.1 million to shareholders in April 2011, subject
to shareholder approval, by means of a buy-back of 1 in 46 shares
at 700 pence per share. A document setting out details of the
tender offer will be posted to shareholders with our Annual Report
and Accounts.
BOARD CHANGES
On 11 May 2010 Richard Tice and Jennica Mortstedt joined the
Board as Deputy Chief Executive and Non-Executive Director,
respectively, whilst Bengt Mortstedt retired as a Non-Executive
Director. I thank my brother Bengt for his many years of service
and wise counsel to the Group.
On 1 January 2011, Henry Klotz became Executive Vice Chairman,
Richard Tice became Chief Executive Officer and Thomas Lundqvist
moved from Vice Chairman to Non-Executive Director. These changes
are designed to ensure the Group has the appropriate management
structure to take it forward.
We have strong teams across the Group and I would like to
express my considerable thanks to my Board colleagues and our staff
for all their efforts and hard work towards our continued
success.
OUTLOOK
The economic signals have rarely been more mixed. In an era of
government austerity, inflation is rising, credit is tightening and
sovereign debt is a concern. Also the signals from the property
sector are mixed: we are letting space, arrears are negligible and
interest rates are at all time lows; yet, due to the banks'
restrictive credit policies, there are fewer buyers for
high-yielding property.
Therefore, we intend to maintain high reserves of liquidity
while, on a selective basis, continuing to actively exploit
attractive property acquisitions as they arise. Meanwhile, we shall
progress some very interesting short and medium-term development
opportunities within our portfolio which have the potential to add
significant further value.
I am pleased with the strong performance in 2010 and with the
fact that the Group is in an excellent position to meet any
challenges and opportunities that lie ahead.
Sten Mortstedt
Executive Chairman
BUSINESS REVIEW
The low void rate of 4.3% is a strong reflection on the focus on
active management and responding to tenants' needs.
The Group's main activity is in commercial real estate across
four European regions: London, France, Germany and Sweden. At 31
December 2010, the Group's property interests of GBP927.5 million
comprised the directly owned investment property portfolio valued
at GBP876.9 million, and an additional property exposure in Sweden
via an associate listed on the Stockholm Stock Exchange, property
company Catena AB, which investment had a market value of GBP50.6
million. The remaining Other Investments comprised investments in
corporate bonds which had a book value of GBP78.1 million at the
year end, and Bulgarian Land Development Plc, website media company
Wyatt Media Group AB and other small corporate investments, which
together had a book value of GBP14.5 million.
INVESTMENT PROPERTY
OVERVIEW The Group's core focus is on providing well-managed,
cost-effective offices and commercial real estate for companies in
key European cities across four countries.
At 31 December 2010, the directly held investment portfolio was
valued at GBP876.9 million, a like-for-like increase in the year of
3.5% in local currencies, or 2.5% after reflecting foreign exchange
movements against sterling. In local currency, the French portfolio
rose in value by 7.5%, Germany by 4.2% and London by 1.3%, whilst
Sweden fell by 1.2%.
The portfolio had a net initial yield of 7.2%, with 381 tenants
and a weighted average lease length of 8.4 years, or 7.3 years to
the first break. Of the contracted rent of GBP65.0 million, 66% was
subject to indexation.
The overall Group vacancy rate continued to be low at 4.3%,
below the 5 year average of 4.7%. This low void rate is a strong
reflection on the Group's focus on actively managing our portfolio,
with our in-house asset and property management teams responding to
tenants' needs.
The property investment markets saw fewer buyers for
high-yielding property in 2010, which provided opportunities for
acquisitions. In London, the Group acquired Apex Tower, New Malden
for GBP21.6 million, and the strategic acquisition of 100 Vauxhall
Walk, SE11 for GBP1.8 million to complete a development site
assembly. These were followed by the purchase in Paris of Colt
Group's French subsidiary headquarters for GBP13.0 million.
LONDON
At 31 December 2010, the London portfolio represented 40% of the
Group's property interests with a value of GBP375.0 million. This
was an increase of 1.3% on a like-for-like basis from twelve months
earlier, and reflected a variety of asset management initiatives
throughout the portfolio. The London portfolio had a strong tenant
profile with 53% by rental value let to government tenants, and 29%
to major corporations. The income had a weighted average lease term
of 10.1 years, or 9.6 years to the first break.
At 31 December 2010, the London portfolio comprised 28
properties with an aggregate lettable area of 127,700 sq m.
Against a backdrop of austerity and recession, the London
vacancy rate of 4.7% by rental income was well below the average
for comparable property. During the year, 8,112 sq m of property
became vacant, and 6,632 sq m was let or had leases renewed with
existing tenants.
As a long-term owner of properties we have continued a programme
of renovation and refurbishments to a number of buildings in the
London portfolio, totalling GBP0.4 million in aggregate in the
year. This included GBP0.3 million at Westminster Tower, where the
common parts and four recently vacated lower floors are under
refurbishment, which should improve rental values. Rent reviews
were settled at Spring Gardens, Westminster Tower, Cambridge House
and CI Tower with a total increase of GBP0.2 million. Activity of
note included a significant lease renewal with, and an additional
letting to, Flight Centre at CI Tower totalling 1,497 sq m, and new
lettings and lease renewals at Clifford's Inn on 2,937 sq m.
Through our close relationships with tenants we have again
achieved excellent levels of debt recovery. On average we received
98% of rent and service charge within 14 days of the due dates.
In November, the Group acquired Apex Tower, New Malden for
GBP21.6 million, including costs. Apex Tower is located on the
opposite side of the High Street to CI Tower. This provides a
number of medium-term asset management opportunities across the two
properties, which, together with their large car parks, cover a
total of two acres, directly adjacent to a busy railway station.
Apex Tower consists of 9,015 sq m of offices on 15 upper floors,
four retail units and a public house at ground floor level (1,202
sq m) and a four storey car park at the rear. The building is fully
let and produces GBP1.9 million of income p.a., of which 94% is
from a lease to BAE Systems on the whole of the offices and
expiring in June 2020; the retail tenants include Tesco Stores and
William Hill Organisation. On acquisition, the net initial yield to
CLS was 8.66% and with debt financing the initial return on equity
was 16.1% p.a.
In the medium term, substantial regeneration is going to occur
in the Vauxhall and Nine Elms area, which is the location of the
new United States embassy, due to open in 2016. The Group has
substantial landholdings in Vauxhall, including three potential
development sites. The largest of these is the three acre Cap
Gemini site at Vauxhall Cross, close to Vauxhall mainline,
underground and bus stations. This site is identified by the GLA
and Lambeth Council as being suitable for tall buildings in the
Vauxhall Nine Elms Opportunity Area. In February 2011, following
discussions with a number of key stakeholders, the Group made
public proposals for a major mixed use redevelopment scheme on this
site, including a large new public square for Vauxhall.
These plans aim to provide over 110,000 sq m gross area,
including shops, offices, a hotel, a multi-screen cinema,
restaurants and bars, together with two 43 storey towers of
residential apartments and student housing. In addition the Group
has proposed an aerial Linear Walk to improve the public realm for
pedestrians in the Vauxhall Cross area. The aim is to submit for
planning permission for this large scheme by the end of 2011, and
vacant possession of the site is expected in 2014.
The Group's development sites in Vauxhall are important projects
in an improving area offering strong potential for adding value to
substantial holdings.
FRANCE
The French portfolio was valued at GBP248.7 million, which
represented 27% of the Group's property interests across its four
key regions. The portfolio increased in value by 7.5% in the year
in local currency on a like-for-like basis. There were no disposals
from the French portfolio in the year, which at the year end
comprised 26 properties of 96,500 sq m with 171 tenants. 21% of the
French portfolio was let to government tenants, most tenancies were
of the traditional French 3:6:9 year duration, and the weighted
average lease length at 31 December 2010 was 5.9 years, or 3.1
years to the first break.
In October the Group acquired 23/27 Rue Pierre Vallette, in the
southern Parisian suburb of Malakoff, for GBP13.0 million. The
building is let to Colt Group SA, a FTSE 250 company specialising
in fibre optic networks, on an indexed lease until September 2018
with no breaks. The 10,776 sq m office and industrial property
produces EUR1.1 million p.a., which equates to EUR104 per sq m and
represented an initial yield of 7.38% to CLS. With the debt
finance, the initial return on equity was 15.26% p.a. The building
is close to the Quatuor office property already owned by CLS in
Montrouge.
In the French portfolio there were 16,080 sq m of new lettings
or renewals, and tenants vacated 15,463 sq m; the resulting year
end vacancy rate was 3.6% by rental value. The letting of 1,131 sq
m at Le Debussy, Paris was noteworthy, together with two sizeable
lettings in Forum and Rhone Alpes, Lyon totalling 1,026 sq m, which
meant that at the year end all five Lyon properties were fully
let.
The refurbishment and renovation across the portfolio totalled
GBP2.5 million, of which the major works were at Le Sigma, Paris
involving new heating and cooling systems.
The French investment market recovered well in 2010, with circa
EUR12.1 billion of transactions. The supply of vacant space has
reduced to 7.2% in the Paris region and with very little new
construction under way, rents are stabilising for well managed,
cost-effective offices. We expect to start to see some rental
growth in 2011 in certain locations. The lack of new construction
is a feature common to all our regions and is likely to remain so
until speculative construction becomes less difficult to
finance.
GERMANY
At 31 December 2010, the German portfolio was valued at GBP196.5
million, being 21% of the Group's property interests. These 16
properties saw an increase in value of 4.2% in local currency on a
like-for-like basis, and comprised 138,000 sq m of lettable space
with 83 tenants on a weighted average lease term of 9.6 years, or
9.3 years to the first break. 18% of the contracted rent was from
government tenants.
During the year tenants vacated 15,689 sq m, and lettings or
lease renewals were achieved in 16,889 sq m, resulting in a void
rate of 5.5% by rental value, well below the national vacancy rate
for offices of 10.6%.
During the second half of 2010 we proved the benefit of working
closely with tenants with the signing of two pre-lets. First, the
entire 3,400 sq m of the Phase 4 office development in Landshut,
which is to be completed by the summer of 2012, was let on a 17.5
year, index-linked lease with no breaks to E.ON Service Plus GmbH,
at a starting rent of GBP0.4 million per annum. Second, the Group
agreed to develop a further 1,642 sq m of space at its office and
light industrial property Grafelfing, in Munich, for its existing
single tenant Dr. Honle AG. The new space is to be completed by the
end of 2011, and has been let, together with the existing space, on
an index-linked lease until October 2020 with no breaks, to form an
8,527 sq m complex.
Notable activity in Hamburg included letting 1,513 sq m at
Fangdieckstrasse to a fast growing medical group, and a lease
renewal for 4,153 sq m at Merkurring.
Germany's GDP rebounded strongly in 2010, growing by 3.6% for
the year, led by export growth. Activity in the German commercial
investment property market increased to EUR19.4 billion in 2010, up
85%. The main investors were open-ended and closed-ended real
estate funds which represented 63% of the market.
The office letting market increased in 2010, and there remained
very limited development activity. We would thus expect to see the
void rate fall in 2011 across most of the main German cities.
SWEDEN
Our Swedish property interests comprised two elements which
together represented 12% of the Group's property interests across
its four key regions.
First, the wholly owned 45,500 sq m of offices in Vanersborg,
near Gothenburg, called Vanerparken. At 31 December 2010 this was
valued at GBP56.7 million, a fall of 1.2% on a like-for-like basis.
The local municipality has leased 91% of the space until 2015 and
2019 subject to annual indexation. The vacancy rate is just
2.0%.
The second element of the Group's exposure to Swedish real
estate is through its 29.9% stake in the Stockholm-listed property
company Catena AB, our associate which had an outstanding year of
performance. During 2010 Catena sold a portfolio of properties in
Norway, and since the year end it has sold the majority of its
portfolio in Sweden, with the exception of one large site in
Stockholm retained for its development potential. Planning
permission is being sought for approximately 1,000 residential
apartments and 50,000 sq m of commercial area and a decision is
expected early in 2012.
In the wake of this activity, the Group received dividends of
GBP9.9 million from Catena in the year and the carrying value of
the investment at the year end was GBP29.6 million. However, the
market value of the Group's shareholding based on Catena's year end
share price of SEK 153 was GBP50.6 million, and this uplift of
GBP21.0 million, or 45 pence of NAV per CLS share, is not reflected
in the CLS balance sheet. The return on capital of our investment
in Catena in 2010 was 168%.
OTHER INVESTMENTS
The corporate bond portfolio is part of the Group's long-term
investment strategy in parallel with the ownership of long-term
investment properties. During the year disposals of corporate bonds
generated historical cost gains of GBP10.7 million, which are
explained further below. Corporate bonds at the year end had a
value of GBP78.1 million against an historical cost of GBP73.3
million. There were 30 different bonds held in the portfolio,
spread across four different sectors - insurance, banks,
industrials, and other - and with a coupon on year end value of
8.29%. This portfolio is actively monitored by our in house team
and external advisers.
Bulgarian Land Development Plc, an associate, is an unquoted
property company holding predominantly residential property assets
in Bulgaria. CLS owns 48.3% of the company; during the second half
of 2010 BLD returned capital to the Group of GBP2.0 million,
leaving the remaining investment held at our share of net asset
value of GBP9.4 million. Further returns of capital are expected
upon future asset sales.
RESULTS FOR THE YEAR
HEADLINES Profit after tax of GBP60.1 million (2009: GBP17.4
million) generated basic and diluted earnings per share of 127.1
pence (2009: 36.4 pence); EPRA earnings per share rose to 58.8
pence (2009: 28.0 pence). Gross property assets at 31 December 2010
were GBP876.9 million (2009: GBP813.0 million), basic net assets
per share rose by 19% to 766.7 pence (2009: 643.3 pence) and EPRA
net assets per share were 16% higher at 941.8 pence (2009: 812.5
pence).
Approximately 40% of the Group's business is conducted in the
reporting currency of sterling, around 50% is in euros, and the
balance is in Swedish kronor. Overall, as the euro was 3% to 4%
weaker than in 2009, profits and net assets were comparatively
around 2% lower as a result.
EXCHANGE RATES TO THE GBP
EUR SEK
--------------------- ------- --------
At 31 December 2008 1.0461 11.4474
2009 average rate 1.1233 11.9290
At 31 December 2009 1.1275 11.5689
2010 average rate 1.1663 11.1221
At 31 December 2010 1.1664 10.4828
--------------------- ------- --------
STATEMENT OF COMPREHENSIVE INCOME In summary, profit before tax
in the year ended 31 December 2010 of GBP70.9 million (2009:
GBP18.5 million) comprised a surplus on revaluation of investment
properties of GBP30.1 million (2009: deficit of GBP6.7 million), a
share of profits of associates of GBP7.7 million (2009: GBP2.5
million), gains on disposals of corporate bonds and other
investments of GBP9.3 million (2009: GBP1.9 million), a net
negative movement in the fair value of derivatives of GBP3.1
million (2009: gain of GBP6.3 million), and a profit from the
underlying property portfolio of GBP26.9 million (2009: GBP14.5
million).
Rental income for 2010 was GBP62.1 million, an increase of
GBP1.5 million or 2.5% over 2009. Additions in France and London
contributed GBP2.8 million of new rent, and developments in Germany
a further GBP0.8 million. However, other factors partially
countered these rises: the weakness of the euro reduced rents by
GBP0.6 million, a one-off termination receipt inflated rents in
2009, and a significantly over-rented lease came to
an end in 2009 with the space let at a market level for
2010.
In total, Group revenue less costs of GBP48.8 million was GBP2.8
million higher than in 2009, largely due to the higher rental
income.
The net surplus on revaluation of investment properties in the
year was GBP30.1 million (2009: deficit of GBP6.7 million). GBP17.8
million of this uplift came from the French portfolio with an
underlying gain of 7.5% in local currency, GBP8.2 million was from
Germany's 4.2% like-for-like uplift, and GBP4.8 million reflected a
1.3% rise in London. Our sole direct property investment in Sweden
fell in value by GBP0.7 million, or 1.2%. The surplus on
revaluation of investment properties is excluded in arriving at
EPRA earnings per share.
Early in 2010, in response to a perceived shift in the risk
profile of part of the corporate bond portfolio, we moved quickly
to liquidate around half of our investments, and in doing so
realised a gain of GBP10.7 million, which is the most significant
element of the net gain on sale of corporate bonds and other
investments of GBP9.3 million. The bond proceeds were gradually
reinvested in bonds with a more appropriate risk profile. The bond
portfolio is a cash investment tool intended to earn higher returns
than bank deposits - in 2010 the return on capital employed from
the bond portfolio was 16.3%.
Net finance costs in 2010 were GBP25.0 million (2009: GBP25.5
million). Within this number, interest payable of GBP24.0 million
(2009: GBP28.5 million) was lower than the previous year due to
around half of the Group's debt benefiting from floating interest
rates, which were lower than in 2009. Interest income of GBP6.1
million (2009: GBP6.4 million) was marginally lower than last year
reflecting lower levels of cash and liquid resources. Foreign
exchange variances created a lower loss in 2010 of GBP4.0 million
(2009: GBP9.7 million) due to smaller foreign exchange movements in
the year, and the net effect of all of these factors produced net
finance costs before the effect of marking derivatives to market of
GBP21.9 million (2009: GBP31.8 million). The net loss of marking
derivatives to market at 31 December 2010 was GBP3.1 million (2009:
gain of GBP6.3 million), which is excluded from EPRA earnings per
share.
The main drivers of the profit of associates after tax of GBP7.7
million (2009: GBP2.5 million) were a profit of GBP9.4 million
(2009: GBP3.0 million) from our 29.9% share in Catena AB, and a
loss of GBP1.6 million (2009: GBP0.5 million) from Bulgarian Land
Development Plc. We received GBP9.9 million from Catena in
dividends, and accounted for our share of the uplift in the net
assets which it retained. During the year its share price doubled
on the development prospects of its property portfolio.
Consequently, as mentioned above, the value of our shares in Catena
exceeded its book value by GBP21.0 million, or 45 pence per CLS
share of unbooked net asset value. Bulgarian Land Development
delisted from AIM in 2010 and set itself the goal of liquidating
its assets in an orderly manner. As a first stage, it returned to
us GBP2.0 million by means of a tender offer buy-back which,
together with the loss mentioned above and a foreign exchange
movement, reduced our carrying value of BLD to GBP9.4 million
(2009: GBP13.5 million).
Once again this year the current tax charge was significantly
below the weighted average rate of tax in the countries in which we
do business. Our French operation was the only part of the Group
which paid tax. The Group recognises a deferred tax asset in
respect of brought forward and current year losses in certain
jurisdictions. These losses will be eroded as future taxable
profits are generated. The tax charge also contains a deferred tax
charge of GBP6.4 million (2009: credit of GBP1.0 million), which
largely represents an adjustment required under IFRS for the
potential tax occasioned by valuation movements on investment
properties.
In April 2010, GBP6.0 million was distributed to shareholders by
means of a tender offer buy-back of 1 in 48 shares at 600 pence per
share. In September, a further GBP4.0 million was distributed by
means of a tender offer buy-back of 1 in 74 shares at 625 pence per
share, and a proposed tender offer buy-back of 1 in 46 shares at
700 pence per share to return GBP7.1 million will be put to
shareholders at the annual general meeting in April 2011.
EPRA NET ASSET VALUE In 2010 CLS joined the European Public Real
Estate Association ("EPRA") and we have adopted many of its
reporting metrics this year for the first time. At 31 December
2010, EPRA net assets per share (a diluted measure which highlights
the fair value of the business on a long-term basis) were 941.8
pence (2009: 812.5 pence), a rise of 16%, or 129.3 pence per share.
The main reason for the increase was profit after tax which added
125.1 pence. The two tender offer buy-backs in the year added 6.8
pence per share and fair value movements on corporate bonds and
listed investments added a further 6.7 pence; against this,
exchange rate variances reduced adjusted net assets per share by
5.9 pence, and the issue of shares from treasury shares and the
granting of share options reduced EPRA NAV by 3.4 pence.
At 31 December 2010, EPRA triple net assets per share (a diluted
measure which discloses net assets per share on a true fair value
basis) were 707.2 pence (2009: 591.0 pence), a rise of 20% or 116.2
pence per share.
CASH FLOW, NET DEBT AND GEARING At 31 December 2010, the Group's
cash balances of GBP48.3 million were GBP22.0 million lower than
twelve months previously, mainly due to property acquisitions and
other capital expenditure of GBP42.9 million and distributions to
shareholders of GBP10.1 million exceeding the cash inflow from
operating activities of GBP31.3 million.
Gross debt of GBP589.3 million was at a similar level to the
GBP592.8 million of twelve months earlier. In practice, GBP100.6
million of loans were repaid or refinanced in the ordinary course
of business, and GBP102.7 million of new loans drawn. GBP21.5
million was raised to finance the acquisitions of Apex Tower in New
Malden and Rue Pierre Vallette in Paris, GBP0.9 million to finance
developments in Germany, and GBP80.3 million was drawn under
refinancing. Financing activities in the year attracted costs of
GBP1.1 million in aggregate. In addition, GBP1.0 million of
interest was added to the principal outstanding on a zero-coupon
bond, GBP1.0 million of loan issue costs were amortised, and the
effect of translating euro-denominated loans into sterling at an
exchange rate 3.3% different from twelve months earlier reduced the
sterling value of overseas loans by GBP6.5 million.
Adjusted net gearing was 123.3% at 31 December 2010 and the
weighted average loan-to-value on borrowings against properties was
63.5%. Adjusted solidity was 41.2% (2009: 38.4%).
The weighted average cost of debt at 31 December 2010 of 4.3%,
whilst still one of the lowest in the property sector, was
marginally higher than the 4.0% twelve months earlier due mainly to
the increase in floating rates between the two dates. In 2010, with
a rise in net rental income and higher profits from associates,
together with lower borrowing costs, recurring interest cover rose
to a comfortable 3.2 times (2009: 2.1 times).
FINANCING STRATEGY The Group's strategy is to hold its
investments predominantly in special-purpose vehicles financed
primarily by non-recourse bank debt in the currency used to
purchase the asset. In this way credit and liquidity risk can most
easily be managed, around 70% of the Group's exposure to foreign
currency is naturally hedged, and the most efficient use can be
made of the Group's assets. Bank debt ordinarily attracts covenants
on loan-to-value and on interest and debt service cover. None of
the Group's debt was in breach of covenants at 31 December 2010.
The Group had 54 loans across the portfolio from 20 banks. None of
the loans at 31 December 2010 had been securitised by any lender,
and the Group had no exposure to the CMBS market.
To the extent that Group borrowings are not at fixed rates, the
Group's exposure to interest rate risk is mitigated by the use of
financial derivatives, particularly interest rate swaps and caps.
At 31 December 2010, the weighted average tenure for derivatives
against floating rate euro loans was 1.0 year. This relatively
short unexpired term reflected the expiry of a number of
derivatives in January and April 2011. Consequently, in late 2010
the Group entered into GBP132.2 million of interest rate caps with
forward start dates to supersede the expiring swaps and caps. The
impact of these transactions was to produce as at 30 April 2011 a
pro forma weighted average tenure for euro derivatives of 4.1
years, with an average cap rate of 3.2%. In total in 2010, in
accordance with the Group's strategy to mitigate its interest rate
risk at a time of rising rates, we entered into derivatives with a
nominal value of GBP205.6 million.
At 31 December 2010, the Group had fixed rate borrowings of
GBP273.5 million, and floating rate borrowings of GBP318.8 million;
of the latter, GBP225.7 million were subject to interest rate caps.
The effect of the interest rate caps with forward start dates will
be that at 30 April 2011, GBP244.7 million of our debt will be
covered by interest rate caps, of which GBP181.7 million will be
capped at 2.5% for over four years.
SHARE CAPITAL At 1 January 2010, there were 53,024,256 shares in
issue, of which 5,000,000 were held as treasury shares. On 11 March
2010, 207,000 treasury shares, and 300,000 share options, were
issued. On 14 April, under the tender offer buy-back, 1,004,817
shares were cancelled in exchange for GBP6.0 million distributed to
shareholders, and on 14 September, under the tender offer buy-back,
638,195 shares were cancelled in exchange for GBP4.0 million
distributed to shareholders. There were no other changes to share
capital in the year, and at 31 December 2010, 46,588,244 shares
were listed on the London Stock Exchange, and 4,793,000 shares
remained in Treasury.
The Directors interned to put to the Annual General Meeting of
the Company in April 2011 a proposal to issue a tender offer to
buy-back 1 in 46 shares at 700 pence per share. If approved by
shareholders this could lead to the purchase and cancellation of
1,012,787 shares, and a distribution to shareholders of GBP7.1
million.
TOTAL RETURNS TO SHAREHOLDERS
In addition to the distributions associated with the tender
offer buy-backs, shareholders benefited from a rise in the share
price in the year from 498.8 pence on 31 December 2009 to 534.5
pence at 31 December 2010. Accordingly, the total shareholder
return in 2010 was 7.7%. In the three years to 31 December 2010,
our total shareholder return of 52% placed us in the top three
performers in the listed property sector, and in the ten years
ended on the same date our return of 247%, did the same.
KEY PERFORMANCE INDICATORS
-- Total Shareholder Return
Aim - to provide a TSR of over 12% per annum over the medium
term
Achievement - 2008-2010: 52%, or 14.9% p.a.
- 2001-2010: 247%, or 9.5% p.a.
-- Effective management of balance sheet
Aim - to sell assets with limited growth potential and invest in
high yielding alternatives
Achievement - 2006 to 2010: GBP746 million of property sales
- 2010: GBP36.4 million of acquisitions yielding an average
initial return on equity of 15.8%
-- Occupancy rate
Aim - to maintain an occupancy level of over 95%
Achievement - 2010: 95.7%
- 2009: 95.5%
-- Administration cost ratio
Aim - to maintain administration costs below 15% of net rental
income
Achievement - 2010: 15.6%
- 2009: 14.9%
CORPORATE BOND PORTFOLIO
At 31 December 2010
Building
Sector Banking Insurance Societies Financials Other Total
--------- ------------ ----------- ----------- ----------- ----------------- ---------
Value GBP25.8m GBP23.2m GBP8.1m GBP5.9m GBP15.1m GBP78.1m
Coupon
yield 10.0% 7.6% 8.0% 7.0% 7.1% 8.3%
--------- ------------ ----------- ----------- ----------- ----------------- ---------
Issuers Lloyds Legal & Nationwide Aberdeen TUI
General AM
RBS Prudential Yorkshire Henderson Corral Finans
Commerzbank AXA Man Group FS Funding (ISS)
Dresdner Scottish Euroclear HeidelbergCement
Widows
BPCE Swiss Life PA Resources
KBC Old Mutual Renewable Energy
Corp
SNS Bank Storebrand
Swedbank
--------- ------------ ----------- ----------- ----------- ----------------- ---------
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
Underperformance of investment knowledge of core markets and
portfolio impacting on financial experience gained through many market
performance due to: -- Cyclical cycles. This experience is
downturn in property market -- supplemented by external advisors and
Inappropriate buy/sell/hold financial models used in capital
decisions allocation decision-making.
-------------------------------------- --------------------------------------
-- Changes in supply of space and/or The Group's property portfolio is
tenant demand affecting rents and diversified across four countries.
vacancies The weighted-average unexpired lease
term is 8.4 years and the Group's
largest tenant concentration is with
the Government sector (40.8 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,
Underperformance of corporate bond the Treasury department undertakes
portfolio 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 Unavailability of The Group has a dedicated Treasury
financing at acceptable prices department and 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 monitored by
the Treasury department and regularly
reported to the Board.
-------------------------------------- --------------------------------------
Foreign currency exposure Property investments are partially
funded 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 risk that there The Group monitors legislative
will be increases in tax rates or proposals and consults external
changes to the basis of taxation advisors to understand and mitigate
the effects of any such change.
-------------------------------------- --------------------------------------
Going concern The risk that given the See below.
economic uncertainties the Group will
not have adequate working capital to
remain a going concern for the next
12 months
-------------------------------------- --------------------------------------
PROPERTY PORTFOLIO
At 31 December 2010, the Group owned 71 properties containing
381 tenants in a total lettable area of 407,742 sq m. Contracted
rent across the Group was GBP65.0 million, which contained leases
with a reversionary element of GBP2.0 million, and the ERV of the
vacant space was GBP3.1 million. The contracted rent also contained
leases which were over-rented by GBP6.2 million, of which virtually
all was on index-linked rents with over five years unexpired.
68% of the Group's rent roll extended beyond five years and 27%
had over 10 years unexpired. The weighted average lease length
across the Group was 8.4 years, or 7.3 years to the first break.
41% of the rent roll was let to government tenants, and a further
28% to major corporations.
RENTAL DATA
Gross Net
rental rental
income income ERV Contracted
for for Contracted at rent Vacancy
the the Lettable rent at year subject to rate at
year year space year end end indexation year
GBPm GBPm sq m GBPm GBPm GBPm end %
--------- ------- ------- --------- ----------- ----- ----------- --------
London 24.5 23.7 127,759 26.0 25.5 4.0 4.7%
France 17.8 17.6 96,479 18.7 18.3 18.7 3.6%
Germany 14.3 14.0 137,971 14.1 14.5 14.1 5.5%
Sweden 5.5 4.4 45,533 6.2 5.5 6.2 2.0%
--------- ------- ------- --------- ----------- ----- -----------
62.1 59.7 407,742 65.0 63.8 43.0 4.3%
--------- ------- ------- --------- ----------- ----- -----------
Note: a further GBP3.6 million of London contracted rent will be
subject to annual indexation from 2015.
VALUATION DATA
EPRA
topped
Market Net up net
value of initial initial True
property Valuation movement yield(1) yield(2) Reversion Over-rented equivalent
GBPm in the year % % % % yield %
--------- --------- --------- --------- ---------- ------------ -----------
Foreign
Underlying exchange
GBPm GBPm
----------- ----------
London 375.0 4.8 - 6.8% 6.4% 3.9% 10.8% 6.8%
France 248.7 17.8 (7.4) 7.4% 7.0% 2.0% 8.5% 7.0%
Germany 196.5 8.2 (6.4) 7.1% 6.7% 3.0% 5.7% 6.0%
Sweden 56.7 (0.7) 5.4 8.6% 8.1% 3.0% 16.2% 8.7%
--------- --------- ----------- ----------
876.9 30.1 (8.4) 7.2% 6.8% 3.1% 9.6%
--------- --------- ----------- ----------
(1) Based on contracted rent and before adding purchasers' costs
to investment property values; if based on passing rent, net
initial yield would be 7.1%
(2) Based on contracted rent and after adding purchasers' costs
to investment property values; if based on passing rent, EPRA net
initial yield would be 6.7%
LEASE DATA
Average lease Passing rent of leases
length expiring in: ERV of leases expiring in:
---------------- ----------------------------- -----------------------------
Year Year
To To Year Year 3 to After Year Year 3 to After
break expiry 1 2 5 year 5 1 2 5 year 5
years years GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------- ------ -------- ----- ----- ----- -------- ----- ----- ----- --------
London 9.6 10.1 0.7 0.7 4.4 20.2 0.7 0.7 4.7 18.0
France 3.1 5.9 1.8 0.6 3.5 12.8 1.4 0.6 3.3 12.3
Germany 9.3 9.6 0.6 0.8 3.1 9.6 0.6 0.8 3.1 9.3
Sweden 5.6 5.6 0.1 0.1 4.4 1.6 0.1 0.1 3.6 1.7
--------- ------ -------- ----- ----- ----- -------- ----- ----- ----- --------
7.3 8.4 3.2 2.2 15.4 44.2 2.8 2.2 14.7 41.3
--------- ------ -------- ----- ----- ----- -------- ----- ----- ----- --------
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The responsibility statement below has been prepared in
connection with the Company's full annual report for the year
ending 31 December 2010. Certain parts thereof are not included
within this announcement.
We confirm to the best of our knowledge that:
-- the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view
of the assets, liabilities, financial position and profit of the
Company and the undertakings included in the consolidation as a
whole; and
-- the Business Review, which is incorporated into the
Directors' Report, includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties they face.
This statement of responsibilities was approved by the Board on
7 March 2011.
By order of the Board
David Fuller BA FCIS
Company Secretary
7 March 2011
GROUP STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2010
2010 2009
Notes GBPm GBPm
---------------------------------------------------- ------ ------- -------
Continuing operations
Group revenue 4 79.1 76.3
Costs 4 (30.3) (30.3)
---------------------------------------------------- ------ ------- -------
48.8 46.0
Net movements on revaluation of investment
properties 11 30.1 (6.7)
Net gain on sale of corporate bonds and other
investments 9.3 1.9
Profit on sale of investment properties - 0.3
---------------------------------------------------- ------ ------- -------
Operating profit 88.2 41.5
Net finance costs 7 (25.0) (25.5)
Share of profit of associates after tax 15 7.7 2.5
---------------------------------------------------- ------ ------- -------
Profit before tax 70.9 18.5
Taxation 8 (10.8) (1.1)
---------------------------------------------------- ------ ------- -------
Profit for the year 5 60.1 17.4
Other comprehensive income
Foreign exchange differences 1.1 (9.5)
Fair value gains on corporate bonds and other
investments 16 3.1 12.5
Fair value (gains)/losses taken to the income
statement on disposal of corporate bonds and
other investments 16 (8.5) 1.0
Deferred tax on net fair value gains on
corporate bonds and other investments 21 1.8 (3.2)
Share of other comprehensive income of
associates 15 (0.4) 0.4
---------------------------------------------------- ------ ------- -------
Total comprehensive income for the year 57.2 18.6
---------------------------------------------------- ------ ------- -------
Profit attributable to:
Owners of the Company 60.1 17.5
Non-controlling interests - (0.1)
---------------------------------------------------- ------ ------- -------
Profit for the year 60.1 17.4
---------------------------------------------------- ------ ------- -------
Total comprehensive income attributable to:
Owners of the Company 57.2 18.7
Non-controlling interests - (0.1)
---------------------------------------------------- ------ ------- -------
Total comprehensive income for the year 57.2 18.6
---------------------------------------------------- ------ ------- -------
Earnings per share from continuing operations
attributable to the owners of the Company during
the year (expressed in pence per share)
Basic 9 127.1 36.4
Diluted 9 127.1 36.4
---------------------------------------------------- ------ ------- -------
GROUP BALANCE SHEET
At 31 December 2010
2010 2009
Notes GBPm GBPm
------------------------------------------------- ------ -------- --------
Non-current assets
Investment properties 11 876.9 813.0
Property, plant and equipment 12 2.6 2.5
Intangible assets 13 1.1 1.1
Investments in associates 15 40.6 40.9
Other investments 16 81.6 73.9
Derivative financial instruments 17 4.6 0.1
Deferred tax 21 11.2 12.7
------------------------------------------------- ------ -------- --------
1,018.6 944.2
------------------------------------------------- ------ -------- --------
Current assets
Trade and other receivables 18 11.5 10.4
Cash and cash equivalents 19 48.3 70.3
------------------------------------------------- ------ -------- --------
59.8 80.7
------------------------------------------------- ------ -------- --------
Total assets 1,078.4 1,024.9
------------------------------------------------- ------ -------- --------
Current liabilities
Trade and other payables 20 (31.8) (30.1)
Current tax (5.3) (5.0)
Derivative financial instruments 17 (1.0) (15.7)
Borrowings, including finance leases 22 (85.0) (113.5)
------------------------------------------------- ------ -------- --------
(123.1) (164.3)
------------------------------------------------- ------ -------- --------
Non-current liabilities
Deferred tax 21 (74.5) (72.3)
Borrowings, including finance leases 22 (504.3) (479.3)
Derivative financial instruments 17 (19.3) -
------------------------------------------------- ------ -------- --------
(598.1) (551.6)
------------------------------------------------- ------ -------- --------
Total liabilities (721.2) (715.9)
------------------------------------------------- ------ -------- --------
Net assets 357.2 309.0
------------------------------------------------- ------ -------- --------
EQUITY
Capital and reserves attributable to the owners
of the Company
Share capital 24 12.9 13.3
Share premium account 26 71.5 70.5
Other reserves 27 102.5 105.0
Retained earnings 171.6 121.5
------------------------------------------------- ------ -------- --------
358.5 310.3
Non-controlling interests (1.3) (1.3)
------------------------------------------------- ------ -------- --------
Total equity 357.2 309.0
------------------------------------------------- ------ -------- --------
GROUP STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2010
Non-controlling
interests Total
Notes Attributable to the owners of the Company GBPm GBPm
--------------- ------ ------------------------------------------------- ---------------- -------
Share Share Other Retained
capital premium reserves earnings Total
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
2010:
Total
comprehensive
income for
the year - - (2.9) 60.1 57.2 - 57.2
Issue of
treasury
shares - 1.0 - - 1.0 - 1.0
Purchase of
own
shares 24 (0.4) - 0.4 (10.0) (10.0) - (10.0)
Expenses
thereof - - - (0.1) (0.1) - (0.1)
Employee
share
option
schemes - - - 0.1 0.1 - 0.1
--------------- ------ -------- -------- --------- --------- ------- ---------------- -------
Total changes
arising in
2010 (0.4) 1.0 (2.5) 50.1 48.2 - 48.2
--------------- ------ -------- -------- --------- --------- ------- ---------------- -------
At 31 December
2010 12.9 71.5 102.5 171.6 358.5 (1.3) 357.2
--------------- ------ -------- -------- --------- --------- ------- ---------------- -------
Non-controlling
interests Total
Notes Attributable to the owners of the Company GBPm GBPm
--------------- ------ ------------------------------------------------- ---------------- -------
Share Share Other Retained
capital premium reserves earnings Total
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
2009:
Total
comprehensive
income/
(loss)
for the year - - 1.2 17.5 18.7 (0.1) 18.6
Purchase of
own shares 24 (3.4) - 3.4 (48.0) (48.0) - (48.0)
Expenses
thereof - - - (0.2) (0.2) - (0.2)
--------------- ------ -------- -------- --------- --------- ------- ---------------- -------
Total changes
arising in
2009 (3.4) - 4.6 (30.7) (29.5) (0.1) (29.6)
--------------- ------ -------- -------- --------- --------- ------- ---------------- -------
At 31 December
2009 13.3 70.5 105.0 121.5 310.3 (1.3) 309.0
--------------- ------ -------- -------- --------- --------- ------- ---------------- -------
GROUP STATEMENT OF CASH FLOWS
for the year ended 31 December 2010
2010 2009
Notes GBPm GBPm
-------------------------------------------------- ------ -------- --------
Cash flows from operating activities
Cash generated from operations 28 51.2 45.7
Interest received 5.2 4.8
Interest paid (21.7) (30.1)
Income tax paid (3.4) (3.0)
-------------------------------------------------- ------ -------- --------
Net cash inflow from operating activities 31.3 17.4
-------------------------------------------------- ------ -------- --------
Cash flows from investing activities
Purchase of investment property (36.4) (29.2)
Capital expenditure on investment property (6.5) (22.8)
Proceeds from sale of investment property 0.1 2.2
Purchase of corporate bonds (51.7) (70.8)
Proceeds from sale of corporate bonds 47.7 24.9
Purchase of equity investments (1.0) -
Proceeds from sale of equity investments 0.8 0.7
Purchase of interests in associate (1.9) (1.8)
Distributions received from associate
undertakings 11.9 1.5
Costs on foreign currency transactions (1.2) (4.2)
Amounts expended in relation to corporate
disposals in prior periods (0.7) (1.0)
Purchases of property, plant and equipment (0.3) (0.1)
-------------------------------------------------- ------ -------- --------
Net cash outflow from investing activities (39.2) (100.6)
-------------------------------------------------- ------ -------- --------
Cash flows from financing activities
Purchase of own shares (10.1) (48.2)
New loans 102.7 69.7
Issue costs of new loans (1.1) (0.3)
Repayment of loans (100.6) (57.4)
Purchase of financial instruments (3.9) (0.1)
Issue of ordinary shares from Treasury shares 1.0 -
-------------------------------------------------- ------ -------- --------
Net cash outflow from financing activities (12.0) (36.3)
-------------------------------------------------- ------ -------- --------
Net decrease in cash and cash equivalents (19.9) (119.5)
Foreign exchange loss (2.1) (5.5)
Cash and cash equivalents at the beginning of the
year 70.3 195.3
-------------------------------------------------- ------ -------- --------
Cash and cash equivalents at the end of the year 19 48.3 70.3
-------------------------------------------------- ------ -------- --------
NOTES TO THE GROUP FINANCIAL STATEMENTS
31 December 2010
1 GENERAL INFORMATION
CLS Holdings plc (the "Company") and its subsidiaries (together
"CLS Holdings" or the "Group") is an investment property group
which is principally involved in the investment, management and
development of commercial properties, and in other investments. The
Group's principal operations are carried out in the United Kingdom,
France, Germany and Sweden.
The Company is registered in the UK, registration number
2714781, of registered address: 86 Bondway, London, SW8 1SF. The
Company is listed on the London Stock Exchange.
The annual financial report (produced in accordance with the
Disclosure and Transparency Rules) can be found on the Company's
website www.clsholdings.com. The 2010 Annual Report and Accounts
will be posted to shareholders on 18 March 2011 and will also be
available on the Company's website.
The financial information contained in this announcement has
been prepared on the basis of the accounting policies set out in
the statutory accounts for the year ended 31 December 2010. Whilst
the financial information included in this announcement has been
computed in accordance with International Financial Reporting
Standards (IFRS), as adopted by the European Union, this
announcement does not itself contain sufficient information to
comply with IFRS. The financial information does not constitute the
Company's statutory accounts for the years ended 31 December 2010
or 2009, but is derived from those accounts. Those accounts give a
true and fair view of the assets, liabilities, financial position
and profit and loss of the Company and the undertakings included in
the consolidation taken as a whole. Statutory accounts for 2009
have been delivered to the Registrar of Companies and those for
2010 will be delivered following the Company's Annual General
Meeting. The auditors have reported on those accounts and the
auditors' reports on both the 2009 and 2010 accounts were
unqualified; did not draw attention to any matters by way of
emphasis; and did not contain statements under s498(2) or (3)
Companies Act 2006 or preceding legislation.
GOING CONCERN
The current economic conditions have created a number of
uncertainties as set out above. The Group's business activities,
together with the factors likely to affect its future development
and performance are set out in the Business Review. The financial
position of the Group, its liquidity position and borrowing
facilities are described in the Business Review and in the
financial statements.
The Directors regularly stress-test the business model to ensure
that the Group has adequate working capital and have reviewed the
current and projected financial positions of the Group, 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 Company and the
Group have adequate resources to continue in operational existence
for the foreseeable future and, therefore, they continue to adopt
the going concern basis in preparing the annual report and
accounts.
2 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 - London
France
Germany
Sweden
Other Investments
There are no transactions between the operating segments.
The Group's results for the year ended 31 December 2010 by
operating segment were as follows:
Other
Investments Total
Investment property GBPm GBPm
------------------ ----------------------------------- ------------ -------
London France Germany Sweden
GBPm GBPm GBPm GBPm
------- ------- -------- -------
Rental income 24.5 17.8 14.3 5.5 - 62.1
Service charge
income 4.2 4.9 2.7 0.3 - 12.1
Other
property-related
income 0.5 0.1 - - - 0.6
Income from
non-property
activities - - - - 4.3 4.3
------------------ ------- ------- -------- ------- ------------ -------
Group revenue 29.2 22.8 17.0 5.8 4.3 79.1
------------------ ------- ------- -------- ------- ------------ -------
Service charges
and similar
expenses (5.5) (5.2) (3.0) (1.4) - (15.1)
Administration
expenses (2.9) (1.5) (1.0) (0.3) (3.9) (9.6)
Other expenses (0.5) (0.2) (1.3) - (0.2) (2.2)
------------------ ------- ------- -------- ------- ------------ -------
Costs (8.9) (6.9) (5.3) (1.7) (4.1) (26.9)
------------------ ------- ------- -------- ------- ------------ -------
Group revenue
less costs 20.3 15.9 11.7 4.1 0.2 52.2
Net movements
on revaluation
of investment
properties 4.8 17.8 8.2 (0.7) - 30.1
Net gain on sale
of corporate
bonds and other
investments - - - - 9.3 9.3
Profit/(loss)
on sale of
subsidiaries - (1.6) - 1.6 - -
------------------ ------- ------- -------- ------- ------------ -------
Segment operating
profit 25.1 32.1 19.9 5.0 9.5 91.6
Net finance
costs (16.2) (2.9) (6.9) (0.4) 1.4 (25.0)
Share of profit
of associates
after tax - - - - 7.7 7.7
------------------ ------- ------- -------- ------- ------------ -------
Segment profit
before tax 8.9 29.2 13.0 4.6 18.6 74.3
Taxation 0.1 (9.6) (0.5) (0.4) (0.4) (10.8)
------------------ ------- ------- -------- ------- ------------ -------
Segment profit
after tax 9.0 19.6 12.5 4.2 18.2 63.5
------------------ ------- ------- -------- ------- ------------
Central
administration
costs (3.4)
------------------ ------- ------- -------- ------- ------------ -------
Profit for
the year 60.1
------------------ ------- ------- -------- ------- ------------ -------
The Group's results for the year ended 31 December 2009 by
operating segment were as follows:
Other
Investments Total
Investment property GBPm GBPm
------------------ ----------------------------------- ------------ -------
London France Germany Sweden
GBPm GBPm GBPm GBPm
------- ------- -------- -------
Rental income 25.0 15.9 14.8 4.9 - 60.6
Service charge
income 4.7 4.2 1.7 0.3 - 10.9
Other
property-related
income 0.4 0.3 0.3 - - 1.0
Income from
non-property
activities - - - - 3.8 3.8
------------------ ------- ------- -------- ------- ------------ -------
Group revenue 30.1 20.4 16.8 5.2 3.8 76.3
------------------ ------- ------- -------- ------- ------------ -------
Service charges
and similar
expenses (6.3) (4.5) (2.8) (1.2) - (14.8)
Administration
expenses (2.6) (1.5) (1.1) (0.5) (3.7) (9.4)
Other expenses (1.0) (0.7) (1.2) (0.2) (0.2) (3.3)
------------------ ------- ------- -------- ------- ------------ -------
Costs (9.9) (6.7) (5.1) (1.9) (3.9) (27.5)
------------------ ------- ------- -------- ------- ------------ -------
Group revenue
less costs 20.2 13.7 11.7 3.3 (0.1) 48.8
Net movements
on revaluation
of investment
properties 24.1 (15.9) (13.5) (1.4) - (6.7)
Gain on sale
of corporate
bonds and other
investments - - - - 1.9 1.9
Profit on sale
of investment
properties 0.3 - - - - 0.3
------------------ ------- ------- -------- ------- ------------ -------
Segment operating
profit/(loss) 44.6 (2.2) (1.8) 1.9 1.8 44.3
Net finance
costs (6.1) (7.0) (7.4) (1.6) (3.4) (25.5)
Share of profit
of associates
after tax - - - - 2.5 2.5
------------------ ------- ------- -------- ------- ------------ -------
Segment
profit/(loss)
before tax 38.5 (9.2) (9.2) 0.3 0.9 21.3
Taxation (4.0) 1.6 0.2 0.6 0.5 (1.1)
------------------ ------- ------- -------- ------- ------------ -------
Segment
profit/(loss)
after tax 34.5 (7.6) (9.0) 0.9 1.4 20.2
------------------ ------- ------- -------- ------- ------------
Central
administration
costs (2.8)
------------------ ------- ------- -------- ------- ------------ -------
Profit for
the year 17.4
------------------ ------- ------- -------- ------- ------------ -------
Other segment information:
Assets Liabilities Capital expenditure
------------------ ------------------ -------------- ----------------------
2010 2009 2010 2009 2010 2009
GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- -------- ------ ------ ---------- ----------
Investment
Property
London 391.2 370.2 295.4 282.0 23.7 1.4
France 256.7 246.1 190.6 187.6 15.5 31.5
Germany 203.2 200.0 154.5 158.8 2.7 17.7
Sweden 61.6 58.6 45.0 30.7 0.6 2.1
Other investments 165.7 150.0 35.7 56.8 - -
------------------ -------- -------- ------ ------ ---------- ----------
1,078.4 1,024.9 721.2 715.9 42.5 52.7
------------------ -------- -------- ------ ------ ---------- ----------
Included within the assets of other investments are investments
in associates of GBP40.6 million (2009: GBP40.9 million).
3 NET FINANCE COSTS
2010 2009
GBPm GBPm
------------------------------------------------------------ ------ ------
Interest expense
Bank loans 18.3 22.7
Debenture loans 4.7 4.7
Other interest - 0.3
Amortisation of issue costs of loans 1.0 0.8
Foreign exchange variances 4.0 9.7
Movement in fair value of derivative financial instruments
Interest rate swaps: transactions not qualifying as
hedges 3.7 (6.7)
Interest rate caps, collars and floors: transactions
not qualifying as hedges (0.6) 0.4
Interest income (6.1) (6.4)
------------------------------------------------------------ ------ ------
25.0 25.5
------------------------------------------------------------ ------ ------
4 TAXATION
2010 2009
GBPm GBPm
-------------- ------ ------
Current tax 4.4 2.1
Deferred tax 6.4 (1.0)
-------------- ------ ------
10.8 1.1
-------------- ------ ------
A deferred tax credit of GBP1.8 million (2009: charge of GBP3.2
million) was recognised directly in equity (note 17).
The charge for the year differs from the theoretical amount
which would arise using the weighted average tax rate applicable to
profits of Group companies as follows:
2010 2009
GBPm GBPm
-------------------------------------------------------------- ------ ------
Profit before tax 70.9 18.5
-------------------------------------------------------------- ------ ------
Tax calculated at domestic tax rates applicable to profits
in the respective countries 20.1 4.9
Expenses not deductible for tax purposes 1.5 0.5
Tax effect of unrecognised (profits)/losses in associates
and joint ventures (2.3) (0.7)
Adjustment in respect of indexation allowance on UK
properties (2.1) (3.2)
Other deferred tax adjustments 0.4 (0.5)
Deferred tax assets not recognised (1.9) 2.9
Adjustment in respect of prior periods (4.9) (2.8)
-------------------------------------------------------------- ------ ------
Tax expense for the year 10.8 1.1
-------------------------------------------------------------- ------ ------
The weighted average applicable tax rate of 28.4 per cent (2009:
26.3 per cent) was derived by applying to their relevant profits
and losses the rates in the jurisdictions in which the Group
operated.
5 EARNINGS PER SHARE
2010 2009
Earnings GBPm GBPm
----------------------------------------------------------- ------- ------
Profit for the period attributable to the owners of the
Company 60.1 17.5
Revaluation (gains)/losses on investment properties (30.1) 6.7
Profit on sale of investment properties - (0.3)
Negative goodwill on share acquisitions (0.1) (2.8)
Change in fair value of derivative financial instruments 3.1 (6.3)
Net gain on sale of corporate bonds and other investments (9.3) (1.9)
Deferred tax relating to the above adjustments 4.1 0.6
----------------------------------------------------------- ------- ------
EPRA Earnings 27.8 13.5
----------------------------------------------------------- ------- ------
2010 2009
Weighted average number of ordinary shares Number Number
---------------------------------------------------- ----------- -----------
Weighted average number of ordinary shares 47,280,274 48,249,810
Dilutive share options 13,339 -
---------------------------------------------------- ----------- -----------
Diluted weighted average number of ordinary shares 47,293,613 48,249,810
---------------------------------------------------- ----------- -----------
2010 2009
Earnings per Share Pence Pence
-------------------- ------- -------
Basic 127.1 36.4
Diluted 127.1 36.4
EPRA 58.8 28.0
-------------------- ------- -------
300,000 share options were granted on 11 March 2010 at an
exercise price of 470 pence.
6 NET ASSETS PER SHARE
2010 2009
Net Assets GBPm GBPm
------------------------------------------------------- ------- -------
Basic net assets 357.2 309.0
Dilutive impact of share options 1.4 -
------------------------------------------------------- ------- -------
Diluted net assets 358.6 309.0
Adjustment to increase fixed rate debt to fair value (25.9) (24.1)
Goodwill as a result of deferred tax (1.1) (1.1)
------------------------------------------------------- ------- -------
EPRA Triple Net Assets 331.6 283.8
Deferred tax on property and other non-current assets 68.4 66.7
Fair value of derivative financial instruments 15.7 15.6
Adjustment to decrease fixed rate debt to book value 25.9 24.1
------------------------------------------------------- ------- -------
EPRA Net Assets 441.6 390.2
------------------------------------------------------- ------- -------
2010 2009
Number Number
-------------------------------------------- ----------- -----------
Number of ordinary shares in circulation 46,588,244 48,024,256
Dilutive share options 300,000 -
-------------------------------------------- ----------- -----------
Diluted number of ordinary shares in issue 46,888,244 48,024,256
-------------------------------------------- ----------- -----------
2010 2009
Net Assets Per Share Pence Pence
---------------------- ------- -------
Basic 766.7 643.3
Diluted 764.8 643.3
EPRA 941.8 812.5
EPRA Triple Net 707.2 591.0
---------------------- ------- -------
7 INVESTMENT PROPERTIES
London France Germany Sweden Total
GBPm GBPm GBPm GBPm GBPm
--------------------- ------- ------- -------- ------- ------
At 1 January
2010 346.8 222.8 192.1 51.3 813.0
Acquisitions 23.4 13.0 - - 36.4
Disposals (0.1) - - - (0.1)
Capital expenditure 0.1 2.5 2.6 0.6 5.8
Net movement
on revaluation
of investment
properties 4.8 17.8 8.2 (0.7) 30.1
Rent-free period
debtor adjustments - - - 0.1 0.1
Exchange rate
variances - (7.4) (6.4) 5.4 (8.4)
--------------------- ------- ------- -------- ------- ------
At 31 December
2010 375.0 248.7 196.5 56.7 876.9
--------------------- ------- ------- -------- ------- ------
London France Germany Sweden Total
GBPm GBPm GBPm GBPm GBPm
---------------------- ------- ------- -------- ------- -------
At 1 January
2009 323.2 223.4 201.4 50.8 798.8
Acquisitions - 29.2 - - 29.2
Capital expenditure 1.3 2.3 17.7 2.1 23.4
Disposals - property
sales (1.9) - - - (1.9)
Net movement
on revaluation
of investment
properties 24.0 (15.9) (13.5) (1.3) (6.7)
Rent-free period
debtor adjustments 0.2 - 1.0 0.3 1.5
Exchange rate
variances - (16.2) (14.5) (0.6) (31.3)
---------------------- ------- ------- -------- ------- -------
At 31 December
2009 346.8 222.8 192.1 51.3 813.0
---------------------- ------- ------- -------- ------- -------
The investment properties (and the owner-occupied property) were
revalued at 31 December 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:
London: Lambert Smith Hampton
France: Jones Lang LaSalle (2009: DTZ Debenham Tie Leung)
Germany: Colliers International (2009: DTZ Debenham Tie
Leung)
Sweden: CB Richard Ellis
Investment properties included leasehold properties with a
carrying amount of GBP19.6 million (2009: GBP18.1 million).
Where the Group leases out its investment property under
operating leases the duration is typically three years or more. No
contingent rents have been recognised in the current or comparative
years.
Substantially all investment properties (and the owner-occupied
property) are secured against debt.
During the year the Group purchased a property in London for
GBP1.8 million. Under the terms of the purchase agreement, should
the site be developed additional consideration may become due to
the vendor. The maximum liability in respect of this is estimated
to be GBP0.5 million. At the balance sheet date the fair value of
the liability was GBPnil.
8 PROPERTY, PLANT AND EQUIPMENT
2010 2009
GBPm GBPm
----------------------------------------- ------ ------
Cost or valuation
At 1 January 6.8 6.6
Additions 0.3 0.1
Disposals (1.8) -
Revaluation increase 0.1 0.1
----------------------------------------- ------ ------
At 31 December 5.4 6.8
----------------------------------------- ------ ------
Accumulated depreciation and impairment
At 1 January (4.3) (3.8)
Depreciation charge (0.3) (0.5)
Disposals 1.8 -
----------------------------------------- ------ ------
At 31 December (2.8) (4.3)
----------------------------------------- ------ ------
Net book value
At 31 December 2.6 2.5
----------------------------------------- ------ ------
An owner-occupied property was revalued at 31 December 2010
based on the external valuation performed by Lambert Smith
Hampton.
9 INTANGIBLE ASSETS
Other
Goodwill intangibles Total
GBPm GBPm GBPm
-------------------------------------- --------- ------------- -------
Cost
At 1 January 2010 and at 31 December
2010 18.6 7.2 25.8
Amortisation
At 1 January 2010 and at 31 December
2010 (17.5) (7.2) (24.7)
-------------------------------------- --------- ------------- -------
Net book value
At 31 December 2010 1.1 - 1.1
-------------------------------------- --------- ------------- -------
Other
Goodwill intangibles Total
GBPm GBPm GBPm
-------------------------------------- --------- ------------- -------
Cost
At 1 January 2009 and at 31 December
2009 18.6 7.2 25.8
Amortisation
At 1 January 2009 and at 31 December
2009 (17.5) (7.2) (24.7)
-------------------------------------- --------- ------------- -------
Net book value
At 31 December 2009 1.1 - 1.1
-------------------------------------- --------- ------------- -------
Goodwill
Goodwill comprised GBP0.8 million (2009: GBP0.8 million) on the
acquisition of a French property portfolio in 2004 and GBP0.3
million (2009: GBP0.3 million) on a German property acquisition in
2005. All other goodwill related to Wyatt Media Group AB and was
fully written down in 2008.
Other intangibles
Other intangibles (relating to trade names, technology, customer
relationships, capitalised development and other costs) relate to
Wyatt Media Group AB and were fully written down during 2008.
2010 Impairment review
Goodwill was reviewed for impairment at 31 December 2010 using
the key assumptions set out below. No impairment was required.
Key assumptions:
Unamortised goodwill at 31 December 2010 related to contingent
deferred tax arising on acquisitions of corporate entities for
which an equal deferred tax liability was recognised in the balance
sheet.
2009 Impairment review
Goodwill was reviewed for impairment at 31 December 2009 using
the key assumptions set out below. No impairment was required.
Key assumptions:
Unamortised goodwill at 31 December 2009 related to contingent
deferred tax arising on acquisitions of corporate entities for
which an equal deferred tax liability was recognised in the balance
sheet.
10 JOINT VENTURES
At 31 December 2010 the Group had a one-third interest (2009:
one-third) in the issued ordinary share capital of Fielden House
Investments Limited, a company incorporated in England and
Wales.
The principal activity of Fielden House Investments Limited is
investment in, and management and development of, commercial
property.
The following amounts represent the Group's share of the assets
and liabilities, and income and expenditure of Fielden House
Investments Limited which are included in the balance sheet and
statement of comprehensive income of the Group:
2010 2009
GBPm GBPm
------------------------- ------ ------
Assets
Non-current assets 1.9 1.8
Current assets 0.1 0.2
------------------------- ------ ------
2.0 2.0
------------------------- ------ ------
Liabilities
Current liabilities (2.1) (0.2)
Non-current liabilities (0.4) (2.5)
------------------------- ------ ------
(2.5) (2.7)
------------------------- ------ ------
Net liabilities (0.5) (0.7)
------------------------- ------ ------
Income 0.2 0.2
Expenses (0.2) (0.2)
------------------------- ------ ------
Profit after tax - -
------------------------- ------ ------
11 INVESTMENTS IN ASSOCIATES
Net assets Goodwill Total
GBPm GBPm GBPm
------------------------------------- ----------- --------- -------
At 1 January 2010 36.1 4.8 40.9
Additions 0.4 1.5 1.9
Share of profit of associates after
tax 7.7 - 7.7
Other equity movements* (0.4) - (0.4)
Distributions received (11.9) - (11.9)
Exchange rate differences 1.9 0.5 2.4
------------------------------------- ----------- --------- -------
At 31 December 2010 33.8 6.8 40.6
------------------------------------- ----------- --------- -------
Net assets Goodwill Total
GBPm GBPm GBPm
At 1 January 2009 34.6 4.7 39.3
Additions 1.7 0.1 1.8
Share of profit of associates after
tax 2.5 - 2.5
Other equity movements* 0.4 - 0.4
Dividends received (1.5) - (1.5)
Exchange rate differences (1.6) - (1.6)
------------------------------------- ----------- --------- ------
At 31 December 2009 36.1 4.8 40.9
------------------------------------- ----------- --------- ------
* Primarily foreign exchange movements of the associate
undertakings.
The Group's interests in its principal associates were as
follows:
Bulgarian Land
Development Other
Catena AB Plc associates Total
At 31 December 2010 GBPm GBPm GBPm GBPm
-------------------------- ---------- --------------- ------------ -------
Interest held in
ordinary share capital 29.9% 48.3% various
Revenues 4.5 0.8 0.2 5.5
-------------------------- ---------- --------------- ------------ -------
Profit/(loss) after
tax 9.4 (1.7) (0.1) 7.6
Realisation of negative
goodwill on acquisition - 0.1 - 0.1
-------------------------- ---------- --------------- ------------ -------
Share of profit/(loss)
of associates after
tax 9.4 (1.6) (0.1) 7.7
-------------------------- ---------- --------------- ------------ -------
Assets 62.1 17.5 0.2 79.8
Liabilities (37.8) (8.1) (0.1) (46.0)
-------------------------- ---------- --------------- ------------ -------
Net assets 24.3 9.4 0.1 33.8
Goodwill 5.3 - 1.5 6.8
-------------------------- ---------- --------------- ------------ -------
Investments in associates 29.6 9.4 1.6 40.6
-------------------------- ---------- --------------- ------------ -------
Market value of 50.6 n/a n/a
interest
-------------------------- ---------- --------------- ------------ -------
Bulgarian Land
Development Other
Catena AB Plc associates Total
At 31 December 2009 GBPm GBPm GBPm GBPm
-------------------------- ---------- --------------- ------------ -------
Interest held in
ordinary share capital 29.8% 47.7% 40.0%
Revenues 5.1 2.1 - 7.2
-------------------------- ---------- --------------- ------------ -------
Profit/(loss) after
tax 3.0 (3.3) - (0.3)
Realisation of negative
goodwill on acquisition - 2.8 - 2.8
-------------------------- ---------- --------------- ------------ -------
Share of profit/(loss)
of associates after
tax 3.0 (0.5) - 2.5
-------------------------- ---------- --------------- ------------ -------
Assets 66.4 27.4 - 93.8
Liabilities (43.8) (13.9) - (57.7)
-------------------------- ---------- --------------- ------------ -------
Net assets 22.6 13.5 - 36.1
Goodwill 4.8 - - 4.8
-------------------------- ---------- --------------- ------------ -------
Investments in associates 27.4 13.5 - 40.9
-------------------------- ---------- --------------- ------------ -------
Market value of
interest 26.1 4.3 n/a
-------------------------- ---------- --------------- ------------ -------
Catena AB
At 31 December 2009 the Group had a 29.8 per cent interest in
Catena AB, a listed Swedish property company. During 2010 the Group
acquired a further 0.1 per cent at a cost of GBP0.3 million,
increasing the aggregate interest to 29.9 per cent. Henry Klotz,
Executive Vice Chairman of the Group, is the Chairman of Catena
AB.
During 2010 Catena returned GBP9.9 million (2009: GBP1.5
million) to the Group in cash following significant realisations of
its property assets.
Bulgarian Land Development Plc
At 31 December 2009 the Group had a 47.7 per cent interest in
Bulgarian Land Development Plc (BLD), a developer of residential
and commercial real estate in Bulgaria. Given the challenges of the
Bulgarian property sector, BLD's major shareholders agreed that it
should reduce running costs, effect an orderly disposal of its
assets, and distribute the net proceeds in order to maximise
returns for shareholders. As a result BLD was de-listed from the
Alternative Investment Market of the London Stock Exchange on 19
August 2010. As part of the de-listing process the Group acquired a
further 1.0 per cent of BLD for GBP0.1 million increasing the
aggregate interest to 48.7 per cent.
In December 2010, the Group received a return of capital of
GBP2.0 million from BLD by means of a tender offer buy-back. As the
tender was not fully subscribed the Group's interest in BLD fell to
48.3%.
Other associates
Other associates comprise associates of the Wyatt Media Group
internet business, each incorporated in Sweden.
Impairment
2010
In assessing the carrying value of Catena AB, the Group
considered that the balance sheet of Catena AB at 31 December 2010
was stated at fair value except for certain deferred tax
liabilities. It was management's assessment that the realisation of
Catena's property assets would occur through corporate disposals
and therefore latent deferred tax liabilities were unlikely to
crystallise. As the Group's share of the net assets of Catena AB,
excluding deferred tax liabilities, exceeded the carrying value of
the Group's interest there was no further impairment of the Group's
interest in Catena AB at 31 December 2010. Furthermore, the market
value of the Group's shares in Catena AB exceeded their carrying
value by GBP21.0 million.
BLD is carried in the balance sheet at a value equal to the
Group's share of its net assets. BLD's net assets, which were
prepared under IFRS, were reviewed and found not to be impaired at
31 December 2010. Accordingly there was no further provision
against the carrying value of the Group's interest in BLD at 31
December 2010.
2009
The carrying value of Catena AB was assessed by management at 31
December 2009 under the same methodology as in 2010. As the Group's
share of the net assets of Catena AB, excluding deferred tax
liabilities, exceeded the carrying value of the Group's interest
there was no further impairment of the Group's interest in Catena
AB at 31 December 2009.
BLD's net assets, which were prepared under IFRS, were reviewed
and found not to be impaired at 31 December 2009. Accordingly there
was no further provision against the carrying value of the Group's
interest in BLD at 31 December 2009.
12 OTHER INVESTMENTS
2010 2009
GBPm GBPm
------------------------------------------------------------- ------ ------
Available-for-sale financial investments carried at fair
value
Listed corporate
bonds UK 37.5 17.1
Eurozone 24.1 40.0
Other 16.5 12.9
Listed equity
securities UK 0.5 0.6
Sweden 2.4 2.5
Other 0.1 0.1
Unlisted
investments Sweden 0.4 0.6
Government securities UK 0.1 0.1
------------------------------------------ ----------------- ------ ------
81.6 73.9
------------------------------------------------------------- ------ ------
The movement of other investments is analysed below:
2010 2009
GBPm GBPm
-------------------------------------------------- ------- -------
At 1 January 73.9 14.3
Additions 52.7 70.7
Disposals (39.1) (23.4)
Fair value movements recognised in reserves
on available-for-sale assets 3.1 12.5
Fair value movements recognised in profit before
tax on available-for-sale assets (8.5) 1.0
Exchange rate variations (0.5) (1.2)
-------------------------------------------------- ------- -------
At 31 December 81.6 73.9
-------------------------------------------------- ------- -------
The table below gives an analysis of the valuation methods used
to measure the fair value of the other investments, grouped into
Levels 1 to 3 based on the degree to which the fair value is
observable.
2010 2009
GBPm GBPm
-------------------------------------------- ------ ------
Level 1 - quoted unadjusted market prices 3.1 3.3
Level 2 - valuation from observable market
data 78.1 70.0
Level 3 - other valuation methods* 0.4 0.6
-------------------------------------------- ------ ------
81.6 73.9
-------------------------------------------- ------ ------
Includes GBP12.8 million (2009: GBP5.1 million) of corporate
bonds priced directly from market makers in those bonds.
* Unlisted equity shares valued using multiples from comparable
listed organisations.
13 DERIVATIVE FINANCIAL INSTRUMENTS
2010 2010 2009 2009
Assets Liabilities Assets Liabilities
GBPm GBPm GBPm GBPm
--------------------- -------- ------------- -------- -------------
Non-current
Interest rate swaps - (19.3) - -
Interest rate caps
and floors 4.6 - 0.1 -
--------------------- -------- ------------- -------- -------------
4.6 (19.3) 0.1 -
--------------------- -------- ------------- -------- -------------
Current
Interest rate swaps - - - (15.7)
Forward foreign
exchange contracts - (1.0) - -
--------------------- -------- ------------- -------- -------------
- (1.0) - (15.7)
--------------------- -------- ------------- -------- -------------
4.6 (20.3) 0.1 (15.7)
--------------------- -------- ------------- -------- -------------
14 TRADE AND OTHER RECEIVABLES
2010 2009
GBPm GBPm
------------------- ------ ------
Current
Trade receivables 3.5 2.8
Prepayments 0.7 0.8
Accrued income 3.5 2.2
Other debtors 3.8 4.6
------------------- ------ ------
11.5 10.4
------------------- ------ ------
15 CASH AND CASH EQUIVALENTS
2010 2009
GBPm GBPm
-------------------------- ------ ------
Cash at bank and in hand 23.9 47.0
Short-term bank deposits 24.4 23.3
-------------------------- ------ ------
48.3 70.3
-------------------------- ------ ------
The cash and cash equivalents currency profile was as
follows:
Cash at bank Short-term
and in hand deposits Total
At 31 December 2010 GBPm GBPm GBPm
--------------------- ------------- ----------- ------
Sterling 13.6 7.5 21.1
Euro 9.2 0.2 9.4
Swedish Krona 1.1 16.7 17.8
--------------------- ------------- ----------- ------
23.9 24.4 48.3
--------------------- ------------- ----------- ------
Cash at bank Short-term
and in hand deposits Total
At 31 December 2009 GBPm GBPm GBPm
--------------------- ------------- ----------- ------
Sterling 18.5 22.0 40.5
Euro 24.5 1.3 25.8
Swedish Krona 4.0 - 4.0
--------------------- ------------- ----------- ------
47.0 23.3 70.3
--------------------- ------------- ----------- ------
16 TRADE AND OTHER PAYABLES
2010 2009
GBPm GBPm
--------------------------------- ------ ------
Current
Trade payables 1.6 1.9
Social security and other taxes 2.1 1.8
Other payables 6.4 5.4
Accruals 12.8 12.1
Deferred income 8.9 8.9
--------------------------------- ------ ------
31.8 30.1
--------------------------------- ------ ------
17 DEFERRED TAX
2010 2009
GBPm GBPm
Deferred tax assets:
- after more than 12 months (11.2) (12.7)
Deferred tax liabilities:
- after more than 12 months 74.5 72.3
----------------------------- ------- -------
63.3 59.6
----------------------------- ------- -------
The movement in deferred tax was as follows:
2010 2009
GBPm GBPm
--------------------------------------------- ------ ------
At 1 January 59.6 61.0
Charged/(credited) to the tax charge in the
statement of comprehensive income 6.4 (1.0)
(Credited)/charged to equity (1.8) 3.2
Exchange rate variances (0.9) (3.6)
--------------------------------------------- ------ ------
At 31 December 63.3 59.6
--------------------------------------------- ------ ------
The movement in deferred tax assets and liabilities during the
year, without taking into consideration the offsetting of balances
within the same tax jurisdiction, was as follows:
Tax losses Other Total
Deferred tax assets GBPm GBPm GBPm
------------------------------------------- ----------- ------ -------
At 1 January 2010 (7.1) (5.6) (12.7)
(Credited)/charged to the tax charge
in the statement of comprehensive income 2.0 (0.5) 1.5
------------------------------------------- ----------- ------ -------
At 31 December 2010 (5.1) (6.1) (11.2)
------------------------------------------- ----------- ------ -------
Tax losses Other Total
Deferred tax assets GBPm GBPm GBPm
------------------------------------------- ----------- ------ -------
At 1 January 2009 (5.4) (7.0) (12.4)
(Credited)/charged to the tax charge
in the statement of comprehensive income (1.7) 1.4 (0.3)
------------------------------------------- ----------- ------ -------
At 31 December 2009 (7.1) (5.6) (12.7)
------------------------------------------- ----------- ------ -------
Fair value
adjustments to
UK capital investment
allowances properties Other Total
Deferred tax liabilities GBPm GBPm GBPm GBPm
-------------------------- ------------ ---------------- ------ ------
At 1 January 2010 12.1 56.5 3.7 72.3
(Credited)/charged
to the tax charge
in the statement
of comprehensive
income (1.9) 6.7 0.1 4.9
Credited to equity - - (1.8) (1.8)
Exchange rate variances - (0.9) - (0.9)
-------------------------- ------------ ---------------- ------ ------
At 31 December 2010 10.2 62.3 2.0 74.5
-------------------------- ------------ ---------------- ------ ------
Fair value
adjustments to
UK capital investment
allowances properties Other Total
Deferred tax liabilities GBPm GBPm GBPm GBPm
----------------------------- ------------ ---------------- ------ ------
At 1 January 2009 12.2 60.5 0.7 73.4
Credited to the
tax charge in the
statement of comprehensive
income (0.1) (0.4) (0.2) (0.7)
Charged to equity - - 3.2 3.2
Exchange rate variances - (3.6) - (3.6)
----------------------------- ------------ ---------------- ------ ------
At 31 December 2009 12.1 56.5 3.7 72.3
----------------------------- ------------ ---------------- ------ ------
18 BORROWINGS
Total
Current Non-current borrowings
At 31 December 2010 GBPm GBPm GBPm
--------------------- -------- ------------ ------------
Bank loans 81.6 461.5 543.1
Debenture loans 1.1 33.0 34.1
Zero coupon note - 9.8 9.8
Other loans 2.3 - 2.3
--------------------- -------- ------------ ------------
85.0 504.3 589.3
--------------------- -------- ------------ ------------
Total
Current Non-current borrowings
At 31 December 2009 GBPm GBPm GBPm
--------------------- -------- ------------ ------------
Bank loans 112.5 434.1 546.6
Debenture loans 1.0 34.1 35.1
Zero coupon note - 8.8 8.8
Other loans - 2.3 2.3
--------------------- -------- ------------ ------------
113.5 479.3 592.8
--------------------- -------- ------------ ------------
Loan covenants
There were no covenant breaches at 31 December 2010 or at 31
December 2009.
The maturity profile of the carrying amount of the Group's
borrowings at 31 December was as follows:
Debenture Zero coupon
At 31 December Bank loans loans note Other loans Total
2010 GBPm GBPm GBPm GBPm GBPm
Within one year
or on demand 82.4 1.1 - 2.3 85.8
More than one
but not more
than two years 126.2 1.2 - - 127.4
More than two
but not more
than five
years 204.4 4.5 - - 208.9
More than five
years 133.1 27.3 9.8 - 170.2
---------------- ----------- ---------- ------------ ------------ -------
546.1 34.1 9.8 2.3 592.3
Unamortised
issue costs (3.0) - - - (3.0)
---------------- ----------- ---------- ------------ ------------ -------
Borrowings 543.1 34.1 9.8 2.3 589.3
Less amount due
for settlement
within 12
months (81.6) (1.1) - (2.3) (85.0)
---------------- ----------- ---------- ------------ ------------ -------
Amounts due for
settlement
after 12
months 461.5 33.0 9.8 - 504.3
---------------- ----------- ---------- ------------ ------------ -------
Debenture Zero coupon
At 31 December Bank loans loans note Other loans Total
2009 GBPm GBPm GBPm GBPm GBPm
--------------- ----------- ---------- ------------ ------------ --------
Within one
year or on
demand 113.1 1.0 - - 114.1
More than one
but not more
than two
years 27.3 1.1 - 2.3 30.7
More than two
but not more
than five
years 200.7 4.0 - - 204.7
More than five
years 208.4 29.0 8.8 - 246.2
--------------- ----------- ---------- ------------ ------------ --------
549.5 35.1 8.8 2.3 595.7
Unamortised
issue costs (2.9) - - - (2.9)
--------------- ----------- ---------- ------------ ------------ --------
Borrowings 546.6 35.1 8.8 2.3 592.8
Less amount
due for
settlement
within 12
months (112.5) (1.0) - - (113.5)
--------------- ----------- ---------- ------------ ------------ --------
Amounts due
for
settlement
after 12
months 434.1 34.1 8.8 2.3 479.3
--------------- ----------- ---------- ------------ ------------ --------
The interest rate risk profile of the Group's fixed rate
borrowings was as follows:
At 31 December 2010 At 31 December 2009
---------- ------------------------------- -------------------------------
Weighted Weighted Weighted Weighted
average average average average
fixed rate period for fixed rate period for
of financial which rate is of financial which rate is
liabilities fixed liabilities fixed
% Years % Years
---------- -------------- --------------- -------------- ---------------
Sterling 6.5 5.6 6.5 6.6
Euro 4.3 2.2 4.3 3.1
---------- -------------- --------------- -------------- ---------------
The interest rate risk profile of the Group's floating rate
borrowings was as follows:
At 31 December 2010 At 31 December 2009
----------- ------------------------------- --------------------------------
% of net Average % of net Average
floating capped floating capped
rate interest Average rate interest Average
loans rate tenure loans rate tenure
capped % Years capped % Years
----------- --------- ---------- -------- ---------- ---------- --------
Sterling 56 2.7 5.0 100 3.9 0.7
Euro 86 4.7 1.0 100 4.7 1.6
Swedish
Krona 100 2.7 2.9 - n/a n/a
US Dollar - n/a n/a n/a n/a n/a
----------- --------- ---------- -------- ---------- ---------- --------
In 2010, the Group entered into certain interest rate caps with
forward start dates of January and April 2011 to replace interest
rate swaps and caps due to expire on those dates. The impact of
these transactions produces a pro forma position at April 2011
of:
Pro forma at 30 April 2011
--------------- -------------------------------------
Average
capped
% of net interest Average
floating rate rate tenure
loans capped % Years
--------------- --------------- ---------- --------
Sterling 64 2.5 4.6
Euro 93 3.2 4.1
Swedish Krona 100 2.7 2.7
US Dollar - n/a n/a
--------------- --------------- ---------- --------
The carrying amounts of the Group's borrowings are denominated
in the following currencies:
Fixed rate Floating rate
financial financial
liabilities liabilities Total
At 31 December 2010 GBPm GBPm GBPm
--------------------- ------------- -------------- ------
Sterling 155.2 91.6 246.8
Euro 117.6 185.8 303.4
Swedish Krona - 33.3 33.3
US Dollar - 5.8 5.8
--------------------- ------------- -------------- ------
272.8 316.5 589.3
--------------------- ------------- -------------- ------
Fixed rate Floating rate
financial financial
liabilities liabilities Total
At 31 December 2009 GBPm GBPm GBPm
--------------------- ------------- -------------- ------
Sterling 154.2 115.4 269.6
Euro 123.8 165.1 288.9
Swedish Krona - 34.3 34.3
--------------------- ------------- -------------- ------
278.0 314.8 592.8
--------------------- ------------- -------------- ------
The carrying amounts and fair values of the Group's borrowings
are as follows:
Carrying amounts Fair values
------------------------
2010 2009 2010 2009
GBPm GBPm GBPm GBPm
--------- -------- ------ ------
Current borrowings 85.0 113.5 85.0 113.5
Non-current borrowings 504.3 479.3 530.2 503.4
------------------------ --------- -------- ------ ------
589.3 592.8 615.2 616.9
------------------------ --------- -------- ------ ------
19 SHARE CAPITAL
Ordinary Total
shares in Treasury ordinary
circulation shares shares
Number GBPm GBPm GBPm
----------- -------------------------------------- ------------ --------- ---------
Ordinary Total
shares in Treasury ordinary
circulation shares shares
------------ ---------- ------------
At 1
January
2010 48,024,256 5,000,000 53,024,256 12.0 1.3 13.3
Cancelled
following
tender
offers (1,643,012) - (1,643,012) (0.4) - (0.4)
Ordinary
shares
issued
from
treasury
shares 207,000 (207,000) - 0.1 (0.1) -
----------- ------------ ---------- ------------ ------------ --------- ---------
At 31
December
2010 46,588,244 4,793,000 51,381,244 11.7 1.2 12.9
----------- ------------ ---------- ------------ ------------ --------- ---------
Ordinary Total
shares in Treasury ordinary
circulation shares shares
Number GBPm GBPm GBPm
----------- ---------------------------------------- ------------ --------- ---------
Ordinary Total
shares in Treasury ordinary
circulation shares shares
------------- ---------- -------------
At 1
January
2009 61,745,471 5,000,000 66,745,471 15.4 1.3 16.7
Cancelled
following
tender
offer (13,721,215) - (13,721,215) (3.4) - (3.4)
----------- ------------- ---------- ------------- ------------ --------- ---------
At 31
December
2009 48,024,256 5,000,000 53,024,256 12.0 1.3 13.3
----------- ------------- ---------- ------------- ------------ --------- ---------
20 TENDER OFFER BUY-BACKS
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. It returned GBP6.0 million to shareholders, equivalent to
12.5 pence per share.
A tender offer by way of a Circular dated 19 August 2010 for the
purchase of 1 in 74 shares at 625 pence per share was completed in
September. It returned GBP4.0 million to shareholders, equivalent
to 8.5 pence per share.
A further tender offer will be put to shareholders in April 2011
for the purchase of 1 in 46 shares at a price of 700 pence per
share which, if approved, will return GBP7.1 million to
shareholders, equivalent to 15.2 pence per share.
21 SHARE PREMIUM ACCOUNT
2010 2009
GBPm GBPm
--------------------------------------------- ------ ------
At 1 January 70.5 70.5
Ordinary shares issued from treasury shares 1.0 -
--------------------------------------------- ------ ------
At 31 December 71.5 70.5
--------------------------------------------- ------ ------
22 OTHER RESERVES
Capital Cumulative Fair
redemption translation value Other
reserve reserve reserve reserves Total
GBPm GBPm GBPm GBPm GBPm
-------------------- ----------- ------------ --------- ---------- ------
At 1 January 2010 20.4 50.7 5.8 28.1 105.0
Purchase of own
shares:
- cancellation
pursuant to
tender offer 0.4 - - - 0.4
Exchange rate
variances - 1.1 - - 1.1
Share of exchange
rate variances of
associates - (0.4) - - (0.4)
Available-for-sale
financial assets:
- net fair value
gains in the year - - (5.4) - (5.4)
- deferred tax
thereon - - 1.8 - 1.8
-------------------- ----------- ------------ --------- ---------- ------
At 31 December 2010 20.8 51.4 2.2 28.1 102.5
-------------------- ----------- ------------ --------- ---------- ------
Capital Cumulative Fair
redemption translation value Other
reserve reserve reserve reserves Total
GBPm GBPm GBPm GBPm GBPm
-------------------- ----------- ------------ --------- ---------- ------
At 1 January 2009 17.0 59.8 (4.5) 28.1 100.4
Purchase of own
shares:
- cancellation
pursuant to tender
offer 3.4 - - - 3.4
Exchange rate
variances - (9.5) - - (9.5)
Share of exchange
rate variances of
associates - 0.4 - - 0.4
Available-for-sale
financial assets:
- net fair value
gains in the year - - 13.5 - 13.5
- deferred tax
thereon - - (3.2) - (3.2)
-------------------- ----------- ------------ --------- ---------- ------
At 31 December 2009 20.4 50.7 5.8 28.1 105.0
-------------------- ----------- ------------ --------- ---------- ------
The amount classified as other reserves was created prior to
listing in 1995 on a Group reconstruction and is considered to
be
non-distributable.
23 CASH GENERATED FROM OPERATIONS
2010 2009
GBPm GBPm
----------------------------------------------- ------- ------
Operating profit 88.2 41.5
Adjustments for:
Net movements on revaluation of investment
properties (30.1) 6.7
Depreciation and amortisation 0.3 0.5
Profit on disposal of investment properties - (0.3)
Gain on disposal of corporate bonds and other
investments (9.3) (2.1)
Share-based payment expense 0.1 -
Changes in working capital:
Decrease/(increase) in debtors 0.5 (0.7)
Increase in creditors 1.5 0.1
----------------------------------------------- ------- ------
Cash generated from operations 51.2 45.7
----------------------------------------------- ------- ------
24 RELATED PARTY TRANSACTIONS
A Group company, Forvaltnings AB Klio, rents office space from a
company owned by Sten Mortstedt, Executive Chairman of CLS Holdings
plc. The total payable in the year was GBP36,000 (2009: GBP34,000).
A company owned by Sten Mortstedt purchased accountancy services
from Forvaltnings AB Klio during the year amounting to GBP9,000
(2009: GBP8,000). In relation to these transactions GBP36,000 was
payable at the balance sheet date (2009: GBP3,000). A Group
company, CLSH Management Limited, provided accounting services to
Bulgarian Land Development Plc, an associate of the Group, for
which a charge of GBP16,000 was made in the year (2009: GBPnil) and
remained outstanding at the balance sheet date.
GLOSSARY OF TERMS
ADJUSTED NET ASSETS OR ADJUSTED SHAREHOLDERS' FUNDS
Net assets excluding the mark-to-market on effective cash flow
hedges and related debt adjustments and deferred tax on
revaluations
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 after any rent-free periods have
expired
CORE PROFIT
Profit before tax and before net movements on revaluation of
investment properties, profit on sale of investment properties,
subsidiaries and corporate bonds, impairment of intangible assets
and goodwill, non-recurring costs, change in fair value of
derivatives and foreign exchange variances
DILUTED EARNINGS PER SHARE
Profit after tax divided by the diluted weighted average number
of ordinary shares
DILUTED NET ASSETS
Equity shareholders' funds increased by the potential proceeds
from issuing those shares issuable under employee share schemes
DILUTED NET ASSETS PER SHARE OR DILUTED NET ASSET VALUE
Diluted net assets divided by the diluted number of ordinary
shares
DILUTED NUMBER OF ORDINARY SHARES
Number of ordinary shares in circulation at the balance sheet
date adjusted to include the effect of potential dilutive shares
issuable under employee share schemes
DILUTED WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES
Weighted average number of ordinary shares in issue during the
period adjusted to include the effect of potential weighted average
dilutive shares issuable under employee share schemes
EARNINGS PER SHARE
Profit after tax divided by the weighted average number of
ordinary shares in issue in the period
EPRA
European Public Real Estate Association
EPRA EARNINGS PER SHARE
Profit after tax, but excluding net gains or losses from fair
value adjustments on investment properties, profits or losses on
disposal of investment properties and other non-current investment
interests, impairment of goodwill and intangible assets, movements
in fair value of derivative financial instruments and their related
current and deferred tax
EPRA NET ASSETS
Diluted net assets excluding the mark-to-market on effective
cash flow hedges and related debt adjustments, deferred tax on
revaluations and goodwill arising as a result of deferred tax
EPRA NET ASSETS PER SHARE
EPRA net assets divided by the diluted number of ordinary
shares
EPRA NET INITIAL YIELD
Annual passing rent less net service charge costs on investment
properties expressed as a percentage of the investment property
valuation after adding purchasers' costs
EPRA TOPPED UP NET INITIAL YIELD
Annual net rents on investment properties expressed as a
percentage of the investment property valuation after adding
purchasers' costs
EPRA TRIPLE NET ASSETS
EPRA net assets adjusted to reflect the fair value of debt and
derivatives and to include the fair value of deferred tax on
property revaluations
EPRA TRIPLE NET ASSETS PER SHARE
EPRA triple net assets divided by the diluted number of ordinary
shares
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 before any rent-free periods have expired
PROPERTY LOAN TO VALUE
Property borrowings expressed as a percentage of the market
value of the property portfolio
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
SOLIDITY
Equity shareholders' funds expressed as a percentage of total
assets
TOTAL SHAREHOLDER RETURN
For a given number of shares, the aggregate of the proceeds from
tender offer buy-backs and change in the market value of the shares
during the year adjusted for cancellations occasioned by such
buy-backs, as a percentage of the market value of the shares at the
beginning of the year
TRUE EQUIVALENT YIELD
The capitalisation rate applied to future cash flows to
calculate the gross property value, as determined by the Group's
external valuers
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EANDLEEEFEFF
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