TIDMCLI
RNS Number : 0271K
CLS Holdings PLC
15 August 2012
Release date: 15 August 2012
Embargoed until: 7:00am
CLS HOLDINGS PLC
("CLS", THE "COMPANY" OR THE "GROUP")
ANNOUNCES ITS HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS TO
30 JUNE 2012
Continued delivery of strategic and financial objectives
CLS is a property investment company with a diverse portfolio of
(GBP)900 million modern, well-let properties in London, France,
Germany and Sweden. CLS's properties have been selected for their
potential to add value and to generate high returns on capital
investment through active asset management.
FINANCIAL HIGHLIGHTS
Strong underlying performance demonstrating resilience of the
Group:
-- EPRA net assets per share up 5.6% to 1037.7 pence (31 December 2011: 983.1 pence).
-- EPRA net assets up 3.1% to (GBP)458.5 million (31 December 2011: (GBP)444.9 million).
-- EPRA earnings per share 30.7 pence (2011: 37.4 pence).
-- EPRA profit before tax (GBP)17.9 million (2011: (GBP)16.4 million).
-- Strong cash flow from operating activities (after interest
and tax) of (GBP)14.3 million (2011: (GBP)14.0 million).
-- Net assets per share up 5.8% to 865.2 pence (31 December 2011: 817.5 pence).
-- Net assets up 3.3% to (GBP)379.7 million (31 December 2011: (GBP)367.5 million).
-- Earnings per share 47.8 pence (2011: 69.9 pence).
-- Rental income at (GBP)33.1 million (2011: (GBP)32.7 million)
up 3.1% like-for-like in local currencies.
-- Interest cover 3.4 times (2011: 3.4 times).
-- Portfolio valued at (GBP)904.4 million (31 December 2011:
(GBP)902.1 million), up 1.1% in local currencies.
-- Weighted average cost of debt further reduced to 3.74% (31
December 2011: 4.06%), one of the lowest in the sector.
-- Highly liquid balance sheet with (GBP)123.3 million available for new investments.
-- Top UK listed property company total shareholder return
performance of 106% between 1 January 2008 and 30 June 2012.
-- Proposed distribution of (GBP)4.6 million (2011: (GBP)4.4
million) by way of tender offer buy-back: 1 in 71 at 750 pence,
equivalent to 10.6 pence per share.
OPERATIONAL HIGHLIGHTS
Significant progress across letting, financing and
development:
-- Occupancy rate highest level in over ten years at 96.5%.
-- Net initial yield of 7%, 326 basis points above cost of debt,
one of the highest in the sector.
-- Successfully refinanced (GBP)117.6 million of existing debt
including our largest asset Spring Gardens.
-- Secured planning consent for the first of two Vauxhall
applications, Spring Mews, a 20,800 sq m mixed-use scheme including
399 student bedrooms and a 120 bedroom hotel.
-- Constructive discussions continuing with local council and
other stakeholders on 154,000 sq m Vauxhall Square planning
application.
-- Completed 1,642 sq m pre-let extension in Grafelfing in
February, with 5,400 sq m Landshut pre-let completed in late July,
both on time and on budget.
-- Intention to issue a new unsecured corporate bond on the
London Stock Exchange's ORB retail bond market in line with
strategy of having a diverse range of funding types and sources.
Further details regarding the bond issue will be announced in due
course.
Sten Mortstedt, Executive Chairman of CLS, commented:
"The first half was one of considerable achievement for the
Group. We have reduced our vacancy rates and financing costs to new
historical lows, secured planning permission on our Spring Mews
application, and continued to make targeted opportunistic
acquisitions and investments with our liquid resources. The Group
remains focused on its core business of generating attractive
shareholder returns through the effective management of property
investments, and is well placed for the future."
ENDS
Copies of the half-yearly financial report are available for
download from our website at www.clsholdings.com. Hard copies can
be requested via the website or by contacting the company (email:
enquiries@clsholdings.com or phone +44 (0)20 7582 7766).
Enquiries:
CLS Holdings plc +44 (0)20 7582 7766
www.clsholdings.com
Sten Mortstedt, Executive Chairman
Henry Klotz, Executive Vice Chairman
Richard Tice, Chief Executive Officer
Smithfield +44 (0)20 7360 4900
Alex Simmons
N+1 Brewin +44 (0)131 529 0356
Nick Tulloch
Liberum Capital
Limited +44 (0)20 3100 2222
Tom Fyson
Kinmont Limited +44 (0)20 7087 9100
Jonathan Gray
CLS will be presenting to analysts at 8.30am on Wednesday, 15
August 2012, at the offices of Liberum Capital, Ropemaker Place,
Level 12, 25 Ropemaker Street, London EC2Y 9LY
Conference Call dial-in numbers as follows:
Conference access numbers:
Participant Telephone +44(0)20 3364 5381 UK Toll
Numbers:
Confirmation Code: 9467791
Participants will have to quote the above code when dialling
into the conference.
CORPORATE OVERVIEW
-- Shareholders' funds of (GBP)380 million
-- EPRA net assets of (GBP)459 million
-- (GBP)904 million of office properties across London, France, Germany and Sweden
-- Top property company total shareholder return performance since 2008
-- Strong alignment of interest with shareholders: management owns 54%
-- Substantial cash and liquid resources available for new investment
-- Cautiously entrepreneurial approach to future opportunities
Investors in European Commercial Property
-- CLS is a property investment company which has been listed on
the London Stock Exchange since 1994
-- We own and manage a diverse portfolio of (GBP)0.9 billion of
modern, well-let office properties in London, France, Germany and
Sweden
-- Our properties have been selected for their potential to add
value and to generate high returns on capital investment
HOW WE OPERATE
Our goal is to create long-term shareholder value
-- We aim to achieve this by:
-- Pursuing an opportunistic investment strategy
-- Focusing on cash returns
-- Operating in diverse locations
-- Utilising diversified sources of finance
-- Maintaining a broad tenant base
-- Minimising vacant space
-- Imposing strict cost control
-- Retaining a high level of liquid resources
Financial highlights
-- EPRA net assets per share: up 5.6% to 1,037.7 pence (31 December 2011: 983.1 pence)
-- EPRA net assets: up 3.1% to (GBP)458.5 million (31 December 2011: (GBP)444.9 million)
-- EPRA earnings per share: 30.7 pence (2011: 37.4 pence)
-- EPRA profit before tax: (GBP)17.9 million (2011: (GBP)16.4 million)
-- Cash flow from operating activities: (GBP)14.3 million (2011: (GBP)14.0 million)
-- Net assets per share: up 5.8% to 865.2 pence (31 December 2011: 817.5 pence)
-- Net assets: up 3.3% to (GBP)379.7 million (31 December 2011: (GBP)367.5 million)
-- Earnings per share: 47.8 pence (2011: 69.9 pence)
-- Profit after tax: (GBP)21.3 million (2011: (GBP)33.6 million)
-- Proposed distribution to shareholders: (GBP)4.6 million
(September 2011: (GBP)4.4 million) by way of tender offer
buy-back:1 in 71 at 750 pence, equivalent to 10.6 pence per
share
-- Low weighted average cost of debt: 3.74% (31 December 2011: 4.06%)
-- Interest cover 3.4 times (2011: 3.4 times)
-- Adjusted solidity: 42.4% (31 December 2011: 40.5%)
-- Adjusted gearing 120% (31 December 2011: 128%)
Other key data
-- Top performer in UK listed property sector total shareholder return since 2008: 106.2%
-- Portfolio value: (GBP)904.4 million - up 1.1% in local currencies
-- Proportion of Government tenants: 40.7%
-- Occupancy rate: 96.5%
-- Indexation applies to 66% of contracted rent
-- Liquid resources: (GBP)123.2 million
CHAIRMAN'S STATEMENT
Continuing to deliver
Overview
I am pleased to report that the first half of 2012 was one of
considerable further achievements across the Group. We have
continued to reduce our vacancy level to a new historical low of
3.5%, and further lowered our average cost of debt to 3.74%. We
have also secured an important planning permission in London for
our Spring Mews mixed-use development and completed the second of
our German pre-lets, both of which I wrote about in the 2011 year
end statement. These achievements have meant that EPRA net asset
value rose in the first half by 5.6% to 1,037.7 pence (31 December
2011: 983.1 pence).
In the face of ongoing macroeconomic uncertainty, our business
strategy displays further strength and resilience due to our asset
diversity with over 400 tenants across four countries, including
three of the strongest in the European Union, Germany, France and
Sweden. That an eventual break-up of the euro could be a positive
for CLS cannot, therefore, be ruled out. Underpinned by government
leases, which provide 41% of rental income in a high-yielding and
well-managed portfolio, the business generates an attractive rental
surplus over our low cost of debt. Our balance sheet is strong with
diverse financing arrangements from over 20 lending sources and we
continuously aim to improve our funding profile, as further
evidenced by our announcement this morning of plans to issue a
retail bond.
We remain the top performer among UK listed real estate
investment and development companies on a Total Shareholder Return
basis having delivered 106.2% since the beginning of 2008,
equivalent to an annualised return of 17.4%.
Results and Financing
Profit before tax for the six months to 30 June 2012 was
(GBP)27.1 million (2011: (GBP)37.1 million) with earnings per share
of 47.8 pence (2011: 69.9 pence). EPRA earnings per share were 30.7
pence (2011: 37.4 pence). Each of these comparatives contained a
number of one-off items, and the underlying business remains very
similar to that of a year ago. EPRA profit before tax was (GBP)17.9
million (2011: (GBP)16.4 million), 9.1% higher than last year, and
the business continues to generate cash.
Shareholders' funds grew in the six months by 3.3% to (GBP)379.7
million (31 December 2011: (GBP)367.5 million), after distributions
to shareholders of (GBP)7.9 million.
The Group's weighted average cost of debt has fallen to 3.74%
(31 December 2011: 4.06%) which we believe is one of the lowest in
the London Stock Exchange's real estate sector.
This highlights the benefits of the treasury management and
hedging strategy that we have pursued over the last few years, as
short and long-term money market rates have continued to fall. At
30 June 2012, net debt as a proportion of gross assets (less cash)
was 52.7%. So far in 2012, we have successfully refinanced
(GBP)117.6 million of debt, including our largest asset, Spring
Gardens, on 10 July, subsequent to which the weighted average
unexpired loan term has increased to 4.6 years.
In addition, as part of our strategy of having a diverse range
of sources and types of finance, today we announce that we are
looking to issue a new unsecured corporate bond on the London Stock
Exchange's ORB retail bond market, with book building due to begin
in a few days.
At 30 June 2012, the Group's net debt had reduced to (GBP)546.3
million. Our liquid resources, held in cash and corporate bonds,
stood at (GBP)123.2 million, a very healthy level confirming the
strength of the Group's balance sheet. The corporate bonds have
generated a total return in the first half of 10.4%, corresponding
to (GBP)9.2 million. We also took the opportunity to sell off part
of the portfolio into the market rally in the first quarter, which
realised gains of (GBP)0.5 million. The interest received from our
corporate bond portfolio generated (GBP)4.1 million of our (GBP)4.5
million of finance income, which covered 39% of our total interest
expense.
Property Portfolio
Despite a weaker overall investment climate, we have achieved
numerous successes with a combination of planning gains, a further
reduction of the vacancy level, rental increases from indexation,
and asset management initiatives, such as extending key leases and
removing break clauses from others. At 30 June the portfolio
valuation stood at (GBP)904.4 million, reflecting an underlying
like-for-like valuation gain since 31 December 2011 of 1.1% in
local currencies. A negative foreign exchange movement of 1.7%
produced an overall net valuation decrease of 0.6%. The London
portfolio grew by 3.1% due to the uplift in the properties
allocated for development, whilst the remainder of the London
portfolio remained stable. In local currencies, France decreased by
0.4%, Germany by 0.2% and Sweden by 1.5%.
Lettings have been very positive for the Group and we have
reduced overall vacancy even further to just 3.5% (31 December
2011: 3.9%). Whilst tenant demand is steady, the complete absence
of new developments in most of our markets for the foreseeable
future should continue to bode well for the Group. We can continue
to refurbish and to maintain high quality space at an affordable
level, and to respond flexibly to our customers' needs. We remain
focused on energy efficiency and sustainability in our existing
portfolio and activities, subjects on which you will find a more
detailed description in the Business Review.
Like-for-like rents in local currency terms were up by 2.6% in
the first half. The Group's average rent of (GBP)168 per sq m
positions us attractively within the key European cities in which
we operate to compete for new tenants. Government tenants represent
41% of rents while major corporations represent 28%, and 66% of the
Group's rental income is subject to indexation. The weighted
average lease length at 30 June 2012 was 7.4 years, or 6.3 years to
first break.
The benefit of having high levels of liquid resources is that it
enables us to move very quickly when attractive acquisition
opportunities arise. In July, we exchanged and completed in just
two weeks on a 1,963 sq m office property in Wallington, Surrey,
generating (GBP)320,885 per annum. The acquisition price was
(GBP)2.08 million, corresponding to a net initial yield of 14.1%.
Well-let to 5 tenants, including the Metropolitan Police and Penta
Consulting, this purchase price equates to a capital value of just
(GBP)1,112 per sq m for a modern office building with good car
parking. This is substantially below replacement cost.
Success was achieved with the 20,800 sq m mixed-use, student
accommodation and hotel development proposal, Spring Mews, in
Vauxhall, SE11, which received planning consent in May. We are
progressing our detailed design and site preparation with an
objective to start construction by the end of the year for a late
2014 completion. On the larger scheme, Vauxhall Square,
constructive discussions are continuing with the planning authority
and other stakeholders regarding our 154,000 sq m application. In
February, at Grafelfing we completed the first of the two pre-let
office schemes in Germany, as I highlighted in the 2011 report, and
the second scheme, pre-let to EON, completed at the end of July.
More details are available in the Business Review.
In Sweden, Catena, the listed property company in which the
Group owns a 29.9% interest, is making good progress with its
planning application for a 150,000 sq m mixed use scheme. A consent
is expected by the end of the year.
Distributions
In April we made a distribution to shareholders of (GBP)7.9
million through our traditional tender offer buy-back process. We
propose to distribute a further (GBP)4.6 million to shareholders in
September by similar means, offering 1 in 71 shares at a price of
750 pence per share, and a circular will be sent to shareholders in
the next few days. If approved, these two shareholder distributions
would correspond to an implied dividend yield of 4.5% based on our
average market capitalisation during the first half of 2012.
Outlook
The challenges in the macroeconomic climate look set to continue
for a considerable time. The markets are likely to remain volatile
and interest rates could remain at these historical lows for a
sustained period.
The Group continues to be well placed to deliver good returns to
shareholders: generating a high income surplus with a very low cost
of debt; maintaining low vacancy levels; adding value through
selective development; and being well financed with substantial
liquid resources. I remain confident that the Group is in an
excellent position to benefit from any attractive investment
opportunities in the short to medium term.
Sten Mortstedt
Executive Chairman
15 August 2012
BUSINESS REVIEW
A clear focus on active management
Investment Property
LONDON Variable quarterly economic data suggest the UK is
treading water at best; however, London itself is clearly
outperforming the rest of the UK by some margin. This has been
another successful six months for our asset management team in the
London region. Whilst lettings continue to suffer around the M25
and beyond, where vacancy levels of over 15% are reported, Central
London markets continue to outperform. We have reduced our vacancy
levels to 2.9% at 30 June, from 4.0% at 31 December 2011, with
particular successes at Westminster Tower, SE11 and Great West
House, Brentford. In total we renewed leases on 4,824 sq m, and
whilst 1,608 sq m became vacant we let 2,739 sq m. This excellent
performance highlights the benefit of working closely with tenants
and potential tenants, with our in-house asset and property
management teams reacting fast and effectively, keeping office
space up to date to meet expectations.
The lack of new or refurbished space in our sub-markets is
clearly benefiting the Group, and on certain buildings we are now
able to increase rents modestly to reflect this. We expect our
holdings in Midtown at Fetter Lane, EC4, Gray's Inn Road, WC1 and
John Adam Street, WC2 in particular will benefit from this.
In May the Group secured planning consent on the first of its
two applications in Vauxhall, called Spring Mews, for a mixed use
scheme with 399 student bedrooms, a 120 bedroom hotel, a 561 sq m
community centre and café, together with 469 sq m of office space,
a 245 sq m convenience store and a new pedestrian mews for the
public, linking Spring Gardens to Tinworth Street. We are
progressing our detailed design and site preparation with a view to
starting construction by the end of the year for a completion in
late 2014. We are in discussions with potential specialist
operators for the hotel and the student building, and anticipate an
annual rental value in excess of (GBP)5 million.
Discussions are continuing with the planning authority and other
stakeholders on our 154,000 sq m Vauxhall Square planning
application. The Group's site is a key piece within the Vauxhall
Nine Elms regeneration zone and our mixed-use proposal has been
well received.
At Clifford's Inn, Fetter Lane, EC4, we have submitted a
planning application for a comprehensive refurbishment to provide
3,433 sq m of new Grade A offices and eight residential apartments.
Subject to receiving planning consent, we aim to start the
refurbishment in April 2013; the cost is expected to be (GBP)9.1
million.
The increase in the value of the London portfolio of 3.1% is a
reflection primarily of the uplift due to properties allocated for
development, and of the asset management successes.
Whilst the traditional banking market in London is weak, other
sources of finance are becoming available to listed companies with
a strong track record and we remain confident of our ability to tap
into these and selectively take advantage of special opportunities
in our markets. In this vein it took us only two weeks to acquire a
1,963 sq m office property in Wallington, Surrey generating
(GBP)320,885 per annum at current market rents, and for which we
paid (GBP)2.08 million, representing a net initial yield of 14.1%;
the five tenants have a weighted average lease profile of 2.4 years
to first break clause.
FRANCE The French economy slowed noticeably in the first half,
with GDP at best being flat; this was inevitably exaggerated by the
presidential election where the prospect of change led to
uncertainty in the business community. There is a noticeable degree
of caution amongst investors, banks and tenants whilst they wait to
see the impact of the new president, both domestically and on the
wider European stage.
Agents research indicates take up has reduced by over 20%
compared to the first half of 2011.
Letting enquiries have reflected this caution, and our French
vacancy rate increased from its all-time low in December of 2.7% to
3.8%, still significantly below the market average. Leases were
renewed on 2,450 sq m, and whilst tenants vacated 2,747 sq m, new
leases were signed for 1,963 sq m. Understandably, some smaller
tenants have shown signs of experiencing difficulties in their
businesses, and our in-house property team has been able to
recognise this early and respond proactively to assist tenants
where possible.
The lack of new construction of speculative office space in our
main Paris and Lyon markets is likely to continue and will assist
the Group as supply will be constrained; vacancy is 7% across the
Greater Paris region and total office availability has fallen over
the last 12 months.
The value of the French portfolio fell by 0.4%, despite rental
indexation of EUR420,000 applying to the portfolio in the first
half.
GERMANY Amongst the Eurozone hiatus in the last six months the
German economy has continued to remain resilient, with unemployment
falling. The office investment market has seen a decline in
transaction volumes of 18%, with the focus being on core areas
where prime yields are hardening, although private investors have
increased their investing activity by 15% in the first half.
Office lettings in the Top 6 cities across Germany are 10.5%
lower than in 2011, but with little new construction, vacancy
levels in these markets have reduced to 9.3%. It is encouraging
also that the Group's vacancy level has fallen to 5.2% (31 December
2011: 6.0%). Leases were signed or renewed on 2,337 sq m, whilst
tenants vacated 2,513 sq m.
The pre-let extension of 1,642 sq m to Dr Honle AG in
Grafelfing, Munich was completed in February, generating an extra
EUR197,000 rent per annum and at the end of July we completed the
5,400 sq m pre-let to E.ON in Landshut near Munich, which will
generate an additional rent of EUR410,000 per annum. Both
developments were completed on time and on budget.
SWEDEN The Nordic banks have low exposure to the peripheral Euro
countries and whilst some overseas lenders have pulled out of the
area, the Nordic countries' positive current account balances
provide the ability to replace credit from abroad with domestic
savings. Coupled with population growth in key cities, this bodes
well for the Swedish property markets both in commercial and in
residential property.
The Group's Vanerparken property near Gothenburg is performing
to plan, with discussions soon to begin on lease renewals. The
Stockholm listed real estate company, Catena AB, in which the Group
has a 29.9% shareholding, is continuing positive negotiations on
its planning application for 950 apartments and 50,000 sq m of
commercial space. A planning consent is expected to be received
around the end of 2012.
Cood Investments AB, a residential property company specialising
in holiday cottages and cabins, in which the Group made an
investment of (GBP)4.0 million in the first half for a 16.6% stake,
is performing satisfactorily.
Other Investments
The corporate bond portfolio remains a key part of the Group's
long-term investment strategy alongside the core ownership of
investment properties. Corporate bonds held at 30 June 2012 had a
value of (GBP)76.1 million (31 December 2011: (GBP)85.1 million)
with a yield of 10.3% on value. A summary of the 34 bonds held at
30 June 2012 from 30 issuers (31 December 2011: 39 bonds from 33
issuers) are set out in note 11 of the financial statements.
The Group owns a 48.3% investment, carried in the balance sheet
at (GBP)8.1 million, in Bulgarian Land Developments Plc which is
working on its strategy of asset sales following achievement of the
individual asset's objectives.
Nyheter 24 Group is an on-line news media company based in
Stockholm and in which CLS owns a 20% interest, which is carried in
the balance sheet at (GBP)1.8 million.
PORTFOLIO STATISTICS
Weighted Contracted
average rent Capital
6 month unexpired per value
Contracted revaluation Net lease let sq per
At 30 rent Valuation in local initial Vacancy term m sq m
June 2012 ((GBP)m) ((GBP)m) currency yield by rent (years) ((GBP)) ((GBP))
------------ ----------- ---------- ------------- --------- --------- ----------- ----------- ---------
London 27.8 412.7 +3.1% 6.4% 2.9% 8.8 219 3,156
France 18.5 239.5 -0.4% 7.7% 3.8% 5.3 199 2,482
Germany 13.8 194.8 -0.2% 7.0% 5.2% 8.7 106 1,395
Sweden 6.4 57.4 -1.5% 8.4% 1.7% 4.1 145 1,266
------------ ----------- ----------
Total
portfolio 66.5 904.4 +1.1% 7.0% 3.5% 7.4 168 2,194
------------ ----------- ----------
Results for the Period
HEADLINES Profit after tax of (GBP)21.3 million (2011: (GBP)33.6
million) generated basic earnings per share of 47.8 pence (2011:
69.9 pence), and EPRA earnings per share of 30.7 pence (2011: 37.4
pence). Gross property assets at 30 June 2012 rose to (GBP)904.4
million (31 December 2011: (GBP)902.1 million); net assets per
share increased by 5.8% to 865.3 pence (31 December 2011: 817.5
pence) and EPRA net assets per share by 5.6% to 1,037.7 pence (31
December 2011: 983.1 pence).
STATEMENT OF COMPREHENSIVE INCOME Although profit after tax of
(GBP)21.3 million (2011: (GBP)33.6 million) was less than in 2011,
the comparative contained a number of one-off items, and the
underlying business remains very similar to that of a year ago.
EPRA profit before tax was (GBP)17.9 million (2011: (GBP)16.4
million), 9.1% higher than last year.
There have been no material property acquisitions or disposals
in the past twelve months, and the business continues to generate
cash. Group revenue in the six months to 30 June 2012 of (GBP)40.0
million (2011: (GBP)39.9 million) and costs of (GBP)14.5 million
(2011: (GBP)14.2 million) were virtually unchanged from last year.
The 1.1% uplift in local currency of the investment property
portfolio generated a revaluation gain of (GBP)10.1 million, a
non-cash item which was some (GBP)4.0 million lower than last year
(2011: (GBP)14.1 million), and it was largely this difference, and
a one-off profit on sale of subsidiaries in 2011 of (GBP)1.2
million, which accounted for the lower operating profit of
(GBP)35.5 million (2011: (GBP)41.3 million).
Interest income of (GBP)4.5 million (2011: (GBP)4.1 million) and
positive foreign exchange variances of (GBP)0.7 million (2011:
(GBP)0.8 million) were similar to last year. Finance income in 2011
also contained a one-off write-off of debt of (GBP)2.3 million on
the liquidation of the subsidiaries which issued it.
Interest expense of (GBP)11.9 million (2011: (GBP)14.6 million)
was (GBP)2.7 million lower than in 2011. In the second half of 2011
the Group cancelled an onerous interest rate swap contract, the
effect of which was a saving in the six months to 30 June 2012 of
(GBP)1.5 million against the comparable period in 2011. In
addition, the Group benefited from lower short-term interest rates
and the strength of sterling. At 30 June 2012, the weighted cost of
debt had fallen to 3.74% (31 December 2011: 4.06%).
EPRA NET ASSETS PER SHARE EPRA net assets per share rose from
983.1 pence to 1,037.7 pence in the six months to 30 June 2012, an
increase of 54.6 pence per share, or 5.6%. The majority of this
increase came from profit after tax, which added 51.6 pence per
share.
CASH FLOW, NET DEBT AND GEARING Net cash flow from operating
activities of (GBP)14.3 million was at a similar level to the
corresponding period in 2011, underlining the Group's ability to
generate cash. (GBP)7.9 million of this was distributed to
shareholders. Interest of (GBP)5.4 million was received from
investments, and a net (GBP)13.9 million from disposing of
corporate bonds and other investments. This cash was used to repay
(GBP)21.7 million of loans, net of new loans taken out in the six
months to 30 June 2012, capital expenditure of (GBP)7.8 million,
the acquisition of an interest in an associate for (GBP)4.0 million
and other expenditure of (GBP)0.4 million leaving a cash balance at
30 June of (GBP)47.1 million.
In the six months to 30 June 2012, gross borrowings fell by
(GBP)31.7 million to (GBP)593.4 million (31 December 2011:
(GBP)625.1 million), but net of cash balances, by only (GBP)23.5
million to (GBP)546.3 million (31 December 2011: (GBP)569.8
million) as cash balances reduced from (GBP)55.3 million in
December to (GBP)47.1 million at the end of June. The Group's
weighted average loan to value was 60.3% (2011: 62.5%). Balance
sheet gearing was down to 144% (2011: 155%) and adjusted gearing,
based on EPRA net assets, was 120% (2011: 128%).
SHARE CAPITAL In April 1,070,324 shares were cancelled under the
tender offer buy-back at 735 pence per share. At 30 June 2012,
there were 43,883,287 shares in issue, and 4,803,103 Treasury
Shares held by the Company.
Sustainability
We have installed our first set of photovoltaic cells at Buspace
Studios, London W10 which will provide much of the electricity
needed for the common parts and aims to cut CO(2) emissions by
almost 24 tonnes per year. Following a lighting review, LED
lighting has been installed in the common parts at Quayside, London
SW6, which led to the consumption of electricity falling by over
90%. We intend to replicate the benefits of similar energy
efficient lighting systems across our property portfolio. As
participants in the Carbon Reduction Commitment Energy Efficiency
Scheme, we have successfully reduced our CO(2) emissions by nearly
1,500 tonnes in the first comparative year to 31 March 2012,
despite increasing the size of the portfolio. We expect to provide
further information on progress against our sustainability measures
at the year end.
Principal Risks and Uncertainties
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remaining six months of the financial year and could cause the
results for the year to differ materially from expected or
historical results. The Directors do not consider that the
principal risks and uncertainties have changed since the
publication of the annual report for the year ended 31 December
2011. A detailed explanation of the risks summarised below can be
found on pages 20 and 21 of the Annual Report, which is available
at www.clsholdings.com:
-- Underperformance of investment portfolio due to:
Cyclical downturn in property market
Inappropriate buy/sell/hold decisions
Changes in supply of space and/or tenant demand
Poor asset management
-- Corporate bond investments
Underperformance of corporate bond portfolio
Insolvency of corporate issuer
-- Failure to secure planning permission
-- Contractor solvency and availability
-- Downturn in investment or occupational markets
-- Unavailability of financing at acceptable prices
-- Adverse interest rate movements
-- Breach of borrowing covenants
-- Foreign currency exposure
-- Financial counterparty credit risk
-- Increases in tax rates or changes to the basis of taxation
-- Break-up of the Euro
-- Economic downturn
-- Inadequate working capital to remain a going concern for the next 12 months
Going Concern
As stated in note 2 to the Condensed Group Financial Statements,
the Directors are satisfied that the Group has sufficient resources
to continue in operation for the foreseeable future, being a period
of not less than 12 months from the date of this Half-Yearly
Financial Report. Accordingly, they continue to adopt the going
concern basis in preparing the Condensed Group Financial
Statements.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
a) the condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting';
b) the Chairman's Statement and Business Review include a fair
review of the information required by DTR 4.2.7R (indication of
important events during the first six months and description of
principal risks and uncertainties for the remaining six months of
the year); and
c) the Chairman's Statement and Business Review include a fair
review of the information required by DTR 4.2.8R (disclosure of
related party transactions and changes therein).
On behalf of the Board
Sten Mortstedt Henry Klotz
Executive Chairman Executive Vice Chairman
INDEPENDENT REVIEW REPORT TO CLS HOLDINGS PLC
We have been engaged by the Company to review the condensed set
of financial statements in the Half-Yearly Financial Report for the
six months ended 30 June 2012 which comprises the Condensed Group
Statement of Comprehensive Income, the Condensed Group Balance
Sheet, the Condensed Group Statement of Changes in Equity, the
Condensed Group Statement of Cash Flows and related notes 1 to 15.
We have read the other information contained in the Half-Yearly
Financial Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Directors' Responsibilities
The Half-Yearly Financial Report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the Half-Yearly Financial Report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this Half-Yearly Financial Report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the Half-Yearly
Financial Report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Half-Yearly Financial Report for the six months ended 30
June 2012 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
15 August 2012
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2012
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2012 2011 2011
(GBP)m (GBP)m (GBP)m
Notes (unaudited) (unaudited) (audited)
---------------------------------------------- ------ -------------- -------------- --------------
Continuing operations
Group revenue 3 40.0 39.9 80.1
Costs 3 (14.5) (14.2) (30.6)
---------------------------------------------- ------ -------------- -------------- --------------
25.5 25.7 49.5
Net movements on revaluation of investment
properties 9 10.1 14.1 18.0
Net (loss)/gain on sale of corporate
bonds and other investments (0.1) 0.3 2.2
Profit on sale of subsidiaries and
associates - 1.2 0.5
---------------------------------------------- ------ -------------- -------------- --------------
Operating profit 35.5 41.3 70.2
Finance income 4 5.2 7.2 12.2
Finance costs 5 (13.0) (13.5) (47.7)
Share of (loss)/profit of associates
after tax 10 (0.6) 2.1 3.0
---------------------------------------------- ------ -------------- -------------- --------------
Profit before tax 27.1 37.1 37.7
Taxation 6 (5.8) (3.5) 1.1
---------------------------------------------- ------ -------------- -------------- --------------
Profit for the period 21.3 33.6 38.8
Other comprehensive income
Foreign exchange differences (4.6) 9.0 (5.0)
Fair value gains/(losses) on corporate
bonds and other investments 3.1 2.0 (16.0)
Fair value losses/(gains) taken to
net (loss)/gain on sale of corporate
bonds and other investments 1.8 0.1 (0.8)
Deferred tax on net fair value gains
on corporate bonds and other investments 6 (1.1) 1.2 4.6
Share of other comprehensive (loss)/income
of associates 10 (0.6) 0.1 -
Revaluation of owner-occupied property 0.1 0.2 0.3
---------------------------------------------- ------ -------------- -------------- --------------
Total comprehensive income for the
period 20.0 46.2 21.9
---------------------------------------------- ------ -------------- -------------- --------------
Profit attributable to:
Owners of the Company 21.3 32.3 37.5
Non-controlling interests - 1.3 1.3
---------------------------------------------- ------ -------------- -------------- --------------
Profit for the period 21.3 33.6 38.8
---------------------------------------------- ------ -------------- -------------- --------------
Total comprehensive income attributable
to:
Owners of the Company 20.0 44.9 20.6
Non-controlling interests - 1.3 1.3
---------------------------------------------- ------ -------------- -------------- --------------
Total comprehensive income for the
period 20.0 46.2 21.9
---------------------------------------------- ------ -------------- -------------- --------------
Earnings per share from continuing
operations attributable to the owners
of the Company during the period (expressed
in pence per share)
Basic 7 47.8 69.9 82.0
Diluted 7 47.7 69.8 81.9
---------------------------------------------- ------ -------------- -------------- --------------
CONDENSED GROUP BALANCE SHEET
at 30 June 2012
30 June 30 June 31 December
2012 2011 2011
(GBP)m (GBP)m (GBP)m
Notes (unaudited) (unaudited) (audited)
-------------------------------------- ------ -------------- -------------- ------------
Non-current assets
Investment properties 9 904.4 924.8 902.1
Property, plant and equipment 2.8 2.7 2.7
Goodwill and other intangible assets 1.1 1.1 1.1
Investments in associates 10 25.8 24.7 24.1
Other investments 11 78.4 114.7 87.8
Derivative financial instruments 0.8 4.7 1.5
Deferred tax 6 12.5 10.5 17.7
-------------------------------------- ------ -------------- -------------- ------------
1,025.8 1,083.2 1,037.0
-------------------------------------- ------ -------------- -------------- ------------
Current assets
Trade and other receivables 10.6 9.9 11.6
Derivative financial instruments 0.7 0.4 0.4
Cash and cash equivalents 47.1 119.5 55.3
-------------------------------------- ------ -------------- -------------- ------------
58.4 129.8 67.3
-------------------------------------- ------ -------------- -------------- ------------
Total assets 1,084.2 1,213.0 1,104.3
-------------------------------------- ------ -------------- -------------- ------------
Current liabilities
Trade and other payables (30.3) (34.0) (30.4)
Current tax 6 (1.3) (3.7) (1.2)
Borrowings 12 (149.8) (98.3) (151.2)
Derivative financial instruments (0.1) - (0.1)
-------------------------------------- ------ -------------- -------------- ------------
(181.5) (136.0) (182.9)
-------------------------------------- ------ -------------- -------------- ------------
Non-current liabilities
Deferred tax 6 (73.9) (79.0) (75.0)
Borrowings 12 (440.0) (587.6) (469.8)
Derivative financial instruments (9.1) (14.1) (9.1)
-------------------------------------- ------ -------------- -------------- ------------
(523.0) (680.7) (553.9)
-------------------------------------- ------ -------------- -------------- ------------
Total liabilities (704.5) (816.7) (736.8)
-------------------------------------- ------ -------------- -------------- ------------
Net assets 379.7 396.3 367.5
-------------------------------------- ------ -------------- -------------- ------------
Equity
Share capital 13 12.2 12.6 12.5
Share premium 71.5 71.5 71.5
Other reserves 85.0 115.4 86.0
Retained earnings 211.0 196.8 197.5
-------------------------------------- ------ -------------- -------------- ------------
379.7 396.3 367.5
-------------------------------------- ------ -------------- -------------- ------------
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2012
Attributable to the owners of the
Company
------------------------------------------------------
Share Share Other Retained Non-controlling
capital premium reserves earnings Total interests Total
Unaudited (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
At 1 January 2012 12.5 71.5 86.0 197.5 367.5 - 367.5
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
Arising in the six months
ended 30 June 2012:
Total comprehensive income
for the period - - (1.3) 21.3 20.0 - 20.0
Purchase of own shares (0.3) - 0.3 (7.9) (7.9) - (7.9)
Employee share option
schemes - - - 0.1 0.1 - 0.1
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
Total changes arising
in the period (0.3) - (1.0) 13.5 12.2 - 12.2
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
At 30 June 2012 12.2 71.5 85.0 211.0 379.7 - 379.7
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
Attributable to the owners of the
Company
------------------------------------------------------
Share Share Other Retained Non-controlling
capital premium reserves earnings Total interests Total
Unaudited (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
At 1 January 2011 12.9 71.5 102.5 171.6 358.5 (1.3) 357.2
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
Arising in the six months
ended 30 June 2011:
Total comprehensive
income for the period - - 12.6 32.3 44.9 1.3 46.2
Purchase of own shares (0.3) - 0.3 (7.1) (7.1) - (7.1)
Expenses thereof - - - (0.1) (0.1) - (0.1)
Employee share option
schemes - - - 0.1 0.1 - 0.1
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
Total changes arising
in the period (0.3) - 12.9 25.2 37.8 1.3 39.1
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
At 30 June 2011 12.6 71.5 115.4 196.8 396.3 - 396.3
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
Attributable to the owners of the
Company
------------------------------------------------------
Share Share Other Retained Non-controlling
capital premium reserves earnings Total interests Total
Audited (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
At 1 January 2011 12.9 71.5 102.5 171.6 358.5 (1.3) 357.2
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
Arising in the year
ended 31 December 2011:
Total comprehensive
income for the year - - (16.9) 37.5 20.6 1.3 21.9
Purchase of own shares (0.4) - 0.4 (11.7) (11.7) - (11.7)
Expenses thereof - - - (0.1) (0.1) - (0.1)
Employee share option
schemes - - - 0.2 0.2 - 0.2
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
Total changes arising
in the year (0.4) - (16.5) 25.9 9.0 1.3 10.3
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
At 31 December 2011 12.5 71.5 86.0 197.5 367.5 - 367.5
---------------------------- --------- --------- ---------- ---------- -------- ---------------- --------
CONDENSED GROUP STATEMENT OF CASH FLOWS
for the six months ended 30 June 2012
Year
Six months Six months ended
ended ended 31 December
30 June 30 June
2012 2011 2011
(GBP)m (GBP)m (GBP)m
Notes (unaudited) (unaudited) (audited)
---------------------------------------------- ------ -------------- -------------- --------------
Cash flows from operating activities
Cash generated from operations 14 26.4 28.3 54.1
Interest paid (11.3) (12.7) (26.1)
Income tax paid (0.8) (1.6) (2.9)
---------------------------------------------- ------ -------------- -------------- --------------
Net cash inflow from operating activities 14.3 14.0 25.1
---------------------------------------------- ------ -------------- -------------- --------------
Cash flows from investing activities
Purchase of investment property - (0.9) (7.2)
Capital expenditure on investment property (7.8) (6.0) (13.2)
Interest received 5.4 3.1 6.9
Purchase of corporate bonds (11.0) (44.8) (54.5)
Proceeds from sale of corporate bonds
and other investments 24.9 22.2 39.0
Purchase of equity investments (0.2) (6.8) (7.6)
Purchase of interests in associate (4.0) - (0.2)
Distributions received from associate
undertakings 0.6 19.9 19.9
Costs on foreign currency transactions (0.3) (1.2) (1.4)
Costs of corporate disposals (0.3) (0.8) (1.8)
Purchases of property, plant and equipment (0.1) (0.1) (0.2)
---------------------------------------------- ------ -------------- -------------- --------------
Net cash inflow/(outflow) from investing
activities 7.2 (15.4) (20.3)
---------------------------------------------- ------ -------------- -------------- --------------
Cash flows from financing activities
Purchase of own shares (7.9) (7.2) (11.8)
New loans 12.1 175.3 174.2
Issue costs of new loans (0.1) (3.0) (2.8)
Repayment of loans (33.7) (91.7) (132.2)
Purchase or cancellation of financial
instruments (0.1) (1.3) (25.9)
---------------------------------------------- ------ -------------- -------------- --------------
Net cash (outflow)/inflow from financing
activities (29.7) 72.1 1.5
---------------------------------------------- ------ -------------- -------------- --------------
Cash flow element of net (decrease)/increase
in cash and cash equivalents (8.2) 70.7 6.3
Foreign exchange gain - 0.5 0.7
---------------------------------------------- ------ -------------- -------------- --------------
Net (decrease)/increase in cash and
cash equivalents (8.2) 71.2 7.0
Cash and cash equivalents at the beginning
of the period 55.3 48.3 48.3
---------------------------------------------- ------ -------------- -------------- --------------
Cash and cash equivalents at the end
of the period 47.1 119.5 55.3
---------------------------------------------- ------ -------------- -------------- --------------
NOTES TO THE CONDENSED GROUP FINANCIAL STATEMENTS
30 June 2012
1 BASIS OF PREPARATION
The financial information contained in this Half-Yearly
Financial Report does not constitute statutory accounts as defined
in section 434 of the Companies Act 2006. The results for the year
ended 31 December 2011 are an abridged version of the full accounts
for that year, which received an unqualified report from the
auditor, did not contain a statement under section 498(2) or (3) of
the Companies Act 2006 or include a reference to any matter to
which the auditor drew attention by way of emphasis without
qualifying the auditor's report, and have been filed with the
Registrar of Companies. The annual financial statements of CLS
Holdings plc are prepared in accordance with IFRSs as adopted by
the European Union. The condensed set of financial statements
included in this Half-Yearly Financial Report has been prepared in
accordance with IAS 34 Interim Financial Reporting, as adopted by
the European Union. The same accounting policies, presentation and
methods of computation are followed in the condensed set of
financial statements as applied in the latest audited annual
financial statements.
2 GOING CONCERN
The Directors regularly stress-test the business model to ensure
that the Group has adequate working capital. They have reviewed the
current and projected financial position of the Group as discussed
in the Business Review, taking into account the repayment profile
of the Group's loan portfolio, and making reasonable assumptions
about future trading performance. The Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and, therefore,
they continue to adopt the going concern basis in preparing the
Half-Yearly Financial Report.
3 SEGMENT INFORMATION
The Group has two operating divisions - Investment Property and
Other Investments. Other Investments comprise corporate bonds,
shares in Catena AB, Bulgarian Land Development Plc and Wyatt Media
Group AB, and other small corporate investments. The Group manages
the Investment Property division on a geographical basis due to its
size and geographical diversity. Consequently, the Group's
principal operating segments are:
Investment London
Property -
France
Germany
Sweden
Other Investments
There are no transactions between the operating segments. There
was no change in the basis of segmentation, nor in the basis of
measurement of segment profit or loss in the period.
The Group's results for the six months ended 30 June 2012 by
operating segment were as follows:
Investment property
--------------------------------------
Other
London France Germany Sweden Investments Total
(GBP)m (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m
------------------------------- -------- -------- -------- -------- ------------- --------
Rental income 13.7 9.4 6.9 3.1 - 33.1
Service charge income 2.1 2.8 1.4 0.2 - 6.5
Other property-related income 0.3 - - - - 0.3
Income from non-property
activities - - - - 0.1 0.1
------------------------------- -------- -------- -------- -------- ------------- --------
Group revenue 16.1 12.2 8.3 3.3 0.1 40.0
------------------------------- -------- -------- -------- -------- ------------- --------
Service charges and similar
expenses (2.7) (2.9) (1.6) (0.8) - (8.0)
Administration expenses (1.0) (0.7) (0.5) (0.2) (0.2) (2.6)
Other expenses (0.6) (0.2) (0.4) (0.1) - (1.3)
------------------------------- -------- -------- -------- -------- ------------- --------
Costs (4.3) (3.8) (2.5) (1.1) (0.2) (11.9)
------------------------------- -------- -------- -------- -------- ------------- --------
Group revenue less costs 11.8 8.4 5.8 2.2 (0.1) 28.1
Net movements on revaluation
of investment properties 12.2 (0.9) (0.3) (0.9) - 10.1
Net loss on sale of corporate
bonds and other investments - - - - (0.1) (0.1)
------------------------------- -------- -------- -------- -------- ------------- --------
Segment operating profit 24.0 7.5 5.5 1.3 (0.2) 38.1
Finance income 0.2 0.1 - - 4.9 5.2
Finance costs (5.6) (2.6) (2.6) (0.7) (1.5) (13.0)
Share of loss of associates
after tax - - - - (0.6) (0.6)
------------------------------- -------- -------- -------- -------- ------------- --------
Segment profit before tax 18.6 5.0 2.9 0.6 2.6 29.7
Taxation (3.3) (1.9) (0.2) (0.4) - (5.8)
------------------------------- -------- -------- -------- -------- ------------- --------
Segment profit after tax 15.3 3.1 2.7 0.2 2.6 23.9
------------------------------- -------- -------- -------- -------- -------------
Central administration costs (2.6)
------------------------------- -------- -------- -------- -------- ------------- --------
Profit for the period 21.3
------------------------------- -------- -------- -------- -------- ------------- --------
The Group's results for the six months ended 30 June 2011 by
operating segment were as follows:
Investment property
--------------------------------------
Other
London France Germany Sweden Investments Total
(GBP)m (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m
-------------------------------- -------- -------- -------- -------- ------------- --------
Rental income 13.1 9.4 7.1 3.1 - 32.7
Service charge income 1.9 2.4 1.5 0.1 - 5.9
Other property-related income 0.3 0.2 - - - 0.5
Income from non-property
activities - - - - 0.8 0.8
-------------------------------- -------- -------- -------- -------- ------------- --------
Group revenue 15.3 12.0 8.6 3.2 0.8 39.9
-------------------------------- -------- -------- -------- -------- ------------- --------
Service charges and similar
expenses (2.8) (2.6) (1.5) (0.7) - (7.6)
Administration expenses (1.0) (0.6) (0.5) (0.1) (1.1) (3.3)
Other expenses (0.6) (0.1) (0.3) - (0.1) (1.1)
-------------------------------- -------- -------- -------- -------- ------------- --------
Costs (4.4) (3.3) (2.3) (0.8) (1.2) (12.0)
-------------------------------- -------- -------- -------- -------- ------------- --------
Group revenue less costs 10.9 8.7 6.3 2.4 (0.4) 27.9
Net movements on revaluation
of investment properties 9.1 3.6 1.3 0.1 - 14.1
Net gain on sale of corporate
bonds and other investments - - - - 0.3 0.3
Profit on sale of subsidiaries
and associates - - - - 1.2 1.2
-------------------------------- -------- -------- -------- -------- ------------- --------
Segment operating profit 20.0 12.3 7.6 2.5 1.1 43.5
Finance income - - - - 7.2 7.2
Finance costs (6.1) (2.7) (3.2) (0.7) (0.8) (13.5)
Share of profit of associates
after tax - - - - 2.1 2.1
-------------------------------- -------- -------- -------- -------- ------------- --------
Segment profit before tax 13.9 9.6 4.4 1.8 9.6 39.3
Taxation (0.1) (2.7) (0.4) (0.6) 0.3 (3.5)
-------------------------------- -------- -------- -------- -------- ------------- --------
Segment profit after tax 13.8 6.9 4.0 1.2 9.9 35.8
-------------------------------- -------- -------- -------- -------- -------------
Central administration costs (2.2)
-------------------------------- -------- -------- -------- -------- ------------- --------
Profit for the period 33.6
-------------------------------- -------- -------- -------- -------- ------------- --------
The Group's results for the year ended 31 December 2011 were as
follows:
Investment property
--------------------------------------
Other
London France Germany Sweden Investments Total
(GBP)m (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m
-------------------------------- -------- -------- -------- -------- ------------- --------
Rental income 26.5 19.1 14.4 6.2 - 66.2
Service charge income 4.2 5.2 2.5 0.3 - 12.2
Other property-related income 0.8 0.1 - - - 0.9
Income from non-property
activities - - - - 0.8 0.8
-------------------------------- -------- -------- -------- -------- ------------- --------
Group revenue 31.5 24.4 16.9 6.5 0.8 80.1
-------------------------------- -------- -------- -------- -------- ------------- --------
Service charges and similar
expenses (5.9) (5.5) (3.3) (1.6) - (16.3)
Administration expenses (1.9) (1.5) (1.1) (0.4) (1.7) (6.6)
Other expenses (1.0) (0.5) (0.6) (0.1) - (2.2)
-------------------------------- -------- -------- -------- -------- ------------- --------
Costs (8.8) (7.5) (5.0) (2.1) (1.7) (25.1)
-------------------------------- -------- -------- -------- -------- ------------- --------
Group revenue less costs 22.7 16.9 11.9 4.4 (0.9) 55.0
Net movements on revaluation
of investment properties 10.2 4.9 2.0 0.9 - 18.0
Net gain on sale of corporate
bonds and other investments - - - - 0.5 0.5
Profit on sale of subsidiaries
and associates - - - 1.8 0.4 2.2
-------------------------------- -------- -------- -------- -------- ------------- --------
Segment operating profit 32.9 21.8 13.9 7.1 - 75.7
Finance income 0.3 0.1 - - 11.8 12.2
Finance costs (30.3) (7.9) (7.1) (1.6) (0.8) (47.7)
Share of profit of associates
after tax - - - - 3.0 3.0
-------------------------------- -------- -------- -------- -------- ------------- --------
Segment profit before tax 2.9 14.0 6.8 5.5 14.0 43.2
Taxation 7.7 (4.4) (0.4) (2.2) 0.4 1.1
-------------------------------- -------- -------- -------- -------- ------------- --------
Segment profit after tax 10.6 9.6 6.4 3.3 14.4 44.3
-------------------------------- -------- -------- -------- -------- -------------
Central administration costs (5.5)
-------------------------------- -------- -------- -------- -------- ------------- --------
Profit for the year 38.8
-------------------------------- -------- -------- -------- -------- ------------- --------
Segment assets and liabilities
Assets Liabilities
---------------------------------- ----------------------------------
31 December
30 June 30 June 31 December 30 June 30 June
2012 2011 2011 2012 2011 2011
(GBP)m (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m
------------------- --------- --------- ------------ --- --------- --------- ------------
Investment
Property
London 441.7 421.6 435.5 296.8 320.6 304.9
France 248.3 306.7 252.9 206.1 229.8 212.9
Germany 199.0 216.2 201.1 144.2 159.7 147.2
Sweden 62.7 65.4 65.2 40.2 46.0 42.0
Other investments 132.5 203.1 149.6 17.2 60.6 29.8
------------------- --------- --------- ------------ --- --------- --------- ------------
1,084.2 1,213.0 1,104.3 704.5 816.7 736.8
------------------- --------- --------- ------------ --- --------- --------- ------------
Segment capital expenditure
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
(GBP)m (GBP)m (GBP)m
Investment Property
London 2.2 3.2 12.6
France 0.3 1.2 1.8
Germany 4.7 1.3 4.0
Sweden 0.4 2.1 2.5
--------------------- ----------- ----------- --------------
7.6 7.8 20.9
--------------------- ----------- ----------- --------------
4 FINANCE INCOME
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
(GBP)m (GBP)m (GBP)m
---------------------------- ----------- ----------- --------------
Interest income 4.5 4.1 9.2
Other finance income - 2.3 2.3
Foreign exchange variances 0.7 0.8 0.7
---------------------------- ----------- ----------- --------------
5.2 7.2 12.2
---------------------------- ----------- ----------- --------------
Other finance income in 2011 comprised the write off of debt on
the liquidation of the subsidiaries which issued it.
5 FINANCE COSTS
Six months
Six months ended Year
ended 30 June ended
30 June 31 December
2012 2011 2011
(GBP)m (GBP)m (GBP)m
-------------------------------------------------- ----------- ----------- --------------
Interest expense
Bank loans 8.2 10.4 21.2
Debenture loans 2.3 2.3 4.7
Other interest 0.9 0.4 1.2
Amortisation of loan issue costs 0.5 1.5 2.1
Movement in fair value of derivative financial
instruments
Interest rate swaps: transactions not qualifying
as hedges 0.1 (2.3) 14.2
Interest rate caps: transactions not qualifying
as hedges 0.7 1.2 4.3
Loss on sale of currency options 0.3 - -
-------------------------------------------------- ----------- ----------- --------------
13.0 13.5 47.7
-------------------------------------------------- ----------- ----------- --------------
6 TAXATION
Year
Six months Six months ended
ended ended 31 December
30 June 30 June
2012 2011 2011
(GBP)m (GBP)m (GBP)m
-------------- ----------- ----------- --------------
Current tax 1.0 (0.1) (1.2)
Deferred tax 4.8 3.6 0.1
-------------- ----------- ----------- --------------
5.8 3.5 (1.1)
-------------- ----------- ----------- --------------
The Balance Sheet movement in current and deferred tax since the
last reported balance sheet is as follows:
Current Deferred Deferred Total
tax tax tax Net
Liability Asset Liability Liability
------------------------------------------- ----------- --------- ----------- -----------
At 1 January 2012 (1.2) 17.7 (75.0) (58.5)
Recognised directly in arriving at profit
after tax (1.0) (4.0) (0.8) (5.8)
Recognised directly in equity - (1.1) - (1.1)
Net tax paid 0.8 - - 0.8
Foreign exchange movements 0.1 (0.1) 1.9 1.9
------------------------------------------- ----------- --------- ----------- -----------
At 30 June 2012 (1.3) 12.5 (73.9) (62.7)
------------------------------------------- ----------- --------- ----------- -----------
7 EARNINGS PER SHARE
Management has chosen to disclose the European Public Real
Estate Association (EPRA) measure of earnings per share (Best
Practices Recommendations October 2010, as clarified by Additional
Guidance July 2011), which has been provided to give relevant
information to investors on the long-term performance of the
Group's underlying business. The EPRA measure excludes items which
are non-recurring in nature such as profits (net of related tax) on
sale of investment properties, other non-current investments and
items which have no impact to earnings over their life, such as the
change in fair value of derivative financial instruments and the
net movement on revaluation of investment properties, and the
related deferred taxation on these items.
Year
Six months Six months ended
ended ended 31 December
30 June 30 June
2012 2011 2011
Earnings (GBP)m (GBP)m (GBP)m
-------------------------------------------------- ----------- ----------- --------------
Profit for the period attributable to the owners
of the Company 21.3 32.3 37.5
Revaluation gains on investment properties (10.1) (14.1) (18.0)
Profit on sale of subsidiaries and associates - (1.2) (2.2)
Change in fair value of derivative financial
instruments 1.1 (1.1) 18.5
Net loss/(gain) on sale of corporate bonds and
other investments 0.1 (0.3) (0.5)
Deferred tax relating to the above adjustments 1.6 4.4 0.5
Adjustments in respect of associates (0.3) (2.7) (3.8)
Non-recurring finance income - - (2.3)
-------------------------------------------------- ----------- ----------- --------------
EPRA Earnings 13.7 17.3 29.7
-------------------------------------------------- ----------- ----------- --------------
Six months Six months Year
ended ended ended
30 June 30 June 31 December
Weighted average number of ordinary shares in 2012 2011 2011
circulation Number Number Number
---------------------------------------------------- ----------- ----------- -------------
Weighted average number of ordinary shares in
circulation 44,571,352 46,237,751 45,738,600
Dilutive share options(1) 70,814 69,112 67,542
---------------------------------------------------- ----------- ----------- -------------
Diluted weighted average number of ordinary shares 44,642,166 46,306,863 45,806,142
---------------------------------------------------- ----------- ----------- -------------
1 300,000 share options were granted on 11 March 2010 at an exercise price of 470 pence.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
Earnings per Share Pence Pence Pence
-------------------- ----------- ----------- -------------
Basic 47.8 69.9 82.0
Diluted 47.7 69.8 81.9
EPRA 30.7 37.4 64.9
-------------------- ----------- ----------- -------------
8 NET ASSETS PER SHARE
Management has chosen to disclose the two European Public Real
Estate Association (EPRA) measures of net assets per share (Best
Practices Recommendations October 2010, as clarified by Additional
Guidance July 2011): EPRA net assets per share and EPRA triple net
assets per share. The EPRA net assets per share measure highlights
the fair value of equity on a long-term basis, and so excludes
items which have no impact on the Group in the long term, such as
fair value movements of derivative financial instruments and
movements on fair value of investment properties, and associated
deferred tax. The EPRA triple net assets per share measure
discloses net assets per share on a true fair value basis: all
balance sheet items are included at their fair value in arriving at
this measure, including deferred tax, fixed rate loan liabilities
and any other balance sheet items not reported at fair value.
30 June 30 June 31 December
2012 2011 2011
Net Assets (GBP)m (GBP)m (GBP)m
------------------------------------------------ -------- -------- ------------
Basic net assets 379.7 396.3 367.5
Dilutive impact of share options 1.4 1.4 1.4
------------------------------------------------ -------- -------- ------------
Diluted net assets 381.1 397.7 368.9
Adjustment to increase fixed rate debt to fair
value, net of tax (23.4) (18.0) (23.7)
Goodwill as a result of deferred tax (1.1) (1.1) (1.1)
------------------------------------------------ -------- -------- ------------
EPRA Triple Net Assets 356.6 378.6 344.1
Deferred tax on property and other non-current
assets 68.8 74.4 67.9
Fair value of derivative financial instruments 7.7 9.0 7.3
Adjustment to reduce fixed rate debt to book
value, net of tax 23.4 18.0 23.7
Adjustments in respect of associates 2.0 0.9 1.9
------------------------------------------------ -------- -------- ------------
EPRA Net Assets 458.5 480.9 444.9
------------------------------------------------ -------- -------- ------------
30 June 30 June 31 December
2012 2011 2011
Number of ordinary shares in circulation Number Number Number
-------------------------------------------------- ----------- ----------- ------------
Number of ordinary shares in circulation 43,883,287 45,597,005 44,953,611
Dilutive share options 300,000 300,000 300,000
-------------------------------------------------- ----------- ----------- ------------
Diluted number of ordinary shares in circulation 44,183,287 45,897,005 45,253,611
-------------------------------------------------- ----------- ----------- ------------
30 June 30 June 31 December
2012 2011 2011
Net Assets Per Share Pence Pence Pence
---------------------- -------- -------- ------------
Basic 865.2 869.1 817.5
Diluted 862.5 866.5 815.2
EPRA 1,037.7 1,047.7 983.1
EPRA Triple Net 807.1 824.9 760.4
---------------------- -------- -------- ------------
9 INVESTMENT PROPERTIES
30 June 30 June 31 December
2012 2011 2011
(GBP)m (GBP)m (GBP)m
--------- -------- -------- ------------
London 412.7 387.3 398.0
France 239.5 267.0 248.3
Germany 194.8 209.7 197.1
Sweden 57.4 60.8 58.7
--------- -------- -------- ------------
904.4 924.8 902.1
--------- -------- -------- ------------
The movement in investment properties since the last reported
balance sheet was as follows:
London France Germany Sweden Total
(GBP)m (GBP)m (GBP)m (GBP)m (GBP)m
------------------------------------- -------- -------- -------- -------- --------
At 1 January 2012 398.0 248.3 197.1 58.7 902.1
Capital expenditure 2.2 0.3 4.7 0.4 7.6
Net movements on revaluation of
investment properties 12.2 (0.9) (0.3) (0.9) 10.1
Rent-free period debtor adjustments 0.3 - - - 0.3
Exchange rate variances - (8.2) (6.7) (0.8) (15.7)
------------------------------------- -------- -------- -------- -------- --------
At 30 June 2012 412.7 239.5 194.8 57.4 904.4
------------------------------------- -------- -------- -------- -------- --------
The investment properties were revalued at 30 June 2012 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
Germany: Colliers International
Sweden: CB Richard Ellis
Investment properties include leasehold properties with a
carrying value of (GBP)18.3 million (June 2011: (GBP)21.0 million;
December 2011: (GBP)19.1 million).
Included within investment properties are properties held for
sale with a carrying value of (GBP)nil (June 2011: (GBP)21.9
million, December 2011: (GBP)nil).
Where the Group leases out its investment property under
operating leases the duration is typically three years or more. No
contingent rents have been recognised in the current or comparative
years. Substantially all investment properties are secured against
debt. During 2010 the Group purchased a property in London for
(GBP)1.8 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 (GBP)0.5 million. At 30 June 2012 the fair value of the
liability was (GBP)nil (June 2011: (GBP)nil; December 2011:
(GBP)nil).
10 INVESTMENTS IN ASSOCIATES
Bulgarian
Land
Development Other
Catena AB Plc associates Total
At 30 June 2012 (GBP)m (GBP)m (GBP)m (GBP)m
--------------------------- ---------- ------------- ------------ --------
Interest held in ordinary
share capital 29.9% 48.3% various
Revenues 0.4 0.2 0.7 1.3
--------------------------- ---------- ------------- ------------ --------
Share of profit/(loss)
of associates after tax 0.4 (0.4) (0.6) (0.6)
--------------------------- ---------- ------------- ------------ --------
Assets 19.6 8.9 6.4 34.9
Liabilities (11.7) (0.8) (3.5) (16.0)
--------------------------- ---------- ------------- ------------ --------
Net assets 7.9 8.1 2.9 18.9
Goodwill 5.1 - 1.8 6.9
--------------------------- ---------- ------------- ------------ --------
Investments in associates 13.0 8.1 4.7 25.8
--------------------------- ---------- ------------- ------------ --------
Market value of interest 16.0 n/a n/a
--------------------------- ---------- ------------- ------------ --------
Bulgarian
Land
Development Other
Catena AB Plc associates Total
At 30 June 2011 (GBP)m (GBP)m (GBP)m (GBP)m
--------------------------- ---------- ------------- ------------ --------
Interest held in ordinary
share capital 29.9% 48.3% various
Revenues 0.2 0.3 0.4 0.9
--------------------------- ---------- ------------- ------------ --------
Share of profit/(loss)
of associates after tax 2.6 (0.5) - 2.1
--------------------------- ---------- ------------- ------------ --------
Assets 19.8 18.2 0.9 38.9
Liabilities (12.1) (8.7) (0.5) (21.3)
--------------------------- ---------- ------------- ------------ --------
Net assets 7.7 9.5 0.4 17.6
Goodwill 5.4 - 1.7 7.1
--------------------------- ---------- ------------- ------------ --------
Investments in associates 13.1 9.5 2.1 24.7
--------------------------- ---------- ------------- ------------ --------
Market value of interest 37.9 n/a n/a
--------------------------- ---------- ------------- ------------ --------
Bulgarian
Land
Development Other
Catena AB Plc associates Total
At 31 December 2011 (GBP)m (GBP)m (GBP)m (GBP)m
--------------------------- ---------- ------------- ------------ --------
Interest held in ordinary
share capital 29.9% 48.3% various
Revenues 0.8 0.6 0.6 2.0
--------------------------- ---------- ------------- ------------ --------
Share of profit/(loss)
of associates after tax 3.7 (0.5) (0.2) 3.0
--------------------------- ---------- ------------- ------------ --------
Assets 19.9 9.3 0.8 30.0
Liabilities (11.5) (0.6) (0.5) (12.6)
--------------------------- ---------- ------------- ------------ --------
Net assets 8.4 8.7 0.3 17.4
Goodwill 5.1 - 1.6 6.7
--------------------------- ---------- ------------- ------------ --------
Investments in associates 13.5 8.7 1.9 24.1
--------------------------- ---------- ------------- ------------ --------
Market value of interest 17.8 n/a n/a
--------------------------- ---------- ------------- ------------ --------
The movement in associates since the last reported balance sheet
is as follows:
Net assets Goodwill Total
(GBP)m (GBP)m (GBP)m
--------------------------------------------------- ----------- --------- --------
At 1 January 2012 17.4 6.7 24.1
Additions 3.7 0.3 4.0
Share of loss of associates after tax (0.6) - (0.6)
Dividends received (0.6) - (0.6)
Share of other comprehensive income of associates (0.6) - (0.6)
Exchange rate differences (0.4) (0.1) (0.5)
--------------------------------------------------- ----------- --------- --------
At 30 June 2012 18.9 6.9 25.8
--------------------------------------------------- ----------- --------- --------
11 OTHER INVESTMENTS
30 June 30 June 31 December
Destination
of 2012 2011 2011
Investment type Investment (GBP)m (GBP)m (GBP)m
------------------------ -------------------------- ------------- -------- -------- ------------
Available-for-sale
financial investments Listed corporate
carried at fair value bonds UK 47.3 71.4 56.0
Eurozone 11.3 15.1 12.2
Other 17.5 22.8 16.9
-------- -------- ------------
76.1 109.3 85.1
Listed equity securities UK 0.4 0.5 0.5
Sweden 1.5 4.3 1.6
Other - 0.1 0.1
Unlisted investments Sweden 0.3 0.4 0.4
Government securities UK 0.1 0.1 0.1
-------------------------- -------------------------------------- -------- -------- ------------
78.4 114.7 87.8
----------------------------------------------------------------- -------- -------- ------------
The movement of other investments since the last reported
balance sheet, analysed based on the methods used to measure their
fair value, is given below:
Level Level Level
1 2 3
Quoted Observable Other
market market valuation
price data methods Total
(GBP)m (GBP)m (GBP)m (GBP)m
--------------------------------------------- -------- ------------ ----------- --------
At 1 January 2012 2.3 85.1 0.4 87.8
Additions 0.2 11.0 - 11.2
Disposals (0.4) (24.4) (0.3) (25.1)
Fair value movements recognised in reserves
on available-for-sale assets (0.2) 3.3 - 3.1
Fair value movements recognised in profit
before tax on available-for-sale assets 0.2 1.3 0.3 1.8
Exchange rate variations (0.1) (0.2) (0.1) (0.4)
--------------------------------------------- -------- ------------ ----------- --------
At 30 June 2012 2.0 76.1 0.3 78.4
--------------------------------------------- -------- ------------ ----------- --------
Corporate Bond Portfolio
At 30 June 2012
Building
Sector Banking Insurance Societies Financials Other Total
-------------- ----------- ------------ ----------- ----------- -------------- -----------
Value (GBP)18.0m (GBP)19.0m (GBP)9.7m (GBP)11.2m (GBP)18.2m (GBP)76.1m
Coupon yield 11.0% 9.3% 9.5% 8.9% 11.7% 10.3%
-------------- ----------- ------------ ----------- ----------- -------------- -----------
Friends Aberdeen Renewable
Issuers Rothschild Provident Nationwide AM Energy
Legal &
SNS Bank General Yorkshire Man Group Thomas Cook
Dresdner RL Finance Investec Corral Finans
Lloyds Direct Line Lottomatica
Co-op Old Mutual Swissport
KBC Swiss Life Europcar
RBS Swiss Re SAS
Irish Life TUI
Generali
Aviva
-------------- ----------- ------------ ----------- ----------- -------------- -----------
12 BORROWINGS
Maturity profile
Bank Debenture Zero Coupon Other
loans loans Note loans Total
At 30 June 2012 (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m
--------------------------------- -------- ---------- ------------ -------- --------
Within one year or on demand 149.6 1.3 - - 150.9
More than one but not more than
two years 65.3 1.4 - - 66.7
More than two but not more than
five years 175.2 5.2 - 27.6 208.0
More than five years 131.8 24.5 11.5 - 167.8
--------------------------------- -------- ---------- ------------ -------- --------
521.9 32.4 11.5 27.6 593.4
Unamortised issue costs (3.2) - - (0.4) (3.6)
--------------------------------- -------- ---------- ------------ -------- --------
Borrowings 518.7 32.4 11.5 27.2 589.8
Less amount due for settlement
within 12 months (148.5) (1.3) - - (149.8)
--------------------------------- -------- ---------- ------------ -------- --------
Amount due for settlement after
12 months 370.2 31.1 11.5 27.2 440.0
--------------------------------- -------- ---------- ------------ -------- --------
Bank Debenture Zero Coupon Other
loans loans Note loans Total
At 30 June 2011 (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m
--------------------------------- -------- ---------- ------------ -------- --------
Within one year or on demand 98.3 1.1 - - 99.4
More than one but not more than
two years 132.1 1.3 - - 133.4
More than two but not more than
five years 217.2 34.2 - - 251.4
More than five years 169.6 26.5 10.3 - 206.4
--------------------------------- -------- ---------- ------------ -------- --------
617.2 63.1 10.3 - 690.6
Unamortised issue costs (3.8) (0.9) - - (4.7)
--------------------------------- -------- ---------- ------------ -------- --------
Borrowings 613.4 62.2 10.3 - 685.9
Less amount due for settlement
within 12 months (97.4) (0.9) - - (98.3)
--------------------------------- -------- ---------- ------------ -------- --------
Amount due for settlement after
12 months 516.0 61.3 10.3 - 587.6
--------------------------------- -------- ---------- ------------ -------- --------
Bank Debenture Zero Coupon Other
loans loans Note loans Total
At 31 December 2011 (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m
--------------------------------- -------- ---------- ------------ -------- --------
Within one year or on demand 151.0 1.2 - - 152.2
More than one but not more than
two years 71.9 1.3 - - 73.2
More than two but not more than
five years 199.4 5.0 - 28.0 232.4
More than five years 130.9 25.5 10.9 - 167.3
--------------------------------- -------- ---------- ------------ -------- --------
553.2 33.0 10.9 28.0 625.1
Unamortised issue costs (3.6) - - (0.5) (4.1)
--------------------------------- -------- ---------- ------------ -------- --------
Borrowings 549.6 33.0 10.9 27.5 621.0
Less amount due for settlement
within 12 months (150.0) (1.2) - - (151.2)
--------------------------------- -------- ---------- ------------ -------- --------
Amount due for settlement after
12 months 399.6 31.8 10.9 27.5 469.8
--------------------------------- -------- ---------- ------------ -------- --------
Currency profile
Fixed Floating
rate rate
financial financial
liabilities liabilities Total
At 30 June 2012 (GBP)m (GBP)m (GBP)m
----------------- ------------- ------------- --------
Sterling 60.0 172.2 232.2
Euro 70.0 228.5 298.5
Swedish krona - 57.3 57.3
Other - 1.8 1.8
----------------- ------------- ------------- --------
130.0 459.8 589.8
----------------- ------------- ------------- --------
Fixed Floating
rate rate
financial financial
liabilities liabilities Total
At 30 June 2011 (GBP)m (GBP)m (GBP)m
----------------- ------------- ------------- --------
Sterling 151.5 95.0 246.5
Euro 118.5 216.7 335.2
Swedish krona - 91.9 91.9
Other - 12.3 12.3
----------------- ------------- ------------- --------
270.0 415.9 685.9
----------------- ------------- ------------- --------
Fixed Floating
rate rate
financial financial
liabilities liabilities Total
At 31 December 2011 (GBP)m (GBP)m (GBP)m
--------------------- ------------- ------------- --------
Sterling 60.2 183.5 243.7
Euro 73.2 239.6 312.8
Swedish krona - 58.7 58.7
Other - 5.8 5.8
--------------------- ------------- ------------- --------
133.4 487.6 621.0
--------------------- ------------- ------------- --------
Fair values
Carrying amounts Fair values
----------------------------- -----------------------------
June June December June June December
2012 2011 2011 2012 2011 2011
(GBP)m (GBP)m (GBP)m (GBP)m (GBP)m (GBP)m
------------------------ -------- -------- --------- --- -------- -------- ---------
Current borrowings 149.8 98.3 151.2 149.8 98.3 151.2
Non-current borrowings 440.0 587.6 469.8 470.6 611.5 501.1
------------------------ -------- -------- --------- --- -------- -------- ---------
589.8 685.9 621.0 620.4 709.8 652.3
------------------------ -------- -------- --------- --- -------- -------- ---------
The fair value of non-current borrowings represents the amount
at which a financial instrument could be exchanged in an arm's
length transaction between informed and willing parties, discounted
at the prevailing market rate, and excludes accrued interest.
13 SHARE CAPITAL
Number Number
of of Ordinary
ordinary treasury shares Total
shares shares Total in Treasury ordinary
in in number circulation shares shares
circulation circulation of shares (GBP)m (GBP)m (GBP)m
--------------------- ------------- ------------- ------------ ------------- --------- ----------
At 1 January 2012 44,953,611 4,803,103 49,756,714 11.3 1.2 12.5
Cancelled following
tender offer(1) (1,070,324) - (1,070,324) (0.3) - (0.3)
--------------------- ------------- ------------- ------------ ------------- --------- ----------
At 30 June 2012 43,883,287 4,803,103 48,686,390 11.0 1.2 12.2
--------------------- ------------- ------------- ------------ ------------- --------- ----------
Number Number
of of Ordinary
ordinary treasury shares Total
shares shares Total in Treasury ordinary
in in number circulation shares shares
circulation circulation of shares (GBP)m (GBP)m (GBP)m
--------------------- ------------- ------------- ----------- ------------- --------- ----------
At 1 January 2011 46,588,244 4,793,000 51,381,244 11.7 1.2 12.9
Cancelled following
tender offer(2) (991,239) - (991,239) (0.3) - (0.3)
--------------------- ------------- ------------- ----------- ------------- --------- ----------
At 30 June 2011 45,597,005 4,793,000 50,390,005 11.4 1.2 12.6
--------------------- ------------- ------------- ----------- ------------- --------- ----------
Number Number
of of Ordinary
ordinary treasury shares Total
shares shares Total in Treasury ordinary
in in number circulation shares shares
circulation circulation of shares (GBP)m (GBP)m (GBP)m
--------------------- ------------- ------------- ------------ ------------- --------- ----------
At 1 January 2011 46,588,244 4,793,000 51,381,244 11.7 1.2 12.9
Cancelled following
tender offer(2
& 3) (1,624,530) - (1,624,530) 0.4 - 0.4
Purchase of own
shares - pursuant
to market purchase (10,103) 10,103 - - - -
--------------------- ------------- ------------- ------------ ------------- --------- ----------
At 31 December
2011 44,953,611 4,803,103 49,756,714 11.3 1.2 12.5
--------------------- ------------- ------------- ------------ ------------- --------- ----------
1. A tender offer by way of a Circular dated 18 March 2012 for
the purchase of 1 in 42 shares at 735 pence per share was completed
in April 2012. It returned (GBP)7.9 million to shareholders,
equivalent to 17.5 pence per share.
2. A tender offer by way of a Circular dated 18 March 2011 for
the purchase of 1 in 47 shares at 725 pence per share was completed
in April 2011. It returned (GBP)7.2 million to shareholders,
equivalent to 15.4 pence per share.
3. A tender offer by way of a Circular dated 22 August 2011 for
the purchase of 1 in 72 shares at 700 pence per share was completed
in September 2011. It returned (GBP)4.4 million to shareholders,
equivalent to 9.7 pence per share.
14 CASH GENERATED FROM OPERATIONS
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
(GBP)m (GBP)m (GBP)m
------------------------------------------------------- ----------- ----------- -------------
Operating profit 35.5 41.3 70.2
Adjustments for:
Net movements on revaluation of investment properties (10.1) (14.1) (18.0)
Depreciation and amortisation 0.1 0.1 0.2
Profit on sale of subsidiaries and associates - (1.2) (2.2)
Net loss/(gain) on sale of corporate bonds and
other investments 0.1 (0.3) (0.5)
Share-based payment expense 0.1 0.1 0.2
Non-cash rental income (0.3) - (0.2)
Revaluation of currency options - - 0.1
Changes in working capital:
Decrease in debtors 0.1 3.6 2.8
(Decrease)/increase in creditors 0.9 (1.2) 1.5
------------------------------------------------------- ----------- ----------- -------------
Cash generated from operations 26.4 28.3 54.1
------------------------------------------------------- ----------- ----------- -------------
15 RELATED PARTY TRANSACTIONS
There have been no material changes in the related party
transactions described in the last annual report, other than those
disclosed elsewhere in this condensed set of financial
statements.
GLOSSARY OF TERMS
ADJUSTED NET ASSETS OR ADJUSTED SHAREHOLDERS' FUNDS
Net assets excluding the mark-to-market on effective cash flow
hedges and related debt adjustments and deferred tax on
revaluations and goodwill arising as a result of deferred tax,
including for associates
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, including for associates
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,
including for associates
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, including for associates
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
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
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
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
DIRECTORS, OFFICERS AND ADVISERS
Directors
Sten Mortstedt (Executive Chairman)
Henry Klotz (Executive Vice Chairman)
Richard Tice (Chief Executive Officer)
John Whiteley (Chief Financial Officer)
Malcolm Cooper * ++ (Non-Executive Director)
Joseph Crawley (Non-Executive Director)
Christopher Jarvis * (Non-Executive Director)
Thomas Lundqvist (Non-Executive Director)
Jennica Mortstedt (Non-Executive Director)
Brigith Terry (Non-Executive Director)
Thomas Thomson (Non-Executive Director)
* member of Remuneration Committee
member of Audit Committee
++ Senior Independent Director
Company Secretary
David Fuller BA, FCIS
Registered Office
86 Bondway
London
SW8 1SF
Registered Number
2714781
Registrars and Transfer Office
Computershare Investor Services Plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 7NH
Shareholder Helpline: 0870 889 3286
CLS Holdings plc on line:
www.clsholdings.com
email:
enquiries@clsholdings.com
Clearing Bank
Royal Bank of Scotland Plc
24 Grosvenor Place
London
SW1X 7HP
Financial Advisers
Kinmont Limited
5 Clifford Street
London
W1S 2LJ
Stockbrokers
Liberum Capital
Ropemaker Place, Level 12
25 Ropemaker Street
London
EC2Y 9LY
N+1 Brewin
12 Smithfield Street
London
EC1A 9BD
Registered Auditor
Deloitte LLP
Chartered Accountants
2 New Street Square
London
EC4A 3BZ
Financial and Corporate Public Relations
Smithfield Consultants Limited
10 Aldersgate Street
London
EC1A 4HJ
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFFDTFISLIF
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