TIDMCLI
RNS Number : 1125U
CLS Holdings PLC
21 November 2019
PRESS RELEASE
Release date: 21 November 2019
Embargoed until: 07:00
CLS Holdings plc ("CLS", the "Company" or the "Group")
Trading Update for the period 1 July 2019 to 20 November
2019
Active recycling of capital to underpin continued growth
Fredrik Widlund, Chief Executive of CLS, commented:
"Our active portfolio management has continued in the second
half of 2019 with further transactions resulting in a more focused
Group. Four property acquisitions, one of which had exchanged as at
the end of July, have been completed in the period for a total of
GBP109.2 million. Four disposals, which had exchanged as at the end
of July, have completed over the same period for a total of GBP91.7
million releasing GBP70 million of cash after repayment of the
associated debt. In September, we also sold our 10.5% shareholding
in Catena AB realising c.GBP113 million in cash. These disposals
put the Group in a strong position with cash and liquid resources
of c.GBP185 million, which we intend to reinvest in further
acquisitions.
"We anticipate that our full year results will be in line with
expectations. Whilst economic and political uncertainty persists,
we remain confident in the long-term fundamentals of our markets
and our strategy. Furthermore, we have the resources, and a
well-positioned portfolio, to continue to capture opportunities in
our core markets and deliver sustainable growth."
A summary of our up to date, key operational and financial
metrics is set out below:
Acquisitions and disposals
We have continued to manage our portfolio on an active basis to
release capital from assets with limited strategic fit and/or
growth potential in order to capture attractive growth
opportunities:
-- Acquisitions: Completion of Office Connect, which had
exchanged as at the end of July, together with the acquisitions of
Clockwork, Lloyds Avenue and Pacific House in October. Total
consideration of GBP109.2 million (before costs), blended net
initial yield of 6.1% and reversionary yield of 6.4%. The
acquisition of One Six Six Harrow for GBP13.8 million exchanged in
November and is expected to complete in January 2020
-- Disposals: Completion of four disposals (Ateliers Victoires in Paris, East Gate in Munich, Schanzenstrasse in Dusseldorf and the Grange in Hayes), which had exchanged as at the end of July. Total consideration of GBP91.7 million, realising GBP70 million after the repayment of the associated debt, at a blended net initial yield of 3.7%. Two further disposals, Quayside in Fulham, which had exchanged as at the end of July, and another in the UK, are due to complete before the year-end for c.GBP25 million
-- Catena: At the start of September, CLS disposed of its entire
10.5% shareholding in Catena AB realising a gain of GBP15.4 million
(3.8 pence per share) before costs since 30 June 2019 and proceeds
of approximately GBP113 million. In the first half, CLS recognised
a gain of GBP21.0 million after foreign exchange on its Catena
shareholding
Vacancy and lettings (up to 31 October 2019)
Vacancies increased during the period, largely as a result of
transactions (selling well-let properties and acquiring limited
vacancy to actively asset manage), but remain below our targeted
level of 5%. A healthy level of lettings was completed and our
markets remain supportive:
-- Vacancy rate:
Group: 4.6% (30 June 2019: 4.2%)
UK: 4.3% (30 June 2019: 4.1%)
Germany: 5.1% (30 June 2019: 4.7%)
France: 4.7% (30 June 2019: 3.1%)
-- Lettings: Since the end of June, 42 deals have been signed
securing over GBP5 million of annual rent, over 4% above December
ERVs
Developments and refurbishments
Potential exists within the portfolio for a select number of
value-add developments:
-- Planning has been submitted for three developments: one in
Stuttgart, Germany; and two in the UK (Maidenhead and Vauxhall),
with determinations expected during the next six months. The
forecast capital requirement is c.GBP90 million over the next two
to three years which is targeted to deliver over GBP5.5 million of
additional rental income
Financing
Cost of debt remains low with substantial cash and liquid
resources available to capture opportunities. As at 31 October
2019:
-- Weighted average cost of debt reduced to 2.42% (30 June 2019: 2.49%)
-- Balance sheet loan to value 34.7% (30 June 2019: 39.3%)
-- Cash and liquid resources of c.GBP185 million comprising over
GBP150 million of cash and c.GBP35 million of corporate bonds, as
well as GBP50 million of undrawn facilities
Portfolio and sustainability
CLS' strategy remains focused on the three largest economies in
Europe transforming office properties into sustainable, modern
spaces that help businesses to grow:
-- The property portfolio is split 51% UK, 34% Germany and 15% France
-- In the UK we have commissioned the installation of Electric
Vehicle charging ports and additional solar photovoltaic systems at
a number of our assets
-- These, and other sustainability improvements, reflected in
our GRESB rating increasing from 63 to 70
Governance
On 15 August 2019, Lennart Sten became the Group's first
independent Non-Executive Chairman following the retirement of
Executive Chairman, Henry Klotz.
We also welcome Bill Holland who has been appointed to the Board
and as a member of the Audit and Remuneration Committees. It is
anticipated that Bill will succeed Malcolm Cooper as Chairman of
the Audit Committee following the publication of the Group's Final
Results in March 2020. He joins Denise Jagger who was appointed to
the Board and as member of the Remuneration and Audit Committees in
August 2019.
-ends-
For further information, please contact:
CLS Holdings plc
(LEI: 213800A357TKB2TD9U78)
www.clsholdings.com
Fredrik Widlund, Chief Executive Officer
Andrew Kirkman, Chief Financial Officer
+44 (0)20 7582 7766
Liberum Capital Limited
Richard Crawley
Jamie Richards
+44 (0)20 3100 2222
Whitman Howard
Hugh Rich
+44 (0)20 7659 1261
Elm Square Advisers Limited
Jonathan Gray
+44 (0)20 7823 3695
Smithfield Consultants (Financial PR)
Alex Simmons
Rob Yates
+44 (0)20 3047 2546
Forward-looking statements
This announcement may contain certain 'forward-looking
statements'. By their nature, forward-looking statements involve
risk and uncertainty because they relate to future events and
circumstances. Actual outcomes and results may differ materially
from those expressed or implied by such forward-looking statements.
Any forward-looking statements made by or on behalf of CLS speak
only as of the date they are made and no representation or warranty
is given in relation to them, including as to their completeness or
accuracy or the basis on which they were prepared. Except as
required by its legal or statutory obligations, the Company does
not undertake to update forward-looking statements to reflect any
changes in its expectations with regard thereto or any changes in
events, conditions or circumstances on which any such statement is
based. Information contained in this document relating to the
Company should not be relied upon as an indicator of future
performance or construed as a profit forecast.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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