RNS No 4592n
CLS HOLDINGS PLC
25th September 1998
CLS HOLDINGS PLC
INTERIM RESULTS FOR THE HALF YEAR ENDED
30 JUNE 1998
Financial Highlights:
30.06.98 30.06.97
Net rental income #14.8 m #15.5 m
Operating profit #14.0 m #14.0 m
Profit before taxation #5.0 m #5.0 m
Profit after taxation #4.5 m #4.9 m
Proposed dividend 2.4 p 2.3 p
Net assets per share 160.8 p 142.1 p (160.3pence 31.12.97)
Gearing 99 % 117 % (104per cent 31.12.97)
Proposed buy back of 1 in 40 shares at 125 pence per share
"Overall our business is performing well. Refurbishment projects are
on schedule and in line with budgets. Generally we are seeing good
rental growth within the portfolio and expect this to be reflected in
improving cash flows and increasing values. We are generating a
significant amount of cash both organically and through selective
disposals and have several investment proposals under consideration."
S. A. Mortstedt
Executive Chairman
For further information, please contact:
Glyn Hirsch, Chief Executive, CLS Holdings plc 0171 582 7766
Brian Basham / Chris Skyrme, Basham and Coyle 0171 253 3300
CLS Holdings plc
Interim Results for the half year ended 30 June 1998
Chairman's Statement
The Board is pleased to announce the Group's results for the six
months ended 30 June 1998.The Group has continued to perform
satisfactorily. A summary of our first six months' activities
follows:
Financial
Profit on ordinary activities before taxation was #5.0 million to 30
June 1998 (1997 #5.0 million) and earnings per share 4.0 pence (1997:
4.4 pence).
Turnover for the period rose to #16.2 million (1997: #15.8 million).
This comprised #14.8 million net rental income (1997: #15.5 million)
which has fallen due to property disposals and #1.4 million other
income (1997: #0.3 million). Interest receivable and financial income
has increased as a result of active management of the Group's liquid
resources in market and treasury operations. The provision for tax on
ordinary activities includes an over provision of advance corporation
tax written off in 1997 following the large take up of the enhanced
scrip dividend offered. The Group will continue to benefit from
brought forward tax losses and capital allowances for the full year.
Dividends for 1998 reflect the provision for the interim dividend
along with the extra distribution relating to the enhanced scrip paid
in May 1998.
In the light of the Group's current share price compared with net
asset value and the levels of cash we are successfully generating both
organically and through disposals the Board believes that it is
advantageous to distribute cash by way of a share buy-back. This will
also result in a tax saving for the company.
Therefore, the Board proposes a buy-back of 1 in 40 shares held at a
price of 125 pence per share. A circular setting out full details of
this tender offer and convening the necessary EGM will be posted
shortly. In addition we propose declaring an interim net dividend of
2.4 pence per share, payable on 27 November 1998 to shareholders on
the register on 9 October 1998.
The unaudited balance sheet at 30 June 1998 incorporates the property
valuation carried out by Allsop & Co. at 31 December 1997. This shows
net assets of #186.0 million (#181.1 million at 31 December 1997),
equating to net assets per share of 160.8 pence; at 31 December 1997
net assets per share were 160.3 pence.
Gearing as at 30 June 1998 was 99 per cent. (104 per cent at 31
December 1997).
Property
Vanerparken
On 22 September 1998 we announced the acquisition of Vanerparken in
Vanersborg, Sweden from NCC, a leading construction and real estate
company. CLS has invested approximately #3.6 million of cash. The
total net rent from the property is SEK 50.0 million (#3.8 million),
which rises upwards annually in line with inflation representing an
initial yield of 10.3 per cent. Eighty seven per cent of the income
is secured until 2015 against leases to the County Council with the
remainder let to the Town Council. With Swedish long term interest
rates of 5.2 per cent the company has fixed long term funding at
under 6 per cent for SEK 460 million (#34.7 million). This will
provide a return on the #3.6 million of cash invested in equity of 48
per cent per annum.
One Leicester Square
The conversion of One Leicester Square, London W1 into a major new
entertainment venue continues on schedule. We are on site and
contemplate an opening next summer.
Citadel House
We announced on 22 September 1998 that at Citadel House, London WC2
we have let 3,057 sq m (32,913 sq.ft) of refurbished quality offices
at a rent of #1,037,026 (#336 per sq m or #31.25 per sq ft). The
tenant is Elan Computing Limited, who have taken a 16 year lease with
a tenant only break at year 11.
Conoco House
Having agreed dilapidations of #0.8 million with the tenant of Conoco
House, Blackfriars Bridge Road, London SE1, we now have a number of
options under consideration including the refurbishment of the
building to provide 5,580 sq m (60,000 sq ft) of high quality
space.
Business Centres
Our small business centres have continued to prosper. Turnover at
London House, Hammersmith is now at a rate of over #0.5 million per
year against #0.4 million at the time of purchase in June 1997, an
increase which will flow through to profits. The business centre at
Chancel House, Neasden is operating well and now produces #0.14
million on an annualised basis from a standing start in November
1997. We announced the purchase of Buspace Studios, London W10 on 11
August 1998. This property comprises 2,508 sq m (27,000 sq ft) and
produces an initial annual income of #0.2 million per annum giving an
initial yield of 9.9 per cent. The property is let to fifty tenants
at low rents of #92.57 per sq m (#8.60 per sq ft) on short-term leases
and provides opportunities for active management.
Princes Court
On 7 July 1998 we announced the sale of our interest in Princes
Court, London E1 for #14.53 million reflecting an initial yield of
8.6 per cent. The profit from this disposal will be seen in the
second half.
Southern House
On 9 September 1998 we announced that we have exchanged contracts for
the sale of our freehold interest in Southern House, Croydon for
#24.875 million. The property is let to British Rail for a further 65
years at a current annual rental of #1.75 million, representing a net
yield to the purchaser of 6.71 per cent.
Residential Developments
We sold our remaining residential units during the first half of the
year at a total profit of #0.45 million. Our involvement in the
residential market has proved profitable and timely.
Spring Gardens Development
We are delighted to announce that we have entered into an agreement
with the London Borough of Lambeth to develop a major leisure/retail
development at Spring Gardens, Vauxhall. The scheme comprises
approximately 139,340 sq m (1,500,000 sq ft) of leisure and retail
activities, a cinema complex and other ancillary uses including
private and social housing.
Board Change
Bengt Mortstedt, an Executive Director of the Company, has decided
that he wishes to retire from his executive role to enable him to
concentrate on his private non-business interests. He has accepted the
Board's offer to remain on the Board in the capacity of a non-
executive director.
Bengt has helped enormously with the development of the group and we
look forward to his continuing contribution as a non-executive. Bengt
has agreed that save with the Board's consent he will not sell shares
prior to 9 May 1999.
Conclusion
Overall our business is performing well. Refurbishment projects are on
schedule and in line with budgets. Generally we are seeing good rental
growth within the portfolio and expect this to be reflected in
improving cash flows and increasing values. We are generating a
significant amount of cash both organically and through selective
disposals and have several investment proposals under consideration.
S. A. Mortstedt
Executive Chairman
25th September 1998
CLS Holdings plc
Interim Results for the half year ended 30 June 1998
CLS Holdings plc
Consolidated Profit and Loss
Account
6 months 6 months 12
to to months
to
30.06.98 30.06.97 31.12.97
# 000 # 000 # 000
(unaudited) (unaudited)
Turnover
Net Rental Income 14,751 15,501 30,535
Other property related income 1,403 305 1,796
16,154 15,806 32,331
Represented by:
Continuing operations 16,154 15,806 32,117
Acquisitions - - 214
Administrative expenses (1,328) (1,258) (2,728)
Net property expenses (866) (546) (1,305)
(2,194) (1,804) (4,033)
Operating Profit 13,960 14,002 28,298
Represented by:
Continuing operations 13,960 14,002 28,242
Acquisitions - - 56
Gains from sale of investment - 85 428
properties
Profit on Ordinary Activities 13,960 14,087 28,726
Before Interest
Interest receivable and financial 1,003 567 1,017
income
Interest payable and related (9,925) (9,650) (19,265)
charges
Profit on Ordinary Activities 5,038 5,004 10,478
Before Taxation
Tax on ordinary activities (493) (141) (726)
Profit For The Period 4,545 4,863 9,752
Dividends (3,406) (2,575) (6,473)
Retained Profit For The Period 1,139 2,288 3,279
Earning per Share 4.0p 4.4p 8.7p
'000 '000 '000
Ordinary shares in issue
Cumulative total 115,639 111,970 112,979
Weighted average number during 113,435 110,831 111,498
the period
CLS Holdings plc
Interim Results for the half year ended 30 June 1998
Consolidated Balance Sheet 30.06.98 30.06.97 31.12.97
# 000 # 000 # 000
(unaudited) (unaudited)
Fixed Assets
Tangible Assets 375,225 354,630 373,719
Investments 4,284 41 4,294
379,509 354,671 378,013
Current Assets
Stocks: trading properties 164 1,113 1,385
Debtors - amounts falling due 2,851 3,403 3,203
after more than one year
Debtors - amounts falling due 6,186 4,130 4,349
within one year
Investments 1,611 212 211
Cash at bank and in hand 18,480 17,612 18,944
29,292 26,470 28,092
Creditors: amounts falling due (27,223) (26,278) (25,618)
within one year
Net Current Assets/(Liabilities) 2,069 192 2,474
Total Assets Less Current 381,578 354,863 380,487
Liabilities
Creditors: amounts falling due (195,602) (195,720) (199,364)
after more than one year
Net Assets 185,976 159,143 181,123
Capital and Reserves
Called up share capital 28,910 27,993 28,245
Share premium account 49,213 45,075 46,098
Revaluation reserve 63,091 43,984 63,705
Other reserves 18,826 18,948 18,892
Profit and loss account 25,936 23,143 24,183
Total Equity Shareholders' Funds 185,976 159,143 181,123
Cash Flow Information 30.06.98 30.06.97 31.12.97
# 000 # 000 # 000
(unaudited) (unaudited)
Cash flow from rental activities 14,332 15,880 30,654
Cash flow from operating 15,032 13,951 28,294
activities
Net interest costs (8,102) (8,026) (18,153)
Cost of dividends (741) (1,832) (3,128)
New Loans 1,726 - 21,968
Repayment of loans (5,188) (11,618) (30,049)
Purchase of interest rate caps - - (281)
Purchase and enhancement of (5,398) (531) (2,242)
properties
Net increase in liquid resources 5,989 (587) (854)
Net decrease in cash (5,109) 1,833 3,746
At 30 June 1998 the group had #2.0m (#0.3m 31 December 1997) of
restricted cash at bank and in hand.
END
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