Annual financial results for the twelve months ended 31 December 2023- CLS Holdings Plc

THIS ANNOUNCEMENT RELATES TO THE DISCLOSURE OF INFORMATION THAT QUALIFIED OR MAY HAVE QUALIFIED AS INSIDE INFORMATION WITHIN THE MEANING OF ARTICLE 7(1) OF THE MARKET ABUSE REGULATION (EU) 596/2014 

CLS HOLDINGS PLC (“CLS”, the “Company” or the “Group”) ANNOUNCES ITS UNAUDITED ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2023.

CLS is a leading office space specialist and a supportive, progressive and sustainably focused commercial landlord, with a c.£2.1 billion portfolio in the UK, Germany and France, offering geographical diversification with local presence and knowledge. For the year ended 31 December 2023, the Group has delivered the following results: 

		31 December		Change
	2023		2022
EPRA Net Tangible Assets (“NTA”) per share (pence) ¹	253.0		329.6	(23.2)%
Statutory NAV per share (pence)¹	233.8		307.3	(23.9)%
Contracted rents (£’million)	112.6		110.2	2.2%
Loss before tax (£’million)	(263.4)		(82.0)	(181.4)
EPRA Earnings per share (“EPS”) (pence) ¹	10.3		11.6	(11.2)%
Statutory EPS from continuing operations (pence) ¹	(62.9)		(20.2)	(42.7)
Dividend per share (pence)	7.95		7.95	–

¹A reconciliation of statutory to alternative performance measures is set out in Note 5 to the financial statements 

Fredrik Widlund, Chief Executive Officer of CLS, commented: 

“CLS performed well during the period and made progress on its strategic objectives. Our high-quality estate underpinned strong leasing momentum and pricing with new leases nearly 7% above ERV. As a result, we held our underlying vacancy rates steady, and delivered net rental income growth of close to 5%. 

“As expected, valuations reduced in the period. However, our outperformance relative to the markets we operate in and the embedded rental growth potential in our portfolio give us confidence in our ability to deliver long-term growth. We remain focused on optimising our portfolio and reducing LTV through the course of 2024, with nearly three-quarters of the loans expiring in 2024 already refinanced, and over £270m of assets targeted for disposal. 

“We firmly believe the outlook for high-quality offices is bright and we are seeing a clear trend of companies thinking strategically about the return to the office as a value driver for their businesses. The investments we have made and continue to make across our portfolio mean we are well placed to thrive.” 

OPERATIONAL HIGHLIGHTS 

• Net rental income increased by 4.8% to £113.0 million (2022: £107.8 million) as a result of indexation (55.2% of contracted rent is index-linked), excellent performance of our hotel and student operations and a full-year of income from prior year acquisitions 

• Strong leasing momentum with 130 new lettings and renewals (2022: 106) generating annual rent of £15.5 million (2022: £8.2 million). Signed 89% more leases by value than in 2022 and these leases were 6.9% above 31 December 2022 estimated rental values 

• Underlying vacancy rate steady at 7.6% but overall vacancy rate increased to 11.0% (2022: 7.4%) due to the completion of developments in the year which are currently being marketed to prospective tenants 

• Rent collection has continued to be strong with 99% collected (2022: 99%) 

• Sold five smaller properties (four completed and one unconditionally exchanged) for a total of £25.4 million, 10.0% above the latest valuations of the properties 

• The buyer for Westminster Tower, Albert Embankment, which exchanged unconditionally in June 2023, failed to complete in 2023 and thus the deposit was called in 2024. The property is now being re-marketed for sale 

• Since year-end we have received strong expressions of interest on two sales for over £70 million at a small discount to valuations.  

• Progressing additional planned sales including our successful student accommodation operation at Spring Mews which we have now owned for ten years 

FINANCIAL HIGHLIGHTS 

• Portfolio valuation down 12.5% in local currency (UK -16.7%, Germany -9.1% and France -9.1%), in line with expectations, with estimated rental value growth of 1.6% more than offset by yield expansion of 62 basis points on a like-for-like basis 

• EPRA NTA per share down 23.3% primarily as a result of property valuation falls. Total accounting return for the year of -20.8% (2022: -3.7%) 

• EPRA EPS down 11.2% to 10.3 pence per share due to higher financing costs, partly offset by higher net rental income from indexation and the excellent performance of our hotel and student operations 

• Loss before tax of £263.4 million (2022: £82.0 million loss) from valuation declines on investment properties of £302.7 million (2022: £136.5 million loss). Statutory EPS was a loss of 62.9p 

• A proposed final dividend of 5.35 pence per share, reflecting the Board’s confidence in our business and assets, resulting in an unchanged full-year dividend of 7.95 pence per share (2022: 7.95 pence per share).  Dividend cover of 1.30 times, within the Group’s stated policy 

FINANCING HIGHLIGHTS 

• Balance sheet remains strong with total liquidity of £120.6 million comprising cash of £70.6 million and two undrawn revolving credit facilities totalling £50 million. Post year-end a new £10.0 million overdraft was agreed 

• Loan-to-value at 48.5% (2022: 42.2%) reflecting valuation declines with net debt of £1,000.0 million broadly unchanged (2022: £992.0 million). Weighted average debt maturity of 3.5 years (2022: 3.8 years) with 76% at fixed rates and 4% subject to interest rate caps (31 December 2022: 72% fixed and 4% caps) 

• Weighted average cost of debt at 31 December 2023 up 92 basis points to 3.61% (2022: 2.69%) resulting from central bank interest rate increases and new refinancings at these higher rates 

• Refinanced or extended £330.6 million of debt in 2023 at an average of 5.27%, including £196.7 million fixed at 4.76% 

• Well advanced with 2024 refinancing activity with £251.7 million out of £350 million executed, leaving £98.3 million across 6 loans in Germany and France with an LTV of 45%, which we are confident will be refinanced successfully 

ENVIRONMENTAL, SOCIAL AND Governance 

• Our sustainability progress was recognised with an increase to a Gold award in the EPRA Sustainability Best Practices Recommendations, up from Silver in 2022. We have also maintained our GRESB award of 4 green stars 

• We maintained over 99% Group electricity being carbon-free, and completed our UK rooftop solar PV energy and electric vehicle charging rollout by installing a further 111kWp of new solar arrays and 20 EV charging points at five of our buildings in the UK  

• Progress continues with implementing our ambitious, but achievable, long-term sustainability targets including our 2030 Net Zero Carbon Pathway. In 2023, we spent a further £4.8 million towards our estimated total programme cost of £65 million such that we have now invested over £15 million since launching our Net Zero Carbon Pathway 

• We are fully compliant with 2024 minimum EPC regulations in the UK and have reduced our EPC D rated buildings by nearly 20% through a combination of refurbishments and disposals 

Dividend Timetable 

The Board has recommended a final dividend of 5.35 pence per ordinary share with the following dividend timetable: 

Announcement date	6 March 2024
Ex-Dividend date	21 March 2024
Record date	22 March 2024
Payment date	2 May 2024

– ends – 

Results presentation 

A presentation for analysts and investors will be held in-person at the London Stock Exchange, by webcast and by conference call on Wednesday 6 March 2024 at 8:30am followed by Q&A. Questions can be submitted either online via the webcast or to the operator on the conference call.  

• The London Stock Exchange: 10 Paternoster Square, London EC4M 7LS 

• Webcast: The live webcast will be available to access here: https://protect-eu.mimecast.com/s/t9fjCNOYMUKqYWFmA8Aw?domain=lsegissuerservices.com  

• Conference call: In order to dial in to the presentation via phone, please register at the following link and the event access details will be sent to your email: https://registrations.events/direct/LON502550 

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 

Richard Crawley 

Jamie Richards 

+44 (0)20 3100 2222 

Panmure Gordon 

Hugh Rich 

+44 (0)20 7886 2733 

Berenberg 

Matthew Armitt 

Richard Bootle 

+44 (0)20 3207 7800 

Edelman Smithfield (Financial PR) 

Alex Simmons 

Hastings Tarrant 

+44 (0)20 3047 2546 

Forward-looking statements 

This document 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 or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance.