Interim Results

Embargoed: 0700hrs 23 September 2005 CLS Holdings plc ('CLS', the 'Company', or the 'Group') Interim Report 2005 For the six month period ended 30 June 2005 Introduction The business has continued to generate profitable growth showing a healthy increase in the value of its property assets in each of its markets comprising the UK, Sweden and Continental Europe. This is the first time that the results of CLS have been reported under International Financial Reporting Standards ('IFRS'). Although this has resulted in a change in the presentation of the Group's results, its underlying strategy, direction and resultant cash flows remain unchanged. The primary focus of our attention and resources is on the efficient management of and investment in property assets in order to enhance value. We continue to believe that the primary indicator of our performance is net asset value per share as adjusted to exclude the provision for deferred taxation. We consider it very unlikely that the maximum deferred tax liability that we are obliged to report under IFRS will ever crystallise as the provision takes no account of the way in which the Group would intend to sell its properties and does not allow for the deduction of indexation relief which is available on the disposal of UK properties. FINANCIAL HIGHLIGHTS Adjusted NAV per share* of 551.2 pence, up 5.7 per cent (Statutory NAV per share of 403.8 pence, up 4.9 per cent) - adverse foreign exchange translation impact on adjusted NAV per share was 22.0 pence. Profit before tax (including property valuation uplift) Â£38.8 million, up 110.9 per cent. Intended distribution for the interim period to 30 June 2005 of Â£7.0 million by way of tender offer buy-back on the basis of 1 for 60 at 510 pence per share, representing a distribution of 8.5 pence per share, an increase of 13.3 per cent. Property portfolio (including share of JVs) valued at Â£1.05 billion, up 2.6 per cent. Net rental income Â£34.0 million, up 5.6 per cent. Annualised added value to shareholders 16.0 per cent, up 7.2 per cent, based on increase in adjusted NAV per share and distributions in the year (15.8 per cent added value based on statutory NAV up 7.2 per cent). Cash Â£54.2 million, down 5.6 per cent on year end position. Key statistics and other financial information Income Statement 30 June 30 June 2005 2004 Adjusted earnings per share* ** 8.2p 9.7p Down 15.5% Earnings per share 33.8p 15.7p Up 115.3% Net rental income Â£34.0m Â£32.2m Up 5.6% Operating profit (excluding fair value gains on Â£26.1m Â£24.6m Up 6.1% investment property) Fair value gains on investment property Â£31.5m Â£10.4m Up 202.9% Net interest payable Â£18.6m Â£16.6m Up 12.0% Underlying profit before tax (excluding fair value Â£7.3m Â£8.0m Down gains on investment property) 8.8% Profit before taxation Â£38.8m Â£18.4m Up 110.9% Profit for the period Â£28.2m Â£13.7m Up 105.8% Balance Sheet 30 June 31 December 2005 2004 Adjusted NAV per share* 551.2p 521.3p Up 5.7% Statutory NAV per share 403.8p 385.1p Up 4.9% Distribution per share from tender offer 8.5p 7.5p Up buy-backs 13.3% Property portfolio Â£1,048.9m Â£1,022.5m Up 2.6% Net asset value Â£330.4m Â£323.0m Up 2.3% Cash Â£54.2m Â£57.4m Down 5.6% Adjusted gearing* 134.4% 134.1% Up 0.3% Statutory gearing 183.5% 181.5% Up 2.0% Adjusted solidity* 39.2% 39.0% Up 0.2% Statutory solidity (net assets as a ratio of 28.3% 28.4% Down gross assets) 0.1% Shares in issue (000's) - excluding treasury 81,822 83,853 Down shares 2.4% IAS 32 fair value on fixed loans adjustment 33.1p 27.8p Up after tax 19.1% * IAS12 requires that a deferred tax provision be made in respect of the potential gain that would arise if properties were to be sold at valuation and for the potential clawback of UK capital allowances to the extent that these amounts are not covered by available tax losses. The calculation of this deferred tax liability has been carried out on the basis that the revaluation gains on the properties will be realised through receipt of net rents for the properties owned. As such the amount provided represents the maximum potential tax liability. Your Board considers it unlikely that this theoretical liability will ever crystallise because it takes no account of the way in which the Group would realise these gains. In particular as further explained in the note on page 8 the deferred tax provision takes no account of the way in which properties are expected to be sold, of the indexation allowance available when calculating a taxable capital gain in the UK or of elections available to ensure that deductions claimed previously for capital allowances are not reversed. The Board has complied with pronouncements from the APB and the UK Listing Authority in showing NAV and Earnings per share including the IAS 12 provision with equal prominence as the adjusted figures. The effect of IAS 12 has been excluded from those statistics that are indicated by an asterisk. At 30 June 2005 the IAS 12 deferred tax charge included in the income statement was Â£10.2 million and the cumulative reduction to net assets was Â£120.6 million (31 December 2004: charge to tax of Â£16.0 million and Â£114.1 million respectively). The accounting policies of the Group are as set out in the Group's IFRS Transition Report for the year ended 31 December 2004 with the exception of the application of IAS32 and IAS39. ** In line with UK property industry practice adjusted earnings per share does not include gains on revaluations and deferred taxation. BUSINESS HIGHLIGHTS Six months to 30 June 2005 Successful completion of our major refurbishment of FrÃ¤saren 12 at Solna and the occupation by ICA Maxi supermarket in May 2005 and ICA headquarter offices in August 2005, in all 24,000 sq.m (259,400 sq.ft). An additional property, Yrket 3, bought at Solna Business Park, Stockholm for Â£ 5.3 million (SEK 70.0 million) giving a return on equity of 18.4 per cent after financing. Office property purchased at 23 rue Raspail, Ivry-sur-Seine, Paris for Â£8.1 million (â‚¬11.6 million) giving a return on equity of 40.7 per cent. Planning permission granted for an extensive Â£11.5 million refurbishment at Great West House, Brentford. Further letting success in the UK, at Solna in Sweden and in France. Chairman's Statement The Group has again produced a solid performance with adjusted NAV per share of 551.2 pence, up 29.9 pence since 31 December 2004 (Statutory NAV per share 403.8 pence, up 18.7 pence per share). The net assets include the effect of notional adverse foreign exchange translation losses of 22.0 pence per share arising on the consolidation of the equity in our Swedish and Continental European operations based in local currency. The property portfolio has shown a further increase in value in each of our three main markets amounting to Â£31.5 million in the six months to 30 June 2005. For the first time this year, under IFRS, the gain in property valuation has been included within Profit before tax which has amounted to Â£38.8 million, showing an increase over the corresponding period last year of 110.9 per cent, mainly due to the increase in fair value of properties. In order to better understand the underlying elements of the Group's performance the movement in its net assets are set out in the table below: OPENING ASSETS Â£m Net assets at 31 December 2004 (UK GAAP) 426.4 Additional IFRS deferred tax provision (107.4) Other IFRS adjustments 4.0 ________ Net assets as restated for IFRS at 31 December 2004 323.0 Adjustment for IAS 39 - fair value financial instruments 8.1 ________ Net assets as restated for IFRS at 1 January 2005 331.1 PROFIT Property trading profit before tax 8.2 Fair value gains on investment properties 31.5 Losses in respect of cable companies (2.4) Gain on sale of equity investment 1.5 ________ Profit before tax 38.8 Current tax (0.5) Deferred tax (10.2) _______ Profit after tax 28.1 OTHER EQUITY MOVEMENTS Tender offer buy-back and market purchases and share issues (10.0) Foreign exchange translation deficit (12.2) Fair value adjustment in respect of non-property assets (6.6) _______ CLOSING ASSETS 30 JUNE 2005 330.4 _______ The annualised return on market capitalisation of the Company (Â£348.4 million at 31 December 2004) was 14.9 per cent (30 June 2004: 13.9 per cent) based on the aggregation of the May 2005 distribution to shareholders, retained profits less adverse foreign exchange translation movements. Our shares are currently trading at a discount to adjusted NAV per share of 14.9 per cent, based on a share price of 469 pence. In November we intend to make a further distribution to shareholders of Â£7.0 million under a proposed tender offer buy-back equivalent in cash terms to an interim net dividend of 8.5 pence per share, an increase of 13.3 per cent over the previous interim distribution. There has been growth in value across the portfolio in the UK, Sweden and Continental Europe, the total value of which is Â£1.05 billion including our interests in joint ventures at London Bridge Tower and New London Bridge House. ICA, Scandinavia's largest food retailer, has now taken occupation of both the supermarket and head office at Solna Business Park near Stockholm, covering a total area of 23,800 sq.m (256,183 sq.ft). This project was successfully completed to budget and to the very tight programme demanded by our tenant. In Paris we have purchased a further property at Ivry-sur-Seine, Paris at a cost of Â£8.1 million on an initial yield of 8.7 per cent. IBM vacated the 6,000 sq.m property Le 41, Courbevoie, Paris causing vacant space in France to rise an additional 4.2 per cent from 5.9 per cent by area at 31 December 2004. However, we pro-actively manage the portfolio and have contained the overall vacancy rate to 9.8 per cent. We continue to believe that there is potential growth in a number of holdings managed by the investment division. The cable companies showed a loss of Â£2.4 million including an impairment provision of Â£1.8 million. During the period we sold our holding in Sit-up TV yielding a profit on that investment of Â£1.6 million and net assets have been enhanced by Â£6.9 million due to the fact that in accordance with IFRS we now carry our equity investments at fair value rather than at the lower of cost and net realisable value. Financial Core property profit of Â£39.6 million (June 2004: Â£20.1 million - restated for IFRS) is set out below: 30 June 2005 Restated 30 June 2004 Â£m Â£m Underlying profit before taxation 7.3 8.0 Fair value gains on investment properties 31.5 10.4 _________ _________ Profit before taxation 38.8 18.4 Add back: Consolidated cable company losses 2.4 2.5 Less: Lease surrenders and variations (0.1) - Sale of investment property - (0.5) Net gains and write downs on equity (1.5) (0.3) investments _________ _________ Core property profit 39.6 20.1 ========= ========= A summary of the results of the Group, analysed by location and main business activity is as set out below: June UK Sweden Continental Equity Restated 2005 Europe** investments June 2004 Â£m Â£m Â£m Â£m Â£m Â£m Net rental income 34.0 16.2 8.0 9.8 - 32.2 Other income 4.1 0.5 0.3 0.3 3.0 1.1 _______ ______ ______ ______ ______ ______ Net rental and other 38.1 16.7 8.3 10.1 3.0 33.3 income Fair value gains on 31.5 12.0 10.8 8.7 - 10.4 investment property (Loss)/gain from sale - (0.1) - 0.1 - 0.5 of investment properties Operating expenses (12.0) (4.3) (1.9) (1.4) (4.4) (9.2) _______ ______ ______ ______ ______ ______ Operating profit/ 57.6 24.3 17.2 17.5 (1.4) 35.0 (loss) Share of associates' (0.3) - - - (0.3) - losses Net interest payable (18.5) (9.5) (5.6)+ (2.7) (0.7) (16.6) and related charges _______ ______ ______ ______ ______ ______ Profit/(loss) on 38.8 14.8 11.6 14.8 (2.4) 18.4 ordinary activities before tax Taxation-current (0.5) - - (0.5) - (0.2) Taxation-deferred (10.2) (2.2) (3.5) (4.5) - (5.1) Minority interest 0.1 - - - 0.1 0.6 _______ ______ ______ ______ ______ ______ Retained profit/ 28.2 12.6 8.1 9.8 (2.3) 13.7 (loss) ________ _______ _______ _______ ________ ________ + Of the net interest payable of Â£5.6 million, Â£0.5 million relates to space undergoing refurbishment at Solna ** Includes the results of France, Luxembourg and Germany Balance sheet Total UK Sweden Continental Equity Europe invest. June 2005 Â£m % Â£m % Â£m % Â£m % Â£m % Investment 1,048.9 100 496.1 47.3 284.2 27.1 268.6 25.6 - - properties Loans (654.6) 100 (325.1) 49.6 (159.6) 24.4 (167.5) 25.6 (2.4) 0.4 Equity in 394.3 100 171.0 43.4 124.6 31.6 101.1 25.6 (2.4) (0.6) property assets Other 56.6 100 23.9 42.2 (11.6) (20.5) 17.4 30.8 26.9 47.5 Net 450.9 100 194.9 43.2 113.0 25.1 118.5 26.3 24.5 5.4 adjusted equity ====== === ====== ==== ====== ====== ======= ==== ====== ===== === == == = Equity in 37.6% 34.5% 43.8% 37.6% Property as a percentage of Investment Share Capital No of shares No of shares Million Million 2005 2004 (six months) (full year) Opening shares for NAV purposes 83.9 87.6 Tender offer buy-back (2.1) (4.1) Share option exercised - 0.4 _________ ________ Closing shares for NAV purposes 81.8 83.9 Shares held in Treasury by the Company 3.7 1.6 _________ ________ Closing shares 85.5 85.5 ========= ======== Options to purchase 555,000 shares were held by staff and management at 30 June 2005 Net rental income of Â£34.0 million increased by Â£1.8 million compared to the six months ended 30 June 2004. This reflected an uplift of Â£0.9 million in the UK and Â£0.9 million in France following acquisitions during 2004 and continued letting success reducing vacant space. Other income as set out in the summary table above, comprises net income from non-property activities and other income. Net income from non-property activities Gross profit from our two cable company investments amounted to Â£1.5 million, an increase of Â£1.3 million on the same period last year. The figures for the previous period included a write off of Â£1.1 million principally relating to disconnections. Other income Other income of Â£2.6 million (30 June 2004: Â£0.9 million) included Â£1.6 million profit on the sale of Sit-up TV, an investment within our equity investment portfolio; Â£0.6 million in respect of dilapidations receipts; Â£0.2 million revenue from Solna Sports Park which was sold to an external operator in May and sundry other income of Â£0.2 million. Operating expenses as set out in the summary table above, comprises administrative expenditure and net property expenses. Administrative expenditure Administrative expenditure of Â£10.2 million (30 June 2004: Â£7.3 million) included costs relating to our two cable company investments totalling Â£4.0 million (30 June 2004: Â£2.7 million) of which an impairment provision in respect of WightCable North Limited amounted to Â£1.8 million. In addition, we have expensed professional fees of Â£1.1 million that were incurred in respect of our development properties. Excluding the above mentioned items, underlying administrative expenditure did not increase compared to the six months to 30 June 2004. Net property expenses Net property expenses amounted to Â£1.8 million in the six months (30 June 2004: Â£1.9 million). The main elements of expenditure were operating costs of Â£0.4 million in respect of Solna Sports Park, depreciation of equipment of Â£0.2 million, void space costs of Â£0.3 million, marketing, letting and related legal fees of Â£0.3 million and bad debts of Â£0.2 million. Gains from sale of investment property A small net profit of Â£35,000 (30 June 2004: Â£0.5 million gain) was made on the sale of three minor French properties for a total consideration of Â£3.1 million (â‚¬4.7 million) Financial income and costs Interest income of Â£0.5 million (30 June 2004: Â£0.9 million) was adversely affected by foreign exchange movements of Â£0.3 million. Interest payable of Â£19.0 million (30 June 2004: Â£17.5 million) comprised bank interest of Â£17.9 million, net loss on fair value of interest rate caps of Â£0.5 million and depreciation of loan arrangement fees of Â£0.6 million. The Group's policy is to expense all interest payable and financial costs to the income statement, including interest incurred in the funding of refurbishment and development projects. During the period interest was expensed in respect of our Solna refurbishment of Â£0.6 million and Great West House, currently undergoing a major refurbishment, of Â£0.2 million. At the period end, gross floating rate loans totalled Â£264.4 million, 40.4 per cent of the total loan book. All floating rate debt was hedged by interest rate caps at an average cap rate of 5.2 per cent for Sterling, 5.0 per cent for Swedish Kronor and 4.8 per cent for Euro (excluding bank margin). The average cost of borrowing, inclusive of the cost of fixed rate borrowings, interest rate caps and amortisation of arrangement fees, was 6.9 per cent on the UK debt, 4.6 per cent for Sweden and 4.0 per cent for Continental Europe. Adjusted gearing has increased by 0.3 per cent to 134.4 per cent incorporating the effect of the re-financings raising an additional Â£60.3 million across all three key markets. Interest cover (excluding fair value gains on investment properties) decreased to 1.41 times at 30 June 2005 from 1.49 times at 30 June 2004. Taxation The Group's current taxation charge continues to benefit from the utilisation of losses and from significant capital allowances and amortisation deductions. There is a significant increase in the deferred tax provision being charged in the income statement following the adoption of IAS12 as explained in the IFRS transition report issued on 15 September 2005. This deferred tax charge reflects the potential tax on the revaluation gain on the properties for the period to June 2005 and the additional capital allowances claimed in that period. The method of calculation for deferred tax under IAS12 has resulted in a provision being made for the maximum potential tax liability based on the difference between the carrying value of each property and its tax base without taking into account any factors which would mitigate that tax liability. In practice the Group would not suffer this liability even if all its properties were to be sold, as it structures its property disposals to reduce tax liabilities on the gains. For overseas properties, we plan to make corporate disposals, as opposed to property disposals, which would result in smaller tax liabilities than those calculated under IAS12. In the UK the actual gain which would be realised on property disposals would be reduced by indexation allowance. At 30 June 2005 this allowance would reduce the potential taxable gains if UK properties were to be sold, by Â£136.3 million and the deferred tax provision in the balance sheet, by Â£40.9 million. Furthermore, on a disposal, the Group intends to make the election available to ensure that there is no claw back of capital allowances previously claimed in respect of UK properties. At 30 June 2005 the potential claw back of allowances in respect of plant and machinery in the Group's UK properties amounts to Â£52.9 million. If this amount had been excluded from the provision, the overall deferred tax provision would be further reduced by Â£15.9 million. Buy-backs and dividends A tender offer buy-back was taken up in full in May of this year in lieu of a final dividend for 2004. With the current share price remaining at a discount to net asset value, we are proposing an interim distribution of Â£7.0 million by way of a further tender offer buy-back of shares on the basis of 510 pence per share for 1 in 60 shares held. This will enhance net asset value per share and is equivalent in cash terms to an interim net dividend of 8.5 pence per share (30 June 2004: 7.5 pence per share), an increase of 13.3 per cent. At 31 December 2004 there were 85,497,177 ordinary shares in issue, of which 1,644,176 were held as Treasury shares. The number of shares at that date, used as a base for the purpose of calculating NAV or Earnings per share and participating in the subsequent tender offer buy-backs, was 83,853,001 as Treasury shares are excluded from such calculations. Since the year end, the Company has completed the 2004 year end tender offer buy-back of 2,045,926 shares (a distribution of Â£9.9 million) and re-purchased 34,000 shares in the market (at a cost of Â£0.1 million). All of the shares thus acquired were transferred to Treasury. After the issue of 30,000 shares relating to the exercise of share options and 18,521 allotted from Treasury in payment of a debt, the number of shares in issue at 30 June 2005 (excluding 3,705,581 shares held as Treasury shares) was 81,821,596. Total shares in issue at 30 June 2005, including Treasury shares, were 85,527,177. If the current tender offer proposal to buy back 1,363,693 shares is accepted, ordinary shares in issue for the purposes of NAV and Earnings per share will have been reduced by a further 1.7 per cent to 80,457,903 shares, an overall reduction in the six months of 3,395,098 shares equivalent to 4.1 per cent of opening shares. Investment Property The value of our portfolio is now Â£1,048.9 million and has increased by a net Â£ 26.4 million (2.6 per cent) since 31 December 2004. This movement included notional foreign exchange translation movements, which had the effect of reducing Swedish and Continental European property values by Â£43.1 million. Acquisitions of new properties totalled Â£13.2 million, refurbishment expenditure amounted to Â£26.5 million, principally at Solna, Stockholm and a revaluation surplus of Â£31.5 million was recorded at 30 June 2005. Disposals of Â£2.9 million were made during the period, offset by an equivalent amount of capitalised rent-free periods transferred from current assets. The revaluation surplus comprises: Â£m UK 12.0 Sweden 10.8 Continental Europe 8.7 ______ 31.5 ______ Cash Cash at bank amounted to Â£54.2 million compared with Â£57.4 million at 31 December 2004. Debt Structure Net debt amounted to Â£600.4 million compared to Â£580.6 million as at 31 December 2004. The increase of Â£19.8 million reflects new property purchases of Â£13.7 million and refurbishment expenditure of Â£27.4 million. New loan finance raised in the six months, net of repayments, amounted to Â£42.1 million. The interest-bearing debt of the Group at 30 June 2005 was Â£654.6 million (31 December 2004: Â£637.9 million). The increase includes re-financing parts of the portfolios in each main market, which raised an additional Â£60.3 million of which Â£27.7 million was raised on the UK portfolio, Â£24.3 million (SEK325 million) in Sweden and Â£9.1 million (â‚¬13.6 million) in France. The funds raised included Â£9.9 million relating to the purchase of new buildings, of which Â£6.3 million related to French purchases and Â£3.6 million to a further property purchase at Solna. The strengthening of Sterling against the Swedish Kronor and the Euro decreased the sterling equivalent of foreign currency loans on translation by Â£26.3 million. These loans finance properties located in Sweden and Continental Europe. The fair value of the Group's fixed rate debt was in excess of book value by an amount of Â£38.7 million (31 December 2004: Â£33.3 million) reflecting decreased long-term interest rates at 30 June 2005. If we were to hold loans at fair value, the notional after tax adjustment to NAV, at a corporation tax rate of 30 per cent (31 December 2004: 30 per cent) would be Â£27.1 million or 33.1 pence per share (31 December 2004: Â£23.3 million or 27.8 pence per share). Gearing adjusted for IAS 12 deferred tax, at 30 June 2005 was 134.4 per cent (31 December 2004: 134.1 per cent), statutory gearing was 183.5 per cent (31 December 2004: 181.5 per cent). Non interest-bearing debt at 30 June 2005, represented by short-term creditors, amounted to Â£41.2 million (31 December 2004: Â£45.0 million). Effect of foreign exchange translation on overseas net assets An adverse foreign exchange movement on translation of adjusted net assets in Sweden and Continental Europe of Â£18.0 million (22.0 pence per share) was included within the Group net assets at 30 June 2005. The adverse translation movement on overseas fixed assets was Â£43.1 million, offset by an exchange translation gain mainly on bank borrowings, of Â£26.3 million. Statutory net assets include an offsetting exchange gain relating to the conversion of deferred tax provisions computed in local currency for overseas operations. This had the effect of reducing the above adjusted translation movement of Â£18.0 million to Â£12.2 million. Property The valuation of the Group's portfolio at 30 June 2005, undertaken by Allsop & Co. in respect of the UK and Swedish properties and by DTZ Debenham Tie Leung in respect of the French properties, amounted to Â£1,048.9 million (31 December 2004 : Â£1,022.5 million). The portfolio comprises 112 properties of which 45 are located in the UK, 23 in Sweden, 42 in France, 1 in Germany and 1 in Luxembourg, with a total lettable area of 609,328 sq.m (6,558,980 sq. ft.). UK The UK portfolio, including joint ventures, has increased in value by 3.5 per cent from Â£479.4 million to Â£496.1 million since December. Office yields have shown further compression and we are beginning to realise the benefits of recent refurbishments carried out at a number of our properties including Westminster Tower, SE1 and Quayside, Fulham SW6. There has been much activity within the Spring Gardens Estate during the first half of the year. In April, we started construction of an 'infill' office block between Units 3 and 4, which upon completion at the end of 2005 will provide further office accommodation of approximately 855 sq.m (9,203 sq.ft) for our Government tenant. The deal for this letting was signed last year and at completion our tenant will be granted a new 20 year lease at Â£32.00 per sq.ft. On 21 June 2005 planning consent was granted for another infill block between Units 5 and 6. This will provide 1,000 sq.m (10,600 sq.ft) of office accommodation. Our tenant has an option to call for this infill to be built and on completion the building would be let at a rent of Â£32.00 per sq.ft as part of the new 20 year lease granted in respect of the adjoining properties. One final infill block is capable of being built between Units 1 and 2. This would provide a further 1,558 sq.m (16,770 sq.ft) of net office space. On 9th August 2005 planning consent was granted for this final infill although as yet terms have not been agreed for its construction. The overcladding and refurbishment of Great West House on the Great West Road, Brentford started in March and is progressing well. Completion remains on schedule for the first quarter of 2006. Approximately 5,070 sq.m (54,500 sq.ft) is currently vacant, representing in the order of 44 per cent of our vacant stock in the UK portfolio. There are signs of tenant demand improving in West London and we are gearing up for a proactive marketing campaign in advance of completion during the first quarter of 2006. The UK vacancy rate, excluding joint ventures, which are fully let, has increased marginally from 7.2 per cent to 7.5 per cent since December. This is largely accounted for by the 998 sq.m (15,000 sq.ft) of offices that became vacant at Chancel House, Neasden. We have refurbished the offices vacated on the 5th floor, and carried out other improvement works to the property including replacement air conditioning, lifts and a new reception. The refurbishment of the reception and common areas at Quayside, Fulham, SW6 has also been completed and is having a positive impact on the marketing of the remaining vacant offices. The five apartments on the top two floors of Ingram House, John Adam Street, WC2 have been completed, as has the refurbishment of the offices over the lower three floors. The office space, comprising 365 sq.m (3,929 sq.ft) was let prior to completion to Spayne Lindsay and Co. and the Internet Advertising Bureau at an office rent of Â£323 per sq.m (Â£30 per sq.ft), whilst three out of the five apartments have been let. Other important lettings during the first half include the letting of 35 Albert Embankment, SE1 to Lovatt Developments Ltd (331 sq.m, 3,563 sq.ft), the letting of the 9th floor at Westminster Tower, SE1 to Westminster Live Ltd (290 sq.m, 3,124 sq.ft) and the letting at CI Tower, New Malden to the Metropolitan Police Authority (116 sq.m, 1,249 sq.ft). Our marketing of the office element of The Shard at London Bridge continues following the pre-letting of the hotel to Shangri-La at the start of the year. The outlook for the second half is positive. With a strengthening occupational market we look forward to reaping the benefits of the improvements carried out at Chancel House, Quayside and Westminster Tower. Finding new investment product that offers value for money is increasingly challenging but we continue to pursue a number of opportunistic and site specific acquisitions. Sweden The Swedish investment market has continued to attract international and local investment and that, together with a fall in short-term Swedish interest rates has contributed to a compression of yields over the last twelve months. The general letting market has stabilized and vacant space is now reducing, particularly in the Greater Stockholm area. Solna Since the beginning of the year we have signed new leases over 9,380 sq.m (100,968 sq.ft) of previously vacant space at Solna Business Park. In FrÃ¤saren 11 Alcatel, the French telecom company, has moved into 1,324 sq.m (14,252 sq.ft). The refurbishment of FrÃ¤saren 12 was completed on schedule enabling ICA to successfully open their supermarket on 25 May and move into its new head office premises on 15 August as planned. Another new tenant, SYSteam, will occupy a further 1,785 sq.m (19,214 sq.ft) with effect from 1 April 2006. At Smeden 1, a ten year lease has been signed with Nautilus, one of the biggest gym operators in Sweden. Our Business Centre has re-opened in newly refurbished space of 1,806 sq.m (19,440 sq.ft) and Ginos Coffee House and restaurant opened for business within its 146 sq.m (1,572 sq.ft) premises in June. In April 2005 we purchased an additional building at Solna Business Park, known as Yrket 3, for a total price of SEK 70 million (Â£5.3 million) including costs. The property comprises a lettable area of 6,273 sq.m (67,524 sq.ft) and generates rent of SEK 5.0 million (Â£0.4 million), 85 per cent of which is secure until 2009. The return on equity after financing is 18.4 per cent and the purchase allows us to improve access to our existing buildings, particularly those used for retail purposes. The property also has significant development potential in its own right. Solna Business Park has now become a landmark within Greater Stockholm and is fast developing a reputation as one of the capital's best developments of its type. LÃ¶vgÃ¤rdet has continued to be fully let and has performed well and in accordance with our projections. VÃ¤nerparken provides key facilities and services to its local community including hospital services and sports and leisure facilities as well as offices and a university, which has extended its lease to mid 2008. The development is currently 96 per cent let. Continental Europe Overall, the French letting market remains quiet reflecting the economy as a whole. Take-up of new lettings in France in general was slightly down on the same period for the previous year. Vacant space in the portfolio has increased to 14,157 sq.m (152,389 sq.ft) or 9.3 per cent by area (December 2004: 5.9 per cent). The principal reason for this was the vacation of the 6,026 sq.m (64,865 sq.ft) property, Le 41, in Paris-La DÃ©fense by IBM, who had previously fully occupied the building. This currently accounts for 42.6 per cent of vacant space in the French portfolio. The property has undergone a minor refurbishment and is being actively marketed for letting. New space was let amounting to 6,376 sq.m (68,633 sq.ft), within a variety of properties during the six months to 30 June 2005. As a consequence, with the exception of the above mentioned Le 41, vacant space within the rest of the portfolio reduced slightly from 5.9 per cent to 5.6 per cent by area. Furthermore, the negotiation in 1/15 Belin in Rueil of a new 6/9 year lease covering a net 9,468 sq.m (101,915 sq.ft) with BNP Paribas Insurance, completed in July, contemporaneously with the surrender of a lease by a previous tenant. This will result in an increase in revenue effective from January 2006 and in addition we will have secured a further long-term lease to a prime tenant. In September 2005 we have signed two major lettings, one of 1,193 sq.m in Sigma to Database Factory, thereafter it only remains 579 sq.m (8.8 per cent.) vacant in the building, and one of 1,064 sq.m in the Paul Doumer property to Veritas, the property is thereafter fully let. Revenue has been enhanced by rent indexation uplifts during the first half of the year of 5.5 per cent generating additional annual income of Â£0.8 million (â‚¬ 1.1 million). In March 2005 one 5,547 sq.m (59,709 sq.ft) property, Rue Raspail ,Ivry-sur-Seine, Paris, was purchased at a cost of Â£8.1 million (â‚¬11.6 million) at an initial yield 8.7 per cent. and generates a return on equity of 40.7 per cent. Three small properties with an area of 2,134 sq.m (22,971 sq.ft) were sold in the period generating a profit of Â£35,000. Two properties underwent significant renovation programs: Le Clemenceau in Courbevoie (Entry hall, new lifts) and Marcel Pourtout, in Rueil (Entry hall, surroundings and partial faÃ§ade modification). We have recently contracted to purchase a 1,595 sq.m office property in Hamburg which is let to a sole tenant on a 15 year lease at a purchase price of Â£2.3 million (â‚¬3.4 million) at a yield of 6.9 per cent. Rent, book value and yields are analysed by location as set out below: Total Net Book Yield on Yield when Rent Rent Value net rent fully let Â£000 % Â£000 % Â£000 % % % UK London City 212 0.3% 212 0.3% 2,850 0.2% 7.4% Fringes London Mid 6,980 9.3% 6,980 10.2% 106,350 10.1% 6.6% town London West 4,045 5.4% 4,045 5.9% 67,730 6.5% 6.0% End London West 5,052 6.7% 4,649 6.8% 70,856 6.7% 6.6% London South 12,357 16.4% 12,342 18.1% 184,608 17.6% 6.7% Bank London South 1,367 1.8% 1,227 1.8% 19,500 1.9% 6.3% West London North 3,063 4.1% 2,414 3.5% 42,500 4.1% 5.7% West Outside 245 0.3% 245 0.4% 1,825 0.2% 13.4% London Total UK 33,321 44.3% 32,114 47.0% 496,219 47.1% 6.5% 6.7%* Sweden Sweden 5,700 7.6% 2,457 3.6% 38,886 3.7% 6.3% Gothenburg Sweden 11,752 15.6% 9,749 14.3% 200,581 19.1% 4.9% Stockholm Sweden 4,318 5.7% 3,701 5.4% 44,684 4.3% 8.3% Vanersborg Total Sweden 21,770 28.9% 15,907 23.3% 284,151 27.1% 5.6% 6.4%** Continental Europe France Paris 15,547 20.6% 15,547 22.9% 217,450 20.7% 7.1% France Lyon 2,692 3.6% 2,692 3.9% 30,275 2.9% 8.9% France Lille 565 0.8% 565 0.8% 6,289 0.6% 9.0% France 409 0.5% 409 0.6% 4,137 0.4% 9.9% Antibes Total France 19,213 25.5% 19,213 28.2% 258,151 24.6% 7.4% 8.4% Luxembourg 785 1.0% 785 1.2% 8,688 0.8% 9.0% Total 785 1.0% 785 1.2% 8,688 0.8% 9.0% 9.0% Luxembourg Germany 223 0.3% 206 0.3% 1,738 0.2% 11.9% Total Germany 223 0.3% 206 0.3% 1,738 0.2% 11.9% 11.9% Total 20,221 26.8% 20,204 29.7% 268,577 25.6% 7.5% 8.4% Continental Europe Group Total 75,312 100.0% 68,225 100.0% 1,048,947 100.0% 6.5% 7.0% Conversion rates: SEK/GBP 14.144 Euro/GBP 1.496 * Yields based on receivable rent and potential rents have been calculated on the assumption that book values at 30 June 2005 will increase by anticipated refurbishment expenditure of approximately Â£13.7 million in respect of projects in the UK. ** Yields based on receivable rent and potential rents have been calculated on the assumption that book values will increase by anticipated refurbishment expenditure of approximately Â£15.3 million in respect of projects in Solna, Stockholm, Sweden. Rent analysed by length of lease and location is set out below: Contracted Contracted Unlet Space under Total Total aggregate but not space refurbishment rental income at or with producing ERV planning consent Sq.m Sq.ft Â£000 Â£000 Â£000 Â£000 Â£000 % UK > 10 61,505 662,061 12,510 294 12,804 36.5% years UK 5-10 43,429 467,484 10,477 10,477 29.9% years UK < 5 45,786 492,855 9,994 46 10,040 28.6% years Development 1,177 12,670 15 15 0.0% Stock Vacant 11,269 121,306 1,736 1,736 4.9% Total UK 163,166 1,756,376 32,981 340 1,751 - 35,072 100.0% Sweden > 10 40,966 440,969 4,563 4,563 17.7% years Sweden 5-10 43,462 467,836 3,413 3,413 13.3% years Sweden < 5 174,345 1,876,695 13,794 13,794 53.6% years Refurbished 25,358 272,960 3,106* 3,106 12.1% Space Vacant 10,193 109,720 859 859 3.3% Total 294,324 3,168,180 21,770 - 859 3,106 25,735 100.0% Sweden France 5-10 60,724 653,649 8,660 8,660 40.0% years France < 5 70,164 755,264 10,553 10,553 48.8% years Vacant 14,157 152,390 2,424 2,424 11.2% Total 145,045 1,561,303 19,213 - 2,424 - 21,637 100.0% France Luxembourg 3,698 39,806 785 785 100.0% < 5 years Total 3,698 39,806 785 - - - 785 100.0% Luxembourg Germany < 5 3,095 33,315 223 223 100.0% years Total 3,095 33,315 223 - - - 223 100.0% Germany Summary Group > 10 102,471 1,103,030 17,073 294 17,367 20.8% years Group 5-10 147,615 1,588,969 22,550 22,550 27.0% years Group < 5 297,088 3,197,935 35,349 46 35,395 42.4% years Refurbished 25,358 272,960 3,106 3,106 3.7% space Development 1,177 12,670 15 15 0.0% Stock Vacant 35,619 383,416 5,019 5,019 6.0% Group Total 609,328 6,558,980 74,972 340 5,034 3,106 83,452 100.0% *Of the rental due on refurbished space in Sweden, Â£0.3 million relates to FrÃ¤saren 11, Solna (2,523 sq.m) which requires further capital expenditure of Â£ 1.9 million. Equity investments At 30 June 2005, equity investments held amounted to Â£19.1 million (December 2004: Â£22.7 million) excluding the Group's cable assets and holdings in associates. The majority by value of these equity investments are listed investments, which are carried at fair market value, and represent approximately 1.6 per cent of the gross assets of the Group. The carrying value of our portfolio of listed investments was Â£16.4 million at 30 June 2005, which includes an unrealised gain of Â£6.9 million. We believe that our unlisted investments have potential for growth in value in due course and we continue to be closely involved in monitoring their progress and add commercial support where appropriate. The investment division has been further formalised through the establishment of CLS Capital Partners Ltd as a holding company for all CLS' venture capital investments. We have recruited a Board for CLS Capital Partners, the membership of which includes a number of non-executive directors who have either held senior positions in venture capital organisations or at Board level within successful blue chip companies. Conclusion The property portfolio has continued to perform well and we continue to search for attractive property investments that meet our strict investment criteria, within the UK, Sweden and Continental Europe. Our focus remains on our overriding objective to optimise shareholder returns. Finally, I am pleased to announce a restructuring of the senior management team in line with our overall planning for succession within the Group. Per Sjoberg will succeed Tom Thomson as Chief Executive Officer with effect from 1 January 2006. Per graduated from Stockholm University with a Bachelor degree in Business Administration. He is also an engineer and has experience of a number of large development projects globally. Before joining CLS Per worked as an independent consultant, and set up his own consultancy company in 1996. He has been responsible for property development activities at the Group since 1 November 2001 and was appointed to the main board as Group Development Director on 6 February 2004. I would like to welcome Per to his new role and wish him every success. Tom Thomson has been associated with CLS for more than twenty years and has been Chief Executive Officer since October 2001. He will retain his main Board position and will become non-executive Vice Chairman. I give him my heart-felt thanks for the very significant contribution he has made to the success of the Group over the years and I very much look forward to continue to work with him in his new role for the foreseeable future. S. A. Mortstedt Executive Chairman 23 September 2005 Unaudited Consolidated Income Statement For the six months ended 30 June 2005 30 June 30 June 31 Dec 2005 2004 2004 Re-stated Re-stated Â£000 Â£000 Â£000 Revenue 45,231 42,355 86,913 ====== ====== ====== Rental and similar income 38,386 36,172 74,489 Service charge and similar income 4,066 3,462 6,900 Service charge expense and similar charges (8,438) (7,475) (13,772) _______ _______ _______ Net rental income 34,014 32,159 67,617 Turnover from non-property activities 2,779 2,721 5,524 Cost of sales of non-property activities (1,275) (2,536) (4,076) _______ _______ _______ Net income non-property activities 1,504 185 1,448 Other operating gains 2,626 945 2,651 Administrative expenses (10,224) (7,277) (15,003) Net property expenses (1,800) (1,891) (3,902) _______ _______ _______ Operating profit before net gains on investment 26,120 24,121 52,811 properties Net gain from fair value adjustment on 31,545 10,389 36,988 investment property Profit from sale of investment property 35 539 464 _______ _______ _______ Operating profit 57,700 35,049 90,263 Finance income 453 897 1,801 Finance expense (19,038) (17,462) (36,050) Share of loss of associates (277) (40) (201) _______ _______ _______ Profit before income tax 38,838 18,444 55,813 Taxation - current (497) (252) (596) Taxation - deferred (10,188) (5,125) (16,042) _______ _______ _______ (10,685) (5,377) (16,638) ______ ______ ______ Profit for the period 28,153 13,067 39,175 Attributable to: ====== ====== ====== Equity holders of the Company 28,224 13,680 40,253 Equity minority interest (71) (613) (1,078) _______ _______ _______ 28,153 13,067 39,175 ======= ======= ======= Basic Earnings per Share 33.8p 15.7p 46.7p ======= ======= ======= Diluted Earnings per Share 33.6p 15.5p 46.5p ======= ======= ======= Unaudited Consolidated Balance Sheet At 30 June 2005 30 June 30 June 31 Dec 2005 2004 2004 Re-stated Re-stated Â£000 Â£000 Â£000 ASSETS Non-current assets Investment property 1,048,948 918,671 1,022,539 Property, plant and equipment 10,337 7,235 10,710 Intangible assets 2,823 198 2,944 Investment in associates 3,618 3,731 3,010 Available-for-sale investments 19,129 171 171 Derivative financial instruments 1,003 - - Deferred income tax assets 16,298 13,684 13,813 Trade and other receivables 433 3,455 3,163 _________ _________ __________ 1,102,589 947,145 1,056,350 Current assets Trade and other receivables 9,145 15,682 11,261 Investments - 8,036 10,492 Cash and cash equivalents 54,244 61,896 57,371 _________ _________ __________ 63,389 85,614 79,124 Total assets 1,165,978 1,032,759 1,135,474 LIABILITES Non-current liabilities Trade and other payables 1,151 4,187 1,279 Deferred income tax liabilities 136,848 109,066 127,951 Borrowings, including finance leases 626,387 555,008 620,508 Provisions for other liabilities and charges - - 301 _________ _________ _________ 764,386 668,261 750,039 Current liabilities Trade and other payables 39,789 35,100 44,128 Current income tax liabilities 1,330 1,149 902 Borrowings, including finance leases 28,363 33,620 17,447 Derivative financial instruments 1,675 - - _________ _________ _________ 71,157 69,869 62,477 Total liabilities 835,543 738,130 812,516 _________ _________ _________ NET ASSETS 330,435 294,629 322,958 ========= ========= ========= EQUITY Capital and reserves attributable to the Company's equity holders Share capital 21,382 21,365 21,374 Other reserves 115,668 113,394 122,070 Retained earnings 194,120 161,383 181,492 _________ _________ __________ 331,170 296,142 324,936 Equity minority interests (735) (1,513) (1,978) _________ _________ __________ TOTAL EQUITY 330,435 294,629 322,958 ========= ========= ========== Unaudited Consolidated Statement of Changes in Equity Attributable to equity holders Minority Total of interest the Company Share Other Retained capital reserves earnings Balance at 1 January 2004 21,911 120,610 157,034 (900) 298,655 as restated under IFRS _________ _________ _________ __________ _________ Arising in the period:- Currency translation - (8,159) - - (8,159) differences on foreign currency net investments Expenses of share issue/ - - (67) - (67) purchase of own shares Purchase of own shares - - (9,264) - (9,264) Issue of shares 63 329 - - 392 Cancellation of shares (609) 609 - - - __________ _________ _________ __________ _________ Net gains / (losses) (546) (7,221) (9,331) - (17,098) recognised directly in equity Employee share option - 5 - - 5 scheme Profits/(loss) for the - - 13,680 (613) 13,067 period __________ __________ _________ __________ _________ Total (decrease) /increase (546) (7,216) 4,349 (613) (4,026) in equity for the period __________ __________ _________ __________ _________ At 30 June 2004 as 21,365 113,394 161,383 (1,513) 294,629 restated under IFRS __________ __________ _________ __________ _________ Arising in the period:- Currency translation - 8,644 (1) - 8,643 differences on foreign currency net investments Expenses of share issue / - - (51) - (51) purchase of own shares Purchase of own shares - - (6,412) - (6,412) Issue of shares 9 27 - - 36 __________ __________ _________ __________ _________ Net gains/ (losses) 9 8,671 (6,464) - 2,216 recognised directly in equity Employee share option - 5 - - 5 scheme Profit for the period - - 26,573 (465) 26,108 __________ _________ _________ __________ _________ Total increase / 9 8,676 20,109 (465) 28,329 (decrease) in equity for the period __________ _________ _________ __________ _________ At 31 December 2004 as 21,374 122,070 181,492 (1,978) 322,958 restated under IFRS __________ _________ _________ __________ _________ Adoption of IAS 32 and IAS - 12,270 (4,148) - 8,122 39 __________ _________ _________ __________ _________ At 1 January 2005 21,374 134,340 177,344 (1,978) 331,080 Arising in the period:- Fair value gains / (losses) -available for sale - (5,069) - - (5,069) -cash flow hedges - (1,523) - - (1,523) Currency translation - (12,219) - - (12,219) differences on foreign currency net investments Expenses of share issue / - - (69) - (69) purchase of own shares Purchase of own shares - - (10,066) - (10,066) Issue of shares 8 136 - - 144 __________ _________ _________ __________ _________ Net gains / (losses) 8 (18,675) (10,135) - (28,802) recognised directly in equity Employee share option - 3 - - 3 scheme Reduction in minority - - (1,314) 1,314 - interest Profit for the period - - 28,225 (71) 28,154 __________ _________ _________ __________ _________ Total increase / 8 (18,672) 16,776 1,243 (645) (decrease) in equity for the period __________ _________ _________ __________ _________ At 30 June 2005 21,382 115,668 194,120 (735) 330,435 ========== ========= ========= ========= ======== Unaudited Consolidated Cash Flow Statement For the six months ended 30 June 2005 30 June 2005 30 June 2004 31 Dec 2004 Re-stated Re-stated Â£000 Â£000 Â£000 Cash flows from operating activities Cash generated from operations 22,440 22,585 52,257 Interest paid (17,756) (16,719) (33,326) Income tax paid (228) (238) (539) ____________ ____________ ____________ Net cash inflow from operating 4,456 5,628 18,392 activities ____________ ____________ ____________ Cash flows from investing activities Purchase of investment property (13,154) (16,067) (38,249) Capital expenditure on investment (27,387) (6,818) (31,177) property Proceeds from sale of investment 2,973 1,202 8,486 property Purchase of property, plant and (474) (352) (1,545) equipment (PPE) Proceeds from sale of PPE - - 2,029 Purchase of available-for-sale financial (2,181) (4,073) (6,529) assets Purchase of interests in associates (277) (546) (1,486) Interest received 783 794 1,715 ____________ ____________ ____________ Net cash outflow from investing (39,717) (25,860) (66,756) activities ____________ ____________ ____________ Cash flows from financing activities Issue of shares 143 392 428 Purchase of own shares (10,136) (9,331) (15,795) New loans 61,121 45,003 112,938 Issue costs of new loans (796) (936) (2,018) Interest rate caps purchased (6) (1,063) (1,234) Repayment of loans (18,192) (9,168) (45,814) ____________ ____________ ____________ Net cash inflow from financing 32,134 24,897 48,505 activities ____________ ____________ ____________ Net (decrease) / increase in cash and (3,127) 4,665 141 cash equivalents Cash and cash equivalents at beginning 57,371 57,231 57,230 of period ____________ ____________ ____________ Cash and cash equivalents at end of 54,244 61,896 57,371 period =========== =========== ============ Independent Review report to CLS Holdings plc Introduction We have been instructed by the company to review the financial information for the six months ended 30 June 2005 which comprises consolidated interim balance sheet as at 30 June 2005 and the related consolidated interim statements of income, cash flows and statement of changes in equity for the six months then ended and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority. As disclosed in note 2, the next annual financial statements of the group will be prepared in accordance with accounting standards adopted for use in the European Union. This interim report has been prepared in accordance with the basis set out in note 3. The accounting policies are consistent with those that the directors intend to use in the next annual financial statements. As explained in note 2, there is, however, a possibility that the directors may determine that some changes are necessary when preparing the full annual financial statements for the first time in accordance with accounting standards adopted for use in the European Union. The IFRS standards and IFRIC interpretations that will be applicable and adopted for use in the European Union at 31 December 2005 are not known with certainty at the time of preparing this interim financial information. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/ 4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the disclosed accounting policies have been applied. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance. Accordingly we do not express an audit opinion on the financial information. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Listing Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2005. PricewaterhouseCoopers LLP Chartered Accountants London 23 September 2005 Notes to the interim financial report 1. General information CLS Holdings plc ('the Company') and its subsidiaries (together 'CLS Holdings' or the 'Group') are an investment property group which is principally involved in the investment, development and management of commercial properties. The Group's principal operations are carried out in the United Kingdom, Sweden and Continental Europe. The Company is registered in the UK, registration number 2714781, of registered address: One Citadel Place, Tinworth Street, London SE11 5EF. The Company has its primary listing on the London Stock Exchange. The Interim Report is unaudited and does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The statutory accounts for 2004, which were prepared under UK Generally Accepted Accounting Principles ('UK GAAP'), a copy of the statutory accounts for that year has been filed with the Registrar of Companies. The Auditors' opinion on those accounts was unqualified and did not contain a statement made under section 237 of the Companies Act 1985. The interim financial information was approved by a duly appointed and authorised committee of the board of directors on 22 September 2005. It has been reviewed by the auditors as set out in their report on page 20. The income statement and balance sheet have been prepared, in accordance with applicable International Accounting Standards ('IAS') and International Financial Reporting Standards ('IFRS') issued by the International Accounting Standards Board ('IASB') and on the basis that all such standards will be endorsed by the European Union ('EU'). These standards are collectively referred to as 'IFRS'. The maintenance and integrity of the CLS Holdings plc web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the web site. Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions. 2. Transition to IFRS To date, CLS Holdings has prepared its financial statements under UK GAAP. Under European legislation, all companies listed in the EU are required to prepare consolidated financial statements under IFRS for financial periods beginning on or after 1 January 2005. As a result the Group will be required to prepare its consolidated financial statements in accordance with IFRS as adopted by the EU. The Group's first IFRS financial statements will be for the year ended 31 December 2005. This report is prepared in accordance with the transitional provisions set out in IFRS 1 - 'First-time Adoption of IFRS'. The Group has applied IFRS 1 to provide a starting point for reporting under IFRS. The date of transition to IFRS is 1 January 2004, as determined in accordance with IFRS 1. All comparative information in these financial statements has been restated to reflect the Group's adoption of IFRS. In accordance with the transitional provisions set out in IFRS 1, and other relevant standards, the Group has applied IFRS expected to be in force as at 31 December 2005 in its financial reporting with effect from 1 January 2004 (date of transition to IFRS), however the Group has made use of the exemption available under IFRS 1 to only apply IAS 32 and IAS 39 from 1 January 2005. The reconciliations of equity at 1 January 2004 (date of transition to IFRS) and at 31 December 2004 (date of last UK GAAP financial statements) and the reconciliation of profit for 2004, as required by IFRS 1, including the significant accounting policies and selected notes to 31 December 2004, have been published* in the 'IFRS Transition Report 31 December 2004'. Reconciliations of equity and profit for the periods ended 30 June 2004 and 31 December 2004, and a reconciliation of equity at 1 January 2005 (the date of transition for IAS 32 and IAS 39) have been presented in section 4 below. This Interim Report has been prepared in accordance with those IFRS standards and International Financial Reporting Interpretations Committee ('IFRIC') interpretations issued and effective or issued and early adopted as at the time of preparing this report. The IFRS standards and IFRIC interpretations that will be applicable at 31 December 2005, including those that will be applicable on an optional basis, are not known with certainty at the time of preparing this report, as further standards and interpretations may be issued that could be applicable for financial years beginning on or after 1 January 2005 or that are applicable to later accounting periods but with the option for companies to adopt for earlier periods. The Group's first annual financial statements prepared under IFRS may, therefore, be prepared in accordance with different accounting policies to those used in the preparation of the financial information in this document. In addition, IFRS is currently being applied in the EU and other countries for the first time and contains many new and revised standards. Therefore practice on which to draw in applying the standards may develop. At this preliminary stage, before the Group's first annual financial statements prepared under IFRS are completed, it should be noted that the financial information in this document could be subject to change. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Group's accounting policies. Although these estimates are based on management's best knowledge of the amount, events or actions, actual results ultimately may differ from those estimates. * The 'IFRS Transition Report 31 December 2004' was released to the Stock Exchange and published on the Company's website, www.clsholdings.com, on 15 September 2005. 3. Accounting policies The interim financial report has been prepared in accordance with the Group's IFRS accounting policies. These are the first IFRS financial statements of the company, details of the impact of transition to IFRS are set out in the following sections, and in the 'IFRS Transition Report 31 December 2004' which has been published*. Changes in accounting policies The same accounting policies and methods of computation are followed in the interim financial report as were followed in the 'IFRS Transition Report 31 December 2004' which has been published*. For the recognition and measurement of financial instruments, the Group applied the exemption in IFRS 1 - 'First Time Adoption of International Financial Reporting Standards' to adopt IAS 32 - 'Financial Instruments: Disclosure and Presentation' and IAS 39 - 'Financial Instruments: Recognition and Measurement' from 1 January 2005 and comparative information presented does not need to comply with these standards in the first year on transition. The principal changes with the adoption of IAS 32 and IAS 39 from 1 January 2005 are: Hedge accounting Hedging instruments such as interest rate swaps and forward foreign exchange contracts have been included in the balance sheet at fair value. Movements in fair value of these hedging instruments are recognised in the income statement or in equity, as appropriate. To the extent that such instruments are ineffective hedges, they are included in the balance sheet at fair value with changes in fair value being recognised in the income statement. These instruments are classified in the balance sheet as 'Derivative financial instruments' under either assets or liabilities, as appropriate. Investments Investments are carried at fair value on the balance sheet, with changes in the fair value being recognised either in the income statement or in equity and recycled through the income statement when the investments are realised, as appropriate. Under UK GAAP these investments were carried at the lower of cost and market value. Under IFRS, these investments will be classified as 'Available-for-sale investments' in the balance sheet. Other financial instruments Movements in the fair value of those derivative financial instruments which are not accounted for as hedging instruments are recognised in the income statement and not by way of a note, as is the case under UK GAAP. These instruments are classified in the balance sheet as 'Derivative financial instruments' under either assets or liabilities, as appropriate. Borrowings The version of IAS 39 adopted by the EU prohibits the option to carry borrowings at their fair values, and consequently the Group continue to include borrowings in the balance sheet at amortised cost. The fair value of borrowings will be disclosed under IAS 32, as is the case under UK GAAP. A reconciliation of the transition to IAS 32 and IAS 39 at 1 January 2005 can be found in section 4.5 below. The revised accounting policies for derivative financial instruments and other investments are set out in the 'IFRS Transition Report 31 December 2004' which has been published*. * The 'IFRS Transition Report 31 December 2004' was released to the Stock Exchange and published on the Company's website, www.clsholdings.com, on 15 September 2005. 4. Reconciliations between IFRS and UK GAAP 4.1 Reconciliation of consolidated IFRS balance sheet at 30 June 2004 (all amounts in GBP thousands unless otherwise stated) Previ- Share Opera- ously Based Busi- ting Foreign Invest- Inter- Impair- Invest- Total Re- repor- pay- ness Income Leases lease exchange ments ests ment ment adjust- stated ted ments combin- taxes incen- in in of pro- ments under under ations tives asso- joint assets perty IFRS ciates ven- tures UK GAAP* IFRS IFRS IAS IAS SIC IAS IAS IAS IAS IAS 2 3 12 17 15 21 28 31 36 40 ASSETS Non- current assets Invest- 882,390 - - - 146 - - - 36,135 - - 36,281 918,671 ment property Property, plant 5,063 - - - - - - - 2,172 - - 2,172 7,235 and equipment Intangible - - - - - - - - 198 - - 198 198 assets Invest- ments 3,731 - - - - - - (71) - 71 - - 3,731 in asso- ciates Invest- ments 8,554 - - - - - - - (8,554) - - (8,554) - in joint ventures Investments 171 - - - - - - - - - - - 171 Deferred income - - - 13,684 - - - - - - - 13,684 13,684 tax assets Trade and other 3,379 - - - - - - - 76 - - 76 3,455 receiv- ables ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ 903,288 - - 13,684 146 - - (71) 30,027 71 - 43,857 947,145 Current assets Trade and other 15,049 - - - - 179 - - 454 - - 633 15,682 receiv- ables Investments 8,036 - - - - - - - - - - - 8,036 Cash and cash 60,189 - - - - - - - 1,707 - - 1,707 61,896 equiv- alents ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ 83,274 - - - - 179 - - 2,161 - - 2,340 85,614 ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Total 986,562 - - 13,684 146 179 - (71) 32,188 71 - 46,1971,032,759 assets ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ LIABILITIES Non- current liabilities Trade and other 4,187 - - - - - - - - - - - 4,187 payables Deferred income 6,231 - - 102,835 - - - - - - - 102,835 109,066 tax liabilities Borrowings, including finance 526,612 - - - 146 - - - 28,250 - - 28,396 555,008 leases Provisions for other liabilities - - - - - - - - - - - - - and charges ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ 537,030 - - 102,835 146 - - - 28,250 - - 131,231 668,261 Current liabilities Trade and other 33,017 - - - - - - - 2,083 - - 2,083 35,100 payables Current income 1,149 - - - - - - - - - - - 1,149 tax liabilities Borrowings, including finance 32,970 - - - - - - - 650 - - 650 33,620 leases ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ 67,136 - - - - - - - 2,733 - - 2,733 69,869 ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Total 604,166 - - 102,835 146 - - - 30,983 - - 133,964 738,130 liabilities ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Net 382,396 - - (89,151) - 179 - (71) 1,205 71 - (87,767) 294,629 assets ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ EQUITY Capital and reserves attributable to the company's equity holders Share 21,365 - - - - - - - - - - - 21,365 capital Other 332,281 10 - 3,082 - - 3,814 - - - (225,793) (218,887) 113,394 reserves Retained 30,263 (10) - (92,233) - 179 (3,814) (71) 1,205 71 225,793 131,120 161,383 earnings ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ 383,909 - - (89,151) - 179 - (71) 1,205 71 - (87,767) 296,142 Minority (1,513) - - - - - - - - - - - (1,513) interest ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Total 382,396 - - (89,151) - 179 - (71) 1,205 71 - (87,767) 294,629 equity ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Notes - a b c d e f g h i j refer to section 4.7 * Reformatted to reflect IFRS reporting requirements 4.2 Reconciliation of consolidated IFRS income statement for year ended 30 June 2004 (all amounts in GBP thousands unless otherwise stated) Previ- Share Opera- ously Based Busi- ting Foreign Invest- Inter- Impair- Invest- Total Re- repor- pay- ness Income Leases lease exchange ments ests ment ment adjust- stated ted ments combin- taxes incen- in in of pro- ments under under ations tives asso- joint assets perty IFRS ciates ven- tures UK GAAP* IFRS IFRS IAS IAS SIC IAS IAS IAS IAS IAS 2 3 12 17 15 21 28 31 36 40 Rental and similar 34,818 - - - - 44 - - 1,310 - - 1,354 36,172 income Service charge and 3,264 - - - - - - - 198 - - 198 3,462 similar income Service charge expense (7,234) - - - - - - - (241) - - (241) (7,475) and similar charges ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Net 30,848 - - - - 44 - - 1,267 - - 1,311 32,159 rental income Turnover from non- 2,721 - - - - - - - - - - - 2,721 property activities Cost of sales (2,536) - - - - - - - - - - - (2,536) of non- property activities ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Net income 185 - - - - - - - - - - - 185 non- property activities Other operating 945 - - - - - - - - - - - 945 gains / (losses) - net Adminis- trative (7,185) (5) - - - - - - (87) - - (92) (7,277) expenses Net property (1,896) - - - 5 - - - - - - 5 (1,891) expenses ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Operating profit before net gain on 22,897 (5) - - 5 44 - - 1,180 - - 1,224 24,121 investment properties Net gain from fair value - - - - - - - - - - 10,389 10,389 10,389 adjustment on invest- ment property Profit on sale 539 - - - - - - - - - - - 539 of invest- ment property ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ _____ _____ Operating 23,436 (5) - - 5 44 - - 1,180 - 10,389 11,613 35,049 profit Interest receivable and similar income: Finance 897 - - - - - - - - - - - 897 income Interest payable and similar charges: Finance (17,457) - - - (5) - - - - - - (5) (17,462) Expense Share of (loss) (40) - - - - - - 71 - (71) - - (40) /profit of associates Share of (loss) 1,180 - - - - - - - (1,180) - - (1,180) - / profit of JVs ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Profit before 8,016 (5) - - - 44 - 71 - (71) 10,389 10,428 18,444 income tax Taxation - (252) - - - - - - - - - - - (252) current Taxation - (551) - - (4,574) - - - - - - - (4,574) (5,125) deferred ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Profit for 7,213 (5) - (4,574) - 44 - 71 - (71) 10,389 5,854 13,067 the period _____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ _____ ____ Attributable to: Equity holders 7,826 (5) - (4,574) - 44 - 71 - (71) 10,389 5,854 13,680 of the parent Minority (613) - - - - - - - - - - - (613) interest ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ 7,213 (5) - (4,574) - 44 - 71 - (71) 10,389 5,854 13,067 ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Notes - refer a. b. c. d. e. f. g. h. i. j. to section 4.7 * Reformatted to reflect IFRS reporting requirements 4.3 Reconciliation of consolidated IFRS balance sheet at 31 December 2004 (all amounts in GBP thousands unless otherwise stated) Previ- Share Opera- ously Based Busi- ting Foreign Invest- Inter- Impair- Invest- Total Re- repor- pay- ness Income Leases lease exchange ments ests ment ment adjust-stated ted ments combin- taxes incen- in in joint of pro- ments under under ations tives asso- ven- assets perty IFRS ciates tures UK GAAP* IFRS IFRS IAS IAS SIC IAS IAS IAS IAS IAS 2 3 12 17 15 21 28 31 36 40 ASSETS Non- current assets Invest- ment 981,560 - - - 146 - - - 40,833 - - 40,9791,022,539 proper- ties Property, plant and 5,040 - - - - - - - 5,670 - - 5,67010,710 equipment Intangible - - 2,509 - - - - - 435 - - 2,944 2,944 assets Investments in 3,010 - - - - - - (143) - 143 - - 3,010 associates Investments in joint 13,848 - - - - - - - (13,848) - - (13,848) - ventures Investments 171 - - - - - - - - - - - 171 Deferred income tax - - - 13,813 - - - - - - - 13,81313,813 assets Trade and other 3,096 - - - - - - - 67 - - 67 3,163 receiv- ables __ __ __ __ __ __ __ __ __ __ __ __ __ 1,006,725 - 2,509 13,813 146 - - (143) 33,157 143 - 49,6251,056,350 Current assets Trade and other 10,480 - - - - 223 - - 558 - - 78111,261 receiv- ables Investments 10,492 - - - - - - - - - - -10,492 Cash and cash 56,680 - - - - - - - 691 - - 69157,371 equivalents __ __ __ __ __ __ __ __ __ __ __ __ 77,652 - - - - 223 - - 1,249 - - 1,47279,124 __ __ __ __ __ __ __ __ __ __ __ __ __ Total 1,084,377 - 2,509 13,813 146 223 - (143) 34,406 143 - 51,0971,135,474 assets __ __ __ __ __ __ __ __ __ __ __ __ LIABILITIES Non- current liabilities Trade and other 1,279 - - - - - - - - - - 1,279 payables Deferred income tax 6,777 - - 121,174 - - - - - - 121,174127,951 liabilities Borrowings, including finance 592,439 - - - 146 - - - 27,923 - 28,069620,508 leases Provisions for other liabilities 301 - - - - - - - - - - 301 and charges __ __ __ __ __ __ __ __ __ __ __ __ __ 600,796 - - 121,174 146 - - - 27,923 - - 149,243750,039 Current liabilities Trade and other 39,472 - - - - - - - 4,656 - - 4,65644,128 payables Current income tax 902 - - - - - - - - - - - 902 liabilities Borrowings, including finance 16,825 - - - - - - - 622 - - 62217,447 leases __ __ __ __ __ __ __ __ __ __ __ __ 57,199 - - - - - - - 5,278 - - 5,27862,477 __ __ __ __ __ __ __ __ __ __ __ __ __ Total 657,995 - - 121,174 146 - - - 33,201 - - 154,52 812,516 liabilities __ __ __ __ __ __ __ __ __ __ __ __ __ Net 426,382 - 2,509 (107,361) - 223 - (143) 1,205 143 - (103,424)322,958 assets __ __ __ __ __ __ __ __ __ __ __ __ __ EQUITY Capital and reserves attributable to the company's equity holders Share 21,374 - - - - - - - - - - -21,374 capital Other 374,592 15 97 (951) - - 13,096 - - - (264,779) (252,522)122,070 reserves Retained 32,394 (15) 2,412 (106,410) - 223 (13,096) (143) 1,205 143 264,779 149,098 181,492 earnings __ __ __ __ __ __ __ __ __ __ __ __ 428,360 - 2,509 (107,361) - 223 - (143) 1,205 143 - (103,424) 324,936 Minority (1,978) - - - - - - - - - - - (1,978) interest __ __ __ __ __ __ __ __ __ __ __ __ __ Total 426,382 - 2,509 (107,361) - 223 - (143) 1,205 143 - (103,424) 322,958 equity __ __ __ __ __ __ __ __ __ __ __ __ __ Notes - refer a. b. c. d. e. f. g. h. i. j. to section 4.7 * Reformatted to reflect IFRS reporting requirements 4.4 Reconciliation of consolidated IFRS income statement for year ended 31 December 2004 (all amounts in GBP thousands unless otherwise stated) Previ- Share Opera- ously Based Busi- ting Foreign Invest- Inter- Impair- Invest- Total Re- reported pay- ness Income Leases lease exchange ments ests ment ment adjust- stated under ments combin- taxes incen- in in of pro- ments under ations tives asso- joint assets perty IFRS ciates ven- tures UK GAAP* IFRS IFRS IAS IAS SIC IAS IAS IAS IAS IAS 2 3 12 17 15 21 28 31 36 40 Rental and 71,787 - - - - 83 - - 2,619 - - 2,702 74,489 similar income Service charge 6,401 - - - - - - - 499 - - 499 6,900 and similar income Service charge expense (13,293) - - - - - - - (479) - - (479) (13,772) and similar charges __ __ __ __ __ __ __ __ __ __ __ __ __ Net 64,895 - - - - 83 - - 2,639 - - 2,722 67,617 rental income Turnover from 5,524 - - - - - - - - - - - 5,524 non- property activities Cost of sales of non- (4,076) - - - - - - - - - - - (4,076) property activities __ __ __ __ __ __ __ __ __ __ __ __ __ Net income 1,448 - - - - - - - - - - - 1,448 non- property activities Other operating 2,651 - - - - - - - - - - - 2,651 gains/ (losses) - net Adminis- trative (14,845) (10) - - - - - - (148) - - (158) (15,003) expenses Net property (3,911) - - - 9 - - - - - - 9 (3,902) expenses __ __ __ __ __ __ __ __ __ __ __ __ __ Operating profit before net gain on 50,238 (10) - - 9 83 - - 2,491 - - 2,573 52,811 investment properties Net gain from fair value adjustment - - (1,394) - - 5 - - - - 38,377 36,988 36,988 on investment property Profit on sale of investment 464 - - - - - - - - - - - 464 properties __ __ __ __ __ __ __ __ __ __ __ __ __ Operating 50,702 (10) (1,394) - 9 88 - - 2,491 - 38,377 39,561 90,263 profit Finance 1,801 - - - - - - - - - - - 1,801 income Finance (36,041) - - - (9) - - - - - - (9) (36,050) expense Share of (loss)/ profit (201) - - - - - - 143 - (143) - - (201) of associates Share of (loss)/ 2,491 - - - - - - - (2,491) - - (2,491) - profit of JVs __ __ __ __ __ __ __ __ __ __ __ __ __ Profit before 18,752 (10) (1,394) - - 88 - 143 - (143) 38,377 37,061 55,813 income tax Taxation (596) - - - - - - - - - - - (596) - current Taxation (1,097) - 3,806 (18,751) - - - - - - - (14,945) (16,042) - deferred __ __ __ __ __ __ __ __ __ __ __ __ __ Profit for 17,059 (10) 2,412 (18,751) - 88 - 143 - (143) 38,377 22,116 39,175 year __ __ __ __ __ __ __ __ __ __ __ __ __ Attributable to: Equity holders 18,137 (10) 2,412 (18,751) - 88 - 143 - (143) 38,377 22,116 40,253 of the parent Minority (1,078) - - - - - - - - - - - (1,078) nterest __ __ __ __ __ __ __ __ __ __ __ __ __ 17,059 (10) 2,412 (18,751) - 88 - 143 - (143) 38,377 22,116 39,175 __ __ __ __ __ __ __ __ __ __ __ __ __ Notes - refer a. b. c. d. e. f. g. h. i. j. to section 4.7 * Reformatted to reflect IFRS reporting requirements 4.5 Reconciliation of consolidated IFRS balance sheet at 1 January 2005 (all amounts in GBP thousands unless otherwise stated) IFRS (excl Financial Income Total IFRS (incl IAS 32 and Instruments taxes Adjustments IAS 32 and IAS 39) IAS 39) IAS 39 IAS 12 ASSETS Non-current assets Investment property 1,022,539 - - - 1,022,539 Property, plant and 10,710 - - - 10,710 equipment Intangible assets 2,944 - - - 2,944 Investments in 3,010 - - - 3,010 associates Available -for -sale - 22,671 - 22,671 22,671 investments Investments 171 (171) - (171) - Derivative financial - 1,315 - 1,315 1,315 instruments Deferred income tax 13,813 - 1,016 1,016 14,829 assets Trade and other 3,163 (1,968) - (1,968) 1,195 receivables ___ ___ ___ ___ ___ 1,056,350 21,847 1,016 22,863 1,079,213 Current assets Trade and other 11,261 (599) - (599) 10,662 receivables Investments 10,492 (10,492) - (10,492) - Cash and cash 57,371 - - - 57,371 equivalents ____ ____ ____ ____ ____ 79,124 (11,091) - (11,091) 68,033 ____ ____ ____ ____ ____ Total assets 1,135,474 10,756 1,016 11,772 1,147,246 ____ ____ ____ ____ ____ LIABILITIES Non-current liabilities Trade and other payables 1,279 - - - 1,279 Deferred income tax 127,951 - 2,888 2,888 130,839 liabilities Borrowings, including 620,508 - - - 620,508 finance leases Derivative financial - 1,063 - 1,063 1,063 instruments Provisions for other 301 (301) - (301) - liabilities and charges ____ ____ ____ ____ ____ 750,039 762 2,888 3,650 753,689 Current liabilities Trade and other payables 44,128 - - - 44,128 Current income tax 902 - - - 902 liabilities Borrowings, including 17,447 - - - 17,447 finance leases ____ ____ ____ ____ ____ 62,477 - - - 62,477 ____ ____ ____ ____ ____ Total liabilities 812,516 762 2,888 3,650 816,166 ____ ____ ____ ____ ____ Net assets 322,958 9,994 (1,872) 8,122 331,080 ____ ____ ____ ____ ____ EQUITY Capital and reserves attributable to the company's equity holders Share capital 21,374 - - - 21,374 Other reserves 122,070 12,270 - 12,270 134,340 Retained earnings 181,492 (2,276) (1,872) (4,148) 177,344 ____ ____ ____ ____ ____ 324,936 9,994 (1,872) 8,122 333,058 Minority interest (1,978) - - - (1,978) ____ ____ ____ ____ ____ Total equity 322,958 9,994 (1,872) 8,122 331,080 ____ ____ ____ ____ ____ Notes - refer to section k. c. 4.7 Notes to the interim financial report (continued) 4.6 Notes to the consolidated IFRS cash flow statement for year ended 31 December 2004 The transition to IFRS will not affect the cash flows of the business. The presentation of the cash flow statement for the Group does not differ significantly from that under UK GAAP, except for the inclusion of short term deposits within the definition of cash and cash equivalents. Previously these were shown separately from cash as liquid resources. From 1 January 2005, due to the classification of investments as 'available-for-sale' financial assets, the movement in investments will now be shown in the cash flow statement under cash flows from investing activities rather than in cash generated from operations. There are no other material differences between the cash flow statement presented under IFRS and the cash flow statement presented under UK GAAP. Notes to IFRS reconciliations IFRS 2 - Share-based payments Share option plans are fair valued at the date of grant and costs taken to the income statement over the vesting period. IFRS 1 transitional exemption applied. A corresponding release from equity means that there is no effect on the balance sheet or NAV. IFRS 3 - Business combinations In the light of IFRS 3, a portfolio acquired during 2004 has been reclassified as a business combination rather than as a purchase of assets. IAS 12 - Income taxes Provision is now made for the deferred tax liability associated with the revaluation of investment properties, this was not required under UK GAAP. IAS 17 - Leases Investment property head leases are capitalised and shown as a corresponding lease liability. SIC 15 - Operating lease incentives Lease incentives are now amortised over the period of the lease, rather than to the first rent review. IAS 21 - The effects of changes in foreign exchange rates Under UK GAAP revaluation movements on overseas assets were booked at the closing rate and retranslated at each reporting period. Since the revaluation movements are now posted to the income statement, they are translated at the average rate. On transition to IFRS, all previous exchange gains held within the revaluation reserve have been transferred back to the cumulative translation reserve. IAS 28 - Investments in associates Cessation of goodwill amortisation. Negative goodwill eliminated. IAS 31 - Interests in joint ventures Proportional consolidation for all joint ventures. The net investment line is now eliminated and joint ventures are shown gross on a line-by-line basis. Cessation of goodwill amortisation. Negative goodwill eliminated. IAS 36 - Impairment of assets Certain assets are reviewed for impairment. An impairment loss is recognised for the amount by which the assets' carrying amount exceeds its recoverable amount. IAS 40 - Investment property Investment property revaluations and tax thereon taken through the income statement. IAS 32 and IAS 39 - Financial instruments Financial assets and liabilities such as interest rate swaps, caps, floors and forward foreign exchange contracts have been included in the balance sheet at fair value. Investments are carried at fair value on the balance sheet. CLS Holdings plc Directors, Officers and Advisers Directors Sten Mortstedt (Executive Chairman) Thomas Thomson BA (Chief Executive and Vice Chairman ) Dan BÃ¤verstam (Chief Financial Officer) Steven Board FCCA (Chief Operating Officer ) Per SjÃ¶berg (Group Development Director) James Dean FRICS * D (Non-executive Director) Keith Harris PhD * D Â¨(Non-executive Director) Thomas Lundqvist D (Non-executive Director) Bengt Mortstedt Juris Cand (Non-Executive Director) * = member of Remuneration Committee D= member of Audit Committee Â¨= senior independent director Company Secretary Steven Board FCCA Registered Office One Citadel Place Tinworth Street London SE11 5EF Registered Number 2714781 Registered Auditors PricewaterhouseCoopers LLP Chartered Accountants 1 Embankment Place London WC2N 6RH Registrars and Transfer Office Computershare Services Plc P O Box 435 Owen House 8 Bankhead Crossway North Edinburgh EH11 4BR Clearing Bank Royal Bank of Scotland Plc 24 Grosvenor Place London SW1X 7HP Financial Advisers Williams de BroÃ« Plc 6 Broadgate London EC2M 2RP Joint Stockbrokers Williams de BroÃ« Plc 6 Broadgate London EC2M 2RP KBC Peel Hunt 11 Old Broad Street London EC2N 1PH CLS Holdings plc on line: www.clsholdings.com e-mail: enquiries@clsholdings.com

Companies

CLS Holdings (CLI)

Thursday, 21st November 2024

COMPANIES COVERED:

HLMA JD. ITH

JD Sports tanks after management tighten profit guidance towards the lower end of expectations, Halma finds support from strong earnings and capital return commitment cheers shareholders in Ithica Energy.

Full Archive

UK 100

Latest directors dealings

3 minutes ago Molten Ventures
44 minutes ago XPS Pensions Group
53 minutes ago Eneraqua Technologies
54 minutes ago Mountview Estates
1 hour ago Thungela Resources Limited NPV (DI)

All directors dealings today