Final Results

RNS Number : 6422Y

CLS Holdings PLC

05 March 2012

 

Release date:	5 March 2012
Embargoed until:	07:00

CLS HOLDINGS PLC

("CLS", THE "COMPANY" OR THE "GROUP")

ANNOUNCES ITS FULL YEAR FINANCIAL REPORT

 FOR THE 12 MONTHS TO 31 DECEMBER 2011

Robust underlying performance in challenging market conditions

CLS is a property investment company with a diverse portfolio of £0.9 billion modern, well-let properties in London, France, Germany and Sweden. CLS's properties have been selected for their potential to add value and to generate high returns on capital investment through active asset management.

FINANCIAL HIGHLIGHTS

Robust underlying performance demonstrating resilience of the Group:-

·     EPRA earnings per share up 53% to 64.9 pence (2010: 42.5 pence)

·     EPRA net assets per share up 3% to 983.1 pence (31 December 2010: 952.9 pence) adversely affected by 53.5 pence through prudent decision to take one-off cost of closing long-term interest rate swap

·     Net assets up 3% to £367.5 million (31 December 2010: £357.2 million)

·     Net assets per share up 7% to 817.5 pence (31 December 2010: 766.7 pence)

·     Portfolio valued at £902.1 million (31 December 2010: £876.9 million), up 2.1% in local currencies

·     Rental income up to £66.2 million (2010 £62.1 million), up 2.6% like-for-like

·     Profit after tax £38.8 million (2010: £60.1 million)

·     Interest rate swap termination provides flexibility and likely to produce cost saving of over £10.7 million over three years and break even after seven years

·     Associated reduction in weighted average cost of debt to 4.1%, one of the lowest in the sector

·     £140.4 million of liquid resources available for new investments

·     Proposed distribution up 10.1% to £7.9 million (2010: £7.2 million) by way of tender offer buy-back: 1 in 42 at 735 pence, equivalent to 17.5 pence per share

·     Highest property company total shareholder return performance over 4 years

OPERATIONAL HIGHLIGHTS

Significant progress across letting, financing and development:-

·     Vacancy rate reduced to lowest level in ten years at 3.9% (31 December 2011: 4.3%)

·     Net initial yield of 7.0%, 290 basis points above cost of debt, one of the highest differentials in the sector

·     Successfully refinanced £113.2 million of existing debt and raised a further £29.5 million of unsecured debt through SEK 300 million bond in Sweden

·     Construction completed on pre-let development in Germany, and well under way on a second, and continuing to make targeted acquisitions

·     Planning applications submitted for Spring Gardens and Vauxhall Square following consultation

Sten Mortstedt, Executive Chairman of CLS, commented:

"We have made significant progress in our core business with a robust performance in letting, financing and development. The Group is solidly placed, with a strong balance sheet, a very healthy cash flow, and a high level of liquid resources for investment when we see the right opportunities. We continue to attract new tenants, maintain low vacancy and progress added value development plans, and, therefore, I am optimistic that we can continue to deliver for shareholders."

-ENDS-

For further information please contact:

CLS Holdings plc	[phone]
www.clsholdings.com
Sten Mortstedt, Executive Chairman
Henry Klotz, Executive Vice Chairman
Richard Tice, Chief Executive Officer
Kinmont Limited	[phone]
Jonathan Gray
Smithfield Consultants Limited	[phone]
Alex Simmons
Liberum Capital Limited	[phone]
Chris Bowman
Tom Fyson
N+1 Brewin	[phone]
Nick Tulloch

CLS will be presenting to analysts at 8.30am on Monday, 5 March 2012, at Smithfield Consultants, 10 Aldersgate Street, London, EC1A 4HJ.

Conference Call dial in numbers as follows:

Conference call access numbers:

Participant Telephone Number:	[phone] (UK Toll)
Confirmation Code:	9804832

Chairman's Statement

OVERVIEW

This was a year of numerous achievements for the Group, both at the core property operating level and with the range and depth of our financing arrangements. We have also achieved the highest total shareholder return amongst our peer group since the downturn began in 2008, producing 64.9% over four years, and 11.1% in 2011.

The effect of these achievements would have been even greater had they not been impacted to a degree by the difficulties at the broader macroeconomic level, in particular with the Eurozone during the second half of the year. Profit after tax was £38.8 million (2010: £60.1 million), earnings per share on an EPRA basis were 64.9 pence (2010: 42.5 pence) and EPRA net asset value rose to 983.1 pence (2010: 952.9 pence).

At the start of 2011, few were predicting that long-term interest rates would plummet, banks would face another round of stress tests, the United States and France would lose their AAA rating, or a potential break-up of the Eurozone which would require companies to start contingency planning. Politicians in Europe have failed to take decisive action that would restore confidence to markets and provide a platform for growth.

However, I am pleased to report that we have been responding with considered tenacity: the vacancy rate has been reduced to our lowest level for over 10 years; we have made property acquisitions in London; we have started building the two pre-let schemes in Germany; and we have submitted plans for two developments in central London for the medium-term.

The benefits of our strategy of diversification remain clear: we operate across four countries, we have a solid customer base of some 400 tenants and we are financed by 20 banks. Over the long term, this spread of risk has been an important aspect of the Group's outperformance. I would stress that our direct exposure to the Eurozone is in its two strongest economies, Germany and France.

INVESTMENT PROPERTY PORTFOLIO

During the year the investment property portfolio grew in local currency terms, on a like-for-like basis, by 2.1%. The value of the London properties grew by 2.7%, France by 1.9%, Germany by 1.0% and Sweden by 1.5%. Acquisitions totalled £7.2 million, being primarily two office buildings in Hounslow, London. The total portfolio valuation at the year end rose to £902.1 million, notwithstanding a negative currency impact of £13.7 million.

Our core investment proposition remains solid: to generate attractive cash returns, using the difference between our net initial yield of 7.0% and our reduced cost of debt of 4.1%. This spread of 290 basis points is, we believe, one of the largest of the listed property sector. The fact that 65% of our rents are indexed is also very valuable at a time of higher inflation and this, together with our asset management initiatives, has been an important part of the overall valuation movement.

We continue to maintain very low vacancy levels, reduced yet further to just 3.9% from 4.3% last year. This was due to the strong emphasis on our in-house asset and property management across all our regions, enabling us to attract and retain tenants as our customers by understanding their needs and ensuring the properties are well maintained, and refurbished when required. Tenant demand is stable and enquiries are based on genuine need, often at short notice and based on companies growing. With no speculative office development activity in our markets, we are continuing to see signs that rents have stabilised with some upward pressure emerging. Tenants want well-managed space, and this is a key differentiator for us.

Our core rental income is secure, with 40% paid by Government tenants, 29% paid by major corporations and a weighted average lease length of 7.7 years, or 6.6 years to first break.

In considering new investments we remain very selective on property type and pricing because it is likely that there will continue to be good opportunities for some time ahead as lenders deal with their distressed loan books.

Our two pre-let developments in Germany totalling 7,042 sq m have progressed well: Gräfelfing was completed successfully in February 2012, and the E.ON building at Landshut will be ready in late summer. The planning applications for our two significant mixed-use schemes in Vauxhall - Spring Mews (20,800 sq m) and Vauxhall Square (154,000 sq m) - were submitted in December and we will be working closely with the local authority during 2012 on both of these applications.

Catena, the Swedish listed property company in which the Group owns 29.9%, submitted a planning application for a 150,000 sq m mixed use scheme at the Stora Frösunda site in Solna, a decision on which is expected in the first half of 2012.

Since the year end the Group has made an opportunistic investment in Sweden in Cood Investments AB, a residential property company specialising in holiday cottages and cabins on vacation sites, paying £4.1 million for a 16.6% stake. In 2011, Cood made a profit after tax in excess of £5.0 million.

RESULTS

Profit after tax of £38.8 million (2010: £60.1 million), was reduced by adverse changes in the value of long term interest rate swaps and a lower increase in the value of investment properties than in 2010. EPRA earnings per share, which exclude such revaluation movements to provide a measure of the underlying operating performance, rose to 64.9 pence per share (2010: 42.5 pence).

Net assets rose to £367.5 million, up by £10.3 million in the year after distributions to shareholders of £11.8 million, and EPRA net assets per share rose to 983.1 pence (2010: 952.9 pence). Basic net assets per share increased by 6.6% to 817.5 pence (2010: 766.7 pence).

Recurring interest cover for the year was a comfortable 2.6 times. The Group's net debt as a proportion of adjusted net assets was a consistent 128% (2010: 122%), and the overall property loan to value was 62.5% (2010: 63.5%).

FINANCING

The Group's business model has long been to ring-fence debt on individual properties, and this continues to serve us well. We have an active relationship with 20 banks, and are delighted to have added two new lenders this year, Saar LB and Santander. We value the strong relationships that we enjoy with our banks and the mutual benefits they provide.

We have increased and strengthened the Group's financing arrangements during 2011. In total we have refinanced £113.2 million of existing debt and raised a further £33.0 million. In May we issued the Group's first corporate bond, a SEK 300 million issue in Sweden, which has been listed on the NASDAQ OMX in Stockholm. This five year, unrated, unsecured bond has a coupon of 375 basis points above STIBOR and is testament to the Group's innovative approach to financing.

This success in raising new finance is encouraging in a climate where a number of banks are closing for new business. We typically approach ten to fifteen banks when seeking new finance, and are keen to explore a wide range of financing options.

The year saw an unusually steep reduction in long-term interest rates - the sterling 15-year swap rate fell by over 150 basis points, its largest annual downward move for over 12 years - and this impacted some of our hedging arrangements. The Group had long-term swaps, covering 22.9% of our debt at the start of the year, and we expected to retain these as a long-term hedge at an average interest rate of 5.74%. However, the exceptional fall in rates increased the liabilities on these swaps by £14.2 million during the year, and to provide more flexibility in the Group's financing we chose to close out a swap with a nominal amount of £83.5 million at a cost of £24.2 million. At the end of 2011 we had swaps in place with a nominal amount of £50 million, for which there was a liability in the balance sheet of £9.1 million.

The positive effect of cancelling the swap, which was due to run until 2026, has been the fall in our weighted average cost of debt to 4.1% (2010: 4.3%) and we expect an interest cost saving in the next three years of over £10.7 million in aggregate and breaking even after seven years.

Since the year end, we have gained credit committee approval to refinance two loans, totalling £89.1 million, including our largest asset, Spring Gardens in London. These two new loans will increase the weighted average loan length from 4.4 years to 5.1 years.

Our balance sheet is strong, with cash and liquid resources of £140 million available for investment. We continue to use corporate bonds to generate higher returns than cash. At the year end, the Group held a portfolio of 39 different bonds with a value of £85.1 million which produced an annual coupon of 10.2%. Since first investing in them towards the end of 2008, the corporate bonds have generated a return of £19.8 million, or 32.8% on average cost. Since the year end, the bonds have risen in value by £8.2 million.

ENERGY EFFICIENCY AND SUSTAINABILITY

During the year, the Group increased its focus on energy efficiency and sustainability, and recruited a full time Sustainability Manager. We now have good base data to measure our success in reducing energy consumption and emissions, and in lowering costs for our customers and the Group. The new £2.3 million geothermal energy facility at Vänerparken in Sweden is complete and operating, and early results are in line with the projected savings of over 80% in consumption and emissions.

CORPORATE GOVERNANCE

As Executive Chairman it is my responsibility to ensure that the Board operates efficiently and effectively, and upholds high standards of corporate governance appropriate for a company of our size. I believe that the decisions taken by the Board and the resulting performance of the Company against its peers is indicative of the fact that we are doing things right.

The steps we have taken this year to change the Board and the composition of its Committees, Board processes and executive remuneration align the Company more closely to the provisions of the UK Corporate Governance Code and introduce greater levels of accountability and transparency to the operation and effectiveness of the Board. This underpins our commitment to good governance for the benefit of all shareholders.

DISTRIBUTIONS TO SHAREHOLDERS

In April 2011, we distributed £7.2 million by way of our traditional tender offer buy-back of shares, and a further £4.4 million in September. The Board proposes to distribute £7.9 million in April using the tender offer buy-back method, at a rate of 1 in 42 shares at 735 pence per share. A circular setting out the details will be sent to shareholders with the Report and Accounts.

OUTLOOK

For economies to grow, businesses and investors need to have confidence to invest and a reasonable supply of credit. Politicians must deliver the basic platform for this to occur, which, in the current climate, means a credible solution to the Eurozone crisis. Until this happens, there will continue to be significant uncertainty and risk in the system.

However, the Group is solidly placed, with a strong balance sheet, a very healthy cash flow, and a high level of liquid resources for investment when we see the right opportunities. We continue to attract new tenants, maintain low vacancy and progress added value development plans, and, therefore, I am optimistic that we can continue to deliver for shareholders.

Sten Mortstedt

Executive Chairman

5 March 2012

Business Review

The main activity of the Group is investment in commercial real estate across four European regions: London, France, Germany and Sweden. There is a particular focus on providing well-managed, cost-effective offices and property for cost-conscious companies in key European cities.

The Group's total property interests at 31 December 2011 were £919.9 million, comprising the wholly-owned investment property portfolio valued at £902.1 million, and a 29.9% investment in Swedish listed property company Catena AB, which had a market value of £17.8 million. The Group's Other Investments comprised the corporate bond portfolio, valued at £85.1 million at the year end, and smaller equity holdings of £13.3 million.

Investment Property

Overview

At 31 December 2011, the directly held investment portfolio totalled £902.1 million, a like-for-like increase of 2.1% in local currencies or 0.5% when translated into sterling. In local currencies, the French portfolio rose by 1.9%, Germany by 1.0%, London by 2.7% and Sweden by 1.5%. The capital value of £2,202 per sq m is close to replacement cost, meaning that the land element in these key European cities is minimal; this highlights how competitive the Group can be in attracting tenants with cost effective rents.

The contracted rent at the year end was £66.3 million, representing a net initial yield of 7.0% on value and an average rent of just £170 per sq m. The income stream is strongly secured as 40% is from government tenants, 29% from major corporations and 65% of rents are subject to indexation. The weighted average lease length is 7.7 years, or 6.6 years to the first break. Only 16% of the current rent roll expires in the next three years.

The overall vacancy rate has been further reduced to 3.9%, reflecting the benefits of active, in-house asset and property management together with maintaining strong relationships with our tenants, working to understand their needs.

In all markets there is less availability of debt than 12 months ago, leading to fewer buyers for the high yielding property that the Group prefers. This situation is expected to continue for a considerable period; we can thus be highly selective about our purchases. Further, the depth of our banking contacts and relationships means that we continue to find debt obtainable.

Across the portfolio the Group is increasing its focus on the sustainability of its properties and ways to make them more energy efficient. There is a wide range of quick and medium-term wins that can and will be made. The employment of a full time Sustainability Manager has helped the Group to promote this and the Corporate Social and Environmental Responsibility Report on page 42 expands on these activities.

London

Value	£398 million
Group's property interests	43%
No of properties	30
Lettable space	133,900 sq m
Net initial yield	6.6%
Vacancy rate	4.0%
Like-for-like uplift	2.7%
Government and major corporates	80%
Average unexpired lease length	9.3 years
To first break	8.6 years

It has been particularly encouraging to be able to reduce the vacancy rate with more lettings given the economic climate. We are seeing fewer but better quality enquiries and a clear trend for tenants to target the better managed buildings, where stable landlords are able to maintain and refurbish to a good standard, and be flexible on lease terms to meet customer needs. This is a key differentiator compared to buildings owned by landlords who are under financial pressure. During the year 6,497 sq m became vacant, we let 8,690 sq m and renewed leases on 2,894 sq m with existing tenants, with particular activity at Great West House, Brentford and Cambridge House, W6, and we completed the refurbishment programme of common parts at Westminster Tower, SE1.

In September, we acquired two office buildings in Hounslow for £5.5 million. The total initial rent of £582,091, gave a yield after costs of 10.1%, rising to £627,562 after fixed rental uplifts. The one vacant floor of 574 sq m has let since the year end, increasing the yield to over 11%. The buildings total 4,693 sq m over four floors, and tenants include Aer Lingus, Alitalia, Telefonica O2, Vandemoortele, First Rate Exchange Services and Quest Diagnostics. The purchase price equated to a capital value of £1,172 per sq m, which is well below replacement cost.

The commitment of the Greater London Authority, and the London boroughs of Lambeth and Wandsworth to the Vauxhall Nine Elms regeneration zone is absolute and the Group is very well placed as one of the credible parties which can help deliver. In December, and after public consultation, we submitted a planning application for a 20,800 sq m mixed use scheme called Spring Mews, behind Albert Embankment in Vauxhall. This comprises: student accommodation of 402 student rooms and amenity space; a 120 bed mid-market hotel; a new 561 sq m community centre and café; 469 sq m of office space; a 245 sq m convenience retail unit; and the creation of a new pedestrian mews linking the development to Spring Gardens. Subject to receiving planning consent, the Group would aim to start on site in the second half of 2012, with completion in 2014. The development, the total cost of which is expected to be in excess of £50 million, would significantly improve the area, bringing immediate benefits to the Group's property at Spring Gardens, which is directly opposite.

Also in December, after almost a year of stakeholder consultations, the Group submitted a planning application for a 154,000 sq m (1,657,650 sq ft) mixed-use development scheme called Vauxhall Square, on the site owned by the Group close to Vauxhall's transport interchange. The proposed scheme comprises: two residential towers of 50 stories containing 510 homes and 15,231 sq m of office space; 3,500 sq m of retail, restaurant and café space; 416 student units; a 438 bed hotel; a 4 screen cinema; 94 affordable housing units; a new homeless hostel; a major new public square (of similar size to Paternoster Square in the City of London); and public realm improvements. Our strong belief is that the redevelopment of the Vauxhall/Nine Elms regeneration area will start at the Vauxhall end and Vauxhall Square is strategically located between the Vauxhall transport links and the proposed new US Embassy. Importantly, it is not dependent on the proposed Northern Line extension. Subject to receiving planning consent, we would aim to start on site in 2014, with phases being completed from 2017. The development cost of the proposed scheme is in excess of £400 million. Prudently, no hope value has yet been ascribed to either this development site or Spring Mews and, consequently, their values fell on a like-for-like basis during the year, due to planning costs.

The Group has been very active in promoting a Business Improvement District (BID) for Vauxhall. BIDs are an established way for local businesses to be actively involved in improving an area. In early 2012 local Vauxhall businesses voted in favour of a BID, which will be called Vauxhall One, and which will start in April 2012, initially for a 5 year period. Richard Tice, Chief Executive Officer of the Company, has been the chairman of the campaign to launch a BID, which we believe can be beneficial for our holdings in Vauxhall.

France

Value	£248 million
Group's property interests	27%
No of properties	26
Lettable space	96,400 sq m
Net initial yield	7.5%
Vacancy rate	2.7%
Like-for-like uplift	1.9%
Government and major corporates	59%
Average unexpired lease length	5.7 years
To first break	2.8 years

The reduction of the vacancy rate from 3.6% a year ago was particularly pleasing given the flexible nature of the traditional French 3:6:9 year lease expiry structure. The year saw 8,043 sq m of new lettings or renewals with tenants vacating from 6,524 sq m. The economic activity on the ground appears healthier than the macro reports in the press. Letting demand continues to be most encouraging across the portfolio, with signs of rental growth, especially in Lyon where we were delighted to secure the British Council into our Forum building in 374 sq m. Renovation work this year has been limited, at £1.7 million, mainly at this Forum building.

The early indications we mentioned a year ago that there would be very little new construction of offices in our locations is holding true, with no sign that this will change in the foreseeable future. This is a most positive situation for the Group given that vacancy rates in Paris and Lyon are below 7%; take up in both locations rose by over 14% in 2011 compared to the previous year. There are no new schemes forecast to be delivered in Lyon in 2012 and the immediate supply of available space is just over one year.

Investment activity, particularly in the first half, was up by over 25% in the Ile de France, making it hard to acquire additional property. Agents forecast lower investment levels in 2012 as banks restrict their lending, and investors wait to see developments in the Eurozone, but there are almost no signs of distress in this region. Domestic investors made up approximately 63% of the investment market and prime Paris yields are still somewhat below 5%.

Germany

Value	£197 million
Group's property interests	22%
No of properties	18*
Lettable space	138,000 sq m
Net initial yield	7.0%
Vacancy rate	6.0%
Like-for-like uplift	1.0%
Government and major corporates	48%
Average unexpired lease length	8.7 years
To first break	8.7 years

* plus one under construction

The average capital value of £1,428 per sq m is comparable with replacement cost and the year end vacancy rate is higher than last year's 5.5% due to the bankruptcy of one tenant in the first half of 2011.

Although the German economy is forecast to grow more slowly in 2012, it is robust and we continue to see signs of confidence in the future plans of our tenants and potential occupiers. In the economy as a whole, leasing take up grew by 16 % in 2011 to the second highest level in 10 years, most markedly in Munich. Likewise investment volumes increased by some 20%.

The main activity during the year has been the construction start for the two pre-let developments near Munich which will add 7,042 sq m when completed. The 1,642 sq m extension for Dr Hönle AG in Gräfelfing was completed at the end of February 2012, and the new 5,400 sq m Landshut building pre-let to E.ON Service Plus GmbH completes in summer 2012. The total additional rent from these two pre-let developments will be €856,000 per annum.

There is growing pressure in Germany on overseas owners of commercial property, funded by overseas banks, who need to dispose of their assets. This is likely to deliver opportunities for CLS in 2012, and there continues to be reasonable availability of bank debt from domestic banks.

Sweden

Value	£77 million
Directly owned
Value	£59 million
Group's property interests	6%
No of properties	1
Lettable space	45,400 sq m
Net initial yield	7.1%
Vacancy rate	1.8%
Like-for-like uplift	1.5%
Government and major corporates	95%
Average unexpired lease length	4.4 years
To first break	4.4 years
Indirectly owned
Value	£18 million
Group's property interest	2%
Interest in Catena AB	29.9%

The Group's Swedish property interests consist of two parts. First the 45,400 sq m office complex in Vänersborg near Gothenburg, called Vänerparken. The £2.3 million investment in energy saving plant for the property was completed in the second half and early data shows the expected savings of over 80% in consumption and CO2 emissions are already being achieved. We are using the same Swedish engineers to advise the Group on opportunities to achieve savings in London which can benefit both the Group and tenants alike.

Second, the Group owns 29.9% of the Stockholm-listed real estate company, Catena AB, which now is focused on its one remaining but significant property in Stockholm. Negotiations are progressing with the local authorities on the 150,000 sq m mixed-use scheme which has been submitted for planning consent for almost 1,000 apartments and 50,000 sq m of commercial space. It is interesting to note that the overall cost of submitting an application for a similar sized mixed-use scheme in Stockholm is only 20% of the comparable cost in London. At the year end, based on Catena's share price the market value of the Group's investment was £17.8 million, being a surplus of £4.3 million over the book value, which equates to an additional 10 pence per share to CLS's net asset value. Following a rise in Catena's share price since the year end, the surplus over book value at 1 March 2012 was £9.4 million, or 21 pence per share of additional net asset value for the Company.

The Swedish economy has been one of the better performers in 2011 with GDP growth of 4.0%, which is forecast to slow in 2012. Property markets are stable and tenant demand is firm, both of which bode well for the Catena site in Stockholm.

Results for the Year

Headlines

Profit after tax of £38.8 million (2010: £60.1 million) generated EPRA earnings per share of 64.9 pence (2010: 42.5 pence), and basic and diluted earnings per share of 82.0 pence and 81.9 pence, respectively (2010: 127.1 pence each). Gross property assets at 31 December 2011 were £902.1 million (2010: £876.9 million), EPRA net assets per share were 3.2% higher at 983.1 pence (2010: 952.9 pence), and basic net assets per share rose by 6.6% to 817.5 pence (2010: 766.7 pence).

Approximately 40% of the Group's business is conducted in the reporting currency of sterling, around 50% is in euros, and the balance is in Swedish kronor. Overall, compared to last year profits benefited marginally from foreign exchange rate movements as on average the euro was 1.2% stronger and the krona 6.8% stronger against sterling than in 2010. However, the euro weakened markedly towards the end of the year, restricting gains in the value of net assets made earlier in the year.

Exchange rates to the £

	EUR	SEK
At 31 December 2009	1.1275	11.5689
2010 average rate	1.1663	11.1221
At 31 December 2010	1.1664	10.4828
2011 average rate	1.1525	10.4091
At 31 December 2011	1.1987	10.7088

Statement of Comprehensive Income

Profit after tax comprised the underlying operating performance of the Group, known as EPRA earnings, and assorted other elements, such as fair value movements, profits on sales and other non-recurring items. EPRA earnings were £9.6 million higher than last year at £29.7 million (2010: £20.1 million). The net uplift on revaluation of the investment property portfolio was £18.0 million (2010: £30.1 million), but the fair value of derivative financial instruments, included within finance costs, fell by £18.5 million (2010: £3.1 million). Other non-recurring profits in the year were £9.6 million (2010: £13.0 million). Consequently, although EPRA earnings rose significantly over those of 2010, in aggregate profit after tax was lower than last year at £38.8 million (2010: £60.1 million).

Rental income of £66.2 million was £4.1 million, or 6.6%, higher than last year. £2.5 million of this increase was from acquisitions, primarily made in 2010, and £0.6 million came from indexation increases, particularly in Germany and France. The comparative weakness of sterling accounted for a further £0.8 million of uplift, and the effect of expiries was largely matched by new lettings.

We monitor the administration expenses incurred in running the property portfolio by reference to the income derived from it, which we call the administration cost ratio, and this is a key performance indicator of the Group. In 2011, administration expenses fell to £12.1 million (2010: £13.0 million), but property-related administration costs increased to £9.7 million (2010: £9.1 million), in part through extending our development team. The administration cost ratio of 15.4% (2010: 15.2%) was close to the KPI target of 15.0% and, notwithstanding the relative complexity of our pan-European operation, was well below that of many real estate companies in our peer group.

The net surplus on revaluation of investment properties in the year was £18.0 million (2010: £30.1 million). £10.2 million of this uplift came from the London portfolio, £4.9 million was from France, £2.0 million from Germany, and our sole direct property investment in Sweden rose in value by £0.9 million. Overall, the underlying revaluation surplus was 2.1% (or 0.5% after foreign exchange effects), comprising 1.7% (4.6% after foreign exchange) in the first half of the year, and 0.4% (minus 3.9% after foreign exchange) in the second half.

Finance income of £12.2 million comprised predominantly interest income of £9.2 million (2010: £6.1 million) from our corporate bond portfolio. This portfolio fell in value towards the end of 2011 during the euro crisis, and ended the year down by £15.6 million, but since first investing in corporate bonds towards the end of 2008, the portfolio has produced an annual compound return on equity of 9.1%. At 31 December 2011 the portfolio generated a yield on market value of 10.2%. To date, the valuation of the portfolio at 31 December 2011 has proved to be a low point, with steady growth in value of £8.2 million in the first two months of 2012.

The rise in Group borrowings (see below) led to an increase in interest expense on bank loans, debenture loans and other loans to £29.2 million (2010: £24.0 million), and the fall in the long-term swap rate in particular created an adverse movement in the fair value of interest rate swaps and caps of £18.5 million (2010: £3.1 million). Consequently, finance costs for the year to 31 December 2011 were £47.7 million (2010: £31.1 million).

In late 2010, Catena AB, in which the Group owns a 29.9% interest, sold the majority of its business and in April 2011 distributed the proceeds, of which our share was a cash dividend of £19.9 million. The main drivers of the profit of associates after tax of £3.0 million (2010: £7.7 million) were a profit of £3.7 million (2010: £9.4 million) from the reduced business of Catena, and a loss of £0.5 million (2010: £1.6 million) from our 48.3% holding in Bulgarian Land Development Plc.

Our French operation was the only part of the Group which paid tax. Elsewhere in the Group, tax losses, including those generated by closing out an interest rate swap, absorbed taxable profits made in the year, creating a current tax credit of £1.2 million. Tax for the year also contained a deferred tax charge of £0.1 million (2010: £6.4 million), which largely represents an adjustment required under IFRS for the potential tax occasioned by valuation movements on investment properties, offset by tax losses.

Distributions to Shareholders

In April 2011, £7.2 million was distributed to shareholders by means of a tender offer buy-back of 1 in 47 shares at 725 pence per share. In September, a further £4.4 million was distributed by means of a tender offer buy-back of 1 in 72 shares at 700 pence per share, and a proposed tender offer buy-back of 1 in 42 shares at 735 pence per share to return £7.9 million will be put to shareholders in April 2012. This represents a 10% uplift over the equivalent distribution last year.

EPRA net asset value

At 31 December 2011, EPRA net assets per share (a diluted measure which highlights the fair value of the business on a long-term basis) were 983.1 pence (2010: 952.9 pence), a rise of 3.2%, or 30.2 pence per share. Elements of the business which increased EPRA NAV in the year included profit after tax (83.3 pence per share), the property portfolio revaluation uplift (39.8 pence), and the two tender offer buy-backs (8.6 pence). However, due to uncertainty over the euro, the fair value of our corporate bonds fell by the equivalent of 34.5 pence per share, the resulting strength in sterling reduced EPRA NAV by 13.5 pence, and the early redemption of an interest rate swap reduced it by a further 53.5 pence per share.

Cash flow, net debt and gearing

At 31 December 2011, the Group's liquid resources of £140.4 million - comprising cash of £55.3 million and corporate bonds of £85.1 million - were £14.0 million higher than £126.4 million twelve months earlier. In May a one-off dividend from our associate Catena AB added £19.9 million. The underlying operations of the business generated cash of £25.1 million during the year, of which £11.8 million was distributed to shareholders. New loans of £171.4 million, after costs, replaced those repaid of £132.2 million, being a net cash inflow of £39.2 million, which financed in part capital expenditure and acquisitions of £20.4 million. The early repayment of an interest rate swap cost £24.2 million, and the bond portfolio fell in value by £15.6 million.

Early in 2011, the Board decided that the Group should raise debt in anticipation of a reduction in the general availability of bank finance later in the year, and this proved to be a well-judged decision. In May, we issued the first CLS corporate bond, for SEK 300 million (£29.5 million), in Sweden. This unsecured, five-year bond, which attracts interest at 375 basis points above STIBOR, has since been listed on the NASDAQ OMX in Stockholm. It was noteworthy that the Group looked to issue the bond in London, but investors in Sweden proved more accommodating to the issue, even though CLS's shares were not listed there. In June, 19 loans in the French portfolio were refinanced by separate facilities from two banks, including one bank which was new to the Group. The new loans of £116.1 million in aggregate replaced others of £85.7 million, increasing the loan to value ratio on the properties which they financed to 68% from under 50%. In London, a new loan of £3.3 million was taken out on the acquisitions in Hounslow, and two were refinanced for £6.0 million, whilst in Germany, £1.7 million was drawn on a new development loan. A short-term SEK 300 million facility taken out during the year was subsequently repaid. Other repayments of bank loans of £19.1 million were made by way of amortisation in the ordinary course of business. Following all of these transactions, and retranslating the resulting loans into sterling, at 31 December 2011 gross debt of £625.1 million was £32.8 million higher than the £592.3 million of twelve months earlier.

The weighted average unexpired term of the Group's debt at 31 December 2011 was 4.4 years. £151.2 million of loans fell due in 2012, including £14.3 million of amortisation of loan balances in the normal course of business.

Since 1 January 2012, £30 million has been refinanced, and £89.1 million has been approved by credit committee and all other appropriate bank internal processes, and is subject to completion of legal documentation. On refinancing of these loans, the weighted average unexpired term of the Group's debt will be 5.1 years.

Adjusted net gearing, which is based on EPRA net assets, was 128% at 31 December 2011 and the weighted average loan-to-value on borrowings against properties was a comfortable 62.5%. Adjusted solidity was 40.5% (2010: 41.7%).

The weighted average cost of debt at 31 December 2011 was 4.1%, one of the lowest in the property sector, and down from 4.3% twelve months earlier. The fall was primarily caused by cancelling a long-term swap (see below). With bank financing now more expensive than when existing loans were taken out, all other things being equal refinancing them as they fall due will gradually increase the average cost of debt of the Group.

In 2011, our low cost of debt led to recurring interest cover of a comfortable 2.6 times (2010: 3.2 times). The fall was caused by a lower share of profit of associates after tax of £3.0 million (2010: £7.7 million), and a higher recurring net interest cost due to higher borrowings.

Financing strategy

The Group's strategy is to hold its investment properties predominantly in single-purpose vehicles financed primarily by non-recourse bank debt in the currency used to purchase the asset. In this way credit and liquidity risk can most easily be managed, around 70% of the Group's exposure to foreign currency is naturally hedged, and the most efficient use can be made of the Group's assets. Around 10% of the Group's debt is not property specific and is taken out by the parent Company to provide additional financial flexibility. This comprises the Swedish bond issued in 2011, and short-term overdraft facilities. Bank debt ordinarily attracts covenants on loan-to-value and on interest and debt service cover. None of the Group's debt was in breach of covenants at 31 December 2011. The Group had 64 loans across the portfolio from 20 banks. None of the loans at 31 December 2011 had been securitised by any lender, and the Group had no exposure to the CMBS market.

To the extent that Group borrowings are not at fixed rates, the Group's exposure to interest rate risk is mitigated by the use of financial derivatives, particularly interest rate swaps and caps. The Board believes that interest rates are likely to remain low longer than the forward interest curve would imply, and therefore, its policy is to allow the majority of debt to remain subject to floating rates. To mitigate the risk of interest rates increasing more sharply than the Board expects, the Group enters into interest rate caps. At 31 December 2011, 21% of the Group's borrowings were at fixed rates or subject to interest rate swaps, 54% were subject to caps and 25% of debt costs were unhedged.

The Group's financial derivatives - predominantly interest rate swaps and interest rate caps - are marked to market at each balance sheet date; at 1 January 2011 the net liability of such derivatives was £15.7 million. The fall in medium and long-term interest rates in 2011 increased the net liability of these derivatives by £18.5 million. To provide more flexibility in the Group's financing we chose to close out our major long-term interest rate swap in December crystallising a £24.2 million accumulated loss. This left the Group with six interest rate swaps with an aggregate notional amount of only £50 million and a derivative liability of £9.1 million at 31 December 2011, at which date they had a weighted average unexpired term of 4.1 years. Other derivatives at 31 December 2011 were mainly interest rate caps and had a net positive value of £1.8 million.

Share capital

At 1 January 2011, there were 51,381,244 shares in issue, of which 4,793,000 were held as treasury shares. On 28 April, under the tender offer buy-back, 991,239 shares were cancelled in exchange for £7.2 million distributed to shareholders, and on 22 September, under the tender offer buy-back, 633,291 shares were cancelled in exchange for £4.4 million distributed to shareholders. In November and December, an aggregate of 10,103 shares were purchased in the market and placed in Treasury. Consequently, at 31 December 2011, 44,953,611 shares were listed on the London Stock Exchange, and 4,803,103 shares were held in Treasury.

The Directors intend to put to shareholders in April 2012 a proposal to issue a tender offer to buy-back 1 in 42 shares at 735 pence per share. If approved by shareholders this could lead to the purchase and cancellation of 1,070,324 shares, and a distribution to shareholders of £7.9 million.

Total Returns to Shareholders

In addition to the distributions and share cancelations associated with the tender offer buy-backs, shareholders benefited from a rise in the share price in the year from 535 pence on 31 December 2010 to 590 pence at 31 December 2011. Accordingly, the total shareholder return in 2011 was 11.1%. In the four years to 31 December 2011, our total shareholder return of 64.9% - a compound annual return of 13.3% - represented the best performance in the listed real estate sector.

Since the Company listed on the London Stock Exchange, it has outperformed the FTSE Real Estate and FTSE All Share indices.

Key Performance Indicators

Total Shareholder Return

Aim

- to provide a TSR of over 12% p.a. over the medium term

Achievement

- 2008-2011: 64.9%, or 13.3% p.a. compound

Effective management of balance sheet

Aim

- to sell assets with limited growth potential and invest in high yielding alternatives

Achievement

- 2006 to 2011: £746 million of property sales

- 2011: Pre-let developments in Landshut and Gräfelfing, Germany will provide returns on equity of 19.4% and 18.3% p.a., respectively

Administration cost ratio

Aim

- to maintain administration costs below 15% of net rental income

Achievement

- 2011: 15.4%

- 2010: 15.2%

- 2009: 14.9%

Occupancy rate

Aim

- to maintain an occupancy level of over 95%

Achievement

- 2011: 96.1%

- 2010: 95.7%

- 2009: 95.5%

Top 10 tenants

The 10 tenants which contribute most rental income to the Group account for 40.5% of the rent roll, and comprise:

London

·     The Home Office Government

·     Secretary of State for Work and Pensions Government

·     Cap Gemini Major Corporation

·     BAE Systems Major Corporation

France

Grand Duchy of Luxembourg Government

Veolia Major Corporation

Germany

City of Bochum Government

E.ON Major Corporation

Sweden

Västra Götaland County Council Government

Vänersborg Kommun Government

PRINCIPAL RISKS AND UNCERTAINTIES

There are a number of potential risks and uncertainties which could have a material impact on the Group's performance and could cause the results to differ materially from expected or historical results. The management and mitigation of these risks are the responsibility of the Board.

Risk	Areas of Impact	Mitigation
Property investment risks Underperformance of investment portfolio due to: • Cyclical downturn in property market • Inappropriate buy/sell/hold decisions	Cash flow Profitability Net asset value Banking covenants	Senior management has detailed knowledge of core markets and experience gained through many market cycles. This experience is supplemented by external advisors and financial models used in capital allocation decision-making.
Changes in supply of space and/or tenant demand	Rental income Cash flow Vacancy rate Void running costs Bad debts Net asset value	The Group's property portfolio is diversified across four countries. The weighted-average unexpired lease term is 7.7 years and the Group's largest tenant concentration is with the Government sector (40%).
Poor asset management	Rental income Cash flow Vacancy rate Void running costs Property values Net asset value	Property teams proactively manage tenants to ensure changing needs are met, and review the current status of all properties weekly. Written reports are submitted bi-weekly to senior management on, inter alia, vacancies, lease expiry profiles and progress on rent reviews.
Other investment risks Corporate bond investments: • Underperformance of portfolio • Insolvency of bond issuer	Net asset value Liquid resources	In assessing potential investments, the Treasury department undertakes research on the bond and its issuer, seeks third-party advice, and receives legal advice on the terms of the bond, where appropriate. The Treasury department and Executive Directors receive updates on bond price movements and third party market analysis on a daily basis, and reports on corporate bonds to the full Board on a bi-weekly basis. The Executive Directors formally review the corporate bond strategy monthly.
Development risks Failure to secure planning permission	Abortive costs Reputation	Planning permission is sought only after engaging in depth with all stakeholders.
Contractor solvency and availability	Reduced development returns Cost overruns Loss of rental revenue	Only leading contractors are engaged. Prior to appointment, contractors are the subject of a due diligence check and assessed for financial viability.
Downturn in investment or occupational markets	Net asset value	Developments are undertaken only after an appropriate level of pre-lets have been obtained.
Funding risks Unavailability of financing at acceptable prices	Cost of borrowing Ability to invest or develop	The Group has a dedicated Treasury department and relationships are maintained with some 20 banks, thus reducing credit and liquidity risk. The exposure on re-financing debt is mitigated by the lack of concentration in maturities.
Adverse interest rate movements	Cost of borrowing Cost of hedging	The Group's exposure to changes in prevailing market rates is largely hedged on existing debt through interest rate swaps and caps, or by borrowing at fixed rates.
Breach of borrowing covenants	Cost of borrowing	Financial covenants are monitored by the Treasury department and regularly reported to the Board.
Foreign currency exposure	Net asset value Profitability	Property investments are partially funded in matching currency. The difference between the value of the property and the amount of the financing is generally unhedged and monitored on an ongoing basis.
Financial counterparty credit risk	Loss of deposits Cost of rearranging facilities Incremental cost of borrowing	The Group has a dedicated Treasury department and relationships are maintained with approximately 20 banks, thus reducing credit and liquidity risk. The exposure on re-financing debt is mitigated by the lack of concentration in maturities.
Taxation risk Increases in tax rates or changes to the basis of taxation	Cash flow Profitability Net asset value	The Group monitors legislative proposals and consults external advisors to understand and mitigate the effects of any such change.
Political and economic risk Break-up of the Euro	Net asset value Profitability	Euro-denominated liquid resources are kept to a minimum. Euro property assets are largely financed with euro borrowings.
Economic downturn	Cash flow Profitability Net asset value Banking covenants	The Group's property portfolio is diversified across four countries. The weighted-average unexpired lease term is 7.7 years and the Group's largest tenant concentration is with the Government sector (40%). 65% of rental income is subject to indexation.
Going concern The Group will not have adequate working capital to remain a going concern for the next 12 months.	Pervasive	The Directors regularly stress-test the business model to ensure the Group has adequate working capital.

Property Portfolio

Rental data

	Gross rental income for the year £m	Net rental income for the year £m	Lettable space sq m	Contracted rent at year end £m	ERV at year end £m	Contracted rent subject £m	Vacancy rate at year end %
London	26.4	24.7	133,918	27.5	26.4	4.3	4.0%
France	18.8	18.5	96,398	18.7	18.3	18.7	2.7%
Germany	14.2	13.4	137,994	13.9	14.5	13.9	6.0%
Sweden	6.2	4.9	45,384	6.2	5.6	6.3	1.8%
Total Portfolio	65.6	61.5	413,694	66.3	64.8	43.2	3.9%

Note: a further £3.8 million of London contracted rent will be subject to annual indexation from 2015.

Valuation data

		Valuation movement in the year
	Market value of property £m	Underlying £m	Foreign exchange £m	Net initial yield (1) %	EPRA topped up net initial yield (2) %	Reversion %	Over-rented %	True equivalent yield %
London	398.0	10.2	-	6.6%	6.2%	3.1%	11.0%	6.9%
France	248.3	4.9	(7.0)	7.5%	7.1%	1.8%	6.7%	7.0%
Germany	197.1	2.0	(5.4)	7.0%	6.6%	0.8%	3.1%	6.0%
Sweden	58.7	0.9	(1.3)	7.9%	7.5%	1.3%	13.4%	9.5%
Total Portfolio	902.1	18.0	(13.7)	7.0%	6.6%	2.1%	8.3%

(1)        Based on contracted rent and before adding purchasers' costs to investment property values; if based on passing rent, net initial yield would be 6.8%

(2)        Based on contracted rent and after adding purchasers' costs to investment property values; if based on passing rent, EPRA net initial yield would be 6.5%

Lease Data

	Average lease length		Passing rent of leases expiring in:				ERV of leases expiring in:
	To break years	To expiry years	Year 1 £m	Year 2 £m	Year 3 to 5 £m	After year 5 £m	Year 1 £m	Year 2 £m	Year 3 to 5 £m	After year 5 £m
London	8.6	9.3	0.9	1.9	5.1	19.6	0.9	2.1	5.1	17.1
France	2.8	5.7	0.3	0.8	5.3	12.2	0.3	0.9	4.9	11.7
Germany	8.7	8.7	1.2	1.0	5.4	6.4	1.1	0.9	5.2	6.3
Sweden	4.4	4.4	0.1	0.1	4.5	1.6	0.1	0.1	3.7	1.6
Total Portfolio	6.6	7.7	2.5	3.8	20.3	39.8	2.4	4.0	18.9	36.7

Statement of Directors' responsibilities

The responsibility statement below has been prepared in connection with the company's full annual report for the year ended 31 December 2011. Certain parts thereof are not included within this announcement.

We confirm to the best of our knowledge that:

the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation as a whole; and the Business Review, which is incorporated into the Directors' Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.

This statement of responsibilities was approved by the Board on 5 March 2012.

By order of the Board

David Fuller BA FCIS

Company Secretary

5 March 2012

Group Statement of comprehensive income

for the year ended 31 December 2011

	Notes	2011 £m	2010 £m
Continuing operations
Group revenue	2	80.1	79.1
Costs	2	(30.6)	(30.3)
		49.5	48.8
Net movements on revaluation of investment properties	8	18.0	30.1
Net gain on sale of corporate bonds and other investments		0.5	9.3
Profit on sale of subsidiaries and associates	25	2.2	-
Operating profit		70.2	88.2
Finance income	3	12.2	6.1
Finance costs	4	(47.7)	(31.1)
Share of profit of associates after tax	12	3.0	7.7
Profit before tax		37.7	70.9
Taxation	5	1.1	(10.8)
Profit for the year		38.8	60.1
Other comprehensive income
Foreign exchange differences		(5.0)	1.1
Fair value (losses)/gains on corporate bonds and other investments	13	(16.0)	3.1
Fair value gains taken to gain on sale of corporate bonds and other investments	13	(0.8)	(8.5)
Deferred tax on net fair value gains on corporate bonds and other investments	17	4.6	1.8
Share of other comprehensive income of associates	12	-	(0.4)
Revaluation of owner-occupied property	9	0.3	-
Total comprehensive income for the year		21.9	57.2
Profit attributable to:
Owners of the Company		37.5	60.1
Non-controlling interests		1.3	-
Profit for the year		38.8	60.1
Total comprehensive income attributable to:
Owners of the Company		20.6	57.2
Non-controlling interests		1.3	-
Total comprehensive income for the year		21.9	57.2
Earnings per share from continuing operations attributable to the owners of the Company during the year (expressed in pence per share)
Basic	6	82.0	127.1
Diluted	6	81.9	127.1

Group Balance Sheet

At 31 December 2011

	Notes	2011  £m	2010 £m
Non-current assets
Investment properties	8	902.1	876.9
Property, plant and equipment	9	2.7	2.6
Goodwill and other intangible assets	11	1.1	1.1
Investments in associates	12	24.1	40.6
Other investments	13	87.8	81.6
Derivative financial instruments	19	1.5	4.6
Deferred tax	17	17.7	11.2
		1,037.0	1,018.6
Current assets
Trade and other receivables	14	11.6	11.5
Derivative financial instruments	19	0.4	-
Cash and cash equivalents	15	55.3	48.3
		67.3	59.8
Total assets		1,104.3	1,078.4
Current liabilities
Trade and other payables	16	(30.4)	(31.8)
Current tax		(1.2)	(5.3)
Borrowings	18	(151.2)	(85.0)
Derivative financial instruments	19	(0.1)	(1.0)
		(182.9)	(123.1)
Non-current liabilities
Deferred tax	17	(75.0)	(74.5)
Borrowings	18	(469.8)	(504.3)
Derivative financial instruments	19	(9.1)	(19.3)
		(553.9)	(598.1)
Total liabilities		(736.8)	(721.2)
Net assets		367.5	357.2
Equity
Share capital	20	12.5	12.9
Share premium	22	71.5	71.5
Other reserves	23	86.0	102.5
Retained earnings		197.5	171.6
Equity attributable to the owners of the Company		367.5	358.5
Non-controlling interests		-	(1.3)
Total equity		367.5	357.2

The financial statements of CLS Holdings plc (registered number: 2714781) were approved by the Board of Directors and authorised for issue on 5 March 2012 and were signed on its behalf by:

Mr S A Mortstedt	Mr E H Klotz
Director	Director

Group Statement of Changes in Equity

for the year ended 31 December 2011

		Attributable to the owners of the Company
	Notes	Share capital £m	Share premium £m	Other reserves £m	Retained earnings £m	Total £m	Non- controlling interests £m	Total £m
At 1 January 2011		12.9	71.5	102.5	171.6	358.5	(1.3)	357.2
Arising in 2011:
Total comprehensive income
for the year		-	-	(16.9)	37.5	20.6	1.3	21.9
Purchase of own shares	20	(0.4)	-	0.4	(11.7)	(11.7)	-	(11.7)
Expenses thereof		-	-	-	(0.1)	(0.1)	-	(0.1)
Employee share option schemes		-	-	-	0.2	0.2	-	0.2
Total changes arising in 2011		(0.4)	-	(16.5)	25.9	9.0	1.3	10.3
At 31 December 2011		12.5	71.5	86.0	197.5	367.5	-	367.5
		Attributable to the owners of the Company
	Notes	Share capital £m	Share premium £m	Other reserves £m	Retained earnings £m	Total £m	Non- controlling interests £m	Total £m
At 1 January 2010		13.3	70.5	105.0	121.5	310.3	(1.3)	309.0
Arising in 2010:
Total comprehensive income
for the year		-	-	(2.9)	60.1	57.2	-	57.2
Issue of treasury shares		-	1.0	-	-	1.0	-	1.0
Purchase of own shares	20	(0.4)	-	0.4	(10.0)	(10.0)	-	(10.0)
Expenses thereof		-	-	-	(0.1)	(0.1)	-	(0.1)
Employee share option schemes		-	-	-	0.1	0.1	-	0.1
Total changes arising in 2010		(0.4)	1.0	(2.5)	50.1	48.2	-	48.2
At 31 December 2010		12.9	71.5	102.5	171.6	358.5	(1.3)	357.2

Group Statement of Cash Flows

for the year ended 31 December 2011

	Notes	2011 £m	2010 £m
Cash flows from operating activities
Cash generated from operations	24	54.1	51.2
Interest paid		(26.1)	(21.7)
Income tax paid		(2.9)	(3.4)
Net cash inflow from operating activities		25.1	26.1
Cash flows from investing activities
Purchase of investment property		(7.2)	(36.4)
Capital expenditure on investment property		(13.2)	(6.5)
Proceeds from sale of investment property		-	0.1
Interest received		6.9	5.2
Purchase of corporate bonds		(54.5)	(51.7)
Proceeds from sale of corporate bonds		31.8	47.7
Purchase of equity investments		(7.6)	(1.0)
Proceeds from sale of equity investments		7.2	0.8
Purchase of interests in associate		(0.2)	(1.9)
Distributions received from associate undertakings		19.9	11.9
Costs on foreign currency transactions		(1.4)	(1.2)
Costs of corporate disposals		(1.8)	(0.7)
Purchases of property, plant and equipment		(0.2)	(0.3)
Net cash outflow from investing activities		(20.3)	(34.0)
Cash flows from financing activities
Issue of ordinary shares from treasury shares		-	1.0
Purchase of own shares		(11.8)	(10.1)
New loans		174.2	102.7
Issue costs of new loans		(2.8)	(1.1)
Repayment of loans		(132.2)	(100.6)
Purchase or cancellation of derivative financial instruments		(25.9)	(3.9)
Net cash inflow/(outflow) from financing activities		1.5	(12.0)
Cash flow element of net increase/(decrease) in cash and cash equivalents		6.3	(19.9)
Foreign exchange gain/(loss)		0.7	(2.1)
Net increase/(decrease) in cash and cash equivalents		7.0	(22.0)
Cash and cash equivalents at the beginning of the year		48.3	70.3
Cash and cash equivalents at the end of the year	15	55.3	48.3

Interest received has been included in cash flows from investing activities as the majority of it arises from investing in corporate bonds. Previously, interest received was disclosed in cash flows from operating activities.

Notes to the group financial statements

31 December 2011

1       General Information

CLS Holdings plc (the "Company") and its subsidiaries (together "CLS Holdings" or the "Group") is an investment property group which is principally involved in the investment, management and development of commercial properties, and in other investments. The Group's principal operations are carried out in London, France, Germany and Sweden.

The Company is registered in the UK, registration number 2714781, with its registered address at 86 Bondway, London, SW8 1SF. The Company is listed on the London Stock Exchange.

The annual financial report (produced in accordance with the Disclosure and Transparency Rules) can be found on the Company's website www.clsholdings.com. The 2011 Annual Report and Accounts will be posted to shareholders on 16 March 2012 and will also be available on the Company's website.

The financial information contained in this announcement has been prepared on the basis of the accounting policies set out in the statutory accounts for the year ended 31 December 2011. Whilst the financial information included in this announcement has been computed in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRS. The financial information does not constitute the Company's statutory accounts for the years ended 31 December 2011 or 2010, but is derived from those accounts. Those accounts give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company and the undertakings included in the consolidation taken as a whole. Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for 2011 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts and the auditors' reports on both the 2010 and 2011 accounts were unqualified; did not draw attention to any matters by way of emphasis; and did not contain statements under s498(2) or (3) Companies Act 2006 or preceding legislation.

GOING CONCERN

The current macro-economic conditions have created a number of uncertainties. The Group's business activities, together with the factors likely to affect its future development and performance are set out in the Business Review. The financial position of the Group, its liquidity position and borrowing facilities are described in the Business Review.

The Directors regularly stress-test the business model to ensure that the Group has adequate working capital and have reviewed the current and projected financial positions of the Group, taking into account the repayment profile of the Group's loan portfolio, and making reasonable assumptions about future trading performance. The Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and, therefore, they continue to adopt the going concern basis in preparing the annual report and accounts.

2       Segment information

The Group has two operating divisions - Investment Property and Other Investments. Other Investments comprise corporate bonds, shares in Catena AB, Bulgarian Land Development Plc and Wyatt Media Group AB, and other small corporate investments. The Group manages the Investment Property division on a geographical basis due to its size and geographical diversity. Consequently, the Group's principal operating segments are:

Investment Property -	London
	France
	Germany
	Sweden

Other Investments

There are no transactions between the operating segments.

The Group's results for the year ended 31 December 2011 by operating segment were as follows:

	Investment Property
	London £m	France £m	Germany £m	Sweden £m	Other Investments £m	Total £m
Rental income	26.5	19.1	14.4	6.2	-	66.2
Service charge income	4.2	5.2	2.5	0.3	-	12.2
Other property-related income	0.8	0.1	-	-	-	0.9
Income from non-property activities	-	-	-	-	0.8	0.8
Group revenue	31.5	24.4	16.9	6.5	0.8	80.1
Service charges and similar expenses	(5.9)	(5.5)	(3.3)	(1.6)	-	(16.3)
Administration expenses	(1.9)	(1.5)	(1.1)	(0.4)	(1.7)	(6.6)
Other expenses	(1.0)	(0.5)	(0.6)	(0.1)	-	(2.2)
Costs	(8.8)	(7.5)	(5.0)	(2.1)	(1.7)	(25.1)
Group revenue less costs	22.7	16.9	11.9	4.4	(0.9)	55.0
Net movements on revaluation of investment properties	10.2	4.9	2.0	0.9	-	18.0
Net gain on sale of corporate bonds and other investments	-	-	-	-	0.5	0.5
Profit on sale of subsidiaries and associates	-	-	-	1.8	0.4	2.2
Segment operating profit	32.9	21.8	13.9	7.1	-	75.7
Finance income	0.3	0.1	-	-	11.8	12.2
Finance costs	(30.3)	(7.9)	(7.1)	(1.6)	(0.8)	(47.7)
Share of profit of associates after tax	-	-	-	-	3.0	3.0
Segment profit before tax	2.9	14.0	6.8	5.5	14.0	43.2
Taxation	7.7	(4.4)	(0.4)	(2.2)	0.4	1.1
Segment profit after tax	10.6	9.6	6.4	3.3	14.4	44.3
Central administration expenses						(5.5)
Profit for the year						38.8

The Group's results for the year ended 31 December 2010 by operating segment were as follows:

	Investment Property
	London £m	France £m	Germany £m	Sweden £m	Other Investments £m	Total £m
Rental income	24.5	17.8	14.3	5.5	-	62.1
Service charge income	4.2	4.9	2.7	0.3	-	12.1
Other property-related income	0.5	0.1	-	-	-	0.6
Income from non-property activities	-	-	-	-	4.3	4.3
Group revenue	29.2	22.8	17.0	5.8	4.3	79.1
Service charges and similar expenses	(5.5)	(5.2)	(3.0)	(1.4)	-	(15.1)
Administration expenses	(2.9)	(1.5)	(1.0)	(0.3)	(3.9)	(9.6)
Other expenses	(0.5)	(0.2)	(1.3)	-	(0.2)	(2.2)
Costs	(8.9)	(6.9)	(5.3)	(1.7)	(4.1)	(26.9)
Group revenue less costs	20.3	15.9	11.7	4.1	0.2	52.2
Net movements on revaluation of investment properties	4.8	17.8	8.2	(0.7)	-	30.1
Net gain on sale of corporate bonds and other investments	-	-	-	-	9.3	9.3
(Loss)/profit on sale of subsidiaries	-	(1.6)	-	1.6	-	-
Segment operating profit	25.1	32.1	19.9	5.0	9.5	91.6
Finance income	-	0.1	-	-	6.0	6.1
Finance costs	(16.2)	(3.0)	(6.9)	(0.4)	(4.6)	(31.1)
Share of profit of associates after tax	-	-	-	-	7.7	7.7
Segment profit before tax	8.9	29.2	13.0	4.6	18.6	74.3
Taxation	0.1	(9.6)	(0.5)	(0.4)	(0.4)	(10.8)
Segment profit after tax	9.0	19.6	12.5	4.2	18.2	63.5
Central administration expenses						(3.4)
Profit for the year						60.1

Other segment information:

	Assets		Liabilities		Capital expenditure
	2011 £m	2010 £m	2011 £m	2010 £m	2011 £m	2010 £m
Investment Property
London	435.5	391.2	304.9	295.4	12.6	23.7
France	252.9	256.7	212.9	190.6	1.8	15.5
Germany	201.1	203.2	147.2	154.5	4.0	2.7
Sweden	65.2	61.6	42.0	45.0	2.5	0.6
Other investments	149.6	165.7	29.8	35.7	-	-
	1,104.3	1,078.4	736.8	721.2	20.9	42.5

Included within the assets of other investments are investments in associates of £24.1 million (2010: £40.6 million).

3       FINANCE INCOME

	2011 £m	2010 £m
Interest income	9.2	6.1
Other finance income	2.3	-
Foreign exchange variances	0.7	-
	12.2	6.1

4       FINANCE COSTS

	2011 £m	2010 £m
Interest expense
Bank loans	21.2	18.3
Debenture loans	4.7	4.7
Other loans	1.2	-
Amortisation of loan issue costs	2.1	1.0
Movement in fair value of derivative financial instruments
Interest rate swaps: transactions not qualifying as hedges	14.2	3.7
Interest rate caps: transactions not qualifying as hedges	4.3	(0.6)
Foreign exchange variances	-	4.0
	47.7	31.1

5       taxation

	2011 £m	2010 £m
Current tax (credit)/charge	(1.2)	4.4
Deferred tax charge (note 17)	0.1	6.4
	(1.1)	10.8

A deferred tax credit of £4.6 million (2010: credit of £1.8 million) was recognised directly in equity (note 17).

The charge for the year differs from the theoretical amount which would arise using the weighted average tax rate applicable to profits of Group companies as follows:

	2011 £m	2010 £m
Profit before tax	37.7	70.9
Tax calculated at domestic tax rates applicable to profits in the respective countries	10.1	20.1
Expenses not deductible for tax purposes	(0.1)	1.5
Tax effect of unrecognised profits in associates and joint ventures	(0.8)	(2.3)
Adjustment in respect of indexation allowance on London properties	(4.6)	(2.1)
Other deferred tax adjustments	(1.6)	0.4
Deferred tax assets not recognised	(0.8)	(1.9)
Adjustment in respect of prior periods	(3.3)	(4.9)
Tax (credit)/charge for the year	(1.1)	10.8

The weighted average applicable tax rate of 26.7% (2010: 28.4%) was derived by applying to their relevant profits and losses the rates in the jurisdictions in which the Group operated.

6       EARNINGS PER SHARE

Management has chosen to disclose the European Public Real Estate Association (EPRA) measure of earnings per share (Best Practices Recommendations October 2010, as clarified by Additional Guidance July 2011), which has been provided to give relevant information to investors on the long-term performance of the Group's underlying business. The EPRA measure excludes items which are non-recurring in nature such as profits (net of related tax) on sale of investment properties and of other non-current investments, and items which have no impact to earnings over their life, such as the change in fair value of derivative financial instruments and the net movement on revaluation of investment properties, and the related deferred taxation on these items. Comparatives have been restated in accordance with EPRA Best Practices Recommendations Additional Guidance July 2011.

Earnings	2011 £m	2010 £m (restated)
Profit for the period attributable to the owners of the Company	37.5	60.1
Revaluation gains on investment properties	(18.0)	(30.1)
Profit on sale of subsidiaries and associates	(2.2)	-
Negative goodwill on share acquisitions	-	(0.1)
Change in fair value of derivative financial instruments	18.5	3.1
Net gain on sale of corporate bonds and other investments	(0.5)	(9.3)
Deferred tax relating to the above adjustments	0.5	4.1
Adjustments in respect of associates	(3.8)	(7.7)
Non-recurring finance income	(2.3)	-
EPRA Earnings	29.7	20.1

Weighted average number of ordinary shares	2011 Number	2010 Number
Weighted average number of ordinary shares in circulation	45,738,600	47,280,274
Dilutive share options†	67,542	13,339
Diluted weighted average number of ordinary shares	45,806,142	47,293,613

Earnings per Share	2011 Pence	2010 Pence (restated)
Basic	82.0	127.1
Diluted	81.9	127.1
EPRA	64.9	42.5

† 300,000 share options were granted on 11 March 2010 at an exercise price of 470 pence.

7       NET ASSETS PER SHARE

Management has chosen to disclose the two European Public Real Estate Association (EPRA) measures of net assets per share (Best Practices Recommendations October 2010, as clarified by Additional Guidance July 2011): EPRA net assets per share and EPRA triple net assets per share. The EPRA net assets per share measure highlights the fair value of equity on a long-term basis, and so excludes items which have no impact on the Group in the long term, such as fair value movements of derivative financial instruments and movements on fair value of investment properties, and associated deferred tax. The EPRA triple net assets per share measure discloses net assets per share on a true fair value basis: all balance sheet items are included at their fair value in arriving at this measure, including deferred tax, fixed rate loan liabilities and any other balance sheet items not reported at fair value. Comparatives have been restated in accordance with EPRA Best Practices Recommendations Additional Guidance July 2011.

Net Assets	2011 £m	2010 £m (restated)
Basic net assets	367.5	357.2
Dilutive impact of share options	1.4	1.4
Diluted net assets	368.9	358.6
Adjustment to increase fixed rate debt to fair value, net of tax	(23.7)	(19.4)
Goodwill as a result of deferred tax	(1.1)	(1.1)
EPRA triple net assets	344.1	338.1
Deferred tax on property and other non-current assets	67.9	68.4
Fair value of derivative financial instruments	7.3	15.7
Adjustment to decrease fixed rate debt to book value, net of tax	23.7	19.4
Adjustments in respect of associates	1.9	5.2
EPRA net assets	444.9	446.8

Number of ordinary shares	2011 Number	2010 Number
Number of ordinary shares in circulation	44,953,611	46,588,244
Dilutive share options	300,000	300,000
Diluted number of ordinary shares	45,253,611	46,888,244

Net Assets Per Share	2011 Pence	2010 Pence (restated)
Basic	817.5	766.7
Diluted	815.2	764.8
EPRA	983.1	952.9
EPRA triple net	760.4	721.1

8       Investment properties

	London £m	France £m	Germany £m	Sweden £m	Total £m
At 1 January 2011	375.0	248.7	196.5	56.7	876.9
Acquisitions	6.4	-	0.8	-	7.2
Capital expenditure	6.1	1.7	3.2	2.5	13.5
Net movement on revaluation of investment properties	10.2	4.9	2.0	0.9	18.0
Rent-free period debtor adjustments	0.3	-	-	(0.1)	0.2
Exchange rate variances	-	(7.0)	(5.4)	(1.3)	(13.7)
At 31 December 2011	398.0	248.3	197.1	58.7	902.1
	London £m	France £m	Germany £m	Sweden £m	Total £m
At 1 January 2010	346.8	222.8	192.1	51.3	813.0
Acquisitions	23.4	13.0	-	-	36.4
Capital expenditure	0.1	2.5	2.6	0.6	5.8
Disposals	(0.1)	-	-	-	(0.1)
Net movement on revaluation of investment properties	4.8	17.8	8.2	(0.7)	30.1
Rent-free period debtor adjustments	-	-	-	0.1	0.1
Exchange rate variances	-	(7.4)	(6.4)	5.4	(8.4)
At 31 December 2010	375.0	248.7	196.5	56.7	876.9

The investment properties (and the owner-occupied property detailed in note 9) were revalued at 31 December 2011 to their fair value. Valuations were based on current prices in an active market for all properties. The property valuations were carried out by external, professionally qualified valuers as follows:

London: Lambert Smith Hampton

France: Jones Lang LaSalle

Germany: Colliers International

Sweden: CB Richard Ellis

Investment properties included leasehold properties with a carrying amount of £19.1 million (2010: £19.6 million).

Where the Group leases out its investment property under operating leases the duration is typically three years or more. No contingent rents have been recognised in either the current or the comparative year.

Substantially all investment properties (and the owner-occupied property detailed in note 9) are secured against debt.

In 2010 the Group purchased a property in London for £1.8 million. Under the terms of the purchase agreement, should the site be developed additional consideration may become due to the vendor. The maximum liability in respect of this is estimated to be £0.5 million. At the balance sheet date the fair value of the liability was £nil (2010: £nil).

9       Property, plant and equipment

	2011 £m	2010 £m
Cost or valuation
At 1 January	5.4	6.8
Additions	0.2	0.3
Disposals	(1.9)	(1.8)
Revaluation	0.3	0.1
At 31 December	4.0	5.4
Accumulated depreciation and impairment
At 1 January	(2.8)	(4.3)
Depreciation charge	(0.2)	(0.3)
Disposals	1.7	1.8
At 31 December	(1.3)	(2.8)
Net book value
At 31 December	2.7	2.6

An owner-occupied property was revalued at 31 December 2011 based on the external valuation performed by Lambert Smith Hampton as detailed in note 9.

10     Joint ventures

At 31 December 2011 the Group had a one-third interest (2010: one-third) in the issued ordinary share capital of Fielden House Investments Limited, a company incorporated in England and Wales, which had a coterminous year end to that of the Group.

The principal activity of Fielden House Investments Limited is investment in, and management and development of, commercial property.

The following amounts represent the Group's share of the assets and liabilities, and of the income and expenditure of Fielden House Investments Limited which are included in the balance sheet and statement of comprehensive income of the Group:

	2011 £m	2010 £m
Assets
Non-current assets	2.3	1.9
Current assets	0.1	0.1
	2.4	2.0
Liabilities
Current liabilities	(0.1)	(2.1)
Non-current liabilities	(2.3)	(0.4)
	(2.4)	(2.5)
Net liabilities	-	(0.5)
Income	0.2	0.2
Expenses	(0.2)	(0.2)
Profit after tax	-	-

11     goodwill and other Intangible assets

	Goodwill £m	Other intangibles £m	Total £m
Cost
At 1 January 2011	18.6	7.2	25.8
Disposals	(17.5)	(7.2)	(24.7)
At 31 December 2011	1.1	-	1.1
Amortisation
At 1 January 2011	(17.5)	(7.2)	(24.7)
Disposals	17.5	7.2	24.7
At 31 December 2011	-	-	-
Net book value
At 31 December 2011	1.1	-	1.1

	Goodwill £m	Other intangibles £m	Total £m
Cost
At 1 January 2010 and 31 December 2010	18.6	7.2	25.8
Amortisation
At 1 January 2010 and 31 December 2010	(17.5)	(7.2)	(24.7)
Net book value
At 31 December 2010	1.1	-	1.1

Goodwill comprised £0.8 million (2010: £0.8 million) on the acquisition of a French property portfolio in 2004 and £0.3 million (2010: £0.3 million) on a German property acquisition in 2005. All other goodwill and other intangibles (relating to trade names, technology, customer relationships, capitalised development and other costs), which had been fully written down, related to the Wyatt Media Group, which was sold in 2011, as described in note 25.

Impairment review 2011 and 2010

Goodwill was reviewed for impairment at 31 December 2011 and at 31 December 2010 using the key assumptions set out below. No adjustment for impairment was required.

Key assumptions:

Unamortised goodwill at 31 December 2011 and at 31 December 2010 related to contingent deferred tax arising on acquisitions of corporate entities for which an equal deferred tax liability was recognised in the balance sheet. Management have reviewed the sensitivity to a fall in property values of each cash generating unit. A fall of 10% would result in a potential impairment of goodwill of up to £0.1 million (2010: £0.2 million).

12     Investments in associates

	Net assets £m	Goodwill £m	Total £m
At 1 January 2011	33.8	6.8	40.6
Additions	0.7	1.4	2.1
Disposals	-	(1.5)	(1.5)
Share of profit of associates after tax	3.0	-	3.0
Dividends received	(19.9)	-	(19.9)
Exchange rate differences	(0.2)	-	(0.2)
At 31 December 2011	17.4	6.7	24.1

	Net assets £m	Goodwill £m	Total £m
At 1 January 2010	36.1	4.8	40.9
Additions	0.4	1.5	1.9
Share of profit of associates after tax	7.7	-	7.7
Share of other comprehensive income of associates*	(0.4)	-	(0.4)
Distributions received	(11.9)	-	(11.9)
Exchange rate differences	1.9	0.5	2.4
At 31 December 2010	33.8	6.8	40.6

*             Primarily foreign exchange movements.

The Group's interests in its principal associates were as follows:

At 31 December 2011	Catena AB £m	Bulgarian Land Development Plc £m	Other associates £m	Total £m
Interest held in ordinary share capital	29.9%	48.3%	various
Revenues	0.8	0.6	0.6	2.0
Share of profit/(loss) of associates after tax	3.7	(0.5)	(0.2)	3.0
Assets	19.9	9.3	0.8	30.0
Liabilities	(11.5)	(0.6)	(0.5)	(12.6)
Net assets	8.4	8.7	0.3	17.4
Goodwill	5.1	-	1.6	6.7
Investments in associates	13.5	8.7	1.9	24.1
Market value of interest	17.8	n/a	n/a
At 31 December 2010	Catena AB £m	Bulgarian Land Development Plc £m	Other associates £m	Total £m
Interest held in ordinary share capital	29.9%	48.3%	various
Revenues	4.5	0.8	0.2	5.5
Profit/(loss) after tax	9.4	(1.7)	(0.1)	7.6
Realisation of negative goodwill on acquisition	-	0.1	-	0.1
Share of profit/(loss) of associates after tax	9.4	(1.6)	(0.1)	7.7
Assets	62.1	17.5	0.2	79.8
Liabilities	(37.8)	(8.1)	(0.1)	(46.0)
Net assets	24.3	9.4	0.1	33.8
Goodwill	5.3	-	1.5	6.8
Investments in associates	29.6	9.4	1.6	40.6
Market value of interest	50.6	n/a	n/a

Catena AB

At 31 December 2011 the Group had a 29.9% (2010: 29.9%) interest in Catena AB, a listed Swedish property company. Henry Klotz, Executive Vice Chairman of the Company, is the Non-Executive Chairman of Catena AB.

During 2011 Catena returned £19.9 million (2010: £9.9 million) to the Group in cash following significant realisations of its property assets.

Bulgarian Land Development Plc

At 31 December 2011 the Group had a 48.3% (2010: 48.3%) interest in Bulgarian Land Development Plc ("BLD"), an unlisted developer of residential and commercial real estate in Bulgaria. Henry Klotz, Executive Vice Chairman of the Company, is the Non-Executive Chairman of BLD.

In December 2010, the Group received a return of capital of £2.0 million from BLD by means of a tender offer buy-back.

Other associates

As described in note 25, on 31 May 2011 the Group sold the remaining operating subsidiaries and certain associates of the Wyatt Media Group. The entities were acquired by Nyheter 24 (a Swedish on-line news and media business) in exchange for a 20% interest in the enlarged Nyheter 24 group. The fair value of the Group's interest in Nyheter 24 was determined on acquisition to be £1.9 million. Henry Klotz, Executive Vice Chairman of the Company, was appointed to the board of Nyheter 24.

The Group retains an associate interest in one former associate of the Wyatt Media Group.

Impairment

2011

In assessing the carrying value of Catena AB, management considered that the net asset value of Catena's balance sheet was not representative of true fair value as it did not include the latent development profit on Catena's remaining single development site, Haga Norra. Furthermore, the market value of the Group's interest in Catena exceeded its carrying value by £4.3 million at 31 December 2011.

BLD was carried in the balance sheet at a value equal to the Group's share of its net assets. BLD's audited net assets, which were prepared under IFRS, were reviewed and found not to be impaired at 31 December 2011. Accordingly there was no requirement to provide for further impairment in the carrying value of the Group's interest in BLD at 31 December 2011.

The fair value of Nyheter 24 was determined on acquisition to be £1.9 million and was based upon detailed forward forecasts. As the progress to date has not been materially dissimilar from these forecasts, the carrying value of Nyheter 24 has not been adjusted since acquisition.

2010

In assessing the carrying value of Catena AB, management considered that the balance sheet of Catena AB at 31 December 2010 was stated at fair value except for certain deferred tax liabilities. It was management's assessment that the realisation of Catena's property assets would occur through corporate disposals and therefore latent deferred tax liabilities were unlikely to crystallise. As the Group's share of the net assets of Catena AB, excluding deferred tax liabilities, exceeded the carrying value of the Group's interest there was no further impairment of the Group's interest in Catena AB at 31 December 2010. Furthermore, the market value of the Group's shares in Catena AB exceeded their carrying value by £21.0 million.

BLD's audited net assets at 31 December 2010, which were prepared under IFRS, were reviewed and found not to be impaired. Accordingly there was no requirement to provide further impairment in the carrying value of the Group's interest in BLD at 31 December 2010.

13     Other investments

	Investment type	Destination of Investment	2011 £m	2010 £m
Available-for-sale financial investments carried at fair value	Listed corporate bonds	UK	56.0	37.5
		Eurozone	12.2	24.1
		Other	16.9	16.5
			85.1	78.1
	Listed equity securities	UK	0.5	0.5
		Sweden	1.6	2.4
		Other	0.1	0.1
	Unlisted investments	Sweden	0.4	0.4
	Government securities	UK	0.1	0.1
			87.8	81.6

The movement of other investments, analysed based on the methods used to measure their fair value, was as follows:

	Level 1 Quoted market prices £m	Level 2 Observable market data† £m	Level 3 Other valuation methods* £m	Total £m
At 1 January 2011	3.1	78.1	0.4	81.6
Additions	7.6	54.5	-	62.1
Disposals	(7.7)	(31.1)	-	(38.8)
Fair value movements recognised in reserves on available-for-sale assets	(0.4)	(15.6)	-	(16.0)
Fair value movements recognised in profit before tax on available-for-sale assets	(0.1)	(0.7)	-	(0.8)
Exchange rate variations	(0.2)	(0.1)	-	(0.3)
At 31 December 2011	2.3	85.1	0.4	87.8

	Level 1 Quoted market prices £m	Level 2 Observable market data† £m	Level 3 Other valuation methods* £m	Total £m
At 1 January 2010	3.3	70.0	0.6	73.9
Additions	1.0	51.7	-	52.7
Disposals	(2.2)	(36.7)	(0.2)	(39.1)
Fair value movements recognised in reserves on available-for-sale assets	(0.3)	3.4	-	3.1
Fair value movements recognised in profit before tax on available-for-sale assets	1.0	(9.5)	-	(8.5)
Exchange rate variations	0.3	(0.8)	-	(0.5)
At 31 December 2010	3.1	78.1	0.4	81.6

† Includes £nil (2010: £12.8 million) of corporate bonds priced directly from market makers in those bonds.

* Unlisted equity shares valued using multiples from comparable listed organisations.

Corporate Bond Portfolio

At 31 December 2011

Sector	Banking	Insurance	Building  Societies	Financials	Other	Total
Value	£15.5m	£31.6m	£11.1m	£11.0m	£15.9m	£85.1m
Coupon yield	11.4%	9.1%	9.8%	9.2%	12.0%	10.2%
Issuers	KBC	AXA	Yorkshire	Investec	TUI
	RBS	Aviva	Nationwide	Euroclear	SAS
	Co-op	Generali		Man Group	Swissport
	Lloyds	Irish Life		Aberdeen AM	Corral Finans
	Dresdner	Swiss Life			Thomas Cook
	SNS Bank	Old Mutual			Cable & Wireless
	Rothschild	Storebrand			HeidelbergCement
	Commerzbank	RL Finance			Renewable Energy Corp
		Legal & General
		Scottish Widows
		Friends Provident

14     Trade and other receivables

	2011 £m	2010 £m
Current
Trade receivables	3.6	3.5
Prepayments	0.5	0.7
Accrued income	5.2	3.5
Other debtors	2.3	3.8
	11.6	11.5

There was no concentration of credit risk with respect to trade receivables as the Group had a large number of tenants spread across the countries in which it operated.

There were no material trade and other receivables classified as past due but not impaired (2010: none). No trade and other receivables were interest-bearing.

Included within other debtors is £0.5 million (2010: £nil) due after more than one year.

15     Cash and cash equivalents

	2011 £m	2010 £m
Cash at bank and in hand	25.7	23.9
Short-term bank deposits	29.6	24.4
	55.3	48.3

At 31 December 2011, Group cash at bank and in hand included £5.8 million (2010: £6.4 million) of cash deposits which were restricted by a third-party charge.

Cash and short-term deposits are invested at floating rates of interest based on relevant national LIBID and base rates or equivalents in the UK, France, Germany and Sweden.

The cash and cash equivalents currency profile was as follows:

At 31 December 2011	Cash at bank and in hand £m	Short-term deposits £m	Total £m
Sterling	10.1	5.2	15.3
Euro	13.6	0.4	14.0
Swedish Krona	2.0	24.0	26.0
	25.7	29.6	55.3

	Cash at bank and in hand £m	Short-term deposits £m	Total £m
At 31 December 2010
Sterling	13.6	7.5	21.1
Euro	9.2	0.2	9.4
Swedish Krona	1.1	16.7	17.8
	23.9	24.4	48.3

16     Trade and other payables

	2011 £m	2010 £m
Current
Trade payables	1.7	1.6
Social security and other taxes	1.9	2.1
Other payables	6.0	6.4
Accruals	11.4	12.8
Deferred income	9.4	8.9
	30.4	31.8

17     Deferred tax

	2011 £m	2010 £m
Deferred tax assets:
- after more than 12 months	(17.7)	(11.2)
Deferred tax liabilities:
- after more than 12 months	75.0	74.5
	57.3	63.3

The movement in deferred tax was as follows:

	2011 £m	2010 £m
At 1 January	63.3	59.6
Charged in arriving at profit after tax	0.1	6.4
Credited to other comprehensive income	(4.6)	(1.8)
Exchange rate variances	(1.5)	(0.9)
At 31 December	57.3	63.3

The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, was as follows:

Deferred tax assets	Tax losses £m	Other £m	Total £m
At 1 January 2011	(5.1)	(6.1)	(11.2)
(Credited)/charged in arriving at profit after tax	(5.5)	2.0	(3.5)
Credited to other comprehensive income	-	(3.1)	(3.1)
Exchange rate variances	-	0.1	0.1
At 31 December 2011	(10.6)	(7.1)	(17.7)

Deferred tax assets	Tax losses £m	Other £m	Total £m
At 1 January 2010	(7.1)	(5.6)	(12.7)
Charged/(credited) in arriving at profit after tax	2.0	(0.5)	1.5
At 31 December 2010	(5.1)	(6.1)	(11.2)

Deferred tax liabilities	UK capital allowances £m	Fair value adjustments to investment properties £m	Other £m	Total £m
At 1 January 2011	10.2	62.3	2.0	74.5
(Credited)/charged in arriving at profit after tax	(0.5)	3.8	0.3	3.6
Credited to other comprehensive income	-	-	(1.5)	(1.5)
Exchange rate variances	-	(1.6)	-	(1.6)
At 31 December 2011	9.7	64.5	0.8	75.0

Deferred tax liabilities	UK capital allowances £m	Fair value adjustments to investment properties £m	Other £m	Total £m
At 1 January 2010	12.1	56.5	3.7	72.3
(Credited)/charged in arriving at profit after tax	(1.9)	6.7	0.1	4.9
Credited to other comprehensive income	-	-	(1.8)	(1.8)
Exchange rate variances	-	(0.9)	-	(0.9)
At 31 December 2010	10.2	62.3	2.0	74.5

Deferred tax assets are recognised in respect of tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. At 31 December 2011 the Group did not recognise deferred tax assets of £7.2 million (2010: £4.7 million) in respect of losses amounting to £27.9 million (2010: £20.2 million) which can be carried forward against future taxable income or gains. The majority of deferred tax assets recognised within the "other" category relate either to deferred tax on swaps with a negative book value or to corporate bonds carried at below cost. Losses recognised as deferred tax assets can be carried forward without restriction.

On 1 April 2012 the UK corporation tax rate reduces from 26% to 25%. As this has been substantively enacted at the balance sheet date the UK deferred tax assets and liabilities have been calculated at a rate of 25%. The impact on net assets for 2011 as a result of this change was an increase of £0.2 million. It is expected that UK tax rates will reduce to 24% by 1 April 2014. A further 1% fall in the rate of UK tax would increase net assets by £0.1 million, and increase profit after tax by £0.1 million.

18     Borrowings

At 31 December 2011	Current £m	Non-current £m	Total borrowings £m
Bank loans	150.0	399.6	549.6
Debenture loans	1.2	31.8	33.0
Zero coupon note	-	10.9	10.9
Other loans	-	27.5	27.5
	151.2	469.8	621.0

At 31 December 2010	Current £m	Non-current £m	Total borrowings £m
Bank loans	81.6	461.5	543.1
Debenture loans	1.1	33.0	34.1
Zero coupon note	-	9.8	9.8
Other loans	2.3	-	2.3
	85.0	504.3	589.3

Arrangement fees of £4.1 million (2010: £3.0 million) have been offset in arriving at the balances in the above tables.

Bank loans

Interest on bank loans is charged at fixed rates ranging between 3.1% and 11.2%, including margin (2010: 4.9% and 11.2%) and at floating rates of typically LIBOR, EURIBOR or STIBOR, plus a margin. Fixed rate margins range between 0.8% and 1.8% (2010: 0.8% and 1.8%) and floating rate margins range between 0.8% and 3.8% (2010: 1.0% and 3.0%). All bank loans are secured by legal charges over the respective properties, and in most cases a floating charge over the remainder of the assets held in the company which owns the property. In addition, the share capital of some of the subsidiaries within the Group has been charged.

Debenture loans

The debenture loans represent amortising bonds which are repayable in equal quarterly instalments of £1.2 million (2010: £1.2 million) with final repayment due in January 2025. Each instalment is apportioned between principal and interest on a reducing balance basis. Interest is charged at an annual fixed rate of 10.8%, including margin. The debentures are secured by a legal charge over a property and securitisation of its rental income.

Zero coupon note

The zero coupon note accrues interest at an annual rate of 11.2%, including margin. It is unsecured and is redeemable as a balloon repayment of principal and interest of £43.7 million in aggregate in February 2025.

Other loans

Other loans totalling £2.3 million were discharged during 2011 on the liquidation of the subsidiaries which issued the debt. Previously the loans attracted variable rate interest ranging from 2.0% to 4.0% per annum, comprising LIBOR plus a margin.

On 15 April 2011, the Group issued SEK 300 million unsecured bonds. The bonds attract a floating rate coupon of 3.75% over three months' STIBOR and are due for repayment in 2016. After two years, the Group has an option to redeem all outstanding bonds subject to an early repayment premium. The bonds were listed on the NASDAQ OMX Stockholm on 5 July 2011.

Loan covenants

There were no covenant breaches at 31 December 2011 or at 31 December 2010.

The maturity profile of the carrying amount of the Group's borrowings was as follows:

At 31 December 2011	Bank loans £m	Debenture loans £m	Zero coupon note £m	Other loans £m	Total £m
Within one year or on demand	151.0	1.2	-	-	152.2
More than one but not more than two years	71.9	1.3	-	-	73.2
More than two but not more than five years	199.4	5.0	-	28.0	232.4
More than five years	130.9	25.5	10.9	-	167.3
	553.2	33.0	10.9	28.0	625.1
Unamortised issue costs	(3.6)	-	-	(0.5)	(4.1)
Borrowings	549.6	33.0	10.9	27.5	621.0
Less amount due for settlement within 12 months	(150.0)	(1.2)	-	-	(151.2)
Amounts due for settlement after 12 months	399.6	31.8	10.9	27.5	469.8

At 31 December 2010	Bank loans £m	Debenture loans £m	Zero coupon note £m	Other loans £m	Total £m
Within one year or on demand	82.4	1.1	-	2.3	85.8
More than one but not more than two years	126.2	1.2	-	-	127.4
More than two but not more than five years	204.4	4.5	-	-	208.9
More than five years	133.1	27.3	9.8	-	170.2
	546.1	34.1	9.8	2.3	592.3
Unamortised issue costs	(3.0)	-	-	-	(3.0)
Borrowings	543.1	34.1	9.8	2.3	589.3
Less amount due for settlement within 12 months	(81.6)	(1.1)	-	(2.3)	(85.0)
Amounts due for settlement after 12 months	461.5	33.0	9.8	-	504.3

The interest rate risk profile of the Group's fixed rate borrowings was as follows:

	At 31 December 2011		At 31 December 2010
	Weighted average fixed rate of financial liabilities  %	Weighted average period for which rate is fixed Years	Weighted average fixed rate of financial liabilities  %	Weighted average period for which rate is fixed Years
Sterling	9.6	11.1	6.5	5.6
Euro	5.1	2.3	4.3	2.2

The interest rate risk profile of the Group's floating rate borrowings was as follows:

	At 31 December 2011			At 31 December 2010
	% of net floating rate loans capped	Average capped interest rate  %	Average tenure Years	% of net floating rate loans capped	Average capped interest rate %	Average tenure Years
Sterling	66	3.7	2.2	56	2.7	5.0
Euro	75	3.2	3.8	86	4.7	1.0
Swedish Krona	53	2.6	1.9	100	2.6	2.9
Other	-	n/a	n/a	-	n/a	n/a

The carrying amounts of the Group's borrowings are denominated in the following currencies:

At 31 December 2011	Fixed rate financial liabilities £m	Floating rate financial liabilities £m	Total £m
Sterling	60.2	183.5	243.7
Euro	73.2	239.6	312.8
Swedish Krona	-	58.7	58.7
Other	-	5.8	5.8
	133.4	487.6	621.0

At 31 December 2010	Fixed rate financial liabilities £m	Floating rate financial liabilities £m	Total £m
Sterling	155.2	91.6	246.8
Euro	117.6	185.8	303.4
Swedish Krona	-	33.3	33.3
Other	-	5.8	5.8
	272.8	316.5	589.3

The carrying amounts and fair values of the Group's borrowings are as follows:

	Carrying amounts		Fair values
	2011 £m	2010 £m	2011 £m	2010 £m
Current borrowings	151.2	85.0	151.2	85.0
Non-current borrowings	469.8	504.3	501.1	530.2
	621.0	589.3	652.3	615.2

Arrangement fees of £4.1 million (2010: £3.0 million) have been offset in arriving at the balances in the above table.

The fair value of non-current borrowings represents the amount at which a financial instrument could be exchanged in an arm's length transaction between informed and willing parties, discounted at the prevailing market rate, and excludes accrued interest.

The Group has the following undrawn committed facilities available at 31 December:

	2011 £m	2010 £m
Floating rate:
- expiring within one year	0.6	-
- expiring after one year	-	-
	0.6	-

19     Derivative financial instruments

	2011 Assets £m	2011 Liabilities £m	2010 Assets £m	2010 Liabilities £m
Non-current
Interest rate swaps	-	(9.1)	-	(19.3)
Interest rate caps	1.5	-	4.6	-
	1.5	(9.1)	4.6	(19.3)
Current
Currency options	0.4	-	-	-
Forward foreign exchange contracts	-	(0.1)	-	(1.0)
	0.4	(0.1)	-	(1.0)
	1.9	(9.2)	4.6	(20.3)

The valuation methods used to measure the fair value of all derivative financial instruments were derived from inputs which were either observable as prices or derived from prices (Level 2).

There were no derivative financial instruments accounted for as hedging instruments.

Interest rate swaps

The aggregate notional principal of interest rate swap contracts at 31 December 2011 was £50.0 million (2010: £133.5 million). The average period to maturity of these interest rate swaps was 4.1 years (2010: 2.8 years).

Forward foreign exchange contracts

The Group uses forward foreign exchange contracts from time to time to add certainty to, and to minimise the impact of foreign exchange movements on, committed cash flows. At 31 December 2011 the Group had £19.9 million of outstanding net foreign exchange contracts (2010: £27.0 million).

Currency options

The Group uses currency options from time to time to hedge the foreign exchange risk relating to the translation of the Group's net investment in overseas subsidiaries. At 31 December 2011 the Group had purchased options to sell €90.0 million in exchange for sterling at an average exchange rate of £1:€1.2876 (2010: none).

20     Share capital

	Number
	Ordinary shares in circulation	Treasury shares	Total ordinary shares	Ordinary shares in circulation £m	Treasury shares £m	Total ordinary shares £m
At 1 January 2011	46,588,244	4,793,000	51,381,244	11.7	1.2	12.9
Cancelled following tender offers	(1,624,530)	-	(1,624,530)	(0.4)	-	(0.4)
Purchase of own shares:
- pursuant to market purchase	(10,103)	10,103	-	-	-	-
At 31 December 2011	44,953,611	4,803,103	49,756,714	11.3	1.2	12.5

	Number
	Ordinary shares in circulation	Treasury shares	Total ordinary shares	Ordinary shares in circulation £m	Treasury shares £m	Total ordinary shares £m
At 1 January 2010	48,024,256	5,000,000	53,024,256	12.0	1.3	13.3
Cancelled following tender offer	(1,643,012)	-	(1,643,012)	(0.4)	-	(0.4)
Ordinary shares issued from treasury shares	207,000	(207,000)	-	0.1	(0.1)	-
At 31 December 2010	46,588,244	4,793,000	51,381,244	11.7	1.2	12.9

Ordinary shares have a nominal value of 25 pence each.

21     Tender offer buy-backs

A tender offer by way of a Circular dated 18 March 2011 for the purchase of 1 in 47 shares at 725 pence per share was completed in April. It returned £7.2 million to shareholders, equivalent to 15.4 pence per share.

A tender offer by way of a Circular dated 22 August 2011 for the purchase of 1 in 72 shares at 700 pence per share was completed in September. It returned £4.4 million to shareholders, equivalent to 9.7 pence per share.

A further tender offer will be put to shareholders in April 2012 for the purchase of 1 in 42 shares at a price of 735 pence per share which, if approved, will return £7.9 million to shareholders, equivalent to 17.5 pence per share.

22     share premium

	2011 £m	2010 £m
At 1 January	71.5	70.5
Ordinary shares issued from treasury shares	-	1.0
At 31 December	71.5	71.5

23     Other reserves

	Capital redemption reserve £m	Cumulative translation reserve £m	Fair value reserve £m	Other reserves £m	Total £m
At 1 January 2011	20.8	51.4	2.2	28.1	102.5
Purchase of own shares:
- cancellation pursuant to tender offer	0.4	-	-	-	0.4
Exchange rate variances	-	(5.0)	-	-	(5.0)
Available-for-sale financial assets:
- net fair value losses in the year	-	-	(16.8)	-	(16.8)
- deferred tax thereon	-	-	4.6	-	4.6
Revaluation of owner-occupied property	-	-	0.3	-	0.3
At 31 December 2011	21.2	46.4	(9.7)	28.1	86.0

	Capital redemption reserve £m	Cumulative translation reserve £m	Fair value reserve £m	Other reserves £m	Total £m
At 1 January 2010	20.4	50.7	5.8	28.1	105.0
Purchase of own shares:
- cancellation pursuant to tender offer	0.4	-	-	-	0.4
Exchange rate variances	-	1.1	-	-	1.1
Share of other comprehensive income of associates	-	(0.4)	-	-	(0.4)
Available-for-sale financial assets:
- net fair value gains in the year	-	-	(5.4)	-	(5.4)
- deferred tax thereon	-	-	1.8	-	1.8
At 31 December 2010	20.8	51.4	2.2	28.1	102.5

The cumulative translation reserve comprises the aggregate effect of translating net assets of overseas subsidiaries into sterling since acquisition.

The fair value reserve comprises the aggregate movement in the value of corporate bonds, other available-for-sale assets and owner-occupied property since acquisition, net of deferred tax.

The amount classified as other reserves was created prior to listing in 1995 on a Group reconstruction and is considered to be non-distributable.

24     Cash generated from operations

	2011 £m	2010 £m
Operating profit	70.2	88.2
Adjustments for:
Net movements on revaluation of investment properties	(18.0)	(30.1)
Depreciation and amortisation	0.2	0.3
Profit on sale of subsidiaries and associates	(2.2)	-
Net gain on sale of corporate bonds and other investments	(0.5)	(9.3)
Share-based payment expense	0.2	0.1
Non-cash rental income	(0.2)	-
Revaluation of currency options	0.1	-
Changes in working capital:
Decrease in debtors	2.8	0.5
Increase in creditors	1.5	1.5
Cash generated from operations	54.1	51.2

25     Business disposals

Wyatt Media Group

On 31 May 2011, the Group disposed of its interests in Wyatt Media Group, comprising five subsidiaries and two associates. All of the corporate entities sold were previously reported in the "Other Investments" division. The entities were disposed of in a share-for-share exchange with Nyheter 24 (a Swedish on-line news and media business) and the Group received a 20% interest in Nyheter 24 following the transaction. In addition the Group received a £0.5 million convertible loan note.

	Wyatt Media Group
	May-11	Dec-10
	£m	£m
Net assets disposed of:
Investments in associates	1.5	1.4
Property, plant and equipment	0.1	0.1
Trade and other receivables	0.4	0.9
Cash and cash equivalents	0.1	0.2
Trade and other payables	(0.5)	(0.9)
	1.6	1.7
Gain on disposal of subsidiaries and associates	0.5
Costs of disposal	0.3
Total consideration	2.4
Satisfied by:
Convertible loan notes received	0.5
Shares in Nyheter 24 (note 12)	1.9
	2.4
Net cash inflow arising on disposal:
Cash consideration	-
Cash and cash equivalents disposed of	(0.1)
	(0.1)

Profit on disposal of subsidiaries and associates	2011 £m	2010 £m
Disposal of the Wyatt Media Group	0.5	-
Release of provisions and guarantees in relation to corporate disposals made in prior years	1.7	-
	2.2	-

26     RELATED PARTY TRANSACTIONS

During the year two Group companies, Förvaltnings AB Klio and Vänerparken Investment AB, rented office space from a company owned by Sten Mortstedt, Executive Chairman of CLS Holdings plc. The total payable in the year by Förvaltnings AB Klio was £19,000 (2010: £36,000) and by Vänerparken Investment AB was £19,000 (2010: £nil). A company owned by Sten Mortstedt purchased accountancy services from both Förvaltnings AB Klio and Vänerparken Investment AB during the year, amounting to £5,000 (2010: £9,000) in respect of Förvaltnings AB Klio and £5,000 (2010: £nil) in respect of Vänerparken Investment AB.

In relation to these transactions £nil (2010: £36,000) was payable by Förvaltnings AB Klio and £nil (2010: £nil) was payable by Vänerparken Investment AB at the balance sheet date.

A Group company, CLSH Management Limited, provided accounting services to Bulgarian Land Development Plc, an associate of the Group, for which a charge of £48,000 was made in the year (2010: £16,000), of which £15,000 (2010: £16,000) remained outstanding at the balance sheet date.

27     EVENT AFTER THE BALANCE SHEET DATE

On 12 January 2012, the Group acquired a 16.64% interest in Cood Investments AB ("Cood"), an unlisted residential property company specialising in holiday cottages and cabins on vacation sites in Sweden. Cood acquires and operates the sites, whilst selling the cabins as vacation homes. The purchase price was £4.1 million, and the Group also provided to Cood up to £8.0 million of lending facilities at market rates. This was a related party transaction as: first, the trust in which Sten Mortstedt is beneficially interested simultaneously acquired at the same price per share an 8.39% in, and provided lending facilities on the same terms to, Cood; and, second, Christer Sandberg, who is a director of certain CLS Group companies, owns 7.5% of the enlarged equity of Cood.

glossary of terms

Administration Cost Ratio

Recurring administration expenses of the Investment Property operating segment expressed as a percentage of net rental income

ADJUSTED NET ASSETS or adjusted shareholders' funds

Net assets excluding the fair value of financial derivatives, deferred tax on revaluations, and goodwill arising as a result of deferred tax

ADJUSTED NET GEARING

Net debt expressed as a percentage of adjusted net assets

ADJUSTED SOLIDITY

Adjusted net assets expressed as a percentage of adjusted total assets

ADJUSTED TOTAL ASSETS

Total assets excluding deferred tax assets

CONTRACTED RENT

Annual contracted rental income after any rent-free periods have expired

CORE PROFIT

Profit before tax and before net movements on revaluation of investment properties, profit on sale of investment properties, subsidiaries and corporate bonds, impairment of intangible assets and goodwill, non-recurring costs, change in fair value of derivatives and foreign exchange variances

DILUTED EARNINGS PER SHARE

Profit after tax divided by the diluted weighted average number of ordinary shares

DILUTED NET ASSETS

Equity shareholders' funds increased by the potential proceeds from issuing those shares issuable under employee share schemes

DILUTED NET ASSETS PER SHARE OR DILUTED NET ASSET VALUE

Diluted net assets divided by the diluted number of ordinary shares

DILUTED NUMBER OF ORDINARY SHARES

Number of ordinary shares in circulation at the balance sheet date adjusted to include the effect of potential dilutive shares issuable under employee share schemes

DILUTED WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES

Weighted average number of ordinary shares in issue during the period adjusted to include the effect of potential weighted average dilutive shares issuable under employee share schemes

EARNINGS PER SHARE

Profit after tax divided by the weighted average number of ordinary shares in issue in the period

EPRA

European Public Real Estate Association

EPRA EARNINGS PER SHARE

Profit after tax, but excluding net gains or losses from fair value adjustments on investment properties, profits or losses on disposal of investment properties and other non-current investment interests, impairment of goodwill and intangible assets, movements in fair value of derivative financial instruments and their related current and deferred tax

EPRA NET ASSETS

Diluted net assets excluding the fair value of financial derivatives, deferred tax on revaluations, and goodwill arising as a result of deferred tax

EPRA NET ASSETS PER SHARE

EPRA net assets divided by the diluted number of ordinary shares

EPRA net initial yield

Annual passing rent less net service charge costs on investment properties expressed as a percentage of the investment property valuation after adding purchasers' costs

EPRA topped up net initial yield

Annual net rents on investment properties expressed as a percentage of the investment property valuation after adding purchasers' costs

EPRA TRIPLE NET ASSETS

EPRA net assets adjusted to reflect the fair value of debt and derivatives and to include the fair value of deferred tax on property revaluations

EPRA TRIPLE NET ASSETS PER SHARE

EPRA triple net assets divided by the diluted number of ordinary shares

ESTIMATED RENTAL VALUE (ERV)

The market rental value of lettable space as estimated by the Group's valuers

NET ASSETS PER SHARE OR NET ASSET VALUE (NAV)

Equity shareholders' funds divided by the number of ordinary shares in circulation at the balance sheet date

NET DEBT

Total borrowings less cash and short-term deposits

NET GEARING

Net debt expressed as a percentage of net assets

NET INITIAL YIELD

Annual net rents on investment properties expressed as a percentage of the investment property valuation

NET RENT

Contracted rent less net service charge costs

OCCUPANCY RATE

Contracted rent expressed as a percentage of the aggregate of contracted rent and the ERV of vacant space

OVER-RENTED

The amount by which ERV falls short of the aggregate of passing rent and the ERV of vacant space

PASSING RENT

Contracted rent before any rent-free periods have expired

Property LOAN TO VALUE

Property borrowings expressed as a percentage of the market value of the property portfolio

RECURRING INTEREST COVER

The aggregate of group revenue less costs plus share of results of associates, divided by the aggregate of interest expense and amortisation of issue costs of debt, less interest income

RENT ROLL

Contracted rent

SOLIDITY

Equity shareholders' funds expressed as a percentage of total assets

TOTAL SHAREHOLDER RETURN

For a given number of shares, the aggregate of the proceeds from tender offer buy-backs and change in the market value of the shares during the year adjusted for cancellations occasioned by such buy-backs, as a percentage of the market value of the shares at the beginning of the year

True equivalent yield

The capitalisation rate applied to future cash flows to calculate the gross property value, as determined by the Group's external valuers

 

END

 

 

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