Interim Results
CLS Holdings PLC
12 September 2002
Embargoed: 0700hrs 12 September 2002
CLS Holdings plc ('CLS', the 'Company', or the 'Group')
Interim Report 2002
Financial Highlights
- Adjusted NAV per share* of 394.7 pence, (up 8.1 per cent since 31 December
2001) after external valuation.
- Profit before tax £8.2 million (£7.4 million for the period to 30 June 2001).
- Core property profit before tax of £10.7 million (up 55.1 per cent on period
to 30 June 2001).
- Acquisition of £60.9 million of new properties.
- Tender offer buy-back fully subscribed resulting in the purchase and
cancellation of 2.5 million shares since 31 December 2001, representing 2.5
per cent of opening share capital.
- Further proposed distribution of £5.4 million by way of tender offer buy-back
on the basis of 1 for 45 at 250 pence per share.
- Cash at bank at 30 June 2002 of £39.7 million after the equity investment in
the new properties (31 December 2001:£55.2 million).
- Potential gross annual rent roll of £79.6 million.
Executive Chairman, Sten Mortstedt, commented,
'The positive results for the six months to 30 June reflect our strategy of
growth through strategic, leveraged acquisitions in our home markets of the UK,
Sweden and France. The balance sheet remains strong and the portfolio well-let.
We continue to optimise value and rental levels by improving the quality of the
portfolio through active management and selective refurbishment.
Core property profits are the highest for any interim period in the Company's
history.'
For further information, please contact:
Tom Thomson, Vice Chairman and Acting Chief Executive
Steven Board, Chief Operating Officer
CLS Holdings plc Tel. +44 (0)20 75827766
www.clsholdings.com
Takki Sulaiman/Ben Simons +44 (0)20 77359415
Hansard Communications +44 (0) 7778 419218
www.hansardcommunications.com
Key Statistics
30 June 2002 30 June 2001
Adjusted NAV per share* 394.7 p 337.0 p Up 17.1 %
FRS 19 adjustment excluded from above NAV per share (13.0) p (9.2) p Up 41.3%
FRS 13 adjustment (after tax) (15.5) p (12.8) p Up 21.1%
Adjusted earnings per share* 7.2 p 5.9 p Up 22.0 %
Shares in issue (000's) 96,807.7 106,878.5 Down 9.4 %
Proposed distribution per share 5.6 p 4.8 p Up 16.7 %
(from tender offer buy-backs)
Profit before taxation £8.2 m £7.4 m Up 10.8 %
Core property profit before taxation £10.7 m £6.9 m Up 55.1 %
* Excludes the effect of the FRS 19 deferred tax provision relating to capital
allowances. At 30 June 2002 the FRS19 deferred tax charge included in the profit
and loss account was £1.1 million and the cumulative reduction to net assets was
£12.6 million (30 June 2001 : £1.6 million and £9.9 million respectively).
Other Financial Information 30 June 31 December
2001 2001
30 June 2002 Restated Restated
Property portfolio £ 830.6 m £ 682.3 m up 21.7 % £ 728.3 m
Net rental income £ 30.4 m £ 25.4 m up 19.7 % £ 51.1 m
Other property related income £ 0.5 m £ 3.2 m down 84.4 % £ 4.3 m
Operating profit £ 21.7 m £ 19.5 m up 11.3 % £ 36.9 m
Net interest payable £ 13.9 m £ 13.1 m up 6.1 % £ 27.0 m
Profit before taxation £ 8.2 m £ 7.4 m up 10.8 % £ 11.3 m
Profit after taxation £ 6.0 m £ 4.8 m up 25.0 % £ 7.1 m
Value of net assets £ 369.6 m £ 350.4 m up 5.5 % £ 350.8 m
Cash £ 39.7 m £ 79.2 m down 50.0 % £ 55.2 m
Interest bearing debt £ 488.7 m £ 405.8 m up 20.4 % £ 421.1 m
Non-interest bearing debt £ 31.5 m £ 26.7 m up 18.0 % £ 29.8 m
Adjusted gearing* 117.5 % 90.6 % Up 26.9 % 101.9 %
Interest Cover 1.59 1.56 Up 2.0 % 1.42
Chairman's Statement
The Board is pleased to announce the Group's results for the six months ended 30
June 2002. We are again pleased to report record NAV per share * of 394.7 pence,
up 8.1 per cent since 31 December 2001.
Despite uncertainty in world markets, the underlying business has continued to
produce a strong performance with core property profit before taxation of £10.7
million having grown by 55.1 per cent over the comparative period to June 2001.
The addition to the Swedish portfolio of 33,494 sq.m of commercial space and
1,282 residential apartments in Gothenburg in January 2002 has generated gross
rent of £2.3 million and contributed £0.6 million to profit before taxation in
the period.
Our investment portfolio was further increased on 28 June 2002 with the purchase
of 10 properties in Paris at a cost of £27.2 million. This acquisition was
financed by bank funding of £23.3 million.
The Group has adopted the requirements of FRS19, which requires a tax provision
to be made in respect of capital allowances to the extent that they are not
covered by available tax losses brought forward. In practice we consider it
highly unlikely that the benefit of these capital allowances will not continue
to be available whether or not the properties are sold in the future. The Board
believes that applying such a provision would be inappropriate and misleading in
presenting NAV per share, EPS and other key indicators. The effect of FRS 19 has
therefore been excluded from the above figures as indicated by an asterisk.
Financial
Core property profits of £10.7 million grew by 55.1 per cent over those for the
six months ended 30 June 2001 reflecting the settlement of a rent review in the
UK at New Printing House Square, new revenue both from our investment at
Lovgardet, Gothenburg, and from recently refurbished space at Solna Business
Park, Stockholm.
The calculation of core property profit is set out below:
30 June 2002 30 June 2001
£m £m
Profit before taxation 8.2 7.4
Less:
Lease surrenders and variations (0.4) (0.3)
Sale of investment property - (0.5)
Non-recurring settlement - (2.8)
Equity investment loss 2.9 3.1
Core property profit 10.7 6.9
Profit before taxation of £8.2 million was reduced by £2.7 million due to a
one-off write-down in respect of the restructuring of one of the Group's equity
investments.
The results of the Group analysed by location and main business activity are as
set out below:
June Equity
2002 UK** Sweden France investments June 2001
£m £m £m £m £m £m
Net rental income 30.4 18.3 5.6 6.5 - 25.4
Less JV income (0.5) (0.5) - - - (0.5)
Other property related income 0.5 0.3 0.2 - - 3.2
Net rental and property related income
(excluding JV) 30.4 18.1 5.8 6.5 - 28.1
Operating expenses (5.8) (3.7) (1.2) (0.7) (0.2) (5.5)
Losses and write-downs from equity investments (2.9) - - - (2.9) (3.1)
JV operating profit 0.4 0.4 - - - 0.5
Operating profit 22.1 14.8 4.6 5.8 (3.1) 20.0
Gains from sale of investment properties - - - - - 0.5
Net interest payable and related charges (13.9) (7.7) (4.1)+ (1.9) (0.2) (13.1)
Profit on ordinary activities before tax 8.2 7.1 0.5 3.9 (3.3) 7.4
** Results relating to Germany were immaterial in the context of the overall
results of the Group and have therefore been included within the UK.
+ Of the net interest payable of £4.1 million, £0.5 million relates to space
undergoing refurbishment at Solna.
Balance sheet
Total Balance Sheet UK* Sweden France
June 2002 £m % £m % £m % £m %
Investment Properties 833.6 100 431.3 51.8 205.3 24.6 197.0 23.6
Loans (488.7) 100 (257.9) 52.7 (108.3) 22.2 (122.5) 25.1
Equity in Property Assets 344.9 100 173.4 50.3 97.0 28.1 74.5 21.6
Other 24.7 100 19.2 77.7 (0.4) (1.6) 5.9 23.9
Net Equity 369.6 100 192.6 52.1 96.6 26.1 80.4 21.8
Equity in Property as a
Percentage of Investment 41.4% 40.2% 47.2% 37.8%
* results from Germany are included within the UK segment.
Share capital No of shares No of shares
Million Million
2002 2001
(six months) (full year)
Opening shares 99.3 108.1
Tender offer buy back (2.5) (3.7)
Buybacks in the market for cancellation - (6.6)
Share options exercised - 1.5
Closing shares 96.8 99.3
Net rental income
Net rental income of £30.4 million is inclusive of the Group's share of joint
venture turnover and has increased by £5.0 million over the six months ended
30 June 2001.
This reflects the settlement of a rent review at New Printing House Square of
£1.2 million (including backdated rent to 1 July 2000), the first five months of
net rental income, amounting to £1.4 million, from our acquisition at Lovgardet,
Gothenburg and the first revenues derived from the refurbishment of Frasaren 11
at Solna Business Park, Stockholm amounting to £0.4 million.
Net rental income is shown net of service charges of £2.8 million
(30 June 2001: £1.5 million).
Other property related income
Other property related income of £0.5 million (30 June 2001: £3.2 million)
includes £0.4 million profit on lease surrenders at Great West House, Brentford
and New London House, Drury Lane.
Administrative expenditure
Administrative expenditure of £3.9 million (30 June 2001: £3.9 million) includes
additional expenditure in respect of Lovgardet amounting to £0.1 million and a
further £0.1 million in respect of strengthening the management within the UK
property division.
Net property expenses
Net property expenses of £2.0 million (30 June 2001 : £1.6 million) includes
amortisation costs of £0.6 million relating to the remaining short lease to NIG
at Elan House, and bad debts of £0.4 million relating to three tenants within
the UK portfolio.
Financial income and costs
Interest income at £1.1 million included favourable foreign exchange movements
of £0.2 million.
Interest payable of £14.9 million comprises bank interest of £13.9 million, net
interest rate cap depreciation of £0.4 million and depreciation of bank loan
issue costs of £0.6 million. The Company's policy is to expense all interest
payable and financial costs to the profit and loss account, including interest
incurred in the funding of refurbishment and development projects which amounted
to £0.5 million for the six months to 30 June 2002.
At the period end floating rate loans totalled £321.7 million. All of our
floating rate debt is hedged by interest rate caps at an average cap rate of 6.7
per cent for Sterling, 6.2 per cent for Swedish Kronor and 6.4 per cent for
Euro. Three month LIBOR sterling rate moved from 5.3 per cent at 30 June 2001 to
4.1 per cent at 30 June 2002. The average cost of borrowing for the UK portion
of our debt was 6.6 per cent, inclusive of the cost of fixed rate borrowings,
interest rate caps and amortisation of arrangement fees, and 4.9 per cent for
the international element. Whilst gearing has increased to 117.5 per cent,
interest cover has increased to 1.59 times, from 1.42 times at 31 December 2001.
Taxation
Within the total charge of £2.3 million is a provision under FRS 19 for deferred
taxation in respect of accelerated capital allowances amounting to £1.1 million.
Buy-backs and dividends
The capital distribution for 2001, in lieu of a final dividend, was by way of a
tender offer buy-back. This was taken up in full in May of this year. With the
current share price remaining at a considerable discount to net asset value we
are proposing an interim distribution of £5.4 million by way of a further tender
offer buy-back of shares on the basis of 250 pence per share for 1 in 45 shares
held. This will enhance net asset value per share and is equivalent in cash
terms to an interim net dividend of 5.6 pence per share (30 June 2001: 4.8 pence
per share), an increase of 16.7 per cent.
At 31 December 2001 there were 99,266,400 ordinary shares in issue. Since that
date the Company has completed the 2001 year end tender offer buy back of
2,481,660 shares. This has involved a total cash expenditure of £7.3 million and
left the number of shares in issue at 30 June 2002 at 96,807,740 after taking
into account the exercise of 23,000 management options during the period.
Investment Properties
Tangible assets at £833.6 million have increased by £103.8 million (14.2 per
cent) since 31 December 2001. The increase has resulted from new purchases
amounting to £60.9 million, refurbishment expenditure of £10.1 million,
principally at Solna, Stockholm and a revaluation surplus arising at 30 June on
the existing portfolio of £8.2 million. Foreign exchange gains on the
translation of Swedish and French assets also enhanced the value by £23.7
million.
Cash
Cash at bank amounted to £39.7 million compared to £55.2 million at
31 December 2001, a reduction of £15.5 million.
The reasons for this movement were:
£m
Net cash received from operating activities 21.9
Cash received from new loans in respect of acquisitions 54.0
Cash received from new loans in respect of refurbishment 3.3
Re-gearing of two existing loans 2.7
Acquisition of properties (60.9)
Additions and refurbishment of existing properties (10.1)
Capital distribution - tender offer buy-back (7.4)
Scheduled repayment of bank loans, arrangement fees and net interest (18.3)
Other (0.7)
(15.5)
The Group continues to focus on cash management and it is anticipated that cash
resources will rise in the second half of the year.
Debt Structure
The net borrowings of the Group at 30 June 2002 were £447.6 million (31 December
2001:£364.8 million), the increase reflecting the financing of the acquisition
of the new investment properties. The strengthening of the Swedish Kronor and
the Euro against Sterling increased the sterling equivalent of foreign currency
loans by £11.6 million. These loans have been taken up to finance properties in
Sweden and France.
The fair value of the Group's fixed rate debt was in excess of book value by an
amount of £21.4 million (31 December 2001: £23.2 million). The notional after
tax adjustment to NAV, at a corporation tax rate of 30 per cent (31 December
2001: 30 per cent), resulting from holding loans at fair value was £15.0 million
or 15.5 pence per share (31 December 2001: £16.2 million or 16.4 pence per
share).
Whilst the FRS13 adjustment is noteworthy the additional interest cost is of
course expensed through the Profit & Loss Account. This excess interest charge
amounted to approximately £1.3 million in the six months to 30 June 2002.
Gearing adjusted for FRS 19 deferred tax, at 30 June 2002 was 117.5 per cent (31
December 2000: 101.9 per cent).
Effect of foreign exchange translation on overseas net assets
An exchange gain on translation of net assets in Sweden and France of £11.4
million (11.8 pence per share) was included within the Group net assets at
30 June 2002. The gain on overseas fixed assets was £23.7 million, offset by an
exchange translation loss mainly on bank borrowings, of £12 .3 million.
If those net assets had been translated at 11 September 2002, the gain would
have been £5.5 million (5.7 pence), a reduction of £5.9 million (6.1 pence).
Property
The valuation of our portfolio at 30 June 2002, undertaken by Allsop & Co. in
respect of the UK and Swedish properties and by DTZ Debenham Tie Leung in
respect of the French properties, gives a total value of £830.6 million, an
increase of £102.3 million from the £728.3 million valuation as at the year end.
Of this increase, £57.6 million is attributable to new acquisitions made in
Sweden and France, namely the purchase of Lovgardet Gothenburg at £30.4 million
in January 2002, and the acquisition of 10 office properties in Paris at a cost
of £27.2 million in June 2002. £10.1 million represents refurbishment
expenditure, principally at Frasaren 11 at Solna Business Park, Sweden.
£8.7 million of the additional value represents a like for like increase in
value of our existing portfolio. Of this, £1.9 million represents an increase in
our UK portfolio, £2.7 million in our Swedish portfolio, and £4.1 million in our
French portfolio.
UK
The capital value of our UK property portfolio has benefited from hardening
yields attributable to investor demand, and also from increased rents as a
result of rent reviews and uplifts on lease renewals and new lettings. We have,
however, also seen a weakening in tenant demand for vacant space.
The rent review at New Printing House Square finalised in April increased the
rent by £664,000 per annum to £5.4 million with effect from 1 July 2000. At
Coombe Hill House, a revised rent of £673,000 per annum was agreed with effect
from 1 May 2001 representing an increase of £143,000 per annum above the rent
previously payable.
A number of rental increases have been agreed either on new lettings or renewals
of existing leases amounting in total to £1.3 million per annum, an average
increase of the rents reviewed of 25.6 per cent.
At Spring Gardens Business Park, Vauxhall, we are currently constructing an
additional 10,800 sq. ft (1,003 sq. m) of offices which have been pre-let to the
UK Government at an annual rent of £345,600, the rent due to commence upon
phased completion of the additional building between September 2002 and January
2003. On final completion of the new building a number of the government's
occupational leases at Spring Gardens will be extended to terms so as to expire
between 2010 and 2025.
The London Borough of Southwark resolved to grant planning consent for the
construction of the proposed 'Shard of Glass' building at Southwark Towers in
which CLS have a one third interest. This has now been called in by the UK
Government and the public enquiry will be heard in February 2003. We continue to
hold our interest at its existing investment value as at 31 December 2001 which
takes no account of any development value.
We have completed lease surrenders at Great West House, Brentford and New London
House, Covent Garden at surrender premiums of £325,000 and £90,000 respectively.
In both cases the leases surrendered were close to expiry and the space was
simultaneously re-let for extended lease periods. One floor at Great West House,
5,447 sq.ft (506 sq.m), was retained for refurbishment before re-letting.
Since 30 June Regent Inns plc have announced that they are no longer proceeding
with their proposal to take an assignment of the existing lease for One
Leicester Square from the Receiver of Big Beat. This now gives CLS full control
of the property and with it the opportunity to offer on the market for the first
time in five years one of London's best located leisure and retail buildings.
Sweden
The acquisition of 33,494 sq m of mixed commercial properties together with
1,282 residential apartments totalling 79,614 sq m at Lovgardet Gothenburg was
completed on 28 January 2002. Active and efficient management of these assets
should generate an increase in net rental income.
The refurbishment of Frasaren 11, one of our buildings at Solna Business Park,
Sweden is now substantially complete. Since the year end we have let a further
5,330 sq. m. of the building taking the total lettings up to 14,130 sq. m.
representing 39 per cent of the net lettable area. We are currently in
negotiations for further substantial lettings in respect of the remaining space.
In January we purchased an additional building immediately adjoining our
existing buildings at Solna Business Park at a price of £3.0 million. The
property extends to 4,862 sq m, and is fully let and producing net rental income
of £340,000 per annum.
France
In June 2002 we completed the acquisition of a portfolio of 10 properties from
Banque Hervet, comprising 10,061 sq.m of offices at an initial yield of 8.6 per
cent. The rental income from this portfolio is expected to increase through the
re-letting of one large office building and active management of the other
properties.
Our management of the existing French portfolio has resulted in a total of 22
new leases being signed showing on average a 29 per cent increase in the
previous rent receivable.
In addition the overall rental income has increased by 2.9 per cent from year
end 2001 due to the annual indexation of leases.
During the first half of 2002 the refurbishment of various properties has
continued successfully.
Rent, book value and yields are analysed by location as set out below:
Total Net Book Yield Yield
Rent rent Value on net when
rent fully let
in '000 £ % in '000 £ % in '000 £ % % %
London City Fringes 280 0.4% 280 0.5% 2,790 0.3% 10.0%
London Mid town 6,629 9.9% 6,629 10.9% 97,250 11.7% 6.8%
London West End 3,028 4.5% 3,028 5.0% 71,185 8.6% 4.3%
London West 5,672 8.5% 5,672 9.3% 64,803 7.8% 8.8%
London South Bank 8,727 13.1% 8,727 14.3% 112,207 13.5% 7.8%
London South West 1,979 3.0% 1,979 3.3% 27,480 3.3% 7.2%
London North West 5,554 8.3% 5,554 9.1% 44,880 5.4% 12.4%
Outside London 344 0.5% 344 0.6% 3,750 0.5% 9.2%
Total UK 32,213 48.2% 32,213 53.0% 424,345 51.1% 7.6% 8.3%*
Germany 234 0.4% 201 0.3% 3,969 0.5% 5.1%
Total Germany 234 0.4% 201 0.3% 3,969 0.5% 5.1% 5.7%
Sweden Gothenburg 5,529 8.3% 2,160 3.5% 34,107 4.1% 6.3%
Sweden Stockholm 8,637 12.9% 6,648 10.9% 126,480 15.2% 5.3%
Sweden Vanersborg 4,361 6.6% 3,864 6.4% 44,694 5.4% 8.6%
Total Sweden 18,527 27.8% 12,672 20.8% 205,281 24.7% 6.2% 8.0%**
France Paris 12,549 18.8% 12,549 20.6% 159,183 19.2% 7.9%
France Lyon 2,391 3.6% 2,391 3.9% 28,933 3.5% 8.3%
France Lille 489 0.7% 489 0.8% 5,095 0.6% 9.6%
France Antibes 357 0.5% 357 0.6% 3,827 0.5% 9.3%
Total France 15,786 23.6% 15,786 25.9% 197,038 23.7% 8.0% 8.2%
Group Total 66,760 100.0% 60,872 100.0% 830,633 100.0% 7.3% 8.2%
(*) Yields based on receivable rent and potential rents have been calculated on
the assumption that book values at 30 June 2002 will increase by anticipated
refurbishment expenditure of approximately £1.8 million in respect of projects
in the UK.
(**)Yields based on receivable rent and potential rents have been calculated on
the assumption that year-end book values will increase by anticipated
refurbishment expenditure of approximately £70.7 million in respect of projects
in Solna, Stockholm, Sweden.
Rent analysed by length of lease and location is set out below:
Space under
Contracted Contracted Unlet Refurbishment Total
Portfolio analysed Aggregate but not Space or with
by lease term Rental income at ERV planning
producing consent
Sq. m Sq.ft £000 £000 £000 £000 £000
UK< 5 yrs 39,718 427,459 9,574 9,574
UK 5-10 yrs 37,107 399,407 8,128 305 8,433
UK>10 yrs 70,182 755,496 13,876 13,876
Refurbished space 961 10,327 330 330
Vacant 11,681 125,732 3,215 3,215
Total UK 159,649 1,718,421 31,578 635 3,215 - 35,428
Germany - let 4,021 43,283 234 234
Vacant 1,259 13,552 23 23
Total Germany 5,280 56,835 234 - 23 - 257
Sweden< 5 yrs 184,710 1,988,267 12,182 12,182
Sweden 5-10yrs 11,665 125,565 825 905 1,730
Sweden > 10yrs 54,540 587,083 4,615 4,615
Refurbished space 33,440 359,957 8,793* 8,793
Vacant 11,414 122,863 527 527
Total Sweden 295,769 3,183,735 17,622 905 527 8,793 27,847
France<3 yrs 100,656 1,083,488 12,851 12,851
France 3-6 yrs 13,693 147,395 1,998 1,998
France 6-9 yrs 6,259 67,374 937 937
Vacant 2,441 26,276 323 323
Total France 123,049 1,324,533 15,786 - 323 - 16,109
Group Total 583,747 6,283,524 65,220 1,540 4,088 8,793 79,641
(*) Of the rental due on refurbished space in Sweden, £3.1 million relates to
Fraseren 11, Solna (21,999 sq m). requiring further capital expenditure of £13.8 million.
Equity investments
Equity investments form just 0.7 per cent of the Group's gross assets and it is
not the intention to make any new equity investments. Where it is considered
commercially appropriate however, limited funds may be made available to some
existing investments if there is a reasonable expectation of increasing their
value.
During the period, one investment was restructured at minimal cost to the Group.
The business of a broadband telecommunications operator based on the Isle of
Wight was acquired from the administrator by a consortium of investors including
CLS. In so doing the carrying cost of the original investment, £2.7 million pre-
tax, was written off. Our increased participation in the business makes it
appropriate to consolidate its results with effect from 30 June 2002. It is
predicted that it will begin to make a positive contribution to the Group during
2003.
Conclusion
The positive results for the six months to 30 June reflect our strategy of
growth through strategic, leveraged acquisitions in our home markets of the UK,
Sweden and France. The balance sheet remains strong and the portfolio well-let.
We continue to optimise value and rental levels by improving the quality of the
portfolio through active management and selective refurbishment.
The aggregate annual contracted rent roll of the Group is £66.8 million
(December 2001 : £57.5 million), with a further £12.8 million projected to be
receivable as vacant space is let and the re-development of Solna is completed,
providing the potential for further organic growth.
There is no doubt that the letting market throughout Europe has weakened.
However as 34 per cent of the contracted rent roll of the Group is derived from
Government bodies, the majority on leases in excess of ten years, and a further
39 per cent is from large companies and major partnerships, our ongoing rental
income is well secured.
S. A. Mortstedt
Executive Chairman
12 September 2002
CLS Holdings plc
Consolidated Profit and Loss Account
6 months to 12 months to
6 months to 30 June 2001 31 December 2001
30 June 2002 £ 000 £ 000
£ 000 Restated Restated
(unaudited) (unaudited)
Net rental income (continuing operations, including joint ventures) 30,360 25,375 51,100
Less: Joint venture (continuing operations) (454) (470) (924)
29,906 24,905 50,176
Other property related income 546 3,174 4,309
30,452 28,079 54,485
Administrative expenses (3,857) (3,943) (8,010)
Net property expenses (1,982) (1,574) (3,318)
(5,839) (5,517) (11,328)
Other operating losses (2,932) (3,100) (6,301)
Group operating profit (continuing operations) 21,681 19,462 36,856
Share of joint ventures' operating profit (continuing operations) 436 460 873
Operating profit including joint ventures 22,117 19,922 37,729
Gains from sale of investment property - 533 524
Profit on ordinary activities before interest 22,117 20,455 38,253
Interest receivable and similar income:
Group 1,042 853 2,223
Joint venture 8 8 17
Interest payable and similar charges:
Group (14,493) (13,538) (28,350)
Joint venture (432) (414) (864)
Profit on ordinary activities before taxation 8,242 7,364 11,279
Tax on profit on ordinary activities:
Group (1,188) (963) (938)
Joint venture - - -
FRS19 deferred tax adjustment :
Group (1,081) (1,644) (3,273)
Joint venture - - -
Profit on ordinary activities after taxation and retained profit 5,973 4,757 7,068
for the period
Adjusted basic earnings per share 7.2 p 5.9p 9.8 p
FRS 19 adjustment per share (1.1)p (1.5)p (3.1)p
Basic earnings per share 6.1p 4.4p 6.7p
Adjusted diluted earnings per share 7.2p 5.9 p 9.7 p
FRS 19 adjustment per share (1.1)p (1.5)p (3.1)p
Diluted earnings per share 6.1p 4.4p 6.6p
Ordinary shares in issue '000 '000 '000
Cumulative total 96,808 106,878 99,266
Weighted average number during the period 98,710 107,943 106,839
CLS Holdings plc
Consolidated Balance Sheet
30 June 2002 30 June 2001 31 December 2001
£ 000 £ 000 £ 000
Restated Restated
(unaudited) (unaudited)
Fixed assets
Tangible assets 833,582 683,183 729,760
Investments:
Interest in joint venture:
Share of gross assets 15,701 12,703 15,257
Share of gross liabilities (13,147) (10,547) (13,147)
2,554 2,156 2,110
Other investments 809 163 712
836,945 685,502 732,582
Current assets
Stocks - trading properties - 2,185 -
Debtors - amounts falling due after more than one year 5,694 2,683 5,179
Debtors - amounts falling due within one year 11,398 11,931 11,740
Investments 6,059 8,012 6,275
Cash at bank and in hand 39,738 79,236 55,239
62,889 104,047 78,433
Creditors: amounts falling due within one year (59,996) (54,993) (58,933)
Net current assets 2,893 49,054 19,500
Total assets less current liabilities 839,838 734,556 752,082
Creditors: amounts falling due after more than one year (457,699) (374,327) (389,788)
Provisions for liabilities and charges (12,563) (9,853) (11,482)
Net Assets 369,576 350,376 350,812
Capital and Reserves
Called up share capital 24,202 26,720 24,817
Share premium account 68,506 68,280 68,476
Revaluation reserve 218,637 187,119 202,022
Capital redemption reserve 9,295 6,723 8,675
Other reserves 23,115 18,428 19,657
Profit and loss account 25,712 43,043 27,165
Total equity shareholders' funds 369,467 350,313 350,812
Equity minority interests 109 63 -
Capital employed 369,576 350,376 350,812
CLS Holdings plc
Statement of Total Recognised Gains and Losses
30 June 2002 30 June 2001 31 December 2001
£ 000 £ 000 £ 000
(unaudited) (unaudited)
Restated Restated
Profit for the period/year 5,973 4,757 7,068
Unrealised surplus on revaluation of properties 8,341 16,020 30,344
Share of joint venture unrealised surplus 333 - -
on revaluation of properties
Currency translation differences on foreign 11,400 (7,870) (6,152)
currency net investments
Other recognised gains relating to the period/year 20,074 8,150 24,192
Total recognised gains and losses relating to the period/year 26,047 12,907 31,260
Prior year adjustment (11,482) - -
Total recognised gains and losses since last annual report 14,565 12,907 31,260
CLS Holdings plc
Consolidated Cash Flow Statement
30 June 2002 30 June 2001 31 Dec 2001
£ 000 £ 000 £ 000
(unaudited) (unaudited)
Restated
Net cash inflow from operating activities 21,913 17,820 38,851
Returns on investments and servicing of finance
Interest received 884 1,114 2,627
Interest paid (13,013) (11,934) (25,968)
Issue costs on new bank loans (1,411) (1,403) (1,940)
Interest rate caps purchased (448) (586) (2,275)
Net cash outflow from returns on investments and servicing of finance (13,988) (12,809) (27,556)
Taxation (141) 138 (887)
Capital expenditure and financial investment
Purchase and enhancement of properties (71,725) (15,152) (41,947)
Sale of investment properties - 105 3,488
Purchase of other fixed assets (166) (214) (1,609)
Purchase of own shares (7,426) (7,300) (25,604)
Net cash outflow for capital expenditure and financial investment (79,317) (22,561) (65,672)
Acquisitions and disposals
Purchase of subsidiary undertakings (91) - -
Cash acquired on purchase of subsidiary undertakings 228 - -
Investment in joint venture - - (331)
Net cash outflow before use of liquid resources and financing (71,396) (17,412) (55,595)
Management of liquid resources
Cash (placed on)/released from short term deposits (7,790) 5,178 12,732
Financing
Issue of ordinary share capital 35 1,236 1,446
New loans 59,985 107,211 139,699
Repayment of loans (4,322) (50,815) (69,577)
Net cash inflow from financing 55,698 57,632 71,568
(Decrease)/increase in cash (23,488) 45,398 28,705
Basis of preparation and accounting policies
The information contained in this interim statement does not constitute accounts
as defined by section 240 of the Companies Act 1985. The un-audited results for
the half-year to 30 June 2002 have been prepared in accordance with UK generally
accepted accounting principles. The accounting policies applied are those set
out in the Group's 2001 Annual Report and Accounts with the exception of the
adoption of Financial Reporting Standard (FRS) 19 'Deferred Tax' with effect
from 1 January 2002. FRS19 requires the Group to provide in full for taxation on
timing differences relating principally to capital allowances. The impact of
adopting this Standard has been to reduce opening reserves by £11.5 million and
the current period retained profit by £1.1 million. The information relating to
the year ended 31 December 2001 is an extract from the latest published
accounts, which have been delivered to the Registrar of Companies. The audit
report on the published accounts was unqualified and did not contain a statement
under section 237 (2) or section 237 (3) Companies Act 1985.
Independent Review report to CLS Holdings plc
Introduction
We have been instructed by the company to review the financial information which
comprises the profit and loss account, balance sheet, cash flow statement and
the statement of total recognised gains and losses. We have read the other
information contained in the interim report for any apparent misstatements or
material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing Rules
of the Financial Services Authority require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial
data, and based thereon, assessing whether the accounting policies and
presentation have been consistently applied unless otherwise disclosed. A review
excludes audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly we do not express an audit opinion
on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2002.
PricewaterhouseCoopers
Chartered Accountants
London
12 September 2002
END
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