CLS Holdings Regulatory News (CLI)

24 Apr 2009 16:29

Immediate Release: Friday 24th April 2009

CLS Holdings plc (the `Company' and the `Group') Annual Report and Accounts posted to Shareholders

The Company announces that it is today posting to shareholders its Annual Report & Accounts for the year ended 31 December 2008, together with the Notice of Annual General Meeting and Form of Proxy. Copies of these documents will shortly be available on the Company's website, www.clsholdings.com

Pursuant to Listing Rule 9.6.3, two copies of each of the above have been forwarded to the UK Listing Authority and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at:

Financial Services Authority25 The North ColonnadeCanary WharfLondon E14 5HSTel No: (0)20 7066 1000

The Appendix to this announcement, which is supplement to our preliminary statement of our financial results made on 25 March 2009 (the "Final Results Announcement"), should be read together. It contains further information required pursuant to DTR 6.3.5 (2) that is in addition to the information communicated in the Final Results Announcement.

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Appendix

The principal risks and uncertainties facing the business are contained in the Directors' Report on page 25 of the Annual Report & Accounts for the year ended 31 December 2008 ("Annual Report") and are repeated below.

Risks & Uncertainties

The Company considers there are a number of potential risks and uncertainties which could have a material impact on the Group's performance and could cause the actual results to differ materially from expected and historical results. Management and mitigation of these risks is the responsibility of the Board.

Risk Mitigation Property investment risks

Underperformance of investment portfolio The senior management has detailed impacting on financial performance due knowledge of core markets and to: Cyclical downturn in property market experience gained through many

market cycles. This experience is

Inappropriate buy/sell/hold decisions supplemented by external advisors

and financial models used in the capital allocation decision Changes in supply and/or tenant demand The Group's average property affecting rents and vacancies portfolio is diversified across four countries. Average time remaining on current leases is 8.1 years and the Groups largest tenant concentration is with the Government sector which comprises 39.8 per cent. The largest single non government tenant represents 3.1 per cent. of gross rent and is a major international bank. Poor asset management Property teams review the current status of all properties weekly and provide a written report to senior management on KPIs including vacancies, lease expiry profiles and progress on rent reviews which are actively managed to mitigate risk. Funding risks The risk that financing or refinancing The Group has a dedicated Treasurywill not be obtained at an acceptable department and relationships are price maintained with approximately 20 banks across the countries in which we operate thus reducing credit risk and increasing opportunities to obtain the best deal. The Group's exposure to changes in prevailing market rates is largely hedged on existing debt but there is an exposure on re-financing of existing debt although this is mitigated by the lack of concentration in maturities. For new property acquisitions the current and expected future cost of debt is considered in the initial decision to buy. Foreign currency exposure 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 but is monitored on an ongoing basis. Taxation risks The risk that there will be increases in The Group monitors legislative tax rates or changes to the basis of proposals and both retains and taxation including corporation tax, VAT consults external advisors as and stamp duty land tax. required to understand and, if possible, mitigate the effects of any such change. Going Concern

The risk that given the economic The current economic conditions uncertainties the Group will not have have created a number of adequate working capital to remain a uncertainties as set out above. going concern for the next 12 months The Group's business activities,

together with the factors likely to affect its future development and performance are set out in the Business Review on pages 7 to 10 of the Annual Report. The financial position of the Group, its liquidity position and borrowing facilities are described on pages 11 to 18 and in Note 3.3 of the accounts in the Annual Report. 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 position of the Group, taking into account the repayment profile of the Group's loan portfolio (as set out in Note 27 to the financial statements in the Annual Report), and making reasonable assumptions about future trading performance. After making detailed enquiries, and based upon current information available to them, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

Directors' responsibility statement

We confirm to the best of our knowledge:

• the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation as a whole; and

• the Chairman's Statement, Business Review and Financial Review, together with the table of risks and uncertainties which are 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.

Enquiries:

Sten Mortstedt, Executive Chairman, CLS Holdings plc +44 (0) 20 7582 7766

Henry Klotz, Chief Executive Officer, CLS Holdings plc +44 (0) 20 7582 7766

Jonathan Gray, NCB Corporate Finance + 44 (0) 20 7071 5200

Adam Reynolds, Hansard Group +44 (0) 20 7245 1100

David Fuller,Deputy Company SecretaryCLS Holdings plc+44 (0) 20 7582 7766