CLS Holdings Regulatory News (CLI)

Release date: 29 December 2021

Embargoed until: Immediate release

CLS Holdings plc ("CLS" or the "Group")

CLS announces the conversion of its UK operations to a Real Estate Investment Trust ("REIT")

CLS announces that it has notified Her Majesty's Revenue & Customs ("HMRC") of the conversion of its UK operations to a UK REIT from 1 January 2022. There is no charge payable to convert.

As a result of the conversion, CLS will pay no UK corporation tax on its UK property operations (rental income, gains on property sales and sales of companies owning UK property) which fall within the REIT regime from the 2022 financial year onwards. For the 2022 interim dividend, expected to be paid in September 2022, and for all dividends going forward, shareholders will receive dividends comprising two elements. The dividends will comprise a Property Income Distribution ("PID") from the UK REIT operations and a second element from CLS' remaining operations. The split will be shown on the face of each dividend voucher.

As part of this process, and in accordance with HMRC guidance, in the Notice of the 2022 Annual General Meeting (the "AGM Notice"), shareholder approval will be sought to amend CLS' existing articles of association (the "Current Articles") by adopting new articles of association (the "New Articles"). The New Articles will incorporate changes necessary for a REIT and changes to reflect developments in law and practice since the Current Articles were adopted in 2010. Further details on the New Articles and the impact of the REIT provisions for both shareholders and the Group will be set out in the AGM Notice.

CLS' controlling shareholder, Creative Value Investment Group Limited (the investment vehicle of The Sten and Karin Mortstedt Family and Charity Trust), has confirmed that it is supportive of the conversion of CLS' UK operations to a REIT.

Fredrik Widlund, Chief Executive Officer of CLS, commented:

"CLS' strategy and business model remain unchanged but our conversion of the UK business to a UK REIT will allow greater comparability with a number of our peers. By only converting part of our operations to a REIT, CLS retains the flexibility to reinvest into the business to drive capital growth." 

Andrew Kirkman, Chief Financial Officer of CLS, commented:

"Conversion of CLS' UK operations to a UK REIT is a logical step at this time, particularly given the enacted increase in the rate of UK Corporation tax from 19% to 25% from 1 April 2023. Conversion is expected to increase EPRA Net Tangible Assets ("NTA") by around 4.5 pence and save around £3 million to £5 million annually in UK corporation tax from 2022 onwards." 

-ends-

For further information, please contact:

CLS Holdings plc

(LEI: 213800A357TKB2TD9U78)

www.clsholdings.com

Fredrik Widlund, Chief Executive Officer

Andrew Kirkman, Chief Financial Officer

+44 (0)20 7582 7766

Liberum Capital Limited

Richard Crawley

Jamie Richards

+44 (0)20 3100 2222

Panmure Gordon

Hugh Rich

+44 (0)20 7886 2733

Elm Square Advisers Limited

Jonathan Gray

+44 (0)20 7823 3695

Smithfield Consultants (Financial PR)Alex Simmons

Rob Yates

+44 (0)20 3047 2546