CLS Holdings Regulatory News (CLI)

15 May 2008 07:00

Embargoed Release: 07:00hrs Thursday 15 May 2008

CLS Holdings plc ("CLS", the "Company" or the "Group") Interim Management Statement for the period 1 January 2008 to 14 May 2008

This is the Company's first Interim Management Statement, made in accordance with the UK Listing Authority's Disclosure and Transparency Rules. It covers the period 1 January 2008 to 14 May 2008.

HIGHLIGHTS

* UK property sales of ‚£47.4 million (excluding London Bridge Quarter) have been completed above December 2007 valuations. * The sale of the shares in the London Bridge Quarter company was completed on 9 January for ‚£30 million in cash as previously announced. This sale had the effect of reducing our property assets by ‚£110 million. * Leasing market and rentals remain stable. * Lower vacancy rates. PROPERTY REVIEW

UK - Occupational demand has remained stable and vacancy levels have fallen from 5.8% at 31 December 2007 to 3.55% through a combination of asset management, new lettings and property sales. In particular, full occupancy has been achieved at both CI Tower and Ingram House. UK property sales of ‚£47.4 million have been completed in the year to date at an average yield of 7%.

France - The French portfolio, comprising 40 properties mainly in and around Paris, continues to generate strong rental returns and has a low vacancy level of 4.7%, with several lease negotiations in progress. Significant interest has been generated above December 2007 valuations in a number of properties that are currently up for sale.

Germany - Negotiations are in progress for the potential sale of certain properties. Development activity has continued at Bochum and Landshut. At Bochum a new 30 year lease agreement has been signed with City of Bochum which will require refurbishment of the existing building costing approximately ¢â€š¬20 million. The lease will commence in mid 2009. At Landshut a new lease agreement was signed in April 2008 that requires the development and extension of the current office building for the large European energy supplier E.ON. This is expected to cost approximately ¢â€š¬5.4 million over the next twelve months so that the tenant will take occupation in mid 2009. Current vacant space in Germany is stable at 2.4%.

FINANCIAL UPDATE

Underlying profit for the first quarter has been strong with increased net rental income and tightly controlled costs. External valuations will be provided in the half yearly report.

Debt levels have fallen to approximately ‚£712 million (31 December 2007 ‚£798 million) and cash has increased to approximately ‚£134 million (31 December 2007 ‚£122 million) at 9 May 2008.

PURCHASE OF OWN SHARES

754,399 of the Company's ordinary shares have been bought back from the market for either cancellation or inclusion as treasury shares since the year end at an average cost of 349.624 pence per share compared to a closing adjusted NAV per share at 31 December 2007 of 764.2 pence.

UPDATE ON GROUP RESTRUCTURE

It was announced on 27 March 2008 in the preliminary financial results for the year ended 31 December 2007, that CLS is considering a number of options to restructure the Group in order to release distributable reserves for future distributions, to align the Group's structure to reflect its pan-European operational focus and to enable the Group to compete more effectively with other UK property investors enjoying REIT status. This process is ongoing and consequently it is not proposed to make a distribution until the restructuring of the Group has been undertaken. Once a firm proposal has been established, shareholder approval will be sought.

BOARD CHANGES

In advance of the proposed change of domicile and the creation of a new holding company for the Group, there have been a number of Board changes. It was announced on 2 May 2008 that Per Sjoberg had resigned as Chief Executive Officer and Henry Klotz was appointed with immediate effect. In addition, Anders BĦĦs resigned from the Board and it was announced that Sten Mortstedt will continue in his role as Executive chairman. On 8 May 2008 Steven Board resigned as Executive Director and Company Secretary. Tom Thomson was appointed Company Secretary in his place.

OUTLOOK

The Company is continuing to focus on its core property operations and as a result the vacancy levels in the portfolio are falling. CLS intends to continue to sell selected properties in the UK, France and Germany so that the Group is strongly positioned to take advantage of attractive purchasing opportunities that the Board believe will arise in the future.

Executive Chairman of CLS, Sten Mortstedt, commented:

"Although we consider that property values will continue to soften in the near term, we take a long term view and believe that our current strategy will yield benefits in the future."

-Ends-

For further information, please contact:

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

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

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