CLS Holdings Regulatory News (CLI)

18 Nov 2008 07:00

Embargoed Release: 07:00hrs Tuesday 18 November 2008

CLS HOLDINGS PLC ("CLS" or the "Company") INTERIM MANAGEMENT STATEMENT FOR THE PERIOD 1 JULY 2008 TO 17 NOVEMBER 2008 HIGHLIGHTS * Sale of King Street and London House, Hammersmith for ‚£7.8 million, a discount of 1.3% to the 30 June valuations * Sale of Belin properties in Paris by Citadel Group via a corporate sale. The properties were valued at ¢â€š¬87.0 million (‚£68.5 million), a discount of 0.7% to the 30 June valuations * Letting of 7,780 sq.m (83,713 sq.ft) at Vƒ¤nerparken, Vƒ¤nersborg, Sweden on a ten year, index-linked lease term to the City of Vƒ¤nersborg at an initial rent of ‚£0.7 million per annum (SEK 8.0 million) * Letting of 1,911 sq.m (20,570 sq.ft) at Liebnizstrasse, Berlin, Germany on terms between two and five years to an adult education association, at an initial annual rent of ‚£0.2 million (¢â€š¬0.3 million) * Letting of 823 sq.m (8,849 sq.ft) at Cambridge House, Hammersmith, UK to Open Society Foundation and SDI Media on terms between six and nine years, at an initial annual rent of ‚£0.2 million. This building is now fully let.

PROPERTY REVIEW

The CLS portfolio has seen continued requirements from existing tenants to renew leases and take up additional areas within existing buildings.

The Company continues to work closely with its tenants and is seeking early renewals and exploring opportunities to retain tenants, both through active management of buildings and delivery of high quality office space at competitive rates.

The downward pressure on valuations across the key markets in which the Company operates has meant that new properties are beginning to appear on the market at very attractive yields. CLS will make acquisitions where the properties fit its strict investment criteria and good potential for future value growth is evident. The Company's strong cash position and excellent relationships with banks will enable it to move swiftly where these opportunities arise.

FINANCIAL UPDATE

Debt levels have fallen further to ‚£544 million and cash at bank has increased to ‚£188 million at 30 September. Following the re-financing of the Munich portfolio during October, which released ‚£15 million (¢â€š¬18.5 million), cash balances are now above ‚£200 million.

Accordingly, adjusted gearing has been reduced, but would rise again at year end if the valuations continue their expected downward trend.

SHARE CAPITAL

As a result of the turmoil in financial markets since 30 June, shares in CLS are trading at a substantial discount to the Adjusted NAV of 765.8p per share as at 30 June 2008. The Company has therefore used its free cash reserves to continue to buy back shares in the market. Since 30 June these purchases have totalled 1.1 million shares at an average of ‚£3.44 per share, a total cost of ‚£ 3.6 million.

The Company has also announced a tender offer buy-back of shares to be completed later this month, the terms of which are 1 in every 25 shares at 425 pence per share. This will result in the purchase of a further 2,575,644 shares and a total distribution to shareholders of ‚£10.9 million.

Assuming no further market buy-backs are made, after completion of the tender offer buy-back on 20 November 2008 the number of shares in issue will be 66,815,471 including 5,000,000 shares held as treasury shares. The number of shares in issue excluding treasury shares and the total number of voting rights in CLS Holdings plc will be 61,815,471.

OUTLOOK

The Company continues its focus on core property operations, and considers that its underlying strategy of forging long-term relationships with tenants will deliver value during the economic downturn. In addition, the significant proportion of lettings to government and local government tenants puts the Company in a strong position relative to the market with secured rental income streams over the short to medium term from tenants with high credit ratings.

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For further information please contact:

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

Henry Klotz, CEO, CLS Holdings plc + 44 (0)20 7582 7766

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

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