CLS Holdings Regulatory News (CLI)

PRESS RELEASE

Release date: 8 April 2020

Embargoed until: 07:00

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

Trading Update for the period 1 January 2020 to 7 April 2020

STRONG BALANCE SHEET PROVIDES ONGOING STABILITY

Fredrik Widlund, Chief Executive of CLS, commented:

"During this unprecedented time, alongside the safety of our staff, our key focus has been to work with our tenants to assist them as best we can. As a result, and in line with current government guidelines, all our properties across all regions are open to ensure tenants can keep their business going if they need an office in which to operate or are performing essential work. Our remote-working operations are functioning effectively to support our key stakeholders.

"Additionally, we want to support our local communities and have offered parking spaces for key healthcare workers where our buildings are located close to hospitals. We are also increasing our charity donations to local charities and foodbanks as well as looking into how we can support charities that are our tenants.

"Whilst Covid-19 is causing an undefined period of uncertainty, our strong cash position and resilient tenant base provides ongoing stability such that the Board believes it is appropriate to proceed with the recommended final dividend payment"

A summary of our key operational and financial metrics is set out below:

Liquid resources and cash collections

The Group remains in a strong financial position. As at 7 April 2020, CLS had cash of over £235 million with a further £50 million in undrawn facilities. Our balance sheet is well capitalised with a Loan to Value of 31.8% (31 December 2019: 31.4%).

The Group's rental income in the UK and France is due on a quarterly basis with the current payment due between 25 March and 6 April. In Germany, rents are due monthly and the current payment was due on 6 April. As at 31 March 2020, the Group's contractual rents are split 54% in the UK, 31% in Germany and 15% in France.

By close on 7 April 2020, we had received 84% of contractual rents due or 87% taking into account those tenants we are supporting by switching to monthly rents (2019: 96% of rents had been collected by 7 April 2019). We are engaging with tenants whose businesses are impacted by short-term cash flow issues and, as a consequence, we are in advanced discussions with a further 5% of our tenants by rent around payment options and asset management initiatives.

Final dividend

Given our strong cash position and resilient tenant base, the Board has concluded, subject to approval at the AGM, that it remains appropriate to pay the final dividend of 5.05 pence per share. The dividend is payable on 29 April 2020.

Vacancy and lettings (as at 7 April 2020)

As expected, vacancy has increased from 31 December 2019 but remains below our targeted level of 5%. This increase is due to completed refurbishments, now available to let, and acquired vacancy in the UK, and some recent lease expiries in France.

· Vacancy rates:

Since 1 January 2020, 27 deals have been signed securing over £4 million of annual rent at 3.5% above December 2019 ERVs. This letting activity included a 10-year lease extension to 2049 agreed with the City of Bochum, Germany. The lease is conditional on CLS extending the existing 256,000 sq. ft (23,800 sqm) by building a further 21,000 sq. ft (1,951 sqm). A 10-year lease for 24,500 sq. ft (2,277 sqm) was also agreed with the main tenant, RSM International, at Portland House, Crawley.

Financing

The Group has £114.5 million of debt, across 9 loans, due to be refinanced in 2020. Three loans (£25.6 million) have already been extended by between 6 and 18 months and a term sheet has been agreed on the largest refinancing, for a new 7-year loan.

Discussions are progressing well on the remaining loans to be financed this year.

Acquisitions and disposals

We have completed the transactions which had exchanged as at 31 December 2019 being:

· Acquisitions: 166 College Road, Harrow and 'TWENTY' Kingston Road, Staines bought for total consideration of £32.8 million (before costs) with a blended net initial yield of 6.1% and reversionary yield of 6.4%; and

· Disposals: Four properties (Sidcup and the remaining two regional assets from our 30 December 2019 portfolio disposal in the UK, and Foch in Paris) were sold for total consideration of £9.1 million.

Until market conditions stabilise and we have more clarity on the medium to long term impact from the current situation, evaluation of any significant acquisitions is on hold. 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulations (EC No. 596/2014).

-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

Whitman Howard

Hugh Rich

+44 (0)20 7659 1261

Elm Square Advisers Limited

Jonathan Gray

+44 (0)20 7823 3695

Smithfield Consultants (Financial PR)Alex Simmons

Rob Yates

+44 (0)20 3047 2546

Forward-looking statements

This announcement may contain certain 'forward-looking statements'. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from those expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of CLS speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Except as required by its legal or statutory obligations, the Company does not undertake to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Information contained in this document relating to the Company should not be relied upon as an indicator of future performance or construed as a profit forecast.