Active Portfolio Management CLS Holdings plc Full Year Results - PowerPoint PPT Presentation

Active Portfolio Management CLS Holdings plc Full Year Results 2019

Contents CLS Holdings plc Full Year Results 2019 Simon Wigzell Head of Group 25 Property 15 Appendices Overview Property Fredrik Widlund 02 CEO Andrew Fredrik Kirkman Widlund Financials Markets & CFO CEO 07 22 Summary

Overview 02 CLS Holdings plc Full Year Results 2019 Fredrik Widlund CEO

03 CLS Holdings plc Full Year Results 2019 Overview Active portfolio management ▪ EPRA NAV up 6.3% to 329.2 pence per share Total Portfolio (31 Dec 2018: 309.8p) ▪ Valuations up 3.0% in local currency driven by Up 3.0% in local currency 33% Germany increasing 8.4% / UK (£1,059.8m) £2.0bn ▪ Refocusing with sales of Catena, First Camp, / Germany (£667.0m) 53% / France (£285.3m) / and Regional UK properties (31 Dec 2018: £1.9bn) 14% ▪ £257.2m of acquisitions and £187.2m of property disposals EPRA NAV (p) ▪ Vacancy stable at 4.0% (31 Dec 2018: 3.8%) ▪ Net rental income increased by 3.1% to Up 6.3% 329.2 309.8 £110.6m (31 Dec 2018: £107.3m) 329.2p 285.6 245.6 ▪ Profit before tax was up 9.7% to £159.0m (31 208.3 (31 Dec 2018: 309.8p) Dec 2018: £144.9m). EPRA EPS down 8.4% to 12.0p (31 Dec 2018: 13.1p) 2015 2016 2017 2018 2019 ▪ Total accounting return of 8.6% (2018: 10.8%) ▪ Proposed dividend of 7.4p per share, up 7.2%

04 CLS Holdings plc Full Year Results 2019 Overview Valuations up 3% in local currency UK Valuation movement in local currency ▪ Total valuation down -0.3% driven / UK / Germany / France by acquisition costs (like-for-like valuations +0.3%) 3.3% ▪ Rental growth with ERVs up 1.3% 8.2% 8.2% 3.8% ▪ Yields down by 22 bps to 5.4% NIY due to portfolio 3.8% 6.6% 4.8% mix after disposals 9.3% 9.3% 8.4% 3.8% 4.7% 1.6% 0.5% Germany -0.3% 2015 2016 2017 2018 2019 ▪ Valuation uplift of 8.4% in local currency UK Germany France Total ▪ Strong rental growth with ERVs up 5.1% Valuation Uplift 1 -0.3% 8.4% 3.8% 3.0% ▪ Yields down by 41 bps to 5.0% NIY ERV Movement 2 1.3% 5.1% 2.5% 2.6% France Net Initial Yield (NIY) 3 5.4% 5.0% 5.2% 5.2% ▪ Valuation uplift of 3.8% in local currency NIY Movement -22 bps -41bps -4bps -25bps ▪ Rental growth with ERVs up 2.5% 1 In local currency 2 Like-for-like 3 EPRA Topped Up NIY ▪ Yields down by 4 bps to 5.2% NIY

05 CLS Holdings plc Full Year Results 2019 Overview Significant year of activity Acquisitions 13 Acquisitions, £257.2m, NIY 5.8% UK Germany ▪ Portland Building, Crawley ▪ Puro, Munich ▪ Gresham House, Crawley ▪ Office Connect, Cologne 19 ▪ Prescot Street, Aldgate ▪ Vauxhall Walk, Vauxhall France ▪ Pacific House, Reading ▪ Les Reflets, Lille ▪ Lloyds Avenue, Aldgate ▪ Park Avenue, Lyon ▪ Clockwork, Hammersmith 9 3 ▪ College Road, Harrow* ▪ Kingston Road, Staines* * Completed Q1 2020 Disposals 28 Properties, £187.2m, NIY 5.4% (3.6% NIY excluding UK Regional Sale) UK Germany ▪ Foliot House, Plymouth ▪ Markstrasse, Witten ▪ Quayside, Fulham ▪ East Gate, Munich ▪ Grange, Hayes ▪ Schanzenstrasse, ▪ 19 Regional UK Portfolio* Dusseldorf ▪ Heather Court, Sidcup* Key France ▪ Ateliers Victoires, Paris Acquisitions ▪ Foch, Paris* * Two UK regional assets, Sidcup and Sales Foch completed Q1 2020

06 CLS Holdings plc Full Year Results 2019 Environmental, Social and Governance Progress in 2019 ▪ Our vision: To be a leading office space specialist and a supportive, progressive and sustainably focused commercial landlord ▪ Imbedding sustainability in all that we do CSR Events GRESB ESG 43 70 ▪ Employee led vision and values project to enhance stakeholder engagement and collaboration Investing in our local communities (31 Dec 2018: 63) ▪ Corporate objectives around carbon and energy and employees reduction, renewable energy and waste management Gender Diversity ▪ Established a workforce advisory panel looking at Tenant Surveys improving workplace policies, practices and wellbeing 713 / Male 49% 51% / Female ▪ New independent non-executive chairman (31 Dec 2018: 441) ▪ Two new independent non- executive directors chairing audit and remuneration committees

Financials 07 CLS Holdings plc Full Year Results 2019 Andrew Kirkman CFO

08 CLS Holdings plc Full Year Results 2019 Finance Strong performance alongside portfolio refocusing EPRA EPS (Pence) 13.1 Down 8.4% 12.6 12.3 12.0 EPRA NAV EPRA EPS 329.2p 12.0p 8.5 (31 Dec 2018: 309.8p) (31 Dec 2018: 13.1p) +6.3% -8.4% 2015 2018 2019 2016 2017 Cost of Debt (%) Record low Cost of Debt Interest Cover 3.40 2.91 2.42% 3.4x 2.51 2.43 2.42 (31 Dec 2018: 2.43%) (31 Dec 2018: 3.8x) -1bp -0.4x 2015 2016 2017 2018 2019 Distributions (£m) Up 7.2% Total Accounting Return Total Proposed Dividend 20.6 19.1 17.5 16.3 7.4p 8.6% 13.4 (31 Dec 2018: 6.9p) (31 Dec 2018: 10.8%) 9.6 9.0 8.4 7.2 5.7 +7.2% -220 basis points 2016 2017 2019 2015 2018

09 CLS Holdings plc Full Year Results 2019 Movement in ERPA NAV Growth through valuations and earnings Movement In EPRA NAV (pence per share) 8.8 (0.7) 14.1 329.2 (7.7) 12.0 309.8 (7.1) 1 At 31 December 2018 Dividends EPRA earnings Property Catena Bonds/Discontinued/Other FX At 31 December 2019 valuation 1 After fx

10 CLS Holdings plc Full Year Results 2019 Movement in ERPA Earnings per Share Impact of foreign exchange and lower finance income Movement In EPRA Earnings (pence per share) 0.8 0.3 13.1 (0.6) (0.3) 12.0 (1.3) 12.0p At 31 December 2018 Net Expenses Finance income Tax/Finance expense FX At 31 December 2019 rental income

11 CLS Holdings plc Full Year Results 2019 Movement in liquid resources Healthy liquid resources Movement in liquid resources (£’m) / Cash / Bonds / / Catena 79.3 165 165.0 .0 259.4 113.1 208.1 75.3 259.4 77.5 34.5 (25.5) 30.3 (28.7) (253.9) 100.3 31 December 2018 From Interest/Tax/Other Dividends Sale of Net drawdown of Property Sale of bonds Catena sale 31 December 2019 operations properties loans acquisitions & capex

12 CLS Holdings plc Full Year Results 2019 Finance Active debt management Financed or refinanced £292.4m debt at 2.65% ▪ £238.2m in GBP at 2.97% and £54.1m in EUR at UK Germany France Total 1.25%; weighted average maturity of 5.2 years Gross debt (£m) 447.0 312.6 137.6 897.2 ▪ £82.7m for new acquisitions and £177.9m fixed Number of loans 15 18 16 49 at 2.50% Net Gearing* 18.6% 45.2% 46.7% 31.4% Cost of debt 3.38% 1.39% 1.60% 2.42% Mitigated key Spring Gardens refinancing risk Years to maturity 3.1 3.5 3.6 3.5 ▪ 2021 maturity refinanced early, extended to 2024 ▪ Debt cost reduced from 3.49% to 2.92% fixed Loan Maturity (£’m) / GBP / EUR / 300 Continue to fix at low interest rates 250 ▪ Fixed debt (77%): 3.6 years at 2.32% 200 ▪ Floating debt (23%): 3.0 years at 2.73% 150 100 Progress made with 2020 objectives 50 ▪ Advancing with £134.0m to be refinanced in 2020 2021 2022 2023 2024 2025 2026 2020 ▪ Exploring wider UK financing strategy options * UK gearing shown after cash of £246.9m

13 CLS Holdings plc Full Year Results 2019 Finance Low cost and diversified debt Interest Cover 3.4x Cost of Debt Interest Cover 3.9 2.42% 3.4x 3.8 3.4 3.4 3.2 (31 Dec 2018: 2.43%) (31 Dec 2018: 3.8x) Balance Sheet LTV Number of lenders 2016 2017 2018 2015 2019 27 31.4% Debt Profile 31 December 2019 (31 Dec 2018: 36.7%) (31 Dec 2018: 26) 22% / Fixed rate 1% / Floating rate (capped) Unencumbered Assets / Floating rate (unhedged) £143.6m 77% (31 Dec 2018: £283.6m)

14 CLS Holdings plc Full Year Results 2019 Movement in property portfolio Net acquisitions and valuations drive increase Movement In property portfolio 1 (£’m) 60 60.8 2 16.6 16 2,012.1 23 232.9 2.9 (58 58.4) 2,01 2,012.1 1,923.3 1,923.3 1,92 (16 163.1) 31 December 2018 Disposals Acquisitions Capex Valuation uplift FX 31 December 2019 1 Comprises investment property, PPE and properties held for sale 2 Includes rent free debtor of £3.7m

15 Property CLS Holdings plc Full Year Results 2019 Simon Wigzell Head of Group Property

16 CLS Holdings plc Full Year Results 2019 Property A diversified tenant base Contracted rent (£109.3m) Average rents (per sq ft) 17.97 Government 17.00 23% 779 779 16.19 15.96 Other 52% Tenants 14.96 25% Major corporations 2015 2016 2017 2018 2019 Property use by rent Top 15 Tenants (32% of contracted rent) 31 December 2019 As at 31 December 2019 1. National Crime Agency (UK) 10. Materna (Germany) / Office (89%) 97 97 2. Secretary of State (UK) 11. Colt (France) / Student (5%) / Hotel (4%) 3. University of Roehampton (UK) 12. Honda (UK) / Food Retail (2%) 4. City of Bochum (Germany) 13. Kaufland (Germany) Properties Dr H ö nle (Germany) 5. BAE Systems (UK) 14. 6. Barts Health NHS Trust (UK) 15. Volksbank (Germany) 7. Hammersmith & Fulham Council (UK) 8. General Mills (UK) 9. Bosch (Germany)