approach CLS Holdings plc Full Year Results 2018 Disclaimer This - PowerPoint PPT Presentation

A diversified approach CLS Holdings plc Full Year Results 2018

Disclaimer This document 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 or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance.

Contents 14 Property 01 24 Overview Appendices 21 06 Markets and Financials Summary Fredrik Widlund – CEO John Whiteley – CFO Simon Wigzell – Head of Group Property

Overview CLS Holdings plc Full Year Results 2018 | 01

Overview Continued growth through diversification ● Rental income increased by 9.9% to £103.0m PROPERTY VALUE BY GEOGRAPHY (31 Dec 2017: £93.7m); like-for-like up 1.0% £1.9bn ● Valuations up 3.7% led by Germany; total portfolio value of over £1.9bn ● EPRA NAV up 8.5% to 309.8 pence per share (31 Dec 2017: 285.6p 1 ) UK (£982.3m) 51% Germany (£629.4m) 33% ● Vacancy driven down to 3.8% (31 Dec 2017: 5.8%) France (£308.1m) 16% ● EPRA EPS up 4.0% to 13.1p (31 Dec 2017: 12.6p 1 ) ● Recycled capital through sales £49m, acquisitions £70m EPRA NAV (pence) 309.8 and capex £18m 285.6 309.8p ● Delivering on capex programme, over 200,000 sq ft of 245.6 recently developed/refurbished space has now been let 208.3 Up 8.5% on long leases 177.4 ● Proposed final dividend up to 4.7p per share, full year 6.9p up 8.7% 2014 2015 2016 2017 2018 1 Restated to exclude discontinued operations CLS Holdings plc Full Year Results 2018 | 02

Strong portfolio growth Valuations up 3.7%, vacancies down UK VALUATION UPLIFT ● Valuation uplift of 0.5%, London up 0.8% £67.9m +£67.9m ● ERVs 1 down 0.6%, NIY 5.6%, unchanged Driven by Germany +£96.8m ● Vacancy down to 4.0% (31 Dec 2017: 5.5%) Germany +£38.6m ● Valuation uplift of 9.3% in local currency ● ERVs 1 up 5.0%; NIY 5.4%, unchanged 2016 2017 2018 ● Vacancy down to 4.2% (31 Dec 2017: 7.1%) UK France Germany France VACANCY 5.8% ● Valuation uplift of 3.8% in local currency Group KPI ● ERVs 1 down 0.3%; NIY 5.3%, unchanged 5.0% 3.8% 3.1% ● Vacancy down to 2.3% (31 Dec 2017: 4.4%) 2.9% 2015 2016 2017 2018 1 Like-for-like CLS Holdings plc Full Year Results 2018 | 03

Strategy Create value, reinvest for the future We acquire the …we secure the …we deliver value We reward right properties… right finance… through active shareholders, management and customers and cost control employees ● Invest in offices in UK, ● Bank loans to SPVs, non- ● In-house asset and ● Distribute half of our Germany and France recourse property management EPRA earnings and reinvest remaining ● Non-prime, good transport ● Primarily fixed rate ● Invest to improve our ● Our tenants are our links, larger European assets ● Some portfolio loans, with cities customers, we ● Effective cost control flexibility understand their needs ● Multi-let to spread risk through efficiencies and ● Up to 7 year terms from ● Reward employees for revenue maintenance 26 lenders their work and loyalty CLS Holdings plc Full Year Results 2018 | 04

Acquisitions and sales Continued portfolio repositioning Sales 2018 SALES AND ACQUISITIONS VOLUME (£m) ● Sold 11 properties during 2018 - £49m (NIY 5.9%) Analyse 50% Considered £4bn 2 properties £70m − UK - 8 properties - £39m Introduction £1.0b Bid 18% Analysed £1bn 11 properties − Germany - 2 properties - £8m £49m Tech DD £200m − France - 1 property - £2m Analyse 50% ● Disposal of First Camp during Q1 2019 - £29m Buy £79m Acquisitions Bid 18% ● Disciplined and opportunistic approach Sales Acquisitions HARMAN HOUSE (UXBRIDGE) ● Acquired 2 properties in 2018 - £70m (NIY 6.4%, RIY 7.4%) − Uxbridge acquired in March 2018 - £51m Tech DD 16% − Hammersmith acquired in April 2018 - £16m − Other acquisitions - £3m Buy £79m ● Exchanged on 2 properties after year end − Lille exchanged December 2018 - £10m − Aldgate exchanged February 2019 - £54m CLS Holdings plc Full Year Results 2018 | 05

Financials CLS Holdings plc Full Year Results 2018 | 06

Financial highlights Delivering growth with low-cost financing EPRA NAV EPRA EPS (pence) Up 8.5% 309.8p Up 3.9% 13.1 (31 Dec 2017: 285.6p 1 ) 12.6 12.3 8.5 7.7 EPRA EPS Up 4.0% 13.1p (2017: 12.6p 1 ) 1 2014 2015 2016 2017 2018 3.64 Total Accounting Return COST OF DEBT (%) 3.40 2.91 10.8% Down 8 2.51 (2017: 18.8%) 2.43 bps Weighted Average Cost of Debt Down 8 bps 2.43% (31 Dec 2017: 2.51%) 2014 2015 2016 2017 2018 DISTRIBUTIONS (£m) Strong Interest Cover 28.1 25.9 3.8x Up 8.7% 23.5 (2017: 3.9x 1 ) 19.1 15.9 19.1 17.5 16.3 13.4 Final Dividend 10.4 Up 8.7% 4.7p 9.0 8.4 7.2 Full year 6.9p (2017: 6.35p) 5.5 5.7 2014 2015 2016 2017 2018 1 Restated to exclude discontinued operations CLS Holdings plc Full Year Results 2018 | 07

Movement in EPRA NAV Driven by earnings and fair value uplifts MOVEMENT IN EPRA NAV (pence per share) 5.5 (1.3) 15.6 309.8 +8.5% (6.5) (2.2) 13.1 285.6 At 1 EPRA earnings Property Catena Other Dividends Discontinued At 31 January valuation valuation operations December 2018 2018 CLS Holdings plc Full Year Results 2018 | 08

Increase in EPRA EPS Enhanced earnings MOVEMENT IN EPRA EPS (pence per share) 2.3 (0.5) +4.0% 13.1 (1.0) 12.6 1 (0.2) (0.1) 2017 Net Other Expenses Net Other 2018 rental income net income finance costs 1 Restated to exclude discontinued operations CLS Holdings plc Full Year Results 2018 | 09

Increase in property portfolio Net acquisitions and fair value uplifts MOVEMENT IN PROPERTY PORTFOLIO 1 (£m) 1,919.8 11.6 +6.8% 68.2 18.0 70.0 1,798.3 (46.3) 31 December Disposals Acquisitions Capex Valuation uplift FX 31 December 2017 2018 1 Comprises investment property, properties held for sale and hotel CLS Holdings plc Full Year Results 2018 | 10

Movement in liquid resources Generating cash for reinvestment in the business MOVEMENT IN LIQUID RESOURCES (£m) 22.8 40.9 48.0 (26.5) 206.0 (70.9) (15.8) 130.6 140.5 (68.6) (5.3) 100.3 65.5 30.3 At 1 January From Dividends Sales Other net Acquisitions Capex Retail bond Other At 31 2018 operations new loans redeemed December ■ ■ 2018 Cash Corporate Bonds CLS Holdings plc Full Year Results 2018 | 11

̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ Debt transactions Actively managing our debt ● 2018 financing, locked in more fixed rates DEBT PROFILE Refinanced £137.7m at 2.16% UK Germany France Total Weighted average duration 5.8 years Gross debt (£m) 381.9 307.8 152.6 842.3 Including £92.0m fixed at 2.20% Number of loans 17 17 16 50 Gearing 26.6% 47.2% 47.5% 36.7% ● Repaid £158.6m costing 3.26% Cost of debt 3.56% 1.44% 1.60% 2.43% Including redeemed £65.0m 5.50% unsecured bond Reduced cost of debt by 21 bps Years to maturity 2.9 3.8 4.2 3.5 Accretive to eps by 0.3p in 2019 DEBT MATURITY (£m) 250 ● Average unexpired term at 31 December 2018: 3.5 years 200 Fixed debt (79%): 3.8 years at 2.41% 150 Floating debt (21%): 2.2 years at 2.50% 100 50 0 2019 2020 2021 2022 2023 2024 2025 GBP EUR CLS Holdings plc Full Year Results 2018 | 12

Debt position Low cost, well-spread debt Weighted Average Cost of Debt INTEREST COVER (TIMES) 2.43% (31 Dec 2017: 2.51%) 3.8x 3.9 3.8 3.4 3.3 3.2 Interest Cover 3.8x (2017: 3.9x 1 ) Fixed Rate Debt 79% 2014 2015 2016 2017 2018 (31 Dec 2017: 74%) (31 Dec 2016: 63%) DEBT PROFILE 31 Dec 2018 Balance Sheet LTV 36.7% Fixed rate (79%) (31 Dec 2017: 36.9%) Floating rate (Capped) (3%) Unencumbered Properties Floating rate (Unhedged) (18%) £284m (31 Dec 2017: £247m) 1 Restated to exclude discontinued operations CLS Holdings plc Full Year Results 2018 | 13

Property CLS Holdings plc Full Year Results 2018 | 14

Asset management Resilient tenant base CONTRACTED RENT ( £109.6m ) AFFORDABLE RENTS (per sq ft) £23.14 689 £19.41 Tenants £11.41 Government (28% by rent) Major corporates (29%) Other (43%) UK Germany France TOP 15 TENANTS (37% of contracted rent) PROPERTY USE BY REVENUE As at 31 December 2018 1. First Secretary of State (UK) 11. Bosch (Germany) 2. National Crime Agency (UK) 12. Epoka (France) Office (89%) 3. Trillium (Prime) Property (UK) 13. Dr Holne (Germany) 4. Roehampton University (UK) 14. Materna (Germany) Student (5%) 5. City of Bochum (Germany) 15. Volksbank (Germany) Hotel (4%) 6. BAE Systems (UK) 7. General Mills (UK) Food retail (2%) 8. Kaufland (Germany) 9. Honda Motors (UK) 10. COLT (France) CLS Holdings plc Full Year Results 2018 | 15