CLS Holdings plc H1 2020 Results
Contents CLS Holdings plc H1 2020 Results Simon Wigzell Head of Group 25 Property 15 Appendices Overview Property Fredrik Widlund CEO 02 Andrew Fredrik Kirkman Widlund Financials Markets & CFO CEO 07 22 Summary Front cover: Spring Mews, Vauxhall, UK
Overview 02 CLS Holdings plc H1 2020 Results Fredrik Widlund CEO TWENTY, Staines, UK
03 CLS Holdings plc H1 2020 Results Overview Resilient performance ▪ CLS performed well against a challenging Total portfolio economic and market backdrop ▪ All of our properties remained open, with Up 3.3% in reported currency 35% necessary modifications to be compliant and safe / UK (£1,067.6m) £2.1bn ▪ EPRA NAV up 3.2% to 339.6p (31 Dec 2019: / Germany (£754.7m) 50% / / France (£307.7m) 329.2p), EPRA NTA up 3.1% to 336.4p (31 Dec (31 Dec 2019: £2.0bn) 2019: 326.3p) 15% ▪ Net rental income increased by 5.0% to £56.5m EPRA NAV (p) (30 June 2019: £53.8m) and 99% of H1 rent has been collected 339.6 Up 3.2% 329.2 ▪ Valuations down 0.1% in local currency, 3.3% up 339.6p 309.8 in reported currency due to weakening sterling 285.6 ▪ Vacancy up to 5.2% (31 Dec 2019: 4.0%) due to (31 Dec 2019: 329.2p) acquired vacancy, refurbishments and reduced 2019 H1 2017 2018 2020 letting activity during lockdown ▪ EPRA EPS up 16.7% to 7.0p (30 June 2019: 6.0p). Dividend maintained
04 CLS Holdings plc H1 2020 Results Overview Strong rent collection, robust tenant base High rent collections underpinned by: Tenant Industries* (% contracted rent) ▪ Government and major corporation tenants (49% of contracted rent) ▪ Only 3% exposure to retail, leisure and travel ▪ Credit quality of tenant base ▪ Well defined internal controls and ongoing dialogue with tenants Rent Collection Statistics Business segment First-half 2020 Third quarter 2020 UK 99% 93% Germany 99% 99% France 98% 93% Group 99% 95% Note: Basis of preparation – Contractual Rent Due (Q3 2020 is 97% including agreed quarterly to monthly changes) * Based on Global Industry Classification - MSCI
05 CLS Holdings plc H1 2020 Results Overview Valuations benefiting from diversity UK Valuation movement in local currency ▪ Valuation down 2.0% / UK / Germany / France ▪ ERVs down 0.2% and increased vacancy ▪ Yields down by 9 bps to 5.3% NIY 8.2% 3.8% 3.8% Germany 6.6% 9.3% 8.4% ▪ Valuation uplift of 2.6% in local currency 0.4% 4.7% 2.6% 0.5% -0.3% -2.0% ▪ ERVs flat 2017 2018 2019 H1 2020 ▪ Yields down by 29 bps to 4.7% NIY UK Germany France Total Valuation Uplift 1 -2.0% 2.6% 0.4% -0.1% France ▪ Valuation uplift of 0.4% in local currency ERV Movement 2 -0.2% 0.0% 0.0% -0.1% Net Initial Yield (NIY) 3 5.3% 4.7% 5.0% 5.0% ▪ ERVs flat NIY Movement -9 bps -29bps -19bps -18bps ▪ Yields down by 19 bps to 5.0% NIY 1 In local currency 2 Like-for-like 3 EPRA Topped Up NIY
06 CLS Holdings plc H1 2020 Results Overview Executing strategy, recycling capital Acquisitions 3 Properties, £49.3m, NIY 6.2% Contracted Rent £3.1m 1 UK 1. College Road, Harrow 2. Kingston Road, Staines Germany 5 3. Georg-Elser-Strasse, Nuremberg 2 1 2 3 Disposals 5 Properties, £42.2m, NIY 3.3% Contracted Rent £1.5m 3 UK 4 1. Dallas Court, Salford Quays 2. Blackburn House, Norwich 3. Heather Court, Sidcup France 4. Foch, Paris Key Germany Acquisitions 5. Albert-Einstein-Ring, Hamburg, (Exchanged H2 2020 at £33.0m) Sales
Financials 07 CLS Holdings plc H1 2020 Results Andrew Kirkman CFO
08 CLS Holdings plc H1 2020 Results Financials Strong performance 12.0 EPRA EPS (pence) 13.1 12.6 12.3 Up 16.6% 6.0 EPRA NTA EPRA EPS 336.4p 7.0p 7.0 6.0 (31 Dec 2019: 326.3) (31 Dec 2019: 6.0p) +3.1% +16.6% 2016 2017 2018 2019 H1 2020 Cost of Debt (%) Record low Cost of Debt Interest Cover 2.91 2.51 2.43 2.42 2.35 2.35% 3.5x (31 Dec 2019: 2.42%) (30 June 2019: 3.6x) -7bp -0.1x 2016 2017 2018 2019 H1 2020 Distributions (£m) Maintained Interim Dividend Total Accounting Return 20.6 19.1 17.5 16.3 2.35p 4.6% 9.6 9.6 9.0 8.4 (30 June 2019: 2.35p) (30 June 2019: 7.3%) 7.2 Maintained -270 basis points 2016 2017 2018 2019 H1 2020
09 CLS Holdings plc H1 2020 Results Movement in EPRA NTA Increase driven by earnings and FX Movement in EPRA NTA (pence per share) 9.0 336.4 (0.3) 0.7 329.2 7.0 326.3 (1.2) (2.9) (5.1) At 31 December EPRA Adjustment At 31 December Dividends EPRA earnings Investment PPE valuation FX Other At 30 June 2020 2019 (EPRA NAV) 2019 (EPRA NTA) property valuation
10 CLS Holdings plc H1 2020 Results Movement in EPRA Earnings per Share Net rental income growth and FX driving earnings increase Movement in EPRA Earnings (pence per share) 0.4 7.0 0.7 0.7 (0.2) 6.0 7.0p (0.6) At 30 June 2019 Net Expenses Finance income FX Tax At 30 June 2020 rental income
11 CLS Holdings plc H1 2020 Results Movement in liquid resources Significant cash balance and continuing to invest Movement in liquid resources (£’m) 39.0 (20.6) 259.4 (14.0) (10.8) 195.4 (57.6) At 31 December 2019 Cash from operations Dividends Interest/tax/other Net loan repayments Net acquisitions/capex At 30 June 2020
12 CLS Holdings plc H1 2020 Results Financials Active debt management Mitigated 2020 refinancing risk ▪ £115m of debt maturing in 2020 of which: UK Germany France Total ▪ £81m has been extended or refinanced Gross debt (£’m) 435.9 343.3 139.4 918.6 ▪ Number of loans 15 19 14 48 £5m was repaid Net gearing 40.8% 45.5% 45.3% 33.7%* ▪ £29m is in advanced refinancing discussions Cost of debt 3.36% 1.38% 1.62% 2.35% Years to maturity 2.6 3.1 3.3 3.1 Financing of new acquisition in Germany Current loan maturity (£’m) / / GBP / EUR ▪ Financed for 7 years 300.0 ▪ Initial LTV 70% 250.0 ▪ At fixed rate of 0.90% (all in 0.96%) 200.0 150.0 100.0 50.0 Continue to fix at low interest rates - ▪ Fixed debt (79%): 3.2 years at 2.27% 2020 2021 2022 2023 2024 2025 2026 2027 ▪ Floating debt (21%): 2.6 years at 2.69% * Includes centrally held cash
13 CLS Holdings plc H1 2020 Results Financials Low cost and diversified debt Interest cover 3.9 3.5x Cost of Debt Interest Cover 3.8 2.35% 3.5x 3.5 (31 Dec 2019: 2.42%) (30 June 2019: 3.6x) 3.4 3.4 2017 2019 H1 2016 2018 Number of lenders Balance Sheet LTV 2020 28 33.7% Debt profile 30 June 2020 (31 Dec 2019: 27) 20% (31 Dec 2019: 31.4%) 3.1 / Fixed rate 1% / Floating rate (capped) Unencumbered Assets Years / Floating rate (unhedged) (Weighted Average £181.2m Maturity) 79% (31 Dec 2019: £143.6m)
14 CLS Holdings plc H1 2020 Results Movement in property portfolio Net additions and FX driving increase Movement in property portfolio 1 (£’m) 2,130.0 69.2 51.7 2 (10.2) (2.1) 9.3 2,012.1 At 31 December 2019 Capex Acquistions Disposals Revaluation FX At 30 June 2020 1 Comprises investment property, PPE and properties held for sale 2 Includes rent free debtor of £0.2m
15 Property CLS Holdings plc H1 2020 Results Simon Wigzell Head of Group Property Cassini Court, Leatherhead, UK
16 CLS Holdings plc H1 2020 Results Property High quality and diversified tenant base Contracted rent (£113.5m) Average rents (per sq ft) Government 18.93 24% 767 767 17.97 Other 51% 17.00 Tenants 16.19 15.96 25% Major corporations 2017 2016 2018 2019 H1 2020 Property use by rent Top 15 tenants (33% of contracted rent) 30 June 2020 30 June 2020 1. National Crime Agency (UK) 10. Colt (France) 2. Secretary of State (UK) 11. Kaufland (Germany) / Office (91%) 96 96 / Student (5%) 3. University of Roehampton (UK) 12. Honda (UK) / Hotel (2%) Dr H ö nle (Germany) 4. City of Bochum (Germany) 13. / Food Retail (2%) 5. Barts Health NHS Trust (UK) 14. BAE Systems (UK) Properties 6. H & F Council (UK) 15. T-Mobile (Germany) 7. Materna (Germany) 8. Bosch (Germany) 9. General Mills (UK)
17 CLS Holdings plc H1 2020 Results Property Securing income Deals done Estimated Rental Value (“ERV”) (£’m) 10.3 52 deals secured £7.8m of annual rent 126.1 4.0% above ERV (3.9) 6.2 (2019: 78 deals, secured £6.9m of annual rent, 4.3% above ERV) 113.5 Lease Extensions Like-for-Like ERV 72% -0.1% Contracted Vacant Reversionary Over-rented ERV New Leases (30 June 2019: 2.0%) Vacancy movement / UK / France / Germany 28% 1.0% 5.2% 0.2% 4.0% 4.6% WAULT Vacancy 3.6% 4.3% 3.1% 4.91 5.2% 5.9% 4.1% (31 Dec 2019: 4.75) (31 Dec 2019: 4.0%) At 1 January Acquisitions/ Net Increase in At 30 June 2020 Refurbishments Vacancy 2020
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