Annual Results 2011 1 Contents Overview Financials Portfolio - - PowerPoint PPT Presentation

Annual Results

2011

1

Contents

• Overview
• Financials
• Portfolio
• Markets
• Summary

2

Richard Tice

Chief Executive Officer

John Whiteley

Chief Financial Officer

London 43% France 27% Germany 22%

Direct 6% Catena 2%

Property investments by value

Sweden

About CLS

• Top TSR performance

since 2008 in UK listed property sector and third in 2011

• Long-term benefits of

diversified property portfolio – 4 markets

• Specialist in

high-yielding offices

• Emphasis on high initial yield

vs low cost of debt

3

31 December 2011

Overview

Year of achievement at operating level:

• Lowest vacancy rate for over ten years
• Higher rental on like-for-like basis
• Lower debt cost
• Additional sources of finance
• Progressing development value

Financial year of two halves:

• Strong first half
• Second half affected by Eurozone crisis

4

Contents

• Overview
• Financials
• Portfolio
• Markets
• Summary

5

Financial Highlights

Strengths

• Underlying earnings up 53%

– to 64.9p (2010: 42.5p)

• Increase in property portfolio

– Up 2.1% in local currency

• Low cost of debt

– 4.1% (2010: 4.3%)

• Highest TSR 2008 to 2011

– 64.9% = 13.3% p.a. compound – 2011: 11.1%

• Increased distribution

– Proposed £7.9m – Thus 10.1% uplift in year to £12.3m Impacted by Eurozone issues

• Weakness of euro
• Fall in corporate bond values
• Fall in long-term interest rates

– Increase in derivative liabilities – Early closure of long-term swap

6

Strong Underlying Earnings

Profit after Tax

20.1 30.1

• 3.1

13.0 60.1 29.7 18.0

• 18.5

9.6 38.8

• 30
• 20
• 10

10 20 30 40 50 60 70 2010 2011 £m

7 EPRA earnings Property valuation surplus FV movement on derivatives Other Profit after tax

952.9 1047.7 983.1 40.5 4.9 30.7 13.9 4.8 42.8 3.7 9.1

• 27.4
• 39.3
• 53.5

800 840 880 920 960 1000 1040 1080 1120

A Year of Two Halves

Movement in EPRA NAV

Pence

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At 1 Jan 2011 Core

• perations

Share buy-backs Uplift of property FX FV bonds At 30 June 2011 Core

• perations

Share buy-backs Uplift of property FX FV bonds Close out swap At 31 Dec 2011

78.1 85.1 48.3 19.9 25.1

• 11.8

39.2

• 20.4
• 24.2

1.8

• 15.6

55.3

50 100 150 200 250

At 1 January 2011 Catena dividend From

• perations

Tender buy- backs Net new loans Capital expenditure Close out of swap Other Bond revaluation At 31 December 2011

Improved Liquidity

Movement in Liquid Resources

£m

9

Bonds Cash 126.4 140.4

Extending Sources of Finance

Movement in Gross Debt

592.3 625.1 29.5 30.4 5.0

• 19.1
• 13.0

540 560 580 600 620 640 660 680

At 1 January 2011 Swedish bond issue French portfolio refinancing New bank loans Amortisation FX At 31 December 2011

£m

10

Moving Forward with Debt Profile

At 31 December 2011

20 40 60 80 100 120 140 160 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Amortisation Bullet Repayments £m

11

Moving Forward with Debt Profile

Pro forma after approved refinancing

20 40 60 80 100 120 140 160 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Amortisation Bullet Repayments £m

12

Fixed rate loans Fixed through swaps Floating rate - capped Floating rate - unhedged

Diverse, low cost debt

Financing

• Strategy

– Ring-fenced – 64 loans – 20 banks and 1 capital markets bond

• Property loan to value 62.5%

(2010: 63.5%)

• Weighted average cost of debt

reduced to 4.1% (2010: 4.3%)

• 75% fixed or hedged

Debt Hedging

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£83.7m £50.0m £334.0m £157.4m

Certainty and Flexibility at a Cost

Movement in Net Derivative Liabilities

• 15.7
• 7.3
• 18.5

1.7 1.0 24.2

• 40
• 35
• 30
• 25
• 20
• 15
• 10
• 5

At 1 January 2011 Fair value movements Derivatives bought Other Close out swap At 31 December 2011 £m

14

• 100%
• 80%
• 60%
• 40%
• 20%

0% 20% 40% 60% 80% CLS

Total Shareholder Return

TSR of listed property companies 2008 - 2011

15 Source: Bloomberg, CLS

Contents

• Overview
• Financials
• Portfolio
• Markets
• Summary

16

Property Portfolio

Overview

• Diversified portfolio:

– 400 tenants, 76 properties – 413,700 sq m

• Stable income platform:

– 40% from governments – 29% from major corporations – WAULT 7.7 years

• 65% of rents indexed
• Strong asset management:

– Void by rent 3.9%

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Property Portfolio Schedule

At 31 December 2011 Contracted Rent £m Valuation £m Uplift in local currency Net Initial Yield % Vacancy By rent %

London 27.5 398.0  2.7% 6.6 4.0 France 18.7 248.3  1.9% 7.5 2.7 Germany 13.9 197.1  1.0% 7.0 6.0 Sweden 6.2 58.7  1.5% 7.1 1.8 Total portfolio 66.3 902.1  2.1% 7.0 3.9

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Rental Indexation

Annual Impact (£000s) Current Index Rate 1.0% 2.0% 3.0% 4.0% 5.0% Current

5.0% London 41 82 123 164 205 205 5.0% France 166 332 497 663 829 829 2.1% Germany 80 228 324 425 473 228 2.3% Sweden 33 66 99 132 155 66 Total portfolio 320 708 1,043 1,384 1,662 1,328

Relevant Indexes: London (RPIX & RPI), France (Insee Construction), Germany (Consumer Price Index), Sweden (Consumer Price Index) 19

Movement in Investment Properties

876.9 924.9 902.1 2.0 5.0 15.0 26.0 10.9 2.8 3.2

• 39.7

860 870 880 890 900 910 920 930 940 950 £m

20

Rack Rented into the Medium Term

Portfolio Rent Expiries

5 10 15 20 25 30 35 40 45

2012 2013 2014 2015 2016 Later

Rent expiring ERV of rent expiring

21

£m

Property Portfolio

Acquisitions in year

Falcon House and Quest House, Hounslow, London

• £5.5m
• n 10.1% initial yield
• Cap Value

£1,172 per sq m

• Subsequent letting,

yield >12%

• 4,693 sq m

22

Well Positioned for Growth

Developments

London - Planning Applications Submitted

• Spring Mews, Vauxhall (1-2 years)
• 20,800 sq m mixed use, student / hotel
• Vauxhall Square (3-6 years)

– 154,000 sq m mixed use Germany - on site

• Munich pre-let to Dr Hönle AG 1,642 sq m

– Completed February 2012

• Landshut pre-let to EON 5,400 sq m

– Complete Summer 2012 Sweden, via Catena associate

• Mixed-use in Stockholm: 950 apartments &

50,000 sq m commercial (2-4 years)

• Planning expected H1 2012

23

Well Positioned for Growth

Regeneration plan for Vauxhall

24

Vauxhall Square Spring Mews

US Embassy Houses of Parliament

Other Investments

Cash management via corporate bonds

• 39 bonds valued at £85.1 million
• ROCE since late 2008: 32.8% (9.1% compound p.a.)
• Running yield 10.2%
• Eurozone worries reduced values by £15.6m in year
• Value recovered £8.2m first two months 2012

Other associates

• Bulgarian Land Development (48.3% stake)

– £8.7m share of book value; cash neutral

• Nyheter24

– Sale of Wyatt; 20% stake in merged group and £0.5m convertible bond

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Contents

• Overview
• Financials
• Portfolio
• Markets
• Summary

26

Market Overview

Future Direction in our Markets

• Positive arbitrage growing between

high net yields and low interest rates

• New lenders emerging as traditional

debt sources recede; margins up

• Real financing advantage for listed
• ver private propcos
• Genuine tenant demand continues
• Exposure to stronger markets in

Europe

27

Market Overview

London

• Development completions in central London lowest since the early 1990s;

almost no new offices under way outside CBD

• London attracting global investment capital
• Banks continue to push consensual sales and receiverships
• Actively targeting new opportunities

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Dec 87 Dec 90 Dec 93 Dec 96 Dec 99 Dec 02 Dec 05 Dec 08 Dec 11

0% 3% 6% 9% 12% 15% 5yr Interest Rate Swaps Inner South Eastern Offices Central London Offices

Source: Savills

Continental Europe

FRANCE

• Some anxiety in investment market - over €6 billion of loans to refinance in 2012-2013
• Greater Paris lettings +14% in 2011, second hand rents +3%, new supply minimal
• Lyon vacancy below 5%, dearth of new supply, ERVs moving back up

GERMANY

• Investment volumes +23% in 2011, similar €20-25bn expected 2012
• Some keen sellers funded by overseas banks
• Lettings at 13% above 10 year average as economy expands
• Munich and Berlin are strongest markets

SWEDEN

• GDP growth 4% in 2011, but slowing fast
• 6% vacancy in Stockholm CBD; 11.5% in Greater Stockholm, much being older stock
• Projected new supply half 10 year average
• Population migration into Stockholm; limited residential supply bodes well for Catena

29 Source: DTZ

Contents

• Overview
• Financials
• Portfolio
• Markets
• Summary

30

Summary

• Strong TSR performance
• Year of achievement at operating level
• Financially a year of two halves
• Retain high levels of liquidity
• New sources of finance
• Development opportunities progressing

31

www.clsholdings.com

CLS Holdings plc

86 Bondway Tel: +44 (0) 20 7582 7766 London Fax: +44 (0) 20 7820 7728 SW8 1SF Email: enquiries@clsholdings.com 32

Appendices

Corporate Bond Portfolio

Banking Insurance Building Societies Financials Other Total Value £15.5m £31.6m £11.1m £11.0m £15.9m £85.1m Coupon yield 11.4% 9.1% 9.8% 9.2% 12.0% 10.2%

Issuers KBC RBS Co-Op Lloyds Dresdner SNS Bank Rothschild Commerzbank AXA Aviva Generali Irish Life Swiss Life Old Mutual Storebrand RL Finance Legal & General Scottish Widows Friends Provident Yorkshire Nationwide Investec Euroclear Man Group Aberdeen AM TUI SAS Swissport Corral Finans Thomas Cook Cable & Wireless HeidelbergCement Renewable Energy Corp

At 31 December 2011

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London

34

• 30 properties
• 133,900 sq m

Spring Mews

Regeneration of area with vibrant 20,800 sq m mixed use scheme

• Business / studio space
• 402 bedroom Student housing
• 120 bedroom hotel
• New building for Vauxhall Gardens

Community Centre

• Convenience store
• Parking for 200 bicycles

Benefits:

• Creating new jobs
• Increased site permeability
• Create an attractive contemporary

environment

35

Vauxhall Square

A new public square enclosed by a major 154,000 sq m mixed-use regeneration scheme:

• Residential – 510 units in

two 50-storey towers

• Offices – 15,230 sq m
• Retail / restaurant
• 3,500 sq m
• Hotel – 438 bedrooms
• Student housing – 416 units
• Multi-screen cinema and 94

affordable housing units

36

France

• 26 properties
• 17 in Paris
• 96,400 sq m

37

Germany

• 18 properties
• 138,000 sq m

38

Sweden

1 property

• 45,400 sq m office park

1 associate, Catena AB

• Proposals for 150,000 sq m

mixed-use development in Stockholm

39

Movement in Rental Income

62.1 66.2 2.5 0.6 0.8 0.2 60 61 62 63 64 65 66 67 Rental Income 2010 Acquisitions Indexation FX Lettings & Expiries Rental Income 2011 £m

40

Vacancy Rate History

2.0% 4.0% 6.0% 8.0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

41

Average Unexpired Lease Term

2 4 6 8 10 London France Germany Sweden Group To first break To end of lease

42

EPS & NAV Growth

2011 2010 EPRA EPS  52.7% 64.9p 42.5p EPRA net assets per share  3.2% 983.1p 952.9p Net assets per share  6.6% 817.5p 766.7p Catena unbooked EPRA NAV 9.6p 44.9p

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