REG - CLS Holdings PLC - Half Yearly Results Announcement 2025
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RNS Number : 0749V CLS Holdings PLC 13 August 2025
CLS HOLDINGS PLC
("CLS", the "Company" or the "Group")
ANNOUNCES ITS HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS TO 30 JUNE 2025
Strong progress made with strategic priorities of lettings, sales and
refinancings
CLS is a leading office space specialist and a supportive, progressive and
sustainably focused commercial landlord, with a £1.75 billion portfolio in
the UK, Germany and France, offering geographical diversification with local
presence and knowledge. For the half-year ended 30 June 2025, the Group has
delivered the following results:
30 June 2025 31 December 2024 Change (%)
EPRA Net Tangible Assets ("NTA") per share (pence) (1) 209.5 215.0 (2.6)
Statutory NAV per share (pence) (1) 192.3 197.3 (2.5)
Contracted rents (£'million) 104.5 108.9 (4.0)
30 June 2025 30 June 2024 Change (%)
Net rental income 53.3 58.9 (9.5)
(Loss) after tax (£'million) (24.4) (61.1) Nm(2)
EPRA Earnings per share ("EPS") (pence) (1) 4.0 4.8 (16.7)
Statutory EPS from continuing operations (pence) (1) (6.1) (15.4) Nm(2)
Dividend per share (pence) 1.30 2.60 (50.0)
(1) A reconciliation of statutory to alternative performance measures is set
out in Note 4 to the condensed Group financial statements
(2) Nm = Not meaningful
Fredrik Widlund, Chief Executive Officer of CLS, commented:
"We continue to make progress reshaping the business, creating a more focused
portfolio of higher-quality, faster-growing properties to drive earnings
growth. Our main priorities in the first half of 2025 included increasing
letting momentum, reducing leverage through asset sales, meeting refinancing
targets, and investing strategically in our properties to unlock their
potential.
"Lettings in the first half increased by 17% compared to the same period last
year, underscoring the significant opportunity within our existing portfolio.
Positive leasing momentum has further accelerated post-period end, a trend we
expect to continue through the remainder of the year.
"CLS has completed or unconditionally exchanged property sales totalling £143
million, with further disposals planned in line with our stated strategy.
These asset sales and refinancing efforts have begun reducing Group leverage,
and we anticipate further reductions in the second half of 2025.
"We enter the second half with clear strategic direction and cautious
optimism, supported by improving market fundamentals, a robust leasing
environment and a somewhat more stable macroeconomic outlook."
OPERATIONAL HIGHLIGHTS
· Net rental income decreased by 9.5% to £53.3 million (30 June
2024: £58.9 million) as a result of property sales and lease expiries, partly
offset by higher income from new lettings and renewals, and indexation
· In the first half of 2025, the sales of Spring Mews Student,
Vauxhall and Grafelfing, Munich for £119.1 million were completed
· By the end of August 2025 two further sales for £24.3 million in
Germany and France will have completed. Marketing has commenced on a further
£190 million of sales to reduce Group LTV further and invest in existing
portfolio opportunities
· Completed 52 lease events (30 June 2024: 58) securing £7.5
million (30 June 2024: £6.4 million) of annual rent 0.8% below ERV. Excluding
two lease renewals at New Printing House Square, leases were signed 7.0% above
ERV
· Leasing momentum has picked up since the half-year with leases
signed at The Coade, Vauxhall for two floors for 6,170 sq. ft (573 sqm) and at
Office Connect, Cologne for 23,304 sq. ft (2,165 sqm). We are currently under
offer for a lease renewal at Pierre Valette, Paris for 116,013 sq. ft (10,778
sqm) and two and a half floors at Artesian, London for 32,659 sq. ft (3,034
sqm), and discussions are well-advanced for further government leases for over
161,000 sq. ft (15,000 sqm) in Germany. These leases represent £6.0 million
of rent and would reduce vacancy on a pro forma basis by 2.2%
· The anticipated expiry of leases to support the repositioning of
New Printing House Square for future development impacted vacancy rates which
rose to 15.1% (31 December 2024: 12.7%). We have made significant progress on
new leases for the building, which will provide vacant possession in 2029. By
end of June 2025, over half of the tenants in New Printing House Square had
renewed their leases and we expect lettings to increase further by year-end
with 4,242 sq. ft (393 sqm) about to be signed
· Engagement with potential partners to secure planning and deliver
the scheme at Citadel Place have started and the discussions with Lambeth
Council are advancing. Works are progressing to plan at The Brix, The Yellow
and Debussy in advance of tenant occupation. Planning applications and PDR
schemes for four residential conversions are being worked up in the UK
FINANCIAL HIGHLIGHTS
· EPRA NTA down 2.6% primarily as a result of property valuation
declines of 1.6% in local currencies with some offset from a 3.6% weakening of
Sterling against the Euro
· Portfolio valuation down 1.6% in local currencies and 0.9% down
excluding Spring Gardens as values bottom out in all three countries. Yield
expansion and higher vacancies resulted in valuation decreases of 2.2% in the
UK, 0.5% in Germany and 3.5% in France in local currencies
· Loss after tax of £24.4 million (30 June 2024: £61.1 million)
principally due to valuation declines on investment properties of £32.3
million (30 June 2024: £82.8 million decline) partly offset by underlying
results
· EPRA EPS down 16.7% to 4.0 pence per share due to lower rental
income from sales and expiries, partly offset by lower net finance expense
from reduced debt levels and borrowing costs. Statutory EPS of (6.1) pence per
share reflects valuation declines for the portfolio
· Cost reduction programme implemented with targeted annual savings
of over £2 million
· Interim dividend of 1.30 pence per share (30 June 2024: 2.60
pence per share), so as to retain cash to invest in the portfolio and in line
with new dividend policy announced in April 2025, to be paid on 2 October 2025
FINANCING
· Weighted average cost of debt at 30 June 2025 down 2 basis points
to 3.75% (31 December 2024: 3.77%) due to the repayment of higher cost debt
following sales and lower interest rates on floating rate debt. Further
marginal reduction in the cost of debt expected in the second half from
targeted sales
· Loan-to-value at 49.2% (31 December 2024: 50.7%) reflecting the
positive impact of the sales programme with some offset from valuation
declines in the first half. Gross debt of £923.0 million (31 December 2024:
£999.2 million) with cash and cash equivalents of £63.9 million (31 December
2024: £60.5 million) and £50.0 million (31 December 2024: £60.0 million) of
undrawn facilities. CLS has no interest cover or loan-to-value covenants at a
Group level
· In 2025, completed or had credit approved the major refinancings
for 2025 accounting for over 90% of the £364.1 million of debt (excluding
amortisation of £9.6 million) maturing across 12 loans. As at 30 June 2025,
we had refinanced or repaid £192.3 million of debt across four loans, and by
12 August 2025 a further £118.5 million across two loans was refinanced or
repaid and £25.1 million was credit approved across three loans
· The £25.1 million which was credit approved will be completed in
September and the remaining £28.2 million across three loans, which expires
in Q4 2025, will be refinanced or repaid by year-end
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
· To deliver our 2030 Net Zero Carbon ("NZC") Pathway, around £6
million of further investment is expected in 2025. This represents the
delivery of energy efficiency and carbon reduction projects by year-end. The
projects are estimated to save 1,500 tonnes CO(2)e per annum, ensuring
alignment with our NZC Pathway
· 85% of our managed portfolio is BREEAM In-Use "Good" or above and
half of our UK portfolio is EPC A or B
· Dr Johannes Conradi, former Chairman of alstria office REIT AG
and Managing Partner at Blacklake Management, appointed as a Non-Executive
Director with effect from 15 September 2025
OUTLOOK
· The occupational market remains healthy and is showing signs of
improvement with increased take-up in the UK and Germany, our two biggest
markets, which bodes well for CLS to capture the significant earnings upside
from reducing vacancy
· Investment markets are showing some signs of recovery with
increased activity in the UK and France. CLS' sales programme is more than 50%
complete, with further sales progress expected by the year-end
DIVIDEND TIMETABLE
Further to this announcement, in which the Board declared an interim dividend
of 1.30 pence per ordinary share, the Company confirmed its dividend timetable
as follows:
Announcement Date 13 August 2025
Ex-Dividend Date 4 September 2025
Record Date 5 September 2025
Payment Date 2 October 2025
-ends-
Results presentation
A presentation for analysts and investors will be held in-person at Panmure
Liberum and by webcast on Wednesday 13 August 2025 at 8:30am followed by
Q&A. Questions can be submitted online via the webcast.
· Panmure Liberum: Ropemaker Place, 25 Ropemaker Street, London
EC2Y 9LY
· Webcast: The live webcast will be available here:
https://sparklive.lseg.com/CLSHoldings/events/3a65f244-56cb-441a-b611-1f7cf4bd9077/cls-holdings-plc-half-year-results-2025
(https://sparklive.lseg.com/CLSHoldings/events/3a65f244-56cb-441a-b611-1f7cf4bd9077/cls-holdings-plc-half-year-results-2025)
For further information, please contact:
CLS Holdings plc
(LEI: 213800A357TKB2TD9U78)
www.clsholdings.com (http://www.clsholdings.com/)
Fredrik Widlund, Chief Executive Officer
Andrew Kirkman, Chief Financial Officer
+44 (0)20 7582 7766
Panmure Liberum
Jamie Richards
David Watkins
+44 (0)20 3100 2000
Berenberg
Carl Gough
Harry Nicholas
+44 (0)20 3207 7800
Edelman Smithfield (Financial PR)
Alex Simmons +44 7970 174 353
Hastings Tarrant +44 7813 407 665
cls@edelmansmithfield.com (mailto:cls@edelmansmithfield.com)
Forward-looking statements
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.
Chief Executive's statement
Strong progress made with strategic priorities of lettings, sales and
refinancings
OVERVIEW
We continue to make progress reshaping the business, creating a more focused
portfolio of higher-quality, faster-growing properties to drive earnings
growth. Our main priorities in the first half of 2025 included increasing
letting momentum, reducing leverage through asset sales, meeting refinancing
targets, and investing strategically in our properties to unlock their
potential. We have completed or unconditionally exchanged on the sale of
properties for £143 million and we are launching further sales in line with
our stated disposal programme. Sales and refinancing have started to reduce
Group leverage, and we will bring this down further in the second half of
2025.
Despite some large, expected lease expiries, our lettings in the first half
were 17% ahead of the same period last year, highlighting that our greatest
opportunity to unlock value is within our portfolio. Positive leasing momentum
has accelerated post half-year and we expect this to carry on throughout the
rest of the year.
The larger lease expiries in the first half resulted in an increase in vacancy
to 15.1% (31 December 2024: 12.7%). This was mainly caused by the scheduled
expiry of all leases at New Printing House Square in mid-June 2025. By end of
June 2025, over half of the tenants had renewed their leases and we expect
this rate to increase further by year-end with 4,242 sq. ft (393 sqm) about to
be signed. In addition to these renewals, leasing momentum has picked up
substantially since the half-year with leases signed at The Coade, Vauxhall
for two floors for 6,170 sq. ft (573 sqm) and at Office Connect, Cologne for
23,304 sq. ft (2,165 sqm). We are currently under offer for a lease renewal at
Pierre Valette, Paris for 116,013 sq. ft (10,778 sqm), and two and a half
floors at Artesian, London for 32,659 sq. ft (3,034 sqm), and discussions are
well-advanced for further government leases for over 161,000 sq. ft (15,000
sqm) in Germany. These leases represent £6.0 million of rent and would reduce
vacancy on a pro forma basis by 2.2%.
Following the significant investments made in recent years to improve the
quality of our portfolio, capital expenditure has reduced to £7.4 million for
the first half.
Over the six months to 30 June 2025, EPRA NTA decreased by 2.6% to 209.5p per
share (31 December 2024: 215.0p) mainly from a reduction in property values.
Total accounting return per share for the six months was -1.3% (30 June 2024:
-8.0%).
In the first half of 2025, the sales of Spring Mews Student, Vauxhall and
Grafelfing, Munich for an aggregate of £119.1 million were completed. Spring
Mews Student was sold for 8% more than 2023 book value which reduced Group
LTV, cost of debt and 2025 refinancing risk, and will be marginally earnings
accretive as the proceeds were used to pay off expensive debt whilst retaining
lower cost debt. By the end of August 2025, two further sales for £24.3
million in Germany and France will have completed. To reduce loan-to-value
further, we expect to make more disposals in the second half.
RESULTS AND FINANCING
The loss after tax for the six months to 30 June 2025 was £24.4 million (30
June 2024: £61.1 million loss), equivalent to a statutory loss per share of
6.1p (30 June 2024: 15.4p loss). The improvement was as a result of: lower
revaluation losses of £32.3 million (30 June 2024: £82.8 million); lower
expenses £17.5 million (30 June 2024: £18.1 million); and lower net finance
expense of £19.2 million (30 June 2024: £20.8 million), partly offset by
lower net rental income of £53.3 million (30 June 2024: £58.9 million) due
to sales and expiries; other and tax of £2.4 million debit (30 June 2024:
£3.1 million credit) and loss on disposal of £6.3 million (30 June 2024:
£1.4 million loss). EPRA earnings per share were 4.0p (30 June 2024: 4.8p),
16.7% down on last year.
Shareholders' funds decreased in the six months to 30 June 2025 by 2.4% to
£765.4 million reflecting property valuation declines.
As at 30 June 2025, the Group had cash and cash equivalents of £63.9 million
and £50.0 million of undrawn facilities, and our loan book remains
substantially at fixed rates with 78% fixed/capped (31 December 2024: 84%).
Our weighted average cost of debt decreased to 3.75% (31 December 2024: 3.77%)
due to the repayment of higher cost debt following sales and lower interest
rates on floating rate debt. Further marginal reduction in the cost of debt is
expected in the second half from targeted sales which will be used to pay down
higher cost debt. Good progress has been made in relation to 2025 debt
maturities such that of the £364.1 million (excluding amortisation of £9.6
million) of debt expiring, only three loans totalling £28.2 million are yet
to be refinanced or credit approved. Net debt excluding leasehold liabilities
was down by £79.6 million to £859.1 million (31 December 2024: £938.7
million) with loan-to-value lower at 49.2% (31 December 2024: 50.7%) as a
result of using disposal proceeds to reduce debt. Interest cover remained high
at 1.9 times (30 June 2024: 2.0 times) demonstrating the Group's operating
strength and ongoing ability to generate cash.
PROPERTY PORTFOLIO
At 30 June 2025, the value of the property portfolio, including properties
held for sale, was £1,746.2 million, £104.0 million lower than six months
earlier. This decrease was as a result of: valuation decreases of £27.6
million excluding tenant incentives; and disposals of £121.6 million, partly
offset by investment in the portfolio through capital expenditure of £7.4
million less depreciation of £0.1 million; and foreign exchange gains of
£37.9 million.
In the first half of 2025, we completed the disposals of Spring Mews Student,
Vauxhall and Grafelfing, Munich, and unconditionally exchanged on Les Reflets,
Lille which completed in July and Jarrestrasse, Hamburg with completion
expected later in August. The sale of Les Reflets marks our exit from Lille
such that our French portfolio is focused in France's two largest cities,
Paris and Lyon. In aggregate, the four properties had a net initial yield of
5.1% and sold for a total of £143.4 million, 3.5% below 31 December 2024
valuations.
As previously announced, to reduce our loan-to-value, we are targeting further
disposals of up to £190 million, in addition to the disposals already
completed or about to complete.
In the six months to 30 June 2025, the valuation of the property portfolio
fell by 1.6% in local currency. There were local currency valuation decreases
of 2.2% in the UK (0.4% excluding Spring Gardens), 0.5% in Germany and 3.5% in
France. In Sterling, valuations increased 0.6% reflecting the weakening of
Sterling in the period. Across the Group, like-for-like ERVs were up 0.4% with
ERVs slightly up or flat on average per country. At 30 June 2025, the EPRA
'topped up' net initial yield of the portfolio was 5.4% (31 December 2024:
5.6%). The reduction in 'topped up' net initial yield from year-end was driven
by lease expiries at New Printing House Square, London. Excluding New Printing
House Square, the 'topped up' net initial yield was 5.7%. The EPRA 'topped up'
net initial yield is at a 166 basis point margin over the Group's average cost
of debt and demonstrates the Group's continuing ability to generate cash.
DIVIDENDS
In October 2025, the Group will pay an interim dividend for the current
financial year of 1.30 pence per share, a 50% reduction on the 2024 interim
dividend, and in line with the revised dividend policy announced in April 2025
of 1.5x to 3.0x EPRA earnings dividend cover so as to retain cash to invest in
the portfolio. The PID part of the dividend is 1.25 pence per share.
ENVIRONMENT, SOCIAL AND GOVERNANCE
We have continued the implementation of technical and cost-effective Net Zero
Carbon ("NZC") projects across all regions. In 2025, we expect to complete
energy efficiency and carbon reduction projects, at a cost of around £6
million. In total, these projects will save an estimated 1,500 tonnes CO(2)e
("tCO(2)e") (per annum), keeping us on track to achieve our 2030 NZC targets.
One of our largest projects at Radius House in Watford, which involves the
replacement of a gas boiler with a heat pump solution, with tenants in-situ,
is expected to achieve savings of c.28,000 tCO(2)e over the course of its
estimated 15-year life span. Other projects include LED lighting and BMS
upgrades across all three regions, window and façade refurbishments in France
and Germany as well as a solar PV array installation in Germany. Furthermore,
we have continued the roll out of our smart water meter programme in the UK,
following the successful implementation in Germany. On completion later this
year, both portfolios will be fully equipped with smart water meters including
leak detection functionality.
We remain on track to meet future regulatory requirements, such as expected
higher minimum EPC standards in the UK, and Décret Tertiaire targets in
France. 85% of our managed portfolio is rated BREEAM In-Use "Good" or above
and half of our UK portfolio is already EPC A or B, whilst 75% of our
portfolio in France is already compliant with the 2030 Décret Tertiaire
energy efficiency targets. Our focus on major decarbonisation projects will
ensure we comply with evolving future regulation, minimising our exposure to
climate-related transition risks, including the increasing demand from tenants
for "net zero carbon ready" spaces.
As part of our biodiversity net-gain strategy, we have continued the roll out
of re-wilding plans across the UK portfolio. Furthermore, as part of being a
responsible and long-term investor in our local communities, we have
maintained our support for local and industry-related charities and community
organisations. Finally, CLS has maintained its Living Wage Employer
accreditation, covering both UK employees and regular contractors.
OUTLOOK
There are signs of improvement in the real estate investment market as the
trend towards tenant downsizing appears to have peaked with occupiers now
looking to expand their footprint and/or commit to new leases. Take up in
Germany and the UK, our two largest markets, is up compared with the same
period last year, and was reflected already in increased letting activity in
Q2. This is encouraging as our biggest opportunities to drive rents are in the
UK and Germany where we have higher vacancy due to recently refurbished space.
The investment market in the UK and France improved in the first half of the
year compared with the same period last year. Conversely investment in Germany
fell compared with the same period, however we have seen positive signs that
the German economy has started to recover. The improvement in investment in
our locations bodes well with buyers returning to the market. Our sales
programme is more than 50% complete, with further sales progress is expected
by the year-end.
We have successfully refinanced, repaid or had credit approved over 90% of the
£364.1 million (excluding amortisation of £9.6 million) of debt expiring in
2025. Our debt maturity profile is now well spread with no more than £170
million of debt expiring in any given year.
There are considerable opportunities in the existing portfolio to drive
long-term shareholder value and in the medium-term our focus is on: completing
the works at The Brix in Essen and handing over the remaining space to the
City of Essen by the end of October 2025; continuing works at The Yellow in
Dortmund, which are also on track to be handed over the City of Dortmund in
early 2026; converting Debussy, Paris into serviced apartments to be operated
by Edgar Suites on a 12 year lease; progressing planning applications and PDR
schemes for four residential conversions in the UK and moving forward with our
residential development of Citadel Place in Vauxhall through a strategic
partnership.
We enter the second half with clear strategic direction and cautious optimism,
supported by improving market fundamentals, a robust leasing environment and a
somewhat more stable macroeconomic outlook.
Business review
United Kingdom
Lettings progress at Artesian and the Coade and future interest rate cut
support expected
30 June 2025 31 December 2024
Value of properties £692.7m £807.0
Percentage of Group's property interests 40% 44%
Number of properties 33 34
Number of tenants 194 210
EPRA vacancy rate 21.5% 18.5%
Lettable space 1.6m sq. ft 1.8m sq. ft
Government and large companies 73.3% 75.2%
Weighted average lease length to end 3.9 years 3.5 years
Leases subject to indexation 34.7% 34.7%
The value of the UK portfolio decreased by £114.3 million as a result of: the
disposal of Spring Mews Student, Vauxhall for £101.1 million; valuation
decreases of £15.8 million or 2.2%; offset by capex additions of £2.6
million. As expected, the largest valuation decrease was at Spring Gardens,
Vauxhall (also known as Citadel Place) due to the shortening lease with the
NCA.
In the first half of the year, 15 lease extensions and 13 new leases were
signed, adding a total of £5.3 million of rent, at slightly below 31 December
2024 ERVs. Whilst the occupational markets in London and the South East remain
active, political and economic uncertainty has led many tenants to seek
re-gears with existing landlords rather than relocate, which has slowed our
attempts to reduce vacancy. However, we have also had some benefit from this
trend, with over 100,000 sq. ft (9,290 sqm) of space at New Printing House
Square re-let to existing tenants. Our most significant leasing transaction in
2025 was a renewal, as the London Borough of Hammersmith and Fulham extended
their lease for 11,700 sq. ft (1,087 sqm) at the Clockwork Building in
Hammersmith.
Interest in The Coade, our 27,723 sq. ft (2,575 sqm) new office development at
Vauxhall Walk, London, has picked up with a further two floors now signed
taking the occupancy to 50%. At Artesian, Prescot Street, we also now have a
further two and a half floors under offer, which are expected to complete in
the second half of the year.
EPRA vacancy increased from 18.5% at 31 December 2024 to 21.5% due to the
scheduled expiry of all leases at New Printing House Square in mid-June 2025.
We expect this to decrease by year-end as we complete leases at The Coade and
Artesian, and let more space at New Printing House Square.
With respect to disposals, we completed the sale of Spring Mews Student,
Vauxhall for £101.1 million. Having fully executed our business plan for the
property and achieved record occupancy and profits, it was the right time to
sell to reduce LTV and debt costs whilst reducing refinancing risk as well as
being earnings accretive.
Progress also continues on Citadel Place, our 2.5 acre site in Vauxhall, where
an all-residential scheme is being pursued. To support this strategy, we
extended the leases on the site with the NCA for an additional seven months to
September 2026, thus securing an additional £7 million of income during the
planning process. We now aim to submit a planning application later in 2025 to
accommodate potential development partners in the delivery of the site.
Discussions have started and are progressing well.
In terms of the UK property market, commercial investment volumes were c.£24
billion in the first half of 2025 an increase of 17% on same period in 2024
(c.£21 billion).
Leasing take-up in London in the first half of 2025 was 3.2 million sq. ft,
which is a notable increase compared to the same period last year while
take-up across the South East office market reached 1.9 million sq. ft, which
was also an increase compared to the same period last year. Vacancy in the
London market is now 9.2% and 12.5% in the South East office market.
Germany
Government spending expected to boost business confidence and economic
recovery
30 June 2025 31 December 2024
Value of properties £823.6m £815.7m
Percentage of Group's property interests 47% 44%
Number of properties 30 31
Number of tenants 356 360
EPRA vacancy rate 9.4% 6.7%
Lettable space 3.6m sq. ft 3.6m sq. ft
Government and large companies 60.0% 56.1%
Weighted average lease length to end 7.0 years 5.6 years
Leases subject to indexation 76.2% 62.3%
The value of the German portfolio increased by £7.9 million as a result of: a
foreign exchange gain of £29.5 million; and capex of £2.7 million, partially
offset by a valuation decrease of £3.8 million or 0.5% in local currency; and
disposals of £20.5 million. The valuation loss was due to yield expansion as
like-for-like ERVs remained stable.
Vacancy increased to 9.4%, compared with 6.7% at 31 December 2024, due to
lease expiries during the year. 15 leases were signed adding £1.5 million of
rent at an average of 10.0% above December 2024 ERVs. The most significant
transaction in the first half was at The Yellow, Dortmund with the City of
Dortmund for 41,300 sq. ft (3,930 sqm). This follows the 103,700 sq. ft (9,634
sqm) lease signed in December 2024, as the City will now occupy additional
space that will be vacated by a current tenant in 2027. Vacancy in the second
half of the year is expected to decrease as we are in advanced discussions
with potential new tenants.
In June, we completed the €20.9 million sale of Gräfelfing, Lochamer Schlag
1, a 42,900 sq. ft (3,986 sqm) office and light industrial building. We also
unconditionally exchanged on the €20.4 million sale of Jarrestrasse 8-19,
Hamburg, a 59,100 sq. ft (5,487 sqm) office building, with completion in late
August. These disposals are in line with our previously announced strategy to
reduce leverage and provide funds to invest in the portfolio.
In terms of ongoing development projects, we expect to complete our €20
million refurbishment at The Brix, Essen, in October 2025. Progress to date
has been on track and 80% of the space has been handed over to the tenant. We
also continue work at The Yellow, in association with our 20 year lease with
the City of Dortmund, with 103,700 sq. ft (9,634 sqm) to be handed over in
early 2026.
The outlook for the second half of the year is expected to be positively
influenced by the approval of the German government's €500 billion
infrastructure spending package, which should boost economic recovery.
Additionally, if there were to be any resulting increase in inflation, this
would enhance the performance of CLS' inflation-indexed rented portfolio.
Whilst larger companies are cautious to commit to new space, due to
geopolitical uncertainty and tariff increases, government and medium-sized
businesses remain active.
The German commercial property investment market has been relatively stable
over the last two years but softened in the first half of 2025 with c.€10
billion trading, which was around 18% lower than the previous year. Other real
estate asset classes, such as retail and logistics, have gained market share;
nevertheless, office investment has also grown its share by over 20% compared
to the same period in 2024.
The German office market in the Top 7 cities recorded take-up of 1.4 million
sqm in the first half of 2025, 9% above 2024 levels. The market is showing
signs of recovery across the board with market momentum for small floorplates
now increasingly being supplemented by leasing in the important medium-sized
segment. The average market vacancy rate in the Top 7 office markets is now
7.6%, ranging from 4.6% in Cologne to 10.9% in Dusseldorf.
France
High quality, sustainable offices remain attractive despite increased supply
30 June 2025 31 December 2024
Value of properties £229.9m £227.5m
Percentage of Group's property interests 13% 12%
Number of properties 16 16
Number of tenants 144 149
EPRA vacancy rate 8.7% 8.3%
Lettable space 0.7m sq. ft 0.8m sq. ft
Government and major corporates 56.2% 62.7%
Weighted average lease length to end 5.3 years 5.7 years
Leases subject to indexation 100.0% 100.0%
The value of the French portfolio increased by £2.4 million as a result of: a
foreign exchange gain of £8.4 million; and capex of £2.1 million, partly
offset by a valuation decrease of £8.1 million or 3.5% in local currency. The
valuation loss was due to vacancy.
Vacancy increased marginally to 8.7% from 8.3% as at 30 June 2025, as recent
lease expiries are taking slightly longer than expected to re-let. Since 1
January 2025, 9 lease extensions and new leases have been signed adding £0.7
million of rent, at 3.3% below December 2024 ERVs. The largest transaction was
a new lease with the IT company, Open Group, for 9,200 sq. ft (855 sqm) in
Park Avenue, Lyon. Leasing momentum has increased in Q3, and we are currently
under offer for a lease renewal for 116,000 sq. ft (10,777 sqm) on a 9/12
year extension at Pierre Valette, Paris. However, we are expecting increased
vacancy at our property Inside in Paris as the tenant has served notice.
In July, we completed the sale of Les Reflets, Lille. The sale marks our exit
from Lille such that that our French portfolio is focused in France's two
largest cities, Paris and Lyon.
In the first quarter of the year, we completed the redevelopment of Petits
Hotels, a 22,400 sq. ft (2,081 sqm) building in central Paris. This was a
comprehensive refurbishment of one of the buildings and it is now fully let at
ERV to tour operator Intermèdes. We are also progressing a €1.3 million
refurbishment project at Bellevue, Paris, upgrading five floors, 14,000 sq.
ft (1,301 sqm), to a high standard, including sustainability and
modernisation enhancements. Completion is targeted for October 2025. Finally,
works continue on the Debussy serviced apartment conversion, pre-let to Edgar
Suites under a 12-year lease. Building permission was granted by the City of
La Garenne-Colombes in February 2025 and we are in the process of finalising
all the necessary associated permits. We aim to commence works by September,
with completion due in early 2027.
On sustainability, we are making excellent progress towards the Décret
Tertiaire 2030 target. 12 of our 16 properties are already compliant, pending
final approval by the French authorities.
French economic growth in the second half of the year is expected to be
modest, and is forecast to be approximately 0.6%. Growth is projected to be
driven by household consumption but constrained by cuts to public spending to
address the rising budget deficit.
Investment volume in commercial real estate over the first half of the year
reached €5.8 billion, up 30% compared to last year. However, this growth
mainly occurred in the first quarter, with growth of 8% in Q2. Investment
volume is still expected to reach €14 billion by the end of 2025 (10% above
2024). Encouragingly, office is playing a larger role in commercial real
estate in Paris accounting for 74% of market share, compared to 50% in H1
2024.
Office take-up in the first half of 2025 in the Greater Paris region reached
768,000 sqm, down 12% compared with the same period last year. Immediate
office supply in the Greater Paris region was estimated to be 5.9 million sqm,
resulting in a 10.8% vacancy rate at 30 June 2025. In the longer term, whilst
the occupier market continues to adjust, Paris remains one of Europe's leading
office rental markets.
Key data
Valuation Data
H1 Valuation Movement
EPRA Topped-up Net Initial Yield
Market Value of Property (£m) EPRA Net Initial Yield
Foreign Exchange (£m)
Underlying (£m) Over-rented Equivalent Yield
Reversion
UK 655.3 (15.8) - 5.1% 6.1% 4.8% 9.3% 7.4%
Germany 822.0 (3.9) 29.5 4.5% 4.8% 4.3% 11.8% 5.3%
France 228.3 (8.2) 8.3 5.4% 5.8% 3.4% 5.9% 6.1%
Total Portfolio 1,705.6 (27.9) 37.8 4.9% 5.4% 4.4% 9.9% 6.0%
Rental Data
Rental Income for the Period (£m) Net Rental Income for the Period (£m) Lettable Space (sqm) Contracted Rent at 30 June 2025 (£m) ERV at 30 June 2025 (£m) Contracted Rent Subject to Indexation (%) EPRA Vacancy rate at 30 June 2025
UK 22.7 26.7 150,270 45.8 55.7 34.6 21.5%
Germany 19.1 17.8 332,207 44.9 45.8 76.2 9.4%
France 6.3 6.0 68,294 13.8 14.7 100.0 8.7%
Total Portfolio 48.1 50.5 550,771 104.5 116.2 61.1 15.1%
Lease Data
Average Lease Length Contracted Rent of Lease Expiring In: ERV of Lease
Expiring In:
To Break (Years) To Expiry (Years) Years 3 - 5 (£m) After 5 Years (£m) Years 3 - 5 (£m) After 5 Years (£m)
Year 1 (£m) Year 2 (£m) Year 1 (£m) Year 2 (£m)
UK 2.8 3.9 4.5 15.7 16.9 8.7 4.6 13.4 17.5 8.2
Germany 7.0 7.0 5.3 8.4 15.6 15.7 5.6 7.8 14.2 13.9
France 2.3 5.3 0.9 0.6 4.7 7.5 0.9 0.6 4.8 7.1
Total Portfolio 4.6 5.4 10.7 24.7 37.2 31.9 11.1 21.8 36.5 29.2
Note: The above tables comprise data for our offices in investment property
and properties held for sale. They exclude owner-occupied, student
accommodation and hotel.
Tenant Industries by Contracted Rent Property use by revenue
Government 26.5% Office Space 81.5%
Commercial and Professional 13.2% Hospitality 6.2%
Information Technology 9.6% Light Industrial 4.0%
Consumer Discretionary 9.4% Education 2.7%
Communication Services 8.5% Retail 2.1%
Health Care 7.7% Laboratory 2.0%
Financials 6.1% Health Care 1.3%
Other 5.7% Residential 0.2%
Industrials 5.5%
Consumer Staples 4.6%
Real Estate 3.2%
Property use by revenue
Office Space 81.5%
Hospitality 6.2%
Light Industrial 4.0%
Education 2.7%
Retail 2.1%
Laboratory 2.0%
Health Care 1.3%
Residential 0.2%
Our investor proposition
Strong and consistent long-term shareholder returns
Set out below are the key tenets of our investment proposition. A fuller
description can be found on the inside front cover and page 1 of CLS' 2024
Annual Report and Accounts:
A clear strategy Active management
· Diversified approach · Experienced in-house capabilities
· Focus on multi-let offices · Secure rents and high occupancy
· Selected development schemes · Interest rate management
Strong 30-year track record A focus on sustainability
· Disciplined approach to investment · Responsible profit
· Cash-backed progressive dividend · Strong ESG performance
· Financing headroom · Climate risk mitigation
DIVIDEND POLICY
The Company expects to generate sufficient cash flow to be able to meet the
growth requirements of the business, maintain an appropriate level of debt and
provide cash returns to shareholders via a dividend.
As announced with our 2024 Full-year results in April 2025, we updated our
dividend policy. The Company will maintain a progressive dividend policy, with
a dividend cover of 1.5 to 3.0 times EPRA earnings (previously 1.2 to 1.6
times). Approximately one-third of the annual dividend is paid as an interim
in October, with the balance paid as a final dividend in May.
ANALYST COVERAGE
We are covered by three brokers which publish regular analyst research:
Panmure Liberum; Berenberg and Peel Hunt. Contact details can be found on our
website www.clsholdings.com (http://www.clsholdings.com) .
2025 INVESTOR ENGAGEMENT
Events which have taken place Events which are due to take place
April 2025 August 2025
Annual Results presentation Half-Year Results presentation
Annual Results investor calls and meetings
August/September 2025
May 2025 Half-Year Results investor calls and meetings
Annual General Meeting
November 2025
Trading Update
Financial review
RESULTS FOR THE PERIOD
HEADLINES
The loss after tax of £24.4 million (30 June 2024: £61.1 million) generated
a basic statutory loss per share of 6.1 pence (30 June 2024: 15.4 pence loss).
EPRA earnings per share, which exclude valuation movements, were 4.0 pence (30
June 2024: 4.8 pence), down 16.7% year on year. This was due to: lower net
rental income from disposals and expiries; and higher other income in 2024
from the forfeited deposit on the failed completion of the sale of Westminster
Tower, which was partially offset by lower finance expenses as net debt and
our weighted average cost of debt reduced. There was also a positive benefit
from lower expenses as a cost reduction programme was implemented in the first
half from which we expect over £2 million per annum of savings. Gross
property assets at 30 June 2025, including those in property, plant and
equipment and those held for sale, decreased to £1,746.2 million (31 December
2024: £1,850.2 million) as a result of: disposals of £121.6 million; and net
valuation decreases of £27.7 million, partly offset by foreign exchange gains
of £37.9 million; and investment in the portfolio through capital expenditure
of £7.5 million less depreciation of £0.1 million. Net assets per share fell
by 2.5% to 192.3 pence (31 December 2024: 197.3 pence) and EPRA NTA per share
fell by 2.6% to 209.5 pence (31 December 2024: 215.0 pence). Total accounting
return per share including dividends paid in the period was -1.3% (30 June
2024: -8.0%).
CLS uses a number of Alternative Performance Measures ("APMs") alongside
statutory figures. We believe that these assist in providing stakeholders with
additional useful information on the underlying trends, performance and
position of the Group. Note 4 to these condensed set of Financial Statements
gives a full description and reconciliation of our APMs, and sets out the full
suite of EPRA measures.
STATEMENT OF COMPREHENSIVE INCOME
Net rental income for the six months to 30 June 2025 of £53.3 million (30
June 2024: £58.9 million) was lower than last year by 9.5% as a result of
disposals and expiries, partly offset by new lettings and renewals, and
indexation. Rent collection remained at the same, consistently high levels
with 99% of first half rent collected and 97% of third quarter contracted rent
due collected to date.
The operating loss of £3.8 million (30 June 2024: £43.9 million loss) was
due primarily to the 1.6% revaluation decline in local currency which was
lower than the same period last year and equivalent to a loss of £32.3
million (30 June 2024: £82.8 million) largely offset by underlying results.
Operating profit before revaluation and disposals of £34.5 million (30 June
2024: £40.8 million) was lower due to less net rental income.
Net interest expense of £20.7 million (30 June 2024: £21.5 million), which
improved £0.8 million, comprises three elements: interest costs of £19.9
million (30 June 2024: £21.3 million) were down year-on-year as a result of
lower net debt and a reduction in our weighted average cost of debt; the
movement in the fair value of derivatives was £1.5 million negative (30 June
2024: £0.7 million negative) as these are closer to expiry; and interest
income was marginally higher at £0.7 million (30 June 2024: £0.5 million).
The tax charge of £0.1 million (30 June 2024: tax credit £4.6 million)
represented an effective rate of 0.4% (30 June 2024: 7.7%). Despite the loss
before taxation, the charge was principally driven by the effect of the UK
REIT regime and non-recognition of tax losses in France and Germany, reducing
the tax credit on revaluation losses.
EPRA NET TANGIBLE ASSETS PER SHARE
EPRA NTA per share fell from 215.0p to 209.5p in the six months to 30 June
2025, a decrease of 5.5p per share or 2.6%. On a per share basis, the decrease
comprised: the decrease in property values of 8.0p; loss on sale of investment
property of 1.9p; the final 2024 dividend of 2.68p; and other negative
movements of 1.6p, partly offset by foreign exchange gains of 4.7p; and EPRA
earnings of 4.0p.
CASH FLOW, NET DEBT AND FINANCING
In the six months to 30 June 2025, gross borrowings decreased by £76.2
million to £923.0 million (31 December 2024: £999.2 million), principally
due to the repayment of higher interest rate debt by utilising the proceeds
from the disposal of Spring Mews Student, Vauxhall.
As at 30 June 2025, the Group had cash and cash equivalents of £63.9 million
(31 December 2024: £60.5 million) and £50.0 million (31 December 2024:
£60.0 million) of undrawn facilities. The cash balance increased by £3.4
million from 31 December 2024 given property sales. During the period, we
invested £11.2 million of capital expenditure in our properties which was
funded by net receipts from disposals of £114.6 million, as was the net
repayment of loans of £96.7 million. Net cash flow from operating activities
was £6.0 million (30 June 2024: £19.9 million) with the decline being mostly
due to tenant incentives for new leases in Germany. Cash used to pay the 2024
final dividend was £9.7 million (net of withholding tax which was paid in
July).
Net debt excluding leasehold liabilities was down by £79.6 million to £859.1
million (31 December 2024: £938.7 million) with loan-to-value lower at 49.2%
(31 December 2024: 50.7%) as a result of using disposal proceeds to reduce
debt. We are seeking to reduce LTV to within our target range of 35% to 45% at
year-end from further sales. CLS has no loan-to-value or interest cover
covenants at a Group level.
The weighted average cost of debt decreased to 3.75% (31 December 2024: 3.77%)
as we used sale proceeds to repay higher cost debt. Based on the current swap
rate and expected refinancings and sales, we would expect the rate to slightly
decrease in the second half of 2025. Weighted average debt maturity was 3.3
years (31 December 2024: 3.4 years).
The proportions of fixed, capped and unhedged debt were 74%, 4% and 22% (31
December 2024: 80%, 4%, 16%) respectively. The proportion of fixed rate debt
has decreased in the first half of the year due to refinancing Spring Gardens
on floating rate debt and the sale of properties. The 4% of total debt subject
to interest rate caps are all for French and German loans which are at a range
of 0.5% to 1.5%, being on average 113 basis points below the average 3-month
EURIBOR of 2.33%.
CLS has 42 different loans secured by individual, or small portfolios of,
properties. The loans vary in terms of the number of covenants with the three
main covenants being ratios relating to loan-to-value, interest cover and debt
service cover. However, some loans only have one or two of these covenants,
some have other covenants and some have none. The loans also vary in terms of
the level of these covenants and the headroom to these covenants.
On average across the 42 loans, CLS has between 22% and 36% headroom for these
three main covenants. In the event of an actual or forecast covenant breach,
all of the loans have equity cure mechanisms to repair the breach which allow
CLS to either repay part of the loan or deposit cash for the period the loan
is in breach, after which the cash can be released.
In the first half of 2025, or shortly thereafter, CLS completed or had credit
approved the major refinancings for 2025 accounting for over 90% of the
£364.1 million of debt (excluding amortisation of £9.6 million) maturing
across 12 loans. As at 30 June 2025, we had refinanced or repaid £192.3
million of debt across four loans, and by 12 August 2025 a further £118.5
million across two loans was refinanced or repaid and £25.1 million was
credit approved across three loans. The £25.1 million which was credit
approved will be completed in September and the remaining £28.2 million
across three loans, which expires in Q4 2025, will be refinanced or repaid by
year-end. As a result of these actions, we have no more than £170 million of
debt expiring in any given year.
PRINCIPAL RISKS AND UNCERTAINTIES
A detailed explanation of the principal risks and uncertainties affecting the
Group, and the steps it takes to mitigate these risks, can be found on pages
56 to 62 of the annual report and financial statements for the year ended 31
December 2024, which is available at www.clsholdings.com/investors.
The Group's principal risks and uncertainties are grouped into six categories:
property; sustainability; business interruption; financing; political and
economic; and people. These risks and uncertainties are expected to remain
relevant for the remaining six months of the financial year, and these are
discussed further below.
The Board has reviewed the risk status of each of the six risk categories,
particularly with regard to the ongoing economic and geopolitical risks
including: higher but reducing interest rates given moderating inflation;
global political uncertainty; changing trade relations; and conflicts in
Ukraine and the Middle East. The overall risk landscape remains heightened but
with an increased likelihood of risk levels moderating in future although not
yet sufficient to alter any of the risk ratings. Both property and financing
risks remain as high risks and we continue to monitor vigilantly the risks
focused around; vacancy; disposals and loan to value; and refinancings, as
well as the accompanying mitigations.
Work continues on refining our approach to testing material controls in
advance of the Board's declaration of the effectiveness of these as at 31
December 2026 as prescribed by the Corporate Governance Code.
Principal risk Status at year-end Change since year-end Commentary
Property High No change The office market remains bifurcated in two ways. The occupational market
remains healthy with tenants seeking out, and paying more for, higher quality
offices. CLS is responding by investing in its properties to provide the best
offices in our locations as well as divesting properties that no longer align
with our long-term strategy. However, the investment market remains sluggish
given higher interest rates, valuation uncertainty and lingering concerns
about future office demand. In addition, we continue to monitor changes in the
regulatory environment, particularly in relation to the Building Safety Act
2022 which may impact the permitted uses and viability of future schemes.
Sustainability Medium No change CLS believes that providing sustainable buildings not only accords with
regulatory demands but also meets changing office trends. We remain committed
to our Sustainability (and wider ESG) Strategy but keep under review the
proposed timing and targets for our Net Zero Carbon Pathway.
Business interruption Low No change We prioritise investing in our IT and other equipment to give our employees
the tools to perform their roles effectively. We have enhanced our resilience
to the threat of cyber attacks with the aid of our Email Gateway and have
identified staff education gaps through surveys specifically relating to cyber
security. We have maintained our Cyber Essential Plus standard certification.
Financing High No change Financing risk remains high despite inflation and interest rates reducing.
This is reflected in higher interest costs with some increases in bank margins
and lower LTV ratios. Through ongoing selected disposals CLS has reduced Group
LTV. CLS also maintains banking relationships, monitors covenants and engages
early with upcoming refinancings. CLS has made significant progress in
relation to debt expiring in 2025 with £335.9 million of the £364.1 million
(excluding amortisation of £9.6 million) either refinanced, credit approved
or repaid as planned. Furthermore, our weighted average cost of debt has
reduced by 2 basis points since 2024 year-end. CLS also continues to monitor
and ensure its compliance with the UK REIT rules.
Political and economic Medium No change As noted, economic conditions remain challenging with higher interest costs
and property valuation declines, and slower growth. These have been mitigated
through CLS' high levels of inflation-indexed rent and higher replacement
values for existing buildings. Geopolitical risks are heightened but CLS'
diversified business model in Europe's three largest economies provides
mitigation.
People Low No change To reduce duplication and achieve process efficiencies, an organisational
restructure was implemented during the first half of the year resulting in a
number of targeted redundancies. As a result, two internal promotions were
made within affected teams to develop and therefore retain key talent. A
review of UK employee benefits was undertaken and a benefits promotion
campaign will be completed to ensure we remain an attractive employer for
current and future employees. Voluntary turnover remains low.
GOING CONCERN
The Directors' assessment of going concern uses the same methodology as for
the preparation and validation of the year-end going concern (and viability)
statement(s) (see pages 63 to 65 of the 2024 Annual Report and Accounts). This
assessment uses forecasts that have been adjusted for the impacts of the
current economic, property and financing markets. A more detailed description
of the approach is set out in note 2 to these condensed Group financial
statements.
The Group is reliant in the Base case and Severe but plausible case upon its
ability to both refinance the debt maturing and to complete a number of
investment property disposals in the going concern period in more challenging
market conditions.
Whilst the Directors remain confident that a combination of sufficient
refinancings and property disposals will be achieved, the timing and value of
both the planned refinancing of facilities falling due within the going
concern review period, and planned property disposals, is outside of
management's control and consequently a material uncertainty exists that may
cast significant doubt on the Group's ability to continue as a going concern.
Notwithstanding this material uncertainty on the going concern assumption,
given our track-record and reputation, and the progress made since 31 December
2024 in terms of refinancing, the Directors are confident that the debt
falling due for repayment in the going concern period will be refinanced or
settled in line with their plans for the reasons set out above, rather than
requiring repayment on maturity, or will be extinguished as part of property
disposals in the period. Therefore, the Directors continue to adopt the going
concern basis in preparing these Group financial statements.
The financial statements do not contain the adjustments that would result if
the Group were unable to continue as a going concern.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
a) the condensed set of financial statements, which has been prepared in
accordance with IAS 34 'Interim Financial Reporting' as contained in UK
adopted financial standards, gives a true and fair view of the assets,
liabilities, financial position and profit of the Group, as required by DTR
4.2.4R;
b) the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the financial year); and
c) the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related party transactions and changes
therein).
On behalf of the Board
Fredrik Widlund Andrew Kirkman
Chief Executive Officer Chief Financial Officer
12 August 2025
Financial statements
Condensed Group income statement
for the six months ended 30 June 2025
Year ended
Six months ended Six months ended
30 June 2025 30 June 31 December 2024
2024
£m £m £m
Notes (unaudited) (unaudited) (audited)
Revenue 3 71.9 77.8 151.9
Service charges and similar expenses 3 (18.6) (18.9) (37.9)
Net rental income 53.3 58.9 114.0
Administration expenses (8.7) (9.0) (17.7)
Other property expenses (8.8) (9.1) (18.1)
Non-recurring items¹ (1.3) - -
Operating profit before revaluation and disposals 34.5 40.8 78.2
Net revaluation movements on investment property 9, 11 (32.3) (82.8) (127.7)
Net revaluation movements on equity investments 0.3 (0.4) (0.6)
Loss on sale of investment property (6.3) (1.4) (2.3)
Loss on sale of equity investments - (0.1) (0.1)
Operating loss (3.8) (43.9) (52.5)
Finance income 5 0.7 0.5 1.4
Finance costs 6 (21.4) (22.0) (45.7)
Foreign exchange gain / (loss) 0.2 (0.3) (0.6)
Loss before tax (24.3) (65.7) (97.4)
Taxation 7 (0.1) 4.6 3.8
Loss for the period attributable to equity shareholders (24.4) (61.1) (93.6)
Basic and diluted earnings per share 14 (6.1)p (15.4)p (23.6)p
( )
(1) During the first half of the year, we conducted a review of staffing and
financial structuring. This resulted in non-recurring costs including
redundancy costs being incurred. This was substantially complete by the
half-year and we do not expect further significant costs to be incurred in the
second half of 2025.
Condensed Group statement of comprehensive income for the six months ended 30
June 2025
Note Six months ended Six months ended Year ended
30 June 2025 30 June 2024 31 December 2024
£m £m £m
(audited)
(unaudited) (unaudited)
Loss for the period (24.4) (61.1) (93.6)
Other comprehensive income
Items that may be reclassified to profit or loss
Revaluation of property, plant and equipment 10 - 0.6 1.3
Foreign exchange differences 16.3 (10.7) (21.6)
Deferred tax on revaluation of property, plant and equipment - (0.1) (0.1)
Total items that may be reclassified to profit or loss 16.3 (10.2) (20.4)
Total other comprehensive income/(expense) 16.3 (10.2) (20.4)
Total comprehensive expense for the period attributable to equity shareholders (8.1) (71.3) (114.0)
Condensed Group balance sheet at 30 June 2025
Notes
30 June 30 June 31 December
2025 2024 2024
£m £m £m
(unaudited) (unaudited) (audited)
Non-current assets
Investment properties 9 1,518.5 1,737.5 1,676.5
Property, plant and equipment 10 42.4 42.2 42.5
Intangible assets 2.7 2.7 2.7
Equity investments 0.9 1.0 0.6
Derivative financial instruments 0.6 3.3 0.7
1,565.1 1,786.7 1,723.0
Current assets
Trade and other receivables 10.6 32.5 14.2
Derivative financial instruments 0.1 0.7 1.1
Cash and cash equivalents 16 63.9 68.5 60.5
74.6 101.7 75.8
Assets held for sale 11 187.0 132.7 133.0
Total assets 1,826.7 2,021.1 1,931.8
Current liabilities
Trade and other payables (54.5) (70.7) (65.7)
Current tax (0.8) (2.2) (0.9)
Borrowings 12 (298.0) (247.9) (372.4)
(353.3) (320.8) (439.0)
Non-current liabilities
Deferred tax (79.0) (79.4) (78.1)
Borrowings 12 (625.0) (780.6) (626.8)
Leasehold liabilities (3.4) (3.4) (3.3)
Derivative financial instruments (0.6) - (0.4)
(708.0) (863.4) (708.6)
Total liabilities (1,061.3) (1,184.2) (1,147.6)
Net assets 765.4 836.9 784.2
Equity
Share capital 13 11.0 11.0 11.0
Share premium 83.1 83.1 83.1
Other reserves 103.2 96.8 86.9
Retained earnings 568.1 646.0 603.2
Total equity 765.4 836.9 784.2
Condensed Group statement of changes in equity for the six months ended 30
June 2025
Unaudited Share Share Other Retained Total
capital premium reserves earnings £m
£m £m £m £m
At 1 January 2025 11.0 83.1 86.9 603.2 784.2
Arising in the six months ended 30 June 2025:
Total comprehensive income/(expense) for the period - - 16.3 (24.4) (8.1)
Share-based payments - - - - -
Dividends to shareholders - - - (10.7) (10.7)
Total changes arising in the period - - 16.3 (35.1) (18.8)
At 30 June 2025 11.0 83.1 103.2 568.1 765.4
Unaudited Share Share Other Retained Total
capital premium reserves earnings £m
£m £m £m £m
At 1 January 2024 11.0 83.1 106.7 728.4 929.2
Arising in the six months ended 30 June 2024:
Total comprehensive expense for the period - - (10.2) (61.1) (71.3)
Share-based payments - - 0.3 - 0.3
Dividends to shareholders - - - (21.3) (21.3)
Total changes arising in the period - - (9.9) (82.4) (92.3)
At 30 June 2024 11.0 83.1 96.8 646.0 836.9
Audited Share Share Other Retained Total
capital premium reserves earnings £m
£m £m £m £m
At 1 January 2024 11.0 83.1 106.7 728.4 929.2
Arising in the year ended 31 December 2024:
Total comprehensive expense for the year - - (20.4) (93.6) (114.0)
Share-based payments - - 0.6 - 0.6
Dividends to shareholders - - - (31.6) (31.6)
Total changes arising in 2024 - - (19.8) (125.2) (145.0)
At 31 December 2024 11.0 83.1 86.9 603.2 784.2
Condensed Group statement of cash flows for the six months ended 30 June 2025
30 June 31 December
2024 2024
£m £m
30 June (unaudited) (audited)
2025
£m
(unaudited)
Notes
Cash flows from operating activities
Cash generated from operations 15 27.2 40.8 71.2
Interest received 0.7 0.5 1.4
Interest paid (19.9) (20.6) (40.6)
Income tax paid on operating activities (2.0) (0.8) (2.5)
Net cash inflow from operating activities 6.0 19.9 29.5
Cash flows from investing activities
Capital expenditure on investment properties (11.2) (9.3) (22.3)
Proceeds from sale of properties 114.6 30.9 63.8
VAT timing difference on sale of property - 8.2 -
Purchases of property, plant and equipment - (0.1) (0.2)
Purchase of intangibles - - (0.2)
Net cash inflow from investing activities 103.4 29.7 41.1
Cash flows from financing activities
Dividends paid (9.7) (20.3) (31.6)
Cash received on settlement of derivative financial instrument 0.1 0.7 0.7
Purchase of derivative financial instrument (0.4) (1.2) (1.2)
Proceeds from borrowings 36.6 26.9 8.8
Transaction costs related to borrowings (0.5) (0.1) (1.0)
Repayment of borrowings (132.8) (56.8) (55.5)
Net cash outflow from financing activities (106.7) (50.8) (79.8)
Cash flow element of net increase / (decrease) in cash and cash equivalents 2.7 (1.2) (9.2)
Foreign exchange gain / (loss) 0.7 (0.9) (0.9)
Net increase / (decrease) in cash and cash equivalents 3.4 (2.1) (10.1)
Cash and cash equivalents at the beginning of the period 60.5 70.6 70.6
Cash and cash equivalents at the end of the period 63.9 68.5 60.5
Notes to the condensed Group financial statements 30 June 2025
1 BASIS OF PREPARATION
The financial information contained in this half-yearly financial report does
not constitute statutory accounts as defined in section 434 of the Companies
Act 2006. The results disclosed for the year ended 31 December 2024 are an
abridged version of the full accounts for that year, which received an
unqualified report from the Auditor, did not contain a statement under section
498(2) or (3) of the Companies Act 2006 but did draw attention to material
uncertainty related to going concern without qualifying the Auditor's report,
and have been filed with the Registrar of Companies. The annual financial
statements of CLS Holdings plc are prepared in accordance with United Kingdom
adopted International Accounting Standards (IASs) and International Financial
Reporting Standards (IFRSs). The condensed financial statements included in
this half-yearly financial report have been prepared in accordance with IAS 34
Interim Financial Reporting, as adopted by the United Kingdom.
The same accounting policies, presentation and methods of computation are
followed in the condensed set of financial statements as applied in the latest
audited annual financial statements. Amendments to IFRSs have become effective
for the financial year beginning on 1 January 2025. These new amendments are
listed below:
· Amendments to IAS 21 - Lack of exchangeability
The adoption of these new standards and amendments to IFRSs did not materially
impact the condensed Group financial statements for the six months ended 30
June 2025 and are not expected to materially impact the full year financial
statements for the 12 months ended 31 December 2025.
2 GOING CONCERN - BASIS OF PREPARATION
Background
CLS' strategy and business model include regular secured loan refinancings,
and capital deployment and recycling through acquisitions, capital expenditure
and disposals. Over the last thirty years, the Group has successfully
navigated several periods of economic uncertainty, including the recent
economic stress resulting from the Covid-19 pandemic, Russia's invasion of
Ukraine and the cost-of-living crisis.
The Group continues to have a very high rent collection and low bad debts, and
has a long-term track record in financing and refinancing debt including
£192.3 million completed in the six months to 30 June 2025 and a further
£143.6 million has been completed or well advanced subsequent to the
half-year, whereby terms sheets have been obtained or they have reached a
first stage credit review.
The Directors note that the Group financial statements for the year ended 31
December 2024 contained disclosure of a Material Uncertainty related to going
concern due to the timing and amounts of the planned refinancing of debt and
disposals of property being then outside of Management's control. In this
context the Directors set out their considerations and conclusions in respect
of going concern for these financial statements below.
Going concern period and basis
The Group's going concern assessment covers the period to 30 September 2026
("the going concern period"). The period chosen takes into consideration the
maturity date of loans totalling £263.6 million that expire by September
2026. The going concern assessment uses the forecast approved by the Board at
its May 2025 meeting as the Base case. The assessment also considers a Severe
but plausible case. The Directors have considered the period between the date
of Board approval and the date of signing the accounts. Based on a review of
events since Board approval in May 2025, the Directors conclude that there
have been no significant changes since the forecast was approved.
Forecast cash flows - Base case
The forecast cash flows prepared for the Base case take account of the Group's
principal risks and uncertainties, and reflect the challenging economic
backdrop. The forecast cashflows have been updated using assumptions regarding
forecast forward interest curves, inflation and foreign exchange, and include
revenue growth, principally from contractual increases in rent, and increasing
cost levels in line with forecast inflation.
The Base case is focused on the cash and working capital position of the Group
throughout the going concern period. In this regard, the Base case assumes
continued access to lending facilities in the UK, Germany and France, and
specifically that debt facilities of £263.6 million with 10 lenders expiring
within the going concern period will be refinanced as expected (£177.1
million) or will be repaid (£86.5 million), some of which are linked to
forecast property disposals. The Board acknowledges that these refinancings
are not fully within its control; however, they remain confident that
refinancings or extensions of these loans will be executed within the required
timeframe, having taken into account:
· existing banking relationships and ongoing discussions with the
lenders in relation to these refinancings;
· CLS' track record of prior refinancings, particularly in the six
months to 30 June 2025 when £192.3 million was successfully refinanced or
extended; and
· recent refinancings subsequent to 30 June 2025 that have been
completed or reached an initial credit committee review stage by lenders, or
where term sheets have been obtained, totalling £118.5 million of the £177.1
million noted above.
The Base case includes property disposals in the going concern period in line
with the Group's business model and the forecast cash flows approved by the
Board in May 2025. The Board acknowledges that property disposals are not
fully within its control; however, they are confident these transactions will
be completed within the going concern period, based on their history of
achieving disposals (with disposals of £119.1 million achieved in the six
months to 30 June 2025). The value of the properties available for disposal is
significantly in excess of the value of the debt maturing during the going
concern period.
The Group's financing arrangements, which utilise ring-fenced property loans,
contain Loan to Value ("LTV"), Interest Cover Ratio ("ICR") and Debt Service
Coverage Ratio ("DSCR") covenants. In the Base case, minimal cure payments
have been forecast given that the Group expects to maintain its compliance
with the covenant requirements.
The near-term impacts of climate change risks within the going concern period
are expected to be immaterial following an assessment of potential significant
inflation resulting from climate change, in the context of increased property
and administrative costs, as part of the reverse stress testing performed by
CLS. Furthermore, the forecast cash flows prepared for the Base case include
all necessary capital expenditure to meet the minimum energy efficiency
standards required in the countries where CLS operates.
Forecast cash flows - Severe but plausible case
A Severe but plausible case has been assessed which has been produced by
flexing key assumptions further including: lower rents, increased service
charges, higher property and administration expenses, falling property values,
higher interest rates and reduced achievements of refinancings and disposals.
These flexed assumptions are more severe than CLS experienced during the
2007-2009 global financial crisis and other downturns such as that experienced
in 2020-2022 during the Covid-19 pandemic. A key assumption in this scenario
is a further reduction to the Base case in property values of 10% until
September 2026, impacting forecast refinancings, sales and cash cures. This is
in addition to the reduction experienced of 1.6% in 2025 and cumulative c.
25.5% decline from 30 June 2022 to 30 June 2025.
Assumptions around refinancing and investment property disposals are adjusted
to incorporate the higher interest rates and lower property values noted
above. A reduction in property values of 10% results in additional cure
payments of £4.0 million being necessary for the Group to remain in
compliance with its covenant requirements.
Mitigating actions
In both the Base case and the Severe but plausible case, if refinancings and
sales are assumed to occur as per the forecast then CLS has sufficient
liquidity. However, if CLS refinancings and sales are assumed to be outside
management's control, CLS can take mitigating actions in terms of depositing
cash to equity cure some loans, scaling back uncommitted capital expenditure
(without impacting revenue streams over the going concern period) and reducing
the dividend to the Property Income Distribution required under the UK REIT
rules as well as drawing the currently available £42.9 million of its
existing £80.0 million revolving credit and overdraft facilities. If no
refinancings or sales occur then CLS' liquidity would be exhausted in the Base
case and Severe but plausible case even after putting in place controllable
mitigating actions as described above.
If needed, further disposals could be considered as there are no sale
restrictions on CLS' £1.75 billion of properties, albeit the timing and the
amount of these potential disposals are not in the Group's control. In terms
of refinancings, as noted above, £118.5 million of refinancings have been
secured since the half-year and the Directors are confident further
refinancings will be executed successfully.
Additionally, the Directors note that the loans that require refinancing in
the going concern period are all through ring-fenced SPV borrower structures.
Accordingly, in extremis, the lender could enforce their security on an
individual property with no claim on the rest of the Group's assets apart from
certain limited guarantees and limited recourse security granted by the
Company and certain Group companies.
Material Uncertainty related to going concern
As described above, the Group is reliant in the Base case and Severe but
plausible case upon its ability to both refinance the debt maturing and to
complete a number of investment property disposals in the going concern period
in challenging market conditions.
Whilst the Directors remain confident that a combination of sufficient
refinancings and property disposals will be achieved, the timing and value of
both the planned refinancing of facilities falling due within the going
concern review period, and planned property disposals, is outside of
Management's control and consequently a material uncertainty exists that may
cast significant doubt on the Group's ability to continue as a going concern.
Notwithstanding this material uncertainty on the going concern assumption,
given our track-record and reputation, the Directors are confident that the
debt falling due for repayment in the going concern period will be refinanced
or settled in line with their plans for the reasons set out above, rather than
requiring repayment on maturity, or will be extinguished as part of property
disposals in the period. In extremis, the loans requiring refinancing are all
through ring-fenced SPV structures, save for certain limited guarantees and
limited recourse security granted by the Company and certain other Group
companies. Therefore, the Directors continue to adopt the going concern basis
in preparing these Group financial statements.
The financial statements do not contain the adjustments that would result if
the Group and Company were unable to continue as a going concern.
3 SEGMENT INFORMATION
Each property represents an operating segment which the Group aggregates into
two reporting segments with similar characteristics - investment properties
and other investments. Other investments comprise the hotel at Spring Mews and
other small corporate investments. Central administration relates to the
operating costs of the Group's headquarters and are not allocated to any
reporting segment. The Group manages the investment properties division on a
geographical basis due to its size and geographical diversity. Consequently,
the Group's principal reporting segments are:
Investment properties: United Kingdom
Germany
France
Other investments
The Group's results for the six months ended 30 June 2025 by operating segment
were as follows:
Other Central Total
investments administration £m
£m £m
Investment properties
United Germany France
£m
Kingdom £m
£m
Rental income 22.7 19.1 6.3 - - 48.1
Other property-related income 4.9 - 0.1 2.8 - 7.8
Service charge income 8.1 5.4 2.5 - - 16.0
Revenue 35.7 24.5 8.9 2.8 - 71.9
Service charges and similar expenses (9.0) (6.7) (2.9) -- - (18.6)
Net rental income 26.7 17.8 6.0 2.8 - 53.3
Administration expenses (3.9) (1.5) (0.8) - (2.5) (8.7)
Other property expenses (4.2) (2.5) (0.3) (1.8) - (8.8)
Non-recurring items (0.2) - - - (1.1) (1.3)
Revenue less costs 18.4 13.8 4.9 1.0 (3.6) 34.5
Net revaluation movements on investment property (15.9) (8.2) (8.2) - - (32.3)
Net revaluation movements on equity - - - 0.3 - 0.3
investments
Loss on sale of investment property (3.0) (3.3) - - - (6.3)
Segment operating (loss)/profit (0.5) 2.3 (3.3) 1.3 (3.6) (3.8)
Finance income 0.6 - - 0.1 - 0.7
Finance costs (11.9) (7.0) (2.4) - (0.1) (21.4)
Foreign exchange gain - - - 0.2 - 0.2
Segment (loss)/profit before tax (11.8) (4.7) (5.7) 1.6 (3.7) (24.3)
3 SEGMENT INFORMATION (continued)
The Group's results for the six months ended 30 June 2024 by operating segment
were as follows:
Other Central Total
investments administration £m
£m £m
Investment properties
United Germany France
£m
Kingdom £m
£m
Rental income 23.3 21.3 6.5 - - 51.1
Other property-related income 7.5 - 0.1 2.8 - 10.4
Service charge income 7.5 6.0 2.8 - - 16.3
Revenue 38.3 27.3 9.4 2.8 - 77.8
Service charges and similar expenses (8.7) (7.1) (3.1) -- - (18.9)
Net rental income 29.6 20.2 6.3 2.8 - 58.9
Administration expenses (3.8) (1.7) (0.8) (0.1) (2.6) (9.0)
Other property expenses (5.1) (2.0) (0.3) (1.7) - (9.1)
Revenue less costs 20.7 16.5 5.2 1.0 (2.6) 40.8
Net revaluation movements on investment property (38.9) (31.4) (12.5) - - (82.8)
Net revaluation movements on equity - - - (0.4) - (0.4)
investments
Loss on sale of equity instruments - - - (0.1) - (0.1)
Loss on sale of investment property (1.3) (0.1) - - - (1.4)
Segment operating (loss)/profit (19.5) (15.0) (7.3) 0.5 (2.6) (43.9)
Finance income 0.2 - - 0.3 - 0.5
Finance costs (13.5) (6.7) (1.6) - (0.2) (22.0)
Foreign exchange loss - - - (0.3) - (0.3)
Segment (loss)/profit before tax (32.8) (21.7) (8.9) 0.5 (2.8) (65.7)
3 SEGMENT INFORMATION (continued)
The Group's results for the year ended 31 December 2024 were as follows:
Investment properties
United Kingdom Germany France Other Central Total
£m £m £m investments administration £m
£m £m
Rental income 47.1 40.3 12.8 - - 100.2
Other property-related income¹ 13.2 0.3 0.3 6.0 0.1 19.9
Service charge income 15.8 11.0 5.0 - - 31.8
Revenue 76.1 51.6 18.1 6.0 0.1 151.9
Service charges and similar expenses (18.6) (13.6) (5.7) - - (37.9)
Net rental income 57.5 38.0 12.4 6.0 0.1 114.0
Administration expenses (7.4) (3.2) (1.4) (0.1) (5.6) (17.7)
Other property expenses (9.7) (4.1) (0.8) (3.5) - (18.1)
Revenue less costs 40.4 30.7 10.2 2.4 (5.5) 78.2
Net revaluation movements on investment properties (73.7) (41.5) (12.5) - - (127.7)
Net revaluation movements on equity investments - - - (0.6) - (0.6)
(Loss)/Profit on sale of investment property (1.6) (0.8) - - 0.1 (2.3)
Loss on sale of other equity investments - - - (0.1) - (0.1)
Segment operating (loss)/profit (34.9) (11.6) (2.3) 1.7 (5.4) (52.5)
Finance income 1.0 - - 0.4 - 1.4
Finance costs (26.9) (14.2) (4.3) - (0.3) (45.7)
Foreign exchange gain/(loss) - - - (0.6) - (0.6)
Segment loss before tax (60.8) (25.8) (6.6) 1.5 (5.7) (97.4)
(1) Other property-related income includes an amount of £2.9 million in the
United Kingdom segment which is the forfeited deposit, net of costs, from the
original purchaser upon their failure to complete on the sale of Westminster
Tower.
SEGMENT ASSETS AND LIABILITIES
Assets Liabilities Capital expenditure
30 June 30 June 31 Dec 30 June 30 June 31 Dec 30 June 30 June 31 Dec
2025 2024 2024 2025 2024 2024 2025 2024 2024
£m £m £m £m £m £m £m £m £m
Investment properties
United Kingdom 702.4 857.0 825.1 418.2 532.9 510.5 2.6 2.5 9.4
Germany 836.5 858.5 828.8 478.7 495.3 477.4 2.7 4.5 8.3
France 235.2 237.4 233.2 160.6 153.2 158.4 2.1 1.8 3.4
Other investments
52.6 68.2 44.7 3.8 2.8 1.3 - - -
1,826.7 2,021.1 1,931.8 1,061.3 1,184.2 1,147.6 7.4 8.8 21.1
4 ALTERNATIVE PERFORMANCE MEASURES ("APMs")
Alternative Performance Measures ("APMs") should be considered in addition to,
and are not intended to be a substitute for, or superior to, IFRS
measurements.
Introduction
The Group has applied the October 2015 European Securities and Markets
Authority ("ESMA") guidelines on APMs and the October 2021 Financial
Reporting Council ("FRC") thematic review of APMs in these results, whilst
noting the International Organization of Securities Commissions ("IOSCO") 2016
guidance and ESMA's December 2019 report on the use of APMs. An APM is a
financial measure of historical or future financial performance, position or
cash flows of the Group which is not a measure defined or specified in
IFRS.
Overview of our use of APMs
The Directors believe that APMs assist in providing additional useful
information on the underlying trends, performance and position of the Group.
APMs assist our stakeholder users of the accounts, particularly equity and
debt investors, through the comparability of information across the European
real estate sector. APMs are used by the Directors and management, both
internally and externally, for performance analysis, strategic planning,
reporting and incentive-setting purposes.
APMs are not defined by IFRS and therefore may not be directly comparable with
other companies' APMs, including peers in the real estate industry. There
are two sets of APMs which we utilise (European Public Real Estate Association
("EPRA") APMs and similar CLS APMs) which are reconciled where possible to
statutory measures on the following pages.
1. EPRA APMs
CLS monitors the Group's financial performance using APMs which are EPRA
measures as these are a set of standard disclosures for the property industry
and thus aid comparability for our stakeholder users. CLS considers the two
measures below to be the most relevant as we believe that these will continue
to reflect the long-term nature of our property investments most accurately:
• EPRA earnings; and
• EPRA net tangible asset value ("NTA").
Whilst CLS primarily uses the measures referred to above, we have also
disclosed other EPRA metrics being:
• EPRA net realisable value ("NRV");
• EPRA net development value ("NDV");
• EPRA net initial yield;
• EPRA 'topped-up' net initial yield;
• EPRA vacancy;
• EPRA capital expenditure;
• EPRA cost ratio;
• EPRA LTV; and
• EPRA like-for-like gross rental income growth.
2. Other APMs
CLS uses a number of other APMs, many of which are commonly used by industry
peers:
• Total accounting return;
• Net debt and gearing;
• Balance sheet loan-to-value;
• Administration cost ratio;
• Dividend cover; and
• Interest cover.
Changes to APMs
The Group adopted the EPRA Best Practice Recommendations ("BPRs") September
2024 in the current reporting period. This has not had a material impact on
the Group's reported EPRA earnings and there has been no change to the Group's
APMs in the year with the same APMs utilised by the business being defined,
calculated and used on a consistent basis.
4 ALTERNATIVE PERFORMANCE MEASURES ("APMs") (continued)
Set out below is a reconciliation of the APMs used in these results to the
statutory measures.
1) EPRA APMs
For use in earnings per share calculations 30 June 2025 30 June 2024 Number 31 December 2024
Number Number
Weighted average number of ordinary shares in circulation 398,056,562 397,410,268 397,410,268
Diluted number of ordinary shares 402,916,907 402,916,907 402,916,907
For use in net asset per share calculations
Number of ordinary shares in circulation 398,110,742 397,410,268 397,410,268
i) EPRA Earnings
Six months Six months ended Year ended 31 December 2024
ended 30 June 2024 £m £m
30 June 2025
£m
Loss for the period (24.4) (61.1) (93.6)
Non-recurring items(1) 1.3 - -
Net revaluation movement on investment property 32.3 82.8 127.7
Deferred taxation on revaluations (1.9) (7.5) (6.6)
Net movement on revaluation of equity investments (0.3) 0.4 0.6
Loss on sale of equity investments - 0.1 0.1
Loss on sale of investment property 6.3 1.4 2.3
Current tax thereon 1.1 2.1 2.1
Movement in fair value of derivative financial instruments 1.5 0.7 3.4
Amortisation of intangible assets 0.2 0.2 0.4
EPRA earnings 16.1 19.1 36.4
Basic and diluted earnings per share (6.1)p (15.4)p (23.6)p
EPRA earnings per share 4.0p 4.8p 9.2p
(1) During the first half of the year, we conducted a review of staffing and
financial structuring. This resulted in non-recurring costs including
redundancy costs being incurred. This was substantially complete by the
half-year and we do not expect further significant costs to be incurred in the
second half of 2025.
ii) Net asset value measures
30 June 2025 IFRS EPRA EPRA EPRA
NAV NTA NRV NDV
£m £m £m £m
IFRS net assets 765.4 765.4 765.4 765.4
Other intangibles - (2.7) - -
Fair value of fixed interest debt - - - 40.3
- tax thereon - - - (1.3)
Deferred tax on revaluation surplus - 79.7 79.7 -
Adjustment for short-term disposals - (8.1) - -
Fair value of financial instruments - (0.1) (0.1) -
Purchasers' costs(1) - - 118.7 -
765.4 834.2 963.7 804.4
Per share 192.3p 209.5p 242.1p 202.1p
(1) Purchasers costs have been calculated using the regional market rates
4 ALTERNATIVE PERFORMANCE MEASURES ("APMs") (continued)
30 June 2024 IFRS EPRA EPRA EPRA
NAV NTA NRV NDV
£m £m £m £m
IFRS net assets 836.9 836.9 836.9 836.9
Other intangibles - (2.7) - -
Fair value of fixed interest debt - - - 63.1
- tax thereon - - - (3.4)
Deferred tax on revaluation surplus - 80.7 80.7 -
Adjustment for short-term disposals - (7.2) - -
Fair value of financial instruments - (4.0) (4.0) -
Purchasers' costs - - 136.9 -
836.9 903.7 1,050.5 896.6
Per share 210.6p 227.4p 264.3p 225.6p
31 December 2024 IFRS EPRA EPRA EPRA
NAV NTA NRV NDV
£m £m £m £m
IFRS net assets 784.2 784.2 784.2 784.2
Other intangibles - (2.7) - -
Fair value of fixed interest debt - - - 50.4
Tax thereon - - - (1.7)
Deferred tax on revaluation surplus - 79.8 79.8 -
Adjustment for short-term disposals - (5.5) - -
Fair value of financial instruments - (1.4) (1.4) -
Purchasers' costs - - 132.6 -
784.2 854.4 995.2 832.9
Per share 197.3p 215.0p 250.4p 209.6p
iii) Yield
EPRA Net Initial Yield ("NIY")
EPRA NIY is calculated as the annualised rental income based on the cash rents
passing at the balance sheet date less non-recoverable property operating
expenses, divided by the gross market value of the property (excluding those
that are under development, held as PPE or occupied by CLS).
Six months ended 30 June 2025
United Kingdom Germany France Total
£m £m £m £m
Rent passing 39.2 42.3 12.9 94.4
Adjusted for properties in development (0.1) - - (0.1)
Forecast non-recoverable service charge (3.7) (2.5) (0.3) (6.5)
Annualised net rents (A) 35.4 39.8 12.6 87.8
Property portfolio¹ 655.3 822.0 228.2 1,705.5
Adjusted for properties in development (11.4) (1.7) (8.6) (21.7)
Purchasers' costs at 6.8% 43.8 55.8 14.9 114.5
Property portfolio valuation including purchasers' costs (B) 687.7 876.1 234.5 1,798.3
EPRA NIY (A/B) 5.1% 4.5% 5.4% 4.9%
(1) The above table comprise data of the investment properties and properties
held for sale. They exclude owner-occupied, student accommodation and hotel.
4 ALTERNATIVE PERFORMANCE MEASURES ("APMs") (continued)
Six months ended 30 June 2024
United Kingdom Germany France Total
£m £m £m £m
Rent passing 43.8 46.8 13.0 103.6
Adjusted for properties in development - - - -
Forecast non-recoverable service charge (3.2) (1.6) (0.6) (5.4)
Annualised net rents (A) 40.6 45.2 12.4 98.2
Property portfolio 695.8 837.4 230.0 1,763.2
Adjusted for properties in development (15.9) (2.1) - (18.0)
Purchasers' costs at 6.8% 46.2 56.8 15.6 118.6
Property portfolio valuation including purchasers' costs (B) 726.1 892.1 245.6 1,863.8
EPRA NIY (A/B) 5.6% 5.1% 5.0% 5.3%
Year ended 31 December 2024
United Kingdom Germany France Total
£m £m £m £m
Rent passing 46.6 41.6 12.9 101.1
Adjusted for properties in development (0.1) - (0.3) (0.4)
Forecast non-recoverable service charge (3.9) (2.5) (0.5) (6.9)
Annualised net rents (A) 42.6 39.1 12.1 93.8
Property portfolio 668.4 814.1 225.9 1,708.4
Adjusted for properties in development (11.4) (2.0) (8.3) (21.7)
Purchasers' costs at 6.8% 44.7 55.2 14.8 114.7
Property portfolio valuation including purchasers' costs (B) 701.7 867.3 232.4 1,801.4
EPRA NIY (A/B) 6.1% 4.5% 5.2% 5.2%
EPRA 'topped-up' NIY
EPRA 'topped-up' NIY is calculated by making an adjustment to EPRA NIY in
respect of the expiration of rent-free periods (or other unexpired lease
incentives such as discounted rent periods and stepped rents).
Six months ended 30 June 2025
United Germany France T
o
Kingdom £m £m t
a
£m l
£
m
Contracted rent 45.8 44.9 13.8 104.5
Adjusted for properties in development (0.1) - - (0.1)
Forecast non-recoverable service charge (3.7) (2.5) (0.3) (6.5)
'Topped-up' annualised net rents (A) 42.0 42.4 13.5 97.9
Property portfolio¹ 655.3 822.0 228.2 1,705.5
Adjusted for properties in development (11.4) (1.7) (8.6) (21.7)
Purchasers' costs at 6.8% 43.8 55.8 14.9 114.5
Property portfolio valuation including purchasers' costs (B) 687.7 876.1 234.5 1,798.3
EPRA 'topped-up' NIY (A/B) 6.1% 4.8% 5.8% 5.4%
(1) The above table comprise data of the investment properties and properties
held for sale. They exclude owner-occupied, student accommodation and hotel.
4 ALTERNATIVE PERFORMANCE MEASURES ("APMs") (continued)
Six months ended 30 June 2024
United Germany France Total
Kingdom £m £m £m
£m
Contracted rent 50.1 47.7 13.9 111.7
Adjusted for properties in development - - - -
Forecast non-recoverable service charge (3.2) (1.6) (0.6) (5.4)
'Topped-up' annualised net rents (A) 46.9 46.1 13.3 106.3
Property portfolio 695.8 837.4 230.0 1,763.2
Adjusted for properties in development (15.9) (2.1) - (18.0)
Purchasers' costs at 6.8% 46.2 56.8 15.6 118.6
Property portfolio valuation including purchasers' costs (B) 726.1 892.1 245.6 1,863.8
EPRA 'topped-up' NIY (A/B) 6.5% 5.2% 5.4% 5.7%
Year ended 31 December 2024
United Kingdom Germany France Total
£m £m £m £m
Contracted rent 50.1 44.9 13.9 108.9
Adjusted for properties in development (0.1) - (0.3) (0.4)
Forecast non-recoverable service charge (3.9) (2.5) (0.5) (6.9)
Annualised net rents (A) 46.1 42.4 13.1 101.6
Property portfolio 668.4 814.1 225.9 1,708.4
Adjusted for properties in development (11.4) (2.0) (8.3) (21.7)
Purchasers' costs at 6.8% 44.7 55.2 14.8 114.7
Property portfolio valuation including purchasers' costs (B) 701.7 867.3 232.4 1,801.4
EPRA NIY (A/B) 6.6% 4.9% 5.6% 5.6%
iv) EPRA vacancy
Six months Six months Year ended
ended ended 31 December
30 June 2025 30 June 2024 2024
£m £m £m
ERV of vacant space (A) 17.6 16.2 15.1
ERV of let space 98.7 107.0 103.9
ERV of lettable space (B) 116.3 123.2 119.0
EPRA vacancy rate (A/B) 15.1% 13.2% 12.7%
4 ALTERNATIVE PERFORMANCE MEASURES ("APMs") (continued)
v) EPRA capital expenditure
Six months Six months Year ended
ended ended 31 December
30 June 2025 30 June 2024 2024
£m £m £m
Acquisitions - - -
Amounts spent on the completed investment property portfolio
Creation of incremental space - - -
Creation of no incremental space 7.4 8.8 21.1
EPRA capital expenditure 7.4 8.8 21.1
Conversion from accrual to cash basis 3.8 0.5 1.2
EPRA capital expenditure on a cash basis 11.2 9.3 22.3
vi) EPRA cost ratio
Six months Six months Year ended
ended ended 31 December
30 June 2025 30 June 2024 2024
£m £m £m
Administration expenses 8.7 9.0 17.7
Other expenses 8.8 9.1 18.1
Less: investment segment and student operating costs (3.0) (3.3) (6.8)
14.5 14.8 29.0
Net service charge costs 2.6 2.6 6.1
Service charge costs recovered through rents but not separately invoiced (0.3) (0.1) (0.3)
Dilapidations receipts (0.9) (0.3) (1.2)
EPRA costs (including direct vacancy costs) (A) 15.9 17.0 33.6
Direct vacancy costs (4.5) (3.9) (8.2)
EPRA costs (excluding direct vacancy costs) (B) 11.4 13.1 25.4
Gross rental income 48.1 51.1 100.2
Service charge components of rental income (0.3) (0.1) (0.3)
Adjusted gross rental income (C) 47.8 51.0 99.9
EPRA cost ratio (including direct vacancy costs) (A/C) 33.3% 33.3% 33.6%
EPRA cost ratio (excluding direct vacancy costs) (B/C) 23.8% 25.7% 25.4%
4 ALTERNATIVE PERFORMANCE MEASURES ("APMs") (continued)
vii) EPRA LTV
Six months Six months Year ended
ended ended 31 December
30 June 2025 30 June 2024 2024
£m £m £m
Borrowings from financial institutions 923.0 1,028.5 999.2
Net payables 44.7 40.4 52.4
Cash and cash equivalents (63.9) (68.5) (60.5)
Net debt (A) 903.8 1,000.4 991.1
Properties held as property, plant and equipment 40.7 40.2 40.7
Investment properties 1,518.5 1,737.5 1,676.5
Properties held for sale 187.0 132.7 133.0
Financial assets - equity investments 0.9 1.0 0.6
Total property value (B) 1,747.1 1,911.4 1,850.8
EPRA LTV (A/B) 51.7% 52.3% 53.5%
viii) EPRA like-for-like gross rental income growth
Six months Six months Year ended
ended ended 31 December
30 June 2025 30 June 2024 2024
% % %
(Decrease)/increase in gross rental income (%) (4.8) 0.3 1.2
Six months Six months Year ended
ended ended 31 December
30 June 2025 30 June 2024 2024
£m £m £m
(Decrease)/increase in gross rental income (£m) (2.4) 0.2 1.1
2. Other APMs
i) Total accounting return per share
Six months Six months Year ended
ended ended 31
30 June 30 June December
2025 2024 2024
p p p
EPRA closing net tangible assets 209.5 227.4 215.0
Add back: prior year final dividend paid¹ 2.7 5.4 5.4
Add back: interim dividend paid - - 2.6
Less: EPRA opening net tangible assets (A) (215.0) (253.0) (253.0)
Return before dividends (B) (2.8) (20.2) (30.0)
Total accounting return (NTA) (B/A) (1.3)% (8.0)% (11.9)%
(1) The 2024 final dividend was 2.68 pence but has been rounded to 2.7 pence
for the purpose of this note.
4 ALTERNATIVE PERFORMANCE MEASURES ("APMs") (continued)
ii) Net debt and gearing
Notes Six months Six months Year ended
ended ended 31
30 June 30 June December
2025 2024 2024
£m £m £m
Borrowings short-term 12 298.0 247.9 372.4
Borrowings long-term 12 625.0 780.6 626.8
Add back: unamortised issue costs 12 3.7 4.4 4.3
Gross debt 12 926.7 1,032.9 1,003.5
Cash 16 (63.9) (68.5) (60.5)
Net debt (A) 862.8 964.4 943.0
Net assets (B) 765.4 836.9 784.2
Net gearing (A/B) 112.7% 115.2% 120.2%
iii) Balance sheet loan-to-value
Notes Six months Six months Year ended
ended ended 31
30 June 30 June December
2025 2024 2024
£m £m £m
Borrowings short-term 12 298.0 247.9 372.4
Borrowings long-term 12 625.0 780.6 626.8
Less: cash 16 (63.9) (68.5) (60.5)
Net debt (A) 859.1 960.0 938.7
1,850.5
Investment properties 9 1,518.5 1,737.5 1,676.5
Properties in PPE 8 40.7 40.2 40.7
Properties held for sale 11 187.0 132.7 133.0
Total property portfolio (B) 1,746.2 1,910.4 1,850.2
Balance sheet loan-to-value (A/B) 49.2% 50.3% 50.7%
iv) Dividend cover Six months Six months Year ended
ended ended 31
30 June 30 June December
2025 2024 2024
£m £m £m
Interim dividend¹ 5.2 10.3 10.3
Final dividend - - 10.7
Total dividend (A) 5.2 10.3 21.0
EPRA earnings (B) 16.1 19.1 36.4
Dividend cover (B/A) 3.10 1.85 1.73
(1) The 30 June 2025 amount represents the proposed interim 2025 dividend
4 ALTERNATIVE PERFORMANCE MEASURES ("APMs") (continued)
v) Interest cover Notes Six months Six months Year ended
ended ended 31
30 June 30 June December
2025 2024 2024
£m £m £m
Net rental income 3 53.3 58.9 114.0
Administration expenses 3 (8.7) (9.0) (17.7)
Other property expenses 3 (8.8) (9.1) (18.1)
Revenue less costs (A) 35.8 40.8 78.2
Finance income (excluding dividends and derivatives) 5 0.7 0.5 1.4
Finance costs (excluding derivatives) 6 (19.9) (21.3) (42.3)
Net interest (B) (19.2) (20.8) (40.9)
Interest cover (-A/B) 1.86 1.96 1.91
vi) CLS administration cost ratio
Six months Six months Year ended
ended ended 31
30 June 30 June December
2025 2024 2024
£m £m £m
Administration expenses 8.7 9.0 17.7
Less: Other investment segment - (0.1) (0.1)
Underlying administration expenses (A) 8.7 8.9 17.6
Net rental income (B) 53.3 58.9 114.0
Administration cost ratio (A/B) 16.3% 15.1% 15.4%
5 FINANCE INCOME
Six months Six months Year ended
ended ended 31
30 June 30 June December
2025 2024 2024
£m £m £m
Interest income
Financial instruments carried at amortised cost 0.7 0.5 1.4
Movement in fair value of derivative financial instruments - - -
0.7 0.5 1.4
6 FINANCE COSTS
Six months Six months Year ended
ended ended 31
30 June 30 June December
2025 2024 2024
£m £m £m
Interest expense
Secured bank loans 19.1 20.4 40.6
Amortisation of loan issue costs 0.8 0.9 1.7
Total interest costs 19.9 21.3 42.3
Movement in fair value of derivative financial instruments 1.5 0.7 3.4
Total finance costs 21.4 22.0 45.7
7 TAXATION
Six months Six months Year ended
ended ended 31
30 June 30 June December
2025 2024 2024
£m £m £m
Deferred tax
Origination and reversal of temporary differences (1.9) (7.5) (6.9)
(1.9) (7.5) (6.9)
Current tax 2.0 2.9 3.1
Tax charge / (credit) 0.1 (4.6) (3.8)
Tax for the six months ended 30 June 2025 has been recorded at an effective
rate of 0.4% (six months ended 30 June 2024: 7.7%; year ended 31 December
2024: 2.2%), representing the best estimate of the average annual effective
tax rate expected for the full year adjusted for the tax effect of one-off
items, applied to the pre-tax income of the six month period. The effective
tax rate for the period of 0.4% is lower than the weighted average tax rate of
23.0%. This is primarily due to the revaluation loss arising from the UK
property rental business which is exempt from UK Corporation Tax under the
REIT regime and tax losses not recognised in Germany and France.
The total tax charge for the period ended 30 June 2025 of £0.1 million is
lower than the £4.6 million tax credit for the six months ended 30 June 2024
and lower than the £2.1 million tax credit recognised for the year ended 31
December 2024 primarily due to lower revaluation losses in Germany and France
and tax losses not recognised in Germany and France.
8 PROPERTY PORTFOLIO
United Kingdom Germany France Total
£m £m £m £m
Investment property 622.0 675.2 221.3 1,518.5
Property held as property, plant and equipment 37.4 1.6 1.7 40.7
Properties held for sale 33.3 146.8 6.9 187.0
Property portfolio at 30 June 2025 692.7 823.6 229.9 1,746.2
United Kingdom Germany France Total
£m £m £m £m
Investment property 699.7 807.8 230.0 1,737.5
Property held as property, plant and equipment 36.8 1.7 1.7 40.2
Properties held for sale 103.2 29.5 - 132.7
Property portfolio at 30 June 2024 839.7 839.0 231.7 1,910.4
United Kingdom Germany France Total
£m £m £m £m
Investment property 657.0 793.6 225.9 1,676.5
Property held as property, plant and equipment 37.5 1.6 1.6 40.7
Properties held for sale 112.5 20.5 - 133.0
Property portfolio at 31 December 2024 807.0 815.7 227.5 1,850.2
The property portfolio which comprises investment properties detailed in note
9, the hotel and owner-occupied property detailed in note 10 and properties
held for sale detailed in note 11 was revalued at 30 June 2025 to its fair
value. Valuations were based on current prices in an active market for all
properties. The property valuations were carried out by external independent
valuers as follows:
30 June 2025 30 June 2024 31 December 2024
Investment property Other property Property portfolio Investment property Other property Property portfolio Investment property Other property Property portfolio
£m £m £m £m £m £m £m £m £m
Cushman and Wakefield 622.0 70.7 692.7 699.7 140.0 839.7 657.0 150.0 807.0
Jones Lang LaSalle 896.5 157.0 1,053.5 1,037.8 32.9 1,070.7 1,019.5 23.7 1,043.2
1,518.5 227.7 1,746.2 1,737.5 172.9 1,910.4 1,676.5 173.7 1,850.2
The total fees, including the fees for this assignment, earned by each of the
valuers from the Group is less than 5% of their total revenues in each
jurisdiction. See note 9 and note 10 for details on valuation technique and
fair value measurement.
9 INVESTMENT PROPERTIES
United Kingdom Germany France Total
£m £m £m £m
At 1 January 2025 657.0 793.6 225.9 1,676.5
Capital expenditure 2.6 2.7 2.1 7.4
Net revaluation movement (15.8) (8.3) (8.2) (32.3)
Lease incentive adjustments¹ 0.1 4.5 0.1 4.7
Exchange rate variances - 29.5 8.3 37.8
Transfer to properties held for sale (21.9) (146.8) (6.9) (175.6)
At 30 June 2025 622.0 675.2 221.3 1,518.5
Germany France Total
United Kingdom
£m £m £m £m
At 1 January 2024 836.3 768.2 246.0 1,850.5
Capital expenditure 2.5 4.5 1.8 8.8
Disposals (3.1) - - (3.1)
Net revaluation movement (38.9) (30.9) (12.5) (82.3)
Lease incentive adjustments (0.4) 0.2 0.1 (0.1)
Exchange rate variances - (18.0) (5.4) (23.4)
Transfer to property, plant and equipment - (0.1) - (0.1)
Transfer (to)/from properties held for sale (96.7) 83.9 - (12.8)
At 30 June 2024 699.7 807.8 230.0 1,737.5
United Kingdom Germany France Total
£m £m £m £m
At 1 January 2024 836.3 768.2 246.0 1,850.5
Capital expenditure 9.4 8.3 3.4 21.1
Disposals (8.2) - - (8.2)
Net revaluation movement (73.7) (41.5) (12.5) (127.7)
Lease incentives adjustments¹ (0.8) 11.2 - 10.4
Exchange rate variances - (36.8) (11.0) (47.8)
Reclassification to property, plant and equipment - (0.1) - (0.1)
Transfer (to)/from properties held for sale (106.0) 84.3 - (21.7)
At 31 December 2024 657.0 793.6 225.9 1,676.5
(1) Increase in the lease incentive adjustments in Germany primarily relates
to the tenant incentive works conducted at the Brix, Essen in advance of a 30
year lease with the City of Essen.
Investment properties include leasehold properties with a carrying value of
£41.0 million (30 June 2024: £63.0 million; 31 December 2024: £62.4
million).
Interest capitalised within capital expenditure in the period amounted to
£nil (30 June 2024: £nil; 31 December 2024: £nil)
Valuation process
The Group's property portfolio was valued by external valuers on the basis of
fair value using information provided to them by the Group such as current
rents, terms and conditions of lease agreements, service charges and capital
expenditure. This information is derived from the Group's property management
systems and is subject to the Group's overall control environment. The
valuation reports are based on assumptions and valuation models used by the
external valuers. The assumptions are typically market related, such as yields
and discount rates, and are based on professional judgement and market
evidence of transactions for similar properties on arm's length terms. The
valuations are prepared in accordance with RICS Valuation - Global standards.
9 INVESTMENT PROPERTIES (continued)
Each Country Head, who reports to the Chief Executive Officer, verifies all
major inputs to the external valuation reports, assesses the individual
property valuation changes from the prior year valuation report and holds
discussions with the external valuers. When the process is complete, the
valuation report is recommended to the Audit Committee and the Board, which
considers it as part of its overall responsibilities.
Valuation techniques
The fair value of the property portfolio (excluding ongoing developments, see
below) has been determined using the following approaches in accordance with
International Valuation Standards:
United Kingdom: an income capitalisation approach whereby
contracted and market rental values are capitalised with a market
capitalisation rate
Germany: a 10 year discounted cash flow
model with an assumed exit thereafter
France: both the market
capitalisation approach and a 10 year discounted cash flow approach
The resulting valuations are cross-checked against the equivalent yields and
the fair market values per square foot derived from comparable recent market
transactions on arm's length terms. Other factors taken into account in the
valuations include the tenure of the property, tenancy details, and ground and
structural conditions.
Ongoing developments are valued under the 'residual method' of valuation,
which is the same method as the income capitalisation approach to valuation
described above, with a deduction for all costs necessary to complete the
development, including a notional finance cost, together with a further
allowance for remaining risk. As the development approaches completion, the
valuer may consider the income capitalisation approach to be more appropriate.
All valuations have considered the environmental, social and governance
credentials of the properties and the potential cost of improving them to
local regulatory standards along with the broader potential impact of climate
change.
These techniques are consistent with the principles in IFRS 13 Fair Value
Measurement and use significant unobservable inputs such that the fair value
measurement of each property within the portfolio has been classified as Level
3 in the fair value hierarchy.
There were no transfers between any of the Levels in the fair value hierarchy
during either 2025 or 2024. The Group determines whether transfers have
occurred between levels in the fair value hierarchy by re-assessing
categorisation at the end of each reporting period.
Gains and losses recorded in profit or loss for recurring fair value
measurements categorised within Level 3 of the fair value hierarchy amount to
a loss of £32.3 million (30 June 2024: £82.8 million; 31 December 2024:
£127.7 million) and are presented in the income statement in the line item
'Net revaluation movements on investment property'. The revaluation surplus
for the property, plant and equipment of £nil (30 June 2024: £0.6 million
gain; 31 December 2024: £1.3 million gain) was included within the
revaluation reserve via other comprehensive income.
All gains and losses recorded in profit or loss in 2025 and 2024 for recurring
fair value measurements categorised within Level 3 of the fair value hierarchy
are attributable to changes in unrealised gains or losses relating to
investment property held at 30 June 2025 and 30 June 2024 respectively.
9 INVESTMENT PROPERTIES (continued)
Quantitative information about fair value measurement using unobservable
inputs (Level 3)
ERV
Average £ per sq. ft Range £ per sq. ft
31-Dec-24 31-Dec-24
30-Jun-25 30-Jun-24 30-Jun-25 30-Jun-24
UK 37.37 37.75 38.08 10.00-52.72 10.00-56.24 10.00-56.41
Germany 14.47 13.78 13.41 9.57-28.62 9.70-28.26 9.19-27.59
France 22.93 21.65 21.42 12.86-47.00 12.69-44.25 12.40-45.25
Equivalent yield
Average % Range %
31-Dec-24 31-Dec-24
30-Jun-25 30-Jun-24 30-Jun-25 30-Jun-24
UK 7.55 7.19 7.39 6.23-10.04 3.44-10.50 6.21-10.03
Germany 5.39 5.25 5.23 4.65-6.40 4.10-6.40 4.30-6.40
France 6.12 6.12 6.13 4.80-7.75 4.86-7.50 4.82-7.50
Sensitivity of measurement to variations in the significant unobservable
inputs
All other factors remaining constant, an increase in estimated rental value
"ERV" would increase valuations, whilst an increase in the equivalent yield
would result in a fall in value, and vice versa. There are inter-relationships
between these inputs as they are partially determined by market conditions. An
increase in the reversionary yield may accompany an increase in ERV and would
mitigate its impact on the fair value measurement.
A decrease in the equivalent yield by 25 basis points would result in an
increase in the fair value of the Group's investment property by £70.7
million (30 June 2024: £81.6 million; 31 December 2024: £79.3 million)
whilst a 25 basis point increase would reduce the fair value by £69.8 million
(30 June 2024: £81.2 million; 31 December 2024: £79.2million). A decrease
in the ERV by 5% would result in a decrease in the fair value of the Group's
investment property by £68.8 million (30 June 2024: £74.8 million; 31
December 2024: £70.7 million) whilst an increase in the ERV by 5% would
result in an increase in the fair value of the Group's investment property by
£64.1 million (30 June 2024: £68.3 million; 31 December 2024: £64.4
million).
Where the Group leases out its investment property under operating leases the
duration is typically three years or more. No contingent rents have been
recognised in the current or prior year.
Although not a key valuation assumption, in the absence of a financial
instruments note and disclosure on foreign exchange risk, the table below
shows how the investment property values would be impacted by a 5% movement in
the sterling/euro exchange rate at 30 June 2025.
£m
5% increase in value of sterling against the euro (42.7)
5% fall in value of sterling against the euro 47.2
10 PROPERTY, PLANT AND EQUIPMENT
30 June 30 June 31 December
2025 2024 2024
£m £m £m
Hotel 31.0 30.8 31.4
Owner-occupied property 9.7 9.4 9.3
Fixtures and fittings 1.7 2.0 1.8
Total 42.4 42.2 42.5
Hotel Owner-occupied property Fixtures Total
£m £m and £m
fittings
£m
At 1 January 2025 31.4 9.3 4.0 44.7
Additions - - 0.1 0.1
Disposals - - - -
Revaluation (0.4) 0.3 - (0.1)
Exchange rate variances - 0.1 - 0.1
At 30 June 2025 31.0 9.7 4.1 44.8
Comprising:
At cost - - 4.1 4.1
At valuation 31.0 9.7 - 40.7
31.0 9.7 4.1 44.8
Accumulated depreciation and impairment
At 1 January 2025 - - (2.2) (2.2)
Depreciation charge - (0.1) (0.2) (0.3)
Disposals - - - -
Revaluation - 0.1 - 0.1
At 30 June 2025 - - (2.4) (2.4)
Net book value
At 30 June 2025 31.0 9.7 1.7 42.4
At 31 December 2024 31.4 9.3 1.8 42.5
Valuation techniques
The fair values of the hotel and owner-occupied property have been determined
using the following approach in accordance with International Valuation
Standards:
Hotel: a 10 year discounted cash flow model with an assumed exit thereafter. The
projected EBITDA in the 11th year is capitalised at a market yield before
being brought back to present day values
Owner - occupied an income capitalisation approach whereby contracted and market rental values
are capitalised with a market capitalisation rate
property:
This technique is consistent with the principles in IFRS 13 Fair Value
Measurement and use significant unobservable inputs such that the fair value
measurement of the hotel within the portfolio has been classified as Level 3
in the fair value hierarchy.
11 ASSETS HELD FOR SALE
United Kingdom Germany France Total
£m £m £m £m
At 1 January 2025 112.5 20.5 - 133.0
Disposals (101.1) (20.5) - (121.6)
Transfer from investment property 21.9 146.8 6.9 175.6
Revaluation - - - -
Exchange rate variances - - - -
At 30 June 2025 33.3 146.8 6.9 187.0
The balance above comprises 7 properties (31 Dec 2024: 4 properties; 30 June
2024: 3 properties) that at 30 June 2025 were being marketed for sale and are
expected to be disposed of within 12 months via an open market process. The
properties are situated in the UK, Germany and France. The Directors expect
that the sale proceeds achieved to be similar to their carrying amounts.
One property classified as held for sale at 31 December 2024 was transferred
back into investment property during the period. Despite the Directors
determining this property met the threshold of held for sale as at 31 December
2024, a suitable purchaser was not identified for this property and it is no
longer classified as held for sale, as it was not being actively marketed at
30 June 2025. As held for sale properties are held at fair value, the change
in classification has no material impact on the financial statements.
United Kingdom Germany France Total
£m £m £m £m
At 1 January 2024 47.3 115.6 9.8 172.7
Disposals (40.8) - (9.8) (50.6)
Transfer from/(to) investment property 96.7 (83.9) - 12.8
Revaluation - (0.5) - (0.5)
Exchange rate variances - (1.7) - (1.7)
At 30 June 2024 103.2 29.5 - 132.7
United Kingdom Germany France Total
£m £m £m £m
At 1 January 2024 47.3 115.6 9.8 172.7
Disposals (40.8) (8.3) (9.8) (58.9)
Transfer from/(to) investment property 106.0 (84.3) - 21.7
Revaluation - - - -
Exchange rate variances - (2.5) - (2.5)
At 31 December 2024 112.5 20.5 - 133.0
12 BORROWINGS
MATURITY PROFILE
At 30 June 2025 Secured bank
loans
£m
Maturing in:
Within one year or on demand 299.2
One to two years 109.3
Two to five years 271.5
More than five years 246.7
926.7
Unamortised issue costs (3.7)
Borrowings 923.0
Due within one year (298.0)
Due after one year 625.0
At the year ended 31 December 2024, £373.7 million of borrowings were due for
repayment within one year and £98.9 million was due within one to two years
including unamortised issue costs (see 2024 Annual Report and Accounts, note
19). During the six-month period, CLS has refinanced or repaid £192.3
million.
At 30 June 2024 Secured bank
loans
£m
Maturing in:
Within one year or on demand 249.4
One to two years 247.9
Two to five years 315.4
More than five years 220.2
1,032.9
Unamortised issue costs (4.4)
Borrowings 1,028.5
Due within one year (247.9)
Due after one year 780.6
At 31 December 2024 Secured bank
loans
£m
Maturing in:
Within one year or on demand 373.7
One to two years 98.9
Two to five years 326.8
More than five years 204.1
1,003.5
Unamortised issue costs (4.3)
Borrowings 999.2
Due within one year (372.4)
Due after one year 626.8
12 BORROWINGS (continued)
FAIR VALUES
Carrying amounts Fair values
30 June 2025 30 June 2024 31 December 2024 30 June 2025 30 June 2024 31 December 2024
£m £m £m £m £m £m
Current borrowings 298.0 247.9 372.4 298.0 247.9 372.4
Non-current borrowings 625.0 780.6 626.8 585.0 719.3 629.8
923.0 1,028.5 999.2 883.0 967.2 1,002.2
The valuation methods used to measure the fair values of the Group's fixed
rate borrowings were derived from inputs which were either observable as
prices or derived from prices taken from Bloomberg (Level 2).
13 SHARE CAPITAL
Number of shares authorised, issued and fully paid
Ordinary Treasury Total ordinary shares Ordinary shares in circulation Treasury Total
shares in shares Number £m shares ordinary shares
circulation Number £m £m
Number
At 1 January 2024, 30 June 2024 and 31 December 2024 397,410,268 41,367,512 438,777,780 9.9 1.1 11.0
Issue of shares 700,474 (700,474) - - - -
- - - -
At 30 June 2025 398,110,742 40,667,038 438,777,780 9.9 1.1 11.0
14 EARNINGS PER SHARE
The calculation of earnings per ordinary share is based on earnings after tax
and the weighted average number of ordinary shares in issue during the year.
30 June 2025 30 June 2024 Number 31 December 2024 Number
Number
Weighted average number of ordinary shares in circulation 398,056,562 397,410,268 397,410,268
Number of ordinary shares in circulation 398,110,742 397,410,268 397,410,268
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. The diluted earnings per share does not assume conversion of potential
ordinary shares that would have an antidilutive effect on earnings per share.
The diluted loss per share for the period to 30 June 2025 was restricted to a
loss of 6.1 pence per share, as the loss per share cannot be reduced by
dilution in accordance with IAS 33 Earnings Per Share.
The Group has three types of dilutive potential ordinary shares, being:
unvested shares granted under the Long Term Incentive Plan for executive
directors and senior management; unvested shares granted under the Element B
plan for executive directors and senior management; and unvested shares
granted under the Special Share Award plan to key management. The issue of all
these unvested shares is contingent upon satisfying specified conditions such
as length of service and company performance.
Employee share plan 30 June 2025 30 June 2024 31 December 2024
Number Number Number
Element B / Special Share Award - 694,695 694,695
LTIP 6,892,410 4,811,944 4,811,944
Total potential dilutive shares 6,892,410 5,506,639 5,506,639
15 CASH GENERATED FROM OPERATIONS
Six months ended Six months ended Year ended
30 June 2025 30 June 2024 31 December 2024
£m £m £m
Operating loss (3.8) (43.9) (52.5)
Adjustments for:
Net movements on revaluation of investment properties 32.3 82.8 127.7
Net movements on revaluation of equity investments (0.3) 0.4 0.6
Depreciation and amortisation 0.3 0.5 1.0
Loss on sale of investment property 6.3 1.4 2.3
Lease incentive debtor adjustments (4.7) 0.1 (10.4)
Share-based payment charge - 0.3 0.6
Loss on sale of other equity investments - - 0.1
-
Changes in working capital:
Decrease/(increase) in receivables 3.2 4.6 2.5
(Decrease)/increase in payables (6.1) (5.4) (0.7)
Cash generated from operations 27.2 40.8 71.2
16 CASH AND CASH EQUIVALENTS
Six months Six months Year ended
ended ended 31
30 June 30 June December
2025 2024 2024
£m £m £m
Cash at bank 63.9 68.5 60.5
At 30 June 2025, cash at bank included £42.6 million (31 Dec 2024: £41.4
million; 30 June 2024: £24.7 million) which was restricted by a third-party
charge. £10.2 million of the restricted cash related to tenant deposits (31
Dec 2024: £10.1 million; 30 June 2024: £9.7 million).
17 RELATED PARTY TRANSACTIONS
There have been no material changes in the related party transactions
described in the last annual report, other than those disclosed elsewhere in
this condensed set of financial statements.
18 POST BALANCE SHEET EVENTS
The Group completed on the sale of Les Reflets, Lille on 25 July 2025 and
unconditionally exchanged on the sale of Jarrestrasse, Hamburg, with
completion in late August for a combined total of £24.3 million. At the
balance sheet date these were all classified as assets held for sale on the
balance sheet.
There were no other material events after 30 June 2025 which have a bearing on
the understanding of the financial statements and require disclosure.
GLOSSARY
Administration cost ratio
Recurring administration expenses of the investment property operating segment
expressed as a percentage of net rental income.
Balance sheet loan-to-value
Net debt expressed as a percentage of property assets.
Building Research Establishment Environmental Assessment Method (BREEAM)
An environmental impact assessment method for non-domestic buildings. Their
standards cover new construction, In-Use as well as refurbishment and fit-out.
BREEAM In-Use enables property investors, owners, managers and occupiers to
determine and drive sustainable improvements in the operational performance of
their buildings. It provides sustainability benchmarking and assurance for all
building types and assesses performance in a number of areas; management,
health & wellbeing, energy, transport, water, resources, resilience, land
use & ecology, and pollution. Performance is measured across a series of
ratings; Good, Very Good, Excellent and Outstanding.
Carbon emissions Scopes 1, 2 and 3
Scope 1 - direct emissions;
Scope 2 - indirect emissions; and
Scope 3 - other indirect emissions.
CDP
CDP, formerly known as the Carbon Disclosure Project, assesses the ESG
performance of all major companies worldwide and aids comparability between
organisations to allow the investor community to assess the carbon and climate
change risk of each company.
Contracted rent
Annual contracted rental income after any rent-free periods have expired.
Dividend cover
The ratio of EPRA earnings over the dividend paid to shareholders.
Earnings per share
Profit for the year attributable to the owners of the Company divided by the
weighted average number of ordinary shares in issue in the period.
Energy Performance Certificate (EPC)
An EPC is an asset rating detailing how energy efficient a building is, rated
by carbon dioxide emission on a scale of A-G, where an A rating is the most
energy efficient. They are legally required for any building that is to be put
on the market for sale or rent.
European Public Real Estate Association (EPRA)
A not-for-profit association with a membership of Europe's leading property
companies, investors and consultants which strives to establish best practices
in accounting, reporting and corporate governance and to provide high-quality
information to investors. EPRA's Best Practices Recommendations includes
guidelines for the calculation of the following performance measures which the
Group has adopted.
EPRA capital expenditure
Investment property acquisitions and expenditure split between amounts used
for the creation of additional lettable area ("incremental lettable space")
and enhancing existing space ("no incremental space") both on an accrual and
cash basis.
EPRA cost ratio
Administrative & operating costs (including & excluding costs of
direct vacancy) divided by gross rental income. A measure to enable meaningful
measurement of the changes in a company's operating costs.
EPRA earnings per share (EPS)
Earnings from operational activities. A measure of a company's underlying
operating results and an indication of the extent to which current dividend
payments are supported by earnings.
EPRA like-for-like rental growth
Like-for-like net rental growth compares the growth of the net rental income
of the portfolio that has been consistently in operation, and not under
development, during the two full preceding periods that are described.
EPRA net reinstatement value (NRV)
NAV adjusted to reflect the value required to rebuild the entity and assuming
that entities never sell assets. Assets and liabilities, such as fair value
movements on financial derivatives are not expected to crystallise in normal
circumstances and deferred taxes on property valuation surpluses are excluded.
EPRA net tangible assets (NTA)
Assumes that entities buy and sell assets, thereby crystallising certain
levels of unavoidable deferred tax.
EPRA net disposal value (NDV)
Represent the shareholders' value under a disposal scenario, where deferred
tax, financial instruments and certain other adjustments are calculated to the
full extent of their liability, net of any resulting tax.
EPRA net initial yield (NIY)
Annualised rental income based on the cash rents passing at the balance sheet
date, less non-recoverable property operating expenses, divided by the market
value of the EPRA property portfolio, increased by estimated purchasers'
costs.
EPRA LTV
The aim of EPRA LTV is to assess the gearing of the shareholder equity within
a real estate company by adjusting IFRS reporting. The main overarching
concepts are: any capital which is not equity is considered as debt
irrespective of its IFRS classification; it is calculated on proportional
consolidation; and assets are included at fair value and net debt at nominal
value.
EPRA 'topped-up' net initial yield
This measure incorporates an adjustment to the EPRA NIY in respect of the
expiration of rent-free periods (or other unexpired lease incentives such as
discounted rent periods and step rents).
EPRA vacancy rate
Estimated rental value (ERV) of immediately available space divided by the ERV
of the lettable portfolio.
Estimated rental value (ERV)
The market rental value of lettable space as estimated by the Group's valuers.
GRESB
GRESB assesses and benchmarks the environmental, social and governance (ESG)
performance of real assets, providing standardised and validated data to the
capital markets.
Interest cover
The aggregate of group revenue less costs, divided by the aggregate of
interest expense and amortisation of loan issue costs, less interest income.
Key performance indicators
(KPIs) Activities and behaviours, aligned to both business objectives
and individual goals, against which the performance of the Group is annually
assessed. Performance measured against them is referenced in the annual
report.
Liquid resources
Cash and short-term deposits.
Net assets per share or net asset value (NAV)
Equity attributable to the owners of the Company divided by the number
of ordinary shares.
Net debt
Total borrowings less liquid resources.
Net gearing
Net debt expressed as a percentage of net assets attributable
to the owners of the Company.
Net initial yield
Net rent on investment properties and properties held for sale expressed as
a percentage of the valuation of those properties.
Net rent
Passing rent less net service charge costs.
Over-rented
The amount by which ERV falls short of the aggregate of contracted rent.
Passing rent
Contracted rent before any rent-free periods have expired.
Property loan-to-value
Property borrowings expressed as a percentage of the market value of the
property portfolio.
Real Estate Investment Trust (REIT)
A Real Estate Investment Trust (REIT) is a vehicle that allows an investor to
obtain broadly similar returns from their investment, as they would have, had
they invested directly in property. In the UK a REIT is exempt from UK tax on
the income and gains of its property rental business. A REIT in the UK is
required to invest mainly in property (75% of total Group's assets and profits
must be in the tax exempt business) and to pay out 90% of the profits from its
property rental business as measured for tax purposes as dividends to
shareholders (property income distributions). In the hands of the shareholder,
property income distributions (PID) are taxable as profits of a UK property
rental business. The PID is received net of withholding tax, unless it is to a
recipient entitled to gross payment.
Rent reviews
Rent reviews take place at intervals agreed in the lease (typically every five
years) and their purpose is usually to adjust the rent to the current market
level at the review date. For upwards only rent reviews, the rent will either
remain at the same level or increase (if market rents are higher) at the
review date.
Rent roll
Contracted rent.
Return on equity
The aggregate of the change in equity attributable to the owners of the
Company plus the amounts paid to the shareholders as dividends and the
purchase of shares in the market, divided by the opening equity attributable
to the owners of the Company.
Reversion
The amount by which ERV exceeds contracted rent.
Streamlined energy and carbon reporting (SECR)
The SECR regulations were introduced in April 2019 and require companies
incorporated in the UK to undertake enhanced disclosures of their energy and
carbon emissions in their financial reporting.
The Task Force on Climate-related Financial Disclosures (TCFD)
Set up by the Financial Stability Board (FSB) in response to the G20 Finance
Ministers and Central Bank Governors request for greater levels of
decision-useful, climate-related information; the TCFD was asked to develop
climate-related disclosures that could promote more informed investment,
credit (or lending), and insurance underwriting decisions. In turn, this would
enable stakeholders to understand better the concentrations of carbon-related
assets in the financial sector and the financial system's exposures to
climate-related risks.
Total Accounting Return - basic
The change in IFRS net assets before the payment of dividends.
Total Accounting Return
The change in EPRA NTA before the payment of dividends.
Total Shareholder Return (TSR)
The growth in capital from purchasing a share, assuming that dividends are
reinvested every time they are received.
True equivalent yield
The capitalisation rate applied to future cash flows to calculate the gross
property value, as determined by the Group's external valuers.
UN Sustainable Development Goals (SDGs)
The 2030 Agenda for Sustainable Development, adopted by all United Nations
Member States in 2015, provides a shared blueprint for peace and prosperity
for people and the planet, now and into the future. At its heart are the 17
Sustainable Development Goals (SDGs), which are an urgent call for action by
all countries - developed and developing - in a global partnership. They
recognise that ending poverty and other deprivations must go hand-in-hand with
strategies that improve health and education, reduce inequality, and spur
economic growth - all while tackling climate change and working to preserve
our oceans and forests.
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