REG - CLS Holdings PLC - Annual Financial Results
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RNS Number : 4919W CLS Holdings PLC 13 March 2026
13 March 2026
THIS ANNOUNCEMENT RELATES TO THE DISCLOSURE OF INFORMATION THAT QUALIFIED OR
MAY HAVE QUALIFIED AS INSIDE INFORMATION WITHIN THE MEANING OF ARTICLE 7(1) OF
THE MARKET ABUSE REGULATION (EU) 596/2014
CLS HOLDINGS PLC
("CLS", the "Company" or the "Group")
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2025
MAKING PROGRESS ON ACHIEVING OUR STRATEGIC PRIORITIES
CLS is a leading office space specialist and a supportive, progressive and
sustainably focused commercial landlord, with a £1.7 billion portfolio in the
UK, Germany and France, offering geographical diversification with local
presence and knowledge.
For the year ended 31 December 2025, the Group has delivered the following
results:
2025 2024 Change (%)
EPRA earnings(1) (£m) 30.2 36.4 (17.0)
Statutory (IFRS) loss after tax (£m) (50.3) (93.6) Nm(2)
EPRA earnings per share(1) (pence) 7.6 9.2 (17.4)
Statutory (IFRS) earnings per share (pence) (12.6) (23.6) Nm(2)
Dividend per share (pence) 4.0 5.28 (24.2)
EPRA net tangible assets(1) (NTA) per share (pence) 200.7 215.0 (6.7)
Statutory net asset value (NAV) per share (pence) 186.4 197.3 (5.5)
Total Accounting Return (%) (4.8) (11.9) Nm(2)
(1) A reconciliation of statutory to alternative performance measures is set
out in Note 5 to the Group financial statements
(2) Nm = Not meaningful
Fredrik Widlund, Chief Executive Officer of CLS, commented:
"In 2025, CLS has focused on achieving its strategic priorities, concentrating
on what is within our control and continuing to navigate a prolonged downturn
in the property cycle amid significant domestic and international economic and
political uncertainty. We are clear on what we need to do to refocus the
business and drive operational efficiency, strengthen our balance sheet and
position our assets for long-term growth: we made good progress in 2025 and
expect that to continue in 2026."
FINANCIAL HIGHLIGHTS
· EPRA EPS fell 17.4% to 7.6 pence (2024: 9.2 pence) per share
reflecting loss of rent from disposals and the above-target vacancy rate,
partly offset by reduced finance and administration costs. Prior year EPS also
benefited from 0.7 pence related to a forfeited deposit.
· Portfolio valuation fell 3.8% in local currency (UK -4.6%, Germany
-2.7% and France -4.5%), although the UK was impacted by a change in the
valuation basis of Spring Gardens to a residential development site. Excluding
this, our UK portfolio fell by 1.6%.
· Statutory loss after tax of £50.3 million (2024: £93.6 million
loss) primarily due to a £79.2 million (2024: £127.7 million) net valuation
decline on investment properties. This translates to statutory loss per share
of 12.6 pence (2024: 23.6 pence loss).
· EPRA NTA per share fell 6.7% to 200.7 pence (2024: 215.0 pence)
primarily as a result of the decline in property values, offset partly by net
foreign exchange gains from our portfolios in Germany and France. Total
accounting return for the year was -4.8% (2024: -11.9%).
· A final dividend of 2.7 pence per share (2024: 2.68 pence) will be
proposed at the Annual General Meeting, resulting in a full dividend of 4.0
pence per share (2024: 5.28 pence per share). The full year dividend is 1.9
times covered by EPRA EPS, in line with the Group's dividend policy.
· Conditional upon shareholder approval at the 2026 AGM, we are
proposing to offer an optional enhanced scrip dividend scheme for the final
dividend under which shareholders are able to opt to take new shares instead
of cash at a 5% discount to the reference share price, increasing their
investment in the company and enhancing our ability to invest in our
portfolio.
OPERATIONAL HIGHLIGHTS
· Net rental income decreased by 11.1% to £101.3 million (2024:
£114.0 million) reflecting the combination of a like-for-like decrease of
6.3% due to increased portfolio vacancy and disposals during the year. The
prior year also benefited from £2.9 million from a forfeited deposit which
did not reoccur in 2025.
· Disposals totalling £144.2 million completed during the year,
including Spring Mews Student, Vauxhall. In December 2025, we signed a
conditional sale agreement with a residential developer for Spring Gardens,
Vauxhall, which is expected to complete in late 2026 or early 2027.
· We secured contracted annual rent of £17.0 million (2024: £16.6
million) across 99 new lettings and renewals in 2025 (2024: 112), including an
eight-year, index-linked lease for 14,700 sqm at Gotic Haus, due to commence
in November 2026. As a whole, leases were signed at 6.3% above 31 December
2024 estimated rental values. Rent collection rates remain high at 99% of
contracted rent due.
· Vacancy increased to 14.5% (2024: 12.7%) largely reflecting
anticipated lease expiries at New Printing House Square in London and Inside
in Paris, as well as the previously announced two large unforeseen
insolvencies in our German portfolio late in the year. We are seeing a good
level of enquiries for our vacant space so far this year and are also
evaluating strategic refurbishment or redevelopment opportunities to support
medium-term value creation.
· Our embedded focus on improving the sustainability credentials of
our portfolio continues: we achieved a 5.8% reduction in like-for-like
landlord energy usage (2024: 4.9% reduction) and 84% of our UK portfolio has
an Energy Performance Certificate rating of A-C (2024: 82%).
FINANCING
· Net debt fell by £86.2 million during the year, mainly reflecting
our disposal activity. Our loan-to-value (LTV) ratio was 50.0% at 31 December
2025 (2024: 50.7%) reflecting lower debt levels, offset by the decline in
portfolio value.
· We refinanced or repaid an exceptionally high £373.7 million of
loans during the year with a minimal impact on the weighted average cost of
debt which was 3.8% at 31 December 2025 (2024: 3.8%). This activity both
increased the average debt maturity to 3.6 years (2024: 3.2 years) and
smoothed the future maturity profile.
· 69% of debt is at fixed rates and 7% is subject to interest rate
caps (2024: 80% fixed and 4% caps).
· Our balance sheet remains resilient with cash and cash
equivalents (including restricted cash) of £49.4 million (2024: £60.5
million) and undrawn credit facilities of £38.0 million (2024: £60.0
million).
OUTLOOK
· We remain confident in both our long-term strategy of owning and
actively managing high-quality, well-located, multi-let office assets in
Europe's three largest economies, and our near-term strategic priorities of
reducing our vacancy, strengthening our balance sheet through active
refinancing and disposals, and investing in our properties.
· Economic conditions remain subdued across Europe but the outlook was
becoming more supportive before the war in the Middle East. It is early days
and therefore difficult to judge the short- and longer-term impact of the war
on Europe's economies and, therefore, property markets. Local factors remain
important: Germany should be well positioned to benefit from stimulative
fiscal policy and, in a number of our markets, office supply constraints are
beginning to emerge following a prolonged period of limited new construction.
· We are focusing on executing initiatives within our control to deliver
on our strategic priorities. We are encouraged by letting interest so far this
year and we continue to work hard to reduce our vacancy rate towards our
long-term target of 5%.
· We expect to dispose between £100 million and £150 million of
assets during 2026 to help reduce our leverage towards our target LTV range of
between 35% and 45%. In addition, we have submitted the planning application
for the Spring Gardens residential redevelopment and, subject to achieving
permission later this year, we expect to complete the disposal in late 2026 or
early 2027.
· While the effects of our disposal programme, refinancing activity
and preparation of certain larger assets for redevelopment are likely to
impact earnings in 2026, we believe these necessary actions will bear fruit in
the medium-term, improving and focusing our portfolio, driving higher
occupancy and strengthening our balance sheet, creating a business capable of
delivering attractive and sustainable long-term value for shareholders.
Dividend Timetable
Ex-dividend date 9 April 2026
Record date 10 April 2026
Scrip Reference Share Price calculation period 9 - 15 April 2026
(5 dealing days)
Scrip Reference Share Price and Enhanced scrip dividend alternative announced 16 April 2026
Latest date for receipt of scrip elections 30 April 2026
Payment date 22 May 2026
- ends -
Results presentation
A presentation for analysts and investors will be held in-person at Panmure
Liberum, by webcast on Friday 13 March 2026 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 to access here:
https://sparklive.lseg.com/CLSHoldings/events/05fc441f-3fb4-4171-9f61-86215644c490/cls-holdings-plc-full-year-results-2025
(https://sparklive.lseg.com/CLSHoldings/events/05fc441f-3fb4-4171-9f61-86215644c490/cls-holdings-plc-full-year-results-2025)
Further information
CLS Holdings plc
(LEI: 213800A357TKB2TD9U78)
www.clsholdings.com (http://www.clsholdings.com/)
Fredrik Widlund, Chief Executive Officer
Harry Stokes, 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.
Group at a glance
Our office portfolio at a glance (at 31 December 2025)
Valuation data(1) Market value of property Underlying valuation movement (%) EPRA net initial yield (%) EPRA 'topped-up' net initial yield Equivalent yield Reversion (%) Over-rented
£m
(%)
(%)
(%)
United Kingdom 641.7 (4.6) 5.5 6.6 7.5 4.9 9.8
Germany 800.4 (2.7) 4.2 4.9 5.3 3.7 14.0
France 223.6 (4.5) 4.7 5.3 6.2 2.6 6.2
Total office portfolio 1,665.7 (3.8) 4.8 5.6 6.1 4.1 11.2
Lease data(1) Average lease length Contracted rent of leases expiring in: ERV of leases expiring in:
To break years To expiry years Year 1 Year 2 3 to 5 years £m After 5 years £m Year 1 Year 2 3 to 5 years £m After 5 years £m
£m
£m
£m
£m
United Kingdom 2.6 3.8 16.2 4.0 15.7 11.5 14.0 3.7 16.2 11.2
Germany 7.4 7.4 4.8 9.2 13.1 18.6 4.9 8.4 12.1 15.6
France 2.5 5.3 0.8 0.7 3.9 7.7 0.8 0.7 3.7 7.4
Total office portfolio 4.7 5.5 21.8 13.9 32.7 37.8 19.7 12.8 32.0 34.2
Rental data(1) Lettable space Contracted rent ERV of lettable Contracted rent subject to indexation EPRA vacancy rate %
sqm
£m
space
£m %
('000)
United Kingdom 146.9 47.4 55.0 30.7 18.0
Germany 323.1 45.7 46.1 76.0 11.1
France 63.6 13.1 14.3 100.0 12.1
Total office portfolio 533.6 106.2 115.4 58.7 14.5
1 The above tables comprise data for our offices in investment
properties and held for sale (see note 12 and 14). They exclude owner-occupied
space, student accommodation and hotel.
Chief Executive's review
Introduction
The economic backdrop of our three chosen geographies of the UK, Germany and
France during 2025 was stable but with slow economic growth. When combined
with varying levels of political uncertainty both domestically and
internationally, the environment was not conducive to improved investment and
employment levels which are so important for office occupier demand.
Post-pandemic hybrid and flexible working practices are stabilising and, in
areas, reversing. Businesses and their employees recognise that offices have
an important role to play in efficient, productive and collaborative working.
Equally, occupiers now expect more from their offices in terms of amenities,
collaborative space, higher sustainability standards (not least to reduce
occupancy costs) and a greater focus on employee wellbeing.
The office sub-markets in which we operate have varying degrees of strength at
the moment. Core city markets tend to be characterised by limited supply and
rental growth; suburban and regional markets have more availability with
softer lease terms while supply stabilises through a combination of lettings
and the removal of older offices through change of use, mainly to residential
space. All of our properties are located in or close to major European cities
and they are characterised by being in strong local business centres with
good transport links. We remain confident in the long-term success of these
markets, particularly as companies look for space convenient for their
employees, with shorter commutes and lower-cost, high quality space.
Recent structural changes have reshaped the office market and CLS is
responding to these changes. We constantly review our portfolio, selling
properties no longer core to our strategy and those for which we have
maximised value, but also focusing on multi-let offices where we can benefit
from tenant diversification. This reduces concentration risk and the impact
of structural changes to any one sector of the economy. For example, the
revolutionary impact of Artificial Intelligence (AI) presents both challenges
and opportunities.
We use AI to make our own business more productive, and we are mindful that
our diversified tenant base will be impacted in different ways and
at different times. By having in-house asset management, we keep close to our
tenants and ensure that we can react quickly to their evolving needs, as well
as directing our capital expenditure to ensure that we are well positioned
to benefit from new businesses and technologies that will emerge as part of
the AI revolution.
Internally, we have undertaken some difficult but necessary measures to reduce
our cost base to reflect the size of our portfolio. The actions we are taking
to improve our operational performance will result in a leaner CLS and one
that is fit for the future.
Delivering on our strategic priorities
We continue to make progress in reshaping the business to ensure long-term
success based on our four strategic priorities.
Reduce vacancy and improve earnings growth
As expected, vacancy increased during the first half of the year from 12.7% at
the end of 2024 to 15.1% at June 2025 as newly refurbished space was
completed. Since the half-year, we have made good progress in letting this new
space at Artesian (now 35% full), The Coade (now 41% full) and at Gotic Haus
in Dortmund with an eight year, 14,700 sqm lease taking the building to 85%
occupied.
As a result of this increased second half letting activity, vacancy fell to
14.5% at the end of 2025 and would have fallen further to 13.7% had it not
been for two larger tenants unexpectedly entering into insolvency in Germany.
During the year, leases signed were on average 6.3% ahead of valuers'
estimated rental values (ERV) and 2026 has started well with a good level of
enquiries, and we continue to work hard to reduce the vacancy rate towards
our long-term target of 5%.
Reduce debt through targeted asset sales
In 2025, we made further progress with our sales programme but in a
consciously disciplined manner. In 2024 we completed £66.1 million of sales
and the progress accelerated in 2025 with £144.2 million of properties sold.
A particular highlight was the £101.1 million sale of Spring Mews Student,
which was well-timed given the more recent downturn in the purpose-built
student accommodation market.
In 2026, we are aiming to dispose of between £100-£150 million of assets,
excluding Spring Gardens where we have exchanged contracts to sell
the property to a residential developer, conditional on achieving
satisfactory planning permission. We have initiated sales programmes on more
than the targeted level and are under offer on around £140 million,
including Spring Gardens.
CLS remains committed to bringing its LTV to within the targeted range of
between 35% and 45%. At the end of 2025, our LTV was 50.0% (2024: 50.7%),
reflecting a balance of asset disposals and property value declines during
the year. Successful completion of £100-£150 million of disposals, absent
further property value declines, will reduce LTV to between 45% and 47%.
However, we may consider more sales if LTV does not reduce sufficiently
quickly, particularly if we receive favourable unsolicited offers.
Successful refinancing or repayment of debt due in 2025
Due to lease expiries and short-term debt extensions, CLS had a
disproportionately higher amount of debt maturing in 2025. As a result of
refinancings and the restructuring of some portfolio loans, all £373.7
million across 11 loans with nine lenders was successfully refinanced,
extended or repaid.
The profile of debt maturities is now more evenly spread in future years such
that no more than £200 million is expiring in any year going forward. As at
31 December 2025, we had £199.3 million of debt maturing in 2026. This
comprised £145.5 million across seven loans, £42.0 million of committed
facilities and £11.8 million of amortisation. We are confident that debt
expiring in 2026 will be refinanced or repaid alongside sales.
Investing in our properties to unlock additional value
The pandemic accelerated occupier demands for higher quality buildings in
terms of amenities, flexibility, wellbeing, digital infrastructure and
sustainability. During the year, we invested £14.3 million in our portfolio,
although capital expenditure requirements vary year to year depending on
occupier demand and timing of projects. We are also more consciously linking
expenditure to pre-lets, as well as regulatory requirements, to ensure faster
and more certain returns on this investment.
Financial results
In 2025, EPRA earnings per share (EPS) fell by 17.4% to 7.6 pence (2024: 9.2
pence), reflecting primarily reduced net rental income largely as a result of
disposals, particularly of Spring Mews Student, offset in part by
lower financing costs as a result of lower levels of net debt and lower
operating and administrative costs. 2024 EPS also benefited by 0.7 pence from
the receipt of a forfeited deposit which was not repeated in 2025.
IFRS EPS improved to a loss of 12.6 pence (2024: loss of 23.6 pence)
reflecting the lower overall decline of our portfolio value and lower net
finance costs compared to 2024. These contributed to a 6.7% reduction in EPRA
NTA to 200.7 pence per share (2024: 215.0 pence) and a 5.5% reduction in
statutory NAV per share to 186.4 pence (2024: 197.3 pence).
Dividends
We are recommending a final dividend of 2.70 pence per share, in line with the
2.68 pence final dividend declared in 2024. The total dividend for the year is
therefore 4.0 pence, 24% lower than the 2024 dividend (5.28 pence), reflecting
the dividend policy established in 2024 that dividends should be 1.5 to 3.0
times covered by EPRA earnings. The 2025 full dividend is 1.9 times covered by
EPRA EPS of 7.6 pence.
Subject to shareholder approval, we are proposing to offer an enhanced scrip
dividend scheme for the 2025 final dividend. Under the UK REIT rules, we are
obliged to distribute substantially all of our UK earnings, leaving us
with limited ability to retain capital in the business for future
investment. By offering an enhanced scrip scheme, shareholders are able
to opt to take new shares at a 5% discount to the Reference Share Price
instead of a cash dividend, increasing their investment in the company
and enhancing our ability to invest in our portfolio.
Property portfolio
At 31 December 2025, the value of our investment portfolio, including assets
held for sale, was £1.70 billion (2024: £1.85 billion), reflecting disposals
during the year as well as a 3.8% decline in value on a constant currency
basis (2024: 5.8% decline). Within this, the UK portfolio fell by 4.6%, or by
1.6% excluding Spring Gardens (2024: 8.3% decline), Germany by 2.7% (2024:
3.5% decline) and France by 4.5% (2024: 5.1% decline).
The lower valuation reflected a slight softening of property yields, by 16
basis points to an equivalent yield of 6.1% (2024: 5.9%) and ERVs which fell
by 0.1% (2024: 0.8% fall).
The overall decline was lower than last year, reflecting our belief that
values are stabilising in a lower interest rate environment. One of the
largest individual moves was Spring Gardens where the valuers have adjusted
the basis of valuation to reflect the conditional agreement to sell the
property for residential development. This comprises a payment on
satisfaction of the conditions (primarily planning permission) and potential
overage payments which will not be known until the new owner completes the
development.
Asset and property management
At 31 December 2025, our lettable portfolio totalled 533,597 sqm and generated
£91.1 million of annualised (passing) rent. Most of our buildings are
multi-let, housing 669 tenants of which 30.2% are government agencies, 32.2%
are large corporations and 13.4% are medium-sized companies. The strength of
our occupier base is reflected in a billed rent collection rate of 99% (2024:
99%). In addition to rent currently being paid, a further £15.1 million of
rent will be paid once rent-free periods expire.
Over the course of the year, we signed £17.0 million of new annualised rent
(2024: £16.6 million) across 99 lettings and renewals at an average 6.3%
above ERV.
Our vacancy rate at the end of 2025 was 14.5% (2024: 12.7%), the increase due
in part to planned expiries at New Printing House Square and other buildings
as we work towards vacant possession in advance of redevelopment, and two
tenant insolvencies in Germany towards the end of the year. We also have a
number of properties which are subject to planned future development,
conversion to alternative use, or actively undergoing significant
refurbishment or development. These buildings form our future pipeline of
opportunities to add value to our portfolio.
During the year, we invested £14.3 million of capital in our existing
portfolio, and delivered 9,532 sqm of newly refurbished or developed space of
which 6,194 sqm has been let.
In 2026, there are a number of known and potential upcoming expiries, not
least at Spring Gardens where the National Crime Agency lease expires in
September, shortly before we expect to sell the site for residential
development, and at Harman House and New Printing House Square, both earmarked
for medium-term redevelopment. While we are working hard to retain tenants,
these may cause short-term volatility in earnings and vacancy while we work to
realise the attractive medium-term opportunities they present.
Balance sheet and financing
At 31 December 2025, net debt fell by 9.2% to £852.5 million (2024: £938.7
million), reflecting disposals during the year. The weighted average cost of
debt remained stable despite the refinancing activity, while the weighted
maturity of the debt book increased to 3.6 years (2024: 3.2 years) as a
result of the refinancing activity carried out during the year, lengthening
and smoothing the future maturity profile.
Our primary leverage indicator is balance sheet loan to value (LTV) ratio and
this improved slightly to 50.0% (2024: 50.7%) reflecting the lower debt
levels, offset by the reduction in the value of the property portfolio. An
alternative leverage measure, net debt to EBITDA (earnings before interest,
tax, depreciation and amortisation) increased to 12.4 times (2024: 11.9 times)
reflecting the interplay between the lower level of earnings during the year
and lower net debt at the end of the year. As we make progress on our
strategic priorities (reducing net debt and improving earnings), we expect
this measure to fall. Interest cover (defined as EBITDA divided by net finance
costs), was 1.8 times (2024: 1.9 times) reflecting lower net finance costs,
following the debt repayments in 2025, offset by lower EBITDA than in 2024.
During the year, we refinanced or repaid £373.7 million of debt across 11
loans from nine lenders. In 2026, the refinancing requirements are
substantially lower, with £199.3 million of maturing secured loans and credit
facilities. Discussions are underway with new and existing lenders, with most
of the debt maturing in the second half of the year.
At 31 December 2025, the Group had cash and cash equivalents (including
restricted cash - see note 16) of £49.4 million (2024: £60.5 million),
£28.0 million of undrawn committed facilities (2024: £50.0 million) and
a £10.0 million overdraft facility (2024: £10.0 million).
Sustainability
CLS is half-way into the delivery of its 2030 Sustainability Strategy and Net
Zero Carbon (NZC) Pathway. Since the launch date in 2020, both the Group's
near and medium-term business strategy and the sustainability landscape have
evolved. To ensure the ongoing and future strategic alignment of the Group's
approach to building and value chain decarbonisation and its overall business
strategy, CLS is undertaking a review of its current NZC Pathway. The Group
remains committed to becoming a net zero carbon business and any amendments
to the current Pathway will be validated by the Science Based Targets
initiative (SBTi), ensuring alignment with the latest climate science.
In 2025, as part of the Group's current NZC Pathway, CLS has continued to
deliver energy efficiency and carbon reduction projects across the portfolio
and the annual, like-for-like, landlord energy consumption decreased by 5.8%
whilst our Scope 1 and 2 greenhouse gas emissions reduced by 9.3%, meaning we
remain on track to deliver our current NZC Pathway targets. We also expect to
meet near-term regulatory requirements in our geographies including minimum
Energy Performance Certificate (EPC) ratings in the UK and Décret Tertiaire
in France: 84% of our UK buildings by space have an EPC rated C or better. Our
investment in this important area continues in 2026 with a number of projects
involving the replacement of gas supply with renewable and cleaner sources of
energy.
In 2025, the Group maintained its EPRA sBPR Gold award for sustainability
disclosure and its GRESB four-stars rating for the sustainability of its
portfolio. In 2026, CLS has chosen not to participate in GRESB to reduce the
burden of reporting allowing us to focus our time and resources on direct
decarbonisation of our portfolio. We will continue to assess our buildings
using certification schemes including BREEAM In-Use which we believe are more
meaningful for both occupiers and investors.
As part of our continued commitment to being a responsible company and a
long-term investor in our local communities, we maintained our support for
local and industry-related charities and community organisations as well as
our Living Wage Employer accreditation, covering both UK employees
and regular contractors.
Our staff and our culture
It has not escaped the attention of most market observers that the property
sector has experienced one of its longer downturns which has naturally
impacted not just our financial results but also our employees. We hold
regular town halls and all staff meetings to ensure there are plenty of
opportunities to provide feedback on how we can maintain and improve our
well-established, positive culture throughout the organisation. I am pleased
that our excellent teams have delivered, and continue to deliver, a resolute
focus on executing our strategic priorities. On behalf of the Board, I want to
reiterate our ongoing thanks for their tremendous dedication to, and
achievements for, CLS.
Outlook
We remain confident that the core of the CLS strategy, which has delivered
resilient performance through multiple market cycles, is the right approach
for the Company over the long term. The strategy continues to focus on the
ownership and active management of high-quality, well-located, multi-let
office assets across Europe's three largest economies.
Economic conditions remain subdued across Europe but the outlook was becoming
more supportive before the war in the Middle East. It is early days and
therefore difficult to judge the short- and longer-term impact of the war on
Europe's economies and its property markets. However, local factors remain
important. Germany should be well positioned to benefit from stimulative
fiscal policy with investment in defence and infrastructure expected to
support economic growth and, in turn, office occupier and investor demand over
the medium-term. Additionally, in a number of our markets, supply constraints
are beginning to emerge for high-quality office space following a prolonged
period of limited new construction.
Notwithstanding the wider geopolitical and economic uncertainties, we are
making good progress in delivering operational improvements and executing
initiatives within our control to advance our strategic priorities. These
actions are concentrated on: letting available space to reduce vacancy and
drive earnings growth; executing sales, at appropriate values, to reduce
balance sheet gearing; exploiting opportunities to capture value uplifts as
well as fund ongoing investment to improve the quality of the portfolio; and
refinancing debt maturities and improving Group liquidity.
In the short term, 2026 has started well with a noticeable uptick in enquiries
for our space. However, the combined effects of our disposal programme,
refinancing activity and the preparation of certain larger assets for
redevelopment are likely to impact earnings in 2026.
In the medium-term, we expect these actions to bear fruit, improving occupancy
and creating workplaces in structurally resilient locations where businesses
want to be, driving improved values for our properties, reducing our gearing
and strengthening our balance sheet.
CLS has successfully navigated several market cycles throughout its history,
and we are confident that the Company is well positioned to emerge from the
current period as a stronger, more focused business, delivering sustainable
long-term value for shareholders.
Fredrik Widlund
Chief Executive Officer
United Kingdom
Value of property portfolio Percentage of Group's property interests Number of properties
£677.4m 40% 33
Number of tenants EPRA vacancy rate Lettable space (sqm)
203 18.0% 146.9k
Government and large companies Weighted average lease length to expiry (years) Leases subject to indexation
70.4% 3.8 30.7%
UK market review
The UK economy experienced another volatile year, initially driven by global
economic uncertainty following the imposition of US trade tariffs, and
subsequently by business and consumer caution ahead of the November Budget.
The commercial property investment market improved, with investment volumes
reaching c.£53 billion, up over 20% compared with 2024. The strongest
improvement occurred in the fourth quarter of the year.
Office leasing take-up in London totalled c.10.0 million sq. ft, while the
wider South East market recorded c.3.5 million sq. ft, both broadly in line
with the previous year. Year-end vacancy in London fell from 9.2% to 8.4%,
driven by limited availability of prime properties. Vacancy in the
South East decreased from 12.3% to 11.6%.
Portfolio movement and valuation summary
In 2025, the value of the UK portfolio decreased by £129.6 million as a
result of a revaluation decline of £32.6 million or 4.6%, disposals of
£101.7 million, including Spring Mews Student, Vauxhall, and depreciation of
£0.1 million, partly offset by capital expenditure of £4.8 million. The
overall valuation decline of 4.6% was largely shaped by movement at Spring
Gardens, Vauxhall reflecting a change in valuation approach for this asset to
reflect its conditional sale as a residential development.
Excluding Spring Gardens, the portfolio experienced a more modest decline of
1.6%, influenced by a 13 basis point expansion in equivalent yields on a
like-for-like basis and higher vacancy following lease expiries.
Encouragingly, ERVs edged upwards by 0.2% on a like-for-like basis.
Asset management
EPRA vacancy reduced from 18.5% at 31 December 2024 to 18.0% due to leasing
progress at Artesian, Aldgate and The Coade, Vauxhall offset by the scheduled
expiry of all leases at New Printing House Square, London in June 2025.
In 2025, 52 lease extensions and new leases secured £8.1 million of rent at
an average of 7.9% below 31 December 2024 ERVs, reflecting some short-term,
flexible leases at properties due for medium-term development.
The most significant new leasing transaction in 2025 was the letting of 1,217
sqm at Artesian to a serviced office operator whilst a further 578 sqm was let
to a social media tech company. There was also meaningful progress at The
Coade in Vauxhall where further lettings were secured to a mixture of
financial, media and professional services companies.
In terms of existing tenants, despite the expiry of all leases at New
Printing House Square, renewals were signed with a significant number of
existing tenants which secured a total rent of c.£4 million per annum as part
of the strategy to reposition the building in 2029.
Developments and refurbishments
Total capital expenditure in 2025 was £4.8 million, which was reduced from
the £9.4 million spent in 2024 as our focus switched to smaller fit-outs to
meet tenant requirements.
At Spring Gardens, let to the National Crime Agency, we exchanged a contract
for sale with London Square Developments Limited conditional on achieving
planning consent for a major residential scheme. The planning application was
submitted in February 2026. To support this strategy we extended the leases
with the National Crime Agency to September 2026, securing additional income
of £7.0 million.
The application for Permitted Development Rights at Columbia House, Bracknell
was recently approved and we will commence the design process shortly for our
repositioning of New Printing House Square.
Disposals
During 2025 we completed the sale of the student accommodation at Spring Mews
for £101.1 million, in line with book value.
We continue to look at opportunities to exit some of our smaller assets, or
assets which have a higher value as alternative use, as market conditions
allow.
Outlook
Economic growth in 2026 is expected to remain muted. Recent reductions in
interest rates have been supportive for the property sector but it remains
sensitive to the continuing international political and economic uncertainty.
The November 2025 budget avoided several business tax measures expected by
commentators which helped build optimism for greater occupier and investment
activity. The degree to which this will translate into sustainable momentum
will depend significantly on how the war in the Middle East develops.
Germany
Value of property portfolio Percentage of Group's property interests Number of properties
£802.1m 47% 29
Number of tenants EPRA vacancy rate Lettable space (sqm)
320 11.1% 323.1k
Government and large companies Weighted average lease length to expiry (years) Leases subject to indexation
55.9% 7.4 76.0%
Germany market review
Germany experienced another year of weak growth, characterised by low business
confidence and political uncertainty. Concerns regarding the long-term impact
of trade tariffs and energy supply continued to place pressure on the export
sector and overall economic growth.
Commercial property investment remained subdued, declining to c.€24 billion,
down 4% compared with 2024.
Office leasing activity across the seven largest cities totalled c.2.7 million
sqm, representing a slight increase on the previous year. Average vacancy rose
to 8.0%, with Berlin recording the largest increase in availability. Vacancy
rates vary significantly between cities, with Cologne among the lowest at
5.0%, while Düsseldorf remains elevated at 11.3%.
Portfolio movement and valuation summary
In 2025, the value of the German portfolio decreased by £13.6 million,
reflecting a revaluation decline of £21.9 million or 2.7% in local currency,
disposals totalling £38.8 million and depreciation of £0.1 million. These
impacts were partly offset by a £41.8 million foreign exchange gain and £5.4
million of capital expenditure. In Sterling, the property valuation growth was
2.6% when incorporating foreign exchange effects and disposals.
The 2.7% valuation decline in local currency reflected a 4 basis point
expansion in equivalent yields on a like-for-like basis and higher vacancy.
ERVs also reduced by 60 basis points on a like-for-like basis.
Asset management
The vacancy rate increased to 11.1% as at 31 December 2025 (2024: 6.7%) as a
result of the expected departure of some large tenants. We were also impacted
by two tenants unexpectedly filing for insolvency: one has terminated their
lease and the other has downsized after being acquired. We are focused on
reconfiguring this space to offer a high-quality product to the market.
In 2025, we completed 27 lease extensions and new lettings, securing £7.5
million of rent at an average of 31.5% above ERV. This was primarily due to a
large eight year lease with a government department of the Federal State of
North Rhine-Westphalia for 14,700 sqm at Gotic Haus, Dortmund. The lease
resulted in a valuation uplift of more than 40% at the property. Excluding
this transaction, the remaining deals were achieved at 17.6% above ERV.
This lease follows earlier successful government lettings at The Brix, Essen
and The Yellow, Dortmund in 2023 and 2024 respectively, demonstrating our
continued ability to compete effectively in this market.
Rent from leases subject to indexation increased by an average of 2.5%.
Developments and refurbishments
Development projects across our German portfolio are expected to deliver
meaningful ERV growth and are already contributing to valuation uplifts. Works
associated with our 30-year lease with the City of Essen at The Brix completed
on time, and the tenant is in occupation. Construction relating to the
20-year lease with the City of Dortmund at The Yellow and the eight-year lease
with the Federal State of North Rhine‑Westphalia at Gotic Haus has commenced
and is progressing well.
We invested £5.4 million in smaller refurbishment projects across the
portfolio to improve sustainability performance, meet regulatory requirements
and address evolving occupier needs. The largest project was at Technisches
Rathaus in Bochum, where we are upgrading the façade and modernising the
lifts to support our tenant's 30‑year lease. We are also expanding marketing
suites in several properties to aid the re‑letting of recently vacated
space.
Disposals
In 2025, we disposed of Jarrestrasse, Hamburg, and Grafelfing Munich, for a
total of £35.6 million at a combined discount to pre-sale values of 8.9%.
Outlook
The €500 billion infrastructure spending package introduced by the
government is expected to support growth, encouraging higher office take up
and strengthening investor confidence.
The German commercial real estate market is set for a selective recovery in
2026, underpinned by stabilising, lower interest rates and an ongoing shift
towards high quality, sustainable assets. The Energy Performance of Buildings
Directive provisions become legally binding in 2026, increasing the impetus
for renovation as new efficiency standards for non residential buildings come
into force.
We are optimistic that vacancy rates in major cities will peak during the
year, reflecting a marked slowdown in new construction. At the same time,
demand is likely to remain focused on core, modern and energy efficient space
in prime locations, reinforcing the relative resilience of higher quality
assets.
France
Value of property portfolio Percentage of Group's property interests Number of properties
£225.3m 13% 15
Number of tenants EPRA vacancy rate Lettable space (sqm)
146 12.1% 63.6k
Government and large companies Weighted average lease length to expiry (years) Leases subject to indexation
56.1% 5.3 100.0%
France market review
Political uncertainty and a softer macroeconomic backdrop dominated the French
economy in 2025, with significant debate surrounding rising government debt
and its impact on sovereign bond yields.
The commercial property investment market improved, with volumes reaching
c.€14 billion, up 10% compared with 2024, and once again dominated by
domestic investors.
Office leasing activity remained challenging, although performance varied
significantly between submarkets. Conditions softened in the CBD, while
several outer arrondissements recorded some improvement. Take-up declined by
9% to c.1.6 million sqm in Paris, while Lyon fell by 20% to c.0.2 million sqm.
Year-end vacancy in Paris increased from 10.2% to 10.7%, and in Lyon from 7.0%
to 7.8%
Portfolio movement and valuation summary
In 2025, the value of the French portfolio decreased by £2.2 million as a
result of a revaluation decline of £10.4 million or 4.5% in local currency
and disposals of £7.9 million, partly offset by capital expenditure of £4.1
million and a foreign exchange gain of £12.0 million. The 4.5% valuation
decline reflected a 8 basis point expansion in equivalent yields on
a like-for-like basis and higher vacancy following the departure of a major
tenant at Inside, Paris. ERVs were flat on a like-for-like basis, and all
leases remain fully indexed.
Asset management
As at 31 December 2025, the EPRA vacancy rate in our French portfolio rose to
12.1% (2024: 8.3%), largely due to the expected lease expiry at Inside, Paris
and the completion of refurbishment works at Bellevue, Paris. We intend to use
this opportunity at Inside to refurbish the space and reconfigure it to
accommodate a broader range of floor plates.
In 2025, excluding contractual indexation uplifts, 20 lease extensions and new
leases secured £1.4 million in rent, averaging 7.1% below ERV. Notably, we
experienced an uptick in leasing activity in Q4, with several new leases in
Paris completed despite a difficult leasing market, removing some of the
vacancy during the year.
Rent from leases subject to indexation increased by an average of 1.5% in
2025.
The most significant transaction in Paris was a lease extension for 675 sqm at
Sigma, located east of La Défense. This renewal was with a long-standing
tenant that has occupied space at Sigma for over ten years, highlighting the
benefits of our customer-focused asset management approach in a competitive
leasing market. In Lyon, the largest transaction was at Park Avenue for 855
sqm with an IT services company.
Developments and refurbishments
A major milestone in the first quarter was the completion of the £1.5 million
redevelopment of Petits Hôtels, a centrally located 2,081 sqm asset in Paris.
The project involved a full refurbishment of one of the buildings, which has
since been let at ERV to a specialist tour operator company.
At Bellevue, Paris, we completed our £1.1 million refurbishment programme in
the third quarter of 2025. The scheme upgraded five floors totalling 1,301
sqm, delivering best-in-class space with enhanced sustainability features. The
improved specification has already generated strong interest, with two new
leases signed in December, and we expect this momentum to continue into 2026.
Disposals
In August, we completed the sale of Les Reflets in Lille which we acquired in
2019. This sale marked our exit from Lille. Our French portfolio is now
focused on France's two largest property markets, Paris and Lyon.
Outlook
France's economy is expected to grow modestly in 2026 but it is sensitive to
the continuing domestic and international political uncertainty.
Investment volumes ended 2025 with a more balanced distribution across
offices, retail and logistics. Conditions in 2026 are expected to remain
broadly stable, with stronger momentum anticipated from 2027 onwards.
Leasing activity is likely to remain relatively muted, although we expect a
gradual improvement in the second half of 2026, led by the Paris Île de
France market and followed by regional markets, particularly with
small-to-medium size businesses targeted by CLS.
Chief Financial Officer's review
Summary
The hard work undertaken by the whole CLS team to make progress on our
strategic priorities is having its desired effect, with lower net debt, a more
streamlined cost base and occupancy starting to improve. These actions have
had short-term negative impacts on our earnings and NTA, but they are vital to
creating the foundations for medium- and long-term growth, delivering a
portfolio and business that are fit for the future.
EPRA net tangible assets (NTA) per share fell by 6.7% to 200.7 pence (2024:
215.0 pence) and basic net assets per share by 5.5% to 186.4 pence (2024:
197.3 pence), primarily reflecting the 3.8% like-for-like decline in the
valuation of our portfolio.
EPRA earnings per share (EPS) were 7.6 pence (2024: 9.2 pence) whilst the IFRS
loss after tax of £50.3 million (2024: £93.6 million loss) generated basic
earnings per share of -12.6 pence (2024: -23.6 pence). We are proposing a
final dividend of 2.7 pence (2024: 2.68 pence), equating to a full dividend
for 2025 of 4.0 pence (2024: 5.28 pence).
The Total Accounting Return per share (the reduction in EPRA NTA plus the
dividends paid in the year) was -4.8%
(2024: -11.9%).
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 5 and our Supplementary disclosures gives a full
description and reconciliation of our APMs.
Income statement
EPRA profit after tax was lower than last year at £30.2 million (2024: £36.4
million), reflecting the impact of disposals and higher vacancy costs, offset
by lower net finance and administration expenses. 2024 EPRA earnings also
benefited from a deposit forfeited by a potential buyer of one of our
properties which equated to £2.9 million (0.7 pence per share).
Net rental income in 2025 of £101.3 million fell by 11.1% (2024: £114.0
million), mainly reflecting the lost income from disposals early in the year,
and higher vacant space. Like-for-like net rental income fell 6.3% to £106.8
million due to lease expiries and movement of properties to development
stock, which reduced rental income by £9.2 million and £0.4 million
respectively, and lower other income of £1.0 million. New leases, renewals
and indexation added £2.6 million and £0.8 million respectively. Income from
student operations fell £4.0 million reflecting the disposal of Spring Mews
Student in early 2025, and a further £1.9 million of rent was lost from other
property disposals.
CLS' tenant relationships remain strong and the quality and diversity of our
tenant base has continued to be reflected in our rent collection. As in
previous years, we collected over 99% of rent and this trend has continued
into the first quarter of 2026.
Overall administration and property expenses, excluding amortisation of
intangibles, decreased by £2.0 million to £33.4 million (2024: £35.4
million). Administration costs were £1.2 million lower compared with 2024
reflecting action taken to reduce our cost base during the year. Property
expenses were £0.8 million lower as a result of the disposal of the student
property early in the year, offset by increased vacancy costs. The proportion
of index-linked rent was 58.7% (2024: 54.4%) of total contracted rent.
Although administration and property expenses were lower, CLS' administration
cost ratio increased to 16.1% (2024: 15.4%) and the EPRA cost ratio increased
to 36.2% (2024: 33.6%) as a result of lower gross rental income and higher
costs associated with vacant space.
The valuation of CLS' properties declined by 3.8% (2024: 5.8% decline) on a
like-for-like basis, although much of this was concentrated on
two properties: Spring Gardens, where the valuers adjusted their valuation
approach to reflect the conditional agreement to sell; and the Spring Mews
hotel which will be subject to higher business rates than previously assumed.
The reduction in the value of investment properties was £79.2 million (2024:
£127.7 million reduction) with falls in the UK of 4.6%, Germany 2.7% and
France 4.5% in local currencies.
Four properties were sold in 2025 for an aggregate consideration of £144.2
million. This consideration was in-line with the
pre-sale book values but, after costs, resulted in a loss on sale of
investment properties before tax of £10.9 million (2024: £2.3 million
loss). At year-end, we have classified £94.9 million (2024: £133.0 million)
of assets as being held for sale, recognising that we expect to dispose of
these assets in the first half of the year. This does not include Spring
Gardens, the current headquarters of the National Crime Agency in Vauxhall,
London as the sale is conditional on planning permission being obtained from
the local council to redevelop the property from offices into residential
space. We are working in partnership with the acquiror on this deal and
submitted planning permission in February 2026. The transaction is expected to
release equity in stages over the next two years, following the repayment of
associated debt.
Net finance costs, excluding movement in derivatives, fell by 10.3% to £36.7
million (2024: £40.9 million) reflecting primarily lower debt during
the year, and the impact of disposals in late 2024 and the sale of Spring
Mews Student in early 2025.
Approximately 52% of the Group's sales are conducted in the reporting currency
of Sterling and 48% in Euros. The year-end Sterling rate against the Euro
weakened by 5.1% and the average Sterling rate weakened by 1.2%, resulting in
a foreign exchange gain of £0.2 million in the income statement (2024: £0.6
million loss).
The low tax expense primarily reflects our status as a UK REIT which means
that we do not pay corporation tax on our property-related profits in our UK
business.
The components of the EPRA earnings are as shown below:
2025 2024
£m £m
Revenue 139.7 151.9
Service charges and similar expenses (38.4) (37.9)
Net rental income 101.3 114.0
Administration expenses(1) (16.1) (17.3)
Other property expenses (17.3) (18.1)
Net finance costs(1) (36.7) (40.9)
Foreign exchange gain/(loss) 0.2 (0.6)
Taxation expense(1) (1.2) (0.7)
EPRA earnings 30.2 36.4
EPRA earnings per share 7.6p 9.2p
1 Balances include EPRA adjustments; the reconciliation to the IFRS
figures can be found in note 5(i).
EPRA net tangible assets and gearing
At 31 December 2025, EPRA net tangible assets (NTA) per share were 200.7 pence
(2024: 215.0 pence), a fall of 6.7%. The main reasons for the decrease were
property valuation decreases of 3.8% in local currency (20.4 pence per
share), dividends paid in the year of 4.0 pence per share, and a loss on
disposal of investment properties of 3.5 pence per share. These were partly
offset by EPRA earnings per share of 7.6 pence per share and foreign exchange
uplifts on our European business of 7.2 pence per share.
The impact of reduced level of debt in the business was partly offset by a
decline in the value of our property portfolio, resulting in a slight
improvement in balance sheet loan-to-value ratio at 31 December 2025 to 50.0%
(2024: 50.7%). We retain our intention to reduce LTV to between 35% and 45% in
the medium-term through disposals and value-enhancing investment. We believe
that this LTV range is more appropriate for the business.
Cash flow and net debt
2025 2024
Borrowings (£m) 901.9 999.2
Cash and cash equivalents (£m) (49.4) (60.5)
Net debt (£m) 852.5 938.7
EBITDA (£m) 68.5 79.2
Net debt:EBITDA ratio (times) 12.4 11.9
Balance sheet loan-to-value ratio (%) 50.0 50.7
Weighted average cost of debt (%) 3.8 3.8
Interest cover (times) 1.8 1.9
Weighted average unexpired debt (years) 3.6 3.2
As at 31 December 2025, the Group's cash and cash equivalents balance
(including restricted cash - see note 16) was £49.4 million (2024: £60.5
million) as set out in note 16 to the Group financial statements. Available
undrawn facilities totalled £28.0 million (2024: £50.0 million), with a
further £10 million uncommitted facility (2024: £10 million) which was
undrawn at year-end. Net cash flow from operating activities, after payment of
£38.0 million for financing costs and tax, generated £14.6 million (2024:
£29.5 million) mainly reflecting the impact of disposals and higher vacancy,
as well as £1.7 million of non-recurring costs related to the staffing review
and financial structuring carried out during the year. Excluding the
non-recurring costs, operating cash flows cover the £15.9 million cash cost
of the interim and final dividend for 2025.
Borrowings decreased by £97.3 million to £901.9 million (2024: £999.2
million) due primarily to the net repayment of loans of £126.8 million,
partially offset by the impact of the weakening Sterling exchange rate on the
Sterling value of our Euro-denominated debt. During the year, CLS increased
the size of its two committed revolving credit facilities from £50 million to
£70 million. It also has a £10 million overdraft facility. As at 31 December
2025, CLS had drawn down £42 million on the revolving credit facilities. No
overdraft was utilised as at 31 December 2025.
The weighted average cost of debt at 31 December 2025 was stable at 3.8%
(2024: 3.8%), translating to group interest cover of 1.8 times (2024: 1.9
times).
Financing strategy and covenants
The Group's financing strategy is based substantially on raising secured debt
against its properties, whether individually or in multi-property
facilities. At Group level, we have a target balance sheet LTV ratio of
between 35% and 45%. At 31 December 2025, LTV was 50.0%, a level which we
are working to reduce through disposals and investment to enhance the value
of our properties.
Most of our properties have debt secured against them. Properties not subject
to secured debt at 31 December 2025 totalled £64.4 million (2024: £41.3
million).
At the start of 2025, the Group had £373.7 million of debt (including £9.6
million of amortisation) across 11 loan facilities expiring in 2025, all of
which have been refinanced, extended or repaid. We took the opportunity to
spread the maturities over a longer period to smooth out future refinancing
peaks: the £222.8 million of new loans taken out during the year had a
weighted average all-in rate of 5.5%, within which £51.6 million were fixed
at a weighted average all-in rate of 4.1%. Consequently, the Group's debt
maturity risk profile is more evenly spread, and the weighted average maturity
has increased to 3.6 years (2024: 3.2 years).
In 2026, the Group has £145.5 million of long-term debt maturing and
comprising of seven loans; loan amortisation of £11.8 million and a further
£42.0 million of expiring short-term credit facilities which we are currently
in discussions to extend or refinance with existing and new lenders.
CLS' objective remains to keep a high proportion of fixed rate debt but to
retain some floating rate debt to provide flexibility to allow early
repayments expected from planned disposals without incurring break costs
typically associated with fixed rate loans.
At 31 December 2025, 69% of the Group's borrowings were at fixed rates or
subject to interest rate swaps, 7% were subject to caps which had been hit
and 24% of loans were unhedged.
At 31 December 2025, the Group had 36 loans (26 through SPVs, eight portfolios
and two credit facilities) from 23 different lenders. The loans vary in terms
of the number and nature of their covenants, although the three most common
relate to LTV ratio, interest cover and debt service cover.
On average, across the 36 loans, CLS has between 23% and 28% headroom against
these three most common 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, substitute property
or deposit cash, for the period the loan is in breach after which the cash
can be released.
Distributions to shareholders
The final dividend for 2024 of 2.68 pence per share (£10.7 million) was paid
in May 2025. In October 2025, CLS paid an interim dividend for 2025 of 1.30
pence per share (£5.2 million).
We are proposing to maintain the final dividend at 2.7 pence per share (2024:
2.68 pence), in line with the dividend policy established a year ago, equating
to a cash amount of £10.7 million (2024: £10.7 million). This equates to a
full year distribution of 4.0 pence per share (£15.9 million), covered 1.9
times by EPRA earnings per share, within our policy of the dividend being
covered 1.5 to 3.0 times by EPRA earnings.
Under the terms of being a UK REIT, CLS is obliged to distribute a minimum of
90% of its UK property income as a Property Income Distribution (PID). The
final dividend will be paid entirely as a PID. As a result of this high
distribution requirement, the ability of a UK REIT to retain capital in the
business for investment is limited. Therefore, we are proposing to offer
shareholders the option of receiving the dividend in new shares rather than
cash, in the form of an enhanced scrip dividend, allowing those who take the
scrip alternative to increase their investment in CLS and to receive a benefit
by doing so in the form of a 5% discount to the reference share price.
Harry Stokes
Chief Financial Officer
Risk management
Our Risk Management Structure
Risk management is a critical component of the operation of our business,
allowing us to take advantage of opportunities whilst ensuring that we do not
expose the business to excessive risk, thereby generating shareholder value
over the long term in a sustainable and compliant manner.
The Board
· Sets our overarching risk appetite and ensures that we manage risks
appropriately across the Group within a robust internal control framework.
The Board delegates oversight of risk management activities to the
Audit Committee.
· Annual assessment of principal and emerging risks.
The Audit Committee
· Key oversight function for risk management, internal controls and
viability.
· Receives updates on risks and the control environment including the
results of any internal control review procedures and other assessments
undertaken in the period at each Audit Committee meeting.
· Reports to the Board on the effectiveness of the external auditors, risk
management and internal controls.
Management Committees
· Several management committees have the responsibility for overseeing
and mitigating risks associated with safety, sustainability, treasury and
energy procurement amongst other things.
· Responsible for the day-to-day operational oversight of risk management.
· Major business-wide decisions such as property acquisitions, disposals,
significant strategy changes and the wider changing geopolitical landscape are
discussed. These decisions are assessed with reference to risk appetite.
The Senior Leadership Team
· Comprised of the CEO, the CFO, the COO and senior members of the
property operations, finance and human resources teams.
· Reviews and monitors the Group's principal and emerging risks
taking into account the appetite for, and impact of, risk in all areas
of the business. These are presented to the Audit Committee every six months
for further discussion.
Group Finance
· Responsible for the management of the Group's risk and internal controls.
· Conducts regular testing and monitoring of material controls.
· Responsible for following up and tracking any process or control
improvements.
· The Group has policies set by the Board that govern key risks across the
business. These are regularly reviewed to ensure they are up to date and
comply with laws and regulations
Business units
· Risk management embedded in day-to-day operations including identifying,
evaluating and reviewing within these units.
· Execute strategic actions in compliance with the Group's objectives and
policies.
What we did in 2025
· Implemented a Failure To Prevent Fraud ('FTPF') Policy and staff
training in advance of the FTPF provisions of the Economic Crime and Corporate
Transparency Act 2023 which became enforceable from September 2025.
· Upgraded the IT firewall at our London head office to ensure our defences
against potential cyber attacks remain robust.
· Addressed internal control recommendations from our external auditor.
· Progressed towards providing a declaration of effectiveness of material
controls by 31 December 2026 by performing testing on a selection of our
material controls.
· Implemented minor process improvements based on observations from
control testing.
· Refinanced, extended or repaid £373.7 million of debt
falling due in 2025.
Our priorities for 2026
· Increasing letting activity to reduce vacancy and improve earnings.
· Executing sales to reduce LTV to our target range of 35%-45%.
· Completing refinancings due in 2026.
· Investing in our properties to unlock the value within the portfolio.
· Continuing to deliver on our roadmap activities for the UK Government's
corporate reforms. This includes:
- agreeing the cadence for and performing cycles of material controls
testing; and
- preparing a draft of the material controls declaration including any
ineffectiveness explanations.
Management of risk throughout the Group
1. Identification
We proactively identify potential risks across all processes and the wider
environment that could impact our organisation.
2. Prioritisation
We evaluate and rank risks based on their potential impact and likelihood of
occurrence. Using risk matrices and scoring systems, we focus our resources on
the most critical risks. This prioritisation process allows us to address the
most significant threats first, ensuring that our risk management efforts are
both effective and efficient.
3. Controls and responses
We develop and implement strategies to mitigate or manage risks. We design
controls to prevent or reduce the impact of risks and plan responses for when
risks materialise. Our controls include preventive, detective, and corrective
measures.
4. Governance and reporting
We have established a robust governance framework to oversee our risk
management. Roles and responsibilities are clearly defined, and policies and
procedures are set to ensure accountability. Regular reporting to senior
management and the Board keeps them informed of the risk landscape and the
effectiveness of our risk management activities, ensuring transparency
and oversight.
5. Monitoring
Continuous monitoring is a key part of our risk management process. We track
identified risks, assess the performance of controls, and detect new risks.
Regular reviews and updates to our risk management plan help us adapt to
changes in the internal and external environment, ensuring that our risk
management practices remain effective and relevant.
6. Audit and assurance
We conduct independent reviews and audits to provide assurance that our risk
management process is functioning as intended. Reviews both internally and by
our external auditors help evaluate the effectiveness of our controls and
compliance with policies. These assurance activities help us identify gaps and
areas for improvement, ensuring that we maintain a robust risk management
framework.
Based on the size of its balance sheet and market capitalisation, CLS is a
large business, but it is relatively small based on the number of people
working directly in the business. The small number of employees and our
internal control structures allow the Group to safeguard its assets, prevent
and detect material fraud and errors and ensure accuracy and completeness
of the accounting records used to produce reliable financial information,
while still allowing the flexibility to take advantage of opportunities
to further the business strategies of the Group.
Risk assessment
As part of annual business planning, the Board undertakes an assessment of
the risks that could threaten the Group's strategic objectives, future
performance, solvency or liquidity.
We use a risk scoring matrix to consider the likelihood and impact of each
risk at regular points throughout the year. We evaluate risks on an inherent
(before mitigating actions) and residual (after mitigating actions and
controls) basis. To do so, we identify principal risks (current risks with
relatively high impact and certainty) and emerging risks (risks where
the extent and implications are not yet fully understood).
Throughout the year, the Board monitored the changing economic and market
situation and considered its effect on the business, as it will continue to
do going forward. The impact of the macro-economic factors is discussed
in the CEO review and the country reviews.
Our principal risks are set out on the following pages. In evaluating these
risks, any potential impact as a result of market uncertainties has been
considered. Changes in the risk profile between 2024 and 2025 are identified
on these pages.
Risk appetite
The Board reviews our risk appetite at least annually. The risk appetite of
the Group is assessed with reference to changes that have occurred, or trends
that are beginning to emerge in the external environment, and changes in the
principal risks and their mitigation. These will guide the actions we take in
executing our strategy. Whilst our appetite for risk will vary over time, in
general we maintain a balanced approach to risk.
Risk appetite vs risk assessment
The Board's risk appetite in relation to the Group's principal
risk assessment is broadly aligned. As shown in the detailed description of
our principal risks, there is divergence of risk appetite and risk status in
relation to the financing and sustainability risks. The Board accepts
that there are factors in relation to these risks that are outside the
Group's control and are likely to change over time. Mitigating actions have
been put in place to ensure financing risk is adequately managed and monitored
to reduce the potential impact on the Group. We expect the sustainability
risk appetite and assessment to align in the medium-term. The Board
recognises that not all risks can be fully mitigated and that they need to
be balanced alongside commercial, and political and
economic considerations.
The Group uses five risk categories to allocate its risk appetite:
Very low: Avoid risk and uncertainty
Low: Keep risk as low as reasonably practical with very limited, if any, reward
Medium: Consider options and accept a mix of low and medium risk options with moderate
rewards
High: Accept a mix of medium and high-risk options with better rewards
Very high: Choose high risk options with potential for high returns
On reviewing our risk appetite, the Board recognised that there are factors
outside of the Group's control, for example the property market environment,
that influences risk appetite in any one year.
Our principal risks
Our principal risks and risk assessments are discussed over the following
pages along with: any change in their risk profile since the last year end;
the current direction of travel; and our risk mitigation actions and plans.
Whilst we do not consider that there has been any material change to the
nature of the Group's principal risks over the last 12 months, several risks
remain elevated as a result of the challenging external environment and
significant ongoing uncertainty.
The following pages are only focused on our principal risks being those that
have the greatest impact on our strategy and/or business model. In addition,
there are many lower level operational and financial risks which are managed
on a day-to-day basis through the effective operation of a comprehensive
system of internal controls.
Key to strategy:
1 We acquire the right properties
2 We secure the right finance
3 We deliver value through active management and cost control
4 We continually assess whether to hold or sell properties
5 We reward shareholders, customers and employees
Key to change in risk profile in year/direction of travel:
- Increasing ¯ Decreasing « No Change
1 Property Link to strategy:
Market fundamentals and/or internal behaviours lead to adverse changes to 1
capital values of the property portfolio or ability to sustain and improve
income generation from these assets.
Key risks: Mitigation: Appetite:
· Cyclical downturn in the property market which may be indicated by 2025 High
an increase in yields
· Maintained strong relationships with our occupiers, agents and Risk assessment:
· Changes in supply of space and/or demand (vacancy rate) direct investors active in the market and actively monitored trends in our
sectors High
· Poor property/facilities management
· Asset management committees meet once a month to discuss each property Change in risk profile in year:
· Inadequate due diligence and/or poor commercial assessment of
acquisitions · Targeted capital expenditure with a focus on sustainability «
to meet tenant demands
· Higher tenant expectations with respect to fit outs and amenities
Direction of travel:
· Rigorous and established governance approval processes for capital and
· Failure of tenants leasing decisions «
· Rising business rates · Engagement with tenants to understand their needs and space requirements KPIs:
· Insufficient health and safety risk protection · Disposal of properties with low yield, limited asset management · TSR(R)
potential or unfavourably balanced risk/reward ratio
· Building obsolescence
· TAR
· Continued monitoring of covenant strength of tenants
· EPS
· High quality provision of property and facilities management services
with our in-house team
· Health and Safety Committee met throughout the year
and provided regular updates to the Board
· Monitored 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
2 Sustainability Link to strategy:
As a result of a failure to plan properly for, and act upon, the potential 1 3
environmental and social impact of our activities, changing societal
attitudes, and/or a breach of any legislation, this could lead to damage to
our reputation and customer relationships, loss of income and/or property
value, and erosion of shareholder confidence in the Group.
Key risks: Mitigation: Appetite:
Transition risks 2025 Medium
· These include regulatory changes, economic shifts, obsolescence, and the · Monitoring and oversight by the Sustainability Committee Risk assessment:
changing availability and price of resources. over key projects and regulatory requirements
Low
Physical risks · Detailed sustainability risk registers maintained, reviewed, and updated
Change in risk profile in year:
· These are climate-related events that affect our supply chain as well as · Evaluation of the physical climate risk profiles of all properties
the buildings' physical form and operation; they include extreme weather
¯
events, pollution and changing weather patterns. · Continued implementation and active monitoring of NZC Pathway projects
Direction of travel:
· Completion of planned energy efficiency and carbon reduction projects
¯
· Continuation of EPC upgrade programme
KPIs:
· Recertification of relevant properties across all three regions
to BREEAM In-Use · TSR(R)
· Integration of sustainability data platform for group-wide · TAR
data management
· Vacancy Rate
· Independent assurance on EPRA sBPR KPI data
· Completion of biodiversity appraisals in the UK
· Maintained living wage accreditation
3 Business interruption Link to strategy:
Data loss; or disruption to corporate or building management systems; or 4
catastrophic external attack; or disaster; may limit the ability of the
business to operate resulting in negative reputational, financial and
regulatory implications for long-term shareholder value.
Key risks: Mitigation: Appetite:
· Cyber threat 2025 Low
· Large scale terrorist attack · Completed the migration of files from on-premise servers to cloud service Risk assessment:
to reduce ransomware risk
· Environmental disaster, power shortage or pandemic
Low
· Maintained a Centre of Internet Security 'A' rating (internet-facing
systems) Change in risk profile in year:
· Continued implementation of shared property and finance system across the «
Group
Direction of travel:
· Engaged external partners for specialist cyber security activities
and independent reviews «
· Continued use of continuous, automated patching across systems KPIs:
· Continued to test and train employees on cyber security · TSR(R)
· TAR
4 Financing Link to strategy:
The risk of not being able to source funding in cost-effective forms will 2
negatively impact the ability of the Group to meet its business plans
or satisfy its financial obligations.
Key risks: Mitigation: Appetite:
· Inability to refinance debt at maturity due to lack of funding sources, 2025 Medium
market liquidity, etc.
· Financed, refinanced, repaid or extended all loans maturing in 2025 Risk assessment:
· Unavailability of financing at acceptable terms
· Weekly treasury meetings took place with the CEO and CFO including High
· Risk of rising interest rates on floating rate debt discussion of financing, rolling 12-month cash flow forecasts, FX requirements
and hedging, amongst other items Change in risk profile in year:
· Risk of breach of loan covenants
· Mitigated risk of interest rate fluctuations, ensuring the majority of «
· Foreign currency risk the Group's borrowings are fixed rate or subject to interest rate caps
Direction of travel:
· Financial counterparty risk · Regularly monitored loan covenants
«
· Risk of not having sufficient liquid resources to meet payment · CLS borrows in local markets and in local currencies via individual SPVs
obligations when they fall due to provide a 'natural' hedge KPIs:
· All loans have equity cure mechanisms to repair breaches · Cost of debt
· Maintained banking relationships with a wide number of lenders across the · EPS
Group to diversify funding sources
· Maintained low weighted average cost of debt
· Increased average debt maturity
· Significant headroom across three main loan covenants
5 Political & economic Link to strategy:
Significant events or changes in the Global and/or European political and/or 3
economic landscape may increase the reluctance of investors and customers to
make timely decisions and thereby impact the ability of the Group to plan and
deliver its strategic priorities in accordance with its core business model.
Key risks: Mitigation: Appetite:
· Global geopolitical and trade environments 2025 Medium
· Potential impact of US tariffs on inflation and interest rates · Monitored events and trends closely, making business responses if needed Risk assessment:
· Maintained membership of key industry bodies Medium
· Monitored tenants for sanction issues Change in risk profile in year:
«
Direction of travel:
-
KPIs:
· EPS
6 People Link to strategy:
The failure to attract, develop and retain the right people with the required 5
skills, and in an environment where employees can thrive, will inhibit the
ability of the Group to deliver its business plans in order to create
long-term sustainable value.
Key risks: Mitigation: Appetite:
· Failure to recruit senior management and key executives with the 2025 Medium
right skills
· Bi-annual townhall meetings held by Senior Independent Director Risk assessment:
· Excessive staff turnover levels to listen to employee concerns and suggestions and discuss with the Board
Medium
· Lack of succession planning and development opportunities · Employee compensation packages reviewed at least annually to ensure they
remain competitive Change in risk profile in year:
· Poor employee engagement levels
· Continuation of wellbeing, social and diversity, equity, and -
inclusion activities
Direction of travel:
-
KPIs:
· TSR(R)
· TAR
Emerging risks
We define emerging risks to be those that may either materialise or impact
over a longer timeframe. They may be a new risk, a changing risk or a
combination of risks for which the broad impacts, likelihoods and costs are
not yet well understood, and which could have a material effect on CLS'
business strategy.
Emerging risks may also be superseded by other risks or cease to be relevant
as the internal and external environment in which we operate evolves. The
Senior Leadership Team, which has representatives from each area of the
business, is tasked with identifying emerging risks for the business and
discussing what impact these risks may have on the business and what steps
we should be taking to mitigate these risks. The Board reviews these
assessments on an annual basis.
Emerging risk Potential impact Mitigation Short Medium Long
<2yrs
2-5yrs
>5yrs
Artificial intelligence The automation of certain tasks through AI may lead to job displacement for Active monitoring of the changing landscape through attendance Ä Ä Ä
those whose roles are automated but it will also create jobs. The adoption of at AI industry talks and regular discussion/awareness at the senior
these technologies by our customers may impact their office space leadership team level of opportunities, risks and regulatory frameworks.
requirements.
Adoption of technology Failure to embrace technology could result in the Group falling behind its We thoroughly examine emerging technologies to ensure that we extract the Ä Ä Ä
competitors in efficiency, thereby risking a loss of competitive edge. As utmost value from any new system or service we opt to incorporate into
buildings evolve to incorporate smart features, tenants may prefer such our comprehensive digital and technological framework.
technologically advanced spaces over those lacking similar amenities.
Neglecting occupant preferences for technology could diminish the We consider applicable regulatory frameworks to ensure adoption of
attractiveness of the Group's office properties, potentially leading to new technologies are compliant.
vacancies and declines in property values and rental revenue.
Regulation/ compliance Increased capital cost of maintaining our property portfolio. Continued ongoing assessment of all properties against emerging regulatory Ä Ä Ä
changes and benchmarking of fit-out and refurbishment projects against
Increased administration costs to ensure resources sufficient to deliver third‑party schemes.
corporate compliance.
Increasing energy and construction costs Increased cost of operating properties will reduce attractiveness of Ongoing consideration of, and investment in, energy efficient plant Ä Ä Ä
tenancies to existing and potential customers. and building-mounted renewable energy systems.
Increased costs of refurbishments and developments leading to reduced Continued monitoring of materials, investment in key skills for staff and
investment returns. viability assessments of buildings.
Changes in office occupation trends Changes in societal attitudes to agile and flexible working practices may In-house asset management model provides the means for the property team to: Ä Ä Ä
reduce demand for space compared to historical trends. proactively manage customers; and gain real-time insight and transparency
on changes in needs and trends allowing us to adapt our properties to meet
these.
Regular review of our assets to assess viability of change of use, leading
to greater diversity of properties in our portfolio.
Climate change, natural resources and biodiversity risks Increased risk of weather-related damage to property portfolio and Our sustainability strategy continues to evolve and has been developed in Ä Ä
reputational impact of not evolving sustainability goals in line with global alignment with Global Real Estate Sustainability Benchmarks (GRESB),
benchmarks and/or public expectations. consideration of the UN Sustainable Development Goals (SDGs) and climate
risk modelling.
Inability to obtain sufficient carbon credits at suitable price to offset
residual carbon emissions in order to achieve net zero carbon. We are investigating various solutions to achieve sufficient offsets by 2030.
Going concern statement
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
macroeconomic stresses resulting from global conflict, the resulting
inflationary pressures and transition to a higher interest rate environment.
The Group continues to have very high levels of rent collection and low bad
debts, and has a long-term track record in financing and refinancing debt
including £373.7 million completed in the twelve months to 31 December 2025
and a further £38.7 million has been completed or well advanced subsequent
to year-end, 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 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 31 July 2027 ("the
going concern period"). The period chosen takes into consideration the
maturity date of loans totalling £254.2 million that expire by July 2027. The
going concern assessment uses the forecast approved by the Board at its
November 2025 meeting as the Base case. The assessment also considers a Severe
but plausible case. The Directors have also 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 November 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 £254.2 million with 13 lenders expiring
within the going concern period will be refinanced or extended as expected
(£164.4 million) or will be repaid (£89.8 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 12 months
to 31 December 2025 when £373.7 million was successfully repaid, refinanced
or extended;
· recent refinancings subsequent to 31 December 2025 that have reached an
initial credit committee review stage by lenders, or where term sheets have
been obtained, totalling £38.7 million of the £164.4 million noted above;
and
· other ongoing discussions with lenders.
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 November 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 £144.2 million achieved in the 12
months to 31 December 2025). The value of the properties available for
disposal is 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
and higher interest rates.
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 July
2027, impacting forecast refinancings, sales and cash cures. This is in
addition to the reduction experienced of 3.8% in 2025 and cumulative c.25.4%
decline from 30 June 2022 to 31 December 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 £1.1 million being necessary for the Group to remain in
compliance with its covenant requirements. Similarly, the assumptions of lower
rents and increased expenses result in additional cure payments of £1.6
million.
Due to the severity of the assumptions used in this scenario, which is Severe
but plausible and therefore not remote, the liquidity of the Group is
exhausted even after putting in place controllable mitigating actions as set
out below.
Mitigating actions
In the Severe but plausible case, CLS is assumed to take mitigating actions
including depositing cash to cure covenant shortfalls under the facilities'
equity-cure provisions, scaling back uncommitted capital expenditure
(specifically where reductions do not affect tenant 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 £30.8 million of its existing £80.0 million revolving credit and
overdraft facilities. If needed, further disposals could be considered as
there are no sale restrictions on CLS' £1.7 billion of properties, albeit the
timing and the amount of these potential disposals are not in the Group's
control.
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 period, and planned property disposals, are outside of Management's
control and consequently a material uncertainty exists that may cast
significant doubt on the Group's and the Company'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 include any adjustments that would be
necessary if the Group and the Company were unable to continue as going
concerns.
Viability statement
The Group's viability assessment follows a similar methodology to the going
concern assessment in terms of analysing the Base case financial forecasts
and a Severe but plausible case but makes the assessment of the viability of
the Company to continue in operation and meet its liabilities as they fall due
over a longer period.
The viability assessment covers the period to 31 December 2029 ("the viability
period"), as it coincides with the forecasts approved by the Board at its
November 2025 meeting. These forecasts comprise the Base case, reviewed
against the actual results for 2025 and incorporating updated assumptions.
The period of four years is a balance between the Group's weighted lease term
and weighted average debt maturity, and so aligns with the period over which
the Group has good operational visibility.
In performing this assessment, the Board notes that the financial information
for the year ended 31 December 2025 contained disclosure of a Material
Uncertainty related to going concern because the timing and amounts of the
planned refinancing of debt and disposals of property at the time were outside
of Management's control. In this context the Directors set out their
considerations and conclusions in respect of their viability statement for
these financial statements below.
Viability assessment
As with the Going Concern assessment, the financial forecast prepared for the
Base case takes account of the Group's principal risks and uncertainties, and
reflects the current challenging economic backdrop. The forecast uses forward
interest rate curves, inflation and foreign exchange.
The Base case forecast is focused on the cash, liquid resources and working
capital position of the Group including covenant compliance. It also assumes
continued access to lending facilities. Within the viability period, it is
assumed that expiring debt facilities of £508.3 million will be refinanced as
expected or repaid from the proceeds of disposals. The Board acknowledges that
these refinancings are not fully within management's control but remains
confident that refinancings or extensions of these loans will be executed
within the required timeframe, having taken into account:
· existing banking relationships;
· CLS' track record of prior refinancings, particularly in the 12 months to
31 December 2025 when £373.7 million was successfully repaid, refinanced or
extended;
· recent refinancings subsequent to 31 December 2025 that have reached an
initial credit committee review stage by lenders, or where term sheets have
been obtained, totalling £38.7 million of the £508.3 million noted above;
and
· other ongoing discussions with lenders.
A Severe but plausible case was also produced by flexing key assumptions
including: lower rents, increased service charges, higher property and
administration expenses, falling property values (mainly a further 10%
reduction in 2026 and no recovery during the viability period), higher
interest rates and reduced achievements of refinancings and disposals. These
flexed assumptions are derived by considering the negative market and economic
impacts experienced during the 2007-2009 global financial crisis and other
downturns such as the Covid-19 pandemic.
Assumptions around refinancing and property disposals are adjusted to include
only those agreed or considered significantly advanced by management. In
addition, a reduction in property values of 10% results in additional equity
cure payments of £1.1 million to remain in compliance with covenant
requirements. Similarly, the assumptions of lower rents and increased expenses
result in additional equity cure payments of £1.6 million.
The impacts of climate change risks within the viability period have been
considered in the Severe but plausible case and are expected to be immaterial.
Due to the severity of the assumptions used in this scenario, the liquidity
of the Group is exhausted even after putting in place mitigating actions
wholly within management's control as set out below.
Mitigating actions
In the Severe but plausible case, CLS would need to take mitigating actions in
terms of depositing cash to equity cure covenants under the facilities,
scaling back uncommitted capital expenditure and reducing the dividend as well
as drawing the currently available £30.8 million of its revolving credit and
overdraft facilities. If needed, further disposals could be considered as
there are no sale restrictions on CLS' £1.7 billion of properties, albeit the
timing and the amount of these potential disposals are not wholly within
management's control.
Additionally, the Board notes that the properties that require refinancing in
the going concern period are on a non-recourse basis to the Group.
Accordingly, in extremis, the lender could enforce their security on an
individual property with no claim on the rest of the Group's assets.
Material uncertainty
The Directors highlighted in their going concern assessment that whilst they
remain confident in the future prospects for the Group and its ability to
continue as a going concern, the Group is reliant upon its ability both to
refinance the debt maturing and to complete property disposals in the going
concern period in what are assumed to be continued challenging market
conditions. The same material uncertainty applies to the future viability of
the Group.
Directors' responsibility statement
Directors' responsibilities
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors are required to prepare the Group
financial statements in accordance with the Companies Act 2006 and United
Kingdom adopted International Accounting Standards and International Financial
Reporting Standards (IFRSs) and have elected to prepare the Parent Company
financial statements in accordance with FRS 101 of United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards and
applicable law). Under company law the Directors must not approve the accounts
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and of the profit or loss of the Group for that period.
In preparing the Parent Company financial statements, the Directors are
required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and prudent;
· state whether applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
· prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
In preparing the Group financial statements, International Accounting
Standard 1 requires that Directors:
· properly select and apply accounting policies;
· present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
· provide additional disclosures when compliance with the specific
requirements in IFRSs are insufficient to enable users to understand the
impact of particular transactions, other events and conditions on the entity's
financial position and financial performance; and
· make an assessment of the Group's ability to continue as a going
concern.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the relevant
financial reporting framework, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole;
· the strategic report includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face; and
· the annual report and financial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Company's position and performance, business model
and strategy.
This statement of responsibilities was approved by the Board on 12 March
2026.
Approved and authorised on behalf of the Board
David Fuller BA FCG
Company Secretary
12 March 2026
Group income statement
for the year ended 31 December 2025
Notes 2025 2024
£m
£m
Revenue 4 139.7 151.9
Service charges and similar expenses 4 (38.4) (37.9)
Net rental income 4 101.3 114.0
Administration expenses (16.4) (17.7)
Other property expenses (17.3) (18.1)
Non-recurring items(1) (1.7) -
Operating profit before revaluation and disposals 65.9 78.2
Net revaluation movements on investment property 12/14 (79.2) (127.7)
Net revaluation movements on equity investments 0.1 (0.6)
Loss on sale of investment property (10.9) (2.3)
Loss on sale of other equity investments - (0.1)
Operating loss (24.1) (52.5)
Finance income 8 1.1 1.4
Finance costs 9 (39.1) (45.7)
Foreign exchange gain/(loss) 0.2 (0.6)
Loss before tax (61.9) (97.4)
Taxation 10 11.6 3.8
Loss for the year attributable to equity shareholders (50.3) (93.6)
Basic and diluted earnings per share 5/24 (12.6)p (23.6)p
The notes are an integral part of these Group financial statements.
1 During the year, we conducted a review of staffing and financial
structuring. This resulted in non-recurring costs including redundancy costs
being incurred.
Group statement of comprehensive income
for the year ended 31 December 2025
Notes 2025 2024
£m
£m
Loss for the year (50.3) (93.6)
Other comprehensive income/(expense):
Items that may be reclassified to profit or loss
Revaluation of property, plant and equipment 26 (1.6) 1.3
Foreign exchange differences 26 25.2 (21.6)
Corporation tax on exchange differences (0.5) -
Deferred tax on revaluation of property, plant and equipment 18 0.7 (0.1)
Total items that may be reclassified to profit or loss 23.8 (20.4)
Total other comprehensive income/(expense) 23.8 (20.4)
Total comprehensive expense for the year attributable to equity shareholders (26.5) (114.0)
The notes are an integral part of these Group financial statements.
Group balance sheet
at 31 December 2025
Notes 2025 2024
£m
£m
Non-current assets
Investment properties 12 1,570.8 1,676.5
Property, plant and equipment 13 40.6 42.5
Intangible assets 2.6 2.7
Equity investments 0.8 0.6
Derivative financial instruments 20 0.5 0.7
1,615.3 1,723.0
Current assets
Trade and other receivables 15 10.5 14.2
Current tax 0.5 -
Derivative financial instruments 20 0.1 1.1
Cash and cash equivalents 16 49.4 60.5
60.5 75.8
Assets held for sale 14 94.9 133.0
Total assets 1,770.7 1,931.8
Current liabilities
Trade and other payables 17 (57.6) (65.7)
Current tax - (0.9)
Borrowings 19 (198.0) (372.4)
(255.6) (439.0)
Non-current liabilities
Deferred tax 18 (65.4) (78.1)
Borrowings 19 (703.9) (626.8)
Leasehold liabilities (3.4) (3.3)
Derivative financial instruments 20 (0.3) (0.4)
(773.0) (708.6)
Total liabilities (1,028.6) (1,147.6)
Net assets 742.1 784.2
Equity
Share capital 23 11.0 11.0
Share premium 83.1 83.1
Other reserves 26 111.0 86.9
Retained earnings 537.0 603.2
Total equity 742.1 784.2
The financial statements of CLS Holdings plc (registered number: 02714781)
were approved by the Board of Directors and authorised for issue on 12 March
2026 and were signed on its behalf by:
Mr F
Widlund
Mr H Stokes
Chief Executive Officer Chief
Financial Officer
The notes are an integral part of these Group financial statements.
Group statement of changes in equity
for the year ended 31 December 2025
Share Share Other Retained Total equity
capital
premium
reserves
earnings
£m
£m
£m
£m
£m
Note 23 Note 26
Arising in 2025:
Total comprehensive income/(expense) for the year - - 23.8 (50.3) (26.5)
Share-based payments - - 0.3 - 0.3
Dividends to shareholders - - - (15.9) (15.9)
Total changes arising in 2025 - - 24.1 (66.2) (42.1)
At 1 January 2025 11.0 83.1 86.9 603.2 784.2
At 31 December 2025 11.0 83.1 111.0 537.0 742.1
Share Share Other Retained Total
capital
premium
reserves
earnings
£m
£m
£m
£m equity
£m
Note 23 Note 26
Arising in 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 1 January 2024 11.0 83.1 106.7 728.4 929.2
At 31 December 2024 11.0 83.1 86.9 603.2 784.2
The notes are an integral part of these Group financial statements.
Group statement of cash flows
for the year ended 31 December 2025
Notes 2025 2024
£m
£m
Cash flows from operating activities
Cash generated from operations 27 52.6 71.2
Interest received 1.1 1.4
Interest paid (37.9) (40.6)
Income tax paid on operating activities (1.2) (2.5)
Net cash inflow from operating activities 14.6 29.5
Cash flows from investing activities
Capital expenditure on investment properties (17.3) (22.3)
Proceeds from sale of properties 136.7 63.8
Income tax paid on sale of properties (4.9) -
Purchases of property, plant and equipment (0.1) (0.2)
Purchase of intangibles (0.2) (0.2)
Net cash inflow from investing activities 114.2 41.1
Cash flows from financing activities
Dividends paid 25 (15.9) (31.6)
Cash received on settlement of derivative financial instrument 0.1 0.7
Purchase of derivative financial instrument (0.3) (1.2)
Proceeds from borrowings 61.2 8.8
Transaction costs related to borrowings (1.5) (1.0)
Repayment of borrowings (186.5) (55.5)
Net cash outflow from financing activities (142.9) (79.8)
Cash flow element of net decrease in cash and cash equivalents (14.1) (9.2)
Foreign exchange gain/(loss) 3.0 (0.9)
Net decrease in cash and cash equivalents (11.1) (10.1)
Cash and cash equivalents at the beginning of the year 60.5 70.6
Cash and cash equivalents at the end of the year 16 49.4 60.5
The notes are an integral part of these Group financial statements.
Notes to the Group financial statements
for the year ended 31 December 2025
1. General information
CLS Holdings plc (the 'Company' or 'Ultimate Parent') and its subsidiaries
(together 'CLS Holdings' or the 'Group') is an investment property group which
is principally involved in the investment, management and development of
commercial properties. The Group's principal operations are carried out
in the United Kingdom, Germany and France.
The Company is an incorporated public limited company and is registered and
incorporated in the United Kingdom. Its registration number is 02714781, with
its registered address at 16 Tinworth Street, London SE11 5AL. The Company is
listed on the London Stock Exchange and domiciled in the United Kingdom.
2. Annual financial report
The financial information set out in this announcement has been prepared in
accordance with the requirements of the Companies Act 2006 and United Kingdom
adopted International Accounting Standards and International Financial
Reporting Standards (IFRSs).
The financial information set out in this announcement does not constitute the
Group's financial statements for the year ended 31 December 2025 or 31
December 2024 as defined by Section 434 of the Companies Act 2006. Statutory
accounts for 2024 have been delivered to the Registrar of Companies and those
for 2025 will be delivered following the Company's Annual General Meeting.
The Group's full financial statements for the year ended 31 December 2025 were
approved by the Board of Directors and reported on by the auditors, BDO LLP,
on 12 March 2026. The independent auditor's report is unqualified, does not
contain statements under section 498 (2) or (3) of the Companies Act 2006,
however does include reference to a material uncertainty related to going
concern.
The financial statements have been prepared on the historical cost basis,
except for the revaluation properties and financial instruments that are
measured at fair values at the end of each reporting period, as explained in
the accounting policies. The consolidated financial statements, including the
results and financial position, are presented in pounds sterling, which is the
functional and presentational currency of CLS Holdings plc. The amounts
presented in the financial statements are rounded to the nearest £0.1
million.
The annual financial report (produced in accordance with the Disclosure and
Transparency Rules) can be found on the Company's website www.clsholdings.com
(http://www.clsholdings.com) . The 2025 Annual Report and Accounts is expected
to be posted to shareholders on 23 March 2026 and will also be available on
the Company's website.
3. Going concern
The Company's going concern assessment has been performed as part of the
Group's going concern assessment.
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
macroeconomic stresses resulting from global conflict, the resulting
inflationary pressures and transition to a higher interest rate environment.
The Group continues to have very high levels of rent collection and low bad
debts, and has a long-term track record in financing and refinancing debt
including £373.7 million completed in the twelve months to 31 December 2025
and a further £38.7 million has been completed or well advanced subsequent to
year-end, 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 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 31 July 2027 ("the
going concern period"). The period chosen takes into consideration the
maturity date of loans totalling £254.2 million that expire by July 2027. The
going concern assessment uses the forecast approved by the Board at its
November 2025 meeting as the Base case. The assessment also considers a Severe
but plausible case. The Directors have also 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 November 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 £254.2 million with 13 lenders expiring
within the going concern period will be refinanced or extended as expected
(£164.4 million) or will be repaid (£89.8 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 12 months to
31 December 2025 when £373.7 million was successfully repaid, refinanced or
extended;
· recent refinancings subsequent to 31 December 2025 that have reached an
initial credit committee review stage by lenders, or where term sheets have
been obtained, totalling £38.7 million of the £164.4 million noted above;
and
· other ongoing discussions with lenders.
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 November 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 £144.2 million achieved in the 12
months to 31 December 2025). The value of the properties available for
disposal is 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
and higher interest rates.
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 July 2027, impacting forecast refinancings, sales and cash cures.
This is in addition to the reduction experienced of 3.8% in 2025 and
cumulative c. 25.4% decline from 30 June 2022 to 31 December 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 £1.1 million being necessary for the Group to remain in
compliance with its covenant requirements. Similarly, the assumptions of
lower rents and increased expenses result in additional cure payments of £1.6
million.
Due to the severity of the assumptions used in this scenario, which is Severe
but plausible and therefore not remote, the liquidity of the Group is
exhausted even after putting in place controllable mitigating actions as set
out below.
Mitigating actions
In the Severe but plausible case, CLS is assumed to take mitigating actions
including depositing cash to cure covenant shortfalls under the facilities'
equity-cure provisions, scaling back uncommitted capital expenditure
(specifically where reductions do not affect tenant 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 £30.8 million of its existing £80.0 million revolving credit
and overdraft facilities. If needed, further disposals could be considered as
there are no sale restrictions on CLS' £1.7 billion of properties, albeit the
timing and the amount of these potential disposals are not in the Group's
control.
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 period, and planned property disposals, are outside of Management's
control and consequently a material uncertainty exists that may
cast significant doubt on the Group's and the Company'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 include any adjustments that would be
necessary if the Group and the Company were unable to continue as going
concerns.
4. 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
2025
Investment properties Other Central administration Total
investments
£m
£m
£m
Year ended 31 December 2025 United Germany France
Kingdom
£m
£m
£m
Rental income 44.2 38.3 12.3 - - 94.8
Other property-related income 7.1 1.1 0.2 6.0 - 14.4
Service charge income 14.9 10.8 4.8 - - 30.5
Revenue 66.2 50.2 17.3 6.0 - 139.7
Service charges and similar expenses (18.4) (14.4) (5.6) - - (38.4)
Net rental income 47.8 35.8 11.7 6.0 - 101.3
Administration expenses (7.2) (2.9) (1.2) (0.1) (5.0) (16.4)
Other property expenses (8.0) (5.3) (0.3) (3.7) - (17.3)
Non-recurring items(1) (0.3) (0.1) (0.3) - (1.0) (1.7)
Revenue less costs 32.3 27.5 9.9 2.2 (6.0) 65.9
Net revaluation movements on investment property (35.4) (33.4) (10.4) - - (79.2)
Net revaluation movements on equity investments - - - 0.1 - 0.1
Loss on sale of investment property (3.0) (4.9) (3.0) - - (10.9)
Segment operating (loss)/profit (6.1) (10.8) (3.5) 2.3 (6.0) (24.1)
Finance income 0.9 - - 0.2 - 1.1
Finance costs (19.9) (13.5) (4.5) (1.2) - (39.1)
Foreign exchange gain - - - 0.2 - 0.2
Segment (loss)/profit before tax (25.1) (24.3) (8.0) 1.5 (6.0) (61.9)
1 During the year, we conducted a review of staffing and financial
structuring. This resulted in non-recurring costs including redundancy costs
being incurred.
2024
Investment properties Other Central administration Total
investments
£m
£m
£m
Year ended 31 December 2024 United Germany France
Kingdom
£m
£m
£m
Rental income 47.1 40.3 12.8 - - 100.2
Other property-related income(1) 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 property (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 loss - - - (0.6) - (0.6)
Segment (loss)/profit 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.
Other segment information
Assets Liabilities Capital expenditure
2025 2024 2025 2024 2025 2024
£m
£m
£m
£m
£m
£m
Investment properties
United Kingdom 688.4 825.1 409.3 510.5 4.8 9.4
Germany 813.0 828.8 457.3 477.4 5.4 8.3
France 230.5 233.2 158.6 158.4 4.1 3.4
Other investments 38.8 44.7 3.4 1.3 - -
1,770.7 1,931.8 1,028.6 1,147.6 14.3 21.1
5. Alternative Performance Measures
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 financial statements, 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 financial statements, 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.
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 ('EPRA NTA').
The Group adopted the EPRA Best Practice Recommendations ('BPRs') September
2024 (see https://www.epra.com/finance/financial-reporting/guidelines for more
details) in the reporting period ended 31 December 2024. This did not have a
material impact on the Group's reported EPRA earnings and there was no change
to the Group's APMs, with the same APMs utilised by the business being
defined, calculated and used on a consistent basis. All other EPRA measures
are shown within the supplementary unaudited disclosures to the financial
statements.
1. EPRA APMs
For use in earnings per share calculations 2025 2024
Number
Number
Weighted average number of ordinary shares in circulation 398,083,875 397,410,268
Diluted number of ordinary shares 404,492,426 402,916,907
For use in net asset per share calculations
Number of ordinary shares in circulation at 31 December 398,110,742 397,410,268
i) Earnings - EPRA earnings
Notes 2025 2024
£m
£m
Loss for the year (50.3) (93.6)
Non-recurring items(1) 1.7 -
Net revaluation movement on investment property 12/14 79.2 127.7
Deferred tax thereon (15.9) (6.6)
Net revaluation movement on equity investments (0.1) 0.6
Loss on sale of investment property 10.9 2.3
Current tax thereon 3.1 2.1
Movement in fair value of derivative financial instruments 9 1.3 3.4
Loss from sale of equity investments - 0.1
Amortisation of intangible assets 0.3 0.4
EPRA earnings 30.2 36.4
Basic and diluted loss per share (12.6)p (23.6)p
EPRA earnings per share 7.6p 9.2p
1 During the year, we conducted a review of staffing and financial
structuring. This resulted in non-recurring costs including redundancy costs
being incurred which are excluded from EPRA earnings as they are unusual in
nature and very unlikely to reoccur in the foreseeable future.
ii) Net asset value measures
2025 2024
IFRS EPRA EPRA EPRA IFRS EPRA EPRA EPRA
NAV
NTA
NRV
NDV
NAV
NTA
NRV
NDV
£m
£m
£m
£m
£m
£m
£m
£m
IFRS Net assets 742.1 742.1 742.1 742.1 784.2 784.2 784.2 784.2
Other intangibles - (2.6) - - - (2.7) - -
Fair value of fixed interest debt - - - 37.6 - - - 50.4
Tax thereon - - - (1.1) - - - (1.7)
Deferred tax on revaluation surplus - 65.8 65.8 - - 79.8 79.8 -
Adjustment for short-term disposals - (5.9) - - - (5.5) - -
Fair value of financial instruments - (0.3) (0.3) - - (1.4) (1.4) -
Purchasers' costs(1) - - 122.6 - - - 132.6 -
742.1 799.1 930.2 778.6 784.2 854.4 995.2 832.9
Per share 186.4p 200.7p 233.7p 195.6p 197.3p 215.0p 250.4p 209.6p
1 EPRA NTA and EPRA NDV reflect IFRS values which are net of
purchasers' costs. Purchasers' costs are added back when calculating EPRA NRV.
6. Loss for the year
Loss for the year has been arrived at after charging/(crediting):
Notes 2025 2024
£m
£m
Auditor's remuneration: Fees payable to the Company's Auditor for:
Audit of the Parent Company and Group accounts 0.7 0.7
Audit of the Company's subsidiaries pursuant to legislation 0.1 0.1
Audit overrun fee for prior year(1) 0.1 0.2
Reporting accountant services 0.2 -
Depreciation of property, plant and equipment 13 0.5 0.6
Amortisation of intangible assets 0.3 0.4
Employee benefits expense 7 10.5 11.6
Foreign exchange (gain)/loss (0.2) 0.6
Provision against trade and other receivables 15 0.8 0.1
1 The fee in 2024 represents fees paid to the previous auditor for
overruns relating to the 2023 audit.
7. Employee benefits expense
2025 2024
£m
£m
Wages and salaries 7.5 7.4
Social security costs 1.0 1.4
Pension costs - defined contribution plans 0.3 0.4
Performance incentive plan 0.4 0.8
Other employee-related expenses 1.3 1.6
10.5 11.6
The Directors are considered to be the only key management of the Group.
Information on Directors' emoluments, share options and interests in the
Company's shares is given in the Remuneration Committee Report.
The monthly average number of employees of the Group in continuing operations,
including Executive Directors, was as follows:
2025 2024
Property Hotel Number Total Number Property Number Hotel Number Total Number
Number
Male 48 9 57 53 11 64
Female 47 9 56 49 10 59
95 18 113 102 21 123
8. Finance income
2025 2024
£m
£m
Interest income on bank deposits 1.1 1.4
1.1 1.4
9. Finance costs
2025 2024
£m
£m
Interest expense
Secured bank loans and facilities 36.3 40.6
Amortisation of loan issue costs 1.5 1.7
Total interest costs 37.8 42.3
Movement in fair value of derivative financial instruments 1.3 3.4
Total finance costs 39.1 45.7
10. Taxation
2025 2024
£m
£m
Corporation tax
Current year charge 5.0 3.0
Adjustments in respect of prior years (0.8) 0.1
4.2 3.1
Deferred tax (see note 18)
Origination and reversal of temporary differences (15.8) (6.9)
(15.8) (6.9)
Tax credit for the year (11.6) (3.8)
A deferred tax credit of £0.7 million (2024: £0.1 million charge) and a
current tax charge of £0.5 million (2024: £nil) were recognised directly in
Other Comprehensive Income (note 18). The (credit)/charge for the year
differs from the theoretical amount which would arise using the weighted
average tax rate applicable to profits of Group companies as follows:
2025 2024
£m
£m
Loss before tax (61.9) (97.4)
Expected tax credit at applicable tax rate (12.5) (21.2)
Expenses not deductible for tax purposes 0.7 0.3
Non-deductible loss from REIT 5.1 13.4
Deferred tax on losses not recognised 2.2 3.8
Adjustments in respect of prior years (0.6) 0.2
Reduction in overseas tax rate (6.7) -
Other 0.2 (0.3)
Tax credit for the year (11.6) (3.8)
The weighted average applicable tax rate of 20.2% (2024: 21.8%) was derived by
applying to their relevant profits and losses the rates in the jurisdictions
in which the Group operated. The standard UK rate of corporation tax applied
to profits is 25.0% (2024: 25.0%). The Germany corporate income tax rate will
be gradually reduced by one percent per year over five years from 2028 to
2032. The effect of which was a reduction of the tax charge in 2025 of £6.7
million.
11. Property portfolio
Notes United Kingdom £m Germany £m France Total
£m
£m
Investment property 12 635.4 711.8 223.6 1,570.8
Property held as property, plant and equipment(1) 13 35.7 1.7 1.7 39.1
Properties held for sale 14 6.3 88.6 - 94.9
Property portfolio at 31 December 2025 677.4 802.1 225.3 1,704.8
Notes United Kingdom £m Germany £m France Total
£m
£m
Investment property 12 657.0 793.6 225.9 1,676.5
Property held as property, plant and equipment(1) 13 37.5 1.6 1.6 40.7
Properties held for sale 14 112.5 20.5 - 133.0
Property portfolio at 31 December 2024 807.0 815.7 227.5 1,850.2
1 The total balance excludes fixtures and fittings of £1.5 million
(2024: £1.8 million) as shown in note 13.
12. Investment property
United Kingdom £m Germany £m France Total investment properties £m
£m
At 1 January 2025 657.0 793.6 225.9 1,676.5
Capital expenditure 4.8 5.4 4.1 14.3
Disposals - (18.3) (7.9) (26.2)
Net revaluation movement (35.4) (33.4) (10.4) (79.2)
Lease incentive adjustments 4.5 11.4 - 15.9
Exchange rate variances - 41.7 11.9 53.6
Transfer from/(to) properties held for sale 4.5 (88.6) - (84.1)
At 31 December 2025 635.4 711.8 223.6 1,570.8
United Kingdom £m Germany £m France Total investment properties £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 incentive adjustments (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
Investment properties included leasehold properties with a carrying amount of
£61.9 million (2024: £62.4 million).
Interest capitalised within capital expenditure in the year amounted to £0.2
million (2024: £nil).
The property portfolio, which comprises investment properties, properties held
for sale (note 14), and hotel and other, detailed in note 13, was revalued at
31 December 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 independent external valuers and directors as follows:
Investment property 2025 Other property 2025 Property portfolio 2025 Investment property 2024 Other property 2024 Property portfolio 2024
£m
£m
£m
£m
£m
£m
Cushman and Wakefield 635.4 42.0 677.4 657.0 150.0 807.0
Jones Lang LaSalle 935.4 3.4 938.8 1,019.5 23.7 1,043.2
Directors' valuation(1) - 88.6 88.6 - - -
1,570.8 134.0 1,704.8 1,676.5 173.7 1,850.2
1 The Directors' valuation includes four properties in Germany which
have been classified as held for sale. The value has been determined with
reference to the third party letters of intent to purchase the properties.
Refer to note 14 for further details.
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.
Valuation process
The Group's property portfolio, other than four properties categorised as held
for sale, was valued by independent 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.
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, which are
consistent with valuation methodologies in their respective countries, and are
in accordance with RICS Valuation - Global 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 reassessing
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 £79.2 million (2024: a loss of £127.7 million) and are presented
in the income statement in the line item 'Net revaluation movements on
investment property'. The revaluation loss for the property, plant and
equipment of £1.6 million (2024: gain of £1.3 million) was included within
the revaluation reserve via other comprehensive income.
All gains and losses recorded in profit or loss in 2025 and 2024 or 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 31 December 2025 and 31 December 2024,
respectively.
Quantitative information about investment property fair value measurement using unobservable inputs (Level 3)
ERV Equivalent yield
Average Range Average Range
2025 2024 2025 2024 2025 2024 2025 2024
£ per sq. ft
£ per sq. ft
£ per sq. ft
£ per sq. ft
%
%
%
%
UK 37.99 38.08 10.00-56.55 10.00-56.41 7.56 7.39 6.16-10.05 6.21-10.03
Germany 14.28 13.41 9.72-29.07 9.19-27.59 5.32 5.23 4.40-6.55 4.30-6.40
France 23.47 21.42 13.06-47.73 12.40-45.25 6.21 6.13 4.80-8.00 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 £69.0
million (2024: £79.3 million) whilst a 25 basis point increase would reduce
the fair value by £68.3 million (2024: £79.2 million). A decrease in the ERV
by 5% would result in a decrease in the fair value of the Group's investment
property by £64.5 million (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 £59.4 million (2024: £64.4 million).
Where the Group leases out its investment property under operating leases the
duration is typically three years or more. No material variable contingent
rents have been recognised in the current or prior year.
13. Property, plant and equipment
Hotel Owner- occupied property £m Fixtures and fittings £m Total
£m
£m
Cost or valuation
At 1 January 2024 30.2 9.5 3.9 43.6
Additions - - 0.2 0.2
Disposals - - (0.1) (0.1)
Reclassification from investment properties - 0.1 - 0.1
Revaluation 1.2 (0.1) - 1.1
Exchange rate variances - (0.2) - (0.2)
At 31 December 2024 31.4 9.3 4.0 44.7
Additions - - 0.1 0.1
Disposals - - (0.1) (0.1)
Revaluation (2.1) 0.3 - (1.8)
Exchange rate variances - 0.2 - 0.2
At 31 December 2025 29.3 9.8 4.0 43.1
Comprising:
At cost - - 4.0 4.0
At valuation 29.3 9.8 - 39.1
29.3 9.8 4.0 43.1
Accumulated depreciation and impairment
At 1 January 2024 - - (1.8) (1.8)
Depreciation charge (0.1) (0.1) (0.4) (0.6)
Revaluation 0.1 0.1 - 0.2
At 31 December 2024 - - (2.2) (2.2)
Depreciation charge (0.1) (0.1) (0.3) (0.5)
Revaluation 0.1 0.1 - 0.2
At 31 December 2025 - - (2.5) (2.5)
Net book value
At 31 December 2025(1) 29.3 9.8 1.5 40.6
At 31 December 2024 31.4 9.3 1.8 42.5
1 If the assets were held at cost, the carrying amount at 31 December
2025 would be £20.2 million for Hotel and £6.8 million for Owner-occupied
property.
Valuation techniques
The fair value of the hotel and owner-occupied property has 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 property an income capitalisation approach whereby contracted and market rental values
are capitalised with a market capitalisation rate
This technique is consistent with the principles in IFRS 13 Fair Value
Measurement and uses 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.
Sensitivity of measurement to variations in the significant unobservable inputs
All other factors remaining constant, an increase in EBITDA would increase the
valuation, whilst an increase in exit capitalised yield would result in a
fall in value, and vice versa. A decrease in the exit capitalisation yield by
100 basis points would result in an increase in the fair value of the hotel by
£5.0 million, whilst a 100 basis point increase would reduce the fair value
by £3.7 million. A decrease in EBITDA by 5% would result in a decrease in
the fair value of the hotel by £1.5 million whilst an increase in the
EBITDA by 5% would result in an increase in the fair value of the hotel by
£1.5 million.
14. Assets held for sale
2025 2024
UK Germany £m France Total UK Germany £m France Total
£m
£m
£m
£m
£m
£m
At 1 January 112.5 20.5 - 133.0 47.3 115.6 9.8 172.7
Disposals (101.7) (20.5) - (122.2) (40.8) (8.3) (9.8) (58.9)
Transfer (to)/from investment property (4.5) 88.6(1) - 84.1 106.0 (84.3) - 21.7
Exchange rate variances - - - - - (2.5) - (2.5)
At 31 December 6.3 88.6 - 94.9 112.5 20.5 - 133.0
1 A Directors' valuation of four properties in Germany classified as
held for sale has been adopted. The valuation reflects letters of intent to
purchase these properties by third parties. The Directors believe this is the
best indication of fair value as it is representative of an arm's length
transaction.
The balance above comprises six properties (2024: four properties) that at the
year-end 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 and Germany. 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 criteria 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 is not being actively marketed
at 31 December 2025. As held for sale properties are held at fair value, the
change in classification has no material impact on the financial statements.
15. Trade and other receivables
2025 2024
£m
£m
Current
Trade receivables 2.6 4.2
Other receivables 5.0 5.3
Prepayments 0.8 2.7
Accrued income 2.1 2.0
10.5 14.2
Trade receivables are shown after deducting a provision of £2.1 million
(2024: £1.7 million) which is calculated as an expected credit loss. The
movements in this provision were as follows:
2025 2024
£m
£m
At 1 January 1.7 1.9
Debt write-offs (0.2) (0.3)
Charge to the income statement 0.8 0.1
Exchange rate variances (0.2) -
At 31 December 2.1 1.7
The Group uses a provision matrix to calculate the expected credit loss for
trade receivables. The provision rates are based on the Group's historical
observed aging of debt and the probability of default. At every reporting
date, the provision rates are updated to incorporate the previous 12 months'
data and forward-looking information such as actual and potential impacts of
political and economic uncertainty, if applicable. In addition, on a
tenant-by-tenant basis, the Group takes into account any recent payment
behaviours and future expectations of likely default events. Specific
provisions are made in excess of the expected credit loss where information is
available to suggest a higher provision is required, for example individual
customer credit ratings, actual or expected insolvency filings or company
voluntary arrangements, likely deferrals of payments due, agreed rent
concessions and market expectations and trends in the wider macro-economic
environment in which our customers operate.
The Directors consider that the carrying amount of trade and other receivables
is approximate to their fair value. There is no concentration of credit risk
with respect to trade receivables as the Group has a large number of customers
who are paying their rent in advance. Further details about the Group's
credit risk management practices are disclosed in note 21.
16. Cash and cash equivalents
2025 2024
£m
£m
Cash at bank 49.4 60.5
At 31 December 2025, cash at bank included £39.2 million (2024: £41.4
million) which was restricted by a third-party charge. £10.1 million of the
restricted cash related to tenant deposits (2024: £10.1 million).
17. Trade and other payables
2025 2024
£m £m
Current
Trade payables 3.1 5.2
Social security and other taxes 1.7 1.7
Tenant deposits 10.1 10.1
Other payables 7.1 4.6
Deferred income 12.7 14.5
Accruals 22.9 29.6
57.6 65.7
18. Deferred tax
Liabilities Assets
UK capital allowances £m Fair value adjustments to properties £m Other Total UK capital allowances £m Losses Other Total Total deferred tax
£m
£m
£m
£m
£m
£m
At 1 January 2024 0.7 89.9 1.5 92.1 - (3.3) (0.1) (3.4) 88.7
Charged/(credited):
to income statement 0.2 (7.6) (0.2) (7.6) - 1.0 (0.3) 0.7 (6.9)
to OCI(1) - 0.1 - 0.1 - - - - 0.1
Exchange rate variances - (3.8) - (3.8) - - - - (3.8)
At 31 December 2024 0.9 78.6 1.3 80.8 - (2.3) (0.4) (2.7) 78.1
Charged/(credited):
to income statement 0.2 (16.0) (0.3) (16.1) - 0.3 - 0.3 (15.8)
to OCI(1) - (0.7) - (0.7) - - - - (0.7)
Exchange rate variances - 3.8 - 3.8 - - - - 3.8
At 31 December 2025 1.1 65.7 1.0 67.8 - (2.0) (0.4) (2.4) 65.4
1 Other Comprehensive Income.
Deferred tax has been calculated based on local rates applicable under local
legislation substantively enacted at the balance sheet date.
Deferred tax assets are recognised in respect of tax losses carried forward to
the extent that the realisation of the related tax benefit through future
taxable profits is probable. At 31 December 2025 the Group offset tax losses
valued at the applicable local tax rate of £11.0 million (2024: £13.3
million) against the deferred tax liability arising on the fair value
adjustments to properties. At 31 December 2025 the Group did not recognise
deferred tax assets of £13.8 million (2024: £13.6 million) in respect of
losses amounting to £93.3 million (2024: £78.8 million) which may be carried
forward and utilised against future taxable income or gains. There is no
expiry period for the carried forward tax losses.
19. Borrowings
At 31 December 2025 At 31 December 2024
Current £m Non-current Total borrowings £m Current Non-current £m Total borrowings £m
£m
£m
Secured bank loans and facilities 198.0 703.9 901.9 372.4 626.8 999.2
Issue costs of £3.9 million (2024: £4.3 million) have been offset in
arriving at the balances in the above tables.
Secured bank loans
Interest on bank loans is charged at fixed rates ranging between 0.9% and 5.1%
including margin (2024: 0.8% and 5.6%) and at floating rates of typically
SONIA or EURIBOR plus a margin. Floating rate margins range between 1.0% and
2.8% (2024: 1.1% and 2.8%). The bank loans are secured by legal charges over
£1,640.4 million (2024: £1,808.9 million) of the Group's properties, and in
most cases a floating charge over the remainder of the assets held in the
company which owns the property. In addition, the share capital of some of
the subsidiaries within the Group has been charged.
Secured green loans
The Group's debt portfolio includes two sustainability linked loans:
· £146.1 million maturing between 2030 and 2032
· £57.5 million maturing in 2033.
These loans have a basis point margin incentive for meeting annual
sustainability targets which align with our Net Zero Carbon Pathway for the
properties which are securing them. The targets have been independently
verified to be aligned with the Loan Market Association (LMA)
Sustainability-Linked loan principles. The targets set for any given year are
based on actual ESG data/milestones achieved in the prior year. The reduction
in interest rate margin is not considered to be a substantial modification of
the loan terms.
Capitalised interest
Interest capitalised within investment property capital expenditure during the
year was £0.2 million (2024: £nil).
The Group has complied with all externally imposed capital requirements to
which it was subject.
The maturity profile of the carrying amount of the Group's borrowings was as
follows:
At 31 December 2025 Secured bank loans £m
Maturing in:
Within one year or on demand 199.3
One to two years 136.0
Two to five years 386.7
More than five years 183.8
905.8
Unamortised issue costs (3.9)
Borrowings 901.9
Due within one year 198.0
Due after one year 703.9
As at 1 January 2025, the Group outstanding borrowings due within the year of
£373.7 million which consisted of £364.1 million of loans maturing in 2025
and £9.6 million of scheduled loan amortisation payments. These amounts have
been fully refinanced, extended or repaid in 2025.
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
The carrying amounts of the Group's borrowings are denominated in the
following currencies:
At 31 December 2025 At 31 December 2024
Sterling £m Euro Total Sterling Euro Total
£m
£m
£m
£m
£m
Fixed rate financial liabilities 203.6 396.5 600.1 236.1 439.6 675.7
Floating rate financial liabilities - swaps - 25.4 25.4 107.7 16.1 123.8
Total fixed rate 203.6 421.9 625.5 343.8 455.7 799.5
Floating rate financial liabilities - capped - 61.9 61.9 - 37.8 37.8
Floating rate financial liabilities 174.1 44.3 218.4 131.1 35.1 166.2
Total floating rate 174.1 106.2 280.3 131.1 72.9 204.0
377.7 528.1 905.8 474.9 528.6 1,003.5
Unamortised issue costs (1.9) (2.0) (3.9) (2.4) (1.9) (4.3)
Borrowings 375.8 526.1 901.9 472.5 526.7 999.2
Of the Group's total borrowings, 69% (2024: 80%) are considered fixed rate
borrowings.
At 31 December 2025, the Group had interest rate swap agreements in place with
an aggregate notional amount of £25.4 million (2024: £123.8 million)
whereby the Group pays an average fixed rate of interest of 2.7% and receives
interest at a daily variable rate. The swap is being used to hedge the
exposure to changes in the variable rate of Sterling and Euro denominated
loans.
The interest rate risk profile of the Group's borrowings was as follows:
Weighted average interest rate(1) Weighted average life
At 31 December 2025 Sterling Euro Total Sterling Years Euro Total
%
%
%
Years
Years
Fixed rate financial liabilities 2.6 3.4 3.1 6.2 2.4 3.7
Floating rate financial liabilities - swaps - 4.8 4.8 - 7.2 7.2
2.6 3.4 3.2 6.2 2.7 3.8
Floating rate financial liabilities - capped - 3.1 3.1 - 4.3 4.3
Floating rate financial liabilities 6.6 3.5 5.9 2.7 2.6 2.7
6.6 3.2 5.3 2.7 3.6 3.0
Gross borrowings 4.4 3.4 3.8 4.6 2.9 3.6
Weighted average interest rate(1) Weighted average life
At 31 December 2024 Sterling Euro Total Sterling Years Euro Total
%
%
%
Years
Years
Fixed rate financial liabilities 2.7 3.0 2.9 6.4 2.5 3.8
Floating rate financial liabilities - swaps 5.4 4.9 5.3 0.5 4.5 1.1
3.5 3.1 3.3 4.5 2.5 3.4
Floating rate financial liabilities - capped - 2.6 2.6 - 2.8 2.8
Floating rate financial liabilities 7.1 4.4 6.5 0.9 7.1 2.2
7.1 3.4 5.8 0.9 4.9 2.3
Gross borrowings 4.5 3.1 3.8 3.5 2.9 3.2
1 The weighted average interest rates are based on the nominal value
of the debt facilities.
The carrying amounts and fair values of the Group's borrowings are as follows:
Carrying amounts Fair values
2025 2024 2025 2024
£m
£m
£m
£m
Current borrowings 198.0 372.4 198.0 372.4
Non-current borrowings 703.9 626.8 705.3 629.8
901.9 999.2 903.3 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).
The Group had the following committed facilities available at 31 December:
2025 2024
£m
£m
Floating rate:
- expiring within one year(1) 70.0 20.0
- expiring after one year(2) - 30.0
70.0 50.0
1 £30.0 million of the facility expiring within one year and
available as at 31 December 2025 was secured by selected UK properties.
2 £30.0 million of the facility expiring after one year and available
as at 31 December 2024 was secured by selected UK properties.
As at 31 December 2025, amounts drawn under the facilities above were £42.0
million (2024: £nil). In addition to the above committed facilities, at 31
December 2025, the Group has a £10.0 million unsecured overdraft facility
available (2024: £10.0 million).
Contractual undiscounted cash outflows
The tables below show the contractual undiscounted cash outflows arising from
the Group's gross debt.
At 31 December 2025 Less than 1 year 1 to 2 2 to 3 3 to 4 4 to 5 Over Total
£m
years
years
years
years
5 years
£m
£m
£m
£m
£m
£m
Secured bank loans 199.3 136.0 125.4 81.6 179.7 183.8 905.8
Interest payments on borrowings(1) 30.5 23.2 19.0 15.9 12.1 11.4 112.1
Effect of interest rate swaps 0.1 0.1 0.1 - - - 0.3
Effect of interest rate caps (0.2) (0.1) - (0.1) (0.1) - (0.5)
Gross loan commitments 229.7 159.2 144.5 97.4 191.7 195.2 1,017.7
At 31 December 2024 Less than 1 year 1 to 2 2 to 3 3 to 4 4 to 5 Over Total
£m
years
years
years
years
5 years
£m
£m
£m
£m
£m
£m
Secured bank loans 373.7 98.9 125.8 115.6 85.4 204.1 1,003.5
Interest payments on borrowings(1) 36.0 17.7 14.8 11.1 8.2 13.8 101.6
Effect of interest rate swaps (1.3) 0.1 0.1 0.1 - - (1.0)
Effect of interest rate caps (0.4) (0.2) (0.1) - - - (0.7)
Gross loan commitments 408.0 116.5 140.6 126.8 93.6 217.9 1,103.4
1 Interest payments on borrowings are calculated without taking into
account future events. Floating rate interest is estimated using a future
interest rate curve as at 31 December.
20. Derivative financial instruments
2025 2025 2024 2024
Assets
Liabilities
Assets
Liabilities
£m
£m
£m
£m
Non-current:
Interest rate caps and swaps 0.5 (0.3) 0.7 (0.4)
Current:
Interest rate caps and swaps 0.1 - 1.1 -
0.6 (0.3) 1.8 (0.4)
The valuation methods used to measure the fair value of all derivative
financial instruments were derived from inputs which were either observable as
prices or derived from prices (Level 2).
There were no derivative financial instruments accounted for as hedging
instruments.
Interest rate caps
The aggregate notional principal of interest rate caps at 31 December 2025 was
£66.7 million (2024: £37.8 million). The average period to maturity of
these interest rate caps was 3.7 years (2024: 1.7 years).
Interest rate swaps
The aggregate notional principal of interest rate swap contracts at 31
December 2025 was £25.4 million (2024: £123.8 million). The average period
to maturity of these interest rate swaps was 3.8 years (2024: 2.5 years).
Forward foreign exchange contracts
The Group uses forward foreign exchange contracts from time to time to add
certainty to, and to minimise the impact of foreign exchange movements on,
committed cash flows. At 31 December 2025, the Group had no outstanding
foreign exchange contracts (2024: none).
Derivative financial instruments cash flows
The following table provides an analysis of the anticipated contractual cash
flows for the derivative financial instruments using undiscounted cash flows.
These amounts represent the gross cash flows of the derivative financial
instruments and are settled as either a net payment or receipt.
2025 2025 2024 2024
Assets
Liabilities
Assets
Liabilities
£m
£m
£m
£m
Maturing in:
Less than 1 year 0.2 (0.2) 1.8 -
1 to 2 years 0.2 (0.1) 0.2 (0.1)
2 to 3 years - (0.1) 0.1 (0.1)
3 to 4 years 0.1 - - (0.1)
4 to 5 years 0.1 - - (0.1)
Over 5 years - - - -
0.6 (0.4) 2.1 (0.4)
21. Financial instruments
Categories of financial instruments
Financial assets of the Group comprise: interest rate caps; foreign currency
forward contracts; financial assets at fair value through other comprehensive
income or fair value through profit and loss; trade and other receivables; and
cash and cash equivalents.
Financial liabilities of the Group comprise: interest rate swaps; forward
foreign currency contracts; bank loans; secured notes; and trade and other
payables.
The fair values of financial assets and liabilities are determined as follows:
(a) Interest rate swaps and caps are measured at the present value of
future cash flows based on applicable yield curves derived from quoted
interest rates;
(b) Foreign currency options and forward contracts are measured using
quoted forward exchange rates discounted to their present value based on
applicable yield curves derived from quoted interest rates;
(c) The fair values of non-derivative financial assets and liabilities
with standard terms and conditions and traded on active liquid markets are
determined with reference to quoted market prices. Financial assets in this
category include financial assets at fair value through other comprehensive
income or fair value through profit and loss such as equity investments;
(d) In more illiquid conditions, non-derivative financial assets are
valued using multiple quotes obtained from market makers and from pricing
specialists. Where the spread of prices is tightly clustered the consensus
price is deemed to be fair value. Where prices become more dispersed or there
is a lack of available quoted data, further procedures are undertaken such as
evidence from the last non-forced trade; and
(e) The fair values of other non-derivative financial assets and financial
liabilities are determined in accordance with generally accepted pricing
models based on discounted cash flow analysis, using prices from observable
current market transactions and dealer quotes for similar instruments.
Except for fixed rate loans, the carrying amounts of financial assets and
liabilities recorded at amortised cost approximate to their fair value.
Capital risk management
The Group manages its capital to ensure that entities within the Group will be
able to continue as going concerns while maximising the return to stakeholders
through the optimisation of debt and equity balances. The capital structure of
the Group consists of debt, cash and cash equivalents and equity attributable
to the owners of the parent, comprising issued capital, reserves and retained
earnings. Management perform 'stress tests' of the Group's business model to
ensure that the Group's objectives can be met and these objectives were met
during 2025 and 2024.
The Directors review the capital structure on a quarterly basis to ensure that
key strategic goals are being achieved. As part of this review they consider
the cost of capital and the risks associated with each class of capital.
The gearing ratio at the year-end was as follows:
Notes 2025 2024
£m
£m
Debt 19 905.8 1,003.5
Cash and cash equivalents 16 (49.4) (60.5)
Net debt (A) 856.4 943.0
Equity (B) 742.1 784.2
Net debt to equity ratio (A/B) 115.4% 120.2%
Debt is defined as long-term and short-term borrowings before unamortised
issue costs as detailed in note 19. Cash and cash equivalents includes
restricted cash (see note 16). Equity includes all capital and reserves of the
Group attributable to the owners of the Company.
Externally imposed capital requirement
The Group was subject to externally imposed capital requirements to the extent
that debt covenants may require Group companies to maintain ratios such as
debt to equity (or similar) below certain levels.
Risk management objectives
The Group's activities expose it to a variety of financial risks, which can be
grouped as:
· market risk;
· credit risk; and
· liquidity risk.
The Group's overall risk management approach seeks to minimise potential
adverse effects on the Group's financial performance whilst maintaining
flexibility.
Risk management is carried out by the Group's treasury department in close
co-operation with the Group's operating units and with guidance from the
Board of Directors. The Board regularly assesses and reviews the financial
risks and exposures of the Group.
(a) Market risk
The Group's activities expose it primarily to the financial risks of changes
in interest rates and foreign currency exchange rates, and to a lesser extent
other price risk such as inflation. The Group enters into a variety of
derivative financial instruments to manage its exposure to interest rate and
foreign currency risk and also uses natural hedging strategies such as
matching the duration, interest payments and currency of assets and
liabilities. There has been no change to the Group's exposure to market risks
or the manner in which these risks are managed and measured.
(I) Interest rate risk
The Group's most significant interest rate risk arises from its long-term
variable rate borrowings. Interest rate risk is regularly monitored by the
treasury department and by the Board on both a country and a Group basis. The
Board's policy is to mitigate variable interest rate exposure whilst
maintaining the flexibility to borrow at the best rates and with consideration
to potential penalties on termination of fixed rate loans. To manage its
exposure the Group uses interest rate swaps, interest rate caps and natural
hedging from cash held on deposit.
In assessing risk, a range of scenarios is taken into consideration such as
refinancing, renewal of existing positions, and alternative financing and
hedging. Under these scenarios, the Group calculates the impact on the income
statement for a defined movement in the underlying interest rate. The impact
of a reasonably likely movement in interest rates, based on historic trends,
is set out below:
Scenario 2025 2024
Income statement & equity
Income statement & equity
£m
£m
Cash +50 basis points 0.2 0.3
Variable borrowings (including swaps and caps) +50 basis points (2.1) (1.8)
Cash -50 basis points (0.2) (0.3)
Variable borrowings (including swaps and caps) -50 basis points 1.4 1.0
An increase or decrease of 100 basis points on the cash balance would result
in a gain/(loss) of £0.5 million/(£0.5 million) from cash and cash
equivalents. An increase of 100 basis points on variable borrowings would
result in a loss of £1.8 million and a decrease of 100 basis points on
variable borrowings would result in a gain of £2.8 million.
(II) Foreign exchange risk
The Group does not have any regular transactional foreign exchange exposure.
However, it has operations in Europe which transact business denominated in
Euros and, to a minimal extent, in Swedish krona. Consequently, there is
currency exposure caused by translating into Sterling the local trading
performance and net assets for each financial period and balance sheet,
respectively.
The policy of the Group is to match the currency of investments with the
related borrowing, which reduces foreign exchange risk on property
investments. A portion of the remaining operations, equating to the net assets
of the foreign property operations, is not hedged except in exceptional
circumstances. Where foreign exchange risk arises from future commercial
transactions, the Group will hedge the future committed commercial
transaction using foreign exchange swaps or forward foreign
exchange contracts.
The Group's principal currency exposure is in respect of the Euro. If the
value of Sterling were to increase or decrease in strength, the Group's net
assets and profit for the year would be affected. The impact of a reasonably
likely movement in exchange rates is set out below:
Scenario 2025 Net 2025 Profit 2024 Net 2024 Profit
assets
before tax
assets
before tax
£m
£m
£m
£m
1% increase in value of Sterling against the Euro (3.7) 0.3 (3.9) 0.2
1% fall in value of Sterling against the Euro 3.8 (0.4) 4.0 (0.2)
A 10% increase in the value of the Sterling against the Euro would result in a
decrease in net assets of £33.9 million and reduction of profit before tax of
£3.2 million. A 10% decrease in the value of the Sterling against the Euro
would result in an increase in net assets of £41.4 million and an increase of
profit before tax of £3.9 million. The sensitivity disclosed related to the
foreign operations, as the sensitivity related to financial instruments is not
considered significant.
(b) Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. Credit risk
arises from the ability of customers to meet outstanding receivables and
future lease commitments, and from financial institutions with which the Group
places cash and cash equivalents, and enters into derivative financial
instruments. The maximum exposure to credit risk is partly represented by the
carrying amounts of the financial assets which are carried in the balance
sheet, including derivatives with positive fair values.
For credit exposure other than to occupiers, the Directors believe that
counterparty risk is minimised to the fullest extent possible as the Group has
policies which limit the amount of credit exposure to any individual financial
institution.
The Group has policies in place to ensure that rental contracts are made with
customers with an appropriate credit history. Credit risk to customers is
assessed by a process of internal and external credit review, and is reduced
by obtaining bank guarantees from the customer or its parent, and cash rental
deposits. At 31 December 2025, the Group held £10.1 million in rent deposits
(2024: £10.1 million) against £3.0 million of trade receivables (2024: £4.2
million). The overall credit risk in relation to customers is monitored on an
ongoing basis. Moreover, a significant proportion of the Group portfolio is
let to Government occupiers which can be considered financially secure.
Credit risk also arises from cash and cash equivalents and deposits with banks
and financial institutions. For banks and financial institutions, only
independently rated parties with a minimum rating of investment grade are
accepted.
At 31 December 2025 the Group held £0.6 million (2024: £1.8 million) of
financial assets at fair value through profit and loss. Management considers
the credit risk associated with individual transactions and monitors the risk
on a continuing basis. Information is gathered from external credit rating
agencies and other market sources to allow management to react to any
perceived change in the underlying credit risk of the instruments in which the
Group invests. This allows the Group to minimise its credit exposure to such
items and at the same time to maximise returns for shareholders.
(c) Liquidity risk
Liquidity risk management requires maintaining sufficient cash, other liquid
assets and the availability of funding to meet short, medium and long-term
requirements. The Group maintains adequate levels of liquid assets to fund
operations and to allow the Group to react quickly to potential risks and
opportunities. Management monitors rolling forecasts of the Group's liquidity
on the basis of expected cash flows so that future requirements can be
managed effectively.
The majority of the Group's debt is arranged on an asset-specific, ring-fenced
basis (mortgage type loans in SPVs), which is designed to ensure that the
Group's exposure in relation to each loan is restricted to the assets of the
relevant SPV borrower(s) and its/their subsidiaries with such assets being a
property or number of properties in a portfolio, save for certain limited
guarantees and limited recourse security granted by the Company and certain
other Group companies. This allows the Group a higher degree of flexibility
in dealing with potential covenant defaults than if the debt was arranged
under a Group-wide borrowing facility. Portfolio loans secured by multiple
properties are also used when circumstances require it or to obtain
better terms.
Banking covenants vary according to each loan agreement, but typically include
loan-to-value and income related covenants. In addition, the Group has two
'green' loans, each of which have a 10-basis point incentive for achieving
certain sustainability targets. The Group targets a loan-to-value in the range
of 35% to 45%. Balance sheet loan-to-value at 31 December 2025 was 50.0%
(2024: 50.7%).
Loan covenant compliance is closely monitored by the treasury department.
Potential covenant breaches can ordinarily be avoided by placing additional
security or a cash deposit with the lender, or by partial repayment to cure an
event of default.
Effect of covenants
All of the Group's non-current borrowings amounting to £703.9 million contain
covenants, which, if not met, would result in the borrowings becoming
repayable on demand. These borrowings are otherwise repayable more than 12
months after the end of the reporting period. As at 31 December 2025, the
Group complied with all the covenants that were required to be met on or
before 31 December 2025. The covenants that are required to be complied with
after the end of the current reporting period do not affect the classification
of the related borrowings as current or non-current at the end of the current
reporting period. Therefore, all these borrowings remain classified as
non-current liabilities. The Group remains in compliance with these covenants
up to the date of this report. The Group's loan facilities and other
borrowings are spread across a range of 23 banks and financial institutions so
as to minimise any potential concentration of risk.
22. Financial assets and liabilities
Fair value through profit and loss Amortised cost Total
£m
£m
carrying value
£m
Financial assets:
Cash and cash equivalents - 49.4 49.4
Derivative financial assets 0.6 - 0.6
Other assets - current(1) - 9.7 9.7
0.6 59.1 59.7
Financial liabilities:
Secured bank loans - (901.9) (901.9)
Derivative financial liabilities (0.3) - (0.3)
Other liabilities - current(2) - (43.2) (43.2)
(0.3) (945.1) (945.4)
At 31 December 2025 0.3 (886.0) (885.7)
Fair value through profit and loss Amortised cost Total
£m
£m
carrying value
£m
Financial assets:
Cash and cash equivalents - 60.5 60.5
Derivative financial assets 1.8 - 1.8
Other assets - current(1) - 11.5 11.5
1.8 72.0 73.8
Financial liabilities:
Secured bank loans - (999.2) (999.2)
Derivative financial liabilities (0.4) - (0.4)
Other liabilities - current(2) - (49.5) (49.5)
(0.4) (1,048.7) (1,049.1)
At 31 December 2024 1.4 (976.7) (975.3)
1 Other assets included all amounts shown as trade and other
receivables in note 15 except prepayments of £0.8 million (2024: £2.7
million). All current amounts are non-interest bearing and receivable within
one year.
2 Other liabilities included all amounts shown as trade and other
payables in note 17 except deferred income and sales and social security taxes
of £14.4 million (2024: £16.2 million). All amounts are non-interest bearing
and are due within one year.
Reconciliation of net financial assets and liabilities to borrowings and
derivative financial instruments
2025 2024
£m
£m
Net financial assets and liabilities: 885.7 975.3
Other assets - current 9.7 11.5
Other liabilities - current (43.2) (49.5)
Cash and cash equivalents 49.4 60.5
Borrowings and derivative financial instruments 901.6 997.8
23. Share capital
Number of shares authorised, issued and fully paid Ordinary shares in circulation Treasury shares Total ordinary shares
£m
£m
£m
Ordinary shares in circulation Treasury shares Total
ordinary
shares
At 1 January 2025 397,410,268 41,367,512 438,777,780 9.9 1.1 11.0
Issue of shares 700,474 (700,474) - - - -
At 31 December 2025 398,110,742 40,667,038 438,777,780 9.9 1.1 11.0
Number of shares authorised, issued and fully paid Ordinary shares in circulation £m Treasury shares Total ordinary shares
£m
£m
Ordinary shares in circulation Treasury shares Total
ordinary
shares
At 1 January 2024 and 31 December 2024 397,410,268 41,367,512 438,777,780 9.9 1.1 11.0
The Board is authorised, by shareholder resolution, to allot shares or grant
such subscription rights (as are contemplated by sections 551(1) (a) and (b)
respectively of the Companies Act 2006) up to a maximum aggregate nominal
value of £3,311,752 representing one-third of the issued share capital of the
Company excluding treasury shares.
24. 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.
2025 2024
Number
Number
Weighted average number of ordinary shares in circulation 398,083,875 397,410,268
Number of ordinary shares in circulation at the year-end 398,110,742 397,410,268
For diluted earnings per share, the weighted average number of ordinary shares
in issues 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 year to 31 December 2025 was restricted to
a loss of 12.6 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 (LTIP) 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 2025 2024
Number
Number
Element B/Special Share Award - 694,695
LTIP 6,408,551 4,811,944
Total potential dilutive shares 6,408,551 5,506,639
25. Dividend
Payment date Dividend per share 2025 2024
p
£m
£m
Current year
2025 final dividend(1) 22 May 2026 2.70 - -
2025 interim dividend 2 October 2025 1.30 5.2 -
Distribution of current year profit 4.00 5.2 -
Prior year
2024 final dividend 23 May 2025 2.68 10.7 -
2024 interim dividend 2 October 2024 2.60 - 10.3
Distribution of current year profit 5.28 10.7 10.3
2023 final dividend 2 May 2024 5.35 - 21.3
Dividends as reported in the Group statement of changes in equity 15.9 31.6
1 Subject to shareholder approval at the AGM on 23 April 2026. Total
cost of proposed dividend is £10.7 million. The proposed dividend is not
recognised as a liability at the balance sheet date.
26. Other reserves
Notes Capital redemption reserve Cumulative translation reserve Fair value reserve Share-based payment reserve £m Other reserves Total
£m
£m
£m
£m
£m
At 1 January 2025 22.7 25.8 7.3 3.0 28.1 86.9
Exchange rate variances - 25.2 - - - 25.2
Corporation tax on exchange differences - (0.5) - - - (0.5)
Property, plant and equipment:
- net fair value losses in the year 13 - - (1.6) - - (1.6)
- deferred tax thereon 18 - - 0.7 - - 0.7
Share-based payments - - - 0.3 - 0.3
At 31 December 2025 22.7 50.5 6.4 3.3 28.1 111.0
Notes Capital redemption reserve Cumulative translation reserve Fair value reserve Share-based payment reserve Other reserves Total
£m
£m
£m
£m
£m
£m
At 1 January 2024 22.7 47.4 6.1 2.4 28.1 106.7
Exchange rate variances - (21.6) - - - (21.6)
Property, plant and equipment:
- net fair value gains in the year 13 - - 1.3 - - 1.3
- deferred tax thereon 18 - - (0.1) - - (0.1)
Share-based payments - - - 0.6 - 0.6
At 31 December 2024 22.7 25.8 7.3 3.0 28.1 86.9
The capital redemption reserve comprises of the nominal value of the Company's
own shares acquired as a result of share buyback programmes.
The cumulative translation reserve comprises the aggregate effect of
translating net assets of overseas subsidiaries into Sterling since
acquisition.
The fair value reserve comprises the aggregate movement in the value of
financial assets classified as fair value through comprehensive income,
owner-occupied property and hotel since acquisition, net of deferred tax.
The amount classified as other reserves was created prior to listing in 1994
on a Group reconstruction and is considered to be non-distributable.
Share options exercised have been settled using the treasury shares of the
Group. The reduction in the treasury share equity component is equal to the
cost incurred to acquire the shares, on a weighted average basis. Any excess
of the cash received from employees over the reduction in treasury shares is
recorded in share premium. In 2025, there were 700,474 treasury
shares transferred to the EBT (2024: none) to satisfy future awards under
employee share plans. At 31 December 2025, the Group held 40,667,038 ordinary
shares (2024: 41,367,512) with a nominal value of £1.0 million (2024: £1.1
million) in treasury. The Company's voting rights and dividends in respect of
the treasury shares, including those own shares which the EBT holds, continue
to be waived.
27. Notes to the cash flow
Cash generated from operations 2025 2024
£m
£m
Operating loss (24.1) (52.5)
Adjustments for:
Net movements on revaluation of investment properties 79.2 127.7
Net movements on revaluation of equity investments (0.1) 0.6
Depreciation and amortisation 0.8 1.0
Loss on sale of investment property 10.9 2.3
Lease incentive debtor adjustments (15.9) (10.4)
Share-based payments 0.3 0.6
Loss on sale of other equity investments - 0.1
Changes in working capital:
Decrease in receivables 3.3 2.5
Decrease in payables (1.8) (0.7)
Cash generated from operations 52.6 71.2
Non-cash movements 2025
Changes in liabilities arising from financing activities Notes 1 January 2025 Financing cash flows £m Amortisation of borrowing issue costs £m Fair value adjustments £m Foreign exchange £m 31 December 2025
£m
£m
Borrowings 19 999.2 (126.8) 1.9 - 27.6 901.9
Derivative financial instruments 20 (1.4) (0.2) - 1.3 - (0.3)
Lease liabilities 3.3 - - - 0.1 3.4
1,001.1 (127.0) 1.9 1.3 27.7 905.0
Non-cash movements 2024
Changes in liabilities arising from financing activities Notes 1 January 2024 Financing cash flows £m Amortisation of borrowing issue costs £m Fair value adjustments £m Foreign exchange £m 31 December 2024
£m
£m
Borrowings 19 1,070.6 (47.7) 1.7 - (25.4) 999.2
Derivative financial instruments 20 (4.3) (0.5) - 3.4 - (1.4)
Lease liabilities 3.5 - - - (0.2) 3.3
1,069.8 (48.2) 1.7 3.4 (25.6) 1,001.1
28. Contingencies
The Group has contingent liabilities in respect of legal claims, guarantees
and warranties arising in the normal course of business. It is not anticipated
that any material liabilities will arise from these contingent liabilities.
29. Commitments
At the balance sheet date the Group had contracted with customers under
non-cancellable operating leases for the following minimum lease payments:
Operating lease commitments - where the Group is lessor 2025 2024
£m
£m
Within one year 97.4 94.2
Between one and two years 76.1 71.3
Between two and three years 63.1 59.4
Between three and four years 51.4 47.6
Between four and five years 41.1 37.3
More than five years 246.8 158.8
575.9 468.6
Operating leases where the Group is the lessor are typically negotiated on a
customer-by-customer basis and include break clauses and indexation
provisions.
Other commitments
At 31 December 2025 the Group had contracted capital expenditure of £16.7
million (2024: £10.3 million). At the balance sheet date, the Group had not
exchanged contracts to acquire any investment properties (2024: £nil). There
were no authorised financial commitments which were yet to be contracted with
third parties (2024: £nil).
30. Post-balance sheet events
There are no post-balance sheet events requiring disclosure.
Supplementary disclosures (unaudited)
Unaudited unless otherwise stated
Alternative Performance Measures
CLS discloses Alternative Performance Measures (APMs) based on methodologies
determined by EPRA and used by industry peers to ensure cross-sector
consistency. We also disclose a number of APMs which are commonly used by
investors to assess a company's performance.
EPRA APMs
· 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.
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.
1. EPRA APMs
i) 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, student accommodation, held as PPE or occupied by
CLS).
2025 2024
United Kingdom £m Germany £m France £m Total United Kingdom £m Germany £m France Total
£m
£m
£m
Rent passing 40.2 39.1 11.8 91.1 46.6 41.6 12.9 101.1
Adjusted for properties in development (0.1) - - (0.1) (0.1) - (0.3) (0.4)
Forecast non-recoverable service charge (2.8) (3.6) (1.0) (7.4) (3.9) (2.5) (0.5) (6.9)
Annualised net rents (A) 37.3 35.5 10.8 83.6 42.6 39.1 12.1 93.8
Property portfolio(1) 641.7 800.4 223.6 1,665.7 668.4 814.1 225.9 1,708.4
Adjusted for properties in development (10.7) (1.7) (9.9) (22.3) (11.4) (2.0) (8.3) (21.7)
Purchasers' costs at 6.8% 42.9 54.3 14.5 111.7 44.7 55.2 14.8 114.7
Property portfolio valuation including purchasers' costs (B) 673.9 853.0 228.2 1,755.1 701.7 867.3 232.4 1,801.4
EPRA NIY (A/B) 5.5% 4.2% 4.7% 4.8% 6.1% 4.5% 5.2% 5.2%
1 Figures in the above table include investment properties and
properties held for sale and exclude owner-occupied premises, student
accommodation and hotel.
ii) 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 step rents).
2025 2024
United Kingdom £m Germany £m France £m Total United Kingdom £m Germany £m France Total
£m
£m
£m
Contracted rent 47.4 45.7 13.1 106.2 50.1 44.9 13.9 108.9
Adjusted for properties in development (0.1) - - (0.1) (0.1) - (0.3) (0.4)
Forecast non-recoverable service charge (2.8) (3.6) (1.0) (7.4) (3.9) (2.5) (0.5) (6.9)
'Topped-up' annualised net rents (A) 44.5 42.1 12.1 98.7 46.1 42.4 13.1 101.6
Property portfolio(1) 641.7 800.4 223.6 1,665.7 668.4 814.1 225.9 1,708.4
Adjusted for properties in development (10.7) (1.7) (9.9) (22.3) (11.4) (2.0) (8.3) (21.7)
Purchasers' costs (6.8%) 42.9 54.3 14.5 111.7 44.7 55.2 14.8 114.7
Property portfolio valuation including purchasers' costs (B) 673.9 853.0 228.2 1,755.1 701.7 867.3 232.4 1,801.4
EPRA 'topped-up' NIY (A/B) 6.6% 4.9% 5.3% 5.6% 6.6% 4.9% 5.6% 5.6%
1 Figures in the above table include investment properties and
properties held for sale and exclude owner-occupied premises, student
accommodation and hotel.
iii) EPRA vacancy
The EPRA vacancy rate calculates vacancy as a proportion of the ERV of the
total portfolio.
2025 2024
£m
£m
ERV of vacant space (A) 16.8 15.1
ERV of let space 98.7 103.9
ERV of total portfolio (B) 115.5 119.0
EPRA vacancy rate (A/B) 14.5% 12.7%
iv) EPRA capital expenditure
This measure shows the total amounts spent on the Group's investment
properties on an accrual and cash basis with a split between expenditure used
for the creation of incremental space and enhancing space ('no incremental
space'). The sum of these expenditures is included in Capital expenditure in
note 12 of the Group financial statements. The Group is not party to any joint
venture arrangements, therefore this measure is not disclosed.
Notes 2025 2024
£m
£m
Acquisitions 12 - -
Amounts spent on the completed investment property portfolio: 12
Creation of incremental space - -
Creation of no incremental space 14.3 21.1
EPRA capital expenditure 14.3 21.1
Conversion from accrual to cash basis 3.0 1.2
EPRA capital expenditure on a cash basis CF(1) 17.3 22.3
1 Group statement of cash flows.
v) EPRA cost ratios
The Group has a policy of capitalising certain staff costs directly
attributable to the management of the development of investment properties.
Notes 2025 2024
£m
£m
Administration expenses 4 16.4 17.7
Other property expenses 4 17.3 18.1
Less: Other investments segment and student accommodation operating costs (5.0) (6.8)
28.7 29.0
Net service charge costs 4 7.9 6.1
Service charge costs recovered through rents but not separately invoiced (0.3) (0.3)
Dilapidations receipts (2.1) (1.2)
EPRA costs (including direct vacancy costs) (A) 34.2 33.6
Direct vacancy costs (9.1) (8.2)
EPRA costs (excluding direct vacancy costs) (B) 25.1 25.4
Gross rental income 4 94.8 100.2
Service charge components of gross rental income (0.3) (0.3)
EPRA gross rental income (C) 94.5 99.9
EPRA cost ratio (including direct vacancy costs) (A/C) 36.2% 33.6%
EPRA cost ratio (excluding direct vacancy costs) (B/C) 26.6% 25.4%
vi) EPRA LTV
Notes 2025 2024
£m
£m
Borrowings from financial institutions 19 901.9 999.2
Net payables 46.6 52.4
Cash and cash equivalents 16 (49.4) (60.5)
Net debt (A) 899.1 991.1
Properties held as property, plant and equipment 13 39.1 40.7
Investment properties 12 1,570.8 1,676.5
Properties held for sale 14 94.9 133.0
Financial assets - equity investments 0.8 0.6
Total property value (B) 1,705.6 1,850.8
EPRA LTV (A/B) 52.7% 53.5%
vii) EPRA like-for-like gross rental income growth
This measure shows the growth in gross rental income on properties owned
throughout the current and previous year. This growth rate excludes properties
held for development, acquired or disposed in either year.
2025 2024
(Decrease)/increase in gross rental income (%) (6.5) 1.2
(Decrease)/increase in gross rental income (£m) (6.5) 1.1
2. Other APMs
i) Total Accounting Return (per share)
Notes 2025 2024
pence
pence
EPRA NTA at 31 December 5 200.7 215.0
Distribution - prior year final(1) 25 2.7 5.4
Distribution - current year interim 25 1.3 2.6
Less: EPRA NTA at 1 January (A) 5 (215.0) (253.0)
Return before dividends (B) (10.3) (30.0)
Total Accounting Return (NTA) (B/-A) (4.8)% (11.9)%
1 The 2024 and 2023 final dividends were 2.68 pence and 5.35 pence
respectively but have been rounded to the nearest 0.1 pence for the purpose of
this note.
ii) Net debt and gearing
Notes 2025 2024
£m
£m
Borrowings short-term 19 198.0 372.4
Borrowings long-term 19 703.9 626.8
Add back: unamortised issue costs 19 3.9 4.3
Gross debt 19 905.8 1,003.5
Cash and cash equivalents 16 (49.4) (60.5)
Net debt (A) 856.4 943.0
Net assets (B) 742.1 784.2
Net gearing (A/B) 115.4% 120.2%
iii) Balance sheet loan-to-value
Notes 2025 2024
£m
£m
Borrowings short-term 19 198.0 372.4
Borrowings long-term 19 703.9 626.8
Less: cash and cash equivalents 16 (49.4) (60.5)
Net debt (A) 852.5 938.7
Investment properties 12 1,570.8 1,676.5
Properties in plant, property and equipment 13 39.1 40.7
Properties held for sale 14 94.9 133.0
Total property portfolio (B) 1,704.8 1,850.2
Balance sheet loan-to-value (A/B) 50.0% 50.7%
iv) Administration cost ratio
CLS' administration cost ratio represents the cost of running the property
portfolio relative to its net income. CLS uses this measure to monitor the
efficiency of the business as it focuses on the administrative cost of active
asset management across three countries.
Notes 2025 2024
£m
£m
Administration expenses 4 16.4 17.7
Less: Other investment segment 4 (0.1) (0.1)
Underlying administration expenses (A) 16.3 17.6
Net rental income (B) 4 101.3 114.0
Administration cost ratio (A/B) 16.1% 15.4%
v) Dividend cover
Notes 2025 2024
£m £m
Interim dividend 25 5.2 10.3
Final dividend (note: 2025 final dividend is subject to approval at the AGM) 25 10.7 10.7
Total dividend (A) 15.9 21.0
EPRA earnings (B) 5 30.2 36.4
Dividend cover (B/A) (times) 1.90 1.73
vi) Interest cover
Notes 2025 2024
£m
£m
Net rental income 4 101.3 114.0
Administration expenses 4 (16.4) (17.7)
Other property expenses 4 (17.3) (18.1)
Group revenue less costs (A) 67.6 78.2
Finance income (excluding derivatives and dividend income) 8 1.1 1.4
Finance costs (excluding derivatives) 9 (37.8) (42.3)
Net interest (B) (36.7) (40.9)
Interest cover (-A/B) (times) 1.84 1.91
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