CLS HOLDINGS PLC Annual Report & Accounts 2003
CLS IS A QUOTED PROPERTY COMPANY OPERATING SUCCESSFULLY IN THREE E UROPEAN MARKETS , THE UK, S WEDEN AND F RANCE . W E ARE CONFIDENT THAT OUR TRACK RECORD OF GROWTH IS SET TO CONTINUE AND WE REMAIN FIRMLY COMMITTED TO ACHIEVING A HIGH LEVEL OF RETURNS FOR SHAREHOLDERS . � .01 .66 Introduction Independent Auditors’ Report .02 .67 Financial Highlights Consolidated Profit and Loss Account .04 .68 Business Highlights Consolidated Balance Sheet .06 .69 Chairman’s Statement Consolidated Cash Flow Statement .10 .70 Financial Review Statement of Group Total Recognised Gains and Losses .20 .70 Property Review Reconciliation of Group Historical Cost Profits and Losses .36 .70 Directors, Officers and Advisers Reconciliation of Movements in Group Shareholders’ Funds .37 .71 Portfolio Company Balance Sheet .57 .72 Directors’ Report Notes to the Financial Statements .62 .92 Directors’ Remuneration Report Five Year Summary
UK S WEDEN F RANCE .
F INANCIAL H IGHLIGHTS 445.7 p Adjusted Net Asset Value (NAV) per share 445.7 pence, up 9.1 per cent (Statutory NAV per share 439.2 pence up 11.2 per cent). � £ 18.8 m Retained profit (after tax and minority interest) £18.8 million up 22.9 per cent. � £ 17.6 m Profit before tax £17.6 million up 2.9 per cent. � 12.8 % T otal return to shareholders 12.8 per cent based on increase in adjusted NAV per share and distributions in the year (15.1 per cent based on statutory NAV). � 16.5 p T otal distribution to shareholders of 16.5 pence per share of which intended final distribution is 10.0 pence. � £ 882.4 m Property portfolio valued at £882.4 million up 3.9 per cent. � £ 63.8 m Net rental income (including associates and JVs) £63.8 million up 5.8 per cent. � £ 56.7 m Y ear end cash £56.7million down 13.7 per cent. � .
Key statistics and other financial information 31 Dec 2003 31 Dec 2002 PROFIT AND LOSS 20.0p Adjusted earnings per share* 17.3p Up 15.6% 20.7p Earnings per share 15.7p Up 31.8% Net rental income £63.8m £60.3m Up 5.8% (including associates and JVs) Operating profit £46.4m £46.1m Up 0.7% (including associates and JVs) £30.7m Net interest payable £28.9m Up 6.2% £21.4m Core profit before tax (see page 14) £19.7m Up 8.6% £17.6m Profit before taxation £17.1m Up 2.9% £18.8m Retained profit £15.3m Up 22.9% BALANCE SHEET 445.7p Adjusted NAV per share* 408.7p Up 9.1% 439.2p Statutory NAV per share 394.9p Up 11.2% Distribution per share from tender 16.5p offer buy-backs 14.4p Up 14.6% £882.4m Property portfolio £848.9m Up 3.9% £385.0m Net asset value £371.7m Up 3.6% £56.7m Cash £65.7m Down 13.7% 125.1% Adjusted gearing* 119.6% Up 5.5% 126.9% Statutory gearing 123.8% Up 3.1% 39.5% Solidity (net assets as a ratio of gross assets) 39.6% Down 0.1% 87,644 Shares in issue (000’s) 94,129 Down 6.9% FRS13 fair value adjustment after tax 20.7p 23.6p Down 12.3% (see page 18) * FRS19 requires a tax provision to be made in respect of capital allowances to the extent that they are not covered by available tax losses brought forward. In practice we consider it unlikely that the benefit of these capital allowances will not continue to be available whether or not the properties are sold in the future. The Board has complied with pronouncements from the APB, ASB and Listing Authority in showing NAV and Earnings per share including the FRS19 provision with equal prominence as adjusted figures. The effect of FRS 19 has been excluded from those statistics that are indicated by an asterisk, a reconciliation of which is set out on the final page of this document. At 31 December 2003 the FRS 19 deferred tax credit included in the profit and loss account was £0.6 million and the cumulative reduction to net assets was £5.7 million (31 December 2002: charge to tax of £1.5 million and £13.0 million respectively). .
B USINESS H IGHLIGHTS Planning permission received for the 1,014 foot (309 metres) London Bridge T ower, the tallest building in Europe. � Acquisition of New London Bridge House by way of 50:50 JV for £39.5 million. � Sale of four UK properties Coombe Hill House, New Malden; Colne House,Watford; Larkhall Lane, SW4 and Vauxhall Street, SE11 at a profit of £1.9 million. � .
Acquisition of two new properties on Bondway,Vauxhall Cross for £4.2 million consolidating our strategic position on this site. � Expansion into Luxembourg in January 2004 by the acquisition of a government let property at a cost of £6.7 million. � Re-financing at Solna, Sweden raised £21.3 million. � .
C HAIRMAN ’ S S TATEMENT T HIS M AY WILL MARK THE 10 TH ANNIVERSARY OF THE LISTING OF CLS H OLDINGS PLC ON THE MAIN MARKET OF THE L ONDON S TOCK E XCHANGE , AND I WOULD THEREFORE LIKE TO TAKE THIS OPPORTUNITY TO LOOK BACK OVER THE LAST TEN YEARS AND SHARE WITH YOU MY THOUGHTS AS I LOOK FORWARD TO THE FUTURE . .
REVIEW OF THE LAST TEN YEARS AND FUTURE STRATEGY. SHAREHOLDERS I would particularly like to thank both our institutional and private shareholders, of whom many have held Our approach since flotation has been to make carefully researched shares since flotation, for their loyalty and active support. investment decisions that are risk averse with a view to ensuring Although some institutions are reluctant to invest in companies that our portfolio remains secure and performs consistently. with a large proprietorial shareholding, in my view such Over the last ten years our net assets have grown from £127.7 companies offer a much stronger recognition of shareholders’ million to £385.0 million, an increase of 201.5 per cent, a growth interests as a whole, given that as investors we are all interested rate of 11.7 per cent compound per annum and 13.8 per cent in increasing capital value and distributions. compound per annum over the last five years. During the last ten years, we have distributed £83.0 million pro- Since flotation net asset value per share has increased from 129.0 rata to shareholders, progressively rising from £3.2 million in 1995 pence to 445.7 pence, 13.2 per cent compound per annum. Our to £14.1 million in 2003, an increase of 340.6 per cent. In addition property assets, based in the UK, Sweden and France have we have made market purchases of shares for cancellation of increased from £287.0 million to £882.4 million, an increase of £35.7 million, making a total of £118.7 million paid to 207.5 per cent. shareholders during this period. This growth has resulted in our shares outperforming the FTSE TENANTS We are long-term investors in property and seek long- Real Estate Index (as at 30 March 2004) by 129 per cent and the term relationships with our tenants of whom nearly 39 per cent FTSE All Share Index by 153 per cent since flotation. are government organisations. We neither trade in nor develop properties for short-term gain. We do however carry out substantial enhancements to our properties for the benefit of % our tenants. 400 Our aim is to provide tenants with high-quality, well-managed 350 premises providing both the flexibility and facilities required by 300 today’s occupiers to enhance their own businesses. To this end, 250 we keep abreast of technological developments so that we can deliver state-of-the-art services to our customers. It is important 200 to us to be responsive to our customers’ requirements and to 150 deliver value for money. 100 LENDING INSTITUTIONS The support of our bankers and other 50 lending institutions has been crucial to our success and growth. 1994 1995 1996 1998 1999 2000 2001 2002 2003 1997 Our portfolio of 109 properties valued at £882.4 million is financed by £540.5 million of loans provided by 17 different financial CLS Holdings – Tot Return Ind FTSE Real Estate - Tot Return Ind institutions, a number of whom have worked with us for more than FTSE Real Estate All Share - Tot Return Ind ten years. Additionally we have £56.7 million deposited with various banks. We look forward to continuing our strong, risk The closing price of our shares on 30 March 2004 was 324.5 pence averse and mutually beneficial relationship with our banking compared to a price of 111 pence on flotation, an increase of partners for the foreseeable future. 192.3 per cent. LOCAL COUNCILS Over the period we have developed excellent This success is a testament to the strong partnerships that have working relationships with a variety of local councils and I would been forged over this period between CLS and our shareholders, like to thank them for their support for our ongoing projects to tenants, lending institutions, local councils, professional advisers, upgrade the environment for local communities adjacent to our suppliers and employees. I would like to thank all who have been investments. We very much look forward to continuing to work involved with the Company during this period and would like to say a few words to each of these stakeholders. with them to improve our living and working environment. .
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