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

Annual Results 2011 1

Contents • Overview • Financials • Portfolio • Markets • Summary Richard Tice John Whiteley Chief Executive Officer Chief Financial Officer 2

About CLS Property investments by value • Top TSR performance 31 December 2011 since 2008 in UK listed France property sector and third in 27% 2011 Germany 22% • Long-term benefits of diversified property portfolio – 4 markets • Specialist in Direct high-yielding offices 6% Sweden Catena London • Emphasis on high initial yield 2% 43% vs low cost of debt 3

Overview Year of achievement at operating level: • Lowest vacancy rate for over ten years • Higher rental on like-for-like basis • Lower debt cost • Additional sources of finance • Progressing development value Financial year of two halves: • Strong first half • Second half affected by Eurozone crisis 4

Contents • Overview • Financials • Portfolio • Markets • Summary 5

Financial Highlights Strengths Impacted by Eurozone issues • Underlying earnings up 53% • Weakness of euro – to 64.9p (2010: 42.5p) • Fall in corporate bond values • Increase in property portfolio • Fall in long-term interest rates – Up 2.1% in local currency • Low cost of debt – Increase in derivative liabilities – 4.1% (2010: 4.3%) – Early closure of long-term swap • Highest TSR 2008 to 2011 – 64.9% = 13.3% p.a. compound – 2011: 11.1% • Increased distribution – Proposed £7.9m – Thus 10.1% uplift in year to £12.3m 6

Strong Underlying Earnings Profit after Tax £m 70 2010 2011 60.1 60 50 38.8 40 30.1 29.7 30 20.1 18.0 20 13.0 9.6 10 0 -3.1 -10 -20 -18.5 -30 EPRA earnings Property valuation FV movement on Other Profit after tax surplus derivatives 7

A Year of Two Halves Movement in EPRA NAV Pence 1120 3.7 9.1 42.8 1080 -27.4 1047.7 4.8 13.9 30.7 1040 -39.3 4.9 40.5 1000 983.1 -53.5 952.9 960 920 880 840 800 At 1 Core Share Uplift of FX FV bonds At 30 Core Share Uplift of FX FV bonds Close out At 31 Dec Jan operations buy-backs property June 2011 operations buy-backs property swap 2011 2011 8

Improved Liquidity Movement in Liquid Resources £m 250 Bonds Cash 39.2 200 25.1 -20.4 19.9 140.4 150 -11.8 -24.2 1.8 126.4 -15.6 55.3 48.3 100 50 85.1 78.1 0 At 1 January Catena From Tender buy- Net new Capital Close out of Other Bond At 31 2011 dividend operations backs loans expenditure swap revaluation December 2011 9

Extending Sources of Finance Movement in Gross Debt £m 680 5.0 660 30.4 640 625.1 -19.1 29.5 620 -13.0 592.3 600 580 560 540 At 1 January 2011 Swedish bond French portfolio New bank loans Amortisation FX At 31 December issue refinancing 2011 10

Moving Forward with Debt Profile At 31 December 2011 £m 160 Amortisation Bullet Repayments 140 120 100 80 60 40 20 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 11

Moving Forward with Debt Profile Pro forma after approved refinancing £m 160 Amortisation Bullet Repayments 140 120 100 80 60 40 20 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 12

Diverse, low cost debt Financing Debt Hedging • Strategy – Ring-fenced Fixed rate – 64 loans loans Floating – 20 banks and rate - Fixed unhedged 1 capital markets bond £83.7m through swaps £157.4m £50.0m • Property loan to value 62.5% (2010: 63.5%) • Weighted average cost of debt reduced to 4.1% £334.0m (2010: 4.3%) • 75% fixed or hedged Floating rate - capped 13

Certainty and Flexibility at a Cost Movement in Net Derivative Liabilities At 31 £m At 1 January Fair value Derivatives December 2011 movements bought Other Close out swap 2011 0 -5 24.2 -7.3 -10 -15 -15.7 -20 -25 1.0 -30 1.7 -35 -18.5 -40 14

Total Shareholder Return TSR of listed property companies 2008 - 2011 80% 60% 40% 20% 0% CLS -20% -40% -60% -80% -100% 15 Source: Bloomberg, CLS

Contents • Overview • Financials • Portfolio • Markets • Summary 16

Property Portfolio Overview • Diversified portfolio: – 400 tenants, 76 properties – 413,700 sq m • Stable income platform: – 40% from governments – 29% from major corporations – WAULT 7.7 years • 65% of rents indexed • Strong asset management: – Void by rent 3.9% 17

Property Portfolio Schedule Contracted Net Initial Vacancy Rent Yield By rent Valuation Uplift in local At 31 December 2011 £m £m currency % % London 27.5 398.0  2.7% � 6.6 4.0 France 18.7 248.3  1.9% 7.5 2.7 Germany 13.9 197.1  1.0% 7.0 6.0 Sweden 6.2 58.7  1.5% 7.1 1.8 Total portfolio 66.3 902.1  2.1% 7.0 3.9 18

Rental Indexation Annual Impact (£000s) Current Index Rate 1.0% 2.0% 3.0% 4.0% 5.0% Current 5.0% London 41 82 123 164 205 205 5.0% France 166 332 497 663 829 829 2.1% Germany 80 228 324 425 473 228 2.3% Sweden 33 66 99 132 155 66 Total portfolio 320 708 1,043 1,384 1,662 1,328 Relevant Indexes: London (RPIX & RPI), France (Insee Construction), Germany (Consumer Price Index), Sweden (Consumer Price Index) 19

Movement in Investment Properties £m 950 3.2 2.8 940 10.9 930 924.9 26.0 920 910 902.1 15.0 900 -39.7 890 5.0 2.0 876.9 880 870 860 20

Rack Rented into the Medium Term Portfolio Rent Expiries £m 45 Rent expiring ERV of rent expiring 40 35 30 25 20 15 10 5 0 2012 2013 2014 2015 2016 Later 21

Property Portfolio Acquisitions in year Falcon House and Quest House, Hounslow, London • £5.5m on 10.1% initial yield • Cap Value £1,172 per sq m • Subsequent letting, yield >12% • 4,693 sq m 22

Well Positioned for Growth Developments London - Planning Applications Submitted • Spring Mews, Vauxhall (1-2 years) - 20,800 sq m mixed use, student / hotel • Vauxhall Square (3-6 years) – 154,000 sq m mixed use Germany - on site • Munich pre-let to Dr Hönle AG 1,642 sq m – Completed February 2012 • Landshut pre-let to EON 5,400 sq m – Complete Summer 2012 Sweden, via Catena associate • Mixed-use in Stockholm: 950 apartments & 50,000 sq m commercial (2-4 years) • Planning expected H1 2012 23

Well Positioned for Growth Regeneration plan for Vauxhall Houses of Parliament Spring Mews US Embassy Vauxhall Square 24

Other Investments Cash management via corporate bonds • 39 bonds valued at £85.1 million • ROCE since late 2008: 32.8% (9.1% compound p.a.) • Running yield 10.2% • Eurozone worries reduced values by £15.6m in year • Value recovered £8.2m first two months 2012 Other associates • Bulgarian Land Development (48.3% stake) – £8.7m share of book value; cash neutral • Nyheter24 – Sale of Wyatt; 20% stake in merged group and £0.5m convertible bond 25

Contents • Overview • Financials • Portfolio • Markets • Summary 26

Market Overview Future Direction in our Markets • Positive arbitrage growing between high net yields and low interest rates • New lenders emerging as traditional debt sources recede; margins up • Real financing advantage for listed over private propcos • Genuine tenant demand continues • Exposure to stronger markets in Europe 27

Market Overview London 5yr Interest Rate Swaps Inner South Eastern Offices Central London Offices 15% 12% 9% 6% 3% Source: Savills 0% Dec 87 Dec 90 Dec 93 Dec 96 Dec 99 Dec 02 Dec 05 Dec 08 Dec 11 • Development completions in central London lowest since the early 1990s; almost no new offices under way outside CBD • London attracting global investment capital • Banks continue to push consensual sales and receiverships • Actively targeting new opportunities 28

Continental Europe FRANCE • Some anxiety in investment market - over € 6 billion of loans to refinance in 2012-2013 • Greater Paris lettings +14% in 2011, second hand rents +3%, new supply minimal • Lyon vacancy below 5%, dearth of new supply, ERVs moving back up GERMANY • I nvestment volumes +23% in 2011, similar € 20-25bn expected 2012 • Some keen sellers funded by overseas banks • Lettings at 13% above 10 year average as economy expands • Munich and Berlin are strongest markets SWEDEN • GDP growth 4% in 2011, but slowing fast • 6% vacancy in Stockholm CBD; 11.5% in Greater Stockholm, much being older stock • Projected new supply half 10 year average • Population migration into Stockholm; limited residential supply bodes well for Catena Source: DTZ 29

Contents • Overview • Financials • Portfolio • Markets • Summary 30

Summary • Strong TSR performance • Year of achievement at operating level • Financially a year of two halves • Retain high levels of liquidity • New sources of finance • Development opportunities progressing 31

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