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A diversified approach

CLS Holdings plc Full Year Results 2018

Disclaimer

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.

Contents

Overview

01

Property

14 06 21

Appendices

24

Fredrik Widlund – CEO John Whiteley – CFO Simon Wigzell – Head of Group Property

Financials Markets and Summary

Overview

CLS Holdings plc Full Year Results 2018 | 01

Continued growth through diversification

Overview

• Rental income increased by 9.9% to £103.0m

(31 Dec 2017: £93.7m); like-for-like up 1.0%

• Valuations up 3.7% led by Germany;

total portfolio value of over £1.9bn

• EPRA NAV up 8.5% to 309.8 pence per share

(31 Dec 2017: 285.6p1)

• Vacancy driven down to 3.8% (31 Dec 2017: 5.8%)
• EPRA EPS up 4.0% to 13.1p (31 Dec 2017: 12.6p1)
• Recycled capital through sales £49m, acquisitions £70m

and capex £18m

• Delivering on capex programme, over 200,000 sq ft of

recently developed/refurbished space has now been let

• n long leases
• Proposed final dividend up to 4.7p per share, full year

6.9p up 8.7%

CLS Holdings plc Full Year Results 2018 | 02

PROPERTY VALUE BY GEOGRAPHY

UK (£982.3m) 51% Germany (£629.4m) 33% France (£308.1m) 16%

£1.9bn

177.4 208.3 245.6 285.6 309.8 2014 2015 2016 2017 2018

EPRA NAV (pence)

309.8p

Up 8.5%

Strong portfolio growth UK

• Valuation uplift of 0.5%, London up 0.8%
• ERVs1 down 0.6%, NIY 5.6%, unchanged
• Vacancy down to 4.0% (31 Dec 2017: 5.5%)

Germany

• Valuation uplift of 9.3% in local currency
• ERVs1 up 5.0%; NIY 5.4%, unchanged
• Vacancy down to 4.2% (31 Dec 2017: 7.1%)

France

• Valuation uplift of 3.8% in local currency
• ERVs1 down 0.3%; NIY 5.3%, unchanged
• Vacancy down to 2.3% (31 Dec 2017: 4.4%)

Valuations up 3.7%, vacancies down

VALUATION UPLIFT

£67.9m

Driven by Germany

CLS Holdings plc Full Year Results 2018 | 03

3.1% 2.9% 5.8% 3.8% 2015 2016 2017 2018 Group KPI 5.0%

VACANCY

2016 2017 2018 UK France Germany

+£38.6m +£96.8m +£67.9m

Create value, reinvest for the future

CLS Holdings plc Full Year Results 2018 | 04

Strategy

We acquire the right properties… …we secure the right finance… …we deliver value through active management and cost control

We reward shareholders, customers and employees

• Distribute half of our

EPRA earnings and reinvest remaining

• Our tenants are our

customers, we understand their needs

• Reward employees for

their work and loyalty

• Invest in offices in UK,

Germany and France

• Non-prime, good transport

links, larger European cities

• Multi-let to spread risk
• Bank loans to SPVs, non-

recourse

• Primarily fixed rate
• Some portfolio loans, with

flexibility

• Up to 7 year terms from

26 lenders

• In-house asset and

property management

• Invest to improve our

assets

• Effective cost control

through efficiencies and revenue maintenance

Sales

• Sold 11 properties during 2018 - £49m (NIY 5.9%)

− UK - 8 properties - £39m − Germany - 2 properties - £8m − France - 1 property - £2m

• Disposal of First Camp during Q1 2019 - £29m

Acquisitions

• Disciplined and opportunistic approach
• Acquired 2 properties in 2018 - £70m (NIY 6.4%, RIY 7.4%)

− Uxbridge acquired in March 2018 - £51m − Hammersmith acquired in April 2018 - £16m − Other acquisitions - £3m

• Exchanged on 2 properties after year end

− Lille exchanged December 2018 - £10m − Aldgate exchanged February 2019 - £54m

CLS Holdings plc Full Year Results 2018 | 05

Introduction £1.0b Analyse 50% Tech DD 16% Bid 18% Buy £79m

Analyse 50% Bid 18% Considered £4bn Tech DD £200m Analysed £1bn Buy £79m

2018 SALES AND ACQUISITIONS VOLUME (£m)

Acquisitions and sales

Continued portfolio repositioning

HARMAN HOUSE (UXBRIDGE)

11 properties £49m 2 properties £70m

Sales Acquisitions

Financials

CLS Holdings plc Full Year Results 2018 | 06

EPRA NAV

309.8p

Up 8.5% (31 Dec 2017: 285.6p1) EPRA EPS

13.1p

Up 4.0% (2017: 12.6p1) Total Accounting Return

10.8%

(2017: 18.8%) Weighted Average Cost of Debt

2.43%

Down 8 bps (31 Dec 2017: 2.51%) Strong Interest Cover

3.8x

(2017: 3.9x1) Final Dividend

4.7p

Up 8.7% Full year 6.9p (2017: 6.35p)

Delivering growth with low-cost financing

Financial highlights

CLS Holdings plc Full Year Results 2018 | 07

3.64 3.40 2.91 2.51 2.43 2014 2015 2016 2017 2018

COST OF DEBT (%)

Down 8 bps Up 8.7%

2014 2015 2016 2017 2018 25.9 23.5 19.1 15.9

DISTRIBUTIONS (£m)

7.7 8.5 12.3 12.6 13.1 2014 2015 2016 2017 2018

EPRA EPS (pence)

Up 3.9%

28.1

285.6 309.8

13.1 15.6 5.5 (1.3) (6.5) (2.2)

At 1 January 2018 EPRA earnings Property valuation Catena valuation Other Dividends Discontinued

• perations

At 31 December 2018

Driven by earnings and fair value uplifts

Movement in EPRA NAV

CLS Holdings plc Full Year Results 2018 | 08

+8.5%

MOVEMENT IN EPRA NAV (pence per share)

Enhanced earnings

Increase in EPRA EPS

CLS Holdings plc Full Year Results 2018 | 09

MOVEMENT IN EPRA EPS (pence per share) 12.61 13.1 (0.5) (1.0) (0.2) (0.1) 2.3

2017 Net rental income Other net income Expenses Net finance costs Other 2018

+4.0%

Net acquisitions and fair value uplifts

Increase in property portfolio

CLS Holdings plc Full Year Results 2018 | 10

31 December 2017 Disposals Acquisitions Capex Valuation uplift FX 31 December 2018

68.2 11.6 18.0 70.0 1,919.8 1,798.3 (46.3)

MOVEMENT IN PROPERTY PORTFOLIO1 (£m)

+6.8%

Generating cash for reinvestment in the business

Movement in liquid resources

CLS Holdings plc Full Year Results 2018 | 11

MOVEMENT IN LIQUID RESOURCES (£m) 65.5 30.3 140.5 48.0 40.9 22.8 100.3 (26.5) (70.9) (15.8) (68.6) (5.3)

At 1 January 2018 From

• perations

Dividends Sales Other net new loans Acquisitions Capex Retail bond redeemed Other At 31 December 2018

206.0 130.6

■

Cash

■

Corporate Bonds

Actively managing our debt

• 2018 financing, locked in more fixed rates

̶

Refinanced £137.7m at 2.16%

̶

Weighted average duration 5.8 years

̶

Including £92.0m fixed at 2.20%

• Repaid £158.6m costing 3.26%

̶

Including redeemed £65.0m 5.50% unsecured bond

̶

Reduced cost of debt by 21 bps

̶

Accretive to eps by 0.3p in 2019

• Average unexpired term at 31 December 2018: 3.5 years

̶

Fixed debt (79%): 3.8 years at 2.41%

̶

Floating debt (21%): 2.2 years at 2.50%

CLS Holdings plc Full Year Results 2018 | 12

Debt transactions

DEBT MATURITY (£m)

Gross debt (£m) 381.9 307.8 152.6 842.3 Number of loans 17 17 16 50 Gearing 26.6% 47.2% 47.5% 36.7% Cost of debt 3.56% 1.44% 1.60% 2.43% Years to maturity 2.9 3.8 4.2 3.5

50 100 150 200 250 2019 2020 2021 2022 2023 2024 2025 GBP EUR

DEBT PROFILE

Weighted Average Cost of Debt

2.43%

(31 Dec 2017: 2.51%) Interest Cover

3.8x

(2017: 3.9x1) Fixed Rate Debt

79%

(31 Dec 2017: 74%) (31 Dec 2016: 63%) Balance Sheet LTV

36.7%

(31 Dec 2017: 36.9%) Unencumbered Properties

£284m

(31 Dec 2017: £247m)

Low cost, well-spread debt

Debt position

CLS Holdings plc Full Year Results 2018 | 13

3.3 3.2 3.4 3.9 3.8 2014 2015 2016 2017 2018

INTEREST COVER (TIMES)

3.8x

DEBT PROFILE 31 Dec 2018

Fixed rate (79%) Floating rate (Capped) (3%) Floating rate (Unhedged) (18%)

Property

CLS Holdings plc Full Year Results 2018 | 14

CLS Holdings plc Full Year Results 2018 | 15

Asset management

TOP 15 TENANTS (37% of contracted rent) As at 31 December 2018 CONTRACTED RENT (£109.6m)

Resilient tenant base

Government (28% by rent) Major corporates (29%) Other (43%)

1. First Secretary of State (UK) 2. National Crime Agency (UK) 3. Trillium (Prime) Property (UK) 4. Roehampton University (UK) 5. City of Bochum (Germany) 6. BAE Systems (UK) 7. General Mills (UK) 8. Kaufland (Germany) 9. Honda Motors (UK) 10. COLT (France) 11. Bosch (Germany) 12. Epoka (France) 13. Dr Holne (Germany) 14. Materna (Germany) 15. Volksbank (Germany)

689

Tenants

£23.14 £11.41 £19.41 UK Germany France

AFFORDABLE RENTS (per sq ft) PROPERTY USE BY REVENUE

Office (89%) Student (5%) Hotel (4%) Food retail (2%)

Leasing deals

176 deals, secured £16.2m of annual rent, 2.2% above ERV

(2017: 173 deals, secured £19.4m of annual rent)

56% lease extension

(2017: 66%)

40% new leases

(2017: 26%)

4% rent review

(2017: 8%)

WAULT

5.3 years

(31 Dec 2017: 5.4 years)

Securing income whilst adding value

Active management

CLS Holdings plc Full Year Results 2018 | 16

LEASING DEALS

UK (£5.7m) Germany (£7.2m) France (£3.3m)

£16.2m

Annual rent

UK Germany France Group 2017 2018

VACANCY RATE

Actively adding value

East Gate, Munich

• Single let tenant vacated January 2017 and valued at €20m
• Refurbished 176,540 sq ft during 2017-2018
• Over 90% multi-let by year end
• YOY valuation uplift net of capex 20%, planned sale

Ateliers Victoires, Paris

• Redevelopment of 21,500 sq ft completed Q3 2018
• Fully let to a single tenant on a long lease during Q4 2018
• YOY valuation uplift net of capex 40%
• Planned sale

CLS Holdings plc Full Year Results 2018 | 17

Capital expenditure programme

One Elmfield Park, Bromley

• Received vacant possession during Q1 2017
• Refurbishment of 24,700 sq ft of space completed 2017
• Fully let to a single tenant on a long lease during Q3 2018
• YOY valuation uplift net of capex 23%

Listening and responding to our customers needs

CLS Holdings plc Full Year Results 2018 | 18

Market trends

GREAT WEST HOUSE (BRENTFORD) ATELIERS VICTOIRES (PARIS)

Customer needs

Lease flexibility Accurate service charge budgeting and total transparency Expansion of annual customer survey Tailored building designs and work programme Introduce ‘London Spec’ to France and Germany ahead

• f the market

Sustainability initiatives

Carbon CO2 2018: Down 15.9% (Target reduction 5.0%) Renewable energy Generated 546,000 kWh

• f energy

(Enough to power 145 homes)

EPC regulation UK portfolio 100% compliant Recycling 2018: 71% (Target 70%)

Sustainability at CLS

Market trends

CLS Holdings plc Full Year Results 2018 | 19

Improved by 13% to a score of 63 out of 100 2 x Green Star Rated Awarded a C rating on the international ratings for carbon disclosure Won a Gold level Green Apple Award for recycling

INTERNALLY MEASURED EXTERNALLY AWARDED

Maximising value from the existing portfolio

Vauxhall Walk, SE11 London

• Existing building 4,465 sq ft and ERV of £90k pa
• Potential 18,000 sq ft office and ERV £900k pa
• Planning application submission Q2 2019
• Potential delivery 2021

St Cloud Gate, Maidenhead

• Existing building 10,124 sq ft and ERV of £250k pa
• Potential 80,000 sq ft office and £3m pa
• Planning application submission Q2 2019
• Potential delivery 2022

CLS Holdings plc Full Year Results 2018 | 20

Medium-term office developments

Vor dem Lauch 14, Stuttgart

• Existing building 93,500 sq ft and ERV of €1.1m pa
• Potential 150,000 sq ft office and ERV €2.7m pa
• Planning application submission Q2 2019
• Potential delivery 2022

Markets & Summary

CLS Holdings plc Full Year Results 2018 | 21

Country snapshots

United Kingdom

• The UK office investment markets

have shown resilience

• The UK investment market has the

second largest level of investment activity in ten years

• Pragmatic occupational markets with

landlords focusing more on occupancy than rental growth

• Whilst forecasting is difficult, we

believe the current market sentiment, especially in Greater London, will continue to offer an attractive investment case

Germany

• German economy slowed down in H2

2018 but the office investment markets remain resilient

• The German investment market has

the highest ever level of investment activity

• Low vacancy and limited supply has

driven rental and capital growth

• The supply in the office market is

unlikely to increase materially in the near-term with over half of future

• ffices having been pre-let

CLS Holdings plc Full Year Results 2018 | 22

Markets

France

• Whilst feeling the effects of street

protests, consumer spending and political measures are forecast to have a positive impact on growth in 2019

• Buoyant investment market across

both Paris and the regions

• The occupational market has remained

strong, with a vacancy rate in Greater Paris around 5%, in part reflecting historically low levels of supply and pre-lettings of new offices

• Property yields outside Paris have

tightened

Robust and disciplined growth

• Another robust set of results with continued growth
• Benefiting from geographical and tenant diversification and

portfolio spread

• Vacancy down in all countries with strong letting pipeline
• Repositioning portfolio towards higher growth and income-

producing properties through our acquisition and disposal programme

• With the changing nature of office occupation our existing

portfolio offers good value-adding opportunities through refurbishments and medium-term developments

• Our strong balance sheet and substantial liquid resources

allow us to take advantage of opportunities as they arise

• Group well positioned in the three largest economies in

Europe to continue to deliver long-term shareholder value

CLS Holdings plc Full Year Results 2018 | 23

Summary and outlook

MAXIMILLIAN FORUM (MUNICH) PRESCOT STREET (E1 LONDON)

Appendices

CLS Holdings plc Full Year Results 2018 | 24

CLS Holdings plc at 31 December 2018

About us

• CLS is a FTSE 250 property investment company with a £1.9bn

property portfolio in London and the South East, and the major cities in Germany and France

• We acquire the right properties

̶

Invest in offices in UK, Germany and France

̶

Non-prime, good transport links, key European cities

̶

Multi-let to spread risk

• We secure the right finance

̶

Bank loans to SPVs, non-recourse

̶

Primarily fixed rate

̶

Some portfolio loans, with flexibility

̶

Up to 7 year terms from 25 banks

• We deliver value through active management and cost control

̶

In-house asset and property management

̶

Invest to improve our assets

̶

Effective cost control through efficiencies and revenue maintenance

• We reward shareholders, customers and employees

̶

Distribute approximately half of our EPRA earnings and reinvest the remaining

̶

Our tenants are our customers, we understand their needs

̶

Reward employees for their work and loyalty

CLS Holdings plc Full Year Results 2018 | 25

TOP 5 SHAREHOLDERS

The Sten and Karin Mortstedt Family & Charity Trust 51.4% Fidelity Worldwide Investments 9.6% Bengt Mortstedt 6.5% Bank of Montreal 6.1% Invesco 5.0%

PROPERTY VALUE BY GEOGRAPHY

UK (£982.5m) 51% Germany (£629.4 m) 33% France (£308.1m) 16%

United Kingdom

VALUE OF INVESTMENT PROPERTIES

£954.9m

LETTABLE SPACE

2.6m sq ft

PERCENTAGE OF GROUP’S PROPERTY INTERESTS

51%

VACANCY RATE

4.0%

GOVERNMENT AND MAJOR CORPORATES

68.3%

VALUE OF INVESTMENT PROPERTIES IN LONDON

£877.2m

CLS Holdings plc Full Year Results 2018 | 26

Business Review

Germany

VALUE OF INVESTMENT PROPERTIES

£629.4m

LETTABLE SPACE

3.2m sq ft

PERCENTAGE OF GROUP’S PROPERTY INTERESTS

33%

VACANCY RATE

4.2%

GOVERNMENT AND MAJOR CORPORATES

40.8%

CLS Holdings plc Full Year Results 2018 | 27

Business Review

France

VALUE OF INVESTMENT PROPERTIES

£308.1m

LETTABLE SPACE

0.9m sq ft

PERCENTAGE OF GROUP’S PROPERTY INTERESTS

16%

VACANCY RATE

2.3%

GOVERNMENT AND MAJOR CORPORATES

49.4%

CLS Holdings plc Full Year Results 2018 | 28

Business Review

CLS Holdings plc Full Year Results 2018 | 29

Portfolio statistics

Group statistics

At 31 December 2018 Valuation4 (£m) Valuation in local currency (%) EPRA NIY1 (%) EPRA topped-up NIY2 (%) Vacancy by rent (%) Weighted average unexpired lease term (years) ERV of contracted rent (£m) Contracted rent (£m) Contracted rent (£/sq ft)

UK 954.9 + 0.5% 5.2% 5.6% 4.0% 5.4 59.4 57.3 23.14 Germany 629.4 + 9.3% 5.1% 5.4% 4.2% 4.9 37.4 35.3 11.41 France 308.1 + 3.8% 4.7% 5.3% 2.3% 5.4 16.9 17.0 19.41 Total portfolio 1,892.43 + 3.7% 5.1% 5.5% 3.8% 5.3 113.7 109.6 17.00

• 1. Excludes developments; calculations based on passing rents
• 2. Excludes developments; calculations based on contracted rents
• 3. Total property value: £1,919.8m (including hotel and properties held for sale)
• 4. Valuations performed by JLL in France and Cushman & Wakefield in the UK and Germany

CLS Holdings plc Full Year Results 2018 | 30

Portfolio statistics

4.3 4.8 2.6 4.2 5.4 4.9 5.4 5.3

0.0 5.0 UK Germany France Total To first break To end of lease

• 10.00

20.00 Rent expiring ERV of rent expiring

AVERAGE UNEXPIRED LEASE TERM EFFECT OF RENT EXPIRIES (£m)

Group statistics

Government (30%) Business services (23%) IT (7%) Manufacturing (13%) Finance (5%) Medical services & healthcare (3%) Education & training (1%) Media and publishing (2%) Telecomms (1%) Charitable (1%) Other (14%)

OFFICE SECTORS BY REVENUE EFFECT OF RENT EXPIRIES (£m)

Index-linked rents (49% by rent)

Movement in rental income

CLS Holdings plc Full Year Results 2018 | 31

MOVEMENT IN RENTAL INCOME (£m)

93.7 11.4 (4.6) 1.8 0.7 2017 Acquisitions Disposals New Printing House Square Other 2018 103.0

Driven by acquisitions

Holdings at 31 December 2018

Banking Insurance Travel & tourism Telecoms & IT Energy & resources Other Total Value £11.8m £2.3m £3.3m £7.3m £1.4m £4.2m £30.3m Running yield 8.0% 6.9% 7.5% 8.1% 10.1% 4.2% 7.9% Issuers RBS HSBC Lloyds Barclays Unicredit Crédit Agricole Société Generale Standard Chartered PGH Capital Brit Insurance Stena Hertz Dell Seagate Centurylink Telecom Italia Xerox Transocean L Brands Stora Enso Liberty Interactive

CLS Holdings plc Full Year Results 2018 | 32

Corporate bond portfolio

Total portfolio return

• 0.9%

Benchmark return iShares Euro High Yield index -3.4% iShares iBoxxUSD High Yield Corporate Bond ETF -2.1% Reason for performance Overall negative returns for 2018, but higher than benchmark returns due to positive currency effect following U.S-dollar appreciation Diversification 21 bond issues in large-cap companies Average duration 11.4 years