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Creating
Life
Stories
CLS Holdings plc
Annual Report and Accounts 2024
2020 2021 2022 2023 2024
345.2
350.5
329.6
253.0
215.0
See also:
Climate Resilience Plan,
ExtendedSustainability Metrics
andSustainability Report
Creating
lifestories
We deliver consistent, long-term
value and steady shareholder growth
by investing in modern spaces
incentralandurban locations.
Our success is based on a deep
understanding of our customers’
business ambitions; a quick-thinking,
fast-responding culture; and a long-
term, progressive attitude.
Our investment case
Delivered outcomes
EPRA NTA pence per share
A clear
strategy
Key investment tenets
Diversified approach
This approach is across countries
(weinvest in major cities in Europe’s
three largest economies), customers
(over 700 customers spread across
most sectors), and financing (loans
with 25 different lenders).
Focus on multi-let offices
Long-term investment in high yielding,
multi-let offices in London and the
South East of the UK, and the larger
cities in Germany and France.
Selected development schemes
Opportunities arise in the portfolio to
carry out development projects to
capture rental and capital growth; the
amount of development is kept below
10% of the portfolio value at any one
time. Opportunities to secure
alternative uses are pursued usually
until planning permission is secured
andthen the property is sold to a
developer.
Inside this report
Strategic
report
02 Group highlights
03 Financial highlights
04 At a glance
06 Chairman’s review
07 Chief Executive’s review
10 Country reviews
16 Strategy, business model and KPIs
18 Strategy in action
22 CFO review
28 Stakeholder engagement
30 Section 172 statement
32 ESG overview
51 People
53 Health and safety
55 Non-financial sustainability
information statement
56 Risk management
63 Going concern and viability
Corporate
governance
66 Chairman’s introduction
67 UK Corporate Governance Code
68 Board of Directors
70 Key Board Activities
72 Relationships with stakeholders
73 Workforce engagement
74 Culture dashboard
75 Division of responsibilities
76 Nomination Committee Report
84 Audit Committee Report
90 Remuneration Committee Report
107 Directors’ Report
111 Directors’ responsibility statement
Financial
statements
112 Independent Auditor’s report
122 Group accounts
161 Company accounts
Other
information
168 Five-year financial summary
169 Supplementary disclosures
174 Glossary
176 Directors, officers and advisors
2020 2021 2022 2023 2024
5.64%
3.77%
2020 2021 2022 2023 2024
7.55
7.70
7.95
7.95
5.28
2020 2021 2022 2023 2024
72
85
85
84
85
1994 1999 2004 2009 2014 2019 2024
Delivered outcomes
NIY vs cost of debt (%)
Delivered outcomes
Distribution of this year’s profit
(pence per share)
Delivered outcomes
GRESB (ESG) score/100
Active
management
Key investment tenets
Experienced in-house capabilities
In-house asset, property and facilities
management teams result in better
cost control, closer asset knowledge
and synergies across the property
portfolio.
Secure rents and high occupancy
Targeted occupancy levels above 95%
with affordable rents and flexible lease
terms to meet customer demand and
so create opportunities to capture
above market rental growth. On
average over 125 lettings executed
each year over the past six years.
Interest rate management
Financing facilities, which are arranged
in-house, seek to balance flexibility,
diversity and maturity of funding whilst
ensuring a low cost of debt which is
targeted to be at least 200 basis points
below the Group’s net initial yield.
Strong 30 year
track record
Key investment tenets
Disciplined approach to investment
Acquisitions are assessed against strict
return and strategic fit criteria but are
pursued on an opportunistic and
property by property basis with no set
capital allocation across countries. Low
yielding assets with limited potential are
sold. Our TSR has outperformed the
FTSE 350 Index over a 30 year period.
Cash-backed progressive dividend
CLS is a total return business using
cash flow generated to pay a
progressive dividend and also to
reinvest in the business to generate
further net asset growth. We aim to
grow the dividend in line with the
growth of the business, targeting the
dividend to be covered 1.5 to 3.0 times
by EPRA earnings.
Financing headroom
Our aim is to keep at least £100 million
of cash and cash equivalents and
undrawn facilities. This approach gives
the ability to move quickly to complete
acquisition opportunities as well as
theflexibility to secure the optimal
financing solution.
A focus on
sustainability
Key investment tenets
Responsible profit
Across our business model, in
everything we do, we seek to generate
responsible profit through employing
sustainable long-term decisions with
the environment in mind.
Strong ESG performance
We believe in full transparency and
therefore continually measure our
progress against global ESG
benchmark schemes in our industry,
such as GRESB. This also allows us to
monitor our progress and gives our
stakeholders confidence in our delivery
against commitments.
Climate risk mitigation
Our in-house sustainability programme
is focused on mitigating our impact on
environmental climate risks and energy
security whilst maximising the benefits
we deliver to the communities in which
we are involved.
 Net initial yield   Cost of debt
CAGR: 8.8%
Total Returns to Shareholders (see page 17 for more recent performance)
 CLS   FTSE All Share   FTSE 350   FTSE RE SS
CLS Holdings PLC Annual Report and Accounts 2024 01
Group highlights
Strategic ESG
See page 4 to 5 See page 32 to 55
Contracted rent (securedin
the year)
£16.6m
(2023: £15.5m)
Contracted rent aboveERV
6.8%
(2023: 6.9%)
Contracted rent which is
index-linked
54.4%
(2023: 55.2%)
EPRA Vacancy Rate
12.7%
(2023: 11.0%)
GRESB
4 Stars
(2023: 4 Stars)
Like-for-like decrease in
landlord energy usage
4.9%
(2023: 8%)
% UK portfolio EPC A OR B
56%
(2023:53%)
Assets Excellent or Very
Good (BREEAM In-use)
53%
(2023: 35%)
CLS Holdings PLC Annual Report and Accounts 202402
Financial highlights
Actual Financial
EPRA EPS
9.2p
(2023: 10.3p)
Statutory EPS
(23.6)p
(2023: (62.9)p)
EPRA NTA (per share)
215.0p
(2023: 253.0p)
Statutory NAV (per share)
197.3p
(2023: 233.8p)
Cost of debt
3.77%
(2023: 3.61%)
Balance sheet LTV
50.7%
(2023: 48.5%)
Total Accounting Return
(11.9)%
(2023: (20.8)%)
Dividend
5.28p
(2023: 7.95p)
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 03
CLS Holdings
At a glance
About CLS Holdings
We are a London-based office and commercial
property specialist with a property portfolio in
the UK, Germany and France. Listed on the
London Stock Exchange main market since
1994, we have over 700 tenants, including
blue-chip organisations and government
departments.
At CLS, our purpose is clear
We transform properties into sustainable,
future-focused spaces that help businesses
togrow and communities to thrive.
What we do
We continuously innovate, modernise andinvest
in our portfolio, creating viable, sustainability-
driven buildings, inspiring workspaces and
thriving cityscapes. We go beyond mere
ownership of our properties, partnering with our
customers to understand their own business
ambitions, and actively shaping the future
success stories across ourcities.
3
countries
81
properties
719
tenants
£1.9bn
property portfolio value
£109m
contracted rent
87.3%
occupancy rate
Our tenants,
our focus
Agility unlocks
opportunity
Openness creates
closeness
Collaboration
gets the job done
We pride ourselves in the way
we build relationships with our
tenants. We get to know them
and understand their business
needs, so they feel listened to
and valued. We are responsive
and flexible, ensuring they stay
with us for the long term.
Our agile approach allows
usto see potential and
opportunities in ways others
can not. It means we can
respond to changing market
conditions and make decisions
quickly. We act with flexibility
and speed to make the most
of possibilities.
We treasure our inclusive,
close-knit and open culture.
Everyone has visibility and a
voice. Our open-door policy
encourages everyone to share
opinions, creating greater
transparency, honesty
andtrust.
We confidently take ownership
of projects from beginning
toend, making the critical
decisions that get the job done.
We get involved and collaborate
across departments and
markets, contributing ideas and
creating new initiatives to drive
us forward.
Supported by our values
Top 15 Tenants by Contracted Rent (32%)
1
2
Secretary of State
3
4
5
6
7
8
9
10
11
12
13
14
Freie und
Hansestadt
Hamburg
15
Tenant Sector by Contracted Rent
1 Government 25.5%
2 Commercial & Professional Services 12.4%
3 Information Technology 11.5%
4 Communication Services 8.5%
5 Consumer Discretionary 7.7%
6 Health Care 7.3%
7 Industrials 6.8%
8 Other 6.1%
9 Financials 5.7%
10 Consumer Staples 4.3%
11 Real Estate 4.2%
UK
Germany
France
CLS Holdings PLC Annual Report and Accounts 202404
44%
44%
12%
Valuation data
1
Market value
of property
£m
Valuation movement
intheyear
EPRA net
initial yield
EPRA
‘topped-up’
net initial
yield Reversion
Over-
rented
Equivalent
yield
Underlying
£m
Foreign
exchange
£m
United Kingdom 668.4 (82.0) – 6.1% 6.6% 4.1% 8.7% 7. 4 %
Germany 814.1 (30.3) (39.3) 4.5% 4.9% 4.6% 9.9% 5.2%
France 225.9 (12.5) (11.0) 5.2% 5.6% 3.6% 5.0% 6.1%
Total office portfolio 1,708.4 (124.8) (50.3) 5.2% 5.6% 4.2% 8.7% 6.2%
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
£m
Year 2
£m
3 to 5 years
£m
After 5 years
£m
Year 1
£m
Year 2
£m
3 to 5 years
£m
After 5 years
£m
United Kingdom 2.6 3.5 11.1 15.1 13.7 10.2 10.9 13.3 13.4 10.2
Germany 5.6 5.6 7. 1 3.8 16.6 1 7. 4 8.6 3.7 15.3 14.9
France 2.7 5.7 0.7 0.5 4.0 8.7 0.6 0.4 3.9 8.7
Total office
portfolio 3.9 4.7 18.9 19.4 34.3 36.3 20.1 17.4 32.6 33.8
Rental data
1
Rental
income for
the year
£m
Net rental
income for
the year
£m
Lettable
space
sqm
Contracted
rent at
year-end
£m
ERV of
lettable
space at
year-end
£m
Contracted
rent subject
to
indexation
%
EPRA
vacancy rate
at year-end
United Kingdom 4 7. 1 50.1 169,338 50.1 58.6 34.7 18.5%
Germany 40.3 38.0 331,770 44.9 45.5 62.3 6.7%
France 12.8 12.4 71,812 13.9 14.9 100.0 8.3%
Total office portfolio 100.2 100.5 572,920 108.9 119.0 54.4 12.7%
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.
Total Portfolio Value (%)
UK
Germany
France
Property Use by Revenue
Office Space 77.3%
Residential 6.2%
Hospitality 5.5%
Light Industrial 4.1%
Education 2.3%
Retail 1.8%
Laboratory 1.6%
Health Care 1.2%
Size by Contracted Rent
Government 25.5%
Large
1
40.3%
Medium
1
18.3%
Other 15.9%
Rent collection
99%
1 Based on Companies House definitions.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 05
Dear Shareholder,
After two years, market fundamentals are again moving in CLS’
favour with reducing interest rates and employers increasingly
promoting greater office time to improve their operations.
Operationally, CLS continues to stay close to our occupiers and
respond to their quality requirements. Our delivery of the best
offices in our locations has been particularly demonstrated in
2024 through some notable lettings in Germany and the UK,
and we continue to see strong demand for well-located and
efficient properties from government and mid-sized companies
that value high quality and cost-effective offices.
Performance and our property portfolio
CLS again delivered resilient performance with valuations now
bottoming. Good underlying rental growth was achieved
through the signing of new leases, increased other income,
record student and hotel results, and indexation, although this
was offset by increased interest expense from higher rates
leading to overall lower earnings.
Our property portfolio fell by 10.3% to £1.85 billion
(2023: £2.06 billion) with the portfolio now split 44% in the UK,
44% in Germany and 12% in France. The movement in the
property portfolio was a result of £116.0 million from a net
valuation decrease of 5.8% in local currencies, £50.5 million
from the strengthening of Sterling by 4.8%, and £67.1 million of
disposals partly offset by £21.1 million of capital expenditure.
The property valuation decreases resulted in EPRA NTA per
share declining by 15.0% to 215.0 pence per share (2023: 253.0
pence per share) and the Total Accounting Return, including the
dividends paid in the year, was -11.9% (2023: -20.8%).
Chairman’s
review
Lennart Sten
Non-Executive Chairman
Strategic outlook
Throughout several property cycles, CLS has pursued a long-term,
successful strategy focused on high-quality, well-located offices
inEurope’s three largest economies. The Board has considered
various possible funding options and strategies and has concluded
that its existing financing methods and strategy remain
appropriate. In the near term, the Board intends to expand its
disposal programme, recycling the net cash proceeds from asset
sales into continuing to develop and refurbish its existing properties
and further reducing leverage across the Group. With the market
bottoming, we are finding increasing opportunities within our
portfolio, to reduce vacancy and increase value by investment.
In order to fund this investment, but also to ensure our leverage
is within our target range of 35% to 45% LTV, we will continue to
sell those properties, at appropriate values, for which we see
less growth potential and/or we have completed the business
plan. This investment will support our vision of being a
sustainably focused property investment company. A large part
of which will be achieved through executing our 2030 Net Zero
Carbon Pathway and meeting our other Sustainability Strategy
targets although, with the ever-changing sustainability
landscape and being half way to 2030, we will also initiate a
review of the strategy, pathway and key targets.
Dividends
As highlighted throughout this report, there are significant
opportunities within the portfolio to grow net asset value, which
is in-line with CLS’ strategy as a total return share focused on
growth and income. Consequently, we are reducing the
dividend by 50% to retain funds to capture these opportunities
and we are revising the dividend policy such that the dividend is
covered 1.5x to 3.0x by EPRA earnings (previously 1.2x to 1.6x).
Our staff and our culture
In 2024, CLS celebrated 30 years on the London Stock Exchange.
During these three decades, the Company has enjoyed great
success but also weathered several downturns, particularly over
the last four years with Covid-19 followed by achallenging
economy. Although this period has been demanding for CLS,
ourteam has performed very well throughout helped by, but also
reinforcing, CLS’ positive culture and, on behalf of the Board, I
again extend our thanks for all their efforts.
CLS cannot control economic market fluctuations but we can, and
will, continue to drive operational improvements to ensure that
CLS takes advantage of opportunities to deliver for shareholders.
Lennart Sten
Non-Executive Chairman
31 March 2025
“ 2024 was another demanding
year for CLS but, with interest
rates reducing and valuations
bottoming, we believe that
2025 will see CLS return
to growth. Regardless, we
remain focused on operational
delivery to reduce vacancy
and increase net asset value
by continuing to provide
high‑quality office space
forour customers.”
CLS Holdings PLC Annual Report and Accounts 202406
Chief
Executive’s
review
Fredrik Widlund
Chief Executive Officer
Creating life stories
2024 was a significant year for CLS in terms of economic and
market activity. For the first time in two years, the central banks
in England and Europe cut interest rates. We did not expect,
and have yet to see, a sudden turn-around in property
investment activity but there are certainly green shoots
emerging. Moreover, and more importantly, we have seen
property valuations start to bottom. For while UK property
valuations initially fell more quickly than in Germany and France,
our properties in all three markets have seen valuation falls of
more than 20% since 2022. However, in the second half of
2024 the values of our properties in Germany and France were
flat and the reduction in UK property values also lessened,
particularly when property specific factors are excluded.
2024 also witnessed a further acceleration in the return to the
office, and whilst working patterns continue to evolve, we have
seen employees now returning to offices in force and employers
increasingly mandating greater office attendance. As we have
consistently said, we do not expect a complete return to
pre-pandemic working with hybrid patterns here to stay.
However, with occupiers mandating more three, four or five
office days, this bodes well for future office letting demand.
2024 was also a significant year for CLS as we celebrated
30years as a publicly listed company on the London Stock
Exchange. To reflect this milestone, we updated our website
and links to our digital marketing to showcase the quality of
ourproperties and that we are “Creating Life Stories” for our
occupiers. As an illustration of how the Company is Creating
Life Stories, in 2024 we signed the highest value of letting
contracts in recent times, either with new or existing
long-termcustomers.
Delivering on our strategy
As a long-term business, CLS has benefited from, and
weathered, many property cycles and we recognise that it is
important for CLS to ensure that its strategy and business
model remains resilient. In these more demanding conditions,
our focus has been on delivering our strategic priorities and
making operational improvements. Our priorities have been,
and continue to be, the letting of recent refurbishments and
executing our refinancing and sales programme.
In 2024, we made good progress in all these areas and have
made more advances in 2025.
“ Our strong leasing
performance and stable
rent collection highlight the
quality and resilience of
our portfolio, while targeted
disposals and refinancing
efforts have strengthened
our balance sheet. We
successfully completed
property sales and loan
refinancings, reducing
debt and positioning the
business for future growth.”
Underlying vacancy, excluding completed refurbishments and
disposals, dropped in 2024 from 11.0% to 10.6% with particularly
strong letting activity in the UK and Germany. We have strong
relationships with occupiers and expect further progress in
2025 as we are seeing continued interest from government
departments and mid-sized companies, sectors that fit well with
CLS’ portfolio of well-located and efficient office properties.
We sold £66.1 million of properties in-line with book values out
of our targeted £270 million sale programme. Progress was
slower than hoped due to a sluggish investment market and
because we remained disciplined on sales prices. Significant
further progress has been made at the start of 2025 as we have
exchanged on Spring Mews Student, for £101.1 million, again
in-line with book value. Wehave also agreed the disposal of
oneproperty in Germany and one property in the UK for a
combined £24.2 million, in-line with the latest valuation.
Thesedisposals are due to be completed in the firsthalf of
theyear. Over the rest of the year, CLS intends to complete
theremaining c.£70 million of its targeted sales programme.
Indue course, CLS may also consider additional sales of assets
to help fund the pipeline of refurbishment and redevelopment
opportunities in the portfolio.
Finally, we completed all of the refinancing of debt maturing
in2024. Furthermore, we have made good progress on
£342.1 million of the £373.7 million debt which matures in
2025.As evidence of this, we have refinanced £42.1 million
and£85.8 million will be refinanced or repaid alongside the
completion of the Spring Mews Student sale.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 07
Chief Executive’s review continued
Asset and property management
The significant capital expenditure investment that CLS made
in 2022 and 2023 to increase the quality of its portfolio started
to pay off in 2024. CLS enjoyed the best leasing performance
in the UK and Germany since 2015. In total, CLS secured
contracted annual rent of £16.6 million which was 7% more than
in 2023 (2023: £15.5 million) as we signed bigger leases across
the 112 new lettings and renewals (2023: 130). The leases were
6.8% above 31 December 2023 ERVs.
While underlying vacancy dropped in 2024, total EPRA vacancy
increased to 12.7% (31 December 2023: 11.0%) as more high-
quality refurbishments were completed in 2024 in the UK and
France, which are now available for occupation.
The combination of the strong letting performance and the
completion of refurbishments, resulted in the vacancy position
again being mixed across the Group. In the UK, vacancy
increased from 15.8% at the end of 2023 to 18.5% at the end of
2024 from the completion of the remaining floors at Artesian,
Prescot Street in London. Although the vacancy in the UK did
reduce from 19.6% in the first half mainly due to the letting of
one floor at Artesian to Médecins Sans Frontières for over
12,000 sq. ft (1,100 sqm). In Germany, a strong letting
performance offset expiries and vacancy dropped from 6.8% in
2023 to 6.7% at theend of 2024. In France, vacancy increased
from 5.6% at the end of 2023 to 8.3% at the end of 2024 from
refurbishments completed in Lyon. We expect vacancy in Lyon
to reduce in 2025 given tight planning restrictions, market
vacancy of 7% and good demand for the smaller units
CLSoffers.
2025 has started positively with the 7-month extension of the
lease with the National Crime Agency at Spring Gardens, which
fits well with our redevelopment timeline as commented on
below. We have larger lease expiries in 2025 at New Printing
House Square in London, where all leases were due to expire
inJune 2025, although we expect to renew over half of the
existing leases and have positive discussions for further space.
We also have one larger lease expiry at Inside in Paris for which
we expect the occupier to vacate or downsize.
Overall, our properties are multi-let with over 700 tenants,
ofwhich 25.5% are government agencies, 40.3% are large
corporations and 18.3% are medium-sized companies.
Reflecting the strength of our tenant base, CLS’ rent collection
has remained consistently in excess of 99% for at least the last
five years.
In 2024, the value of the portfolio was down by 5.8% in local
currencies with the UK down 8.3%, Germany down 3.5% and
France down 5.1%.
During the year some properties increased in value with the rate
of valuation reduction down significantly in the second half, with
the value of the properties in Germany and France essentially
flat. In the UK, the shortening lease at Spring Gardens, one of
the largest assets in the Group, leased by the National Crime
Agency, contributed to roughly half of the UK reduction as the
site is valued as an office investment with a shortening lease and
not yet as a development site. The ERV of the Group declined
0.8% but excluding the ERV decline at New Printing House
Square forwhich the major refurbishment (and thus ERV
increase) was delayed, then Group ERV was up 1.8% with
increases in all three countries. However, this ERV increase was
not sufficient to offset the 12-basis point increase in equivalent
yields to 5.93%(2023: 5.81%), or a 24 basis point increase on a
like-for-like basis.
Financial results
In 2024, CLS’ focus remained on delivery of its strategic
objectives as the economic backdrop continued to be
demanding. Property valuations were down, but outperformed
relative to the market and started to bottom in the second half
of the year, and whilst net rental income grew by 3.8%, on a
like-for-like and constant currency basis, finance costs rose
more rapidly such that EPRA earnings were lower.
EPRA earnings per share fell 10.7% from 10.3 pence in 2023 to
9.2 pence in2024 (IFRS loss per share 2024: (23.6) pence,
2023: (62.9) pence) as increased rental income from new leases
and renewals, other income including the forfeited Westminster
Tower deposit and another record year for our student and
hotel operations less lease expiries was more than offset by
increased finance costs that increased from 3.61% to 3.77% due
to higher rates on refinanced debt. The operating loss for the
year was £52.5 million (2023: £223.4 million loss).
“ Looking ahead, we believe the
commercial property market
is at or near the bottom of the
current cycle across the UK,
Germany, and France. Over
the past year, the real estate
sector has entered a period
of cautious optimism, with
signs of gradual recovery and
stabilising investment activity.”
CLS Holdings PLC Annual Report and Accounts 202408
ERV potential of the portfolio £m
Contracted rent as
at 31 December 2024
Portfolio
vacancy
Over-rented Potential
portfolio ERV
Lettable ERV as
at 31 December 2024
On-going
refurbs
1
Potential
developments
Post 2026
108.9
15.1
(4.9)
8.1
119.1
c. 127
c. 3 c. 130
EPRA NTA decreased by 15.0% (2023: 23.2% decrease) to
215.0 pence per share (IFRS net assets 2024: £784.2 million,
2023: £929.2 million), reflecting revaluation reductions of
5.8%in local currency, foreign exchange losses of £25.8 million
from the 4.8% strengthening of Sterling against the Euro
(2023: £26.3 million loss) and dividend payments, which was
partly offset by EPRA earnings.
At the year-end, we had cash and cash equivalents of
£60.5 million (2023: £70.6 million), which was lower than in
2023 due to the repayment of debt and continued investment
in the portfolio, as well as £50.0 million of committed credit
facilities (2023: £50.0 million) and a £10 million overdraft facility
(2023: £nil) and have significantly progressed the 2025
refinancings that are going to become due.
Sustainability
This year we maintained progress on our Net Zero Carbon
Pathway, with year-on-year reductions of 4.9% in landlord
energy consumption and 6.9% in Scope 1 and 2 greenhouse gas
emissions, on a like-for-like basis. Additionally, our focus was to
ensure the complex task of replacing the remaining gas heating
systems with electric heatpumps was derisked and aligned
withour leasing and refurbishment plans over coming years.
Wecompleted the majority of this feasibility work, which has
adjusted our forward works programme resulting in a planned
reduction in projects implemented this year to 27 and a reduced
capital investment of £0.8 million.
Alongside maintaining compliance for key energy and
sustainability regulations in all countries, CLS continues to
report under many different sustainability frameworks that go
beyond compliance. We maintained our 4 star rating in GRESB,
as well as our EPRA SBPR Gold award for reporting and
improved our BREEAM In-Use ratings at 8 buildings.
Finally, as part of being a responsible company and long-term
investor, we have continued to support local and industry-
related charities, with our core focus being to support the issues
of youth homelessness and youth skills.
2025 and beyond
Our long-term strategy remains unchanged, and our focus
remains on operational delivery and securing capital for
investment. Operationally the highest priority for 2025 is to
reduce vacancy.
Included again is our rent progression waterfall chart which has
been updated to show the changes and progress made in the
year. In summary, it shows the more than 20% rental upside that
exists within the portfolio, with a large proportion of it able to
becaptured quickly. We are confident that vacancy will reduce
in 2025 given that two-thirds of our vacancy is EPC A or B
(orequivalent), with almost all the remainder being EPC C.
Securing these rental increases is critical to drive rental
growthin excess of higher financing costs and thus achieve
higher profits.
What has been increasingly evident in the last year is that a
greater number of value-creating opportunities to invest and
grow the business have emerged within the portfolio.
These opportunities include: The Brix in Essen and The Yellow
inDortmund, both related to the new long-term government
leases recently signed; Debussy in Paris, a conversion of an
existing office building into serviced apartments; and a
comprehensive upgrade of Bismarckstrasse in Berlin that will
drive significantly higher rents. Each of these projects have the
potential to deliver an estimated profit on cost between 15-25%
in the near term.
In the UK, we are also progressing our plans for both Citadel
Place (currently known as Spring Gardens), to secure planning
for a residential development of 500 new homes, as well
asseveral UK office properties that are suitable for residential
conversion.
In terms of capital and the balance sheet, the focus is on
executing upcoming refinancings and reducing LTV through
selective disposals to give the firepower to execute these
opportunities. For CLS to remain successful we need to invest
in these opportunities, at what appears to be a particularly
favourable point in the cycle, to meet customer needs and
deliver asset value growth.
By delivering on the opportunities within our existing property
portfolio, together with more favourable monetary policies and
an improving macro-economic environment, CLS is well placed
to deliver long-term value for shareholders.
Fredrik Widlund
Chief Executive Officer
31 March 2025
1 In addition, there is a further £2.2m relating to Bismarckstrasse and Debussy for which other funding options are being explored.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 09
2
2
2
2
2
7
4
2
Sutton
Staines
Leatherhead
Reigate
Bromley
Chelmsford
Uxbridge
Crawley
Teddington
Richmond
Hammersmith
Bracknell
Reading
Watford
Harrow
City & Midtown
Central London
Acton
New Malden
0.0%
10.0%
15.0%
5.0%
Q1 21 Q4 24Q3 24Q2 24Q1 24Q4 23Q3 23Q2 23Q1 23Q4 22Q3 22Q2 22Q1 22Q4 21Q3 21Q2 21
United Kingdom
London & South East
Value of property portfolio
£807.0m
Number of tenants
210
Government and large
companies
75.2%
Percentage of Group’s
property interests
44%
EPRA vacancy rate
18.5%
Years weighted average
leaselength to end
3.5
Number of properties
34
Lettable space (sq. ft)
1.8m
Leases subject to indexation
34.7%
Key:   CLS   London   South East
CLS Holdings PLC Annual Report and Accounts 202410
Market overview
The UK economy experienced a mixed
year with stronger GDP growth in the first
half of 2024 offset by stagnation in the
second half, leading to overall GDP
growth of 0.8%. Business uncertainty
grew following tax increases announced
in the Autumn budget, but inflation fell
to2.5% in 2024 from over 7% in 2023.
The commercial property investment
market achieved a volume of
c.£43 billion, up21% compared to 2023,
with the strongest improvement in the
fourth quarter of 2024. Leasing take-up
in London for the year was just below the
10-year average at c.11 million sq. ft and
inline with the previous year. The wider
South East/M25 office market was up
close to 5% with c.3.6 million sq. ft of
take-up.
Year-end vacancy in London was up
marginally to 9.2% from 9.1% at the end of
2023 while the South East/M25 market
was up to 12.3% from 11.8% in 2023.
Portfolio movement and
valuationsummary
In 2024, the value of the UK portfolio
decreased by £112.9 million as a result of
arevaluation decline of £73.3 million or
8.3%, and disposals of £49.0 million,
partly offset by capital expenditure of
£9.4 million. The 8.3% valuation decline
was a result of equivalent yields
expanding by 41 basis points on a
like-for-like basis and increased vacancy
from refurbishments completed in the
year, and ERVs decreasing by 2.4% on a
like-for-like basis. The decline in like-for-
like ERVs is due to a change in valuation
assumption for New Printing House
Square, following our decision to delay
redevelopment to the end of the decade.
Excluding this results in like-for-like ERV
growth of 3.0% for the portfolio.
CLS’ valuation decline was in line with the
UK office market. However, excluding the
valuation of Spring Gardens, which was
significantly impacted by the shortening
office lease and the development
potential not considered, CLS’ valuation
decline was better than the market at
5.1% for the other 33 properties.
Asset management
Underlying vacancy, excluding completed
refurbishments and disposals, fell from
15.8% to 15.0% as a result of improved
leasing activity during the year across
both new lettings and renewals.
The EPRA vacancy rate increased
to18.5% as of 31 December 2024
(2023: 15.8%) due to the completion of
the refurbishment of the remaining three
floors at Artesian at the start of 2024.
In 2024, we let or renewed leases for
205,503 sq. ft and lost 226,145 sq. ft of
space from expiries, showing minimal
movement in underlying vacancy. Newly
refurbished space of 65,232 sq. ft
became lettable during 2024, mainly
atArtesian, The Portland Building and
KingsCourt, increasing our vacancy
rate.Excluding rent reviews, 55 lease
extensions and new leases secured
£7.6 million of rent at an average of
3.0%above 31 December 2023 ERVs.
The most significant new leasing
transaction in 2024 was the letting of
the5th floor (12,052 sq. ft) at Artesian
toMédecins Sans Frontières (UK). In
terms of existing tenants, we completed
a new lease with Signature Litigation for
atotal of 29,816 sq. ft of office space
over fourfloors at 138 Fetter Lane in
centralLondon.
Once again, our student and hotel
operations achieved a record breaking
year. The student accommodation is
fullylet for the 2024/25 academic year,
with sales for 2025/26 in line with
expectations. The hotel occupancy
averaged 93% for 2024 (2023: 87%)
andaverage daily room rates also grew
by2% which led to a further increase
inprofitability.
Developments and refurbishments
Total capital expenditure in 2024 was
£9.4 million, which was reduced from the
£37.7 million spent in 2023 due to the
completion of major projects at The
Coade and Artesian. In-line with current
market trends the focus in 2024 was to
undertake a select number of CAT A plus
refurbishments to capitalise on tenant
demand for high quality fitted spaces.
At Spring Gardens, let to the National
Crime Agency, we plan to submit a planning
application in Q2 this year for Citadel Place,
a major residential scheme. We have also
agreed, subject to contract, to extend the
leases with the National Crime Agency
toSeptember 2026, aligning with our
proposed development programme.
Disposals
During 2024 we continued with our
strategy of disposing of some of our
smaller assets and assets which have a
higher value for an alternative use.
We completed the sale of Aqueous II
which is a 35,922 sq. ft office building in
Birmingham and the sale of Cassini Court
and Pascal Place which are two buildings
totalling 26,739 sq. ft located in
Leatherhead.
As for buildings with higher value
alternative uses, following the failure of
the original buyer to complete the sale
ofWestminster Tower by the prescribed
date in Q4 2023, the sale contract was
rescinded and the deposit retained.
Thebuilding was subsequently sold to
analternative buyer in June 2024 at the
same price of £40.8 million.
Overall, these sales realised a total
of£48.9m which were in line with
bookvalue.
Outlook
The consensus forecast for the UK
economy indicates a rebound, with GDP
growth projected at 1.1% for 2025.
Whilst uncertainty persists regarding
thetrajectory of UK interest rates, the
outlook for UK real estate investment
hasbecome more positive compared to
twelve months ago, with increasingly
larger transactions in the office sector.
With a concentrated development
pipeline and limited speculative activity,
best-in-class office space remains highly
sought after, as supply is not currently
keeping pace with lease events. Office-
first work policies are gaining momentum
among businesses of all sizes, leading to
companies upgrading their corporate
accommodations. Our flexible and
customer-centric approach will enable
usto capitalise on this positive
structuralshift.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 11
3
Harburg
Hafencity
Altona
Barmbek
Wandsbek
City Sud
St Pauli
Rudsheimer
Strasse
Martinsried
Locham
Neuperlach
Altstadt
Unterföhring
Ismaning
Flughafen
München
2
Düsseldorf
Herzberge
Aldershof
Charlottenburg
Hamburg
Dusseldorf
Munich
Berlin
0.0%
4.0%
8.0%
Q1 21 Q4 24Q3 24Q2 24Q1 24Q4 23Q3 23Q2 23Q1 23Q4 22Q3 22Q2 22Q1 22Q4 21Q3 21Q2 21
Germany
Value of property portfolio
£815.7m
Number of tenants
360
Government and large
companies
56.1%
Percentage of Group’s
property interests
44%
EPRA vacancy rate
6.7%
Years weighted average
leaselength to end
5.6
Number of properties
31
Lettable space (sq. ft)
3.6m
Leases subject to indexation
62.3%
Key:   CLS   Hamburg   Munich   Berlin 
 Düsseldorf   Cologne   Stuttgart   Frankfurt
CLS Holdings PLC Annual Report and Accounts 202412
Market review
The German economy had a challenging
year due to lower business confidence
and political uncertainty, and GDP
contracted by 0.2% as global demand for
industrial goods weakened. The annual
inflation rate fell to 2.5% from 6.1%
in2023.
The commercial property investment
market achieved a volume of
c.€25 billion, up 10% compared to 2023.
Investment markets are likely to have
bottomed out and should benefit from
improved investor sentiment due to
attractive yields compared to long-term
swap rates. Leasing take-up in the larger
cities in Germany was still below the
10-year average but at c.2.7 million sqm
take-up, showed a small increase to the
previous year.
Year-end vacancy for the seven largest
cities increased to 6.8% from 5.7% at the
end of 2023 with significant differences
between Cologne and Hamburg at 4.3%
and 5.3% respectively to over 10% in
Dusseldorf.
Portfolio movement and
valuationsummary
In 2024, the value of the German
portfolio decreased by £69.8 million
asaresult of a revaluation decline of
£30.3 million or 3.5% in local currency,
aforeign exchange decrease of
£39.4 million, disposals of £8.3 million,
and depreciation of £0.1 million partly
offset by capital expenditure of
£8.3 million. The 3.5% valuation decline
resulted from equivalent yields expanding
by 12 basis points on a like-for-like basis
with some offset from ERVs increasing by
0.9% on alike-for-like basis, the majority
of leasesbeing indexed and improvement
invacancy.
According to the Association of German
Pfandbrief Banks, office property values
in Germany fell by 5.6% in 2024 which
compares to the fall in CLS’ property
values of 3.5%. This outperformance of
CLS’ German properties was a result of
valuation uplifts for those properties
where we have secured long-term leases
with public bodies or institutions.
Asset management
Underlying vacancy, excluding completed
refurbishments and disposals, fell from
6.8% to 6.0% as a result of improved
leasing activity with several government
and mid-sized companies secured during
the year.
The EPRA vacancy rate decreased to
6.7% as of 31 December 2024
(2023: 6.8%) as a result of strong leasing
activity during the year across new leases
and renewals, offset by the expected
departure of some large tenants.
In 2024, we let or renewed leases for
50,551 sqm and lost 41,669 sqm of space
from expiries. Excluding those arising
from contractual indexation uplifts, 36
lease extensions and new leases secured
£7.1 million of rent at an average of 12.2%
above ERV. The rent secured surpassed
2023 levels by nearly 40%. Leases
subject to indexation increased by an
average of 3.7%.
The largest transaction in 2024 was a
20-year lease signed with the City of
Dortmund for 9,634 sqm at The Yellow
inDortmund. The property, acquired by
CLS in 2021, is now fully let with a WAULT
of nine years. Further details are in
thestrategy in action case study on
page18.
Developments and refurbishments
Several ongoing development projects
within our German portfolio will
significantly grow ERVs and are already
driving valuation uplifts.
Works associated with our 30-year lease
with the City of Essen at The Brix are
progressing well and construction has
been under way since the summer of
2024. The first stage handover is
scheduled for April with the second stage
later in 2025.
Smaller refurbishments also continued
with £8.3 million spent across our
portfolio, enhancing sustainability
credentials and meeting the demands
ofthe occupier market. For example, at
Hansaallee, Düsseldorf, we refurbished
the entrance area to include a new
co-working space for tenants and
theirclients.
We are also commencing work at The
Yellow in Dortmund as part of the new
20-year lease with the City of Dortmund,
to tailor the space to their needs. In
2025, we will also be starting works at
Gotic Haus, Dortmund, following the
departure of the main tenant. The
building will be divided into similarly sized
rental units so it can be gradually let and
fully configured to meet occupiers’
needs, including private entrances.
Disposals
In 2024, we disposed of Hansastrasse,
Dortmund, a 3,986 sqm office building,
for £7.7 million, which was c.3% discount
to book value.
Outlook
The consensus forecast for the German
economy indicates a gradual but muted
recovery, with GDP growth projected at
0.3% for the year. The recent result of
thefederal election is expected to shift
Germany’s economic policy towards a
more growth-oriented path, likely
resulting in an increase in office take-up
and stronger confidence in Germany as
an investment location.
The gap between well-connected,
sustainable, quality assets and non-
energy-efficient older assets in out-of-
town business park locations will continue
to widen. The latter are at risk of
obsolescence thereby reducing supply in
the longer term, which will support CLS’
portfolio. With continued strong demand
from government and medium-sized
businesses, we expect our lettings pace
to continue and vacancy to reduce
in2025.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 13
Villeurbanne
La Part-Dieu
Brotteaux
Gare de Lyon
Part-Dieu
6th Arr.
3rd Arr.
Boulogne-Billancourt
Malakoff
Courbevoie
10th Arr.
La Garenne-Colombes
Rueil-Malmaison
Levallois-Perret
La Défense
2
2
2
Paris
Lyon
Paris
0.0%
4.0%
8.0%
Q1 21 Q4 24Q3 24Q2 24Q1 24Q4 23Q3 23Q2 23Q1 23Q4 22Q3 22Q2 22Q1 22Q4 21Q3 21Q2 21
France
Value of property portfolio
£227.5m
Number of tenants
149
Government and large
companies
62.7%
Percentage of Group’s
property interests
12%
EPRA vacancy rate
8.3%
Years weighted average
leaselength to end
5.7
Number of properties
16
Lettable space (sq. ft)
0.8m
Leases subject to indexation
100%
Key:   CLS   Paris   Lyon
CLS Holdings PLC Annual Report and Accounts 202414
Market review
The French economy experienced a
comparably strong year with GDP growth
of 1.1% despite a precarious political
situation following the snap election in
June 2024. The annual inflation rate fell
to 2.3% from 5.7% in 2023.
The commercial property investment
market achieved a volume of
c.€12.5 billion, up 2% compared to the
previous year, also with the strongest
performance in the fourth quarter of
2024. Leasing take-up in Paris for the
year was 1.75 million sqm, 11% below 2023
and close to 20% below the 10-year
average. Take-up in Lyon reached
249,000 sqm, which was stable to
lastyear.
Year-end vacancy in Paris increased to
10.2% from 8.5% at the end of 2023 while
the Lyon market was up to 7.0% from
4.9% in 2023.
Portfolio movement and valuation
summary
In 2024, the value of the French portfolio
decreased by £30.0 million as a result of
a revaluation decline of £12.5 million or
5.1% in local currency, a foreign exchange
decrease of £11.1 million, and disposals
of£9.8 million, partly offset by capital
expenditure of £3.4 million. The 5.1%
valuation decline was a result of
equivalent yields expanding by 16 basis
points on a like-for-like basis and
increased vacancy, with some offset from
ERVs increasing by 0.6% on a like-for-like
basis and all leases being indexed.
According to market data, office property
values in France fell by 3.3% in 2024
which compares to the fall in CLS’
property values of 5.1%. This was driven
by higher yield shifts in the Western
Crescent of Paris, where the majority
ofour Paris properties are located,
compared with Paris CBD.
Asset management
Underlying vacancy, excluding completed
refurbishments and disposals, increased
from 5.6% to 7.1% primarily as a result of
lease expiries at Front de Parc in Lyon.
The EPRA vacancy rate increased to
8.3% as of 31 December 2024
(2023: 5.6%) resulting from a marked
difference in vacancy in our portfolio
with3.8% in Paris but 16.3% in Lyon, which
we are confident of reducing given the
tighter market conditions in the city.
In 2024, we let or renewed leases for
8,229 sqm and lost 7,545 sqm of space
due to expiries, however, 2,525 sqm of
refurbished space came back into the
portfolio, mainly at Park Avenue in Lyon.
Excluding contractual indexation uplifts,
21 lease extensions and new leases
secured £1.9 million in rent, averaging
3.9% above ERV. Leases subject to
indexation increased by an average of
5.2% in 2024.
The most significant transaction in Paris
was with the software company Pixid at
Cap G, a modern building located east
ofLa Défense. The lease for 1,022 sqm,
which was signed at 9% above ERV,
means that Cap G is now fully let. In Lyon,
the largest transaction was a nine-year
lease renewal for 1,274 sqm with a
consultancy, Wavestone, at Park Avenue.
The newly refurbished building now
boasts an energy-efficient façade, with
panoramic views over Parc de la Tête
d’Or, and has received increased levels
ofinterest from occupiers in the second
half of 2024. Post year-end we also
completed a further lease for the
5thfloor at Park Avenue.
Developments and refurbishments
Following the successful completion of
works at Park Avenue last year, we
continued to invest in our properties
throughout 2024. This includes the
4,198sqm office building Debussy in
Paris, which is set to be converted into 57
serviced apartments. These apartments
are pre-let to Edgar Suites, a leading
national operator, under a 12-year
agreement. Nexity will manage the
conversion through a fixed-price
redevelopment contract, valued at
c.€12 million, with completion targeted
for the beginning of 2027.
We have also embarked on a significant
project at Petits Hôtels, a 2,079 sqm
office in central Paris. We commenced a
€1.7 million, 8-month transformation to
create contemporary workspaces, with a
strong focus on sustainability to meet
France’s Décret Tertiaire standards. As a
result, we secured a pre-let for the entire
renovated building B with the new rent
c.70% higher than the previous rate.
Theproject is scheduled for completion
in Spring 2025.
Disposals
In May 2024, we completed the disposal
of Quatuor, located in the Montrouge
area in Paris. The 2,500 sqm office
building was originally acquired for
€4.6 million in 2002 and is located in
front of the future Grand Paris metro
station. The City of Montrouge
purchased the property for €11.3 million,
which was in line with the latest valuation.
Outlook
France currently faces political
uncertainty due to the lack of a clear
parliamentary majority and the consensus
forecast for the French economy
indicates a reduction in GDP growth to
0.7% for 2025.
In 2025, the French real estate market is
expected to maintain similar investment
volume levels to 2024, although this
remains highly correlated to the
trajectory of interest rate reductions.
Thesupply and demand balance remains
challenging in parts of Paris, while
theCBD faces constraints with low
vacancies. Lyon is expected to lease
welldue to restrictive policies for new
developments that support existing
office properties.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 15
  Net initial yield  Cost of debt
2020 2021 2022 2023 2024
5.1
5.8
7.4
11.0
12.7
2020 2021 2022 2023 2024
8.1%
3.7%
-3.7%
-20.8%
-11.9%
2020 2021 2022 2023 202
4
5.64%
3.77%
Strategy and business model and KPIs
Realising value and reinvesting for the future
We acquire the
rightproperties
At CLS, we invest in commercial real
estate across the UK, Germany, and
France, with the majority of our
properties being offices situated in
key European cities, carefully chosen
in central or urban locations, close to
excellent transport networks. Most
of our properties are multi-let to a
wide variety of occupiers, giving us
the opportunity to add value whilst
spreading our risk.
We secure the
rightfinance
Most of our properties are held in
their own legal entity and are
financed with bank loans borrowed
on an asset specific, ring-fenced
basis to the rest of the Group. We
also have some portfolio loans. We
have the flexibility to borrow at fixed
or floating rates of interest and, by
borrowing against each asset, we are
able to use a level of gearing suitable
to the specific property.
We deliver value
through active
management and
cost control
The key to active management is to
perform it in-house. By using our
own employees, we harness greater
motivation, response times and
attention to detail than if tasks were
to be outsourced. By performing
in-house, not only do we have a
hands-on relationship with our
occupiers, but we are able to
controlcosts.
KPIs/OPIs
• TSR – Relative
• Total Accounting Return
Link to principal risks
• Property risk
• Sustainability risk
KPIs/OPIs
• Cost of debt
• EPRA earnings per share
Link to principal risks
• Financing risk
• Property risk
KPIs/OPIs
• Vacancy rate
• Administration cost ratios
Link to principal risks
• Sustainability risk
• Business interruption risk
Learn more here:
For more information go to page 18
Learn more here:
For more information go to page 19
Learn more here:
For more information go to page 20
Total Accounting Return
(%)
Net initial yield vs cost
of debt (%)
EPRA vacancy rate
(%)
Learn more here:
CFO review on pages22 to 25
Learn more here:
CFO review on pages22 to 25
Learn more here:
Country reviews on pages10 to 15
Why this is important to CLS
This KPI measures the change in EPRA NTA
per share of the Company before the payment
of dividends and so represents the value
added to the Company inthe year.
Our target
Our target Total Accounting Return is over 8%.
Why this is important to CLS
This KPI compares the return from our
properties with reference to the cost of
debtfinancing them.
Our target
We seek to maintain a cost of debt at least
200 bps below the Group’s net initial yield.
Why this is important to CLS
This KPI measures the potential rental income
of unlet space and, therefore, the cash flow
which the Company would seek to capture.
Our target
We target a vacancy rate of between 3% and
5%; if the rate exceeds 5%, other than through
recent acquisitions or refurbishments, we may
be setting our rental aspirations too high in the
current market; if it is below 3% we may be
letting space too cheaply.
CLS Holdings PLC Annual Report and Accounts 202416
2020 2021 2022 2023 2024
12.2
11.3
11.6
10.3
9.2
2020 2021 2022 2023 2024
72
85 85
84
85
2020 2021 2022 2023
18th
23rd 23rd
11th
15th
2024
We continually assess
whether to hold or
sell properties
Our active management approach
isapplied at a portfolio level,
continually assessing whether
properties meet return criteria and/
or we can continue to add value.
Each property in our portfolio has
itsown asset management plan,
which we flex depending upon our
occupiers’ requirements and leasing
activity.
We reward shareholders,
customers and
employees
We pay dividends to our shareholders,
with the balance reinvested in the
business. Our occupiers are our
customers. We pride ourselves in how
we build relationships and align our
strategic vision to their own business
ambitions. We reward employees for
their work and their loyalty, through
salaries and bonus schemes which
reflect the success of the business.
KPIs/OPIs
• TSR – Relative
• Total Accounting Return
Link to principal risks
• Property risk
• Financing Risk
KPIs/OPIs
• Dividend cover
• Staff turnover
Link to principal risks
• People risk
• Business interruption risk
Learn more here:
For more information go to page 21
Learn more here:
For more information go to pages 28 to 29
EPRA earnings per share
(p)
GRESB (ESG) score/100Total Shareholder Return
– relative (%)
Learn more here:
CFO review on pages 22 to 25
Why this is important to CLS
This KPI is our main sustainability indicator
which is an industry standard measure which
helps gauge the sustainability credentials of
our portfolio.
Our target
We aim to maintain or exceed our previous
year’s GRESB Score.
Why this is important to CLS
This KPI gives relevant information to investors
on theincome generation of the Group’s
underlying property investment business and
an indication of the extent to which current
dividend payments are supported by earnings.
Our target
We will seek to grow the earnings of the
business alongside net asset value.
Why this is important to CLS
This KPI measures the change in the wealth of
a CLS shareholder over the year, against the
change in the wealth of the shareholders of a
peer group of 20companies (2023: 23
companies) in the FTSE 350.
Our target
Our target Total Shareholder Return (relative)
is between the median and upper quartile.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 17
Strategy in action
Maximising value, reinvesting for growth
Case study
Latest acquisition
to be 100% full
The Yellow, Dortmund,
Germany
In July 2022, CLS completed our
latest acquisition which was The
Yellow, a 23,982 sqm (258,140 sq. ft)
office in the CBD of Dortmund for
€66.25 million with significant
repositioning opportunities and
12%vacancy.
In December 2024, we announced
a20-year lease with the City of
Dortmund for 9,634 sqm (103,700 sq.
ft). Occupancy is scheduled in two
phases, with space handed over in
Summer 2025 and early 2026.
The lease will increase the Weighted
Unexpired Average Lease Term
(WAULT) from 2.5 years to 9 years
and the property will become fully let.
By filling existing and upcoming
vacancy, total rental income will
increase from €3.9 million
to€4.8 million in 2026 as well as
driving an increase in valuation.
“ This significant lease
agreement with the City
of Dortmund reflects our
commitment to providing
high‑quality, sustainable
office space, especially to
government tenants.”
Einar Osterhage
Head of Asset Management
We acquire the
right properties
Strategy
We invest in high-yielding properties,
predominantly offices, with a focus on
cash returns. We diversify market risk by
investing in geographical areas with
differing characteristics and also seek
todiversify the tenant base.
Strategy implementation
We target modern, high quality
properties with good asset management
opportunities in larger cities in the UK,
Germany and France. In addition to
geographic diversity, we have a wide
variety of tenants in many different
sectors and we invest in Sterling
andEuros.
Our performance in 2024
• Since mid-2022 whilst property values
have been falling, CLS has not made
any acquisitions. Instead, our focus
hasbeen on reducing LTV through
disposals
• We did, and do, continue to invest in
our portfolio to improve its quality and
meet tenant needs. This has allowed us
to attract tenants at higher rents and
reduce vacancy
• In 2024, we spent £21.1 million of capital
expenditure which included £7.1 million
on our most significant repositionings
at Artesian, The Brix, Bismarckstrasse
and the advancement of planning
permission for Citadel Place
Priorities for 2025
• Our focus will be on the many
opportunities within the portfolio
toupgrade or reposition existing
properties to capture higher rents and
values. We will reduce our LTV to within
our target range of 35% to 45% before
considering acquisitions
• We will continue to improve the quality
of our property portfolio including
sustainability enhancements as per
ourNet Zero Carbon Pathway. Capital
expenditure is expected to be higher
in2025, utilising around £30 million of
internal funding
CLS Holdings PLC Annual Report and Accounts 202418
Case study
Successful linked
refinancings
FleXion and Gotic Haus,
Germany
The two German properties, FleXion
and Gotic Haus had loans with Berlin
Hyp expiring in 2024, being 30 March
2024 and 31 October 2024 respectively,
for a total of €38.37 million.
The loan for FleXion had been agreed
when the property had vacancy of 72%
but on the basis of a business plan to
reduce this. The loan was initially
extended until the end of September
2024, by when the vacancy had
reduced to 23%, soboth loans couldbe
considered together.
The largest tenant at Gotic Haus
vacated the property in July 2024
resulting in vacant space of c.70% in
the building. The same financing
strategy for Gotic Haus, alongside
executing its business plan to reduce
vacancy, was agreed with the bank as
had been executed for FleXion.
Ultimately, both loans were refinanced
on a cross secured basis for a period
of 5 years at the same amount of
€38.37 million and at a blended rate
of 4.81%.
“ 2024 was another busy and
successful year in terms of
financing activity. 2025 is
expected to be no different
and we have already made
great progress with the
refinancing of loans expiring
this year as well as new
capex facilities.”
Alain Millet
Group Treasurer
We secure the
right finance
Strategy
Whilst CLS has several financing strategic
objectives, the key ones are to: target a
low cost of debt whilst maintaining an
appropriate LTV; maintain a high
proportion of fixed rate debt; utilise
diversified sources of finance to reduce
risk; and maintain a high level of liquid
resources.
Strategy implementation
To meet CLS’ strategic objectives, we:
aim to keep cost of debt at least 200
basis points below net initial yield albeit
this depends on market conditions;
execute fixed rate debt loans or use
interest rate caps and hedges; have
strong relationships with over 25 lending
institutions which each have less than
20% of our total loan exposure; own
properties in special purpose vehicles
financed individually or in small portfolios
by ring-fenced debt in the currency used
to purchase the asset; and keep at least
£100 million in cash and cash equivalents
and undrawn facilities. As noted in the
Going concern assessment on page 63,
CLS’ business model relies upon the
refinancing of loans annually, as well as
disposals, for which we have a successful
track record.
Our performance in 2024
Financed, refinanced or extended by
more than one year, nine loans to a value
of £154.5 million.
These loans were at a weighted average
duration of 3.7 years and at a weighted
all-in rate of 5.13%.
These loans encompassed all of the
financings expiring in 2024 and one
newloan.
Priorities for 2025
We have made significant headway with
the refinancing activity for 2025 such
that of the £373.7 million of debt
(including £9.6 million of amortisation)
across 11 loan facilities expiring in 2025
(£377.7 million at the start of 2024),
progress has been made with
£342.1 million. This progress comprises
the following: £42.1 million has been
refinanced; £85.8 million will be
refinanced or repaid alongside the
completion of the Spring Mews Student
sale; and £189.1 million has been credit
approved or we have received heads of
terms. The remaining £47.1 million of debt
maturing in 2025 comprises four loans,
one in Germany for £12.7 million and
three in France for £34.4 million. We have
made good progress with £25.1 million
ofthis amount and expect to refinance
these twoloans in the second quarter
of2025. The remaining two loans for
£22.0 million do not mature until the
fourth quarter of2025.
Four capex facilities for significant
property refurbishments or
repositionings for a total of c.£40 million
to be completed.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 19
Strategy in action continued
We deliver value through
active management and
cost control
Strategy
Our overall objective is to maintain a high
occupancy for our properties alongside
adiversified customer base which is
underpinned by a strong core income
stream. In conjunction with driving letting
performance, we maintain strict cost
control.
Strategy implementation
In order to deliver on high occupancy
andcost control, we use in-house staff
wherever appropriate. Consequently, we
use in-house local asset and property
managers who maintain close links with
occupiers to understand their needs.
Ourfocus is on the quality of service
andaccommodation for our customers.
On the cost side, we perform as many
back-office functions as possible
in-house and monitor our performance
against our peer group.
Our performance in 2024
• Completed 112 lease events securing
£16.6 million of annual rent at 6.8%
above ERV with like-for-like contracted
rent increasing by 3.7%
• Underlying vacancy was down at 10.6%
but the overall vacancy rate increased
to 12.7%. The increasewas due to
completion of redevelopments
currently being marketed to
prospective tenants
• The bad debt provision remained low
at£1.7 million and rent collection
remained at the same, consistently
highlevel of99%
Priorities for 2025
• Our priorities remain unchanged from
last year with the focus on increasing
letting activity, particularly in the UK
• Reduce vacancy levels below 11.0% and
over time bring down to our historic
target level of 5.0%
• Maintain rent collection levels and
actively manage bad debts as well
ascontinue cost control measures
Case study
Pre-let proves
value of
refurbishment
Petits Hôtels,
Paris, France
Petits Hôtels is a 2,079 sqm (22,378
sq. ft) office in central Paris. In
February 2024, following lease expiry,
the smaller of the twobuildings at 465
sqm (5,005 sq. ft) became vacant.
After securing planning permission,
CLS embarked on a €1.7 million
8-month transformation of this
4-floor courtyard building. Whilst
retaining the exterior of a typical
Parisian building, the interior is
beingcompletely redesigned to
provide contemporary workspaces
suited to the current occupiers’ needs.
The project has a strong sustainability
focus tomeet energy efficiency
objectives under France’s Décret
Tertiaire by installing exterior insulation
and the latest HVAC and BMS system,
amongst other things. The project
isscheduled to complete in
spring2025.
In December 2024, CLS secured a
pre-let for the whole of the renovated
building to a travel company under a
4/6/9-year lease starting in April
2025. The new rent is 56% above the
previous rent and the uplift in the
valueof the property is estimated at
€2.5 million. Thewhole office is now
fully let.
“ This complete refurbishment
has resulted in CLS offering
premium office spaces whilst
retaining the character of a
very sought‑after Parisian
building. This sustainably‑
focused upgrade has
attracted a great occupier
and delivered long‑term
value for PetitsHôtels.”
Ly David
Asset Manager, France
CLS Holdings PLC Annual Report and Accounts 202420
Case study
Successful sale
ofCLS’ Student
Accommodation
Spring Mews Student,
Vauxhall, UK
In 2014, CLS constructed its student
accommodation as part of the
mixed-use Spring Mews development,
comprising student, hotel and offices.
Since the early years, it has always
been fully occupied (apart from the
Covid pandemic) and in 2024,
following a minor upgrade, itachieved
record results with little further upside
potential remaining.
The decision to sell the property was
taken in the first half of 2024 and
marketing commenced shortly
thereafter. Unfortunately, enactment
of the Building Safety Act, with
regulations relating to residential
buildings over 18 metres, added
complexity to the sale and delayed
theprocess.
In March 2025, the saleofSpring
Mews Student was unconditionally
exchanged with Rosethorn and
Barings for £101.1 million, in-line with
the 2024 year-end valuation and 8.1%
ahead ofthe 2023 year-end valuation.
The sale will complete in May 2025
when the remaining 90% consideration
will be paid. At the same time, CLS will
restructure the financing associated
with Spring Mews student such that
other properties will be substituted
into the Aviva portfolio financing so
asto retain the 2.54% debt and repay
more expensive debt.
“ CLS has achieved excellent
financial returns from the
development and ownership
of Spring Mews Student. The
sale allows this value to be
realised and reinvested into
other portfolio opportunities.”
Helen Pilcher
Head of UK Development
We continually assess
whether to hold or
sell properties
Strategy
Our focus is to hold those properties with
the potential to add value through active
asset management. We dispose of those
properties; which are too small or too
lowyielding; for which the risk/reward
balance is unfavourable; or for which
theacquisition business plan has been
executed and there is limited active asset
management potential.
Strategy implementation
We have an asset management plan for
every property which we flex to capture
rental and capital growth via leasing and
refurbishment activity. We will also assess
whether greater value can be captured
through a change of use. If a decision to
dispose of a property is made, we will
seek to optimise the timing of sales
depending on market conditions, the
characteristics of the property and the
overall portfolio composition.
Our performance in 2024
• Disposed of five properties across all
ofour geographies for £66.1 million,
in-line with the pre-sale valuations
• After the original buyer failed to
complete, the sale of Westminster
Tower was completed in September
2024 at the same consideration of
£40.8 million, its book value. We
recognised £2.9 million, net of costs,
inrespect of the retained deposit as
the original buyer failed to complete
Priorities for 2025
• Since the start of 2025, we have
exchanged on or agreed the sale
ofthree properties in the UK and
Germany for £125.3 million, in-line with
book values, to reduce LTV. These
sales leave £78.6 million of disposals
left to be executed in 2025 of the
originally targeted 2024 disposal
amount of c.£270 million
• In addition, we are exploring the
disposal of a further c.£130 million to
reduce LTV to be comfortably within
our targeted range of 35% to 45% and
help fund opportunities within our
property portfolio
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 21
Graph A: Net rental income £m
Net rental income
31 Dec 2023
New leases
& renewals
Expiries
Indexation
Student & Hotel
Other income
Developments
FX/other
Disposals
L-F-L & constant
currency
31 Dec 2024
Net rental income
31 Dec 2024
113.0
5.7
(4.8)
(2.5)
0.9
1.2
3.8
(1.7)
(1.6)
114.0
117.3
Summary
Given valuation declines, EPRA net tangible assets (‘NTA’)
pershare fell by 15.0% to 215.0 pence (2023: 253.0 pence)
andbasic net assets per share by 15.6% to 197.3 pence
(2023: 233.8pence). EPRA earnings per share were 9.2 pence
(2023: 10.3 pence) whilst the loss after tax of £93.6 million
(2023: £249.8 million loss) generated basic earnings per share
of -23.6 pence (2023: negative 62.9 pence). EPRA EPS
covered the full year dividend of 5.28 pence per share
1.73times.
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 give a
full description and reconciliation of our APMs.
Income statement
Net rental income in 2024 of £114.0 million, as set out in graph A,
was up 0.9% from 2023 (£113.0 million). On a like-for-like and
constant currency basis, net rental income was up 3.8% to
£117.3 million. The increase arose from four areas: new leases
and renewals of £5.7 million; other income of £3.8 million
including the forfeited deposit less costs of £2.9 million on
thebuyer’s failed completion of the Westminster Tower sale;
another record year for our student and hotel operations up
£1.2 million; and rental indexation increases of £0.9 million.
Thisincrease was offset by lease expiries and movement of
properties to development stock which reduced rental income
by £4.8 million and £2.5 million respectively. Overlaying the
impact of lost rental income from property disposals of
CFO review
Andrew Kirkman
Chief Financial Officer
£1.7 million and the impact of foreign exchange from Sterling
strengthening in 2024 of £1.6 million resulted in reported net
rental income of £114.0 million.
CLS’ tenant relationships remain strong and the quality and
diversity of our tenant base has continued to be reflected in our
rent collection, and, as in previous years, we collected over 99%
of rent. Rent collection for the first quarter of 2025 is 99% as is
customary at this point in time.
Overall administration and property expenses increased by
£2.0 million to £35.8 million (2023: £33.8 million).
Administration costs were lower by £0.5 million compared
with2023 due to tight control over personnel costs. Property
expenses were £2.5 million higher as a result of one-off savings
in 2023 such as recovery of long outstanding bad debt,
increased costs associated with higher vacancy and the variable
costs from hotel and student operations were higher as a result
of higher occupancy. The proportion of index-linked rent was
54.4% (2023: 55.2%) of the total contracted rent of the
portfolio. This high level of indexation continues to be a
benefitin a time of higher inflation and interest rates.
Due to lower personnel costs, CLS’ administration cost ratio
decreased to 15.4% (2023: 16.0%) whereas our EPRA cost
ratioincreased to 25.4% (2023: 25.1%) as a result of higher
property expenses.
Given market weakness from higher interest rates and
economic uncertainty, the valuation of CLS’ properties fell,
although the reduction was lower than wider market movements
and reduced significantly in the second half as values began to
bottom. The reduction in the value of investment properties,
excluding lease incentive movements, was £127.7 million
(2023: £302.7 million fall) with falls in the UK of 8.3%,
Germany3.5% and France 5.1% in local currencies.
Five properties were sold in 2024 for an aggregate
consideration of £66.1 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 £2.3 million
(2023: £1.4 million profit). Since the year-end, we have
exchanged on or agreed the sale of three properties for
£125.3 million, in-line with book value, which are due to
complete in the first half of 2025. Operating loss for the
yearwas £52.5 million (2023: loss £223.4 million).
CLS Holdings PLC Annual Report and Accounts 202422
Graph C: EPRA NTA movement
pence per share
At 31 Dec
2023
EPRA EPS
Dividends
Property
valuation
FX
Other
At 31 Dec
2024
253.0
9.2
(8.0)
(31.8)
(6.5)
(0.9)
215.0
Graph B: EPRA EPS movement
pence per share
At 31 Dec
2023
Rent
and SC
Other
Income
Student and
hotel income
Student and
hotel expenses
Expenses
Other
Fin inc/exp
At 31 Dec
2024
10.3
(0.7)
0.7
0.3
(0.4)
(0.1)
(1.3)
0.4 9.2
Finance income of £1.4 million (2023: £1.6 million) reduced
given lower cash deposit balances and lower interest rates on
cash deposits. Derivative financial instruments fell in value by
£3.4 million (2023: £4.2 million reduction) as they are now
closeto maturity. Finance costs, excluding the movement on
derivative financial instruments, increased to £42.3 million
(2023: £37.1 million) as a result of higher interest costs on
floating rate, and recently refinanced, loans given wider market
interest rate increases particularly since these loans were
lastfinanced.
Approximately 54% of the Group’s sales are conducted in the
reporting currency of Sterling and 46% in Euros. The year-end
Sterling rate against the Euro strengthened by 4.8% and the
average Sterling rate strengthened by 2.7%, both more than in
2023, resulting in a higher level of foreign exchange losses of
£0.6 million in the income statement compared to last year
(2023: £0.3 million).
Exchange rates to the £ EUR
At 31 December 2022 1.1295
2023 average rate 1.1500
At 31 December 2023 1.1535
2024 average rate 1.1814
At 31 December 2024 1.2085
The effective tax rate of 3.9% (2023: 5.2%) was below the
weighted average rate of the countries in which we operate
principally as a result of the conversion of CLS’ UK operations
toa REIT at the start of 2022 and the consequent lower UK
effective tax rate.
Overall, as set out in graph B, EPRA earnings were lower than
last year at £36.4 million (2023: £40.9 million) and generated
EPRA earnings per share of 9.2 pence (2023: 10.3 pence). The
decrease of 1.1 pence in EPRA EPS was primarily due to: the
increase in finance expenses of 1.3 pence; and a decrease in
rental income and net service charge of 0.7 pence, which were
only partly offset by: increases in other income of 0.7 pence
which mostly consisted of the Westminster Tower deposit; and
a net increase of 0.2 pence from the increase in Other of 0.4
pence due to lower tax, less higher property (0.1 pence) and
hotel and student operating costs (0.1 pence).
EPRA net tangible assets and gearing
At 31 December 2024, EPRA net tangible assets per share
were215.0 pence (2023: 253.0 pence), a fall of 15.0%, or
38.0pence per share. As set out in graph C, the main reasons
for the decrease were: property valuation decreases of 5.8%
inlocal currency or 31.8 pence per share; dividends of 7.95
pence per share paid in the year; foreign exchange declines
onour European business of 6.5 pence per share; and other
movements of 0.9 pence per share, partly offset by EPRA
earnings per share of 9.2 pence per share.
Balance sheet loan-to-value (net debt to property assets) at
31 December 2024 increased to 50.7% (2023: 48.5%) which
was as a result of property valuation reductions as net debt fell
by over £60 million. The value of properties not secured against
debt decreased to £41.3 million (2023: £74.1 million). In 2025,
CLS is intending to remain a net disposer of property to reduce
LTV below 45% in the short-term and 40% in the medium-term.
Cash flow and net debt
As at 31 December 2024, the Group’s cash and cash equivalents
balance was £60.5 million (2023: £70.6 million) as set out in
graph D. Net cash flow from operating activities, after payment
of £41.7 million for financing costs and tax, generated
£29.5 million, a decrease of £16.4 million from 2023 reflecting
higher debt and tenant fit-out costs. Dividends of £31.6 million
were paid. Capital expenditure of £22.5 million was funded by
proceeds after tax from property disposals of £63.8 million. In
addition, there was a net repayment of loans of £47.7 million and
foreign exchange reductions and other of £1.6 million. The net
result of property and financing transactions, being the
investment of £10.1 million in the business to reduce net debt
andgrow net tangible assets.
Gross debt decreased by £71.4 million to £999.2 million
(2023: £1,070.6 million) due to: the net repayment of loans of
£47.7 million; and the decrease of £25.3 million due to the
strengthening of Sterling against the Euro, less the amortisation
of loan issue costs of £1.5 million. In the year, £74.4 million
(£73.4 million net of capitalised fees) of new or replacement
loans were taken out, loans of £102.4 million were repaid and
£18.7 million of contractual periodic or partial repayments
weremade. Year-end net debt fell to £938.7 million
(2023: £1,000.0 million). At the year-end, CLS’ additional
facilities remained unchanged comprising two undrawn
revolving credit facilities totalling £50.0 million, both of which
are committed, and a £10 million overdraft.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 23
Graph D: Movement in liquid resources
£m
At 31 Dec
2023
Cash from
operations
Interest/tax
Dividends
paid
Sales of
properties
Other
Capex
Net loan
drawdown
At 31 Dec
2024
70.6
71.2
(41.7)
(31.6)
63.8
(47.7)
(22.5)
(1.6)
60.5
2020 2024
3.77
202320222021
2.28
3.61
2.69
2.22
Graph E: Cost of debt
%
Secured rent above ERV for new leases
+6.8%
The weighted average cost of debt at 31 December 2024 was
3.77%, 16 basis points (‘bps’) higher than 12 months earlier but
4bps lower than at the half-year. The full-year movement was
as a result of: new higher cost debt drawn for completed
refinancings and new debt (28 bps increase); and the
strengthening of Sterling against the Euro (1 bps increase),
lessadecrease in the reference rates on floating rate loans
(8bps decrease); and repayments of higher cost loans (5 bps
decrease). In 2024, interest cover at 1.9 times (2023: 2.2 times)
gave comfortable covenant headroom although it has limited
relevance as there are no Group interest cover or LTV
covenants.
Financing strategy and covenants
In 2024, we refinanced the remaining expiring loans for 2024
which had not already been refinanced in 2023. We have made
significant headway with the refinancing activity for 2025 such
that of the £373.7 million of debt (including £9.6 million of
amortisation) across 11 loan facilities expiring in 2025
(£377.7 million at the start of 2024), progress has been made
with £342.1 million. This progress comprises the following:
£42.1 million has been refinanced; £85.8 million will be
refinanced or repaid alongside the completion of the Spring
Mews Student sale; and £189.1 million has been credit approved
or we have received heads of terms. The remaining £47.1 million
of debt maturing in 2025 comprises four loans, one in Germany
for £12.7 million and three in France for £34.4 million. We have
made good progress with £25.1 million of this amount and
expect to refinance these two loans in the second quarter of
2025. The remaining two loans for £22.0 million do not mature
until the fourth quarter of 2025.
The Group’s strategic financing priorities remain to keep the
cost of debt low whilst: keeping an appropriate LTV; maintaining
a high proportion of fixed debt; increasing the amount of green
loans; and seeking to match the Group’s weighted average
debtmaturity against the Group’s WAULT. At a tactical level,
thepriorities for this year are to complete the remaining
CFO review continued
refinancings for 2025 and progress refinancings due in 2026,
albeit there is a much lower amount maturing in 2026 than
2025. We are also investigating financing properties in the UK
using Euro-denominated loans given the significant swap rate
differential between Sterling- and Euro-denominated loans and
CLS’ existing unhedged Euro exposure on the equity invested
in our properties in Germany and France.
As noted, CLS’ objective remains to keep a high proportion of
fixed rate debt. However, in 2024 just as in 2022 and
2023 more floating rate loans and extensions than usual were
executed given that: some properties are to be sold and thus
CLS wants to avoid break costs; the letting profile for some
properties needs to be improved in advance of securing a
longer-term fixed rate loan; and a belief that lower rates could
be secured in the future once the floating rate loan expired. As
a good example, CLS secured short-term intra-year extensions
for three loans for £39.9 million. Two of these loans were
subsequently financed for five years and one was repaid after
the property was sold.
In 2024, the Group refinanced, financed or extended, by more
than one year, 9 loans to a value of £154.5 million for a weighted
average duration of 3.7 years and at a weighted average all-in
rate of 5.13%. Of these £137.7 million were fixed at a weighted
average all-in rate of 4.99%. Consequently, at 31 December
2024, 79.7% of the Group’s borrowings were at fixed rates or
subject to interest rate swaps, 3.8% were subject to caps which
had been hit and 16.6% of loans were unhedged. The fixed rate
debt had aweighted average maturity of 3.4 years and the
floating rate 2.3years. The overall weighted average unexpired
term of the Group’s debt was 3.2 years (2023: 3.5 years). The
Group’s debt maturity at the start and end of 2024 is set out in
graph F.
“ We have made significant
headway with the refinancing
activity for 2025such that
of the £373.7million expiring
in 2025, progress has been
made with £342.1 million
ofdebt.”
CLS Holdings PLC Annual Report and Accounts 202424
Portfolio value by country
UK
Germany
France
£807m
£816m
£228m
2024 2025
400
300
200
100
0
2026 2027 2028 2029 2030 2031 2032 2033 2034-
2039
GBP EUR Repaid/refinanced New debt maturity
Graph F: Debt maturity
£m
Rent collection
99%
The Group’s financial derivatives, predominantly interest rate
swaps, are marked to market at each balance sheet date. At
31 December 2024 they represented a net asset of £1.4 million
(2023: £4.3 million asset), with the asset declining in value as
the swaps reach maturity.
At 31 December 2024, the Group had 44 loans (33 through
SPVs, eight portfolios and three facilities) from 25 different
lenders. The loans vary in terms of the number of covenants
with the three main financial covenants being ratios relating to
loan-to-value, interest cover and debt service cover. However,
some loans only have one or two of these covenants, some
have other covenants, and some have none. The loans also vary
in terms of the level of these covenants and the headroom to
these covenants.
On average, across the 44 loans, CLS has between 14% and
32% headroom for these three main covenants. In the event of
an actual or forecast covenant breach, all of the loans have
equity cure mechanisms to repair the breach, which allow CLS
to either repay part of the loan, substitute property or deposit
cash, for the period the loan is in breach after which the cash
can be released.
Distributions to shareholders and
TotalAccounting Return
The final dividend for 2023 of 5.35 pence per share
(£21.3 million) was paid in May 2024 and in October 2024,
CLSpaid an interim dividend for 2024 of 2.60 pence per
share(£10.3 million).
Given the significant opportunities within the portfolio to grow
net asset value and thus the desire to retain funds to capture
these opportunities, we are reducing the proposed final
dividend for 2024 by 50% to 2.68 pence per share equating
to£10.7 million (2023: 5.35 pence per share equating to
£21.3 million). This would result in a full year distribution of
5.28pence per share (£21.0 million), covered 1.73 times by
EPRA earnings per share. The revised dividend policy going
forward isfor the dividend to be covered 1.5 to 3.0 times by
EPRA earnings. This investment focus and dividend policy
isconsistent with CLS’ strategy as a total return share
concentrated on growth and income. The Total Accounting
Return, being the reduction in EPRA NTA plus the dividends
paid in the year, was -11.9% (2023: -20.8%).
As a result of the conversion of our UK operations to a REIT in
2022, shareholders receive dividends comprising two elements.
The dividends comprise a Property Income Distribution (‘PID’)
from the UK REIT operations and a second element from CLS’
remaining operations. For the 2024 interim dividend of 2.60
pence per share, the PID was 1.75 pence per share and for the
proposed final dividend of 2.68 pence per share, the PID will be
1.50 pence per share giving a full year dividend of 5.28 pence
per share of which 3.25 pence per share is the PID. The split
between the PID and the dividend from our remaining
operations is likely to fluctuate over time and will depend on the
level of capital allowances and inter-company interest, amongst
other things.
Andrew Kirkman
Chief Financial Officer
31 March 2025
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 25
Creating life stories
Crafting legendary spaces:
How our tenant fit out created MSF’s ideal office
At CLS, our commitment to our core values is evident
inthe work we do and the relationships we build. This
was especially clear in our recent project creating a
bespoke fit-out space for Médecins Sans Frontières
(MSF), which ultimately led to them renting an entire
floor with CLS. Here we take a closer look at how our
values were brought to life during this project:
Our tenants,
our focus
From the outset, our priority was ensuring the project’s
successand making sure the final space met MSF’s vision and
operational needs. We held fortnightly in-person meetings
on-site with MSF’s team, giving us the chance to collaborate
closely and ensure that every detail was considered, from the
look and feel of the space to the layout and logistics of their
move. By keeping MSF at the forefront of the process, we
wereable to create a space that perfectly suited their needs.
Openness
creates closeness
Building a strong, personal relationship with our tenants is key
tounderstanding their specific requirements. After the initial
viewings, we took the extra step to meet with MSF at Artesian,
where we had more in-depth discussions. Dan Howson, Head
ofUK, visited their existing office and held staff workshops to
better understand what aspects of their current setup were
working and what could be improved. This open dialogue
allowed us to build trust and ensured that the new fit-out
wouldtruly reflect their needs.
“ We are delighted to welcome MSF as
anewcustomer to our portfolio and are
particularly pleased that our strategy
of working closely with our occupiers
has produced an attractive workspace
for their employees. The fit‑out works
were specifically designed to promote
collaboration and inclusivity in the
officeenvironment whilst taking full
advantage ofthe attractive amenities
andsustainability features at Artesian.”
Dan Howson, Head of UK
Collaboration
gets the job done
Collaboration was essential to this project’s success. CLS’
instructed agents, C&W and Comptons, played a vital role in
introducing MSF to us. From there, we worked closely with MSF
to develop the space on their behalf, giving us more control
over the build based on our tenant’s expectations. By selecting
Morgan Lovell as our contractor, we were able to draw on our
collective extensive experience with office fit outs, ensuring
that the process was as seamless as possible. This collaboration
extended beyond the construction phase. Once MSF moved in,
we continued to assist with every detail, from offering pastries
on their first days to providing ongoing support through our
property management team and answering any queries they
had. This hands-on approach created a smooth transition into
their new office space at Artesian.
“ Key to the success of this project was the
unwavering commitment and collaboration
between CLS, their dedicated professional
team, PBC, and Morgan Lovell. Our unified
approach ensured that tenant needs
were not only met, but that their staff
were involved and integral to the project’s
journeyfrom day one.”
Andrew Ledlie, Project Director, Morgan Lovell
CLS Holdings PLC Annual Report and Accounts 202426
Tenant Lifestyle
We are committed to delivering modern solutions that meet
theneeds of tenants, ensuring their experience is seamless
andenjoyable. We teamed up with Foodles to provide
affordable and balanced workplace meals via smart self-service
fridges at CLS’s Pacific House in Reading, improving the office
experience for tenants. This initiative offered the ideal “farm
tofridge” solution, enabling employees to enjoy healthy,
convenient meals throughout the day. In today’s world, having
an in-house food provider that allows office workers to grab a
quick bite without leaving the building has become a top priority
for tenants. By introducing such tenant-centric initiatives,
wecontinue to place a strong emphasis on the comfort and
well-being of those working in our properties. This partnership
not only enhances the daily work environment but also supports
a healthier and more efficient workplace. With the addition of
Foodles, we’ve taken another step toward making office life
more convenient and accessible.
Efficiency for Tenants
We focused on working with our tenant to improve the
Harburger Ring building in Germany by upgrading key elements
to enhance energy efficiency and comfort. We replaced the
existing lighting with energy-saving LED fixtures, fine-tuned
theheating system for greater efficiency, and have made plans
to swap out thewindows this year to improve insulation. By
reducing heat loss and making the building more energy-
efficient, tenants experience lower heating costs in winter and a
more stable indoor environment year-round. The upgrades to
Harburger Ring not only lower operational costs for tenants but
also contribute to a healthier, eco-conscious workplace, aligning
with the growing demand for sustainability. Additionally, by
investing in energy-efficient solutions, we have helped tenants
create a positive environmental footprint, which is becoming
increasingly important for businesses today. The overall result
isa more pleasant and productive environment that supports
the well-being of employees and reflects a commitment to
long-term sustainability.
Tenant Security
In today’s fast-paced work culture, the safety and well-being of
tenants are top priorities. We’ve partnered with Safe Haven to
enhance security across all our buildings with on-site security
personnel. Safe Haven is a security-operated service that
provides a safe place of refuge for anyone feeling vulnerable or
in need of assistance. By signing up all of our UK properties with
this service, we offer tenants a sense of comfort and safety,
ensuring that help is readily available whenever needed. This
initiative reinforces our commitment to creating secure and
supportive environments for everyone in our buildings. Safe
Haven gives employees peace of mind, knowing that they have
access to immediate assistance if they ever feel unsafe or
require support. This partnership not only strengthens the
security of our properties but also provides an added layer of
care and consideration for those who work in our spaces. With
Safe Haven, our tenants can feel more secure, supported, and
confident in their workplace, contributing to a safer, more
positive work environment overall.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 27
Stakeholder engagement
Our stakeholders
Why are they important?
We believe that engaging with our key stakeholders is
fundamental to our ability to make well informed decisions
which ultimately have a positive impact on the business, in the
communities in which we invest and on the people with whom
we do business. Positive engagement and collaboration with
our stakeholders supports the implementation of our long-term
strategy for growth.
We engage with our stakeholders through a variety of channels
throughout the year. We have seen a positive impact on the
decisions we have taken during the year as a result of the input
from this stakeholder engagement.
Key to strategy
We acquire the right properties
We secure the right finance
We deliver value through active
management and cost control
We continually assess whether
to hold or sell properties
We reward shareholders,
customers and employees
Tenants Suppliers Communities Employees Investors Financial institutions
Priorities in 2024 • Improvements to communal
areas to meet tenants’ needs
• Input into tenants’
refurbishments
• Implementation of
sustainability initiatives and
data platform
• Support fair tendering
processes with feedback from
suppliers
• Investigating updating our
supplier portal
• Improvements in public realms
• Financial and in-kind support
for local charities and other
organisations
• Implementing CSR programme
Priorities in 2024 • Monitor staff engagement
• Enhance CLS culture through
wellbeing measures
• Action outcomes of 2023 staff
survey
• Highlight quality and future
readiness of portfolio
• Successfully execute
refinancing strategy
• Progress long-term growth
strategy
• Drive progress of sales pipeline
• Ongoing compliance with loan
covenants
• Economic and market research
and trends
• Sustainability initiatives
How we engaged • Regular feedback through
tenant meetings
• Tenant surveys
• Quarterly review meetings with
principal suppliers
• Fair tendering process to
ensure we work in partnership
with suppliers
• Supporting local organisations
in the areas in which we invest
• Working closely with
communities and councils on
refurbishment and
development projects
How we engaged • Open door policy for raising
issues
• Town hall meetings with all
employees
• Operation of anonymous
whistleblowing hotline
• Q&A session at analyst
presentations
• Regular meetings with investors
• Feedback through our key
advisors
• Frequent meetings with all
lenders
• Presentations to and from
institutions
• Property visits
Outcomes and
opportunities
• Programme of refurbishments
and modern design fit out
• Active asset, property and
facilities management to deal
with issues quickly
• Enhancing tenant
communications on activities
taking place on site
• Appointment of new facilities
management company in
Germany
• Obtain commitments from
relevant suppliers in line with
requirements from the living
wage foundation
• Ensure communication of
Group objectives to enable
collaborative approach
• Increase in funding for local
charities and organisations
• Adapted refurbishments/
redevelopments in light of
feedback
• Commitment to the Group’s
policy of prompt payment of
invoices
Outcomes and
opportunities
• More all staff meetings hosted
by the CEO and SLT to
maintain open lines of
communication
• CSR initiatives including group
volunteering days and social
events
• Continued review of portfolio
• Additional sales programme
• Launch of new website
highlighting quality and future
readiness of portfolio
• Communication of Group
strategy at individual meetings
• Regular updates on portfolio
changes
• Ensuring best practice in
compliance reporting
Link to business
model and strategy
       
 
Link to business
model and strategy
 
       
CLS Holdings PLC Annual Report and Accounts 202428
Tenants Suppliers Communities Employees Investors Financial institutions
Priorities in 2024 • Improvements to communal
areas to meet tenants’ needs
• Input into tenants’
refurbishments
• Implementation of
sustainability initiatives and
data platform
• Support fair tendering
processes with feedback from
suppliers
• Investigating updating our
supplier portal
• Improvements in public realms
• Financial and in-kind support
for local charities and other
organisations
• Implementing CSR programme
Priorities in 2024 • Monitor staff engagement
• Enhance CLS culture through
wellbeing measures
• Action outcomes of 2023 staff
survey
• Highlight quality and future
readiness of portfolio
• Successfully execute
refinancing strategy
• Progress long-term growth
strategy
• Drive progress of sales pipeline
• Ongoing compliance with loan
covenants
• Economic and market research
and trends
• Sustainability initiatives
How we engaged • Regular feedback through
tenant meetings
• Tenant surveys
• Quarterly review meetings with
principal suppliers
• Fair tendering process to
ensure we work in partnership
with suppliers
• Supporting local organisations
in the areas in which we invest
• Working closely with
communities and councils on
refurbishment and
development projects
How we engaged • Open door policy for raising
issues
• Town hall meetings with all
employees
• Operation of anonymous
whistleblowing hotline
• Q&A session at analyst
presentations
• Regular meetings with investors
• Feedback through our key
advisors
• Frequent meetings with all
lenders
• Presentations to and from
institutions
• Property visits
Outcomes and
opportunities
• Programme of refurbishments
and modern design fit out
• Active asset, property and
facilities management to deal
with issues quickly
• Enhancing tenant
communications on activities
taking place on site
• Appointment of new facilities
management company in
Germany
• Obtain commitments from
relevant suppliers in line with
requirements from the living
wage foundation
• Ensure communication of
Group objectives to enable
collaborative approach
• Increase in funding for local
charities and organisations
• Adapted refurbishments/
redevelopments in light of
feedback
• Commitment to the Group’s
policy of prompt payment of
invoices
Outcomes and
opportunities
• More all staff meetings hosted
by the CEO and SLT to
maintain open lines of
communication
• CSR initiatives including group
volunteering days and social
events
• Continued review of portfolio
• Additional sales programme
• Launch of new website
highlighting quality and future
readiness of portfolio
• Communication of Group
strategy at individual meetings
• Regular updates on portfolio
changes
• Ensuring best practice in
compliance reporting
Link to business
model and strategy
       
 
Link to business
model and strategy
 
       
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 29
Section 172 statement
Overview
The Board recognises the importance
ofthe views of key stakeholders in its
decision-making process and the
execution of its strategy. It believes these
to be crucial in maintaining a reputation
for high standards of business conduct,
and a Group that people want to work for
and to do business with.
Our key stakeholders are set out on
pages 28 to 29 and illustrate how the
Group has engaged and consulted with
them. This approach is reflected in the
Board’s decision-making process and
examples of key decisions are set out in
this section.
To support the recording and reporting
of our section 172 obligations, Board
papers are written so that they include
aspecific section detailing how the
decision the Board is being asked to
make would affect key stakeholders.
Insome circumstances it has led to
decisions being amended to reduce the
impact on certain stakeholder groups.
Meeting tenants and employees
(including those below senior
management level) through our property
tours and Board presentations together
with individual meetings with members of
staff and external advisors on specific
topics, provides an excellent platform
tounderstand the views of our key
stakeholder groups.
The Board also receives regular reports
and feedback from meetings with
investors and analysts, which provide
further insight and discussion on the
views of investors.
The Board undertook two property tours
in Munich and London in 2024, where
Board members were able to interact
withemployees below Board level and
external advisors. They were able to
seethe locations of our buildings and
understand the changing needs of
tenants through different styles of fit out
and design. They also met with a number
of tenants which enabled them to receive
first hand feedback.
Relevant disclosures
The likely consequences of
any decision in the long term
Page 4 CompanyPurpose
Page 1 Dividend Policy
Pages 16-17 Our Business Model
Pages 2-25 Performance Review
Page 32-55 Sustainability
The interests of the
Company’s employees
Page 51-52 and 74 Company Culture
Page 51-55 Diversity and Inclusion
Page 52 and 73 Employee Engagement
Page 51-52 Our People
Pages 2-25 Performance Review
Page 55 Whistleblowing
The need to foster business
relationships with suppliers,
customers and others
Page 108 Modern Slavery
Pages 16-17 Our Business Model
Pages 2-25 Performance Review
Page 41 Responsible Payment Practices
Page 32-55 Sustainability
Page 55 Whistleblowing
The impact of the Company’s
operations on the community
and the environment
Page 4 Purposeand vision
Page 32-55 Sustainability
Page 42-50 TCFD
The desirability of the Company
maintaining a reputation for high
standards of businessconduct
Page 85 Internal Controls
Page 1 Purpose and vision
Page 32-55 Sustainability
Page 55 Whistleblowing
The need to act fairly as between
members of the Company
Page 72 Annual General Meeting
Page 1 Dividend Policy
Pages 28-31 Stakeholder Engagement
Page 32-55 Sustainability
Purpose Vision Strategy
Stakeholders
See pages
28-29
2030 Goals
See page 38 and
Sustainability
Report
Risks
See pages
56-62
Culture
See page 51-52
and 74
Decision
making
See pages
30-31 & 70-71
Purpose-led considerations
Our purpose is to transform office
properties into sustainable, modern
spaces that help businesses to grow.
Our investments are based on long-
term vision, continually modernising a
our portfolio into viable, future focused
and sustainable properties.
Our vision is to be a leading office
space specialist and a supportive,
progressive and sustainably focused
landlord. We achieve this by aligning
our strategic vision to our tenants’
business ambition, reinforcing our
diversification in our key markets
andelevating the importance of
sustainability across all aspects of
ourbusiness.
Our four key values of: collaboration
gets the job done; our tenants our
focus; agility unlocks opportunity; and
openness creates closeness, define
ourculture.
Together, these underpin the decisions
made at every level across the Group.
CLS Holdings PLC Annual Report and Accounts 202430
Refinancing Agreements
Securing the right finance remains one of
the key tenets ofCLS’ business model
and strategy and has delivered significant
value to our stakeholders. As the
property and financing markets have
been challenging post pandemic,
wehave prioritised building in greater
flexibility toour financing agreements
tomitigate against this. We refinanced
and extended all of our 2024 maturity
loans this year and initiated discussions
on a number of 2025 loans. The
execution of our financing strategy in
2024 wasa significant achievement
inthecurrent economic climate, giving
usgreater flexibility and resilience.
Consideration of S172
impactsby the Board
initsdecision making
Investors
1
2
The execution of our financing strategy
materially reduced the Group’s liquidity
and refinancing risks, enhancing our
resilience in the current economic climate
and giving our investors confidence that
the company will continue to deliver on
itsstrategy.
Financial institutions
1
The financing agreements we entered
into this year have strengthened our
relationship with our lenders and ensured
that the terms remain favourable and
beneficial to all parties. Our new
agreements we are party to have also
allowed us to build relationships with
lenders and ultimately expandour
network for financing optionsin
thefuture.
Monitoring sustainability
This year we have carried out numerous
projects in collaboration with the regional
property teams aimed at improving the
efficiency and sustainability of our
portfolio, ensuring we have future ready,
attractive properties. It was estimated
that these projects would save
approximately 300 tonnes CO
2
e per
annum and will put us on track to achieve
further energy and carbon reduction
savings next year. We also continued to
monitor our sustainability reporting and
benchmarking frameworks, which
concluded that CLS is aligned with
bestpractice in this area. We have
implemented our sustainability data
platform which now provides better data
reporting and automation of energy
consumption data, resulting in more
accurate, timely and reliable data that
enables easier third-party verification.
Consideration of S172
impactsby the Board
initsdecision making
Communities/environment
1
3
6
Oversight of our sustainability strategy
incorporating our CSR initiatives ensures
we deliver onour objectives for the
communities inwhich we invest,
promoting education, employment and
our long-term strategic aims to become
Net Zero by 2030. Further details on our
initiatives can be found on page 32
Tenants
1
2
Our sustainability strategy is designed
tosupport our purpose which is to
provide sustainable office space that
helps businesses grow. The Sustainability
Committee is able to monitor and ensure
that we are on track to meet our targets
which in turn deliver cost savings for
tenants through various energy
efficiencyand wellbeing measures.
Dividend Considerations
The Company’s progressive dividend
policy supports the longterm strategic
plan and provides an attractive return
toshareholders.
Through the annual strategic plan, the
Board monitors the Group’s cash flow
position as a result of our desire to
reinvest and grow the portfolio, and
support our vision to be a leading office
space specialist and a supportive,
progressive and sustainability-focused
commercial landlord.
Consideration of S172
impactsby the Board
initsdecision making
Investors
5
The Board concluded that given the
financial and operational performance
ofthe Group against an uncertain
macro-economic background, the 2024
interim dividend was paid at the same
level as the previous year. The Board
reviewed the financial and operational
performance of the Group during 2024
and, given the significant opportunities
within the portfolio to grow net asset
value and retain funds to capture these
opportunities, deemed it in the interests
of the Company therefore its investors to
reduce the final dividend by 50% to 2.68
pence per share.
Employees
4
The Board considered how this would
benefit and reward employees. Our
remuneration structure and annual
outcomes reflect both Group and
individual performance. Additionally,
those employees who own shares in
CLSthrough our Share Incentive Plan
were equally rewarded. Itconcluded
thatthere were significant benefits in
rewarding employees through the
performance of the Group.
Key – Section 172 criteria
1
The likely consequences of anydecision in the
longterm
4
The interests of the Company’s employees
2
The need to foster the Company’s business
relationships with suppliers, customers and others
5
The need to act fairly between shareholders
3
The desirability of the Company maintaining a
reputation for highstandards of business conduct
6
The impact of the Company’s operations on the
community and the environment
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 31
ESG overview
Sustainability Strategy to 2030
Environmental
A positive environmental impact
We will invest in our properties and collaborate with
occupiers to sustainably manage natural resources,
support local environments and build resilience to
climate risks; delivering future-ready assets.
Net Zero Carbon Pathway
See page 38 for details
Social
Creating shared value
We will create and share value with our stakeholders
by engaging collaboratively with our occupiers,
supporting local communities and partnering with
our supply chain.
Social Value Framework
See the Social section
of the 2024 Sustainability
Report for details
Governance
Being a responsible business
Strong governance and transparency will provide
the basis for demonstrating our values, supporting
people and working with our stakeholders to
uphold high standards.
Monitoring and regulatory reporting
See the Governance section
of the 2024 Sustainability
Report for details
Our Sustainability Strategy maps the journey CLS will take up to 2030,
with the key targets and milestones set appropriately to reflect the
position we are starting from against each material element.
Our strategy is summarised below.
We believe that sustainable outcomes
and shareholder returns are not a
zero-sum game. Properly valuing and
integrating sustainability risks and
opportunities into our business strategy
provides resilience to future disruption
and unlocks potential future growth.
Our strategy takes steps to prepare and
adapt our business before regulation
requires it, or the environment and our
customers demand it. A more sustainable
operating model reduces material risks to
our reputation and balance sheet. Crucial
to this is our commitment to being a net
zero carbon business by 2030.
The fundamentals remain the same.
Weare working in line with globally
recognised sustainability frameworks and
targets to have a positive environmental
impact, create shared value with our
stakeholders and be a responsible
business with strong governance
andtransparency.
Explore deeper with our
Sustainability Report
Our separate Sustainability Report,
published alongside our Annual Report,
provides a deeper dive on the data and
work behind making CLS a more
sustainable business and driving our
ESGagenda.
This separate report is designed to
matchnumerous relevant ESG and
sustainability reporting frameworks. It
provides a greater level of transparency,
with substantial amounts of the specialist
data and information these frameworks
require and is useful for many of our
varied stakeholders.
Metrics and Framework Alignment
We align to EPRA sBPR (Sustainability
Best Practices Reporting), SASB
(Sustainability Accounting Standards
Board) and GRESB (Global Real Estate
Sustainability Benchmark) frameworks
and report in accordance with the
SBTi(Science Based Targets initiative)
andCRREM (Carbon Risk Real
EstateMonitor).
Whilst not currently obligated, we
remainwell placed to align reporting
(withminimal changes) to the ISSB
(International Sustainability Standards
Board) standards as well as the EU’s
CSRD (Corporate Sustainability
Reporting Directive) standards.
CLS Holdings PLC Annual Report and Accounts 202432
The table overleaf shows a summary of
key metrics for 2024. The full tables, with
splits by country, can be found in the rear
of the separate Sustainability Report.
These include all the disclosures for
updated EPRA sBPR guidelines,
geographical splits of the data and the
table of SASB indicators. We provide
ourannual sustainability data as a
downloadable file from our website
(inCSV format for easy use).
For more detail, please visit
ourwebsite to read our
Sustainability Strategy and
2024 Sustainability Report
https://www.clsholdings.com/
sustainability/reports/
2024 ESG highlights
Proportion of buildings with BREEAM
In-use ratings of Very Good or above
53%
Proportion of total group electricity
from renewable or carbon-free sources
99.5%
Equivalent social value generated
(excluding supply chain)
£364,500
Employee volunteering hours given
tocommunity and charitable
organisations
856 Hours
Net zero carbon pathway projects
completed
27
Reduction in like-for-like Scope 1 and 2
GHG emissions from 2023
6.9%
2024 in review
We continue to show improvements with
energy and GHG savings on a like-for-like
basis, as well as measures to make our
buildings more efficient and future-ready,
demonstrated by improved EPCs and
BREEAM ratings.
Our work on delivering improved social
value in the communities we operate in
continued with further significant growth
and focus on skills for young people.
Notably, a key new tenant chose to
occupy one of our refurbished assets
partly because of its sustainability
credentials.
Performance and Progress in 2024
Focus Areas
With a narrowed set of focus areas this
year, we made good progress against the
targets we set ourselves, fully achieving
9out of 12 targets.
We again saw energy reductions
generally in line with our Net Zero Carbon
(NZC) Pathway. We were close to our
energy and carbon reduction targets we
set ourselves for the year.
The impact of our projects was
manifested mainly in reduced electricity
consumption. There has been a decrease
in like-for-like landlord electricity
consumption of 12% across the business.
GHG (Greenhouse Gas) emission factors
returned to their downward trend after
the Ukraine war shock on European
energy markets. Combined with our
energy savings this meant our total
Scope 1 and 2 GHG emissions, using
location-based carbon factors, reduced
by 6.9% like-for-like and 1.6% on an
absolute basis. As a result, we were close
to our NZC Pathway target (achieving
closer alignment than in 2023), and in line
with the target we set ourselves at the
beginning of the year.
Scope 3 GHG emissions were
significantly lower than last year due to
reduced spending on construction and
refurbishment projects as our major
projects ended.
We have also worked on improving the
accuracy of our Scope 3 data which has
led to lower Scope 3 emissions reporting
as a result of increased accuracy. This
includes a new tenant energy use
estimation method and use of DEFRA
emissions factors for spend-based
estimations for Scope 3 categories 1, 2
and 6. We have thus restated relevant
2023 GHG emissions figures using these
factors to enable better comparison.
A further 27 energy projects were
completed in 2024 saving an estimated
294 tonnes CO
2
e (tCO
2
e). This was less
than planned, due to some projects
running over and the scaling back of
capital expenditure. We still increased
theproportion of our UK properties rated
EPC A or B to 56%.
We also completed feasibility studies on
most of our fossil fuel heated buildings
toallow heating system electrification
projects to commence in operational
buildings from 2025.
Whilst no more PV or EV chargers were
installed this year, planning has advanced
for installations in 2025/26 in Germany.
Water consumption decreased in line with
more vacancy in some buildings whilst
waste, across our managed buildings,
increased; but interventions meant that
recycling improved also. Our recycling
proportion went from 49% to 58%.
We have maintained the social metrics
which we report on and added the
newEPRA metric on community
engagement. Board and employee
gender balance remained steady as well
as employee turnover. See the People
section (pages 51-52) for more
commentary.
CSR and social value remain important.
We held numerous volunteering events
this year, with over 850 hours of
employee time given and just over
£203,000 of donations (cash and
in-kind) to charities in our focus areas.
Weupdated 31 BREEAM In-Use ratings
this year across our UK, French and
German portfolios. 53% of buildings
arenow rated Excellent or Very Good,
showing our properties are on track to
befit for a sustainable future.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 33
ESG overview continued
EPRA sBPR and SASB Summary data
GHG emissions metrics
(GHG-Dir-Abs, GHG Indir-Abs, GHG-Dir-LfL, GHG-Indir-LfL)
Absolute Like-for-like
2024
tCO
2
e
2023
tCO
2
e Difference %
2024
tCO
2
e
2023
tCO
2
e Difference %
Scope 1 GHG emissions (Direct) 4,868¹ 4,504⁴ 8.1% 4,201 4,236⁵ (0.8)%
Gas 4,259 3,903⁴ (9.1)% 3,655 3,699⁵ (1.2)%
Gas oil 18 8 122.4% 18 8 (122.4)%
Diesel 4 5 (28.6)% 4 5 (19.9)%
Fugitive emissions 588 588³ 0% 524 524³ 0%
Scope 2 GHG emissions
(Energy Indirect – Location-based) 6,939¹ 7,497³ (7.4)% 5,994 6,716⁵ (10.8)%
Electricity (location-based) 3,722 4,176³ (10.9)% 3,267 4,032⁵ (19)%
Purchased Heat (location-based) 3,218 3,321³ (3.1)% 2,727 2,684⁵ 1.6%
Scope 2 GHG Emissions
(Energy Indirect – Market-based) 741¹ 865³ (14.3)% 487 644³ (24.4)%
Electricity (market-based) 1 2³ (50.9)% 1 2³ (50.9)%
Purchased heat (market-based) 740 863 (14.2)% 486 642 (24.3)%
Total Scope 1 and 2 GHG emissions
(Location-based) 11,808¹ 12,001³ (1.6)% 10,195 10,953⁵ (6.9)%¹⁰
Progress against NZC Pathway target 11,5916 – 1.9%¹ ⁹ – – –
Total Scope 3 GHG Emissions (Other Indirect)
2
–
selected categories 25,941 37,472⁴ (30.8)% – – –
Upstream emissions
2
13,750 24,991⁴ (45)% – – –
Downstream emissions
2
12,191 12,481⁴ (2.3)% – – –
Total Scope 1, 2 and 3 GHG emissions
(Location-based) 37,748 49,474⁴
³ (23.7)% – – –
Energy consumption metrics
(Elec-Abs, Elec-LfL, DH&C-Abs, DH&C-LfL, Fuels-Abs, Fuels-LfL, IF-RE-130a.2, IF-RE-130a.3)
Absolute Like-for-like
2024
MWh
2023
MWh Difference %
2024
MWh
2023
MWh Difference %
Electricity
Total purchased electricity for landlord spaces 17,629 18,714³ (5.8)% 15,651 17,788⁵ (12)%
Total purchased electricity sub-metered to occupiers 7,555 7, 4 6 3 1.2% 6,442 7,303 2.5%
Total electricity generated through on-site PV 883 979 (9.8)% 883 965⁵ (8.5)%
Total electricity generated through on-site CHP 269 386 (30.3)% 269 386 (30.3)%
Proportion of electricity obtained from renewable
sources 99.5% 99.5% 0% 99.9% 99.9% 0%
Grid electricity consumed within head offices 163 163 0% – – -
District Heating and Cooling
Total landlord purchased district heating and cooling 10,485 11,213⁴ (6.5)% 8,760 8,696⁵ 0.7%
Proportion of district heating and cooling obtained
fromrenewablesources 12% 11% 9% 14% 13% 4.6%
Fuels
Total direct fuel consumption for landlord spaces 23,283 21,339⁴ 9.1% 19,984 20,224⁵ 2%
Total direct fuel consumption sub-metered to occupiers 16 16 0% 16 16 0%
Total Group energy consumption in landlord spaces
(net of onsite energy generation) 44,395 46,708⁵ (4.9)%¹⁰
Total Group energy consumption in landlord spaces 52,549¹ 52,630⁴ ³ (0.2)% 45,547 48,059⁵ (5.2)%
CLS Holdings PLC Annual Report and Accounts 202434
Intensity metrics
(Energy-Int, GHG-Int, Water-Int)
Absolute Like-for-like
2024 2023 Difference % 2024 2023 Difference %
Total building energy intensity per floor area 91.6 kWh/m² /
yr
104.4 kWh/m² /
yr
(12.3)% 100.6 kWh/m²
/yr
112.4 kWh/m² /
yr
(10.5)%
Total building energy intensity per £ revenue 0.53 kWh/£
revenue/yr
– – – – –
Total Scope 1 and 2 GHG emissions intensity per
floorarea
18.0 kgCO
2
e/
m² /yr¹
20.8 kgCO
2
e/
m² /yr
(13.7)% 19.7 kgCO
2
e/
m² /yr
22.2 kgCO
2
e/
m² /yr
(11.3)%
Total Scope 3 GHG emissions intensity per floor area² 39.5 kgCO
2
e/
m² /yr
65.1 kgCO
2
e/
m² /yr
(39.3)% – – –
Total Scope 1, 2 and 3 GHG emissions intensity per
floorarea²
57.5 kgCO
2
e/
m² /yr
85.9 kgCO
2
e/
m² /yr
(33.1)% – – –
Total Scope 1, 2 and 3 GHG emissions intensity per
£revenue²
0.33
kgCO
2
e/£
revenue/yr
– – – – –
Total building water intensity per floor area 0.29 m³ /m² /
yr
0.37 m³ /m² /yr (21.2)% 0.30 m³ /m² /
yr
0.35 m³ /m² /yr (13.0)%
Total building water intensity per £ revenue 1.68 litres /£
revenue/yr
– – – – -
Water, waste and certificates metrics
(Water-Abs, Water-Lfl, Waste-Abs, Waste-LfL, IF-RE-140a.2)
Absolute Like-for-like
2024 2023 Difference % 2024 2023 Difference %
Water
Total landlord-obtained water 191,552 m³ ¹ 213,151 m³ ³ (10.1)% 157,074 m³ 172,045 m³ ⁵ (8.7)%
% Total water withdrawn in regions with high or
extremely high baseline water stress 52% 42% 23.8% – –
Waste
6
tonnes tonnes tonnes tonnes
Total waste collected 1,383¹ 1,251 10.6% 1,249 1,084 15.3%
Total non-hazardous waste 1,383¹ 1,251 10.6% 1,249 1,084 15.3%
Total hazardous waste 0 0 0% 0 0 0%
Total waste recycled 802¹ 619 29.6% 698 543 28.6%
Total waste incinerated with energy recovery 581¹ 632 (8.1)% 552 541 (2)%
Proportion of waste recycled 58%¹ 49% 17.2% 56% 50% 11.5%
Proportion of waste incinerated with energy recovery 42%¹ 51% (16.9)% 44% 50% (11.5)%
For data on mandatory and voluntary certifications across our portfolio (Cert-Tot) including measuring levels of certification attained
in EPCs and BREEAM In-Use and percentage coverage by both portfolio value and floor area, see the Sustainability Report.
1 2024 figure Independently Assured by DNV.
2 CLS currently only reports absolute Scope 3 emissions, therefore no like-for-like breakdown has been provided.
3 Figure restated due to use of revised calculation method.
4 Figure restated due to replacement of estimated data or availability of new data.
5 Figure restated with revised set of buildings aligned with EPRA sBPR guidelines.
6 2024 NZC Pathway target total Scope 1 & 2 emissions (absolute).
7 This figure was likely under-reported due to new introduction of LEARN system, tracking employee training.
8 Excluding employees on maternity leave and fixed term contractors who are not subject to annual appraisals.
9 Percentage difference between NZC Pathway target and actual Scope 1 and 2 emissions.
10 Figure used for Group energy and carbon sustainability KPI.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 35
ESG overview continued
EPRA sBPR and SASB Summary data continued
Social metrics
(Diversity-Emp, Emp-Training, Emp-Dev, Emp-Turnover, H&S-Emp, H&S-Asset, H&S-Comp, Comty-Eng)
2024 2023 Difference %
Gender Diversity
All employees – %offemaleemployees 49% 48% 2%
Board of Directors – %offemaleemployees 38% 40% (5)%
Training
Average hours of training – allemployees 19 10 243%
Performance Appraisals
Percentage of all employees who received performance appraisals⁸ 100% 100% 0%
Turnover
Total number of new employee hires 21 17 24%
Total rate of employee turnover 25% 25% 0%
Health and Safety
Employee health and safety – Injury rate (UK only)/absentee rate (days/employee) 36/5.2 97/- –
Percentage of assets with health and safety assessments 100% 100% –
Incidents of non-compliance with asset health and safety regulations and standards 0 0 –
Community
Percentage of assets with community engagement, impact assessments & development programmes 83% –
Governance metrics
(Gov-Board, Gov-Selec & Gov-COI measures)
Refer to Corporate Governance Section for data and information covering the composition of the Board and the process for
nomination and selection as well as the process for managing conflicts of interest.
Regulated Reporting and Methodology
The disclosures included in this ESG section cover the following reporting
requirements that we are subject to as a UK publicly listed company:
• Greenhouse gas (‘GHG’) reporting requirements defined within the Companies
Act 2006 (Strategic Report and Directors’ Report) Regulations 2013.
• Energy reporting requirements under the Streamlined Energy and Carbon
Reporting (‘SECR’) requirements in the Companies (Directors’ Report) and
Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.
• Climate-related financial disclosures consistent with recommendations from the
Financial Stability Board’s Task Force for Climate-Related Financial Disclosures
(TCFD), as required under current UK Listing Rules.
The scope, boundary and methodology adopted for the calculation of the Scopes 1,
2 and 3 GHG emissions, SECR metrics, and other environmental and social
indicators are set out in the Sustainability Metrics: Scope, Boundaries &
Methodology section in the back of our detailed Sustainability Report.
Independent Assurance
For the fifth consecutive year we
engaged DNV Business Assurance
Services UK Ltd (DNV), an
independent expert in assurance
andrisk management, to undertake
limited independent assurance.
Theassurance scope covers water,
waste, energy and Scope 1, 2 and
selected Scope 3 GHG emissions,
EPRA sBPR metrics as well as
progress on our NZC Pathway.
The specific metrics that have been
subject to assurance are identified in
the relevant data tables.
CLS Holdings PLC Annual Report and Accounts 202436
ESG priorities for 2025
In the year ahead our key priority is to
continue delivering future energy and
carbon reductions to progress our
NZCPathway. This includes a focus on
decarbonising heating systems, further
roll out of energy efficiency measures,
and commencing EV charging and PV
installations in Germany.
We will continue our focus on
engagement with our tenants and supply
chain, key to improving Scope 3 GHG
emissions (our largest emissions
segment), social value and other
environmental metrics. With our state-of-
the-art online data platform operational,
we now want to share insights and
reporting with our occupiers and
stakeholders in an improved way.
We will continue work on improvements
inother environmental areas with a
particular focus on biodiversity this year,
alongside our continuing programme of
green building certifications using
BREEAM In-Use.
On social value, our goal is to focus our
work better, broaden our measurement
and maintain our social value particularly
around helping young people develop
their skills in the work place.
We will also continue to focus more
heavily on compliance as we seek to
address regulations in EU states including
the French Décret Tertiaire regulations.
Finally, the team will review our
Sustainability Strategy and Net Zero
Carbon Pathway to ensure its ongoing
relevance.
In the year ahead
our key priority is to
continue delivering
future energy and
carbon reductions
to progress our
Net Zero Carbon
Pathway
Focus Areas
• Reduce GHG emissions 2% like-for-like
• Deliver on key building heating electrification projects
• Implement initiatives to rewild grassland
• Conduct a halfway review of the Sustainability Strategy and Net Zero
Pathway including key targets and commitments (e.g. company and
building sustainability certifications)
• Conduct tenant satisfaction surveys and review wellbeing
• Increase engagement with our tenants and supply chain, including
data collection and reporting, to improve sustainability KPIs
(e.g.Scope 3 GHG emissions, energy, waste, water and social value)
• Include supply chain in social value measurement and review
measurement methods
• Ensure EPRA award and GRESB rating are maintained
• Achieve compliance with prompt payment code
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 37
Net Zero Carbon Pathway to 2030 Summary chart
Adjusted
baseline
Business
as usual
Electricity de
carbonisation
Energy
efficiency &
F-Gas phase
down
Maximise
onsite solar
energy
Upstream &
downstream
measures
Carbon
offsets
ESG overview continued
Spotlight on Net Zero Carbon Progress
Spotlight on Net Zero Carbon
Progress
Our Net Zero Carbon Pathway is built
from asset-level energy audits creating a
robust technical evidence base of the
energy and carbon saving opportunities
and costs for each property. These have
been aggregated into a Group-wide
model to calibrate our targets, strategy
and capital expenditure plans. In addition,
they have been incorporated into
individual asset management plans to
enable strategic decisions about the
refurbishment, sale or full redevelopment
of assets to be made.
Where refurbishment is viable, the
projects highlighted in the energy audit
are incorporated into Net Zero Carbon
Asset Management Plans for each
building to ensure the optimal timing and
allocation of capital over the course of
the pathway, to achieve our carbon
reduction targets. These plans have
resulted in a timeline of carbon reduction
through to 2030, which will be constantly
updated as expenditure is incurred at
each asset. These plans are reviewed
each year to incorporate technology
improvements as well as any acquisitions
or disposals.
We have included the full portfolio of
buildings in our NZC Pathway and report
on progress against our targets, projects
completed and delivery costs. The
pathway includes a 65% reduction (giving
a buffer on our 42% commitment) in
Scope 1 and 2 GHG emissions and a 27%
reduction in Scope 3 emissions by 2030
against a 2020 baseline. The plans are
aligned to meet or exceed our SBTi
target (42% reduction required) as well as
the CRREM pathways for 2030.
Residual GHG emissions in 2030 will be
addressed with appropriate and robust
carbon offsets. We are continuing to
monitor options for offsets and will
provide more details once the regulatory
environment is more certain.
We have verified that our NZC plans for
each building align with anticipated
regulatory changes (e.g. MEES in the UK
and Décret Tertiare in France) and include
appropriate costs to meet these. Our
focus for this year was on feasibility
studies, where fossil fuel heating needs
to be replaced. This was to ensure NZC
plan risks are well managed.
Energy Efficiency and Carbon
Reduction Projects
During 2024, we delivered a variety of
projects to improve energy efficiency
and reduce energy costs in our buildings
in the UK, Germany and France.
We completed 27 carbon reduction
projects from the NZC Pathway at a cost
of £0.8 million. The projects save an
estimated 294 tCO
2
e annually. Whilst a
significant reduction compared to 2023,
this was in line with our reduced capital
spending on refurbishment. Similar to
2023, they included:
• Replacement of ventilation and cooling
plant and equipment with higher
efficiency units;
• Replacing old extractor fans and old
motors in air handling units with
speed-controlled EC equivalents;
• Improving ventilation fan controls in car
parks and toilets (e.g. carbon monoxide
and time controls);
• Replacing old light fittings in common
areas and tenant areas, including
emergency lighting and external and
carpark lighting with LED lighting and
automatic lighting controls; and
• Upgrades to controls including
introducing Building Management
Systems (BMS).
In addition, there were also simple
operational changes to BMS and control
systems adjustments where they were
inefficiently deviating from optimum
settings.
CLS Holdings PLC Annual Report and Accounts 202438
13%
18%
32%
23%
10%
4%
GHG Intensity kgCO
2
/m
2
40
35
30
25
15
10
5
0
2024 2025 2026 2027 2028 2029
2030
tC02e
20 21 22 23 24 25 26 27 28 29 30
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Spotlight on Net Zero Carbon Progress
SECR Measurables 2024 2023 % Change
Total Scope 1 & 2 GHG emissions (GHG-Indir-Abs-Scope 1 & Scope 2) tCO
2
e 11,808¹ 12,001² (1.6)%
GHG Emissions intensity ratio (GHGInt) – Scope 1 & 2 emissions per net lettable floor area
(kg CO
2
e/m²) 18.0¹ 20.8 (13.7)%
Underlying global energy use (MWh) Total Energy-Abs 52,549¹ 52,630² (0.2)%
UK energy use (MWh) Total Energy-Abs 25,430 23,195 9.6%
Offshore energy use (MWh) Total Energy-Abs 27,119 29,436² (7.9)%
Scope 3 GHG Emissions Selected Categories 2024 (tCO
2
e) 2023 (tCO
2
e) % Difference
Category 1: Purchased goods and services 3,790¹ 3,603² 5.2%
Category 2: New construction and other capital goods 8,611¹ 19,853² (56.6)%
Category 3: T&D and WTT losses 1,085¹ 1,145 (5.2)%
Category 5: Water and waste treatment 44¹ 70 (37.1)%
Category 6: Business travel 162¹ 253 (36.0)%
Category 7: Employee commuting, including homeworking 58¹ 68 (14.7)%
Category 13: Sub-metered utilities, & occupier-controlled utilities 12,191¹ 12,481² (2.3)%
Total Scope 3 GHG Emissions Selected Categories 25,941 37,472² 30.8%
An example of a completed project is the
installation of self-learning thermostats at
Adlershofer Tor which is expected to
achieve savings of c.122,400 kWh/year.
We continued to expand our coverage
ofAutomatic Meter Reading (‘AMR’)
technology across our utility supplies in
2024. 78% of our main utility meters in
managed assets now have AMR and
include the expansion of smart water leak
detection in the UK.
Streamlined Energy and Carbon
Reporting (SECR)
As a listed company, we are required
toreport in accordance with SECR
regulations. The table below provides a
summary of the required measurables
(aligned to the EPRA sBPR performance
measures on page 34). This, along with
the previous section on Energy Efficiency
Projects, forms our disclosure. More
detailed figures are provided in the
Sustainability Report in the Extended
Sustainability Metrics section along
withcalculation details in the Scope,
Boundaries & Methodology section.
1 2024 figure Independently Assured by DNV.
2 Figure restated due to use of revised calculation method or data.
 Scope 1
 Scope 2
 Scope 3 – Downstream leased assets
  Scope 3 – New construction and other capitalgoods
 Scope 3 – Purchased goods and services
  Scope 3 – Waste generated in operations, Water,
Employee commuting, Business travel,
Fuel and energy related activities
Total group Scope 1, 2 and 3
GHG emissions 2024 (tonnes CO
2
e)
37,748
Projected CLS GHG intensity vs CRREM v2 pathway
 
CLS GHG intensity projected
 
CRREM 1.5°C (Carbon)
CLS progress vs Net Zero Carbon Pathway
 
Actual
 
Projections
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 39
ESG overview continued
Environmental Summary
2024 Focus Areas and Performance
Target Performance
Energy & Carbon
Reduce carbon emissions and energy use in line with the NZC
Pathway model (>3% like-for-like)
Achieved • Scope 1 & 2 GHG emissions reduced
by 6.9% like-for-like
• Absolute GHG emissions are just 1.9%
above our Net Zero Carbon Pathway
target
• Landlord energy use reduced by 4.9%
like-for like, led by an electricity use
reduction of 12%
Energy & Carbon
Ensure completion of relevant planned NZC energy efficiency
and PV projects for 2024 and capex plans set for key large NZC
projects due prior to 2030
Achieved • 27 NZC Pathway projects completed
costing £0.8 million and saving an
estimated 294 Tonnes of CO
2
e per
year
• Feasibility studies completed on nearly
all gas heated buildings to plan for
heating electrification capex for
2025-2030
Data
Review utilities metering and monitoring systems in each region
and action any changes required to ensure they are providing
accurate and timely data
Partially
Achieved
• Sustainability data platform rolled out
to undertake 2024 reporting
• Utilities metering continued to improve
with 78% smart metering
Key Environmental Highlights
Percentage of smart metering
on main utilities
78%
Percentage of UK Properties
rated EPC A or B
56%
Landlord energy use
reduced by 4.9%
like‑for‑like, led by
an electricity use
reduction of 12%
CLS Holdings PLC Annual Report and Accounts 202440
Key Social & Governance Highlights
Equivalent social value
generated (excluding
supply chain)
£364,500
Employee volunteering
hours given
856
Maintained Living Wage
Employer accreditation
EPRA SBPR
Gold award achieved
Social & Governance Summary
Social & Governance Summary
2024 Focus Areas and Performance
Target Performance
Stakeholder Engagement
Increase engagement with our tenants and supply chain,
including data collection and reporting, to improve sustainability
KPIs (e.g. Scope 3 GHG emissions, energy, waste, water and
social value)
Partially
Achieved
• Waste reduction engagement
commenced in the UK this year
• Continued work on providing data for
tenants sustainability reporting
• Supply chain engagement work
partially deferred until 2025
Supply Chain
Implement key actions to improve compliance with prompt
payment code
Achieved • Accounting processes were revised
and significant improvements achieved
particularly in the UK
• 95% of UK SMEs paid within 30 days
and 99% of all suppliers paid within 60
days, ensuring compliance with prompt
payment code
Social Value
Further grow our social value focussing on measures under
‘Improved employability of young people’ outcome
Achieved • Reached £364,500 social value
generated by our own work
• Continued youth work with National
Literacy Trust and new partner Black
Prince Trust
Regulation & Risk
Ensure the business is working towards compliance with key
future regulations (i.e. MEES, Decret Tertiare, Decret BACS,
ISSB standards/TCFD and CSRD/EU taxonomy)
Achieved • MEES (UK) and Decret Tertiaire (FR)
compliance is on track. 56% of UK
buildings now EPC A or B
• Updated annual reporting output in line
with new version of EPRA sBPR to
better align with future regulations
• Undertook preliminary EU Taxonomy
assessments and data platform in place
for future assessments
Reporting
Improve the efficiency and effectiveness of sustainability/ESG
data reporting internally and externally by rolling out a new
sustainability data platform
Partially
Achieved
• Sustainability data platform rolled out
to undertake 2024 reporting
• Tenant reporting delayed until 2025
Reputation & Ratings
Build CLS’ reputation externally on sustainability and ensure
EPRA award and GRESB rating are maintained
Achieved • GRESB 4 Stars
• EPRA sBPR Gold Award
• Head of Sustainability presented on
CLS work at 3 major conferences
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 41
We recognise that the impacts of
climatechange, such as higher average
temperatures, alongside changes to
technology, markets, policy, regulation
and consumer sentiment, on the pathway
to a net zero carbon economy, create
risks and opportunities that could have
material impacts on the value of the
company and our assets.
CLS has made climate-related financial
disclosures as required under UK Listing
Rules. These are consistent with
recommendations from the Financial
Stability Board’s Task Force on Climate-
Related Financial Disclosures (TCFD)
which are now part of the IFRS
Sustainability Disclosure Standards (i.e.
IFRS S2) developed by the International
Sustainability Standards Board (ISSB).
We are fully compliant with all 11
recommendations. This includes showing:
how climate change considerations
areintegrated into our governance
processes; the potential impacts on our
strategy and financial planning; how they
are incorporated in risk management; and
the relevant climate-related metrics and
targets that CLS uses to drive action.
The tables and sections below summarise
our responses to the recommended
disclosures of the TCFD framework and
signposts the location of additional detail
within our separate comprehensive 2024
Sustainability Report published
concurrently.
We have documented the details of
somedisclosures elsewhere (e.g. the
Sustainability Report) to meet the needs
of our stakeholders to minimise the
length of this Annual Report.
Governance
Reporting Requirements
(as per regulations) CLS Disclosure
Additional Information/
References
Description of
thegovernance
arrangements
inrelation to
assessing and
managing
climate-related
risks and
opportunities
A)
The Board’s
oversight of
climate-related risks
and opportunities
The Board has clear oversight of climate-related matters and
is responsible for overseeing our approach to all material
climate related risks and opportunities. The Board receives
regular briefings on such issues and through CLS’ governance
framework, can effectively delegate to the appropriate
sub-committees and individuals. Given the risks and
opportunities arising from climate change impact various
aspects of our operations, the Board’s sub-committee
includes representation from department heads. This ensures
company-wide management of climate-related risks and
opportunities using a “top down, bottom up” approach.
Division of
Responsibilities
page 75
Our Risk
Management
Structure page 56
B)
Management’s role
in assessing and
managing climate-
related risks and
opportunities
The CEO maintains the overall responsibility for the
management ofclimate-related risks and opportunities,
supported by the COO andHead of Sustainability. The CLS
Sustainability Committee, whichcomprises key department
leads (including the COO, Head ofSustainability and regional
property heads), forms a key part of the management
structure. As part of the Committee’s quarterly meetings,
theimpacts of climate change on the business are reviewed.
Performance against climate related KPIs (outlined in
theKPIsand Targets section below) are assessed to
determine if andwhat actions are required to manage risks
andopportunities. Actions are assigned to the relevant
department heads, ensuring robust management across all
business operations. For further details on the division of
responsibilities across the organisation andthe process by
which climate-related issues are communicated, including
upwards to the Board, please see ourGovernance Framework.
To embed a further level of accountability, we link climate-
related performance measures into our Remuneration Policy
for the Executive Directors’ bonuses.
Division of
Responsibilities
page 75
Remuneration
Committee Report
page 92
ESG overview continued
Climate-related Financial Disclosure
CLS Holdings PLC Annual Report and Accounts 202442
Risk Management
Reporting Requirements
(as per regulations) CLS Disclosure
Additional Information/
References
Description of how
CLS identifies,
assesses,
andmanages
climate-related
risks and
opportunities
A)
Description of CLS
processes for
identifying and
assessing climate-
related risks
Climate-related transition risks and opportunities are identified
and assessed by the CLS Sustainability team and documented
inthe Sustainability Risk Register. The Register is reviewed by
the Sustainability Committee on at least an annual basis and,
where necessary, updated to reflect the ever-changing
regulatory landscape, global socio-economic conditions and
stakeholder demands, amongst other issues.
Physical risks are identified and assessed on both an asset and
portfolio level using the Jupiter Intelligence ClimateScore
Global platform. Using the latest climate science, we identify
risks and assess the level of exposure of our buildings to a
rangeof acute and chronic climate hazards, over different
time horizons, against different climate scenarios. Using the
platform, wealso quantify the level of risk from a financial
perspective, providing oversight of the cost of action versus
inaction. Like transitional risks/opportunities, all material
physical risks are summarised, as applicable, in the
Sustainability Risk Register which is reviewed and updated
annually. Both physical and transition risks and opportunities
are reviewed bytheSustainability Committee in accordance
with TCFD guidance and Companies (Strategic Report)
(Climate-related Financial Disclosure) Regulations 2022.
To align our assessment of CLS’ key areas of risk and
opportunity associated with climate change to future
reporting frameworks (e.g. ISSB standards), we will look at
updating our previous materiality assessment in our strategy
review, and update the Sustainability Risk Register, if required.
Sustainability
Report –
Sustainability Risk
Register Summary
2024 section
Sustainability
Report – Climate-
related Risks &
Opportunities
section
B)
Description of CLS
processes for
managing climate-
related risks
Fundamentally, climate-related risks and opportunities are
managed in accordance with CLS’ group-wide approach to
riskmanagement. Once identified, physical and transitional
risksand opportunities are managed using the mitigations
andcontrols outlined within our Sustainability Report and
Climate Resilience Plan. Day-to-day management is owned
bythe Sustainability team in conjunction with the Group’s
Sustainability Committee, which meets on a quarterly basis.
Theteam has significant knowledge and experience of
climate-related and sustainability matters. In addition, we
utilise the services of expert third party consultants where
necessary. Training and presentations are provided to the
Board and management to maintain up-to-date industry
knowledge. TheBoard has experience in advising both
listedand non-listed organisations on their approach to
ESGmatters in the built environment and across
corporatedisciplines.
Sustainability
Report – Climate-
related Risks &
Opportunities
section
Climate Resilience
Plan
Risk Management
section pages
56-62
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 43
Reporting Requirements
(as per regulations) CLS Disclosure
Additional Information/
References
Description of how
CLS identifies,
assesses,
andmanages
climate-related
risks and
opportunities
C)
Description of how
CLS processes
foridentifying,
assessing and
managing climate-
related risks are
integrated into
CLSoverall risk
management
The Group risk management strategy involves the ongoing
assessment and management of six principal risks, considered
those that have the greatest impact on our business strategy.
The principal risks act as a centralised risk repository involving
an annual evaluation of risk profiles and an analysis of the
impacts on the Group’s business model. It also provides the
structure to assign the appropriate controls. Sustainability is
represented within the six principal risks as it is considered that
climate-related transition and physical risks are “key risks” to
the business. All transition and physical risks are included in
theSustainability Risk Register which is maintained by the
Sustainability team and reviewed by the Sustainability
Committee on at least an annual basis or when a material
change in the risk landscape occurs. Climate-related risk
profiles are reviewed and relevant controls are assigned based
on the ongoing evaluation of the Sustainability Risk Register.
Furthermore, climate risks, opportunities and any necessary
responses are managed across the same time horizons used
by the Group to establish any emerging risks (page 62)
ensuring their inclusion in short, medium and long-term
business planning.
Sustainability
Report –
Sustainability Risk
Register Summary
2024 section
Risk Management
section pages
59-62
Strategy: Principal Risks & Opportunities
This section sets out the principal physical and transitional climate-related risks and opportunities arising in connection with our
operations and the scenarios, including timeframes, over which these risks and opportunities develop.
Only the material risks and opportunities to the business are outlined below. Further details and risk analysis are presented inthe
Sustainability Report including commentary on the updates to the ClimateScore Global platform data analysis methodology.
We have assessed the risks and opportunities presented to the business using two possible climate change scenarios; a 1.8ºC
global warming trajectory (aligned with Shared Socioeconomic Pathway (SSP) 1 and Representative Concentration Pathway (RCP)
2.6) and a 4.4ºC trajectory (aligned with SSP 5 and RCP 8.5). Risks and opportunities are also considered against three different
timeframes: short (< 1 year); medium (until 2030); and long-term (beyond 2030). The two climate change scenarios ensure we
identify, assess and manage risks and opportunities across a full spectrum of global warming scenarios. The time frames against
which we assess risks and opportunities have been selected to align with the Group’s overall approach to risk management (please
see pages 62) which establishes the time horizons the Group uses. The timeframes used mean we are able to capture climate-
related risks and opportunities in an optimal way given the nature business and how it operates.
Time Horizon Our Approach
Short term (< 1 year) Our annual strategic budgeting process combined with the individual NZC Asset
Management Plans (see page 38), ensures that the necessary resource and capital
required to mitigate the impacts of climate change and maximise any opportunities,
isidentified and allocated to each property on a yearly basis.
Medium term (until 2030) We are acting now, until 2030, to meet the targets set out within our NZC Pathway.
Our NZC Asset Management Plans ensure we respond to both transitional and
physical climate-related risks whilst decarbonising our operations in line with our
science-based target timeframe.
Long term (beyond 2030) Our assets typically have a lifespan of over 50 years. The identification of long-term
risks (i.e.beyond 2030) is thus critical for our business model, especially investment
allocation and development decisions. Consideration of long-term risks and
opportunities is fundamental in ensuring our portfolio remains resilient in the decades
to come.
ESG overview continued
Climate-related Financial Disclosure continued
CLS Holdings PLC Annual Report and Accounts 202444
Strategy: Climate-related Physical Risks Summary Table
We have used the Jupiter Intelligence ClimateScore Global platform to perform analysis and prioritisation of climate-related
physical risks associated with well-known hazards. These are summarised in the table below. More details of the analysis from
theClimateScore Global platform is provided in the risk tables in the Sustainability Report including hazard likelihood and impact
ratings. Inthe review of risks and opportunities by the Sustainability Committee, it was agreed there are currently no material
opportunities associated with physical climate change related to our current business model over and above providing high
qualitybuildings with strong sustainability credentials which meet regulatory standards.
Scenario Short term (< 1 year)
Medium term
(until2030) Long term (beyond 2030)
SSP 1/RCP 2.6
Approximately 1.8°C
warming by 2100. A
scenario in line with
the United Nations
Climate Change
Agreement of 2015.
According to the
IPCC, it requires
thatgreenhouse
gasemissions
startdeclining
immediately and
reach zero by 2100.
This relies on global
implementation of
stringent climate
policies.
Low risks
Across the portfolio,
hazard levels are
highest for Flooding
and Drought.
A 1 in 100-year flood
event, with water
depth exceeding
2m, would impact
8% of the portfolio.
48% of the portfolio
could be exposed to
drought which could
impact building
operations without
appropriate
mitigations and
controls.
Impacts
Disruption at
buildings leading
toreactive
maintenance adding
to operating costs
and possible tenant
dissatisfaction.
No material
change from
the short term
Marginal increases
inrisks
No significant
change to overall
portfolio exposure.
Forexample, slightly
warmer summers are
expected butthese
do not pose
significant risk of
heat stress.
Impacts
Slightly increased
disruption at buildings
leading to increased
reactive maintenance
costs and possible
tenant
dissatisfaction.
SSP 5/RCP 8.5
Approximately 4.4°C
warming by 2100. A
‘business as usual’
high-emissions
scenario. This
scenario is
consistent with
nomajor policy
changes or industry
moves to reduce
emissions globally
leading to high
atmospheric GHG
concentrations.
Low risks
Flooding and
Drought remain the
most significant
hazards in a high-
emissions scenario.
The change to the
risk profile compared
with SSP1 is
immaterial (given
thetimeframe).
Impacts
Impacts as per the
SSP1 warming
scenario.
No material
change from
the short term
Material increases
in risks
Portfolio impacted
by hotter, drier
summers; warmer,
wetter winters and
more frequent
severe weather
events. Sea level rise
and increases in river
peak flows put
additional strain on
the flood defences
which may cause
flood defence
failures across the
regions.
Impacts
Increased disruption
at buildings leading
tosignificantly
increased reactive
maintenance
costsand tenant
dissatisfaction.
Significantly
increased insurance
premiums.
Increased capital
allocation for
buildingretrofit/
refurbishment
projects to meet
potentially higher
insurance
requirements/
buildings standards.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 45
Strategy: Climate-related Transitional Risk & Opportunities Summary Table
Climate-related transitional risks were considered during the development of the NZC Pathway. These are reviewed at least
annually by the Sustainability Committee to ensure that any material changes are captured. More detail is provided in the risk tables
in the Sustainability Report including hazard likelihood and impact ratings. Note that we have blended the material opportunity of
increased occupier demand forlow-carbon buildings with the risk of failing to provide net zero aligned buildings, asit can be seen
both ways and the resulting actions/mitigation is the same.
Scenario Short term (< 1 year)
Medium term
(until2030) Long term (beyond 2030)
SSP 1/RCP 2.6
SSP 1/RCP 2.6
Approximately 1.8°C
warming by 2100. A
scenario in line with
the United Nations
Climate Change
Agreement of 2015.
According to the
IPCC, it requires
thatgreenhouse
gasemissions
startdeclining
immediately and
reach zero by 2100.
This relies on global
implementation of
stringent climate
policies.
Medium risks
Associated with
existing regulations,
for example, MEES
and Décret Tertiaire
as well as local
planning
requirements
favouring low
embodied carbon
development
schemes. In
addition, there is
increasing occupier
and investor
demand for
assetswith high
sustainability
credentials.
Impacts
Capital allocation
for building retrofit/
refurbishment
projects as per our
NZC Pathway and
Sustainability
Strategy.
No material
change from the
short term
High risks
Impact of
regulations
including MEES and
Décret Tertiaire.
Carbon tax –
potential for the
built environment to
be included in UK
Emissions Trading
Scheme.
Operational and
embodied carbon
obligations for
development
schemes.
Continued increase
in occupier and
investor demand
for ESG.
Impacts
Capital allocation for
building retrofit/
refurbishment
projects as per our
NZC Pathway and
Sustainability
Strategy.
Increased operating
costs e.g. cost of
energy.
SSP 5/RCP 8.5
Approximately 4.4°C
warming by 2100.
A‘business as usual’
high-emissions
scenario. This
scenario is
consistent with
nomajor policy
changes or industry
moves to reduce
emissions globally
leading to high
atmospheric GHG
concentrations.
Medium risks
Risks remain
consistent with the
SSP 1 scenario.
Impacts
Impacts remain
consistent with the
SSP 1 scenario.
No material
change from the
short term
Material increases
in risks
Like all other
commercial
landlords operating
in Europe, as
adaptation
measures are
adopted to cope
with changes in
climate and the
associated physical
risks.
Impacts
Increased capital
allocation for
buildingretrofit /
refurbishment
projects outside
ofthat captured in
NZC Pathway and
Sustainability
Strategy.
Increased operating
costs e.g. cost of
energy.
ESG overview continued
Climate-related Financial Disclosure continued
CLS Holdings PLC Annual Report and Accounts 202446
Strategy: Business Model & Strategy Resilience
The tables below outline the financial and strategic impacts of transitional and physical climate-related risks on CLS’ operations
and explains how our business strategy is designed to mitigate and respond to these impacts, ensuring our portfolio and business
model remains resilient in the long-term. We only outline the impact of transitional risk under SSP 1/RCP 2.6 as this climate scenario
requires the greatest level of transition and aligns with our financial and strategic planning. We outline physical risk in both climate
scenarios.
Scenario 1 – SSP 1/RCP 2.6
Summary risk potential Financial impact Strategy impact potential Financial plan impact potential
Physical The capital allocated to deliver the
targets set out in our NZC
Pathway, Sustainability Strategy
and Climate Resilience Plan,
amounts to an estimated £65
million between 2021 and 2030.
This investment will ensure the
necessary adaptation measures
and mitigating controls are
implemented across our portfolio.
Furthermore, our properties are
insured against all weather hazards
and critical incidents (e.g.
flooding) and following
discussions with our insurance
brokers, there will be no material
change to our insurance premiums
in the medium term, including for
buildings considered at higher risk
of flooding, for example.
Our active asset management
approach, in line with our
Sustainability Strategy, NZC
Pathway, Climate Resilience
Planand overall Group strategy,
means our properties undergo a
programme of upgrades and
future proofing to address
physicalclimate risks. This process
is manageable within current
planned capital allocations.
Assuch, we are confident our
business model will remain resilient
in the long term.
As above, annual budgets factor in
investment aligned with the NZC
Pathway, Sustainability Strategy
and Climate Resilience Plan
meaning we expect no material
impact on our future financial
planning.
Transitional The Group’s NZC Pathway is
underpinned by individual
property energy audits which
identify energy and carbon saving
opportunities. As per the above,
the investment allocated to
deliverthe NZC Pathway and
auditfindings (as well as our
Sustainability Strategy and
Climate Resilience Plan) amounts
to an estimated £65 million. We
have integrated the energy audits
into individual Asset Management
Plans to enable strategic decisions
about the refurbishment, sale or
full redevelopment of our assets
to be made. In addition, we report
against all relevant mandatory
GHG, energy and ESG reporting
frameworks as well as several
voluntary disclosures (see page
32), ensuring we meet all current
and future regulation.
Our Sustainability Strategy, NZC
Pathway and Climate Resilience
Plan align with our business model
and overall strategy. Notably,
ouractive asset management
approach continuously upgrades
our portfolio of buildings to meet
energy and carbon targets and is
manageable within current
planned capital allocations. Given
this, our analysis suggests our
business model and strategy
remain resilient in the short to
medium term to climate-related
transition risks in all scenarios by
following the actions and targets
inour Sustainability Strategy,
NZCPathway and Climate
Resilience Plan.
In the short term, annual budgets
already factor in investment
alignedwith the NZC Pathway
andSustainability Strategy. In the
longer term, our strategic budgets
and investment programme
includes the estimated £65 million
from 2021 to 2030 to prevent
obsolescence (i.e. not meeting
future climate standards) and
creates a resilient portfolio.
Relative to our peer group of
commercial landlords with
properties in UK, German & French
cities, we see no major differences.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 47
Scenario 2 – SSP5/RCP 8.5
Summary risk potential Financial impact Strategy impact potential Financial plan impact potential
Physical The £65 million investment
allocated to deliver our NZC
Pathway, Sustainability Strategy
and Climate Resilience Plan,
between 2021 and 2030, will
ensure comprehensive and robust
mitigation measures and controls
are implemented across our
portfolio. Our analysis of the short,
medium and long-term hazard
levels associated with climate
change across the UK, Germany
and France (see Climate-related
Risks & Opportunities section of
the Sustainability Report),
highlight some adaptation
measures will be necessary but
this will be covered by the capex
we have already identified and
allocated in the medium-term.
Furthermore, any physical
modification costs (i.e. potential
costs associated with introducing
additional flood defences or
overheating protection to
properties) are considered
non-material as project costs are
likely to be relatively insignificant
and only affect a small minority of
our buildings.
Our analysis gives us confidence
inthe resilience of our strategy, as
we are supporting the transition
toa low-carbon world whilst
managing the impact of climate-
related risks to our portfolio.
Although it does not undermine
our overall model as a commercial
landlord, we recognise our
strategy and adaptation measures
may need to evolve in the long
term under a >4ºC warming (i.e.
SSP 5) scenario. This may involve
measures including divestment of
assets which are less resilient to
extreme heat and rainfall (as part
of a holistic asset assessment), or
investment into additional building
infrastructure to limit the impact
of flooding, coastal surge and
extreme heat. This scenario could
also result in changes to our
customers’ and supply chain
partners’ businesses, including
business failures, or supply chain
disruption. Increased due
diligence in supply chain selection
may be required, particularly
considering the sourcing of
construction materials which may
be processed or manufactured in
countries where the effects of
climate change are more extreme.
We do not expect this to impact
tenant demand for workspace.
In the medium to long-term, whilst
our Sustainability Strategy, NZC
Pathway and Climate Resilience
Plan still apply, we note that capital
allocations and operating costs
(e.g. insurance premiums) may
exceed current planning to meet
future standards. However, we fully
expect this will be in line with our
peer group of commercial
landlords with properties in UK,
German and French cities.
ESG overview continued
Climate-related Financial Disclosure continued
CLS Holdings PLC Annual Report and Accounts 202448
Metrics & Targets
Metrics for tracking climate-related transition and physical risks are shown in the tables below. More details on the targets and
calculations are in the referenced documents. Some metrics are independently assured as indicated in the tables.
Note that most targets and metrics used to manage climate related transitional risk are drawn from our Sustainability Strategy and
NZC Pathway whilst targets for managing physical risks are taken from our Climate Resilience Plan. Interim focus areas and targets
are established and reviewed year on year by the Sustainability Committee.
As per the Scope, Boundaries & Methodology 2024 section of the Sustainability Report, GHG emissions are calculated in line with
the GHG Protocol guidance. Further detail on the interlinkage between our metrics and targets and risks and opportunities can be
found in the Sustainability Report.
Climate-related Transition Risk & Opportunities – Metrics & Targets
KPI EPRA/SASB Reference 2024 2023 2022 Targets & References
Scope 1 and 2
emissions (tCO
2
e)
GHG-Dir-Abs,
GHG-Indir-Abs
Elec-Abs
11,808
1
12,001 12,212 42% reduction in
absolute Group
Scope 1 and 2
emissions by 2030
(see NZC Pathway/
SBTi aligned target)
Total group energy
consumption (MWh)
Total-Energy-Abs 52,549
1
52,630 55,975 N/A
Proportion of
electricity sourced
from renewable
sources (%)
Elec-Abs 99.5% 99.5% 99.9% 100%
Total fuel consumed
on site (MWh)
Fuels-Abs 23,283 21,339 22,978 N/A
Building emissions
intensity by floor
area (kWh/m2/year)
Energy-Int 91.6 104.4 117 85 kWh/m2/year
(aligned with 1.5 ºC
CRREM pathway)
Scope 3 emissions
(tCO
2
e) and
selected Scope 3
categories split
GHG-Indir-Abs 25,941¹
Selected Scope 3
categories as per
P 39
37,4 7 2 – Physical intensity
reduction by 20%
per m2 NLA (See
NZC Pathway/SBTi
aligned target/
CRREM aligned
target)
EPC (Energy
Performance
Certificate) split of
UK portfolio
Cer t-Tot 56% EPC A or B
44% EPC C or
below
53% EPC A or B
47% EPC C or
below
45% EPC A or B
55% EPC C or
below
Fully MEES
compliant in UK –
regulation currently
under review
Fully Décret Tertiare
compliant in France
1 KPI performance is independently assured in 2024.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 49
Climate-related Physical Risk & Opportunities – Metrics & Targets
KPI EPRA/SASB Reference 2024 2023 2022 Targets & References
Number and % by
value of assets
located in areas
exposed to high
orhighest risk of
inland, coastal and
flash flooding –
current & 2030
(SSP 5 Scenario)
1, 2
N/A 2024: 7
8% by value
(2024)
2030 (SSP 5
Scenario): 7
2023: 7
8% by value
(2023)
2030 (SSP 5
Scenario): 7
2022: 9
(% by value not
measured)
2030 (SSP 5
Scenario): 9
Less than 5% assets
(by value) by 2035
% Assets with
measures installed
to mitigate flooding
(highest risk areas)
N/A 0% 0% Not measured 100% by 2035
% Total water
withdrawn in
regionswith high
orextremely high
baseline water stress
SASB IF-RE-140a.2 52% 42% – To be revised
% Assets with
adaptation
measures to
mitigate overheating
N/A Not yet measured – – 100% by 2035
1 As per ClimateScore Global definitions.
2 Methodology for calculation included in the Sustainability Report.
ESG overview continued
Climate-related Financial Disclosure continued
CLS Holdings PLC Annual Report and Accounts 202450
People
CLS has just over 100 employees looking after our property portfolio
across three countries.
Attracting, motivating and retaining a diverse and high-performing team is vital
toour long-term success. This includes offering appropriate remuneration and
benefits packages, providing learning and development opportunities, maintaining
open and continuous employee dialogue and increasing engagement, as wellas
creating a supportive working environment that encourages diversity, promotes
equity and fosters tolerance and teamwork.
Key aspects are summarised over with more detail and data included in our
Sustainability Report.
A breakdown of our employee numbers and gender diversity statistics as required
by the Companies Act 2026, can be found on page 81 and are incorporated into
this strategic report by reference.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 51
Recruitment
Our levels of voluntary turnover have
reduced this year and we continue to
attract, motivate and retain the right
people to support the achievement of
our goals.
Our policies and procedures ensure we
run objective and inclusive recruitment
processes and see a diverse range of
candidates, including those with non-
traditional routes into our sector.
All employees and applicants are treated
consistently regardless of gender, gender
reassignment, marital or civil partnership
status, age, race (including: colour, ethnic
or national origin), religion or belief,
disability or sexual orientation. Conditions
or requirements, including age limits,
which cannot be justified objectively are
not applied within our processes.
Entry and progression within the business
is solely determined by the role
requirements for skills, knowledge and
experience as well as aptitude.
Training and Development
We run a comprehensive onboarding
programme for new starters to ensure
that they quickly understand our purpose,
vision and our values, and canaccess the
resources and people required to be
successful in their roles.
We also ensure that our people managers
have the support that they need to
manage their teams effectively and
promote the value of continuous
development.
All employees are actively encouraged
toundertake learning and development
activities to develop both personally and
professionally as well as ensure their
knowledge remains current. This includes
seminar or webinar attendance,
e-learning, internal ’lunch & learns’ or
workshops to share knowledge and
external networking events as well as
more traditional classroom based courses
on subjects such as interpersonal or
software skills.
Each employee is allocated a personal
training budget to use for professional
development and annual training hours
are monitored. Additionally, we support
employees to attain professional
qualifications in their specialist areas
through sponsorship of their studies and
time off for revision and examinations.
Remuneration
Our overall remuneration and benefits
package is designed to attract, motivate
and retain employees. Our remuneration
structure is simple, combining salary and
benefits with an annual bonus and a
long-term retention bonus, based on the
Group’s medium-term performance.
Packages are reviewed and benchmarked
at least annually to ensure we remain
competitive in each of our regional
markets.
In addition, we encourage employee
share ownership which aligns both
performance and reward. The Group
hasa share incentive plan, which is open
to all employees in the UK, Germany
andLuxembourg. The scheme matches
employee contributions in the ratio of 1:1.
We continue to ensure that all UK
employees are paid at least the London
Living Wage and we review this annually
as part of our salary review process at
year end, ahead of the April
implementation date.
We also support equal pay for work of
equal value and review this annually
during the salary review and discretionary
bonus process, although we do not
disclose gender pay gap data due to
thelow employee sample size.
Engagement
Our transparent and non-hierarchical
approach to management encourages
everyone to share opinions and ideas
andthis creates greater trust and
engagement.
We also have a very clear vision and
values which are communicated to
employees during onboarding and are
used to assess performance during the
annual review process. This aims to
support our culture, ensure clarity of
direction and encourage constructive
behaviours which will support the
achievement of our business objectives.
This year we reviewed the results of an
independently-run anonymous 2023
employee survey. With a high response
rate the data gathered represents the
views of our workforce and demonstrates
that employees are engaged in ensuring
business success. Outcomes were used
to inform areas for focus this year and in
future years.
Additionally, our Senior Independent
Director, Elizabeth Edwards, hosts
“townhalls” twice each year for each
office and all employees are invited to
attend so that the Board can engage
directly with employees, share
information and hear their views. The
summary output of these sessions is
shared with the Board. More details on
this are in Workforce Engagement on
page 73.
With a predominantly flat management
structure, all employees can be quickly
and effectively informed of matters
concerning their interests and the
financial and economic factors affecting
the business. This includes quarterly
strategic updates to all employees from
the CEO and senior leadership as well as
dedicated intranet and an internal social
media channel. These promote new
policies, procedures, Group activities,
employee social and volunteering
events,and recognise individual or
teamachievements.
On an individual basis, employees receive
a minimum of two appraisals/review
conversations each year. All employees
agree annual objectives with their
manager which are tracked and adjusted
as needed to ensure their continued
motivation as well as alignment to, and
achievement of, business goals.
Welfare
The health, safety, and wellbeing of our
employees remains paramount. We
continually strive to maintain our low
workplace incident record and have
implemented comprehensive health
andsafety protocols.
Employees have the opportunity to
participate in schemes or activities
designed to promote general health and
well-being such as private healthcare, an
employee assistance programme, sports
club or gym contributions, health checks,
financial wellbeing support, social events
and volunteering, which are locally
determined by region.
We also offer all employees flexible start
and finish times, whilst maintaining core
hours, in order to maintain a healthy
balance between home and work
commitments.
People continued
CLS Holdings PLC Annual Report and Accounts 202452
Health and safety
All countries we operate in maintain and
follow their own local health and safety
policies in line with local regulations. They
report issues, if they arise, to the Chief
Executive Officer and Health and Safety
Committee. We also employ accredited
advisors in each country to advise on
health and safety matters.
Separately, we engage specialists for
management and reporting of health
andsafety for major refurbishment
anddevelopment projects in line with
best practice.
It is a core focus of the Board that CLS manages its activities so that the
health and safety of its employees, customers, advisors and contractors,
and the general public is not compromised.
The Group sets health and safety objectives covering our workforce and
portfolio which are monitored by the Health and Safety Committee.
Our Health and Safety Committee
coversissues related to CLS assets
andemployees. Chaired by the Chief
Operating Officer, the Committee
comprises Facilities Managers, Property
Managers, employees and advisors.
TheChief Executive Officer also attends
Health and Safety Committee meetings
to remain informed. The Committee
reports quarterly to the Board and
updates are provided at each scheduled
board meeting.
This reporting process has worked
effectively throughout the year and has
ensured ongoing compliance with health
and safety legislation in all operating
countries.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 53
UK
Each managed or occupied UK property
undergoes an annual risk assessment
against which our targets can be
measured. Our targets address risk
management and control; document
compliance; and incidents.
Our retained external health and safety
consultant attends the quarterly Health &
Safety Committee meetings and
presents a report on their findings from
the UK portfolio and measures our
performance against these targets.
Asummary of the report is provided
totheBoard.
This year, accident frequency remained
well below the national rate and our
external health and safety consultant
considered our risks remain well managed
and to a high standard.
Germany
CLS’ buildings in Germany comply with
building permits and are regularly
reviewed by local authorities to ensure
legal compliance.
Facilities governed by special regulations
(e.g. laboratories) are reviewed more
frequently by a certified specialist.
Services (such as fire safety, electricity
supply, ventilation, lifts and heating) are
reviewed as required by law or business
standards and at least once a year by
authorised personnel.
Reports and protocols are reviewed by
the CLS operational team. They also
ensure that all scheduled reviews are
conducted in accordance with local laws.
Facilities management contractors
provide comprehensive reports on a
monthly basis to the CLS operational
team.
The CLS operational team reports on
health and safety matters to the Health &
Safety Committee, where it was noted
that risks remain well managed and in
compliance with local regulations.
France
All buildings must comply with the Code
du travail (Labour Code), which defines
our responsibilities.
Each tenant oversees their own security
on their premises in accordance with
theCode and security obligations of
thebuilding.
The building facilities (such as the
electricity supply and building and
mechanical safety checks) are reviewed
once or twice a year by a statutory
controller. These reports are reviewed
and acted upon by our operational team.
This process is audited externally twice a
year and the results of those audits are
discussed at the Health & Safety
Committee. As at the date of this report,
100% of regulatory audit reports have
been processed and the external audit
confirmed that risk management was at a
high level.
Facilities management
contractorsin France provide
comprehensivereports
onamonthlybasis to
theoperationalteam.
Asat the date of this report,
100%
of allidentified risks were
undercontrol
95.1%
document compliance
zero
accident rate
Health and safety continued
CLS Holdings PLC Annual Report and Accounts 202454
Non-financial sustainability information statement
Relevant policies and risk management processes
Additional
information
Environmental
matters
Our Sustainability Strategy incorporating our Net Zero Carbon Pathway sets out our
commitment to our stakeholders of being a responsible commercial property investor,
ensuring that our business model and strategy is future ready.
Our climate related risks, opportunities, targets, KPIs and management processes are
in line with the requirements of TCFD.
Environmental
Performance
Review,
pages 32-50
Employees Through our employee handbooks and policies, we set out the standards of behaviour
we expect from our employees. This demonstrates our commitment to the highest
standards of ethical behaviour in dealing with all of our stakeholders.
Our training and development policy supports all employees in their development,
and our people management policies ensures we have a meritocratic culture that
allows employees to succeed.
We are an accredited London Living Wage employer.
Social
Performance
Review, page 41
Our People,
pages 51-52,
and73
Human rights Our anti-slavery policy reflects our commitment to upholding human rights in the
countries we operate. Our modern slavery statement is published on our website
annually and is available at www.clsholdings.com and sets out the steps we have taken
to prevent slavery and human trafficking in our supply chain.
There have been no reports of modern slavery reported to the Company during
theyear.
Social
Performance
Review, page 41
Stakeholder
Engagement,
pages 28-29
Social and
community
matters, including
consumers
Our Sustainability Strategy sets out our approach to supporting our employees,
customers and suppliers.
We have an active corporate social responsibility committee which sets our
programme for investing in our communities.
We ask that all employees commit at least one day to undertake a community
supportactivity.
Social
Performance
Review, page 41
Our Stakeholder
Engagement,
pages 28-29
Anti-bribery
and corruption
We have an anti-bribery and anti-corruption policy that sets out the responsibilities
and expectations of our employees. The policy also contains our gifts and hospitality
policy, which requires registration for all gifts and hospitality and prior line manager
approval over certain limits.
This is supported by a whistleblowing policy that enables employees to raise concerns
through a dedicated hotline, website or through normal whistleblowing reporting
procedures.
All staff receive training on these policies as part of an employee’s induction, with
regular refreshers, and are required to confirm compliance annually.
Our suppliers are asked to confirm whether they have their own policy and, if not, that
they understand and comply with our policy.
GHG Emissions information Pages 34-35
Climate-related financial disclosures Pages 42-50
Diversity information Pages 80-81
Principal risks and impact of business activity Pages 59-62
Description of business model Pages 16-21
Non-financial key performance indicators Page 17, 37-41, 49
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 55
3rd Line of Defence 2nd Line of Defence
1st Line
of Defence
Risk management
What we did in 2024
• Established an initial list of material controls. This included performing
testing cycles over a number of these controls.
• Targeted capital expenditure to ensure properties remain appealing to
tenants in terms of their amenities and sustainability credentials to
mitigate identified property and sustainability risks.
• Retained our Cyber Essentials Plus ranking.
• Achieved milestone targets on the Net Zero Carbon Pathway.
• Addressed 2023 internal control recommendations as outlined by our
externalauditor.
• Engaged external consultants who performed an in-depth analysis of our
buildings’ climate related resilience.
• Competency checks were undertaken for the consultants and
contractors we engageand regular safety tours of our assets were
undertaken by the property management team.
• Successful sales of targeted properties in our portfolio to align with our
principal strategies to put the Group in a strong position going forward.
• Effectively managed our financing strategies to ensure sustainable
growth and financial stability, positioning us for continued success in
thefuture.
Our priorities for 2025
• Continue to deliver on our roadmap of readiness activities for the UK
Government’s proposed corporate reforms. This includes:
IJ agreeing upon a target level of confidence required for each
materialcontrol;
IJ agreeing the cadence for monitoring material controls, including
whatis presented to the Board. Developing an internal control testing
framework and approach to testing our materialcontrols;
IJ agreeing the Board’s appetite for disclosing any material control’s
ineffectiveness and actions required to address weaknesses;
IJ preparing a draft of the material controls declaration including any
ineffectiveness explanations; and
IJ assigning ownership and oversight for each material control.
• Finance remaining 2025 maturing debt and advance refinancings of
2026loans.
• Ensure Cyber Essentials Plus ranking retained.
• Enhance our crisis response capabilities to reflect the dynamic nature of
the global risklandscape.
• Digitally enable employees and tenants, and continue to build digital
literacy, awareness and capability.
• Minimise financial risk in relation to securing future gas and electricity
supply for the portfolio through adherence to risk limits with guidance
from our external energy procurement partners.
• Closely monitor and support the business through risks arising from the
changing geopolitical environment.
Our Risk Management Structure
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.
Risk and Assurance Manager
• Responsible for the management of the Group’s risk and internal control system, CoreStream. 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.
• Executes strategic actions in compliance with the Group’s objectives and policies.
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.
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.
CLS Holdings PLC Annual Report and Accounts 202456
1
4
6
5
2
3
Culture &
Leadership
Management of risk throughout the Group
Audit &
Assurance
Monitoring
Identification
Prioritisation
Governance &
Reporting
Controls &
Responses
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.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 57
CatastrophicNegligible
Impact
4
1
2
5
3
6
Likelihood
Very Unlikely Very LikelyUnlikely Possible Likely
Risk management continued
Our Assessment and Appetite for Risk
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.
Risks are reviewed in detail with their respective owners,
typically a member of the Senior Leadership Team or key
business leader.
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).
The chart above illustrates the relative positioning of the potential
impact and likelihood of the principal risks on the Group’s
strategic objectives, financial position or reputation after
mitigation. Internal or external forces, or a combination of both,
will continue to have the potential to alter this positioning and
therefore these risks are closely monitored on a continual basis.
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 so going forward. The impact
of the macro-economic factors is discussed in the CEO review
and the individual country property reviews.
Our principal risks are set out on the following pages 59 to 61.
Inevaluating these risks, any potential impact as a result of
market uncertainties has been considered.
Risk appetite
The Board reviews our risk appetite at least annually. The risk
appetite of the Group is assessed with reference to changes
both 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. 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
market that influences their appetite in any one year.
Property
Sustainability
Business
Interruption
Financing
Political &
Economic
People
Risk
assessment
High Med Low High Med Low
Risk
appetite
High Med Low Med Med Med
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 table
thereisdivergence of risk appetite and risk status in relation
tothe financing and people 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 people 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.
1. Property
2. Sustainability
3. Business Interruption
4. Financing
5. Political & Economic
6. People
Key:
Very High
High
Medium
Low
Very Low
CLS Holdings PLC Annual Report and Accounts 202458
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: Key to risk assessment:
A
We acquire the
rightproperties
D
We continually
assess whether
tohold or sell
properties
B
We secure the
rightfinance
E
We reward
shareholders,
customers and
employees
C
We deliver value through
active management and
cost control
Increasing
Decreasing
No Change
High
Medium
Low
Principal Risk description Mitigation
1
Property
Strategy
A
KPIs: TSR(R), TAR, EPS
Risk assessment:
Change in risk profile
inthe year:
Direction of travel:
Learn more here:
Country reviews on
pages10 to 15
Market fundamentals and/or internal
behaviours lead to adverse changes to
capital values of the property portfolio or
ability to sustain and improve income
generation from theseassets.
Key risks
• Cyclical downturn in the property market which
may be indicated by an increase in yields
• Changes in supply of space and/or demand
(vacancy rate)
• Poor property/facilities management
• Inadequate due diligence and/or poor
commercial assessment of acquisitions
• Failure of tenants
• Insufficient health and safety risk protection
• Building obsolescence
2024
• Maintained strong relationships with our
occupiers, agents and direct investors active
inthe market and actively monitored trends in
our sectors
• Asset management committees meet once a
month to discuss each property
• Continued investment of £21.1 million in our
properties with refurbishments taking place in
over 30 properties to meet tenant demands
• Rigorous and established governance approval
processes for capital and leasing decisions
• Engagement with tenants to understand their
needs and space requirements
• Targeted capital expenditure with a focus on
sustainability
• Disposal of 5 properties with low yield, limited
asset management potential or risk/reward ratio
unfavourably balanced
• Continued monitoring of covenant strength and
health of tenants
• High quality provision of property and facilities
management services with our in-house team
• Health and Safety Committee met 3 times to
closely monitor activity and regulation,
reporting to every Board meeting
2025
• Continue with our current controls and
mitigating actions
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 59
Risk management continued
Principal Risk description Mitigation
2
Sustainability
Strategy
A
 
C
KPIs: TSR(R), TAR, VR
Risk assessment:
Change in risk profile
inthe year:
Direction of travel:
Learn more here:
ESG on pages32 to 55
As a result of a failure to plan properly for,
and act upon, the potential 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
Transition risks:
These include regulatory changes, economic
shifts, obsolescence, and the changing availability
and price of resources.
Physical risks:
These are climate-related events that affect our
supply chain as well as the buildings’ physical form
and operation; they include extreme weather
events, pollution and changing weatherpatterns.
2024
• Implemented new sustainability data platform
• Continued monitoring and oversight by the
Sustainability Committee over key ongoing
projects
• Implementation of our climate resilience plan
• Detailed Sustainability risk registers maintained,
reviewed and updated
• Continued implementation and active
monitoring of NZC Pathway projects
• Completion of planned energy efficiency
projects including all scheduled PV installations
• Continued EPC upgrade programme
• Recertification of relevant properties in the UK
and France to BREEAM In-Use V6
• Independent assurance on EPRA sBPR KPI data
• Renewal of Sustainable refurbishment and
fit-out guide
• Maintained living wage accreditation
2025
• Ongoing rollout of biodiversity net gain plan
• Initiate a review of the NZC Pathway including
the strategy and key targets
• Continue with our current controls and
mitigating actions
3
Business
interruption
Strategy
D
KPIs: TSR(R), TAR
Risk assessment:
Change in risk profile
inthe year:
Direction of travel:
Data loss; or disruption to corporate or
building management systems; or
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
• Cyber threat
• Large scale terrorist attack
• Environmental disaster, power shortage
orpandemic
2024
• Maintained a Centre of Internet Security ‘A’
rating
• Maintained Cyber Essentials Plus certification
• Conducted penetration testing on the Group’s
properties (e.g. simulate cyber-attacks on
building management systems)
• Continued implementation of shared property
and finance system across the Group
• Continued use of external partners for
specialist cyber security activities and
independent reviews
• Transitioned to continuous and automated
patching across all managed systems
• New Email Gateway implemented
• Identity management protection implemented
• Continued to test and train employees on
cybersecurity
2025
• Complete implementation of shared property
and finance system across the Group
• Start to drive greater cost and reporting
efficiencies across the Group from using a
common platform
• Reassess business continuity and disaster
recovery plans
• Continue with our current controls and
mitigating actions
CLS Holdings PLC Annual Report and Accounts 202460
Principal Risk description Mitigation
4
Financing
Strategy
B
KPIs: Cost of debt, EPS
Risk assessment:
Change in risk profile
inthe year:
Direction of travel:
Learn more here:
CFO review on pages22 to 25
The risk of not being able to source
funding in cost-effective forms will
negatively impact the ability of the
Groupto meet its business plans or
satisfyits financial obligations.
Key risks
• Inability to refinance debt at maturity due to
lack of funding sources, market liquidity, etc.
• Unavailability of financing at acceptable
debtterms
• Risk of rising interest rates on floating rate debt
• Risk of breach of loan covenants
• Foreign currency risk
• Financial counterparty risk
• Risk of not having sufficient liquid resources to
meet payment obligations when they fall due
• In 2024, the financing markets remained open
and supportive for CLS but with greater
amounts of loans maturing in 2025 the risk has
increased. Notwithstanding this, CLS has made
significant progress with 2025 debt maturities
as set out on page 24
2024
• Financed, refinanced or extended 9 loans to a
value of £154.5 million
• Weekly treasury meetings took place with the
CEO and CFO including discussion of financing,
rolling 12-month cash flow forecasts, FX
requirements and hedging, amongst other items
• Weekly cash flow forecasts prepared and
distributed to Senior Leadership Team
• 79.7% of the Group’s borrowings are fixed rate
plus a further 3.8% of interest rate caps
• Regularly monitored loan covenants
• CLS borrows in local markets and in local
currencies via individual SPVs to provide a
‘natural’ hedge
• All loans have equity cure mechanisms to repair
breaches
• Maintained a wide number of banking
relationship with 25 lenders across the Group to
diversify funding sources
• Maintained low weighted average cost of debt
(3.77%)
• Maintained average debt maturity of 3.2 years
• Significant headroom across three main loan
covenants of between 14% and 32%
2025
• Continue with our current controls and
mitigating actions
5
Political &
economic
Strategy
C
KPIs: EPS
Risk assessment:
Change in risk profile
inthe year:
Direction of travel:
Learn more here:
Chief Executive’s review on
pages7 to 9
Significant events or changes in the Global
and/or European political and/or 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
• Ongoing transition of the UK from the EU
• Global geopolitical and trade environments
• Potential impact of US tariffs on inflation and
interest rates
2024
• Monitored events and trends closely, making
business responses if needed
• Maintained membership of key industry bodies
for example the British Property Federation,
British Council of Offices and Better Buildings
Partnership
• Monitored tenants for sanction issues
2025
• Continue with our current controls and
mitigating actions
6
People
Strategy
E
KPIs: TSR(R), TAR
Risk assessment:
Change in risk profile
inthe year:
Direction of travel:
Learn more here:
ESG pages32 to 55
The failure to attract, develop and retain
the right people with the required 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
• Failure to recruit senior management and key
executives with the right skills
• Excessive staff turnover levels
• Lack of succession planning and development
opportunities
• Poor employee engagement levels
2024
• Bi-annual townhall meetings held by Senior
Independent Board member to listen to
employee concerns and suggestions and
discuss with the Board
• Employee compensation packages reviewed
atleast annually to ensure they remain
competitive
• Implementation of a calendar of wellbeing,
social and diversity, equity, and inclusion
activities
• Implementation of feedback from Staff
Engagement and Enablement Survey
2025
• Continue with our current controls and
mitigating actions
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 61
Risk management continued
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
<2yrs
Medium
2-5yrs
Long
>5yrs
Adoption of
technology
Failure to embrace technology could result
inthe Group falling behind its competitors
inefficiency, thereby risking a loss of
competitive edge. As buildings evolve to
incorporate smart features, tenants may
prefer such technologically advanced
spacesover those lacking similar amenities.
Neglecting occupant preferences for
technology could diminish the attractiveness
of the Group’s office properties, potentially
leading to vacancies and a decline in
rentalrevenue.
We thoroughly examine emerging
technologies to ensure that we extract the
utmost value from any new system or service
we opt to incorporate into our comprehensive
digital and technological framework.
Artificial
intelligence
The automation of certain tasks through AI
may lead to job displacement for those whose
roles are automated but it will also create jobs.
This could have implications on our current
tenant base which may impact office space
requirements.
Active monitoring of the changing landscape
through attendance at AI industry talks and
regular discussion/awareness at the executive
committee level.
Regulation/
compliance
Increased capital cost of maintaining our
property portfolio.
Increased administration costs to ensure
resources sufficient to deliver corporate
compliance.
Continued ongoing assessment of all
properties against emerging regulatory
changes and benchmarking of fit-out and
refurbishment projects against third-party
schemes.
Increasing energy
and construction
costs
Increased cost of operating properties will
reduce attractiveness of tenancies to existing
and potential customers.
Increased costs of refurbishments and
developments leading to reduced investment
returns.
Ongoing consideration of, and investment in,
energy efficient plant and building-mounted
renewable energy systems.
Continued monitoring of materials,
investment in key skills for staff and viability
assessments of buildings.
Changes in office
occupation trends
Changes in societal attitudes to agile and
flexible working practices may reduce
demand for space compared to historical
trends.
In-house asset management model provides
the means for the property team to:
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.
Climate change,
natural resources
and biodiversity
risks
Increased risk of weather-related damage to
property portfolio and reputational impact of
not evolving sustainability goals in line with
global benchmarks and/or public
expectations.
Inability to obtain sufficient carbon credits at
suitable price to offset residual carbon
emissions in order to achieve net zero carbon.
Our sustainability strategy continues to
evolve and has been developed in alignment
with Global Real Estate Sustainability
Benchmarks (GRESB), consideration of the
UN Sustainable Development Goals (SDGs)
and climate risk modelling.
We are investigating various solutions to
achieve sufficient offsets by 2030.
CLS Holdings PLC Annual Report and Accounts 202462
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 economic
stress resulting from the Covid-19 pandemic, Russia’s invasion
of Ukraine and the cost-of-living crisis.
The Group continues to have very high rent collection and low
bad debts, and has a long-term track record in financing and
refinancing debt including £154.5 million completed in 2024,
£42.1 million already completed in 2025 and a further
£174.1 million has been well advanced subsequent to year-end,
whereby term sheets have been obtained, we have reached a
first stage credit review or short term extensions between 3 to
12 months have been agreed in anticipation of the planned
refinancings of these facilities.
The Directors note that the Group financial statements for the
year ended 31 December 2023 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 2026 (‘the going concern period’). The period chosen
takes into consideration the maturity date of loans totalling
£426.0 million that expire by July 2026. The going concern
assessment uses the forecast approved by the Board at its
November 2024 meeting as the Base case. The assessment
also considers a Severe but plausible case. The Directors have
considered the period between the date of Board approval and
the date of signing the accounts. Based on a review of events
since Board approval in November 2024, 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 cash
flows have been updated using assumptions regarding forecast
forward interest curves, inflation and foreign exchange, and
includes 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 £426.0 million with 11 lenders expiring within
thegoing concern period will be refinanced as expected
(£303.0 million) or will be repaid (£123.0 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 2024 when £154.5 million was
successfully refinanced or extended; and
• recent refinancings subsequent to 31 December 2024 that
have completed, reached an initial credit committee review
stage by lenders, or where term sheets have been obtained,
totalling £216.2 million (£66.2 million of which short term
extensions between 3 to 12 months have been agreed in
anticipation of the planned refinancings of these facilities) of
the £303.0 million noted above.
The Base case includes property disposals in the going concern
period in line with the Group’s business model and the forecast
cash flows approved by the Board in November 2024. 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 £66.1 million
achieved in the 12 months to 31 December 2024) and the
progress made with the disposal of Spring Mews Student which
has been unconditionally exchanged. The value of the
properties available for disposal is significantly in excess of the
value of the debt maturing during the going concern period.
The Group’s financing arrangements, which utilise ring-fenced
property loans, contain Loan-to-Value (‘LTV’), Interest Cover
Ratio (‘ICR’) and Debt Service Coverage Ratio (‘DSCR’)
covenants. In the Base case, minimal cure payments have been
forecast given that the Group expects to maintain its
compliance with the covenant requirements.
The near-term impacts of climate change risks within the going
concern period are expected to be immaterial following an
assessment of potential significant inflation resulting from
climate change, in the context of increased property and
administrative costs, as part of the reverse stress testing
performed by CLS. Furthermore, the forecast cash flows
prepared for the Base case include all necessary capital
expenditure to meet the minimum energy efficiency standards
required in the countries where CLS operates.
Forecast cash flows – Severe but plausible case
A Severe but plausible case has been assessed which has been
produced by flexing key assumptions further including: lower
rents, increased service charges, higher property and
administration expenses, falling property values, higher interest
rates and reduced achievements of refinancings and disposals.
These flexed assumptions are more severe than CLS
experienced during the 2007-2009 global financial crisis and
other downturns such as that experienced in 2020-2022 during
the Covid-19 pandemic. A key assumption in this scenario is a
further reduction to the Base case in property values of 10%
until July 2026, impacting forecast refinancings, sales and cash
cures. This is in addition to the reduction experienced of 12.5%
in 2023 and cumulative c.24% decline from 30 June 2022 to
31 December 2024.
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 63
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 £11.8 million
being necessary for the Group to remain in compliance with its
covenant requirements.
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 in terms of depositing cash to equity cure
some loans, scaling back uncommitted capital expenditure
(without impacting revenue streams over the going concern
period) and reducing the dividend to the Property Income
Distribution required under the UK REIT rules as well as drawing
the currently available £42.9 million of its existing £60.0 million
revolving credit and overdraft facilities. If needed, further
disposals could be considered as there are no sale restrictions
on CLS’ £1.9 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 review period, and planned
property disposals, is outside of Management’s control and
consequently a material uncertainty exists that may cast
significant doubt on the Group’s ability to continue as a
goingconcern.
Going concern statement continued
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
borrower structures, save for certain limited guarantees and
limited recourse security granted by the Company and certain
other Group companies. Therefore, the Directors continue to
adopt the going concern basis in preparing these Group
financial statements.
The financial statements do not contain the adjustments that
would result if the Group and Company were unable to continue
as a going concern.
CLS Holdings PLC Annual Report and Accounts 202464
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 considerably longer period.
The viability assessment covers the period to 31 December
2028 (‘the viability period’), a period chosen as it is coincident
with the period of the forecasts approved by the Board at its
November 2024 Board meeting. These forecasts comprise the
Base case but they have been updated for the actual results for
2024 and any changed assumptions. The period of 4 years was
also chosen as this is similar to the Group’s WAULT and
weighted average debt maturity, and so aligns with the period
over which the Group has good visibility.
In performing this assessment, the Board notes that the
financial information for the year ended 31 December 2024
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 is focused on the cash, liquid resources and
working capital position of the Group including forecast
covenant compliance. The forecast also assumes continued
access to lending facilities but given the longer time period
thanthe going concern period the amounts requiring to be
refinanced are consequentially greater. Within the viability
period, it is assumed debt facilities of £703.1 million expiring
willbe refinanced (£557.4 million) as expected or repaid
(£145.8 million), which is linked to forecast property sales) taking
into account:
• existing banking relationships;
• CLS’ track record of prior refinancings, particularly in
12 months to 31 December 2024 when £154.5 million was
successfully refinanced or extended;
• refinancings subsequent to year-end that have completed,
orwhere terms have been agreed, or where negotiations are
very advanced totalling £216.2 million (£66.2 million of which
short term extensions between 3 to 12 months have been
agreed in anticipation of the planned refinancing of these
facilities) of the £703.1 million expiring before 31 December
2028; 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, 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 that experienced in 2020-
2022 during the Covid-19 pandemic. A key assumption in this
scenario is a further reduction in property values of 10% until
31 December 2026 which is in addition to the fall in value already
experienced in 2022, 2023 and 2024 but no subsequent
bounce back in valuation has been assumed.
Assumptions around refinancing and property disposals are
adjusted to only include those agreed or considered
significantly advanced by management. In addition, a reduction
in property values of 10% results in additional cure payments
of£11.8 million being necessary for the Group to remain in
compliance with its covenant requirements.
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,
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.
In the Severe but plausible case, CLS would need to take
mitigating actions in terms of depositing cash to equity cure
some loans as envisaged under the facilities, scaling back
uncommitted capital expenditure and reducing the dividend to
the Property Income Distribution required under the UK REIT
rules as well as drawing the currently available £42.9 million of
itsexisting £60.0 million revolving credit and overdraft facilities,
of which £30 million is committed until October 2026 with
theoption to extend a further two years and £20 million is
committed until November 2025 with an option to extend a
further year.
Additionally, the Board note that the properties 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 other Group companies.
Material uncertainty
The Directors highlighted in their going concern assessment
(see note 2.1) 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 to both refinance
the debt maturing and to complete a number of property
disposals in the going concern period in challenging market
conditions. The same material uncertainty may also cast
significant doubt over the future viability of the Group.
Our 2024 strategic report, from the Inside Front Cover–
page 65, has been reviewed and approved bythe Board
of Directors on 31 March 2025.
Approved and authorised on behalf of the Board
David Fuller
Company Secretary
31 March 2025
Strategic report Corporate governance Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 65
Chairman’s
introduction
Lennart Sten
Non-Executive Chairman
Dear Shareholder
On behalf of the Board, I am pleased to present the Corporate
Governance Report for the year ended 31 December 2024.
Thisreport sets out our governance framework, the Board’s key
focus areas in the last year as well as our approach to monitoring
company culture and aligning our strategy with our purpose,
vision and values.
This report also outlines how we have complied with the
principles set out in the2018 UK Corporate Governance Code.
Our code compliance statement can befound on page 67.
In 2025 we will be adopting the 2024 UK Corporate
Governance Code and our focus during 2024 has been to work
through our processes to ensure that they are aligned with the
new requirements.
Living our purpose and culture
2024 continued to pose challenges, with interest rates
remaining higher for longer than expected, general economic
uncertainty and higher employment costs being key
considerations for business decision making.
Our emphasis has therefore been on optimising our operations
and focusing on what is within our control so as to execute our
business model to the best of our abilities. This requires a strong
culture and key core values, which in turn create a purpose
driven, team-orientated organisation that works at its best.
During the year, one of our key considerations has been to
ensure that our purpose, culture and values resonated
throughout the organisation.
We recognised that to achieve our goals we needed our teams
to work together, in-person, supporting each other and helping
to make quick decisions for the benefit of our tenants and other
key stakeholders, whilst understanding the need to balance
individual flexibility. We understand that our in-person working
may not be suitable for all, but we have been able to recruit and
retain talented individuals that share our vision and drive the
business forward.
Board Composition
In line with the principles of the 2018 UK Corporate Governance
Code guidelines on Board composition, succession and
evaluation, we carried out a robust review of the independence,
diversity and composition of our Board members in 2024 and
you can find further information on page 80 of the Nomination
Committee’s report.
Following recommendations from the Nomination Committee,
the Board considered my independence and that of Elizabeth
Edwards given that we have both served as directors for more
than nine years. It was concluded that, taking into account both
my and Elizabeth’s time commitment, the nature of our other
non-executive roles, and our continued leadership and
challenge at meetings demonstrating our independence, we
remained independent and should continue to serve. The Board
also concluded that this in turn provided significant continuity
and experience inaperiod of economic uncertainty.
“ Our purpose driven
culture, supported by our
core values and robust
governance framework
has proven to drive our
performance.”
Board focus areas in 2024
• Reviewed and approved financial
statementsfollowing recommendations fromthe
Audit Committee
• Considered our sales strategy across the portfolio
and monitored the sales pipeline
• Considered our financing strategy in light ofthe
changing economic landscape
• Reviewed the implementation of our workforce
engagement mechanisms
• Continued to monitor the implementation ofour
Sustainability policy
Priorities for 2025
• Focus on big trends within the commercial
propertymarket
• Oversee culture to provide assurance that
theagreed values and culture are being embedded
• Continuous review of risk and uncertainties facing
the Company and their implications forthe
businessmodel
• Oversee implementation of the 2024 UK Corporate
Governance Code
• Recruitment of two new independent non-executive
Oversee the appointment and induction of two new
independent non-executive directors
CLS Holdings PLC Annual Report and Accounts 202466
Nevertheless, the Board recognise the need to refresh its
composition and it was agreed that Elizabeth would step down
from the Board at the end of 2025. We commissioned
anexternal search consultancy, Sapphire Partners, to assist
inthe appointment of two new independent non-executive
directors during 2025, witha specific focus on German real
estate experience and audit committee experience.
We also appointed Eva Linqvist to the Nomination Committee
to strengthen the balance of independence on the Committee
and to assist in our search for two new independent non-
executive directors.
As a founding member of CLS and after serving as a director
for over 25 years (from 1992 until 2010 and again from 2017),
Bengt Mortstedt decided to retire from the Board on
28 February 2025. On behalf of the Board, I would like to thank
Bengt for his longstanding commitment to the Group; without
whom CLS would not be what it is today. We all wish him the
very best in his retirement.
Internal Board & Committee Effectiveness Review
This year we facilitated an internal Board & Committee
effectiveness review, following an external review last year.
Weachieved a number of our objectives, which included more
discussion of the resilience of the Group’s business model in
light of macro economic factors, further “deep dives” into
specific areas of the business such as individual developments,
and communication with employees below Board level.
Areas of focus for the year ahead will be centred around Board
composition, where we have announced the search for two
newindependent non-executive directors, macrotrends within
the property sector and their impact on the execution of our
strategy, as well askeeping abreast of the risks and uncertainties
facing the business.
Looking forward
Ensuring we have the right culture and values enables us to
create and build strong and successful relationships with our key
stakeholders, which is vitally important in the current economic
landscape. This in turn creates an environment where we are
able to remain resilient and seize opportunities when they arise,
supporting the delivery of our long-term strategy for the
benefit ofall stakeholders.
Lennart Sten
Non-Executive Chairman
31 March 2025
Board leadership and Company purpose
Our Board of Directors is responsible for setting the Group’s strategy and
ultimately ensuring the success of the Group. We aim to hold five Board
meetings per year, including astrategy day. Our purpose is to transform
office properties into sustainable, modern spaces, that help businesses to
grow. This year we held eight Board meetings.
Board of Directors 68-69
Board activities 70-71
Approach to s.172(1) 30-31
Strategy, Purpose, Vision and Values 16-17 and 30
Division of responsibilities
This year we reviewed our division of responsibilities to ensure that they
reflect our Boardstructure.
Governance framework 75
Composition, succession and evaluation
Our Board consists of an Independent Non-Executive Chairman, two
Executive Directors, three independent Non-Executive Directors and two
non-independent Non-Executive Directors. Succession planning is reviewed
periodically by the Nomination Committee. The evaluation of the Board and
Committees’ performance is overseen by our Chairman.
Nomination Committee Report/
Chairman’sstatement
76-83
External Board evaluation 82-83
Audit, risk and internal control
The Audit Committee has oversight of the financial accounts production
process and audit, and reviews the effectiveness ofour risk management and
internal controls system and theneed for an internal audit function annually.
Audit Committee report 84-89
Going concern basis 63-64
Viability statement 65
Assessment of the principal risks facing
theGroup 59-61
Annual review of systems of risk
management and internal control 85, 87
Fair, balanced and understandable 86
Remuneration
The Remuneration Committee is responsible for the design, implementation
and oversight of the Group’s Remuneration Policy, which was approved by
shareholders on 27 April 2023.
Remuneration Committee Report 90-106
Principles and how the Company addresses them
The principal corporate governance rules which applied to the
Company in the year were those set out in the UK Corporate
Governance Code published by the Financial Reporting Council
(‘FRC’) in April 2018 (the ‘Code’), the UK Financial Conduct
Authority (‘FCA’) Listing Rules and the FCA’s Disclosure
Guidance and Transparency Rules.
The Board fully supports the principles ofgood governance as
set out in theCode, which is available on the FRC’s website
(www.frc.org.uk), and itsapplication ofthemain principles are
set out onpages66 to 111.
Compliance with the Code
Save as identified below and explained inthis report, the
Board considers that throughout 2024 it complied with the
provisions of the 2018 UK Corporate Governance Code.
During the year the Board recognises that it did not comply
with the following Code provisions:
11 – Board balance, explanation on page 77
17 – Nomination Committee membership, explanation on
page76
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 67
Corporate governanceStrategic report
Board independenceDirectors’ tenure (years)
0 – 5 3
6 – 10 2
10+ 3
Executive 2
Independent 3*
Non-Independent 2
Board of Directors
The right team to deliver our strategy
Board members’ range of experience
7
Property Wide ranging experience of the property
sector including our European markets
4
International markets Experience and in-depth
knowledge of dealing in, and the operation of,
international markets
4
Financial management Substantial background of
financial experience from wide ranging industries
andmarkets
7
Governance Significant listed company governance
experience and understanding of investor requirements
8
Risk management In-depth insight and experience of
risk management within the property sector
8
ESG Knowledge of environmental, social and
governance issues facing listed and non-listed
organisations in the property sector and wider UK
businesses and charities
Board independence
at31 December 2024*
43%
Female representation
as at 31 December 2024
38%
* Excluding the Chairman, in accordance with Code Provision 11.
Visit our website to view the full
biographicalinformation for the Directors:
https://www.clsholdings.com/about-us/our-leadership
CLS Holdings PLC Annual Report and Accounts 202468
Joined:
1 August 2014
Lennart Sten
Independent Non-Executive Chairman
Former roles: CEO, GE Capital Real Estate Europe.
President, GE Real Estate Nordic. CEO Fabege AB.
General Counsel, GE Capital Equipment Finances
AB. Partner, Baker & McKenzie, Stockholm. Founder
and CEO of Svenska Handelsfastigheter
Qualifications: Degree in Law, Stockholm University
Experience: International property industry.
Chairman, KlaraBo Sverige AB. Chairman,
Samhällsbyggnadsbolaget i Norden AB. Board
member, Interogo Holding AG.
Attendance: Board 8/8, Remuneration Committee
5/5 Nomination Committee 1/1, AGM 1/1
Joined:
11 May 2015
Anna Seeley
Non-Executive Director and Vice Chair
Former roles: European Property Surveyor, General
Electric Corporation and BT Group. Group Property
Director, CLS Holdings plc. Chartered Surveyor,
Chestertons
Qualifications: Degree in Property Valuation and
Finance, City University and Chartered Surveyor
Experience: 20+ years of property industry and
business experience
Attendance: Board 8/8, Nomination Committee 1/1,
AGM 1/1
Joined:
3 November 2014
Fredrik Widlund
Chief Executive Officer
Former roles: Global Commercial Leader and MD,
GE trade finance business. Regional CEO, GE’s
European Leasing businesses. Managing Director,
GE Capital Real Estate. CFO, GE Capital Equipment
Finance. Various positions with Royal Dutch Shell
Qualifications: Degree in Business Administration,
Stockholm University
Experience: Business leadership, property and
finance experience in global organisations. Trustee
of Morden College, a social and housing charity,
Chair of Property Committee
Attendance: Board 8/8, AGM 1/1
Joined:
1 July 2019
Andrew Kirkman
Chief Financial Officer
Former roles: Finance Director, Harworth Group plc.
Finance Director, Viridor. Chief Finance Officer,
Balfour Beatty Capital. Global Head of Corporate
Finance, Bovis Lend Lease
Qualifications: Masters in Politics, Philosophy and
Economics, Oxford University. Fellow, Institute of
Chartered Accountants
Experience: Extensive plc, property, finance and
operational experience. NED, A2Dominion Housing
Limited, a housing association. Oxford University
Audit and Scrutiny Committee member.
Attendance: Board 8/8, AGM 1/1
Joined:
7 March 2017
Bengt Mortstedt*
Non-Executive Director
Former roles: Director, CLS Holdings plc (1992–
2010). Former Junior District Court Judge
inSweden
Qualifications: Degree in Law, Stockholm University
Experience: European property market and CLS
Holdings plc business. Developed and runs hotels in
St Vincent & Grenadines, West Indies
Attendance: Board 8/8 AGM 1/1
* Retired from the Board on 28 February 2025.
Joined:
20 November 2019
Bill Holland
Independent Non-Executive Director
Former roles: Senior Partner, KPMG real estate
auditpractice
Qualifications: Fellow, Institute of Chartered
Accountants. Degree in Economics from
DurhamUniversity
Experience: Real estate, finance and audit
experience. NED, Urban&Civic plc, Chair of Audit
Committee. NED, Ground Rents Income Fund plc,
Chair Audit Committee. Governor, Winchester
College
Attendance: Board 8/8, Remuneration Committee
5/5 Audit Committee 4/4, AGM 1/1
Joined:
13 May 2014
Elizabeth Edwards
Senior Independent Director
Former roles: Managing Director, Landesbank Berlin
London. Head of BerlinHyp London office. Senior
positions with National Australia Bank,
Westdeutsche Immobilien. Management
Consultant, PwC. Trustee Refuge. Past Master,
Worshipful Company of Chartered Surveyors,
member Charity Committee. Past Warden,The
StOlave’s and St Saviour’s Schools Foundation.
Qualifications: Fellow, Royal Institution of Chartered
Surveyors. Honours Degree in Estate Management,
South Bank University
Experience: Extensive commercial property
investment and finance expertise in the UK and
Europe (primarily Germany). Senior NED, Schroders
European REIT plc, member of Audit, Valuation &
Risk, Nomination, Remuneration and Management
Engagement Committees. Trustee, Central School
of Ballet, Chair of Audit Committee. The St Olave’s
and St Saviour’s Schools Foundation Court trustee,
member Finance & General Purposes Committee.
Attendance: Board 8/8, Audit Committee 3/4
Nomination Committee 1/1, AGM 1/1
Joined:
22 September 2023
Eva Lindqvist
Independent Non-Executive Director
Former roles: Senior roles, Ericsson. Senior Vice
President, Telia Sonera telecoms division. Chief
Executive, Telia Sonera international carrier. CEO,
Xelerated Holdings AB, NED, Keller Group plc
Qualifications: MSc, engineering degree in Applied
Physics. Marketing Diploma. Master of Business
Administration. Melbourne Graduate School of
Management. Helen Schytt Fellowship
Experience: NED, Tele2AB. NED, Greencoat
Renewables plc, member Audit, Management
Engagement, Nomination and Remuneration
Committees. NED, Vesuvius plc, Chair of
Remuneration Committee, member Audit,
Nomination Committees. Member of the Royal
Swedish Academy of Engineering Sciences
Attendance: Board 7/8, Remuneration Committee
5/5 Audit Committee 4/4 Nomination Committee
1/1, AGM 0/1
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 69
Corporate governanceStrategic report
Key announcements, decisions and Board approvals
Key Board activities
January
Board effectiveness review
and discussion
February
Business update
March
Approval of the 2023
annual report and accounts
Approval of the 2023 final
dividend
Launch of sale of Spring
Mews Student
Accommodation
Agreement to convert
Debussy, Paris to serviced
apartments
April
All shareholder resolutions
passed
Approval of sale of
Westminster Tower for
£40.8m
May
Property tour in Munich
Consideration of capital
allocation
June
Sale of Aqueous II,
Birmingham, and
Hansastrasse, Dortmund,
totalling £10.7m
How governance supports
our business model and
strategy
Our governance structure enables
the Board to provide the necessary
oversight of the Company’s long-
term strategic plan and
businessmodel.
The Board and Executive
Committees facilitatethe
implementation of the Group’s
strategy and business model
withtwo way dialogue ensuring that
the Group’s Vision, Purpose and
strategic goals are aligned.
Clear reporting lines and division of
responsibilities ensure efficient and
effective strategic decision making.
Read more:
on page 75
The Board Governance role What we considered for 2024 Relevant stakeholders Find out more
We acquire the
right properties
The Board considers the Group’s investment criteria and market
conditions in the regions to ensure it supports its long-term
strategy.
• Received detailed updates on the markets in which we operate together with
investments at each Board meeting
• Received presentations from the UK, German and French Valuers on market
conditions and key portfolio risks and opportunities
• Considered acquisitions and disposals strategy in light of challenging market and
ability to meet investment criteria
• Investors
• Employees
Read more:
on pages 16 and 18
We secure the
right finance
The Board considers the Group’s financing strategy to ensure it
remains appropriate, dynamic and diverse.
• Received updates on the Group’s debt position including covenant reports,
cashflow and budgets
• Received detailed updates on the Group’s financing strategy
• Considered the impact on the Group of higher LTV following property valuationfalls
• Financial
Institutions
Read more:
on pages 16 and 19
We deliver value
through active
management
and cost control
The Board considers the Group’s operational strategy to deliver
on the Group’s vision to be a supportive, progressive and
sustainably focused commercial landlord.
• Received updates on asset, property and facilities management operations
• Ensured appropriate resourcing levels to provide quality active in-house asset
management
• Monitored performance against budget and organisational structure as part of cost
control measures
• Reviewed and approved 2025 budget and forecasts
• Tenants
• Suppliers
Read more:
on pages 16 and 20
We continually
assess whether
to hold or sell
properties
The Board oversees management’s assessments of the entire
portfolio to ensure the Company focuses on holding properties
with the potential to add value in line with the Group’s
investment strategy and sustainability goals. It also reviews and
approves the active sales programme for capital recycling.
• Received updates on vacancy rates and rent collections
• Received senior management recommendations for capital and operational
expenditure in relation to building management
• Received updates on the sustainability strategy including the Net Zero Carbon
pathway
• Reviewed the Group’s strategy for the property portfolio at the Strategy Board
meeting held in September
• Tenants
• Communities
• Suppliers
Read more:
on pages 17 and 21
We reward
shareholders,
customers and
employees
The Board aims to grow the dividend in line with the growth in
the business and in line with its dividend policy. It also ensures
the reward structures for its employees underpin our values
andsupport the success of the business. Our tenants are our
customers, and we provide sustainable office space that helps
businesses grow.
• Considered and approved interim and final dividend proposals, based on the
financial performance of the Group
• Considered appropriate reward structures for employees that reflect Group
performance
• Approved capital expenditure budgets, supported by our sustainability strategy,
todeliver sustainable office space
• Investors
• Employees
Read more:
on pages 17 and
51-52
CLS Holdings PLC Annual Report and Accounts 202470
July
Approval of the appointment of
BDOas external auditors, following
anaudit tender
August
Approval of the 2024 half-yearly report
and interim dividend
Review of principal risks and
uncertainties including emerging risks
Approval of 10 year lease at Artesian to
Médecins Sans Frontières
October
Consideration of the Group strategy
Financing Strategy discussion
November
UK property tour
Trading update
Three significant new leases secured
inGermany
Reviewed the Group’s principal risks
and considered emerging risks which
could potentially impact long-term
strategy
Review of composition of the Board
and independence
December
Business update
Lease for 9,600 sqm at theYellow,
Dortmund
Approval of the lease renewal at
FetterLane and to progress
discussions regarding a potential
leaseextension at Spring Gardens
The Board Governance role What we considered for 2024 Relevant stakeholders Find out more
We acquire the
right properties
The Board considers the Group’s investment criteria and market
conditions in the regions to ensure it supports its long-term
strategy.
• Received detailed updates on the markets in which we operate together with
investments at each Board meeting
• Received presentations from the UK, German and French Valuers on market
conditions and key portfolio risks and opportunities
• Considered acquisitions and disposals strategy in light of challenging market and
ability to meet investment criteria
• Investors
• Employees
Read more:
on pages 16 and 18
We secure the
right finance
The Board considers the Group’s financing strategy to ensure it
remains appropriate, dynamic and diverse.
• Received updates on the Group’s debt position including covenant reports,
cashflow and budgets
• Received detailed updates on the Group’s financing strategy
• Considered the impact on the Group of higher LTV following property valuationfalls
• Financial
Institutions
Read more:
on pages 16 and 19
We deliver value
through active
management
and cost control
The Board considers the Group’s operational strategy to deliver
on the Group’s vision to be a supportive, progressive and
sustainably focused commercial landlord.
• Received updates on asset, property and facilities management operations
• Ensured appropriate resourcing levels to provide quality active in-house asset
management
• Monitored performance against budget and organisational structure as part of cost
control measures
• Reviewed and approved 2025 budget and forecasts
• Tenants
• Suppliers
Read more:
on pages 16 and 20
We continually
assess whether
to hold or sell
properties
The Board oversees management’s assessments of the entire
portfolio to ensure the Company focuses on holding properties
with the potential to add value in line with the Group’s
investment strategy and sustainability goals. It also reviews and
approves the active sales programme for capital recycling.
• Received updates on vacancy rates and rent collections
• Received senior management recommendations for capital and operational
expenditure in relation to building management
• Received updates on the sustainability strategy including the Net Zero Carbon
pathway
• Reviewed the Group’s strategy for the property portfolio at the Strategy Board
meeting held in September
• Tenants
• Communities
• Suppliers
Read more:
on pages 17 and 21
We reward
shareholders,
customers and
employees
The Board aims to grow the dividend in line with the growth in
the business and in line with its dividend policy. It also ensures
the reward structures for its employees underpin our values
andsupport the success of the business. Our tenants are our
customers, and we provide sustainable office space that helps
businesses grow.
• Considered and approved interim and final dividend proposals, based on the
financial performance of the Group
• Considered appropriate reward structures for employees that reflect Group
performance
• Approved capital expenditure budgets, supported by our sustainability strategy,
todeliver sustainable office space
• Investors
• Employees
Read more:
on pages 17 and
51-52
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 71
Corporate governanceStrategic report
Relationship with stakeholders
The Company values its dialogue with both institutional
andprivate investors
The Board’s primary contact with existing and prospective
institutional shareholders is through the Chief Executive Officer
and the Chief Financial Officer, who have regular meetings
withinstitutional shareholders. They also undertake analyst
presentations following the Company’s half-yearly and annual
financial results. They are supported by a financial relations
advisor and two corporate brokers, all of whom are in regular
contact with institutional and retail shareholders, and
withanalysts.
A report of feedback from each institutional investor meeting
isprepared by the broker who organised it and a report of
unattributed feedback from analysts on analyst presentations is
prepared by the financial relations advisor. All such reports and
coverage of the Company by analysts are circulated to the
Board. Consequently, all Directors develop an understanding
ofthe views of institutional shareholders and commentators.
Analyst presentations, following the announcement of half-
yearly and annual financial results, are webcast and available on
the Company’s website.
The Committee and Panel Chairs seek regular engagement
with stakeholders on significant matters as they arise. Further
detail can be found in each Committee report.
The Group issues its annual financial report to each of its
shareholders. In accordance with the UK company disclosure
regulations the Group does not distribute its half-yearly financial
report to shareholders but makes it available on its website.
We aim to provide all shareholders at least 20 working days’
notice of the Annual General Meeting at which all Directors
whoare available to attend are introduced and are available
forquestions. All shareholders are welcome to attend the
Company’s Annual General Meeting and to arrange individual
meetings by appointment. The views received at such meetings
are fed back to the Board.
Proxy voting
The proxy forms for the Annual General Meeting which was held
in 2024 included a “vote withheld” box.
Details of the proxies lodged for this meeting were announced
to the London Stock Exchange and are on the Company’s
website at www.clsholdings.com. Shareholders may also
chooseto register their vote by electronic proxy on the
Company’s website.
At the 2025 Annual General Meeting, the Company will comply
with the Listing Rules in respect of the voting requirements for
the re-election of independent Directors where a Company has
a controlling shareholder.
Key shareholder events
January
• 6 institutional investor meetings
February
• 1 institutional investor meeting
March
• Analyst presentation
• 33 institutional investor meetings
• 3 sales presentations
April
• 1 Investor Meet webcast viewed
by174 retail investors
May
• 1 institutional investor meeting
June
• 1 institutional investor meeting
August
• Analyst presentation
• 13 institutional investor meetings
• 2 sales presentations
September
• 11 institutional investor meetings
November
• 6 institutional investor meetings
2024 AGM
At the 2024 AGM, all the resolutions as set out inthe
Notice of Meeting were unanimously passed on a poll.
All financial reports and press releases are also
included on the Group’s website at
https://www.clsholdings.com/
CLS Holdings PLC Annual Report and Accounts 202472
Workforce engagement
Helping to enhance our workingenvironment
Dear Shareholder,
As the director responsible for workforce engagement, I am
pleased to report on the way in which we have engaged with
ouremployees across the Group and acted upon the feedback
we received.
Main activities during the year
As reported last year, this year we changed our approach to
workforce engagement. The Board agreed that, given the
different sub-cultures that exist in each region, a more
bespokeapproach should be adopted to gain specific
detailedunderstanding of country specific workforce matters.
Our process is to have bi-annual meetings in each country, with
one meeting in-person and the other via videoconference.
Weheld meetings in April and October via a series of “town hall”
meetings in the UK, Germany, France and Luxembourg. Given
the smaller groups, it meant that all employees were able to be
invited in each region. This met our aim to have a more diverse
range of views taking into consideration different employment
markets and working norms.
Following the town hall meetings I have reported our discussions
to the Board, which in turn assists it in ensuring we consider
these views when making key decisions.
Areas we discussed
We have now seen the benefits of in-person working, through
better communication and collaboration, whilst maintaining
flexibility for employees. There was a general feeling that
theculture of the organisation as a whole, together with the
cohesiveness of smaller teams meant that the delivery of the
Group’s values was as strong as ever. This can only be seen as
apositive in a difficult macro-environment where we see our
teams come together to focus on successfully delivering on
ourannual objectives.
There is always more we can achieve and our feedback from
thefirst meeting included the need for more communication
onthe activities in other key areas of the business, whether
thatbe internal or external messaging. We were able to meet
this objective through the publication of our new website and
implementation of a social media plan to raise the Group’s
profile and highlight several building specific projects and ESG
measures. This plan is ongoing.
I noted the feedback on gender diversity at the senior
leadership level, which I discussed with Fredrik Widlund and
theBoard. To reflect our organisation, promote wider discussion
and have more representation from our property teams, we
made four promotions to the Senior Leadership Team which
resulted in better gender balance.
Another area we sought to address was feedback on creating
long-term career journeys for employees. As explained in the
Nomination Committee report, since we are a small company
byheadcount career longevity is always going tobe a challenge,
but we have reiterated our training and development
programmes that are available to every employee to aid in
retention and motivation.
Overall, I welcomed the opportunity to meet our teams and
understand their challenges. What I most admired was that,
despite the industry wide headwinds, we have a very dedicated,
extremely motivated and forward thinking group of people that
aspire to deliver for the business.
Looking forward
With our new process for seeking workforce engagement now
in place, I believe this has offered a wider audience the ability
toprovide feedback on workforce policies and practices. The
Board have also expressed their thanks to our employees for
their open and honest feedback which they consider very useful
in the decision making process and understanding the culture
ofthe organisation. We will continue with this process and also
implement suggestions received to improve the ”town hall”
meetings which I hope will deliver further benefits to our Board,
senior leaders and the organisation.
Elizabeth Edwards
Chair, Workforce Advisory Panel
31 March 2025
Our focus for the year ahead
• Continue to oversee workforce engagement
through employee ”town hall“ meetings
• Continue to facilitate communication betweenthe
Board and employees
• Continue to discuss the views of theemployees
and review CLS’ workplacepractices
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 73
Corporate governanceStrategic report
Culture dashboard
Promoting an open, collaborative culture
Maintaining a healthy culture
The Board recognises the need to establish the correct culture,
values and ethics to ensure good standards of behaviour are
maintained throughout the Group.
Our culture is defined by our purpose, vision and values. More
information on these can be found on page 4. Together, they
promote an open and collaborative environment that enables
our workforce to operate at its best through an efficient
decision-making structure that facilitates ownership and
enables a hands-on operating process.
How the Board assessed and monitors culture
To ensure that our culture through our values is upheld within
the organisation, we engage with the business in a number of
ways. We have regular updates from the Chief Executive
Officer, we meet with senior managers across the business
through Board presentations, formal and informal meetings,
and property tours. We also receive feedback through Elizabeth
Edwards, our designated non-executive director for workforce
engagement, who chairs our “town hall” meetings that take
place across all regions and which are designed to ensure the
voice of the workforce is considered in our decision-making
process and our values are being implemented and upheld.
At each of our meetings, the Board also receives information
onhuman resourcing matters such as employee
turnover,diversity statistics, feedback (and action plans)
fromstaff surveys and an overview of matters discussed at
exitinterviews.
Through these feedback mechanisms the Board considers that
the organisation has the right culture in place that supports its
purpose and ability to deliver on its strategy.
The Board is also able to assess and monitor Group culture
through a range of key sources which are shown below.
Cultural priorities
Cultural identifier
Promoting
integrity and
openness
Valuing
diversity
Being
responsive to
the views of
stakeholders
Culture
aligned to
purpose and
values
Culture
aligned to
strategy
Staff surveys and regular meetings with staff
Regular feedback through the Town Hall meetings
Flexible Working Policy
Training budget per head
Whistleblowing Policy
Anti-bribery and Corruption Policy
Modern Slavery Policy
Anti-Tax Evasion Policy
Employee data (HR updates, turnover and exit interviewfeedback)
CLS Holdings PLC Annual Report and Accounts 202474
Division of responsibilities
The Board’s role
The Board has ultimate responsibility for setting the
Group’s strategic direction, leading and overseeing
culture, delivering value sustainably, understanding the
risks the Group faces and ensuring that we uphold the
highest standards of corporate governance.
Board and Committee structure
The Board is supported by the Audit, Remuneration,
Nomination and Disclosure Committees who update
Board members at each meeting. The Board discusses
issues arising from Committee meetings which allows
them to gain a wider understanding of the operation of
the Group.
Chair leadership and effectiveness
As the Group’s Independent Non-Executive Chairman,
Lennart leads the Board in promoting a culture of
openness and debate to ensure that the Board operates
effectively. It is the Board’s culture and accepted practice
to give regular feedback, but once a year a more formal
feedback session is undertaken with the Non-Executive
Directors, led by the Senior Independent Director without
the Chair present. This session reviews the Chair’s overall
performance, considering areas such as communication,
effective leadership and oversight of the Board and
company culture. The right “tone from the top” is key to
support our purpose, vision and values. Lennart and the
Board lead by example and the culture of openness and
collaboration resonates throughout the Group.
Roles and responsibilities of theDirectors
The Board’s composition and responsibilities are
setoutin a formal schedule of matters specifically
reserved to it for decisions. Matters reserved for Board
decisions include identifying strategic long-term
objectives, approving the annual Groupbudget, and
approving substantial property transactions and
investment decisions over £10 million.
The implementation of Board decisions and the
day-to-day operations of the Group are delegated
tothe Executive Directors.
All Board members are required to notify the Company
as soon as they become aware of a situation that could
give rise to a conflict or potential conflict of interest.
Atthe beginning of each Board meeting the Chairman
requires all Directors (including the representative of
the majority shareholder) to confirm that they do not
have a potential personal conflict regarding any item on
the agenda. If a conflict arises, the Director is excluded
from discussions and voting, unless the Board
unanimously decides otherwise.
Division of responsibilities
The responsibilities of the Independent Non-Executive
Chairman, who is responsible for the overall strategy of
the Group, the Non-Executive Vice Chair who supports
the Chairman, and the Chief Executive Officer, who is
responsible for implementing the strategy and for the
day-to-day running of the Group, are clearly divided. A
written statement of thedivision of these responsibilities
isreviewed and approved by the Board each year.
Board and committee structure
(as at 31 December 2024)
The Board
• Non-Executive Chairman (Independent upon appointment)
• Two Executive Directors
• Three independent Non-Executive Directors
• Two non-independent Non-Executive Directors
• Ensuring the Company’s growth and shareholder value
Remuneration
Committee
Three independent
Non-Executive
Directors
Develops the
Company’s policies
on executive and
senior management
remuneration and
sets the remuneration
packages of individual
Executive Directors
and other senior
management
Audit
Committee
Three independent
Non-Executive
Directors
Monitors the
arrangements for risk
management,
corporate reporting
and internal controls.
Maintains the
relationship with
theAuditor
Financial
Investment
Committee
Analyses financial
investment
opportunities and
reviews investment
portfolios
Asset Management
Committee
Reviews the Group’s
property
investments in each
country
CSR Committee
Assists in
implementing the
Group’s ESG
strategy in relation
tocreating shared
value within
thecommunity
Health and Safety
Committee
Reviews and
moderates the
Group’spolicy and
bestpractices for
Health andSafety
Group
Restructuring
Committee
Reviews and
approves proposals
for all subsidiary
company
restructuring
projects
Treasury
Committee
Reviews all
financings, debt
maturity, cashflow
and other key
treasury matters
Sustainability
Committee
Monitors and reviews
performance against
the sustainability
strategy, and reports
on bestpractice and
legislative changes
Nomination
Committee
One non-
independent
Non-Executive
Director
Three independent
Non-Executive
Directors
Monitors and
evaluates the Board’s
skills and experience
to ensure full Board
discussion
Executive
Committee
Reviews the daily
running of the
Group’sbusiness
Disclosure
Committee
Monitors inside
information and
closeperiods
Senior Leadership
Team
Reports on the day
to day operation of
the Group and
implementation of
strategy acrosseach
region and function
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 75
Corporate governanceStrategic report
Nomination Committee Report
Enhancing the skills and experience of the Board
Dear shareholder
On behalf of the Nomination Committee, I am pleased to
present my report as Chair of the Committee for the year
ended 31 December 2024. This report is intended to give an
insight into the work of the Committee during the year.
The Nomination Committee is responsible for ensuring that
theBoard consists of members who have the relevant skills,
experience and knowledge in order to set, and enable the
executive directors to deliver, the Company’s strategy.
Role of the Committee
The Committee makes recommendations to the Board with
regard to the nomination, selection and succession of directors
and senior executives. The Committee also focuses on ensuring
that there is appropriate succession planning in place, having
regard to the provisions of the UK Corporate Governance Code.
The Committee regularly evaluates the Board’s performance
and effectiveness both as a group and as individual directors,
and reviews the annual Board effectiveness process to ensure
itcontinues to operate in the best possible way.
Membership and attendance
The Committee met formally once during 2024 and held
frequent discussions outside formal meetings.
To ensure further independent representation on the
Committee, Eva Lindqvist became a member on 12 November
2024. At the year-end the Committee therefore comprised
fourNon-Executive Directors, three of whom are deemed
independent. Given that the Group has a Controlling
Shareholder, we recognise the need for independent oversight.
The Company Secretary acts as Secretary to the Committee
and its Terms of Reference are available on the Company’s
website.
Main activities throughout the year
The Committee continued to fulfil its core responsibility,
principally to:
• review the structure of the Board and its Committees and
ensure it has the right skills and experience.
• lead the process for Board appointments.
• ensure plans are in place for orderly succession of Board and
senior management positions.
• oversee the development of a diverse pipeline forsuccession.
• report on how the annual Board evaluation has
beenconducted
Set out below are the key areas of our work this year.
“ Our succession planning
will strengthen the skills
experience oftheBoard.”
Committee members’ attendance
during the year ended31December 2024
Anna Seeley
Lennart Sten
Elizabeth Edwards
Eva Lindqvist
CLS Holdings PLC Annual Report and Accounts 202476
Board composition and skills
At the year end, the Board consisted of a Non-Executive
Chairman (who was independent on appointment), two
Executive Directors, three independent Non-Executive
Directors and two non-independent Non-Executive Directors.
Of the two non-independent Non-Executive Directors: I am a
director of Creative Value Investment Group Limited (CVIG),
the investment vehicle for The Sten and Karin Mortstedt Family
& Charity Trust; and Bengt Mortstedt remains one of our largest
shareholders.
The Committee notes that while Board composition has not
complied with Provision 11 of the Code during the year, it
believes that the composition reflects the skills required to
meetthe current needs of the Group to ensure it will support
the delivery of its strategy.
We ensure that all Non-Executive Directors (both those
deemed to be independent and non-independent by the
Board) maintain their independent oversight of the Executive
Directors so that there can be no perception of undue
closeness. This is undertaken through our review of Board
composition, in light of the criteria set out in Provision 10 of
theCode, the Board effectiveness review process and the
Chairman’s annual review, which also considers the interaction
between Board members during meetings. This continues
todemonstrate that there is objective and independent
judgement, and that constructive challenge exists amongst
Board members.
As an additional process this year, because we recognise that
during the year both the Chair, Lennart Sten, and Elizabeth
Edwards, Senior Independent Director, have now served
morethan nine years, the Board considered their ongoing
independence. We took into account their other roles outside
ofthe Group, their time commitment and leadership and
contribution to discussions at Board meetings and concluded
that they remained independent.
We explained in last year’s report that the Board strongly
believes, during a prolonged period of economic uncertainty,
that providing continuity is essential and therefore Lennart will
remain in post-beyond nine years. We will keep this decision
under regular review annually. Elizabeth Edwards has confirmed
her retirement from the Board at the end of 2025, which will
facilitate a handover period for our new Board appointments as
explained below.
As one of our founding members, and after approximately
25years service as a director, Bengt Mortstedt retired from
theBoard at the end of February 2025.
Appointments to the Board
As recommended by the UK Corporate Governance Code,
theCommittee leads the process for Board appointments and
makes its recommendations to the Board for final approval.
Our process for Board appointments starts with the
Committee’s review of Board composition, taking into account
the skills, experience and background that it needs to fulfil
itsobjectives. If an appointment is recommended, it is the
Committee’s policy to use an open advert and/or an external
search consultancy for the appointment of the Chair and
Non-Executive Directors. In line with our diversity, equity and
inclusion policy, we expect our external search consultancy to
provide us with a diverse selection of candidates from which to
short list.
A detailed role specification is reviewed with the Chairman
andthe Committee following which a final role specification
isthen approved.
The Committee then initiates a two stage interview process,
with candidates first meeting members of the Committee,
thenother members of the senior leadership team.
Following these interviews, a shortlist of two candidates will be
made based on their level of experience, commercial focus and
broad skill sets, and a decision made.
Prior to making recommendations to the Board, the
Committeealso considers the time commitment expected
ofthe proposed director in line with any other commitments
they may already have.
Directors are also required to seek approval from the Chairman
and the Chief Executive Officer prior to accepting additional
commitments to ensure that they will be able to continue to
devote a suitable amount of time to the Company.
Professional development at a glance
Training and information
sessions
Site visits, Board dinners
and breakfast meetings
Briefing material onBoard portal
Deep dives on key topics
Management and
one-to-one meetings
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 77
Corporate governanceStrategic report
This year, we again considered the mix of experience, tenure,
background, industry knowledge and constructive challenge
atBoard meetings. It is the opinion of the Committee, and
endorsed by the Board, that the Chairman and all the Non-
Executive Directors bring independence of judgement and
character, a wealth of experience and knowledge, and the
appropriate balance of skills, which are appropriate to effect
oversight and implementation of the Group’s strategy.
Notwithstanding our review, we have also focussed on Board
succession planning given that Elizabeth Edwards will retire
fromthe Board at the end of 2025. In light of her skills and
experience, especially in relation to the German real estate
market we also confirmed that we would seek the appointment
of two new independent non-executive directors, one of whom
should have German real estate experience and the other listed
company and audit committee experience.
In accordance with our policy on the appointment of new
directors, we appointed an external search consultancy,
Sapphire Partners, who specialise in championing a diverse
range of candidates.
We are currently in the initial stages of the process and we
hopeto be able to announce new appointments during 2025.
Induction and ongoing development
It is important for all Directors, both Executive and Non-
Executive, when joining the Company, to be provided with,
andgiven an insight into, the Company’s operations, culture
andvalues.
I set out our induction programme, which has been designed
toinvolve a full overview of the Group and how it operates:
• Individual meetings with the Non-Executive Chairman,
ChiefExecutive Officer and the Chief Financial Officer.
• A programme of meetings with country leaders and senior
managers across the Group to understand key operational
matters.
• Bespoke tours of the Group’s portfolio and offices in the UK,
Germany and France.
• Meetings with other Non-Executive Directors.
As part of ongoing development, the Board aims to hold one
Board meeting a year either in France or Germany, preceded by
a property tour, so that it can gain first hand knowledge of the
activities, challenges and opportunities across the portfolio.
Our individual portfolio tours and Board meetings allow
Directors to engage directly with a range of employees below
Board level, which we believe is important in relationship building
and understanding our talent pipeline, people and culture.
Italso raises the profile and understanding of the role of the
Board and its governance responsibilities. Meetings are also
arranged with key advisors such as the external auditor,
valuersand brokers on an ongoing basis both at Board level
andindividually.
Ongoing training and development beyond the induction
process is encouraged, with updated schedules of events
produced at each Board meeting.
This year, the Board was able to visit our portfolio in Munich
where they also met with a number of our property team,
allowing them to gain a greater understanding of our properties
and meet more employees below Board level. We also
undertook a UK property tour in November, visiting a number of
our London properties and were able to meet with our property
teams and tenants at each location.
We are fortunate to have a Board that has established
relationships and I am pleased to see the strength of those
relationships develop.
Succession planning
In considering succession planning for the Board, the
Committee assesses its optimal composition in terms of skills
and experience, and aligns it to medium and long-term time
horizons primarily based on individual tenure and the need to
refresh Board membership. Because of the composition of
theCommittee, on which I serve as the representative of the
controlling shareholder, these plans are discussed with their
input. As noted above, no appointments are made without
fulland open discussion through an independent search
consultancy.
While identifying and developing talent across the Group
remains primarily the responsibility of management, we have
aduty to secure its long-term success.
Nomination Committee Report continued
1
Individual CEO meetings with
Heads ofFunctions
3
Identification of individuals’
development needs and timeline
5
CEO presents to the
NominationCommittee
2
Assessment of teams
and highperformers
4
Group-wide report compiled
6
Nomination Committee presents
key findings to the Board
Succession planning review process
CLS Holdings PLC Annual Report and Accounts 202478
The Committee received updates from the Chief Executive
Officer in relation to succession planning, both at Board and
senior management level, to ensure there is a good quality
pipeline in place. This enabled the Committee to challenge
those plans in order to understand the actions taken to enhance
the pipeline, ensuring there is representation from a diverse
range of employees.
During the year we have been able to monitor the Group
succession plans noting where we have potential internal
successors or where we have to undertake an independent
external appointments process.
The Committee is acutely aware that retaining talent is key to
the successful execution of our succession plans. We also
appreciate that, as a relatively small and flat organisation, this
can be challenging. Through monitoring, benchmarking and
career development opportunities we aim to retain our
besttalent.
Training
In order to ensure that the Directors’ knowledge and skills
remain up-to-date, Directors are encouraged to attend regular
training courses. We also provide for “deep dives” on different
subjects at each Board meeting so that Directors can keep up
to date with the latest developments in a wide range of topics.
The Company Secretary also provides regular governance
updates to the Board.
Diversity
The Board’s policy is that the selection of new Board members
should be based on the best individual for the role and that the
Board’s composition should have an appropriate balance of
skills and diversity to meet the requirements of the business.
At the end of 2023, female Board representation stood at 44%,
however this fell to 38% in 2024 following Denise Jagger’s
resignation. With our search for two new independent non-
executive directors, we expect this percentage will change
during 2025. We continue to have one senior board position,
the Senior Independent Director, held by a woman.
On recruitment, our policy is that we expect our search
consultants to ensure, where possible, there is a diverse
selection of candidates. We ensure that this is not just for
gender but also all diversity characteristics; a policy that we
encourage throughout the Group when recruiting. To this end,
we ask our search firms for all recruitment levels across the
Group to aim for a long list of at least 50% women and
appropriate diversity representation.
We recognise that there are significant benefits of diversity,
including age, gender, ethnicity, core skills, experience, and
educational and professional background, which we continue
toevaluate whenever changes to the Board’s composition
areconsidered.
As reported last year, we had work to do in relation to gender
diversity at senior management level. Following a review of the
senior leadership team by Fredrik Widlund to ensure better
representation from our property management functions
across our regions, we were able to achieve at the same time
greater gender diversity, which I very much welcome.
Our Diversity, Equity and Inclusion Policy underlines our
commitment to attracting, promoting and developing talent
nomatter who they are.
Board effectiveness review
Following an external review in 2023, our 2024 board
effectiveness review took place through an internal review
undertaken by questionnaire and followed up by an indepth
Board discussion at our November meeting. Further details
onthe outcome and actions from the review can be found on
pages 82 and 83 of this report.
Performance of the Committee
The Committee undertakes a review of its performance each
year. During 2024, this review was undertaken internally by
wayof a questionnaire and concluded that the Committee
continued to perform effectively and had unfettered access
tothe information and advice it needed to make informed
decisions on all matters related to remuneration.
Anna Seeley,
Chair, Nomination Committee
31 March 2025
Our focus for the year ahead
• Oversee the appointment of new Board members
• Annual review of our succession plans for the Board
• Annual review of succession plans and talent pipeline
below Board level
• Ongoing Board development
• Implement findings from internal Board
effectivenessprocess
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 79
Corporate governanceStrategic report
Nomination Committee Report continued
Board Diversity Policy
Objectives
Policy objectives Implementation
Ensure the Board comprises an
appropriate balance of skills,
experience and knowledge
required to oversee and support
the management of the Company
effectively.
The Committee continues to monitor the composition of the Board and meets at least
annually to review and discuss it. As explained above, an executive search firm, Sapphire
Partners, has been appointed to search for two new Non-Executive Director during 2025 to
replace the German real estate experience that will be lost when Elizabeth Edwards retires
from the Board and enhance our governance and audit committee experience.
Ensure consideration is given to
candidates for Non-Executive
Director Board appointments
froma wide pool, including
thosewith no listed company
Board experience.
The brief that is given to our independent executive search firms is to ensure that this Policy
objective is met. Whenconsidering appointments to the Board, the Committee endeavours
to consider candidates with a broad range of experience. No appointments were made in
2024. For our upcoming appointments, we will be using Sapphire Partners, a search firm
specialising in ensuring diversecandidates.
Ensure Board appointment ‘long
lists’ contain diverse candidates,
including diversity of social and
ethnic backgrounds, and cognitive
and personal strengths.
The brief that is given to our independent executive search firms is to ensure that this Policy
objective is met. Whenconsidering appointments to the Board, the Committee endeavours
to consider candidates with a broad range of experience. Whilst no Board appointments were
made in 2024, we will ensure that will be adhered to during our appointment process in 2025.
Targets
Policy targets Progress against target
40% women representation on
theBoard.
38% female representation on our Board at 31 December 2024 (2023: 44%).
Minimum of one Board Director
from an ethnic minority
background.
When the Board seeks to appoint a Non-Executive Director, it will expect its independent
consultants to ensure candidates come from a diverse range ofbackgrounds. Currently
notmet.
One senior Board position held
byawoman.
Elizabeth Edwards is our Senior Independent Director and therefore this target has been met.
Data on diversity of the board and executive management (at 31 December 2024)
A) Table for reporting on gender identity or sex
No of board
members
Percentage of
theboard
Number of senior
positions on
theboard
(CEO,CFO, SID
andChair)
Number in
executive
management
Percentage of
executive
management
Men 5 62 3 7 64
Women 3 38 1 4 36
Other – – – – –
Not specified/prefer not to say – – – – –
B) Table for reporting on ethnic background
White British or other White
(including minority-white groups) 8 100 4 10 91
Mixed/Multiple Ethnic Groups – – – 1 9
Asian/Asian British – – – –
Black/African/Caribbean/
BlackBritish – – – –
Other ethnic group, including Arab – – – –
Not specified/prefer not to say – – – – –
CLS Holdings PLC Annual Report and Accounts 202480
Snapshot of Company diversity
at 31 December 2024
1. Male = 5 62%
2. Female = 3 38%
1. Male = 64 52%
2. Female = 59 48%
1. Male = 2 100%
2. Female = 0 0%
1. Male = 7 64%
2. Female = 4 36%
Board tenure (years)Age ranges (total employees)
Composition of the Board
Ethnicity (UK employees)
Gender diversity
1. Executive 2
2. Independent 4
*
3. Non-Independent 2
1. 0 – 5 3
2. 6 – 10 2
3. 10+ 3
1. 19 – 29 19%
2. 30 – 39 24%
3. 40 – 49 24%
4. 50 – 59 23%
5. 60 – 79 11%
1. White 54%
2. Asian 18%
3. Black 2%
4. Mixed 3%
5. Did not respond 21%
6. Preferred not to say 2%
Board
Executive Committee All Employees
Senior Leadership team
* including the Chairman who was independent
uponappointment and, together with Elizabeth
Edwards, is deemed to be independent by
theBoard.
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 81
Corporate governanceStrategic report
Year 2
Internal questionnaire and
follow up on results of previous
performance evaluations
Year 3
Internal questionnaire and
follow up on results of previous
performance evaluations.
Year 1
Externally facilitated
questionnaire using Independent
Audit’s Thinking Board Software.
The process was divided
into fourstages:
Nomination Committee Report continued
Review of Board effectiveness
Appointment of consultants
The last external Board effectiveness
review was undertaken in 2023, by
Independent Audit Limited using their
online governance assessment service
Thinking Board. They have no connection
with CLS or any individual director.
Over the subsequent two years an
internal questionnaire is used to assess
Board effectiveness.
Each year, the results of the review
together with those of the previous year,
are discussed in detail and enable the
Board to understand better whether
there have been improvements in the
operation of the Board and also where it
can be enhanced.
Based on the results of the 2024 review,
this approach met the Board’s objective.
Board Effectiveness Framework
The process covered the key areas of: Board Leadership
andCompany Purpose; Division of Responsibilities; and
Composition, Succession and Evaluation.
The primary purpose of the review was to direct the Board’s
attention to areas where there might be opportunities to
improve its performance.
The report was broken down into themes, which corresponded
to the groupings of questions covering the key topics
highlighted in the chart.
After an introductory overview, each thematic section provided
a chart of the responses, with commentary that summarised the
findings, drew out key points, and contextualised the results
based on the experiences of other review processes.
The review was presented to the Board for discussion at its
November 2024 meeting.
1st Stage
Design and scope of questionnaire to
address core areas and key themes,
and facilitate the ability toprovide
confidential written responses to
where improvements could be made.
2nd Stage
External questionnaire including
follow up on results of previous
performance evaluations.
3rd Stage
Review of the results of the
questionnaire and benchmark
findings against the 2023 externally
facilitated review outcomes.
4th Stage
Presentation of report to the
Boardfor discussion and to preparea
plan for achieving desired outcomes.
Evaluation process
Board Evaluation Framework
Board Leadership and
Company Purpose
Engagement
Strategy
Leadership
Governance
Division of
Responsibilities
Succession
Challenge
Risk
Engagement
Composition,
succession and
evaluation
Structure
Role
Dynamics
Composition
CLS Holdings PLC Annual Report and Accounts 202482
2024 Internal Board effectiveness results and objectives for the forthcoming year
Three key areas within the internal Board Effectiveness Framework
2025 objective
1.
Leadership
There was unanimous agreement that members
work together on a basis of trust and openness,
thatthe right people are around the table and that
Directors have a good understanding of their duties.
There was a consistent view that the Chairman led
and listened, and this was also true for the CEO.
Members agreed that they kept abreast of changes
to the regulatory and governance landscape, and
concluded that as a result they were effective in
discharging their duties.
Enhanced focus on Board succession planning to
ensure skills and experience are enhanced following
Elizabeth Edwards’ retirement from the Board.
2.
Accountability &
Risk
The Board considered that sufficient time had been
allocated to the strategic opportunities, risks,
emerging technology and changes in the real estate
industry, and that consideration of scenario planning
had improved. The Board considered the additional
focus on internal controls and risk/scenario planning
had also improved during the year.
More monitoring of culture to provide assurance that
the agreed values are being embedded.
Ensure regular feedback on employee matters to
ensure it is in line with values and long-term success
of the business.
Continue the programme of more contact with
senior leaders below Board level and better
interaction with employees at all levels.
3.
Board &
Committee
operation
Members agreed that there was a good balance
between operational and strategic matters, and
thatfree discussion facilitated better oversight of
the monitoring of organisational risks and controls.
Itwas noted that there was appropriate challenge
ofthe views of the Chair, and CEO, which had
created a feeling of mutual respect and
understanding between members. Whilst there was
an agreement that the Board communicated well
with key stakeholders, efficiencies could be gained
from more streamlined presentations.
More time for deep dives on alternative strategic
options.
More concise presentations from valuers.
More updates in between meetings and contact with
other non-executive directors.
4.
Board dynamics
Board dynamics are positive and information was
considered to be of a high standard, clear and
comprehensive. Meetings were well chaired and
supported by the Secretariat. Additional informal
conversations with the Chair would be welcomed in
between meetings.
Continue with property tours which allows the Board
to spend more time together to build relationships.
Increase interaction with the Chair through
dedicated one to one sessions. Facilitate
opportunity to spend more time with executive
andmanagement teams to share experiences.
Objectives and outcomes arising from 2023 external board evaluation results
Objectives Outcomes
Continue to have: more contact with senior leaders below Board level; and better
interaction with employees at all levels.
Continuation of “Deep dive” presentations from senior leaders below Board level.
Increased participation on property tours from key property managers.
Monitoring of culture to provide assurance that the agreed values are
beingimbedded.
Implemented enhanced reporting from HR, with more detail around exit
interviews and statistical analysis.
Town Hall meetings where all employees are invited to attend, facilitating an
understanding of the Group’s culture and values.
Enhanced focus on the “big trends” and resulting key risks to ensure resilience of
the business model.
Key focus session at the Strategy Board meeting to understand challenges and
opportunities in the real estate market.
Continue to consider the skills of the Board for future NED appointments,
specifically in the European market.
Nomination Committee review of Board composition and succession planning
undertaken. Appointment of external search firm for two independent
non-executive directors; one with specific German real estate experience and
the other with governance and audit committee experience.
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 83
Corporate governanceStrategic report
Dear shareholder
On behalf of the Audit Committee, I am pleased to present the
report of the Committee for the year ended 31 December
2024. This report is intended to provide an insight into the
workof the Committee during the year.
Role of the Committee
The Committee’s main roles and responsibilities are set out
below and reflect the Code provisions. The Committee has
Terms of Reference, which are reviewed annually and are
available on the Company’s website.
Membership and attendance
Our Committee is comprised entirely of independent
non-executive directors.
My experience means I have recent and relevant financial
experience, and my fellow Committee members all have significant
experience of the real estate and other commercial sectors,
including other audit committees on which they sit. Further
detailsof our experience can be found on pages 68 and 69.
The Committee met four times during 2024.
This year the Committee has focussed on a number of
significant areas.
Valuations
Whilst inflation has reduced to more normal levels, we now
expect interest rates to remain higher for longer. This has
impacted the Committee’s key considerations when assessing
the changing risk environment. This year, our focus was to
ensure that, in light of the ongoing challenging market
conditions, the assumptions made by the valuers underpinning
the valuations were adequately robust. We received
presentations from our valuers in each region and had the
benefit of reviewing their reports in advance. This enabled
theCommittee to challenge the valuers where there was a
significant valuation variance fromprior period ends. The
Committee is of the view that the valuations are appropriate.
Further commentary on matters relating to valuations are set
out below.
Going Concern
The Committee continued to monitor and review the Going
Concern assessment.
At the half year and the year end, the Committee noted that in
both the “Base Case” and the “Severe but plausible” scenario,
the Group is reliant upon itsability to both refinance maturing
debt and to complete a number of investment property
disposals in the going concern period in challenging market
conditions. Management remain confident that, whilst sufficient
refinancing and property disposals would be achieved, the
planned refinancings of facilities falling due within the going
concern review period, and planned property disposals, were
outside management’s direct control. Consequently we
reached the conclusion that a material uncertainty existed in
both the “Base Case” and “Severe but plausible” scenario that
could cast significant doubt on the Group’s ability to continue as
a going concern.
The Auditors reviewed Management’s paper on the assessment
of the Group’s going concern and they also agreed that a
material uncertainty existed.
Audit Committee Report
Ensuring oversight, risk management
and integrity of financialreporting
“ This year we have
made good progress
considering how we will
comply with the new
Code’s requirements
on internal controls.”
Committee members’ attendance
during the year ended31December 2024
Bill Holland
Elizabeth Edwards
Eva Lindqvist
CLS Holdings PLC Annual Report and Accounts 202484
CoreStream Database
The Board
Audit Committee
Material controls
During the year, Management executed all scheduled
refinancings and negotiations have started on a significant
proportion of2025 loans.
Notwithstanding the material uncertainty, after due
consideration, the Committee is satisfied that the assessment
of the going concern basis and statements made inconnection
with it are appropriate. In addition, having taken into account the
key judgements made in relation to the goingconcern period,
and the current progress on both the refinancings and sales, the
Committee agreed that there is a reasonable expectation that
the Group will be able to continue in operation and meet its
liabilities as they fall due and to continue as a going concern for
the period to at least 31 July2026.
Review of Internal Controls
During the year, Management undertook a comprehensive
review of material internal controls covering the key risk areas.
Material controls were also tested. The diagram below provides
a general summary of these across the Group.
Key internal controls tested for effectiveness in 2024 include:
• Financial – authorisation procedures, financial monitoring and
reporting controls
• Treasury & Tax – covenant compliance, bank reconciliations,
REIT tax assessment controls
• Operational – approval of new leases and renewals, tenant
credit checks, safety compliance, valuation information
• Governance & HR – policy adherence, whistleblowing,
Groupcommittee oversight
• IT – cyber security training, cyber penetration testing
• Sustainability – Net Zero Carbon pathway and ESG
monitoring controls
The testing results were presented to the Committee
throughout the year for review. It was noted thatwhile there
were no major control failings, minor process improvements had
been made where appropriate.
Sustainability
This year, a new sustainability data platform was implemented
which provides instant management information in relation to
energy (and therefore carbon) consumption and our progress
against the Net Zero Carbon Pathway, all of which will enable
our property management teams to focus resources to achieve
further energy and carbon savings.
The Committee remained satisfied with the current process for
sustainability data assurance, which was provided by a suitably
qualified external consultant.
Corporate Governance
We have aligned our key processes and procedures to position
ourselves for compliance with the revised UK Corporate
Governance Code and will report against these requirements in
our next annual report.
Financial
The financial controls ensure robust
oversight and accountability within the
organisation. They provide a structured
framework for approvals and
segregation of duty controls, budgeting
oversight, payroll approvals, monitoring
financial performance and analysing
variances.
Governance & HR
The governance and HR controls
ensureorganisational resilience and
compliance. They provide a framework
for business continuity, regulatory
compliance and ethical conduct.
Thisensures legal compliance and a
supportive environment for employees.
Treasury & Tax
The treasury and tax controls ensure
robust cash management and
compliance. They provide a framework
for monitoring loans, covenant
compliance checks, and regular oversight
over current and future financing
decisions and REIT and tax compliance.
This ensures effective oversight of
financing and tax activities and
adherence to regulatory requirements.
Sustainability
The sustainability controls ensure
theorganisation’s commitment to
environmental goals. They provide a
framework for tracking progress on
theNet Zero Carbon Pathway and
ESGKPIs. This ensures accountability,
continuous improvement and alignment
with sustainability objectives.
IT
The IT controls ensure the security
andintegrity of critical systems and
data. They provide a framework for
restricting access, enhancing
cybersecurity awareness and regularly
testing system defences. This ensures
robust protection against cyber threats
and unauthorised access.
Operational
The operational controls ensure
efficiency and compliance in daily
activities. They provide a framework for
leasing activities, procurement, tenant
credit checks, maintenance audits,
health and safety, and emergency
preparedness. This ensures smooth
operations, safety and effective
property management.
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 85
Corporate governanceStrategic report
Audit Committee Report continued
Main activities during the year
Principal responsibilities of the Committee
Areas of responsibility Key areas discussed and reviewed by the Committee during the year in discharging its responsibilities
Monitoring the integrity of the
financial statements and any
formal announcements relating
tofinancial performance, and
reviewing significant financial
reporting judgements
contained inthem
At our meetings in March 2025 and August 2024 we reviewed the full year and half-year results,
respectively. This was in conjunction with the external audit report from BDO, our external
auditor, on the year-end financial statements.
We challenged management on the integrity of those financial statements and our discussions
with them focused on the significant financial judgements which are explained in the next table.
Providing advice on whether
the annual report and accounts,
taken as a whole, is
fair,balanced and
understandable, andproviding
theinformation necessary for
shareholders to assess CLS’
position and performance,
businessmodel andstrategy
We reviewed the 2024 annual report and accounts at our Committee meetings in February
andMarch 2025, and reported our conclusions to the Board that it contained sufficient
information for shareholders to assess the Group’s performance and strategic operations.
We also considered the Alternative Performance Measures (‘APMs’) that CLS uses alongside
statutory figures and concluded that these should remain unchanged from last year and that
these assist in providing stakeholders with additional useful information on the underlying
trends, performance and position of the Group. Note 5 and the Supplementary disclosures
tothe financial statements give a full description and reconciliation of our APMs.
Additionally, having considered how the report was formulated, reviewed internally and by the
external Auditor, we considered that the 2024 annual report and accounts meets the criteria set
out in Provision 25 of the Code and recommended them to the Board. The Board’s statement is
set out on page 111.
Our focus for the year ahead
• Ensure valuations and assumptions underpinning the
valuations are appropriate
• Monitor principal and emerging risks to ensure the risk
register remains appropriate and mitigations are in place
• Review and monitor internal controls and receive regular
updates on internal controls testing
• Receive regular reviews on the implementation of MRIx,
a new property and finance software system, and
CoreStream, our risk management software
• Foster a good working relationship with the external
auditor, with a focus on the key issues outlined in each
audit report during the year
• Monitor the impact of changes to accounting and
governance laws and regulations
• Monitor sustainability data reporting and processes
Cyber Risks
During the year, we received presentations from our Head of IT
outlining the steps the Group had taken to reduce the potential
for a cyber security incident. This included penetration testing,
which showed that our security defences were sufficiently
robust, and the IT training to assist employees in preventing
risks entering our IT environment has been effective.
Performance of the Committee
The Committee undertakes a review of its performance each
year. During 2024, this review was undertaken internally by
wayof a questionnaire and concluded that the Committee
continued to perform effectively and had unfettered access
tothe information and advice it needed to make informed
decisions on all matters related to remuneration.
Audit Tender
This year we also conducted an external audit tender
inaccordance with the FRC’s guidance and statutory
requirements. Of the three firms invited to tender, we
recommended to the Board that BDO LLP should be
appointedas external auditor, given that they had the
requisitequality, skills and technical competence, including
sector specific experience. Further details are set out below.
Bill Holland
Chair, Audit Committee
31 March 2025
CLS Holdings PLC Annual Report and Accounts 202486
Areas of responsibility Key areas discussed and reviewed by the Committee during the year in discharging its responsibilities
Reviewing our risks, risk
management systems and
internal financial controls
The Committee assists the Board in undertaking a robust assessment of the Group’s principal
and emerging risks. It receives reports at its meetings which identify principal risks and any
movements in them, which it then reviews and reports to the Board on its findings, for wider
discussion and approval. The ways in which the Group’s principal and emerging risks are
identified and addressed are set out on pages 56 to 62.
We reviewed the overall status of the principal risks and uncertainties, the changes in risk profile
in 2024 and the current direction of travel for 2025. It was noted that in 2024, the risk profiles
remained largely unchanged. In regard to the current direction of travel of the risks faced, our
assessment deemed that there would be no material changes in the risk profiles. We will
continue to monitor any changes to the Political & Economic risk profile and any adverse effects
this may have in the market.
As explained on page 56, during the year, in addition to reviewing the established framework for
internal controls and risk management systems, the Committee received and discussed reports
from management on the operation and testing of the Group’s internal controls.
We also continued to monitor the roll-out of the Group’s new property and finance system,
which is now live in the UK and France. German implementation was delayed due to software
deficiencies and is now expected to be in Q1 2025. The system is now starting to provide the
operational efficiencies expected, following a significant amount of testing and development.
Monitoring and reviewing
annually whether there is a need
for an internal audit function
In light of the size and complexity of the Group, and the regular updates the Committee
receives on internal controls operation and testing, the Committee considers that there remains
no requirement for an in-house internal audit function. How assurance on internal controls is
achieved is set out on page 85 and pages 56 and 57.
Conducting the audit
tenderprocess and making
recommendations to the Board,
about the appointment,
reappointment and removal
of the external auditor, and
approving the remuneration
and terms of engagement of
the external auditor
Our competitive tender process started in May 2024, in which the incumbent auditor and two
challenger firms were invited to participate. The Committee assessed their skills, experience and
relevant sector knowledge.
Following the Committee’s review of the two final possible audit firm options and its
recommendation to the Board, BDO were appointed as the Group’s external auditor on
8 September 2024. They will stand for appointment at the 2025 AGM.
The Committee reviewed the fee for the 2024 audit at its meeting in November 2024 and
confirmed that it was appropriate.
In undertaking this tender, the Committee considers that it has complied with the provisions of
the Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of
Competitive Tender Processes and Audit Committee Responsibilities) Order 2014.
Reviewing and monitoring
theexternal auditor’s
independence and
objectivity
The Committee receives a report from the external auditor on their continued independence,
contained in their report at the year end and at the planning meeting in November. Following
consideration, the Committee considers BDO remains independent and objective in its external
audit of the Group.
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 87
Corporate governanceStrategic report
Areas of responsibility Key areas discussed and reviewed by the Committee during the year in discharging its responsibilities
Reviewing the effectiveness of
the external audit process,
taking into consideration
relevant UK professional
andregulatory requirements
We reviewed BDO’s reports on the external audit strategy from the audit of the annual report
and accounts. We found the reports to be comprehensive, sufficiently detailed andfocused.
We also met with the auditor prior to the Board’s final approval of these financial statements in
order to receive reports on the external audit process. The Committee is pleased to report that
there were no issues of a material nature that needed to be brought to the Board’s attention.
After the external audit process has taken place the Committee meets with internal
stakeholders to review the effectiveness of the external audit process. This is fed back to
ourexternal audit partner. We consider that BDO provided an effective audit and that key
accounting and auditing judgements had been identified and reported in line with regulatory and
professional requirements. This allowed us to recommend their reappointment to the Board.
The Audit Committee also met with BDO during the audit process without management
present to ascertain if there were any concerns, to discuss the audit reports and to ensure that
the BDO received the support and information requested from management. No concerns
were identified.
The FRC undertook an inspection of Ernst & Young LLP’s audit of CLS Holdings plc’s financial
statements for the year ended 31 December 2023. They assessed the audit as “Good” with no
Key or Other Findings arising from the inspection.
Developing and implementing
apolicy on the engagement of
the external auditor to supply
non-audit services, ensuring
there is prior approval of
non-audit services, considering
the impact this may have on
independence, taking into
account the relevant
regulations and ethical
guidance, and reporting to the
Board on any improvement or
action required
The Committee has developed a policy on the supply of non-audit services to safeguard
auditor independence and objectivity. The policy reflects the requirements of the FRC’s
ethicalstandard.
During the year non-audit services undertaken by the external auditor amounted to £nil
(2023: £nil, £77,000 for the previous auditor in respect of an interim review and provision of a
technical financial reporting database).
The Committee considers that it has complied with the provisions of the Statutory Audit
Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender
Processes and Audit Committee Responsibilities) Order 2014.
Audit Committee Report continued
CLS Holdings PLC Annual Report and Accounts 202488
Significant issues considered by the
Committee relating to thefinancial
statements How these issues were addressed by the Committee
Property valuations The Committee met with the Group’s UK, German and French valuers during the year and
extended an invitation to the whole Board to attend. During the meetings we discussed the
methodology used for the six monthly valuations of the Group’s properties and received
in-depth reports on the local markets in which the properties were located.
We discussed the risks and opportunities for the key properties in each location that were of
significant value or had the largest changes in valuations to better understand our long-term
plan for each property. Independently, the external auditor also met with the Group’s valuers
using real estate specialists and provided the Committee with a summary of their review
contained within their report at year end.
The Committee was satisfied with the explanations provided by the valuers in relation to the
portfolio and that the methodology, assumptions and judgements used were appropriate.
TheCommittee recommended to the Board that the valuations were suitable for inclusion in
thefinancial statements and the work of the auditor was appropriate.
Going concern and viability
statements
As described above, the Committee considered management’s assessment of the Group’s
going concern and viability statements.
In accordance with Provisions 30 and 31 of the UK Corporate Governance Code, our going
concern and viability statements, and the methodology used in their preparation, can be found
onpages 63 to 65.
Revenue recognition The Committee considered the main areas of judgement exercised by management in
accounting for revenue, including the treatment of rent, lease incentives and service charge
income. The external auditor confirmed that they had audited the timing of revenue recognition,
treatment of rents, service charge income, other property-related income andlease incentives,
and assessed the risk of management override. Based on the audit procedures performed, they
did not identify any matters to bring to the Committee’s attention. The Committee, having
consulted with the external auditor, concurred with the judgements applied by management and
was satisfied that revenue is appropriately recognised and reported.
Significant transactions The Committee considered there to be no significant transactions during the year that were
outside the ordinary course of business.
Management override
ofcontrols
The Committee assessed the framework for financial controls, which are regularly updated by
management and brought to the Committee for review and approval. The Committee found no
concerns arising from its review.
The external auditor performed planned audit procedures on the key areas which may be
susceptible to management override. This included identifying fraud risks during the audit
planning stages, making inquiries of management about risks of fraud and the associated
controls, considering the effectiveness of management’s controls designed to address the risk
of fraud and performing specific procedures regardless of identified risks, including journal entry
testing. The external auditor confirmed to the Committee that they did not identify any matters
that suggested there had been instances of management override during the year.
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 89
Corporate governanceStrategic report
Remuneration Committee Report
Balancing reward with performance
Dear shareholder
I am pleased to present the Report of the Remuneration
Committee (“Report”) for the year ended 31 December 2024.
2024 was my first full financial year as Chair of the Remuneration
Committee (the ‘Committee’) having joined the Board in
September 2023.
The2023 Directors’ Remuneration Policy, which received
99.17% shareholder support and can be found in the 2022
Annual Report and on the Company’s website, isin its final year
and as such we plan to undertake a review and bring a new or
amended Policy forward for shareholder approval at the 2026
Annual General Meeting.
The sections contained in this Report are:
• this Annual Statement from the Chair of the Committee; and
• the Annual Report on Remuneration which explains how we
havepaid our Directors under the current Policy this year
andhow our framework aligns with our wider strategy and
corporategovernance best practice, as well as how we consider
remuneration of the wider workforce in relation to executive pay.
As in previous years, the Report comprising the Annual
Statement and the Annual Report on Remuneration are subject
to a single advisory shareholder vote at the AGM, which will be
held on 16 May 2025.
2024 Group performance and outcomes
The last few years have been challenging for the real estate
industry as a whole and 2024 was no different.
The expectation of the extent to which interest rates would fall
has impacted both the activity of investment markets and
associated financing costs. The impact of impending higher
employment costs for businesses from increased taxes in the
UK has also impacted business confidence and therefore
decision making. These macro economic factors have had an
impact on the overall results of the Group and the achievement
of KPls.
As set out in the CEO report, the Board’s focus for the
executive team was to continue to drive lettings and complete
the required refinancings. We have been highly successful at
both, with record lettings, ahead of ERV, and delivering our
programme of refinancings.
However, there were fundamental market conditions that were
outside the control of the Directors and held back performance.
The investment market continues to be subdued, causing
delays in the sale of some properties and leading to
opportunistic and unrealistic offers. We also continue to pause
acquisitions. Valuation declines continued, although they have
stabilised and we are hopeful that the macro economic position
improves in the coming years.
Continuing to focus on our tenants’ needs and developing
effective working relationships has shown we are able to deploy
our in-house resources quickly and effectively as our tenants’
needs evolve.
“ We have considered
both operational and
market performance when
analysing outcomes and
setting executive pay.”
Committee members’ attendance
during the year ended31December 2024
Eva Lindqvist
Bill Holland
Lennart Sten
CLS Holdings PLC Annual Report and Accounts 202490
Our 2023 final dividend was payable in May 2024 and our
2024interim dividend in October 2024. On both occasions,
theBoard carefully considered the overall performance of
theGroup and concluded that it was appropriate to pay the
dividends in line with our existing dividend policy. Given the
overall performance of the Group and the benefits of retaining
funds to invest in opportunities in our property portfolio, the
Board has decided to propose a 2.68 pence final 2024
dividendwhich, together with the interim dividend, results in
a5.28 pence full year dividend, which is 1.73x covered by
EPRAearnings.
The Committee considered these efforts and achievements
toensure they were reflected in remuneration outcomes as set
out below.
Annual Bonus key performance indicators
The 2024 annual bonus was based 40% on EPRA Earnings
pershare (“EPRA EPS”), 15% on Total Accounting Return,
25%on EPRA Vacancy rate and 20% on strategic objectives.
Provisional targets were set prior to the start of the year and
were finalised during the year to take into account internal
forecasts and the external outlook.
EPRA EPS was 9.16 pence, which was below target but above
threshold resulting in a bonus of 39.9% of the maximum for this
element. This was driven by increased net rental income but
offset by higher financing costs.
Total Accounting Return, based on EPRA NTA, was –11.9%,
which was below threshold resulting in no bonus for this
element. This fall in NTA from 253.0 to 215.0 pence per share
was almost entirely as a result of revaluation declines, including
the impact of sterling strengthening against the euro.
EPRA vacancy rate was 12.7%, which was below target but
above the threshold resulting in a bonus of 44.2% of the
maximum for this element of the bonus. Although we also
sawstrong lettings demand across the existing portfolio with
significant lease deals in all three countries, there were a large
number of refurbishments made available to let during the year,
which resulted in the vacancy rate being higher than anticipated.
The Strategic Objectives were reviewed and, following
discussion, the Committee agreed that the Executive Directors’
performance had been excellent, such that it approved to
award100% of the maximum available bonus for this element.
The overall bonus payout is, therefore, 47.0% of maximum.
The Committee determined that, taken as a whole, the slightly
below target attainment against our annual bonus measures
broadly reflected the performance of the Group in challenging
market conditions. We also noted that some external factors
(outside management’s control) had impacted the ability to
achieve the stretching targets which had been set at the start
ofthe year. For example, the extent to which macro elements,
such as the decline in property values during the year, impacted
the NTA, and a change in government policy resulting in a shift
in the anticipated rate of interest rate cuts during the year
impacted our EPS performance. Despite these headwinds, the
Committee concluded that no discretionary adjustment was
warranted in relation to the formulaic outcome from the annual
bonus scheme.
LTIPs
The 2021 LTIP Awards were granted on 10 March 2021 and
performance was assessed over a 3 year period ending on
31 December 2023.
As reported last year, the relative TSR element was below
median and therefore resulted in nil vesting under this
elementof the award. The EPRA NTA per share calculation
wasundertaken after last year’s report was published and
performance was also below the median. Therefore, the
overallvesting for the 2021 LTIP was Nil.
The 2022 LTIP Awards were granted on 16 March 2022 and
performance is assessed over the 3-year period ended
31 December 2024. CLS’s TSR was below median and therefore
has resulted in nil vesting under this element of the award.
Thefinal assessment against the relative TAR (EPRA NTA)
pershare performance condition will be considered when all
comparator group companies have published their 2024
EPRANTA per share figures. When available, the Committee
will assess the achievement against the performance targets
under both measures to determine thefinal vesting level. The
2022 LTIP’s final vesting outcome will be reported in next
year’sreport.
Discretion
The Committee did not exercise discretion in relation to the
formulaic outcomes of the 2024 annual bonus, 2021 LTIP award
or PIP Element A run off award.
Implementation of Policy for 2025
Salary increase
The Committee reviewed base salaries forthe Executive
Directors in the context of the currenteconomic environment
and increases awarded to ourgeneral employee population. As
a result, a 3% uplift was awarded to both Fredrik Widlund and
Andrew Kirkman from 1 January 2025, mirroring the percentage
increase awarded tothe wider workforce.
Variable pay
Bonus potential remain unchanged at150% of salary and 125%
of salary for the CEO and CFOrespectively.
Our 2023 Policy includes the ability to grant LTIP awards with a
face value of up to 200% of salary and recent practice has been
to grant awards below this limit, at 150% of salary for the CEO
and 120% of salary for the CFO.
Recent awards have vested at relatively low levels (2020 –
29.9%, 2021 – 0% and 2022 – 0% (estimated)) and inflight
awards granted in 2023 and 2024 are likely to have little value
based on current estimates. The Committee believes LTIP
awards should be motivational and retentional, and the current
lack of value delivered (and forecast to be delivered) has
created retention and motivation issues internally. Reflecting
this, the Committee has considered carefully the approach for
the 2025 LTIP and has decided to make awards at 175% and
145% of salary for both the CEO and CFO, respectively, which
remain well below the 200% limit contained in the Policy.
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 91
Corporate governanceStrategic report
Remuneration Committee Report continued
The Committee is fully aware of the fall in share price in recent
years and the guidance around reducing award levels in such
cases. However, given the personnel pressures facing the
business and the desire to put in place a meaningful LTIP award
to drive performance and retain key staff, the Committee
believes the higher LTIP award level in 2025 is in the best
interests of shareholders. Stretching performance targets
based on achieving a recovery in the share price and closing
theNTA to share price discount will apply. The Committee will
review the vesting outcome and will adjust vesting if it is felt that
there have been windfall gains.
Performance Measures
Annual Bonus
The Committee reviewed the 2025 performance measures for
the annual bonus and LTIP, and proposed the annual bonus
metrics as set out below:
• EPRA EPS – 30% weighting (previously 40%)
• EPRA vacancy rate – 25% weighting (no change)
• Group Loan To Value – 15% weighting (new KPI)
• Strategic objectives (including ESG) – 30% weighting
(previously 20%)
The Board is focused on reducing LTV and has therefore
included this as a bonus measure for 2025. There are a number
of key operational and strategic projects that we consider
require significant focus to achieve, such as the significant
quantum of refinancings, hence an increase in the strategic
objectives weighting. The Committee will review the balance of
measures again for 2026 as part of the review of the Directors’
Remuneration Policy during 2025.
The strategic performance element includes ESG objectives
which both reflects broader investor views and ensures that the
Executive Directors are rewarded for effective delivery against
the company’s ESG strategy.
LTIP
In conjunction with the decision to increase the award level for
2025, the Committee has considered the appropriateness of
the LTIP performance measures in light of the medium-term
strategic objectives of the Group. The following measures
willapply:
• 35% Absolute Total Shareholder Return (Share price and
dividends)
• 35% Absolute Total Accounting Return (NTA plus dividends)
• 30% Relative Total Accounting Return (NTA plus dividends)
We have removed relative TSR this year given the lack of
comparable UK-listed real estate businesses focused on
European offices which reduces its effectiveness as a metric.
Instead, absolute TSR measure will be included. Driving growth
and value through the existing portfolio is a key objective for
CLS and therefore TAR will account for 65% of the LTIP.
Furtherdetails on the targets are set out on page 106.
Concluding remarks
The Group has continued to face headwinds as a result of the
current economic climate and in this context the Committee
believes that Executive Director bonus and LTIP outcomes for
2024 are reflective of the results contained in this annual report.
The Committee wishes to motivate and retain the current
executive team and, in this context, has decided to increase the
2025 LTIP grant level contained in the shareholder-approved
Policy, but remain below policy limits. Webelieve our approach
to pay aligns with the Company’s strategy of growing
profitability and delivering appropriate returns. We trust that this
report will answer any questions you may have in respect of
remuneration, and we would be glad toreceive your support at
the 2025 AGM in respect of the advisory vote on the Annual
Report on Remuneration.
As this is the final year of our current Policy, we will be
undertaking a comprehensive review of remuneration and will
be seeking input and feedback from our leading shareholders,
before putting forward a new or amended Policy for approval
in2026.
Finally, I want to recognise that the Company’s performance
would not be possible without the hard work shown by our
employees during these challenging times. To all staff – thank
you for your dedication and commitment to making CLS the
strong business it remains today.
Eva Lindqvist
Chair, Remuneration Committee
31 March 2025
Our focus for the year ahead
• Oversee the implementation of the Remuneration
Policy in relation tothe Executive Directors and the
workforce generally
• Monitor performance against KPIs
• Continue to ensure consistency of approach and fair
pay conditions across the Group and seek expert
advice and market data to inform decisions
• Ensure Company performance is appropriately
reflected in any performance-related pay element of
remuneration
• Initiate shareholder consultation in preparation for a
new or amended Remuneration Policy in 2026
CLS Holdings PLC Annual Report and Accounts 202492
Company
Strategy
We acquire the right properties
• Invest in high-yielding properties, predominantly offices, with a focus on cash returns
• Diversify market risk by investing in geographical areas with differing characteristics
We secure the right finance
• Target a low cost of debt
• Utilise diversified sources of finance to reduce risk
• Maintain an appropriate level of liquid resources
We deliver value through active management and cost control
• Maintain high occupancy rates
• Maintain a diversified customer base underpinned by a strong core income stream
• Maintain strict cost control
We reward shareholders, customers and employees
• Grow dividend in line with growth of the business
• Provide cost effective accommodation by investing profits back into the business
• Reward employees for their work and loyalty
We continually assess whether to hold or sell properties
• Focus on holding those properties with the potential to add value through active asset management
• Sell those properties which are low yielding or where the risk/reward ratio is unfavourably balanced
Remuneration
Principles
Our Group strategy informs our Remuneration principles
and our structure supports these objectives
Competitive • Salaries are targeted to be at a conservative level and variable pay is targeted at above
median so that combined, total remuneration should be competitive when compared
with companies of similar size and scale, i.e. peers in the FTSE 350/Small Cap real
estatesector.
• LTIP ensures more competitive market positioning, provided that the executive team
delivers long-term sustainable performance.
Link to Code Provision
40 factors:
• Alignment to culture.
• Proportionality.
Performance • A significant part of the Executive Directors’ reward is determined by the Company’s
success in delivering its strategy.
• Failure to achieve threshold levels of annual and long-term performance may result in no
bonus and/or no vesting of the LTIP.
• The fixed element of the Policy remains conservative against industry and sector peers.
• The Committee retains discretion to adjust pay outcomes if they do not reflect wider
business performance in line with best practice.
Link to Code Provision
40 factors:
• Predictability.
• Alignment to culture.
Shareholder
aligned
• A considerable part of the reward is paid in shares combined with significant shareholding
requirements.
• Annual bonus over 100% of salary will be deferred in shares and vest after 3 years subject
to continued employment.
• In the case of the LTIP, deferral applies over a period of 5 years from grant. This allows
the build up and retention of meaningful shareholdings by the Executive Directors.
• Post-employment shareholding requirement increases lock-in over longer term and
incentivises effective long-term decision making.
Link to Code Provision
40 factors:
• Risk.
• Alignment to culture.
• Clarity.
Simple and
transparent
• All aspects of the remuneration structure are clear to participants and openly
communicated.
• The annual bonus is aligned to market practice.
• The LTIP is also aligned to standard market practice and is simple to understand.
• The overall framework for remuneration is therefore aligned with good governance.
Link to Code Provision
40 factors:
• Simplicity.
• Clarity.
Our chosen incentive plan measures
clearly support the Company strategy
Annual Bonus
(2024)
EPRA Earnings
Per Share (40%)
Total Accounting
Return (15%)
EPRA Vacancy
rate (25%)
Strategic
Objective (20%)
LTIP
(2024)
Relative Total Shareholder Return
(35%)
Relative EPRA NTA growth per share
(65%)
Our chosen incentive plan measures clearly support the
Company strategy and culture, whilst being market consistent
Linking our Remuneration Policy to our Strategy
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 93
Corporate governanceStrategic report
Remuneration Committee Report continued
Annual Report on Remuneration
Single total figure for Executive Directors’ remuneration (Audited)
The following table shows an analysis of remuneration in respect of qualifying services for the 2023 and 2024 financial years for
each Executive Director:
2024
Executive Director
Salary
£000
Taxable
benefits
£000
5
Pension
£000
Annual
Bonus
£000
3
LTIP
£000
4
Other fees
£000
6
Total rem
£000
Total fixed
£000
7
Total
variable
£000
8
Fredrik Widlund
1
507 7 51 360 31 1 957 565 392
Andrew Kirkman
2
325 9 33 192 13 1 573 367 206
2023
Executive Director
Salary
£000
Taxable
benefits
£000
5
Pension
£000
Annual
Bonus
£000
3
LTI P
£000
4
Other fees
£000
6
Total rem
£000
Total fixed
£000
7
Total
variable
£000
8
Fredrik Widlund
1
492 5 49 349 35 22 952 546 406
Andrew Kirkman
2
315 7 32 186 14 7 561 354 207
1 Mr Widlund received total pension contributions of £50,659 (2023: £49,183). In accordance with the Policy, the entire amount was paid as cash in lieu (this element
of salary is not bonusable or pensionable). The 2023 Salary column has been restated to separate pension contributions paid as salary, which is now contained in
the Pension column for comparison.
2 Mr Kirkman received total pension contribution of £32,507 (2023: £31,560). In accordance with the Policy, £22,507 (2023: £24,610) was paid as cash in lieu and
£10,000 (2023: £7,499) was paid to his SIPP (this element of salary is not bonusable or pensionable). The 2023 Salary column has been restated to separate
pension contributions paid as salary, which is now contained in the Pension column for comparison.
3 The Annual Bonus column total for 2024 includes bonus earned for 2024, which is paid in cash up to 100% of salary, with any additional bonus deferred into shares
for 3 years: Mr Widlund £357,075; Mr Kirkman £190,941. Includes the dividends attributable to deferred shares during the year under PIP A Account: Mr Widlund
£3,034 (2023: 2,087); Mr Kirkman £1,239 (2023: £1,146).
4 The 2024 LTIP column consists of the entire final value of deferred notional share balance under PIP A Account to be paid in March 2025. No value has been
attributed to the 2022 LTIP. The 2023 LTIP column consists of 50% of the value of the opening balance of deferred notional shares under PIP A Account. The
value of the notional shares under Element A has been based on the average market value of a share for the 30-day period to 31 December 2024 of £0.808
(2023: £0.981) in accordance with the rules of the PIP. There are no further payments to be made under the PIP.
5 Taxable benefits column relate to the provision of private medical insurance.
6 Other fees relate to: the Matching Shares that vested during the year under the All Employee Share Incentive Plan. Mr Widlund: £627 (2023: £1,076) Mr Kirkman:
£628 (2023: £1,371). Based on the average market value of a share for the 30-day period to 31 December 2024 of £0.808 (2023: £0.981). There were no further
vestings of Element B Awards and therefore no further dividend equivalents were paid to Mr Widlund (2023: £21,160) or Mr Kirkman (2023: £6,036).
7 Total fixed column is the total of salary, pension and benefits.
8 Total variable column is the total of bonus cash and deferred shares, LTIP and Other fees.
CLS Holdings PLC Annual Report and Accounts 202494
Annual Bonus Plan (audited)
The table below sets out the annual opportunity and outcomes for the Executive Directors.
CEO CFO
Maximum Bonus opportunity (% salary) in 2024 150% 125%
Maximum Bonus opportunity (£) in 2024 £759,890 £406,341
KPIs achievement as % of maximum 4 7. 0 % 4 7. 0 %
Bonus as a % of 2024 salary 70.5% 58.7%
Total Bonus based on achievement above £357,075 £190,941
Bonus payable in cash (maximum 100% of salary) £357,075 £190,941
Bonus deferred into shares (where bonus is over 100% of salary) Nil Nil
A breakdown of the KPI achievements are set out below:
2024 KPI Weighting
Threshold
performance
(25% payout)
On Target
Performance
(50% payout)
Maximum
Performance
(100% payout)
2024
Achievement
% of maximum
earned CEO CFO
EPRA EPS 40% 8.00p 9.95p 11.00p 9.16p 39.9% £121,193 £64,806
Total Accounting Return* 15% (8.00)% (2.80)% 9.00% (11.88)% 0% £0 £0
EPRA Vacancy rate 25% 15.00% 12.00% 10.00% 12.70% 44.2% £83,904 £44,867
Strategic Objective 20%
Assessed by Remuneration
Committee
(see details below) 100% £151,978 £81,268
Total 100% £357,075 £190,941
* Based on EPRA NTA.
Assessment of strategic objectives
The strategic objectives were reviewed and performance assessed by the Committee as set out below.
ESG specific performance
To achieve a reduction in carbon emissions and energy use in line
with the Net Zero Carbon pathway model (3% like for like) and
completion of relevant planned NZC energy efficiency projects.
The Group met this objective by achieving a 6.9% reduction in
carbon emissions and 4.9% reduction in energy usage, and
completed its planned energy efficiency projects for 2024.
Operational
• Implement the strategy for Bismarckstrasse and Spring
Gardens by November 2024.
• Successfully execute the key Treasury priorities including
thedelivery of 2024 refinancings and progress with
2025refinancings.
• The Group implemented a refurbishment strategy for
Bismarckstrasse and the development strategy for
SpringGardens by November 2024.
• All 2024 refinancings were delivered and 80% of the 2025
refinancings had been initiated.
Digitisation
To complete the delivery of MRI and the implementation of the
new website in 2024
In 2024, we have continued to make improvements to MRI.
InSeptember, we delivered significant enhancements to the
UKand French operations and provided the foundations for
theGerman transition. Due to the supplier’s failure to deliver
abug free product and all the necessary enhancements
forGermany, it was decided not to go live in Germany/
Luxembourg in September due to operational risks.
Implementation is now targeted to be in H1 2025 post
year-endprocesses and the delivery of necessary system
enhancements. The Committee noted that this delay was
outside of management’s control and that the decision to
delayimplementation was sensible, and the correct decision
inthe circumstances.
The new Website was delivered in December 2024.
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 95
Corporate governanceStrategic report
Remuneration Committee Report continued
Performance Incentive Plan (PIP) – 2024 Element A (run off)
The schematic below illustrates the final operation of PIP Element A:
Year 2021 2022 2023 2024
Cycle 4 1st year 2nd year 3rd year 4th year
As set out in the Policy, with the introduction of the Annual Bonus Plan, no further contributions were made to the PIP Element A.
Inline with the rules of the scheme, the remaining balance was to be released at the end of 2024.
The following table sets out for cycle 4, the PIP Element A Accounts for the participants and shows the number of deferred
notional shares which formed the opening balance at 1 January 2024 and their opening value, the value of the notional shares as at
31 December 2024 and the final payments from the accounts in respect of 2024.
PIP Plan Element A Accounts (cycle 4) CEO CFO
Number of deferred notional shares in Account at the start of Year 3 38,168 15,582
Value of deferred notional shares at the start of year 3
1
£37,458 £15,292
Change in value of deferred notional shares £(6,618) £(2,702)
Value of deferred notional shares at end of year 3
2
£30,840 £12,591
Plus dividends attributable to deferred notional shares during year 4 £3,034 £1,239
Cumulative Account £33,874 £13,829
Less: Final 2024 payment out of the Account £(33,874) £(13,829)
Value of Final Account
3
£nil £nil
1 The price used to calculate the opening value of shares was the average mid-market value of a share for the 30-day period to 31 December 2023,which was £0.981
per share.
2 The price used to calculate the closing value of shares was the average mid-market value of a share for the 30-day period to 31 December 2024, which was £0.808
per share.
3 In the context of the operation of the PIP Element A, the deferred notional shares is a mechanism that allows the deferred cash element of the award to be linked to
the share price. The Committee confirms that no actual shares were issued.
Long-Term Incentive Plan (LTIP)
Vesting outcome for 2021 LTIP award (audited)
The 2021 LTIP Awards were granted on 10 March 2021 with targets based on CLS’ performance versus the constituent companies
of the FTSE 350 Supersector Real Estate Index under two equally weighted measures: Relative Total Shareholder Return growth
(“TSR”) and Relative EPRA Net Tangible Asset growth per share (“EPRA NTA per share”) both assessed over 3 years ending on
31 December 2023.
As explained in the 2023 Annual Report, the final assessment against the relative EPRA NTA per share performance condition was
pending as it could only be considered when all comparator group companies had published their 2023 EPRA NTA per share
figures. This assessment was undertaken by the Committee during the year and the final outcomes against both performance
targets were as follows:
• The relative TSR performance was below median and therefore resulted in nil vesting under this element of the award.
• The relative EPRA NTA per share performance was below median and therefore resulted in nil vesting under this element of the
award. Full details are set out below:
Performance target Actual performance
Measure Weighting
Median
(25% vesting)
Upper
quartile
(100%
vesting)
CLS
performance
LTIP vesting
outcome of
element
LTIP vesting
outcome
after
weighting
Relative TSR growth 50% (0.3)% 6.8% (48.5)% nil nil
Relative EPRA NTA per share growth 50% (6.8)% 11.7% (26.7)% nil nil
Vesting of LTIP (as a % of maximum) 100% - - - - nil%
CLS Holdings PLC Annual Report and Accounts 202496
The Committee considered that the formulaic nil vesting outcome reflected the underlying performance of the Company.
TheLTIP value in the directors’ remuneration table for 2023 was reported as nil and did not therefore have to berestated.
Vesting outcome for 2022 LTIP award (audited)
The 2022 LTIP Awards were granted on 16 March 2022. CLS’ performance is measured against the constituent companies of the
FTSE 350 Supersector Real Estate Index under the same two equally weighted measures as the 2021 awards: Relative TSR and
Relative EPRA NTA per share.
The relative TSR element was assessed over a 3 year performance period ending on 31 December 2024. CLS’ TSR growth was
below median and therefore this resulted in nil vesting for this element, as set out in the table below.
The final assessment against the relative EPRA NTA per share performance condition is pending as this can only be considered
when all comparator group companies have published their 2024 EPRA NTA per share figures. When available, the Committee will
assess the achievement against the performance targets under both measures to determine the final vesting level of the 2022
awards. In line with the Company’s shareholder approved remuneration policy, the Committee will also consider whether the
formulaic 2022 LTIP vesting outcome fairly reflected the underlying performance of the Company, including the consideration of
windfall gains having arisen, before determining final vesting.
As explained above, the vesting outcomes in the tables below only relate to the relative TSR element. The final vesting outcome will
be presented in the 2025 annual report on remuneration:
Performance target Actual performance
Measure Weighting
Median
(25% vesting)
Upper quartile
(100% vesting) CLS performance
LTIP vesting outcome
of element
LTIP vesting outcome
after weighting
Relative TSR growth 50% (22.2)% (15.0)% (53.8)% nil nil
Relative EPRA NTA
per share growth 50% tbc tbc tbc tbc tbc
Vesting of LTIP
(as a % of maximum) 100% n/a tbc
Executive Director Date of Grant
Shares
awarded
Estimated
Vesting
percentage
Estimated
Number of
shares
vesting
Estimated
value of
shares
vesting
Estimated
value
attributable Vesting date
End of
holding
period
Fredrik Widlund
16 March
2022 349,416 tbc tbc tbc tbc
16 March
2025
16 March
2027
Andrew Kirkman
16 March
2022 170,830 tbc tbc tbc tbc
16 March
2025
16 March
2027
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 97
Corporate governanceStrategic report
Remuneration Committee Report continued
Reconciliation of LTIP with single figure table for 2024
CEO CFO
LTIP in single figure table
Comprising the final payment from the PIP Element A accounts (cycle 4) £37,458 £15,292
Value of LTIP due to share price increase/(decrease) £(6,618) £(2,701)
Estimated Value of 2022 LTIP Award
1
nil nil
Total LTIP £30,840 £12,591
1 Estimated value of the 2022 LTIP awards only includes the Relative TSR element as the Relative EPRA Net Asset per share target has not yet been assessed.
LTIP awards granted in 2024
LTIP awards were granted on 13 March 2024 in the form of nil-cost options. The awards had a face value of 150% of base salary for
the CEO and 120% for the CFO. The normal vesting date of the LTIP Awards will be 13 March 2026, being the third anniversary of
the award date. Dividend equivalents will be payable on vested shares. On completion of the vesting period, any awards that vest
will be subject to a further two-year holding period.
The award levels were significantly below the maximum level that is permissible under the Policy (200% of salary), recognising the
reduction in share price since the 2023 LTIP grant. In addition, the outcome will be reviewed at vesting to ensure no windfall gains
have occurred as a result of changes in the share price between the grant and vesting.
As set out in the table below, the number of shares granted under the award was calculated using a share price of £0.923, being the
quoted closing price of the Company’s Ordinary Share on 12 March 2024.
Scheme interests awarded under the LTIP (audited)
Name Role
Base salary at
date of grant
Face value of
2024 LTIP award
(% of base salary)
Face value of
2024 LTIP award
Value at vesting
(threshold
vesting of 25%
Number of
shares granted Vesting date
End of holding
period
Fredrik Widlund CEO £506,594 150% £759,891 £189,973 823,283
13 March
2027
13 March
2029
Andrew Kirkman CFO £325,074 120% £390,089 £97,522 422,631
13 March
2027
13 March
2029
The LTIP awards will vest based on the satisfaction of the following performance conditions which are each measured over a three
year period ending on 31 December 2026:
Threshold Maximum
Award vesting
2
(% of relevant part of award vesting) 25% 100%
Total Shareholder Return relative to selected
1
FTSE 350 Real Estate Super Sector Constituents (35%) Median Upper Quartile
EPRA NTA growth per share relative to selected
1
FTSE 350 Real Estate Super Constituents (65%) Median Upper Quartile
1 The Committee refined its approach to the peer group for both metrics, such that it continues to be based on the FTSE350 Supersector Real Estate Index but now
excludes certain companies that are deemed to be less relevant for comparison. The comparator group for 2024 constitutes 19 companies.
2 Straight-line interpolation between threshold and maximum performance levels.
CLS Holdings PLC Annual Report and Accounts 202498
Total pension entitlements
The Executive Directors are entitled to participate in a defined contribution pension scheme, into which the Company contributes
up to 10% of base salary. No Directors were participants in the scheme as at 31 December 2024 (2023: none). As a result of the
applicable HMRC limits, Fredrik Widlund instead received the full 10% contribution as a salary supplement and Andrew Kirkman
received part of his 10% contribution as a salary supplement and the balance as a contribution to his Self Invested Personal Pension
Plan (see Note 2, Single Total Figure for Executive Directors’ Remuneration (Audited)).
Overall 2024 remuneration
The Committee is satisfied that the current Policy operated as intended and that the overall 2024 remuneration paid to Executive
Directors set out above was appropriate.
External appointments
Mr Widlund was appointed as a Trustee of Morden College, a social and housing charity, on 31 August 2018, for which no
remuneration is paid. On 1 January 2021, Mr Kirkman was appointed as a non-executive director of A2Dominion Housing Group
Limited, a housing association, for which he is paid £13,855 per annum. In February 2024, Mr Kirkman was appointed to the Oxford
University Audit and Scrutiny Committee, for which no payment is received.
Single total figure for Non-Executive Directors’ remuneration (audited)
Non-Executive Directors do not participate in any of the Company’s incentive arrangements nor do they receive any benefits other
than reimbursement for reasonable travel expenses for attending Board meetings.
The following table sets out the fees received for 2024 and 2023:
Base membership fees Other committee fees Additional fees Taxable benefits
7
Total
2024 2023 2024 2023 2024 2023 2024 2023 2024 2023
Elizabeth Edwards
1
60 55 10 10 4 1 1 – 75 66
Bill Holland
2
50 45 15 15 – – 2 2 67 62
Eva Lindqvist
3
50 11 16 3 – – 3 2 69 16
Bengt Mortstedt
4
50 45 – – – – 21 30 71 75
Anna Seeley
5
128 120 – – – – – – 128 120
Lennart Sten
6
235 220 – – – – 1 – 236 220
1 Ms Edwards received the following annual fees: Board membership £50,000; Senior Independent Director £10,000 (included in base membership fee); Audit
Committee membership £5,000; Nomination Committee Membership £5,000; and Workforce advisory fees £4,250 (included in Additional Fees).
2 Mr Holland received the following fees: Board membership £50,000; Audit Committee Chair £10,000; Remuneration Committee membership £5,000.
3 Eva Lindqvist received the following fees: Board membership £50,000; Remuneration Committee Chair £10,000; Audit Committee membership £5,000 and
following her appointment to the Nomination Committee on 12 November 2024 a prorated membership fee of £666.
4 Mr Mortstedt retired from the Board on 28 February 2025.
5 Ms Seeley received the annual following fees: Non-Executive Vice-Chair fee of £128,000 (inclusive of all Committee fees).
6 Mr Sten received the following annual fees: Non-Executive Chairman fee of £235,000 (inclusive of all Committee fees).
7 In accordance with the Company’s expenses policy, Non-Executive Directors receive reimbursement for their reasonable expenses for attending Board meetings.
In instances where those costs are treated by HMRC as taxable benefits, the Company also meets the associated tax cost to the Non-Executive Directors
throughPAYE.
Payments to past directors (audited)
There were no payments made to past directors in 2024.
Payments for loss of office (audited)
No payments for loss of office were made in 2024.
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 99
Corporate governanceStrategic report
Remuneration Committee Report continued
Directors’ interests in shares (audited)
The Executive Directors’ interests against the shareholding requirement under the Policy is provided below, with an indication
ofwhether the requirement has been met. Under the Policy the Committee has implemented minimum shareholdings for the
Executive Directors, which requires that the Chief Executive Officer should build a holding with a value of at least 250% of salary
and the Chief Financial Officer at least 200% of salary within 5 years of the Policy being approved. At 31 December 2024, the
interests of the Directors in the ordinary shares of 2.5 pence each of the Company were:
Director
Unconditional
shares
Vested but
unexercised
LTIP awards
SIP shares
(partnership)
SIP shares
(matching)
Total
interests
3
Shareholding
(%) salary
3
Shareholding
requirement
4
LTIP unvested
awards
Fredrik Widlund
1
710,054 – 8,119 8,119 726,292 116 N 1,709,640
Andrew Kirkman
2
466,237 – 6,581 6,581 477,399 119 N 869,098
Elizabeth Edwards 9,809 – – – – n /a n /a –
Bill Holland 18,931 – – – – n /a n /a –
Eva Lindqvist – – – – – n /a n /a –
Bengt Mortstedt
6
26,063,140 – – – – n/a n/a –
Anna Seeley 12,273 – – – – n/a n/a –
Lennart Sten 111,350 – – – – n /a n /a –
1 As at the date of this report: the SIP balance for Mr Widlund consists of: 8,720 Partnership Shares and 8,720 Matching Shares.
2 As at the date of this report: the SIP balance for Mr Kirkman consists of: 7,182 Partnership Shares and 7,182 Matching Shares.
3 Shares counting towards total interests and therefore shareholding requirement include beneficially owned and all SIP shares, but excludes unvested LTIP awards.
Shareholding values based on 30-day average share price up to 31 December 2024, £0.808.
4 Mr Widlund met the shareholding requirement of 250% of salary in 2021 and it is noted that his total interests increased during the year by 60,851 shares but the
overall value decreased by £65,954 (2023: decrease £249,387). Mr Kirkman met the shareholding requirement of 200% of salary in 2022 and it is noted that his
total interests increased by 1,382 shares but the overall value decreased by £81,234 (2023: decrease of £223,516).
5 As set out on page 98, 50% of the 2022 LTIP award did not meet the performance conditions and therefore lapsed. As at the date of this report, unvested LTIP
awards: Mr Widlund 1,534,932 shares and Mr Kirkman 783,683 shares.
6 Mr Mortstedt retired from the Board on 28 February 2025.
As part of Policy, a post-cessation of employment shareholding requirement has been implemented for the Executive Directors
requiring the minimum shareholding requirement or actual shareholding on cessation if lower to be retained for two years. The
Committee has determined that to ensure enforcement of this requirement, approval must be sought by the Company for any
sales during this period. These restrictions would be set out in an agreement with the individual at the appropriate time.
Other than as set out in the notes above, there have been no movements in interests held by Directors between 31 December 2024
and the date of this report.
Total returns to shareholders 2015–2024
To comply with the remuneration regulations, the Company’s TSR performance is compared to the TSR performance of the
FTSE350 and the FTSE 350 Supersector Real Estate indices over the last 10 years (see total return shareholders graph on page 1).
The Committee believes that these are the most appropriate indices.
Executive Director service contracts and Non-Executive Director letters of appointment
Each of the Executive Directors has a service contract of no fixed term. There is no provision in the contracts of Mr Widlund or
Mr.Kirkman for contractual termination payments, save for those payments normally due under employment law.
Each Non-Executive Director has a letter of appointment but, in accordance with best practice, none has a service contract. All of
the Non-Executive Directors are appointed until such time as they are not re-elected. In compliance with the Code, all Company
Directors will face annual re-election at the Company’s AGM. If a director fails to be re-elected the terms of their appointment will
cease. It is the Company’s policy not to offer notice periods of more that 12 months exercisable by either party.
Details of the service contracts for those who served as Executive Directors during the year are as follows:
Date of current service contact Notice period
Fredrik Widlund 3 November 2014 12 months
Andrew Kirkman 30 March 2019 12 months
CLS Holdings PLC Annual Report and Accounts 2024100
The table below sets out the dates that each Non-Executive Director was first appointed and the notice period by which their
appointment may be terminated early by either party.
Director Date of appointment Date of resignation Notice period
Elizabeth Edwards 13 May 2014 – 3 months
Bengt Mortstedt 7 March 2017 28 February 2025 3 months
Bill Holland 20 November 2019 – 3 months
Anna Seeley 11 May 2015 – 3 months
Lennart Sten 1 August 2014 – 3 months
Eva Lindqvist 22 September 2023 – 3 months
Historical CEO remuneration
The table below sets out total CEO remuneration for 2024 and prior years, together with the percentage of maximum awarded
under the annual or long-term incentive elements of the Policy at that time. 2024 includes the annual bonus awarded and the 2022
LTIP TSR element which completed its performance period on 31 December 2024.
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
CEO total remuneration
(£000) 656 828 1,062 1,117 1,078 830 944 835 952 957
Element A of PIP – % of
maximum 81.0% 76.0% 93.3% 62.7% 8 7. 3 % 43.3% 31.1% 18.4% n /a n /a
Annual Bonus Plan n /a n /a n /a n /a n/a n /a n /a n /a 46.9% 4 7. 0 %
Element B of PIP – % of
maximum n/a 76.0% 93.3% 62.7% 8 7. 3 % n /a n /a n /a n/a n /a
LTIP – % of maximum n/a n/a n /a n /a n /a n /a n /a 29.9% nil nil
*
n/a is shown in years where the Company did not operate either the PIP Element A, B or LTIP.
* the vesting outcome relates to the relative TSR element only. The final vesting outcome will be presented in the 2025 annual report on remuneration.
Annual Percentage change in Directors’ and employee remuneration
The table below shows how the annual percentage change in each Directors‘ salary/fees, benefits and bonus between 2020, 2021,
2022, 2023 and 2024 compared with the percentage in each of those components of pay for employees. Only the executive
directors are employees of CLS Holdings plc. All other employees are employed by wholly owned CLS Holdings plc subsidiaries.
Percentage change 2024/23 Percentage change 2023/22 Percentage change 2021/22 Percentage change 2020/21
Salary/
fees %
Taxable
benefits
% Bonus %
Salary/
fees %
Taxable
benefits
% Bonus %
Salary/
fees %
Taxable
benefits
% Bonus %
Salary/
fees %
Taxable
benefits
% Bonus %
Fredrik Widlund 3 40 3 3 – 406 3.2 (46.3) (37.0) 1.0 12.5 (27.3)
Andrew Kirkman 3 29 3 3 – 492 3.4 – (36.3) 1.6 16.7 (27.9)
Elizabeth Edwards 12 100 – – (201) – – 100.0 – 4.8 – –
Bengt Mortstedt
1
11 (30) – – 4 – – 75.0 – 0.0 128.6 –
Bill Holland 8 0 – – 46 – – (50) – 0.0 – –
Anna Seeley 7 0 – – – – – – – – (40.0) –
Lennart Sten 7 100 – – – – – – – 1.7 100.0 –
Eva Lindqvist 371 50 – 100 100 – n /a n /a n /a n /a n /a n/a
Employees (7.7) (0.4) 64 (3) 2 (36) (1.5) 12.6 (25.8) 1.4 (5) 2.7
1 Mr Mortstedt retired from the Board on 28 February 2025.
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 101
Corporate governanceStrategic report
Remuneration Committee Report continued
As a result of the Board and Committee changes during 2020, Ms Edwards and Mr Holland received additional remuneration for
their new responsibilities. There were no changes to the Board/Committee fees for the years ended 2021, 2022 and 2023.
As set out in last year’s annual report, a review of non-executive fees was undertaken in 2024, having last been reviewed in 2019,
and the base fee was increased from 1 January 2024 by £5,000. (See page 99, single total figure for Non-Executive Directors
Table Notes).
Eva Lindqvist served a full year and received additional remuneration following her membership of the Nomination Committee in
November 2024.
The Group’s pay review, taking effect from 1 January 2025 for UK employees, awarded a standard percentage increase in wages
and salaries of 3% to all employees (including the Executive Directors).
The nature and level of benefits to employees in the year ended 31 December 2024 was broadly similar to those of the previous year.
CEO pay ratio
CLS Holdings plc has less than 250 UK employees as at 31 December 2024 and is therefore not required to disclose the CEO pay
ratio information under the regulations.
Relative importance of the spend on pay
2024
(£’000)
2023
(£’000)
Percentage
change
Increase/
(decrease)
Remuneration paid to employees of the Group 8,177 8,865 (7.8)
Distributions to shareholders 31,594 31,583 0.0
Share buyback Nil Nil Nil
Group revenue 151,879 148,787 2.1
Wider workforce considerations cascade of pay through the organisation
The Group aims to provide a remuneration package for all employees which is market competitive and operates the same core
structure as for Executive Directors. The Company’s remuneration philosophy for all senior management from the Executive
Directors downwards is that all employees should have a significant annual element of performance-based pay.
For all employees, the Group operates a performance-based annual bonus scheme. The Company also has a Share Incentive Plan
(SIP) in order to increase levels of share-ownership throughout the Company and to allow employees to share in the success of the
Company. Additionally, the Group’s pension contributions to an employee’s pension scheme are determined by their length of
service from a minimum of 5% of salary up to a maximum of 10%.
Executive Directors and senior management are participants in the LTIP, with the number of employees eligible to participate being
18. For the wider workforce, the LTIP is replaced by a time-based, company growth related loyalty bonus. This ensures a focus on
long-term sustainable value creation to align experience with those of shareholders.
The table below summarises the cascade of pay elements through the organisation below Executive Directors.
Number of
employees
Fixed
Remuneration
(including
pension) Annual bonus
Loyalty
bonus
Bonus
deferral LTIP
Share
Incentive
Plan
Shareholding
guidelines
Executive Directors 2 Y Y – Y Y Y Y
Senior Leadership
(excl. Executive Directors) 9 Y Y – – Y Y –
Senior Management
(excl. Senior Leadership Team) 7 Y Y – – Y Y –
Wider Workforce 88 Y Y Y – – Y –
CLS Holdings PLC Annual Report and Accounts 2024102
Employee engagement
We regularly communicate with our employees on a range of issues, including executive pay, through a variety of channels including
all employee meetings, employee surveys, managers’ meetings and through our dedicated Intranet. Additionally, in 2019, Elizabeth
Edwards was designated the Non-Executive Director responsible for overseeing employee engagement and chairs the “town hall”
meetings in each of our regions. This provided the opportunity for an open discussion between employees and the Board. The
annual report from Elizabeth Edwards, as the designated Non-Executive Director responsible for employee engagement, can be
found on page 73. During the year, the Board reviewed the effectiveness of the current mechanism for seeking wider workforce
views. The revised mechanism to seek the views of the workforce has been effective in enabling us to gain a deeper level of
understanding and insight into the issues on a country by country basis, which in turn assists us to address any issues locally and
with the appropriate nuance.
Fairness and diversity
The Company is committed to an active equal opportunities policy from recruitment and selection, through training and
development, to performance reviews and promotion. All decisions relating to employment practices are objective, free from bias
and based solely upon work criteria and individual merit. The Company is responsive to the needs of its employees, customers and
the community at large. We are an organisation which uses everyone’s talents and abilities, where diversity is valued. The Company
remains supportive of the employment and advancement of disabled persons and ensures its promotion and recruitment practices
are fair and objective. The Company encourages the continuous development and training of its employees and the provision of
equal opportunities for the training and career development of all employees.
Gender pay reporting
The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 requires companies with over 250 UK employees to
disclose their gender pay gap annually. CLS Holdings plc has under 250 UK employees as at 31 December 2024 and is therefore
not required to disclose the Gender Pay Gap information under the regulations.
The Committee notes that results based on a relatively small sample of employees would not be meaningful and therefore has
decided not to disclose the Company gender pay gap. Overall the Committee feels assured that the quality of processes behind
individual pay decisions are effective in delivering an equal pay environment (like pay for like work) for the wider workforce.
Role of the Committee
The Committee’s main purpose is to assist the Board in discharging its responsibilities for:
• reviewing the overall remuneration policy for executive directors and senior management;
• recommending and monitoring the level and structure of remuneration for executive directors and senior management;
• governing all share schemes; and
• reviewing any major changes in employee compensation and benefit structures throughout the Group.
The Committee’s Terms of Reference, which are reviewed annually, are available on the Company’s website.
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 103
Corporate governanceStrategic report
Remuneration Committee Report continued
Membership and attendance
At the year end, the Committee comprised three independent Directors including the Chair of the Board, who was independent on
appointment. The Committee therefore complies with the provisions of the UK Corporate Governance Code (the “Code”).
During 2024, the Committee met five times and held a number of informal discussions with the Executive Directors and the
fullBoard. We believe it is important that during the year the Committee keeps up-to-date to enable timely discussions where
business decisions may affect remuneration.
The Company Secretary acts as secretary to theCommittee.
Performance of the Committee
The Committee undertakes a review of its performance each year. During 2024, this review was undertaken internally by wayof a
questionnaire and concluded that the Committee continued to perform effectively and had unfettered access tothe information
and advice it needed to make informed decisions on all matters related to remuneration.
Advisors to the Remuneration Committee
To ensure that the Group’s remuneration practices are in line with best practice, the Committee has appointed an independent
external remuneration advisor.
During the year, the Committee held a competitive tender for the position of remuneration advisor to the Committee. As a result of
that tender, FIT Remuneration Consultants LLP (FIT) were appointed in November 2024, replacing PwC.
During the year, the Committee sought advice from PwC and FIT in relation to emerging issues and development of best practice
as well as specifically on the application of our own policies related to remuneration. On occasion, the CEO and COO were invited
to parts of Remuneration Committee meetings to hear from PwC and FIT about the broader landscape and trends in executive pay
and emerging practices, and respond to questions from the Committee.
Such attendances excluded any matter concerning their own remuneration.
FIT adheres to the Remuneration Consultants Group Code of Conduct in its dealings with the Committee. The Committee reviews
the objectivity and independence of the advice it receives from FIT at a private meeting each year. It is satisfied that FIT is providing
independent, robust and professional advice.
The fees for the advice provided in 2024 by PwC were £51,863 excluding VAT (2023: £131,250). There were no costs included
from FIT in 2024.
CLS Holdings PLC Annual Report and Accounts 2024104
Statement of implementation of policy in following financial year
The table below sets out the intended implementation of our Policy for 2025. The full Policy, as approved at our 2023 AGM, can be
found on our website together with a summary of the changes from the previous policy.
Element of remuneration CEO CFO
Salary 3% increase for 2025, which is the
average workforce increase (3%)
2025 salary: £ 521,792 (2024:
£506,594)
3% increase for 2025, which is the average workforce
increase (3%)
2025 salary: £334,826 (2024: £325,074)
Pension 10% of salary employer contribution in line with Policy and maximum wider workforce contribution rate.
Benefits Standard benefits in line with Policy
Annual bonus –
Quantum
Maximum opportunity of 150% of salary
(no change)
Maximum opportunity of 125% of salary (no change)
Annual bonus –
Structure
• Payment will be in cash up to 100% of salary subject to the satisfaction of performance criteria.
• Any balance over 100% of salary will be deferred (at that point) into shares and vest after 3 years,
subject to continued employment.
• 25% of maximum paid for threshold performance.
• Malus and clawback provisions apply.
Annual bonus –
Performance measures
Reweighting of existing metrics and addition of new metric as set out below:
• EPRA EPS – 30% weighting (previously 40%)
• EPRA vacancy rate – 25% weighting (no change)
• Group Loan To Value – 15% weighting (new performance measure, replacing Total Accounting
Return, which is now contained in the LTIP performance measure)
• Strategic objectives (including ESG) – 30% weighting (previously 20%)
In line with market practice for traditional annual bonus arrangements and with the bonus increasingly
being driven by commercially sensitive targets, the Committee has not disclosed detailed annual bonus
targets for 2024. However, full and transparent disclosure of the targets and performance outcomes
will continue to be set out on a retrospective basis in next year’s Directors’ Remuneration Report.
LTIP – Quantum 175% of salary (policy maximum is 200%
of salary)
145% of salary (policy maximum is 200% of salary)
LTIP – Structure • Awarded in nil cost options or conditional awards with performance measured over 3 years.
• Vested awards will be subject to a further 2 year holding period post-vesting.
• Malus and clawback will operate over the full 5 year lock-in period.
LTIP – Performance
measures
• Absolute Total Shareholder Return – 35% weighting
• Absolute Total Accounting Return – 35% weighting
• Relative Total Accounting Return – 30% weighting
• The peer group for Relative Total Accounting Return is based on the FTSE350 Supersector Real
Estate Index and excludes certain companies that are deemed to be less relevant for comparison.
The comparator group constitutes around 20 companies.
25% of awards vest for threshold performance rising on a straight-line basis to 100% for maximum
performance. See page 92 for further details.
Non-Executive Directors (Including Non-Executive Chairman and Non-Executive Vice Chair)
Fees Non-Executive Directors are paid a base fee and are eligible to receive Committee Chair and
membership fees, SID fee and designated workforce advisory daily fee. Non-Executive Directors do
not participate in any variable remuneration. See the section below for further details on fee levels and
changes for 2024.
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 105
Corporate governanceStrategic report
Remuneration Committee Report continued
The Committee does not expect to deviate from Policy during the year.
Non-Executive Directors (Including Non-Executive Chairman and Non-Executive Vice Chair) (audited)
The current fee levels, and those for the future financial year, are set out in the table below.
Fees 2025
£000
Fees 2024
£000
Change
%
Chairman fees 235 235 0
Non-Executive Vice Chair 128 128 0
NED Base Membership fee 50 50 0
Senior Independent Director 10 10 0
Audit Committee Chair 10 10 0
Remuneration Committee Chair 10 10 0
Committee membership 5 5 0
Designated workforce NED £850 £850 p/d 0
No additional fees are paid to the Chair of the Nomination Committee as the role is currently carried out by the Vice Chair.
Fees were last reviewed in 2024.
See page 99 for total fees received in 2024 by each of the Non-Executive Directors based on their respective responsibilities.
Long-Term Incentive Awards to be granted in 2025
The table below sets out the 2025 LTIP measures and targets.
The CEO’s award will be 175% of salary (2024: 150%) and the CFO’s award will be 145% of salary (2024: 120%), which are in
accordance with the Policy limits and relative benchmark data.
Weighting Threshold Maximum
Award vesting for performance (% maximum) 25% 100%
Absolute Total Shareholder Return 35% 5%p.a. 14%p.a.
Absolute Total Accounting Return 35% 4% p.a. 8% p.a.
Relative Total Accounting Return 30% Median Upper Quartile
Straight line interpolation between performance levels.
The recalibration of the performance measures represents the key focus for the Group in the medium term as it enters the next
phase of the property cycle and the desire to grow organically with the opportunities that are available within the existing portfolio.
The move from relative to absolute targets reflects the limited number of comparable pan-European listed companies, but more
stretching targets have been applied.
As set out above, the comparator group for Relative Total Accounting Return will still constitute around 20 companies that are
constituents from the FTSE350 Supersector Real Estate Index.
Shareholder voting
The following table represents the voting outcome for the Directors’ Remuneration Report at the 2024 Annual General Meeting
and the current Policy that was approved at the 2023 Annual General Meeting.
Directors Remuneration Report
(2024 AGM)
Directors Remuneration Policy
(2023 AGM)
Number
of votes
% of
votes cast
Number
of votes
% of
votes cast
For 315,413,480 99.26 349,550,240 99.17
Against 2,345,420 0.74 2,931,226 0.83
Total votes cast 317,758,900 352,481,466
Votes withheld 3,249,934 101,878
CLS Holdings PLC Annual Report and Accounts 2024106
The Directors present their annual report and the audited
financial statements for the year ended 31 December 2024.
The Chairman’s letter, strategic report and corporate
governance report form part of this report and should be read
in conjunction with it.
Review of business
• The Group income statement for the year is set out on
page122.
• The Group objectives, business model, strategy and KPIs are
set out on pages 16 and 17.
• Important events (including post-balance sheet events)
affecting the Company are set out on pages 2 to 111.
• The principal and emerging risks and uncertainties are set out
on pages 59 to 62.
• The use of financial instruments are set out on page 23, and
in note 21 to the Group financial statements.
• The risk management objectives are detailed in note 21 to the
Group financial statements. See also pages 56 to 62.
• The Group’s likely future developments are set out on pages
Inside Front Cover to 9.
Directors
Biographical details and experience of the current Directors of
the Company are set out on pages 68 and 69.
The provisions concerning the appointment and replacement of
directors are contained in the Company’s Articles of Association
and Companies Act 2006. The Articles may be amended by
special resolution of the shareholders. All Directors will be
subject to annual re-election at the 2025 Annual General
Meeting in accordance with the UK Corporate Governance
Code. In his role as independent Non-Executive Chairman,
Lennart Sten recommends the re-election of the retiring
Directors at the 2025 Annual General Meeting, given their
experience, performance and continued important contribution
to the long-term success of the Company. The Senior
Independent Non-Executive Director recommends the
re-election of Mr Sten.
Directors’ remuneration and interests in shares are set out on
pages 90 to 106. Related party transactions are set out in note
32 to the Group financial statements.
Directors’ Report
Dividends
An interim dividend of 2.60 pence per share was paid on
2 October 2024. The Directors are proposing a final dividend of
2.68 pence per share making a total dividend for the year ended
31 December 2024 of 5.28 pence per share. The final dividend
will be paid on 23 May 2025 to shareholders who are on the
register of members on 11 April 2025.
Purchase of the Company’s shares
There were no purchases of the Company’s own shares during
the year. A resolution will be proposed at the 2025 Annual
General Meeting to seek authority for the Company to make
market purchases of up to 10% of the current issued share
capital.
Share capital
Changes in share capital are shown in note 23 to the Group
financial statements. As at 31 December 2024, the Company’s
issued share capital consisted of 438,777,780 ordinary shares
of 2.5 pence each, of which 397,410,268 shares held voting
rights and 41,367,512 shares were held as treasury shares, and all
of which ranked pari passu. On 14 January 2025 the Company
transferred 700,474 shares out of treasury to satisfy awards
under the Company’s share plans. Following this transaction,
the Company’s issued share capital consisted of 438,777,780
shares, of which 398,110,742 shares held voting rights and
40,667,038 shares were held as treasury shares, and all of which
ranked pari passu. The rights (including full details relating to
voting), obligations and any restrictions on transfer relating to
the Company’s shares, and the powers of the Directors in that
regard, are set out in the Company’s Articles of Association.
Major interests in the Company’s shares
No major shareholding notifications were disclosed to the
Company in accordance with DTR 5 during the year ended
31 December 2024 and no such disclosures have been made
between the year end and the date of this report. As at the
dateof this report, so far as the Company is aware and based
on theCompany’s register of interests disclosed pursuant to
s793of the Companies Act 2006, the interests of the top 10
shareholders (directly or indirectly) in the Company’s issued
share capital are:
No. of shares %
The Trustee of The Sten and Karin Mortstedt Family & Charity Trust 219,917,524 55.24%
Bengt Mortstedt 26,063,140 6.55%
Allianz Global Investors 13,756,871 3.46%
Janus Henderson Investors 12,023,336 3.02%
Amati Global Investors 7,010,169 1.76%
Invesco 6,499,106 1.63%
Vanguard Group 6,387,933 1.60%
Dowgate Capital 5,701,129 1.43%
BlackRock Investment Management 5,605,594 1.41%
Hargreaves Lansdown, stockbrokers (EO) 5,411,459 1.36%
Details of the Directors’ interests in shares are shown in the Remuneration Committee Report on page 100. There are no
shareholders who carry special rights with regard to control of the Company and there are no restrictions on voting rights. The
Company knows of no agreements between holders of securities which would result in restrictions on the transfer of securities or
on voting rights.
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 107
Corporate governanceStrategic report
Significant agreements – change of control
A change of control of the Company may cause a number
ofagreements to which the Company or its active subsidiaries
isparty, such as commercial trading contracts, banking
arrangements, property leases and licence agreements, to
alteror terminate or provisions in those agreements to take
effect. Inthe context of the Group as a whole, only the banking
arrangements are considered to be significant. There are no
agreements between the Company and its Directors or
employees providing for compensation for loss of office or
employment that occur because of a change of control.
Relationship agreement – controlling shareholder
As at 31 December 2024, Creative Value Investment Group
Limited (‘CVIG’), the investment vehicle for The Sten and Karin
Mortstedt Family & Charity Trust, held through its wholly owned
subsidiaries 55.24% of the Company’s shares in issue and
wastherefore seen as a controlling shareholder under the
ListingRules.
Pursuant to UKLR 6.6.1R (13), the Company confirms that it
continues to comply with the requirement of UKLR 6.2.3R
thatit is able to carry on the business of its main activity
independently from its controlling shareholder. The Company
confirms that it has in place and will have in place at all times
aconstitution that allows the election and re-election of
independent directors tobe conducted in accordance with
UKLR 6.2.8R and UKLR6.2.9R.
Property portfolio
A valuation of all the investment properties, properties held for
sale and hotel in plant, property and equipment in the Group at
31 December 2024 was carried out by Cushman & Wakefield for
the UK, and JLL in Germany and France, which produced an
aggregate market value of £1,850.2 million (2023
£2,062.9 million).
Corporate governance
The Corporate Governance Statement, prepared in
accordancewith rule 7.2 of the FCA’s Disclosure Guidance and
Transparency Rules, is set out on pages 66 to 111 and forms part
of this report. It applies to the Company and its subsidiaries. It
does not include associates. The Group has no joint ventures.
Employees, environmental and social issues
The Group’s policies on employment, environmental and social
issues (including the information required by the Companies
Act 2006 (strategic report and Directors’ report) Regulations
2013), including charitable donations, are summarised in the
Environmental, Social and Governance Review on pages 32
to50. GHG emissions can be found on page 34. No political
donations to any parties, organisations or candidates, or
political expenditure were made during 2024. The Group has
also published Sustainability Strategy and Net Zero Carbon
pathway documents which are available on line at
www.clsholdings.com.
Charitable donations during the year totalled £203,329
(2023: £85,559). As part of the Group’s ESG strategy, it
sponsors charitable events and organisations relating to the
realestate industry and, more specifically, assists charities and
organisations with donations and staff involvement initiatives in
the areas where our properties are located. Further details can
be found on page 33.
Engagement with suppliers, customers and others in a
UK business relationship with the Company
The statement in respect of the Company’s engagement with
suppliers, customers and others throughout the year is set out
in the stakeholder engagement sections on pages 28 and 29
and our Prompt Payment Code is detailed in the environmental,
social and governance review on page 41.
Human rights
The Board ensures the Group upholds and promotes respect
for human rights in all its current operating locations and aims
toprevent any negative human rights impact. As the Group
operates in the UK, Germany and France it is subject to the
European Convention on Human Rights and the UK Human
Rights Act 1998. The Group respects all human rights and in
conducting its business regards those rights relating to non-
discrimination and fair treatment to be the most relevant and
tohave the greatest potential impact on its key stakeholders,
which are deemed to be customers, employees and suppliers.
The Board has also noted its moral and legal obligations under
the Modern Slavery Act 2015 (the “Act”). The Board has a zero
tolerance approach towards modern slavery, and throughout
the year the Company has contacted its first tier contractors
and suppliers to ensure their compliance with the Act. Our full
statement onModern Slavery can be found on our website at
www.clsholdings.com. The Group’s policies seek to ensure that
employees comply with the relevant legislation and regulations
in place to promote good practice. The Group’s policies are
formulated and kept up to date and communicated to all
employees through the Group Intranet and, where appropriate,
individual presentations. In the year to 31 December 2024, the
Group was not aware of any incident in which the organisation’s
activities have resulted in an abuse of human rights.
Insurance of directors and indemnities
The Company has arranged insurance cover in respect of legal
action against its Directors and Officers. The Company has
granted indemnities to each of the Directors and other senior
management, uncapped in amount but subject to applicable
law, in relation to certain losses and liabilities which they may
incur in the course of acting as Directors or employees of the
Company or one or more of its subsidiaries or associates.
Theseindemnities are categorised as a ‘qualifying third-party
indemnities’ for the purposes of the Companies Act 2006.
Auditor
A resolution to confirm the appointment of BDO LLP as Auditor
to the Company will be proposed at the forthcoming Annual
General Meeting.
2025 Annual General Meeting
The 2025 Annual General Meeting will be held on Thursday,
16 May 2025. The notice of meeting, including explanatory
notes for the resolutions to be proposed, will be posted
toshareholders.
Directors’ Report continued
CLS Holdings PLC Annual Report and Accounts 2024108
Disclosure of information to the Auditor
Each Director has confirmed at the date of this report that:
• so far as they are aware, there is no relevant audit information
of which the Company’s auditor is unaware; and
• they have taken all the steps that they ought to have taken as
a Director in order to make themselves aware of any relevant
audit information and to establish that the Company’s auditor
is aware of that information. This confirmation is given and
should be interpreted in accordance with the provisions of
s418 of the Companies Act 2006.
Going concern
Notwithstanding the material uncertainty the Directors have a
reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the
foreseeable future and further details of this analysis are set out
together with the viability statement on pages 63 to 65.
Therefore, the Directors continue to adopt the going concern
basis in preparing the annual report and accounts.
Disclosures under UKLR 6.6R
The table below is included to comply with the disclosure requirements under UKLR 6.6.1R. The information required by the Listing
Rules can be found in the annual report at the location stated below.
UKLR Information required Disclosure
6.6.1(1) Interest capitalised by the Group Not applicable
6.6.1(2) Publication of unaudited financial information Page 168
6.6.1(3) Long-term incentive schemes disclosure required by UKLR 9.3.3R None
6.6.1(4) Director’s waiver of emoluments None
6.6.1(5) Director’s waiver of future emoluments None
6.6.1(6) Non-pro-rata allotments for cash (issuer) None
6.6.1(7) Non-pro-rata allotments for cash (major subsidiaries) None
6.6.1(8) Listed company is subsidiary of another company None
6.6.1(9) Contracts of significance with a director None
6.6.1(10) Contracts of significance with Controlling Shareholder None
6.6.1(11) Dividend waiver Not applicable
6.6.1(12) Waiver of future dividends Not applicable
6.6.1(13) Compliance with UKLR 6.2.3R in relation to controlling shareholder Page 108
The following table is included to comply with the additional disclosure requirements under the UKLR 6.6.6R
UKLR Information required Disclosure
6.6.6(1) Directors· (and Connected Persons’) interests in CLS shares at year end and at not more
than one month prior to the date of the AGM notice
Page 100
6.6.6(2) Interests in CLS shares disclosed under DTR5 at year end and not more than one month
prior to the date of AGM notice
Page 107
6.6.6(3) The going concern statement Page 63-64
6.6.6(4)(a) Amount of authority to purchase own shares available at year end 39,741,026 shares
6.6.6(4)(b) Off-market purchases of own shares during the year None
6.6.6(4)(c) Off-market purchases of own shares since year end None
6.6.6(4)(d) Non-pro-rata sales of treasury shares during the year None
6.6.6(5) Compliance with the Main Principles of the UK Corporate Governance Code Page 67
6.6.6(6)(b) Details of non-compliance with the UK Corporate Governance Code Pages 67, 68 and 76
6.6.6(7) Directors proposed for re-election: the unexpired term of any director’s service contract
and a statement about directors with no service contracts
Page 101
6.6.6(8) Climate-related financial disclosures consistent with the TCFD recommendations and
recommended disclosures
Pages 42-50
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 109
Corporate governanceStrategic report
Employee Benefit Trust
Altum Trustees Limited (the “Trustee”) continues as Trustee
ofCLS Holdings plc’s Employee Benefit Trust (the “EBT”).
TheEBT is used to purchase the Company’s shares in the
market from time to time for the benefit of employees,
including to satisfy outstanding awards under Company’s
various share plans.
During the year, the EBT made market purchases of 127,661
shares (2023: 341,340 shares) and released these shares on
14 March 2024 to satisfy vested share plan awards. As at
31 December 2024, the EBT did not hold any shares. On
14 January 2025, 700,474 shares were transferred from
treasury tothe EBT to satisfy future share plan awards in 2025.
A dividend waiver is in place from the Trustee in respect of all
dividends payable by the Company’s on shares which the EBT
may hold. Further details regarding the EBT and of treasury
shares issued pursuant to CLS Holdings plc employee share
plans during the year are set out in note 23 to the financial
statements.
Approved by the Board and signed on its behalf by:
David Fuller BA FCG
Company Secretary
31 March 2025
Directors’ Report continued
CLS Holdings PLC Annual Report and Accounts 2024110
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 FRS101 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
31 March 2025.
Approved and authorised on behalf of the Board
David Fuller BA FCG
Company Secretary
31 March 2025
Financial statements Additional information
CLS Holdings PLC Annual Report and Accounts 2024 111
Corporate governanceStrategic report
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at
31 December 2024 and of the Group’s loss for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
• the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of CLS Holdings Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year
ended 31 December 2024 which comprise the Group income statement, the Group statement of comprehensive income, the
Group and Company balance sheets, the Group and Company statements of changes in equity, Group statement of cash flows
and notes to the financial statements, including material accounting policy information. The financial reporting framework that has
been applied in their preparation is applicable law and UK adopted international accounting standards and as regards the Parent
Company financial statements, applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure
Framework” (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion. Our audit opinion is consistent with the additional report to the audit committee.
Independence
Following the recommendation of the audit committee, we were appointed by the Directors on 6 September 2024 to audit the
financial statements for the year ended 31 December 2024 and subsequent financial periods. The period of total uninterrupted
engagement including retenders and reappointments is less than 1 year, covering the year ended 31 December 2024. We remain
independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard
were not provided to the Group or the Parent Company.
Material Uncertainty related to going concern
We draw attention to Note 2 – Going Concern in the financial statements, which indicates that the going concern assumption is
dependent both upon the timing and value of the refinancing of the debt maturing and upon investment property disposals, during
the going concern period to 31 July 2026. The Group and Company acknowledge that these refinancings and disposals are
dependent on circumstances outside their control. As stated in note 2, these events or conditions, along with the other matters as
set forth in note 2, indicate that a material uncertainty exists that may cast significant doubt on the Group’s and Company’s ability
to continue as a going concern. Consequently, we determined Going Concern to be a key audit matter.
Our opinion is not modified in respect of this matter.
We draw attention to the viability statement in the Annual Report on page 65, which indicates that an assumption made by the
statement of viability is for the Group to be able to refinance its existing debt that is maturing, and to achieve the planned disposals
of property assets. The Directors consider that the material uncertainty referred to in respect of going concern may cast significant
doubt over the future viability of the Group should these events not complete.
Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent
Company’s ability to continue to adopt the going concern basis of accounting included:
• Assessing the appropriateness of the going concern period to 31 July 2026 (“the going concern period”), which takes into
consideration the maturity of loans maturing (amounting to £426m) and the planned disposals (of £359m) in that period;
• Obtaining an understanding of the Directors’ process for assessing going concern including an understanding of the key
assumptions used;
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• Using our knowledge of the Group and its market sector together with the current economic environment to assess the
Directors’ identification of the inherent risks to the Group’s business and how these might impact the Group’s ability to remain a
going concern for the going concern period, being the period to 31 July 2026, which is at least 12 months from when the financial
statements are authorised for issue;
• We have reviewed the forecasts that support the Directors’ going concern assessment and:
– obtained an understanding of how management prepared the forecasts and the two separate scenarios: the Base case, which
is based on the Group’s forecast cash flows approved by the Board at its November 2024 meeting, updated for actual results
to date. The Severe but plausible case starts from the Base case and then flexes its key assumptions further; it applies more
severe assumptions including; lower rents; increased service charge costs, and higher property and administration expenses;
falling property values; higher interest rates; and the impact of these on planned sales and refinancings;
– challenged forecast assumptions through comparison with those that would be expected in the current economic and financial
environment, including forecast inflation levels and interest rates, together with other macro-economic factors which may
adversely affect future occupancy and income and cost levels, and the impact of a further fall in property valuations on
compliance with loan covenants;
– challenged the appropriateness of each of the key assumptions in the two scenarios by testing them to supporting evidence
and searching for contradictory evidence. We did this using our understanding of the Group’s business, evidence gained
during the audit, knowledge of the wider real estate market and input from our real estate valuation and debt specialists.
We assessed historical forecasting accuracy as an input into determining the ability of management to forecast for the going
concern period;
– challenged forecast assumptions in comparison to the current performance of the Group; and
– confirmed whether the terms and conditions of the Group’s loan agreements had been appropriately incorporated into the
going concern scenarios and modelling, including the maturity profile of the Group’s borrowings and the requirements in
relation to covenant compliance.
• We performed testing to evaluate whether the covenant requirements of the debt facilities would be breached under the Base
case and the Severe but plausible case prepared by management, and applied additional stress tests to observe their impact on
liquidity;
• We challenged the mitigations used by management in both the Base case and the Severe but plausible case, including certain
refinancing and repayment of debt, property disposals, dividend distribution and capital expenditure, by comparing to actual
cash flows in 2024, obtaining supporting evidence from management and searching for contrary evidence. We also challenged
to what extent these mitigations are within management’s control;
• We considered the ability of management to execute the refinancings of the debt maturing in the going concern period within
the timescale required, which covered £426m of debt falling due within the going concern period. Our audit procedures included
considering evidence of the progress of ongoing refinancing and management’s refinancing track record. We also obtained the
perspective of our debt advisory specialists in the UK and Germany on the market appetite for refinancing such loans;
• We also challenged management as to whether the Group would be able to complete the planned property disposals (£359m)
included in their going concern assessment within the timescale required. Our audit procedures included considering evidence
ofthe progress to date of planned disposals; and
• We read the disclosures in the Annual Report and Financial Statements in relation to going concern to assess whether they
appropriately disclose the risks, the impact on the Group’s operations and results and the availability of mitigating actions to
betaken.
The results of the Severe but plausible downside scenario modelled by management indicate that a material uncertainty exists that
may cast significant doubt on the Group’s and Company’s ability to continue as a going concern.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of
this report.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 113
Strategic report Financial statements
Overview
Key audit matters 2024
• Valuation of the Property portfolio
• Going Concern
Materiality • Group financial statements as a whole – £19.3m based on 1% of Total Assets
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of
internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of
management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement. We then applied professional judgement to focus our audit procedures on the areas
that posed the greatest risks to the Group financial statements. We continually assessed risks throughout our audit, revising the
risks where necessary, with the aim of reducing the Group risk of material misstatement to an acceptable level, in order to provide
abasis for our opinion.
Components in scope
The Group operates across two operating segments being other investments and investment property, with the investment
property segment being managed across three separate geographic regions, the UK, Germany and France. The other investments
segment comprises the Group’s UK hotel operation and other small corporate investments based in Sweden. The head office is
located in the UK where the other investments operating segment and UK investment property operating segment are managed.
Both the Germany and France operating segments have separate local management and accounting functions.
For components in scope, we used a combination of risk assessment procedures and further audit procedures to obtain sufficient
appropriate evidence. These further audit procedures included:
• procedures on the entire financial information of the component, including performing substantive procedures;
• procedures on one or more classes of transactions, account balances or disclosures; and
• specific audit procedures.
Based on our risk assessment, we identified that the UK Component (including the Group’s UK hotel operation) and Germany
component required audits of their entire financial information due to the extent to which these components contribute to the
identified Group risks of material misstatement.
We identified that the France component required audit procedures over specific financial statement areas due to extent to which
certain financial statement areas within this component contribute to the identified Group risks of material misstatement.
The audit work performed over the UK component was performed by the UK firm and the audit work in respect of the German
andFrench components was performed by local BDO Network firms in Luxembourg and France respectively. Certain additional
procedures were performed at Group level by the Group audit team in respect of the key Audit matters, together with audit
procedures over the Group consolidation which gave us the evidence we needed to form our opinion on the Group financial
statements as a whole.
The remainder of the other investments segment, comprising small corporate investments based in Sweden was not identified as
contributing to the identified Group risks of material misstatement and the financial information related to this component was
principally subject to analytical review procedures performed by the Group audit team.
Procedures performed centrally
We considered there to be a high degree of centralisation of financial reporting processes in relation to Borrowings, Finance Costs
and Going Concern. We therefore designed and performed procedures centrally in these areas.
The Group operates a centralised IT function that supports IT processes for certain components. This IT function is subject to
specified risk-focused audit procedures, predominantly the testing of the relevant IT general controls and IT application controls.
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Working with other auditors
As Group auditor, we determined the components at which audit work was performed, together with the resources needed to
perform this work. These resources included component auditors, who formed part of the group engagement team as reported
above. As Group auditor we are solely responsible for expressing an opinion on the financial statements.
For the work performed by component auditors, we determined the level of involvement needed in order to be able to conclude
whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the Group financial statements as a
whole. Our involvement with component auditors included the following:
• As part of our audit planning, we issued Group audit instructions to the German and French component teams and held remote
planning meetings via video conference to discuss the Group and local risks identified and to agree the testing approach and
audit timelines. The planning documentation was reviewed by senior members of the Group audit team;
• A visit to Luxembourg (Germany component) and France (France component) was conducted by senior members of the Group
audit team to perform a review of the complete audit files for the German component and to review the relevant audit work in
relation to the specific financial statement area identified for the France component based on the extent to which certain
financial statement areas within this component contribute to the identified Group risks of material misstatement. Following the
review, any further work required by the Group audit team was performed by the component auditors and reviewed by the Group
audit team via remote access to the audit files; and
• At the completion stage, the Group audit team attended closing meetings with the local audit team via video conference and
reviewed their reporting, addressing risks and specific procedures raised. Discussions were held with Group management on the
findings from our audit, including adjustments raised.
Climate change
Our work on the assessment of potential impacts on climate-related risks on the Group’s operations and financial
statements included:
• Enquiries and challenge of management and the Group’s independent property valuers to understand the actions they have
taken to identify climate-related risks and their potential impacts on the financial statements and adequately disclose climate-
related risks within the annual report;
• Our own qualitative risk assessment taking into consideration the sector in which the Group operates and how climate change
affects this particular sector and property asset class;
• Review of the minutes of Board and Audit Committee meetings and other papers related to climate change and performed a risk
assessment as to how the impact of the Group’s risk assessment as set out in the ESG: climate related Financial Disclosure may
affect the financial statements and our audit; and
• Involvement of climate-related experts in evaluating management’s risk assessment.
We challenged the extent to which climate-related considerations, including the expected cash flows from the initiatives and
commitments, have been reflected where appropriate in management’s going concern assessment and viability assessment.
We also assessed the consistency of management’s disclosures included as ‘Statutory Other Information’ within the Strategic
Report with our knowledge obtained from the audit.
Based on our risk assessment procedures, we considered the following key audit matter to be materially impacted by climate-
related risks and related commitments; Valuation of the Property portfolio. The explanation of, and our audit response to, this
climate-related risk is included in the related key audit matter below.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 115
Strategic report Financial statements
Key audit matters
In addition to the matter described in the Material uncertainty related to going concern section of our report, we have determined
the matter below to be the key audit matter to be communicated in our report.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources
inthe audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How the scope of our audit addressed the key audit matter
Valuation of the
Property portfolio:
£1,850.2m
(2023: £2,062.9m)
Refer to the Audit
Committee Report (page
84); Materialaccounting
policies (pages127 – 133);
and Notes11, 12, 13and 14
oftheConsolidated
Financial Statements.
The Group has engaged
Cushman & Wakefield
(UKProperties) and Jones Lang
LaSalle (German and French
Properties) toundertake a full
year end valuation of all the
properties in accordance
withRICS Valuation –
Global Standards.
The valuation of the property
portfolio requires significant
judgement and use ofestimates
by management and the
external valuers.
Any input inaccuracies or
unreasonable bases used in
these estimates (such as
inrespect of market rental
income and yields applied) could
result in a material misstatement
of the income statement and
balance sheet.
There is also a risk that
management may influence
thesignificant judgements and
estimates in respect of property
valuations in order to achieve
property valuation and other
performance targets to meet
market expectations or bonus
targets, through intentionally
misstating property or lease data
provided to external valuers.
Our audit work included, but was not restricted to, the following:
Group’s controls relating to the valuation of investment properties
• We reviewed and evaluated the design, implementation and appropriateness of the
Group’s controls relating to the valuation of investment properties, including the
processes by which the Group ensures that accurate data is provided to the external
valuers. In doing so, we performed a walkthrough of the relevant controls by obtaining
support for the design and implementation of the controls.
Experience of the valuers and relevance of their work
• We assessed the competency, qualifications, independence and objectivity of the
independent external valuers engaged by the Groupand reviewed the terms of their
engagement for any unusual arrangements, limitations in the scope of their work or
evidence of management bias.
• Together with our internal UK auditor’s experts we read the valuation reports and
confirmed that all valuations had been prepared in accordance with applicable valuation
guidelines and were therefore appropriate for determining the carrying value in the
Group’s financial statements.
Data provided to the valuer
• We validated the underlying data provided to the valuer by management which included
key observable inputs such as current rent and lease term by agreeing a sample to the
executed lease agreements as part of our audit work.
Assumptions and estimates used by the valuer
With respect to the German and French investment properties, our internal real estate
valuation specialists for each jurisdiction performed the following procedures:
• Developed yield expectations for each property using available independent industry
data, reports and comparable transactions in the market around the period end.
• Evaluated the other key valuation assumptions, being the market rental values, taking into
account the location and specifics of each property.
• We tested the mathematical accuracy of the valuation calculations through
reperformance based on the inputs used by the external valuer.
• Attended meetings with our Group German and French property valuers, together with
senior members of the Group audit team, and discussed the assumptions used and the
valuation movement in the period with the independent valuers.
• Where the valuation yield, market rental value or recalculated valuation was outside of our
expected range we challenged the independent valuer on specific assumptions and
reasoning for the yields and/or market rents applied and corroborated their explanations
where relevant, including agreeing to third-party documentation and market
comparisons.
With respect to the UK property valuations, the work performed was consistent with the above
and included the following areas:
• developing yield expectations for each property using available independent industry
data, reports and comparable transactions in the market around the period end.
• attending the meetings with the Group’s UK property valuers to assist us in assessing that
explanations provided were appropriate and in line with market knowledge.
Related disclosures in the financial statements
• We reviewed the appropriateness of the Group’s disclosures within the financial
statements in relation to valuation methodology, key valuation assumptions and valuation
sensitivity by checking that these adhere to the disclosure requirements of the reporting
framework used.
Key observations:
Based on our work we have not noted any material instance which may indicate that the
assumptions adopted by the Directors in the valuation were not reasonable or that the
methodology applied was inappropriate.
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Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions
of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality
level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not
necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:
Group financial statements 2024
£m
Parent company financial statements 2024
£m
Materiality £19.3m £5.1m
Basis for determining
materiality
Materiality for the Group and Parent Company’s financial statements was set at 1% of total assets
(2023:1%). This provides a basis for determining the nature and extent of our risk assessment procedures,
identifying and assessing the risk of material misstatement and determining the nature and extent of
further audit procedures.
Rationale for the benchmark
applied
We determined that total assets would be the most appropriate basis for determining overall materiality as
we consider it to be the principal considerations for the users of the financial statements in assessing the
financial performance of the Group.
Performance materiality £11.5m £3.1m
Basis for determining
performance materiality
Performance materiality is set at an amount to reduce to an appropriate low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds materiality. On the basis of our risk
assessment, together with our assessment of the Group’s overall control environment, our judgement
was that overall performance materiality for the Group should be 60% of materiality. We determined that
the same measure as the Group was appropriate for the Parent Company.
Rationale for the percentage
applied for performance
materiality
We determined that 60% of materiality would be appropriate based on our risk assessment, together
with our assessment of the Group’s and Parent Company’s overall control environment, the low number
of components, the low value of brought forward adjustments impacting the current year and the
acknowledgement that as it is our first year auditing the Group and thus our understanding of the Group
is likely to be less than it would be otherwise.
Specific materiality
We also determined that for other account balances and classes of transactions that impact the calculation of EPRA Earnings,
amisstatement of less than materiality for the financial statements as a whole, specific materiality, could influence the economic
decisions of users.
As a result, we determined that specific materiality for these items should be £1.8 million, being 5% of EPRA Earnings.
EPRA Earnings excludes the impact of the net loss on revaluation of investment properties and related deferred tax movements,
changes in fair value of interest rate derivatives, changes in the fair value of equity investments, profits/(losses) on the sale of
investment property and equity investments and the amortisation of intangible assets. We further applied a performance
materiality level of 60% of specific materiality to ensure that the risk of errors exceeding specific materiality was appropriately
mitigated. We consider that the EPRA Earnings benchmark is comparable with other market participants.
Component performance materiality
For the purposes of our Group audit opinion, we set performance materiality for each component of the Group, apart from
theParent Company whose materiality and performance materiality are set out above, based on a percentage of between
30%and 60% of Group performance materiality dependent on a number of factors including the size and our assessment of
therisk of material misstatement of that component. Component performance materiality ranged from £3.5m to £7.2m
(Specificcomponent performance materiality: £330k to £741k).
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £965k
(Specificmateriality £90k). We also agreed to report differences below this threshold that, in our view, warranted reporting
onqualitative grounds.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 117
Strategic report Financial statements
Other information
The directors are responsible for the other information. The other information comprises the information included in the Annual
Report and Accounts other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any
formof assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we
are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on
thework we have performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
Corporate governance statement
The UK Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part
ofthe Corporate Governance Statement relating to the parent company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.
Going concern
and longer-term
viability
• The Directors’ statement with regards to the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on page 63 to 64; and
• The Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment
covers and why the period is appropriate set out on page 65.
Other Code
provisions
• Directors’ statement on fair, balanced and understandable set out on page 111;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out
on pages 59 to 62;
• The section of the annual report that describes the review of effectiveness of risk management and
internal control systems set out on pages 56 to 62; and
• The section describing the work of the audit committee set out on pages 84 to 89.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the financial year for which
thefinancial statements are prepared is consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with applicable
legalrequirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in
the course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report.
Directors’
remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
Corporate
governance
statement
In our opinion, based on the work undertaken in the course of the audit, the information about internal control and
risk management systems in relation to financial reporting processes and about share capital structures, given in
compliance with rules 7.2.5 and 7.2.6 in the Disclosure Guidance and Transparency Rules sourcebook made by the
Financial Conduct Authority (the FCA Rules), is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained
in the course of the audit, we have not identified material misstatements in this information.
In our opinion, based on the work undertaken in the course of the audit the information about the Parent Company’s
corporate governance code and practices and about its administrative, management and supervisory bodies and
their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
We have nothing to report arising from our responsibility to report if a corporate governance statement has not been
prepared by the Parent Company.
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Matters on which
we are required to
report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us
to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our
audit have not been received from branches not visited by us; or
• the Parent Company financial statements and the part of the Directors’ remuneration report to be audited
are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the
financialstatements and for being satisfied that they give a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
duetofraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability
tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
isahigh level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
materialmisstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
inthe aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
• Our understanding of the Group and the industry in which it operates;
• Discussion with management, those charged with governance and legal counsel; and
• Obtaining an understanding of the Group’s policies and procedures regarding compliance with laws and regulations;
we considered the significant laws and regulations to be UK adopted international accounting standards, the Companies Act 2006,
UK Listing Rules and applicable tax regulations (including compliance with the UK REIT Regime).
The Group is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the
amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws
and regulations to be VAT Regulations, employment law, Health and Safety Act and environmental regulations.
Our procedures in respect of the above included:
• Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations;
• Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws and regulations;
• Review of financial statement disclosures and agreeing to supporting documentation;
• Involvement of tax experts and specialists in the audit; and
• Review of legal expenditure accounts to understand the nature of expenditure incurred.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 119
Strategic report Financial statements
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment
procedures included:
• Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;
• Obtaining an understanding of the Group’s policies and procedures relating to:
– Detecting and responding to the risks of fraud; and
– Internal controls established to mitigate risks related to fraud.
• Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;
• Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;
• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud; and
• Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted
bythese.
Based on our risk assessment, we considered the areas most susceptible to fraud to be inputs to the valuation of the property
portfolio and management override of controls.
Our procedures in respect of the above included:
• To address the risk arising in relation to the inputs into the valuation of the property portfolio, we agreed the key observable
inputs provided by management to those used by the external valuer, which consists of the current rent and lease term.
We agreed these inputs to a sample of executed lease agreements as part of our audit work;
• Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting
documentation;
• Involvement of forensic specialists in the audit to assist in the identification and assessment of potential fraud risks relevant to the
Group; and
• Assessing significant estimates made by management for bias within the valuation of the property portfolio as mentioned under
the key audit matters heading.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including
component engagement teams who were all deemed to have appropriate competence and capabilities and remained alert to any
indications of fraud or non-compliance with laws and regulations throughout the audit. For component engagement teams, we also
reviewed the results of their work performed in this regard.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud
may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the
events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
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to the members of CLS Holdings Plc continued
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Thomas Edward Goodworth
(Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
31 March 2025
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 121
Strategic report Financial statements
20242023
Notes£m£m
Revenue
4
151.9
1 48. 7
Service charges and similar expenses
4
(37 .9)
(35 .7)
Net rental income
4
114. 0
113 . 0
Administration expenses
(17 . 7)
(18.2)
Other property expenses
(18. 1)
(15 . 6)
Operating profit before revaluation and disposals
78.2
79 .2
Net revaluation movements on investment property
12/14
(127 . 7)
(30 2.7)
Net revaluation movements on equity investments
(0.6)
(1.3)
(Loss)/profit on sale of investment property
(2.3)
1 .4
Loss on sale of other equity investments
(0. 1)
–
Operating loss
(52.5)
(223. 4)
Finance income
8
1.4
1 .6
Finance costs
9
(45. 7)
(41. 3)
Foreign exchange loss
(0.6)
(0 .3)
Loss before tax
(9 7. 4)
(263 .4)
Taxation
10
3.8
1 3.6
Loss for the year attributable toequityshareholders
(93. 6)
(249 .8)
Basic and diluted earnings per share
5/24
(23.6)p
(62. 9)p
The notes on pages 127 to 160 are an integral part of these Group financial statements.
CLS Holdings PLC Annual Report and Accounts 2024122
Group income statement
for the year ended 31 December 2024
2024 2023
Notes£m£m
Loss for the year
(93. 6)
(249 .8)
Other comprehensive income:
Items that may be reclassified to profit or loss
Revaluation of property, plant and equipment
26
1.3
2.2
Foreign exchange differences
26
(21.6)
(12.3)
Deferred tax on revaluation of property, plant and equipment
18
(0. 1)
(0.6)
Total items that may be reclassified to profit or loss
(20. 4)
(10.7)
Total other comprehensive expense
(20. 4)
(10 .7)
Total comprehensive expense for the year attributable to equity shareholders
(114.0)
(260 .5)
The notes on pages 127 to 160 are an integral part of these Group financial statements.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 123
Financial statementsStrategic report
Group statement of comprehensive income
for the year ended 31 December 2024
2024 2023
Notes£m£m
Non-current assets
Investment properties
12
1 ,676. 5
1,850 .5
Property, plant and equipment
13
42. 5
4 1.8
Intangible assets
2 .7
2 .9
Equity investments
0.6
1 .4
Derivative financial instruments
20
0 .7
3 .6
1, 723.0
1, 900.2
Current assets
Trade and other receivables
15
14.2
1 6. 7
Derivative financial instruments
20
1 .1
0. 7
Cash and cash equivalents
16
6 0.5
70.6
75.8
8 8.0
Assets held for sale
14
133.0
172. 7
Total assets
1,931. 8
2, 160 .9
Current liabilities
Trade and other payables
17
(6 5 .7)
(68 .6)
Current tax
(0.9)
(0 .3)
Borrowings
19
(3 72.4)
(193 .9)
(439.0)
(262. 8)
Non-current liabilities
Deferred tax
18
(7 8 .1)
(88.7)
Borrowings
19
(626.8)
(876. 7)
Leasehold liabilities
(3.3)
(3 .5)
Derivative financial instruments
20
(0 .4)
–
(70 8.6)
(968. 9)
Total liabilities
(1, 147 .6)
(1,231.7)
Net assets
7 84.2
9 29 .2
Equity
Share capital
23
11.0
11. 0
Share premium
8 3 .1
8 3.1
Other reserves
26
86 .9
106.7
Retained earnings
603.2
7 28.4
Total equity
784.2
929 .2
The financial statements of CLS Holdings plc (registered number: 02714781) were approved by the Board of Directors and
authorised for issue on 31 March 2025 and were signed on its behalf by:
Mr F Widlund Mr A Kirkman
Chief Executive Officer Chief Financial Officer
The notes on pages 127 to 160 are an integral part of these Group financial statements.
CLS Holdings PLC Annual Report and Accounts 2024124
Group balance sheet
at 31 December 2024
Share Share Other Retained
capital premium reserves earnings Total equity
£m £m £m £m£m
Arising in 2024:
Note 23
Note 26
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
8 3 .1
106. 7
72 8.4
92 9.2
At 31 December 2024
11.0
8 3 .1
86 .9
603.2
784.2
Share Share Other Retained
capital premium reserves earnings Total equity
£m £m £m £m£m
Note 23
Note 26
Arising in 2023:
Total comprehensive expense for theyear
–
–
(10.7)
(249 .8)
(260 .5)
Share-based payments
–
–
0. 5
–
0. 5
Dividends to shareholders
–
–
–
(31. 6)
(31. 6)
Transfer of fair value on property, plant and equipment
–
–
1 .5
(1.5)
–
Total changes arising in 2023
–
–
(8 .7)
(28 2.9)
(291. 6)
At 1 January 2023
11. 0
8 3.1
11 5.4
1, 011.3
1,220 . 8
At 31 December 2023
11. 0
8 3.1
106.7
7 28.4
9 29 .2
The notes on pages 127 to 160 are an integral part of these Group financial statements.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 125
Financial statementsStrategic report
Group statement of changes in equity
for the year ended 31 December 2024
20242023
Notes£m£m
Cash flows from operating activities
Cash generated from operations
27
71.2
83. 2
Interest received
1.4
1 .6
Interest paid
(40.6)
(35 . 1)
Income tax paid on operating activities
(2.5)
(3.8)
Net cash inflow from operating activities
29. 5
4 5.9
Cash flows from investing activities
Capital expenditure on investment properties
(22.3)
(46 . 4)
Proceeds from sale of properties
63.8
1 7.0
Income tax paid on sale of properties
–
(1. 8)
Purchases of property, plant and equipment
(0 .2)
(0 . 8)
Purchase of intangibles
(0.2)
(0 .3)
Net cash inflow/(outflow) from investing activities
4 1 .1
(32. 3)
Cash flows from financing activities
Dividends paid
25
(31.6)
(31. 6)
Cash received on settlement of derivative financial instrument
0 .7
–
Purchase of derivative financial instrument
(1.2)
–
Proceeds from borrowings
1
8.8
72. 5
Transaction costs related to borrowings
(1.0)
(1. 1)
Repayment of borrowings
1
(55.5)
(96 .0)
Net cash outflow from financing activities
(79.8)
(56.2)
Cash flow element of net decrease in cash and cash equivalents
(9.2)
(42. 6)
Foreign exchange loss
(0.9)
(0 .7)
Net decrease in cash and cash equivalents
(10. 1)
(43 .3)
Cash and cash equivalents at the beginning of the year
7 0.6
1 1 3.9
Cash and cash equivalents at the end of the year
16
6 0.5
70.6
1 Proceeds from borrowings and repayment of borrowings for the year ended 31 December 2023 have been restated. Details of these restatements are included at note 27.
The notes on pages 127 to 160 are an integral part of these Group financial statements.
CLS Holdings PLC Annual Report and Accounts 2024126
Group statement of cash flows
for the year ended 31 December 2024
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. Material accounting policies
The principal accounting policies applied in the preparation of these Group financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The financial statements have 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).
Going concern
Background
CLS’ strategy and business model include regular secured loan refinancings, and capital deployment and recycling through
acquisitions, capital expenditure and disposals. Over the last thirty years, the Group has successfully navigated several periods of
economic uncertainty, including the recent economic stress resulting from the Covid-19 pandemic, Russia’s invasion of Ukraine and
the cost-of-living crisis.
The Group continues to have very high rent collection and low bad debts, and has a long-term track record in financing and
refinancing debt including £154.5 million completed in 2024, £42.1 million already completed in 2025 and a further £174.1 million has
been well advanced subsequent to year-end, whereby term sheets have been obtained, we have reached a first stage credit review
or short term extensions between 3 to 12 months have been agreed in anticipation of the planned refinancing of these facilities.
The Directors note that the Group financial statements for the year ended 31 December 2023 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 2026 (‘the going concern period’). The period chosen takes
into consideration the maturity date of loans totalling £426.0 million that expire by July 2026. The going concern assessment uses
the forecast approved by the Board at its November 2024 meeting as the Base case. The assessment also considers a Severe but
plausible case. The Directors have considered the period between the date of Board approval and the date of signing the accounts.
Based on a review of events since Board approval in November 2024, 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 cash flows have been updated using assumptions regarding forecast forward
interest curves, inflation and foreign exchange, and includes 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 £426.0 million with 11 lenders expiring within the going concern period will be refinanced as expected (£303.0 million)
or will be repaid (£123.0 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 2024 when £154.5 million was successfully
refinanced or extended; and
• recent refinancings subsequent to 31 December 2024 that have completed, reached an initial credit committee review stage by
lenders, or where term sheets have been obtained, totalling £216.2 million (£66.2 million of which short term extensions between
3 to 12 months have been agreed in anticipation of the planned refinancing of these facilities) of the £303.0 million noted above.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 127
Financial statementsStrategic report
Notes to the Group financial statements
for the year ended 31 December 2024
2. Material accounting policies continued
2.1 Basis of preparation – continued
Going concern continued
Forecast cash flows – Base case continued
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 2024. 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 £66.1 million achieved in the 12 months to 31 December 2024) and the progress made with
the disposal of Spring Mews Student which has been unconditionally exchanged. The value of the properties available for disposal
is significantly in excess of the value of the debt maturing during the going concern period.
The Group’s financing arrangements, which utilise ring-fenced property loans, contain Loan-to-Value (‘LTV’), Interest Cover Ratio
(‘ICR’) and Debt Service Coverage Ratio (‘DSCR’) covenants. In the Base case, minimal cure payments have been forecast given
that the Group expects to maintain its compliance with the covenant requirements.
The near-term impacts of climate change risks within the going concern period are expected to be immaterial following an
assessment of potential significant inflation resulting from climate change, in the context of increased property and administrative
costs, as part of the reverse stress testing performed by CLS. Furthermore, the forecast cash flows prepared for the Base case
include all necessary capital expenditure to meet the minimum energy efficiency standards required in the countries where
CLS operates.
Forecast cash flows – Severe but plausible case
A Severe but plausible case has been assessed which has been produced by flexing key assumptions further including: lower rents,
increased service charges, higher property and administration expenses, falling property values, higher interest rates and reduced
achievements of refinancings and disposals.
These flexed assumptions are more severe than CLS experienced during the 2007-2009 global financial crisis and other
downturns such as that experienced in 2020-2022 during the Covid-19 pandemic. A key assumption in this scenario is a further
reduction to the Base case in property values of 10% until July 2026, impacting forecast refinancings, sales and cash cures. This is
in addition to the reduction experienced of 12.5% in 2023 and cumulative c.24% decline from 30 June 2022 to 31 December 2024.
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 £11.8 million being
necessary for the Group to remain in compliance with its covenant requirements.
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 in terms of depositing cash to equity cure some loans,
scaling back uncommitted capital expenditure (without impacting revenue streams over the going concern period) and reducing
the dividend to the Property Income Distribution required under the UK REIT rules as well as drawing the currently available
£42.9 million of its existing £60.0 million revolving credit and overdraft facilities. If needed, further disposals could be considered
as there are no sale restrictions on CLS’ £1.9 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 review period, and planned
property disposals, is outside of Management’s control and consequently a material uncertainty exists that may cast significant
doubt on the Group’s ability to continue as a going concern.
Notwithstanding this material uncertainty on the going concern assumption, given our track-record and reputation, the Directors
are confident that the debt falling due for repayment in the going concern period will be refinanced or settled in line with their plans
for the reasons set out above, rather than requiring repayment on maturity, or will be extinguished as part of property disposals in
the period. In extremis, the loans requiring refinancing are all through ring-fenced SPV borrower 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.
CLS Holdings PLC Annual Report and Accounts 2024128
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
2. Material accounting policies continued
2.1 Basis of preparation – continued
Going concern continued
The financial statements do not contain the adjustments that would result if the Group and Company were unable to continue as a
going concern.
Historical cost and fair value
The financial statements have been prepared on the historical cost basis, except for investment and other properties and financial
instruments that are measured at fair value at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on fair value of the consideration given in exchange for goods and services. Fair value is the
price that would be received to sell the asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.
Presentational and functional currency
The consolidated financial statements, including the results and financial position, are presented in pounds Sterling (GBP, £),
the functional and presentational currency of CLS Holdings plc.
The amounts presented in the financial statements are rounded to the nearest £0.1 million.
New standards and interpretations
In the current year, the Group has applied a number of new standards and amendments to IFRSs issued by the International
Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2024.
Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements.
These new standards and amendments are listed below:
• Amendments to IAS 1 – Classification of Liabilities as Current or Non-Current
• Amendments to IAS 1 – Non-current Liabilities with Covenants
• Amendments to IAS 7 and IFRS 7 – Disclosures: Supplier Finance Arrangements
• Amendments to IFRS 16 – Lease Liability in a Sale and Leaseback
At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRSs that
have been issued but are not yet effective:
• Amendments to IFRS 10 and IAS 28 – Sale or contribution of assets between an investor and its associate or joint venture
• Amendments to IAS 21 – Lack of exchangeability
• Amendments to IFRS 9 – Classification and Measurement of Financial Instruments
• IFRS 18 – Presentation and Disclosure in Financial Statements
• IFRS 19 – Subsidiaries without Public Accountability: Disclosures
The Directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements
of the Group in future periods, however, the presentation of the Group income statement may change on adoption of IFRS 18.
2.2 Business combinations
Where property is acquired, via corporate acquisitions or otherwise, management considers the substance of the assets and
activities of the acquired entity in determining whether the acquisition represents the acquisition of a business. The Group
determines that it has acquired a business when the acquired set of activities and assets/liabilities include an input and a
substantive process that, together, significantly contribute to the ability to create outputs i.e. rental income and capital
appreciation. The acquired process is considered substantive if it is critical to the ability to continue to earn rental income and drive
capital appreciation, and the inputs acquired include an organised workforce with the necessary skills, knowledge, or experience to
perform that process or it significantly contributes to the ability to continue producing rental income and drive capital appreciation
and is considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue
producing rental income and capital appreciation.
Where such acquisitions are not determined to be an acquisition of a business, they are not treated as business combinations.
Rather, the cost to acquire the corporate entity or assets and liabilities is allocated between the identifiable assets and liabilities
of the entity based on their relative fair values at the acquisition date.
(I) Subsidiary undertakings
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
They are deconsolidated from the date that control ceases.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 129
Financial statementsStrategic report
2. Material accounting policies continued
2.2 Business combinations – continued
(II) Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value
of identifiable assets and liabilities of a subsidiary or associate at the date of acquisition in a business combination. It is initially
recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which
is recognised as an asset is reviewed for impairment at least annually.
2.3 Assets held for sale
Assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell,
except for investment properties held for sale which are measured at fair value.
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale
transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the
asset (or disposal group) is available-for-sale in its present condition. Management must be committed to the sale which should
be expected to qualify for recognition as a completed sale within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary
are classified as held for sale when the criteria above are met, regardless of whether the Group will retain a non-controlling interest
in its former subsidiary after sale.
2.4 Foreign currency
(I) Foreign currency transactions
Transactions in foreign currencies are translated into Sterling using the exchange rate prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Sterling at the
exchange rate ruling at that date, and differences arising on translation are recognised in the income statement.
For financial assets measured at fair value through profit and loss, exchange differences are recognised in the income statement in
the ‘finance costs or finance income’ line item.
(II) Consolidation of foreign entities
The results and financial position of all Group entities which have a functional currency different from Sterling are translated
into Sterling as follows:
(a) assets and liabilities are translated at the closing rate at the date of the balance sheet;
(b) income and expenses for each income statement are translated at the average exchange rates; and
(c) all resulting exchange differences are recognised directly in equity in the cumulative translation reserve.
2.5 Investment properties
Investment property comprises principally offices that are not occupied substantially for use by, or in the operations of, the Group,
nor for sale in the ordinary course of business, but are held primarily to earn rental income and for capital appreciation. These
buildings are substantially rented to tenants and not intended to be sold in the ordinary course of business.
Investment properties are measured initially at cost, including directly attributable transaction costs. Transaction costs include
transfer taxes and professional fees for legal and other services. Additions to investment properties comprise costs of a capital
nature; in the case of investment properties under development, these include capitalised interest and certain staff costs directly
attributable to the management of the development. Capitalised interest is calculated at the rate on associated borrowings applied
to expenditure on the development between the date of gaining planning consent and the date of practical completion.
The Group recognises sales and purchases of investment property when control passes on completion of the contract. Gains
or losses on the sale of properties are calculated with reference to the carrying value at the end of the previous year, adjusted for
subsequent capital expenditure. Income from deposits forfeited in circumstances where potential purchasers have failed to
complete in accordance with sale and purchase agreements are recognised upon rescission of the agreement.
Investment properties are carried at fair value, based on market value as determined by professional external valuers at the balance
sheet date. Investment properties being redeveloped for continuing use as investment properties, or for which the market has
become less active, continue to be classified as investment properties and measured at fair value. Changes in fair values are
recognised in the income statement.
Transfers are made to (or from) investment property only when there is evidence of a change in use.
Lease incentives are not held as separate assets or liabilities on the balance sheet but are instead included within the investment
property balance. Net revaluation movement of investment properties is increased or decreased by the movement of lease
incentive balances during the period.
CLS Holdings PLC Annual Report and Accounts 2024130
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
2. Material accounting policies continued
2.6 Property, plant and equipment
Property, plant and equipment is measured initially at cost, being the consideration paid, including related transaction costs.
Property is subsequently measured at fair value, based on market value as determined by professional external valuers at
the balance sheet date. Fixtures and fittings and head office fit-out are stated at historical cost less accumulated depreciation
and any impairment loss.
Any increase arising on the revaluation of land and buildings held as property, plant and equipment is credited to the fair value
reserve via other comprehensive income, except to the extent that it reverses a revaluation decrease for the same asset previously
recognised as an expense, in which case the increase in value is credited to the income statement to the extent the decrease was
previously expensed. On disposal of an asset the revaluation reserve relating to that asset becomes realised and is transferred in
equity to retained earnings.
Land is not depreciated. Depreciation on the property, plant and equipment that is depreciated is calculated using the straight-line
method to allocate cost less estimated residual values over the estimated useful lives or lease length, as follows:
Fixtures and fittings 4–5 years
Head Office fit-out 10 years
Hotel 250 years
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of an asset is determined as
the difference between the sale proceeds and the carrying amount of the asset and is recognised in the income statement.
2.7 Financial instruments
(I) Derivative financial instruments
The Group uses derivative financial instruments, including swaps and interest rate caps, to help manage its interest rate and foreign
exchange rate risks. Derivative financial instruments are initially recorded at, and subsequently revalued to, fair value.
Revaluation gains and losses are recognised in finance income or finance costs in the income statement.
(II) Financial assets at fair value through profit and loss (FVTPL)
Financial assets at FVTPL are measured at fair value. Revaluation gains and losses are recognised in the income statement.
(III) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits, tenant deposits and other short-term highly liquid
investments which are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
(IV) Trade and other receivables/Trade and other payables
Trade and other receivables are recognised initially at their transaction price if they do not contain any significant financing
components. Subsequently they are measured at amortised cost with a recognised loss allowance for expected credit losses which
is measured at an amount equal to the lifetime expected credit loss. Trade and other payables are stated at transaction price which
is approximate to their fair value and subsequently measured at amortised cost.
(V) Borrowings
Borrowings are recognised initially at fair value less attributable transaction costs. Subsequently, borrowings are stated
at amortised cost with any difference between the amount initially recognised and the redemption value being recognised in the
income statement over the period of the borrowings, using the effective interest rate method.
Where the Group has sustainability linked loans, consideration is given to whether an embedded derivative exists. Our assessment
is that there are no embedded derivatives associated with our sustainability linked loans.
When debt refinancing occurs, existing liabilities are treated as being extinguished when the new liability is substantially different
from the existing liability. To determine if a liability is substantially different, the Group considers the transaction as a whole, taking
into account both qualitative and quantitative characteristics.
Borrowing costs attributable to the construction of a qualifying asset are capitalised at the weighted average borrowing rate for the
applicable region on direct expenditure incurred between the date of gaining planning consent and the date of practical completion.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 131
Financial statementsStrategic report
2. Material accounting policies continued
2.8 Revenue
The Group’s revenue includes rental income, service charge income and other property-related income.
(I) Rental income
Rental income from operating leases is recognised on a straight-line basis over the lease term. Direct costs associated with
securing the rental income are also recognised on a straight-line basis over the lease term. Rents and service charges received in
advance for the period following the reporting date are considered deferred income.
Fixed or contractually defined rental increases, which can take the form of actual amounts or agreed percentages, are recognised
on a straight-line basis over the term. Rental increases related to a price index are recognised when the increase takes place.
Lease incentives being offered to tenants to enter into a lease, such as an initial rent-free period or a cash contribution to fit-out
or similar costs, are part of the net consideration for the use of the property and are therefore recognised on the same straight-
line basis.
Where the total consideration due under a lease is modified, for example to remove a break or extend the term, the revised
remaining consideration due is recognised on a straight-line basis over the remaining term of the lease. Lease modifications are
accounted for from the effective date of modification. Initial direct costs associated with the original lease continue to be
recognised and amortised over the remaining term of the modified lease.
(II) Service charge income
Service charge income relates to expenditure for services including, but not limited to, cleaning, security, repairs and maintenance
which is directly recoverable from tenants and is recognised in the period in which it is earned as tenants benefit from the services
based on actual service charge costs incurred. The Group has determined that it acts as agent, as it does not take control of these
services which are predominantly provided by third parties.
(III) Other property income
Other property income relates to income from the Group’s student accommodation and hotel in addition to dilapidations receipts
and surrender premiums.
Income from the Group’s student accommodation relates to rents received from tenants for the provision of student
accommodation. Income is recognised on a straight-line basis over the lease term. See rental income policy for more detail.
Hotel revenue is recognised as the rooms are occupied and services rendered. Where the supply of service has only been partially
completed at the balance sheet date, turnover represents the value of the service provided to date based on a portion of the
contract value.
Dilapidations income is payable by tenants when the Group agrees with the tenant to perform required remedial works to
fulfil the contractual obligations of the lease. Dilapidation income is recognised when the amounts become contractually due,
usually at the time an agreement between parties is reached. Surrender premiums are payable when a lease is terminated prior
to expiry. Surrender premiums for the early termination of a lease are recognised as revenue when the amounts become
contractually due.
2.9 Taxation
Current tax is based on taxable profit for the year and is calculated using tax rates that have been enacted or substantively enacted
by the balance sheet date.
Deferred tax is provided using the balance sheet liability method on temporary differences between the carrying value of assets
and liabilities for financial reporting purposes and the values used for tax purposes. Temporary differences are not provided for
when they arise from initial recognition of goodwill or from the initial recognition of assets or liabilities in a transaction that does not
affect accounting or taxable profit and does not give rise to equal taxable and deductible temporary differences.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of
assets and liabilities, and is calculated using rates that are expected to apply in the period when the liability is settled or the asset
is realised, in the tax jurisdiction in which the temporary differences arise.
CLS Holdings PLC Annual Report and Accounts 2024132
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
2. Material accounting policies continued
2.9 Taxation – continued
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the
assets can be used. The deferred tax assets and liabilities are only offset if they relate to income taxes levied by the same taxation
authority, there is a legally enforceable right of set-off and the Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax are recognised in the income statement except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in other comprehensive
income or equity respectively.
The Group has applied the exemption in IAS 12 Income Taxes to recognising and disclosing information about deferred tax assets
and liabilities related to Pillar Two income taxes.
2.10 Leases
The Group as a lessor
Leases where the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified
as operating leases.
The Group as a lessee
The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying
assets for all leases, except for short-term leases and leases of low-value assets.
(I) Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to
be made over the lease term which, if in respect of investment property, forms part of the cost of that property on initial recognition.
The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable
lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of
penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments
that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period
in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses either the borrowing rate of the loan attached to the property
at the lease commencement date or, if the property is not financed, then the operating segment’s incremental borrowing rate at
the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change
in the lease payments (e.g. changes to future payments resulting from a change in an index or rate used to determine such lease
payments) or a change in the assessment of an option to purchase the underlying asset.
(II) Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use).
The Group leases properties that meet the definition of investment property. These right-of-use assets are presented as part of the line
item ‘Investment property’ in the balance sheet.
(III) Short-term leases and low value assets
The Group applies the short-term lease recognition exemption to its short-term leases of equipment (i.e. those leases that have
a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease
of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments
on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 133
Financial statementsStrategic report
3. Accounting judgements and key sources of estimation uncertainty
Accounting judgements
In accordance with IAS 1, the Directors have considered the judgements that have been made in the process of applying the Group’s
accounting policies, which are described in note 2, and which of those judgements have the most significant effect on amounts
recognised in the financial statements.
Going concern
For the purposes of the going concern assessment, the Group makes judgements in determining future cash flows which are based
on assumptions. The most significant judgements relate to the terms and ability to refinance loan facilities and recycle capital.
These judgements are made by management based on recent performance, external factors and management’s knowledge and
expertise of cash flow drivers. See note 2 for more details.
Key sources of estimation uncertainty
Valuation of properties
The Group uses the valuations performed by its independent external valuers as the fair value of its investment properties and
those properties held at valuation and classified as property, plant and equipment. The valuations are based upon assumptions
including market rentals (‘ERV’), future development costs and an appropriate equivalent yield and capitalisation rates as
appropriate (see notes 12 and 13 for more detail). The valuers also make reference to market evidence of transaction prices for
similar properties.
Other estimates
Climate change
In preparing the financial statements, the Group has considered the impact of climate change, taking into account the relevant
disclosures in the Strategic report, including those made in accordance with the recommendations of the Taskforce on Climate
Related Financial Disclosure (see pages 42 to 50). These considerations included the limited exposure in terms of our properties
to potential physical climate risks along with a commitment to invest £65 million in our Net Zero Carbon Pathway. On this basis,
the Group has concluded that climate change did not have a material impact on the financial reporting judgements and estimates,
consistent with the assessment that this is not expected to have a significant impact on the Group’s going concern or viability
assessment. The Group considers that this will remain the case until approximately 2030 after which the differing climate scenarios
diverge, resulting in different risk profiles, the impact and mitigations of which will be captured in the Climate Resilience strategy
being developed (see page 32 for more detail).
CLS Holdings PLC Annual Report and Accounts 2024134
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
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
2024
Investment properties
United Other Central
Kingdom Germany France investments administration Total
Year ended 31 December 2024 £m £m £m £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.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 135
Financial statementsStrategic report
4. Segment information continued
2023
Investment properties
United Other Central
Kingdom Germany France investments administration Total
Year ended 31 December 2023 £m £m £m £m £m £m
Rental income
46.4
43.2
13.2
–
–
102.8
Other property-related income
8.9
0.6
0.9
5.5
–
15.9
Service charge income
13.4
11.7
4.9
–
–
30.0
Revenue
68.7
55.5
19.0
5.5
–
148.7
Service charges and similar expenses
(16.3)
(14.0)
(5.4)
–
–
(35.7)
Net rental income
52.4
41.5
13.6
5.5
–
113.0
Administration expenses
(7.5)
(3.2)
(1.3)
(0.1)
(6.1)
(18.2)
Other property expenses
(8.6)
(4.2)
(0.4)
(2.4)
–
(15.6)
Revenue less costs
36.3
34.1
11.9
3.0
(6.1)
79.2
Net revaluation movements on investment property
(186.6)
(90.6)
(25.5)
–
–
(302.7)
Net revaluation movements on equity investments
–
–
–
(1.3)
–
(1.3)
Profit/(loss) on sale of investment property
0.4
(1.6)
(0.1)
2.7
–
1.4
Segment operating (loss)/profit
(149.9)
(58.1)
(13.7)
4.4
(6.1)
(223.4)
Finance income
0.1
–
–
1.5
–
1.6
Finance costs
(25.2)
(11.9)
(4.0)
–
(0.2)
(41.3)
Foreign exchange gain/(loss)
–
–
0.1
(0.4)
–
(0.3)
Segment (loss)/profit before tax
(175.0)
(70.0)
(17.6)
5.5
(6.3)
(263.4)
Other segment information
Assets
Liabilities
Capital expenditure
2024 2023 2024 2023 2024 2023
£m £m £m £m £m £m
Investment properties
United Kingdom
825.1
930.0
510.5
548.2
9.4
3 7. 2
Germany
828.8
908.1
477.4
510.8
8.3
9.3
France
233.2
265.0
158.4
164.3
3.4
3.1
Other investments
44.7
57.8
1.3
8.4
–
0.8
1,931.8
2,160.9
1,147.6
1,231.7
21.1
50.4
CLS Holdings PLC Annual Report and Accounts 2024136
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
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 results, whilst noting the International
Organization of Securities Commissions (‘IOSCO’) 2016 guidance and ESMA’s December 2019 report on the use of APMs.
An APM is a financial measure of historical or future financial performance, position or cash flows of the Group which
is not a measure defined or specified in IFRS.
Overview of our use of APMs
The Directors believe that APMs assist in providing additional useful information on the underlying trends, performance and
position of the Group. APMs assist our stakeholder users of the accounts, particularly equity and debt investors, through the
comparability of information across the European real estate sector. APMs are used by the Directors and management, both
internally and externally, for performance analysis, strategic planning, reporting and incentive-setting purposes.
APMs are not defined by IFRS and therefore may not be directly comparable with other companies’ APMs, including peers in
the real estate industry. There are two sets of APMs which we utilise (European Public Real Estate Association (‘EPRA’) APMs and
similar CLS APMs) which are reconciled where possible to statutory measures on the following pages.
CLS monitors the Group’s financial performance using APMs which are EPRA measures as these are a set of standard disclosures
for the property industry and thus aid comparability for our stakeholder users. CLS considers the two measures below to be the
most relevant as we believe that these will continue to reflect the long-term nature of our property investments most accurately:
• EPRA earnings; and
• EPRA net tangible asset value (‘NTA’).
The Group adopted the EPRA Best Practice Recommendations (‘BPRs’) September 2024 in the current reporting period. This has
not had a material impact on the Group’s reported EPRA earnings and there has been no change to the Group’s APMs in the year
with the same APMs utilised by the business being defined, calculated and used on a consistent basis. All other EPRA measures are
shown within the supplementary unaudited disclosures to the financial statements.
1. EPRA APMs
2024 2023
For use in earnings per share calculations Number Number
Weighted average number of ordinary shares in circulation
397,410,268
397,330,507
Diluted number of ordinary shares
402,916,907
400,942,040
For use in net asset per share calculations
Number of ordinary shares in circulation at 31 December
397,410,268
397,410,268
i) Earnings – EPRA earnings
2024 2023
Notes £m £m
Loss for the year
(93.6)
(249.8)
Net revaluation movement on investment property
12/14
127.7
302.7
Deferred tax on revaluations
(6.6)
(16.3)
Net revaluation movement on equity investments
0.6
1.3
Loss/(profit) on sale of investment property
2.3
(1.4)
Current tax thereon
2.1
–
Movement in fair value of derivative financial instruments
9
3.4
4.2
Loss from sale of equity investments
0.1
–
Amortisation of intangible assets
0.4
0.2
EPRA earnings
36.4
40.9
Basic and diluted loss per share
(23.6)p
(62.9)p
EPRA earnings per share
9.2p
10.3p
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 137
Financial statementsStrategic report
5. Alternative Performance Measures continued
ii) Net asset value measures
2024
2023
IFRS EPRA EPRA EPRA IFRS EPRA EPRA EPRA
NAV NTA NRV NDV NAV NTA NRV NDV
2024 £m £m £m £m £m £m £m £m
IFRS Net assets
784.2
784.2
784.2
784.2
929.2
929.2
929.2
929.2
Other intangibles
–
(2.7)
–
–
–
(2.9)
–
–
Fair value of fixed interest debt
–
–
–
50.4
–
–
–
56.7
Tax thereon
–
–
–
(1.7)
–
–
–
(3.3)
Deferred tax on revaluation surplus
–
79.8
79.8
–
–
90.0
90.0
–
Adjustment for short-term disposals
–
(5.5)
–
–
–
(6.6)
–
–
Fair value of financial instruments
–
(1.4)
(1.4)
–
–
(4.3)
(4.3)
–
Purchasers’ costs
1
–
–
132.6
–
–
–
1 4 7. 7
–
784.2
854.4
995.2
832.9
929.2
1,005.4
1,162.6
982.6
Per share
197.3p
215.0p
250.4p
209.6p
233.8p
253.0p
292.5p
247.2p
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:
2024 2023
Notes £m £m
Auditor’s remuneration: Fees payable to the Company’s Auditor for:
Audit of the Parent Company and Group accounts
0.7
0.5
Audit of the Company’s subsidiaries pursuant to legislation
0.1
0.2
Audit overrun fee for prior year
1
0.2
–
Depreciation of property, plant and equipment
13
0.6
0.6
Amortisation of intangible assets
0.4
0.2
Employee benefits expense
7
11.6
12.1
Foreign exchange loss
0.6
0.3
Provision against trade and other receivables
15
0.1
–
1
The fee was paid to the previous auditor for overruns relating to the 2023 audit.
Other services provided to the Group by the Company’s Auditor consisted of the 2024 interim review of £nil (2023: £76k for the
previous auditor) and the provision of access to a technical financial reporting database of £nil (2023: £1k for the previous auditor).
7. Employee benefits expense
2024 2023
£m £m
Wages and salaries
7.4
7. 6
Social security costs
1.4
1.4
Pension costs – defined contribution plans
0.4
0.3
Performance incentive plan
0.8
1.2
Other employee-related expenses
1.6
1.6
11.6
12.1
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 on pages 90 to 106.
The monthly average number of employees of the Group in continuing operations, including Executive Directors, was as follows:
2024
2023
Property Hotel Total Property Hotel Total
Number Number Number Number Number Number
Male
53
11
64
50
11
61
Female
49
10
59
48
9
57
102
21
123
98
20
118
CLS Holdings PLC Annual Report and Accounts 2024138
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
8. Finance income
2024 2023
£m £m
Interest income
Financial instruments carried at amortised cost
1.4
1.6
1.4
1.6
9. Finance costs
2024 2023
£m £m
Interest expense
Secured bank loans
40.6
35.5
Amortisation of loan issue costs
1.7
1.6
Total interest costs
42.3
3 7. 1
Movement in fair value of derivative financial instruments
3.4
4.2
Total finance costs
45.7
41.3
10. Taxation
2024 2023
£m £m
Corporation tax
Current year charge
3.0
5.6
Adjustments in respect of prior years
0.1
(1.9)
3.1
3.7
Deferred tax (see note 18)
Origination and reversal of temporary differences
(6.9)
(17.3)
(6.9)
(17.3)
Tax credit for the year
(3.8)
(13.6)
A deferred tax charge of £0.1 million (2023: £0.6 million) was recognised directly in equity (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:
2024 2023
£m £m
Loss before tax
(97.4)
(263.4)
Expected tax credit at applicable tax rate
(21.2)
(56.3)
Expenses not deductible for tax purposes
0.3
0.3
Non-deductible loss from REIT
13.4
42.9
Deferred tax on losses not recognised
3.8
3.7
Adjustments in respect of prior years
0.2
(3.8)
Other
(0.3)
(0.4)
Tax credit for the year
(3.8)
(13.6)
The weighted average applicable tax rate of 21.8% (2023: 21.4%) 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%
(2023: 23.5%).
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 139
Financial statementsStrategic report
11. Property portfolio
United
Kingdom Germany France Total
Notes £m £m £m £m
Investment property
12
657.0
793.6
225.9
1,676.5
Property held as property, plant and equipment
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
United
Kingdom Germany France Total
Notes £m £m £m £m
Investment property
12
836.3
768.2
246.0
1,850.5
Property held as property, plant and equipment
13
36.3
1.7
1.7
39.7
Properties held for sale
14
4 7. 3
115.6
9.8
172.7
Property portfolio at 31 December 2023
919.9
885.5
2 5 7. 5
2,062.9
12. Investment property
Total
United investment
Kingdom Germany France properties
£m £m £m £m
At 1 January 2024
836.3
768.2
246.0
1,850.5
Acquisitions
–
–
–
–
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
1
(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
Total
United investment
Kingdom Germany France properties
£m £m £m £m
At 1 January 2023
1,030.0
990.5
274.5
2,295.0
Acquisitions
–
–
–
–
Capital expenditure
3 7. 2
9.3
3.1
49.6
Disposals
(3.7)
(6.6)
–
(10.3)
Net revaluation movement
(186.1)
(90.6)
(25.5)
(302.2)
Lease incentive adjustments
(0.3)
1.6
(0.2)
1.1
Exchange rate variances
–
(20.3)
(5.7)
(26.0)
Transfer to properties held for sale
(40.8)
(115.7)
(0.2)
(156.7)
At 31 December 2023
836.3
768.2
246.0
1,850.5
1 Increase in the lease incentive adjustments in Germany primarily relates to the tenant incentive works conducted at the Brix, Essen in advance of a 30 year lease with the
City of Essen.
Investment properties included leasehold properties with a carrying amount of £62.4 million (2023: £65.1 million).
Interest capitalised within capital expenditure in the year amounted to £nil (2023: £1.0 million).
CLS Holdings PLC Annual Report and Accounts 2024140
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
12. Investment property continued
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 2024 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 as follows:
Investment Other Property Investment Other Property
property property portfolio property property portfolio
2024 2024 2024 2023 2023 2023
£m £m £m £m £m £m
Cushman and Wakefield
657.0
150.0
807.0
836.3
83.6
919.9
Jones Lang LaSalle
1,019.5
23.7
1,043.2
1,014.2
128.8
1,143.0
1,676.5
173.7
1,850.2
1,850.5
212.4
2,062.9
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 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 2024 or 2023. 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 £127.7 million (2023: a loss of £302.7 million) and are presented in the income statement in the
line item ‘Net revaluation movements on investment property’. The revaluation gain for the property, plant and equipment
of £1.3 million (2023: gain of £2.2 million) was included within the revaluation reserve via other comprehensive income.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 141
Financial statementsStrategic report
12. Investment property continued
All gains and losses recorded in profit or loss in 2024 and 2023 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
2024 and 31 December 2023, respectively.
Quantitative information about investment property fair value measurement using unobservable inputs (Level 3)
ERV
Equivalent yield
Average
Range
Average
Range
2024 2023 2024 2023 2024 2023 2024 2023
£ per sq. ft £ per sq. ft £ per sq. ft £ per sq. ft % % % %
UK
38.08
34.76
10.00-56.41
10.00–56.05
7.39
6.08
6.21-10.03
2.98–13.23
Germany
13.41
14.40
9.19-27.59
9.93–29.70
5.23
5.24
4.30-6.40
4.40–6.20
France
21.42
21.96
12.40-45.25
12.99–43.53
6.13
6.00
4.82-7.50
4.79–7.40
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 £79.3 million (2023: £84.8 million) whilst a 25 basis point increase would reduce the fair value by £79.2 million
(2023: £85.4 million). A decrease in the ERV by 5% would result in a decrease in the fair value of the Group’s investment
property by £70.7 million (2023: £79.0 million) whilst an increase in the ERV by 5% would result in an increase in the fair
value of the Group’s investment property by £64.4 million (2023: £70.7 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.
CLS Holdings PLC Annual Report and Accounts 2024142
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
13. Property, plant and equipment
Owner-
occupied Fixtures
Hotel property and fittings Total
£m £m £m £m
Cost or valuation
At 1 January 2023
26.7
10.8
3.5
41.0
Additions
0.5
–
0.3
0.8
Reclassification (to)/from fixtures and fittings
(0.2)
–
0.2
–
Revaluation
3.2
(1.2)
–
2.0
Exchange rate variances
–
(0.1)
(0.1)
(0.2)
At 31 December 2023
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
Comprising:
At cost
–
–
4.0
4.0
At valuation
31.4
9.3
–
40.7
31.4
9.3
4.0
44.7
Accumulated depreciation and impairment
At 1 January 2023
–
–
(1.4)
(1.4)
Depreciation charge
(0.1)
(0.1)
(0.4)
(0.6)
Revaluation
0.1
0.1
–
0.2
At 31 December 2023
–
–
(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)
Net book value
At 31 December 2024
1
31.4
9.3
1.8
42.5
At 31 December 2023
30.2
9.5
2.1
41.8
1 If the assets were held at cost, the carrying amount at 31 December 2024 would be £20.2 million for Hotel and £6.8 million for Owner-occupied property.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 143
Financial statementsStrategic report
13. Property, plant and equipment continued
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 £5.5 million, whilst a 100 basis point increase would reduce the fair value by £4.1 million.
A decrease in EBITDA by 5% would result in a decrease in the fair value of the hotel by £1.6 million whilst an increase in the EBITDA
by 5% would result in an increase in the fair value of the hotel by £1.6 million.
14. Assets held for sale
2024
2023
UK Germany France Total UK Germany France Total
£m £m £m £m £m £m £m £m
At 1 January
47.3
115.6
9.8
172.7
7. 0
3.6
9.7
20.3
Disposals
(40.8)
(8.3)
(9.8)
(58.9)
–
(3.6)
–
(3.6)
Transfer from/(to) investment property
106.0
(84.3)
–
21.7
40.8
115.6
0.3
156.7
Revaluation
–
–
–
–
(0.5)
–
–
(0.5)
Exchange rate variances
–
(2.5)
–
(2.5)
–
–
(0.2)
(0.2)
At 31 December
112.5
20.5
–
133.0
4 7. 3
115.6
9.8
172.7
The balance above comprises 4 properties (2023: 6 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.
Three properties classified as held for sale at 31 December 2023 were transferred back into investment property during the period.
Despite the Directors determining these properties met the threshold of held for sale as at 31 December 2023, a suitable purchaser
was not identified for these properties and they are no longer classified as held for sale, as they were not being actively marketed at
31 December 2024. 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
2024 2023
£m £m
Current
Trade receivables
4.2
8.8
Other receivables
5.3
4.4
Prepayments
2.7
1.4
Accrued income
2.0
2.1
14.2
16.7
CLS Holdings PLC Annual Report and Accounts 2024144
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
15. Trade and other receivables continued
Trade receivables are shown after deducting a provision of £1.7 million (2023: £1.9 million) which is calculated as an expected credit
loss. The movements in this provision were as follows:
2024 2023
£m £m
At 1 January
1.9
2.8
Debt write-offs
(0.3)
(0.9)
Charge to the income statement
0.1
–
At 31 December
1.7
1.9
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. An additional review
of tenant debtors was undertaken to assess recoverability in light of the political and economic uncertainty.
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
2024 2023
£m £m
Cash at bank
60.5
70.6
At 31 December 2024, cash at bank included £41.4 million (2023: £26.1 million) which was restricted by a third-party charge.
£10.1 million of the restricted cash related to tenant deposits (2023: £10.7 million).
17. Trade and other payables
2024 2023
£m £m
Current
Trade payables
5.2
4.1
Social security and other taxes
1.7
2.2
Tenant deposits
10.1
10.7
Other payables
4.6
5.7
Deferred income
14.5
20.5
Accruals
29.6
25.4
65.7
68.6
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 145
Financial statementsStrategic report
18. Deferred tax
Liabilities
Assets
Fair value
adjustments Total
UK capital to UK capital deferred
allowances properties Other Total allowances Losses Other Total tax
£m £m £m £m £m £m £m £m £m
At 1 January 2023
0.3
108.6
1.6
110.5
–
(2.6)
(0.2)
(2.8)
1 0 7. 7
Charged/(credited)
to income statement
0.4
(17.0)
(0.1)
(16.7)
–
(0.7)
0.1
(0.6)
(17.3)
to OCI
1
–
0.6
–
0.6
–
–
–
–
0.6
Exchange rate variances
–
(2.3)
–
(2.3)
–
–
–
–
(2.3)
At 31 December 2023
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
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 2024 the Group offset tax losses valued at the applicable local
tax rate of £13.3 million (2023: £12.8 million) against the deferred tax liability arising on the fair value adjustments to properties.
At 31 December 2024 the Group did not recognise deferred tax assets of £13.6 million (2023: £13.2 million) in respect of losses
amounting to £78.8 million (2023: £76.1 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 2024
At 31 December 2023
Non- Total Non- Total
Current current borrowings Current current borrowings
£m £m £m £m £m £m
Secured bank loans
372.4
626.8
999.2
193.9
876.7
1,070.6
Issue costs of £4.3 million (2023: £5.0 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 0.8% and 5.6% including margin (2023: 0.8% and 5.1%) and
at floating rates of typically SONIA or EURIBOR plus a margin. Floating rate margins range between 1.1% and 2.8% (2023: 1.1%
and 2.8%). The bank loans are secured by legal charges over £1,808.9 million (2023: £1,988.8 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.
CLS Holdings PLC Annual Report and Accounts 2024146
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
19. Borrowings continued
Secured green loans
The Group’s debt portfolio includes two sustainability linked loans:
• £149.5 million maturing between 2030 and 2032
• £58.5 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. Each of the 2024 targets (tested on 31 December 2023 actual results) have been
met resulting in lower interest rates being applied to these loans. 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 £nil (2023: £1.0 million).
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:
Secured
bank loans
At 31 December 2024 £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
At the year ended 31 December 2023, £195.4 million of borrowings were due for repayment within one year and £327.0 million was
due within one to two years excluding unamortised issue costs. During 2024, CLS refinanced £154.5 million of which £74.4 million
was classified as new loans.
Secured
bank loans
At 31 December 2023 £m
Maturing in:
Within one year or on demand
195.4
One to two years
327.0
Two to five years
331.0
More than five years
222.2
1,075.6
Unamortised issue costs
(5.0)
Borrowings
1,070.6
Due within one year
(193.9)
Due after one year
876.7
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 147
Financial statementsStrategic report
19. Borrowings continued
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
At 31 December 2024
At 31 December 2023
Sterling Euro Total Sterling Euro Total
£m £m £m £m £m £m
Fixed rate financial liabilities
236.1
439.6
675.7
238.9
462.4
701.3
Floating rate financial liabilities – swaps
107.7
16.1
123.8
115.3
–
115.3
Total fixed rate
343.8
455.7
799.5
354.2
462.4
816.6
Floating rate financial liabilities – capped
–
37.8
37.8
–
40.6
40.6
Floating rate financial liabilities
131.1
35.1
166.2
159.9
58.5
218.4
Total floating rate
131.1
72.9
204.0
159.9
99.1
259.0
474.9
528.6
1,003.5
514.1
561.5
1,075.6
Unamortised issue costs
(2.4)
(1.9)
(4.3)
(3.3)
(1.7)
(5.0)
Borrowings
472.5
526.7
999.2
510.8
559.8
1,070.6
Of the Group’s total borrowings, 80% (2023: 76%) are considered fixed rate borrowings.
At 31 December 2024, the Group had interest rate swap agreements in place with an aggregate notional amount of £123.8 million
(2023: £115.3 million) whereby the Group pays an average fixed rate of interest of 2.72% 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
Sterling Euro Total Sterling Euro Total
At 31 December 2024 % % % Years 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
Weighted average interest rate
1
Weighted average life
Sterling Euro Total Sterling Euro Total
At 31 December 2023 % % % Years Years Years
Fixed rate financial liabilities
2.7
2.5
2.5
7. 4
2.8
4.4
Floating rate financial liabilities – swaps
4.7
–
4.7
–
–
1.0
3.3
2.5
2.8
5.3
2.8
3.9
Floating rate financial liabilities – capped
–
2.6
2.6
–
3.8
3.8
Floating rate financial liabilities
7. 1
5.2
6.6
1.6
2.9
1.9
7. 1
4.2
6.0
1.6
3.3
2.2
Gross borrowings
4.5
2.8
3.6
4.1
2.9
3.5
1 The weighted average interest rates are based on the nominal value of the debt facilities.
CLS Holdings PLC Annual Report and Accounts 2024148
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
19. Borrowings continued
The carrying amounts and fair values of the Group’s borrowings are as follows:
Carrying amounts
Fair values
2024 2023 2024 2023
£m £m £m £m
Current borrowings
372.4
193.9
372.4
193.9
Non-current borrowings
626.8
876.7
629.8
820.0
999.2
1,070.6
1,002.2
1,013.9
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 undrawn committed facilities available at 31 December:
2024 2023
£m £m
Floating rate:
– expiring within one year
20.0
-
– expiring after one year
1
30.0
50.0
50.0
50.0
1 This facility is secured by selected UK properties.
In addition to the above committed facilities, at 31 December 2024, the Group has £10.0 million of uncommitted facilities available
(2023: £nil).
Contractual undiscounted cash outflows
The tables below show the contractual undiscounted cash outflows arising from the Group’s gross debt.
Less than 1 to 2 2 to 3 3 to 4 4 to 5 Over
1 year years years years years 5 years Total
At 31 December 2024 £m £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
Less than 1 to 2 2 to 3 3 to 4 4 to 5 Over
1 year years years years years 5 years Total
At 31 December 2023 £m £m £m £m £m £m £m
Secured bank loans
195.3
327.0
75.5
135.7
119.8
222.2
1,075.5
Interest payments on borrowings
1
39.4
32.8
14.9
12.3
8.2
1 7. 6
125.2
Effect of interest rate swaps
(2.8)
(0.6)
–
–
–
–
(3.4)
Effect of interest rate caps
(0.8)
(0.4)
(0.3)
(0.1)
–
–
(1.6)
Gross loan commitments
231.1
358.8
90.1
147.9
128.0
239.8
1,195.8
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.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 149
Financial statementsStrategic report
20. Derivative financial instruments
2024 2024 2023 2023
Assets Liabilities Assets Liabilities
£m £m £m £m
Non-current:
Interest rate caps and swaps
0.7
(0.4)
3.6
–
Current:
Interest rate caps and swaps
1.1
–
0.7
–
1.8
(0.4)
4.3
–
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 2024 was £37.8 million (2023: £40.8 million). The average
period to maturity of these interest rate caps was 1.7 years (2023: 2.7 years).
Interest rate swaps
The aggregate notional principal of interest rate swap contracts at 31 December 2024 was £123.8 million (2023: £115.3 million).
The average period to maturity of these interest rate swaps was 2.5 years (2023: 0.9 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 2024, the Group had no outstanding foreign exchange
contracts (2023: 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.
2024 2024 2023 2023
Assets Liabilities Assets Liabilities
£m £m £m £m
Maturing in:
Less than 1 year
1.8
–
3.8
–
1 to 2 years
0.2
(0.1)
1.0
–
2 to 3 years
0.1
(0.1)
0.3
–
3 to 4 years
–
(0.1)
0.1
–
4 to 5 years
–
(0.1)
–
–
Over 5 years
–
–
–
–
2.1
(0.4)
5.2
–
CLS Holdings PLC Annual Report and Accounts 2024150
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
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 2024 and 2023.
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:
2024 2023
Notes £m £m
Debt
19
1,003.5
1,075.6
Liquid resources 16
(60.5)
(70.6)
Net debt (A)
943.0
1,005.0
Equity (B)
784.2
929.2
Net debt to equity ratio (A/B)
120.2%
108.2%
Debt is defined as long-term and short-term borrowings before unamortised issue costs as detailed in note 19. Liquid resources are
cash and short-term deposits. Equity includes all capital and reserves of the Group attributable to the owners of the Company.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 151
Financial statementsStrategic report
21. Financial instruments continued
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:
2024 2023
Income Income
statement statement &
& equity equity
Scenario £m £m
Cash +50 basis points
0.3
0.4
Variable borrowings (including swaps and caps) +50 basis points
(1.8)
(2.6)
Cash -50 basis points
(0.3)
(0.4)
Variable borrowings (including swaps and caps) -50 basis points
1.0
1.3
An increase or decrease of 100 basis points on the cash balance would result in a gain/(loss) of £0.6 million/(£0.6 million) from cash
and cash equivalents. An increase of 100 basis points on variable borrowings would result in a loss of £1.3 million and a decrease of
100 basis points on variable borrowings would result in a gain of £2.0 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.
CLS Holdings PLC Annual Report and Accounts 2024152
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
21. Financial instruments continued
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:
2024 2024 2023 2023
Net Profit Net Profit
assets before tax assets before tax
Scenario £m £m £m £m
1% increase in value of Sterling against the Euro
(3.9)
0.2
(5.1)
0.9
1% fall in value of Sterling against the Euro
4.0
(0.2)
5.2
(0.9)
A 10% increase in the value of the Sterling against the Euro would result in a decrease in net assets of £36.1 million and reduction of
profit before tax of £1.7 million. A 10% decrease in the value of the Sterling against the Euro would result in an increase in net assets
of £44.2 million and an increase of profit before tax of £2.1 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 2024, the Group held £10.1 million in rent deposits
(2023: £10.7 million) against £4.2 million of trade receivables (2023: £8.8 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 2024 the Group held £1.8 million (2023: £4.3 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 2024 was
50.7% (2023: 48.5%).
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.
The Group’s loan facilities and other borrowings are spread across a range of 25 banks and financial institutions so as to
minimise any potential concentration of risk.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 153
Financial statementsStrategic report
22. Financial assets and liabilities
Fair value Total
through profit Amortised carrying
and loss cost value
£m £m £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)
Fair value Total
through profit Amortised carrying
and loss cost value
£m £m £m
Financial assets:
Cash and cash equivalents
–
70.6
70.6
Derivative financial assets
4.3
–
4.3
Other assets – current
1
–
15.3
15.3
4.3
85.9
90.2
Financial liabilities:
Secured bank loans
–
(1,070.6)
(1,070.6)
Other liabilities – current
2
–
(45.9)
(45.9)
–
(1,116.5)
(1,116.5)
At 31 December 2023
4.3
(1,030.6)
(1,026.3)
1 Other assets included all amounts shown as trade and other receivables in note 15 except prepayments of £2.7 million (2023: £1.4 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 £16.2 million
(2023: £22.7 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
2024 2023
£m £m
Net financial assets and liabilities:
975.3
1,026.3
Other assets – current
11.5
15.3
Other liabilities – current
(49.5)
(45.9)
Cash and cash equivalents
60.5
70.6
Borrowings and derivative financial instruments
997.8
1,066.3
23. Share capital
Number of shares authorised, issued and fully paid Ordinary Total
Ordinary Total shares in Treasury ordinary
shares in Treasury ordinary circulation shares shares
circulation shares shares £m £m £m
At 1 January 2024 and 31 December 2024
397,410,268
41,367,512
438,777,780
9.9
1.1
11.0
CLS Holdings PLC Annual Report and Accounts 2024154
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
23. Share capital continued
Number of shares authorised, issued and fully paid Ordinary Total
Ordinary Total shares in Treasury ordinary
shares in Treasury ordinary circulation shares shares
circulation shares shares £m £m £m
At 1 January 2023
397,210,866
41,566,914
438,777,780
9.9
1.1
11.0
Issue of shares
199,402
(199,402)
–
–
–
–
At 31 December 2023
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.
2024 2023
Number Number
Weighted average number of ordinary shares in circulation
397,410,268
397,330,507
Number of ordinary shares in circulation at the year-end
397,410,268
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 period to 31 December 2024
was restricted to a loss of 23.6 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 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.
2024 2023
Employee share plan Number Number
Element B/Special Award
694,695
820,246
LTIP
4,811,944
2,880,054
Total potential dilutive shares
5,506,639
3,700,300
25. Dividend
Dividend
Payment per share 2024 2023
date p £m £m
Current year
2024 final dividend
1
23 May 2025
2.68
–
–
2024 interim dividend
2 October 2024
2.60
10.3
–
Distribution of current year profit
5.28
10.3
-
Prior year
2023 final dividend
2 May 2024
5.35
21.3
–
2023 interim dividend
3 October 2023
2.60
–
10.3
Distribution of prior year profit
7. 9 5
21.3
10.3
2022 final dividend
2 May 2023
5.35
–
21.3
Dividends as reported in the Group statement of changes in equity
31.6
31.6
1 Subject to shareholder approval at the AGM on 16 May 2025. Total cost of proposed dividend is £10.7 million. The proposed dividend is not recognised as a liability at the
balance sheet date.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 155
Financial statementsStrategic report
26. Other reserves
Share-
Capital Cumulative based
redemption translation Fair value payment Other
reserve reserve reserve reserve reserves Total
Notes £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
Capital Cumulative Share-based
redemption translation Fair value payment Other
reserve reserve reserve reserve reserves Total
Notes £m £m £m £m £m £m
At 1 January 2023
22.7
59.7
3.0
1.9
28.1
115.4
Exchange rate variances
–
(12.3)
–
–
–
(12.3)
Property, plant and equipment:
– net fair value gains in the year
13
–
–
2.2
–
–
2.2
– deferred tax thereon
18
–
–
(0.6)
–
–
(0.6)
– reserve transfer on disposal of PPE
–
–
1.5
–
–
1.5
Share-based payments
–
–
–
0.5
–
0.5
At 31 December 2023
22.7
47.4
6.1
2.4
28.1
106.7
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 2024, there were no treasury shares transferred
to the EBT (2023: 199,402) to satisfy future awards under employee share plans. At 31 December 2024, the Group held 41,367,512
ordinary shares (2023: 41,367,512) with a nominal value of £1.1 million (2023: £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.
CLS Holdings PLC Annual Report and Accounts 2024156
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
27. Notes to the cash flow
2024 2023
Cash generated from operations £m £m
Operating loss
(52.5)
(223.4)
Adjustments for:
Net movements on revaluation of investment properties
127.7
302.7
Net movements on revaluation of equity investments
0.6
1.3
Depreciation and amortisation
1.0
0.8
Loss/(profit) on sale of investment property
2.3
(1.4)
Lease incentive debtor adjustments
(10.4)
(1.1)
Share-based payments
0.6
0.5
Loss on sale of other equity investments
0.1
–
Changes in working capital:
Decrease/(increase) in receivables
2.5
(0.9)
(Decrease)/increase in payables
(0.7)
4.7
Cash generated from operations
71.2
83.2
Non-cash movements
2024
Amortisation
1 January Financing of borrowing Fair value Foreign 31 December
2024 cash flows issue costs adjustments exchange 2024
Changes in liabilities arising from financing activities
Notes
£m £m £m £m £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
Non-cash movements
2023
Amortisation
1 January Financing of borrowing Fair value Foreign 31 December
2023 cash flows issue costs adjustments exchange 2023
Changes in liabilities arising from financing activities
Notes
£m £m £m £m £m £m
Borrowings
19
1,105.9
(24.6)
1.6
–
(12.3)
1,070.6
Derivative financial instruments
20
(8.5)
–
–
4.2
–
(4.3)
Lease liabilities
3.6
–
–
–
(0.1)
3.5
1,101.0
(24.6)
1.6
4.2
(12.4)
1,069.8
Prior period restatement
Proceeds from borrowings and repayment of borrowings for the year ended 31 December 2023 have been restated on the Group
statement of cash flows to exclude any loans that were refinanced with the same lender where cash did not transfer between the
Group and the lender upon refinancing. As a result, in the prior year proceeds from borrowings decreases from £129.1 million to
£72.5 million and repayment of borrowings decreases from £152.6 million to £96.0 million.
28. Contingencies
In 2021 and 2023, CLS Holdings plc dissolved 2 subsidiaries (the ‘Companies’). Before the Companies were dissolved, capital
reductions and distributions of the net assets of the subsidiaries, primarily represented by intercompany receivables of £0.8 million,
to the Parent should have been executed. However, they were not. As a consequence of this, as a matter of Law, on dissolution of
these Companies the technical titles to the intercompany receivables were transferred from the Group to the Crown. The Directors
have taken legal advice and started the process to restore these Companies. Thereafter, the Directors can execute the capital
reductions and make appropriate distributions to the Parent of these Companies assets. Also, based on that legal advice, the
Directors consider that it is improbable that the Crown will pursue the CLS Group for these assets of the Companies prior to the
process of the restoration of the Companies being completed and the technical title to the receivables being returned to the
Group. Therefore, the Directors consider that it is not probable that an outflow of cash or other economic resources of £0.8 million
from the Group will occur, and therefore no provision is recognised at year-end, but has been disclosed as a contingent liability.
Subsequent to 31 December 2024, notice was received that the Companies had been successfully restored, reducing the
contingent liability to £nil at the date of this report.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 157
Financial statementsStrategic report
29. Commitments
At the balance sheet date the Group had contracted with customers under non-cancellable operating leases for the following
minimum lease payments:
2024 2023
Operating lease commitments – where the Group is lessor £m £m
Within one year
94.2
100.9
Between one and two years
71.3
84.0
Between two and three years
59.4
61.0
Between three and four years
47.6
48.6
Between four and five years
37.3
36.7
More than five years
158.8
153.2
468.6
484.4
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 2024 the Group had contracted capital expenditure of £10.3 million (2023: £6.9 million). At the balance sheet
date, the Group had not exchanged contracts to acquire any investment properties (2023: £nil). There were no authorised financial
commitments which were yet to be contracted with third parties (2023: £nil).
30. Post-balance sheet events
On 26 March 2025, the Group unconditionally exchanged on the disposal of Spring Mews Student for £101.1 million. Completion is
scheduled for May 2025.
31. Subsidiaries
The Group financial statements include the financial statements of CLS Holdings plc and all of its subsidiaries, which are listed
below. All are 100% owned unless otherwise stated. Those marked with a * were dissolved during 2024.
United Kingdom
Registered Office: 16 Tinworth Street, London SE11 5AL
16 Tinworth Street (Residential)
Limited
401 King Street Limited
Apex Tower Limited
Base Offices Limited
Brent House Limited
Cassini Pascal Limited
Centenary Court Limited
Central London Securities Limited
Chancel House Limited
CI Tower Investments Limited
Citadel Finance Limited
Citadel Holdings plc
CLS Aberdeen Limited
CLS Capital Partners Limited
CLS Chancery House Limited
CLS Church Road Limited
CLS Cliffords Inn Limited
CLS Clockwork Limited
CLS Crawley Limited
CLS England and Wales Limited
CLS Gateway House Limited
CLS Germany Limited
CLS Gresham Limited
CLS Harrow Limited
CLS Holdings UK Limited
CLS Kings Court Limited
CLS Lloyds Avenue Limited
CLS London Limited
CLS London Properties Limited
CLS Northern Properties Limited
CLS One Limited
CLS Pacific House Limited
CLS Prescot Limited
CLS Priory Place Limited
CLS Residential Investments Limited
CLS Scotland Limited*
CLS South London Limited
CLS Spring Gardens Limited
CLS Staines Limited
CLS UK Properties Limited
CLS UK Property Finance Limited
CLS UK Property Finance 2 Limited
CLS UK Property Finance 3 Limited
CLS Watford Limited
CLSH Management Limited
Columbia Bracknell Limited
Coventry House Limited
Dukes Road Limited
Elmfield Road Limited
Falcon Quest Limited
Fetter Lane Apartments
Limited
Fetter Lane Leasehold Limited
Harman House Limited
Hygeia Harrow Limited
Ingrove Limited
Instant Office Limited
Kennington Road Limited
Ladywell House Limited*
Larkhall Lane Limited
Maidenhead Cloud Gate
Limited
Mirenwest Limited
New Printing House Square
Limited
NYK Investments Limited
One Elmfield Park Limited
Quayside Lodge Limited
Rayman Finance Limited
Reflex Bracknell Limited
Sentinel House Limited
Shard of Glass Limited
Sidlaw House Limited*
Southern House Limited
Spring Gardens III Limited
Spring Mews (Block D) Limited
Spring Mews (Hotel) Limited
Spring Mews (Student) Limited
Spring Mews Limited
Three Albert Embankment
Limited
Vauxhall Square Limited
Vauxhall Square One Limited
Vauxhall Square (Student) Limited
Wandsworth Road Limited
CLS Holdings PLC Annual Report and Accounts 2024158
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
31. Subsidiaries continued
Jersey
Registered Office: 1st Floor Liberation House, Castle Street, St Helier, Jersey JE1 1GL
CLS Holdings plc Employee Benefit Trust
France
Registered Office: 36 Rue Jules Verne, 92300 Levallois-Perret, Paris
120 Jean Jaures Sàrl
235 Lyon Sarl
Avenue du Park SCI
BV France Sàrl
Capitaine Guynemer Sàrl
CLS France Sàrl
CLS Management Sàrl
Debussy SCI
De Musset Sàrl
Forum France SCI
Georges Clemenceau Sàrl
Immobilière 6 Sàrl
Immobilière 8 Sàrl
Immobilière 10 Sàrl
Immobilière V SA
Jean Walter Sàrl
Le D’Aubigny SCI
Le Quatuor SCI
Le Sigma Sàrl
Leclerc SCI*
Mission Marchand Sàrl
Parc SCI
Petits Hotels Sàrl
Rhone Alpes Sàrl
Scala Sàrl
SCI Frères Peugeot
SCI Pierre Valette
Sego Sàrl
Solferino SCI
Germany
Registered Office: Nagelsweg 37, 20097 Hamburg
CLS Germany GmbH
CLS Green Energy GmbH
Jarrestrasse Immobilien GmbH
Luxembourg
Registered Office: 33 Avenue de la Liberte, 1931 Luxembourg
Aldershofer Sarl
Albertina Sarl
Cavernet Sarl
Chronotron Sarl
CLS Dortmund Hiltropwall Sarl
CLS Hansaalee Sarl
CLS Immobilien Stuttgart Sarl
CLS Investments Sarl
CLS Investments 2 Sarl
CLS Luxembourg Sarl
CLS Metropolis Sarl
CLS Palisade Sarl
CLS Storkower Strasse Sarl
CLS Tangentis Sarl
CLS Wendenstrasse Sarl
Freepost Sarl
Garivet Sarl
Gotic Haus Sarl
Grossglockner Sarl
Hermalux Sarl
Kapellen Sarl
Landstrasse Sarl
Naropere Sarl
Network Perlach Sarl
Prater Sarl
Salisbury Hill Sarl
Satimood Sarl
Schonbrunn Sarl
Zillertal Sarl
Netherlands
Registered Office: Burgemeester van Reenensingel 101, 2803 DA Gouda
CLS Management BV
Portapert Properties UK BV
Sweden
Registered Office: Skönabäck 122, 274 91 Skurup
Rasstaf Sweden AB
Museion Förvaltning AB
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 159
Financial statementsStrategic report
32. Related party transactions
Transactions with Directors
Distributions totalling £2,176,534 (2023: £2,161,582) were made through dividend payments in the year in respect of ordinary
shares held by the Directors and £17,483,443 (2023: £16,653,658) to the controlling shareholder.
During the year the following transactions occurred with companies associated to the controlling shareholder:
• The Group recharged salary costs in relation to providing administration services. CLS Holdings plc invoiced costs totalling
£64,436 (2023: £60,450). At the balance sheet date £nil was outstanding (2023: £60,450).
• A Group company, CLS Holdings plc has a £20 million revolving credit facility with Creative Value Investment Group Limited, the
investment vehicle of The Sten and Karin Mortstedt Family and Charity Trust. As at balance sheet date the amount drawn on this
facility was £nil (2023: £nil).
During the year, or previous year, the following transactions associated with the Directors occurred:
• During the year, the Group invoiced rental related charges of £60,268 (2023: £179,790) to IKEA Limited, a company in a group
of companies with a common Director. At the balance sheet date £78,086 was outstanding as payable (2023: £5,946 as
receivable).
Directors’ remuneration
The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for
each of the categories specified in IAS 24 Related Party Disclosures.
2024 2023
£000 £000
Short-term employee benefits
1,473
1,428
Post-employment benefits
44
49
Other long-term benefits
10
7
Other fees
2
–
1,529
1,484
CLS Holdings PLC Annual Report and Accounts 2024160
Notes to the Group financial statements continued
for the year ended 31 December 2024 continued
Notes
2024
£m
2023
£m
Non-current assets
Investment in subsidiary undertakings 7 498.2 534.5
Intangible assets 2.7 2.9
Current assets
Trade and other receivables 8 9.3 7 7. 5
Cash and cash equivalents 0.1 –
Total assets 510.3 614.9
Current liabilities
Trade and other payables 9 (222.5) (241.3)
Total liabilities (222.5) (241.3)
Net assets 287.8 373.6
Equity
Share capital 10 11.0 11.0
Share premium 11 83.1 83.1
Other reserves 11 29.4 28.8
Retained earnings 11 164.3 250.7
Shareholders’ funds 12 287.8 373.6
The Company reported a loss for the financial year ended 31 December 2024 of £54.8 million (2023: £17.4 million profit).
The notes on pages 163 to 167 are an integral part of these Company financial statements.
These financial statements of CLS Holdings plc (registered number: 02714781) were approved by the Board of Directors and
authorised forissue on 31 March 2025 and were signed on its behalf by:
Mr F Widlund Mr A Kirkman
Chief Executive Officer Chief Financial Officer
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 161
Financial statementsStrategic report
Company balance sheet
at 31 December 2024
Notes
Share
capital
£m
Share
premium
£m
Other
reserves
£m
Retained
earnings
£m
Total
£m
Arising in 2024:
Loss for the year 5 – – – (54.8) (54.8)
Share-based payments 11 – – 0.6 – 0.6
Dividends to shareholders 6 – – – (31.6) (31.6)
Total changes arising in 2024 – – 0.6 (86.4) (85.8)
At 1 January 2024 11.0 83.1 28.8 250.7 373.6
At 31 December 2024 11.0 83.1 29.4 164.3 287.8
Notes
Share
capital
£m
Share
premium
£m
Other
reserves
£m
Retained
earnings
£m
Total
£m
Arising in 2023:
Profit for the year 5 – – – 1 7. 4 1 7. 4
Share-based payments 11 – – 0.5 – 0.5
Dividends to shareholders 6 – – – (31.6) (31.6)
Total changes arising in 2023 – – 0.5 (14.2) (13.7)
At 1 January 2023 11.0 83.1 28.3 264.9 387.3
At 31 December 2023 11.0 83.1 28.8 250.7 373.6
The notes on pages 163 to 167 are an integral part of these Company financial statements.
CLS Holdings PLC Annual Report and Accounts 2024162
Company statement of changes in equity
for the year ended 31 December 2024
1. General information
These separate Company financial statements are presented as required by the Companies Act 2006 and prepared on the
historical costbasis. The Company has applied UK GAAP Financial Reporting Standard 101 ‘Reduced Disclosure Framework’
(‘FRS101’). CLS Holdings plc is the ultimate Parent Company of the CLS Holdings Group registered and incorporated in the
UnitedKingdom under Companies Act 2006. Its primary activity (which occurs exclusively within the United Kingdom) is to
holdshares in subsidiary companies.
2. Basis of accounting
As permitted by FRS 101, the Company has taken advantage of all the disclosure exemptions including the following:
• IAS 1 – exemption from capital management disclosures requirements
• IAS 7 – cash flow statement
• IAS 8 – IFRSs issued but not yet effective
• IAS 24 – related party disclosures
• IFRS 2 – share based payments
• IFRS 7 – financial instruments
• IFRS 13 – fair value measurement
Where required, equivalent disclosures are given in the Group financial statements.
Going concern
The Group and Company’s going concern assessment covers the period to 31 July 2026. The going concern assessment uses
thebusiness plan approved by the Board at its November 2024 meeting as the Base case (see note 2.1 of the Group financial
statements). Whilst the Directors consider that a material uncertainty exists that may cast significant doubt on the Company’s
ability to continue as a going concern (see note 2 to the Consolidated financial statements for more details) the financial
statements are prepared on a going concern basis. The financial statements do not contain the adjustments that would result if
theCompany was unable to continue as a going concern.
3. Material accounting policies
The principal accounting policies are summarised below.
3.1 Investments in subsidiaries
Investments in subsidiaries are accounted for at cost less provisions for impairment. Dividend income isrecognised when received.
3.2 Impairment
Investments are reviewed for impairment whenever events or changes in circumstances indicate that carrying amounts may not be
recoverable. Recoverability of investments are measured by comparison of the carrying amount of the investment and fair value
less costs to sell. If such assets are considered to be impaired, the impairment to be recognised is the amount by which the carrying
amount exceeds the fair value of the investments.
3.3 Pension costs
The Company operates a defined contribution pension scheme for all eligible employees. The pension costs charged represent
the contributions payable. Differences between contributions payable in the year and contributions paid are shown as either
accruals or prepayments in the balance sheet.
3.4 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction from proceeds, netof tax. Where a Group company purchases the Company’s equity share capital, the
consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable
to the owners of the Company until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or
reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax
effects, is included inequityattributable to the owners of the Company.
3.5 Foreign currencies
The financial statements are presented in Sterling, which is the currency of the primary economic environment in which the
Company operates, known as its functional currency. Transactions in currencies other than the Company’s functional currency
arerecognised at therates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets
and liabilities that are denominated in other currencies are translated into Sterling at the rates prevailing atthat date.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 163
Financial statementsStrategic report
Notes to the Company financial statements
for the year ended 31 December 2024
4. Accounting judgements and key sources of estimation uncertainty
Accounting judgements
In accordance with IAS 1, the Directors have considered the judgements that have been made in the process of applying
theCompany’s accounting policies, which are described in note 3, and which of those judgements have the most significant effect
on the amounts recognised in the financial statements.
Going concern
For the purposes of the going concern assessment, the Group and Company makes judgements in determining future cash flows
which are based on assumptions. The most significant judgements relate to the terms and ability to refinance loan facilities and
recycle capital. These judgements are made by management based on recent performance, external factors and management’s
knowledge and expertise of cash flow drivers. See note 2 to the Consolidated financial statements for more details.
In the opinion of the Directors, they consider the following to be ongoing judgements.
• Impairments to investment in subsidiaries – the recoverable amount is considered to be best estimated by the net asset value at
the subsidiaries.
Key sources of estimation uncertainty
The key sources of estimation uncertainty in the preparation of the Company’s financial statements is the net asset value at the
subsidiaries that is primarily determined by the property values therein (see note 3 in the consolidated financial statements).
5. Profit for financial year
As permitted by s408 Companies Act 2006, the Company’s profit and loss account has not been presented in these financial
statements. The Company’s loss for the financial year was £54.8 million (2023: £17.4 million profit).
Audit fees for the Company were £0.2 million (2023: £0.1 million).
Details of the Directors employed during the year and of their remuneration is included in the Remuneration Committee Report on
pages 90 to 106.
CLS Holdings PLC Annual Report and Accounts 2024164
Notes to the Company financial statements continued
for the year ended 31 December 2024 continued
6. Dividend
Payment
date
Dividend
per share
p
2024
£m
2023
£m
Current year
2024 final dividend
1
23 May 2025 2.68 – –
2024 interim dividend 2 October 2024 2.60 10.3 –
Distribution of current year profit 5.28 10.3 –
Prior year
2023 final dividend 2 May 2024 5.35 21.3 –
2023 interim dividend 3 October 2023 2.60 – 10.3
Distribution of current year profit 7. 9 5 21.3 10.3
2022 final dividend 2 May 2023 5.35 – 21.3
Dividend as reported in the Group statement of changes in equity 31.6 31.6
1 Subject to shareholder approval at the AGM on 16 May 2025. Total cost of proposed dividend is £10.7 million.
7. Investment in subsidiary undertakings
2024
£m
2023
£m
At 1 January 534.5 440.4
Additions 190.0 208.3
Disposals – (62.1)
Provision for impairment (226.3) (52.1)
At 31 December 498.2 534.5
Certain indicators of impairment were identified by the Company as at 31 December 2024. A determination of the recoverable
amount of the investments in subsidiaries were made using the net asset value at the subsidiaries, resulting in an impairment of
£226.3 million (2023: £52.1 million). The recoverable amount remains sensitive to the financial performance and financial position
of both the Company and its subsidiaries, including the valuation of investment properties of its subsidiaries (see note 12 of Group
financial statements).
During the year, the Group performed a recapitalisation of existing subsidiaries of £187.1 million, which is included in the additions of
£190.0 million.
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 165
Financial statementsStrategic report
8. Trade and other receivables
2024
£m
2023
£m
Amounts owed by subsidiary undertakings 3.1 74 .8
Social security and other taxes 0.7 0.2
Other receivables 5.3 2.3
Prepayments and accrued income 0.2 0.2
9.3 7 7. 5
9. Trade and other payables
2024
£m
2023
£m
Trade payables 0.2 0.1
Amounts owed to subsidiary undertakings 219.2 239.0
Accruals 3.1 2.2
222.5 241.3
10. Share capital
Number of shares authorised, issued and fully paid
Ordinary
shares in
circulation
£m
Treasury
shares
£m
Total
ordinary
shares
£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
Number of shares authorised, issued and fully paid
Ordinary
shares in
circulation
£m
Treasury
shares
£m
Total
ordinary
shares
£m
Ordinary
shares in
circulation
Treasury
shares
Total
ordinary
shares
At 1 January 2023 397,210,866 41,566,914 438,777,780 9.9 1.1 11.0
Issue of shares 199,402 (199,402) – – – –
At 31 December 2023 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.
11. Reserves
Other reserves
Share
premium
£m
Capital
redemption
reserve
£m
Share-
based
payment
reserve
£m
Other
£m
Total
£m
Retained
earnings
£m
At 1 January 2024 83.1 22.7 1.5 4.6 28.8 250.7
Share-based payments – – 0.6 – 0.6 –
Loss for the year – – – – – (54.8)
Dividends to shareholders – – – – – (31.6)
At 31 December 2024 83.1 22.7 2.1 4.6 29.4 164.3
CLS Holdings PLC Annual Report and Accounts 2024166
Notes to the Company financial statements continued
for the year ended 31 December 2024 continued
11. Reserves continued
Other reserves
Share
premium
£m
Capital
redemption
reserve
£m
Share-based
payment
reserve
£m
Other
£m
Total
£m
Retained
earnings
£m
At 1 January 2023 83.1 22.7 1.0 4.6 28.3 264.9
Share-based payments – – 0.5 – 0.5 –
Profit for the year – – – – – 1 7. 4
Dividends to shareholders – – – – – (31.6)
At 31 December 2023 83.1 22.7 1.5 4.6 28.8 250.7
12. Reconciliation of movements in shareholders’ funds
2024
£m
2023
£m
At 1 January 373.6 387.3
(Loss)/profit for the year (54.8) 1 7. 4
Dividends to shareholders (31.6) (31.6)
Share-based payments 0.6 0.5
At 31 December 287.8 373.6
13. Contingencies
Guarantees
At 31 December 2024 and 31 December 2023 CLS Holdings plc had guaranteed certain liabilities of Group companies. These were
primarily in relation to Group borrowings and covered interest and amortisation payments. The principal amount of a secured loan
from an external lender to a Group company was covered by a guarantee totalling £20.0 million at 31 December 2024 provided by
CLS Holdings plc (£39.50 million at 31 December 2023). CLS Holdings plc guarantees a £30 million revolving credit facility with
RBS. As at 31 December 2024 the amount drawn on this facility was £nil (31 December 2023: £nil). Since the possibility of payment
by the Company under any of these guarantees and warranties is considered remote, no provisions in relation to these have been
made in the Company’s financial statements and no reportable contingent liability exists.
Other
In 2021 and 2023, CLS Holdings plc dissolved 2 subsidiaries (the ‘Companies’). Before the Companies were dissolved, capital
reductions and distributions of the net assets of the subsidiaries, primarily represented by intercompany receivables of £0.8 million,
to the Parent should have been executed. However, they were not. As a consequence of this, as a matter of Law, ondissolution of
these Companies the technical titles to the intercompany receivables were transferred from the Group to the Crown. The Directors
have taken legal advice and started the process to restore these Companies. Thereafter, the Directors canexecute the capital
reductions and make appropriate distributions to the Parent of these Companies’ assets. Also, based on that legal advice, the
Directors consider that it is improbable that the Crown will pursue the CLS Group for these assets of the Companies prior to the
process of the restoration of the Companies being completed and the technical title to the receivables being returned to the
Group. Therefore, the Directors consider that it is not probable that an outflow of cash or other economic resources of £0.8 million
from the Group will occur, and therefore no provision is recognised at year-end, but has been disclosed as a contingent liability.
14. Commitments
At 31 December 2024, the Company had no contracted capital expenditure (2023: £nil) and no authorised financial commitments
which were yet to be contracted with third parties (2023: £nil).
Corporate governance Additional information
CLS Holdings PLC Annual Report and Accounts 2024 167
Financial statementsStrategic report
2024
£m
2023
£m
2022
£m
2021
£m
2020
£m
Continuing operations
Revenue 151.9 148.7 139.7 139.8 139.4
Net rental income 114.0 113.0 1 0 7. 8 108.0 109.8
Administration expenses (17.7) (18.2) (15.7) (16.2) (18.5)
Other property expenses (18.1) (15.6) (16.2) (14.4) (15.1)
Operating profit before revaluation and disposals 78.2 79.2 75.9 7 7. 4 76.2
Net revaluation movements on investment property (127.7) (302.7) (136.5) 28.5 31.5
(Loss)/profit on sale of investment property (2.3) 1.4 0.5 (0.1) 11.6
Loss on sale of other equity investments (0.1) – – – –
Net revaluation movements on equity investments (0.6) (1.3) (3.8) 7. 5 –
Operating (loss)/profit (52.5) (223.4) (63.9) 113.3 119.3
Finance income 1.4 1.6 10.1 5.9 3.2
Finance costs (46.3) (41.6) (27.1) (27.7) (26.0)
Impairment of goodwill – – (1.1) – –
(Loss)/profit before tax (97.4) (263.4) (82.0) 91.5 96.5
Taxation 3.8 13.6 0.1 28.0 (19.1)
(Loss)/profit for the year (93.6) (249.8) (81.9) 119.5 7 7. 4
Dividends paid 31.6 31.6 32.4 30.8 30.1
Distribution of current year’s profit 21.0 31.6 31.9 31.4 30.8
Net assets employed
Non-current assets 1,723.0 1,900.2 2,351.4 2,301.1 2,181.4
Current assets 208.8 260.7 150.0 237.4 279.6
1,931.8 2,160.9 2,501.4 2,538.5 2,461.0
Current liabilities (439.0) (262.8) (234.0) (229.8) (158.2)
Non-current liabilities (708.6) (968.9) (1,046.6) (978.0) (1,032.2)
Net assets 784.2 929.2 1,220.8 1,330.7 1,270.6
Ratios 2024 2023 2022 2021 2020
Net assets per share (pence) 197.3 233.8 307.3 326.6 311.9
EPRA NTA per share (pence) 215.0 253.0 329.6 350.5 345.2
Earnings per share (pence) (23.6) (62.9) (20.2) 29.3 19.0
EPRA earnings per share (pence) 9.2 10.3 11.6 11.3 12.2
Total Accounting Return – basic (%) (12.2) (21.3) (3.5) 7. 1 8.2
Total Accounting Return – EPRA NTA (%) (11.9) (20.8) (3.7) 3.7 8.1
Net gearing (%) 120.2 108.2 81.7 65.4 58.3
Balance sheet loan-to-value (%) 50.7 48.5 42.2 3 7. 1 33.7
Interest cover (times) 1.91 2.23 2.98 3.16 3.26
CLS Holdings PLC Annual Report and Accounts 2024168
Five-year financial summary (unaudited)
Alternative Performance Measures
CLS uses all the EPRA metrics but we have also disclosed the measures that CLS used to prefer for certain of these categories.
The notes below highlight where the measures that we monitor differ and our previous rationale for using them.
The measures we disclose are:
• 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) Yield
EPRA net initial yield (NIY)
EPRA NIY is calculated as the annualised rental income based on the cash rents passing at the balance sheet date less non-
recoverable property operating expenses, divided by the gross market value of the property (excluding those that are under
development, student accommodation, held as PPE or occupied by CLS).
2024 2023
United
Kingdom
£m
Germany
£m
France
£m
Total
£m
United
Kingdom
£m
Germany
£m
France
£m
Total
£m
Rent passing 46.6 41.6 12.9 101.1 45.5 46.4 13.2 105.1
Adjusted for properties in development (0.1) – (0.3) (0.4) – – – –
Forecast non-recoverable service charge (3.9) (2.5) (0.5) (6.9) (3.7) (2.0) (0.5) (6.2)
Annualised net rents (A) 42.6 39.1 12.1 93.8 41.8 44.4 12.7 98.9
Property portfolio
1
668.4 814.1 225.9 1,708.4 745.4 883.8 246.0 1,875.2
Adjusted for properties in development (11.4) (2.0) (8.3) (21.7) (15.7) (2.9) – (18.5)
Purchasers’ costs at 6.8% 44.7 55.2 14.8 114.7 49.6 59.9 16.7 126.2
Property portfolio valuation including
purchasers’ costs (B) 701.7 867.3 232.4 1,801.4 779.3 940.8 262.7 1,982.9
EPRA NIY (A/B) 6.1% 4.5% 5.2% 5.2% 5.4% 4.7% 4.8% 5.0%
1 The above table comprise data of the investment properties and properties held for sale. They exclude owner-occupied, student accommodation and hotel.
Corporate governance Financial statements
CLS Holdings PLC Annual Report and Accounts 2024 169
Additional informationStrategic report
Supplementary disclosures (unaudited)
Unaudited unless otherwise stated
Alternative Performance Measures continued
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).
2024 2023
United
Kingdom
£m
Germany
£m
France
£m
Total
£m
United
Kingdom
£m
Germany
£m
France
£m
Total
£m
Contracted rent 50.1 44.9 13.9 108.9 50.9 4 7. 5 14.2 112.6
Adjusted for properties in development (0.1) – (0.3) (0.4) – – – –
Forecast non-recoverable service charge (3.9) (2.5) (0.5) (6.9) (3.7) (2.0) (0.5) (6.2)
‘Topped-up’ annualised net rents(A) 46.1 42.4 13.1 101.6 4 7. 2 45.5 13.7 106.4
Property portfolio
1
668.4 814.1 225.9 1,708.4 745.4 883.8 246.0 1,875.2
Adjusted for properties in development (11.4) (2.0) (8.3) (21.7) (15.7) (2.8) – (18.5)
Purchasers’ costs (6.8%) 44.7 55.2 14.8 114.7 49.6 59.9 16.7 126.2
Property portfolio valuation including
purchasers’ costs (B) 701.7 867.3 232.4 1,801.4 779.3 940.9 262.7 1,982.9
EPRA ‘topped-up’ NIY (A/B) 6.6% 4.9% 5.6% 5.6% 6.1% 4.8% 5.2% 5.4%
1 The above table comprise data of the investment properties and properties held for sale. They exclude owner-occupied, student accommodation and hotel.
ii) Vacancy
The EPRA vacancy rate calculates vacancy as a proportion of the ERV of the total portfolio.
EPRA vacancy
2024
£m
2023
£m
ERV of vacant space (A) 15.1 13.9
ERV of let space 103.9 112.4
ERV of total portfolio (B) 119.0 126.3
EPRA vacancy rate (A/B) 12.7% 11.0%
iii) Capital expenditure
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 Notes to the Group financial statements. The Group is not party to
any joint venture arrangements, therefore this measure is not disclosed.
Notes
2024
£m
2023
£m
Acquisitions 12 – –
Amounts spent on the completed investment property portfolio 12
Creation of incremental space – 2.1
Creation of no incremental space 21.1 4 7. 5
EPRA capital expenditure 21.1 49.6
Conversion from accrual to cash basis 1.2 (3.2)
EPRA capital expenditure on a cash basis CF
1
22.3 46.4
1 Group statement of cash flows.
CLS Holdings PLC Annual Report and Accounts 2024170
Supplementary disclosures (unaudited) continued
Unaudited unless otherwise stated continued
iv) Cost ratios
EPRA cost ratio
The Group has a policy of capitalising certain staff costs directly attributable to the management of the development of
investment properties as outlined in note 2.5 of the Notes to the Group financial statements.
Notes
2024
£m
2023
£m
Administration expenses 17.7 18.2
Other property expenses 4 18.1 15.6
Less: Other investments segment and student accommodation operating costs (6.8) (5.2)
29.0 28.6
Net service charge costs 4 6.1 5.7
Service charge costs recovered through rents but not separately invoiced (0.3) (0.1)
Dilapidations receipts (1.2) (2.3)
EPRA costs (including direct vacancy costs) (A) 33.6 31.9
Direct vacancy costs (8.2) (6.1)
EPRA costs (excluding direct vacancy costs) (B) 25.4 25.8
Gross rental income 4 100.2 102.8
Service charge components of gross rental income (0.3) (0.1)
EPRA gross rental income (C) 99.9 102.7
EPRA cost ratio (including direct vacancy costs) (A/C) 33.6% 31.1%
EPRA cost ratio (excluding direct vacancy costs) (B/C) 25.4% 25.1%
v) EPRA LTV
Notes
2024
£m
2023
£m
Borrowings from financial institutions 19 999.2 1,070.6
Net payables 52.4 52.2
Cash and cash equivalents 16 (60.5) (70.6)
Net debt (A) 991.1 1,052.2
Properties held as property, plant and equipment 13 40.7 39.7
Investment properties 12 1,676.5 1,850.5
Properties held for sale 14 133.0 172.7
Financial assets – equity investments 0.6 1.4
Total property value (B) 1,850.8 2,064.3
EPRA LTV (A/B) 53.5% 51.0%
vi) 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.
Notes
2024
%
2023
%
Increase in gross rental income (%) 1.2 3.5
2024
£m
2023
£m
Increase in gross rental income (£m) 1.1 3.4
Corporate governance Financial statements
CLS Holdings PLC Annual Report and Accounts 2024 171
Additional informationStrategic report
Alternative Performance Measures continued
2. Other APMs
i) Total Accounting Return per share
Notes
2024
pence
2023
pence
EPRA NTA at 31 December 5 215.0 253.0
Distribution – prior year final
1
25 5.4 5.4
Distribution – current year interim 25 2.6 2.6
Less: EPRA NTA at 1 January (A) 5 (253.0) (329.6)
Return before dividends (B) (30.0) (68.6)
Total Accounting Return (NTA) (B/A) (11.9)% (20.8)%
1 The 2023 and 2022 final dividend was 5.35 pence but has been rounded to 5.4 pence for the purpose of this note.
ii) Net debt and gearing
Notes
2024
£m
2023
£m
Borrowings short-term 19 372.4 193.9
Borrowings long-term 19 626.8 876.7
Add back: unamortised issue costs 19 4.3 5.0
Gross debt 19 1,003.5 1,075.6
Cash 16 (60.5) (70.6)
Net debt (A) 943.0 1,005.0
Net assets (B) 784.2 929.2
Net gearing (A/B) 120.2% 108.2%
iii) Balance sheet loan-to-value
Notes
2024
£m
2023
£m
Borrowings short-term 19 372.4 193.9
Borrowings long-term 19 626.8 876.7
Less: cash 16 (60.5) (70.6)
Net debt (A) 938.7 1,000.0
Investment properties 12 1,676.5 1,850.5
Properties in plant, property and equipment 13 40.7 39.7
Properties and land held for sale 14 133.0 172.7
Total property portfolio (B) 1,850.2 2,062.9
Balance sheet loan-to-value (A/B) 50.7% 48.5%
CLS Holdings PLC Annual Report and Accounts 2024172
Supplementary disclosures (unaudited) continued
Unaudited unless otherwise stated continued
iv) CLS 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
2024
£m
2023
£m
Administration expenses 17.7 18.2
Less: Other investment segment 4 (0.1) (0.1)
Underlying administration expenses (A) 17.6 18.1
Net rental income (B) 4 114.0 113.0
Administration cost ratio (A/B) 15.4% 16.0%
v) Dividend cover
Notes
2024
£m
2023
£m
Interim dividend 25 10.3 10.3
Final dividend 25 10.7 21.3
Total dividend (A) 21.0 31.6
EPRA earnings (B) 5 36.4 40.9
Dividend cover (B/A) 1.73 1.30
vi) Interest cover
Notes
2024
£m
2023
£m
Net rental income 4 114.0 113.0
Administration expenses 4 (17.7) (18.2)
Other property expenses 4 (18.1) (15.6)
Group revenue less costs (A) 78.2 79.2
Finance income (excluding derivatives and dividend income) 8 1.4 1.6
Finance costs (excluding derivatives) 9 (42.3) (37.1)
Net interest (B) (40.9) (35.5)
Interest cover (-A/B) 1.91 2.23
Corporate governance Financial statements
CLS Holdings PLC Annual Report and Accounts 2024 173
Additional informationStrategic report
Administration cost ratio
Recurring administration expenses oftheinvestment
propertyoperating segment expressed as a percentage
ofnetrental income.
Balance sheet loan-to-value
Net debt expressed as a percentage ofproperty assets.
Building Research Establishment Environmental
Assessment Method (BREEAM)
An environmental impact assessment method for non-
domestic buildings. Their standards cover new construction,
In-Use as well asrefurbishment and fit-out. BREEAM In-Use
enables property investors, owners, managers and occupiers
todetermine and drive sustainable improvements in the
operational performance of their buildings. It provides
sustainability benchmarking and assurance for all building types
and assesses performance in a number ofareas; management,
health & wellbeing, energy, transport, water,resources,
resilience, land use & ecology, and pollution. Performance is
measured across a series of ratings; Good, VeryGood,
Excellent and Outstanding.
Carbon emissions Scopes 1, 2 and 3
Scope 1 – direct emissions;
Scope 2 – indirect emissions; and
Scope 3 – other indirect emissions.
CDP
CDP, formerly known as the Carbon Disclosure Project,
assesses the ESG performance of all major companies
worldwide and aidscomparability betweenorganisations to
allow the investor community to assess the carbon and climate
change risk of each company.
Contracted rent
Annual contracted rental income after any rent-free periods
haveexpired.
Dividend cover
The ratio of EPRA earnings over the dividend paid
to shareholders.
Earnings per share
Profit for the year attributable to the owners of the Company
divided by the weighted average number of ordinary shares in
issue in theperiod.
Energy Performance Certificate (EPC)
An EPC is an asset rating detailing how energy efficient a
building is,rated by carbon dioxide emission on a scale of A-G,
where an Arating is the most energy efficient. They are legally
required for any building that is to be put on the market for sale
or rent.
European Public Real Estate Association (EPRA)
A not-for-profit association with a membership of Europe’s
leading property companies, investors and consultants which
strives to establish best practices in accounting, reporting and
corporate governance and to provide high-quality information
to investors. EPRA’s Best Practices Recommendations includes
guidelines for the calculation of the following performance
measures which the Group has adopted.
EPRA capital expenditure
Investment property acquisitions and expenditure split between
amounts used for the creation of additional lettable area
(‘incremental lettable space’) and enhancing existing space
(‘noincremental space’) both on an accrual and cash basis.
EPRA cost ratio
Administrative & operating costs (including & excluding costs
ofdirect vacancy) divided by gross rental income. A measure to
enable meaningful measurement of the changes in a company’s
operating costs.
EPRA earnings per share (EPS)
Earnings from operational activities. A measure of a company’s
underlying operating results and an indication of the extent to
whichcurrent dividend payments are supported by earnings.
EPRA like-for-like rental growth
Like-for-like net rental growth compares the growth of the net
rental income of the portfolio that has been consistently in
operation, and not under development, during the two full
preceding periods that are described.
EPRA net reinstatement value (NRV)
NAV adjusted to reflect the value required to rebuild the entity
andassuming that entities never sell assets. Assets and
liabilities, such as fair value movements on financial derivatives
are not expected to crystallise in normal circumstances and
deferred taxes on property valuation surpluses are excluded.
EPRA net tangible assets (NTA)
Assumes that entities buy and sell assets, thereby crystallising
certain levels of unavoidable deferred tax.
EPRA net disposal value (NDV)
Represent the shareholders’ value under a disposal scenario,
where deferred tax, financial instruments and certain other
adjustments are calculated to the full extent of their liability,
netofany resultingtax.
EPRA net initial yield (NIY)
Annualised rental income based on the cash rents passing at
thebalance sheet date, less non-recoverable property
operating expenses, divided by the market value of the EPRA
property portfolio, increased by estimated purchasers’ costs.
EPRA LTV
The aim of EPRA LTV is to assess the gearing of the
shareholderequity within a real estate company by adjusting
IFRS reporting. The main overarching concepts are: any capital
which is not equity is considered as debt irrespective of its IFRS
classification; it is calculated on proportional consolidation; and
assets are included at fair value and net debt at nominal value.
EPRA ‘topped-up’ net initial yield
This measure incorporates an adjustment to the EPRA NIY
inrespect of the expiration of rent-free periods (or other
unexpired lease incentives such as discounted rent periods
andstep rents).
EPRA vacancy rate
Estimated rental value (ERV) of immediately available space
divided by the ERV of the lettable portfolio.
Estimated rental value (ERV)
The market rental value of lettable space asestimated by the
Group’s valuers.
CLS Holdings PLC Annual Report and Accounts 2024174
Glossary
Rent reviews
Rent reviews take place at intervals agreed in the lease (typically
every five years) and their purpose is usually to adjust the rent to
thecurrent market level at the review date. For upwards only
rent reviews, the rent will either remain at the same level or
increase (ifmarket rents are higher) at the review date.
Rent roll
Contracted rent.
Return on equity
The aggregate of the change in equity attributable to the
owners of the Company plus the amounts paid to the
shareholders as dividends and the purchase of shares in the
market, divided by the opening equity attributable to the
owners of the Company.
Reversion
The amount by which ERV exceeds contracted rent.
Streamlined energy and carbon reporting (SECR)
The SECR regulations were introduced in April 2019 and require
companies incorporated in the UK to undertake enhanced
disclosures of their energy and carbon emissions in their
financial reporting.
The Task Force on Climate-related Financial Disclosures
(TCFD)
Set up by the Financial Stability Board (FSB) in response to the
G20 Finance Ministers and Central Bank Governors request for
greater levels of decision-useful, climate-related information;
the TCFD was asked to develop climate-related disclosures that
could promote more informed investment, credit (or lending),
and insurance underwriting decisions. In turn, this would enable
stakeholders to understand better the concentrations of
carbon-related assets in the financial sector and the financial
system’s exposures to climate-related risks.
Total Accounting Return – basic
The change in IFRS net assets before the payment of dividends.
Total Accounting Return
The change in EPRA NTA before the payment of dividends.
Total Shareholder Return (TSR)
The growth in capital from purchasing ashare, assuming that
dividends are reinvested every time they are received.
True equivalent yield
The capitalisation rate applied to future cash flows tocalculate
thegross property value, asdetermined bytheGroup’s
externalvaluers.
UN Sustainable Development Goals (SDGs)
The 2030 Agenda for Sustainable Development, adopted by
allUnited Nations Member States in 2015, provides a shared
blueprint for peace and prosperity for people and the planet,
now and into the future. At its heart are the 17 Sustainable
Development Goals (SDGs), which are an urgent call for action
by all countries – developed and developing – in a global
partnership. They recognise that ending poverty and other
deprivations must go hand-in-hand with strategies that improve
health and education, reduce inequality, and spur economic
growth – all while tackling climate change and working to
preserve our oceans and forests.
GRESB
GRESB assesses and benchmarks the environmental, social
andgovernance (ESG) performance of real assets, providing
standardised and validated data to the capital markets.
Interest cover
The aggregate of group revenue less costs, divided by the
aggregate of interest expense and amortisation of loan issue
costs, less interest income.
Key performance indicators (KPIs)
Activities and behaviours, aligned to both business objectives
andindividual goals, against which the performance of the
Group isannually assessed. Performance measured against
them is referenced in the annual report.
Liquid resources
Cash and short-term deposits.
Net assets per share or net asset value (NAV)
Equity attributable to the owners of the Company divided by
the number ofordinary shares.
Net debt
Total borrowings less liquid resources.
Net gearing
Net debt expressed as a percentage ofnetassets attributable
totheowners ofthe Company.
Net initial yield
Net rent on investment properties and properties held for sale
expressed as apercentage of the valuation of those properties.
Net rent
Passing rent less net service charge costs.
Over-rented
The amount by which ERV falls short of the aggregate
ofcontracted rent.
Passing rent
Contracted rent before any rent-free periods have expired.
Property loan-to-value
Property borrowings expressed as apercentage of the market
value of the property portfolio.
Real Estate Investment Trust (REIT)
A Real Estate Investment Trust (REIT) is a vehicle that allows an
investor to obtain broadly similar returns from their investment,
asthey would have, had they invested directly in property. In the
UKa REIT is exempt from UK tax on the income and gains of its
property rental business. A REIT in the UK is required to invest
mainly in property (75% of total Group’s assets and profits must
be in the tax exempt business) and to pay out 90% of the profits
from its property rental business as measured for tax purposes
as dividends to shareholders (property income distributions).
In the hands of the shareholder, property income distributions
(PID) are taxable as profits of a UK property rental business.
The PID is received net of withholding tax, unless it is to a
recipient entitled togross payment.
Corporate governance Financial statements
CLS Holdings PLC Annual Report and Accounts 2024 175
Additional informationStrategic report
Directors
Lennart Sten
*◊
(Non-Executive Chairman)
Anna Seeley
◊
(Non-Executive Vice Chair)
Fredrik Widlund (Chief Executive Officer)
Andrew Kirkman (Chief Financial Officer)
Elizabeth Edwards
‡†◊
(Non-Executive Director)
Bill Holland
*†
(Non-Executive Director)
Eva Lindqvist
*†
(Non-Executive Director)
‡ Senior Independent Director
* Member of Remuneration Committee
† Member of Audit Committee
◊ Member of Nomination Committee
Chief Operating Officer & Company Secretary
David Fuller BA, FCG
Registered Office
16 Tinworth Street, London, SE11 5AL
Registered Number
02714781
Website
www.clsholdings.com
Email
enquiries@clsholdings.com
Telephone
+44 (0)20 7582 7766
Registrars and Transfer Office
Computershare Investor Services Plc
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Shareholder Helpline: 0870 889 3286
Germany
CLS Germany GmbH
Hamburg Office:
Nagelsweg 37
20097 Hamburg
Düsseldorf Office:
Roßstraße 96
40476 Düsseldorf
Tel: +49 (0)40 29 81 39 0
France
CLS France Sarl
36 rue Jules Verne
92300 Levallois-Perret
Tel: +33 (0)1 86 26 48 50
Luxembourg
CLS Luxembourg Sarl
33 Avenue de la Liberte
1931 Luxembourg
Tel: +352 (0)27 861 217
Clearing Bank
Royal Bank of Scotland Plc
24 Grosvenor Place
London
SW1X 7HP
Joint Corporate Brokers
Panmure Liberum Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London
EC2Y 9LY
Joh. Berenberg, Gossler & Co. KG
London Branch
60 Threadneedle Street
London
EC2R 8HP
Registered Auditor
BDO LLP
Chartered Accountants
55 Baker Street
W1U 7EU
Financial and Corporate Public Relations
Daniel J. Edelman Limited
Southside
105 Victoria Street
London
SW1E 6QT
CLS Holdings PLC Annual Report and Accounts 2024176
Directors, officers and advisors
Both the paper manufacturer and printer are
registered to the Environmental Management
System_ISO14001 and are Forest Stewardship
Council® (FSC)® chain-of-custody certified
Consultancy, design and production
CLS Holdings plc
16 Tinworth Street
London
SE11 5AL
Tel: +44 (0)20 7582 7766
Fax: +44 (0)20 7735 2779
www.clsholdings.com
enquiries@clsholdings.com