CLS HOLDINGS PLC

("CLS", the "Company" or the "Group")

ANNOUNCES ITS HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS TO 30 JUNE 2026

 

Progress made with strategic priorities of lettings, sales, refinancings and investments

 

CLS is a leading office space specialist and a supportive, progressive and sustainably focused commercial landlord, with a £1.6 billion portfolio in the UK, Germany and France, offering geographical diversification with local presence and knowledge. For the half-year ended 30 June 2026, the Group has delivered the following results:

 

		30 June 2026	30 June 2025	Change (%)
EPRA earnings1 (£m)		10.9	16.1	(32.3)
Statutory (IFRS) loss after tax (£m)		(69.6)	(24.4)	Nm2
EPRA earnings per share1 (pence)		2.7	4.0	(32.5)
Statutory (IFRS) earnings per share (pence)		(17.5)	(6.1)	Nm2
Dividend per share (pence)		-	1.30	Nm2
Total Accounting Return (%) (per share)		(9.5)	(1.3)	Nm2

 

		30 June 2026	31 December 2025	Change (%)
EPRA net tangible assets1 (NTA) per share (pence)		177.7	200.7	(11.5)
Statutory net asset value (NAV) per share (pence)		164.2	186.4	(11.9)

¹  A reconciliation of statutory to alternative performance measures is set out in Note 4 to the condensed Group financial statements

² Nm = Not meaningful

 

Fredrik Widlund, Chief Executive Officer of CLS, commented:

 

"The first half reflects the earnings and valuation pressures we set out in our recent Trading Update on 4 August. Our priorities are clear: to focus on the actions within our control and execute them effectively across the portfolio.

 

"Our local teams remain focused on active, asset-by-asset management of our well-located, multi-let offices: leasing vacant space, reducing void costs, progressing disposals and refinancing, and investing selectively where there is clear occupier demand or an opportunity to improve the use of an asset. We have made progress in each of these areas, but there is more work to do. Our focus for the second half is on completing that activity and converting it into improved occupancy and financial flexibility over time. The actions we are taking to strengthen the business over the medium term are positioning CLS for sustainable long-term growth."

 

FINANCIAL HEADLINES

•	EPRA EPS fell 32.5% to 2.7 pence (30 June 2025: 4.0 pence) per share due to lower rental income from asset sales and tenant departures, partly offset by lower administration, property costs and net finance expense from reduced debt levels and borrowing costs.
•	Portfolio valuation fell 4.6% in local currency (UK -7.2%, Germany -2.5% and France -3.7%), as a result of a 27 bps property yield expansion and a 1.8% decline in ERVs across the Group
•	Statutory loss after tax of £69.6 million (30 June 2025: £24.4 million) primarily due to valuation declines on investment properties of £84.2 million (30 June 2025: £32.3 million decline) partly offset by underlying earnings. This translates to statutory loss per share of 17.5 pence (30 June 2025: 6.1 pence loss).
•	EPRA NTA per share fell 11.5% to 177.7 pence (31 December 2025: 200.7 pence) as a result of the decline in property values, further exacerbated by a 1.2% strengthening of Sterling against the Euro. Total accounting return (per share) for the period was -9.5% (31 December 2025: -4.8%).
•	Given the importance of reducing leverage and completing the disposal programme, the Board has concluded that it is appropriate to determine the level of distribution at the full year results once the full-year earnings are known. Accordingly, no interim dividend will be paid, and the Board intends to consider a single final dividend for the entirety of 2026 based on full-year earnings, taking into account our dividend policy of a dividend cover of 1.5-3.0x EPRA earnings and UK REIT distribution requirements.

 

OPERATIONAL HEADLINES

•	Net rental income decreased by 13.1% to £46.3 million (30 June 2025: £53.3 million) reflecting the combination of a like-for-like decrease of 4.7% due to lease expiries, the majority of which related to block expiries at New Printing House Square in June 2025, German insolvencies in H2 2025, and £201.2 million of disposals since the start of 2025.
•	In the first half of 2026, the sales of The Brix in Germany, four flats in London and one floor of our Rhone Alpes property in France were completed for £56.8 million in line with book value. In July 2026, we sold the Columbia building in Bracknell and at 30 June 2026 had entered into an agreement to sell the Clockwork building in London. The sale of Clockwork is expected to complete in the second half of the year.
•	We secured contracted rent of £5.7 million in the first half of the year (30 June 2025: £7.5 million) across 57 new lettings and renewals (30 June 2025: 52) with the number of new leases increasing during the period. As a whole, leases were signed at 8.9% below 31 December 2025 estimated rental values. 56 lettings were on average completed in line with ERV, whilst one lease at New Printing House Square was completed below ERV. The one lease at New Printing House Square was agreed ahead of the planned redevelopment in 2029 to reduce void costs. Rent collection rates remain high at 98% of contracted rent due.
•	Vacancy was stable at 14.5% (31 December 2025: 14.5%) largely reflecting steady leasing activity across the portfolio and particularly strong progress in France. We are seeing a good level of enquiries for our vacant space and signed a further £1.9 million of leases in July.
•	Planning for the redevelopment of Spring Gardens (Citadel Place) continues to progress following submission of the planning application in March this year. The application is now expected to be considered by the Planning Committee in September 2026.
•	At New Printing House Square, a pre-application has been submitted for a residential conversion including a proposed self-storage scheme within part of the basement and at Spring Mews we successfully secured planning permission to convert the remaining standalone student accommodation units into serviced apartments.
•	In Dortmund, at The Yellow we delivered the second phase of the fit-out works for the new tenant and subsequently agreed terms for additional space. The repositioning of Max Forum in Munich as a life-science hub progressed with several active leasing discussions.
•	Our embedded focus on improving the sustainability credentials of our portfolio continues: we achieved a 3% reduction in like-for-like landlord energy usage (31 December 2025: 5.8% reduction) and 88% of our UK portfolio has an Energy Performance Certificate rating of A-C (31 December 2025: 84%).

 

FINANCING

•	Net debt fell by £44.2 million during the first half of the year, mainly reflecting our disposal activity. Our loan-to-value (LTV) ratio was 51.6% at 30 June 2026 (31 December 2025: 50.0%) with lower debt levels, more than offset by the decline in portfolio value.
•	As at 30 June 2026 57% of our 2026 debt maturities or expiries had been refinanced, extended or repaid. We subsequently received credit approval or agreed terms for a further 32% and we are in discussions on the remaining 11% and are confident to refinance by the end of the year. Our weighted average cost of debt was 3.9% at 30 June 2026 (31 December 2025: 3.8%). The average debt maturity decreased to 3.2 years (31 December 2025: 3.6 years) partly as a result of debt repaid on property sales.
•	72% of debt is at fixed rates and 3% is subject to interest rate caps (31 December 2025: 69% fixed and 7% caps).
•	Our balance sheet remains resilient with cash and cash equivalents (including restricted cash) of £35.3 million (31 December 2025: £49.4 million) and undrawn credit facilities of £44.1 million (31 December 2025: £38.0 million).

 

OUTLOOK

•	We remain committed to our long-term strategy of owning and actively managing office properties in Europe's three largest economies, while focusing on our near-term priorities of reducing vacancy, strengthening the balance sheet through refinancing and disposals, and investing in our properties.
•	Our markets continued to experience modest economic growth and a higher-for-longer interest rate environment, which is affecting occupier decision-making, investment activity and financing costs. However, the outlook is gradually becoming more supportive. Business confidence is improving, and occupiers increasingly accept ongoing uncertainty, and the importance of the office to company identity, culture, and operations remains clear.
•	Leasing markets remained stable across our regions, with demand for modern, well-located offices evident, and our leasing pipeline for the second half of the year is encouraging.
•	We have continued to make progress with disposals with £75.7 million completed or exchanged, and a further £22.5 million under offer and expect to deliver around £100 million of disposals during the year.
•	We have completed or agreed 89% of our refinancing activity for the year, demonstrating the resilience of the secured lending model we have operated for many years and have started to progress on our 2027 debt maturities.
•	With near-term earnings under pressure, particularly from asset sales and the departure of our largest tenant, the Board now expects 2026 full year EPS to be in the range of 4.6 to 5.5 pence per share. We continue to make progress against our strategic priorities, supported by our experienced local teams, a well-located portfolio and improving financial flexibility, and we believe the actions we are taking today position CLS to benefit as market conditions improve.

 

-ends-

 

Results presentation

A presentation for analysts and investors will be held in-person at Panmure Liberum and by webcast on Wednesday 12 August 2026 at 8:30am followed by Q&A. Questions can be submitted online via the webcast.

 

•	Panmure Liberum: Ropemaker Place, 25 Ropemaker Street, London EC2Y 9LY
•	Webcast: The live webcast will be available here: https://sparklive.lseg.com/CLSHoldings/events/b7b1d8b9-151f-4a73-991b-33d911d9e832/cls-holdings-plc-half-year-results-2026

 

 

For further information, please contact:

 

CLS Holdings plc

(LEI: 213800A357TKB2TD9U78)

www.clsholdings.com

Fredrik Widlund, Chief Executive Officer

Patrick Symons, Chief Financial Officer

+44 (0)20 7582 7766

 

Panmure Liberum

Jamie Richards

David Watkins

+44 (0)20 3100 2000

 

Berenberg

Carl Gough

Harry Nicholas

+44 (0)20 3207 7800

 

Edelman Smithfield (Financial PR)

Alex Simmons +44 7970 174 353

Hastings Tarrant +44 7813 407 665

[email protected]

 

 

Forward-looking statements

This document may contain certain 'forward-looking statements'. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from those expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of CLS speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Except as required by its legal or statutory obligations, the Company does not undertake to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Information contained in this document relating to the Company or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance.

 

Chief Executive's statement

 

Progress made with strategic priorities of lettings, sales, refinancings and investments

 

Introduction

 

During the first half of the year, we remained focused on actions within our control and made progress against most of our four strategic priorities: reducing vacancy and improving earnings growth; reducing debt through targeted asset sales; refinancing or repaying debt maturities; and investing selectively in our portfolio to unlock additional value.

 

These priorities are particularly important in the current environment, where modest economic growth and a more cautious interest rate outlook continue to affect occupier decision-making, office investment markets and financing costs. These factors, together with lower income following asset sales, have impacted earnings and full year 2026 earnings are now expected to be lower as announced in our Trading Update on 4 August 2026.

 

Despite market conditions and lower headline results, in the first six months of the year we saw progress against a number of our priorities, particularly in leasing activity, sales and financing, and overall vacancy remained stable, helping position the portfolio for future earnings growth.

 

Reduce vacancy and improve earnings growth

 

Vacancy as 30 June 2026 was stable at 14.5% despite the impact of disposals, reflecting steady leasing activity across the portfolio and particularly strong progress in France.

 

Reducing vacancy remains our top priority and we are taking an active, asset-by-asset approach to improving occupancy. This will not only generate additional rental income, but also reduce void costs, support valuations and strengthen our refinancing position.

 

Reduce debt through targeted asset sales

 

We have made progress with our disposals programme and in the first half of the year, we executed £56.8 million of sales and have exchanged on a further £18.9 million targeted for completion in H2. We have remained disciplined on pricing, with completed disposals achieved at book value.

 

We remain on track to execute around £100 million of disposals during the year, within our target range, providing additional balance sheet flexibility through lower debt and additional headroom.

 

The sale of Spring Gardens is progressing well, following delays associated with the local elections. Engagement with the council has been positive, and the proposed development offers clear benefits, including a high level of affordable housing and the revitalisation of a redundant office building.

 

We are committed to bringing the group Loan-to-Value (LTV) ratio to within the targeted range of between 35% and 45%. At 30 June 2026, our LTV was 51.6% (31 December 2025: 50.0%), reflecting a balance of asset disposals and property value declines during the period.

 

Successful refinancing or repayment of debt due in 2026

 

During the period, we refinanced or repaid £113.6 million of debt across four loans including amortisation. Of the £85.7 million due for refinancing in the second half of the year, we have received credit approval or agreed terms for £63.8 million and the remaining £21.9 million is well progressed with lenders.

 

A notable achievement during the period was the refinancing of Spring Gardens. Despite the complexity created by the upcoming expiry of the National Crime Agency lease and planning permission not yet being in place, we successfully arranged a bridging facility that provides flexibility through to the expected sale of the property which remains on track for 2027.

 

Investing in our properties to unlock additional value

 

During the first half of the year, we invested £12.5 million in our portfolio, which included £5.9 million of capex and £6.6 million invested in tenant fit outs ahead of occupation of government tenants on large long-term leases at two of our properties in Germany, both of which increased in value during the period. We adopt a disciplined approach to enhancing our properties by focusing on retaining existing occupiers and reducing vacancy.

 

We continue to undertake reviews of the portfolio to identify assets where redevelopment or a change of use may deliver the best outcome. For example, following the sale of the student accommodation block, we successfully secured planning permission to convert the remaining standalone student accommodation units into serviced apartments.

 

Financial results

 

In H1 2026, EPRA EPS fell by 32.5% to 2.7 pence (H1 2025: 4.0 pence), primarily reflecting lower net rental income following disposals completed during 2025, particularly Spring Mews Student, lease expiries including the 2025 block expiry at New Printing House Square, and the impact of the 2025 German insolvencies. This was partially offset by lower finance, administration and other property expenses.

 

IFRS EPS declined to a loss of 17.5 pence (H1 2025: 6.1 pence loss) reflecting the decline of our portfolio value. These factors contributed to a 11.5% reduction in EPRA NTA to 177.7 pence per share (31 December 2025: 200.7 pence) and a 11.9% reduction in statutory NAV per share to 164.2 pence (31 December 2025: 186.4 pence).

 

Dividends

 

Given the importance of reducing leverage and completing the disposal programme, the Board has concluded that it is appropriate to determine the level of distribution at the full year results once the full-year earnings are known.

 

Accordingly, no interim dividend will be paid, and the Board intends to consider a single final dividend for the entirety of 2026 based on full-year earnings, taking into account our dividend policy of a dividend cover of 1.5-3.0x EPRA earnings and UK REIT distribution requirements.

 

Property portfolio

 

At 30 June 2026, the value of our investment portfolio, including assets held for sale, was £1.6 billion (31 December 2025: £1.7 billion), reflecting disposals during the period as well as a 4.6% decline in value on a constant currency basis. Within this, the UK portfolio fell by 7.2%, Germany fell by 2.5% and France fell by 3.7%.

 

The lower valuation reflected a softening of property yields, by 27 basis points to an equivalent yield of 6.4% (31 December 2025: 6.1%) and like-for-like ERVs which fell by 1.8% (31 December 2025: 0.1% fall). This was the first valuation of our UK portfolio by Colliers, who took over from Cushman & Wakefield following the RICS changes to mandatory rotation rules in the UK. JLL remains the valuer of the German and French portfolios.

 

Asset and property management

 

Over the course of the first half, we completed 57 leasing transactions (H1 2025: 52) for a total of £5.7 million (H1 2025: £7.5 million) of annual rent at 8.9% below ERV. Excluding one lease at New Printing House Square, where a three-year lease was agreed, to reduce holding costs, ahead of the planned redevelopment of the property from 2029, lettings were completed in line with ERV. Market vacancy has continued to increase across our markets, and our leasing activity has largely offset expiries and disposals in the period.

 

Group vacancy increased from 14.5% at year-end to 14.7% at 31 March 2026 before again reducing down to 14.5% at 30 June 2026. Leasing momentum strengthened through Q2 and continued into July, with a further £1.9 million of leases signed.

 

On a country basis, the UK, has seen a modest improvement in its vacancy rate since the start of the year, from 18% to 17.8% in the first quarter and thereafter to 17.7% in Q2. In Germany, the vacancy increased from 11.1% at year end to 12.3% in the first quarter and 12.5% in Q2 with the sale of the fully let Brix adding 0.7% to vacancy. In France, we saw strong leasing activity and vacancy reduced from 12.1% at year end to 10.3% in Q1 and 7.7% in Q2.

 

Our largest single future vacancy is at Spring Gardens, where the National Crime Agency lease is due to expire at the end of September. Given the significance of the departure of our largest tenant and release of the occupied space, EPRA vacancy is expected to increase at year end.

 

Balance sheet and financing

 

At 30 June 2026, net debt fell by 5.2% to £808.3 million (31 December 2025: £852.5 million), primarily reflecting disposals during the year.  

 

The weighted average cost of debt increased slightly as interest rates increased during the period and cheaper debt associated with disposals was repaid. The weighted average maturity of the debt decreased to 3.2 years (31 December 2025: 3.6 years) partly as a result of long-term debt being repaid on the sale of The Brix.

 

Our primary leverage indicator is balance sheet loan-to-value (LTV) ratio, and this increased slightly to 51.6% (31 December 2025: 50.0%). This reflected the reduction in the value of the property portfolio, partially offset by lower debt levels. Interest cover (defined as EBITDA divided by net finance costs) was 1.6 times (H1 2025: 1.9 times) reflecting lower net finance costs, following net debt repayments, offset by lower EBITDA.

 

Sustainability

 

CLS Holdings is committed to becoming a net zero carbon (NZC) business. This year, to ensure the strategic alignment of our approach to decarbonisation and the Group's overall business strategy, we are updating our current NZC Pathway, in line with the Science Based Targets initiative.

 

To support the delivery of our near term and ultimately, our new long-term NZC targets, we have continued implementing technical and cost-effective NZC projects across all three regions. In 2026, we expect to complete approximately £2 million worth of carbon reduction and energy efficiency projects. In total, these projects will save an estimated 312 tonnes CO2e (tCO2e) per annum. Further to the completion of our heating electrification project at Radius House, Watford, in 2025, this year, we are replacing the gas boiler at Hansaallee in Dusseldorf, with a ground source heat pump (GSHP). The GSHP installation represents one of our largest projects and is expected to achieve annual carbon savings of c.80 tCO2e whilst the total annual energy consumption of the building is expected to decrease by c.30%. Other key projects due to complete by year end include lighting and BMS upgrades across the UK, Germany and France.

 

Through the delivery of our asset level NZC management plans as well as our Sustainability Strategy, we remain well positioned to meet all regulatory requirements in our geographies. This includes the updated Minimum Energy Efficiency Standards in the UK, Décret Tertiaire in France as well as anticipated changes to national legislation within France and Germany enforced by the recently recast European Performance of Buildings Directive. In addition, CLS expects to maintain its EPRA sBPR Gold award whilst we continue to assess building performance using certification schemes including BREEAM.

 

Outlook

We remain committed to our long-term strategy of owning and actively managing office properties in Europe's three largest economies, while focusing on our near-term priorities of reducing vacancy, strengthening the balance sheet through refinancing and disposals, and investing in our properties.

Our markets continued to experience modest economic growth and a higher-for-longer interest rate environment, which is affecting occupier decision-making, investment activity and financing costs. However, the outlook is gradually becoming more supportive. Business confidence is improving, and occupiers increasingly accept ongoing uncertainty, and the importance of the office to company identity, culture, and operations remains clear.

Leasing markets remained stable across our regions, with demand for modern, well-located offices evident, and our leasing pipeline for the second half of the year is encouraging.

We have continued to make progress with disposals with £75.7 million completed or exchanged, and a further £22.5 million under offer and expect to deliver around £100 million of disposals during the year.

We have completed or agreed 89% of our refinancing activity for the year, demonstrating the resilience of the secured lending model we have operated for many years and have started to progress on our 2027 debt maturities.

With near-term earnings under pressure, particularly from asset sales and the departure of our largest tenant, the Board now expects 2026 full year EPS to be in the range of 4.6 to 5.5 pence per share. We continue to make progress against our strategic priorities, supported by our experienced local teams, a well-located portfolio and improving financial flexibility, and we believe the actions we are taking today position CLS to benefit as market conditions improve.

 

Business review

 

United Kingdom

 

Delivering leasing progress while unlocking development potential

 

	30 June 2026	31 December 2025
Value of properties	£628.2m	£677.4m
Percentage of Group's property interests	40%	40%
Number of properties	33	33
Number of tenants	202	203
EPRA vacancy rate	17.7%	18.0%
Lettable space	144.7k sqm	146.9k sqm
Government and large companies	69.4%	70.4%
Weighted average lease length to expiry	3.5 years	3.8 years
Leases subject to indexation	31.4%	30.7%

 

The value of the UK portfolio decreased by £49.2 million as a result of: valuation decreases of £49.0 million or 7.2%, disposals of £2.2 million; offset by capex additions of £2.0 million. Spring Gardens recorded the largest valuation decline, with a fall of 11.6%, due to the upcoming expiry of the National Crime Agency lease in September 2026 and the planned disposal of the property. The valuation decline for the rest of the portfolio was primarily driven by a 55 bps outward shift in equivalent yields, reflecting reduced expectations for interest rate cuts and continued caution in office investment markets. During the period, Colliers was appointed as the UK portfolio valuer, replacing Cushman & Wakefield. This is due to the RICS valuer rotation requirements in the UK.

 

In H1 2026, we signed 14 new leases and five lease extensions, securing £1.6 million of annualised rent at a 27% discount to December 2025 ERVs. This discount was due to a strategic 2,500 sqm letting at New Printing House Square, where leasing is limited to short-term agreements ahead of the June 2029 block expiry at which point a residential conversion is anticipated. In addition to generating rent, this letting is expected to reduce annual holding costs by approximately £1.1 million. Excluding this transaction, UK leases were completed at 1.1% above ERV.

 

EPRA vacancy decreased from 18.0% at 31 December 2025 to 17.7% at 30 June 2026. The number of new leases increased during the period, while renewals were lower due to fewer expiries and hence less potential extensions. The National Crime Agency lease at Spring Gardens is due to expire in September 2026. As the property is expected to be removed from lettable space following the sale to London Square, the loss of this significant occupied space is expected to increase UK and Group EPRA vacancy by 4.0% and 1.0%, respectively, on a pro-forma basis.

 

With respect to disposals, we closed on the sale of Columbia House, Bracknell in July and exchanged on the Clockwork Building, Hammersmith with expected completion in Q4 2026 and in line with our strategy of selling properties better suited for alternative uses. We also continued to wind down our residential portfolio with the sale of several flats in Vauxhall in the first half of the year.

 

Planning for the redevelopment of Spring Gardens (Citadel Place) continues to progress following submission of the planning application in March this year. The application is expected to be considered by the Planning Committee in September 2026, with preparatory site clearance works already planned. At New Printing House Square, a pre-application has been submitted for a residential conversion, alongside initiatives to reduce holding costs and increase income, including a proposed self-storage scheme within part of the basement. Elsewhere in the UK portfolio, we have submitted pre-applications to pursue opportunities to redevelop selected properties or unlock value from underutilised space.

 

In terms of the UK property market, commercial investment volumes were c.£15 billion in the first half of 2026, a decrease of over 40% on same period in 2025.

 

Leasing take-up in London in the first half of 2026 was c.510,000 sqm, which was similar to the same period last year, while take-up across the South East office market reached c.120,000 sqm, below last year due to the absence of larger M4 corridor lettings. Vacancy in the London market is now 8.4% and 11.7% in the South East office market.

Germany

 

Positioned to benefit from improving market conditions and public investment

 

	30 June 2026	31 December 2025
Value of properties	£725.2m	£802.1m
Percentage of Group's property interests	46%	47%
Number of properties	28	29
Number of tenants	307	320
EPRA vacancy rate	12.5%	11.1%
Lettable space	304.3k sqm	323.1k sqm
Government and large companies	45.9%	55.9%
Weighted average lease length to end	6.0 years	7.4 years
Leases subject to indexation	73.6%	76.0%

 

The value of the German portfolio decreased by £76.9 million as a result of: disposals of £52.3 million; a valuation decrease of £19.1 million or 2.5% in local currency; a foreign exchange loss of £8.8 million, partially offset by capex of £3.3 million. The valuation loss was due to yields expanding by an average of 10 bps and ERVs declining by 1.1%.

 

Vacancy increased to 12.5%, compared with 11.1% at 31 December 2025, due to lease expiries and a disposal during the period. Excluding the disposal of The Brix, which was fully let, vacancy would have increased to 11.8%. Vacancy in the second half of the year is expected to decrease as we are in advanced discussions with several potential new tenants.

 

In H1 2026, 21 leases were signed, adding £3.0 million of annualised rent at an average of 2.7% above December 2025 ERVs. The most significant transaction was the extension of Deutsche Telekom's 5,900 sqm lease at Georg-Elser-Strasse, Nuremberg. The lease extends a tenant relationship of more than a decade, highlighting the benefits from our long-term occupier relationships.

 

In May, we completed the £51.9 million sale of The Brix, Essen, a 21,800 sqm office building fully let to the City of Essen. Other disposals are being considered, aligned with our strategic priority to reduce leverage.

 

During the period, we delivered the second phase of the fit-out works at The Yellow, Dortmund. A further phase has been agreed to accommodate the tenant's requirement for additional space. We have also commenced works associated with the recent lease to the Federal State of North-Rhine Westphalia at Gotic Haus, Dortmund. These projects contributed to valuation increases of approximately 5% at both properties, a result of the value created through targeted investment and leasing activity.

 

The outlook for the second half of the year is expected to benefit from the German Government's planned economic reforms and increased public investment, including €500 billion of infrastructure spending and €400 billion for defence. Tenant demand is driven by occupiers with upcoming lease expiries in supply-constrained markets, supporting occupier demand for high-quality offices in well-connected locations.

 

The German commercial property investment market showed increasing momentum in the first half of 2026, and investment volumes increased to c. €12 billion, 20% above the prior year, although still below the five-year average of €20 billion. The office sector recorded a 9% increase in transaction volumes compared with H1 2025 and was once again the largest commercial real estate asset class.

 

Office take-up in Germany's Top 7 cities totalled 1.3 million sqm in the first half of 2026, broadly unchanged year-on-year. Leasing activity showed further signs of recovery, with demand for larger floorplates complementing continued resilience in the small-unit segment. Vacancy rates across the Top 7 cities ranged from 5.0% in Cologne to 11.8% in Düsseldorf, and market participants expect vacancy levels to peak during 2026.

France

 

Leveraging our strong local platform to reduce vacancy in a challenging market

 

	30 June 2026	31 December 2025
Value of properties	£212.5m	£225.3m
Percentage of Group's property interests	14%	13%
Number of properties	15	15
Number of tenants	157	146
EPRA vacancy rate	7.7%	12.1%
Lettable space	62.9k sqm	63.6k sqm
Government and major corporates	57.0%	56.1%
Weighted average lease length to end	5.0 years	5.3 years
Leases subject to indexation	100.0%	100.0%

 

The value of the French portfolio decreased by £12.8 million, comprising a £8.2 million valuation decline 3.7% in local currency); a foreign exchange loss of £2.6 million and a disposal of £2.6 million, partly offset by capex of £0.6 million. The valuation decline was driven by yields expanding by 16 bps, reflecting prevailing office investment market conditions in Paris and Lyon.

 

Vacancy reduced to 7.7% from 12.1% at 31 December 2025, benefiting from strong leasing activity during the first half of 2026. During the period, we signed 14 new leases and three lease renewals, securing £1.1 million of annualised rent. While rents were agreed at an average of 9.7% below December 2025 ERVs, the reduction in void costs is expected to provide an earnings benefit equivalent to approximately 45% of the rent secured.

 

We achieved letting success across both of our French markets, including new leases to IT companies for 610 sqm at Front de Parc, Lyon, and 530 sqm at Inside, Paris. In addition, existing tenant Estreem extended its lease at Rhône Alpes, Lyon, doubling its occupied area from 530 sqm to 1,050 sqm. These transactions demonstrate our ability to maintain leasing momentum using our local market expertise and well-established tenant relationships.

 

In May, we completed the sale of one floor comprising 1,070 sqm at Rhône Alpes, Lyon to the co-owner at a premium to the pre-sale valuation.

 

We continue to invest selectively in projects that improve lettability and enhance tenant amenities. We are on track to meet the Décret Tertiaire 2030 target of reducing energy consumption by 40% for each property in the French portfolio.

 

French economic growth is expected to remain modest during the second half of 2026, with GDP forecast to increase by approximately 0.8% for the year.

 

Commercial real estate investment volumes totalled c.€6.6 billion during the first half of 2026, an increase of 14% compared with the prior year period. Activity was concentrated in the second quarter, which accounted for c.€4.6 billion of transaction volume. Nearly half of all H1 2026 transactions occurred in the Paris market.

 

Office take-up in the Greater Paris region totalled 750,000 sqm in the first half of 2026, which was flat compared to the corresponding period in 2025. Immediate office supply increased to 6.5 million sqm, resulting in a vacancy rate of 11.8% at 30 June 2026.

 

Despite a challenging economic environment, vacancy across the French portfolio has improved and rent collection remains strong. The portfolio remains well positioned over the longer term, supported by its concentration in France's two largest cities, Paris and Lyon.

 

 

Key data

 

Valuation data

 

	Market value of property	Underlying	EPRA net initial yield	EPRA 'topped-up' net initial yield	Equivalent yield
	(£m)	(%)	(%)	(%)	(%)
UK	591.6	(7.2)	6.0%	6.8%	8.0%
Germany	723.5	(2.5)	4.4%	5.0%	5.4%
France	210.9	(3.7)	5.1%	5.8%	6.4%
Total office portfolio	1,526.0	(4.6)	5.1%	5.8%	6.4%

 

Rental data

 

	Lettable space sqm	Contracted rent at 30 June 2026	ERV of lettable space at 30 June 2026	Contracted rent subject to indexation	EPRA vacancy rate at 30 June 2026
	('000)	(£m)	(£m)	(%)	(%)
UK	144.7	46.1	53.1	31.4	17.7
Germany	304.3	41.0	42.8	73.6	12.5
France	62.9	13.3	14.0	100.0	7.7
Total office portfolio	512.4	100.4	109.9	57.8	14.5

 

Lease data

 

	Average lease length		Contracted rent of leases expiring in:				ERV of leases expiring in:
	To break	To expiry	Year 1	Year 2	3 to 5 years	After 5 years	Year 1	Year 2	3 to 5 years	After 5 years
	(years)	(years)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)
UK	2.3	3.5	17.2	5.9	11.6	11.4	14.4	5.5	12.5	11.3
Germany	5.8	6.0	4.0	8.8	12.7	15.5	4.0	7.7	11.7	14.0
France	2.3	5.0	1.2	1.8	3.2	7.1	1.1	1.8	3.0	7.0
Total office portfolio	3.7	4.7	22.4	16.5	27.4	28.3	19.5	15.0	27.2	32.3

Note: The above tables comprise data for our offices in investment properties and properties held for sale (see note 9 and 11). They exclude owner-occupied space, student accommodation and hotel.

 

Tenant sector by Contracted Rent % Government 29.3 Commercial & Professional Services 12.5 Information Technology 10.1 Consumer Services 8.0 Consumer Discretionary 7.4 Industrials 7.0 Other 6.5 Health Care 6.5 Financials 5.2 Consumer Staples 4.1 Real Estate 3.4

 

Our investor proposition

 

Strong and consistent long-term shareholder returns

 

Set out below are the key tenets of our investment proposition. A fuller description can be found on the inside front cover and page 2-3 of CLS' 2025 Annual Report and Accounts:

 

A clear strategy	Active management
·      Diversified approach ·      Focus on multi-let offices ·      Selected development schemes	·      Experienced in-house capabilities ·      Secure rents and high occupancy ·      Interest rate management

 

Strong track record	A focus on sustainability
·      Disciplined approach to investment ·      Cash-backed progressive dividend	·      Responsible profit ·      Strong ESG performance ·      Climate risk mitigation

 

DIVIDEND POLICY

 

The Company expects to generate sufficient cash flow to be able to meet the growth requirements of the business, maintain an appropriate level of debt and provide cash returns to shareholders via a dividend.

 

As announced with our 2024 Full-year results in April 2025, we updated our dividend policy. The Company will maintain a progressive dividend policy, with a dividend cover of 1.5 to 3.0 times EPRA earnings (previously 1.2 to 1.6 times).

 

ANALYST COVERAGE

 

We are covered by three brokers which publish regular analyst research: Panmure Liberum; Berenberg and Peel Hunt. Contact details can be found on our website www.clsholdings.com.

 

2026 INVESTOR ENGAGEMENT

 

Events which have taken place	Events which are due to take place
March 2026 Annual Results presentation Annual Results investor calls and meetings   May 2026 Annual General Meeting   August 2026 Trading Update	August 2026 Half-Year Results presentation   August/September 2026 Half-Year Results investor calls and meetings   November 2026 Trading Update

 

 

Financial review

 

RESULTS FOR THE PERIOD

 

SUMMARY

 

EPRA net tangible assets (NTA) per share fell by 11.5% to 177.7 pence (31 December 2025: 200.7 pence) and basic net assets per share by 11.9% to 164.2 pence (31 December 2025: 186.4 pence), primarily reflecting the 4.6% like-for-like decline in the valuation of our portfolio.

 

EPRA earnings per share (EPS) were 2.7 pence (H1 2025: 4.0 pence) whilst the IFRS loss after tax of £69.6 million (H1 2025: £24.4 million loss) generated basic earnings per share of -17.5 pence (H1 2025: -6.1 pence).

 

The Total Accounting Return per share (the reduction in EPRA NTA plus the dividends paid in the period) was -9.5%
(31 December 2025: -4.8%).

 

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 4 gives a full description and reconciliation of our APMs.

 

INCOME STATEMENT

 

EPRA profit after tax for the six months ended 30 June 2026 was lower than the same period last year at £10.9 million (H1 2025: £16.1 million), reflecting the impact of £201.2 million of disposals since the start of 2025, partially offset by lower expenses.

 

Net rental income in H1 2026 of £46.3 million fell by 13.1% (H1 2025: £53.3 million), reflecting the lost income from disposals, including Spring Mews Student in mid-2025, and tenant departures in 2025. Like-for-like net rental income fell 4.7% to £50.8 million due to lease expiries, the majority of which related to block expiries at New Printing House Square in June 2025 and German insolvencies in H2 2025. New leases, including renewals, and indexation added £2.1 million and £0.5 million respectively.

 

CLS' tenant relationships remain strong and the quality and diversity of our tenant base has continued to be reflected in our rent collection. As in previous years, we collected over 98% of rent in the first six months of the year.

 

Overall administration and property expenses, excluding amortisation of intangibles, decreased by £1.6 million to £15.7 million (H1 2025: £17.3 million). Administration costs were £0.7 million lower compared with 2025 reflecting actions taken to reduce our cost base. Property expenses were £0.9 million lower as a result of the disposal of Spring Mews Student in mid-2025, offset by increased vacant holding costs.

 

The valuation of CLS' properties declined by 4.6% on a like-for-like basis as a result of yield expansion in all our markets. The reduction in the value of investment properties was £84.2 million (H1 2025: £32.3 million reduction) with falls in the UK of 7.2%, Germany 2.5% and France 3.7% in local currencies.

 

Six properties were sold in H1 2026 for an aggregate consideration of £56.8 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 £0.5 million (H1 2025: £6.3 million loss). At period-end, we have classified £44.8 million (31 December 2025: £94.9 million) of assets as being held for sale, recognising that we expect to dispose of these assets in the second half of the year. This does not include Spring Gardens, the current headquarters of the National Crime Agency in Vauxhall, London as the sale is conditional on planning permission being obtained to redevelop the property from offices into residential space.

 

Net finance costs, excluding movement in derivatives, fell by 3.6% to £18.5 million (H1 2025: £19.2 million) primarily reflecting lower debt, from repayments made on execution of property sales.

 

A foreign exchange loss of £0.1 million was recognised in the income statement (H1 2025: £0.2 million gain).

 

The low tax expense primarily reflects our status as a UK REIT which means that we do not pay corporation tax on our property-related profits in our UK business.

 

 

The components of the EPRA earnings are as shown below:

		30 June 2026 £m	30 June 2025 £m
Revenue		64.3	71.9
Service charges and similar expenses		(18.0)	(18.6)
Net rental income		46.3	53.3
Administration expenses1		(7.8)	(8.5)
Other property expenses		(7.9)	(8.8)
Net finance costs1		(18.5)	(19.2)
Foreign exchange (loss)/gain		(0.1)	0.2
Taxation expense1		(1.1)	(0.9)
EPRA earnings		10.9	16.1
EPRA earnings per share		2.7p	4.0p

1   Balances include EPRA adjustments; the reconciliation to the IFRS figures can be found in note 4.

 

EPRA NET TANGIBLE ASSETS AND GEARING

 

At 30 June 2026, EPRA net tangible assets (NTA) per share were 177.7 pence (31 December 2025: 200.7 pence), a fall of 11.5%. The main reasons for the decrease were property valuation decreases of 4.6% in local currency (20.7 pence per share), cash and scrip dividends paid in the period of 2.3 and 1.7 pence per share respectively, a loss on disposal of investment properties of 0.3 pence per share and a loss of 0.7 pence per share from FX and Other EPRA adjustments. These were partly offset by EPRA earnings of 2.7 pence per share.

 

The decline in the value of our property portfolio was only partly offset by the reduced level of debt in the business, resulting in a higher balance sheet loan-to-value ratio at 30 June 2026 to 51.6% (31 December 2025: 50.0%). We retain our intention to reduce LTV to between 35% and 45% in the medium-term through disposals and value-enhancing investment. We believe that this LTV range is more appropriate for the business.

 

 

CASH FLOW AND NET DEBT

 

		30 June 2026	31 December 2025
Borrowings (£m)		843.6	901.9
Cash and cash equivalents (£m)		(35.3)	(49.4)
Net debt (£m)		808.3	852.5
EBITDA (£m)		30.9	68.5
Net debt:EBITDA ratio (times)		12.2	12.4
Balance sheet loan-to-value ratio (%)		51.6	50.0
Weighted average cost of debt (%)		3.9	3.8
Interest cover (times)		1.6	1.8
Weighted average unexpired debt (years)		3.2	3.6

 

As at 30 June 2026, the Group's cash and cash equivalents balance (including restricted cash - see note 12) was £35.3 million (31 December 2025: £49.4 million). Available undrawn facilities totalled £27.1 million (31 December 2025: £28.0 million), with a further £17 million unsecured overdraft and uncommitted facilities (31 December 2025: £10 million unsecured overdraft facility) which was undrawn at 30 June 2026. Net cash flow from operating activities, after payment of £18.3 million for financing costs and tax, was £nil (H1 2025: £6.0 million net inflow) was lower primarily as a result of £7.1 million of tenant incentives, particularly in Germany where we are completing substantial fit outs in advance of long-term government leases. In the six months ended 30 June 2026, the Group has paid £7.3 million of the 2025 year-end cash dividend (net of withholding tax of £1.8 million which was paid in July).

 

Borrowings decreased by £58.3 million to £843.6 million (31 December 2025: £901.9 million) due to the net repayment of loans predominantly from the sale of The Brix in Essen. During the six months ended 30 June 2026, CLS obtained a new revolving credit facility of €57.0 million (£49.1 million at 30 June 2026). The new facility provides access to lower rate Euro denominated debt and has resulted in an increase in available funds compared to the £40.0 million previously available.

 

The weighted average cost of debt at 30 June 2026 increased marginally to 3.9% (31 December 2025: 3.8%), translating to group interest cover of 1.6 times (H1 2025: 1.9 times).

 

FINANCING STRATEGY AND COVENANTS

 

The Group's financing strategy is based substantially on raising secured debt against its properties, whether individually or in multi-property facilities. At Group level, we have a target balance sheet LTV ratio of between 35% and 45%. At 30 June 2026, LTV was 51.6%, a level which we are working to reduce through disposals and investment to enhance the value of our properties.

 

Most of our properties have debt secured against them. Properties not subject to secured debt at 30 June 2026 totalled £47.2 million (31 December 2025: £64.4 million).

 

At the start of 2026, the Group had £199.3 million of debt (including £11.8 million of amortisation) across nine loan facilities expiring in 2026. As at 30 June 2026 57% of 2026 maturities had been refinanced, extended or repaid. We have received credit approval or agreed terms for a further 32% and we are in discussions on the remaining 11%. Our average debt maturity decreased to 3.2 years (31 December 2025: 3.6 years) partly as a result of long-term debt being repaid on the sale of The Brix.

 

CLS' objective remains to keep a high proportion of fixed rate debt but to retain some floating rate debt to provide flexibility to allow early repayments expected from planned disposals without incurring break costs typically associated with fixed rate loans.

 

At 30 June 2026, 72% of the Group's borrowings were at fixed rates or subject to interest rate swaps, 3% were subject to caps which had been hit and 25% of loans were unhedged.

 

At 30 June 2026, the Group had 36 loans (26 through SPVs, eight portfolios and two credit facilities) from 25 different lenders. The loans vary in terms of the number and nature of their covenants, although the three most common relate to LTV ratio, interest cover and debt service cover.

 

On average, across the 36 loans, CLS has between 20% and 31% headroom against these three most common covenants. In the event of an actual or forecast covenant breach, all of the loans have equity cure mechanisms to repair the breach, which allow CLS to either repay part of the loan, substitute property or deposit cash, for the period the loan is in breach after which the cash can be released.

 

PRINCIPAL RISKS AND UNCERTAINTIES

 

A detailed explanation of the principal risks and uncertainties affecting the Group, and the steps it takes to mitigate these risks, can be found on pages 53 to 60 of the annual report and financial statements for the year ended 31 December 2025, which is available at www.clsholdings.com/investors.

 

The Group's principal risks and uncertainties are grouped into six categories: property; sustainability; business interruption; financing; political and economic; and people. These risks and uncertainties are expected to remain relevant for the remaining six months of the financial year, and these are discussed further below.

 

The Board has reviewed the risk status of each of the six risk categories, particularly with regard to the ongoing economic and geopolitical risks including: rising interest rates; global political uncertainty; changing trade relations; and conflicts in Ukraine and the Middle East. The overall risk landscape remains heightened although not yet sufficient to alter any of the risk ratings. Both property and financing risks remain as high risks and we continue to monitor vigilantly the risks focused around; vacancy; disposals and loan to value; and refinancings, as well as the accompanying mitigations.

 

Work continues on testing material controls in advance of the Board's declaration of the effectiveness of these as at 31 December 2026 as prescribed by the Corporate Governance Code.

 

Principal risk	Status at year-end	Change since year-end	Commentary
Property	High	No change	The office market continues to be bifurcated. The occupational market remains healthy with tenants seeking out, and paying more for, higher quality offices. CLS is responding by investing in its properties to provide the best offices in our locations as well as divesting properties that no longer align with our long-term strategy. However, the investment market remains sluggish given higher interest rates, valuation uncertainty and lingering concerns about future office demand. In addition, we continue to monitor changes in the regulatory environment, particularly in relation to the Building Safety Act 2022 which may impact the permitted uses and viability of future schemes.
Sustainability	Low	No change	CLS believes that providing sustainable buildings not only accords with regulatory demands but also meets changing office trends. We remain committed to our Sustainability (and wider ESG) Strategy but will keep under review the proposed timing and targets for our Net Zero Carbon Pathway.
Business interruption	Low	No change	CLS has continued to invest in cyber security through improved device management and continued migration of our remaining on-premise infrastructure to the cloud. We are in the process of sourcing a managed security operations centre provider to help accelerate security improvements and manage incidents effectively.
Financing	High	No change	Financing risk remains high as inflation and interest rates have not reduced, nor are they expected to reduce in the near term. This is reflected in higher interest costs for CLS with some increases in bank margins and lower LTV ratios. Through ongoing selected disposals CLS has made progress towards reducing Group LTV. CLS maintains banking relationships, monitors covenants and engages early with upcoming refinancings. CLS has made significant progress in relation to debt expiring in 2026 to date with the majority either refinanced, credit approved or repaid as planned.
Political and economic	Medium	No change	As noted, economic conditions remain challenging with higher interest costs and property valuation declines, and slower growth. These have been mitigated through CLS' high levels of inflation-indexed rent and higher replacement values for existing buildings. Geopolitical risks remain heightened but CLS' diversified business model in Europe's three largest economies provides mitigation.
People	Medium	No change	To mitigate people risk, the Group rolled out a new staff survey platform which provides continuous real-time feedback in relation to employee-related matters. The platform's data-driven insights assist line-managers with identifying potential issues such that correcting actions can be taken in a timely manner.

 

GOING CONCERN

 

The Directors' assessment of going concern uses the same methodology as for the preparation and validation of the year-end going concern (and viability) statement(s) (see pages 61 to 63 of the 2025 Annual Report and Accounts). This assessment uses forecasts that have been adjusted for the impacts of the current economic, property and financing markets. A more detailed description of the approach is set out in note 2 to these condensed Group financial statements.

 

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, and the progress made since 31 December 2025 in terms of refinancing, 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. 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 were unable to continue as a going concern.

 

RESPONSIBILITY STATEMENT

 

We confirm that to the best of our knowledge:

a)   the condensed set of financial statements, which has been prepared in accordance with IAS 34 'Interim Financial Reporting' as contained in UK adopted financial standards, gives a true and fair view of the assets, liabilities, financial position and profit of the Group, as required by DTR 4.2.4R;

b)   the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the financial year); and

c)   the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

 

On behalf of the Board

 

 

Fredrik Widlund                       Patrick Symons

Chief Executive Officer              Chief Financial Officer

11 August 2026

 

 

Group financial statements

 

Condensed Group income statement

for the six months ended 30 June 2026

 

		Six months ended	Six months ended	Year ended
		30 June 2026	30 June 2025	31 December 2025
		£m	£m	£m
Notes		(unaudited)	(unaudited)	(audited)
Revenue	3	64.3	71.9	139.7
Service charges and similar expenses	3	(18.0)	(18.6)	(38.4)
Net rental income		46.3	53.3	101.3
Administration expenses		(8.0)	(8.7)	(16.4)
Other property expenses		(7.9)	(8.8)	(17.3)
Non-recurring items¹		-	(1.3)	(1.7)
Operating profit before revaluation and disposals		30.4	34.5	65.9
Net revaluation movements on investment property	9, 11	(84.2)	(32.3)	(79.2)
Net revaluation movements on equity investments		(0.1)	0.3	0.1
Loss on sale of investment property		(0.5)	(6.3)	(10.9)
Gain on sale of equity investments		0.1	-	-
Operating loss		(54.3)	(3.8)	(24.1)
Finance income	5	0.3	0.7	1.1
Finance costs	6	(18.4)	(21.4)	(39.1)
Foreign exchange (loss) / gain		(0.1)	0.2	0.2
Loss before tax		(72.5)	(24.3)	(61.9)
Taxation	7	2.9	(0.1)	11.6
Loss for the period attributable to equity shareholders		(69.6)	(24.4)	(50.3)
Basic and diluted earnings per share	15	(17.5)p	(6.1)p	(12.6)p

 

¹ In 2025, we conducted a review of staffing and financial structuring. This resulted in non-recurring costs including redundancy costs being incurred.

 

Condensed Group statement of comprehensive income for the six months ended 30 June 2026

	Note	Six months ended 30 June 2026 £m (unaudited)	Six months ended 30 June 2025 £m (unaudited)	Year ended 31 December 2025 £m (audited)
Loss for the period		(69.6)	(24.4)	(50.3)
Other comprehensive income/(expense):
Items that may be reclassified to profit or loss
Revaluation of property, plant and equipment	10	0.8	-	(1.6)
Foreign exchange differences		(4.6)	16.3	25.2
Corporation tax on exchange differences		-	-	(0.5)
Deferred tax on revaluation of property, plant and equipment		(0.1)	-	0.7
Total items that may be reclassified to profit or loss		(3.9)	16.3	23.8
Total other comprehensive (expense)/income		(3.9)	16.3	23.8
Total comprehensive expense for the period attributable to equity shareholders		(73.5)	(8.1)	(26.5)

 

Condensed Group balance sheet at 30 June 2026

	Notes	30 June 2026 £m (unaudited)	30 June 2025 £m (unaudited)	31 December 2025 £m (audited)
Non-current assets
Investment properties	9	1,481.2	1,518.5	1,570.8
Property, plant and equipment	10	41.5	42.4	40.6
Intangible assets		2.6	2.7	2.6
Equity investments		0.7	0.9	0.8
Derivative financial instruments		0.2	0.6	0.5
		1,526.2	1,565.1	1,615.3
Current assets
Trade and other receivables		10.0	10.6	10.5
Current tax		-	-	0.5
Derivative financial instruments		-	0.1	0.1
Cash and cash equivalents	12	35.3	63.9	49.4
		45.3	74.6	60.5
Assets held for sale	11	44.8	187.0	94.9
Total assets		1,616.3	1,826.7	1,770.7
Current liabilities
Trade and other payables		(48.7)	(54.5)	(57.6)
Current tax		(1.0)	(0.8)	-
Borrowings	13	(174.1)	(298.0)	(198.0)
		(223.8)	(353.3)	(255.6)
Non-current liabilities
Deferred tax		(60.1)	(79.0)	(65.4)
Borrowings	13	(669.5)	(625.0)	(703.9)
Leasehold liabilities		(3.4)	(3.4)	(3.4)
Derivative financial instruments		(0.1)	(0.6)	(0.3)
		(733.1)	(708.0)	(773.0)
Total liabilities		(956.9)	(1,061.3)	(1,028.6)
Net assets		659.4	765.4	742.1
Equity
Share capital	14	11.1	11.0	11.0
Share premium		84.6	83.1	83.1
Other reserves		107.0	103.2	111.0
Retained earnings		456.7	568.1	537.0
Total equity		659.4	765.4	742.1

 

Condensed Group statement of changes in equity for the six months ended 30 June 2026

Unaudited	Share capital £m	Share premium £m	Other reserves £m	Retained earnings £m	Total £m
At 1 January 2026	11.0	83.1	111.0	537.0	742.1
Arising in the six months ended 30 June 2026:
Total comprehensive expense for the period	-	-	(3.9)	(69.6)	(73.5)
Share-based payments	-	-	(0.1)	-	(0.1)
Dividends to shareholders	-	-	-	(9.1)	(9.1)
Scrip dividend related share issue	0.1	1.5	-	(1.6)	-
Total changes arising in the period	0.1	1.5	(4.0)	(80.3)	(82.7)
At 30 June 2026	11.1	84.6	107.0	456.7	659.4
Unaudited	Share capital £m	Share premium £m	Other reserves £m	Retained earnings £m	Total £m
At 1 January 2025	11.0	83.1	86.9	603.2	784.2
Arising in the six months ended 30 June 2025:
Total comprehensive income/(expense) for the period	-	-	16.3	(24.4)	(8.1)
Dividends to shareholders	-	-	-	(10.7)	(10.7)
Total changes arising in the period	-	-	16.3	(35.1)	(18.8)
At 30 June 2025	11.0	83.1	103.2	568.1	765.4
Audited	Share capital £m	Share premium £m	Other reserves £m	Retained earnings £m	Total £m
At 1 January 2025	11.0	83.1	86.9	603.2	784.2
Arising in the year ended 31 December 2025:
Total comprehensive income/(expense) for the year	-	-	23.8	(50.3)	(26.5)
Share-based payments	-	-	0.3	-	0.3
Dividends to shareholders	-	-	-	(15.9)	(15.9)
Total changes arising in the year	-	-	24.1	(66.2)	(42.1)
At 31 December 2025	11.0	83.1	111.0	537.0	742.1

 

Condensed Group statement of cash flows for the six months ended 30 June 2026

	Notes	30 June 2026 £m (unaudited)	30 June 2025 £m (unaudited)	31 December 2025 £m (audited)
Cash flows from operating activities
Cash generated from operations	16	18.4	27.2	52.6
Interest received		0.3	0.7	1.1
Interest paid		(18.6)	(19.9)	(37.9)
Income tax paid on operating activities		(0.1)	(2.0)	(1.2)
Net cash inflow from operating activities		-	6.0	14.6
Cash flows from investing activities
Capital expenditure on investment properties		(10.3)	(11.2)	(17.3)
Proceeds from sale of properties		56.6	114.6	136.7
Income tax paid on sale of properties		-	-	(4.9)
Purchases of property, plant and equipment		(0.2)	-	(0.1)
Purchase of intangibles		(0.1)	-	(0.2)
Net cash inflow from investing activities		46.0	103.4	114.2
Cash flows from financing activities
Dividends paid		(7.3)	(9.7)	(15.9)
Cash received on settlement of derivative financial instrument		0.4	0.1	0.1
Purchase of derivative financial instrument		-	(0.4)	(0.3)
Proceeds from borrowings		62.3	36.6	61.2
Transaction costs related to borrowings		(1.5)	(0.5)	(1.5)
Repayment of borrowings		(113.5)	(132.8)	(186.5)
Net cash outflow from financing activities		(59.6)	(106.7)	(142.9)
Cash flow element of net (decrease) / increase in cash and cash equivalents		(13.6)	2.7	(14.1)
Foreign exchange (loss) / gain		(0.5)	0.7	3.0
Net (decrease) / increase in cash and cash equivalents		(14.1)	3.4	(11.1)
Cash and cash equivalents at the beginning of the period		49.4	60.5	60.5
Cash and cash equivalents at the end of the period		35.3	63.9	49.4

 

Notes to the condensed Group financial statements 30 June 2026

1 BASIS OF PREPARATION

 

The financial information contained in this half-yearly financial report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The results disclosed for the year ended 31 December 2025 are an abridged version of the full accounts for that year, which received an unqualified report from the Auditor, did not contain a statement under section 498(2) or (3) of the Companies Act 2006 but did draw attention to material uncertainty related to going concern without qualifying the Auditor's report, and have been filed with the Registrar of Companies. The annual financial statements of CLS Holdings plc are prepared in accordance with United Kingdom adopted International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs). The condensed financial statements included in this half-yearly financial report have been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the United Kingdom.

 

The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the latest audited annual financial statements. Amendments to IFRSs have become effective for the financial year beginning on 1 January 2026. These new amendments are listed below:

 

·    Amendments to IFRS 9 - Classification and Measurement of Financial Instruments

·    Amendments to IFRS 9 and IFRS 7 - Contracts Referencing Nature-dependent Electricity

 

The adoption of these new standards and amendments to IFRSs did not materially impact the condensed Group financial statements for the six months ended 30 June 2026 and are not expected to materially impact the full year financial statements for the 12 months ended 31 December 2026.

 

2 GOING CONCERN - BASIS OF PREPARATION

 

Background

CLS' strategy and business model include regular secured loan refinancings, and capital deployment and recycling through acquisitions, capital expenditure and disposals. For more than thirty years since CLS listed, the Group has successfully navigated several periods of economic uncertainty, including the recent macroeconomic stresses resulting from global conflict, the subsequent inflationary pressures and transition to a higher interest rate environment.

 

The Group continues to have very high levels of rent collection and low bad debts, and has a long-term track record in financing and refinancing debt including £113.6 million completed in the six months to 30 June 2026 and a further £63.8 million has been completed or well advanced subsequent to the half-year, whereby term sheets have been obtained or they have reached a first stage credit review.

 

The Directors note that the Group financial statements for the year ended 31 December 2025 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 30 September 2027 ("the going concern period"). The period chosen takes into consideration the maturity date of loans totalling £182.6 million that expire by September 2027. The going concern assessment uses the forecast approved by the Board at its May 2026 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 May 2026, the Directors conclude that there have been no significant changes since the forecast was approved.

 

Forecast cash flows - Base case

The forecast cash flows prepared for the Base case take account of the Group's principal risks and uncertainties and reflect the challenging economic backdrop. The forecast cashflows have been updated using assumptions regarding forecast forward interest curves, inflation and foreign exchange, and include revenue growth, principally from contractual increases in rent, and increasing cost levels in line with forecast inflation.

 

The Base case is focussed 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 £182.6 million with 11 lenders expiring within the going concern period will be refinanced or extended as expected (£133.4 million) or will be repaid (£49.2 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 six months to 30 June 2026 when £113.6 million was successfully repaid, refinanced or extended;
•	recent refinancings subsequent to 30 June 2026 that have reached an initial credit committee review stage by lenders, or where term sheets have been obtained, totalling £63.8 million of the £182.6 million noted above; and
•	other ongoing discussions with lenders.

 

 

The Base case includes property disposals in the going concern period in line with the Group's business model and the forecast cash flows approved by the Board in May 2026. 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 £56.8 million achieved in the six months to 30 June 2026). The value of the properties available for disposal is in excess of the value of the debt maturing during the going concern period.

 

The Group's financing arrangements, which utilise ring-fenced property loans, contain Loan to Value ('LTV'), Interest Cover Ratio ('ICR') and Debt Service Coverage Ratio ('DSCR') covenants. In the Base case, minimal cure payments have been forecast given that the Group expects to maintain its compliance with the covenant requirements.

 

The near-term impacts of climate change risks within the going concern period are expected to be immaterial following an assessment of potential significant inflation resulting from climate change, in the context of increased property and administrative costs, as part of the reverse stress testing performed by CLS. Furthermore, the forecast cash flows prepared for the Base case include all necessary capital expenditure to meet the minimum energy efficiency standards required in the countries where CLS operates.

 

Forecast cash flows - Severe but plausible case

A Severe but plausible case has been assessed which has been produced by flexing key assumptions further including: lower rents, increased service charges, higher property and administration expenses, falling property values and higher interest rates.

 

These flexed assumptions are more severe than CLS experienced during the 2007-2009 global financial crisis and other downturns such as that experienced in 2020-2022 during the Covid-19 pandemic. A key assumption in this scenario is a further reduction to the Base case in property values of 10% until September 2027, impacting forecast refinancings, sales and cash cures. This is in addition to the reduction experienced of 4.6% until half year and cumulative c.28% decline from 30 June 2022 to 30 June 2026.

 

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 £6.0 million being necessary for the Group to remain in compliance with its covenant requirements. The assumptions of lower rents and increased expenses would result in only a negligible increase in ICR and DSCR cure payments.

 

Due to the severity of the assumptions used in this scenario, which is Severe but plausible and therefore not remote, the liquidity of the Group is exhausted even after putting in place controllable mitigating actions as set out below.

 

Mitigating actions

In the Severe but plausible case, CLS is assumed to take mitigating actions including depositing cash to equity cure covenant shortfalls under the facilities, scaling back uncommitted capital expenditure (specifically where reductions do not affect tenant revenue streams over the going concern period) and reducing the dividend to the Property Income Distribution required under the UK REIT rules as well as drawing the available £37.1 million of its existing £87.0 million revolving credit, overdraft and uncommitted facilities. If needed, further disposals could be considered as there are no sale restrictions on CLS' £1.6 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 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.

 

3 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

 

The Group's results for the six months ended 30 June 2026 by operating segment were as follows:

	Investment properties
	United Kingdom £m	Germany £m	France £m	Other investments £m	Central administration £m		Total £m
Rental income	21.3	17.8	5.9	-	-		45.0
Other property-related income	1.8	0.1	-	2.7	-		4.6
Service charge income	7.0	5.5	2.2	-	-		14.7
Revenue	30.1	23.4	8.1	2.7	-		64.3
Service charges and similar expenses	(8.4)	(6.9)	(2.7)	-	-		(18.0)
Net rental income	21.7	16.5	5.4	2.7	-		46.3
Administration expenses	(3.7)	(1.5)	(0.7)	-	(2.1)		(8.0)
Other property expenses	(3.9)	(2.0)	(0.3)	(1.7)	-		(7.9)
Operating profit before revaluation and disposals	14.1	13.0	4.4	1.0	(2.1)		30.4
Net revaluation movements on investment property	(51.0)	(24.8)	(8.4)	-	-		(84.2)
Net revaluation movements on equity investments	-	-	-	(0.1)	-		(0.1)
Loss on sale of investment property	(0.1)	(0.4)	-	-	-		(0.5)
Gain on sale of equity instruments	-	-	-	0.1	-		0.1
Segment operating (loss)/profit	(37.0)	(12.2)	(4.0)	1.0	(2.1)		(54.3)
Finance income	0.2	-	-	0.1	-		0.3
Finance costs	(7.5)	(6.6)	(2.4)	-	(1.9)		(18.4)
Foreign exchange loss	-	-	-	(0.1)	-		(0.1)
Segment (loss)/profit before tax	(44.3)	(18.8)	(6.4)	1.0	(4.0)		(72.5)