CLS profit nearly halves

Property investment company CLS said annual pre-tax profit nearly halved after adverse changes in the value of long term interest rate swaps and a lower increase in the value of investment properties than in 2010.

The group, which has a portfolio of £0.9bn properties in London, France, Germany and Sweden, said pre-tax profit slumped to £37.7m for the year ended 31 December 2011 from £70.9m the same time a year earlier.

Profit after tax fell to £38.8m from £60.1m while revenue rose to £80.1m from £79.1m before.

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EPRA net assets per share rose 3% to 983.1p after it was adversely affected by the decision to take a one-off cost of closing the long-term interest rate swap.

EPRA earnings per share, excluding revaluation movements, rose to 64.9p from 42.5p, as restated.

"Interest rate swap termination provides flexibility and likely to produce cost saving of over £10.7m over three years and break even after seven years," CLS explained.

Rental income rose to £66.2m from £62.1m previously, with like-for-like income up 2.6%.

Chairman Sten Mortstedt said while the group is solidly placed, with a strong balance sheet, a very healthy cash flow, and a high level of liquid resources for investment, its progress have inevitably been hurt by difficulties at the broader macroeconomic level, in particular with the eurozone during the second half of the year.

"For economies to grow, businesses and investors need to have confidence to invest and a reasonable supply of credit. Politicians must deliver the basic platform for this to occur, which, in the current climate, means a credible solution to the eurozone crisis. Until this happens, there will continue to be significant uncertainty and risk in the system," the group said.