Corporate credibility took centre stage in health and property-adjacent small caps, with CLS Holdings confirming a sharp earnings downgrade already flagged to the market, while Eco Animal Health moved to bolster its livestock vaccines pipeline through a licensing deal with a French biotech.
CLS Holdings cuts guidance as valuations slide
CLS Holdings plc, a commercial landlord with a £1.6 billion office portfolio spanning the UK, Germany and France, lowered its full-year earnings guidance alongside half-year results that showed widening losses across the business. The update follows a trading warning issued on 4 August and confirms that the pressures flagged then have fed through into the numbers, with lower rental income from asset sales and tenant departures outweighing savings on administration and finance costs.
EPRA earnings per share fell 32.5% to 2.7p in the six months to 30 June, down from 4.0p a year earlier, while the statutory loss after tax widened to £69.6 million from £24.4 million, driven by an £84.2 million decline in investment property valuations. Portfolio values fell 4.6% in local currency terms, with the UK down 7.2%, Germany down 2.5% and France down 3.7%, as property yields expanded 27 basis points and estimated rental values slipped 1.8%. EPRA net tangible assets per share dropped 11.5% to 177.7p, compounded by sterling's 1.2% strengthening against the euro, while net rental income fell 13.1% to £46.3 million on lease expiries including departures at New Printing House Square. The loan-to-value ratio climbed to 51.6% from 50.0% at the end of 2025, as falling asset values outpaced debt reduction, even as CLS pressed ahead with £75.7 million of completed or exchanged disposals this year and a further £22.5 million under offer, against a full-year target of around £100 million.
"The first half reflects the earnings and valuation pressures we set out in our recent trading update on 4 August," said Fredrik Widlund, chief executive of CLS Holdings.
Deferring the interim dividend decision to full-year results signals that deleveraging now outranks shareholder distributions in management's priorities, a stance underscored by the rising loan-to-value ratio despite active disposals. With guidance now reset to a lower earnings base and portfolio values still falling across all three geographies, the disposal programme has shifted from opportunistic to essential, the pace and pricing of asset sales through the second half will determine whether CLS can arrest the leverage creep before it becomes a balance-sheet problem rather than an earnings one.
Eco Animal Health licenses sheep toxoplasmosis vaccine
Eco Animal Health Group (AIM:EAH), which develops and markets branded veterinary products for livestock productivity and welfare, has signed a perpetual exclusive licence with French biotech Vaxinano SAS for a vaccine candidate targeting toxoplasmosis in sheep, with shares rising 5.67% to 102.5p. The agreement covers all major sheep-rearing markets globally and applies to patent-protected technology, giving Eco a foothold against a parasite-driven disease that causes abortion, stillbirth and weak lambs, with significant economic costs for producers.
Under the terms, Eco will pay Vaxinano a modest upfront licence fee alongside a future development milestone payment and royalties on commercial sales, with the entire commitment funded from operating cash flow within the current year's research and development budget. Management is betting on the candidate's advanced development stage and the company's established commercial and distribution infrastructure to accelerate its path to market. "This agreement with Vaxinano is an exciting step forward for ECO, strengthening our position in livestock vaccines, complementing our new and growing vaccines franchise," said David Hallas, chief executive of Eco Animal Health.
The deal extends Eco's diversification beyond its legacy antibiotic-led product base into higher-margin vaccine territory, an area the company has flagged as a growth priority. Structuring the payments around milestones and royalties rather than a large upfront outlay keeps balance-sheet risk contained while giving Eco optionality on a candidate that, if it clears remaining development hurdles, could open a global revenue stream in a market with no fully established incumbent solution.
