RNS Number:4192E
MWB Business Exchange Plc
25 September 2007
FOR IMMEDIATE RELEASE
25th September 2007
MWB BUSINESS EXCHANGE PLC:
INTERIM RESULTS FOR SIX MONTHS TO 30TH JUNE 2007
MWB Business Exchange Plc is the UK's second largest provider of flexible office
space and meeting rooms. The organisation currently operates a total of 58
centres focused on Central London and key regional business centres.
HIGHLIGHTS
==========
* Revenue grew 22% to #47.9m over the comparable six month period to
30th June 2006
* EBITDA rose strongly by 42% to #6.2m compared to the six months to 30th
June 2006
* Pre tax profits increased 10% to #4.4m compared to the six months to
30th June 2006
* Annualised Revenue Per Available Workstation (REVPAW) advanced 19% to
#8,600 at 30th June 2007 from #7,250 at 30th June 2006
* Annualised Revenue Per Occupied Workstation (REVPOW) up 9% to #9,800 at
30th June 2007 compared to #8,960 at 30th June 2006
* Meeting and conference room division up by more than 50% to #5.1m over
the comparable six month period to 30th June 2006
* Occupancy increased to 88% at 30th June 2007, up from 81% at 30th June
2006
* Robust contracted income accounting for over 60% of current 12 month
projections
* New Business Exchange centre successfully opened at Baker Street - over
90% occupancy achieved within 5 months
* Six additional centres to be launched by year end
* In the 12 weeks since 30th June 2007, MWB Business Exchange has
generated unaudited EBITDA of approximately #3.8m before the positive impact
of newly opened centres
"This is an exciting time for the business as we continue to go from strength
to strength, exceeding expectations around our key performance indicators and
profitability. We have the right business model in place to continue growing
and to deliver enhanced shareholder value." Richard Balfour-Lynn, Chairman, MWB
Business Exchange Plc.
Contact:
MWB Business Exchange Plc Tel: 020 7706 2121
Richard Balfour-Lynn, Chairman
John Spencer, Chief Executive
Keval Pankhania, Finance Director
Baron Phillips Associates Tel: 020 7920 3161
Baron Phillips
KBC Peel Hunt Ltd Tel: 020 7418 8900
Capel Irwin
Nicholas Marren
CHAIRMAN'S STATEMENT
====================
This has been another period of excellent growth for the business with advances
in all our key areas of performance.
Over the six months under review we have continued to develop the business in
line with our stated strategy of generating attractive returns from sustainable
income streams resulting in a dramatic increase in EBITDA. We have continued to
concentrate on fulfilling our defined growth plan by taking occupational leases
in the London market whilst expanding in targeted regional cities through
operating and management agreements (OMAs).
During the period since flotation in December 2005, we have either opened or are
in the process of opening 15 new centres, of which seven are London leases, four
are London OMAs, one is a regional lease and three are regional OMAs. Typically
our new centres are un-branded and have been designed with a more contemporary
feel to maximise appeal to our clients. We also closed eight underperforming
centres to improve our overall business model and improve returns to
shareholders. As a result of this activity, we now have 58 centres at the date
of this statement, half of which are in London. We have been rigorous in the
management of mature centres, with particular emphasis placed on margin
improvement; enhancing EBITDA through improved yield management; growing
existing as well as new income; and continuing to mitigate risk.
Our meeting venues offering has continued to perform strongly over the last six
months with revenues across our 250 meeting rooms increasing by more than 50%
over the same period last year. This increase is a result of continued targeted
marketing and higher client retention. The outlook on growth in this area
remains strong.
The Company has made significant progress in a number of key areas as we
continue to develop and improve the MWB Business Exchange offer to meet the
requirements of our increasingly expanding and diverse client base.
Our dedicated acquisition and launch teams are highly experienced in finding new
locations as well as project managing the design and fit out processes. The
group has a proven track record of acquiring and developing commercial
properties into operational business centres and typically we can make the
process of conversion of an acquired location to a business centre in as little
as three months. This enables pre-sales and marketing activity to begin as soon
as the acquisition of the relevant centre has been completed and the key
objectives can be delivered by our teams.
A particular strength is our ability to ensure sales and marketing activity is
focussed on generating committed occupancy before new centres become
operational. This is illustrated by the fact that on average, our new locations
are achieving occupancy levels in excess of 85% within five months of opening,
which is comparable to occupancy levels for mature centres which are already
well established.
There is little doubt that the impact of our strategy of concentrating on key
business markets and locations, which has also improved our brand awareness, is
a major factor in the upsurge in demand and interest in our products and
services. Over the past six months we have expanded our Central London portfolio
significantly with new centres reaching maturity in the West End - Baker Street,
Tottenham Court Road and Cavendish Square - and in the City - Cannon Street,
London Bridge and London Wall.
This expansion is further supported by new centres which are expected to come on
stream during the course of the current six months to the end of December 2007,
including Liverpool Street, Basinghall Street, Threadneedle Street and Finch
Lane in the City, while Basil Street (the former Basil Street hotel) in
Knightsbridge will become a fully operational business centre in the Summer of
2008. Currently we have a total of 58 centres open, or set to open within the
next few months, providing more than 15,500 workstations and 250 meeting rooms,
compared to approximately 14,000 workstations and 200 meeting rooms at December
2006.
Growth has been focused around the London market where 11 centres have been
opened since flotation in December 2005, seven of which were new leases. The
demand for space in London has been and continues to be strong while available
office accommodation is becoming scarce. London's position as the financial
capital of the world and the run up to the 2012 Olympics leads us to believe
that demand will remain very strong looking forward. Office rents in London are
continuing to increase with record levels being achieved in the West End,
particularly in Mayfair and St James's. Rents in the City are likewise
increasing and this is having a positive effect on the workstation rates we
are achieving.
OMAs have shown particularly strong growth. Over the last six months, we have
taken on or are in the process of acquiring five OMAs taking our total to 18. Of
the five new centres, three are in London, one is in Newcastle and one is in the
heart of Manchester's vibrant business district.
A key aspect of our OMA growth is that they help expand the portfolio without
exposing the Company to substantial capital expenditure or to long term lease
liabilities, while still generating significant management fees and share of
profits for the Company.
This is an increasingly powerful aspect of our business as it enables us to work
closely with property owners to generate income quickly from their vacant space
which may be surplus to the owner/occupier's current needs.
Typically these OMAs run for up to 10 years but the length of the contract can
be tailored to the individual landlord's or tenant's requirements. We will
continue to pursue OMAs, especially outside London, as they generate attractive
returns for relatively low risk.
OMAs are also a stepping stone to exploring other growth opportunities with
landlords, for example back-to-back leases, turnkey solutions, fit-out services
and facilities management, thereby generating further valuable returns for both
parties.
The financial results for the six months to 30th June 2007 show a significant
improvement over the comparable period to 30th June 2006. Total revenue advanced
by 22% to #47.9m compared to #39.3m for the six month period to 30th June 2006.
This has produced a healthy increase in EBITDA, which rose 42% to #6.2m over the
six month period to 30th June 2007, compared with #4.4m during the six months to
30th June 2006. Pre tax profits for the six months to 30th June 2007 grew to
#4.4m, a 10% increase from #4.0m over the comparable period. The differential
between growth in EBITDA and growth in pre tax profits is a result of higher
depreciation in this half, emanating from the significant investment made in new
centres and in our existing buildings. As these new centres mature during the
second half of 2007, the results will demonstrate the truer benefit of this
capital investment which we expect will be demonstrated in further growth in
EBITDA and pre tax profits compared to these first six months.
The strength of our financial performance in the six months to 30th June 2007 is
reflected in our key performance indicators. Revenue per available workstation
rose by 19% to #8,600 at 30th June 2007 compared to 30th June 2006 and revenue
per occupied workstation grew by 9% to #9,800 over the same period. Occupancy
has increased from 81% to 88% at period end 30th June 2007 compared to period
end 30th June 2006.
We remain financially strong with no finance leases or bank loans, allied with
rapid conversion of EBITDA into cashflow. This results in the business being
highly cash generative with the ability to expand organically from its own
resources. Strong operational cashflow remains a prime focus for the business.
As I have mentioned, market conditions remain strong for our distinctive
unbranded flexible proposition. Leads have increased by 14% over the previous 6
months and by 17% over the same time last year. In addition, we have secured 33%
more workstation sales over the last 6 months, compared to the period ended 30th
June 2006. Pricing has continued to increase and we have achieved a 5% uplift in
the year to date.
Our clients initially contract with us for 8 months on average, with over 70%
renewing at least once leading to an average stay of almost 2 years. Our strong
contracted income equates to over 60% of our current 12 month projections. When
taking account of client renewals, this level of committed income increases to
over 85%, demonstrating the stability of our business.
Currently we have in excess of 1,500 clients contracted with the average client
using eight workstations at the point of sale. Our client base is predominately
small and medium enterprises (SMEs) that are attracted to the contemporary,
bright and non-branded interiors of our properties which are typically based in
prime locations.
Even though our centres are largely unbranded, we have a powerful corporate
brand reinforced by highly motivated and committed centre teams, who are at the
forefront of the business. These client facing employees are trained rigorously
through our 'We're the Business' programme to support the needs of our clients
so that they can focus on what they do best - their business. Our mission is to
give our clients and employees the freedom to excel; we continue to experience
feedback from our clients stating they are very satisfied with the service we
provide and our employee engagement statistics remain exceptionally high.
We have an ongoing objective in our recruitment and talent development policy
which is to attract and retain the very best employees. This means we have a
dynamic and dedicated employee base led by our Talent Development Director. The
well established management team's ongoing pledge to improving the client
experience is supported by the role of the Client Service Director who is
responsible for the delivery of this strategy.
As a result of our scalable business model, we become business incubators for
many of our clients. This is supported by the fact that 30% of new workstation
sales each month derive from expansion of existing clients. The rest of the
portfolio is taken by companies who require outsourced space for specific
projects, temporary relocation or overflow offices. It is noticeable that a
growing number of corporates are planning to use flexible office space on an
ongoing basis or as part of their property strategy. Given the changing view
taken by businesses away from long-term leases, serviced offices are an
increasingly attractive property solution.
Investment in the general maintenance and upkeep of our business centres remains
important in addition to the ongoing development and provision of our IT and
Telecoms infrastructure. It is important to our clients that they have access to
the latest technology alongside new products and services and the management
team places significant emphasis on this. In both of these areas, we feel it is
important to keep looking to the future, adapting to the changing needs of our
clients and keeping abreast of advances in products and service delivery.
Our strategy of focussing on SMEs continues to ensure a low level of risk in our
business. Less than 18% of our available space is taken by clients who occupy
more than 15% of any building and no client has more than 2% of our total
portfolio of workstations, in line with our previously highlighted strategy. In
order to manage our business in these instances, we have phased exit
arrangements in the contracts of our larger clients. Across the portfolio, this
strategy enables us to develop a pipeline of prospective clients in order to
immediately fill space once the first phase of departure occurs. This is
important as it reduces the business' vulnerability to large move-outs.
Equally important is the fact that no industry dominates our client base. Our
sector diversification includes IT and Telecoms at 13% of workstations, followed
by Real Estate at 9%, Banking and Finance at 8% and Recruitment at 7%. This
ensures that we are not over-exposed to any sector downturn or client move,
which lies at the heart of our commitment to build sustainable income and
enhanced profit generation.
The recent corrections in the financial markets are not expected to affect our
2007 full year results. In the 12 weeks since 30th June 2007, MWB Business
Exchange generated unaudited EBITDA of approximately #3.8m before the impact of
newly opened centres. Given our strong contracted income, current levels of
business activity and new centres which are expected to open by December 2007,
the Board of MWB Business Exchange looks forward to 2008 with increasing
confidence.
The Company is also reviewing a number of further growth opportunities, both
acquisitive and organic, in line with our stated strategy. This is an exciting
time for the business as we continue to go from strength to strength, exceeding
expectations around our key performance indicators and profitability. We have
the right business model in place to continue growing and to deliver enhanced
shareholder value.
Richard Balfour-Lynn
Chairman
MWB Business Exchange Plc
25th September 2007
KEY FINANCIAL HIGHLIGHTS
========================
The key performance indicators together with the trading performance and balance
sheets for the six months ended 30th June 2007 and comparative periods, are
summarised below:-
Six months Six months Year
ended ended ended
30th June 30th June 31st December
2007 2006 2006
Operating statistics
--------------------
Revenue #'000 47,910 39,285 82,305
Occupancy at period end % 88 81 78
Revenue per available work station # 8,600 7,250 6,870
per month at period end (REVPAW)
Revenue per occupied workstation # 9,800 8,960 8,830
per month at period end (REVPOW)
EBITDA #'000 6,231 4,394 8,767
Number of operating centres at 40 34 39
period end
Number of operating and
management agreements at period
end 15 16 16
===== ===== =====
Financial performance
---------------------
Profit before tax #'000 4,407 3,999 7,626
Earnings per share 6.4p 5.8p 11.0p
30th June 30th June 31st December
2007 2006 2006
Balance sheet composition
-------------------------
Property, plant and equipment #'000 36,128 21,472 31,451
Total equity shareholders' funds #'000 14,260 7,376 11,062
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
for the six months ended 30th June 2007
========================================
Six months Six months Year
ended ended ended
30th June 30th June 31st December
2007 2006 2006
Notes #'000 #'000 #'000
--------------------------------------------------------------------------------
Revenue 2 47,910 39,285 82,305
Cost of sales (42,985) (34,737) (73,913)
--------------------------------------------------------------------------------
Gross profit 4,925 4,548 8,392
Administrative expenses (561) (725) (1,105)
--------------------------------------------------------------------------------
Operating profit 4,364 3,823 7,287
Finance income 151 260 473
Finance expense (108) (84) (134)
--------------------------------------------------------------------------------
Profit before taxation 4,407 3,999 7,626
Taxation 4 - - -
--------------------------------------------------------------------------------
Profit for the period 10 4,407 3,999 7,626
================================================================================
Earnings per share 5 6.4p 5.8p 11.0p
Diluted earnings per share 5 6.3p 5.8p 11.0p
================================================================================
All amounts relate to continuing operations.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
at 30th June 2007
=====================================
30th June 30th June 31st December
2007 2006 2006
Notes #'000 #'000 #'000
--------------------------------------------------------------------------------
Non-current assets
Property, plant and equipment 6 36,128 21,472 31,451
--------------------------------------------------------------------------------
Current assets
Trade and other receivables 7 16,938 12,754 15,464
Cash and cash equivalents - 5,467 576
--------------------------------------------------------------------------------
16,938 18,221 16,040
--------------------------------------------------------------------------------
Total assets 53,066 39,693 47,491
--------------------------------------------------------------------------------
Current liabilities
Overdrafts (32) - -
Trade and other payables 8 (29,882) (24,669) (27,786)
Loans and borrowings (802) (258) (573)
--------------------------------------------------------------------------------
(30,716) (24,927) (28,359)
--------------------------------------------------------------------------------
Non-current liabilities
Other payables & accruals 9 (7,975) (7,390) (7,726)
Loans and borrowings (115) - (344)
--------------------------------------------------------------------------------
(8,090) (7,390) (8,070)
--------------------------------------------------------------------------------
Total liabilities (38,806) (32,317) (36,429)
--------------------------------------------------------------------------------
Net assets 14,260 7,376 11,062
================================================================================
Equity
Called up share capital 10 69 69 69
Share premium 10 35,459 35,459 35,459
Merger reserve 10 38,831 38,831 38,831
Retained earnings 10 (60,099) (66,983) (63,297)
--------------------------------------------------------------------------------
Total equity 14,260 7,376 11,062
================================================================================
CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
for the six months ended 30th June 2007
===========================================
Six months Six months Year
ended ended ended
30th June 30th June 31st December
2007 2006 2006
#'000 #'000 #'000
--------------------------------------------------------------------------------
Profit for the period 4,407 3,999 7,626
Adjustments for non-cash items
Finance expense 108 84 134
Finance income (151) (260) (473)
Depreciation and amortisation 1,867 571 1,480
Share based payments 28 - 59
--------------------------------------------------------------------------------
Cash flows from operations before changes
in working capital 6,259 4,394 8,826
Change in trade and other receivables (1,474) (841) (3,551)
Change in trade and other payables 2,345 735 4,144
--------------------------------------------------------------------------------
Cash generated from operations 7,130 4,288 9,419
Interest paid (108) (180) (186)
--------------------------------------------------------------------------------
Net cash from operating activities 7,022 4,108 9,233
--------------------------------------------------------------------------------
Cash flows from investing activities
Interest received 151 260 473
Purchase of property, plant and equipment (6,544) (4,181) (15,069)
--------------------------------------------------------------------------------
Net cash from investing activities (6,393) (3,921) (14,596)
--------------------------------------------------------------------------------
Cash flows from financing activities
Borrowings drawn - - 917
Borrowings repaid - (4,914) (4,914)
Decrease in hire purchase and leasing
contracts - (1,419) (1,677)
Dividends Paid (1,237) - -
--------------------------------------------------------------------------------
Net cash used in financing activities (1,237) (6,333) (5,674)
--------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (608) (6,146) (11,037)
Opening cash and cash equivalents 576 11,613 11,613
--------------------------------------------------------------------------------
Closing cash and cash equivalents (32) 5,467 576
================================================================================
NOTES
=====
1. ACCOUNTING POLICIES
======================
Basis of preparation
--------------------
The AIM Rules require that the next annual consolidated accounts of the Group,
for the year ending 31st December 2007, be prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the EU
("adopted IFRSs").
This interim financial information has been prepared on the basis of the
recognition and measurement requirements of adopted IFRSs as at 30th June 2007
that are effective (or available for early adoption) at 31st December 2007, the
Group's first annual reporting date at which it is required to use adopted
IFRSs. Based on these adopted IFRSs, the directors have applied the accounting
policies, as set out below, which they expect to apply when the first annual
IFRS accounts are prepared for the year ending 31st December 2007.
However, the adopted IFRSs that will be effective (or available for early
adoption) in the annual accounts for the year ending 31st December 2007 are
still subject to change and to additional interpretations and therefore cannot
be determined with certainty. Accordingly, the accounting policies for that
annual period will be determined finally only when the annual financial
statements are prepared for the year ending 31st December 2007.
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in these interim accounts and in
preparing an opening IFRS balance sheet at 1st January 2006 for the purposes of
the transition to Adopted IFRS.
The adoption of IFRS has no effect on the underlying operations of the Group,
its strategy and management, nor on the cash flows derived from the Group's
business operations. These standards do, however, affect the way in which such
activities are presented in the Group accounts.
Most of these new standards have affected the presentation of the Group's
results in some way. The most significant impact on the Group accounts have been
set out in detail in note 11 to the accounts.
Where necessary, adjustments are made to the information included in the
accounts of subsidiaries to bring their accounting policies in line with those
used by the Group and so reflect that information on a consistent basis with the
rest of the Group.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Transition to Adopted IFRS
--------------------------
An explanation of how the transition to Adopted IFRS has affected the reported
financial performance, positions and cash flows of the Group is set out in
detail in note 11 to the accounts. The Group is preparing its accounts in
accordance with Adopted IFRS for the first time in the accounts for the six
months ended 30th June 2007 and has applied IFRS 1 - "First Time Adoption of
International Financial Reporting Standards". In accordance with IFRS 1, the
Group has taken advantage of the exemption at 1st January 2006, the date of
transition to IFRS and accordingly business combinations occurring prior to
transition have not been restated.
Use of estimates and judgements
-------------------------------
The preparation of accounts requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates. Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future periods affected.
Basis of consolidation
----------------------
Subsidiaries are entities controlled by the Group. Control exists when the Group
has the power, directly or indirectly, to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. In assessing
control, potential voting rights that are currently exercisable or convertible
are taken into account. The accounts of subsidiaries are included in the
consolidated accounts from the date that control commences until the date that
control ceases.
Property, plant and equipment
-----------------------------
Operating leasehold improvements and plant, machinery, fixtures and equipment
are included in the balance sheet at their depreciated historic cost. Impairment
of operational leasehold improvements and plant, machinery, fixtures and
equipment to below their depreciated historical cost is charged directly to the
income statement.
Additions include costs of a capital nature and certain enhancement expenditure.
Any expenditure directly attributable to operational leasehold improvements and
plant, machinery, fixtures and equipment in the course of development are
treated as part of the cost of the properties. All other costs associated with
operational leasehold improvements and plant, machinery, fixtures and equipment
are written off as incurred.
Depreciation is provided to write off the cost less estimated residual value of
tangible fixed assets by equal annual instalments over their estimated useful
economic lives as follows:
Operating leasehold improvements
Machinery and electrical - Useful economic life or to end of lease
if shorter
Ceilings, floors and partitions - 15 years or to end of lease if shorter
Front of house - 7 years or to end of lease if shorter
Fixtures and equipment - 4 to 10 years
Leases
------
Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other
leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the Group at their
fair value or, if lower, at the present value of the minimum lease payments,
each determined at the inception of the lease. The corresponding liability to
the lessor is included in the balance sheet as a finance lease obligation. Lease
payments are apportioned between finance charges and reduction of the finance
lease obligation, so as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged directly against income,
unless they are directly attributable to assets which are not yet ready for
their intended use, in which case they are capitalised into the costs of those
assets.
Operating leases are not recognised in the Group balance sheet, except that
rentals payable and incentive fees received under operating leases are charged/
amortised to the income statement on a straight-line basis over the entire term
of the relevant lease.
Impairment
----------
The carrying amounts of the Group's assets, are reviewed at each balance sheet
date to determine whether there is any indication of impairment. If any such
indication exists, the asset's recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in the income statement. The recoverable amount of the Company's
receivables carried at amortised cost is calculated as the present value of
estimated future cash flows, discounted at the original effective interest rate
(i.e., the effective interest rate computed at initial recognition of these
financial assets). Receivables with a short duration are not discounted.
The recoverable amount of other assets is the greater of their net selling price
and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to
the asset. For an asset that does not generate largely independent cash inflows,
the recoverable amount is determined for the cash-generating unit to which the
asset belongs.
Cash and cash equivalents
-------------------------
Cash and cash equivalents comprise cash balances and call deposits. Bank
overdrafts that are repayable on demand and form an integral part of the Group's
cash management are included as a component of cash and cash equivalents for the
purpose only of the statement of cash flows.
Debt and financial instruments
------------------------------
Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.
Interest bearing borrowings are initially recorded at fair value less
attributable transaction costs. Subsequent to initial recognition, interest
bearing borrowings are stated at amortised cost. The net amount of any premium
or discount over the nominal value, less issue costs, is amortised over the life
of the instrument on an effective interest basis and charged to interest payable
in the income statement.
Trade receivables
-----------------
Trade receivables do not carry any interest and are initially recorded at their
fair value. Subsequent to initial recognition, trade receivables are recognised
at amortised cost less impairment.
Trade payables
--------------
Trade payables do not carry any interest and are initially recognised at their
fair value.
Provisions
----------
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, and it is probable
that an outflow of economic benefits will be required to settle the obligation.
If the effect is material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and, where appropriate, the risks specific to the
liability.
Turnover and revenue recognition
--------------------------------
Revenue is measured at the fair value of the consideration received or
receivable and represents licence fees and amounts charged to customers for
goods and services provided by the Group, net of discounts and VAT. Licence fee
income is invoiced in advance, deferred and recognised on provision of the
service. Service income is recognised in the month the service is provided.
Interest income is accrued on a time basis by reference to the principle
outstanding and at the effective interest rate applicable.
Cost of sales
-------------
Comprised of the direct costs incurred in managing and operating the Group's
activities.
Retirement benefit costs
------------------------
Payments to defined contribution retirement benefit schemes are charged as an
expense as they fall due.
Share-based payment transactions
--------------------------------
Certain employees (excluding Directors) of the Group may receive part of their
remuneration in the form of share-based payment transactions, whereby employees
render services in exchange for rights over shares. The fair value of options
granted is recognised as an employee expense with a corresponding increase in
equity. The fair value is measured at grant date and spread over the period
during which the employees become unconditionally entitled to the options. The
fair value of the options granted is measured using an option valuation model,
taking into account the terms and conditions upon which the options were
granted. The amount recognised as an expense is adjusted to reflect the actual
number of share options that vest except where forfeiture is due only to share
prices not achieving the threshold for vesting.
Net financing costs
-------------------
Net financing costs comprise interest payable, finance charges on finance leases
and interest receivable on funds invested. Interest income and interest payable
are recognised in profit or loss as they accrue, using the effective interest
method.
Corporation tax and deferred taxation
-------------------------------------
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the period. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income and expense that are taxable in other years and it
further excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have been enacted
or substantively enacted by the balance sheet date.
Deferred tax is the tax that is expected to be payable or recoverable on
differences between the carrying amount of assets and liabilities in the
accounts and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition of other assets
and liabilities in a transaction that affects neither the tax profit nor the
accounting profit.
Deferred tax liabilities are recognised for temporary differences arising on
investments in subsidiaries, except where the Group is able to control the
reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted at the balance sheet date. Deferred tax is charged or
credited in the income statement, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also dealt with
in equity.
Dividends
---------
Dividends that have been approved by shareholders at previous Annual General
Meetings are included within liabilities until paid. Dividends proposed at the
balance sheet date that are subject to approval by shareholders at the annual
general meeting are not included as a liability in the current period's
accounts.
2. REVENUE
==========
Six months Six months Year
ended ended ended
30th June 30th June 31st December
2007 2006 2006
#'000 #'000 #'000
Licence fees and related income 47,910 39,285 82,305
====== ====== ======
3. EARNINGS BEFORE INTEREST, TAXATION, DEPRECIATION AND AMORTISATION ("EBITDA")
===============================================================================
The Board's prime measure of return used to monitor results is the level of
earnings before interest, taxation, depreciation and amortisation ("EBITDA").
The EBITDA for the six months ended 30th June 2007, with comparatives for the
previous periods, is calculated as follows:
Six months Six months Year
ended ended ended
30th June 30th June 31st December
2007 2006 2006
#'000 #'000 #'000
Operating profit 4,364 3,823 7,287
Add depreciation 1,867 571 1,480
----- ----- -----
EBITDA 6,231 4,394 8,767
===== ===== =====
4. TAXATION
===========
At 30th June 2007, the Group had approximately #15 million of capital allowances
and #4 million of net trading losses carried forward in certain parts of the
Group.
5. EARNINGS PER SHARE
=====================
The earnings per share figures are calculated by dividing the profit
attributable to equity shareholders of the Company for the period, by the
weighted average number of ordinary shares in issue during the period, as
follows:-
Six months Six months Year
ended ended ended
30th June 30th June 31st December
2007 2006 2006
#'000 #'000 #'000
Profit on ordinary activities after
taxation 4,407 3,999 7,626
====== ====== ======
Number Number Number
'000 '000 '000
Weighted average number of ordinary
shares in issue during the
period-basic 69,100 69,100 69,100
Weighted average number of shares
reserved to be issued under share
option schemes 701 171 262
------ ------ ------
69,801 69,271 69,362
====== ====== ======
Earnings per share 6.4p 5.8p 11.0p
====== ====== ======
Diluted earnings per share 6.3p 5.8p 11.0p
====== ====== ======
6. PROPERTY, PLANT AND EQUIPMENT
================================
Plant,
Operating machinery,
leasehold fixtures &
improvements equipment Total
#'000 #'000 #'000
Cost
At 1st January 2007 66,599 22,878 89,477
Additions 4,780 1,764 6,544
------ ------ ------
At 30th June 2007 71,379 24,642 96,021
------ ------ ------
Depreciation
At 1st January 2007 (42,342) (15,684) (58,026)
Charge for the period (841) (1,026) (1,867)
------ ------ ------
At 30th June 2007 (43,183) (16,710) (59,893)
------ ------ ------
Net book value 28,196 7,932 36,128
at 30th June 2007 ====== ====== ======
Net book value 24,257 7,194 31,451
at 31st December 2006 ====== ====== ======
At 30th June 2007 the net carrying amount of leased plant and machinery was #nil
(30th June 2006: #163,000, 31st December 2006: #nil). Leased equipment secured
lease obligations were also #nil at 30th June 2007 (30th June 2006: #258,000,
31st December 2006:#nil).
7. TRADE AND OTHER RECEIVABLES
==============================
30th June 30th June 31st December
2007 2006 2006
#'000 #'000 #'000
Trade receivables 3,554 984 3,159
Other debtors 1,091 518 1,168
Prepayments and accrued income 9,926 9,063 9,551
Retention balances 2,367 2,189 1,586
------ ------ ------
16,938 12,754 15,464
====== ====== ======
Retention balances predominantly comprise cash funds received from tenants as
security for lease obligations. These are retained in Group bank accounts that
are separate from the main Group facilities and are not generally available for
use in the Group's operations.
8. TRADE AND OTHER PAYABLES
===========================
30th June 30th June 31st December
2007 2006 2006
#'000 #'000 #'000
Trade payables 536 1,066 909
Amounts due to related parties 62 406 73
Client deposits 12,812 11,280 11,575
Operating lease incentives 1,181 1,272 1,188
Accruals 9,841 8,741 9,711
PAYE, NIC and VAT 1,513 948 988
Deferred income 3,937 956 3,342
------ ------ ------
29,882 24,669 27,786
====== ====== ======
9. NON-CURRENT LIABILITIES - OTHER PAYABLES AND ACCRUALS
========================================================
30th June 30th June 31st December
2007 2006 2006
#'000 #'000 #'000
Accruals and deferred income 735 880 762
Operating lease incentives 7,240 6,510 6,964
----- ----- -----
7,975 7,390 7,726
===== ===== =====
10. CAPITAL AND RESERVES
========================
Statement of changes in equity:
Share Share Merger Retained
capital premium reserve earnings Total
#'000 #'000 #'000 #'000 #'000
At 1st January 2007 69 35,459 38,831 (63,297) 11,062
Profit for the period - - - 4,407 4,407
Dividends to equity - - - (1,237) (1,237)
shareholders
Share based payments - - - 28 28
------ ------ ------ ------ ------
At 30th June 2007 69 35,459 38,831 (60,099) 14,260
====== ====== ====== ====== ======
At 1st January 2006 69 35,459 38,831 (70,982) 3,377
Profit for the period - - - 3,999 3,999
------ ------ ------ ------ ------
At 30th June 2006 69 35,459 38,831 (66,983) 7,376
====== ====== ====== ====== ======
At 1st January 2006 69 35,459 38,831 (70,982) 3,377
Profit for the year - - - 7,626 7,626
Share based payments - - - 59 59
------ ------ ------ ------ -----
At 31st December 2006 69 35,459 38,831 (63,297) 11,062
====== ====== ====== ====== ======
11. EXPLANATION OF TRANSITION TO IFRS
=====================================
As stated in Note 1, these accounts are the first consolidated accounts of the
Group that have been presented under Adopted IFRS.
The accounting policies in Note 1 have been applied consistently in preparing
the consolidated accounts for the six months ended 30th June 2007, together with
the comparative information for the six months ended 30th June 2006 and the year
ended 31st December 2006 which are set out in this document. The same policies
have also been applied in the preparation of an opening IFRS balance sheet at
1st January 2006, the Group's date of transition.
The comparative figures for the financial year ended 31st December 2006 are not
the Company's statutory accounts for that financial year. Those accounts, which
were prepared under UK GAAP, have been reported on by the Company's auditors and
delivered to the registrar of companies. The report of the auditors was (i)
unqualified, (ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report, and
(iii) did not contain a statement under section 237(2) or (3) of the Companies
Act 1985.
In preparing the opening IFRS balance sheet and the comparative information for
the six months ended 30th June 2007, the Board has adjusted amounts reported
previously in its accounts for the periods then ended which had been prepared in
accordance with UK GAAP.
An explanation of how the transition from previous UK GAAP to IFRS has affected
the Group's reported financial position and its reported financial performance
is set out in the following tables and the notes that accompany these tables.
The principal change arising from the adoption of IFRS on the results of the
Group for the six months ended 30th June 2007, and the resultant effect on the
results for the year ended 31st December 2006, is as follows:-
SIC 15 - Operating Lease Incentives. Under UK GAAP, lease incentives were
required to be amortised over the period to the next rent review. Under SIC 15,
these are required to be amortised over the entire length of the lease. The
effect of this has been to reduce the credit to the income statement relating to
the amortisation of lease incentives received in prior years, and to increase
the resulting provision carried in the balance sheet at June 2007 and December
2006. The adoption of this Standard reduced disclosed Equity Shareholders' Funds
at 31st December 2006 by #6.4m, or 9.3p per share based on the then issued share
capital of the Company.
The effect on equity attributable to shareholders of the Group at 31st December
2006 as a result of adopting IFRS was as follows:-
Pence
#'000 per share
Equity attributable to shareholders under UK GAAP 17,503 25.3p
SIC 15 - Lease incentives amortised over life of lease (6,441) (9.3p)
------ ------
Equity attributable to shareholders under Adopted IFRS 11,062 16.0p
====== ======
Reconciliation of consolidated income statement for the six months ended 30th
-----------------------------------------------------------------------------
June 2006
---------
Previously SIC - 15
reported Operating Restated
under lease under
UK GAAP incentives IFRS
For the six months ended 30th June 2006 #'000 #'000 #'000
--------------------------------------------------------------------------------
Turnover 39,285 - 39,285
--------------------------------------------------------------------------------
Cost of sales (35,343) 606 (34,737)
--------------------------------------------------------------------------------
Gross profit 3,942 606 4,548
--------------------------------------------------------------------------------
Administration expenses (674) - (674)
--------------------------------------------------------------------------------
Net operating profit before financing
expenses 3,268 606 3,874
--------------------------------------------------------------------------------
Net financing income 125 - 125
--------------------------------------------------------------------------------
Profit before tax 3,393 606 3,999
--------------------------------------------------------------------------------
Current taxation on ordinary activities - - -
--------------------------------------------------------------------------------
Profit after taxation for the year 3,393 606 3,999
--------------------------------------------------------------------------------
Attributable to:
--------------------------------------------------------------------------------
Equity shareholders of the Company 3,393 606 3,999
--------------------------------------------------------------------------------
Profit for the year 3,393 606 3,999
--------------------------------------------------------------------------------
Basic profit per share - pence 4.9p 0.9p 5.8p
--------------------------------------------------------------------------------
Diluted profit per share - pence 4.9p 0.9p 5.8p
--------------------------------------------------------------------------------
IFRS adjustments
SIC-15 - Lease incentives amortised over term of lease
Reconciliation of consolidated income statement for the year ended 31st December
--------------------------------------------------------------------------------
2006
----
Previously SIC - 15
reported Operating Restated
under lease under
UK GAAP incentives IFRS
For the year ended 31st December 2006 #'000 #'000 #'000
--------------------------------------------------------------------------------
Turnover 82,305 - 82,305
--------------------------------------------------------------------------------
Cost of sales (73,766) (147) (73,913)
--------------------------------------------------------------------------------
Gross profit 8,539 (147) 8,392
--------------------------------------------------------------------------------
Administration expenses (997) - (997)
--------------------------------------------------------------------------------
Net operating profit before financing
expenses 7,542 (147) 7,395
--------------------------------------------------------------------------------
Net financing income 231 - 231
--------------------------------------------------------------------------------
Profit before tax 7,773 (147) 7,626
--------------------------------------------------------------------------------
Current taxation on ordinary activities - - -
--------------------------------------------------------------------------------
Profit after taxation for the year 7,773 (147) 7,626
--------------------------------------------------------------------------------
Attributable to:
--------------------------------------------------------------------------------
Equity shareholders of the Company 7,773 (147) 7,626
--------------------------------------------------------------------------------
Profit for the year 7,773 (147) 7,626
--------------------------------------------------------------------------------
Basic profit per share - pence 11.2p (0.2p) 11.0p
--------------------------------------------------------------------------------
Diluted profit per share - pence 11.2p (0.2p) 11.0p
--------------------------------------------------------------------------------
IFRS adjustments
SIC-15 - Lease incentives amortised over term of lease
Reconciliation of net assets and equity at 30th June 2006
---------------------------------------------------------
1st January
2006
Previously Opening SIC - 15
reported balance Operating Restated
Under sheet lease under
UK GAAP adjustment incentives IFRS
At 30th June 2006 #'000 #'000 #'000 #'000
--------------------------------------------------------------------------------
Non-current assets
--------------------------------------------------------------------------------
Operational properties 17,895 - - 17,895
--------------------------------------------------------------------------------
Plant & equipment 3,577 - - 3,577
--------------------------------------------------------------------------------
21,472 - - 21,472
--------------------------------------------------------------------------------
Current assets
--------------------------------------------------------------------------------
Trade and other receivables 10,565 - - 10,565
--------------------------------------------------------------------------------
Cash and cash equivalents 7,656 - - 7,656
--------------------------------------------------------------------------------
18,221 - - 18,221
--------------------------------------------------------------------------------
Total assets 39,693 - - 39,693
--------------------------------------------------------------------------------
Current liabilities
--------------------------------------------------------------------------------
Trade and other payables (25,491) (257) 1,079 (24,669)
--------------------------------------------------------------------------------
Tax liabilities - - - -
--------------------------------------------------------------------------------
Borrowings including finance
leases (258) - - (258)
--------------------------------------------------------------------------------
(25,749) (257) 1,079 (24,927)
--------------------------------------------------------------------------------
Non-current liabilities
--------------------------------------------------------------------------------
Other payables and accruals (880) (6,037) (473) (7,390)
--------------------------------------------------------------------------------
Total liabilities (26,629) (6,294) 606 (32,317)
--------------------------------------------------------------------------------
Net assets 13,064 (6,294) 606 7,376
--------------------------------------------------------------------------------
Equity
--------------------------------------------------------------------------------
Called up share capital 69 - - 69
--------------------------------------------------------------------------------
Share premium account 35,459 - - 35,459
--------------------------------------------------------------------------------
Merger reserve 38,831 - - 38,831
--------------------------------------------------------------------------------
Retained earnings (61,295) (6,294) 606 (66,983)
--------------------------------------------------------------------------------
Total equity 13,064 (6,294) 606 7,376
--------------------------------------------------------------------------------
Equity shareholders' funds
per share - pence per share 18.9p (9.1p) 0.9p 10.7p
--------------------------------------------------------------------------------
Reconciliation of net assets and equity at 31st December 2006
-------------------------------------------------------------
1st January
2006
Previously Opening SIC - 15
reported balance Operating Restated
Under sheet lease under
UK GAAP adjustment incentives IFRS
At 31st December 2006 #'000 #'000 #'000 #'000
--------------------------------------------------------------------------------
Non-current assets
--------------------------------------------------------------------------------
Operational properties 24,257 - - 24,257
--------------------------------------------------------------------------------
Plant & equipment 7,194 - - 7,194
--------------------------------------------------------------------------------
31,451 - - 31,451
--------------------------------------------------------------------------------
Current assets
--------------------------------------------------------------------------------
Trade and other receivables 13,878 - - 13,878
--------------------------------------------------------------------------------
Cash and cash equivalents 2,162 - - 2,162
--------------------------------------------------------------------------------
16,040 - - 16,040
--------------------------------------------------------------------------------
Total assets 47,491 - - 47,491
--------------------------------------------------------------------------------
Current liabilities
--------------------------------------------------------------------------------
Trade and other payables (26,970) (257) (559) (27,786)
--------------------------------------------------------------------------------
Tax liabilities - - - -
--------------------------------------------------------------------------------
Borrowings including finance
leases (573) - - (573)
--------------------------------------------------------------------------------
(27,543) (257) (559) (28,359)
--------------------------------------------------------------------------------
Non-current liabilities
--------------------------------------------------------------------------------
Other payables and accruals (2,445) (6,037) 412 (8,070)
--------------------------------------------------------------------------------
Total liabilities (29,988) (6,294) (147) (36,429)
--------------------------------------------------------------------------------
Net assets 17,503 (6,294) (147) 11,062
--------------------------------------------------------------------------------
Equity
--------------------------------------------------------------------------------
Called up share capital 69 - - 69
--------------------------------------------------------------------------------
Share premium account 35,459 - - 35,459
--------------------------------------------------------------------------------
Merger reserve 38,831 - - 38,831
--------------------------------------------------------------------------------
Retained earnings (56,856) (6,294) (147) (63,297)
--------------------------------------------------------------------------------
Total equity 17,503 (6,294) (147) 11,062
--------------------------------------------------------------------------------
Equity shareholders' funds
per share - pence per share 25.3p (9.1p) (0.2p) 16.0p
--------------------------------------------------------------------------------
Reconciliation of net assets and equity - Opening Balance Sheet at 1st January
------------------------------------------------------------------------------
2006
----
Previously SIC - 15
reported Operating Restated
under lease under
UK GAAP incentives IFRS
At 1st January 2006 #'000 #'000 #'000
--------------------------------------------------------------------------------
Non current assets
--------------------------------------------------------------------------------
Operational properties 15,941 - 15,941
--------------------------------------------------------------------------------
Plant & equipment 1,921 - 1,921
--------------------------------------------------------------------------------
17,862 - 17,862
--------------------------------------------------------------------------------
Current assets
--------------------------------------------------------------------------------
Trade and other receivables 9,472 - 9,472
--------------------------------------------------------------------------------
Cash and cash equivalents 14,054 - 14,054
--------------------------------------------------------------------------------
23,526 - 23,526
--------------------------------------------------------------------------------
Total assets 41,388 - 41,388
--------------------------------------------------------------------------------
Current liabilities
--------------------------------------------------------------------------------
Trade and other payables (24,129) (257) (24,386)
--------------------------------------------------------------------------------
Tax liabilities - - -
--------------------------------------------------------------------------------
Borrowings including finance leases (6,591) - (6,591)
--------------------------------------------------------------------------------
Non-current liabilities (30,720) (257) (30,977)
--------------------------------------------------------------------------------
Other payables and accruals (997) (6,037) (7,034)
--------------------------------------------------------------------------------
Total liabilities (31,717) (6,294) (38,011)
--------------------------------------------------------------------------------
Net assets 9,671 (6,294) 3,377
--------------------------------------------------------------------------------
Equity
--------------------------------------------------------------------------------
Called up share capital 69 - 69
--------------------------------------------------------------------------------
Share premium account 35,459 - 35,459
--------------------------------------------------------------------------------
Merger reserve 38,831 - 38,831
--------------------------------------------------------------------------------
Retained earnings (64,688) (6,294) (70,982)
--------------------------------------------------------------------------------
Total equity 9,671 (6,294) 3,377
--------------------------------------------------------------------------------
Equity shareholders' funds per
share - pence per share 14.0p (9.1p) 4.9p
--------------------------------------------------------------------------------
12. ACCOUNTS AND INTERIM REPORT
===============================
The audited accounts of MWB Business Exchange Plc for the year ended 31st
December 2006 and copies of these interim accounts along with the interim
accounts for the six months ended 30th June 2006, are available from the Company
Secretary, Filex Services Limited, at the Company's registered office of 179
Great Portland Street, London W1W 5LS.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKPKKBBKKACB
MWB Business Exchange (LSE:MBE)
Historical Stock Chart
From Jun 2024 to Jul 2024
MWB Business Exchange (LSE:MBE)
Historical Stock Chart
From Jul 2023 to Jul 2024
