RNS Number : 1704C
MWB Business Exchange Plc
28 August 2008
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FOR IMMEDIATE RELEASE
28 August 2008
MWB BUSINESS EXCHANGE PLC:
INTERIM RESULTS FOR SIX MONTHS TO 30 JUNE 2008
HIGHLIGHTS
* Revenue grew 25% to �59.7m over comparable six months to 30 June 2007.
* EBITDA rose strongly by 81% to �11.3m compared to six months to 30 June 2007.
* Pre-tax profits grew 100% to �8.8m against �4.4m for the comparable six month period.
* Revenue per available workstation (REVPAW) advanced 12% to �9,630 at 30 June 2008 from �8,600 at 30 June 2007.
* Revenue per occupied workstation (REVPOW) up 7% to �10,500 at 30 June 2008 compared to �9,800 at 30 June 2007.
* Meeting and Conference Room division revenue up by 20% to �6.1m over six months to 30 June 2007.
* Occupancy increased to 92% at 30 June 2008, up from 88% at 30 June 2007.
* Robust contracted income already accounts for approximately 75% of remaining projections to December 2008.
"Our highly focused strategy, where we have concentrated on proven growing markets such as Central London, continues to bear fruit for
the Company. We are again delivering results for the six months to 30 June 2008 that are ahead of expectations." Richard Balfour-Lynn,
Chairman, MWB Business Exchange Plc.
Contact:
MWB Business Exchange Plc
Richard Balfour-Lynn, Chairman Tel: 020 7706 2121
John Spencer, Chief Executive Tel: 020 7868 7268
Keval Pankhania, Finance Director Tel: 020 7868 7255
Baron Phillips Associates Tel: 020 7920 3161
Baron Phillips
KBC Peel Hunt Ltd Tel: 020 7418 8900
Capel Irwin
Nicholas Marren
CHAIRMAN'S STATEMENT
Once again I am pleased to report another period of strong progress and consolidation as MWB Business Exchange continues to make
advances on all fronts in spite of the present difficult economic climate.
Our highly focused strategy, where we have concentrated on proven growing markets such as Central London, continues to bear fruit for
the Company. We are again delivering results for the six months to 30 June 2008 that are ahead of expectations. EBITDA for the period was
�11.3m, a very creditable 81% uplift over our already strong performance a year ago and has resulted in a 100% increase in pre-tax profits
to �8.8m. Our balance sheet continues to be strong as we benefit from healthy cash flows; we had �9.5m of borrowings at 31 December 2007 all
of which have now been repaid.
These results reflect the increasing maturity of both the MWB Business Exchange brand and its product offering. The concept of serviced
offices continues to gather momentum and market acceptance, and this is borne out in the advances MWB Business Exchange has made over the
period.
We started the period with very high occupancy levels of 90% and I am pleased to report that we maintained those levels during the six
months to 30 June 2008, ending the period at 92%. This has given us both strong cash flow and protection of income streams as the average
length of client occupancy is approximately two years; a similar level to that at 31 December 2007.
Demand for the MWB Business Exchange offering has remained strong, with lead flow up 24% over the comparative period. The London City
market has remained particularly buoyant, with lead flow up 54% - an encouraging statistic considering current vacancy rates and low take up
in the conventional office market. These figures, coupled with our focus on securing client contracts for longer terms, reinforce our belief
that we are well placed to address the forthcoming challenges that the current economic climate presents. Organisations do not want to
commit to long term lease obligations and require the versatility that flexible office space can provide. Conventional leases can also be an
unnecessary risk for occupiers - which is why the risk averse route we provide continues to be so appealing to both corporates and SMEs
alike.
Our strategy has also been to preserve cash flow and as a result we have not opened any new leased or capital intensive centres during
the first half of 2008. Instead we have concentrated on driving business in the new centres that were opened last year, the results of which
have been very encouraging. These new centres have reached maturity quickly and consequently have made a positive contribution to cash flow
in a relatively short time frame. We have launched new services, some of which generate additional revenue and all of which help to improve
client retention - particularly important in the current market conditions.
A key highlight in the development of new services has been the enhancement of our IT and Telecoms offering, which enables us to provide
additional product and service streams, tailored to the specific requirements of our diverse client base. This has resulted in a 13%
increase in IT and Telecoms revenue over the period to �4.9m compared to the prior six months ended 31 December 2007.
In the present market we are adopting a cautious approach to expansion. We do not envisage acquiring more leased centres at present, but
there are opportunities to grow using our proven Operating and Management Agreement (OMA) operation, both within Central London and key
regional centres, and these are being pursued.
Since the period end, we have opened a further centre using the OMA strategy. Located in the City, not far from Bank in Clement's Lane,
EC4, this 34,150 sq. ft. building provides us with a further 407 workstations, as well as an additional Meeting and Conference Room
offering. Under our OMA model we receive a regular management fee and a profit share with no exposure to capital expenditure or long leases.
OMAs also continue to be particularly appealing to landlords and corporate occupiers looking to maximise their returns from vacant or
under-utilised space. This in turn enables us to adopt minimum risk in the growth of our centres, yet still enables us to expand our
business. Today we have a total of 17 centres that are operated under OMAs.
Since January 2008 we have reduced the number of centres slightly to 56, closing two underperforming locations and opening one new
centre as described above. Despite this we have marginally increased the number of workstations to 15,914 as we have taken on additional
space in existing buildings such as Cavendish Square in London's West End, where demand remains strong. Likewise we have maintained our
Meeting and Conference Room offer which continues to make a growing and profitable contribution to our business model.
The revenue in our Meeting and Conference Room division during the six months ended 30 June 2008 totalled �6.1m, a 20% increase over the
comparable period. To help support the continued growth of this division, we have recently implemented a new yield management and booking
system, primarily to cope with the increased demand for our meeting rooms that we are experiencing from the corporate sector. We are
benefiting from companies' lower training budgets which require more single day facilities rather than including an overnight stay with
consequent higher accommodation costs. The new system enables us to better identify the sources of leads to maximise efficiencies and
provides us with a platform for a greatly improved on-line booking capability.
It is particularly pleasing, especially in the current climate, to see this strong performance reflected in our key performance
indicators. For example, revenue per available workstation (REVPAW) advanced 12% to �9,630 at 30 June 2008 from �8,600 a year ago.
Similarly, revenue per occupied workstation (REVPOW) increased 7% to �10,500 from �9,800 in June 2007.
We have approximately 1,500 serviced office clients, spread across a diverse range of sectors, who have an average initial requirement
of seven workstations for an initial eight month term. Today our contracted income equates to approximately 75% of our projections for the
remainder of the year to December 2008. When anticipated renewals are factored in, this figure rises to 90%, further underpinning our
business model and providing certainty of our future income stream.
We work tirelessly to ensure that we support our clients' businesses and provide them with the freedom to excel during their time with
us. Our latest independent client survey reported that over 90% of our clients were satisfied or very satisfied with the service we provided
and virtually all rated our people as good, very good or excellent. These results are especially pleasing as they highlight that our
strategy of both people development and market differentiation has been successful.
Over the past two years we have successfully implemented our strategy of focusing centre expansion in key markets, especially Central
London and in particular the West End, where a shortage of quality space and rising rents for office space have made the MWB Business
Exchange offering particularly attractive. In addition we ensure our centres are unbranded which increasingly appeals to a broad range of
clients. We continue to reap the operational and financial benefits of this approach.
Despite this considerable success, MWB Business Exchange's share price has fallen over the last year and recently dropped below the 80p
issue price at the time of our AIM flotation in December 2005. The current share price represents a 2007 historic EBITDA multiple of less
than three times. In our view, this does not represent anywhere near the true value of the Company, especially when considering our
excellent results since flotation, our financial position and the Company's prospects, even in the short and medium term.
The Company is ungeared, having repaid all its loans from retained cash flow during the six months to 30 June 2008, whilst retaining a
revolving bank loan facility of �13m to take advantage of opportunities as they arise.
It is clear that market conditions are becoming tighter, but we are pleased to confirm that to date we have not seen any negative impact
on revenue streams due to the diversity and high quality of our offer. However we are monitoring the market extremely closely. Prospects for
the remainder of the year to December 2008 continue to be good and we anticipate reporting further progress in March 2009.
Richard Balfour-Lynn
Chairman
28 August 2008
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
for the six months ended 30 June 2008
Six months Six months Year
ended ended ended
30 June 30 June 31
2008 2007 December
2007
Notes �'000 �'000 �'000
Revenue 59,713 47,910 100,046
Cost of sales (50,337) (42,985) (84,895)
Gross profit 9,376 4,925 15,151
Administrative expenses (559) (561) (1,662)
Results from operating 8,817 4,364 13,489
activities
Finance income 430 151 352
Finance expenses (447) (108) (599)
Profit before taxation 8,800 4,407 13,242
Taxation (1,500) - (180)
Profit for the period 4 7,300 4,407 13,062
Basic earnings per share 2 10.6p 6.4p 18.9p
Diluted earnings per share 2 10.6p 6.3p 18.8p
All results relate to continuing operations.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
at 30 June 2008
30 June 30 June 31 December
2008 2007 2007
Notes �'000 �'000 �'000
Non-current assets
Intangible assets - goodwill 7,587 - 7,587
Property, plant and equipment 3 41,913 36,128 42,197
49,500 36,128 49,784
Current assets
Trade and other receivables:-
Due after more than one year 1,975 - 1,944
Due within one year 18,097 16,938 15,945
Cash and cash equivalents 5,838 - 4,512
25,910 16,938 22,401
Total assets 75,410 53,066 72,185
Current liabilities
Bank overdraft - (32) -
Loans and borrowings - (802) (491)
Trade and other payables (34,048) (29,882) (28,397)
(34,048) (30,716) (28,888)
Non-current liabilities
Loans and borrowings - (115) (9,411)
Trade and other payables (12,573) (7,975) (10,941)
(12,573) (8,090) (20,352)
Total liabilities (46,621) (38,806) (49,240)
Net assets 28,789 14,260 22,945
Equity
Share capital 4 69 69 69
Share premium account 4 35,459 35,459 35,459
Merger reserve 4 38,831 38,831 38,831
Retained earnings 4 (45,570) (60,099) (51,414)
Total equity attributable to
shareholders 4 28,789 14,260 22,945
of the Company
CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
for the six months ended 30 June 2008
Six months Six months Year
ended ended ended
30 June 30 June 31
2008 2007 December
2007
�'000 �'000 �'000
Profit for the period 7,300 4,407 13,062
Adjustments for non-cash items
Corporation tax 1,500 - 180
Finance expenses 447 108 599
Finance income (430) (151) (352)
Depreciation of property, plant and 2,399 1,867 3,988
equipment
Loss on disposal of fixed assets 57 - -
Equity settled share-based 171 28 58
obligations
Cash flows from operations before 11,444 6,259 17,535
changes in workingcapital
Change in trade and other receivables (2,183) (1,474) (391)
Change in trade and other payables 5,839 2,345 2,316
Cash generated from operations 15,100 7,130 19,460
Interest paid (414) (108) (523)
Net cash received from operating 14,686 7,022 18,937
activities
Cash flows from investing activities
Interest received 430 151 352
Acquisition of subsidiary, net of - - (10,199)
cash acquired
Purchase of property, plant and (2,172) (6,544) (12,695)
equipment
Net cash used in investing activities (1,742) (6,393) (22,542)
Cash flows from financing activities
Proceeds from drawdown of borrowings - - 9,411
Borrowings repaid (9,991) - (633)
Shares purchased and cancelled (293) - -
Dividends paid (1,334) (1,237) (1,237)
Net cash received/(used) in financing (11,618) (1,237) 7,541
activities
Net increase/(decrease) in cash and 1,326 (608) 3,936
cash equivalents
Opening cash and cash equivalents 4,512 576 576
Closing cash and cash equivalents 5,838 (32) 4,512
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
The Half-Yearly Financial Report of MWB Business Exchange Plc ('the Company') for the six months ended 30 June 2008 incorporates the
results of the Company and its subsidiaries (together 'the Group') for the period then ended. The results have been prepared on the basis of
the accounting policies adopted in the financial statements of the Group at the previous year end of 31 December 2007, consistently applied
in all material respects in the preparation of these financial results.
2. 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
30 June 30 June 31 December
2008 2007 2007
�'000 �'000 �'000
Profit attributable to equity 7,300 4,407 13,062
shareholders of the Company
Number Number Number
'000 '000 '000
Weighted average number of 69,036 69,100 69,100
ordinary shares (basic)
Effect of shares issuable under 146 701 545
share option schemes
Weighted average number of shares 69,182 69,801 69,645
(diluted)
Earnings per share 10.6p 6.4p 18.9p
Diluted earnings per share 10.6p 6.3p 18.8p
3. PROPERTY, PLANT AND EQUIPMENT
Plant,
Operating machinery,
leasehold fixtures &
improvements equipment
Total
�'000 �'000 �'000
Cost
At 1 January 2008 (restated) 41,836 26,453 68,289
Additions 1,321 851 2,172
Reclassification (5,296) 5,296 -
Disposals (40) (449) (489)
At 30 June 2008 37,821 32,151 69,972
Depreciation
At 1 January 2008 (restated) (7,847) (18,245) (26,092)
Charge for the period (1,009) (1,390) (2,399)
Reclassification 5,064 (5,064) -
Disposals - 432 432
At 30 June 2008 (3,792) (24,267) (28,059)
Net book value at 30 June 2008 34,029 7,884 41,913
The cost and depreciation figures at 1 January 2008 shown above have been restated from those at 31 December 2007 by the elimination of
�35,922,000 of fully depreciated assets.
4. RECONCILIATION OF MOVEMENT ON CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY
HOLDERS OF THE COMPANY
Share Share Merger Retained
capital premium reserve earnings Total
�'000 �'000 �'000 �'000 �'000
At 1 January 2008 69 35,459 38,831 (51,414) 22,945
Profit for the period - - - 7,300 7,300
Total recognised income and 69 35,459 38,831 (44,114) 30,245
expense
Dividends paid to equity - - - (1,334) (1,334)
shareholders
Shares purchased and cancelled - - - (293) (293)
Write back of share option - - - 171 171
cost through equity
At 30 June 2008 69 35,459 38,831 (45,570) 28,789
In the six months to 30 June 2008, 300,000 shares were bought in the market and cancelled for a total cost of �293,328, at an average
price of 97.8p per share, inclusive of fees and stamp duty. The nominal value of the shares purchased was �300, for which amount a capital
redemption reserve fund has been established. As both of these movements are less than �1,000, neither is disclosed in the table above.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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