Serviced Office Group PLC
17 September 2007
Serviced Office Group plc AIM (SVO)
Interim Results for the six months ended 30 June 2007
Serviced Office Group is an AIM-Listed provider of flexible office space, which
currently operates a total of 12 centres, providing a total of 1,848
workstations.
HIGHLIGHTS
• Total revenues for the six months ended 30 June 2007 of £3.1 million
(2006: £2.3 million) an increase of 26 per cent.
• Operating profit of £660,000 including a surplus on revaluation of
£179,000 (2006: £490,000) an increase of 26 per cent.
• Profit before tax of £136,000, (2006: £100,000) an increase of 26 per
cent.
• Number of workstations in the period increased by 354 to 1,848, an
increase of 24 per cent.
• Increase in net asset value per share to 7.7p (2006: 7.1p) an increase
of 8 per cent.
• Basic earnings per share 0.11p (2005: 0.09p) an increase of 22 per
cent.
Michael Kingshott, Chairman, comments:
'The current year has shown encouraging progress, particularly in our more
recently acquired properties, with Blackfriars, Richmond and Crawley fully
occupied. As I stated in the year end results, the extensive refurbishment
programme has slowed down the growth in revenue during the first half of the
year. We expect an improved performance in the coming months as the newly
refurbished space starts to become available.
'We are delighted with our new Joint venture with UBS Investment Bank and,
whilst it is early days, it is pleasing to note that both Chiswick and
Teddington are showing great potential. The new property in Beckenham is planned
to open in October, which will raise the number of workstations to 2,042,
representing an increase over last year of 73%'
17th September 2007
Enquiries:
Serviced Office Group plc Tel: 020 7583 8833
Michael Kingshott, Chairman
Stephen Clague, Finance Director
Evolution Securities Tel: 020 7071 4300
Fergus Marcroft
College Hill Tel: 020 7457 2020
Gareth David
CHAIRMAN'S STATEMENT
I am pleased to report our interim results for the six months ended 30 June
2007.
Despite the ongoing refurbishment programme, we have seen some encouraging
performances in this first half year. Revenues are up 26% to £3.1m from £2.3m.
Earnings per share has increased to 0.11p per share (2005: 0.09p) an increase of
22 per cent. We continue to experience growth in the value of our freehold
properties, with the gain in the Crawley freehold being realised through its
sale to Consort Property Holdings Limited, our Joint Venture with UBS Investment
Bank.
The Joint Venture ('JV'), which was formed in July this year with a planned
initial investment of up to £50m, has to date acquired three properties, at
Crawley, Teddington and Chiswick, from our company for a consideration of
approximately £10m, of which £8m was used to repay bank debt. As announced on
31st August, the JV has contracted to acquire the freehold of County House in
Beckenham for £5.6million, a property of some 46,000 square feet.
The Company now owns the freehold of four business centres, at Harrow, Hayes,
Kingston, and Bournemouth, as well as operating an additional five business
centres within leased premises in Blackfriars, Richmond, Marlow and two in
Uxbridge.
Whilst the JV now owns three freeholds, with the imminent addition of Beckenham,
we are confident that the wider selection of offerings to our clients for
conferences and flexible office space will drive the occupancy levels in the
future.
£4.2 million of cash has been spent on investment in our properties and their
refurbishment with £2.8m being funded by bank debt. At the half year our
overdraft was £1.1m. With the formation of the JV, our cash reserves improved by
£1.2m.
The competitive conditions prevailing within the property sector over the past
12 months, has meant that we have not been able to grow the business as fast as
we would have liked. However, we do expect to take advantage of the correction
in the market in the future as property price expectations become more realistic
and more in line with our own values.
We are not declaring a dividend for the half-year, and as we have said before,
the Group will only begin dividend payments when it has reached an appropriate
stage in its development.
I reaffirm our commitment to ensure that the Group will become a significant
force in a sector of the property market in which the management team has
considerable experience. We continue to seek further acquisitions, both directly
and indirectly, through our JV.
MICHAEL KINGSHOTT
Chairman
17th September 2007
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2007
30 June 30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
ASSETS
Non current assets
Investment property 25,792 18,409 22,908
Property, plant & equipment 3,782 1,623 2,478
Goodwill 1,482 1,482 1,482
Available-for-sale investments - 374 -
31,056 21,888 26,868
Current assets
Inventories 63 63 63
Trade and other receivables 1,554 762 817
Cash and cash equivalents - 1,657 335
1,617 2,482 1,215
Total assets 32,673 24,370 28,083
EQUITY
Capital and reserves attributable to
equity holders of the company
Called up share capital 4,400 4,400 4,400
Share premium account 4,194 4,190 4,194
Profit and loss account (1,846) (2,368) (1,940)
Total equity 6,748 6,222 6,654
LIABILITIES
Non current liabilities
Long term borrowings 21,250 15,250 18,500
Finance lease 51 - 63
Deferred tax 943 575 575
22,244 15,825 19,452
Current liabilities
Trade and other payables 2,576 2,118 1,977
Current income tax 8 205 -
Bank overdraft 1,097 - -
3,681 2,323 1,977
Total liabilities 25,924 18,148 21,429
Total equity and liabilities 32,673 24,370 28,083
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007
30 June 30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Turnover 3,134 2,313 5,273
Cost of Sales (2,067) (1,433) (3,244)
Gross Profit 1,067 880 2,029
Net gain from revaluation of investment properties 179 - 755
Administrative expenses (586) (391) (999)
Operating profit 660 489 1,785
Finance costs (524) (401) (843)
Interest received - 13 28
Profit before income tax 136 101 970
Income tax expense (42) (25) (304)
Profit for the period from continuing operations 94 - 666
Loss for the period from discontinued operations - - (162)
Profit for the period 94 76 504
Earnings per share:
Continued operations
Basic 0.11p 0.09p 0.76p
Diluted 0.11p 0.09p 0.76p
Including discontinued operations
Basic 0.11p 0.09p 0.57p
Diluted 0.11p 0.09p 0.57p
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2007
Attributable to equity holders
of the company
Share Share Retained Total
Capital Premium Earnings Equity
£000 £000 £000 £000
Balance at 1 January 2006 4,400 4,190 (2,444) 6,146
Profit for the period - - 504 504
Grant of employee share options - 4 - 4
Balance at 31 December 2006 4,400 4,194 (1,940) 6,654
Balance at 1 January 2007 4,400 4,194 (1,940) 6,654
Profit for the period - - 94 94
Balance at 30 June 2007 4,400 4,194 (1,846) 6,748
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007
30 June 30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Profit from operations 660 489 1,785
Adjustment for :
Depreciation of plant and equipment 192 119 230
Revaluation of investment properties (179) - (755)
Amortisation of Share Options - - 4
Operating cash flow before movement in working capital
673 608 1,264
Increase in inventories - - -
Decrease/(Increase) in receivables 174 254 119
(Increase)/Decrease in other current assets (911) (196) (116)
Increase/(Decrease) in payables 557 716 349
Cash generated from operations 492 1,382 1,616
Interest Paid (463) (833) (1,219)
Net cash from operating activities 28 549 397
Cash flows from investing activities
Interest received - 13 28
Purchase of investment properties (2,704) (1,465) (5,209)
Purchases of plant and equipment (1,496) (452) (1,349)
(6,530)
Proceeds received from available-for-sale investments - - 212
(discontinued operations)
Net cash (used in) investment activities (4,200) (1,904) (6,318)
Cash flows from financing activities
New bank loans issued 2,750 1,250 4,500
Payments under finance lease (11) - (6)
Net cash from financing activities 2,739 1,250 4,494
Net (decrease) in cash and cash equivalents (1,433) (105) (1,427)
Cash and cash equivalents at the beginning of the 335 1,762 1,762
year
Cash and cash equivalents (1,097) 1,657 335
Bank balances and cash (1,097) 1,657 335
NOTES TO THE PRELIMINARY RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
1. Basis of preparation
The unaudited interim financial information has been prepared in accordance with
International Accounting and Financial Reporting Standards (IFRS). The
financial information in this report for the six months ended 30 June 2007 does
not constitute statutory accounts as defined in section 240 of the companies Act
1985. The financial information for the year ended 31 December 2006, has been
extracted from the statutory accounts at that date, which have been delivered to
the Registrar of Companies. The auditors report on those accounts was
unqualified and did not contain a statement under section 237(2) or section 237
(3) of the Companies Act 1985.
2. Revenue is derived from the Group's serviced office business.
3. Earnings per share June 2007 June 2006 December 2006
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Weighted average number of shares in issue (thousands) 88,006 86,425 88,006
Continuing operations
Profit attributable to equity holders of the company 94 76 666
Basic earnings per share (pence) 0.11 0.09 0.76
Including discontinued operations
Profit attributable to equity holders of the company 94 76 504
Basic earnings per share (pence) 0.11 0.09 0.57
There is no difference between the basic and diluted earnings per share
4. Income tax expense
June 2007 June 2006 December 2006
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Current corporation tax (12) 25 (10)
Deferred tax 54 - 314
42 25 304
5. This financial information was approved by the Board on 17th September 2007.
6. Copies of this interim report are being sent to all of the Company's
shareholders. Further copies can be obtained from the Company's registered
office at Fleet House, 8 - 12 New Bridge Street, London, EC4V 6AL.
This information is provided by RNS
The company news service from the London Stock Exchange