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Your Space Plc

Preliminary Results Announcement

for the year ended 31 March 2008

7th October  2008

Your Space Plc ('Your Space' or the 'Company') is pleased to announce its preliminary results for the year ended 31 March 2008.

Financial highlights:

• Turnover £11.075 m

• Full year profit before tax of £1.1m

• Earnings per share 3.9p 

• Return on capital employed 12.45 %  

• An interim cash dividend of 6p per share was paid on 31 January 2008 

• A Bonus Share of 1 share for every 14 Ordinary Shares of 10p each in the capital of the Company which were held by shareholders on the Record Date was issued on the 28 March 2008

Operational highlights:

• The restructuring of Your Space has now evolved into an almost complete services business.

• The Company has developed into 3 distinct businesses within the Group under the consultancy of Your Space Solutions: 

• 2 new serviced office centres secured post March 2008, both situated in prime city centre locations in Newcastle-upon-Tyne and Manchester, take the total number of centres to 10 once fully operational following the completion of substantial restoration works. A conditional exchange has also been agreed on a site in Leicester city centre

• Your Space Solutions Division is currently undertaking contract values of over £4m to carry out specialist restoration work. The division is also in negotiations to secure other contracts for the Group across the UK

In accordance with AIM Rule 20, Your Space plc confirms that its annual report and accounts for the year ending 31 March 2008 has been sent to all shareholders and can also be downloaded from the Company's website at: www.yourspaceplc.com .

The Company's registered office is; 23 New Mount Street, Manchester, M4 4DE.

For further information, please contact:

Jim Millar, Finance Director                                  Tel: 0151 229 1702

Sue Lace, Company Secretary                               Tel: 0151 229 1702        

Richard Hughes/Bobby Fletcher, Zeus Capital       Tel: 0161 831 1512

Chairman's Statement

I am now pleased to report the results for the year ended 31 March 2008.

In the 12 months to 31 March 2008, turnover increased to £11.075m (2007: £2.157m) and profit before tax was £1.121m   (2007: £5.245m of which £3.634m related to the one off profits from the disposal of investment properties).

At the year end the net assets of the Group were £6.603m or 30p per ordinary share compared to £5.957m or 31p per share at 31 March 2007. Earnings per share were 3.9p from 17.1p last year.

Your Space has progressed from a strategy of simply owning and letting serviced offices to one of restoring and renovating quality buildings for the occupation of our serviced office division as well as offering a range of service products that meet the needs of businesses today.  Despite the uncertainties in the economy generally we have continued to grow our portfolio and our market share. 

The Group is continuing to grow its portfolio with the addition of quality serviced office buildings in prime locations around the UK. We have successfully implemented the changes within our business model to facilitate this growth. We have also improved on our range of services to our clients.

I would like to take this opportunity to thank all the team throughout the business for all their hard work. We have a very dedicated work force and on behalf of the board, I would like to say we appreciate their commitment to the Group.

The Directors consider it would be prudent in the current climate not to declare a final dividend. However we propose to continue a progressive dividend policy.  The situation will be reviewed when the circumstances are right and of course dependant on adequate distributable reserves.    

Christopher R L Phillips

Non-executive Chairman

Chief Executive's Statement

Introduction

It is with great pleasure we can report another successful 12 months for the year 2007/8. 

In view of the volatility in the financial markets we changed the emphasis of our business model last year to ensure we could meet these challenges whilst at the same time we wanted to continue to grow our portfolio. These changes focused on securing restoration/construction contracts on prime buildings in city centres facilitated by our Solutions Division and converting these to serviced offices. We also introduced our new fledgling virtual/web hosting business this year. We now have 3 divisions within the group:

• Restoration/construction division

• Serviced office/conferencing division

• Virtual /web hosting division

Over the previous two years our policy has been one of disposing of our freehold assets and leasing the buildings back for use as serviced offices. This has enabled us to reinvest into the business improving further the quality of office space within our portfolio and upgrading our infrastructure via the latest telecommunication and IT platforms. We have however taken the decision to retain 2 freehold sites in Sheffield and Glasgow both of which we intend to fully convert and operate as serviced offices. We will consider an eventual sale of these assets via a leaseback arrangement in the future when we believe we can maximize even further our investment value in these assets. We would not however dismiss the opportunity to consider the purchase of further freehold sites if we believe the fundamentals of such a transaction meet our objectives. 

Please refer to the update I gave as part of our trading statement on the on the 27 March 2008 when we announced the bonus issue of shares which provided a reflection on the Company's trading activities to 31 March 2008. I have therefore concentrated on the period in 2008 and the outlook for the future to bring you right up to date. 

Review 2008 January - September 2008.

Post the financial year end we have secured 2 further quality buildings (below) for occupation by our Serviced Office Division via our partnership with landlords. 

• Newcastle-upon-Tyne - a period Grade II listed building located in the commercial core of the city centre, close to the metro and main railway station which comprises approximately 35,000 sq ft which since last reporting includes the addition of further space secured at these premises

• Manchester - a 1980s building in a prime city centre location comprising 35,000 sq ft which benefits from a private underground car park.

Restoration/construction contracts by our Construction Division worth approximately £4m are being undertaken on these buildings and as a result of our partnerships with landlords facilitated by our Solutions Division we have also negotiated some beneficial rent free periods for our Serviced Office Division. The decision not to acquire these types of freehold assets last year was to ensure we concentrated on our core trading business to continue to grow our portfolio rather than taking on the investment risks especially in these turbulent times. It also ensures we can expand our business model without using our own cash resources or increasing the funding costs/gearing levels.

The partnership works well as we are able to restore quality prime located buildings and provide landlords with a turnkey solution whilst at the same time providing newly converted space for our Serviced Office Division. The landlord is also able to tap into the potential in their buildings. The Serviced Office Division is able to provide superior  space in prestigious buildings to our clients and the restoration works ensures it is bespoke to our needs offering air conditioned offices, conference facilities and VIP lounges with the latest IT and teleco platforms. 

We are receiving increasing levels of enquires from landlords across the UK and Your Space Solutions Division is in negotiations with several others to secure further sites.

Serviced Office Centre

Our aim is to seek impressive, prominent, city centre buildings that can provide up to 35,000 sq ft of space which we can restore as serviced offices to include conference suites/meeting rooms, VIP space and individual offices of varying sizes all benefitting from newly installed individually controlled air-conditioning. Where appropriate we will also look to incorporate an in- house branded cafe, concierge service, car parking as well as an inclusive telephone calls package. 

Each centre is unique with its own branding. Our aim is to offer a boutique style setting for SME type businesses rather that the clinical environment you see from other providers.   

I am pleased to report that we are continuing to enjoy year on year growth within our existing centres. We have a wide mix of businesses in each with no reliance on any one client or sector. Manchester New Mount Street centre which was the first centre we refurbished two years ago is operating successfully. Our average revenue per client during this period has increased from £8,500 per annum and is now averaging £20,000 per client per annum. We have not rested here but instead have undertaken further improvements to this site. We completed a substantial upgrade of the lower ground space and will shortly be embarking on a further upgrade of 11,000 sq ft of space in the upper floors. This will create capacity for a further 33 clients which will increase the revenue once fully occupied by circa £660,000 pa for what will be little additional running costs. 

Our Clerkenwell office is another example where we have increased the average revenue per client, specifically from £30,000 to £42,000 per client per annum, as a result of improving the space. We will continue to invest in our existing portfolio were we feel it is necessary. 

Other sites are showing similar increases in the average revenue per client. 

Due to our extensive investment in our telecommunication platform and in conjunction with NTL/Cisco we now offer free telephone usage for our clients on the 'tel everyone package'. As such we believe we are the only national operator to now offer free telephone calls inclusive with the rent. This is another factor which distinguishes us from our competitors.

Virtual/Web Hosting Services

Over the past 2 years we have worked closely with our Partners Cisco and NTL to upgrade our telecommunications and IT platforms so that we could competitively enter the virtual office world.  As a result, this year we launched what we believe is the world's first free virtual office. We are presently undertaking a pilot scheme in our Liverpool and Manchester sites to iron out any teething issues. Following this trial period it is expected that we will roll this out nationwide. It is already proving a great success with enquiry levels strong. Full details are on our web site.  

To complement this service we have invested in a bespoke online database/billing system which is close to being operational. This will allow for 95% of our bookings be it virtual or actual to be carried out on line. We will also shortly be announcing services being offered via web hosting and we plan to cross sell products to our virtual customers on our platform for which we will receive an additional income stream from our partners who provide us with their various products.

The world of virtual business and web hosting services is changing rapidly. We know both Microsoft and Cisco have invested heavily in this area. This market for businesses is substantial although we believe the key factor for providers of the web hosted services is gaining access to the virtual business customer. Our offering complements this with our network of business hubs positioned in prime buildings in boutique style surroundings in cities throughout the regions. We are targeting all levels of SMEs from start ups in the virtual world to established companies who may not wish to employ their own IT department. We will generate additional revenue from mail forwarding, conferencing and catering. Our product and services will enable businesses to be given IT and software support, secure document storage as well as introducing other products to meet their needs, all via web hosted services.

Outlook

The company is now a truly hybrid model with each division complementing each other and we are continuing to grow our business. We have the expertise to offer an attractive package to landlords & Institutions and working in partnership with them we can offer our specific skills to produce a quality finish in prestigious buildings in prime locations throughout the UK and at the same time ensure a commercial use of the building. 

 

This market is also providing us with great opportunities as more businesses wake up to the benefits of serviced offices rather than taking on the liability and restrictions of a conventional lease arrangement. This is attractive to both existing businesses and start ups. Businesses no longer need to commit to investing capital in substantial infrastructure/hardware costs but instead can focus on their own enterprise which of course is extremely attractive in the current climate.

To summarize we have acted swiftly to meet the challenges in this present economic cycle and have adapted our business to suit. We intend to take full advantage of the market conditions that prevail today and keep our expansion plans on course.  

Shaun Mealey.

Chief Executive Officer

    

Financial review

Group consolidated income statement

		2008	2007
		£'000	£'000
Revenue		11,075	2,157
Cost of sales		(7,217)	(390)
Gross profit		3,858	1,767
Administration expenses		(5,218)	(3,083)
Gain on revaluation of investment properties		4,174	3,370
Impairment of inventories		(1,076)	-
(Loss)/profit on sale of non current assets		(523)	3,634
Profit on ordinary activities before financing		1,215	5,688
Finance income		175	215
Finance costs		(269)	(658)
Profit before income tax		1,121	5,245
Income tax expense		(299)	(1,910)
Profit for year attributable to the equity holders of the
parent		822	3,335
Earnings per share from total and continuing		2008		2007
operations		p		p
Basic		3.9		17.1
Diluted		3.6		16.5

Consolidated statement of changes in Shareholders equity

	Share capital	Share premium	Capital redemption	Shares to be issued	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 1 April 2006	1,909	4,489	69	-	(174)	6,293
Profit for the year - total income and expenditure for the year	-	-	-	-	3,335	3,335
Shares issued	43	136	-	-	-	179
Share options	-	-	-	12	-	12
Dividends paid	-	-	-	-	(3,862)	(3,862)
At 31 March 2007	1,952	4,625	69	12	(701)	5,957
Profit for the year - total income and expenditure for the year	-	-	-	-	822	822
Dividend paid	-	-	-	-	(1,213)	(1,213)
Share option charge	-	-	-	60	-	60
Equity element of subscription warrants	-	-	-	16	-	16
Share issue	69	892	-	-	-	961
Bonus issue	144	(144)	-	-	-	-
As at 31 March 2008	2,165	5,373	69	88	(1,092)	6,603

Consolidated Balance Sheet

		2008	2007
Assets		£'000	£'000
Non - current assets
Investment properties		7,503	2,004
Property plant and equipment		1,640	295
		9,143	2,299
Current assets
Inventories		12,787	6,033
Trade and other receivables		3,303	1,927
Cash and cash equivalents		68	5,430
		16,158	13,390
Non-current assets held for sale		-	5,000
Total assets		25,301	20,689

			2008		2007
Liabilities			£'000		£'000
Non - current liabilities
Borrowings			839		4,127
Deferred tax liabilities			1,957		1,658
Other payables			237		-
Derivatives			647		-
			3,680		5,785
Current liabilities
Short term borrowings and overdraft			11,385		7,100
Trade and other payables			3,633		1,595
Current tax liabilities			-		252
			15,018		8,947
Equity attributable to equity holders of the parent
Share capital			2,165		1,952
Share premium account			5,373		4,625
Shares to be issued			88		12
Capital redemption reserve			69		69
Retained earnings			(1,092)		(701)
			6,603		5,957
Total equity and liabilities			25,301		20,689

Consolidated cashflow statement

		2008	2007
		£'000	£'000
Cash flows from operating activities
Cash used in operations		(8,718)	(8,965)
Interest paid		(269)	(658)
Interest received		175	215
Net cash outflow from operating activities		(8,812)	(9,408)
Cash flows from investing activities
Purchase of investment properties		(325)	(1,235)
Sale of investment properties		3,477	19,214
Purchase of property plant and equipment		(1,452)	-
Net cash inflow from investing activities		1,700	17,979
Cash flows from financing activities
Dividends paid		(1,213)	(3,862)
Ordinary share placing		961	-
Issue of convertible loan		1,488	-
Hire purchase agreements		356	-
Increase/(decrease) in bank and other borrowings		158	(541)
Net cash inflow/(outflow) from financing activities		1,750	(4,403)
Net (decrease)/increase in cash and cash equivalents		(5,362)	4,168
Cash and cash equivalents at 1 April 2007		5,430	1,262
Cash and cash equivalents at 31 March 2008		68	5,430

Reconciliation of profit for the year to cash generated from operation

	2008	2007
	£'000	£'000
Net cash from operating activities
Profit before taxation	1,121	5,245
Depreciation	107	108
Gain from change in fair value of investment property	(4,174)	(3,370)
Loss/(profit) on sale of investment properties	523	(3,634)
Tax paid	(252)	-
Increase in inventories	(6,756)	(6,033)
Increase in receivables	(1,376)	(1,252)
Increase/(decrease) in payables	2,089	(29)
	(8,718)	(8,965)

1. Profit per share

The calculation of the basic profit per share is based on the profit after tax of £822,000 (2007: £3,335,000) and on 21,218,004 (2007:19,524,868) ordinary shares being the weighted average number of ordinary shares in issue during the period. The fully diluted earning per share is based on profit of £822,000 and on 22,648,004 ordinary shares.

2. Dividends

The directors are not proposing the payment of a dividend in respect of the year ended 31 March 2008.

3. Publication of non-statutory accounts

The financial information set out in this preliminary announcement does not constitute the Group's statutory accounts for the year ended 31 March 2008, as defined in Section 240 of the Companies Act 1985, but is derived from those accounts, which are prepared in accordance with International Financial Reporting Standards. 

The financial statements for the period ended 31 March 2008 have not yet been filed at Companies House, but will be in due course.  The auditors have reported on those accounts; their report was unqualified but included an emphasis of matter paragraph concerning a material uncertainty regarding going concern below.

4.  Going Concern

The financial statements have been prepared on a going concern basis.  

The Group continues to be fully compliant with its financial covenants. However, the Group has a revolving credit facility of £11.4m which is due for renewal in October 2008. The Board is satisfied that the facility will be renewed based on positive discussions held with the bank. However, should this facility not be renewed, and in the absence of alternative funding sources, the Group would be required to dispose of certain assets including the properties in Glasgow and Sheffield. Given current market conditions there is a significant risk that the properties would take an extended period to realise cash which might also be significantly less than their book values. As a result, should the Group be unable to repay their bank borrowings from property and stock sales, there exists a material uncertainty which casts significant doubt over the Group's ability to continue as a going concern.  

The Directors have also prepared a forecast. Reasonable enquires have been made and assumptions taken with regard to cashflow and sensitivities. The Board is satisfied that should the lower of these estimates be achieved the Group will generate sufficient working capital to meet all of its liabilities. However, achieving this forecast is dependent upon the construction contracts division generating a sufficient level of new contracts and maintaining occupancy levels within the Group's business centre. Given the uncertainty in the economy, there is a risk the forecast level of sales and cash may not be achieved. In this event the directors would realise cash through the sale of certain properties. However, for the reasons set out above, should these property sales not be forthcoming, the Group might be unable to pay their debts as they fall due. This creates a material uncertainty over the ability of the Group to pay its debts as they fall due which cast significant doubt over the Group's ability to continue as a going concern.  

It is the opinion of the Directors that contracted work and emerging deals for property renovation will materialise, that the Group will continue to attract customers to its serviced offices and that the Group will deliver on its forecast. In addition support from the Group's bank is anticipated. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements, these financial statements do not include any adjustments that would result if the going concern basis of preparation is inappropriate.

The statutory accounts are prepared on the basis of the accounting policies stated in the Group statutory accounts for the year ended 31 March 2008. 

Copies of the Group's statutory accounts can be found on the Group's website at: www.yourspaceplc.com 

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