Your Space plc (“YSP”) interim results
21 December 2007
Period ended: 30 September 2007
Highlights
Ø YSP business model continues to grow
Ø Turnover £9.6m
Ø Pre tax profit £2.48m
Ø £13.6m of cash generated from operations in the period
Ø An interim cash dividend of 6p per share payable on 31 January 2008 to shareholders on the register at the close of business on 4 January 2008
Ø A conditional recommended scrip dividend via the issue of 6.5p of additional shares for each existing share which will be issued on or before 31st March 2008
Post interim period
Ø Conditional exchange of contracts agreed to dispose of Glasgow property through sale and leaseback for in excess of £8m
Ø Share placing of almost £1m
Ø Convertible loan note of £1.5m gross issued to assist with the expansion programme
Ø Further substantial investments in our IT and Teleco infrastructure and services in Partnership with NTL/Virgin & Cisco
Ø Group head office function successfully implemented
Ø Anticipated growth in the services business and the established centres trading profitably
Ø Group plan to take advantage of market conditions through the acquisition of further centres
Ø Group in discussions to acquire further sites
Chairman’s statement
It gives me great pleasure to again announce another profitable period reporting pre-tax profits of almost £2.5m. With the structural changes in the period implemented and creation of the Head Office function, the Group is now set up to enjoy considerable economies of scale to take on the expansion plans throughout the regions of the UK. I am also pleased to announce that the Company will be paying a 6 pence per share cash dividend on 31 January 2008 to shareholders on the register at the close of business on 4 January 2008. It is also the Board's intention to issue additional shares to existing shareholders by way of a scrip dividend and/or a capitalisation of profits or share premium account based on 6.5p of additional shares for each existing share held subject to there being sufficient distributable reserves at that time and shareholder approval being obtained. It is anticipated that this will be paid on or before 31st March 2008.
The YSP Board believe the current market conditions will provide an opportunity to expand the model more quickly within the UK. We see the price to acquire character buildings in need of restoration will be favourable to us reinforced by the decline in the residential buy to let market plus the proposed changes in legislation to business rates on the exemptions currently enjoyed on vacant/part vacant commercial property. We believe these factors coupled with our specialist knowledge in the development of character buildings will ensure we are able to take advantage of these opportunities for acquisition.
Our model is based on the fact we have our own in-house highly experienced construction and restoration business and as a result we are able to keep our cost to a fraction of the price should we employ an outside contractor. We source and purchase most of the materials directly and we employ a full complement of the trades necessary to carry out the work.
The Services business is trading well and we anticipate further growth in the 2nd half of the year.
On a fully operational basis our services business will have 8 centres and 215,000 gross sq/ft under management. We also plan to add further centres in 2008 and beyond.
We announced on the 19th November that we had raised almost £1m by way of a recent placing of 686,500 ordinary 10p shares to an institutional investor in line with our policy to attract further investment for our growth aspirations and it was pleasing to report that this was the same amount of shares that the Company bought back for cancellation 20 months ago.
In addition we have recently finalised an additional funding line of £1.5m from an American fund YA Global Investments LP, via a secured convertible loan note to supplement our growth targets. This carries a 7% coupon for a maximum term of 3 years. This note is redeemable at a variable premium of 10% if redeemed within 6 months, or 15% if redeemed thereafter and is also convertible into the Company’s ordinary shares at a rate which is the lower of the current market price and 80% of the market price at the date of conversion. The Company has also issued warrants to the American fund to subscribe at any time over the next 2 years for (i) up to 300,000 ordinary shares in the Company at a price which is the lower of the current market price and 75% of the market price at the date of exercise and (ii) up to a further 75,000 ordinary shares in the Company at a price equal to 125% of the current market price.
In view of the increased scale of the operation it was felt prudent to restructure the business by centralising all our operations under one Head Office function to support and manage our team in all the sites at local level to ensure we provided a high level of customer care but at the same time enjoying the benefits of these economies of scale particularly as we continue to expand our brand and operation throughout the UK.
To conclude the YSP board are excited about the future prospects for the business and they have a vast wealth of experience in construction, property and facility management services. We believe the business is now set up to handle the future growth that the Board anticipates in the coming year.
Chris Phillips, Chairman
