The momentum generated during the first eight months of 2008, together with the Board’s proven strategy, produced a further 18% advance in revenue during the year together with uplifts in all our key performance indicators. Despite the economic downturn, particularly the crisis in the banking markets and subsequent government rescue initiatives in September 2008, demand for our flexible office space remained strong, with group-wide lead flow 16% ahead of 2007.

We continued to generate strong cashflow throughout the year with net cash at the balance sheet date of £16.4m and net tangible fixed assets of £41.5m. EBITDA for the 12 months to 31 December 2008 was £18.1m, a 6.5% uplift over the comparable period despite the difficult business environment, while pre-tax profits rose by 10% to £14.0m against £12.7m last time.

Despite the pressures endured over the latter part of the year it is pleasing to report that we maintained occupancy at 90% and generated increases in both revenue per available workstation (REVPAW) and revenue per occupied workstation (REVPOW). REVPAW rose by 3% to £8,700 from £8,435 and REVPOW advanced by a similar percentage to £9,650 from £9,355.

Our Meeting and Conference Room offer produced further growth over the period. This generated a 7% uplift in income to £11.3m compared to £10.5m during 2007. Whilst the occupancies of our meeting rooms continue to grow there has been downward pressure on rate in the early part of 2009. Our clients continue to value our differentiated proposition, particularly the high levels of service they receive, which has meant our pricing has been less affected than some of our competitors.

It has been pleasing to witness continued growing demand for this product as businesses have increasingly turned away from residential-based conference and meeting room facilities in their efforts to find more cost effective solutions.

We have approximately 1,500 serviced office clients in our portfolio, spread across a wide range of sectors, who have an average requirement of 8 workstations and stay for approximately 23 months. We continue to focus on ensuring they receive the very best support infrastructure from our operational teams. Our differentiated proposition and the delivery of service excellence continues to have a positive effect on our renewal rates with over 70% renewing at least once.

As we stated at the half year, we are not opening any new leased and therefore capital intensive centres in the near future. Instead we have concentrated on opening centres under Operating and Management Agreements (OMAs), by means of which cash can be generated with little or no capital expenditure required from Business Exchange.

As a result during 2008 only one further centre was opened: St. Clement’s House, London EC4, which provides a further 416 workstations together with additional meeting and conference room facilities, held under an OMA. During the period we did not renew our lease on the Bracknell Highview centre which was not profitable. Since year end we are pleased to announce the opening of a further Executive Centre at Harrogate, taking our portfolio to 56 locations.

Our growth strategy has been to focus on London and particularly the West End where historically occupier demand has recovered most quickly as the market recovers. However, in line with our stated strategy, we continue to review all expansion opportunities with caution.

Demand for our centres in the City, where the effects of the banking crisis have been the most acute, is robust as the market is becoming much more educated about the short-term benefits of serviced offices compared to the longer-term commitment of leased accommodation. This is particularly beneficial in the current adverse climate to companies downsizing and in need of temporary or short-term space, as our flexible office proposition continues to play more of an important role in the commercial property sector. Our proposition is also extremely attractive to new start-up businesses that either do not want, or are unable to commit to, a long-term lease.

In terms of demand, 2009 has started more strongly than we anticipated; while the level of enquiries has been good there has been continued pressure on rates and we are seeing sustained demand for flexibility, reflecting the general uncertainty in the market. In response to this new business environment, we have continued to rigorously manage our costs and generally lowered our overhead base during the second half of 2008, the benefits of which are already being felt in the current year.

We are expanding and improving the services we offer to clients, particularly in the IT and Telecom areas that are seeing rapid and dramatic change. We are also reviewing a number of opportunities to leverage the strength of the management team as we explore other potential income streams.

We have a strong cash-generative business with a sound balance sheet and the Board remains positive about the medium-term future for the Company, both in terms of profit and shareholder value.

John Spencer
Chief Executive
MWB Business Exchange Plc
28 April 2009