Longboat Energy Regulatory News (LBE)

11 Mar 2008 07:02

Marylebone Warwick Balfour Grp PLC11 March 2008 FOR IMMEDIATE RELEASE11 March 2008 MARYLEBONE WARWICK BALFOUR GROUP PLC PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007 HIGHLIGHTS MWB GROUP PLC • Substantial uplift in equity attributable to shareholders of the Company over the year, increasing by £105.1m to £204.4m from £99.3m at 31 December 2006. • Equity attributable to shareholders of the Company in pence per share advances 107% to 254p from 123p at 31 December 2006. • Adjusted equity attributable to shareholders of the Company in pence per share, after taking account of stakes in MWB Business Exchange Plc and Liberty Plc at Stock Market values at 31 December 2007 and incentives payable on realisation, amounts to 263p, an increase of 42% from 185p at 31 December 2006. • EBITDA (excluding profits on sales of properties and one-off transaction costs) up 17% to £33.3m against £28.5m in the 2006 comparable period. "I am extremely heartened by the performance of our operating businesses overthe period. We have a strong cash flow and the businesses are underpinned byvaluable property assets and excellent people. I am confident that ourbusinesses will continue to thrive and deliver excellent shareholder value.". Eric SandersonChairman - more -Contact: Marylebone Warwick Balfour Group Plc Tel: 020 7706 2121 Richard Balfour-Lynn, Chief Executive Andrew Blurton, Group Finance Director Baron Phillips Associates Tel: 020 7920 3161 Baron Phillips MALMAISON AND HOTEL DU VIN • 22 operating hotels now open - a further 4 to open over next 12 months - compared to 17 at December 2006 year end. • Hotel properties valued at £529m at 31 December 2007 up from £337m at 31 December 2006. • Revenue over the year grew by 20% to £95.3m from £79.1m for the year to 31 December 2006. • Like-for-like revenue (excluding new hotel openings) rose 5.3% over the year to 31 December 2006. • EBITDA before exceptional items consistent for the year at £23.9m compared to £23.4m for the year to 31 December 2006, despite major opening programme. • Overall occupancy for the year to 31 December 2007, including new hotels, at 79%, compared with 81% for the year to 31 December 2006, despite major opening programme. Occupancy maintained at 81% on a like-for-like basis. • Average room rate over period rose by 8% to £115 against £106 for the year to 31 December 2006. "With our established pipeline of further hotel openings, we believe we willcontinue to deliver further growth over the coming period. We look to thefuture with a confidence that comes from an established brand which is able todeliver what our customers demand and expect". Robert B. CookChief ExecutiveMalmaison Group MWB BUSINESS EXCHANGE PLC • Revenue grown by 22% to £100m from £82m in year to 31 December 2006. • EBITDA rose strongly by 83% to £17m from £9.3m in year to 31 December 2006. • Revenue Per Available Workstation (REVPAW) advanced 23% to £8,435 at 31 December 2007 from £6,870 at 31 December 2006. • Revenue Per Occupied Workstation (REVPOW) up 6% to £9,355 at 31 December 2007 compared to £8,830 at 31 December 2006. • Meeting and conference room division revenues up by more than 36% to £10.5m over year to 31 December 2006. • Occupancy increased to 90% at 31 December 2007, up from 77% at 31 December 2006. • Robust contracted income already accounting for over 60% of current 12 month projections to December 2008. • Seven new Business Exchange Centres successfully opened during the year. "This has been another year of strong earnings growth as MWB Business Exchangecontinues to consolidate its position as one of the country's leading providersof flexible office space. We believe that the right business model is in placeto ensure that we continue to deliver growth in shareholder value". John SpencerChief ExecutiveMWB Business Exchange Plc LIBERTY PLC • New Chief Executive joined 1 July 2007 and additional appointments to executive management team. • Advance in total Group revenue to £46.7m - up from £44.6m in year to December 2006. • Flagship store sales including concessions advanced in year to December 2007 by 2% to £38.3m. o Menswear increased in year to 31 December 2007 by 18% to £4.6m. o Liberty of London luxury brand up 8% in year to 31 December 2007 to £3.2m. • Liberty balance sheet underpinned by Great Marlborough Street Flagship Store valued at £33m. • Independent Liberty of London shop leased in Sloane Street - anticipated Summer 2008 opening. "We continue to make great strides in establishing our Liberty of London luxuryproducts label, and its progression to becoming a global brand. The Board isconfident that Liberty has the structures, products and people to produce animproving platform for growth in the current year". Geoffroy de La BourdonnayeChief ExecutiveLiberty Plc CHAIRMAN'S STATEMENT This has been a year that mixed great success with some disappointment.Operationally, the three businesses within MWB Group have performedexceptionally well, but at the corporate level we were not able to complete twomajor transactions as a result of the deterioration in financial markets towardsthe end of the period. I comment on this further below. This statement covers the audited financial statements for the twelve months to31 December 2007 and the comparative period for the eighteen months ended 31December 2006. In some instances, where relevant, I have also commented on theperformance relative to the previous twelve months ended 31 December 2006. I am pleased to be able to report that Business Exchange and the Malmaison groupproduced excellent growth over the 12 months to 31 December 2007 while Libertydelivered a commendable performance under difficult circumstances. At the heart of the Group results are the revenue increases generated byBusiness Exchange and Malmaison - up by 22% and 20% respectively for the year -with our serviced office business delivering an excellent 83% increase in EBITDAto £17.0m, from £9.3m for the year to December 2006. Malmaison saw EBITDA holdfirm at £23.9m in spite of five new hotel openings over the period. At theoperating level, Liberty saw revenue increase by 5% to £46.7m, supported by anexceptional performance by its fabrics division, which recorded a 63% increasein EBITDA to £2.3m over the period compared to £1.4m for the previous year. Our strategy of developing strong management teams within the three corebusinesses continues to prove a tremendous success. As each company grows, therespective management team has been extremely adept at recruiting bright andcommitted people at all levels to ensure future growth is maintained. While there are detailed reports from each of the Chief Executives following mystatement, I would like to emphasise the importance we place on our people. Inour view, this Human Capital is as important as the tangible assets within theGroup. As a result, we invest considerable time and money in developing thetalent we have in each business. We believe we have outstanding peoplethroughout the Group and the results we are reporting here reflect their qualityand commitment. Everyone in our three companies recognises a simple fact: they are in a serviceorientated customer-led business. This is true whether they are a salesassistant at Liberty, a receptionist in Business Exchange or a Hotel du Vinrestaurant waiter. And importantly, each can rise to the very top of theirrespective companies if they have the desire to do so. Our AIM-quoted MWB Business Exchange has continued to consolidate its positionas one of the UK's leading providers of flexible office space. Its strategy offocusing on sustainable growth supported by risk mitigation has resulted infurther Central London expansion for its leased space and Operational andManagement Agreements in the regions. As a result, the West End now accountsfor 32% of Business Exchange's portfolio but generates 45% of total revenue and54% of its EBITDA before central costs. Across the company, occupancy levelshave been strong, concluding the year at 90%, compared to 77% at the 2006 yearend, despite launching seven brand new centres during the year. There is a similar story at Malmaison and Hotel du Vin where five new hotelswere opened during the year taking the year-end total to 22, while occupancylevels were maintained at 79%, reflecting the speed at which these newproperties reach stabilisation. One of the key growth indicators from theMalmaison group this year has been the substantial uplift in property values.At 30 June 2007 our hotel portfolio was independently valued at £526m comparedwith £337m at the December 2006 year-end. At 31 December 2007, our largerportfolio was valued at £529m, representing a fall in values of some £19m in thesecond half. Nevertheless, it is gratifying to note the robustness of our hotelportfolio which has been able to withstand most of the adverse effects of therecent market turbulence. While some of the uplift over the year reflects capital expenditure,particularly on our new hotels, £146m of the increase for the year representsthe valuation surplus arising over the year despite the adverse financial andproperty markets over the last six months. This valuation takes no account ofthe market value of the operational business, its brand and goodwill and wetherefore believe there is further capital value that can be realised forshareholders as this successful niche business continues to grow. Secured onthis property we have debt of £240m, giving operational gearing of only 45%. Liberty, our AIM-quoted retail emporium in London's West End, continues toestablish the Liberty of London luxury brand both within Europe and NorthAmerica. While some of its divisions performed well, uncertainties in thefinancial and consumer markets resulted in a more challenging second half which,combined with a management re-structuring, meant Liberty's progress wasrestrained. Substantial investment is being made in Liberty's luxury brand andin the current year this will include the launch of the first Liberty of Londonstand-alone shop in Sloane Street. All this brand expenditure is expensed as itis incurred which inevitably adversely affects profits. Net debt has increasedto £8.7m from £1.2m last year but still represents property gearing of only 26%as Liberty is well underpinned by net assets of £42m, of which £33m is accountedfor by the valuable Liberty flagship store. At the Group level, operating EBITDA was £33.3m for the 12 months to 31 December2007, compared to £28.5m for the previous year. As a result of the £121m Group share of the increase in property values duringthe year, equity attributable to shareholders after taking account of minorityinterests, rose to £204.4m from £99.3m at 31 December 2006. This represents adrop of some 33p per share from the 287p per share reported in our June 2007results, reflecting the adverse financial and property markets in the secondhalf of the year. Nevertheless, overall the results to December 2007 confirm anincrease of 131p a share for the year, up from 123p to 254p per share at 31December 2007. Importantly, there has also continued to be substantial growth in adjustedequity attributable to shareholders. This has risen from £149.1m (185p a share)at 31 December 2006 to £211.4m (263p a share) at 31 December 2007, reflectingthe growth at the Malmaison group over the period. During the year we endeavoured to realise shareholder value and return cash orcash equivalents under our Cash Distribution Programme through the disposal ofour hotel business. Initially we agreed terms to sell the property interestsand retain the operating business of the Malmaison and Hotel du Vin Group as setout in our circular issued in May 2007 and shareholders approved thistransaction later that month. Unfortunately, due to financial constraints ofour proposed purchaser, this deal could not be completed. Nevertheless, therewas considerable interest in our hotels from other potential buyers and we cameextremely close to concluding a disposal of the entire division including theoperating business later in the year. However, at the last moment,uncertainties in the debt market meant bidders could not finalise unconditionaloffers for the division and these negotiations had to be terminated in September2007. Excluding the one-off costs of £8m in respect of this sales activity during theyear, the Group made pre-tax loss of £6m for the year ended 31 December 2007.Overall, the loss for the year after these one-off costs, was £14.3m or 19.4p ashare. Since the year-end we announced a major capital reorganisation and restructuringof the Group as a key component of the Cash Distribution Programme. Theseproposals involve a Group structure with greatly increased flexibility on futuredisposals of our operating businesses; increases in the available options as towhen cash or cash equivalents can be returned to Shareholders; and increases inthe Group's reserves that can be distributed to Shareholders. These proposalswere approved at a shareholders meeting held on 4 March 2008. I am extremely heartened by the performance of our operating businesses over theperiod. We have a strong cash flow and the businesses are underpinned byvaluable property assets and excellent people. I am confident that ourbusinesses will continue to thrive and deliver excellent shareholder value. Eric SandersonChairman11 March 2008 MALMAISON AND HOTEL DU VIN OPERATING REVIEW This has been another exciting and rewarding year for our hotel business.Within the Malmaison and Hotel du Vin group we opened a further five new hotelsduring the period, taking the year end total to 22, and increased revenue bysome 20% to £95.3m. We have further consolidated our position as the UK's leading lifestyle boutiquehotel group as we continue to win travel industry awards, including BusinessTraveller's "World's Best Small Hotel Chain" and The Guardian's "Best HotelGroup" which Hotel du Vin (HdV) won for the fifth consecutive year. Over the next 12 months we are on track to open four new hotels: Poole (HdV),Newcastle (HdV), Edinburgh (HdV) and Aberdeen (Malmaison), which will complementour existing portfolio and generate further earnings for the Group. As a resultof the current pipeline of openings, we will have a total of 26 operatingproperties in the UK by the end of 2008 - 14 HdV hotels and 12 Malmaison. This will expand further when our recently acquired Golf Hotel at St Andrews isconverted into a Hotel du Vin. We are also in negotiations for properties inChester and Canterbury which should be concluded shortly. Additionally, we aremaking progress with our proposed makeover of the Sussex Arts Club in Brightonwhich adjoins our existing HdV hotel. We acquired the building last year andhave submitted plans to the local authority to provide an additional 11bedrooms, together with a new Pub du Vin concept. Elsewhere we are currently targeting a further five locations which, ifsuccessful, would take the HdV total to 18 and Malmaison to 14, making anoverall total of 32 by 2010. What has been particularly pleasing over the period is that we have maintainedoccupancy at just under 80% despite the initial short-term impact of five newopenings: Liverpool, Reading, Cambridge, Cheltenham and York, whichconventionally would have had an adverse impact on average occupancy levels.The speed at which these new properties reach stabilisation is way ahead of theindustry norm and reflects the quality of both the product and staff, with thelatter doing much to establish the atmosphere and high service standard thatbrings clients back to our hotels time and time again. Importantly the impact of these new hotels continues to enhance the Malmaisonand Hotel du Vin brands and our position within the markets that we serve.Overall revenue for the year rose to £95.3m from £79.1m in the year to December2006. On a like-for-like basis underlying growth was 5.3%. Operating EBITDAheld firm at £23.9m over the 12 months to December 2007 despite the new hotelopenings. We are confident of achieving further growth in 2008, as our 2007openings continue to establish themselves and our current year pipeline comes onstream. Overall occupancy on a like for like basis, remained consistent at 81%, butRevenue per occupied room (REVPOR) increased by 8% giving us an average of £115across the group. These occupancy achievements should also be seen against thebackdrop that two of our hotels - the Oxford Malmaison and HdV Cheltenham - hadto be closed for a period during the year; the former due to a small fire andthe latter due to last Summer's floods. Both hotels were fully covered byinsurance and the group was, therefore, fully protected from the financialeffect of these events. In a fast growing business such as the Malmaison Group, cost control is anincreasingly important feature to ensure continually improving margins. One ofthe benefits that comes from our size is our ability to buy goods and servicesmore competitively, although this has become more challenging in the currentenvironment where property rates and utilities which are major components of ourcost base, are increasing well above the rate of inflation. Over the past year we have continued to enhance margins through continuallybetter controls on expenditure which has meant further improvements on both roomand catering margins. This ability to drive down costs - but without damagingeither service or quality of food and rooms - will continue as we further expandthe group. Underpinning this growth is our ever strengthening balance sheet. All ourhotels, with the exception of the Oxford Malmaison, are owned freehold or areeffective freeholds. As a result, the year-end independent valuation shows a £192m increase in thevalue of our properties from £337m at December 2006 to £529m at this year end.£43m of this increase comprises capital expenditure during the year and thebalance of £149m reflects the valuation surplus arising on these propertiesduring the year. This represents a gain of £164m in the first half of the year,and a reduction of £15m in the second six months, reflecting the recent changesin the financial markets. Nevertheless it is gratifying to note the robustnessof our hotel portfolio as it has been able to withstand most of the recentmarket turbulence. Against this we have debt of £240m, giving operational gearing of only 45%. Itshould also be borne in mind that this latest valuation again takes no accountof the market value of our hotel operating business, its brands and goodwill,thus underpinning further capital value that can be realised for shareholders. It is obviously pleasing to report such positive financial progress over theyear, but none of this would be possible without the devotion and dedication ofour management and staff. Today, the Malmaison Group employs as many as 1,700people and that over the past three years we have created more than 1,000 newjobs, an achievement of which we are justifiably proud. We invest considerable time and money in our people. Last year alone we spentover £1m on people development and as a result we have one of the lowestindustry staff turnover figures at 25% compared to an industry average of over50%. Such is the interest in the group from people wishing to start a career inhotel and catering, or further their career by joining Malmaison, that 68% ofall new recruits last year joined us with no recruitment cost to the business. To put these figures into further perspective, we have trained over 500 managersduring the last 3 years and 90% of our current deputy managers and chefs havebeen promoted from within the organisation. Against this background it isperhaps hardly surprising that we won an award from the Chartered Institute ofPersonnel Development for Best Talent Management in the UK. This was not ahotel industry award but was won in competition against all industries andbusinesses. Malmaison also won the Best Place to Work award from the Catererand Hotelkeeper and was recently recognised by The Sunday Times in its Top 100Companies to Watch. We are conscious that current market conditions are not ideal for any business,especially in discretionary spending sectors, but we have always relished achallenge. Over the last five years during our ownership of Malmaison and Hoteldu Vin, events such as 9/11, foot and mouth disease and SARS, have not had thenegative impact on our hotels that have been witnessed elsewhere in theindustry. Irrespective of the economic and business climate our philosophy is,and continues to be, that we strive to offer an exciting and memorableexperience that will bring our clients back to us time and time again. We are not complacent but we do believe we provide a product that our clientswant and enjoy. This is borne out by our newly opened hotels that deliverstabilised income streams extraordinarily quickly, as each one rapidlyestablishes itself in its location and creates a reputation for good food, wineand hospitality. With our established pipeline of further hotel openings, we believe we willcontinue to deliver further growth over the coming period. We look to thefuture with a confidence that comes from an established brand which is able todeliver what our customers demand and expect. While we appreciate currentmarket conditions are not ideal, our performance in the first quarter of 2008suggests a continued resilience that comes from providing a quality offer at asensible price. Robert B. CookChief ExecutiveMalmaison Group11 March 2008 MALMAISON AND HOTEL DU VIN - KEY FINANCIAL HIGHLIGHTS Malmaison has expanded organically and by acquisition of further operatinghotels during the year under review. The key performance indicators for thebusiness, together with its trading and balance sheet performance in recentperiods, are summarised below:- Eighteen Year ended Year ended months ended 31 December 31 December 31 December 2007 2006 2006Malmaison_________ Total revenue £'000 58,198 48,912 70,612Average occupancy for period % 78 79 79Average room rate for period £ 113 107 106Operating EBITDA* £'000 14,761 9,670 17,316Number of operating hotels at period end 11 9 9 _______ ______ ______Hotel du Vin_____________ Total turnover £'000 37,074 30,189 44,446Average occupancy for period % 81 84 85Average room rate for period £ 124 118 116Operating EBITDA* £'000 9,143 13,719 17,147Number of operating hotels at period end 11 8 8 _______ ______ ______Combined Malmaison and Hotel du Vin___________________________________ Operating EBITDA* £'000 23,904 23,389 34,463Operating profit/(loss) before tax* '000 (4,551) 5,101 7,480Total recognised income and expense £'000 135,601 22,236 36,845 _______ ______ ______ *Operating EBITDA and operating profit/(loss) before tax exclude one off costsof aborted sale transactions and exceptional gains and losses. 31 December 31 December 2007 2006Balance sheet composition_________________________Property, plant and equipment £'000 528,923 336,958Debt £'000 (239,512) (199,803)Equity attributable to shareholders of MWB Groupin Malmaison and Hotel du Vin £'000 222,675 106,380Equity attributable to shareholders of MWB Groupin Malmaison and Hotel du Vin, in pence per MWBGroup share Pence 276p 132p _______ _______ MWB BUSINESS EXCHANGE PLC OPERATING REVIEW This has been another year of strong earnings growth as MWB Business Exchangecontinues to consolidate its position as one of the country's leading providersof flexible office space while increasingly focusing on both client service andprofitability. I am delighted to report a 22% growth in revenue for the 12 months to 31December 2007 as income rose to £100.0m from £82.3m in the comparable period ayear ago. This has resulted in a 83% increase in EBITDA from £9.3m to £17.0mfor the year to December 2007, while pre-tax profits rose by almost 60% to£12.7m from £8.0m. The Board is proposing a final dividend of 1.93p perordinary share, 8% higher that last year's dividend of 1.79p, which if approved,will be payable on 30 May 2008 to shareholders on the register on 2 May 2008. The Company's strategy of sustainable growth across its four main areas ofactivity - Business Exchange, City Executive Centres (CEC), Meeting Rooms andPartnerships - is consistent and well established. We are continuallyde-risking the business to reduce volatility, although we are confident that thecurrent market conditions will also present opportunities. We have a strong and established management team that combines property andbusiness service expertise. This has enabled us to benefit from growthopportunities available through leasehold acquisitions, Operating and ManagementAgreements (OMAs) and back-to-back deals. At the same time we have developedour Partnerships division, which provides management solutions to landlords,corporate occupiers and commercial property agents. We have also continued toseek ways to add value to our client base through service enhancements and newproducts, in addition to the continuous development of our people. Our focus on sustainable growth runs in parallel with our risk mitigationstrategies. During the year to December 2007 growth has focused on two mainareas: acquisition of occupational leases in London, particularly in the WestEnd, where the market shows the greatest demand characteristics for the serviceswe provide, and regional OMAs. By growing the number of OMAs we can expand the portfolio without exposing thebusiness to substantial capital expenditure or to long-term lease liabilities,yet still generating significant management fees and profit share for theCompany. OMAs also provide a gateway for further growth opportunities in theform of back-to-back leases, turnkey solutions, fit-out services and facilitiesmanagement, which in turn generate further returns. We continue to review the performance of our portfolio on a regular basis with aview to divesting any poor performing centres. Over the year to December 2007we closed eight locations to improve our overall business model and enhanceshareholder returns. At the year-end, Business Exchange comprised a total of approximately 15,600workstations in 57 centres, of which 44 operated under the four/five starBusiness Exchange brand including four OMAs, together with 13 City ExecutiveCentres, our three-star brand, which are all management contracts. As a resultwe now have almost 1.5m sq ft of flexible office accommodation, incorporatingour highly successful 250 strong Meeting and Conference Room offer. One of the business's strengths is its extremely broad client spread. We arenot reliant on a few specialised sectors and, at the same time, only a verysmall number of clients occupy more than 15% of the workstations in any onecentre. This prevents the business from being materially exposed to a departurefrom a large occupier at the end of a licence agreement and allows us to planmove-outs in a controlled and efficient manner. In instances where a client does occupy more than 15% of a centre, we ensure aphased exit clause is incorporated into their contract enabling us to develop apipeline of prospective clients who can move in once the first phase ofdeparture occurs; further ensuring our exposure to large move-outs is limited. Our sales and marketing continues to focus on attracting smaller and medium sizebusinesses (SMEs) alongside the ongoing development of existing and newcorporate relationships. As a result we have a broad range of clients acrosswidely diverse sectors including: professional services, media, consultancy,leisure, real estate, financial services and government. We believe the breadthof our client base is a major strength in the current economic and financialclimate. Our proposition offers an ideal solution for companies, in particular SMEs,looking to establish a footprint in major UK commercial areas. The traditionalleased office model, prevalent elsewhere in the market, is restrictive ifcompanies are expanding or contracting in an ever changing business environment.It is also an unnecessary risk for companies to take on, which is why so manyare choosing the more flexible and risk adverse route we provide. This is reflected in the demand for our unbranded proposition which has remainedstrong. Lead flow has increased by 30% and the number of workstation salesacross our network increased by 31% to December 2007 in comparison to the 12months to December 2006. The rate we accomplish for workstations sales has gonefrom strength to strength and we have achieved an 11% increase in 2007 over theprevious comparable period, largely as a result of the ongoing improvement inour proposition. Over the year we have continued our strategy of focusing on prime office marketswith particular emphasis on London's West End. Today we have approximately 5,000workstations in the West End, representing 32% of our portfolio, generating 45%of our total revenue and 54% of our EBITDA before central costs. We have significantly expanded our Central London portfolio where demand remainsstrong, with new centres reaching maturity in the West End - Baker Street,Tottenham Court Road and Cavendish Square - and the City - Cannon Street, LondonBridge and London Wall. This was further enhanced by our £12m acquisition ofStanhope Business Centres which gave us two more excellent properties in CoventGarden, an area where we have previously been under-represented, that we believewill deliver significant future earnings. Our experienced acquisitions and launch team ensures each new centre has a highlevel of occupancy prior to opening. An excellent example is our latest centreclose to Liverpool Street Station in the City of London which was virtuallyfully occupied on opening following the signing of a long licence agreement witha major clearing bank. In the year to December 2007 we also added new locations in Central Manchester,Newcastle and Basinghall Street in the City of London while Baker Street andLondon Bridge became fully operational. On average, all our new centres achieve85% occupancy in less than six months of opening, representing a strongperformance for the group. As we have stated previously, our focus is onensuring we drive income and that each centre delivers increasingly profitablerevenue through optimising revenue per available workstation (REVPAW). Thisapproach, combined with targeted sales and marketing, has resulted in occupancyover the year growing to 90% compared with 77% at the previous year-end. Anexcellent achievement considering we have opened and launched five new centresover this year, as well as the two Stanhope locations. At the heart of this performance is the substantial progress we have made ingrowing income at the basic workstation level. As a result of increases in rateand services income, REVPAW increased 23% to £8,435 from £6,870 at December 2006while we achieved a 6% rise in revenue per occupied workstation (REVPOW) to£9,355 from £8,830 a year ago. Service income also improved, growing by 29%over the year to December 2007. Clients contract with us, on average, for an initial eight-month period, withover 70% renewing. This leads to an average total stay of nearly two years.Our strong contracted income equates to over 60% of our current 12-monthprojections for the year to December 2008. When renewals are factored in, thisfigure rises to 80% further underpinning our business model and providingcertainty of our future income stream. Currently we have around 1,500 contracted clients with an average initialrequirement of eight workstations. We recognise that our client's brand - notours - is most important to them, which is why a majority of our centres areunbranded, and all will be by the end of 2008. Our client base is predominantly SMEs. Their feedback indicates that theychoose us on the basis of our ongoing investment in contemporary, bright andnon-branded interiors situated in prime business locations, priced reasonablywhile still delivering superior service delivery. Our highly successful meeting and conference room division, offering 250 roomsacross the UK, grew revenue by 36% to £10.5m from £7.7m for the year to December2006. Demand remains strong for our third party business meeting rooms; thevolume of repeat bookings is growing and our sales and marketing activitycontinues to generate further new business. Our continued drive to provide clients with a truly differentiated propositionremains critically important to us. As the first person our clients see or talkto, and the people who support them on a day-to-day basis, our staff areeffectively an extension of our clients' business. We invest considerably instaff training through our "We're the business" programme, to ensure thateveryone in the business fully understands our service ethos and deliversexceptional client service. "Centres of excellence" were established across our business during 2007 inorder to utilise exceptionally high performing centres to educate and developother business centre managers and develop best practice throughout the group.This programme has been a great success and provides learning and developmentopportunities both for new recruits and existing employees. Also these centresare the first to trial our new products and services as we seek to continuallyimprove the service we offer to our clients. The Group takes staff recruitment and training very seriously and retaining highachievers is important to us. We concentrate on creating client-focused teams,strengthening staff capabilities and rewarding people for performance. We are extremely proud that research reveals some 75 per cent of our people arehighly committed to the business, an extraordinary statistic when compared toother service industries. Our employees are enthusiastic and supportive and aimto create a lively, positive atmosphere in all our centres. We look ahead to 2008 with confidence. The strategy of sustainability and riskmitigation is ongoing as we continue to improve profitability across theportfolio and pursue new growth opportunities in areas that we have prioritised. The Group will also seek to further differentiate our proposition in themarketplace and look at new and innovative ways to improve our clients'experience with MWB Business Exchange. We believe that the right business modelis in place to ensure that we continue to deliver growth in shareholder value. John SpencerChief ExecutiveMWB Business Exchange Plc11 March 2008 MWB BUSINESS EXCHANGE PLC - KEY FINANCIAL HIGHLIGHTS The key performance indicators for this business and the trading and balancesheet performance in recent periods, are summarised below:- Eighteen Year ended Year ended months ended 31 December 31 December 31 December 2007 2006 2006Operating statistics____________________ Revenue 100,046 82,306 118,157Occupancy at period end % 90 77 77Revenue per available workstation ("REVPAW")at period end £ 8,435 6,870 6,870Revenue per occupied workstation ("REVPOW") atperiod end £ 9,355 8,830 8,830EBITDA £'000 16,982 9,307 12,029Number of operating centres at year end Number 41 39 39Number of operating and management agreementsat year end Number 16 16 16 ______ ______ ______ Financial performance_____________________ Profit before tax £'000 12,746 8,043 10,215 ______ ______ ______ 31 December 31 December 2007 2006Balance sheet composition_________________________ Property, plant and equipment £'000 42,197 30,691Net cash/( debt) £'000 (5,031) 1,428Adjusted equity attributable to shareholdersof MWB Group in MWB Business Exchange Plc £'000 39,548 68,212Adjusted equity attributable to shareholdersof MWB Group in MWB Business Exchange Plc, inpence per MWB Group share Pence 49p 85p ______ ______ LIBERTY PLC OPERATING REVIEW Retailing this year has been a story of two halves. The first six months of theyear under review continued the sales growth we had begun to witness towards theend of 2006. Then in the second half we felt the impact of last Autumn'sturmoil in the financial markets. Liberty has weathered this uncertain periodwell and its performance has been commendable, particularly as it has undertakena major management re-structuring programme over the same period. Revenue over the 12 months to 31 December 2007 not only held up well but alsomade further advances over the excellent sales platform established in theprevious year. Across the Liberty group total sales amounted to £46.7m, anincrease of 5% over 2006, with a particularly excellent performance from thefabrics division, recording an 11% rise to £13.3m. At the same time, we continue to make great strides in establishing our Libertyof London luxury products label, and its progression to becoming a global brand.Sales within the flagship store of the Liberty of London product rangecontinued to rise but, importantly, the brand is gaining recognition both withinEurope and North America. Liberty of London retail revenue increasedsignificantly during the year to £3.2m while its wholesale business is beginningto gain ground through showcasing the range in both Milan and Paris. However, the Liberty of London business plan continues to require substantialinvestment and over the year we invested almost £3.5m in the brand. Thisinvestment included the establishment of a stand-alone studio and showroom inpremises close to the flagship store; additional staff, brand distribution,European product launches, and increased marketing spend. Although this investment helps grow and enhance our increasingly valuable brand,these costs are expensed as they occur and inevitably adversely impact theprofit and loss account over the short term. We are confident that this brandinvestment will show commercial returns in the years ahead, though we do notexpect this to be translated into positive profit returns by the brand duringthe next few years while we continue to increase our brand investment andexpenditure. During the course of the current year the Liberty of London brand will continueto establish its own identity both within the UK and internationally through thelaunch of its own dedicated store in London's Sloane Street. This stand-alonestore is planned to open this Summer and is an opportunity for Liberty of Londonto showcase its entire range of designs and products in an entirely dedicatedenvironment. Within the flagship store the great success story of the year has been thegrowth of menswear sales which have advanced by approximately 18% over the sameperiod last year. This rise reflects a number of initiatives that havedelivered increased footfall through the basement. Not only has the menswearrange been more exciting and attractive but also the addition of a champagne barand a men's grooming centre to the basement offer has been very well received bycustomers. Other star performers over the year included Gifts (up 14% over the year toDecember 2006), and Beauty (up 4%) although both Ladieswear and Home generatedoverall lower sales during 2007 compared to the year before. There is littledoubt that our Home range was affected by the general downturn in the secondhalf of the year. Our Ladieswear offer during 2007 enjoyed less success than inthe past and we have already implemented major changes to correct this for thecurrent year. We have now consolidated our position in Japan and have bought out our jointventure partners so that we now own the entire business. Not only does thisgive us, naturally, far greater control of the business in Japan but it alsogives us a tremendous platform from which we can expand our product sales,including Liberty of London, throughout the Far East. With the necessaryinfrastructure in place we are very excited about the potential for our businessin this part of the world. While the Autumn was slower in some departments, such as Ladieswear and Home,for the reasons I outlined above, the flagship store experienced a good run upto Christmas with sales across the business running at 5% higher than the samefour week period in 2006. This was particularly heartening for the store as ittended to buck the general retail trend and showed a healthy rise over theprevious year's record levels. We are also building on the increasing success of our fabrics division with astrengthened sales team enabling us to provide a bespoke service to globalcustomers both in terms of design and fabric. We have appointed two experiencedsales executives to spearhead our planned growth in Fabrics and we have alsoappointed new sales agents. We are also delighted to be working with Central StMartins' students on fabric design projects. As shareholders will have noted, expenditure on the Liberty of London brand rosefrom just under £2m in the year to December 2006 to almost £3.5m for 2007. Theimpact of this investment in our future and one-off reorganisation costs thisyear of £2.7m, is that EBITDA for the year was a loss of £3.5m compared to lastyear's loss of approximately £0.9m. After interest and depreciation totalling£3.0m, this resulted in a loss of £6.5m compared to the pre-tax loss of £2.6mfor the previous year. We are hopeful that costs incurred during 2007 willimprove performance during this current year to December 2008. The business is underpinned by a strong balance sheet. This comprises netassets of £42.0m, of which £33m relates to the valuable Liberty flagship store.Debt at December 2007 was £8.7m, up from last year's £1.2m, but still representsproperty gearing of only 26%. The major reorganisation of the business led to the departure of Iain Renwickand the appointment of Geoffroy de La Bourdonnaye as our new Chief Executive inJuly, joining from Christian Lacroix. He is now supported by two further seniormanagement appointments: Sara Edwards as Human Resources and Change Director,and Guy Hipwell as Director of Internet, Supply Chain and Retail Merchandising.In January 2008, we also appointed Jonathan Samols as IT Director and Fran Pagejoined us from Harvey Nichols as Head of Marketing for Liberty. These seniorexecutives complement our existing team and give the business a stronger basefor future growth. We now have a dedicated and well regarded team at Liberty and we expect to seeits impact during the course of 2008. During the first half of 2008 we arere-launching our lingerie offer with a number of international and exclusivebrands such as Elle McPherson and Kiki de Montparnasse. Elsewhere we have launched our comprehensive Bridal department with exclusivedesigns from Christian Lacroix and Karl Lagerfeld as well as an on-line weddingand gift list due to commence later in the year. Importantly, in June 2008 we are launching the Liberty transactional websiteenabling our world-wide customer base to choose from around 2,000 lines. Thesewill include Liberty of London branded goods, as well as a range of exclusivebrands and gifts. We anticipate that over the medium term we will be able tooffer more than 5,000 lines through this Internet sales platform and therebygreatly enhance Liberty's sales capability. This is an important newenhancement to our business model and we believe it will play a key role inhelping establish Liberty as a global brand. At the same time we are exploring a number of initiatives aimed at raising bothLiberty's profile and widening its customer base. We have already concluded anagreement with the Victoria and Albert Museum whereby Liberty has become itsexclusive retail partner. The first example of this partnership is theimportant China Design exhibition now being launched at the V&A in March 2008which will run through to mid-July. We have curated a selection of many highprofile fashion and design artists, including Michael Wolf, who will beexhibiting exclusively during the exhibition. In addition to all the commercial initiatives aimed at enhancing our productoffering, service standards and look, feel and marketing of the Store, given thechallenging economic conditions, we are streamlining our operations, which willenable us to become more customer and category focused. Liberty is now well placed to take advantage of its long established reputationof offering cutting edge design based on some of the world's most recognisablefabric prints. With the forthcoming launch of our Liberty of London stand-aloneshop, we believe the business is poised to move up to its next level ofdevelopment. While we appreciate that performance will be impacted to varyingdegrees by the general economic climate. The Board is confident that Libertyhas the structures, products and people to produce an improving platform forgrowth in the current year. Geoffroy de La BourdonnayeChief ExecutiveLiberty Plc11 March 2008 LIBERTY PLC - KEY FINANCIAL HIGHLIGHTS Liberty Plc is in the process of transforming itself into a dynamic retaildestination, underpinned by a strong and expanding retail brand. The historicaltrading and balance sheet performance of Liberty Plc is summarised below:- Eighteen months Year ended Year ended ended 31 December 31 December 31 December 2007 2006 2006Financial performance_____________________ Total revenue £'000 46,689 44,575 67,250Operating EBITDA before brand expenditure and reorganisation costs £'000 2,671 1,091 1,376Operating loss before brand expenditure and reorganisation costs £'000 200 (451) (912)Brand expenditure £'000 (3,484) (1,971) (2,843)Reorganisation costs £'000 (2,702) - -Loss before tax £'000 (6,493) (2,647) (2,293)Total recognised income and expense £'000 (8,342) 8,462 9,854 ______ ______ ______ 31 December 31 December 2007 2006Balance sheet composition_________________________ Intangible asset - brand £'000 18,200 18,200Property, plant and equipment £'000 34,400 36,587Net debt £'000 (8,704) (1,191)Adjusted equity attributable to shareholdersof MWB Group in Liberty Plc £'000 46,862 44,887Adjusted equity attributable to shareholdersof MWB Group in Liberty Plc, in pence per MWB Group share Pence 58p 56p ___ ___ FINANCIAL REVIEWfor the year ended 31 December 2007________________________________________________________________________________________________________________________INTRODUCTION____________ The Chairman's Statement and Operating Reviews provide information on theGroup's principal operations and the Board's expectations for the future. ThisFinancial Review covers in greater depth the more significant features of thefinancial statements for the year ended 31 December 2007, which include anindependent valuation of the Group's properties at that date. OBJECTIVES__________ The strategy of the Company, led by the activities of the Board, is to realisethe Group's assets in cash or cash equivalents over the remainder of the periodof its Business Plan. This emanates from the proposals set out in the May 2002Circular which were approved by shareholders at an extraordinary general meetingheld in May 2002. This provides a clear focus for all activities of the Group. At an extraordinary general meeting held in May 2002, Shareholders approvedimplementation of the Cash Distribution Programme. At the time, the Company'sshare price was 92p per share and the Board set itself the target of returning200p per share in cash or cash equivalents to Shareholders, initially byDecember 2005. In March 2004, when the Scheme was amended and based on theissued share capital at that time, this represented a return to Shareholders of£220m. The realisation process was extended a further three years to December2008 in order to enable Shareholders to benefit from the significant increase invalue being created in the Company's operating businesses. Throughout this time, the Board has remained highly focused in delivering theCash Distribution Programme in the manner originally envisaged. This hasinvolved property sales totalling more than £600 million, all at prices well inexcess of recent valuations and original cost. As a result, the Group has paiddown the majority of its debt from the time of implementation of the programme,the Group's three core operating businesses have been significantly enhanced, wehave created a strong and vibrant Group going forward and the Company's shareprice has increased from 99p immediately prior to the issue of the May 2002Circular, to 172p by the date of this report. EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF MWB GROUP PLC____________________________________________________ During the year ended 31 December 2007, the Group produced an increase in equityattributable to shareholders by growth achieved across the Group. As a result,there was a net increase in equity attributable to shareholders of MWB Group Plcduring the year by £105.1m from £99.3m to £204.4m and by 131p from 123p to 254pper share. The movement in equity attributable to shareholders of MWB during the period issummarised in the following table:- Year ended 31 December 2007 Pence £'000 per shareEquity attributable to shareholders of MWB Group Plc at 1 January 2007 99,322 123pMovements during the year:Revaluation of property, plant and equipment, net of tax 121,009 150pRetained loss (15,635) (19p)Effective portion on changes in fair value of derivative financial hedges (500) -Defined benefit pension scheme actuarial gains, net of tax 527 -Other movements including transfers and payments to minority interests (346) - ______ ______Equity attributable to shareholders of MWB Group Plc at 31 December 2007 204,377 254p ______ ______ ADJUSTED EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF MWB GROUP PLC_____________________________________________________________ Under Adopted IFRS, the Company's interests in its two listed subsidiaries, MWBBusiness Exchange Plc and Liberty Plc, continue to be consolidated in the Groupfinancial statements inclusive of their freehold and short leasehold propertiesat current valuation or cost. However, these property valuations reflect onlythe values of the properties themselves and the financial statements do notreflect the current market value of the Group's shareholdings in these twolisted subsidiaries. Both subsidiaries are quoted on the AIM of the London Stock Exchange and,therefore, a market value for the Group's shareholding in each of the twocompanies is readily available. In order that shareholders are aware of the underlying value of the Group, theincrease in equity attributable to shareholders of MWB Group Plc as a result ofassessing these two investments by reference to their market value and takingaccount of incentives payable on realisation at 31 December 2007 and at theprevious year end, is set out below. 31 December 2007 31 December 2006 Pence Pence per per £'000 share £'000 shareEquity attributable to shareholders of MWB Group Plc perfinancial statements 204,377 254p 99,322 123p Unrealised surplus of market value of MWB Group's shareholdingin MWB Business Exchange Plc(1) 24,076 30p 60,378 75p Unrealised surplus of market value of MWB Group's shareholdingin Liberty Plc(2) 18,603 23p 11,431 14p _______ ____ _______ _____ 247,056 307p 171,131 212pLess Central Incentive Scheme and Bonus Plan amounts thatwould become payable on realisation at this value (35,603) (44p) (22,049) (27p) _______ ____ _______ _____Total adjusted equity attributable to shareholders of MWB Group Plc 211,453 263p 149,082 185p _______ ____ _______ _____ Notes (1) The unrealised surplus of market value of MWB Group's 67.9% shareholding in MWB Business Exchange Plc is based on the share price of MWB Business Exchange Plc at 31 December 2007 of 110p (2006: 179p) per share, and is after deducting deferred consideration of £9.5m that would become payable on realisation of the Group's investment in MWB Business Exchange and divisional bonuses payable on realisation at this value. (2) The unrealised surplus of market value of MWB Group's 68.3% shareholding in Liberty Plc is based on the share price of Liberty Plc at 31 December 2007 of 310p (2006: 295p) per share, after deducting divisional bonuses that would become payable on realisation at this value. The adjusted equity attributable to shareholders of MWB Group Plc is analysed asfollows:- 31 December 2007 31 December 2006 Pence Pence per per £'000 share £'000 shareMalmaison and Hotel du Vin 222,675 276p 106,380 132pMWB Business Exchange Plc 39,548 49p 68,212 85pLiberty Plc 46,862 58p 44,887 56pGroup debt and incentives payable, less cash and other assets (97,632) (120p) (70,397) (88p) _______ ______ ______ _____Total adjusted equity attributable to shareholders of MWBGroup Plc 211,453 263p 149,082 185p _______ ______ ______ _____ In addition to the assessment above, shareholders should be aware that theadjusted equity attributable to shareholders of MWB Group Plc of 263p (2006:185p) per share above does not reflect the market value of the Malmaison andHotel du Vin business, as this is not a listed subsidiary for which a marketvalue can be readily confirmed. The Board is confident that the value of theGroup's 82.5% interest in the Malmaison and Hotel du Vin business issignificantly higher than the £223m or 276p per share for this business withinadjusted equity attributable to shareholders of MWB Group Plc, thusdemonstrating a further enhancement in underlying equity value of the Groupabove the adjusted figure of 263p per share in the table above. PURCHASE OF ORDINARY SHARES BY THE COMPANY AND OTHER DISTRIBUTIONS__________________________________________________________________ The Board is continuing to implement the Cash Distribution Programme, whichinvolves distributing surplus funds to Shareholders by means of buy-backs ofOrdinary Shares in the market, tender offers to Shareholders, cashdistributions, demergers, distributions of assets and similar value distributionprogrammes. Since May 2002, the Company has purchased approximately 60.5 million OrdinaryShares under this programme, representing approximately 43% of the issued sharecapital at the date of its implementation, returning approximately £70.4 millionin cash to Shareholders. In Addition, on 7 February 2008, the Board announced details of proposalsrelating to a capital reorganisation and the introduction of a new holdingcompany for the Group. These Proposals will facilitate the Group's strategy todistribute in cash or cash equivalents, substantially all of its material assetsand to facilitate the returning of this under the Cash Distribution Programme.These proposals were approved at an Extraordinary General Meeting held on 4March 2008. Specifically, the Proposals: • created a group structure which increases the flexibility for the Board on future potential disposals of the operating businesses; • increase the available options as to when cash or cash equivalents can be returned to Shareholders; and • increase the distributable reserves of the Group which can be distributed to Shareholders. NET ASSET VALUE_______________ The net assets of the Group are financed by Equity attributable to shareholdersof MWB Group Plc and minority interests. The sources of finance of the Group at31 December 2007 in the consolidated balance sheet and at previous period endwere as follows:- 31 December 31 December 2007 2006 £'000 £'000Total equity attributable to shareholders of MWB Group Plc 204,377 99,322Minority interests 91,783 53,963 _______ _______Net assets at period end 296,160 153,285 _______ _______ The analysis of net assets in the consolidated balance sheet across the Group'soperations as revealed by the Consolidated Balance Sheet at 31 December 2007,and at the previous period end, is as follows:- Total equity Net assets attributable to before Less shareholders debt and (Debt)/ Net minority of MWB cash cash assets interests Group PlcAt 31 December 2007 £'000 £'000 £'000 £'000 £'000___________________ Malmaison and Hotel du Vin 531,117 (239,512) 291,605 (68,930) 222,675Liberty Plc 50,710 (8,704) 42,006 (13,747) 28,259MWB Business Exchange Plc 27,857 (5,031) 22,826 (7,354) 15,472Group debt, less cash and other assets (5,512) (54,765) (60,277) (1,752) (62,029) _______ ________ _______ _______ _______ 604,172 (308,012) 296,160 (91,783) 204,377 _______ ________ _______ _______ _______Equity attributable to shareholders ofMWB Group Plc in pence per share 254p ____ Total equity Net assets attributable to before Less shareholders debt and (Debt)/ Net minority of MWB cash cash assets interests Group PlcAt 31 December 2006 £'000 £'000 £'000 £'000 £'000___________________Malmaison and Hotel du Vin 336,666 (199,803) 136,863 (30,483) 106,380Hotel investments (660) 374 (286) (1,909) (2,195)Liberty Plc 52,423 (1,191) 51,232 (17,776) 33,456MWB Business Exchange Plc 10,249 1,428 11,677 (3,843) 7,834West India Quay apartments 2,721 3,647 6,368 - 6,368Group debt, less cash and other assets (3,007) (49,562) (52,569) 48 (52,521) _______ ________ _______ _______ _______ 398,392 (245,107) 153,285 (53,963) 99,322 _______ ________ _______ _______ _______Equity attributable to shareholders ofMWB Group Plc in pence per share 123p ____ REVIEW OF PROPERTY, PLANT AND EQUIPMENT_______________________________________ Valuation surplus on property portfolio at 31 December 2007___________________________________________________________ A valuation of the Group's freehold and long leasehold property interests wasundertaken at 30 June 2007 and at 31 December 2007. The valuation was performedby DTZ Debenham Tie Leung and was performed on the basis of Market Value. Thenet surplus over previous book value before minority interests for the yearended 31 December 2007 totalled £146.3m, which has been included in thesefinancial statements. In accordance with normal valuation practice, the valuations of the Group'shotel interests include value ascribed for plant, machinery, fixtures andfittings forming part of the service installations of the building. Theytherefore represent a valuation of the total interest of the Group in thoseproperties. The valuations exclude the value of any goodwill that may arisefrom the present occupation of the properties and this is not recordedseparately in the financial statements of the Group. In accordance with normal valuation practice, the valuation of the Group'sretail interests includes value ascribed to plant, machinery and fittingsforming part of the services and installation of the building, but excludesmoveable shop fittings. All property interests owned by MWB Business ExchangePlc are short leasehold interests; these interests are not revalued underAdopted IFRSs at each period end and are recorded at the lower of cost and netrealisable value. Surpluses or deficits arising on valuation of the Group's operational propertiesare transferred to revaluation reserve, while impairment of operationalproperties to below their historical cost is charged directly to the IncomeStatement. Trading properties and operational properties in the course of construction arerecorded at the lower of cost and net realisable value and are therefore notrevalued upwards in the Group financial statements. The property market was relatively strong during the first six months of theyear to 31 December 2007. The valuation surplus credited to the revaluationreserve during that period totalled £135.9m and arose as follows:- Less Credited previous Less to Gross book Gross minority revaluation valuation value surplus interests reserve £'000 £'000 £'000 £'000 £'000Malmaison 314,542 (216,634) 97,908 (17,134) 80,774Hotel du Vin 187,080 (121,492) 65,588 (11,478) 54,110Liberty Plc 37,000 (35,510) 1,490 (472) 1,018 ________ ________ _______ ________ _______ 538,622 (373,636) 164,986 (29,084) 135,902 ________ ________ _______ ________ _______ During the second six months of the year to 31 December 2007, property prices inthe market have fallen as a result of the "credit crunch" and other relatedmatters in the financial markets. Nevertheless, it is gratifying to note therobustness of our hotel portfolio which has been able to withstand most of theadverse effects of the recent market turbulence. As a result, the valuationdeficit debited to the revaluation reserve during this second six months of theyear to 31 December 2007 amounted to £14.9m and arose as follows:- Less previous Less Debited to Gross book Gross minority revaluation valuation value deficit interests reserve £'000 £'000 £'000 £'000 £'000Malmaison 315,500 (329,225) (13,725) 2,402 (11,323)Hotel du Vin 205,320 (206,498) (1,178) 206 (972)Liberty Plc 33,000 (36,803) (3,803) 1,205 (2,598) _______ ________ _______ _____ _______ 553,820 (572,526) (18,706) 3,813 (14,893) _______ ________ _______ _____ _______ The valuation surplus credited to the revaluation reserve for the year ended 31December 2007 is the net of the £135.9m surplus in the first half and the £14.9mdeficit in the second half. This amounted to £121.0m and arose as follows:- Less Credited/ previous Gross Less (debited) to Gross book surplus/ minority revaluation valuation value (deficit) interests reserve £'000 £'000 £'000 £'000 £'000Malmaison 315,500 (231,317) 84,183 (14,732) 69,451Hotel du Vin 205,320 (140,910) 64,410 (11,272) 53,138Liberty Plc 33,000 (35,313) (2,313) 733 (1,580) _______ ________ _______ _____ _______ 553,820 (407,540) 146,280 (25,271) 121,009 _______ ________ _______ _____ _______ Portfolio analysis by division______________________________ At 31 December 2007, the Group held the majority of its direct propertyinterests as non-current assets. These are disclosed in the consolidatedbalance sheet at that date as follows:- 31 December 31 December 2007 2006 £'000 £'000Non current assets__________________ Operational properties 522,663 336,150Operational properties in the course of construction 26,047 27,144Plant and equipment 56,923 43,558 _______ _______Total property interests at period end 605,633 406,852 _______ _______ The above interests are analysed as follows:- Percentage at 31 December 31 December 31 December 2007 2007 2006 £'000 % £'000Hotels______ Malmaison 309,044 51 212,064Hotel du Vin 219,879 36 124,894 _______ __ _______ 528,923 87 336,958MWB Business Exchange Plc 42,197 7 30,691_________________________ Liberty Plc 34,400 6 36,587___________ Other 113 - 2,616_____ _______ __ _______ Total property interests at period end 605,633 100 406,852 _______ __ _______ Intangible assets_________________ An external professional valuation of the Liberty brand was undertaken byEquilibrium Consulting at 31 December 2007, based on the business and operationsof the Group at that date. This confirmed the value of the Liberty brand atmore than the book value of £18.2m at which it has been included in thefinancial statements of the Group throughout the year. Accordingly, theDirectors have concluded that no impairment provision is required and the brandhas been retained at a value of £18.2m in these financial statements. In October 2007, the Group acquired the entire issued share capital of StanhopeBusiness Centres Limited. Goodwill of £7.6 million arose on this acquisition.The Directors have assessed the carrying value of this goodwill and the profitgenerated from the acquisition, and have concluded that no impairment ofgoodwill is necessary for the year ended 31 December 2007. In December 2007,the Group acquired the remaining 49% of the issued share capital of LibertyJapan Company Ltd. Goodwill of £0.2m arose on this acquisition. The Directorshave assessed the carrying value of this goodwill and have concluded that noimpairment existed at 31 December 2007. At 31 December 2007, unamortised goodwill carried forward in the consolidatedbalance sheet amounted to £7.8 million. REVIEW OF LOAN FACILITIES_________________________ Net debt________ The Group's loans, borrowings and cash are included in the consolidated balancesheet at 31 December 2007 as follows:- 31 December 31 DecemberComposition at period end 2007 2006 £'000 £'000Loans and borrowings 330,194 260,832Long leasehold obligations 703 710Fair value of derivative financial instruments - (1,462) _______ _______Total loans and borrowings 330,897 260,080Less net cash and overdrafts (22,885) (14,973) _______ _______Total net debt at period end 308,012 245,107 _______ _______ Analysis of debt/(cash) by operating business_____________________________________________ Malmaison and Hotel du Vin 239,512 199,803MWB Business Exchange Plc 5,031 (1,428)Liberty Plc 8,704 1,191Central debt 54,765 45,541 _______ _______ 308,012 245,107 _______ _______ Net cash and overdrafts_______________________ The Group's net cash and overdrafts are held in the following operatingdivisions in the Group:- 31 December 31 December 2007 2006 £'000 £'000Malmaison and Hotel du Vin 6,910 8,679MWB Business Exchange Plc 4,379 1,428Liberty Plc 4,296 (1,191)Central 7,300 6,057 _______ _______ 22,885 14,973 _______ _______ Cash balances are held within the above divisions for utilisation within theirbusinesses. Generally only cash within the Central division is available foruse in the Company's own activities. Movement in net debt during the year____________________________________ The movement in total net debt during the year ended 31 December 2007 arose asfollows:- Year ended Year ended 31 December 31 December 2007 2006 £'000 £'000Total net debt at start of the period 245,107 302,067Debt drawn on expansion of Malmaison and Hotel du Vin 34,486 14,903Net proceeds received from sales of properties, including sale of Liverpool residential apartments and Old Bailey, (2006: including West India Quay, Argyle Street and Park Lane) (15,189) (158,058)Net debt repaid on West India Quay development - (46,896)Buy back of ordinary shares - 56,382Net cash outflow from other Group operations during the period 43,608 76,709 _______ _______Total net debt at period end 308,012 245,107 _______ _______Average cost of borrowings at period end, inclusive of margin 7.3% 6.5% _______ _______ Net debt relating to Equity attributable to shareholders of MWB_______________________________________________________________ The majority of the Group's net debt has been drawn by subsidiaries that aremajority owned, but not wholly owned, by the Group. These comprise the Group'smajority interests in its three operating businesses of MWB Malmaison HoldingsLimited, MWB Business Exchange Plc and Liberty Plc. The net debt relating to equity attributable to shareholders of MWB Group Plc at31 December 2007 amounted to £262m (2006: £212m), calculated as follows:- 31 December 31 December 2007 2006 £'000 £'000Total net debt as above 308,012 245,107Less net debt attributable to minority interests (46,288) (33,538) _______ _______Total net debt attributable to equity attributable to shareholders of MWB Group 261,724 211,569 _______ _______ Gearing_______ At 31 December 2007, gearing was 104%, calculated as follows:- 31 December 31 December 2007 2006 £'000 £'000Total net debt 308,012 245,107 Net assets 296,160 153,285 Gearing - total net debt divided by net assets 104% 160% _______ _______ REVIEW OF EARNINGS__________________ Results_______ The total recognised income and expense for the year ended 31 December 2007,analysed between the share attributable to shareholders of MWB Group Plc and theshare attributable to minority interests, is as follows:- Equity Shareholders Total for Minority of MWB the year interest Group PlcYear ended 31 December 2007 £'000 £'000 £'000Income statementLoss for the period (14,314) 1,321 (15,635)Credited to equity through reservesForeign exchange translation differences for foreign operations 64 32 32Revaluation of property, plant and equipment, net of tax 146,280 25,271 121,009Effective portion of changes in fair value of cash flow hedges (613) (113) (500)Defined benefit pension scheme actuarial gains, net of tax 765 238 527 ______ ______ _______Total recognised income and expense for the year 132,182 26,749 105,433 ______ ______ _______Total recognised income and expense attributable to Shareholdersin pence per share 130.9p _______ Equity Shareholders Total for Minority of MWB the year interest Group PlcYear ended 31 December 2006 £'000 £'000 £'000Income statementProfit for the period 9,013 8,031 982Credited to equity through reservesForeign exchange translation differences for foreign operations (566) (228) (338)Revaluation of property, plant and equipment, net of tax 19,949 4,511 15,438Effective portion of changes in fair value of cash flow hedges 3,138 618 2,520Defined benefit pension scheme actuarial gains, net of tax 4,935 1,570 3,365Deferred tax released on sale of properties 1,214 97 1,117 ______ ______ _______Total recognised income and expense for the year 37,683 14,599 23,084 ______ ______ _______Total recognised income and expense attributable to Shareholdersin pence per share 24.0p _______ Equity Shareholders Total for Minority of MWB the period interests Group PlcEighteen months ended 31 December 2006 £'000 £'000 £'000Income statementProfit for the period 11,506 9,377 2,129Credited to equity through reservesForeign exchange translation differences for foreign operations (234) 90 (324)Revaluation of property, plant and equipment, net of tax 37,627 8,618 29,009Effective portion of changes in fair value of cash flow hedges 5,753 1,008 4,745Defined benefit pension scheme actuarial gains, net of tax 4,977 1,570 3,407Deferred tax released on sale of properties 324 97 227 ______ ______ _______Total recognised income and expense for the period 59,953 20,760 39,193 ______ ______ _______Total recognised income and expense attributable to Shareholdersin pence per share 38.9p _______ Summary of earnings___________________ The Board's prime measure of return used to monitor the results of the operatingdivisions is the level of earnings before interest, taxation, depreciation andamortisation, or EBITDA. The results before minority interests for the yearended 31 December 2007, together with comparative information for previousperiods is summarised below:- Total Profit/(loss) Recognised before income and Revenue EBITDA EBIT taxation expenseYear ended 31 December 2007 £'000 £'000 £'000 £'000 £'000Malmaison and Hotel du Vin Operating income 95,272 23,904 17,575 (4,551) 143,428 Apartment sales 10,112 2,012 2,012 2,012 2,012 Abortive transaction costs - (7,129) (7,129) (7,129) (7,129) Pre-opening costs - (2,710) (2,710) (2,710) (2,710) _______ ______ ______ _______ _______ 105,384 16,077 9,748 (12,378) 135,601 _______ ______ ______ _______ _______Liberty Plc Operating income 46,689 2,671 200 (307) (2,156) Reorganisation costs - (2,702) (2,702) (2,702) (2,702) Expenditure on brand - (3,484) (3,484) (3,484) (3,484) _______ ______ ______ _______ _______ 46,689 (3,515) (5,986) (6,493) (8,342) _______ ______ ______ _______ _______ MWB Business Exchange PlcOperating income 100,046 16,982 12,993 12,746 12,640 _______ ______ ______ _______ _______ Others - 6,994 6,994 7,079 1,823Group debt less cash and other assets - - - (4,704) (4,704) _______ ______ ______ _______ _______ - 6,994 6,994 2,375 (2,881)Head office administration - (9,779) (10,013) (10,013) (4,836) _______ ______ ______ _______ _______ - (2,785) (3,019) (7,638) (7,717) _______ ______ ______ _______ _______ 252,119 26,759 13,736 (13,763) 132,182 _______ ______ ______ _______ _______ Notes______ 1. EBITDA = Earnings before interest, taxation, depreciation and amortisation. 2. EBIT = Earnings before interest and taxation. Total Profit/(loss) recognised before income and Revenue EBITDA EBIT taxation expenseYear ended 31 December 2006 £'000 £'000 £'000 £'000 £'000Malmaison and Hotel du Vin Operating income 79,101 23,389 17,598 5,101 22,236 _______ ______ ______ _______ _______Hotel investmentsOperating income 16,563 5,825 3,653 (11) (1,495)Sale of Park Lane hotel - 3,729 3,729 3,729 5,318Sale of West India Quay hotel - 5,825 5,825 5,825 10,177 _______ ______ ______ _______ _______ 16,563 15,379 13,207 9,543 14,000 _______ ______ ______ _______ _______Liberty Plc Operating income 44,575 1,091 (451) (676) 10,433 Expenditure on brand - (1,971) (1,971) (1,971) (1,971) _______ ______ ______ _______ _______ 44,575 (880) (2,422) (2,647) 8,462 _______ ______ ______ _______ _______MWB Business Exchange Plc 82,306 9,307 7,827 8,043 8,048 _______ ______ ______ _______ _______West India Quay - apartment sales 9,364 3,320 3,320 2,970 2,909Others 3,305 (1,680) (1,836) (1,843) 103Group debt less cash and other assets - - - (3,213) (3,213) _______ ______ ______ _______ _______ 12,669 1,640 1,484 (2,086) (201)Head office administration - (9,148) (9,288) (9,288) (14,862) _______ ______ ______ _______ _______ 12,669 (7,508) (7,804) (11,374) (15,063) _______ ______ ______ _______ _______ 235,214 39,687 28,406 8,666 37,683 _______ ______ ______ _______ _______ Total Profit/(loss) recognised before income andEighteen months ended Revenue EBITDA EBIT taxation expense31 December 2006 £'000 £'000 £'000 £'000 £'000Malmaison and Hotel du Vin Operating income 115,058 34,463 26,401 7,480 36,845 _______ ______ ______ _______ _______Hotel investmentsOperating income 39,820 13,060 8,098 (571) (247)Sale of Argyle Street hotel - 2,770 2,770 2,770 2,770Sale of Park Lane hotel - 3,729 3,729 3,729 5,318Sale of West India Quay hotel - 5,825 5,825 5,825 10,177 _______ ______ ______ _______ _______ 39,820 25,384 20,422 11,753 18,018 _______ ______ ______ _______ _______Liberty PlcOperating income 67,250 1,376 (912) (1,170) 10,977Sale of minor trademark - 1,720 1,720 1,720 1,720Expenditure on brand - (2,843) (2,843) (2,843) (2,843) _______ ______ ______ _______ _______ 67,250 253 (2,035) (2,293) 9,854 _______ ______ ______ _______ _______MWB Business Exchange PlcOperating results - leased properties 110,274 11,692 10,083 9,878 9,824Operating results - operating and managementagreements 7,883 337 337 337 337 _______ ______ ______ _______ _______ 118,157 12,029 10,420 10,215 10,161 _______ ______ ______ _______ _______ West India Quay - apartment sales 14,457 4,350 4,350 4,000 4,000 Others 4,759 358 163 104 104Group debt less cash and other assets - - - (6,694) (6,694) _______ ______ ______ _______ _______ 19,216 4,708 4,513 (2,590) (2,590)Head Office administration - (12,956) (13,169) (13,169) (12,335) _______ ______ ______ _______ _______ 19,216 (8,248) (8,656) (15,759) (14,925) _______ ______ ______ _______ _______ 359,501 63,881 46,552 11,396 59,953 _______ ______ ______ _______ _______ Taxation_________ The net tax charge for the year ended 31 December 2007 arose as follows:- Eighteen Year ended Year ended months ended 31 December 31 December 31 December 2007 2006 2006 £'000 £'000 £'000Net tax (charge)/credit per Consolidated Income Statement (551) 347 110 32% minority interest in tax charge of MWB Business Exchange Plc 58 - - 49% minority interest in tax charge of Japanesesubsidiary of Liberty Plc 182 214 328 32% minority interest in tax charge of Liberty Plcresulting in a credit to MWB Shareholders 60 71 109 ____ ___ ___Net tax credit/(charge) received/(borne) by equityshareholders of MWB Group Plc (251) 632 547 ____ ___ ___ Earnings per share and recognised income and expense per share______________________________________________________________ The earnings per share and recognised income and expense per share figures havebeen calculated as follows:- Eighteen Year ended Year ended months ended 31 December 31 December 31 December 2007 2006 2006Earnings/(loss) per Consolidated IncomeStatement attributable to shareholders of MWB Group Plc £'000 (15,635) 982 2,129 Weighted average number of shares in issueduring year '000 80,522 96,257 100,768 Earnings/(loss) per share based on ConsolidatedIncome Statement Pence (19.4p) 1.0p 2.1p ____ ___ ___ Recognised income and expense attributable toshareholders of MWB Group Plc £'000 105,433 23,084 39,193 Weighted average number of shares in issueduring year '000 80,522 96,257 100,768 Recognised income per share based on recognisedincome and expense Pence 130.9p 24.0p 38.9p ____ ___ ___ Dividend________ Shareholders approved implementation of the Cash Distribution Programme andassociated cessation of annual revenue distributions at a meeting ofshareholders held in May 2002. The Board is continuing to implement the CashDistribution Programme and to direct disposal proceeds to the repayment of netdebt and to the buy-back of shares by the Company, thus returning cash toshareholders. Since May 2002, the Company has purchased approximately 60.5 million OrdinaryShares under this programme, representing approximately 43% of the issued sharecapital at the date of its implementation, returning approximately £70.4 millionin cash to Shareholders. The Directors envisage distributing further funds to shareholders by means ofbuy-backs of ordinary shares, tender offers to shareholders, cash distributions,demergers, distributions of assets and similar. Cash flow_________ The consolidated cash flow statement on page 49 shows the funds generated by theGroup, those raised from external sources, the investments made and the effectthereof on the Group's cash position. This can be summarised as follows:- Eighteen Year ended Year ended months ended 31 December 2007 31 December 31 December 2006 2006 £'000 £'000 £'000Net cash inflow from operating activities (1,639) 3,100 22,990Net cash inflow/(outflow) from investing activities (66,061) 132,341 174,472Net cash received/(used) in financing activities 75,612 (162,029) (222,026) ______ _______ _______Net increase/(decrease) in cash and cash equivalents 7,912 (26,588) (24,564)Opening cash and cash equivalents 14,973 41,561 39,537 ______ _______ _______Closing cash and cash equivalents 22,885 14,973 14,973 ______ _______ _______ Conclusion__________ The year ended 31 December 2007 has been another highly successful period forthe Group. Adjusted equity attributable to shareholders of £211m or 263p pershare, is 42% higher than the adjusted equity attributable to shareholders at 31December 2006 of 185p per share. Andrew BlurtonGroup Finance Director11 March 2008 CONSOLIDATED INCOME STATEMENTfor the year ended 31 December 2007________________________________________________________________________________________________________________________ Pro-forma Eighteen Year ended unaudited months ended 31 December year ended 31 December 2007 31 December 2006 2006 Notes £'000 £'000 £'000________________________________________________________________________________________________________________Revenue 252,119 235,214 359,501 Cost of sales (218,468) (200,270) (303,554)________________________________________________________________________________________________________________Gross profit 33,651 34,944 55,947 Administrative expenses (16,924) (15,424) (22,995)________________________________________________________________________________________________________________Results from operating activities 16,727 19,520 32,952 Net gain/(loss) on sale of property, plantand equipment 3 7,586 (668) 2,326Profit on disposal of subsidiary companies - 9,554 9,554Abortive transaction costs 4 (8,077) - -Capital reorganisation costs 5 (2,500) - -Profit on disposal of trademark - - 1,720Finance income 7 1,093 2,240 2,665Finance expenses 7 (28,592) (21,980) (37,821)________________________________________________________________________________________________________________Profit/(loss) before taxation (13,763) 8,666 11,396 Taxation (551) 347 110________________________________________________________________________________________________________________Profit/(loss) for the period (14,314) 9,013 11,506================================================================================================================ Attributable to:Equity shareholders of the Company (15,635) 982 2,129Minority interests 13 1,321 8,031 9,377________________________________________________________________________________________________________________Profit/(loss) for the period (14,314) 9,013 11,506================================================================================================================ Earnings/(loss) per share (basic and diluted) 8 (19.4p) 1.0p 2.1p================================================================================================================ All results relate to continuing operations. CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE_______________________________________________________ for the year ended 31 December 2007________________________________________________________________________________________________________________________ Pro-forma unaudited year ended Eighteen Year ended 31 December months ended 31 December 2006 31 December 2007 £'000 2006 £'000 £'000________________________________________________________________________________________________________________Foreign exchange translation differences for foreignoperations 64 (566) (234) Revaluation of property, plant and equipment 146,280 19,949 37,627 Effective portion of changes in fair value of cash flow hedges (613) 3,138 5,753 Defined benefit pension scheme actuarial gains, net of tax 765 4,935 4,977 Deferred tax released on sale of properties - 1,214 324________________________________________________________________________________________________________________Income and expense recognised directly to equity 146,496 28,670 48,447 Profit/(loss) for the period (14,314) 9,013 11,506________________________________________________________________________________________________________________ Total recognised income and expense for the period 132,182 37,683 59,953================================================================================================================ Attributable to:Equity shareholders of the Company 105,433 23,084 39,193Minority interests 26,749 14,599 20,760________________________________________________________________________________________________________________Total recognised income and expense for the period 132,182 37,683 59,953================================================================================================================Total recognised income and expense for the yearattributable to shareholders of MWB Group in pence per share 130.9p 24.0p 38.9p================================================================================================================ CONSOLIDATED BALANCE SHEETat 31 December 2007________________________________________________________________________________________________________________________ 31 December 31 December 2007 2006 Notes £'000 £'000_______________________________________________________________________________________________________________Non-current assetsIntangible assets and goodwill 9 25,969 18,200Operational properties 10 522,663 336,150Operational properties in the course of construction 10 26,047 27,144Plant and equipment 10 56,923 43,558Deferred tax asset 16,292 -Financial instruments 5 1,462_______________________________________________________________________________________________________________ 647,899 426,514_______________________________________________________________________________________________________________Current assetsInventories 9,489 9,126Trade and other receivables: Due after more than one year 2,345 1,450 Due within one year 40,652 41,035Cash and cash equivalents 23,731 16,164_______________________________________________________________________________________________________________ 76,217 67,775_______________________________________________________________________________________________________________Total assets 724,116 494,289_______________________________________________________________________________________________________________Current liabilitiesBank overdrafts (846) (1,191)Loans and borrowings 11 (34,579) (23,239)Trade and other payables 12 (67,630) (64,566)Tax payable (16,721) (783)_______________________________________________________________________________________________________________ (119,776) (89,779)_______________________________________________________________________________________________________________Non-current liabilitiesLoans and borrowings 11 (295,615) (237,593)Employee benefits 6 (416) (1,548)Other provisions - (3,400)Trade and other payables 12 (12,149) (8,684)=============================================================================================================== (308,180) (251,225)===============================================================================================================Total liabilities (427,956) (341,004)===============================================================================================================Net assets 296,160 153,285===============================================================================================================EquityShare capital 40,261 40,261Share premium account 79,563 79,563Other reserves 229,074 109,806Retained earnings (144,521) (130,308)_______________________________________________________________________________________________________________Total equity attributable to shareholders of the Company 204,377 99,322Minority interests 13 91,783 53,963_______________________________________________________________________________________________________________Total equity 296,160 153,285===============================================================================================================Equity attributable to shareholders of the Company in pence pershare 14 254p 123p =============================================================================================================== CONSOLIDATED CASH FLOW STATEMENTfor the year ended 31 December 2007________________________________________________________________________________________________________________________ Pro-forma unaudited Eighteen Year ended year ended months ended 31 December 31 December 31 December 2007 2006 2006 £'000 £'000 £'000_______________________________________________________________________________________________________________Profit/(loss) for the period (14,314) 9,013 11,506Adjustments for non-cash itemsTaxation 551 (347) (110)Finance expenses 28,592 21,980 37,821Finance income (1,093) (2,240) (2,665)Loss/(gain) on sale of property, plant and equipment (7,586) 668 (2,326)Loss/(gain) on sale of subsidiary companies - (9,554) (9,554)Gain on sale of trademark - - (1,720)Depreciation of property, plant and equipment 13,023 11,281 17,329Amortisation of intangible assets - - -Currency translation differences 93 (462) (462)_______________________________________________________________________________________________________________Cash flows from operations before changes in working capital 19,266 30,339 49,819Change in trading properties - 3,750 4,099Change in inventories (363) (552) (845)Change in trade and other receivables (14,805) (12,992) 8,872Change in trade and other payables 22,138 11,351 6,518Change in provisions and employee benefits 5,670 (4,812) (5,315)_______________________________________________________________________________________________________________Cash generated from operations 31,906 27,084 63,148Interest paid (33,276) (23,505) (39,409)Tax paid (269) (479) (749)_______________________________________________________________________________________________________________Net cash from operating activities (1,639) 3,100 22,990_______________________________________________________________________________________________________________Cash flows from investing activitiesInterest received 3,267 2,229 2,661Proceeds from sale of property, plant and equipment 12,597 - 52,500Cash receipts from sale of subsidiary companies, net of cashdisposed - 208,664 208,664Acquisition of subsidiaries (11,434) - -Proceeds from sale of trademark - - 1,720Purchase of property, plant and equipment (70,491) (78,552) (91,073)_______________________________________________________________________________________________________________Net cash from investing activities (66,061) 132,341 174,472_______________________________________________________________________________________________________________Cash flows from financing activitiesPurchase of own shares, inclusive of costs (5) (56,555) (56,555)Proceeds from issue of share capital - 173 173Proceeds from draw down of borrowings 71,598 69,706 89,987Borrowings repaid (2,236) (148,181) (242,380)Receipt from/(payments to) minority interests 11,776 (25,462) (9,669)Payment of operating lease liabilities (5,521) (1,710) (3,582)_______________________________________________________________________________________________________________Net cash from financing activities 75,612 (162,029) (222,026)_______________________________________________________________________________________________________________Net increase/(decrease) in cash and cash equivalents 7,912 (26,588) (24,564)Opening cash and cash equivalents 14,973 41,561 39,537_______________________________________________________________________________________________________________Closing cash and cash equivalents 22,885 14,973 14,973=============================================================================================================== NOTES_____ 1. ACCOUNTING POLICIES FOR GROUP FINANCIAL STATEMENTS________________________________________________________________________________________________________________________ Basis of preparation The financial information set out above does not constitute the Company'sstatutory accounts for the year ended 31 December 2007 or the period ended 31December 2006. Statutory accounts for 2006, which were prepared underInternational Financial Reporting Standards, as adopted by the European Union("IFRSs"), have been delivered to the registrar of companies, and those for 2007will be delivered in due course. The auditors have reported on those accounts;their reports were unqualified, did not include references to any matters towhich the auditors drew attention by way of emphasis without qualifying theirreports and did not contain statements under section 237(2) or (3) of theCompanies Act 1985. 2. EARNINGS BEFORE INTEREST, TAXATION, DEPRECIATION AND AMORTISATION ("EBITDA")________________________________________________________________________________________________________________________ Pro-forma unaudited Eighteen Year ended year ended months ended 31 December 31 December 31 December 2007 2006 2006 £'000 £'000 £'000_______________________________________________________________________________________________________________The EBITDA of the Group is calculated as follows:- Profit before finance income, finance expenses andtaxation 13,736 28,406 46,552Add depreciation of property, plant and equipment forthe period 13,023 11,281 18,050Less net write back of property write downs and other non-cash items - - (721) ______ _____ _____Total EBITDA for the period 26,759 39,687 63,881 ______ _____ _____ 3. PROFIT/(LOSS) ON DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT________________________________________________________________________________________________________________________ Pro-forma unaudited Eighteen Year ended year ended months ended 31 December 31 December 31 December 2007 2006 2006 £'000 £'000 £'000_______________________________________________________________________________________________________________The profit on disposal of property, plant and equipmentarose as follows:- Profit on disposal of Old Bailey property in London 4,711 - -Profit/(loss) on disposal of other property, plant and equipment 2,875 (668) 2,326Profit/(loss) on disposal of property, plant andequipment 7,586 (668) 2,326 ______ _____ _____ 4. ABORTIVE TRANSACTION COSTS________________________________________________________________________________________________________________________ Pro-forma unaudited Eighteen Year ended year ended months ended 31 December 31 December 31 December 2007 2006 2006 £'000 £'000 £'000_______________________________________________________________________________________________________________Costs on proposed sale of properties to Vector Hospitality Plc in June 2007, and proposed sale ofMalmaison and Hotel du Vin in September 2007 8,077 - - _____ _____ _____ On 4 May 2007, the Board sent a circular to Shareholders setting out details ofa proposed sale to Vector Hospitality Plc of a portfolio of 24 long leaseholdproperties comprising the majority of the Malmaison and Hotel du Vin propertiesowned by the Group at that date, for a minimum consideration of £495.1m. Thatcircular also included notice of an extraordinary general meeting of the Companyat which a resolution relating to the proposed sale to Vector Hospitality wasapproved by Shareholders. On 7 June 2007, the Group was informed by VectorHospitality Plc that the fundraising proposed to be undertaken by it to fundthis proposed acquisition would not take place and that in accordance with theshare purchase agreement with the Group, Vector Hospitality would not be able tocomplete the acquisition of these long leasehold interests. The proposed saletherefore terminated on 30 June 2007 and the costs of £4.6m incurred in relationthereto have been written off. On 2 July 2007, the Board appointed Bank of America Securities to conduct thesale of 21 Malmaison and Hotel du Vin hotels owned by the Group, a further fivehotels under development, the unique Malmaison and Hotel du Vin brands and thehotel operations of the business. Strong interest was received to acquire thesebusinesses from trade and private equity investors and detailed due diligenceand sale negotiations were well advanced. However, the major uncertaintiesexperienced within the debt financing markets which commenced in late Summer2007 meant that bidders could not finalise unconditional offers at the highlevels previously indicated for these property interests, brands and business.Accordingly the Board, having been advised by Bank of America Securities,considered that delaying the sale process until after the adverse debt financingenvironment that then existed and which has continued thereafter haveterminated, was in the best interests of Shareholders of the Company. Theproposed sale was therefore terminated on 20 September 2007 and the costs of£3.5m incurred in relation thereto have been written off. 5. CAPITAL REORGANISATION COSTS________________________________________________________________________________________________________________________On 7 February 2008 the Board announced proposals in respect of a capitalreorganisation and the introduction of a new holding company which had beenundertaken by the Company during the fourth quarter of 2007, were set out indetail in a Circular to Shareholders issued on that day. The proposals wereapproved at an extraordinary general meeting of the Company held on 4 March2008. These proposals increase the reserves of the Group which can bedistributed to shareholders in line with the 2002 Cash Distribution Programme.They also create a Group structure which gives increased flexibility on futurepotential disposals of the operating businesses and increases the options to theCompany as to when cash and cash equivalents can be returned to shareholders aswell as simplifying the process for returning cash. The total costs of theseproposals are anticipated to be £4.0m, of which £2.5m had been incurred by 31December 2007. The balance is expected to have been incurred by 30 June 2008and will accordingly be expensed in the Half-Yearly Financial Report of theCompany for the six months ended 30 June 2008. Pro-forma unaudited Eighteen Year ended year ended months ended 31 December 31 December 31 December 2007 2006 2006 £'000 £'000 £'000_______________________________________________________________________________________________________________Capital reorganisation costs 2,500 - - ______ _____ _____ 6. PENSIONS________________________________________________________________________________________________________________________Overall summary_______________ The Company and its subsidiaries operate defined contribution pension schemes inmost areas of the Group. It also operates two defined benefit pension schemesin its 68.3% owned subsidiary Liberty Plc. One of these is for certain UKemployees of its subsidiary Liberty Retail Plc, which has been closed to newentrants since February 2002 and was closed to future accrual in January 2007.The pension obligations of this scheme are guaranteed by the Company's 68.3%owned subsidiary Liberty Plc but not by MWB Group Plc. The other definedbenefit pension scheme is a small scheme for employees of the Japanesesubsidiary of Liberty Plc. The assets of all pension schemes of the Group are held in separate trustadministered funds. The total pension charge of the Group for the year ended 31December 2007 was £0.9m (eighteen months ended 31 December 2006: £1.1m). Pro-forma unaudited Eighteen Year ended year ended months ended 31 December 31 December 31 December 2007 2006 2006 £'000 £'000 £'000_____________________________________________________________________________________________________________Summary________ Cumulative net liability of UK Scheme (414) (1,593) (1,593)Cumulative net assets/(liabilities) of Japanese Scheme (2) 45 45 ______ _____ _____Total present value of employee benefits (416) (1,548) (1,548) ______ _____ _____ 7. FINANCE INCOME AND EXPENSES________________________________________________________________________________________________________________________ Pro-forma unaudited Eighteen Year ended year ended months ended 31 December 31 December 31 December 2007 2006 2006 £'000 £'000 £'000_______________________________________________________________________________________________________________The finance income arose as follows:- Interest income on cash deposits for the period 1,093 2,240 2,665 ______ _____ _____The finance expenses arose on financial liabilitiesmeasured at amortised cost as follows:-Unsecured Loan Stock 2009/2012 2,924 2,924 4,415Unsecured Loan Stock 2005/2006 - - 173Bank loans and overdrafts 24,431 18,963 31,309Amortisation of debt issue costs 4,047 1,557 3,237Finance leases and hire purchase contracts - 37 129Defined benefit pension scheme net financing cost - 36 150 ______ _____ _____ 31,402 23,517 39,413Less finance costs capitalised in respect of development expenditure before tax relief (2,810) (1,537) (1,592) ______ _____ _____Total finance expenses for the period 28,592 21,980 37,821 ______ _____ _____ 8. EARNINGS/(LOSS) PER SHARE AND RECOGNISED INCOME AND EXPENSE PER SHARE________________________________________________________________________________________________________________________ Earnings/(loss) per share_________________________ The earnings/(loss) per share figures are calculated by dividing the profit/(loss) attributable to equity shareholders of the Company for the period, by theweighted average number of shares in issue during the period, as follows:- Pro-forma unaudited Eighteen Year ended year ended months ended 31 December 31 December 31 December 2007 2006 2006 £'000 £'000 £'000_______________________________________________________________________________________________________________Profit/(loss) for the period attributable to equityshareholders of the Company £'000 (15,635) 982 2,129 ______ _____ _____ Weighted average number of ordinary shares in issueduring the period '000 80,522 96,257 100,768 ______ _____ _____ Earnings/(loss) per share (basic and diluted) Pence (19.4p) 1.0p 2.1p ______ _____ _____ Recognised income and expense per share_______________________________________ The figures for recognised income and expense attributable to shareholders ofthe Company in pence per share are calculated by dividing the recognised incomeand expense attributable to equity shareholders of the Company for the period,by the weighted average number of shares in issue during the period, as follows:- Pro-forma unaudited Eighteen Year ended year ended months ended 31 December 31 December 31 December 2007 2006 2006 £'000 £'000 £'000_______________________________________________________________________________________________________________Recognised income and expense for the periodattributable to equity shareholders of the Company £'000 105,433 23,084 39,193 ______ _____ _____ Weighted average number of ordinary shares in issueduring the period '000 80,522 96,257 100,768 ______ _____ _____Recognised income and expense attributable toequity Shareholders of the Company, in pence pershare Pence 130.9p 24.0p 38.9p ______ _____ _____ 9. INTANGIBLE ASSETS AND GOODWILL________________________________________________________________________________________________________________________ ________31 December 2007_________ 31 December Brand Goodwill Total 2006 £'000 £'000 £'000 £'000_____________________________________________________________________________________________________________At 1 January 2007 18,200 - 18,200 18,200 Acquisition of Stanhope Business Centres Ltd in September 2007 - 7,587 7,587 - Acquisition of minority interest in Liberty jointventure in Japan - 182 182 - ______ _____ _____ ______ At 31 December 2007 18,200 7,769 25,969 18,200 ______ _____ _____ ______ The value of £18.2m at 1 January 2007 relates to the Liberty brand. TheDirectors consider that the Group's brands have indefinite lives due to thedurability of their underlying businesses which has been demonstrated over manyyears. Accordingly the book value of the Liberty brand has not been amortisedbut has instead been subject to an annual impairment review. An external professional valuation of the Liberty brand was undertaken byEquilibrium Consulting at 31 December 2007. This review was based on theprojected underlying business performance of the Liberty brand over the periodfrom January 2008 to December 2012, and assumed compound sales growth rates of10.0%, a discount rate of 11.0% and an annual sales growth rate to perpetuity of2.25%. This confirmed the value of the Liberty brand at more than the bookvalue of £18.2m at which it has been included in the financial statementsthroughout the year. Accordingly, the Directors have confirmed that noimpairment provision is required and the brand has been retained at that levelin these financial statements. On 28 September 2007, the Group acquired 100% of the issued share capital ofStanhope Business Centres Limited for a total consideration of £12.0m. StanhopeBusiness Centres Limited is the parent company of a group of companies providingserviced office solutions. This transaction was accounted for using the purchasemethod of accounting 10. PROPERTY, PLANT AND EQUIPMENT________________________________________________________________________________________________________________________ -------------Operational properties---------------- Plant, In the Operating machinery, Long course of leasehold fixtures & Freehold leasehold construction improvements equipment Total £'000 £'000 £'000 £'000 £'000 £'000_____________________________________________________________________________________________________________Cost or valuationAt 1 January 2007 223,242 88,210 27,144 25,985 81,939 446,520Additions 22,884 7,584 16,398 9,428 19,067 75,361Reclassification 7,940 4,316 (15,025) - 2,769 -Disposals (1,225) (8,100) (2,470) (5) (92) (11,892)Acquisition of subsidiary - - - 1,731 308 2,039Revaluation 92,680 50,985 - - - 143,665 ______ _______ ______ ______ _______ _______At 31 December 2007 345,521 142,995 26,047 37,139 103,991 655,693 ______ _______ ______ ______ _______ _______DepreciationAt 1 January 2007 - - - (1,287) (38,381) (39,668)Charge for the period (1,863) (752) - (1,705) (8,703) (13,023)Disposals - - - - 16 16Revaluation 1,863 752 - - - 2,615 ______ _______ ______ ______ _______ _______At 31 December 2007 - - - (2,992) (47,068) (50,060) ______ _______ ______ ______ _______ _______ Net book valueat 31 December 2007 345,521 142,995 26,047 34,147 56,923 605,633 ______ _______ ______ ______ _______ _______ Analysis of valuation surplus for the periodSurplus credited torevaluation reserve 74,102 46,907 - - - 121,009Surplus credited to minorityinterests 20,441 4,830 - - - 25,271 ______ _______ ______ ______ _______ _______ Revaluation surplusreflected in property, plantand equipment 94,543 51,737 - - - 146,280 ______ _______ ______ ______ _______ _______ 31 December 31 December 2007 2006Operational properties at net book value £'000 £'000________________________________________ Freehold properties as above 345,521 223,242Long leasehold properties as above 142,995 88,210Operating leasehold improvements as above 34,147 24,698 ______ _______ 522,663 336,150 ______ _______ -----------------------------Operational properties------ Freehold and long Plant, leasehold In the Operating machinery, investment Long course of leasehold fixtures & properties Freehold leasehold construction improvements equipment TotalGroup £'000 £'000 £'000 £'000 £'000 £'000 £'000_____________________________________________________________________________________________________________Cost or valuationAt 1st July 2005 4,540 388,915 60,597 - 16,347 93,646 564,045Additions - 16,440 17,283 27,144 11,911 19,931 92,709Reclassification (4,540) 2,500 1,753 - 287 - -Disposals - (210,230) - - (2,560) (31,638) (244,428)Reversal of prior period impairments - 369 - - - - 369Revaluation - 25,248 8,577 - - _ 33,825 ______ _______ ______ ______ _______ _______ _______ At 31st December 2006 - 223,242 88,210 27,144 25,985 81,939 446,520 ______ _______ ______ ______ _______ _______ _______DepreciationAt 1st July 2005 - - - - - (27,341) (27,341)Charge for the period - (4,500) (601) - (1,427) (11,467) (17,995)Disposals - 1,299 - - 140 427 1,866Revaluation - 3,201 601 - - _ 3,802 ______ _______ ______ ______ _______ _______ _______ At 31st December 2006 - - - - (1,287) (38,381) (39,668) ______ _______ ______ ______ _______ _______ _______ Net book valueat 31st December 2006 - 223,242 88,210 27,144 24,698 43,558 406,852 ______ _______ ______ ______ _______ _______ _______ Valuation_________ The Group's property, plant and equipment is all located in the United Kingdom.The Group's Operational properties were valued at 31 December 2007 by qualifiedprofessional valuers working for the company of DTZ Debenham Tie Leung,Chartered Surveyors, ("DTZ"), acting in the capacity of External Valuers. Allsuch valuers are Chartered Surveyors, being members of the Royal Institution ofChartered Surveyors ("RICS"). DTZ act as valuers to the MWB Group and undertake half year and year endvaluations for accounting purposes. DTZ has been carrying out this valuationinstruction for the Group for a continuous period since June 1999 and PaulWolfenden has been the signatory of Valuation Reports provided to MWB Group forthe same period since June 1999. In addition, DTZ provide ad-hoc valuationadvice to MWB Group. DTZ is a wholly owned subsidiary of DTZ Holdings plc. Inthe financial year to 30 April 2007, the proportion of total fees payable by MWBGroup to the total fee income of DTZ Holdings plc was less than 5%. It is notanticipated that this situation will vary in terms of the financial year of DTZto 30 April 2008. DTZ have not received any introductory fees or acquisitionfees in respect of any of the properties owned by MWB Group within the 12 monthsprior to the date of valuation. DTZ have been appointed as valuers in respectof certain of the properties and in the last 12 months they have providedvaluation advice for bank lending purposes in relation to certain of theproperties. All valuations were carried out in accordance with the RICS Appraisal andValuation Standards 5th Edition ("the Manual") and the properties were valued onthe basis of Market Value of the Properties. Market Value is defined in theManual as the estimated amount for which a property should exchange on the dateof valuation between a willing buyer and a willing seller in an arm's lengthtransaction after proper marketing, where the parties had each actedknowledgeably, prudently and without compulsion. The valuation of the hotels is based on estimates of annual maintainableearnings before interest, tax, depreciation and amortisation ("EBITDA") for eachproperty over a 10 year cash flow period. These estimates are based on thehistoric, current and budgeted trading information provided by the Group to DTZ.DTZ apply a market discount rate to the cash flow forecast of the hotels toassess the net present value of each property asset. This is in line with themethod used by the market for the valuation of this type of property. In valuing the Group's hotels, DTZ have had regard to the valuation of theproperties as fully equipped operational entities, and to their tradingpotential. The valuation therefore includes the land and buildings; the tradefixtures, fittings, furniture, furnishings and equipment; and the market'sperception of the trading potential excluding personal goodwill; together withan assumed ability to renew existing licences, consents, certificates andpermits. The value excludes consumables and stock in trade. The valuation excludes any goodwill associated with the management by theCompany or its subsidiaries but recognises that the hotel property assets wouldprobably be sold as trading entities. Guidance Note 3 of the Red Book statesthat the valuer must lot or group properties in the manner most likely to beadopted in the case of an actual sale. Therefore DTZ have lotted together thehotel properties owned by the MWB Group; were the hotel properties to bemarketed individually the values achieved could be less than those included inthe Valuation Report. Properties valued by DTZ at 31 December 2007 carried in the balance sheet atvaluation included in property, plant and equipment totalled £553.8m. Thecarrying value of properties in the balance sheet excludes those revaluationsurpluses attributable to the land element of long leaseholds and developmentswhich are held at cost. Other minor properties, the short leasehold propertiesof MWB Business Exchange Plc, and plant and equipment, are carried at the lowerof cost and realisable value in the table above. These assets had a net bookvalue at 31 December 2007 of £51.8m. The historic cost of the Group's properties at 31 December 2007 includescapitalised interest of £7.9m (31 December 2006: £5.1m). 11. LOANS AND BORROWINGS________________________________________________________________________________________________________________________ 31 December 31 December 2007 2006 £'000 £'000________________________________________________________________________________________________________________Current liabilities___________________ Secured bank loans 32,959 21,619Other unsecured loan borrowings 1,620 1,620 ______ _____ 34,579 23,239 ______ _____Non-current liabilities Secured bank loans 265,170 205,5669.75% Unsecured Loan Stock 2009/2012 29,640 29,602Other unsecured loan borrowings 805 2,425 ______ _____ 295,615 237,593 ______ _____Total loans and borrowings 330,194 260,832 ______ _____ 12. TRADE AND OTHER PAYABLES________________________________________________________________________________________________________________________ 31 December 31 December 2007 2006 £'000 £'000________________________________________________________________________________________________________________Due within one year___________________Trade payables 18,126 13,036Other payables 2,015 8,370Client deposits 13,302 11,408Accruals 27,453 24,401PAYE, NIC and VAT 6,037 4,203Deferred income 697 3,148 ______ _____ 67,630 64,566 ______ _____Due after more than one year____________________________Other payables 1,153 2,458Operating lease incentives 10,293 5,516Long leasehold obligations 703 710 ______ _____ 12,149 8,684 ______ _____ 13. MINORITY INTERESTS________________________________________________________________________________________________________________________ The movements in minority interests of the Group during the year ended 31December 2007 arose as follows:- Add Add minority minority share of Other At share of valuation movements At 1 January result for surplus for during 31 December 2007 the year the year the year 2007 £'000 £'000 £'000 £'000 £'000______________________________________________________________________________________________________________MWB Business Exchange Plc 3,843 4,186 - (675) 7,354MWB Malmaison Holdings Limited 30,483 (1,128) 26,004 13,571 68,930Liberty Plc 17,776 (1,905) (733) (1,391) 13,747Others 1,861 168 - (277) 1,752 _____ _____ ______ ______ ______ 53,963 1,321 25,271 11,228 91,783 _____ _____ ______ ______ ______ During the year ended 31 December 2007, the Group drew down further funds fromthe minority shareholder in MWB Malmaison Holdings Limited, resulting inminority interests increasing by the amounts drawn down plus the share ofretained equity attributable to each increased amount subscribed. 14. EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY IN PENCE PER SHARE________________________________________________________________________________________________________________________The Equity attributable to shareholders of MWB Group in pence per share iscalculated by dividing the Equity attributable to shareholders of MWB Group ateach year end by the number of ordinary shares in issue at such date. Therelevant figures are as follows:- 31 December 31 December 2007 2006_______________________________________________________________________________________________________________Equity attributable to shareholders of MWB Group per consolidated balance sheet £'000 204,377 99,322 _______ ______Number of ordinary shares in issue at year end '000 80,522 80,522 _______ ______Equity attributable to shareholders of MWB Group inpence per share Pence 254p 123p _______ ______ 15. COMMITMENTS AND GUARANTEES________________________________________________________________________________________________________________________ Contingent liabilities______________________ In June 2003 the Group bought out the minority interests in the share capital ofMWB Business Exchange Limited ("BusEx"), for an initial consideration of £16mand deferred consideration of £9.5m. In December 2005, a new holding companyfor BusEx, MWB Business Exchange Plc, was floated on AIM and the Group'sretained interest at the date of flotation was valued at £38m. This subsidiaryhas continued to expand and by 31 December 2007, the Group's interest in MWBBusiness Exchange Plc had increased in value to approximately £52m. The paymentof any of the deferred consideration of £9.5m referred to above from theacquisition of minority interests in June 2003 is dependent on value beingdistributed out of MWB Business Exchange Plc to MWB Group or received from athird party sale by the Group, for the serviced office business of MWB BusinessExchange Plc before June 2018. This includes value received from incomedistributions, capital repayments and proceeds from external sales of MWBBusiness Exchange Plc or its business. No provision is included in the financial statements for the deferredconsideration as its payment is contingent on value being distributed out of MWBBusiness Exchange Plc and it being received by the MWB Group. However, it wouldbecome payable if the Group's interest in MWB Business Exchange Plc was realisedin cash by the Group and it has accordingly been included as a contingentliability at 31 December 2007. 16. DESPATCH OF FINANCIAL STATEMENTS________________________________________________________________________________________________________________________A copy of the above document has been submitted to the UK Listing Authority, andwill be available for inspection at the UK Listing Authority's Document ViewingFacility, which is situated at the Financial Services Authority, 25 The NorthColonnade, Canary Wharf, London E14 5HS, telephone number 020 7676 1000. The financial statements will be sent to Shareholders during April 2008. Theaudited financial statements of Marylebone Warwick Balfour Group Plc for theeighteen months ended 31 December 2006 and further copies of this preliminaryannouncement are available from the Company Secretary, City Group P.L.C. at theCompany's registered office, 30 City Road, London EC1Y 2AG. This information is provided by RNS The company news service from the London Stock Exchange