30 Mar 2010 07:00
FOR IMMEDIATE RELEASE
30 March 2010
MWB GROUP HOLDINGS Plc
FINAL RESULTS FOR 12 MONTHS TO 31 DECEMBER 2009
HIGHLIGHTS
MWB GROUP HOLDINGS Plc
·; Equity attributable to shareholders of 144p per share at December 2009, from 174p per share at December 2008.
·; Property values stabilise with current year deficit only £2.1m compared with £79.2m in 2008.
·; Malmaison and Hotel du Vin trading results steady despite challenging market conditions. Operating EBITDA at £26.6m level with last year.
·; Overall record revenues of £60.8m at Liberty up 20% on 2008.
·; Significant expansion in MWB Business Exchange following acquisition of 16 former MLS Group Plc centres.
·; Overall MWB Group Holdings loss before tax increased to £15.4m from £9.9m in 2008 reflecting tougher market conditions and expenditure on the newly acquired MLS centres.
"I continue to believe we have the strength and depth of management as well as excellent products and services within our operating companies, that make us better placed than most to ride out whatever the economy may present us with. All our businesses have started the current year well but we are adopting a cautious approach to this year as a whole until the direction of the UK economy becomes clearer."
Eric Sanderson
Chairman
MALMAISON AND HOTEL DU VIN
·; Revenue increased 3% to £111m from £108m in 2008.
·; Strong performance in food and beverage now generating annual revenue of almost £50m.
·; Operating EBITDA level with previous year at £26.6m.
·; Occupancy stable for the year at 79% despite challenging economic environment.
·; Room rates reflected tougher market conditions easing from £112 to £99 at Malmaison and £120 to £111 at Hotel du Vin.
·; Full year's contribution by four new hotels opened in 2008 with an exceptionally good performance by Malmaison Aberdeen.
"We believe our corporate market is set to grow again although the leisure market could come under pressure in the third quarter as the impact of proposed Government changes in fiscal policy begin to bite. The lessons from 2009, together with our strong cash flow management and strategies we have put in place over the past year, have put us in an excellent position to take full advantage of market improvements as they occur."
Robert B. Cook
Chief Executive
Malmaison and Hotel du Vin Group
MWB BUSINESS EXCHANGE
·; Revenue down 5% to £112.4m over the previous 12 month period.
·; Significant expansion in capacity by acquisition during Spring 2009 of 16 former MLS Group PLC centres, predominantly in London.
·; Excluding start-up losses of £2.6m from the MLS centres, overall EBITDA reduced by 31% to £12.4m compared to the year to 31 December 2008.
·; Revenue Per Available Workstation (REVPAW) reduced 29% to £6,180 at 31 December 2009 from £8,700 at 31 December 2008.
·; Revenue Per Occupied Workstation (REVPOW) down 22% to £7,545 at 31 December 2009 compared to £9,650 at 31 December 2008.
·; Despite challenging market conditions occupancy of 82% at 31 December 2009 compared with 90% at the previous year end.
·; Three additional new centres in London and one in Harrogate opened in the year to 31 December 2009. Two further London centres to open in Spring 2010.
·; Special 15p per MWB Business Exchange share interim dividend paid in June 2009. (Total 2008 dividend per MWB Business Exchange share 1.93p).
"Already we are seeing the market for serviced offices and meeting rooms improve and demand strengthen. Early indications are that occupancy is increasing and rates are stabilising, particularly in London. Our strategy of maintaining the leading position in Central London will enable us to take full advantage of the improving market conditions forecast by the capital's leading property consultants."
John Spencer
Chief Executive
MWB Business Exchange Plc
LIBERTY PLC
·; Overall 20% sales uplift to £60.8m against £50.9m last year.
·; Flagship store sales 18% higher at £37.3m against £31.5m a year earlier.
·; Since the February 2009 "Renaissance of Liberty" launch, flagship store trading and margins have achieved overall positive EBITDA for the first time in the last ten years.
·; Liberty accepted as showcase for established international and home grown design talent including Grayson Perry, Alexander McQueen, Ronnie Wood and Stella McCartney.
·; March 2010 - contracts exchanged for the sale and leaseback of the iconic flagship store for £41.5m.
"Liberty has demonstrated its ability to buck economic and retail trends by returning to profitability during one of the worst downturns in recent retail history. It has created an environment that is increasingly appealing to an ever widening customer base while at the same time enhancing the brand and the values that it represents."
Geoffroy de La Bourdonnaye
Chief Executive
Liberty Plc
CHAIRMAN'S STATEMENT
This has been a challenging year for the Group but, as the accompanying results indicate, the management teams in each of our companies have faced up to the challenges presented by the economic climate and have performed well. We believe that each of our companies have outperformed their peer group which demonstrates the quality of our people as well as their products and services.
There is little doubt that all three sectors in which we operate - retail, hotels, and serviced offices - have come under severe pressure as both companies and consumers have cut expenditure. However, against the backdrop of such a difficult business environment we have delivered a good performance.
Liberty, our iconic British brand, has enjoyed a renaissance over the past year with a 20% revenue increase to almost £61m and positive EBITDA of £0.1m, its first for more than a decade. Revenues at the flagship store rose 18% and by 23% in its fabrics division. All this has been achieved within a retail sector that, in many areas, has suffered badly as consumers cut back heavily on spending.
On 15 March 2010 we announced that contracts had been exchanged for the sale and leaseback of the freehold of Liberty's landmark flagship store in Great Marlborough Street, London W1, subject to approval by Shareholders in General Meeting. The price agreed was £41.5m, some £11m more than the valuation of the building at 31 December 2009. This is clearly highly beneficial. The proceeds from the sale will be used to repay all bank borrowings in Liberty and intergroup debt provided by MWB to Liberty, with the remainder providing working capital. Thereafter, Liberty is leasing the Tudor Building on a 30 year institutional lease at an annual rent of £2.1m with fixed increases every five years.
We also announced on 12 March 2010 that we had received approaches that could lead to an offer being made for Liberty, the company. Discussions resulting from these approaches are continuing and we will report to shareholders when we have further news.
At our boutique hotel business, Malmaison and Hotel du Vin, occupancy was maintained at around 79%, slightly down on the previous year. Despite pressure on rate, total revenue was up from £108m in the previous year to £111m this year, aided by full year contributions from the four hotels that opened in the second half of 2008 and EBITDA remained level with last year at £26.6m. Our hotels' performance was further boosted, against all odds, by food and beverage revenue which is now running at almost £50m annually, equivalent to a healthy restaurant group in its own right.
MWB Business Exchange outperformed both its peers and market expectations with the "Business Exchange" section of the business generating EBITDA of £12.2m and pre-tax profits of £7.1m, down from £13.9m in the previous year. This is an extremely creditable performance within the context of a difficult commercial property tenant market where demand for space over the period has fallen substantially. Business Exchange made a quantum leap over the period when it took over 16 centres from a distressed competitor and became London's market leader in the provision of serviced offices, with a total of 45 centres in the capital at the date of this statement.
While very little capital outlay needed to be incurred in the acquisition of these centres, as expected, many required investment to bring them up to Business Exchange's exacting standards. This has had a short term impact on the enlarged Business Exchange's EBITDA as the new centres become fully integrated and occupancy levels come up to the company's targets. As a result, EBITDA for the whole of Business Exchange for 2009 was £9.8m against £18.1m for 2008. However, Business Exchange paid a special interim dividend totalling some £9.8m, of which £7m was received by the Group.
At Group level, EBITDA for the 12 months to 31 December 2009 was £28.8m, slightly down on the previous year's £31.1m, reflecting market conditions. Pre-tax losses for the period widened to £15.4m from £9.9m last year and losses per share amounted to 22.0p compared to 3.6p in 2008.
MWB has benefited from last Autumn's revival in the property investment market and our total property assets, including plant and equipment stabilised at £559.5m, with £8.2m of the first half decline in values being reversed in the second half, resulting in an overall decline of just £2.1m for the full year. After reflecting the retained loss from earnings and the fall in property values, equity attributable to MWB Group shareholders fell from £125.9m to £104.5m, which translated into 144p per share compared to 174p per share last year.
Towards the end of 2009 we announced a £27.5m equity raising through the placing of 91.7m new Units in MWB Group. At the same time we also announced that we had cut costs within the Group and are continuing to do so during the current year. £7.5m of the new equity was used to redeem the same amount of our Unsecured Loan Stock and the remainder, amounting to £17.1m net of fees, has been used to reduce borrowings and provide working capital. This puts us in a much stronger position going forward.
As part of this cost-cutting exercise Andrew Blurton, our Joint Finance Director, resigned from the Board with effect from 12 January 2010, although he continues to be involved in the Group, on a consultancy basis until the end of June 2010 to ensure an orderly handover. The Board would like to record its appreciation of Andrew's contribution to the development of the Group since its inception and wish him every success in the future.
Across the Group we are facing another difficult year in the UK economy. Although there are signs and indications that the worst of the recession is behind us, we believe there is still uncertainty in the future. With an imminent General Election, difficulties being experienced by members of the Eurozone, and possible changes to domestic fiscal policies, it is not sensible to predict too far into the future.
However, I continue to believe we have the strength and depth of management as well as excellent products and services within our operating companies, that make us better placed than most to ride out whatever the economy may present us with. All our businesses have started the current year well but we are adopting a cautious approach to this year as a whole until the direction of the UK economy becomes clearer.
Eric Sanderson
Chairman
30 March 2010
MALMAISON AND HOTEL DU VIN OPERATING REVIEW
It has been another challenging year for our boutique hotel business, as we have had to adapt to changing market conditions and the continuing adverse economic environment putting rates under pressure. In spite of this, occupancy remained stable throughout 2009 at around 79%.
At the half-year we reported that, not unexpectedly, there had been a decline in our corporate customer base and an increase in leisure business, particularly at Malmaison. This shift in our customer base continued throughout the second half of the year. Whilst occupancy remained consistent over the course of the year, we saw a 10% decline in average room rates across the group to £104 against £115. Malmaison, which is more reliant on the corporate market, bore the brunt of this rate drop with a 12% fall from £112 to £99, while Hotel du Vin ("HdV"), which is more leisure orientated, saw rates ease by a more modest 8% to £111 against £120 previously.
What has been incredibly encouraging and extremely positive has been the rise in customer spend on food and beverage ("F&B"). HdV saw a 13% increase in its restaurant business revenues over the year to more than £28m and F&B income now accounts for approximately 55% of total HdV business. Malmaison experienced a 10% uplift in its restaurant revenue to £20.7m which represented 34% of total revenue. Increasingly the group is maximising its position as a great restaurant business with rooms, as food and beverage is now generating annual revenue of almost £50m.
Total revenue across the group for the 12 months to 31 December 2009 was marginally up on the previous year at £111.0m against £107.6m. Malmaison accounted for £60.3m of the total, slightly down on the past year's £62.3m, while HdV produced a near 12% uplift at £50.8m compared to £45.3m last time. HdV benefited from a full year's contribution from three new hotels that opened in the second half of 2008: Poole, Newcastle and Edinburgh.
At Malmaison there was only one new hotel making a first full year contribution: Aberdeen, which opened in November 2008 and took off almost immediately, reaching 79% occupancy for the 12 months to 31 December 2009. Aberdeen has been an incredible success, outstripping its budget by some margin; it generated a 24% increase over budgeted revenue for the year and exceeded its food and beverage budget by some 70%.
Group EBITDA was level with last year at £26.6m. Malmaison contributed EBITDA of £15.4m, down from £16.5m, while HdV produced £11.2m against £9.9m, an increase of 13%. On a like-for-like basis HdV's revenue was slightly down at £41.7m compared to £42.5m but EBITDA was unchanged at £10.5m.
There was regional variation in performance, especially at Malmaison. Leeds, Manchester and Liverpool came under strong room rate pressure although restaurant revenues overall were good, especially at Manchester. Scotland performed better than the other regions, underpinned by the very strong contribution from Aberdeen. London, which had a slow first six months, produced a strong second half performance.
Leisure and social spending were the highlights at HdV. Our hotels at Brighton, Cambridge, Cheltenham, Devonshire Gardens and Harrogate particularly benefited from weddings and events revenue. Devonshire Gardens, for example, was the chosen venue for 84 weddings over the course of the year and advance bookings for the current year are even stronger. The extension at Brighton, comprising 12 extra rooms, completed during the year and also did well.
Conversely our new HdVs at Poole, Edinburgh and Newcastle endured fairly tough trading conditions and they are taking longer to establish themselves in their respective markets than originally envisaged. However, I can report that they are all now trading more strongly and are getting nearer to the revenue levels we originally anticipated.
Our approach to the more challenging market place has been to communicate a clear "value for money" message to existing and potential new customers. To help deliver this message, particularly during the first six months of 2009, we offered a group wide promotion of two courses and a bottle of wine for £29. In only the second month of the promotion we estimated this drove an extra 22,000 covers in all our restaurants. Interestingly, take-up of this promotion has slowed as customers traded up to the full à la carte menu.
The group continues to collect industry awards including the Business Traveller award for "Best Smaller Hotel Chain" in 2009 while the Aberdeen Malmaison won the "Best Architecture - Conversion of an Existing Building" award at the European Hotel Design Awards 2009.
We have decided to sell two of our properties: the Edinburgh Malmaison and the St Andrews hotel which was to be converted into an HdV. The Edinburgh property is our oldest Malmaison and we believe it is better to realise value from this investment and relocate our Edinburgh presence into a city centre property. At St Andrews, whilst the unbranded hotel operates successfully, we believe the cost of converting the hotel into an HdV outweighs the medium term resultant investment value of the property. We will update shareholders as these sales progress.
In the current climate our focus has been on controlling costs without impacting on our award winning service. In a business like ours, the big areas of expenditure are food and labour costs which we have kept under very strict control including finding new lower cost suppliers or re-negotiating existing contracts without sacrificing quality.
Capital expenditure has been deliberately reduced over the course of 2009. However, we have invested in new management software that enables us to monitor the room pricing of comparable hotel groups in a transparent way and allows us to adjust our room rates accordingly.
2010 has started with mixed fortunes. The widespread snow and ice at the start of January had an impact across the group although I am pleased to report that there has been a strong recovery and I am confident we will meet our first quarter's budget. February is already looking very positive with Malmaison recovering very quickly from the early setbacks.
This year's restaurant promotions, "The Three Tenners" at Malmaison and "Du Vin or not Du Vin" at HdV, are already proving to be highly successful with revenue ahead of last January, despite the adverse weather.
We anticipate the first part of the year, in the run-up to the General Election, to deliver results comparable to last year but post-election the future is less certain. We believe our corporate market is set to grow again although the leisure market could come under pressure in the third quarter as the impact of proposed Government changes in fiscal policy begin to bite.
This degree of uncertainty leads us to be cautious about the future. However, the lessons from 2009, together with our strong cash flow management and strategies we have put in place over the past year, have put us in an excellent position to take full advantage of market improvements as they occur.
Robert B. Cook
Chief Executive
Malmaison and Hotel du Vin Group
30 March 2010
MALMAISON AND HOTEL DU VIN - KEY FINANCIAL HIGHLIGHTS
The key performance indicators for the business, together with its trading and balance sheet performance for the years ended 31 December 2009 and 2008, are summarised below:-
|
| Year ended 31 December 2009 | Year ended 31 December 2008 |
Malmaison |
|
|
|
|
|
|
|
Total revenue | £'000 | 60,271 | 62,322 |
Average occupancy for year | % | 78 | 79 |
Average room rate for year | £ | 99 | 112 |
Operating EBITDA* | £'000 | 15,366 | 16,526 |
Number of operating hotels at year end |
| 12 | 12 |
|
|
|
|
Hotel du Vin |
|
|
|
|
|
|
|
Total revenue | £'000 | 50,763 | 45,314 |
Average occupancy for year | % | 81 | 81 |
Average room rate for year | £ | 111 | 120 |
Operating EBITDA* | £'000 | 11,221 | 9,927 |
Number of operating hotels at year end |
| 14 | 14 |
|
|
|
|
Combined Malmaison and Hotel du Vin |
|
|
|
Total revenue | £'000 | 111,034 | 107,636 |
Operating EBITDA* | £'000 | 26,587 | 26,453 |
*Operating EBITDA excludes pre-opening costs and profit on disposal of fixed assets.
|
| 31 December 2009 | 31 December 2008 |
Balance sheet composition |
|
|
|
Property, plant and equipment | £'000 | 483,085 | 493,311 |
Debt | £'000 | (278,357) | (282,322) |
Equity attributable to shareholders of |
|
|
|
MWB Group in Malmaison and Hotel du Vin | £'000 | 140,331 | 147,703 |
Equity attributable to shareholders of |
|
|
|
MWB Group in Malmaison and Hotel du Vin, |
|
|
|
in pence per MWB Group share | Pence | 194p | 204p |
MWB BUSINESS EXCHANGE PLC OPERATING REVIEW
Business Exchange experienced a successful 2009 by adhering to its well proven strategy of focusing on the London market. Expansion in this market has been our stated goal for some time as we have always believed that concentrating our centres in such a dynamic business environment will generate the most profitable returns.
The highlight of the year was our acquisition of 16 carefully selected centres from MLS, a rival of Business Exchange, which was going into administration. These centres are predominantly located in London. Since the year end we have secured two new Central London centres in Knightsbridge and Paddington. Both centres will open in the first half of 2010 and are in prime locations where there is very little competition.
As a result, Business Exchange has an increasingly dominant footprint in the capital with 47 centres. Today Business Exchange is London's largest provider of serviced offices with almost 14,000 workstations covering nearly 1.2m sq ft. These centres now account for 64% of our total portfolio of 73 centres across 1.8m sq ft, providing approximately 20,000 workstations.
As is well documented, the market demand for offices in the UK has been extremely weak and, as a consequence, total revenue for the year to 31 December 2009 dropped 5% to £112.4m compared to £118.5m in 2008. This reflected a 9% fall in occupancy to 82% and an 18% decline in rate in our mature centres, offset by the acquisition of the MLS centres. The resulting EBITDA was £9.8m against £18.1m while pre-tax profits declined to £4.2m from £14.0m the previous year. In June 2009 we paid a special interim dividend totalling £9.8m. Even after this, our operations continue to be underpinned by £18.1m of net assets, with no debt.
As a result REVPOW (annualised revenue per occupied workstations) in our mature centres eased some 14% from £9,650 to £8,265 and REVPAW (annualised revenue per available workstation) was down 20% to £6,955 from £8,700. There was also an 18% decline in revenue from our meeting and conference room division which dropped to £9.2m from £11.3m.
Business Exchange, London's largest provider of serviced offices, offers a powerful mix of product, price and location underpinned by robust internal cost controls that ensure the company has reasonable resilience against the current market conditions. It should be noted that the contracted nature of Business Exchange's revenue creates a lag of up to 18 months between what occurs in the market and the financial performance reflected in our results. In other words our numbers reflect price reductions that occurred in 2008 and 2009.
In 2009 we continued to see a demand shift in the market towards small and medium sized enterprises (SMEs) as corporates and larger clients reined back their expenditure in both serviced offices and meeting rooms. We, therefore, saw larger higher paying clients move out which were replaced by smaller clients and start-up businesses in a more competitive environment.
Encouragingly, our renewal rates were maintained at 70% and as the year progressed our existing clients accepted rate increases for their workstations on renewal. Equally, new workstation prices stabilised. This was in stark contrast to the end of 2008 and the first half of 2009 when incoming licencees were paying considerably less than those they replaced. The benefit to Business Exchange, therefore, of licence fees hardening will not be seen until the second half of 2011 and thereafter.
Our focus on the SME and business start-up market enables us to spread our risk. Although there is an initial short term revenue fall when a large client moves out there is greater long term benefit from the Group's improved resilience due to a wider and more diverse client base. At the same time, our provision of high level service and employee engagement, together with the quality of our centres, continue to attract, and, increasingly retain clients. Typically the average number of workstations licensed to a client at 31 December 2009 was six and the average length of stay 25 months (compared to eight and 23 months respectively a year ago).
We continue to ensure the business reflects a broad and dynamic customer base and is not dependent on any one specific sector. Just as importantly, we are constantly reviewing and improving our infrastructure. To that end, the roll out of our new IT and Telephony platform will create new revenue-generating opportunities through a broader product and service offering, as well as meeting the ever evolving demands of our wide client base.
The current year is one of consolidation with the focus on improving the performance of the new and existing centres by driving occupancy and revenue. Already we are seeing the market for serviced offices and meeting rooms improve and demand strengthen. Early indications are that occupancy is increasing and rates are stabilising, particularly in London. Our strategy of maintaining the leading position in Central London will enable us to take full advantage of the improving market conditions forecast by the capital's leading property consultants. London's position as a major global financial centre will be reinforced as confidence returns to the financial markets and we move towards the 2012 Olympics.
John Spencer
Chief Executive
MWB Business Exchange Plc
30 March 2010
MWB BUSINESS EXCHANGE PLC - KEY FINANCIAL HIGHLIGHTS
The key performance indicators for this business and the trading performance and balance sheets for the years ended 31 December 2009 and 2008, are summarised below:-
|
| Year ended 31 December 2009 | Year ended 31 December 2008 |
Operating statistics |
|
|
|
|
|
|
|
Revenue | £'000 | 112,416 | 118,544 |
Occupancy at year end* | % | 82 | 90 |
Annualised revenue per available workstation |
|
|
|
("REVPAW") at year end* | £ | 6,180 | 8,700 |
Annualised revenue per occupied workstation |
|
|
|
("REVPOW") at year end* | £ | 7,545 | 9,650 |
EBITDA | £'000 | 9,806 | 18,088 |
Leased centres at year end | Number | 50 | 38 |
Number of Operating and Management Agreement | Number | 8 | 4 |
centres at year end |
|
|
|
Management contract centres at year end | Number | 15 | 13 |
|
|
|
|
*Leased centres only |
|
|
|
|
|
|
|
|
|
|
|
Financial performance |
|
|
|
|
|
|
|
Profit before tax | £'000 | 4,209 | 14,003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 31 December 2009 | 31 December 2008 |
Balance sheet composition |
|
|
|
|
|
|
|
Property, plant and equipment | £'000 | 44,464 | 41,535 |
Net cash | £'000 | 6,241 | 16,404 |
Equity attributable to shareholders of |
|
|
|
MWB Group in MWB Business Exchange Plc | £'000 | 11,234 | 24,339 |
Equity attributable to shareholders of |
|
|
|
MWB Group in MWB Business Exchange Plc, |
|
|
|
in pence per MWB Group share | Pence | 15p | 34p |
LIBERTY PLC OPERATING REVIEW
This has been an historic year for our iconic brand. For the first time in a decade Liberty has produced positive EBITDA against a background of possibly one of the most difficult economic environments the retail sector has experienced since the early 1990's.
As shareholders know, much of this success has been driven by the highly acclaimed Renaissance of Liberty which was launched in February 2009. Looking back at the launch, which was opened by Slumdog Millionaire actress Freida Pinto, it is clear that the Renaissance was a watershed for both the flagship store and the brand itself.
In many ways the Renaissance re-captured the original spirit of Liberty: quirkiness and cutting edge design, all set in a redesigned store. This not only brought back many of our former customers but attracted many thousands of new ones who began to explore the store and brand for the first time.
Very quickly Liberty became the watchword for new and exciting fashion with many brands being introduced by the store to London for the first time. As well as showcasing established international designers, during 2009 we did much to promote young British designers both the little known and the well known. These included Michael Birch, Lost Property, Alexander McQueen, Stella McCartney, Nudie, Grayson Perry, Barbour and Ronnie Wood.
Once more, Liberty was offering an exciting, eclectic but accessible fashion unavailable elsewhere in London, right across the fashion palette - from scarves to jewellery, from dresses to perfume, and bags to sunglasses. Liberty was even home to Hermès' first ever pop-up shop which was a tremendous success.
The result was an overall 20% uplift in Liberty's like-for-like revenues for 2009 to almost £61m against £51m during the previous year. Sales at the flagship store also rose strongly with total revenue for 2009 18% higher at £37.3m against £31.5m a year earlier.
What has been particularly pleasing is that we have maintained the momentum established at the time of the Renaissance launch not only through the 2009 Spring/Summer season but also through Autumn/Winter and into the first quarter of 2010.
2009 also saw the introduction of the Liberty Style Service which has attracted a new group of VIPs to the store. The Style Service offers one-to-one styling advice to individual customers that helps them to select not only the most appropriate range of garments but also the most suitable accessories that complement those choices. It enables the serious customer to access the entire Liberty range in one room and allows them to experiment in a discreet environment as well as enhancing their shopping experience.
While it is often fashion and designers that capture the headlines as well as customers' hearts, Liberty has made great progress in other areas too. Our well-established fabrics business has had another record year as demand for new designs as well as the back catalogue continues unabated.
Not only have collaborations with designers such as Grayson Perry delivered great results but our fabrics have been used in some unlikely settings, such as recycled coffee bags. This eco-bag from Lost Property took the humble coffee bean bag, lined it with a Liberty print and created another fashion must-have that flew out of the door at £50 a time. We also re-introduced a collection of souvenir items such as mugs and handkerchiefs, all with Liberty prints. These instant gifts, which we brought to the store during Summer 2009, have been extremely successful and we continue to sell them today.
Additionally we have created new, and even more vibrant, prints in a range of different fabrics that have included silk and wool for the first time. This division has been supported by an expanded commercial team.
The end result has been another extremely strong contribution from our fabrics division that saw revenue rise a further 23% to £21.5m compared to £17.4m in 2008, which in itself was a record performance. The Japanese element of our Fabrics division benefited from a strong Yen in comparison to the Pound as it produced a 43% increase in revenue in our Sterling financial statements.
It is also pleasing to see our Internet division making solid progress over the year. Clearly the division is benefiting from the increased exposure the Liberty brand is receiving, both at home and internationally. As we expanded our on-line store it attracted a growing customer base, which was particularly evident in the run-up to Christmas as sales of seasonal gifts grew rapidly. We believe this division has a great future and will be a major component in the business as we go forward.
As shareholders know we took the strategic decision to close our Knightsbridge stand-alone Liberty of London store in the Summer of 2009. The decision was principally taken as we had received an extremely attractive offer for our lease on the shop in Sloane Street. In turn this gave us the opportunity to re-structure the division by re-modelling the brand and product offer across the Liberty range, as well as exploring other opportunities to develop Liberty of London both at home and internationally.
There is no doubt in our mind that 2009 has been a year of great progress for the business with all divisions reporting sustainable growth, at a time when there is great uncertainty in the economy and the political climate. All our operating divisions delivered EBITDA growth and it is satisfying to be able to report that our Internet business, which was only launched in July 2008 is already breaking even at the EBITDA level.
Liberty has demonstrated its ability to buck economic and retail trends by returning to profitability during one of the worst downturns in recent retail history. It has created an environment that is increasingly appealing to an ever widening customer base while at the same time enhancing the brand and the values that it represents. Once more Liberty has become an exciting, eclectic but accessible place to shop and therefore we view the future with confidence.
Geoffroy de La Bourdonnaye
Chief Executive
Liberty Plc
30 March 2010
LIBERTY PLC - KEY FINANCIAL HIGHLIGHTS
Liberty Plc is in the process of transforming itself into a dynamic retail destination, underpinned by a strong and expanding retail brand. The historical trading and balance sheet performance of Liberty Plc is summarised below:-
|
| Year ended 31 December 2009 | Year ended 31 December 2008 |
Financial performance |
|
|
|
|
|
|
|
Total revenue | £'000 | 60,774 | 50,850 |
Operating EBITDA before brand expenditure and |
|
|
|
reorganization costs | £'000 | 3,004 | 1,815 |
Operating profit/(loss) before brand expenditure |
|
|
|
and reorganisation costs | £'000 | 1,025 | (435) |
Brand expenditure | £'000 | (2,761) | (4,344) |
Reorganisation costs | £'000 | (135) | (1,346) |
Loss before taxation | £'000 | (3,392) | (6,651) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 31 December 2009 | 31 December 2008 |
Balance sheet composition |
|
|
|
|
|
|
|
Intangible asset - brand | £'000 | 18,200 | 18,200 |
Property, plant and equipment | £'000 | 31,858 | 31,006 |
Net debt | £'000 | (10,601) | (12,390) |
Equity attributable to shareholders of |
|
|
|
MWB Group in Liberty Plc | £'000 | 28,795 | 27,004 |
Equity attributable to shareholders of |
|
|
|
MWB Group in Liberty Plc, in pence per |
|
|
|
MWB Group share | Pence | 40p | 37p |
FINANCIAL REVIEW
for the year ended 31 December 2009
INTRODUCTION
The Chairman's Statement and Operating Reviews provide information on the Group's principal operations and the Board's expectations for the future. This Financial Review covers in greater depth the more significant features of the financial statements for the year ended 31 December 2009, which include an independent valuation of the Group's properties at that date.
OBJECTIVES
The strategy of the Company, led by the activities of the Board, is to realise the Group's assets in cash or cash equivalents, repay the related debt and return surplus proceeds to Shareholders. This emanates from the Cash Distribution Programme proposals approved by Shareholders as set out in the May 2002 Circular. Since this date approximately £80.4m in cash has been returned to Shareholders in the form of buy back of shares.
This Cash Distribution Programme was originally targeted to be completed by the end of December 2005 but has been extended at various times due to prevailing market conditions. In the current adverse economic environment, the Board considers that it is not viable to retain a short term target date by which such realisations will be completed. Accordingly, and as outlined in the Prospectus issued to Shareholders in December 2009, the Cash Distribution Programme has now been extended to 31 December 2016.
The policy to realise the Company's assets in cash or cash equivalents by the disposal of the businesses provides a clear focus. Within the Group, each of MWB's three businesses has its own business plan which is operated and managed by the Directors of each separate business.
As a result, each of the operating divisions can go forward and maximise its performance whilst MWB is well placed to realise cash and cash equivalents which can be distributed to Shareholders following a sufficient improvement in market values.
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF MWB GROUP HOLDINGS PLC
During the year ended 31 December 2009, there was a net decrease in equity attributable to shareholders of MWB Group Holdings Plc of £21.4m, from £125.9m to £104.5m, or 30p per share from 174p to 144p per share.
The movement in equity attributable to shareholders of MWB during the year is summarised in the following table:-
| Year ended | |
| 31 December 2009 | |
|
| Pence |
| £'000 | per share |
Equity attributable to shareholders of MWB Group Holdings Plc |
|
|
at 1 January 2009 | 125,881 | 174p |
Movements during the year: |
|
|
Revaluation of property, plant and equipment, net of tax | (1,901) | (3p) |
Retained loss | (15,948) | (22p) |
MWB Business Exchange Plc purchase of ordinary shares | (1,701) | (2p) |
Effective portion of changes in fair value of derivative financial hedges | (2,713) | (4p) |
Defined benefit pension scheme actuarial losses, net of tax | (680) | (1p) |
Other movements | 1,598 | 2p |
Equity attributable to shareholders of MWB Group Holdings Plc |
|
|
at 31 December 2009 | 104,536 | 144p |
NET ASSET VALUE
The net assets of the Group are financed by equity attributable to shareholders of MWB Group Holdings Plc and minority interests. The sources of finance of the Group at 31 December 2009 in the consolidated balance sheet and at the previous year end were as follows:-
| 31 December 2009 £'000 | 31 December 2008 £'000 |
Total equity attributable to shareholders of |
|
|
MWB Group Holdings Plc | 104,536 | 125,881 |
Minority interests | 71,713 | 77,918 |
Net assets at year end | 176,249 | 203,799 |
The analysis of net assets in the Consolidated Statement of Financial Position across the Group's operations at 31 December 2009, and at the previous year end, is as follows:-
At 31 December 2009 | Net assets before debt and cash £'000 | (Debt)/ cash £'000 | Net assets £'000 | Less minority interests £'000 | Total equity attributable to shareholders of MWB Group Holdings Plc £'000 |
Malmaison and Hotel du Vin | 473,153 | (278,357) | 194,796 | (54,465) | 140,331 |
MWB Business Exchange Plc | 11,835 | 6,241 | 18,076 | (6,842) | 11,234 |
Liberty Plc | 48,167 | (10,601) | 37,566 | (8,771) | 28,795 |
Group debt, less cash and other assets | 5,858 | (80,047) | (74,189) | (1,635) | (75,824) |
| 539,013 | (362,764) | 176,249 | (71,713) | 104,536 |
Equity attributable to shareholders |
|
|
|
|
|
of MWB Group Holdings Plc in |
|
|
|
|
|
pence per share |
|
|
|
| 144p |
At 31 December 2008 | Net assets before debt and cash £'000 | (Debt)/ cash £'000 | Net assets £'000 | Less minority interests £'000 | Total equity attributable to shareholders of MWB Group Holdings Plc £'000 |
Malmaison and Hotel du Vin | 484,555 | (282,322) | 202,233 | (54,530) | 147,703 |
MWB Business Exchange Plc | 19,249 | 16,404 | 35,653 | (11,314) | 24,339 |
Liberty Plc | 49,763 | (12,390) | 37,373 | (10,369) | 27,004 |
Group debt, less cash and |
|
|
|
|
|
other assets | 7,982 | (79,442) | (71,460) | (1,705) | (73,165) |
| 561,549 | (357,750) | 203,799 | (77,918) | 125,881 |
Equity attributable to shareholders |
|
|
|
|
|
of MWB Group Holdings Plc in |
|
|
|
|
|
pence per share |
|
|
|
| 174p |
REVIEW OF PROPERTY, PLANT AND EQUIPMENT
Valuation surplus on property portfolio at 31 December 2009
A valuation of the Group's freehold and long leasehold property interests was undertaken at 30 June 2009 and at 31 December 2009. The valuation was performed by DTZ and was performed on the basis of Existing Use Value. The net deficit over previous book values before minority interests for the year ended 31 December 2009 totalled £2.1m, which has been included in these financial statements.
In accordance with normal valuation practice, the valuations of the Group's hotel interests include value ascribed for plant, machinery and fixtures and fittings forming part of the service installations of the building. They therefore represent a valuation of the total interest of the Group in those properties. The valuations exclude the value of any goodwill that may arise from the present occupation of the properties and this is not recorded separately in the financial statements of the Group.
In accordance with normal valuation practice, the valuation of the Group's retail interests includes value ascribed to plant, machinery and fittings forming part of the services and installation of the building, but excludes moveable shop fittings. All property interests owned by MWB Business Exchange Plc are short leasehold interests; these interests are not revalued under Adopted IFRSs at each period end and are recorded at the lower of cost and net realisable value.
Surpluses or deficits arising on valuation of the Group's operational properties are transferred to revaluation reserve, while impairment of operational properties to below their historical cost is charged directly to the Income Statement.
Operational properties in the course of construction are recorded at the lower of cost and net realisable value and are therefore not revalued upwards in the Group financial statements.
The valuation deficit debited to the revaluation reserve during the six months ended 30 June 2009 totalled £8.4m and arose as follows:-
Six months to 30 June 2009 | Gross valuation | Less previous book value | Gross deficit | Less minority interests | Debited to revaluation reserve |
| £'000 | £'000 | £'000 | £'000 | £'000 |
Malmaison | 275,573 | 275,706 | (133) | 23 | (110) |
Hotel du Vin | 205,649 | 215,061 | (9,412) | 1,647 | (7,765) |
Liberty Plc | 28,800 | 29,547 | (747) | 237 | (510) |
| 510,022 | 520,314 | (10,292) | 1,907 | (8,385) |
The uncertainties in the financial markets caused property prices in the market to decline in the first six months of the year under review. This was reflected in the £10.3m decline in the Group property portfolio value recorded in June 2009. However, this decline has decelerated in the second half of the year as £8.2m of the first half year decline was reversed reducing the overall fall in value to £2.1m for the year. The Group share of the valuation surplus credited to the revaluation reserve during this second six months of the year to 31 December 2009 amounted to £6.5m and arose as follows:-
Six months to 31 December 2009 | Gross valuation | Less previous book value | Gross surplus | Less minority interests | Credited to revaluation reserve |
| £'000 | £'000 | £'000 | £'000 | £'000 |
Malmaison | 273,790 | 272,553 | 1,237 | (216) | 1,021 |
Hotel du Vin | 209,460 | 204,242 | 5,218 | (914) | 4,304 |
Liberty Plc | 30,250 | 28,554 | 1,696 | (537) | 1,159 |
| 513,500 | 505,349 | 8,151 | (1,667) | 6,484 |
The valuation deficit debited to the revaluation reserve for the year ended 31 December 2009 (being the deficit of £8.4m in the first half and surplus of £6.5m in the second half summarised in the tables above) amounted to £1.9m and arose as follows:-
Year to 31 December 2009 | Gross valuation | Less previous book value | Gross surplus/ (deficit) | Less minority interests | Credited/ (Debited) to revaluation reserve |
| £'000 | £'000 | £'000 | £'000 | £'000 |
Malmaison | 273,790 | 272,686 | 1,104 | (193) | 911 |
Hotel du Vin | 209,460 | 213,654 | (4,194) | 733 | (3,461) |
Liberty Plc | 30,250 | 29,301 | 949 | (300) | 649 |
| 513,500 | 515,641 | (2,141) | 240 | (1,901) |
Portfolio analysis by division
At 31 December 2009, the Group's interests are disclosed in the Consolidated Statement of Financial Position as follows:-
| 31 December 2009 | 31 December 2008 |
| £'000 | £'000 |
Non current assets |
|
|
Operational properties | 499,414 | 502,644 |
Operational properties in the course of construction | 1,929 | 1,691 |
Plant and equipment | 58,123 | 61,597 |
Total property interests at year end | 559,466 | 565,932 |
The above interests are analysed as follows:-
|
| Percentage at |
| Percentage at |
| 31 December | 31 December | 31 December | 31 December |
| 2009 | 2009 | 2008 | 2008 |
| £'000 | % | £'000 | % |
Hotels |
|
|
|
|
Malmaison | 271,457 | 48 | 275,450 | 49 |
Hotel du Vin | 211,628 | 38 | 217,861 | 38 |
| 483,085 | 86 | 493,311 | 87 |
MWB Business Exchange Plc | 44,464 | 8 | 41,535 | 7 |
Liberty Plc | 31,858 | 6 | 31,006 | 6 |
Other | 59 | - | 80 | - |
Total property interests at |
|
|
|
|
year end | 559,466 | 100 | 565,932 | 100 |
INTANGIBLE ASSETS
Intangible assets comprise the goodwill on the acquisition of Liberty in 2000, Stanhope Business Centres in 2007 and the MLS business centres in 2009.
During the year ended 30 June 2000, £18.2m of goodwill arose on the acquisition of the Liberty group and brand. An impairment review of the carrying value of this brand was undertaken by the Directors on 31 December 2009 by comparing the carrying amount with the value in use. At 31 December 2009, the value in use was determined by the Company by discounting future cash flows generated from continuing use of the cash generating unit. This is based on projected cash flows in Liberty's 5 year business plan and further projections for years 6 to 10 to produce a 10 year cash flow model. Based on this review, the Directors concluded that there had been no impairment of the Liberty brand value during the year ended 31 December 2009.
An impairment review of the Stanhope Business Centres goodwill was undertaken by the Directors on 31 December 2009 comparing the carrying value of goodwill with the anticipated recoverable amount of the two business centres owned by Stanhope Business Centres. The recoverable amount of the cash-generating unit is based on value in use, which is calculated from cash flow projections for the lifetimes of the underlying leases, using data from Board approved budgets covering the period to 31 December 2011. Based on this review, the Directors concluded that there had been no impairment to the Stanhope Business Centres goodwill during the year ended 31 December 2009.
Further goodwill of £2.8m arose during 2009 when the Group acquired 16 former MLS Group PLC ("MLS") business centres. These centres are complementary to MWB Business Exchange's portfolio and in line with its stated strategy of focusing on London and the surrounding area. The centres are held in a newly incorporated sub-group headed by MWB Executive Centres (Holdings) Ltd, of which the Group owns 65%. The goodwill recognised arises from the synergies forecast to be gained from the assimilation of the new centres into the Group's network and the strengthening of its brands to become the dominant provider of serviced office accommodation in the London region. An impairment review of the goodwill arising on the acquisition of the MLS centres was undertaken by the Directors at 31 December 2009 comparing the carrying value of goodwill with the recoverable amount of the cash-generating units to which goodwill was allocated. As a result of this review, the Directors have determined that there has been no impairment to goodwill during the year ended 31 December 2009.
REVIEW OF LOAN FACILITIES
Net debt
The Group's loans, borrowings and cash are included in the Consolidated Statement of Financial Position at 31 December 2009 as follows:-
Composition at year end | 31 December 2009 | 31 December 2008 |
| £'000 | £'000 |
Loans and borrowings | 376,004 | 387,193 |
Long leasehold obligations | 697 | 699 |
Hire purchase and leasing contracts | 192 | - |
Fair value of derivative financial instruments | 5,526 | 1,894 |
Total loans and borrowings | 382,419 | 389,786 |
Less net cash and cash equivalents | (19,655) | (32,036) |
Total net debt at year end | 362,764 | 357,750 |
|
|
|
|
|
|
Analysis of debt/(cash) by operating business |
|
|
|
|
|
Malmaison and Hotel du Vin | 278,357 | 282,322 |
MWB Business Exchange Plc | (6,241) | (16,404) |
Liberty Plc | 10,601 | 12,390 |
Central debt | 80,047 | 79,442 |
| 362,764 | 357,750 |
Net cash
The Group's cash and overdrafts are held in the following operating divisions in the Group:-
| 31 December 2009 £'000 | 31 December 2008 £'000 |
Malmaison and Hotel du Vin | 9,011 | 4,860 |
MWB Business Exchange Plc | 6,433 | 23,333 |
Liberty Plc | 1,943 | 1,903 |
Central | 2,268 | 1,940 |
| 19,655 | 32,036 |
Cash balances are held within the above divisions for utilisation within their businesses. Generally only cash within the Central division and the financing facilities available to the Company are available for use 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 2009 arose as follows:-
| Year ended 31 December 2009 | Year ended 31 December 2008 |
| £'000 | £'000 |
Total net debt at start of the year | 357,750 | 308,012 |
Debt (amortised)/drawn Malmaison and Hotel du Vin | (1,431) | 38,150 |
Buy back of ordinary shares | 1,701 | 10,078 |
Dividends paid to subsidiary minority interests | 2,808 | - |
Net cash outflow from other Group operations during the year | 1,936 | 1,510 |
Total net debt at year end | 362,764 | 357,750 |
|
|
|
Average cost of borrowings at year end, inclusive of margin | 5.6% | 7.4% |
Net debt relating to Equity attributable to shareholders of MWB
The net debt relating to equity attributable to shareholders of MWB Group Holdings Plc at 31 December 2009 amounted to £312m (2008: £310m), calculated as follows:-
| 31 December 2009 £'000 | 31 December 2008 £'000 |
Total net debt as above | 362,764 | 357,750 |
Less net debt attributable to minority interests | (50,292) | (48,118) |
Total net debt attributable to equity attributable to |
|
|
shareholders of MWB Group Holdings Plc | 312,472 | 309,632 |
Review of available bank facilities
On 27 April 2009, the Group extended £348m of its banking facilities provided by Bank of Scotland and Royal Bank of Scotland. The terms of these facilities, comprising three separate loans to Malmaison and Hotel du Vin, MWB Business Exchange and MWB itself, previously ran to the end of 2009, but have now been extended to 31 December 2011. In December 2009 the Liberty facility was also extended to 31 December 2011. This significant extension has however not been achieved without cost but the Directors strongly believe it is in the Group's long term interests to extend these facilities given the current level of illiquidity in the financial markets.
The Board's approach to managing liquidity is to ensure, as far as possible, that the Group will always have sufficient funds to meet its liabilities as they fall due, without incurring unacceptable losses or risking damage to the Group's reputation in its business sectors. The Group uses detailed divisional cash flow reporting to assist the Board in monitoring cash flow requirements and optimising cash returns on investments across the whole Group. The Group typically ensures it has sufficient forecast cash and available facilities to meet expected cash outflows for a forward period of 18 months. The Group meets its day to day working capital requirements through cash generated in its operating businesses, Liberty, Malmaison and Hotel du Vin and Business Exchange, and from its loan and overdraft facilities. The Group's facilities include interest cover and gearing covenants with which the Group is in compliance at 31 December 2009.
On 17 December 2009 the Group announced a Placing of 91,666,667 New Units at 30 pence per New Unit. This Placing was successfully completed on 12 January 2010 following a General Meeting of the Company. The Placing raised £27.5m in gross proceeds, of which £7.5m was applied to purchase for cancellation £7.5m of the Loan Stock and £2.9m was paid in fees. The net proceeds received by the Company after the Placing amounted to £24.6m.
Review of available bank facilities
In addition to the cash raised, amendments to the Loan Stock gearing covenant were also implemented at a meeting of Loan Stockholders on 11 January 2010. Previously the Group's borrowings could not exceed four times Shareholders' funds excluding intangible assets and goodwill. The Loan Stock gearing covenant has now been amended in line with the Company's Articles of Association, such that the Group's borrowings must not exceed five times Shareholders' funds with the inclusion of intangible assets and goodwill.
Loan covenants
The Malmaison and Hotel du Vin division has four covenant tests in its banking facility, being EBITDA to Interest Cover, Cashflow Cover, Loan to Value Cover and Debt to EBITDA Cover. All loan covenants were met for the year ended 31 December 2009. The Malmaison and Hotel du Vin Loan to Value Covenant requires the loan to be no more than 72.5% of the value of the secured property. At 31 December 2009, the Loan to Value percentage amounted to 58.8% of the secured property value of £483m. Accordingly, the portfolio value would have to decrease by approximately £92m or more before this covenant would not be satisfied. Given the continued strong performance of Malmaison and Hotel du Vin, and the revenue and cost saving initiatives the Directors have at their disposal, the Directors, after taking advice from the Company's property valuers DTZ, consider it unlikely that this portfolio would suffer such a high level of decline in property value over the period covered by their cash flow projections.
Business Exchange has three covenant tests in relation to its bank facility, namely Debt Service Cover, Senior Interest Cover and EBITDA to Debt Cover. Debt Service Cover requires the ratio of Net Cash to Senior Interest to be not less than 1:1; Senior Interest Cover requires the ratio of EBIT to Senior Interest to be not less than 4:1; and EBITDA to Debt Cover requires the ratio of EBITDA to Debt to be not less than 1:1. These covenants were all met for the year ended 31 December 2009. At 31 December 2009, the Business Exchange loan was not drawn down. The Directors monitor adherence to these covenants carefully and take steps to ensure adherence at all times. In addition to this, Management has put in place revenue preservation and cost savings plans which are anticipated to further benefit EBITDA and cash flow for 2010 and future years. On 17 December 2009 the facility was further amended to, amongst other things, permit Business Exchange to cash cure any potential breaches of financial covenants that might occur with 14 days of the relevant test date provided that the maximum amount of cash cure in any six consecutive test periods is £2.0m.
Liberty has three covenant tests in relation to its bank facility, namely Loan to Value Security Cover, Debt Service Cover and Senior Interest Cover, with Liberty of London brand costs and other one-off costs excluded from the test of the latter two. Security Cover requires the loan to be no more than 67% of the Realisation Value of the Tudor Building. At 31 December 2009, the Tudor Building was valued at £30.25m, and £12.5m of facilities were utilised. Accordingly, the Loan to Value Security Cover was only 41% at that date, demonstrating significant headroom. Sufficient headroom is also forecast over the period covered by the Projections. Debt Service Cover requires the ratio of EBITDA to Total Debt Service to be not less than 1.25:1. Senior Interest Cover requires the ratio of EBIT to Senior Interest to be not less than 1.5:1. These covenants were met for the year ended 31 December 2009. The Directors continue to monitor adherence to these covenants carefully and to take reasonable steps to ensure adherence at all times. The bank facility also permits the Group to cash cure any breach that might occur within 14 days of the relevant test date provided that the maximum amount of cash cure in any two consecutive periods is £2.0m.
MWB Group Holdings Plc itself has two covenants in relation to its bank facility. These covenants require consolidated EBITDA to be 125% or more of consolidated interest expense, and for the MWB Group Holdings Plc debt, excluding the Company's Unsecured Loan Stock, to be capped at 150% of consolidated EBITDA. MWB Group Holdings is forecast to meet its covenants with headroom during the eighteen months covered by the Group cash flow forecasts. The covenant in relation to MWB Group Holdings' Unsecured Loan Stock includes a gearing covenant restricting net debt attributable to shareholders to a maximum of four times adjusted shareholders' funds. This covenant was met at 31 December 2009 with headroom of £15m in adjusted shareholders' funds. On 11 January 2010 Loan Stockholders approved resolutions amending the gearing covenant such that net debt attributable to Shareholders must not exceed five times rather than four Shareholders' funds and that the definition of Shareholders' funds now includes intangibles and goodwill whereas these were previously excluded. If this covenant had been tested on the new basis at 31 December 2009 the headroom in adjusted shareholders' funds would be £44m.
Further information relating to the basis of preparation of the financial statements and the Group's forecast loan covenant compliance is set out in note 1 to the financial statements.
Gearing
At 31 December 2009, gearing was 206%, calculated as follows:-
| 31 December 2009 | 31 December 2008 |
| £'000 | £'000 |
Total net debt | 362,764 | 357,750 |
Net assets | 176,249 | 203,799 |
Gearing - total net debt divided by net assets | 206% | 176% |
REVIEW OF EARNINGS
Results
The total comprehensive income and expense for the year ended 31 December 2009, analysed between the share attributable to shareholders of MWB Group Holdings Plc and the share attributable to minority interests, is as follows:-
|
|
| Equity |
|
|
| Shareholders of |
| Total for | Minority | MWB Group |
| the year | interests | Holdings Plc |
Year ended 31 December 2009 | £'000 | £'000 | £'000 |
Income statement |
|
|
|
Loss for the year | (16,077) | (129) | (15,948) |
Charged to equity through reserves |
|
|
|
Foreign exchange translation differences for foreign |
|
|
|
operations | (222) | (70) | (152) |
Revaluation of property, plant and equipment | (2,141) | (240) | (1,901) |
Effective portion of changes in fair value of |
|
|
|
cash flow hedges | (3,290) | (577) | (2,713) |
Defined benefit pension scheme actuarial losses | (995) | (315) | (680) |
Total comprehensive income and expense |
|
|
|
for the year | (22,725) | (1,331) | (21,394) |
|
|
| Equity |
|
|
| Shareholders of |
| Total for | Minority | MWB Group |
| the year | interests | Holdings Plc |
Year ended 31 December 2008 | £'000 | £'000 | £'000 |
Income statement |
|
|
|
Profit/(loss) for the year | 289 | 3,007 | (2,718) |
Credited/(charged) to equity through reserves |
|
|
|
Foreign exchange translation differences for foreign |
|
|
|
operations | 1,076 | 351 | 725 |
Revaluation of property, plant and equipment | (79,231) | (14,364) | (64,867) |
Effective portion of changes in fair value of |
|
|
|
cash flow hedges | (2,243) | (393) | (1,850) |
Defined benefit pension scheme actuarial losses | (2,019) | (640) | (1,379) |
|
|
|
|
Total comprehensive income and expense |
|
|
|
for the year | (82,128) | (12,039) | (70,089) |
A segmental analysis of the Revenue, EBITDA, EBIT and Profit Before Tax for the current and previous year under review can be found in note 2 of these financial statements.
Taxation
The net amount of tax borne by equity shareholders of MWB Group for the year ended 31 December 2009 amounted to £0.4m (2008: £10.3m credited to equity shareholders) and arose as follows:-
| Year ended | Year ended |
| 31 December | 31 December |
| 2009 | 2008 |
| £'000 | £'000 |
Corporation tax (charge)/credit | (7) | 16,402 |
Foreign tax | (690) | (395) |
Deferred tax credit/(charge) | 42 | (5,792) |
Net tax (charge)/credit per Consolidated Income Statement | (655) | 10,215 |
|
|
|
28% minority interest in tax credit/(charge) of |
|
|
MWB Business Exchange Plc | 3 | (25) |
|
|
|
32% minority interest in tax charge of Liberty Plc | 221 | 126 |
Net tax amount (borne by)/credited to equity shareholders of |
|
|
MWB Group Holdings Plc | (431) | 10,316 |
Loss per share
The loss per share figures have been calculated as follows:-
|
| Year ended 31 December 2009 | Year ended 31 December 2008 |
Loss per Consolidated Income Statement attributable |
|
|
|
to shareholders of MWB Group Holdings Plc | £'000 | (15,948) | (2,718) |
|
|
|
|
Weighted average number of shares in issue during |
|
|
|
Year | '000 | 72,371 | 76,291 |
|
|
|
|
Loss per share based on Consolidated Income |
|
|
|
Statement | Pence | (22.0p) | (3.6p) |
Dividend
The Board is continuing to implement the Cash Distribution Programme and to direct disposal proceeds to the repayment of net debt and the return of funds to Shareholders. Accordingly, no dividends have been declared in relation to the year ended 31 December 2009.
Whilst the payment of dividends remains an option, once surplus funds have been realised, the Directors envisage distributing further funds to shareholders by means of buy-backs of ordinary shares, tender offers to shareholders, cash distributions, demergers, distributions of assets and similar value distribution programmes during the remainder of the Cash Distribution Programme to December 2016.
Cash flow
The consolidated cash flow statement shows the funds generated by the Group, those raised from external sources, the investments made and the effect thereof on the Group's cash and cash equivalents.
This can be summarised as follows:-
| Year ended 31 December 2009 | Year ended 31 December 2008 |
| £'000 | £'000 |
Net cash inflow from operating activities | 19,076 | 14,294 |
Net cash outflow from investing activities | (15,161) | (51,637) |
Net cash (used in)/received from financing activities | (16,296) | 46,494 |
Net (decrease)/increase in cash and cash equivalents | (12,381) | 9,151 |
|
|
|
Opening cash and cash equivalents | 32,036 | 22,885 |
Closing cash and cash equivalents | 19,655 | 32,036 |
Post balance sheet events
On 11 January 2010, the Company raised £27.5m through the issue of 91,666,667 New Units at 30 pence each. As a result, Units in issue after the Placing at the date of these financial statements amounted to 164,038,149. These monies had been raised in order to provide the Company with a stronger financial base increasing headroom and flexibility in relation to banking covenants and ongoing funding requirements.
The monies raised were applied as follows: the cancellation of £7.5m of Unsecured Loan Stock, transaction fees of £2.9m, termination payments amounting to £1.65m to Andrew Blurton, the former Joint Finance Director, the repayment of a £4.0m intra-group loan from MWB Business Exchange, with the remaining balance of £11.4m being available for working capital and bank loan repayment.
Despite the current market uncertainties, on 12 March the Company announced that it had received approaches that could lead to an offer being made for Liberty, the Group's retail operator. At the date of these financial statements discussions in relation to these approaches are continuing and the Company will report to Shareholders when there is further news. In addition, on 15 March 2010, the Company announced that contracts had been exchanged for the sale and leaseback of the freehold of the Liberty flagship store for £41.5m, subject to Shareholder approval in General Meeting. The proceeds from this sale will be used to repay all bank borrowings in Liberty and inter-group debt previously provided by MWB, with the remainder available as working capital.
Conclusion
MWB has three good operating businesses. They are all well managed, have a strong financial base and provide excellent products and services. Each business has demonstrated its ability to deliver creditable results, even in these tough market conditions.
Jagtar Singh
Finance Director
30 March 2010
BUSINESS RISKS AND UNCERTAINTIES
Risk factors relating to the Group as a whole
The Board and the Senior Executive team identify and evaluate risks and uncertainties in the period covered by the Group Business Plan and design controls to mitigate these. Responsibility for management of each key risk is identified and delegated by the Board to specific Executive Directors and Senior Executives within each of the Group's operating businesses.
This section of the report describes some of the specific risks that could materially affect the Group's business, its operating profits, earnings, net assets, liquidity and capital resources. The risks outlined below should be considered in connection with any financial and forward-looking information in the financial statements. The risks below are not the only ones that the Group faces and some that the Group does not currently believe to be material could later turn out to be material.
Continuing adverse economic conditions may have a material adverse effect on the Group's results
The Group's operating and financial performance is affected by the economic conditions both in the United Kingdom (from where 92.9% of the Group's revenue was derived in the year ended 31 December 2009) where the effects of a severe economic recession are currently being experienced, and worldwide. The current challenging economic conditions in the United Kingdom and worldwide, including factors relating to the prevailing levels of employment, real disposable income, salaries, wage rates, market rent levels, availability of funding, business and consumer confidence, consumer demand, tourism and business and consumer perception of economic conditions, could result in further reductions in asset values (including the Group's properties) and the Group's business volumes and have a material adverse effect on the Group's business, financial condition and operating results. A further worsening of economic conditions in the UK is likely to have a further material adverse effect on the Group.
The Group's longer term ability to refinance its debt facilities upon maturity may be restricted
The Malmaison and Hotel du Vin, Business Exchange, Liberty and MWB bank finance facilities mature in December 2011 (£284m, £8m, £15m and £53m respectively). The longer term ability of the Group to repay and/or refinance its existing debt facilities is dependent on its future performance, which will be affected by a number of factors, including general, economic, political, debt and equity capital market conditions, credit availability and the willingness of lending banks to lend to the hotel, serviced office and retail sectors. If the Group were to be unable in the longer term to service its borrowings and/or repay its borrowings when due, it might not be able to refinance its debt or ensure its debt continues to be available to it, or the Group might only be able to secure its funding at a significantly increased cost. There is also a risk that funding will not be made available to the Group in the longer term or that the cost of accessing and servicing the funding may be prohibitive. The Group could therefore be forced to sell its assets in order to comply with its obligations under its existing debt facilities, and sales in such circumstances may not deliver the level of proceeds that may otherwise be expected. This may have a material adverse effect on the Group's business, results of operations and overall financial condition.
MWB's financial indebtedness and the covenants contained in the Group's debt facilities could restrict the Group's flexibility and limit its ability to withstand adverse trading conditions
The existing level of MWB's financial indebtedness and gearing, combined with the financial covenants that are contained in its principal debt facility agreements, could restrict the operational flexibility and management decisions of the Group, place the Group at a disadvantage in relation to competitors that have less debt and increase the Group's vulnerability to, and limit its ability to withstand, any continuation of adverse economic and sector conditions. The above factors could have a material adverse effect on the Group business, results of operations and overall financial condition.
The Group may be affected adversely in the longer term by further declines in property values
The Group owns freehold and long leasehold interests in properties located in the UK. These properties are used by the Group from which to operate the Malmaison and Hotel Du Vin and Liberty businesses and are the principal assets in the Consolidated Statement of Financial Position of the Group. At 31 December 2009 these had a book value, reflecting a professional external open market value at that date, of £559.5m. This reflects a cumulative unrealised valuation surplus of £150.1m.
The disruption in the financial markets over the last two years and the severe economic recession as described in the paragraph headed "Continuing adverse economic conditions may have a material adverse effect on the Group's results" have adversely affected and may continue to adversely affect the Group's property values. In the year ended 31 December 2009 the Group's property values reduced by £2.1m, of which £1.9m was attributable to Shareholders. Reduction in value of the Group's properties through revaluations, impacts both Shareholders' funds and also gearing and loan to value covenants in Malmaison and Hotel du Vin's and Liberty's respective banking facilities and in the Loan Stock Trust Deed.
Further reductions in property values could in the longer term have a material adverse effect on the Group's businesses, financial condition or operating results.
Effects of downturn in travel may adversely affect the Group
The Group is dependent for part of its revenue on tourists and business travellers. The Group's results could be adversely affected by events that reduce travel including adverse economic conditions, such as those currently being experienced, a decrease in travel to London where Liberty operates or travel to areas where Malmaison and Hotel du Vin operates hotels. Additional causes of reduced travel may include actual or threatened acts of terrorism or war, epidemics, travel-related accidents or industrial action, increased transportation and fuel costs and natural disasters. Any of these factors could have a material adverse effect on the Group's businesses, financial condition or results of operations.
The Group may be adversely affected by an increase in operating costs
The Group's operating and other expenses could increase without a corresponding increase in turnover. Factors which could increase operating and other expenses include increases in the rate of cost inflation (including energy costs), increases in payroll (including any increases in the minimum wage), taxes and other statutory charges, insurance premia, rent, rates and the costs of maintenance of properties and failure to perform by third parties and sub-contractors leading to increases in operating costs. Such increases could have a material adverse effect on the Group's business, financial conditions or results of operations.
The Company's ability to make distributions to Shareholders in the future is dependent on the realisation of assets
The ability of the Company to make distributions in the future to Shareholders by means of buy-backs of Units, tender offers to Shareholders, cash distributions, demergers, distributions of assets and similar value distribution programmes in accordance with its strategy is dependent upon it having sufficient cash resources, or assets (in the case of distributions in kind), out of which any proposed distributions may be made. There are risks and uncertainties which could adversely affect the net assets available for distribution to Shareholders. Such risks include, but are not restricted to, the ability of the Group to realise its assets in the manner and amount currently envisaged and distribution of funds to Shareholders in an efficient manner as well as all the other risks referred to in this section of the document which could materially adversely affect the Group's businesses, financial condition or results of operations.
The Group is exposed to interest rate and counterparty credit risks
The Group borrows from banks at floating rates of interest, although the £284m facility advanced to Malmaison and Hotel du Vin has been swapped by the Group into fixed rates to the end of its term in December 2011 using financial derivative instruments. Upon any refinancing the Group might use fixed and/or floating rate borrowings designed to protect the Group in the drawings of its cash requirements. Fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. Variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. If interest rates rise then the Group's cost of variable rate borrowings would increase.
The Group is reliant in part on the reputation of its brands
The Group operates under four core brands, namely Liberty, Malmaison, Hotel du Vin and MWB Business Exchange. If an event occurred that materially damaged the reputation of any of these core brands or there was a failure to sustain the appeal of the Group's brands to its customers, this could have an adverse impact on the Group's earnings and assets and resultant Shareholder value.
Unfavourable publicity concerning any of the Group's brands or substantial erosion in the reputation of, or value associated with, the Group's brands could have an adverse effect on the Group's businesses, financial condition or results of operations.
Loss of Executive Directors and other key personnel may adversely affect the Group
The Group is highly dependent on its team of Executive Directors and senior executives who have extensive experience and knowledge of the relevant industry in which they work. The future success of the Group is, in part, dependent upon the ability of its existing management team and on the Group's ability to motivate and retain staff with the requisite experience. However, there can be no assurance that the Executive Directors or Group's other key personnel will continue to be employed by the Group, that the Executive Directors and senior executives will be suitably incentivised or that it will be able to attract and retain qualified personnel in the future. The loss of services of Executive Directors or key personnel, or a failure to attract and retain these and other qualified new personnel, could have a material adverse effect on the Group's businesses, financial condition or results of operations.
Influence of the 1997 Concert Party
The 1997 Concert Party owns 33.51 per cent of the Enlarged Issued Share Capital. As a consequence, the 1997 Concert Party is able to exercise a significant amount of control over the voting of Shareholders in the Company. For example, where the consent of 75% or more of Shareholders is required in general meeting, it will not be possible to obtain that majority unless the 1997 Concert Party votes in favour or abstains from voting. Where the consent of 50% or more of Shareholders is required in general meeting, it will usually be possible for the 1997 Concert Party to obtain that majority unless other Shareholders join together to vote against the relevant resolution.
Conflicts of interest may arise by reason of certain of the interests of the Executive Directors outside the Group
The Executive Directors have material business interests outside the Group. Despite the existence of the Conflicts Committee and anti-conflicts procedures in the governance of the Group, the interests of the Executive Directors outside the Group could give rise to actual or potential conflicts of interest between their roles as Directors of and Shareholders in the Company and of other companies in the Group, and their roles and interests outside the Group, which could affect the business of the Group. This is particularly the case with Malmaison and Hotel du Vin where the outside hotel interests of the Executive Directors could in future be in competition with the Group.
The Group could suffer material losses in excess of insurance proceeds
Any of the Group's properties or other assets could suffer physical damage caused by fire or other causes, resulting in losses that may not be fully compensated by insurance. In addition, there are certain types of losses, generally of a catastrophic nature, such as earthquakes, floods, hurricanes, terrorism or acts of war, which may be uninsurable on economic terms or at all. Inflation, changes in building codes and ordinances, environmental considerations, and other factors might also result in losses that may not be fully compensated by insurance proceeds. Should an uninsured loss or a loss in excess of insured limits occur, the Group would lose capital and anticipated future revenue. In addition, the Group may incur further costs to repair damage caused by uninsured risks. The Group would also remain liable for any debt or other financial obligation related to that part of the business in which the uninsured risk has occurred.
Technology and systems disruption may adversely affect the Group's efficiency
To varying degrees, the Group is reliant upon technologies and systems for the running of its businesses, particularly those which are highly integrated with business processes. Any disruption to those technologies or systems could adversely affect the efficiency of the business.
The Group may have to make substantial additional investments in new technologies or systems to remain competitive. Failing to keep pace with developments in technologies or systems may put the Group at a competitive disadvantage. The technologies or systems that the Group chooses may not be commercially successful or the technology or system strategy employed may not be sufficiently aligned with the needs of the business or responsive to changes in business strategy. As a result, the Group could lose customers, fail to attract new customers or incur substantial costs or face other losses.
The Group's operations are subject to health and safety and other regulations
The Group needs to comply with regulations relating to, amongst others, planning, land use, building regulation standards, health and safety, environmental matters and employment. Significant events or breaches or violations of applicable laws or regulations could result in restrictions on operations, damages, fines, litigation and/or other sanctions and/or result in MWB incurring liabilities which, in turn, could have a material adverse effect on the Group's businesses, results of operations and overall financial condition or adversely affect the value of the Group's assets. Changes in the legal framework in particular concerning planning, land use and building regulations, may negatively influence property values. From time to time, regulations are introduced which can impact on the costs of the Group's businesses and affect returns. In recent years these have included building regulations for the containment and management of asbestos and the measurement and reporting of energy efficiency of buildings. Such changes in the future could have an adverse impact on the value of the Group's businesses, financial condition or results of operations.
The Group may incur environmental liabilities resulting from ownership of property
The Board views the assessment of environmental risk as an important element of its due diligence process when it acquires its properties. However, there can be no guarantee that the Group will not incur unexpected liabilities such as clean-up costs and fines for environmental pollution in respect of properties owned by the Group.
The costs of any required clean-up of or fines for environmental pollution may be substantial regardless of whether the Group originally caused the relevant contamination. The presence of hazardous or toxic substances, or the failure to remedy the situation properly, may also adversely affect the value of the relevant property or the Group's ability to sell, let or regenerate that property or to borrow using the property as security. The Group could be required to remove or remediate any hazardous substances that it has caused or knowingly permitted to be located at any property that it has owned or occupied in the past or which it may own in the future.
The Group may be affected by political, legal and regulatory developments
Future political, legal or regulatory developments concerning the businesses of the Group and the industry sectors in which they operate may affect their ability to operate and trade profitably. Political risks include the imposition of trade barriers, changes of regulatory developments and the volatility of input costs, selling prices, taxes and currencies. Changes in the future could have an adverse impact on the value of the Group's business, financial condition or results of operations.
Changes in tax legislation may materially change the tax payable by the Group
The Group is exposed to financial risks from increases in tax rates and changes in the basis of taxation, including corporation tax, National Insurance and VAT. In particular, any increase in the rate of VAT could have an adverse effect on the revenues and net operating profits of the Group's businesses. Provision has been made in the financial statements for current and deferred taxation in accordance with the Group's accounting policy on taxation which is summarised in note 1. Should the amount of tax provided prove to be insufficient to meet agreed or potential liabilities, further provision may be necessary, which would reduce Equity Attributable to Shareholders.
Additional risks relating to Malmaison and Hotel du Vin
Malmaison and Hotel du Vin is susceptible to economic downturn in the hotel industry and may be adversely affected by factors common to the hotel industry
Malmaison and Hotel du Vin's hotel revenue is dependent on the business, leisure and tourist markets. Therefore, a downturn in these sectors could have a material adverse effect on the revenues and profitability of Malmaison and Hotel du Vin's hotels. Reductions in room rates and occupancy levels could have a material adverse effect on Malmaison and Hotel du Vin's financial condition and results of operations, and could reduce Malmaison and Hotel du Vin's income available for distribution to its shareholders, principally MWB, and the value of MWB's investment in Malmaison and Hotel du Vin.
The revenue receivable by Malmaison and Hotel du Vin could be adversely affected by various operating risks common to the UK hotel industry, many of which are beyond Malmaison and Hotel Du Vin's control, including the cyclical nature of the hotel industry; a decrease in travel to and within the UK as a result of adverse economic conditions; increases in fuel costs and other expenses which may affect travel patterns and reduce the number of business and leisure and tourist travellers; a decrease in travel to areas where Malmaison and Hotel du Vin operates hotels caused by any epidemic or other disaster, natural or otherwise; increasing threats of terrorism, terrorist events, airline strikes, changes in airport security policies and other similar factors that may affect travel patterns and reduce the number of business and commercial travellers and tourists; and any other factors that may lead to reduced occupancy and room rates.
Additional risks relating to Business Exchange
Business Exchange may suffer an increase in defaults affecting its financial performance
The risk to Business Exchange arises principally from the Group's receivables from customers. The demographics of the Group's customer base, including the general default risk in the principal sectors in which the Group operates, have less of an influence on credit risk. Geographically there is a concentration of credit risk in London, where the Group has 45 serviced offices. Total revenue in London was approximately £86.5 million for the year ended 31 December 2009. The Group has established credit policies for dealing with new customers, their creditworthiness, payment and delivery terms.
Reliance on key business centres and the London market
Business Exchange's portfolio is deliberately London biased as the Board considers that this market shows the best demand characteristics for the service provided by Business Exchange. The 45 London centres operated by Business Exchange account for 66% of its total workstations and 77% of total revenue. Dedicated marketing and sales resources are deployed to these key locations to ensure occupancy and revenues are maintained, and to satisfy levels of existing and prospective client demand. Business Exchange's buildings are well maintained and are considered by the Board to be well protected against this type of risk.
Reliance on key clients
MWB Business Exchange has concentrated on increasing the number of SMEs and smaller corporate clients, thereby preventing a reliance on a small number of larger clients. However, if Business Exchange were to lose one or more significant clients which were not quickly replaced at a similar level of REVPOW, revenue would be impacted. As a business strategy, the number of clients who occupy more than 15% of any one business centre in the Group has been significantly reduced in recent years. As a result, there are now only 44 clients out of approximately 2,000 who occupy such an amount, and no single client occupies more than 2% of the entire portfolio.
Changes in the office market
If the conventional property market changes significantly and landlords offer variations to existing leases such as shorter leases, more flexible lease terms, giving significant rent reductions, or providing significant rent free periods, the Group's business centres may become less attractive to both existing and potential clients.
Long-term cost base does not match short-term revenue profile
MWB Business Exchange currently leases the majority of its properties; the remainder are operated under management agreements. The length of the leases and the time at which it may exercise any break option in such leases is nearly always longer than the duration of the period of occupation by clients. If revenues decline, Business Exchange may not be able to reduce significantly its property related cost base throughout the remaining period of these leases.
Most of its business centres are profitable and the strong profitability of the network largely negates this impact. Whilst Business Exchange cannot assign a lease without landlord consent, it could sublet which would substantially reduce the liability. Operating and Management Agreements and management contracts are also used to mitigate the risk from leases as such agreements normally generate a revenue stream to the Group regardless of occupancy and market conditions.
Additional risks relating to Liberty
The sector in which Liberty operates is highly competitive
The retail industry is highly competitive, particularly with respect to merchandise selection and quality, store location and design, inventory, price, customer service, credit availability and advertising. Liberty competes with a wide variety of retailers of varying sizes covering different product categories. Some of Liberty's competitors are general retailers that compete with it in a number of product groups while others are specialist retailers that compete with it only in certain product categories.
Liberty faces a variety of competitive challenges including anticipating and quickly responding to changing consumer demands; maintaining favourable brand recognition and effectively marketing its products to consumers in diverse market segments; developing and sourcing innovative, high-quality fashion products in styles that appeal to consumers of varying age groups and tastes; sourcing merchandise efficiently; pricing its products competitively; and changes in consumer behaviour and spending patterns, particularly as a result of changes in general economic conditions.
Actions taken by Liberty's competitors, as well as actions taken by it to maintain its competitiveness and reputation, have placed and will continue to place pressure on its pricing strategy, margins and profitability. Some of Liberty's competitors may have greater financial resources, greater purchasing economies of scale and/or lower cost bases, any of which may give them a competitive advantage over Liberty. These factors could have a material adverse effect on Liberty's business, results of operations and financial condition.
Liberty could be adversely affected by changes in fashion trends
Liberty is dependent upon its ability to interpret and offer fashion products that consumers wish to purchase. The availability of new products and changes in customer preferences make it difficult to predict demand accurately. Liberty's success depends, in part, on its ability to predict and respond to changing consumer demands and preferences, and to translate market trends into appropriate saleable merchandise offerings.
In some instances Liberty must enter into contracts for the purchase and manufacture of merchandise well in advance of the applicable selling season. The long lead times between ordering and delivery make it important to predict accurately the demand for items. There can be no assurance that Liberty's orders will match actual demand. If Liberty is unable to predict or respond to demand or to changing styles or trends successfully, its revenue will be lower and it may be forced to rely on additional markdowns or promotional sales to dispose of excess or slow-moving inventory or it may experience inventory shortfalls on popular merchandise. Any of these factors could have a material adverse effect on its business, financial condition and results of operations.
In addition, Liberty's ability to anticipate and respond to changing customer preferences and tastes depends, in part, on its ability to attract and retain key personnel in its buying, design, merchandising, marketing and other functions. There is competition for such personnel and Liberty may not be able to attract and retain a sufficient number of qualified personnel in future periods.
Any disruption or other adverse event affecting Liberty's relationship with any of its major suppliers could adversely affect its business
Any significant disruption or adverse event affecting Liberty's relationship with any of its major suppliers could have a material adverse affect on its business, financial condition and results of operations. If Liberty needs to replace any of its major suppliers, it may face risks and costs associated with a transfer of operations. A failure to replace any of its major suppliers or store card providers on commercially reasonable terms, or at all, could also have a material adverse effect on Liberty's business, financial condition or results of operations.
Liberty is susceptible to economic downturn in the retail industry and may be adversely affected by factors common to the retail industry
Liberty's income is dependent to a large extent on the general economic conditions prevailing at any given time and notably their impact on consumer confidence and levels of discretionary expenditure. Economic downturns where consumer confidence tends to be negatively impacted can have a material adverse effect.
The revenue received by Liberty could be adversely affected by various operating risks common to the UK retail industry, many of which are beyond Liberty's control, including adverse seasonal weather conditions; a decrease in consumer spending; a decrease in overseas travel to the UK as a result of the global recession; a decrease in travel within Central London caused by any epidemic or other disaster, natural or otherwise; increasing threats of terrorism, terrorist events, airline strikes, changes in airport security policies, or factors that affect travel patterns and reduce the number of customers visiting Liberty; and increases in fuel costs and other expenses affecting travel, which may affect travel patterns and reduce travel.
All of these factors could be exacerbated due to the seasonal nature of the UK retail industry. Liberty's revenue is not equally weighted throughout the calendar year. Historically, its most important trading period in terms of revenue, operating results and cash flow has been the Christmas season, with approximately 21% of annual revenue generated in the final six weeks of the calendar year. If revenue during Liberty's peak seasons, particularly the Christmas season, are significantly lower than it expects for any reason, it may be left with a substantial amount of unsold inventory. In that event, Liberty may be forced to rely on markdowns or promotional sales to dispose of excess inventory, which could have a material adverse effect on its business, financial condition and results of operations. At the same time, if it fails to purchase a sufficient quantity of merchandise, it may not have an adequate supply of products to meet consumer demand causing lost revenue and associated margins.
Liberty could face uninsured product liability claims
Liberty is potentially vulnerable to product liability claims and it could also face liability and/or reputational damage relating to counterfeit products.
Defaults by concession partners could have an adverse impact on Liberty's business
16% of Liberty's total revenue was derived from concessions during the year ended 31 December 2009 (2008: 16%). Due to the current economic climate, some concession operators within the industry have experienced disappointing financial results. Defaults by Liberty's concession partners of the terms of those concession partners' agreements with Liberty may have an adverse effect on Liberty's business, financial condition and operating results.
Defaults by customers of Liberty's wholesale Art Fabrics business could have an adverse impact on Liberty's business
Liberty of London's wholesale distribution business supplies Liberty Art Fabrics to a number of wholesale customers. If customers of the wholesale business default Liberty could suffer financial loss, which could have a material adverse effect on Liberty's business, financial condition or results of operations.
The Liberty Pension Scheme's deficit could have an adverse impact on Liberty
The Liberty Pension Scheme, which is closed to new entrants, had a deficit of £2.8m at 31 December 2009 under the basis of accounting required by International Accounting Standard 19. The contributions made by Liberty during the year ended 31 December 2009 amounted to £0.4m, of which £0.1m covers the management and administration of the scheme and £0.3m is used to reduce the funding deficit of the scheme. The level of deficit of the Liberty Pension Scheme has fluctuated over the latest three years due to volatility in the financial markets. If the value of the Liberty Pension Scheme assets were to decline relative to its liabilities, the pension scheme would show an increased deficit which would result in a reduction in Liberty's net asset value and/or Liberty might be required to make additional contributions to cover this shortfall. Any change in assumptions used to calculate the value of the Liberty Pension Scheme's assets or liabilities could result in an increased deficit in the scheme and/or Liberty being required to make additional contributions to the Liberty Pension Scheme. If increased contributions were required, this would have an adverse impact on cash flow and net worth of Liberty, with resultant adverse effects on the cash flow and net worth of the Group.
Liberty may be adversely affected by foreign exchange fluctuations
Liberty settles a proportion of its merchandise purchases in foreign currency. Liberty's business is therefore subject to risks due to fluctuations in currency exchange rates. Liberty's currency hedging strategies may not adequately protect its operating results from the effects of exchange rate fluctuations or may limit any benefit that it might otherwise receive from favourable movements in exchange rates. The results of Liberty's Japanese subsidiary in the Group's consolidated results are affected by movement in the Sterling/Yen exchange rate during any period and at the relevant period end. No specific hedging instruments are deployed against dividend receipts in Yen from Liberty's business in Japan.
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2009
|
| Year ended 31 December 2009 | Year ended 31 December 2008 |
| Notes | £'000 | £'000 |
Revenue | 2 | 284,299 | 277,876 |
|
|
|
|
Cost of sales |
| (259,134) | (239,291) |
Gross profit |
| 25,165 | 38,585 |
|
|
|
|
Administrative expenses |
| (14,771) | (21,482) |
Net gain on sale of property, plant and |
|
|
|
equipment |
| - | 635 |
Net gain on lease surrender |
| 85 | - |
Capital reorganisation costs |
| - | (2,462) |
Results from operating activities |
| 10,479 | 15,276 |
|
|
|
|
Finance income | 4 | 310 | 1,694 |
Finance expenses | 4 | (26,211) | (26,896) |
Loss before taxation |
| (15,422) | (9,926) |
|
|
|
|
Taxation | 5 | (655) | 10,215 |
(Loss)/profit for the year |
| (16,077) | 289 |
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
Equity shareholders of the Company |
| (15,948) | (2,718) |
Minority interests | 15 | (129) | 3,007 |
(Loss)/profit for the year |
| (16,077) | 289 |
|
|
|
|
|
|
|
|
Loss per share (basic and diluted) | 6 | (22.0p) | (3.6p) |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND EXPENSE
for the year ended 31 December 2009
| Year ended 31 December 2009 £'000 | Year ended 31 December 2008 £'000 |
(Loss)/profit for the year | (16,077) | 289 |
|
|
|
Other comprehensive income and expense for the year |
|
|
net of tax: |
|
|
|
|
|
Foreign exchange translation differences for foreign |
|
|
operations | (222) | 1,076 |
Revaluation of property, plant and equipment | (2,141) | (79,231) |
Effective portion of changes in fair value of cash flow |
|
|
hedges | (3,290) | (2,243) |
Defined benefit pension scheme actuarial losses | (995) | (2,019) |
|
|
|
Other comprehensive loss for the year net of tax | (6,648) | (82,417) |
|
|
|
Total comprehensive income and expense for the year | (22,725) | (82,128) |
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
Equity shareholders of the Company | (21,394) | (70,089) |
Minority interests | (1,331) | (12,039) |
|
|
|
|
|
|
Total comprehensive income and expense for the year | (22,725) | (82,128) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2009
|
| 31 December 2009 | 31 December 2008 |
| Notes | £'000 | £'000 |
Non-current assets |
|
|
|
Intangible assets and goodwill | 7 | 28,794 | 25,969 |
Operational properties | 8 | 499,414 | 502,644 |
Operational properties in the course of construction | 8 | 1,929 | 1,691 |
Plant and equipment | 8 | 58,123 | 61,597 |
Deferred tax asset | 14 | 10,542 | 10,500 |
Financial instruments | 13 | - | 341 |
|
| 598,802 | 602,742 |
Current assets |
|
|
|
Inventories |
| 14,306 | 11,705 |
Trade and other receivables: |
|
|
|
Due after more than one year | 9 | 2,569 | 2,660 |
Due within one year | 9 | 31,844 | 35,677 |
Cash and cash equivalents | 10 | 19,655 | 32,064 |
|
| 68,374 | 82,106 |
Total assets |
| 667,176 | 684,848 |
Current liabilities |
|
|
|
Bank overdrafts | 10 | - | (28) |
Loans and borrowings | 11 | (11,424) | (342,632) |
Derivative financial instruments | 13 | (5,526) | (2,235) |
Trade and other payables | 12 | (86,988) | (74,324) |
Tax payable |
| (393) | (157) |
|
| (104,331) | (419,376) |
Non-current liabilities |
|
|
|
Loans and borrowings | 11 | (364,580) | (44,561) |
Employee benefits |
| (2,814) | (2,066) |
Trade and other payables | 12 | (19,202) | (15,046) |
|
| (386,596) | (61,673) |
Total liabilities |
| (490,927) | (481,049) |
Net assets |
| 176,249 | 203,799 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
Share capital |
| 217 | 217 |
Other reserves |
| 125,715 | 131,152 |
Retained earnings |
| (21,396) | (5,488) |
|
|
|
|
Total equity attributable to shareholders of the Company | 16 | 104,536 | 125,881 |
Minority interests | 15 | 71,713 | 77,918 |
Total equity |
| 176,249 | 203,799 |
|
|
|
|
Equity attributable to shareholders of the Company |
|
|
|
in pence per share | 16 | 144p | 174p |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Share capital | Capital redemption reserve | Revaluation reserve | Hedging reserve | Translation reserve |
Year ended 31 December 2009 | £'000 | £'000 | £'000 | £'000 | £'000 |
At 1 January 2009 | 217 | 25 | 121,234 | (1,845) | 794 |
Total comprehensive income for the year: |
|
|
|
|
|
Loss for the year | - | - | - | - | - |
Revaluation of property, plant and equipment | - | - | (1,901) | - | - |
Defined benefit pension scheme actuarial loss | - | - | - | - | - |
Effective portion of changes in fair value of cash flow hedges | - | - | - | (2,713) | - |
Transfer of depreciation on revalued properties | - | - | (671) | - | - |
Foreign exchange translation differences for foreign operations | - | - | - | - | (152) |
Total comprehensive income for the year | - | - | (2,572) | (2,713) | (152) |
Transactions with owners recorded directly in equity |
|
|
|
|
|
Contributions by and distributions to owners |
|
|
|
|
|
Dividend paid to external shareholders of MWB Business Exchange Plc | - | - | - | - | - |
Transfer on increase in minority interests in MWB Malmaison Holdings Ltd |
|
|
|
|
|
and MWB Business Exchange Plc | - | - | - | - | - |
Payment to minority | - | - | - | - | - |
Issue and purchase of Ordinary Shares | - | - | - | - | - |
Write back of option cost through equity | - | - | - | - | - |
Total transactions with owners | - | - | - | - | - |
Share capital and reserves at 31 December 2009 | 217 | 25* | 118,662* | (4,558)* | 642* |
* = Disclosed as 'Other reserves' at 31 December 2009 totalling £125,715,000 in the Consolidated Statement of Financial Position.
| Merger reserve | Other reserve | Retained earnings | Total equity attributable to shareholders | Minority interests | Total equity |
Year ended 31 December 2009 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
At 1 January 2009 | 9,161 | 1,783 | (5,488) | 125,881 | 77,918 | 203,799 |
Total comprehensive income for the year: |
|
|
|
|
|
|
Loss for the year | - | - | (15,948) | (15,948) | (129) | (16,077) |
Revaluation of property, plant and equipment | - | - | - | (1,901) | (240) | (2,141) |
Defined benefit pension scheme actuarial loss | - | - | (680) | (680) | (315) | (995) |
Effective portion of changes in fair value of cash flow hedges | - | - | - | (2,713) | (577) | (3,290) |
Transfer of depreciation on revalued properties | - | - | 671 | - | - | - |
Foreign exchange translation differences for foreign operations | - | - | - | (152) | (70) | (222) |
Total comprehensive income for the year | - | - | (15,957) | (21,394) | (1,331) | (22,725) |
Transactions with owners recorded directly in equity |
|
|
|
|
|
|
Contributions by and distributions to owners |
|
|
|
|
|
|
Dividend paid to external shareholders of MWB Business Exchange Plc | - | - | (2,803) | (2,803) | - | (2,803) |
Transfer on increase in minority interests in Malmaison Holdings Ltd |
|
|
|
|
|
|
and MWB Business Exchange Plc | - | - | 4,226 | 4,226 | (4,226) | - |
Payment to minority | - | - | - | - | (117) | (117) |
Issue and purchase of Ordinary Shares | - | - | (1,701) | (1,701) | (678) | (2,379) |
Write back of option cost through equity | - | - | 327 | 327 | 147 | 474 |
Total transactions with owners | - | - | 49 | 49 | (4,874) | (4,825) |
Share capital and reserves at 31 December 2009 | 9,161* | 1,783* | (21,396) | 104,536 | 71,713 | 176,249 |
|
|
|
|
|
|
|
Retained earnings at 31 December 2009 comprise the following:- |
|
|
|
|
|
|
Scheme of Arrangement April 2008 | (10,396) |
Increase in retained earnings due to capital reduction | 160,883 |
Accumulated net loss in Consolidated Income Statements to 31 December 2009 | (91,468) |
Purchase by the Company of its own ordinary shares and Units that have subsequently been cancelled | (80,415) |
Retained earnings at 31 December 2009 | (21,396) |
| Share capital | Share premium | Capital redemption reserve | Revaluation reserve | Hedging reserve | Translation reserve |
Year ended 31 December 2008 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
At 1 January 2008 | 40,261 | 79,563 | 30,663 | 187,151 | 5 | 69 |
Scheme of Arrangement April 2008 | 120,864 | (79,563) | (30,663) | - | - | - |
At 1 January 2008 restated for effect of Scheme of Arrangement | 161,125 | - | - | 187,151 | 5 | 69 |
Total comprehensive income for the year: |
|
|
|
|
|
|
Profit for the year | - | - | - | - | - | - |
Revaluation of property, plant and equipment | - | - | - | (64,867) | - | - |
Defined benefit pension scheme actuarial loss | - | - | - | - | - | - |
Effective portion of changes in fair value of cash flow hedges | - | - | - | - | (1,850) | - |
Transfer of depreciation on revalued properties | - | - | - | (1,050) | - | - |
Foreign exchange translation differences for foreign operations | - | - | - | - | - | 725 |
Total comprehensive income for the year | - | - | - | (65,917) | (1,850) | 725 |
Transactions with owners recorded directly in equity |
|
|
|
|
|
|
Contributions by and distributions to owners |
|
|
|
|
|
|
Capital reduction | (160,883) | - | - | - | - | - |
Dividend paid to external shareholders of MWB Business Exchange Plc | - | - | - | - | - | - |
Transfer on increase in minority interests in MWB Malmaison Holdings Ltd |
|
|
|
|
|
|
and MWB Business Exchange Plc | - | - | - | - | - | - |
Issue and purchase of Ordinary Shares | (25) | - | 25 | - | - | - |
Write back of option cost through equity | - | - | - | - | - | - |
Total transactions with owners | (160,908) | - | 25 | - | - | - |
Share capital and reserves at 31 December 2008 | 217 | - | 25* | 121,234* | (1,845)* | 794* |
* = Disclosed as 'Other reserves' at 31 December 2008 totalling £131,152,000 in the Consolidated Statement of Financial Position.
| Merger reserve | Other reserve | Retained earnings | Total equity attributable to shareholders | Minority interests | Total equity |
Year ended 31 December 2008 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
At 1 January 2008 | 9,403 | 1,783 | (144,521) | 204,377 | 91,783 | 296,160 |
Scheme of Arrangement April 2008 | (242) | - | (10,396) | - | - | - |
At 1 January 2008 restated for effect of Scheme of Arrangement | 9,161 | 1,783 | (154,917) | 204,377 | 91,783 | 296,160 |
Total comprehensive income for the year: |
|
|
|
|
|
|
Profit for the year | - | - | (2,718) | (2,718) | 3,007 | 289 |
Revaluation of property, plant and equipment | - | - | - | (64,867) | (14,364) | (79,231) |
Defined benefit pension scheme actuarial loss | - | - | (1,379) | (1,379) | (640) | (2,019) |
Effective portion of changes in fair value of cash flow hedges | - | - | - | (1,850) | (393) | (2,243) |
Transfer of depreciation on revalued properties | - | - | 1,050 | - | - | - |
Foreign exchange translation differences for foreign operations | - | - | - | 725 | 351 | 1,076 |
Total comprehensive income for the year | - | - | (3,047) | (70,089) | (12,039) | (82.128) |
Transactions with owners recorded directly in equity |
|
|
|
|
|
|
Contributions by and distributions to owners |
|
|
|
|
|
|
Capital reduction | - | - | 160,883 | - | - | - |
Dividend paid to external shareholders of MWB Business Exchange Plc | - | - | (427) | (427) | - | (427) |
Transfer on increase in minority interests in MWB Malmaison |
|
|
|
|
|
|
Holdings Ltd and MWB Business Exchange Plc | - | - | 1,809 | 1,809 | (1,809) | - |
Issue and purchase of ordinary shares | - | - | (9,987) | (9,987) | (91) | (10,078) |
Write back of option cost through equity | - | - | 198 | 198 | 74 | 272 |
Total transactions with owners | - | - | 152,476 | (8,407) | (1,826) | (10,233) |
Share capital and reserves at 31 December 2008 | 9,161* | 1,783* | (5,488) | 125,881 | 77,918 | 203,799 |
|
|
|
|
|
|
|
Retained earnings at 31 December 2008 comprise the following:- |
|
|
|
|
|
|
Scheme of Arrangement April 2008 | (10,396) |
Increase in retained earnings due to capital reduction | 160,883 |
Accumulated net loss in Consolidated Income Statements to 31 December 2008 | (75,560) |
Purchase by the Company of its own ordinary shares and Units that have subsequently been cancelled | (80,415) |
Retained earnings at 31 December 2008 | (5,488) |
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2009
| Year ended 31 December 2009 £'000 | Year ended 31 December 2008 £'000 |
(Loss)/profit for the year | (16,077) | 289 |
Adjustments |
|
|
Taxation | 655 | (10,215) |
Finance income | (310) | (1,694) |
Finance expenses | 26,211 | 26,896 |
Gain on sale of property, plant and equipment | - | (635) |
Depreciation of property, plant and equipment | 17,809 | 15,840 |
Currency translation differences | 110 | 148 |
Equity settled share-based payment transactions | 474 | 272 |
Cash flows from operations before changes in working capital | 28,872 | 30,901 |
Change in inventories | (2,601) | (2,216) |
Change in trade and other receivables | 4,150 | 4,252 |
Change in trade and other payables | 14,713 | 9,640 |
Change in provisions and employee benefits | 748 | 1,650 |
Cash generated from operations | 45,882 | 44,227 |
Interest paid | (26,345) | (29,445) |
Tax paid | (461) | (488) |
Net cash from operating activities | 19,076 | 14,294 |
Cash flows from investing activities |
|
|
Interest received | 310 | 1,674 |
Proceeds from sale of property, plant and equipment | - | 1,091 |
Acquisition of business - goodwill | (2,138) | - |
Purchase of property, plant and equipment | (13,333) | (54,402) |
Net cash used in investing activities | (15,161) | (51,637) |
Cash flows from financing activities |
|
|
Purchase of own shares, inclusive of costs | (2,379) | (10,078) |
Proceeds from draw down of borrowings | 4,069 | 74,232 |
Borrowings repaid | (15,258) | (17,233) |
Increase in hire purchase and leasing contracts | 192 | - |
Payments to minority interests | (2,920) | (427) |
Net cash (used in)/from financing activities | (16,296) | 46,494 |
Net (decrease)/increase in cash and cash equivalents | (12,381) | 9,151 |
Opening cash and cash equivalents | 32,036 | 22,885 |
Closing cash and cash equivalents (note 10) | 19,655 | 32,036 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES FOR GROUP FINANCIAL STATEMENTS
Basis of preparation
MWB Group Holdings Plc is a company incorporated and domiciled in the United Kingdom. The address of the Company's registered office is 30 City Road, London EC1Y 2AG. The consolidated financial statements of the Company for the year ended 31 December 2009 comprise the Company and the subsidiaries (together referred to as the "Group"). The consolidated financial statements for the year ended 31 December 2009 have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRS"). The Company has elected to prepare its Parent Company financial statements in accordance with UK GAAP.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these Group financial statements and have been applied consistently by Group entities.
The results of the Group for the year ended 31 December 2009 incorporate the results of the Company and its subsidiary undertakings for the period then ended. The results have been prepared on the basis of the accounting policies adopted in the financial statements of MWB Group Holdings Plc and its subsidiary companies for the year ended 31 December 2009, which comprised the Group at the previous year end. These policies have been applied consistently in all material respects in the preparation of these results.
The financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet its liabilities as they fall due for the foreseeable future. The Group is dependent for its working capital requirements on cash generated from operations, cash holdings of £19.7m at 31 December 2009, bank facilities totalling £360m (of which £349m was drawn at 31 December 2009), Unsecured Loan Stock of £30m and a bank overdraft of £1m (which was undrawn at 31 December 2009). Other than the overdraft which is due for renewal on 1 September 2010, the remaining bank facilities run until 31 December 2011. The Unsecured Loan Stock is redeemable at the Company's option at any time between June 2009 and June 2012 and no later than 30 June 2012. The Directors have prepared cash flow projections for the period to 30 June 2011 ('the Projections') which are based on certain assumptions. The resultant cash flow projections show that the Group is capable of operating within the financing arrangements referred to above and meeting the financial covenant tests in relation to all loans drawn included in these arrangements throughout the period covered by the Projections.
The Directors recognise that in the current economic environment, risks may exist regarding future property values and the achievability of projected occupancy levels, room rates and margins in Malmaison and Hotel du Vin; projected occupancy levels and workstation rates in Business Exchange, and projected sales and margins at Liberty.
In evaluating the going concern assumption, the Directors have taken into account various uncertainties including the following:
The Group is required to comply with a number of covenants in the Company's Articles of Association, in its bank facilities and in the loan stock deed, the principal ones of which are summarised in note 11"Loans and Borrowings" to the financial statements. All of these covenants were fully complied with for all loans drawn at 31 December 2009 and are forecast to be fully complied with for all loans drawn during the period covered by the Projections. The Directors are aware that compliance with these covenants could be affected if there are continued reductions in property values or significantly adverse trading conditions. The Directors continue to monitor adherence to these covenants carefully and to ensure adherence at all times.
In order to increase headroom and flexibility in relation to the banking covenants and ongoing funding requirements, on 11 January 2010 the Company successfully raised £27.5m through the Placing detailed more fully in note 18 "Post Balance Sheet Event". At the same time that these monies were raised the Company also obtained an easing in the Loan Stock covenant such that the net debt attributable to shareholders' threshold was raised from four to five times adjusted shareholders' funds.
The Liberty and Malmaison and Hotel du Vin divisions are forecast to draw their available bank facilities during the term covered by the Projections in accordance with their Business Plans. Both divisions are forecast to fully comply with these covenants during the period covered by the Projections. The Directors have tested the impact of variations from the Projections on the ability of these divisions to operate within the financial covenants and their available cash resources, to reflect reasonably possible downside risks to the assumptions contained within the Projections. In such downside scenarios, the ability of the divisions to continue to operate within the facilities available without further recourse to MWB beyond commitments already made, and maintaining compliance with the financial covenants, would be dependent on implementing various cost saving initiatives and mitigating actions within the timescales required. These cost saving initiatives and mitigating actions are all under the control of the Group and the Directors consider they would be implemented as required.
The Group receives dividends from its 71.5% owned subsidiary MWB Business Exchange and these along with other financial resource in the Group are used to fund cash requirements elsewhere in the Group. The forecasts show that MWB Business Exchange will have sufficient cash reserves and distributable profits to pay the dividends required.
After making enquiries, and after considering the above, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For these reasons, the Directors consider it appropriate to prepare the financial statements on a going concern basis.
The consolidated financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value:
• Operational properties; and
• Derivative financial instruments.
These consolidated financial statements are presented in UK Sterling, which is the Company's functional currency. All financial information has been rounded to the nearest thousand pounds.
Use of estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
In particular, information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements relate to:
• the assumptions used to measure defined benefit obligations
• the assumptions used to assess deferred tax
• the assumptions used to assess value in use for impairment testing of the Group's brands and goodwill
• the valuation of the Group's properties
• the assumptions used to assess the carrying value of receivables
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account.
The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Dilution gains and losses on increases in minority interests, where no change of control results, are recognised directly in equity. Where necessary, accounting policies of subsidiaries are changed on acquisition to align them with the policies adopted by the Group.
Intra-group balances and transactions and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of cost of acquisition over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquired company. When the excess is negative it is recognised immediately in the Income Statement. Goodwill is carried at cost less any recognised impairment losses that arise from annual assessments of its carrying value.
Brands
Brands acquired by the Group are included in the financial statements at their cost less impairment. The Directors consider that the Group's brands have indefinite lives due to the durability of their underlying businesses which has been demonstrated over many years. Accordingly, the brands have not been amortised but have instead been subject to an impairment assessment conducted at each financial year end. Where this reveals a surplus, the value of the brand is retained, where it reveals a deficit, the brand is written down and the deficit is charged to the Income Statement. Subsequent expenditure on brands is recognised in the Income Statement when incurred.
Property, plant and equipment
Operational properties are land and buildings held for use in the production or supply of goods or services, or for administrative purposes, and are stated in the balance sheet at their revalued amounts, being the fair value, determined from market-based evidence and appraisals undertaken by professional valuers at the balance sheet date.
Any revaluation increase arising on the revaluation of such land and buildings is credited to the revaluation reserve within equity, except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense, in which case the increase is credited to the Income Statement to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of such land and buildings is charged as an expense in the Income Statement to the extent that it exceeds the balance, if any, held in the revaluation reserve relating to previous revaluations of that asset.
Operational properties in the course of construction are measured at cost less any impairment losses.
The cost of self constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use and the costs of dismantling and removing any items and of restoring the site on which they were located. Borrowing costs related to the construction of qualifying assets are capitalised. Operational properties in the course of construction are considered complete when they are capable of generating income and the development is complete. At that point they are re-measured to fair value and any gain or loss on re-measurement is recognised in the revaluation reserve.
Leasehold improvements are measured at cost less accumulated depreciation and any impairment losses. Cost includes expenditure that is directly attributable to the acquisition of an asset and includes professional fees and, for qualifying assets, capitalised borrowing costs.
The gain or loss on disposal or derecognition of property, plant and equipment is determined by comparing the sale proceeds with the carrying amount of the asset at the date of disposal or retirement, and is recognised in the Income Statement. When revalued assets are sold, the amounts included in the revaluation reserve relating to those assets are transferred directly to retained earnings.
Depreciation of properties in the course of construction is provided on the same basis as other property assets, in that it commences when the assets are ready for their intended use. Depreciation is charged so as to write off the cost or valuation of property, plant and equipment, other than land and property under construction and less residual amounts, using the straight line method, over their following estimated useful lives:-
Freehold and long leasehold listed operational properties |
| The shorter of 100 years and the term of the lease |
|
|
|
Other freehold and long leasehold operational properties |
| 50 years |
|
|
|
Leasehold improvements |
| The shorter of 50 years and the term of the lease |
|
|
|
Building surface finishes and services |
| The shorter of 30 years and the term of the lease |
|
|
|
Plant and machinery |
| 15 to 20 years |
|
|
|
Fixtures and equipment |
| 3 to 10 years |
Freehold land is not depreciated.
Leased assets
Leases would be classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Assets held under operating leases are not recognised as assets of the Group. Rentals payable and incentives received under operating leases are recognised in the Income Statement on a straight-line basis over the term of the lease.
Lease incentives
Lease incentives, such as rent free periods received or granted, are amortised on a straight-line basis over the non-cancellable period of the lease.
Impairment
The carrying amounts of the Group's non-financial assets, inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether there is any objective evidence of impairment. If any indication exists, the asset's recoverable amount is estimated. For goodwill and intangible assets that have an indefinite useful life, the recoverable amount is estimated at each balance sheet date.
The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value, less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-discount rate that reflects current market assessments of the time value of money, and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash generating unit"). For the purpose of impairment testing, the goodwill acquired in a business combination is allocated to cash-generating units that are expected to benefit from the synergies of the combination.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the Income Statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of other assets in the unit on a pro-rata basis.
Inventories
Inventories are measured at the lower of cost and net realisable value. Cost is based on the first in, first out, principle and comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing inventories to their existing location and condition. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on transactions are recognised in the Income Statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated at foreign exchange rates ruling at the dates the fair value was determined.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at an average rate for the period where this rate approximates to the foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from the translation of foreign operations, and of related qualifying hedges, are taken directly to the translation reserve. They are released into the Income Statement upon disposal.
Financial instruments
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables. Non-derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition, non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose only of the statement of cash flows.
Interest bearing bank loans and overdrafts and the Group's unsecured loan stock are initially recorded at fair value. The net amount of any premium or discount over the nominal value, less issue costs, is amortised over the life of the instrument via the effective interest method over its life and charged or credited to interest payable in the Income Statement.
Ordinary share capital is classified as equity. Incremental costs directly attributable to the issue of Ordinary Shares and share options are recognised as a deduction from equity, net of any tax effects. When share capital recognised as equity is purchased by the Company, the amount of consideration paid including directly attributable costs, net of any tax effects, is recognised as a deduction from total equity.
The Group's activities expose it primarily to the financial risk of changes in interest rates and foreign currency exchange rates on its overseas business. The Group uses interest rate swaps, swaptions, caps, floors and collars to hedge these exposures. The Group does not use derivative instruments for speculative purposes.
Derivatives are recognised initially at fair value; attributable transaction costs are recognised in the Income Statement as incurred. Subsequent to initial recognition, derivatives are measured at fair value.
Changes in the fair value of derivative financial instruments that are designated and effective as cash flow hedges are recognised directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in the Income Statement. If the cash flow hedge of a firm commitment or a forecast transaction results in the recognition of an asset or a liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of an asset or a liability, amounts deferred in equity are recognised in the Income Statement in the same period in which the hedged item affects net income.
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the Income Statement as they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss previously recognised in equity is retained in equity until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in equity is transferred to the carrying amount of the asset when it is recognised. In other cases, the amount recognised in equity is transferred to the Income Statement in the period that the hedged item is recognised.
The fair value of forward exchange contracts is based on their listed market price, if available. If a listed price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract, using a risk-free interest rate based on Government bonds.
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Obligations for contributions to defined contribution pension schemes are recognised as an expense in the Income Statement as incurred.
The Group's net obligation in respect of defined benefit pension schemes is calculated separately for each scheme by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value at the date of the financial statements. Any unrecognised past service costs and the fair value of any scheme assets is deducted in calculating the Group's net obligation to the scheme for the retirement benefits to be provided. The discount rate used is the yield at the balance sheet date on AA credit rated bonds that have maturity dates approximating to the term of the Group's obligations under the scheme, and which are denominated in the same currency in which the benefits are expected to be paid. When the calculation results in a benefit to the Group, the recognised asset is limited to the net total of any unrecognised past service costs and the present value of any future refunds from the scheme or reductions in future contributions to the scheme.
When the benefits of a scheme are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in the Income Statement on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the Income Statement.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Revenue recognition
Revenue is measured at the fair value of consideration received or receivable. In the Group's hotel operations, revenue principally comprises invoices issued to customers during the period for accommodation and services provided. In the Group's serviced office operations, revenue principally comprises licence fees billed to clients, rentals charged and service charges invoiced to licencees. In Liberty Plc, revenue principally comprises amounts receivable for goods and services provided in the normal course of business, net of staff discounts and the costs of loyalty scheme rewards. Revenue from store sales of goods, and commission on concession sales, are recognised when goods are sold to the customer. Internet and fabric sales are recognised when the goods are delivered to the customer.
Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest rate applicable.
In all instances, revenue is shown net of discounts and VAT.
Cost of sales
Cost of sales comprises the book value of disposals of trading properties and developments in progress, together with the direct costs incurred in managing and operating the Group's property and operational activities.
Share-based payment transactions
The share option programme allows certain employees to acquire shares in its listed subsidiaries; these awards are granted by the listed subsidiaries concerned.
For equity-settled share based payments, the fair value of options granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period in which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using an option valuation model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is due only to share prices not achieving the threshold for vesting.
For cash-settled share based payments, the fair value of amounts payable to employees is recognised as an expense with a corresponding increase in liabilities over the period that employees become entitled to payment. The liability is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognised as a payroll cost in the Income Statement. The cash-settled share based payments only relate to employees of certain subsidiaries and do not involve employees or Directors of MWB Group Holdings Plc.
Dividends
Dividends that have been approved by shareholders at previous Annual General Meetings are included within liabilities. Dividends proposed at the balance sheet date that are subject to approval by shareholders at the annual general meeting are not included as a liability in the current period's financial statements.
Finance income and expense
Finance income comprises interest received or receivable on funds invested. Interest income is recognised in the Income Statement as it accrues, using the effective interest method. Dividend income is recognised in the Income Statement on the date the Group entity's right to receive the income is established.
Finance expenses comprise interest paid or payable and finance charges on finance leases that are recognised in the Income Statement. Interest incurred on loans specific to properties in the course of development is capitalised during the development phase but ceases to be capitalised once the development is completed and ready for occupation. Where such interest is allowable in computing the taxation liabilities of the Group, this is used to reduce the tax charge in the Income Statement.
Taxation
The income tax expense in the Consolidated Income Statement comprises current and deferred tax. Income tax expense is recognised the Consolidated Income Statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Any additional income taxes which arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are only offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities but they intend to settle current tax liabilities and assets on a net basis, or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
New standards and interpretations adopted for the first time
A number of new standards, amendments to standards and interpretations have been issued which are effective for the financial year ended 31 December 2009. Accordingly, they have been applied in preparing these financial statements. The standards and amendments to standards and interpretations that have become effective are as follows:-
IFRIC 14: The Group has assessed the impact of IFRIC 14 - IAS 19. This relates to the limit on a defined benefit asset, minimum funding requirements and their interaction at 31 December 2009. IFRIC 14 provides additional guidance on assessing the amount that can be recognised as an asset of a defined benefit pension surplus and as a consequence the amount of deferred tax on that surplus. The adoption of IFRIC 14 at 1 January 2009 has not impacted the balance sheet.
IFRS 8: Operating Segments, which introduces the management approach to segment reporting. This is mandatory for the year ending 31 December 2009 and requires disclosure of segment information based on internal reports regularly reviewed by the Board, in order to assess each segment's performance and to allocate resources to them. There is no profit impact from the adoption of IFRS 8 by the Group in 2009.
Revised IAS 23: Borrowing Costs, requires that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset and removes the option to expense borrowing costs. The revised IAS 23 has become mandatory for the Group's 2009 consolidated financial statements and accords with the policy already adopted by the Group. In accordance with the transitional provisions, the Group has applied the revised IAS 23 to qualifying assets for which capitalisation of borrowing costs commences on or after the effective date. Therefore there is no impact on prior periods in the Group's 2009 consolidated financial statements.
IFRIC 13: Customer Loyalty Programmes, addresses the accounting by entities that operate, or otherwise participate in, customer loyalty programmes under which customers can redeem credits for awards such as free or discounted goods or services. IFRIC 13 is mandatory for the Group's 2009 consolidated financial statements. There has been no material effect following the adoption of this standard.
Revised IAS 1: Presentation of Financial Statements (2007), introduces the term "total comprehensive income", which represents changes in equity during a period other than those changes resulting from transactions with owners in their capacity as owners. Total comprehensive income may be presented in either a single statement of comprehensive income (effectively combining both the Income Statement and all non-owner changes in equity in a single statement), or in an Income Statement and a separate Statement of Comprehensive Income. Revised IAS 1, which is mandatory for the Group's 2009 consolidated financial statements, and the Group has provided total comprehensive income in a single Statement of Comprehensive Income in its 2009 consolidated financial statements.
Amendment to IFRS 2: Share-based Payment - Vesting Conditions and Cancellations, clarifies the definition of vesting conditions, introduces the concept of non-vesting conditions, requires non-vesting conditions to be reflected in grant-date fair value and provides the accounting treatment for non-vesting conditions and cancellations. The amendments to IFRS 2 are mandatory for the Group's 2009 consolidated financial statements, with retrospective application. There has been no material effect following the adoption of this standard.
New standards and interpretations not yet adopted
Other relevant new standards and interpretations which have been endorsed but which were not mandatory for the Group during the year under review include:
IFRS3 (revised) "Business Combinations" (mandatory for the year commencing on or after 1 July 2009).
Amendments to IAS 27 "Consolidated and Separate Financial Statements" (mandatory for the year commencing on or after 1 July 2009).
IFRIC 17 "Distributions of Non-Cash Assets to Owners" (mandatory for the year commencing on or after 1 July 2009, subject to EU endorsement).
The above are not anticipated to have a material impact on the financial statements of the Group or Company although the precise impact of IFRS3 (revised) cannot be foreseen as it is dependent on future business combinations activity.
2. SEGMENT REPORTING
Segmental information is presented in respect of the Group's reporting segments which are based on the Group's management and internal reporting structure in line with the 'management approach' of IFRS 8 "Operating Segments".
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Inter-segment pricing is determined on an arm's length basis. Unallocated items comprise mainly activities that have now been sold, central loans and borrowings and related expenses, corporate assets (primarily the Company's head office operations) and tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment.
The Group considers the performance of the three principal operations, being Malmaison and Hotel du Vin, MWB Business Exchange and Liberty in assessing the performance of the Group and making decisions about the allocation of resources. Accordingly, these are the reporting segments disclosed. The segments are reported in a manner consistent with the internal reporting provided by management.
The Group therefore comprises the following reportable segments:
·; Malmaison and Hotel du Vin - The ownership and operation of the Group's branded hotels;
·; MWB Business Exchange Plc - The Group's AIM quoted serviced office subsidiary;
·; Liberty Plc - The Group's AIM quoted retail operating subsidiary; and
·; Central - The central costs incurred by the Group.
The Board's prime measure of return used to monitor the results of the operating divisions is the level of earnings before interest, taxation, depreciation and amortisation, or EBITDA. The results before minority interests for the year ended 31 December 2009, together with comparative information for previous year is summarised below:-
|
|
|
| Profit/(loss) |
|
|
|
| before |
| Revenue | EBITDA | EBIT | taxation |
Year ended 31 December 2009 | £'000 | £'000 | £'000 | £'000 |
Malmaison and Hotel du Vin |
|
|
|
|
Operating income | 111,034 | 26,587 | 16,460 | (1,443) |
Pre-opening costs | - | (146) | (146) | (146) |
| 111,034 | 26,441 | 16,314 | (1,589) |
|
|
|
|
|
MWB Business Exchange Plc |
|
|
|
|
Operating income | 112,416 | 9,806 | 4,414 | 4,209 |
|
|
|
|
|
Liberty Plc |
|
|
|
|
Operating income | 60,774 | 3,004 | 1,025 | 293 |
Reorganisation costs |
| (135) | (135) | (135) |
Expenditure on brand | - | (2,761) | (3,550) | (3,550) |
| 60,774 | 108 | (2,660) | (3,392) |
|
|
|
|
|
Others | 75 | (71) | (71) | (70) |
Group debt less cash | - | - | - | (7,062) |
| 75 | (71) | (71) | (7,132) |
Head office administration | - | (7,484) | (7,518) | (7,518) |
| 75 | (7,555) | (7,589) | (14,650) |
| 284,299 | 28,800 | 10,479 | (15,422) |
Notes
1. EBITDA = Earnings before interest, taxation, depreciation and amortisation.
2. EBIT = Earnings before interest and taxation.
|
|
|
| Profit/(loss) |
|
|
|
| before |
| Revenue | EBITDA | EBIT | taxation |
Year ended 31 December 2008 | £'000 | £'000 | £'000 | £'000 |
Malmaison and Hotel du Vin |
|
|
|
|
Operating income | 107,636 | 26,453 | 17,413 | (632) |
Property disposals | - | 710 | 710 | 710 |
Pre-opening costs | - | (1,266) | (1,266) | (1,266) |
| 107,636 | 25,897 | 16,857 | (1,188) |
|
|
|
|
|
MWB Business Exchange Plc |
|
|
|
|
Operating income | 118,544 | 18,088 | 13,641 | 14,003 |
|
|
|
|
|
Liberty Plc |
|
|
|
|
Operating income | 50,850 | 1,815 | (435) | (961) |
Reorganisation costs | - | (1,346) | (1,346) | (1,346) |
Expenditure on brand | - | (4,344) | (4,344) | (4,344) |
| 50,850 | (3,875) | (6,125) | (6,651) |
|
|
|
|
|
Others | 846 | 1,397 | 1,397 | 1,534 |
Group debt less cash | - | - | - | (7,130) |
| 846 | 1,397 | 1,397 | (5,596) |
Head office administration | - | (10,391) | (10,494) | (10,494) |
| 846 | (8,994) | (9,097) | (16,090) |
| 277,876 | 31,116 | 15,276 | (9,926) |
There were no differences in the measurement of the segment's results and the Group's results.
Consolidated Income Statement analysis - including entity-wide disclosures
Year ended 31 December 2009 | Malmaison & Hotel du Vin £'000 | MWB Business Exchange Plc £'000 | Liberty Plc £'000 | Central £'000 | Consolidated £'000 |
Total external revenues |
|
|
|
|
|
Hotel income | 111,034 | - | - | - | 111,034 |
Licence fee income | - | 112,416 | - | - | 112,416 |
Retail income | - | - | 60,774 | - | 60,774 |
Management fee income | - | - | - | 75 | 75 |
Revenue per the Consolidated Income Statement | 111,034 | 112,416 | 60,774 | 75 | 284,299 |
Inter-segment revenue | - | - | - | - | - |
Total segment revenue | 111,034 | 112,416 | 60,774 | 75 | 284,299 |
Total segment revenue by geographical origin |
|
|
|
|
|
United Kingdom | 111,034 | 112,416 | 50,709 | 75 | 274,234 |
Japan | - | - | 10,065 | - | 10,065 |
| 111,034 | 112,416 | 60,774 | 75 | 284,299 |
Segment result | 16,460 | 4,414 | 890 | (7,589) | 14,175 |
Project start-up expenses |
|
|
|
| (3,696) |
|
|
|
|
|
|
Profit before finance income, finance expenses and |
|
|
|
|
|
taxation |
|
|
|
| 10,479 |
Interest income |
|
|
|
| 310 |
Interest expense |
|
|
|
| (26,211) |
Taxation |
|
|
|
| (655) |
Loss for the year |
|
|
|
| (16,077) |
Consolidated Income Statement analysis - including entity-wide disclosures
Year ended 31 December 2008 | Malmaison & Hotel du Vin £'000 | MWB Business Exchange Plc £'000 | Liberty Plc £'000 | Central £'000 | Consolidated £'000 |
Total external revenues |
|
|
|
|
|
Hotel income | 107,636 | - | - | - | 107,636 |
Licence fee income | - | 118,544 | - | - | 118,544 |
Retail income | - | - | 50,850 | - | 50,850 |
Proceeds from sale of trading properties | - | - | - | 846 | 846 |
Revenue per the Consolidated Income Statement | 107,636 | 118,544 | 50,850 | 846 | 277,876 |
Inter-segment revenue | - | 164 | - | - | 164 |
Total segment revenue | 107,636 | 118,708 | 50,850 | 846 | 278,040 |
Total segment revenue by geographical origin |
|
|
|
|
|
United Kingdom | 107,636 | 118,708 | 43,793 | 846 | 270,983 |
Japan | - | - | 7,057 | - | 7,057 |
| 107,636 | 118,708 | 50,850 | 846 | 278,040 |
Segment result | 18,123 | 13,641 | (1,781) | (9,097) | 20,886 |
Project start-up expenses |
|
|
|
| (5,610) |
|
|
|
|
|
|
Profit before finance income, finance expenses and |
|
|
|
|
|
taxation |
|
|
|
| 15,276 |
Interest income |
|
|
|
| 1,694 |
Interest expense |
|
|
|
| (26,896) |
Taxation |
|
|
|
| 10,215 |
Profit for the year |
|
|
|
| 289 |
Consolidated Statement of Financial Position
31 December 2009 | Malmaison & Hotel du Vin £'000 | MWB Business Exchange Plc £'000 | Liberty Plc £'000 | Central £'000 | Consolidated £'000 |
Total assets | 498,807 | 81,221 | 73,743 | 13,405 | 667,176 |
Total liabilities | (304,011) | (63,145) | (36,177) | (87,594) | (490,927) |
Segment net assets/(liabilities) | 194,796 | 18,076 | 37,566 | (74,189) | 176,249 |
|
|
|
|
|
|
Capital expenditure in the year | 2,938 | 7,615 | 2,767 | 13 | 13,333 |
|
|
|
|
|
|
Depreciation in the year | 10,127 | 5,370 | 2,278 | 34 | 17,809 |
31 December 2008 | Malmaison & Hotel du Vin £'000 | MWB Business Exchange Plc £'000 | Liberty Plc £'000 | Central £'000 | Consolidated £'000 |
Total assets | 505,618 | 92,968 | 70,982 | 15,280 | 684,848 |
Total liabilities | (303,385) | (57,315) | (33,609) | (86,740) | (481,049) |
Segment net assets/(liabilities) | 202,233 | 35,653 | 37,373 | (71,460) | 203,799 |
|
|
|
|
|
|
Capital expenditure in the year | 47,783 | 4,067 | 2,483 | 69 | 54,402 |
|
|
|
|
|
|
Depreciation in the year | 9,040 | 4,447 | 2,250 | 103 | 15,840 |
There are no differences in the measurement of the segments' assets and the Group's assets and liabilities.
3. EARNINGS BEFORE INTEREST, TAXATION, DEPRECIATION AND AMORTISATION ("EBITDA")
| Year ended 31 December 2009 £'000 | Year ended 31 December 2008 £'000 |
The EBITDA of the Group is calculated as follows:- |
|
|
|
|
|
Profit before finance income, finance expenses and taxation | 10,479 | 15,276 |
Add depreciation of property, plant and equipment and |
|
|
amortisation for the year | 18,321 | 15,840 |
Total EBITDA for the year | 28,800 | 31,116 |
4. FINANCE INCOME AND EXPENSES
| Year ended 31 December 2009 £'000 | Year ended 31 December 2008 £'000 |
The finance income arose as follows:- |
|
|
|
|
|
Interest income on cash deposits for the year | 310 | 1,671 |
Defined benefit pension scheme net financing income | - | 23 |
Total finance income for the year | 310 | 1,694 |
|
|
|
The finance expenses arose on financial liabilities measured at |
|
|
amortised cost as follows:- |
|
|
Unsecured Loan Stock 2009/2012 | 2,925 | 2,925 |
Bank loans and overdrafts | 18,837 | 24,275 |
Defined benefit pension scheme net financing expense | 125 | - |
Amortisation of debt issue costs | 4,418 | 1,135 |
| 26,305 | 28,335 |
Less finance costs capitalised in respect of development |
|
|
expenditure before tax relief | (94) | (1,439) |
Total finance expenses for the year | 26,211 | 26,896 |
5. TAXATION
| Year ended 31 December 2009 £'000 | Year ended 31 December 2008 £'000 |
Current taxation (charge)/credit |
|
|
UK Corporation tax |
|
|
Tax on loss for the year | - | - |
Adjustment in respect of prior year provisions following |
|
|
agreement of taxation liabilities | (7) | 16,402 |
|
|
|
Foreign tax |
|
|
Tax on profit for the year | (690) | (395) |
| (697) | 16,007 |
|
|
|
Deferred taxation credit/(charge) |
|
|
|
|
|
Deferred tax asset arising/(written off) on accelerated capital |
|
|
allowances, trading tax losses, unrelieved capital expenditure |
|
|
and interest payments | 42 | (5,792) |
Total taxation (charge)/credit | (655) | 10,215 |
No tax was recognised directly in equity during the year ended 31 December 2009 or during the previous year.
The taxation (charges)/credit has been increased from the amount that would arise from applying the prevailing corporation tax rate to the loss before taxation in the Consolidated Income Statement, as follows:-
| Year ended 31 December 2009 £'000 | Year ended 31 December 2008 £'000 |
UK corporation tax credit at 28% (2008: 28.5%) on the loss |
|
|
before taxation in Consolidated Income Statement | 4,318 | 2,829 |
Excess of depreciation charged over capital allowances |
|
|
claimed | (4,421) | (1,202) |
Expenditure permanently disallowed for taxation purposes |
|
|
and unrelieved tax losses | (4,022) | (2,311) |
Difference between taxation provisions on chargeable gains |
|
|
on disposals of properties and accounting profits on such |
|
|
Disposals | (142) | - |
Adjustment of provision made in respect of prior years |
|
|
following agreement of taxation liabilities | (7) | 16,402 |
Taxation on overseas earnings at higher rate than UK |
|
|
corporation tax | (264) | (136) |
Profits not taxable and capitalised expenditure deductible for |
|
|
taxation purposes | 26 | 400 |
Tax losses brought forward from earlier periods utilised in |
|
|
current period | 3,815 | 25 |
Total corporation tax charge for the year | (697) | 16,007 |
|
|
|
Deferred tax asset (written off)/arising on accelerated capital |
|
|
allowances, trading tax losses, unrelieved capital |
|
|
expenditure and interest payments | 42 | (5,792) |
Taxation (charge)/credit for the year | (655) | 10,215 |
6. LOSS PER SHARE
The loss per share figures are calculated by dividing the loss attributable to equity holders of the Company for the year, by the weighted average number of shares or units in issue during the year, as follows:-
|
| Year ended 31 December 2009 | Year ended 31 December 2008 |
Loss for the year attributable to equity |
|
|
|
shareholders of the Company | £'000 | (15,948) | (2,718) |
Weighted average number of units or ordinary |
|
|
|
shares in issue during the year | '000 | 72,371 | 76,291 |
|
|
|
|
Loss per share (basic and diluted) | Pence | (22.0p) | (3.6p) |
7. INTANGIBLE ASSETS AND GOODWILL
| 31 December 2009 £'000 | 31 December 2008 £'000 |
Brand | 18,200 | 18,200 |
|
|
|
Goodwill |
|
|
- Stanhope Business Centres Limited | 7,587 | 7,587 |
- MLS | 2,825 | - |
- Liberty Japan Company Limited | 182 | 182 |
At 31 December 2009 | 28,794 | 25,969 |
The brand value of £18.2m relates to the Liberty brand. The Directors consider that the Group's brand has an indefinite life due to the durability of the underlying business. This has been demonstrated over many years. Accordingly the book value of the Liberty brand has not been amortised but has instead been subject to an annual impairment review.
At 31 December 2009, the value in use was determined by discounting future cash flows generated from continuing use of the cash generating unit. This is based on projected cash flows in the Company's 5 year business plan and further projections for years 6 to 10 to produce a 10 year cash flow model. A 2% growth assumption has been applied to cash flows at the end of year 10. Forecast annual revenue growth included in the projections is 5.8% in 2010, 3.4% by year 5 reflecting the 5 year business plan and 3.2% by year 10. The cash flows generated from the business plan project net outflows in 2009 and 2010 with net cash inflows beginning in 2011. A pre-tax discount rate of 10% was applied to resultant cash flows to determine present day value in use, reflecting current market assessments of risk specific to the asset. The values assigned also represent assessments of future trends in the retail industry and are based on both external sources and internal historical data. The above calculation of value in use is particularly sensitive in two areas: a movement of 1% in the discount rate would affect the calculated value of the brand by £5m, and a movement of 1% in future planned net cash inflows before capital expenditure, central costs and working capital movements would affect the calculated value of the brand by approximately £7m. The impairment review at 31 December 2009 supported the value in use of the Liberty brand at more than the book value of £18.2m at which it has been included in the financial statements of the Group throughout the year. Accordingly the brand has been retained at a value of £18.2m in these financial statements.
The Group acquired Stanhope Business Centres Limited in 2007, a serviced office business based in London, Goodwill of £7.6m arose on this acquisition and was recognised in the year ended 31 December 2007. An impairment review of the Stanhope Business Centres goodwill was undertaken by the Directors on 31 December 2009. This compared the carrying value of goodwill with the anticipated recoverable amount of the two business centres owned by Stanhope Business Centres which are the cash-generating unit to which the goodwill was allocated. The recoverable amount of the cash-generating unit is based on value in use, which is calculated from cash flow projections for the lifetimes of the underlying leases, using data from Board approved budgets covering the period to 31 December 2011. The key assumptions for the value in use calculations were discount rates, licence fee income, client renewals and occupancy rates. The Directors estimate discount rates using pre-tax rates that reflect the current market assessments of the time value of money and risks specific to the cash-generating units, and they consider the appropriate pre-tax risk adjusted discount rate is 11%. Changes in licence fee income, client renewals, occupancy rates and direct costs are based on assumed compound growth rates of 2% to 5%, as well as past experience and expectations of future changes in the market. Based on this review, the Directors concluded that there had been no impairment to the Stanhope Business Centres goodwill during the year ended 31 December 2009.
During the period 29 April to 1 June 2009 the Group acquired 16 business centres (one of which was subsequently closed) formerly of MLS Group PLC ("MLS"). These centres are complementary to the Business Exchange portfolio and in line with its stated strategy of focusing on London and the surrounding area. The transactions were accounted for using the purchase method of accounting as summarised below, which gave rise to goodwill of £2.8m.
| Fair value |
| £'000 |
|
|
Net assets acquired |
|
|
|
Property, plant and equipment | 732 |
Lease deposit | 225 |
Licensee deposit liabilities | (1,414) |
Finance lease and other liabilities | (230) |
| (687) |
Goodwill | 2,825 |
Total consideration | 2,138 |
|
|
Satisfied by: |
|
|
|
Cash paid and payable | 943 |
Directly attributable costs | 1,195 |
| 2,138 |
No cash or cash equivalents were acquired.
An impairment review of the goodwill arising from the MLS acquisition was undertaken by the Directors on 31 December 2009. The criteria, assumptions and methodology used were similar to those described in relation to the Stanhope Business Centres. Based on this review, the Directors concluded that there had been no impairment to the MLS goodwill during the year ended 31 December 2009.
8. 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 valuation |
|
|
|
|
|
| |
At 1 January 2009 | 334,951 | 134,153 | 1,691 | 39,251 | 117,572 | 627,618 | |
Additions | 733 | (6) | 273 | 4,451 | 8,702 | 14,153 | |
Disposals | - | - | (35) | (26) | (749) | (810) | |
Written off | - | - | - | (1,095) | (19,902) | (20,997) | |
Revaluation | (267) | (4,951) | - | - | - | (5,218) | |
At 31 December 2009 | 335,417 | 129,196 | 1,929 | 42,581 | 105,623 | 614,746 | |
|
|
|
|
|
|
| |
Depreciation |
|
|
|
|
|
| |
At 1 January 2009 | - | - | - | (5,711) | (55,975) | (61,686) | |
Charge for the year | (2,338) | (739) | - | (3,165) | (11,567) | (17,809) | |
Disposals | - | - | - | 1 | 140 | 141 | |
Written off | - | - | - | 1,095 | 19,902 | 20,997 | |
Revaluation | 2,338 | 739 | - | - | - | 3,077 | |
At 31 December 2009 | - | - | - | (7,780) | (47,500) | (55,280) | |
|
|
|
|
|
|
| |
Net book value |
|
|
|
|
|
| |
at 31 December 2009 | 335,417 | 129,196 | 1,929 | 34,801 | 58,123 | 559,466 | |
|
|
|
|
|
|
| |
Analysis of valuation deficit |
|
|
|
|
|
| |
for the year |
|
|
|
|
|
| |
Deficit debited to revaluation |
|
|
|
|
|
| |
reserve | 1,574 | (3,475) | - | - | - | (1,901) | |
Deficit debited to minority |
|
|
|
|
|
| |
interests (note 15) | 497 | (737) | - | - | - | (240) | |
|
|
|
|
|
|
| |
Revaluation deficit reflected |
|
|
|
|
|
| |
in property, plant and |
|
|
|
|
|
| |
equipment | 2,071 | (4,212) | - | - | - | (2,141) | |
Operational properties at net book value | 31 December 2009 £'000 | 31 December 2008 £'000 |
Freehold properties as above | 335,417 | 334,951 |
Long leasehold properties as above | 129,196 | 134,153 |
Operating leasehold improvements as above | 34,801 | 33,540 |
Total operational properties per consolidated balance sheet | 499,414 | 502,644 |
| --------------------------Operational properties------------------------ |
|
| |||
|
|
|
|
| Plant, |
|
|
|
| In the | Operating | machinery, |
|
|
| Long | course of | leasehold | fixtures & |
|
| Freehold | leasehold | construction | improvements | equipment | Total |
Group | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Cost or valuation |
|
|
|
|
|
|
At 1 January 2008 | 345,521 | 142,995 | 26,047 | 37,139 | 103,991 | 655,693 |
Additions | 36,165 | 1,068 | 1,608 | 2,704 | 14,282 | 55,827 |
Reclassification | 25,964 | - | (25,964) | (311) | 311 | - |
Disposals | (140) | - | - | (281) | (1,012) | (1,433) |
Revaluation | (72,559) | (9,910) | - | - | - | (82,469) |
At 31 December 2008 | 334,951 | 134,153 | 1,691 | 39,251 | 117,572 | 627,618 |
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
At 1 January 2008 | - | - | - | (2,992) | (47,068) | (50,060) |
Charge for the year | (2,374) | (864) | - | (2,720) | (9,882) | (15,840) |
Disposals | - | - | - | 1 | 975 | 976 |
Revaluation | 2,374 | 864 | - | - | - | 3,238 |
At 31 December 2008 | - | - | - | (5,711) | (55,975) | (61,686) |
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
at 31 December 2008 | 334,951 | 134,153 | 1,691 | 33,540 | 61,597 | 565,932 |
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 2009 by qualified professional valuers working for the company of DTZ, Chartered Surveyors, ("DTZ"), acting in the capacity of External Valuers. All such valuers are Chartered Surveyors, being members of the Royal Institution of Chartered Surveyors ("RICS").
DTZ act as valuers to the MWB Group and undertake half year and year end valuations for accounting purposes. DTZ has been carrying out this valuation instruction for the Group for a continuous period since June 1999 and Paul Wolfenden has been the signatory of Valuation Reports provided to MWB Group for the same period since June 1999. In addition, DTZ provide ad-hoc valuation advice to MWB Group. DTZ is a wholly owned subsidiary of DTZ Holdings plc. In the financial year to 30 April 2009, the proportion of total fees payable by MWB Group to the total fee income of DTZ Holdings plc was less than 5%. It is not anticipated that this situation will vary in terms of the financial year of DTZ to 30 April 2010. DTZ has not received any introductory fees or acquisition fees in respect of any of the properties owned by MWB Group within the 12 months prior to the date of valuation. DTZ has been appointed as valuers in respect of certain of the properties and in the last 12 months they have provided valuation advice for bank lending purposes in relation to certain of the properties.
All valuations were carried out in accordance with the RICS Appraisal and Valuation Standards 6th Edition ("the Manual") and the properties were valued on the basis of Existing Use Value. Existing Use Value is defined in the Manual as the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, wherein the parties had acted knowledgeably, prudently and without compulsion, assuming that the buyer is granted vacant possession of all parts of the property required by the business and disregarding potential alternative uses and any other characteristics of the property that would cause its Market Value to differ from that needed to replace the remaining service potential.
The valuation of the hotels is based on estimates of annual maintainable earnings before interest, tax, depreciation and amortisation ("EBITDA") for each property over a 10 year cash flow period. These estimates are based on the historic, 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 to assess the net present value of each property asset. This is in line with the method 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 the properties as fully equipped operational entities, and to their trading potential. The valuation therefore includes the land and buildings; the trade fixtures, fittings, furniture, furnishings and equipment; and the market's perception of the trading potential excluding personal goodwill; together with an assumed ability to renew existing licences, consents, certificates and permits. The value excludes consumables and stock in trade.
The valuation excludes any goodwill associated with the management by the Company or its subsidiaries but recognises that the hotel property assets would probably be sold as trading entities. Guidance Note 3 of the Red Book states that the valuer must lot or group properties in the manner most likely to be adopted in the case of an actual sale. Therefore DTZ have lotted together the hotel properties owned by the MWB Group; were the hotel properties to be marketed individually the values achieved could be less than those included in the Valuation Report.
Properties valued by DTZ at 31 December 2009 carried in the balance sheet at valuation included in property, plant and equipment totalled £513.5m. The carrying value of properties in the balance sheet excludes those revaluation surpluses attributable to the land element of long leaseholds and developments which are held at cost. Other minor properties, the short leasehold properties of MWB Business Exchange Plc, and plant and equipment, are carried at the lower of cost and realisable value in the table above. These assets had a net book value at 31 December 2009 of £46m.
The historic cost of the Group's properties at 31 December 2009 includes capitalised interest of £9.4m (31 December 2008: £9.3m).
The reconciliation of the values at which the properties are included in the above table with their original cost less accumulated depreciation, is as follows:-
| Original cost less | Cumulative |
|
| accumulated | valuation |
|
| depreciation at | surplus at | Valuation at |
| 31 December 2009 | 31 December 2009 | 31 December 2009 |
| £'000 | £'000 | £'000 |
Operational properties |
|
|
|
Freehold properties | 244,491 | 90,926 | 335,417 |
Long leasehold properties | 70,048 | 59,148 | 129,196 |
Operational properties in the course of |
|
|
|
construction | 1,929 | - | 1,929 |
Operating leasehold improvements | 34,801 | - | 34,801 |
| 351,269 | 150,074 | 501,343 |
Plant, machinery, fixtures and equipment | 58,123 | - | 58,123 |
At 31 December 2009 | 409,392 | 150,074 | 559,466 |
Segmental analysis
The Group's property, plant and equipmentwas in the following operating businesses at 31 December 2009:-
|
| Operational |
|
|
|
| properties | Plant, |
|
|
| in the | machinery, |
|
| Operational | course of | fixtures & |
|
| properties | construction | equipment | Total |
| £'000 | £'000 | £'000 | £'000 |
Malmaison and Hotel du Vin | 438,554 | 1,929 | 42,602 | 483,085 |
MWB Business Exchange Plc | 34,652 | - | 9,812 | 44,464 |
Liberty Plc | 26,208 | - | 5,650 | 31,858 |
Central assets | - | - | 59 | 59 |
| 499,414 | 1,929 | 58,123 | 559,466 |
The majority of the Group's borrowings and its undrawn facilities are secured by charges on substantially all of the Group's property, plant and equipment.
9. TRADE AND OTHER RECEIVABLES
| 31 December 2009 | 31 December 2008 |
| £'000 | £'000 |
Due after more than one year |
|
|
Other receivables | 2,569 | 2,660 |
Due within one year |
|
|
Trade receivables | 12,566 | 12,603 |
Other receivables |
|
|
Other taxes and social security | 118 | 164 |
Other debtors | 1,009 | 1,884 |
Prepayments and accrued income | 17,067 | 17,942 |
Retention balances | 1,084 | 3,084 |
| 31,844 | 35,677 |
Retention balances predominantly comprise cash funds received from tenants as security for lease obligations. These are retained in bank accounts that are separate from the main Group facilities and are not generally available for use in the Group's operations.
10. CASH AND CASH EQUIVALENTS
| 31 December 2009 | 31 December 2008 |
| £'000 | £'000 |
Cash and cash equivalents per consolidated balance sheet | 19,655 | 32,064 |
Less bank overdrafts per consolidated balance sheet | - | (28) |
Net cash and cash equivalents per consolidated cash flow |
|
|
statement | 19,655 | 32,036 |
The Group's net cash and cash equivalents are held in the following operating divisions of the Group.
| 31 December 2009 £'000 | 31 December 2008 £'000 |
Malmaison and Hotel du Vin | 9,011 | 4,860 |
MWB Business Exchange Plc | 6,433 | 23,333 |
Liberty Plc | 1,943 | 1,903 |
Central | 2,268 | 1,940 |
| 19,655 | 32,036 |
Cash balances are held within the above divisions for utilisation within their businesses. Generally only cash within the Central division is available for use in the Company's own activities.
11. LOANS AND BORROWINGS
| 31 December 2009 | 31 December 2008 |
| £'000 | £'000 |
Current liabilities |
|
|
|
|
|
Secured bank loans | 3,924 | 341,827 |
9.75% Unsecured Loan Stock 2009/2012 | 7,500 | - |
Other unsecured loan borrowings | - | 805 |
| 11,424 | 342,632 |
Non-current liabilities |
|
|
|
|
|
Secured bank loans | 342,080 | 14,634 |
9.75% Unsecured Loan Stock 2009/2012 | 22,500 | 29,927 |
| 364,580 | 44,561 |
Total loans and borrowings | 376,004 | 387,193 |
Terms and debt repayment schedule
All of the Group's loans are denominated in Sterling and no foreign exchange risk was suffered by the Group on its debt arrangements during the year ended 31 December 2009 or in the previous year. The Group's loans bear floating rates of interest which are normally for periods ranging from one week to one year, set by reference to LIBOR. The terms on the Group's outstanding loans at 31 December 2009, inclusive of bank margin, are summarised as follows:-
| 31 December 2009 | 31 December 2009 | 31 December 2008 | |||
| Nominal interest rate per annum | Latest year of maturity | Face value | Carrying amount | Face value | Carrying amount |
|
|
| £'000 | £'000 | £'000 | £'000 |
Current liabilities |
|
|
|
|
|
|
Secured bank loans |
|
|
|
|
|
|
Malmaison and Hotel du Vin | Libor + 2.5% | 2010 | 5,000 | 3,924 | 284,248 | 284,248 |
MWB Business Exchange Plc | Libor + 1.25% | 2009 | - | - | 6,930 | 6,930 |
Central | Libor + 5% | 2009 | - | - | 50,649 | 50,649 |
|
|
|
|
|
|
|
Listed Unsecured Loan Stock | 9.75% | 2012 | 7,500 | 7,500 | - | - |
|
|
|
|
|
|
|
Other unsecured loan |
|
|
|
|
|
|
borrowings - central | 9.0% | 2009 | - | - | 810 | 805 |
|
|
| 12,500 | 11,424 | 342,637 | 342,632 |
Non-current liabilities |
|
|
|
|
|
|
Secured bank loans |
|
|
|
|
|
|
Malmaison and Hotel du Vin | Libor + 2.5% | 2011 | 278,487 | 277,222 | - | - |
MWB Business Exchange Plc | Base/Libor + 2.75% | 2011 | - | - | - | - |
Liberty Plc | Base/Libor + 2.5% | 2011 | 12,543 | 12,543 | 14,634 | 14,634 |
|
|
|
|
|
|
|
Listed Unsecured Loan Stock | 9.75% | 2012 | 22,500 | 22,500 | 30,000 | 29,927 |
Other unsecured loan |
|
|
|
|
|
|
borrowings - central | Libor + 5.0% | 2011 | 53,000 | 52,315 | - | - |
|
|
| 366,530 | 364,580 | 44,634 | 44,561 |
|
|
| 379,030 | 376,004 | 387,271 | 387,193 |
The Company may purchase the listed Unsecured Loan Stock by tender or in the market. The Loan Stock is redeemable at the Company's option at any time after 30 June 2009 at par plus accrued interest; any Loan Stock outstanding on 30 June 2012 will be redeemed by the Company at par plus accrued interest.
The majority of the Group's borrowings and its undrawn facilities are secured by charges on substantially all of the Group's property, plant and equipment. The secured loans are proportionately repayable if any of the underlying security is sold.
Extension of term of bank facilities
In 2009, the Group extended £363m of its banking facilities provided by Bank of Scotland and Royal Bank of Scotland. The terms of these facilities, comprising three separate loans to Malmaison and Hotel du Vin, MWB Business Exchange, Liberty and MWB itself, have now been extended to 31 December 2011. Because of this extension, loans shown as current liabilities in 2008 are now medium term and therefore non-current liabilities in 2009.
Loan covenants
The Malmaison and Hotel du Vin division has four covenant tests in its banking facility, being EBITDA to Interest Cover, Cashflow Cover, Loan to Value Cover and Debt to EBITDA Cover. All such covenants were met for the year ended 31 December 2009 and are forecast to be met for the next eighteen months. The Malmaison and Hotel du Vin Loan to Value Covenant requires the loan to be no more than 72.5% of the value of the secured property. At 31 December 2009, the Loan to Value percentage amounted to 58.8% of the secured realisable property value.
Business Exchange has three covenant tests in relation to its bank facility, namely Debt Service Cover, Senior Interest Cover and EBITDA to Debt Cover. Debt Service Cover requires the ratio of Net Cash to Senior Interest to be not less than 1:1; Senior Interest Cover requires the ratio of EBIT to Senior Interest to be not less than 4:1; and EBITDA to Debt Cover requires the ratio of EBITDA to Debt to be not less than 1:1. This loan was not drawn down at 31 December 2009.
Liberty has three covenant tests in relation to its bank facility, namely Loan to Value Security Cover, Debt Service Cover and Senior Interest Cover, with Liberty of London brand costs and other one-off costs excluded from the test of the latter two. Security Cover requires the loan to be no more than 67% of the Realisation Value of the Tudor Building. At 31 December 2009, the Tudor Building was valued at £30.25m, and £12.5m of facilities were utilised. Accordingly, the Loan to Value Security Cover was only 41% at that date, demonstrating significant headroom. Sufficient headroom is also forecast over the period covered by the Projections. Debt Service Cover requires the ratio of EBITDA to Total Debt Service to be not less than 1.25:1. Senior Interest Cover requires the ratio of EBIT to Senior Interest to be not less than 1.5:1. These covenants were met for the year ended 31 December 2009 with continuing headroom forecast over the period covered by the Projections.
MWB Group Holdings Plc itself has two covenants in relation to its bank facility. These covenants require consolidated EBITDA to be 125% or more than consolidated interest expense, and for the MWB Group Holdings Plc debt, excluding the Company's Unsecured Loan Stock, to be capped at 150% of consolidated EBITDA. MWB Group Holdings is forecast to meet its covenants with headroom during the eighteen months covered by the Group cash flow forecasts. The covenant in relation to MWB Group Holdings' Unsecured Loan Stock includes a gearing covenant restricting net debt attributable to shareholders to a maximum of four times adjusted shareholders' funds. This covenant was met at 31 December 2009.
At the same time as the Placing that took place in January 2010, the Company obtained an easing in the Loan Stock covenant, the Group share of net debt threshold was increased from four to five times adjusted shareholders' funds.
Movement of loans during the year
| Year ended 31 December 2009 £'000 | Year ended 31 December 2008 £'000 |
At start of year | 387,193 | 330,194 |
Loans drawn down | 4,069 | 74,232 |
Loans repaid | (15,258) | (17,233) |
At end of year | 376,004 | 387,193 |
Net debt
The Group's loans, borrowings and cash are included in the consolidated balance sheet at 31 December 2009 as follows:-
| 31 December 2009 | 31 December 2008 |
| £'000 | £'000 |
Loans and borrowings | 376,004 | 387,193 |
Long leasehold obligations | 697 | 699 |
Hire purchase and leasing contracts | 192 | - |
Fair value of financial instruments | 5,526 | 1,894 |
Total loans and borrowings | 382,419 | 389,786 |
Less net cash and cash equivalents in note 10 | (19,655) | (32,036) |
Total net debt at year end | 362,764 | 357,750 |
|
|
|
|
|
|
Analysis of debt/(cash) by operating business |
|
|
|
|
|
Malmaison and Hotel du Vin | 278,357 | 282,322 |
MWB Business Exchange Plc | (6,241) | (16,404) |
Liberty Plc | 10,601 | 12,390 |
Central debt | 80,047 | 79,442 |
| 362,764 | 357,750 |
Undrawn facilities
At 31 December 2009, the Group had £11.5m (2008: £10.5m) of undrawn financing facilities available for specific operating businesses of the Group. The expiry profile of these facilities was as follows:-
| 31 December 2009 £'000 | 31 December 2008 £'000 |
In one year or less | 1,000 | 10,110 |
In more than one year | 10,471 | 367 |
| 11,471 | 10,477 |
The Group's undrawn credit financing facilities are for use by the following operating businesses:-
| 31 December 2009 £'000 | 31 December 2008 £'000 |
Malmaison and Hotel du Vin | 13 | 2,081 |
MWB Business Exchange Plc | 8,000 | 6,029 |
Liberty Plc | 2,458 | 367 |
Central facilities | 1,000 | 2,000 |
| 11,471 | 10,477 |
12. TRADE AND OTHER PAYABLES
| 31 December 2009 | 31 December 2008 |
| £'000 | £'000 |
Due within one year |
|
|
Trade payables | 29,404 | 20,347 |
Other payables | 4,122 | 2,534 |
Client deposits | 13,883 | 15,351 |
Accruals | 33,528 | 30,878 |
PAYE, NIC and VAT | 5,890 | 5,207 |
Deferred income | 4 | 7 |
Hire purchase and leasing contracts | 157 | - |
| 86,988 | 74,324 |
Due after more than one year |
|
|
Other payables | 550 | 596 |
Operating lease incentives | 17,920 | 13,751 |
Long leasehold obligations | 697 | 699 |
Hire purchase and leasing contracts | 35 | - |
| 19,202 | 15,046 |
13. FINANCIAL INSTRUMENTS
Overall summary
The Group has exposure to the following principal risks in the operation and management of its financing:-
(i) Liquidity risk;
(ii) Market risk;
(iii) Interest rate risk;
(iv) Currency risk; and
(v) Credit risk.
The Directors have overall responsibility for the establishment and oversight of the Group's risk management framework. This is managed and controlled through a detailed funding policy and capital management strategy, details of which are set out below. The Audit Committee of the Board monitors the Group's risk management policies and reports to the Board on its activities.
Funding policy
The Group has three principal central facilities available for investment in the divisions, providing a total of £306m of medium term funds. A further £54m is available from bank facilities made available to the Group centrally.
The Group borrows from banks at fixed and floating rates of interest. Interest rate exposure from floating rate debt is hedged by financial derivative instruments where the Board considers that interest rate rises are expected to occur in the medium term. The principal purpose of the Group's hedging arrangements is to protect the Group against adverse interest rate movements and to retain some opportunity to benefit from falls in short term interest rates. The Group does not use hedging arrangements to speculate on interest rate movements. Derivative instruments used by the Board principally comprise interest rate swaps, floors and collars.
The Group's treasury policies are designed to ensure that:-
(i) sufficient committed loan facilities are available to support current and future business requirements. Cash and loan management is a core feature of the Board's business model and two year rolling cash flow forecasts, updated on a monthly basis, are controlled by the Executive Directors to manage these requirements.
(ii) the interest cost on Group debt is supported as much as possible from maintainable income flows, with the retirement of debt matched against forecast capital inflows over short and medium term capital programmes.
(iii) interest rate exposure is managed through a combination of fixed rate debt and interest rate swaps, thus fixing interest rates as much as possible by reference to passing income at the date of drawdown.
Capital management
The Board's policy is to maintain a strong capital base within the Group so as to maintain investor and creditor protection, and to maintain market confidence in the Group. This strategy also sustains future development potential of the Group. The Directors monitor the Return on Capital achieved by the Group, which the Board has defined as EBITDA divided by total shareholders' equity, and its comparison to Return on Value, being EBITDA divided by Group enterprise value. These benchmarks of performance are used to manage and report performance within the three principal operating businesses and for the Group as a whole. The Directors also manage the Group's operations in a manner designed to enhance Cash Returns to Shareholders, in accordance with the Cash Distribution Programme.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.
In order to provide a stronger financial base, increasing headroom and flexibility in relation to banking covenants and ongoing funding requirements, the Company raised £27.5m through a Placing in January 2010.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. There were no material changes in the Group's approach to capital management during the year ended 31 December 2009 or during the previous year.
Financial risk management
The Board and Senior Executive team identify and evaluate risks and uncertainties covered by the Group Business Plan and design controls to mitigate these. Most of the financial risks faced by the Group at the date of approval of these financial statements emanate from the volatility of financial markets, the resultant reduction in supply of credit and its significant increase in cost. These risks fall into a number of categories, all of which have been proactively managed by the Board in the past and even more significantly in the current economic climate.
The Group's funding financial risk centres on the total interest cost incurred on the Group's short and medium term loans, which at 31 December 2009 totalled £376m. The Board has swapped £281m of these funds into fixed rates and retained £65m at floating rates due to the relatively low level of current interest rates. The balance of £30m represents fixed rate facilities. The Board reviews this policy on a regular basis to ensure good management of the Group's exposure to interest rate fluctuations.
The principal financial controls that are in operation across the Group are as follows:-
·; The assessment of risk and the improvement of returns therefrom. The Board is responsible for identifying business risks affecting the Group, and for assessing the likelihood of their impact. The Board's approach to risk management and internal control aims to assist the Group in meeting the challenge of balancing commercial success with cost efficiency. This is managed by the Executive Directors through regular and formal decision making processes for each major operating business within the Group. The Board identifies key business risks and manages these in accordance with the Group's Business Plans.
·; In-depth capital expenditure appraisals. The Group has defined guidelines for capital expenditure. Before investing in any major property asset, assessments of maximum capital expenditure, maximum cash requirements, forecast levels of profitability to be derived from the investment and risk profile of the asset to be acquired are quantified and analysed by the Executive Directors. Where actual results are materially different from those previously forecast, remedial action is taken, which may if necessary involve the early disposal of the asset concerned or cancellation of the proposal prior to further cost being incurred.
·; Financial management and results. Monthly budgets and annual forecasts are prepared for each operating business of the Group, against which actual results are monitored and controlled by the Executive Directors. Where variances arise, these are investigated, business initiatives are implemented and process changes made to improve performance.
·; Control of the Group's cash requirements. Rolling 18 month forward cash flow forecasts are prepared by Senior Executives of each of the Group's three operating businesses. These are reviewed by the Board prior to commencement of each financial year, and are regularly reviewed and contrasted during each year.
·; Group financial reporting. Detailed reports are provided to all members of the Board. These reports provide full analyses of monthly, quarterly and year to date financial performance, asset allocation, growth expectations and related KPI based information for each operating business in the Group, with comparison against budgets and prior year results. These appraisals enable the Board to ensure that control within pre-determined levels of performance of each operating business is achieved, both financially and operationally. Where this is not being achieved, appropriate financial decisions are implemented to enable results achieved to be close to those originally forecast.
Liquidity risk
The Board's approach to managing liquidity is to ensure, as far as possible, that the Group will always have sufficient funds to meet its liabilities as they fall due, without incurring unacceptable losses or risking damage to the Group's reputation in its business sectors. The Group uses detailed divisional cash flow reporting to assist the Board in monitoring cash flow requirements and optimising cash returns on investments across the whole Group. The Group typically ensures it has sufficient forecast cash and available facilities to meet expected cash outflows for a forward period of 18 months. The Group meets its day to day working capital requirements through cash generated in its operating businesses, Liberty, Malmaison and Hotel du Vin, and Business Exchange, and from its loan and overdraft facilities. The Group's facilities include interest cover and gearing covenants with which the Group is in compliance at 31 December 2009. Based on the detailed forecasts prepared for each division, the Group is forecast to comply with the covenants in the facilities for the period covered by these projections.
Market risk
Market risk that affects the Group is the risk that changes in market prices, such as interest rates, foreign currency rates and equity prices, will affect the Group's income or the value of its holdings of financial instruments. The objective of the Group's market risk management is to manage and control market risk exposures within acceptable parameters, while seeking to optimise returns to shareholders.
The Group buys and sells derivatives for its financial liabilities, and also incurs financial liabilities, in order to manage market risks.
The Group enters into commodity contracts only to meet the Group's expected future usage and sale requirements. These principally occur in the Group's Malmaison and Hotel du Vin business and in Liberty Plc.
The primary goal of the Group's available-for-sale equity securities investment strategy is to maximise investment returns commensurate with acceptable levels of risk, in order to meet as much as possible the Group's defined scheme pension obligations. Management is assisted in this regard by professional external advisors.
Interest rate risk
The Group's fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group's variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Investments in short-term receivables and payables are not exposed to interest rate risk.
The Group's policy of managing its exposure to changes in interest rates is generally achieved by entering into interest rate swaps or fixed rate contracts with financially secure counter-parties denominated in Sterling, where considered appropriate by the Board. The Group seeks to apply hedge accounting in order to obtain cash flow certainty and does not enter into hedge contracts on a speculative or trading basis. In addition, various financial amounts - for example trade debtors and trade creditors - arise directly from the Group's normal trading operations.
Disclosures have been made below in respect of current and long term financial liabilities of the Group. These are expressed in total and by reference to the associated financial instruments used to manage the interest rate exposures arising therefrom. The Group is not required to account for fixed rate financial assets and liabilities at fair value through the Income Statement. Where the Group has entered into derivatives that qualify for hedge accounting such as interest rate swaps, changes in the fair value of such instruments are recognised through equity.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at 31 December 2009 would have been charged/(credited) directly to the Income Statement or through equity reserves by the amounts shown below. This analysis, before tax, assumes that all other variables, in particular foreign currency rates, remain constant.
| Income Statement | Equity | ||
| 100 bp Increase £'000 | 100 bp Decrease £'000 | 100 bp Increase £'000 | 100 bp Decrease £'000 |
31 December 2009 |
|
|
|
|
Variable rate instruments | (650) | 650 | - | - |
Cash flow sensitivity (net) | (650) | 650 | - | - |
|
|
|
|
|
31 December 2008 |
|
|
|
|
Variable rate instruments | (1,064) | 1,064 | - | - |
Cash flow sensitivity (net) | (1,064) | 1,064 | - | - |
Currency risk
The Group is currently only exposed to currency risk on sales and purchases that are denominated in Japanese Yen. Total sales in Yen amounted to £10m for the year ended 31 December 2009 (2008: £7m), amounting to only 4% (2008: 3%) of the total revenue for the year. All other Group revenue is denominated in Sterling, the Group's functional currency. The Group uses forward exchange contracts to hedge its currency risk, most of which have a maturity of less than one year from the balance sheet date. The Group does not have any loans taken out by any Group entities, in any currency other than Sterling.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.
As over 99% of the Group's gross assets are denominated in Sterling, the Group did not have a material exposure to foreign currency risk at 31 December 2009 or at the previous year end. The remaining 1% of Group assets are denominated in Japanese Yen. Accordingly, a 10% strengthening of Sterling against the Yen would not have had a material effect on the Group at 31 December 2009 or at the previous year end.
Credit risk
Credit risk for the Group arises if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Board considers there is not a material risk attached to the customer base of the Group's businesses. This is because the customer base is intrinsically diversified and management ensures the business has a broad spread of customers at each of the Group's locations. No single customer accounts for more than 1% of Group revenue.
The three principal operating divisions of the Group have established credit policies for dealing with new customers, their creditworthiness and their payment and delivery terms. The Group's review includes external ratings when available, and in some cases bank references. Purchase limits are established for each customer, which represent the maximum open amount that may be permitted in the day-to-day operations of the Group without requiring prior approval from a member of Middle or Senior Management. Customers that fail to meet the Group's benchmark creditworthiness level may still transact with the Group but on a restricted basis and generally only on a prepayment basis.
Customers that are graded as high risk are placed on a restricted customer list, and future sales are only made on a restricted basis. In the Group's Business Centre operations, customers are generally required to deposit two months' licence fee at the commencement of the licence. In other areas of the Group, collateral is not required in respect of trade and other receivables.
Exposure to credit risk
The carrying amount of financial assets represents their maximum credit exposure to the Group, which at 31 December 2009 was as follows:-
|
| 31 December 2009 | 31 December 2008 |
| Note | £'000 | £'000 |
Trade and other receivables | 16 | 34,413 | 38,337 |
Cash and cash equivalents | 17 | 19,655 | 32,036 |
Forward exchange contracts used for hedging |
|
|
|
liabilities | 21 | - | 341 |
|
| 54,068 | 70,714 |
The carrying amount of the maximum exposure to credit risk for financial assets of the Group at 31 December 2009, by division, was as follows:-
| 31 December 2009 | 31 December 2008 |
| £'000 | £'000 |
Malmaison and Hotel du Vin | 13,433 | 9,793 |
MWB Business Exchange Plc | 26,345 | 43,846 |
Liberty Plc | 11,487 | 12,375 |
Central | 2,803 | 4,700 |
| 54,068 | 70,714 |
No customer of the Group comprised more than 2% of the carrying amount of Group trade receivables at 31 December 2009 (2008: 2%).
The ageing of trade receivables at 31 December 2009 was as follows:-
| Gross 31 December 2009 | Impairment provision 31 December 2009 | Gross 31 December 2008 | Impairment provision 31 December 2008 |
| £'000 | £'000 | £'000 | £'000 |
Not overdue | 6,533 | - | 6,266 | - |
1-30 days overdue | 3,282 | (184) | 2,463 | - |
31-120 days overdue | 2,955 | (487) | 4,036 | (501) |
120 days to one year overdue | 570 | (128) | 658 | (359) |
More than one year overdue | 190 | (165) | 94 | (54) |
| 13,530 | (964) | 13,517 | (914) |
The Group holds cash deposits as security for indebtedness from the majority of its clients in the Business Exchange division of the Group. These are utilised, where appropriate, to offset the charge to the Income Statement that would otherwise occur from provisions for impairment referred to above. Based on historic default rates, the Board believes that no material amount of impairment allowance is necessary in addition to that provided above in respect of trade receivables more than 30 days due; the majority of the unprovided balance relates to customers that have good financial track records with the Group.
The movement on the impairment provision during the year was as follows:-
| Year ended 31 December 2009 | Year ended 31 December 2008 |
| £'000 | £'000 |
Opening provision | (914) | (997) |
Amounts provided | (693) | (935) |
Amounts utilised | 643 | 1,018 |
Closing provision | (964) | (914) |
Determination of fair values
The following tables show the carrying amounts and fair values of the Group's financial instruments at 31 December 2009 and at the previous year end. The carrying amounts are included in the Group balance sheet, with the exception of derivative financial instruments held to manage interest rate exposure, where only a notional value and its fair value are appropriate. The fair values of the financial instruments are the amounts at which the instruments could be exchanged in a current transaction between willing parties. The fair value of all other financial instruments is not materially different from the carrying amounts because they incur interest at variable rates.
The fair value of the Group's loan stock has been estimated on the basis of quoted market prices for similar issues with similar maturities, and on calculations of the present value of future cash flows using the appropriate discount rates prevailing at 31 December 2009. The fair values of other financial instruments reflect the replacement values of the financial instruments used to manage the Group's exposure to adverse interest rate movements.
The carrying amounts of financial assets and liabilities, together with their fair values at 31 December 2009 and at the previous year end, were as follows:-
| 31 December 2009 | 31 December 2008 | ||
| Carrying amount | Fair value | Carrying amount | Fair value |
| £'000 | £'000 | £'000 | £'000 |
Trade and other receivables | 16,144 | 16,144 | 17,147 | 17,147 |
Net cash and cash equivalents | 19,655 | 19,655 | 32,036 | 32,036 |
Forward exchange contracts used for hedging |
|
|
|
|
liabilities | - | - | 341 | - |
Financial derivative instruments | (5,526) | (5,526) | (2,235) | (2,235) |
Secured bank loans | (346,004) | (349,030) | (356,461) | (356,461) |
Unsecured loan stock | (30,000) | (31,619) | (29,927) | (31,543) |
Other unsecured loans | - | - | (805) | (810) |
Long leasehold obligations | (697) | (697) | (699) | (699) |
Trade and other payables | (67,796) | (67,796) | (54,355) | (54,355) |
| (414,224) | (418,869) | (394,958) | (396,920) |
Liquidity risk and hedge profile
The maturity profile of the Group's financial liabilities is set out below:-
|
| Contractual cash flows |
|
|
| |||
| Within | Between | Between | After |
| Carrying | ||
| one year | one and | two and | more than |
| amount | ||
| or on | two | five | five |
| liability/ | ||
| demand | years | years | years | Total | (asset) | ||
31 December 2009 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
Non-derivative financial liabilities |
|
|
|
|
|
| ||
Secured bank loans | 5,000 | 344,030 | - | - | 349,030 | 346,004 | ||
Unsecured Loan Stock | 7,500 | - | 22,500 | - | 30,000 | 30,000 | ||
Other loan borrowings | - | - | - | - | - | - | ||
Long leasehold obligations | - | - | - | 697 | 697 | 697 | ||
Trade and other payables | 67,211 | 585 | - | - | 67,796 | 67,796 | ||
Total non-derivative financial liabilities | 79,711 | 344,615 | 22,500 | 697 | 447,523 | 444,497 | ||
|
|
|
|
|
|
| ||
Derivative financial liabilities |
|
|
|
|
|
| ||
Forward contracts used for hedging liabilities | - | - | - | - | - | - | ||
| 79,711 | 344,615 | 22,500 | 697 | 447,523 | 444,497 | ||
|
| Contractual cash flows |
|
|
| |||
| Within | Between | Between | After |
| Carrying | ||
| one year | one and | two and | more than |
| amount | ||
| or on | two | five | five |
| liability/ | ||
| demand | years | years | years | Total | (asset) | ||
31 December 2008 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
Non-derivative financial liabilities |
|
|
|
|
|
| ||
Secured bank loans | 341,828 | 14,633 | - | - | 356,461 | 356,461 | ||
Unsecured Loan Stock | - | - | 29,927 | - | 29,927 | 29,927 | ||
Other loan borrowings | 805 | - | - | - | 805 | 805 | ||
Long leasehold obligations | - | - | - | 699 | 699 | 699 | ||
Trade and other payables | 53,759 | 596 | - | - | 54,355 | 54,355 | ||
Total non-derivative financial liabilities | 396,392 | 15,229 | 29,927 | 699 | 442,247 | 442,247 | ||
|
|
|
|
|
|
| ||
Derivative financial liabilities |
|
|
|
|
|
| ||
Forward contracts used for hedging liabilities | - | - | - | - | - | (341) | ||
| 396,392 | 15,229 | 29,927 | 699 | 442,247 | 441,906 | ||
Management of capital
The Group's objectives when managing capital are to safeguard the entity's ability to continue as a going concern and fulfill its corporate objectives.
The Group manages the capital structure and makes adjustments to it in light of changes in economic conditions, the risk characteristics of the underlying assets and its corporate strategy. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
Consistent with others in the property sector the Group monitors capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated as net debt divided by adjusted capital. Net debt is calculated as total debt (as shown in the balance sheet) less cash and cash equivalents. Adjusted capital comprises all components of equity (ie share capital, share premium, minority interest, retained earnings, and revaluation surplus) other than amounts recognised in equity relating to cash flow hedges.
The Group's strategy during 2009, which was unchanged from 2008, has been to maintain the debt-to-adjusted capital ratio in the range of 1.0 to 2.0, in order to reasonably protect shareholder interests and for the Group to be able to access finance at reasonable cost. The debt-to-adjusted capital ratios at 31 December 2009 and at 31 December 2008 were as follows:-
| 31 December 2009 | 31 December 2008 |
| £m | £m |
Total debt at year end | 383 | 390 |
Less cash and cash equivalents at year end | (20) | (32) |
Net debt at year end | 363 | 358 |
|
|
|
Total equity at year end | 176 | 204 |
Plus amounts recognised in equity relating to cash flow hedges | 3 | 2 |
Adjusted capital at year end | 179 | 206 |
|
|
|
Net debt to adjusted capital ratio at year end | 2.0 | 1.7 |
The increase in the debt to adjusted capital ratio during 2009 resulted primarily from the proportionately greater decrease in value of Group property and other assets compared to the increase in net debt.
14. DEFERRED TAXATION
The deferred taxation liabilities/(assets) at 31 December 2009 and at the previous year end arose as follows:-
| 31 December 2009 | ||
| Total £'000 | Provided £'000 | Not provided £'000 |
Accelerated capital allowances | (8,425) | (1,205) | (7,220) |
|
|
|
|
Trading tax losses | (24,587) | (8,579) | (16,008) |
|
|
|
|
Unrelieved capital expenditure and interest |
|
|
|
payments | (23,312) | (5,944) | (17,368) |
Total deferred tax assets | (56,324) | (15,728) | (40,596) |
|
|
|
|
Short term timing differences | 878 | 878 | - |
|
|
|
|
Deferred tax (credit)/liability arising from potential |
|
|
|
tax payable on valuation surpluses | (5,649) | 4,308 | (9,957) |
Total net deferred tax assets | (61,095) | (10,542) | (50,553) |
| 31 December 2008 | ||
| Total £'000 | Provided £'000 | Not provided £'000 |
Accelerated capital allowances | (6,823) | (221) | (6,602) |
|
|
|
|
Trading tax losses | (19,859) | (10,204) | (9,655) |
|
|
|
|
Unrelieved capital expenditure and interest |
|
|
|
payments | (29,622) | (5,477) | (24,145) |
Total deferred tax assets | (56,304) | (15,902) | (40,402) |
|
|
|
|
Short term timing differences | 884 | 884 | - |
|
|
|
|
Deferred tax (credit)/liability arising from potential |
|
|
|
tax payable on valuation surpluses | (3,950) | 4,518 | (8,468) |
Total net deferred tax assets | (59,370) | (10,500) | (48,870) |
Deferred tax assets and liabilities provided
At 31 December 2009, the Group had accelerated capital allowances, trading tax losses and interest payments from current and prior periods amounting to £56,171,000 (2008: £56,793,000) that it expects to be available to reduce future tax liabilities likely to arise in the Group. At 31 December 2009, these exceed brand valuation surpluses and short term timing differences totalling £18,521,000. The excess of £37,650,000 has been recognised at the prevailing tax rate of 28% (2008: 28%) in the net deferred tax asset at the year end of £10,542,000 (2008: £10,500,000).
Deferred tax assets and liabilities not provided
In addition, the Group has accelerated capital allowances, trading tax losses, capital losses and unrelieved capital expenditure totalling £154,792,000 (2008: £149,361,000) that are not expected to be capable of utilisation in the foreseeable future. Also, certain capital losses in the wider MWB Group totalling £25,754,000 (2008: £25,175,000) are restricted in their use and are not expected to be readily realisable. These tax assets totalling £180,546,000 (2008: £174,536,000), recognised at the prevailing tax rate of 28% (2008: 28%), form the deferred tax asset not provided of £50,553,000 disclosed above.
15. MINORITY INTERESTS
The movements in minority interests of the Group during the year ended 31 December 2009 arose as follows:-
|
|
| Add |
|
|
|
| Add | minority |
|
|
|
| minority | share of | Other |
|
| At | share of | valuation | movements | At |
| 1 January | result for | deficit for | during | 31 December |
| 2009 | the year | the year | the year | 2009 |
| £'000 | £'000 | £'000 | £'000 | £'000 |
MWB Business Exchange Plc | 11,314 | 418 | - | (4,890) | 6,842 |
MWB Malmaison Holdings Limited | 54,530 | 965 | (540) | (490) | 54,465 |
Liberty Plc | 10,369 | (1,560) | 300 | (339) | 8,770 |
Others | 1,705 | 48 | - | (117) | 1,636 |
| 77,918 | (129) | (240) | (5,836) | 71,713 |
16. EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY IN PENCE PER SHARE
The Equity attributable to shareholders of MWB Group Holdings in pence per share is calculated by dividing the Equity attributable to shareholders of MWB Group Holdings at each year end by the number of ordinary shares in issue at such date. The relevant figures are as follows:-
|
| 31 December 2009 | 31 December 2008 |
Equity attributable to shareholders of |
|
|
|
MWB Group Holdings per Consolidated |
|
|
|
Statement of Financial Position | £'000 | 104,536 | 125,881 |
|
|
|
|
Number of ordinary shares in issue at year end | '000 | 72,371 | 72,371 |
|
|
|
|
Equity attributable to shareholders of MWB |
|
|
|
Group Holdings in pence per share | Pence | 144p | 174p |
17. RELATED PARTY BALANCES AND TRANSACTIONS
Arrangements with ServCo Limited Partnership
(i) Background
In March 2002, the Company entered into a services agreement (the "Services Agreement") with ServCo Limited Partnership ('ServCo'), an entity controlled by the Executive Directors, which was approved by Independent Shareholders at an extraordinary general meeting of the Company held in May 2002. This agreement governs the relationship between the Company on behalf of the Group and ServCo in relation to the provision of administrative, operational and head office outsourced services by ServCo to the Group.
Under the Services Agreement, the Company on behalf of the Group pays management fees and rental payments at agreed levels but subject to adjustment as agreed between the Company and ServCo (or in default of agreement, by an expert appointed in accordance with the dispute resolution mechanism contained in the Services Agreement) for any increase or decrease in the cost to ServCo of providing services to the Group. These fees represent the salary and head office costs directly incurred by the Group prior to approval of the Services Agreement by Independent Shareholders in May 2002, that are now incurred directly by ServCo and recharged to the Group in accordance with these approved arrangements.
A Share Transfer Agreement relating to the acquisition by ServCo of Marylebone Warwick Balfour Management Limited was approved by Independent Shareholders at the same extraordinary general meeting in May 2002. As a result, certain contractual obligations that existed between Marylebone Warwick Balfour Management Limited (which was previously owned by the Group) and the Group continue to subsist after that share transfer agreement and are charged to the Group, in a similar manner as they did prior to completion of the share transfer agreement.
(ii) Fees paid during year ended 31 December 2009
In accordance with the Services Agreement and Share Transfer Agreement referred to above, the Group paid management fees of £2.4m and rental payments of £0.5m to ServCo during the year ended 31 December 2009 (year ended 31 December 2008: £3.9m). The fees payable to ServCo under the Services Agreement are not remuneration payable to the Directors.
In accordance with the service contracts between the Executive Directors and the Company, annual salaries of the Executive Directors, plus associated national insurance, travel allowance, bonus and pension contributions, in all totalling £1.4m (2008: £1.6m) were paid to ServCo, rather than to the Executive Directors themselves. In addition, the salary of one Senior Executive of the Company (who is also a partner of ServCo) of £0.2m (2008: £0.2m) plus associated national insurance and pension contributions, was paid to ServCo rather than to the Senior Executive concerned. The payment of these salaries and associated costs to ServCo, rather than to the individuals concerned, results in no additional cost being incurred by the Group.
No amounts were outstanding either to or from ServCo at 31 December 2009 or at the previous year end and no amounts were written off in respect of any such balances during either year.
Arrangements with Alternative Hotel Group Limited
The Group has occupied head office premises at 1 West Garden Place, Kendal Street, London W2 for many years. As a result of implementation of the Cash Distribution Programme in 2002 and the sale of Group assets to return cash to shareholders that has been achieved therefrom, surplus space became available at these offices. During the year ended 31 December 2008, the Board assessed the market value of this space once it had become available and licenced it at market value to companies in the AHG Management Services Limited group of companies ("AHG").
Richard Balfour-Lynn, the Chief Executive of MWB, Michael Bibring and the wife of Jagtar Singh, are shareholders in and directors of AHG which has a 50% shareholding in a company which operates a private residential hotel conference business, carried on from rural properties situated outside the M25 and not in city locations. None of these Directors are involved in the day to day management of such business and the business has an independent management team. The Board considers that such holdings do not conflict with the duties of such individuals as Directors of MWB Group Holdings Plc. The Board also considers that such a residential conference business does not compete with either the meeting and conference rooms business of Business Exchange which only operates in city locations and does not offer residential hotel facilities, or the hotel business of Malmaison and Hotel du Vin which operates in city locations and does not focus on offering conference facilities as a core service. The Board also considers that the hotel businesses owned by AHG do not compete with the business of Malmaison and Hotel du Vin, as they have distinct offerings which are targeted at a different consumer base. Malmaison and Hotel du Vin focuses on branded boutique hotels in city locations with an emphasis on a high quality food, beverage and accommodation offering. In contrast AHG owns larger hotels predominantly located in non urban locations while its hotels in urban locations focus on providing conferencing facilities.
During the year ended 31 December 2009, the Group charged £0.3m (2008: £0.3m) to AHG in respect of the licensed office space referred to above. No amounts were outstanding either to or from AHG at 31 December 2009 and no amounts were written off in respect of any such balances during the year.
Cash held on behalf of employees in relation to Placing in January 2010
At 31 December 2009, the Company held £2.3m in its bank account which represented monies forwarded by employees, including Directors, in anticipation of the Placing that took place in January 2010. These monies have not been included in the Group or Company statement of financial position at 31 December 2009, as they belonged fully to the relevant individuals and were deposited with the Company in trust on behalf of the employees solely to simplify the administration of the collection of the relevant employee placing subscriptions. The cash in the bank account was matched by a payable of an equal amount, also not reported in either the Group or Company statement of financial position as reported in these financial statements. At the date of publication of these financial statements, these monies had been passed in full to the issuing house in relation to the Placing which completed on 11 January 2010.
18. POST BALANCE SHEET EVENT
On 11 January 2010, the Company raised £27.5m through the issue of 91,666,667 New Units at 30 pence each. As a result, Units in issue after the Placing at the date of these financial statements amounted to 164,038,149. These monies had been raised in order to provide the Company with a stronger financial base increasing headroom and flexibility in relation to banking covenants and ongoing funding requirements.
The monies raised were applied as follows: the cancellation of £7.5m of Unsecured Loan Stock, transaction fees of £2.9m, termination payments amounting to £1.65m to Andrew Blurton, the former Joint Finance Director, the repayment of a £4.0m intra-group loan from MWB Business Exchange, with the remaining balance of £11.4m being available for working capital and bank loan repayment.
On 12 March 2010, Liberty exchanged contracts for the sale and leaseback of its freehold property, the Tudor building, for £41.5m. Completion of this disposal is subject to shareholder approval and the Circular in relation thereto will be sent to shareholders in April 2010.
19. FINANCIAL STATEMENTS
The financial information set out above does not constitute the Group's statutory accounts for the year ended 31 December 2009 or 2008.
The Group statutory accounts for the financial year 2008 have been reported on by the Group's auditor and delivered to the registrar of companies. The report of the auditors was unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985, but was modified to include an emphasis of matter paragraph which drew attention to note 1 to the financial statements of year ended 31 December 2008, which indicated the existence of a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern.
The financial statements for 2009 will be delivered to the registrar of companies in due course. The auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
PROFORMA STATEMENT OF NET ASSETS (UNAUDITED)
The following unaudited proforma statement of net assets is based on the financial position of the Group at 31 December 2009, adjusted to illustrate the estimated proforma effects of the Placing which completed in January 2010 and the sale and leaseback of the Liberty freehold property for which contracts were exchanged on 15 March 2010, as if these events had taken effect on 31 December 2009.
The unaudited proforma statement of net assets has been prepared for illustrative purposes only and, because of its nature, the pro forma statement addresses a hypothetical situation and, therefore, does not represent the Group's actual financial position or results.
| 31 December 2009 | Adjustments relating to Placing | Proforma 31 December 2009 | Adjustments relating to property disposal | Proforma 31 December 2009 |
| £'000 | £'000 | £'000 | £'000 | £'000 |
Non-current assets |
|
|
|
|
|
Intangible assets and goodwill | 28,794 | - | 28,794 | - | 28,794 |
Operational properties | 499,414 | - | 499,414 | (26,208) | 473,206 |
Operational properties in the course of |
|
|
|
|
|
Construction | 1,929 | - | 1,929 | - | 1,929 |
Plant and equipment | 58,123 | - | 58,123 | (4,042) | 54,081 |
Deferred tax asset | 10,542 | - | 10,542 | - | 10,542 |
| 598,802 | - | 598,802 | (30,250) | 518,552 |
Current assets |
|
|
|
|
|
Inventories | 14,306 | - | 14,306 | - | 14,306 |
Trade and other receivables: |
|
|
|
|
|
Due after more than one year | 2,569 | - | 2,569 | - | 2,569 |
Due within one year | 31,844 | - | 31,844 | - | 31,844 |
Cash and cash equivalents | 19,655 | - | 19,655 | 27,643 | 47,298 |
| 68,374 | - | 68,374 | 27,643 | 96,017 |
Total assets | 667,176 | - | 667,176 | (2,607) | 664,569 |
Current liabilities |
|
|
|
|
|
Loans and borrowings | (11,424) | 7,500 | (3,924) | - | (3,924) |
Derivative financial instruments | (5,526) | - | (5,526) | - | (5,526) |
Trade and other payables | (86,988) | 1,650 | (85,338) | - | (85,338) |
Tax payable | (393) | - | (393) | - | (393) |
| (104,331) | 9,150 | (95,181) | - | (95,181) |
Non-current liabilities |
|
|
|
|
|
Loans and borrowings | (364,580) | 15,450 | (349,130) | 12,542 | (336,588) |
Employee benefits | (2,814) | - | (2,814) | - | (2,814) |
Trade and other payables | (19,202) | - | (19,202) | - | (19,202) |
| (386,596) | 15,450 | (371,146) | 12,542 | (358,604) |
Total liabilities | (490,927) | 24,600 | (466,327) | 12,542 | (453,785) |
Net assets | 176,249 | 24,600 | 200,849 | 9,935 | 210,784 |
| 31 December 2009 | Adjustments relating to Placing | Proforma 31 December 2009 | Adjustments relating to property disposal | Proforma 31 December 2009 |
| £'000 | £'000 | £'000 | £'000 | £'000 |
Shareholders' funds | 104,536 | 24,600 | 129,136 | 6,790 | 135,926 |
Minority interests | 71,713 | - | 71,713 | 3,145 | 74,858 |
Total equity | 176,249 | 24,600 | 200,849 | 9,935 | 210,784 |
|
|
|
|
|
|
Equity Attributable to Shareholders |
|
|
|
|
|
in pence per Unit | 144p |
| 79p |
| 83p |
|
|
|
|
|
|
Units in issue: | 72,371,482 |
| 164,038,149 |
| 164,038,149 |
Notes:
1. The gross proceeds of the Placing referred to above refer to the issue by the Company of 91,666,667 New Units at a price of 30 pence per Unit on 11 January 2010, that raised gross proceeds of £27.5m, and increased the enlarged issued share capital to 164,038,149 Units.
2. Costs of disposal of the Liberty property of £1,000,000 have been deducted from the anticipated sales proceeds.
3. Save for the adjustment for the net proceeds of the Placing as described in note 1 above and the sale and leaseback of the Liberty Tudor Building , no adjustment has been made to reflect any trading or other transactions undertaken by the Group since 31 December 2009.
Proforma impact on MWB's audited net profit for the year ended 31 December 2009
The impact on the audited Group loss after tax for the year ended 31 December 2009 on the basis that this was prepared as if the Placing and sale of the Liberty Tudor Building had taken effect on 1 January 2009 would have been as follows:-
1. Net finance costs would decrease reflect the reduction of debt arising from the net proceeds of the Placing and the disposal of the Liberty Tudor Building; and
2. Rental costs in Liberty would increase by £2.1m and depreciation costs would reduce to reflect the sale and leaseback of the Liberty Tudor Building.
3. The taxation charge would be adjusted in order to reflect the tax effect of the reduction in finance costs and the increase in the rental costs.
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS
The Directors are responsible for preparing the Directors Report and the Group and Parent Company financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of their profit or loss for that period. In preparing each of the Group and Parent Company financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them consistently;
• Make judgments and estimates that are reasonable and prudent;
• For the group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;
• For the Parent Company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the parent company financial statements; and
• Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
We the Directors of MWB Group Holdings Plc confirm that to the best of our knowledge:
·; the financial statements of the Group have been prepared in accordance with IFRSs as adopted by the EU, and for the Company under UK GAAP, in accordance with applicable United Kingdom law and give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
·; the Report of the Directors includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that face the Group.
GROUP BUSINESS CENTRES at 31 December 2009
Contact details for all business centres operated by the Group:-
4/5 star offices | Telephone: | Freephone 0808 100 1800 | Web: | www.mwbex.com |
3 star offices | Telephone: | Freephone 0800 013 0355 | Web: | www.cecoffices.com |
Leased centres | Location | Number of workstations |
43 Temple Row | Birmingham B2 5LS | 275 |
Atrium Court, The Ring | Bracknell RG12 1BW | 464 |
Lower Castle Street | Bristol BS1 3AG | 243 |
Wellington House, East Road | Cambridge CB1 1BH | 172 |
9-10 St. Andrew Square | Edinburgh EH2 2AF | 352 |
Westpoint, 4 Redheughs Rigg, South Gyle | Edinburgh EH12 9DQ | 256 |
Crossweys, 28-30 High Street | Guildford GU1 3EL | 171 |
1 Farnham Road | Guildford GU2 4RG | 299 |
Craneshaw House, 8 Douglas Road | Hounslow TW3 1DA | 165 |
Vantage House, 21-23 Wellington Street | Leeds LS1 4DE | 370 |
1 Whitehall, Whitehall Road | Leeds LS1 4HR | 411 |
Liverpool Street, 55 Old Broad Street | London EC2M 1RX | 370 |
Providian House, 16-18 Monument Street | London EC3R 8AJ | 219 |
107-111 Fleet Street | London EC4A 2AB | 408 |
60 Cannon Street | London EC4N 6JP | 344 |
Winchester House, 259-269 Old Marylebone Road | London NW1 5RA | 375 |
Alpha House, 100 Borough High Street | London SE1 1LB | 283 |
6 Hays Lane | London SE1 2QG | 255 |
10 Greycoat Place | London SW1P 1SB | 543 |
Lasenby House, 32 Kingly Street | London W1B 5QQ | 256 |
Liberty House, 222 Regent Street | London W1B 5TR | 297 |
77 Oxford Street | London W1D 2ES | 290 |
18 Soho Square | London W1D 3QL | 278 |
130 Shaftesbury Avenue | London W1D 5EU | 721 |
Cobalt Building, 19-20 Noel Street | London W1F 8GW | 141 |
33 Cavendish Square | London W1G 0PW | 516 |
Marble Arch Tower, 55 Bryanston Street | London W1H 7AA | 256 |
1 Berkeley Street | London W1J 8DJ | 357 |
85 Tottenham Court Road | London W1T 4DU | 360 |
83 Baker Street | London W1U 6LA | 347 |
26-28 Hammersmith Grove | London W6 7BA | 499 |
1a Hammersmith Broadway | London W6 9DL | 311 |
16-19 Southampton Place | London WC1A 2AJ | 200 |
4/4a Bloomsbury Square | London WC1A 2RP | 160 |
344-354 Gray's Inn Road | London WC1X 8BP | 313 |
88 Kingsway | London WC2B 6AA | 330 |
Amadeus House, Floral Street | London WC2E 9DP | 264 |
25 Floral Street | London WC2E 9DS | 313 |
17-19 Bedford Street | London WC2E 9HP | 205 |
53-59 Chandos Place | London WC2N 4HS | 211 |
Golden Cross House, 8 Duncannon Street | London WC2N 4JF | 500 |
Siena Court, The Broadway | Maidenhead SL6 1NJ | 175 |
Trident One, Styal Road | Manchester M22 5XB | 328 |
Exchange House, 494 Midsummer Boulevard | Milton Keynes MK9 2EA | 260 |
15 Wheeler Gate | Nottingham NG1 2NA | 117 |
John Eccles House, Robert Robinson Avenue, Oxford Science Park | Oxford OX4 4GP | 124 |
Atlantic House, Imperial Way | Reading RG2 0TD | 363 |
Parkshot House, 5 Kew Road | Richmond TW9 2PR | 442 |
Centurion House, London Road | Staines TW18 4AX | 183 |
Regal House, 70 London Road | Twickenham TW1 3QS | 135 |
50 leased centres at 31 December 2009 |
| 15,227 |
|
|
|
Operating and Management Agreement centres | Location | Number of Workstations |
Level 33, 25 Canada Square, Canary Wharf | London E14 5LB | 270 |
27 Austin Friars | London EC2N 2QP | 104 |
City Tower, 40 Basinghall Street | London EC2V 5DE | 220 |
133 Houndsditch | London EC3A 7AH | 327 |
St. Clement's House, 27/28 Clement's Lane | London EC4N 7AE | 416 |
Westgate House, Westgate Road | London W5 1YY | 195 |
Pall Mall Court, King Street | Manchester M2 4PD | 241 |
Elizabeth House, Duke Street | Woking GU21 5AM | 62 |
8 Operating and Management Agreement centres at 31 December 2009 |
| 1,835 |
Management contract centres | Location | Number of Workstations |
Tower Point 44, North Road | Brighton BN1 1YR | 350 |
Europa House, Barcroft Street | Bury BL9 5BT | 266 |
Temple Court, Cathedral Road | Cardiff CF11 9HA | 164 |
Castle Court, Cathedral Road | Cardiff CF11 9LJ | 103 |
Copthall Bridge House, Station Bridge | Harrogate HG1 1SP | 177 |
Silk House Court, Tithebarn Street | Liverpool L2 2LZ | 114 |
1 Sekforde Street, Clerkenwell | London EC1R 0BE | 213 |
London Wall City Business Centre 2 London Wall Buildings | London EC2M 5UU | 156 |
2 Finch Lane | London EC3V 3NA | 71 |
52 Grosvenor Gardens | London SW1W 0AU | 234 |
118 Piccadilly, Mayfair | London W1J 7NW | 102 |
Cuthbert House, City Road, All Saints | Newcastle-upon-Tyne NE1 2ET | 192 |
Quorum Business Park, Benton Lane | Newcastle-upon-Tyne NE12 8BX | 390 |
Watson Chambers, Market Place | Sheffield S1 2GH | 156 |
Provincial House, Solly Lane | Sheffield S1 4BB | 116 |
|
|
|
15 management contract centres at 31 December 2009 |
|
2,804 |
|
|
|
Total |
|
|
73 centres at 31 December 2009 |
| 19,866 |
MALMAISON AND HOTEL DU VIN HOTELS at 31 December 2009
Malmaison |
City | Number of bedrooms | Telephone number |
Malmaison, 49-53 Queens Road | Aberdeen AB15 4YP | 80 | 01224 327 370 |
Malmaison, 34-38 Victoria Street | Belfast BT1 3GH | 64 | 028 9022 0200 |
Malmaison, Mailbox, |
|
|
|
1 Wharfside Street | Birmingham B1 1RD | 189 | 0121 246 5000 |
Malmaison, 1 Tower Place, Leith | Edinburgh EH6 7DZ | 100 | 0131 468 5000 |
Malmaison, 278 West George Street | Glasgow G2 4LL | 72 | 0141 572 1000 |
Malmaison, 1 Swinegate | Leeds LS1 4AG | 100 | 0113 398 1000 |
Malmaison, William Jessop Way, |
|
|
|
Princes Dock | Liverpool L3 1QZ | 130 | 0151 229 5000 |
Malmaison, Charterhouse Square | London EC1M 6AH | 97 | 020 7012 3700 |
Malmaison, Piccadilly | Manchester M1 3AQ | 167 | 0161 278 1000 |
Malmaison, Quayside | Newcastle-upon-Tyne NE1 3DX | 122 | 0191 245 5000 |
Malmaison, 3 Oxford Castle | Oxford OX1 1AY | 94 | 01865 268 400 |
Malmaison, 18-20 Station Road | Reading, Berkshire RG1 1JX | 75 | 0118 956 2300 |
12 operating Malmaison |
| 1,290 |
|
|
|
|
|
Hotel du Vin |
|
|
|
Hotel du Vin, Church Street | Birmingham B3 2NR | 66 | 0121 200 0600 |
Hotel du Vin, Ship Street | Brighton, Sussex BN1 1AD | 49 | 01273 718 588 |
Hotel du Vin, The Sugar House, |
|
|
|
Narrow Lewins | Bristol BS1 2NU | 40 | 0117 925 5577 |
Hotel du Vin, 15-19 Trumpington |
|
|
|
Street | Cambridge CB2 1QA | 41 | 01223 227 330 |
Hotel du Vin, Parabola Road | Cheltenham GL50 3AQ | 49 | 01242 588 450 |
Hotel du Vin, 2 Forrest Road | Edinburgh EH1 1EZ | 47 | 0131 247 4900 |
Hotel du Vin, One Devonshire |
|
|
|
Gardens | Glasgow G12 0UX | 49 | 0141 339 2001 |
Hotel du Vin, Prospect Place | Harrogate HG1 1LB | 48 | 01423 856 800 |
Hotel du Vin, New Street | Henley-on-Thames, Oxon RG9 2BP | 43 | 01491 848 400 |
Hotel du Vin, City Road | Newcastle-upon-Tyne NE1 2BE | 42 | 0191 245 5000 |
Hotel du Vin, Thames Street | Poole, Dorset BH15 1JN | 38 | 01202 785 570 |
Hotel du Vin, Crescent Road | Tunbridge Wells, Kent TN1 2LY | 34 | 01892 526 455 |
Hotel du Vin, Southgate Street | Winchester, Hampshire SO23 9EF | 24 | 01962 841 414 |
Hotel du Vin, 89 The Mount | York YO24 1AX | 44 | 01904 557 350 |
14 operating Hotel du Vin |
| 614 |
|
26 operating hotels |
| 1,904 |
|
|
|
|
|
Current developments at 30 June 2009 |
City | Number of bedrooms |
|
Hotel du Vin, 40 The Scores | St. Andrews KY16 9AS | 21 |
|
Hotel du Vin, Stour Street | Canterbury CT1 2ND | 44 |
|
2 current developments |
| 65 |
|