Last checked at 27 Aug 2009 07:00
FOR IMMEDIATE RELEASE
27 August 2009
MWB GROUP HOLDINGS PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2009
HIGHLIGHTS
MWB GROUP HOLDINGS PLC
Group properties valued at £552m -2% reduction from December 2008 book values.
Group revenue virtually unchanged at £135.7m and EBITDA rose to £16.6m against £15.1m for same period a year ago.
Pre-tax losses reduced from £5.4m to £5.1m and loss per share improved 8% to 9.0p.
Equity shareholders' funds were 150p per share against 174p per share at December 2008 year end.
Liberty bucks retail trend and delivers exceptional performance; revenue growth of 17% to £26m and positive operating EBITDA for first time in ten years.
Malmaison and Hotel du Vin operating in tougher trading conditions; revenue unchanged at £52m but EBITDA down slightly to £10.4m.
MWB Business Exchange in more competitive business environment- revenue eased 4% to £57.4m. Consolidating position as London's leading provider of serviced offices with acquisition of 16 profitable former MLS centres.
"In the circumstances, all MWB Group companies have produced extremely creditable results in a difficult business environment. We believe we have the people, the products and services to ride out the current adverse climate and we are well placed to take full advantage of the upturn when it finally appears. To that end I have total confidence in the underlying strength of our businesses but remain cautious in my short term outlook."
Eric Sanderson
Chairman
MALMAISON AND HOTEL DU VIN
Revenue maintained at £52m for six months to 30 June 2009.
Success in developing new business sectors as well as growing market share in established sectors.
Higher marketing spend resulting in better than anticipated occupancy levels of 77% across group.
Average room rates decline 12% to £102 due to economic climate.
Focused marketing towards leisure market both domestically and internationally - tangible benefits from weak Pound and strong Euro.
Tight cost controls and successful initiatives helped ensure food and beverage margins were maintained at 35%.
EBITDA still strong at £10.4m, though down from all time high of £12.2m in six months to June 2008.
"We have the product to maintain our traditional market share as well as penetrating new markets while keeping a tight control on costs. I am confident that we are in the right locations with the right product and service levels to continue to perform well in this challenging trading environment."
Robert B. Cook
Chief Executive
Malmaison and Hotel du Vin Group
MWB BUSINESS EXCHANGE PLC
Revenue shows only 4% fall to £57.4m over comparable six months to 30 June 2008, despite adverse economic conditions.
Occupancy still high at 85% at 30 June 2009, with a slight fall from the all-time peak of 92% at 30 June 2008.
Forward contracted income already accounts for approximately 85% of remaining projected revenue to December 2009.
Significant expansion in capacity by acquisition in May/June 2009 of 16 former MLS Group centres, of which 12 are in London, will be reflected in second half performance.
Two additional new centres in London and Harrogate opened in the six months to 30 June 2009.
Core Revenue Per Available Workstation (REVPAW) down 16% to £8,055 at 30 June 2009 from £9,630 at 30 June 2008.
Core Revenue Per Occupied Workstation (REVPOW) down 10% to £9,490 at 30 June 2009 compared to £10,500 at 30 June 2008.
EBITDA strong at £8.6m though 24% lower than six months to 30 June 2008, reflecting reduced market rate.
Average monthly workstation rate only 6% lower than twelve months ago: £590 at 30 June 2009 against £630 at 30 June 2008.
"Trading for the first six months of 2009 has been ahead of our expectations, given the tough economic climate. We view the future with cautious optimism on the basis we have continued to trade strongly and our cash flow is robust."
John Spencer
Chief Executive
MWB Business Exchange Plc
LIBERTY PLC
Revenue grew by 17% to £25.6m against £21.8m, resulting in positive operating EBITDA of £73,000 against negative £2.7m for same period last year. Greater efficiencies achieved within business - 10% reduction in overheads.
Impact of successful Liberty Renaissance launch continues to be felt in flagship store:
Revenue 12% higher at £18.6m
Positive EBITDA of £1.2m
Healthy sales growth recorded in most product categories.
Fabrics continued strong growth:
28% revenue increase to £9.7m against £7.6m for June 2008 period
Positive EBITDA of £2.2m
All growth achieved outside of Japan and reflects upsurge in worldwide interest in Liberty fabrics.
Liberty of London
Improved product range
£0.7m cash premium for Sloane Street shop
£0.5m of annual cost saving as retailing refocused into flagship store.
During second half of year:
Liberty partnering Hermès with in-store "pop-up shop"
Limited edition Liberty-Hermès ties and scarves released
Expansion of Beauty offer - launch of 12 new exclusive lines
Christmas theme to be created by British Fashion Award winner Luella.
World class management team assembled since 2007 turning Liberty into both authoritative retail destination and one of the fastest growing UK brands.
Strategic review underway to identify ways of expanding Liberty.
"We have already demonstrated our ability to deliver solid progress in difficult market conditions and I have no doubt we have the products, the people and infrastructure in place to take full advantage of any upswing in retail spending."
Geoffroy de La Bourdonnaye
Chief Executive
Liberty Plc
CHAIRMAN'S STATEMENT
The quality of the three businesses comprising the Group, MWB Business Exchange, Liberty and Malmaison and Hotel du Vin, is reflected in our results for the six months to 30 June 2009. Not only can this be seen from the positive operating results achieved but also in terms of the underlying property values within those companies. The fall in values since the December 2008 year-end has been a modest 2% which, I believe, underlines the strength of those operational businesses, especially our hotel operations.
Group revenue for the period was virtually unchanged at £135.7m against £134.1m, and EBITDA was £16.6m compared to £15.1m for the six months to 30 June 2008. Pre-tax losses were at a similar level to last year at £5.1m against £5.4m in the six months to June 2008, while the loss per share improved 8% to 9.0p from 9.8p due to the share buy-backs during the year.
At the end of June 2009, the Group's properties were valued at £552.3m compared to their book value at that date of £562.6m. This confirmed a dramatic slowdown in rate of value diminution, in part reflecting the strong performance of our hotels. In the previous six month period our property values had declined by £42.0m and by £37.0m in the first half of 2008. As a result, and after net debt of £366m, equity shareholders' funds at 30 June 2009, were £108.8m or 150p per share, against £125.9m and 174p per share at 31 December 2008.
Turning to the individual businesses, the period's success story has undoubtedly been Liberty. This iconic British brand and retail emporium has bucked the broad retail trend and delivered exceptional results for the half year with 17% revenue growth to more than £25m, and for the first time in ten years, it has produced positive operating EBITDA.
At the heart of this uplift has been the highly successful Liberty Renaissance launch in February 2009. The revitalised flagship store has attracted increasing numbers of customers and strong media attention. We reported at the time of our 2008 annual results in April this year that the impact of this Renaissance was a very positive sales and margin increase at the store. This improvement continued through the remainder of the first half resulting in the flagship store revenues recording a 12% increase over the comparative 2008 period.
Not only did the flagship store deliver excellent results but also Liberty's fabrics division has continued its strong growth with a further 28% uplift in revenues over the period, producing £2.2m of EBITDA, a 27% growth. This growth reflects the upsurge in interest in Liberty fabrics - both new and old - and the company's designs can now be seen in a wide range of products and clothing.
As we indicated in our December 2008 results, trading at our Liberty of London leasehold shop on Sloane Street had been slower than expected. In June 2009, an unsolicited offer resulted in a £0.7m cash premium being received by Liberty for this lease. By refocusing Liberty of London's retail operations back into the flagship store, there will be future annual cost savings of approximately £0.5m which will result in Liberty of London achieving profitability more quickly now that it operates from a much lower cost base.
Overall, prospects look promising for Liberty as the company moves into its stronger second half and we anticipate a positive outcome for the year, although this is dependent on no further worsening of the economic climate. We do believe we have reached a turning point for Liberty after a number of false dawns. To that end the Liberty Board has appointed advisers to examine strategic ways in which Liberty can grow and develop both at home and internationally.
We anticipated last Autumn that our highly successful hotels business, Malmaison and Hotel du Vin, would encounter much more challenging trading conditions during the first half of 2009; and so it has proved to be. However the Malmaison management team had already implemented a cost savings programme and over the past six months has continued to scrutinise outgoings rigorously without sacrificing service levels.
Despite the adverse economic climate, combined revenue from both Malmaison and Hotel du Vin was virtually unchanged at £52.5m for the first six months against £52.0m for the comparative period a year ago, although the group operated four more hotels at the end of June 2009 than it had a year earlier. Occupancy was down three percentage points for both Malmaison and HdV at 76% and 78% respectively while average room rates fell 12% and 11% respectively. As a result, operating EBITDA was down 15% at £10.4m from £12.2m for the same period last year.
While the business suffered from a slowdown in the corporate market there has been a marked increase over the period in leisure travel bookings from within the UK and Europe, particularly for Malmaison. This shift partly reflects the group's focusing of its marketing efforts towards the leisure travel sector as the weak pound has deterred some people from European travel, while at the same time the strong Euro has made the UK an attractive and relatively inexpensive destination for Europeans.
We have said for some time that 2009 would be a year of consolidation following the past three years of fairly rapid expansion. As a result no new hotels were opened during the period while we focused our efforts on developing the four new properties which were launched in the second half of 2008. Nevertheless, in March 2009, we were successful in securing planning consent for a new HdV in Canterbury and negotiations over the acquisition of a proposed hotel in Chester are nearing completion. At the same time, ways of developing the Malmaison and HdV brands both here and internationally are being continually examined.
While the second half of the year for Malmaison and HdV has started well, trading conditions are likely to remain challenging, although many of the cost-saving measures implemented a year ago are continuing to impact. The re-focused marketing and sales initiatives launched over the past six months, together with high service levels and strong brand recognition, enables the management team to face the challenging climate with confidence.
MWB Business Exchange, our AIM-quoted serviced office business, has also felt the impact of the economic climate over the first half of the year. The management team here foresaw the changing economic climate and took the necessary steps to mitigate the impact as much as possible. Changes in demand characteristics, from larger corporates to start-ups and SMEs, have led to Business Exchange developing a range of value driven services to further differentiate it from its competitors.
However a more competitive serviced office environment led, inevitably, to a downward pressure on rates. As a result, revenue for the six months to 30 June 2009 eased 4% to £57.4m, while EBITDA reduced by 24% to £8.6m and pre-tax profits were £5.7m against £8.8m last year. During the period an interim dividend of 15p per share was paid to Business Exchange shareholders, the majority of which was received by MWB Group.
Over the past two years Business Exchange's strategy has been to focus its expansion within the Greater London market and major provincial centres. As a result the company has become London's dominant serviced office provider following its acquisition of 16 profitable centres from the administrator and former landlords of the MLS Group, taking Business Exchange's total centres in the capital to 45. At the period end the company had a total of 73 centres, covering 1.75m sq ft and providing approximately 20,000 workstations.
Also the company reached agreement for an 11 year Operating and Management Agreement on 32,000 sq ft of space in a prestigious City office building close to Liverpool Street Station. This will provide a further 350 workstations and seven meeting rooms when it opens in September 2009 but will involve no capital expenditure by the group or commitment to landlords.
It is unlikely there will be any significant improvement in market conditions for Business Exchange over the short term but I am confident that, at Business Exchange, we have the management team, infrastructure and product range to compete successfully in the current market while being capable of taking full advantage of the upturn when it arrives.
In the circumstances, all the MWB operating businesses have produced extremely creditable results in a difficult business environment. The covenants included in all our financing facilities at 30 June 2009 were complied with. We are nevertheless aware that, although we consider this to be unlikely, the gearing covenant in respect only of the Group's £30m Unsecured Loan Stock which has an historically lower covenant than all our other facilities, could be affected if there are continued material reductions in property values or trading conditions for the Group are significantly adverse. The Board recognises that in the current adverse market conditions it is difficult to predict future property values with previous levels of accuracy, and we have therefore commented on this in note 1 to our financial statements. The Board is also exploring various options open to the Company with the aim of strengthening the Group's financial structure and will update shareholders at the appropriate time.
In the meantime we believe we have the people, the products and services to ride out the current adverse climate and that we are well placed to take full advantage of the upturn when it finally appears. To that end I have total confidence in the underlying strength of our businesses but remain cautious in my short-term outlook.
Eric Sanderson
Chairman
27 August 2009
MALMAISON AND HOTEL DU VIN OPERATING REVIEW
We said at the time of our results announcement for the year to December 2008, that 2009 was proving to be a challenging business environment. This has continued to be the case during the second and third quarters although there has been some evidence of improved volumes both in room bookings and food and beverage.
Over the six months to 30 June 2009 we have maintained our programme of consolidation that we referred to in the annual statement. At the same time we have been focused on costs and ensuring that all outgoings are closely scrutinised to see whether further savings are achievable. However our strict cost controls have not sacrificed the service levels which our customers have come to expect from our 26 strong Malmaison and Hotel du Vin group.
The impact of the tougher market conditions meant that the first quarter was soft, while the second quarter showed signs of improvement, albeit intermittently. The broad corporate travel market has been slow over the first half of 2009 and, therefore, we have re-focused much of our marketing towards the leisure travel sector both domestically and internationally. The weaker Pound - particularly against the Euro - has had some tangible benefits for both Malmaison and Hotel du Vin during the period.
We have seen a greater level of leisure travel bookings from within the UK and Europe, particularly for Malmaison, as people have been deterred from European travel because of the strong Euro, while the UK has become an attractive and relatively cheap destination for Europeans. To that end we have invested in greater marketing spend aimed at capturing more of the in-bound European leisure and business traveller. We anticipate the results of this marketing will be seen by the beginning of September.
We have also had considerable success in developing business in new sectors as well as growing market share in some of our more established areas. Over the period we have been pleased to attract Government and Government-related bookings for the first time as well as capturing more of the established sport, especially football, and the wider music industry market.
We have spent 30% more on sales and marketing this period, but the result is a better than anticipated occupancy level. Across the group occupancy was 77% for the period, only three percentage points lower than at the year-end. However the real impact of the current adverse economic climate has been felt at the room rates level which is approximately 12% lower than last year at £102 compared to £116 for 2008.
I believe we have adapted well to current market conditions and it is a reflection of our ability to expand our customer base that demonstrates the underlying strength of our business as well as our brands. There have been a number of successful initiatives that have attracted new customers as well as reinforcing brand loyalty within our established client base.
One initiative that has generated an additional 1,200 room nights a month has been our well received Sunday night promotion. Here we have offered customers a room on Sunday nights for only £10 providing they spend at least £75 in the restaurant. Also we have been successful in attracting new restaurant customers by offering customers a meal for £29 including a bottle of wine. This promotion has generated approximately 100,000 additional covers during the six months ended 30 June 2009. Together with extremely tight cost controls, these promotions have helped maintain margins on the Group's food and beverage at 35% over the period.
In the early Summer we benefited from the good weather, particularly in June, where we were able to offer al fresco dining at 20 of our hotels. Also what has proven beneficial is that we have seen an upsurge in bookings, and consequent increase in food and beverage revenue, at those of our hotels which benefit from special social and sporting events such as Cheltenham and Henley.
Similarly we have experienced stronger bookings at those of our hotels which provide spa facilities as a number of our customers have been spending their money on shorter, higher quality breaks within the UK rather than travelling abroad.
As confirmed in our December 2008 annual statement, there have been no new hotel openings during the first six months of 2009 as we look to consolidate our current position and continue to develop the new properties we launched last year. We continue to operate our St Andrews hotel in its original format and will convert it to a Hotel du Vin when the time is right. In March 2009 we secured planning permission for a new HdV in Canterbury while in Chester we are into final negotiations over the acquisition of a site for a proposed new hotel there.
Although market conditions are far from conducive to support further major expansion of the business, we continually examine ways of developing the Malmaison and HdV brands both here in the UK and elsewhere and the situation is kept under review.
The second half of the year has started quite strongly but levels of bookings can be volatile. Traditionally the first two months of the third quarter are relatively quiet for us, particularly in the parts of our business that are orientated towards the corporate market, but our views on the year as a whole remain positive.
I am pleased to report that indications for the second half are good but there is a cost attached to maintaining occupancy levels in the present market as a result of higher third party transaction costs and commissions. We continue to invest heavily in marketing and sales while the competitive nature of the current business environment means that our room rates are under constant pressure. Importantly we are maintaining brand values by ensuring that we continue to offer the standards of quality and service our customers have come to expect as well as surprising new clients on the quality of our offer.
There is little doubt that trading conditions in the second half of the year will continue to be challenging, but I believe we have the product to maintain our traditional market share as well as penetrating new markets while keeping a tight control on costs. To that end, although I view the coming months with caution, I am confident that we are in the right locations with the right product and service levels to continue to perform well in this challenging trading environment.
Robert B. Cook
Chief Executive
Malmaison and Hotel du Vin Group
27 August 2009
MALMAISON AND HOTEL DU VIN - KEY FINANCIAL HIGHLIGHTS
The key performance indicators for the business, together with its trading and balance sheet performance in recent periods, are summarised below:-
| Six months ended 30 June 2009 | Six months ended 30 June 2008 | Year ended 31 December 2008 | ||
| Malmaison | ||||
| Total revenue | £'000 | 28,830 | 30,657 | 62,322 |
| Average occupancy for period | % | 76 | 79 | 79 |
| Average room rate for period | £ | 100 | 114 | 112 |
| Operating EBITDA | £'000 | 6,282 | 7,984 | 16,526 |
| Number of operating hotels at period end | 12 | 11 | 12 | |
| Hotel du Vin | ||||
| Total revenue | £'000 | 23,669 | 21,363 | 45,314 |
| Average occupancy for period | % | 78 | 81 | 81 |
| Average room rate for period | £ | 109 | 122 | 120 |
| Operating EBITDA | £'000 | 4,139 | 4,249 | 9,927 |
| Number of operating hotels at period end | 14 | 11 | 14 | |
| Combined Malmaison and Hotel du Vin | ||||
| Total revenue | £'000 | 52,499 | 52,020 | 107,636 |
| Operating EBITDA | £'000 | 10,421 | 12,233 | 26,453 |
| 30 June 2009 | 30 June 2008 | 31 December 2008 | ||
| Balance sheet composition | ||||
| Property, plant and equipment | £'000 | 480,615 | 509,915 | 493,311 |
| Debt | £'000 | (279,612) | (261,272) | (282,322) |
| Adjusted equity attributable to | ||||
| shareholders of MWB Group in | ||||
| Malmaison and Hotel du Vin | £'000 | 137,152 | 182,990 | 147,703 |
| Adjusted equity attributable to | ||||
| shareholders of MWB Group in | ||||
| Malmaison and Hotel du Vin, | ||||
| in pence per MWB Group share | Pence | 190p | 246p | 204p |
MWB BUSINESS EXCHANGE PLC OPERATING REVIEW
Trading for the first six months of 2009 has been ahead of our expectations, given the tough economic climate. Occupancy remained buoyant at 85%, while the average monthly workstation rate continued to be strong at £590. Revenue per occupied workstation stood at a healthy £9,490 per annum and as a result revenue for the six months was £57.4m.
EBITDA for the period was £8.6m and pre-tax profit for the first half was £5.7m. These figures are lower than the comparable figures for last year, but still very encouraging in light of market conditions. Forward contracted income already accounts for approximately 85% of remaining projections to December 2009. This figure increases to over 90% when including a conservative estimate for anticipated renewals. Our differentiated strategy and emphasis on service excellence continue to have a positive effect on renewal rates, with over 70% of clients renewing at least once.
Following the collapse of one of our principal competitors, the major highlight of the period was the acquisition during the second quarter of 16 of the most profitable and desirable centres of MLS Group PLC. The acquisition was a significant milestone for us. Not only did it increase our network of centres to 73, but it also reinforced our position as London's dominant provider of serviced offices. We now operate 45 centres in Greater London.
As a result of this expansion, Business Exchange's workstations have risen to nearly 20,000, an uplift of over 25%, increasing our portfolio of serviced offices to approximately 1.75m sq ft of space. Of the total 73 centres, 52 are leased, seven are Operating and Management Agreement contracts and the remaining 14 are held under management contracts.
Importantly, the acquisition of the MLS centres has enabled us rapidly to expand our City Executive Centres three-star brand, which targets small start-up businesses looking for a low-cost entry into the convenient flexible office market. We can also present a wider product range to suit the diverse needs of our prospects and clients.
In addition to the MLS deal, we reached agreement for an 11 year Operating and Management Agreement on 32,000 sq ft of space close to Liverpool Street station at 133 Houndsditch EC3. The landlord, Henderson Global Investors, is investing over £2.9m in a refurbishment programme that, on completion, will provide a further 350 workstations and seven meeting rooms. The centre is expected to open in October.
We recognise that the business environment has been difficult for many of our clients and we have focused on ensuring they receive the best possible support from our service teams - enabling them to concentrate solely on their core business activities.
There is little doubt that the more challenging business environment is likely to continue for the rest of 2009. To counter some of the impact of tougher trading conditions we have maintained a strong grip on costs and a number of revenue generating and cost saving initiatives have been implemented over the past six months. As a consequence, our balance sheet remains strong with net assets of £23.2m, cash of £2.9m, no debt and undrawn facilities of £8.0m.
We view the future with cautious optimism on the basis we have continued to trade strongly and our cash flow is robust. We have the management team, infrastructure and product range to compete successfully in the current market and, at the same time, take full advantage of any upturn when it arrives.
John Spencer
Chief Executive
MWB Business Exchange Plc
27 August 2009
MWB BUSINESS EXCHANGE PLC - KEY FINANCIAL HIGHLIGHTS
The key performance indicators for this business and the trading performance and balance sheets in recent periods, are summarised below:-
| Six months ended 30 June 2009 | Six months ended 30 June 2008 | Year ended 31 December 2008 | ||
| Operating statistics | ||||
| Total revenue | £'000 | 57,384 | 59,713 | 118,544 |
| Occupancy at period end* | % | 85 | 92 | 90 |
| Annualised revenue per available | ||||
| workstation ("REVPAW") | ||||
| at period end* | £ | 8,055 | 9,630 | 8,700 |
| Annualised revenue per occupied | ||||
| workstation ("REVPOW") | ||||
| at period end* | £ | 9,490 | 10,500 | 9,650 |
| EBITDA | £'000 | 8,596 | 11,273 | 18,088 |
| Leased centres at period end | Number | 52 | 39 | 38 |
| Operating and Management Agreement | ||||
| centres ("OMAs") at period end | Number | 7 | 4 | 4 |
| Management contract centres at | ||||
| period end | Number | 14 | 13 | 13 |
| Financial performance | ||||
| Profit before tax | £'000 | 5,658 | 8,800 | 14,003 |
| 30 June 2009 | 30 June 2008 | 31 December 2008 | ||
| Balance sheet composition | ||||
| Property, plant and equipment | £'000 | 41,282 | 41,913 | 41,535 |
| Net cash | £'000 | 2,959 | 5,838 | 16,404 |
| Adjusted equity attributable to | ||||
| shareholders of MWB Group in | ||||
| MWB Business Exchange Plc | £'000 | 25,242 | 34,619 | 24,415 |
| Adjusted equity attributable to | ||||
| shareholders of MWB Group in | ||||
| MWB Business Exchange Plc | ||||
| in pence per MWB Group share | Pence | 35p | 47p | 33p |
\* These figures reflect MWB Business Exchange's core 4/5 star centres and exclude OMAs, managed centres and centres recently acquired from MLS Group.
LIBERTY PLC OPERATING REVIEW
While much has been written about the state of the UK economy and its impact on the retail sector, I am pleased to report that Liberty, Britain's iconic luxury brand, has recorded its best first half for many years. Even more pleasing is the double-digit sales growth we are reporting across the business for the six months to 30 June 2009 and the fact we have recorded positive operating EBITDA, for the first time in the last ten years.
There is little doubt our efforts to raise Liberty's profile as an increasingly global luxury brand are beginning to pay dividends, not only in direct sales but also in reputation as some of the world's leading brands, such as Apple, MAC Cosmetics and Hermès have all approached Liberty for collaborations.
Group revenue grew by 17% to £25.6m during the first half compared to £21.8m over the same period a year ago. As a result operating EBITDA was a positive £73,000 against a negative £2.63m for the six months to 30 June 2008, a substantial improvement over the last few years' performance.
But the real story of the first half has been the highly successful Liberty Renaissance launch in February 2009. Liberty's "new look" flagship store and greatly improved offer was unveiled by "Slumdog Millionaire" actress Freida Pinto. With the addition of new brands such as Balmain, Marni and Fendi in ladies ready-to-wear, Paul Morelli and Stephen Dwek in jewellery, Givenchy in handbags and Burberry Prorsum in men's ready-to-wear, Liberty has recaptured its authority in fashion.
The sales upsurge following the Renaissance has resulted in revenue at the flagship store for this six months being 12% higher than 2008 levels. Virtually all product categories recorded healthy sales growth following the Renaissance launch, but in particular, fashion accessories such as scarves, jewellery and gift items, ladies' and men's ready-to-wear, fabrics and furniture were all well received by customers.
Liberty's sales growth has been driven by the domestic market although we continue to benefit from the increase in overseas shoppers, especially those from Europe who are discovering the relative cheapness of the UK in comparison to Euro denominated countries.
Our fabrics division has continued its strong growth with a 28% revenue increase over the period to £9.75m against £7.64m in the first six months of 2008, and produced EBITDA 27% higher at £2.2m. All of this growth has been achieved outside of Japan and reflects the upsurge in interest in Liberty fabrics - both new and old. Apart from some of our collaborations, both with fashion houses and individual artists and designers such as Grayson Perry, Liberty fabrics are being incorporated into a wide range of traditional and other products and clothing.
We continue to make progress with our transactional website which is benefiting from the brand's increasingly higher profile. As the website was only launched in July 2008 there are no meaningful comparatives to prior periods. We will be able to judge performance better, once we have completed six quarters of activity and have a clearer idea of the product range that is most appealing to our international customer base. However, we are pleased with the progress that this part of our business has already made to date.
Liberty of London, our in-house designed luxury brand business, producing leather goods, accessories and scarves, has continued to improve both its product range and distribution. Today, more than 80 stores around the world stock Liberty of London products and there was a slight increase in revenue at £1.4m over the period compared to the 2008 first half.
We announced in late June 2009 that we had surrendered the lease on the Liberty of London Sloane Street shop following an unsolicited offer from a European fashion brand. Liberty received a £0.7m cash premium for the lease and we estimate there will be future annual cost savings of approximately £0.5m by refocusing Liberty of London's retail operation back into the flagship store. As a result, Liberty of London will have greater ability to be profitable as it will operate from a much lower cost base.
While the business has had a strong first half, we are, nevertheless, adopting a cautious approach to the remainder of the year. We believe trading conditions continue to be tough, as the future direction of the economy, both in the UK and abroad, remains uncertain. However, over the past 12 months Liberty's senior management team has worked hard at generating greater efficiencies within the business and as a result there has been an overall reduction of more than 10% in overheads. This has been achieved in some of the back office areas, such as payroll and support services, but at no cost to the important customer service where we continue to see great improvements.
Although recognising the future economic environment is unpredictable we remain committed to ensuring that Liberty generally and the flagship store in particular is one of London's most exciting and innovative shopping experiences. We have developed a number of initiatives that will be launched over the next two months.
As one of the world's leading scarf authorities, Liberty is partnering Hermès on an historical collaboration. From September there will be a Hermès "pop-up" shop within the flagship store that focuses on this luxury brand's traditional accessories, such as scarves and ties, but with a Liberty twist. To mark the collaboration, Hermès has created an exclusive limited edition range of scarves and ties using Liberty's renowned Tana Lawn cottons. The collection will include two different size scarves in six different micro floral prints and a new range of Hermès super slim ties.
The second half of the year also sees the renaissance and expansion of Liberty's Beauty offering with the launch of 12 new exclusive beauty and fragrance lines such as Le Métier de Beauté, Revive, Byredo and Francis Kurkdjian.
With Christmas looming on the horizon we have invited British Fashion Award winner Luella to create this year's festive theme. The flagship store will be Christmas themed from mid-October onwards. This promises to be an exciting backdrop to what we anticipate will be a very busy time for Liberty and there are a number of special events and promotions planned to attract an increasing number of customers into the store.
A world-class team has been assembled since 2007 and is now turning Liberty not only into the most authoritative retail destination for fashion, design and beauty but also one of the fastest growing brands globally in both fashion and retail.
We want to maintain this trend and, as a result, we have appointed advisers to undertake a strategic review of Liberty, with the express aim of identifying ways in which it can be developed and expanded, both within the UK and internationally.
As I have already indicated it is difficult to forecast with certainty what the remaining four months of the year hold for us. We have had an excellent first half and we believe the momentum we have achieved over the past six months will help Liberty buck the adverse market trend. We have already demonstrated our ability to deliver solid progress in difficult market conditions and I have no doubt we have the products, people and infrastructure in place to take full advantage of any upswing in retail spending. Therefore I view the future with a degree of cautious confidence.
Geoffroy de La Bourdonnaye
Chief Executive
Liberty Plc
27 August 2009
LIBERTY PLC - KEY FINANCIAL HIGHLIGHTS
The historical trading and balance sheet performance of Liberty Plc is summarised below:-
| Six months ended 30 June 2009 | Six months ended 30 June 2008 | Year ended 31 December 2008 | ||
| Financial performance | ||||
| Total revenue | £'000 | 25,612 | 21,805 | 50,580 |
| Operating EBITDA before brand | ||||
| expenditure, reorganisation costs | ||||
| and lease surrender | £'000 | 2,300 | 274 | 1,815 |
| Results from operating activities before | ||||
| brand expenditure, reorganisation costs | ||||
| and lease surrender | £'000 | 1,030 | (718) | (435) |
| Brand expenditure | £'000 | (2,227) | (1,971) | (4,344) |
| Reorganisation costs | £'000 | - | (936) | (1,346) |
| Gain on lease surrender | £'000 | 85 | - | - |
| Loss before taxation | £'000 | (1,910) | (4,146) | (6,651) |
| 30 June 2009 | 30 June 2008 | 31 December 2008 | ||
| Balance sheet composition | ||||
| Intangible asset - brand and goodwill | £'000 | 18,382 | 18,382 | 18,382 |
| Property, plant and equipment | £'000 | 30,381 | 33,400 | 31,006 |
| Net debt | £'000 | (12,369) | (12,756) | (12,390) |
| Adjusted equity attributable to | ||||
| shareholders of MWB Group Plc | ||||
| in Liberty | £'000 | 40,163 | 42,480 | 34,971 |
| Adjusted equity attributable to | ||||
| shareholders of MWB Group | ||||
| in Liberty Plc, in pence per | ||||
| MWB Group share | Pence | 55p | 57p | 49p |
INTERIM MANAGEMENT REPORT
for the six months ended 30 June 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 Interim Management Report covers in greater depth the more significant features of the financial statements for the six months ended 30 June 2009, which include an independent valuation of the Group's properties at that date.
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF MWB GROUP HOLDINGS PLC
During the six months ended 30 June 2009, operating improvements continued to be achieved across the Group, although the capital values of the Group's property portfolio reduced. Overall, this resulted in a reduction in equity attributable to shareholders during the period from £125.9m to £108.8m at 30 June 2009 equating to a reduction from 174p to 150p per share.
The movement in equity attributable to shareholders of MWB during the period is summarised in the following table:-
| Six months ended | ||
| 30 June 2009 | ||
| Pence | ||
| £'000 | per share | |
| Equity attributable to shareholders of MWB Group Holdings Plc | ||
| at 1 January 2009 | 125,881 | 174p |
| Movements during the period: | ||
| Revaluation of property, plant and equipment, net of tax | (8,385) | (12p) |
| Retained loss | (6,501) | (9p) |
| Effective portion of changes in fair value of derivative financial hedges | (378) | - |
| Defined benefit pension scheme actuarial gains, net of tax | (1,138) | (2p) |
| Other movements | (697) | (1p) |
| Equity attributable to shareholders of MWB Group Holdings Plc | ||
| at 30 June 2009 | 108,782 | (150p) |
ADJUSTED EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF MWB GROUP HOLDINGS PLC
Under Adopted IFRS, the Company's interests in its two AIM quoted subsidiaries, MWB Business Exchange Plc and Liberty Plc, continue to be consolidated in the Group financial statements inclusive of their freehold and short leasehold properties at current valuation or cost. However, these property valuations reflect only the values of the properties themselves and the financial statements do not reflect the current market value of the Group's shareholdings in these two listed subsidiaries.
Both subsidiaries are quoted on the AIM Market of the London Stock Exchange and, therefore, a market value for the Group's shareholding in each of the two companies is readily available.
In order that shareholders are aware of the underlying value of the Group, the impact to shareholders of MWB Group arising from assessing these two investments by reference to their market value at 30 June 2009, and taking account of incentives that would be payable if these amounts were realised in cash, is set out below:-
| 30 June 2009 | 31 December 2008 | |||
| £'000 | Pence per share | £'000 | Pence per share | |
| Equity attributable to shareholders of MWB Group | ||||
| Holdings Plc per financial statements | 108,782 | 150p | 125,881 | 174p |
| Unrealised surplus of market value of | ||||
| MWB Group's shareholding in | ||||
| MWB Business Exchange Plc(1) | 10,316 | 14p | 76 | - |
| Unrealised surplus of market value of | ||||
| MWB Group's shareholding in Liberty Plc(2) | 12,789 | 18p | 7,967 | 11p |
| 131,887 | 182p | 133,924 | 185p | |
| Less Central Incentive Scheme and Bonus Plan(3) | (12,804) | (18p) | (13,235) | (18p) |
| Total adjusted equity attributable to | ||||
| shareholders of MWB Group Holdings Plc | 119,083 | 164p | 120,689 | 167p |
Notes
(1) The unrealised surplus of market value of MWB Group's 71.5% shareholding in MWB Business Exchange Plc is based on the share price of MWB Business Exchange Plc at 30 June 2009 of 74p (31 December 2008: 52p) per share, and is after deducting deferred consideration of £9.5m that would become payable on realisation of the Group's investment in MWB Business Exchange and incentive arrangements in subsidiaries payable on realisation at this value.
(2) The unrealised surplus of market value of MWB Group's 68.3% shareholding in Liberty Plc is based on the share price of Liberty Plc at 30 June 2009 of 260p (31 December 2008: 227p) per share, after deducting divisional bonuses that would become payable on realisation at this value.
(3) These amounts would only become payable on realisation of values as above and if such realised values were distributed to shareholders.
The adjusted equity attributable to shareholders of MWB Group Holdings Plc is analysed as follows:-
| 30 June 2009 | 31 December 2008 | ||||
| £'000 | Pence per share | £'000 | Pence per share | ||
| Malmaison and Hotel du Vin | 137,152 | 190p | 147,703 | 204p | |
| MWB Business Exchange Plc | 25,242 | 35p | 24,415 | 33p | |
| Liberty Plc | 40,163 | 55p | 34,971 | 49p | |
| Group debt and incentives payable, less cash and | |||||
| other assets | (83,474) | (116p) | (86,400) | (119p) | |
| Total adjusted equity attributable to | |||||
| shareholders of MWB Group Holdings Plc | 119,083 | 164p | 120,689 | 167p | |
In addition to the assessment above, shareholders should be aware that the adjusted equity attributable to shareholders of MWB Group Holdings Plc of 164p (31 December 2008: 167p) per share above does not reflect the market value of the Malmaison and Hotel du Vin business, as this is not a listed subsidiary for which a market value can be readily confirmed. The Board is confident that the value of the Group's 82.5% interest in the Malmaison and Hotel du Vin business is significantly higher than the £137.2m or 190p per share for this business within adjusted equity attributable to shareholders of MWB Group Holdings Plc, thus demonstrating a further enhancement in underlying equity value of the Group above the adjusted figure of 164p per share in the table above.
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 30 June 2009 in the consolidated balance sheet and at the previous period ends were as follows:-
| 30 June 2009 £'000 | 30 June 2008 £'000 | 31 December 2008 £'000 | |
| Total equity attributable to shareholders of | |||
| MWB Group Holdings Plc | 108,782 | 157,457 | 125,881 |
| Minority interests | 71,617 | 83,767 | 77,918 |
| Net assets at period end | 180,399 | 241,224 | 203,799 |
REVIEW OF PROPERTY, PLANT AND EQUIPMENT
Valuation of property portfolio at 30 June 2009
A valuation of the Group's freehold and long leasehold property interests was undertaken at 30 June 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 six months ended 30 June 2009 totalled £10.3m, 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 interest 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 upwards under Adopted IFRSs at each period end and are therefore 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) |
Portfolio analysis by division
At 30 June 2009, the Group held all its direct property interests as non-current assets. These are disclosed in the consolidated balance sheet at that date as follows:-
| 30 June 2009 | 31 December 2008 | |
| £'000 | £'000 | |
| Non current assets | ||
| Operational properties | 489,985 | 502,644 |
| Operational properties in the course of construction | 1,908 | 1,691 |
| Plant and equipment | 60,452 | 61,597 |
| Total property interests at period end | 552,345 | 565,932 |
| The above interests are analysed as follows:- |
| Percentage at | |||
| 30 June | 30 June | 31 December | |
| 2009 | 2009 | 2008 | |
| £'000 | % | £'000 | |
| Hotels | |||
| Malmaison | 272,871 | 49 | 275,450 |
| Hotel du Vin | 207,744 | 38 | 217,861 |
| 480,615 | 87 | 493,311 | |
| MWB Business Exchange Plc | 41,282 | 7 | 41,535 |
| Liberty Plc | 30,381 | 6 | 31,006 |
| Other | 67 | - | 80 |
| Total property interests at period end | 552,345 | 100 | 565,932 |
REVIEW OF LOAN FACILITIES
Net debt
The Group's loans, borrowings and cash are included in the consolidated balance sheet at 30 June 2009 as follows:-
| Composition at period end | 30 June 2009 | 31 December 2008 |
| £'000 | £'000 | |
| Loans and borrowings in note 8 | 380,329 | 387,193 |
| Hire purchase and leasing contracts | 182 | - |
| Long leasehold obligations | 697 | 699 |
| Fair value of derivative financial instruments | 2,876 | 1,894 |
| Total loans and borrowings | 384,084 | 389,786 |
| Less net cash and cash equivalents in note 7 | (17,625) | (32,036) |
| Total net debt at period end | 366,459 | 357,750 |
| Analysis of debt/(cash) by operating business | ||
| Malmaison and Hotel du Vin | 279,612 | 282,322 |
| MWB Business Exchange Plc - cash | (2,959) | (16,404) |
| Liberty Plc | 12,369 | 12,390 |
| Central debt | 77,437 | 79,442 |
| 366,459 | 357,750 |
Cash
The Group's cash was held in the following operating divisions in the Group:-
| 30 June 2009 £'000 | 31 December 2008 £'000 | |
| Malmaison and Hotel du Vin | 7,829 | 4,860 |
| MWB Business Exchange Plc | 3,120 | 23,333 |
| Liberty Plc | 1,968 | 1,903 |
| Central | 4,708 | 1,940 |
| 17,625 | 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 net debt during the six months ended 30 June 2009 arose as follows:-
| Six months ended 30 June 2009 | Year ended 31 December 2008 | |
| £'000 | £'000 | |
| Total net debt at start of the period | 357,750 | 308,012 |
| Debt drawn on expansion of Malmaison and Hotel du Vin | 2,069 | 38,150 |
| Buy back of ordinary shares | (2,379) | 10,078 |
| Net cash outflow from other Group operations during the period | 9,019 | 1,510 |
| Total net debt at period end | 366,459 | 357,750 |
| Average cost of borrowings at period end, | ||
| inclusive of margin | 6.4% | 7.4% |
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. As a result, none of the Group's funding facilities are due to expire in the current financial year to 31 December 2009 and the shortest expiry date is the facility provided to Liberty, whose term runs to 30 September 2010. The covenants included in all our financing facilities were complied with at 30 June 2009.
Net debt relating to Equity attributable to shareholders of MWB
The majority of the Group's net debt has been drawn by subsidiaries that are majority owned, but not wholly owned, by the Group. These comprise the Group's majority interests in its three operating businesses of MWB Malmaison Holdings Limited, MWB Business Exchange Plc and Liberty Plc.
The net debt relating to equity attributable to shareholders of MWB Group Holdings Plc at 30 June 2009 amounted to £314m (31 December 2008: £310m), calculated as follows:-
| 30 June 2009 £'000 | 31 December 2008 £'000 | |
| Total net debt as above | 366,459 | 357,750 |
| Less net debt attributable to minority interests | (52,006) | (48,118) |
| Total net debt attributable to equity shareholders | ||
| of MWB Group | 314,453 | 309,632 |
Gearing
At 30 June 2009, gearing was 203%, calculated as follows:-
| 30 June 2009 | 31 December 2008 | |
| £'000 | £'000 | |
| Total net debt | 366,459 | 357,750 |
| Net assets | 180,399 | 203,799 |
| Gearing - total net debt divided by net assets | 203% | 176% |
Summary of earnings
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 six months ended 30 June 2009, together with comparative information for previous periods are summarised below:-
| Profit/(loss) | ||||
| before | ||||
| Revenue | EBITDA | EBIT | taxation | |
| Six months ended 30 June 2009 | £'000 | £'000 | £'000 | £'000 |
| Malmaison and Hotel du Vin | ||||
| Operating income | 52,499 | 10,421 | 5,358 | (2,544) |
| MWB Business Exchange Plc | ||||
| Operating income | 57,384 | 8,596 | 5,746 | 5,658 |
| Liberty Plc | ||||
| Operating income | 25,612 | 2,300 | 1,030 | 232 |
| Expenditure on brand | - | (2,227) | (2,227) | (2,227) |
| 25,612 | 73 | (1,197) | (1,995) | |
| Lease surrender | - | 85 | 85 | 85 |
| Fixtures disposal | - | 587 | - | - |
| 25,612 | 745 | (1,112) | (1,910) | |
| Others | 180 | 69 | 69 | 69 |
| Group debt less cash | - | - | - | (3,205) |
| 180 | 69 | 69 | (3,136) | |
| Head office administration | - | (3,197) | (3,214) | (3,214) |
| 180 | (3,128) | (3,145) | (6,350) | |
| 135,675 | 16,634 | 6,847 | (5,146) |
Notes
1. EBITDA = Earnings before interest, taxation, depreciation and amortisation.
2. EBIT = Earnings before interest and taxation.
| Profit/(loss) | ||||
| before | ||||
| Revenue | EBITDA | EBIT | taxation | |
| Six months ended 30 June 2008 | £'000 | £'000 | £'000 | £'000 |
| Malmaison and Hotel du Vin | ||||
| Operating income | 52,020 | 12,233 | 7,863 | (1,134) |
| Pre-opening costs | - | (433) | (433) | (433) |
| 52,020 | 11,800 | 7,430 | (1,567) | |
| MWB Business Exchange Plc | ||||
| Operating income | 59,713 | 11,273 | 8,817 | 8,800 |
| Liberty Plc | ||||
| Operating income | 20,634 | 274 | (718) | (1,239) |
| Reorganisation costs | - | (936) | (936) | (936) |
| Brand income/(expenditure) | 1,171 | (1,971) | (1,971) | (1,971) |
| 21,805 | (2,633) | (3,625) | (4,146) | |
| Others | 538 | 1,226 | 1,226 | 1,376 |
| Group debt less cash and other assets | - | - | - | (3,162) |
| 538 | 1,226 | 1,226 | (1,786) | |
| Head office administration | - | (6,602) | (6,683) | (6,683) |
| 538 | (5,376) | (5,457) | (8,469) | |
| 134,076 | 15,064 | 7,165 | (5,382) |
| 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 | 50,580 | 1,815 | (435) | (961) |
| Reorganisation costs | - | (1,346) | (1,346) | (1,346) |
| Expenditure on brand | - | (4,344) | (4,344) | (4,344) |
| 50,580 | (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) | |
| 277,606 | 31,116 | 15,276 | (9,926) |
Taxation
No UK corporation tax arose on the Group results for the six months ended 30 June 2009 (June 2008: £0.7m). During the same period, a tax charge of £0.3m (June 2008: £0.2m) arose on the Liberty profits earned in Japan. The Group has a deferred tax asset of £10.5m (June 2008: £15.7m) retained on its consolidated balance sheet that is available to offset future corporation tax that would otherwise be payable by the Group in future years.
Loss per share
The loss per share figures have been calculated as follows:-
| Six months ended 30 June 2009 | Six months ended 30 June 2008 | Year ended 31 December 2008 | ||
| Loss for the period attributable | ||||
| to equity shareholders of | ||||
| the Company | £'000 | (6,501) | (7,778) | (2,718) |
| Weighted average number of Units | ||||
| or ordinary shares in issue during period | '000 | 72,371 | 79,741 | 76,291 |
| Loss per share (basic and diluted) | Pence | (9.0p) | (9.8p) | (3.6p) |
Dividend
Shareholders approved implementation of the Cash Distribution Programme and associated cessation of annual revenue distributions at a meeting of shareholders held in May 2002. Since then, the Company and the Group's previous holding company, Marylebone Warwick Balfour Group Plc, have purchased approximately 68.7 million Units and shares for cancellation under this programme, representing approximately 50% of the issued share capital at the date of its implementation. This has resulted in the return of approximately £80.4m in cash to Shareholders over the period.
Conclusion
MWB has three good operating businesses. They are all well managed, have good finance and provide excellent products and services. Each business has demonstrated its ability to perform well even in these tough market conditions.
Andrew Blurton
Group Finance Director
27 August 2009
CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2009
| Six months ended 30 June 2009 | Six months ended 30 June 2008 | Year ended 31 December 2008 | ||
| Notes | £'000 | £'000 | £'000 | |
| Revenue | 2 | 135,675 | 134,076 | 277,606 |
| Cost of sales | (123,298) | (115,576) | (239,021) | |
| Gross profit | 12,377 | 18,500 | 38,585 | |
| Administrative expenses | (5,615) | (8,918) | (21,482) | |
| Results from operating activities | 6,762 | 9,582 | 17,103 | |
| Net gain on sale of property, plant and | ||||
| equipment | - | - | 635 | |
| Net gain on lease surrender | 85 | - | - | |
| Capital reorganisation costs | - | (2,417) | (2,462) | |
| Finance income | 253 | 819 | 1,694 | |
| Finance expenses | (12,246) | (13,366) | (26,896) | |
| Loss before taxation | 2 | (5,146) | (5,382) | (9,926) |
| Taxation | 4 | (324) | (1,506) | 10,215 |
| Profit/(loss) for the period | (5,470) | (6,888) | 289 | |
| Attributable to: | ||||
| Equity shareholders of the Company | (6,501) | (7,778) | (2,718) | |
| Minority interests | 1,031 | 890 | 3,007 | |
| Profit/(loss) for the period | (5,470) | (6,888) | 289 | |
| Loss per share (basic and diluted) | 5 | (9.0p) | (9.8p) | (3.6p) |
All results relate to continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2009
| Six months ended 30 June 2009 | Six months ended 30 June 2008 | Year ended 31 December 2008 | |
| £'000 | £'000 | £'000 | |
| Profit/(loss) for the period | (5,470) | (6,888) | 289 |
| Other comprehensive income and expenses | |||
| for the period net of tax: | |||
| Foreign exchange translation differences for foreign | |||
| operations | (462) | (322) | 1,076 |
| Revaluation of property, plant and equipment | (10,292) | (37,158) | (79,231) |
| Effective portion of changes in fair value of | |||
| cash flow hedges | (458) | (42) | (2,243) |
| Defined benefit pension scheme actuarial losses | (1,665) | (1,595) | (2,019) |
| Other comprehensive loss for the period | |||
| net of tax | (12,877) | (39,117) | (82,417) |
| Total comprehensive loss for the period | (18,347) | (46,005) | (82,128) |
| Attributable to: | |||
| Equity shareholders of the Company | (16,718) | (39,636) | (70,089) |
| Minority interests | (1,629) | (6,369) | (12,039) |
| Total comprehensive loss for the period | (18,347) | (46,005) | (82,128) |
CONSOLIDATED BALANCE SHEET
at 30 June 2009
| 30 June 2009 | 30 June 2008 | 31 December 2008 | ||
| Notes | £'000 | £'000 | £'000 | |
| Non-current assets | ||||
| Intangible assets and goodwill | 28,723 | 25,969 | 25,969 | |
| Operational properties | 6 | 489,985 | 491,759 | 502,644 |
| Operational properties in the course of construction | 6 | 1,908 | 38,094 | 1,691 |
| Plant and equipment | 6 | 60,452 | 55,427 | 61,597 |
| Deferred tax asset | 9 | 10,542 | 15,673 | 10,500 |
| Financial instruments | - | - | 341 | |
| 591,610 | 626,922 | 602,742 | ||
| Current assets | ||||
| Inventories | 11,878 | 9,527 | 11,705 | |
| Trade and other receivables: | ||||
| Due after more than one year | 2,566 | 2,430 | 2,660 | |
| Due within one year | 33,889 | 35,792 | 35,677 | |
| Cash and cash equivalents | 7 | 17,625 | 12,280 | 32,064 |
| 65,958 | 60,029 | 82,106 | ||
| Total assets | 657,568 | 686,951 | 684,848 | |
| Current liabilities | ||||
| Bank overdrafts | 7 | - | - | (28) |
| Loans and borrowings | 8 | (4,403) | (1,615) | (342,632) |
| Derivative financial instruments | (2,876) | (35) | (2,235) | |
| Trade and other payables | (60,517) | (65,615) | (74,324) | |
| Tax payable | (289) | (17,352) | (157) | |
| (68,085) | (84,617) | (419,376) | ||
| Non-current liabilities | ||||
| Loans and borrowings | 8 | (375,926) | (345,385) | (44,561) |
| Employee benefits | (3,607) | (1,855) | (2,066) | |
| Trade and other payables | (29,551) | (13,870) | (15,046) | |
| (409,084) | (361,110) | (61,673) | ||
| Total liabilities | (477,169) | (445,727) | (481,049) | |
| Net assets | 180,399 | 241,224 | 203,799 | |
| Equity | ||||
| Share capital | 217 | 273 | 217 | |
| Other reserves | 121,727 | 166,904 | 131,152 | |
| Retained earnings | (13,162) | (9,720) | (5,488) | |
| Total equity attributable to shareholders of the Company | 10 | 108,782 | 157,457 | 125,881 |
| Minority interests | 71,617 | 83,767 | 77,918 | |
| Total equity | 180,399 | 241,224 | 203,799 | |
| Equity attributable to shareholders of the Company | ||||
| in pence per share | 10 | 150p | 212p | 174p |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Share capital | Capital redemption reserve | Revaluation reserve | Hedging reserve | Translation reserve | |
| Six months ended 30 June 2009 | £'000 | £'000 | £'000 | £'000 | £'000 |
| At 1 January 2009 | 217 | 25 | 121,234 | (1,845) | 794 |
| Total comprehensive income for the period: | |||||
| Retained loss for the period | - | - | - | - | - |
| Revaluation of property, plant and equipment, net of tax | - | - | (8,385) | - | - |
| Defined benefit pension scheme actuarial loss | - | - | - | - | - |
| Effective portion of changes in fair value of cash flow hedges | - | - | - | (378) | - |
| Transfer of depreciation on revalued properties | - | - | (346) | - | - |
| Foreign exchange translation differences for foreign operations | - | - | - | - | (316) |
| Total comprehensive income for the period | - | - | (8,731) | (378) | (316) |
| 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 | - | - | - | - | - |
| Issue and purchase of Ordinary Shares | - | - | - | - | - |
| Write back of option cost through equity | - | - | - | - | - |
| Total transactions with owners | - | - | - | - | - |
| Share capital and reserves at 30 June 2009 | 217 | 25* | 112,503* | (2,223)* | 478* |
* = Disclosed as 'Other reserves' at 30 June 2009 totalling £121,727,000 in the consolidated balance sheet.
| Merger reserve | Other reserve | Retained earnings | Total equity attributable to shareholders | Minority interests | Total equity | |
| Six months ended 30 June 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 period: | ||||||
| Retained loss for the period | - | - | (6,501) | (6,501) | 1,031 | (5,470) |
| Revaluation of property, plant and equipment, net of tax | - | - | - | (8,385) | (1,907) | (10,292) |
| Defined benefit pension scheme actuarial loss | - | - | (1,138) | (1,138) | (527) | (1,665) |
| Effective portion of changes in fair value of cash flow hedges | - | - | - | (378) | (80) | (458) |
| Transfer of depreciation on revalued properties | - | - | 346 | - | - | - |
| Foreign exchange translation differences for foreign operations | - | - | - | (316) | (146) | (462) |
| Total comprehensive income for the period | - | - | (7,293) | (16,718) | (1,629) | (18,347) |
| 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 | - | - | 4,037 | 4,037 | (4,037) | - |
| Issue and purchase of Ordinary Shares | - | - | (1,701) | (1,701) | (678) | (2,379) |
| Write back of option cost through equity | - | - | 86 | 86 | 43 | 129 |
| Total transactions with owners | - | - | (381) | (381) | (4,672) | (5,053) |
| Share capital and reserves at 30 June 2009 | 9,161* | 1,783* | (13,162) | 108,782 | 71,617 | 180,399 |
| Retained earnings at 30 June 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 30 June 2009 | (83,234) |
| Purchase by the Company of its own ordinary shares and Units that have subsequently been cancelled | (80,415) |
| Retained earnings at 30 June 2009 | (13,162) |
| Share capital | Share premium | Capital redemption reserve | Revaluation reserve | Hedging reserve | Translation reserve | |
| Six months ended 30 June 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 (note 1) | 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 period: | ||||||
| Retained loss for the period | - | - | - | - | - | - |
| Revaluation of property, plant and equipment, net of tax | - | - | - | (30,521) | - | - |
| Defined benefit pension scheme actuarial loss | - | - | - | - | - | - |
| Effective portion of changes in fair value of cash flow hedges | - | - | - | - | (29) | - |
| Transfer of depreciation on revalued properties | - | - | - | (546) | - | - |
| Foreign exchange translation differences for foreign operations | - | - | - | - | - | (187) |
| Total comprehensive income for the period | - | - | - | (31,067) | (29) | (187) |
| 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 | - | - | - | - | - | - |
| Issue and purchase of Ordinary Shares | 31 | - | 18 | - | - | - |
| Write back of option cost through equity | - | - | - | - | - | - |
| Total transactions with owners | (160,852) | - | 18 | - | - | - |
| Share capital and reserves at 30 June 2008 | 273 | - | 18* | 156,084* | (24)* | (118)* |
* = Disclosed as 'Other reserves' at 30 June 2008 totalling £166,904,000 in consolidated balance sheet.
| Merger reserve | Other reserve | Retained earnings | Total equity attributable to shareholders | Minority interests | Total equity | |
| Six months ended 30 June 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 (note 1) | (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 period: | ||||||
| Retained loss for the period | - | - | (7,778) | (7,778) | 890 | (6,888) |
| Revaluation of property, plant and equipment, net of tax | - | - | - | (30,521) | (6,637) | (37,158) |
| Transfer on increase in minority interests in Malmaison Holdings Ltd | ||||||
| and MWB Business Exchange Plc | - | - | 1,592 | 1,592 | (1,592) | - |
| Defined benefit pension scheme actuarial loss | - | - | (1,089) | (1,089) | (506) | (1,595) |
| Effective portion of changes in fair value of cash flow hedges | - | - | - | (29) | (13) | (42) |
| Transfer of depreciation on revalued properties | - | - | 546 | - | - | |
| Foreign exchange translation differences for foreign operations | - | - | (32) | (219) | (103) | (322) |
| Total comprehensive income for the period | - | - | (6,761) | (38,044) | (7,961) | (46,005) |
| 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) |
| Issue and purchase of ordinary shares | - | - | (8,574) | (8,525) | (91) | (8,616) |
| Write back of option cost through equity | - | - | 76 | 76 | 36 | 112 |
| Total transactions with owners | - | - | 151,958 | (8,876) | (55) | (8,931) |
| Share capital and reserves at 30 June 2008 | 9,161* | 1,783* | (9,720) | 157,457 | 83,767 | 241,224 |
| Retained earnings at 30 June 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 30 June 2008 | (81,205) |
| Purchase by the Company of its own ordinary shares and Units that have subsequently been cancelled | (79,002) |
| Retained earnings at 30 June 2008 | (9,720) |
| 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 (note 1) | 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: | ||||||
| Retained profit for the year | - | - | - | - | - | - |
| Revaluation of property, plant and equipment, net of tax | - | - | - | (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 balance sheet.
| 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 (note 1) | (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: | ||||||
| Retained profit for the year | - | - | (2,718) | (2,718) | 3,007 | 289 |
| Revaluation of property, plant and equipment, net of tax | - | - | - | (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 CASH FLOW STATEMENT
for the six months ended 30 June 2009
| Six months ended 30 June 2009 £'000 | Six months ended 30 June 2008 £'000 | Year ended 31 December 2008 £'000 | |
| Profit/(loss) for the year | (5,470) | (6,888) | 289 |
| Adjustments | |||
| Taxation | 324 | 1,506 | (10,215) |
| Finance income | (253) | (834) | (1,694) |
| Finance expenses | 12,246 | 13,381 | 26,896 |
| Gain on sale of property, plant and equipment | - | - | (635) |
| Net gain on lease surrender | (85) | - | - |
| Depreciation of property, plant and equipment | 9,200 | 7,899 | 15,840 |
| Currency translation differences | (85) | 66 | 148 |
| Equity settled share-based payment transactions | 129 | 112 | 272 |
| Cash flows from operations before changes in | |||
| working capital | 16,006 | 15,242 | 30,901 |
| Change in inventories | (173) | (38) | (2,216) |
| Change in trade and other receivables | 3,497 | 4,776 | 4,252 |
| Change in trade and other payables | (5,159) | (753) | 9,640 |
| Change in provisions and employee benefits | 1,541 | - | 1,650 |
| Cash generated from operations | 15,712 | 19,227 | 44,227 |
| Interest paid | (11,833) | (14,186) | (29,445) |
| Taxation paid | (234) | (245) | (488) |
| Net cash from operating activities | 3,645 | 4,796 | 14,294 |
| Cash flows from investing activities | |||
| Interest received | 317 | 834 | 1,674 |
| Proceeds from sale of property, plant and equipment | - | - | 1,091 |
| Purchase of property, plant and equipment | (6,433) | (23,999) | (54,402) |
| Acquisition of business - goodwill | (2,754) | - | - |
| Net cash used in investing activities | (8,870) | (23,165) | (51,637) |
| Cash flows from financing activities | |||
| Purchase of own Units, inclusive of costs | (2,379) | (8,616) | (10,078) |
| Proceeds from draw down of borrowings | 4,397 | 27,063 | 74,232 |
| Borrowings repaid | (8,583) | (10,256) | (17,233) |
| Payments to minority interests | (2,803) | (427) | (427) |
| Increase in hire purchase and leasing contracts | 182 | - | - |
| Net cash (used in)/from financing activities | (9,186) | 7,764 | 46,494 |
| Net increase in cash and cash equivalents | (14,411) | (10,605) | 9,151 |
| Opening cash and cash equivalents | 32,036 | 22,885 | 22,885 |
| Closing cash and cash equivalents (note 7) | 17,625 | 12,280 | 32,036 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Basis of preparation
The Half-Yearly Financial Report of the Group for the six months ended 30 June 2009 has been prepared in accordance with IAS 34: 'Interim Financial Reporting' as adopted for use in the European Union ('EU') and in accordance with the Disclosure and Transparency Rules of the Financial Services Authority. The financial information contained in this Half-Yearly Financial Report has neither been audited nor reviewed by the auditors.
The Half-Yearly Financial Report for the six months ended 30 June 2009 incorporates 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 the Group for the year ended 31 December 2008, with the addition of new standards that have come into effect during the period under review and which are listed below.
On 7 February 2008, Marylebone Warwick Balfour Group Plc ("Old MWB") announced its intention to re-organise the MWB group of companies. This involved, inter alia, a Court approved Scheme of Arrangement under Section 425 of the Companies Act 1985 (the 'Scheme') with the result of making MWB Group Holdings Plc the new holding company of the Group. In accordance with the sanction from the Court under the Scheme, the issued share capital and the share premium of Old MWB at the effective date of the Scheme were cancelled against its distributable reserves at that date. Under the Scheme, shareholders received one Unit in MWB Group Holdings Plc for each ordinary share previously held in Old MWB. Each Unit comprises one ordinary share and twenty B shares. The B shares do not confer on their holders any rights in relation to income or voting and have only limited rights to participate in capital. The B shares do, however, enable the Company to return cash or cash equivalents to shareholders by their redemption at future dates from the resources of the Group. Every B share is, for all practical purposes, inseparable from an ordinary share. As a consequence, the respective rights of shareholders in the Units in relation to capital, dividend and voting, remained as they would have been had the B shares not been allotted and issued. The Scheme was accounted for as a reverse acquisition in accordance with IFRS 3 'Business Combinations'. As a result, the previous Group has been deemed to acquire MWB Group Holdings Plc, no goodwill arose on the acquisition, and the net assets of the Group remained unaffected. Differences between the restated amounts in the financial statements of MWB Group Holdings Plc and those previously reported in Old MWB represent the merger reserve in MWB Group Holdings Plc shown in these financial statements.
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 £18m at 30 June 2009, bank facilities totalling £363m, unsecured loan stock of £30m and a bank overdraft of £1m (which was undrawn at 30 June 2009). The earliest maturity of the remaining facilities relates to the overdraft which falls due for renewal on 1 September 2010 and the Liberty facility of £15m that has a term that runs to 30 September 2010. The Directors have prepared cash flow projections for the period to 31 December 2010 ('the Projections') which are based on certain assumptions. These show that the Group is capable of operating within the financing arrangements referred to above.
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 Trust Deed relating to its Unsecured Loan Stock, including a gearing covenant on the Unsecured Loan Stock restricting net debt attributable to shareholders to four times adjusted capital and reserves. All of these covenants were complied with at 30 June 2009. 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. The Directors have tested the impact of variations from the Projections on the ability of the divisions to operate within the financial covenants and their available cash resources, under a combination of different scenarios constructed 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, should these downside scenarios crystallise. 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, including under reasonable downside scenarios. As referred to in the Chairman's Statement accompanying these financial statements, the Board is exploring various options open to increase the flexibility in the financing of the Group. The Directors are also aware that in view of uncertainty in the market over property values, the gearing covenant in the Company's Unsecured Loan Stock in the period covered by the Company's forecasts, which will be next formally tested as at 31 December 2009, and which had headroom in shareholders' funds at 30 June 2009 of £18.4m, gives rise to a material uncertainty which may require the Group to raise additional funding. In the absence of successfully raising such additional funding, if required, this could cast significant doubt upon the Group's and Company's ability to continue to operate as a going concern for the whole of the period covered by the Projections. In those circumstances, the Group and Company might then be unable to continue realising their assets and discharging their liabilities in the normal course of business.
2. SEGMENT REPORTING
The primary format of the segmental information in respect of the Group's businesses is based on the Group's internal reporting structure. Segment results 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.
| Profit/(loss) | ||||
| before | ||||
| Revenue | EBITDA | EBIT | taxation | |
| Six months ended 30 June 2009 | £'000 | £'000 | £'000 | £'000 |
| Malmaison and Hotel du Vin | ||||
| Operating income | 52,499 | 10,421 | 5,358 | (2,544) |
| MWB Business Exchange Plc | ||||
| Operating income | 57,384 | 8,596 | 5,746 | 5,658 |
| Liberty Plc | ||||
| Operating income | 25,612 | 2,300 | 1,030 | 232 |
| Expenditure on brand | - | (2,227) | (2,227) | (2,227) |
| 25,612 | 73 | (1,197) | (1,995) | |
| Lease surrender | - | 85 | 85 | 85 |
| Fixtures disposal | - | 587 | - | - |
| 25,612 | 745 | (1,112) | (1,910) | |
| Others | 180 | 69 | 69 | 69 |
| Group debt less cash | - | - | - | (3,205) |
| 180 | 69 | 69 | (3,136) | |
| Head office administration | - | (3,197) | (3,214) | (3,214) |
| 180 | (3,128) | (3,145) | (6,350) | |
| 135,675 | 16,634 | 6,847 | (5,146) |
Notes
1. EBITDA = Earnings before interest, taxation, depreciation and amortisation.
2. EBIT = Earnings before interest and taxation.
| Profit/(loss) | ||||
| before | ||||
| Revenue | EBITDA | EBIT | taxation | |
| Six months ended 30 June 2008 | £'000 | £'000 | £'000 | £'000 |
| Malmaison and Hotel du Vin | ||||
| Operating income | 52,020 | 12,233 | 7,863 | (1,134) |
| Pre-opening costs | - | (433) | (433) | (433) |
| 52,020 | 11,800 | 7,430 | (1,567) | |
| MWB Business Exchange Plc | ||||
| Operating income | 59,713 | 11,273 | 8,817 | 8,800 |
| Liberty Plc | ||||
| Operating income | 20,634 | 274 | (718) | (1,239) |
| Reorganisation costs | - | (936) | (936) | (936) |
| Brand income/(expenditure) | 1,171 | (1,971) | (1,971) | (1,971) |
| 21,805 | (2,633) | (3,625) | (4,146) | |
| Others | 538 | 1,226 | 1,226 | 1,376 |
| Group debt less cash | - | - | - | (3,162) |
| 538 | 1,226 | 1,226 | (1,786) | |
| Head office administration | - | (6,602) | (6,683) | (6,683) |
| 538 | (5,376) | (5,457) | (8,469) | |
| 134,076 | 15,064 | 7,165 | (5,382) |
| 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 | 50,580 | 1,815 | (435) | (961) |
| Reorganisation costs | - | (1,346) | (1,346) | (1,346) |
| Expenditure on brand | - | (4,344) | (4,344) | (4,344) |
| 50,580 | (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) | |
| 277,606 | 31,116 | 15,276 | (9,926) |
The analysis of net assets in the consolidated balance sheet across the Group's operations as revealed by the Consolidated Balance Sheet at 30 June 2009, and at the previous period ends, is as follows:-
| At 30 June 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 | 469,804 | (279,612) | 190,192 | (53,040) | 137,152 |
| MWB Business Exchange Plc | 20,228 | 2,959 | 23,187 | (8,261) | 14,926 |
| Liberty Plc | 48,354 | (12,369) | 35,985 | (8,611) | 27,374 |
| Group debt, less cash and other assets | 8,472 | (77,437) | (68,965) | (1,705) | (70,670) |
| 546,858 | (366,459) | 180,399 | (71,617) | 108,782 | |
| Equity attributable to shareholders | |||||
| of MWB Group Holdings Plc in | |||||
| pence per share | 150p |
| At 30 June 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 | 505,365 | (261,272) | 244,093 | (61,103) | 182,990 |
| MWB Business Exchange Plc | 23,061 | 5,838 | 28,899 | (9,143) | 19,756 |
| Liberty Plc | 50,632 | (12,756) | 37,876 | (11,768) | 26,108 |
| Group debt, less cash and other assets | (2,377) | (67,267) | (69,644) | (1,753) | (71,397) |
| 576,681 | (335,457) | 241,224 | (83,767) | 157,457 | |
| Equity attributable to shareholders | |||||
| of MWB Group Holdings Plc in | |||||
| pence per share | 212p |
| 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 |
3. EARNINGS BEFORE INTEREST, TAXATION, DEPRECIATION AND AMORTISATION ("EBITDA")
| Six months ended 30 June 2009 £'000 | Six months ended 30 June 2008 £'000 | Year ended 31 December 2008 £'000 | |
| The EBITDA of the Group is calculated | |||
| as follows:- | |||
| Profit before finance income, finance expenses | |||
| and taxation | 6,847 | 7,165 | 15,276 |
| Add depreciation of property, plant and | |||
| equipment for the period | 9,200 | 7,899 | 15,840 |
| Add depreciation related to disposals | 587 | - | - |
| Total EBITDA for the period | 16,634 | 15,064 | 31,116 |
4. TAXATION
| Six months ended 30 June 2009 £'000 | Six months ended 30 June 2008 £'000 | Year ended 31 December 2008 £'000 | |
| Current taxation (charge)/credit | |||
| UK Corporation tax | |||
| Tax on profit/(loss) for the period | - | (1,500) | - |
| Adjustment in respect of prior year provisions | |||
| following agreement of taxation liabilities | (9) | 842 | 16,402 |
| Foreign tax | |||
| Tax on profit for the period | (357) | (228) | (395) |
| (366) | (886) | 16,007 | |
| Deferred taxation credit/(charge) | |||
| Deferred tax asset relating to accelerated | |||
| capital allowances, trading tax losses, unrelieved | |||
| capital expenditure and interest payments, | |||
| increased/(utilised) during period | 42 | (620) | (5,792) |
| Total taxation (charge)/credit | (324) | (1,506) | 10,215 |
5. LOSS PER SHARE
Weighted average number of units or shares in issue during the period:-
| Six months ended 30 June 2009 '000 | Six months ended 30 June 2008 '000 | Year ended 31 December 2008 '000 | |
| Number of units or shares in issue at start of period | 72,371 | 80,522 | 80,522 |
| Units purchased by the Company for | |||
| cancellation during period | |||
| 23 April 2008 | - | (2,153) | (2,153) |
| 24 April 2008 | - | (800) | (800) |
| 18 June 2008 | - | (425) | (425) |
| 23 June 2008 | - | (2,773) | (2,773) |
| 2 October 2008 | - | - | (2,000) |
| Number of units in issue at end of period | 72,371 | 74,371 | 72,371 |
| Weighted average number of units or shares in issue | |||
| during period | 72,371 | 79,741 | 76,291 |
Loss per share
The loss per share figures are calculated by dividing the loss attributable to equity holders of the Company for the period, by the weighted average number of units in issue during the period, as follows:-
| Six months ended 30 June 2009 | Six months ended 30 June 2008 | Year ended 31 December 2008 | ||
| Loss for the period attributable to equity | ||||
| shareholders of the Company | £'000 | (6,501) | (7,778) | (2,718) |
| Weighted average number of units or | ||||
| ordinary shares in issue during the period | '000 | 72,371 | 79,741 | 76,291 |
| Loss per share (basic and diluted) | Pence | (9.0p) | (9.8p) | (3.6p) |
6. 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 | 180 | (3) | 217 | 844 | 5,254 | 6,492 | |
| Revaluation | (4,578) | (7,271) | - | - | - | (11,849) | |
| At 30 June 2009 | 330,553 | 126,879 | 1,908 | 40,095 | 122,826 | 622,261 | |
| Depreciation | |||||||
| At 1 January 2009 | - | - | - | (5,711) | (55,975) | (61,686) | |
| Charge for the period | (1,176) | (381) | - | (1,831) | (5,812) | (9,200) | |
| Disposals | - | - | - | - | (587) | (587) | |
| Revaluation | 1,176 | 381 | - | - | - | 1,557 | |
| At 30 June 2009 | - | - | - | (7,542) | (62,374) | (69,916) | |
| Net book value | |||||||
| at 30 June 2009 | 330,553 | 126,879 | 1,908 | 32,553 | 60,452 | 552,345 | |
| Analysis of valuation deficit | |||||||
| for the period | |||||||
| Deficit debited to revaluation | |||||||
| reserve | (2,701) | (5,684) | - | - | - | (8,385) | |
| Deficit debited to minority | |||||||
| interests | (701) | (1,206) | - | - | - | (1,907) | |
| Revaluation deficit reflected | |||||||
| in property, plant and | |||||||
| equipment | (3,402) | (6,890) | - | - | - | (10,292) | |
| Operational properties at net book value | 30 June 2009 £'000 | 31 December 2008 £'000 |
| Freehold properties as above | 330,553 | 334,951 |
| Long leasehold properties as above | 126,879 | 134,153 |
| Operating leasehold improvements as above | 32,553 | 33,540 |
| Total operational properties per consolidated balance sheet | 489,985 | 502,644 |
| -----------------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 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 30 June 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 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 Manual 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 Malmaison and Hotel du Vin properties owned by MWB Group; were the hotel properties to be marketed individually the values achieved could be less than those included in the Valuation Report.
Properties included in property, plant and equipment valued by DTZ at 30 June 2009, totalled £510.0m. 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 not revalued upwards and are carried at the lower of cost and net realisable value. These assets had a net book value at 30 June 2009 of £42.3m.
The historic cost of the Group's properties at 30 June 2009 includes capitalised interest of £9.4m (31 December 2008: £9.3m).
7. CASH AND CASH EQUIVALENTS
| 30 June 2009 | 30 June 2008 | 31 December 2008 | |
| £'000 | £'000 | £'000 | |
| Cash and cash equivalents per consolidated balance sheet | 17,625 | 12,280 | 32,064 |
| Less bank overdrafts per consolidated balance sheet | - | - | (28) |
| Net cash and cash equivalents per consolidated | |||
| cash flow statement | 17,625 | 12,280 | 32,036 |
The Group's net cash and cash equivalents are held in the following operating divisions of the Group.
| 30 June 2009 | 30 June 2008 | 31 December 2008 | ||
| £'000 | £'000 | £'000 | ||
| Malmaison and Hotel du Vin | 7,829 | 3,184 | 4,860 | |
| MWB Business Exchange Plc | 3,120 | 5,838 | 23,333 | |
| Liberty Plc | 1,968 | 1,346 | 1,903 | |
| Central | 4,708 | 1,912 | 1,940 | |
| 17,625 | 12,280 | 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. During the six months ended 30 June 2009, cash holdings at MWB Business Exchange were reduced, principally because £2.4m was used to purchase its own shares, £9.8m was used to pay dividends and £2.8m was used in acquiring further business centres. Of the total dividend paid of £9.8m, £7.0m was received by MWB Group Holdings Plc, the remaining £2.8m being paid to minority shareholders of MWB Business Exchange.
8. LOANS AND BORROWINGS
| 30 June 2009 | 30 June 2008 | 31 December 2008 | |
| £'000 | £'000 | £'000 | |
| Current liabilities | |||
| Secured bank loans | 4,403 | - | 341,827 |
| Other unsecured loan borrowings | - | 1,615 | 805 |
| 4,403 | 1,615 | 342,632 | |
| Non-current liabilities | |||
| Secured bank loans | 345,926 | 315,469 | 14,634 |
| 9.75% Unsecured Loan Stock 2009/2012 | 30,000 | 29,916 | 29,927 |
| 375,926 | 345,385 | 44,561 | |
| Total loans and borrowings | 380,329 | 347,000 | 387,193 |
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 Group itself, previously ran to the end of 2009, were extended to 31 December 2011. These loans were shown as current liabilities in the consolidated balance sheet at 31 December 2008 because at that date their term ran to 31 December 2009. However, because of this extension, these loan facilities are now medium term and therefore non-current liabilities at the date of this financial report. The shortest expiry date of all the Group's facilities is the facility provided to Liberty, whose term runs to 30 September 2010. The covenants included in all the Group's financing facilities were complied with at 30 June 2009.
Net debt
The Group's loans, borrowings and cash are included in the consolidated balance sheet at 30 June 2009 as follows:-
| 30 June 2009 | 30 June 2008 | 31 December 2008 | |
| £'000 | £'000 | £'000 | |
| Loans and borrowings | 380,329 | 347,000 | 387,193 |
| Hire purchase and leasing contracts | 182 | - | - |
| Long leasehold obligations | 697 | 702 | 699 |
| Fair value of derivative financial instruments | 2,876 | 35 | 1,894 |
| Total loans and borrowings | 384,084 | 347,737 | 389,786 |
| Less net cash and cash equivalents in note 7 | (17,625) | (12,280) | (32,036) |
| Total net debt at period end | 366,459 | 335,457 | 357,750 |
9. DEFERRED TAXATION
The deferred taxation liabilities/(assets) at 30 June 2009 and at previous period ends arose as follows:-
| 30 June 2009 | |||
| Total £'000 | Provided £'000 | Not provided £'000 | |
| Deferred tax assets | |||
| Accelerated capital allowances | (898) | 1,159 | (2,057) |
| Trading tax losses | (21,775) | (6,935) | (14,840) |
| Unrelieved capital expenditure and interest | |||
| payments | (36,452) | (10,534) | (25,918) |
| Valuation deficits | (12,366) | - | (12,366) |
| Total deferred tax (assets) | (71,491) | (16,310) | (55,181) |
| Deferred tax liabilities | |||
| Short term timing differences | 899 | 899 | - |
| Valuation surpluses | 4,869 | 4,869 | - |
| Net deferred tax (assets) at 30 June 2009 | (65,723) | (10,542) | (55,181) |
| 30 June 2008 | |||
| Total £'000 | Provided £'000 | Not provided £'000 | |
| Deferred tax assets | |||
| Accelerated capital allowances | (4,285) | 2,157 | (6,442) |
| Trading tax losses | (18,448) | (8,807) | (9,641) |
| Unrelieved capital expenditure and interest payments | (32,319) | (20,499) | (11,820) |
| Total deferred tax (assets) | (55,052) | (27,149) | (27,903) |
| Deferred tax liabilities | |||
| Short term timing differences | 1,050 | 1,050 | - |
| Valuation surpluses | 10,426 | 10,426 | - |
| Net deferred tax (assets) at 30 June 2008 | (43,576) | (15,673) | (27,903) |
| 31 December 2008 | |||
| Total £'000 | Provided £'000 | Not provided £'000 | |
| Deferred tax assets | |||
| 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) |
| Deferred tax liabilities | |||
| Short term timing differences | 884 | 884 | - |
| Valuation surpluses | (3,950) | 4,518 | (8,468) |
| Net deferred tax (assets) at 31 December 2008 | (59,370) | (10,500) | (48,870) |
Deferred tax assets and liabilities provided
At 30 June 2009, the Group had accelerated capital allowances, trading tax losses and interest payments from current and prior periods amounting to £58.3m (30 June 2008: £97.0m; December 2008: £56.8m) that it expects to be available to reduce future tax liabilities likely to arise in the Group. At 30 June 2009, these exceed short term timing differences and valuation surpluses of £20.6m (30 June 2008: £41.0m; 31 December 2008 £19.3m). The excess of £37.7m has been recognised at the prevailing tax rate of 28% in the net deferred tax assets at the period end of £10.5m (30 June 2008: £15.7m; 31 December 2008: £10.5m) included above.
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 £171.9m (30 June 2008: £74.5m; 31 December 2008: £149.3m) that are not expected to be capable of utilisation in the foreseeable future. Also, certain capital losses in the wider MWB Group totalling £25.2m (30 June 2008: £25.2m; 31 December 2008: £25.2m) are restricted in their use and are not expected to be readily realisable. These tax assets totalling £197.1m (30 June 2008: £99.7m; 31 December 2008: £174.5m), recognised at the prevailing tax rate of 28%, form the deferred tax asset not provided of £55.2m (30 June 2008: £27.9m; 31 December 2008: £48.9m) included above.
10. 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 the Company at each period end by the number of ordinary shares in issue at such date. The relevant figures are as follows:-
| 30 June 2009 | 30 June 2008 | 31 December 2008 | ||
| Equity attributable to shareholders of | ||||
| MWB Group Holdings per consolidated | ||||
| balance sheet | £'000 | 108,782 | 157,457 | 125,881 |
| Number of ordinary shares in issue | ||||
| at period end | '000 | 72,371 | 74,371 | 72,371 |
| Equity attributable to shareholders of | ||||
| MWB Group Holdings in pence per share | Pence | 150p | 212p | 174p |
11. 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 period ended 30 June 2009
In accordance with the Services Agreement and Share Transfer Agreement referred to above, the Group paid management fees of £1.2m and rental payments of £0.2m to ServCo during the six months ended 30 June 2009 (six months ended 30 June 2008: £1.9m; 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 £0.6m (six months ended 30 June 2008: £0.9m; year ended 31 December 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 £0.1m (six months ended 30 June 2008: £0.1m; year ended 31 December 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 30 June 2009 or at the previous period end and no amounts were written off in respect of any such balances during either period.
(iii) Remaining term
The term of the Services Agreement runs to 31 December 2010 in accordance with the Business Plan of the Group. Under the Services Agreement, the Company will pay annual fees in respect of the cost incurred by ServCo in providing these services to the Company. The fees payable by MWB to ServCo have been reduced from £3.5m per annum to £2.4m per annum with effect from 1 January 2009.
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. Accordingly, 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 ("AHG") group of companies.
Richard Balfour-Lynn, the Chief Executive of MWB, Michael Bibring and a Partner related to 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 six months ended 30 June 2009, the Group charged £0.2m (six months ended 30 June 2008: £0.1m; year ended 31 December 2008: £0.3m) to AHG in respect of the licensed office space referred to above. All amounts due were paid by AHG to MWB and accordingly no amounts were outstanding either to or from AHG at 30 June 2009 nor at the previous year end, and no amounts were written off in respect of any such balances during the period.
12. FINANCIAL STATEMENTS AND HALF-YEARLY FINANCIAL REPORT
A copy of this document has been submitted to the UK Listing Authority, and is available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS, telephone number 020 7676 1000.
The financial information set out in this Half-Yearly Financial Report in relation to MWB Group includes information for the six months ended 30 June 2009, with comparative information for the six months ended 30 June 2008 and the year ended 31 December 2008. Statutory financial statements for the year ended 31 December 2008 for the companies forming the MWB Group have been delivered to the Registrar of Companies. The auditors have reported on those financial statements; their reports were unqualified and did not contain statements under Section 237(2) or (3) of the Companies Act 1985. The auditors' report was modified to include an emphasis of matter paragraph which drew attention to note 1 to the financial statements for the year ended 31 December 2008.
This Half-Yearly Financial Report will be sent to shareholders during September 2009 and an electronic copy is available on the Company's website at www.mwb.co.uk from the date of its announcement on 27 August 2009. The audited financial statements of MWB Group Holdings Plc for the year ended 31 December 2008, further copies of this Half-Yearly Financial Report, and the Half-Yearly Financial Report for the six months ended 30 June 2008, are available from the Company Secretary, City Group P.L.C., at the Company's registered office of 30 City Road, London EC1Y 2AG.
STATEMENT OF RESPONSIBILITY OF DIRECTORS
We confirm to the best of our knowledge that:
This Half-Yearly Financial Report has been prepared in accordance with IAS34 Interim Financial Reporting as adopted by the EU;
The Half-Yearly Financial Report includes a fair review of the information required by:
• DTR 4.2.7.R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the Half-Yearly Financial Report; and a description of the principal risks and uncertainties for the remaining six months of the year; and
• DTR 4.2.8.R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the latest annual financial statements that could do so.
For and on behalf of the Board
| Richard Balfour-Lynn | Andrew Blurton |
| Chief Executive | Group Finance Director |
| 27 August 2009 |
GROUP BUSINESS CENTRES at 30 June 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 |
| Number of | ||
| Leased centres | Location | 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 |
| 52-54 Leadenhall Street | London EC3A 2BJ | 215 |
| 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 |
| Bracton House, 34-36 High Holborn | London WC1V 6AE | 270 |
| 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 |
| 52 leased centres at 30 June 2009 | 15,712 | |
| Operating and Management Agreement | Number of | |
| centres | Location | 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 |
| 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 |
| 7 Operating and Management Agreement | ||
| centres at 30 June 2009 | 1,508 | |
| Number of | ||
| Management contract centres | Location | 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 |
| 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 |
| 14 management contract centres | ||
| at 30 June 2009 | 2,570 | |
| Total | ||
| 73 centres at 30 June 2009 | 19,790 |
MALMAISON AND HOTEL DU VIN HOTELS at 30 June 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 | 39 | |
| Hotel du Vin, Stour Street | Canterbury CT1 2ND | 44 | |
| 2 current developments | 83 |