Longboat Energy Regulatory News (LBE)

28 Mar 2006 07:04

Marylebone Warwick Balfour Grp PLC28 March 2006 NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS---------------------------------------------------- 1. BASIS OF CONSOLIDATION AND ACCOUNTING POLICIES Marylebone Warwick Balfour Group Plc ("the Company" or "MWB") is a companydomiciled in The United Kingdom. These unaudited consolidated interim accountsfor the six months ended 31st December 2005 comprise the accounts of the Companyand its subsidiaries (together referred to as "the Group") and have beenprepared in accordance with International Financial Reporting Standards("IFRS")for the first time. EU law (IAS Regulation EC 1606/2002) requires the next annual consolidatedaccounts of the Company for the year ending 30th June 2006 to be prepared inaccordance with International Financial Reporting Standards adopted for use inthe EU IFRS. The adoption of IFRS has no effect on the underlying operations of the Group,its strategy or management, or on the cash flows derived from the business. Theadoption of IFRS only affects the way in which such activities are presented inthe accounts of the Group. On 16th January 2006, the Company published unaudited results for the year ended30th June 2005 restated in accordance with IFRS ("the IFRS restatement") whichshowed the effect of this transition on the Group's 2005 results and on itsopening and closing balance sheets. The disclosures required by IFRS 1concerning the transition from UK GAAP to IFRS are given in note 15. These unaudited consolidated interim accounts have been prepared on the basis ofthe accounting policies disclosed below and as adopted in the IFRS restatement(which are those expected to be applied in the accounts for the year ending 30thJune 2006). By their nature, the unaudited consolidated interim accounts do notinclude all information required to be included in full annual accounts. The comparative figures for the year ended 30th June 2005 have been extractedfrom the IFRS restatement and are therefore not the Company's statutory accountsfor that financial year. The statutory accounts, which were prepared under UKGAAP, have been reported on by the Company's auditors and delivered to theRegistrar of Companies. The report of the auditors was unqualified and did notcontain statements under section 237(2) or (3) of the Companies Act 1985. The accounts are prepared on the historical cost basis except that the followingassets and liabilities are stated at their fair value: • Investment and operational properties • Property held under finance leases • Interest rate swaps NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS---------------------------------------------------- ________________________________________________________________________________________________________________________ 1. BASIS OF CONSOLIDATION AND ACCOUNTING POLICIES (continued) ________________________________________________________________________________________________________________________In accordance with IFRS 1 - "First Time Adoption of International FinancialReporting Standards", the Group has taken advantage of the following exemptionsat 1st July 2004, the date of transition to IFRS: • Business combinations occurring prior to transition have not been restated • Share options granted before 7th November 2002 or vested prior to 1st January 2005 have not been recognised in accordance with IFRS 2. The Group has chosen not to take the exception permitted under IFRS 1 fromapplying IAS 32 and 39 for its comparative periods and accordingly these havebeen adopted in the comparative information in the interim accounts. Where necessary, adjustments are made to the accounts of subsidiaries to bringthe accounting policies used by such subsidiaries into line with those used bythe Group. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. Brands In accordance with IFRS 3, brands are initially included in the accounts attheir fair value. The Directors consider that the Group's brands have indefinitelives due to the durability of their underlying businesses which has beendemonstrated over many years. Accordingly, the brands have not been amortisedbut have instead been subject to an impairment assessment conducted at eachfinancial year end. Where this reveals a surplus, the value of the brand isretained, where it reveals a deficit, the brand is written down and the deficitis charged to the income statement. Goodwill In accordance with IFRS 1, goodwill written off to reserves under UK GAAP priorto 1998 has not been reinstated and is not included in determining anysubsequent profit or loss on disposal. Minority interests Dilution gains and losses on increases in minority interest, where no change ofcontrol results, are recognised directly in equity. Tangible fixed assets - property, plant and equipment Land and buildings held for use in the production or supply of goods orservices, or for administrative purposes, are stated in the balance sheet attheir revalued amounts, being the fair value, determined from market-basedevidence and appraisals undertaken by professional valuers at the balance sheetdate. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________ 1. BASIS OF CONSOLIDATION AND ACCOUNTING POLICIES (continued)________________________________________________________________________________________________________________________Tangible fixed assets - property, plant and equipment (continued) Any revaluation increase arising on the revaluation of such land and buildingsis credited to the properties revaluation reserve, except to the extent that itreverses a revaluation decrease for the same asset previously recognised as anexpense, in which case the increase is credited to the income statement to theextent of the decrease previously charged. A decrease in carrying amount arisingon the revaluation of such land and buildings is charged as an expense to theextent that it exceeds the balance, if any, held in the properties revaluationreserve relating to previous revaluations of that asset. Depreciation on revalued buildings is charged to income. On a subsequent sale orretirement of a revalued property, the attributable revaluation surplusremaining in the properties revaluation reserve is transferred directly toaccumulated profits. Properties in the course of construction are carried at cost, less anyrecognised impairment loss. Cost includes professional fees and, for qualifyingassets, borrowing costs capitalised in accordance with the Group's accountingpolicy. Depreciation of these assets, on the same basis as other propertyassets, commences when the assets are ready for their intended use. Fixtures and equipment are stated at cost less accumulated depreciation and anyimpairment loss. Depreciation is charged so as to write off the cost or valuation of fixedassets, other than land and property under construction, over their estimateduseful lives, using the straight line method, over the following periods:________________________________________________________________________________________________________________________Freehold and long leasehold listed operational properties The shorter of 100 years and the term of the lease Other freehold operational properties 50 years Other long leasehold properties and related leasehold 50 yearsimprovements Short leasehold The shorter of 50 years and the term of the lease Building surface finishes and services 30 years Plant and machinery 15 to 20 years Fixtures and equipment 3 to 10 years________________________________________________________________________________________________________________________ The gain or loss on the disposal or retirement of a fixed asset is determined asthe difference between the sales proceeds and the carrying amount of the assetand is recognised in income. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________1. BASIS OF CONSOLIDATION AND ACCOUNTING POLICIES (continued)________________________________________________________________________________________________________________________Investment properties Investment property, which is property held to earn rentals and/or capitalappreciation, is stated at its fair value at the balance sheet date, determinedfrom market-based evidence and appraisals undertaken by professional valuers atthe balance sheet date. Gains or losses arising from changes in the fair valueof investment property are included in the income statement for the period inwhich they arise. Leases Leases are classified as finance leases whenever the terms of the lease transfersubstantially all the risks and rewards of ownership to the lessee. All otherleases are classified as operating leases. Assets held under finance leases are recognised as assets of the Group at theirfair value or, if lower, at the present value of the minimum lease payments,each determined at the inception of the lease. The corresponding liability tothe lessor is included in the balance sheet as a finance lease obligation.Lease payments are apportioned between finance charges and reduction of thefinance lease obligation, so as to achieve a constant rate of interest on theremaining balance of the liability. Finance charges are charged directly againstincome, unless they are directly attributable to assets which are not yet readyfor their intended use, in which case they are capitalised into the costs ofthose assets. Benefits receivable on the entry into operating leases are spreadon a straight line basis over the entire term of the lease. Rentals payable and incentive fees received under operating leases are charged/amortised to income on a straight-line basis over the entire term of therelevant lease. Properties held for resale Properties held for resale are measured at the lower of carrying amount and fairvalue less costs to sell. Stocks Stocks are stated at the lower of cost and net realisable value. Provisionsagainst book values are recorded principally by reference to the age of stock.Cost comprises direct materials and, where applicable, direct labour costs andthose overheads that have been incurred in bringing the stocks to their presentlocation and condition. Cost is calculated using the weighted average method inthe retail division and FIFO for the hotels. Net realisable value representsthe estimated selling price less all estimated costs of completion and costs tobe incurred in marketing, selling and distribution. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________ 1. BASIS OF CONSOLIDATION AND ACCOUNTING POLICIES (continued)________________________________________________________________________________________________________________________ Debt and financial instruments Financial assets and financial liabilities are recognised on the Group's balancesheet when the Group becomes a party to the contractual provisions of theinstrument. Interest bearing bank loans and overdrafts and the Group's unsecured loan stockare recorded at the proceeds received, net of direct issue costs. The net amountof any premium or discount over the nominal value, less issue costs, isamortised over the life of the instrument and charged or credited to interestpayable in the income statement, thus producing a constant cost of financingover the life of the instrument. Trade receivables Trade receivables do not carry any interest and are stated at their nominalvalue as reduced by appropriate allowances for estimated irrecoverable amounts. Trade payables Trade payables are not interest bearing and are stated at their nominal value. Derivative financial instruments and hedge accounting The Group's activities expose it primarily to the financial risks on changes ininterest rates. The Group uses interest rate swaps, swaptions, caps, floors andcollars to hedge these exposures. The Group does not use derivative instrumentsfor speculative purposes. Changes in the fair values of derivative financial instruments that aredesignated and effective as hedges of future cash flows are recognised directlyin equity and the ineffective portion is recognised immediately in the incomestatement. If the cash flow hedge of a firm commitment or a forecast transactionresults in the recognition of an asset or a liability, then, at the time theasset or liability is recognised, the associated gains or losses on thederivative that had previously been recognised in equity are included in theinitial measurement of the asset or liability. For hedges that do not result inthe recognition of an asset or a liability, amounts deferred in equity arerecognised in the income statement in the same period in which the hedged itemaffects net income. Changes in the fair value of derivative financial instruments that do notqualify for hedge accounting are recognised in the income statement as theyarise. Hedge accounting is discontinued when the hedging instrument expires or is sold,terminated, exercised or no longer qualifies for hedge accounting. At that time,any cumulative gain or loss on the hedging instrument recognised in equity isretained in equity until the forecasted transaction occurs. If a hedgedtransaction is no longer expected to occur, the net cumulative gain or lossrecognised in equity is transferred to net profit or loss for the period. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS________________________________________________________________________________________________________________________1. BASIS OF CONSOLIDATION AND ACCOUNTING POLICIES (continued)________________________________________________________________________________________________________________________ Foreign exchange Monetary assets and liabilities denominated in foreign currencies are translatedinto Sterling at rates of exchange prevailing at the balance sheet date.Transactions denominated in foreign currencies are recorded in Sterling at therates ruling on the date of those transactions. Exchange differences in thenormal course of trading are included in the income statement. For the purposes of consolidation, the balance sheet and income statements ofsubsidiary undertakings that are denominated in foreign currencies, aretranslated at the rates of exchange ruling on the balance sheet date. Theincome statements are translated at an average rate for the accounting period.Exchange differences arising from the translation at the closing rates of theopening net assets of subsidiary undertakings denominated in foreign currenciesand differences arising between the average rates used and the closing rate, arerecorded as a movement on the Group's translation reserve. Such translationdifferences are recognised as income or as expenses in the period in which theoperation is disposed of. Turnover and revenue recognition Revenue is measured at the fair value of the consideration received orreceivable and represents rent, the amounts receivable from sales of propertyheld for resale, fees, hotel billings and amounts charged to customers for goodsand services provided by the Group, net of discounts and VAT. Sales of properties are recognised on exchange of contracts. Revenue from construction contracts is recognised in accordance with the Group'saccounting policy on construction contracts (see below). Interest income is accrued on a time basis by reference to the principaloutstanding and at the effective interest rate applicable. Dividend income from investments is recognised when the shareholders' rights toreceive payments have been established. Construction contracts Where the outcome of a construction contract can be estimated reliably, revenueand costs are recognised by reference to the stage of completion of the contractactivity at the balance sheet date. This is normally measured by the proportionthat contract revenues and costs incurred for the work to date bear to theestimated total contract costs, except where this would not be representative ofthe stage of completion. Variations in work, claims and incentive payments areincluded to the extent that they have been agreed. When it is probable that contract costs will exceed total contract revenue, theexpected loss is recognised as a loss immediately. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________1. BASIS OF CONSOLIDATION AND ACCOUNTING POLICIES (continued)________________________________________________________________________________________________________________________ Cost of sales Cost of sales comprises the book value of disposals of operational properties,properties held for resale and developments in progress, together with thedirect costs incurred in managing and operating the Group's property activities,net of recoveries charged to tenants. Retirement benefit costs Payments to defined contribution retirement benefit schemes are charged as anexpense as they fall due. For defined benefit retirement benefit schemes, the cost of providing benefitsis determined using the Projected Unit Credit Method, with actuarial valuationsconducted every three years. Actuarial gains and losses are recognised in fullin the period in which they occur. They are recognised outside the incomestatement and presented in the statement of recognised income and expense. The retirement benefit obligation recognised in the balance sheet represents thepresent value of the defined benefit obligation as adjusted for unrecognisedpast service cost, and as reduced by the fair value of scheme assets. Any assetresulting from this calculation is limited to past service cost, plus thepresent value of available refunds and reductions in future contributions to theplan. Interest payable Interest incurred on loans specific to properties in the course of developmentis capitalised once the development is completed and ready for occupation. Wheresuch interest is allowable in computing the taxation liabilities of the Group,this is used to reduce the tax charge in the income statement. All otherinterest payable is charged to the income statement. Corporation tax and deferred taxation The tax expense represents the sum of the tax currently payable and deferredtax. The tax currently payable is based on taxable profit for the year. Taxableprofit differs from net profit as reported in the income statement because itexcludes items of income and expense that are taxable in other years and itfurther excludes items that are never taxable or deductible. The Group'sliability for current tax is calculated using tax rates that have been enactedor substantively enacted by the balance sheet date. Deferred tax is the tax that is expected to be payable or recoverable ondifferences between the carrying amount of assets and liabilities in theaccounts and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Such assets and liabilities are not recognised if the temporarydifference arises from goodwill or from the initial recognition of other assetsand liabilities in a transaction that affects neither the tax profit nor theaccounting profit. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________1. BASIS OF CONSOLIDATION AND ACCOUNTING POLICIES (continued)________________________________________________________________________________________________________________________ Corporation tax and deferred taxation (continued) Deferred tax liabilities are recognised for temporary differences arising oninvestments in subsidiaries, except where the Group is able to control thereversal of the temporary difference and it is probable that the temporarydifference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply duringthe period when the liability is settled or the asset is realised. Deferred taxis charged or credited in the income statement, except when it relates to itemscharged or credited directly to equity, in which case the deferred tax is alsodealt with in equity. Dividends Dividends that have been approved by shareholders at previous Annual GeneralMeetings are included within liabilities. Dividends that are proposed at the balance sheet date are subject to approval byshareholders at the Annual General Meeting and are not included as a liabilityin the current year's accounts. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS________________________________________________________________________________________________________________________2. DIVISIONAL ANALYSIS________________________________________________________________________________________________________________________ The analysis of Group turnover is as follows:----------------------------------------------- Six months Six months Year ended ended ended 31st December 31st December 30th June 2005 2004* 2005*Turnover £'000 £'000 £'000_______________________________________________________________________________________________________________Malmaison 21,700 21,471 38,723Hotel du Vin 14,257 6,310 18,382Hotel investments 23,257 22,521 42,110Liberty Plc 22,675 24,379 44,829MWB Business Exchange PlcLeased properties 33,501 28,602 58,972Operating and management agreements 2,350 - 834West India Quay - apartment sales 5,093 6,520 28,550Other 1,454 2,504 4,060 _______ _______ _______ 124,287 112,307 236,460 _______ _______ _______By geographical origin:United Kingdom 122,202 110,129 231,575Japan 2,085 2,178 4,885 _______ 124,287 112,307 236,460 _______ _______ _______ Six months Six months Year ended ended ended 31st December 31st December 30th JuneEarnings before interest, taxation, 2005 2004* 2005*depreciation and amortisation ("EBITDA") £'000 £'000 £'000_______________________________________________________________________________________________________________The EBITDA of the Group is calculated as follows:- Net operating profit before financing expenses 18,146 12,530 21,769Add depreciation and amortisation for the period 6,048 7,995 17,948 _______ _______ _______Total EBITDA for the period 24,194 20,525 39,717 _______ _______ _______ *Restated to reflect IFRS reporting requirements. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________2. DIVISIONAL ANALYSIS (continued)________________________________________________________________________________________________________________________ Six months Six months Year ended ended ended 31st December 31st December 30th June 2005 2004* 2005*Analysis of EBITDA £'000 £'000 £'000_______________________________________________________________________________________________________________The analysis of EBITDA for the period is as follows:-Malmaison Operating income 7,646 6,355 11,953Hotel du Vin Operating income 3,428 1,747 4,230Hotel investments Operating income 7,245 7,157 12,799 Pre-opening costs - (470) (587) Sale of Argyle Street hotel 2,760 - - Sale of Howard hotel - 7,933 7,921Liberty Plc Operating income 1,133 852 213 Sale of Lasenby and Regent House - - 5,006MWB Business Exchange Plc Operating income - leased properties 2,427 (258) 2,236 Operating income - operating and management agreements 295 - 24Sale of properties - (383) (383)West India Quay - apartment sales 1,030 487 2,659Other 2,038 442 252 _______ _______ _______ 28,002 23,862 46,323Head office administration (3,808) (3,337) (6,606) _______ _______Total EBITDA for the period 24,194 20,525 39,717 _______ _______ _______ *Restated to reflect IFRS reporting requirements. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________2. DIVISIONAL ANALYSIS (continued)________________________________________________________________________________________________________________________ Six months Six months Year ended ended ended 31st December 31st December 30th June 2005 2004* 2005*Profit/(loss) before taxation £'000 £'000 £'000_______________________________________________________________________________________________________________The analysis of Group profit/(loss) before taxation forthe period is as follows:-Malmaison and Hotel du Vin Operating income 2,379 1,334 333Hotel investments Operating income (550) (2,495) (5,249) Pre-opening costs - (470) (587) Sale of Argyle Street hotel 2,760 - - Sale of Howard hotel - 7,933 7,921Liberty Plc Operating income 354 (2,492) (5,386) Sale of Lasenby House and Regent House - - 5,006MWB Business Exchange Plc Operating income - leased properties 1,877 (2,569) (3,435) Operating income - operating and management agreements 295 - (272) Sale of properties - (383) (383)West India Quay - apartment sales 1,030 444 2,659Other 1,947 666 580Group debt less cash and other assets (3,481) (5,112) (9,899) _______ _______ _______ 6,611 (3,144) (8,712)Head office administration (3,881) (3,493) (6,874) _______ _______ _______Profit/(loss) on ordinary activities before taxation for the period 2,730 (6,637) (15,586) _______ _______ _______By geographical origin:United Kingdom 2,392 (7,007) (16,458)Japan 338 370 872 _______ _______ _______ 2,730 (6,637) (15,586) _______ _______ _______ *Restated to reflect IFRS reporting requirements. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________2. DIVISIONAL ANALYSIS (continued)________________________________________________________________________________________________________________________ The analysis of net assets, minority interests and shareholders' funds of theGroup at 31st December 2005, with comparatives for previous periods, equity areas follows:- Equity Minority Shareholders' Net assets interests funds £'000 £'000 £'00031st December 2005_____________________________________________________________________________________________________________Malmaison and Hotel du Vin 81,671 5,448 76,223Hotel investments 59,995 30,182 29,813Liberty Plc 42,733 15,053 27,680MWB Business Exchange Plc 4,828 1,366 3,462West India Quay 3,772 1,257 2,515Group debt less cash and other assets (4,081) 84 (4,165) _______ _______ _______ 188,918 53,390 135,528 _______ _______ _______Equity shareholders' funds per share 124p _______ Equity Minority Shareholders' Net assets* interests* funds* £'000 £'000 £'00031st December 2004_____________________________________________________________________________________________________________Malmaison and Hotel du Vin 65,686 - 65,686Hotel investments 53,511 14,404 39,107Liberty Plc 49,256 14,279 34,977MWB Business Exchange Plc (27,104) - (27,104)West India Quay 29,698 14,185 15,513Group debt less cash and other assets (39,023) 91 (39,114) _______ _______ _______ 132,024 42,959 89,065 _______ _______ _______Equity shareholders' funds per share 82p _______ *Restated to reflect IFRS reporting requirements. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________2. DIVISIONAL ANALYSIS (continued)________________________________________________________________________________________________________________________ Equity Minority Shareholders' Net assets* interests* funds* £'000 £'000 £'00030th June 2005_____________________________________________________________________________________________________________Malmaison and Hotel du Vin 81,248 - 81,248Hotel investments 77,587 18,566 59,021Liberty Plc 42,992 15,500 27,492MWB Business Exchange Plc (22,576) - (22,576)West India Quay 24,984 14,757 10,227Group debt less cash and other assets (44,543) 67 (44,610) _______ _______ _______ 159,692 48,890 110,802 _______ _______ _______Equity shareholders' funds per share 101p _______ *Restated to reflect IFRS reporting requirements. ________________________________________________________________________________________________________________________3. PROFIT ON DISPOSAL OF PROPERTIES AND OTHER FIXED ASSETS________________________________________________________________________________________________________________________ Six months Six months Year ended ended ended 31st December 31st December 30th June 2005* 2004* 2005* £'000 £'000 £'000_____________________________________________________________________________________________________________The profit on disposal of investment properties and otherfixed assets arose as follows:- Profit on disposal of Argyle Street hotel 2,760 - -Profit on disposal of The Howard hotel - 7,933 7,921Profit on disposal of Lasenby House, Regent House and minor trademark 1,720 - 5,006Profit on disposal of other fixed assets 234 132 64Loss on disposal of Business Centre properties - (383) (383) _______ _______ _______ 4,714 7,682 12,608 _______ _______ _______ *Restated to reflect IFRS reporting requirements. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________4. INTEREST COST________________________________________________________________________________________________________________________ Six months Six months Year ended ended ended 31st December 31st December 30th June 2005 2004* 2005* £'000 £'000 £'000_____________________________________________________________________________________________________________The net interest payable and similar charges arose as follows:-Unsecured Loan Stock 2009/2012 1,491 - -Unsecured Loan Stock 2005/2006, including redemption premium 173 2,085 5,814Bank loans and overdrafts 12,424 17,920 32,476Finance leases and hire purchase contracts 92 244 400Bank charges, debt issue and debt repayment costs 1,680 1,931 2,697Defined benefit pension scheme financing costs 36 56 112 _______ _______ _______ 15,896 22,236 41,499Less interest capitalised before tax relief (55) (1,790) (2,191) _______ _______ _______Total interest cost for the period 15,841 20,446 39,308 _______ _______ _______ *Restated to reflect IFRS reporting requirements. ________________________________________________________________________________________________________________________5. CURRENT TAXATION ON ORDINARY ACTIVITIES________________________________________________________________________________________________________________________ Six months Six months Year ended ended ended 31st December 31st December 30th June 2005 2004 2005 £'000 £'000 £'000_____________________________________________________________________________________________________________The taxation (charge)/credit for the period arose asfollows:-UK Corporation taxUtilisation of current period losses in reducing liabilities of earlier years and adjustments in respect of prior periods (5) 128 604 Foreign tax Tax on profit for the period (225) (186) (402) Adjustment in respect of prior periods (7) (31) (31) _______ _______ _______Current taxation on ordinary activities (237) (89) 171 _______ _______ _______ NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________5. CURRENT TAXATION ON ORDINARY ACTIVITIES (continued)________________________________________________________________________________________________________________________ The taxation (charge)/credit on the profit/(loss) on ordinary activities hasbeen decreased from the amount that would arise from applying the prevailingcorporation tax rate to the profit/(loss) before taxation in the consolidatedincome statement as follows:- Six months Six months Year ended ended ended 31st December 31st December 30th June 2005 2004* 2005* £'000 £'000 £'000_____________________________________________________________________________________________________________UK corporation tax at 30% for each period on the profit/(loss) before taxation in consolidated income statement (835) 1,991 4,675 Excess of depreciation charged over capital allowances claimed 13 (2,219) (1,087) Expenditure permanently disallowed for taxation purposes and unrelieved tax losses (1,622) (407) (712) Difference between taxation on chargeable gains on disposals of properties and accounting profits on such disposals (2,630) (5,297) (7,266) Taxation on overseas earnings at a higher rate than UK corporation tax (124) (71) (139) Profits that are not taxable and capitalised expenditure deductible for taxation purposes 2,344 1,441 2,996 Tax losses brought forward from earlier periods utilised in current period 2,629 4,376 1,125 _______ _______ _______Total corporation tax and similar taxes charge for the period (225) (186) (408) Utilisation of current year losses in reducing liabilities of earlier periods and reduction/(increase) in taxation provisions in respect of prior periods (12) 97 579 _______ _______ _______Current taxation on ordinary activities (237) (89) 171 _______ _______ _______ *Restated to reflect IFRS reporting requirements. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS________________________________________________________________________________________________________________________6. MINORITY INTERESTS________________________________________________________________________________________________________________________ Minority interests in the profit/(loss) on ordinary activities after taxationfor the period arose in the following divisions of the Group:- Six months Six months Year ended ended ended 31st December 31st December 30th June 2005 2004* 2005* £'000 £'000 £'000_____________________________________________________________________________________________________________MWB Business Exchange Plc 63 - -Malmaison Holdings Limited 456 - -Hotel investments - West India Quay 77 (849) (881)Hotel investments - 140 Park Lane Limited (68) (174) (337)Liberty Plc 135 (955) (281)West India Quay apartments 664 679 1,251Others 19 (8) (10) _______ _______ _______ 1,346 (1,307) (258) _______ _______ _______ *Restated to reflect IFRS reporting requirements. ________________________________________________________________________________________________________________________7. EARNINGS/(LOSS) PER SHARE________________________________________________________________________________________________________________________The earnings/(loss) per share figures are calculated by dividing the profit/(loss) attributable to equity shareholders of the Parent for the period, by theweighted average number of shares in issue during the period, as follows:- Six months Six months Year ended ended ended 31st December 31st December 30th June 2005 2004* 2005* £'000 £'000 £'000_____________________________________________________________________________________________________________Profit/(loss) for the period attributable to equityshareholders of the Parent 1,147 (5,419) (15,157) _______ _______ _______ '000 '000 '000Weighted average number of ordinary shares in issueduring the period 109,650 109,690 109,598 Earnings/(loss) per share (basic and diluted) 1.0p (4.9p) (13.8p) _______ _______ _______ *Restated to reflect IFRS reporting requirements. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________8. TANGIBLE FIXED ASSETS________________________________________________________________________________________________________________________ Investment ---------properties---------- -----------Operational properties----------- Plant, machinery, Long Long Short fixtures & Freehold leasehold Freehold* leasehold* leasehold* equipment Total* £'000 £'000 £'000 £'000 £'000 £'000 £'000GroupCost or valuationAt 1st July 2005 2,500 2,040 388,915 60,597 16,347 93,646 564,045Additions 139 4,581 3,129 91 1,211 2,877 12,028Disposals - - (40,762) 96 802 (9,504) (49,368)Revaluation - - 14,153 2,093 - - 16,246 _______ ________ _______ _______ _______ _______ _______At 31st December 2005 2,639 6,621 365,435 62,877 18,360 87,019 542,951 _______ ________ _______ _______ _______ _______ _______DepreciationAt 1st July 2005 - - - - - (27,341) (27,341)Charge for the year - - (1,985) (256) (407) (4,121) (6,769)Disposals - - 125 - - 2,873 2,998Revaluation - - 1,603 200 - - 1,803 _______ ________ _______ _______ _______ _______ _______ At 31st December 2005 - - (257) (56) (407) (28,589) (29,309) _______ ________ _______ _______ _______ _______ _______Net book valueAt 31st December 2005 2,639 6,621 365,178 62,821 17,953 58,430 513,642 _______ ________ _______ _______ _______ _______ _______At 30th June 2005 2,500 2,040 388,915 60,597 16,347 66,305 536,704 _______ ________ _______ _______ _______ _______ _______ Analysis of valuation surplus for the period Reflected in fixed assets Surplus credited to incomestatement - - 305 - - - 305Surplus credited torevaluation reserve (note12) - - 11,679 1,892 - - 13,571Surplus credited tominority interests throughrevaluation reserve (note13) - - 3,707 401 - - 4,108Surplus credited tominority interests throughincome and statement (note13) - - 65 - - - 65 _______ ________ _______ _______ _______ _______ _______Net revaluation surplusreflected in fixed assets - - 15,756 2,293 - - 18,049 _______ ________ _______ _______ _______ _______ _______ *Restated to reflect IFRS reporting requirements. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________8. TANGIBLE FIXED ASSETS (continued)________________________________________________________________________________________________________________________Valuation--------- The Group's Investment and Operational properties were valued at 31st December2005 by qualified professional valuers working for the company of DTZ DebenhamTie Leung, Chartered Surveyors, ("DTZ"), acting in the capacity of ExternalValuers. All such valuers are Chartered Surveyors, being members of the RoyalInstitution of Chartered Surveyors ("RICS"). All valuations were carried out in accordance with the RICS Appraisal andValuation Standards 5th Edition ("the Manual") and the properties were valued onthe basis of Market Value or Existing Use Value of the Properties asappropriate. Market Value is defined in the Manual as the estimated amount forwhich a property should exchange on the date of valuation between a willingbuyer and a willing seller in an arm's-length transaction after propermarketing, where the parties had each acted knowledgeably, prudently and withoutcompulsion. The DTZ valuation is not qualified by any reference to existing oralternative use and implies the value to which a property will derive, havingregard to its most valuable use. Existing Use Value equates to the value as operating properties of the Group'sproperties. In valuing the hotels, DTZ have had regard to the valuation of theproperties as fully equipped operational entities, and to their tradingpotential. The valuation therefore includes the land and buildings; the tradefixtures, fittings, furniture, furnishings and equipment; and the market'sperception of the trading potential excluding personal goodwill; together withan assumed ability to renew existing licences, consents, certificates andpermits. The value excludes consumables and stock in trade. The valuation excludes any goodwill associated with the management by theCompany or its subsidiaries but recognises that the hotel property assets wouldprobably be sold as trading entities. The valuation also represents individualproperty values and does not reflect any premium value which may be attributableto an acquisition of the properties as a portfolio. Fixed asset properties valued by DTZ at 31st December 2005 totalled £497m.Certain other minor fixed assets and the short leasehold properties of MWBBusiness Exchange Plc no longer carried at valuation with a net book value of£17m are also included in the table above. The valuation resulted in a netsurplus for the six months ended 31st December 2005 of £18m. The Group's tangible fixed assets are located within the United Kingdom. Thehistoric cost of the Group's properties at 31st December 2005 includescapitalised interest of £25.2m (six months ended 31st December 2004: £32.4m;year ended 30th June 2005: £28m). NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________9. CURRENT LIABILITIES________________________________________________________________________________________________________________________ 31st December 31st December 30th June 2005 2004 2005 £'000 £'000 £'000Trade and other payables Trade creditors 13,085 14,133 13,508 Amounts due to related parties 87 100 - Other creditors 19,185 23,235 21,116 Accruals 24,887 20,155 24,976 Deferred income 1,907 4,498 2,023 _______ _______ _______ 59,151 62,121 61,623 _______ _______ _______Tax liabilities Corporation tax 1,543 1,767 1,533 Other taxes and social security 4,570 8,753 6,760 _______ _______ _______ 6,113 10,520 8,293 _______ _______ _______Borrowings, including finance leasesCurrent portion of secured bank and other loans 55,197 2,788 8,7057.50% Unsecured Loan Stock 2005/2006 - - 34,101Hire purchase and leasing contracts 1,804 4,133 3,263 _______ _______ _______ 57,001 6,921 46,069 _______ _______ _______ 122,265 79,562 115,985 _______ _______ _______ NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________10. NON CURRENT LIABILITIES________________________________________________________________________________________________________________________ 31st December 31st December 30th June 2005 2004* 2005* £'000 £'000 £'0009.75% Unsecured Loan Stock 2009/2012 30,000 - 30,0007.50% Unsecured Loan Stock 2005/2006 - 31,421 -Bank loans (secured) 253,476 422,377 338,671Other loan borrowings 4,045 5,665 4,855Less debt issue costs (4,144) (2,848) (3,107) _______ _______ _______ 283,377 456,615 370,419Hire purchase and leasing contracts - 1,594 320Long leasehold obligations 715 747 718 _______ _______ _______Borrowings, including finance leases 284,092 458,956 371,457 Fair value of derivative financial instruments 2,535 3,281 4,280Deferred tax provision 8,468 324 330Other payables 2,482 46 1,746 _______ _______ _______ 297,577 462,607 377,813Provisions (note 11) 17,525 17,863 17,520 _______ _______ _______ 315,102 480,470 395,333 _______ _______ _______ *Restated to reflect IFRS reporting requirements. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________10. NON CURRENT LIABILITIES (continued)________________________________________________________________________________________________________________________In June 2005, the Company issued £30m of 9.75% Unsecured Loan Stock 2009/2012;full details were set out in Listing Particulars of the Company dated 14th June2005. The Company redeemed the 7.50% Unsecured Loan Stock 2005/2006 on 31stJuly 2005, inclusive of redemption premium, for £34.1m. Summary of loans and overdrafts at year end------------------------------------------- 31st December 31st December 30th June 2005 2004 2005 £'000 £'000 £'000Repayable within one year:Current portion of bank loans 52,577 2,788 8,705Current portion of other loan borrowings 2,620 - 34,101 _______ _______ 55,197 2,788 42,806 _______ _______ _______Repayable:In more than one year but not more than two years 32,971 48,010 123,698In more than two years but not more than five years 89,496 261,229 99,530In more than five years 160,910 147,376 147,191 _______ _______ _______ 283,377 456,615 370,419 _______ _______ _______Total loans and overdrafts 338,574 459,403 413,225 _______ _______ _______ 31st December 31st December 30th June 2005 2004 2005 £'000 £'000 £'000Analysis by division--------------------Malmaison and Hotel du Vin 184,639 165,064 165,990Hotel investments 110,721 145,672 145,170Liberty Plc - 49,765 -MWB Business Exchange Plc 4,847 8,843 8,677West India Quay apartments 2,446 38,709 6,024Central debt and other assets 35,921 51,350 87,364 _______ _______ _______ 338,574 459,403 413,225 _______ _______ _______ NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS________________________________________________________________________________________________________________________ 11. PROVISIONS FOR LIABILITIES AND CHARGES________________________________________________________________________________________________________________________ The movements on provisions for liabilities and charges during the six monthperiod ended 31st December 2005 were as follows:- ------------------------31st December 2005---------------- Operating European 30th June lease Employee closure Other 2005 incentives* benefits* provision provisions* Total* Total* £'000 £'000 £'000 £'000 £'000 £'000At 1st July 2005 5,466 6,821 4,900 333 17,520 15,478Increase in operating lease incentives 272 - - - 272 1,564Reduction in deficit on Liberty Plc defined benefit pension scheme - (233) - - (233) 1,192Net decrease in other provisions during the period - - - (34) (34) (714) _____ _____ _____ _____ _____ ______At 31st December 2005 5,738 6,588 4,900 299 17,525 17,520 _____ _____ _____ _____ _____ ______ *Restated reflect IFRS reporting requirements. ________________________________________________________________________________________________________________________12. MOVEMENT ON RESERVES ________________________________________________________________________________________________________________________ Hedging and Revaluation translation Retained reserve* reserve* earnings* £'000 £'000 £'000 At 1st July 2005* 96,237 (4,157) (142,778)Profit retained for the period - - 1,147Revaluation surplus for the period 13,571 - -Net gain on increase in minority interests in MWB Business Exchange Plc and Malmaison - 784 8,617Actuarial loss on defined benefit pension schemes - - 42Deferred tax on properties at valuation - - (890)Change in fair value of financial derivatives - 1,448 -Transfer on sale of properties during period (8,839) - 8,839Transfer of depreciation on revalued tangible fixed assets (599) - 599Currency translation differences for the period - - 7 _______ _______ _______ At 31st December 2005 100,370 (1,925) (124,417) _______ _______ _______ During the six months ended 31st December 2005 there was no movement on theshare premium account, the capital redemption reserve, the merger reserve or theother reserves of the Group. *Restated to reflect IFRS reporting requirements. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________12. MOVEMENT ON RESERVES (continued)________________________________________________________________________________________________________________________Revaluation reserve The revaluation reserve has arisen in the following divisions of the Group:- Valuation Revaluation surplus Less reserve at on tangible minority 31st December fixed assets interests 2005 £'000 £'000 £'000 Malmaison and Hotel du Vin 61,247 (1,358) 59,889Hotel investments 52,746 (16,844) 35,902Liberty Plc 6,598 (2,089) 4,509Others 70 - 70 _______ _______ _______ At 31st December 2005 120,661 (20,291) 100,370 _______ _______ _______ ________________________________________________________________________________________________________________________13 MINORITY INTERESTS________________________________________________________________________________________________________________________ The movements in minority interests of the Group during the six months ended31st December 2005 arose as follows:- Add Add minority minority share of Other At share of valuation movements At 31st 1st July profit for surplus for during December 2005 the period the period the period 2005 £'000 £'000 £'000 £'000 £'000MWB Business Exchange Plc - 63 - 1,303 1,366Malmaison Holdings Limited - 456 1,899 3,093 5,448Hotel Investments 32,751 9 1,927 (4,505) 30,182Liberty Plc 15,500 135 282 (864) 15,053West India Quay apartments 572 664 - 21 1,257Others 67 19 - (2) 84 _________ ________ _______ _______ _______ 48,890 1,346 4,108 (954) 53,390 _________ ________ _______ _______ _______ NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________13. MINORITY INTERESTS (continued)________________________________________________________________________________________________________________________ Malmaison and Hotel du Vin-------------------------- On 26th July 2005, the Company announced it had raised £30m of new equity andextended an existing £167m banking facility by a further £75m in its Malmaisonand Hotel du Vin Division. These additional funds, totalling £105m, were raisedto finance the further expansion of Malmaison and Hotel du Vin, aimed atincreasing the number of Malmaison and Hotel du Vin hotels from their thennumber of 15 hotels to over 25 during the subsequent five years. The new equity was provided by The Royal Bank of Scotland, which subscribed £30mof preferred equity carrying a priority return of 5% per annum. As a result ofthis transaction, RBS now owns 17.5% of Malmaison Holdings Limited, the holdingcompany of the Malmaison and Hotel du Vin hotels with effect from 26th July2005. ________________________________________________________________________________________________________________________14. EQUITY SHAREHOLDERS' FUNDS PER SHARE________________________________________________________________________________________________________________________ The equity shareholders' funds per share figures of the Group are calculated bydividing the equity shareholders' funds at the year end by the number of sharesin issue at that date. They are calculated as follows:- 31st December 31st December 30th June 2005 2004* 2005* £'000 £'000 £'000 Equity attributable to shareholders of the Parent perconsolidated balance sheet 135,528 89,065 110,802 _______ _______ _______ '000 '000 '000 Number of ordinary shares in issue at period end 109,650 109,150 109,650 _______ _______ _______ Equity shareholders' funds per share 124p 82p 101p _______ _______ _______ *Restated to reflect IFRS reporting requirements. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________15. EXPLANATION OF TRANSITION TO IFRS________________________________________________________________________________________________________________________ As stated in Note 1, these are the Group's first consolidated interim accountsprepared under IFRS. These accounts represent the first half of the year'sresults of the Group for the year ending 30th June 2006, the first year of IFRSannual consolidated accounts for the Group. The accounting policies in Note 1 have been applied in preparing theconsolidated interim accounts for the six months ended 31st December 2005, thecomparative information for the six months ended 31st December 2004 and for theyear ended 30th June 2005, as well as the preparation of an opening IFRS balancesheet at 1st July 2004 (the Group's date of transition). In preparing the opening IFRS balance sheet, the comparative information for thesix months ended 31st December 2004 and for the year ended 30th June 2005, theBoard has adjusted amounts reported previously in its accounts for the periodsthen ended which had been prepared in accordance with UK GAAP. An explanation of how the transition from previous UK GAAP to IFRS has affectedthe Group's reported financial position and its reported financial performanceis set out in the following tables and the notes that accompany these tables. The principal changes arising from the adoption of IFRS on the results of theGroup for the six months ended 31st December 2004, the year ended 30th June2005, and the resultant effect on the results for the six months ended 31stDecember 2005, are as follows:- (i) IAS 16 - Property, Plant and Equipment. The effect of implementing this Standard is that valuation surpluses previously recorded under UK GAAP on the Group's short leasehold properties (principally in the MWB Business Exchange Plc division) have been reversed in the December 2004, June 2005 and December 2005 accounts. In addition, this results in a reversal of the previous write downs and reversals thereof that appeared in the Group income statement. The adoption of this Standard has reduced disclosed Equity Shareholders' Funds at 30th June 2005 by approximately £31m, or 28p per share. (ii) IAS 17 - Leases. This Standard requires the land element within long leasehold interests to be separated from the property interest and for the land element to be recorded as an operating lease and therefore at cost. Under UK GAAP, both the land and property element were recorded at valuation. The effect of implementing this Standard has been to reduce carrying values of the Group's long leasehold interests and to increase the recorded profit if these interests are subsequently sold. The adoption of this Standard has reduced disclosed Equity Shareholders' Funds at 30th June 2005 by approximately £3m or 3p per share. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS________________________________________________________________________________________________________________________15. EXPLANATION OF TRANSITION TO IFRS (continued)________________________________________________________________________________________________________________________(iii) SIC 15 - Operating Lease Incentives. Under UK GAAP, lease incentives were required to be amortised over the period to the next rent review. Under SIC 15, these are required to be amortised over the entire length of the lease. The effect of this has been to reduce the credit to the income statement relating to the amortisation of lease incentives received in prior years, and to increase the resulting provision carried in the balance sheet at December 2004, June 2005 and December 2005. The adoption of this Standard has reduced disclosed Equity Shareholders' Funds at 30th June 2005 by approximately £5m, or 5p per share. (iv) IAS 39 - Financial Instruments. This Standard requires interest rate swaps (as opposed to fixed rate loans) to be recorded at fair value in the accounts. This is in contrast to UK GAAP which generally only required these items to be recorded at cost, with the fair value disclosed by way of note. Under IFRS, to the extent that such derivatives are effective hedges, changes in fair value are recognised through equity reserves. To the extent that such derivatives are ineffective hedges, changes in fair value are recognised in the income statement. The adoption of this Standard has reduced disclosed Equity Shareholders' Funds at 30th June 2005 by approximately £4m, or 4p per share. (v) IAS 12 - Income Taxes. This Standard requires deferred tax provisions that may potentially be payable on the sale of properties and other assets to be provided in full, whereas UK GAAP required this potential liability to be disclosed only as a contingent liability and not provided for in the accounts. Due to the availability of capital allowances, unrelieved interest payments and capital losses brought forwards, the implementation of this Standard has reduced Equity Shareholders' funds of the Group by £200,000 and therefore less than 1p per share. (vi) IAS 19 - Employee Benefits. This Standard requires recognition in the accounts of any surplus or deficit of a defined benefit pension scheme operated by the Group. The Group operates one such scheme, in Liberty Plc, and the deficit has therefore been fully provided. The adoption of this Standard reduced disclosed Equity Shareholders' Funds at 30th June 2005 by approximately £5m, or 4p per share. (vii) IFRS 2 - Share Based Payments. This Standard requires the fair value of share options at the date of grant to be charged over the vesting period of the grant; this affects the recording of options granted by Liberty Plc and MWB Business Exchange Plc. Implementation of this Standard has resulted in a small charge being made against profits of the Group for the current year. NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________15. EXPLANATION OF TRANSITION TO IFRS (continued)________________________________________________________________________________________________________________________ The effect on Equity Shareholders' Funds of the Group at 30th June 2005 as aresult of adopting IFRS has been as follows:- Pence £'000 per share Equity shareholders' funds under UK GAAP 159,522 145pIAS 16 - Reduction in carrying value of the Group's short leasehold interests (30,934) (28p)IAS 17 - Reduction in carrying value of the land element of long leasehold properties (3,150) (3p)SIC 15 - Lease incentives amortised over life of lease (5,466) (5p)IAS 39 - Recognition of fair value of derivatives (4,280) (4p)IAS 12 - Recognition of deferred tax (231) -IAS 19 - Recognition of defined benefit pension costs (4,659) (4p)Equity shareholders' funds under IFRS 110,802 101p NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________15. EXPLANATION OF TRANSITION TO IFRS (continued)________________________________________________________________________________________________________________________ Reconciliation of consolidated income statement for the year ended 30th June 2005 Previously IAS 16 SIC - 15 reported Property, Operating IAS 39 IAS 12 IAS 19 IFRS 2 Restated under plant and IAS 17 lease Financial income Employee Share based underFor the year ended 30th June UK GAAP equipment Leases incentives instruments Tax benefits payments IFRS2005 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Turnover 236,460 - - - - - - - 236,460Cost of sales (201,142) (11,623) - (1,564) - - - - (214,329)Gross profit 35,318 (11,623) - (1,564) - - - - 22,131Administration expenses (12,675) - - - - - (269) (26) (12,970)Operating profit before profit on disposal of properties 22,643 (11,623) - (1,564) - - (269) (26) 9,161Profit on disposal of investment properties and other fixed assets 5,540 - 7,068 - - - - - 12,608Net operating profit before 28,183 (11,623) 7,068 (1,564) - - (269) (26) 21,769financing expenses Net financing costs (38,009) - - - - - (112) - (38,121)Change in fair value - - - - 766 - - - 766derivative financial instruments Loss before tax (9,826) (11,623) 7,068 (1,564) 766 - (381) (26) (15,586)Current taxation on ordinary 177 - - - - (6) - - 171activities Loss before taxation for the (9,649) (11,623) 7,068 (1,564) 766 (6) (381) (26) (15,415)year Attributable to: Equity shareholders of the (8,625) (11,623) 6,219 (1,564) 718 (4) (260) (18) (15,157)Parent Minority interests (1,024) - 849 - 48 (2) (121) (8) (258)Loss for the year (9,649) (11,623) 7,068 (1,564) 766 (6) (381) (26) (15,415)Basic loss per share - pence (7.9p) (10.6p) 5.7p (1.4p) 0.6p - (0.2p) - (13.8p)Diluted loss per share - (7.9p) (10.6p) 5.7p (1.4p) 0.6p - (0.2p) - (13.8p)pence IFRS adjustments IAS 16 - Leasehold interests previously held at valuation now held at costIAS 17 - Finance lease accounting - reclassification of land element as an operating leaseSIC-15 - Lease incentives amortised over term of leaseIAS 39 - Movements in derivatives and tax thereon taken through income statement where hedge accounting not appliedIAS 12 - Recognition of deferred tax on property revaluations taken through income statementIAS 19 - Movement on pensions liability taken through income statementIFRS 2 - Share based payments recorded through income statement at fair value NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________15. EXPLANATION OF TRANSITION TO IFRS (continued) ________________________________________________________________________________________________________________________ Reconciliation of consolidated income statement for the six months ended 31st December 2004 Previously SIC - 15 reported IAS 40 Operating IAS 39 IAS 12 IAS 19 IFRS 2 Restated under Investment IAS 17 lease Financial income Employee Share based underFor the six months ended UK GAAP property Leases incentives instruments Tax benefits payments IFRS 31st December 2004 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover 112,307 - - - - - - - 112,307Cost of sales (94,362) (6,136) - (775) - - - - (101,273)Gross profit 17,945 (6,136) - (775) - - - - 11,034Administration expenses (6,038) - - - - - (135) (13) (6,186)Operating profit before profit on disposal of properties 11,907 (6,136) - (775) - - (135) (13) 4,848Profit on disposal of investment properties and other fixed assets 3,294 - 4,388 - - - - - 7,682Net operating profit before 15,201 (6,136) 4,388 (775) - - (135) (13) 12,530financing expenses Net financing costs (19,627) - - - 516 - (56) - (19,167)Loss before tax (4,426) (6,136) 4,388 (775) 516 - (191) (13) (6,637)Current taxation on ordinary (89) - - - - - - - (89)activities Loss before taxation for the (4,515) (6,136) 4,388 (775) 516 - (191) (13) (6,726)period Attributable to: Equity shareholders of the (3,265) (6,136) 4,388 (775) 509 - (131) (9) (5,419)Parent Minority interests (1,250) - - - 7 - (60) (4) (1,307)Loss for the period (4,515) (6,136) 4,388 (775) 516 - (191) (13) (6,726) Basic earnings per share - (3.0p) (5.6p) 4.0p (0.7p) 0.5p - (0.1p) - (4.9p)pence Diluted earnings per share - (3.0p) (5.6p) 4.0p (0.7p) 0.5p - (0.1p) - (4.9p)pence NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________15. EXPLANATION OF TRANSITION TO IFRS (continued)________________________________________________________________________________________________________________________ Summary reconciliation of equity 1st July 2004 31st December 2004 30th June 2005 ______________________________ ____________________________ _____________________________ Effect of Effect of Effect of Previous transition Previous transition Previous transition £'000 UK GAAP to IFRS IFRS UK GAAP to IFRS IFRS UK GAAP to IFRS IFRSNon current assets Brand 18,200 - 18,200 18,200 - 18,200 18,200 - 18,200Investment and 527,999 (35,583) 492,416 526,797 (38,021) 488,776 512,738 (42,339) 470,399operational properties Development properties 21,265 - 21,265 - - - - - - 567,464 (35,583) 531,881 544,997 (38,021) 506,976 530,938 (42,339) 488,599Plant and equipment 43,599 - 43,599 66,696 - 66,696 66,305 - 66,305 611,063 (35,583) 575,480 611,693 (38,021) 573,672 597,243 (42,339) 554,904Current assets Trading properties 1,113 - 1,113 21,125 - 21,125 4,099 - 4,099Inventories 7,054 - 7,054 9,455 - 9,455 8,366 - 8,366Trade and other 91,763 - 91,763 43,815 - 43,815 64,104 - 64,104receivables Cash and cash 49,015 - 49,015 43,989 - 43,989 39,537 - 39,537equivalents 148,945 - 148,945 118,384 - 118,384 116,106 - 116,106Total assets 760,008 (35,583) 724,425 730,077 (38,021) 692,056 713,349 (42,339) 671,010Current liabilities Trade and other (64,423) - (64,423) (62,121) - (62,121) (61,623) - (61,623)payables Tax liabilities (5,147) - (5,147) (10,520) - (10,520) (8,293) - (8,293)Borrowings including (57,063) - (57,063) (6,921) - (6,921) (46,069) - (46,069)finance leases (126,633) - (126,633) (79,562) - (79,562) (115,985) - (115,985)Non-current liabilities Borrowings including (460,222) (1,164) (461,386) (458,209) (747) (458,956) (370,739) (718) (371,457)finance leases Derivative financial - (3,065) (3,065) - (3,281) (3,281) - (4,280) (4,280)instruments Deferred tax provision - (324) (324) - (324) (324) - (330) (330)Other provisions (20,581) 5,102 (15,479) (20,165) 2,302 (17,863) (14,206) (3,314) (17,520)Other payables (1,791) - (1,791) (46) - (46) (1,746) - (1,746) (482,594) 549 (482,045) (478,420) (2,050) (480,470) (386,691) (8,642) (395,333)Total liabilities (609,227) 549 (608,678) (557,982) (2,050) (560,032) (502,676) (8,642) (511,318)Net assets 150,781 (35,034) 115,747 172,095 (40,071) 132,024 210,673 (50,981) 159,692 NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________ 15. EXPLANATION OF TRANSITION TO IFRS (continued)________________________________________________________________________________________________________________________ Summary reconciliation of equity (continued) 1st July 2004 31st December 2004 30th June 2005 ______________________________ ____________________________ _____________________________ Effect of Effect of Effect of Previous transition Previous transition Previous transition £'000 UK GAAP to IFRS IFRS UK GAAP to IFRS IFRS UK GAAP to IFRS IFRSEquity Called up share capital 54,900 - 54,900 54,575 - 54,575 54,825 - 54,825Share premium account 79,364 - 79,364 79,364 - 79,364 79,514 - 79,514Capital redemption 15,650 - 15,650 15,975 - 15,975 15,975 - 15,975reserve Revaluation reserve 105,535 (33,222) 72,313 101,177 (30,053) 71,124 130,067 (33,830) 96,237Hedging and translation 149 (2,310) (2,161) 149 (3,042) (2,893) 134 (4,291) (4,157)reserve Merger reserve 9,403 - 9,403 9,403 - 9,403 9,403 - 9,403Other reserves 1,379 - 1,379 1,553 - 1,553 1,783 - 1,783Retained earnings (157,507) 3,276 (154,231) (136,355) (3,681) (140,036) (132,179) (10,599) (142,778)Equity attributable to shareholders of the Parent 108,873 (32,256) 76,617 125,841 (36,776) 89,065 159,522 (48,720) 110,802 Minority interests 41,908 (2,778) 39,130 46,254 (3,295) 42,959 51,151 (2,261) 48,890 Total equity 150,781 (35,034) 115,747 172,095 (40,071) 132,024 210,673 (50,981) 159,692 Equity shareholders' funds per share - pence per share 99p (30p) 69p 115p (33p) 82p 145p (44p) 101p NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________ 15. EXPLANATION OF TRANSITION TO IFRS (continued)________________________________________________________________________________________________________________________ Reconciliation of equity at 30th June 2005 1st July 2004 Previously Opening SIC - 15 reported Balance IAS 16 Operating under Sheet Property, lease IAS 39 IAS 12 IAS 19 Restated UK GAAP adjustment plant and IAS 17 incentives Financial income Employee under equipment Leases instruments Tax benefits IFRSAt 30th June 2005 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Non current assets Brand 18,200 - - - - - - - 18,200Investment and 512,738 (35,583) (11,132) 4,376 - - - - 470,399operational properties 530,938 (35,583) (11,132) 4,376 - - - - 488,599Plant & equipment 66,305 - - - - - - - 66,305 597,243 (35,583) (11,132) 4,376 - - - - 554,904Current assets Trading properties 4,099 - - - - - - - 4,099Inventories 8,366 - - - - - - - 8,366Trade and other 64,104 - - - - - - - 64,104receivables Cash and cash equivalents 39,537 - - - - - - - 39,537 116,106 - - - - - - - 116,106Total assets 713,349 (35,583) (11,132) 4,376 - - - - 671,010Current liabilities Trade and other payables (61,623) - - - - - - - (61,623)Tax liabilities (8,293) - - - - - - - (8,293)Borrowings including (46,069) - - - - - - - (46,069)finance leases (115,985) - - - - - - - (115,985)Non-current liabilities Borrowings including finance leases (370,739) (1,164) - 446 - - - - (371,457)Derivative financial instruments - (3,065) - - - (1,215) - - (4,280)Deferred tax provision - (324) - - - - (6) - (330)Other provisions (14,206) 5,102 (5,660) - (1,564) - - (1,192) (17,520)Other payables (1,746) - - - - - - - (1,746) (386,691) 549 (5,660) 446 (1,564) (1,215) (6) (1,192) (395,333)Total liabilities (502,676) 549 (5,660) 446 (1,564) (1,215) (6) (1,192) (511,318)Net assets 210,673 (35,034) (16,792) 4,822 (1,564) (1,215) (6) (1,192) 159,692 NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________ 15. EXPLANATION OF TRANSITION TO IFRS (continued)________________________________________________________________________________________________________________________ Reconciliation of equity at 30th June 2005 (continued) Previously Opening IAS 16 SIC - 15 reported Balance Property, Operating IAS 39 IAS 12 IAS 19 Restated under Sheet plant and IAS 17 lease Financial income Employee under At 30th June 2005 UK GAAP adjustment equipment Leases incentives instruments Tax benefits IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Equity Called up share capital 54,825 - - - - - - - 54,825Share premium account 79,514 - - - - - - - 79,514Capital redemption 15,975 - - - - - - - 15,975reserve Revaluation reserve 130,067 (33,222) (5,170) 4,562 - - - - 96,237Hedging and translation 134 (2,310) - - - (1,981) - - (4,157)reserve Merger reserve 9,403 - - - - - - - 9,403Other reserves 1,783 - - - - - - - 1,783Retained earnings (132,179) 3,276 (11,622) (589) (1,564) 718 (4) (814) (142,778)Equity attributable to equity shareholders of the Parent 159,522 (32,256) (16,792) 3,973 (1,564) (1,263) (4) (814) 110,802 Minority interests 51,151 (2,778) - 849 - 48 (2) (378) 48,890Total equity 210,673 (35,034) (16,792) 4,822 (1,564) (1,215) (6) (1,192) 159,692 Equity shareholders' funds per share - pence per share 145p (30p) (15p) 3p (1p) (1p) - - 101p NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________15. EXPLANATION OF TRANSITION TO IFRS (continued)________________________________________________________________________________________________________________________ Reconciliation of equity at 31st December 2004 Previously 1st July SIC - 15 reported 2004 Operating under Opening IAS 40 lease IAS 39 IAS 12 IAS 19 Restated UK GAAP Balance Investment IAS 17 incentives Financial income Employee under Sheet Property Leases instruments Tax benefits IFRS At 31st December 2004 adjustment £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Non current assets Brand 18,200 - - - - - - - 18,200Investment and 526,797 (31,195) (4,492) (2,334) - - - - 488,776operational property 544,997 (31,195) (4,492) (2,334) - - - - 506,976Plant & equipment 66,696 - - - - - - - 66,696 611,693 (31,195) (4,492) (2,334) - - - - 573,672Current assets Trading properties 21,125 - - - - - - - 21,125Inventories 9,455 - - - - - - - 9,455Trade and other 43,815 - - - - - - - 43,815receivables Cash and cash equivalents 43,989 - - - - - - - 43,989 118,384 - - - - - - - 118,384Total assets 730,077 (31,195) (4,492) (2,334) - - - - 692,056Current liabilities Trade and other payables (62,121) - - - - - - - (62,121)Tax liabilities (10,520) - - - - - - - (10,520)Borrowings including (6,921) - - - - - - - (6,921)finance leases (79,562) - - - - - - - (79,562)Borrowings including (458,209) (1,193) - 446 - - - - (458,956)finance leases Derivative financial - (3,065) - - - (216) - - (3,281)instruments Deferred tax provision - (324) - - - - - - (324)Other provisions (20,165) 5,130 (1,456) - (775) - - (597) (17,863)Other payables (46) - - - - - - - (46) (478,420) 548 (1,456) 446 (775) (216) - (597)(480,470)Total liabilities (557,982) 548 (1,456) 446 (775) (216) - (597)(560,032)Net assets 172,095 (30,647) (5,948) (1,888) (775) (216) - (597) 132,024 NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________ 15. EXPLANATION OF TRANSITION TO IFRS (continued)________________________________________________________________________________________________________________________ Reconciliation of equity at 31st December 2004 (continued) Previously SIC - 15 reported Opening Operating under Balance IAS 40 lease IAS 39 IAS 12 IAS 19 Restated UK GAAP Sheet Investment IAS 17 incentives Financial income Employee underAt 31st December 2004 adjustment Property Leases instruments Tax benefits IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Equity Called up share capital 54,575 - - - - - - - 54,575Share premium account 79,364 - - - - - - - 79,364 Capital redemption 15,975 - - - - - - - 15,975reserve Revaluation reserve 101,177 (28,686) 208 (1,575) - - - - 71,124Hedging and translation 149 (2,310) - - - (732) - - (2,893)reserve Merger reserve 9,403 - - - - - - - 9,403Other reserves 1,553 - - - - - - - 1,553Retained earnings (136,355) 3,129 (6,156) 21 (775) 509 - (409) (140,036)Equity attributable to equity shareholders of the Parent 125,841 (27,867) (5,948) (1,554) (775) (223) - (409) 89,065 Minority interests 46,254 (2,780) - (334) - 7 - (188) 42,959 Total equity 172,095 (30,647) (5,948) (1,888) (775) (216) - (597) 132,024 Equity shareholders' funds per share - pence per share 115p (27p) (5p) (1p) - - - - 82p NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________ 15. EXPLANATION OF TRANSITION TO IFRS (continued)________________________________________________________________________________________________________________________ Reconciliation of equity - Opening Balance Sheet at 1st July 2004 SIC - 15 Previously IAS 16 Operating reported Property, lease IAS 39 IAS 12 IAS 19 Restated under plant and IAS 17 incentives Financial income Employee under UK GAAP equipment Leases instruments Tax benefits IFRSAt 1st July 2004 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Non current assets Brand 18,200 - - - - - - 18,200Investment and operational 527,999 (28,775) (6,808) - - - - 492,416properties Development properties 21,265 - - - - - - 21,265 567,464 (28,775) (6,808) - - - - 531,881Plant & equipment 43,599 - - - - - - 43,599 611,063 (28,775) (6,808) - - - - 575,480Current assets Trading properties 1,113 - - - - - - 1,113Inventories 7,054 - - - - - - 7,054Trade and other receivables 91,763 - - - - - - 91,763Cash and cash equivalents 49,015 - - - - - - 49,015 148,945 - - - - - - 148,945Total assets 760,008 (28,775) (6,808) - - - - 724,425Current liabilities Trade and other payables (64,423) - - - - - - (64,423)Tax liabilities (5,147) - - - - - - (5,147)Borrowings including finance (57,063) - - - - - - (57,063)leases (126,633) - - - - - - (126,633)Non-current liabilities Borrowings including finance (460,222) - (1,164) - - - - (461,386)leases Derivative financial instruments - - - - (3,065) - - (3,065)Deferred tax provision - - - - - (324) - (324)Other provisions (20,581) 14,634 - (3,902) - - (5,630) (15,479)Other payables (1,791) - - - - - - (1,791) (482,594) 14,634 (1,164) (3,902) (3,065) (324) (5,630) (482,045)Total liabilities (609,227) 14,634 (1,164) (3,902) (3,065) (324) (5,630) (608,678)Net assets 150,781 (14,141) (7,972) (3,902) (3,065) (324) (5,630) 115,747 NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________15. EXPLANATION OF TRANSITION TO IFRS (continued)________________________________________________________________________________________________________________________ Reconciliation of equity - Opening Balance Sheet at 1st July 2004 (continued) Previously IAS 16 SIC - 15 reported Property, Operating IAS 39 IAS 12 IAS 19 Restated under plant and IAS 17 lease Financial income Employee under UK GAAP equipment Leases incentives instruments Tax benefits IFRS At 1st July 2004 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Equity Called up share capital 54,900 - - - - - - 54,900Share premium account 79,364 - - - - - - 79,364Capital redemption reserve 15,650 - - - - - - 15,650Revaluation reserve 105,535 (26,099) (7,123) - - - - 72,313Hedging and translation reserve 149 - - - (2,310) - - (2,161)Merger reserve 9,403 - - - - - - 9,403Other reserves 1,379 - - - - - - 1,379Retained earnings (157,507) 11,958 - (3,902) (707) (227) (3,846)(154,231)Equity attributable to equity shareholders of the Parent 108,873 (14,141) (7,123) (3,902) (3,017) (227) (3,846) 76,617 Minority interests 41,908 - (849) - (48) (97) (1,784) 39,130Total equity 150,781 (14,141) (7,972) (3,902) (3,065) (324) (5,630) 115,747 Equity shareholders' funds per share - pence per share 99p (13p) (6p) (4p) (3p) - (4p) 69p NOTES TO THE UNAUDITED CONSOLIDATED INTERIM ACCOUNTS ________________________________________________________________________________________________________________________16. ACCOUNTS AND INTERIM ANNOUNCEMENT________________________________________________________________________________________________________________________A copy of the above document has been submitted to the UK Listing Authority, andwill be available for inspection at the UK Listing Authority's Document ViewingFacility, which is situated at The Financial Services Authority, 25 The NorthColonnade, Canary Wharf, London E14 5HS, telephone number 020 7676 1000. This interim announcement will be sent to shareholders during April 2005. Theaudited accounts of Marylebone Warwick Balfour Group Plc for the year ended 30thJune 2005, further copies of these interim accounts, and the interim accountsfor the six months ended 31st December 2004, are available from the CompanySecretary, City Group P.L.C. at the Company's registered office of 30 City Road,London EC1Y 2AG. This information is provided by RNS The company news service from the London Stock Exchange