RNS Number:2382K
Marylebone Warwick Balfour Grp PLC
29 March 2005
FOR IMMEDIATE RELEASE
29th March 2005
MARYLEBONE WARWICK BALFOUR GROUP PLC
INTERIM RESULTS FOR SIX MONTHS ENDED 31st DECEMBER 2004
HIGHLIGHTS
Financial results
* Following independent valuation of the property Group's portfolio,
Equity Shareholders Funds increase to 115p per share + 16%
* EBITDA up to #16.3m + 51%
* Gearing down to 245% from 311%
Hotels
* Now represents 74% of Group asset value
* #66.4m acquisition of Hotel du Vin to create UK's largest boutique hotel
group
* Malmaison occupancy levels rise by 5% to 80% and average room rate
increased to almost #100 a night
* Malmaison turnover rose 42% to #21.5m producing EBITDA of #6.4m
* Hotel du Vin produced EBITDA of #1.7m for three months of ownership
* New Malmaison opened in Belfast in December and further openings in
Oxford and Liverpool confirmed
* New Hotel du Vin opened in Henley-on-Thames in March 2005
* Howard Hotel sold for #75m in November 2004 - above book value
Liberty
* 11% sales increase during half year with 14% sales surge over Christmas
period
* Sales increase continued in January with 15% uplift
* At EBIT level Liberty is almost at break even as losses reduced to
#445,000
* Aim to eliminate all Liberty debt through property sales
Business Exchange
* Occupancy levels improved to 77% from 67%
* Revenue from available workstations up from #5,400 to #5,700
* Further reduction in bank debt to #9m following #13.5m sale of three
centres
* Average contract term increased from eight to 12 months
* Increased focus on Operating and Management Agreements:
- Opened 30,000 sq ft OMA business centre in November 2004 at Citigroup's Canary
Wharf headquarters
- In January 2005 took controlling stake in City Executive Centres which manages
13 buildings under OMAs
Conclusion
* "The signs across our divisions are encouraging, particularly for our
Malmaison and Hotel du Vin hotel operations. All our businesses are making
sound progress and we expect to record continuing growth in underlying value
per share as we mature our businesses ready for sale. I am confident that
further advances will be made by the year end and I therefore look forward
to the future success of the Group," Brian Myerson, Chairman.
MARYLEBONE WARWICK BALFOUR GROUP PLC
INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31st DECEMBER 2004
CHAIRMAN'S STATEMENT
--------------------
This has been a period of progress in each of our three main operating divisions
of Hotels, Serviced Offices and Liberty. The success has been particularly
strong at Malmaison, our lifestyle hotel group, where the performance has
produced both asset and earnings growth.
Elsewhere in the Group there has been strong growth at the net asset level. We
have commissioned an independent interim valuation of our property assets which
has contributed to an increase in equity shareholders funds of some 16% since
the June 2004 year end and a rise of 40% since the same time a year ago.
It is also pleasing to report that the momentum gained in the first half of the
year is being maintained in the second half as a combination of management and
operational restructuring that has been implemented over the last 12 months
continues to have a positive impact on the Group results.
During the six months ended 31st December 2004 we have been active on the
corporate front as we continue to develop the business to return cash or cash
equivalents to shareholders by the end of December 2007. With that in mind we
have been looking hard at our operating divisions to further improve
profitability and performance as well as their future value.
During the period under review we made a significant corporate acquisition, one
major disposal and an important strategic move. In October we acquired the
award-winning hotel business, Hotel du Vin, for #66.4m. This design led hotel
group complements our Malmaison brand and takes our lifestyle hotels to 15.
Today MWB is the UK's leading lifestyle hotel group and the aim is to expand the
portfolio to at least 25 hotels by December 2007.
Within a few weeks of the Hotel du Vin acquisition we announced the sale of The
Howard Hotel for #75m, a healthy surplus over the 30th June 2004 valuation of
#69m. The Howard reflects MWB's philosophy of acquiring assets with potential
for improvement and thereafter creating an uplift in value through hands on
management which we then realise for the benefit of shareholders.
In December, MWB Business Exchange, our serviced offices division, signed its
first Operating and Management Agreement with Citigroup, the world's largest
financial services business, for a 30,000 sq ft business centre in the US
group's Canary Wharf UK headquarters building. This marked the first tangible
step in our new strategy for MWB Business Exchange, whereby it increasingly
concentrates resources in securing Operating and Management Agreements, rather
than taking traditional leases on existing office buildings.
It is also worth noting that Liberty, which we own through our 68% holding in
Retail Stores Plc, bucked the Christmas trend with a 14% increase in trading in
the flagship store, in comparison to the same period last year. This continued
after Christmas, through the January sales and into February. I report on this
in more detail below.
Over the past year we have continued to simplify the Group's business. Our
activities are in the three clearly defined areas I have mentioned above and
this enables us to focus resources as well as creating a better understood
business model. We have also spent considerable time and effort in identifying
and installing extremely able and competent management teams in these three main
businesses. I am pleased to report that all three divisional management teams
are delivering consistently improving results as the impact of their changes and
restructuring is felt.
Results
An independent valuation of the Group's properties, which will now be a regular
feature of our interim results, produced a #20.7m surplus, the majority of which
was from our hotel division. As a result Group equity shareholders' funds
increased by 16% over the half year to 115p per share, against 99p at the last
year end.
Group EBITDA rose by 51% to #16.3m compared to #10.8m for the same period a year
ago. Over half of this growth was produced by Malmaison and Hotel du Vin, with
the remainder generated from our profitable sale of the Howard Hotel.
At the pre-tax level there was a further write back of property provisions
totalling #6.2m, principally in our Serviced Office division. These had been
charged to the profit and loss account in previous years and have therefore
increased profits this period. After this credit of #6.2m, a depreciation charge
of #8.7m and an interest expense of #19.7m, we produced greatly reduced retained
losses for the six month period of #3.3m against #12.5m for the same period last
year.
I am pleased to report lower gearing, down from 311% at the June 2004 year end
to 245% at December 2004. This is a result of the reduction in our Group debt
and of an increase in our property values which enhance Group net asset value.
We are also committed to reducing operational gearing within the Group over the
coming 12 months. This is being achieved through the controlled sale of assets
where we are achieving prices well above book values, as seen by the disposal of
the Howard Hotel. Simultaneously we are developing and maturing our operational
businesses in readiness for sale or demerger. Such sales or demergers will be
undertaken in the right market conditions in order that disposals of assets take
place at prices which reflect the full extent of their value.
Hotels
Our hotel operations are now the Group's largest division, representing 74% of
our asset value. This division comprises our lifestyle hotel business - made up
of Malmaison and the newly acquired Hotel du Vin - and three hotel investments:
The Park Lane Marriott, The West India Quay Marriott and the Radisson SAS in
Argyle Street Glasgow.
Malmaison continues to go from strength to strength under the management team
led by Robert Cook, who is responsible for our lifestyle hotel business
including the newly acquired Hotel du Vin. During the period we opened our first
hotel in Belfast and confirmed new openings of Malmaison hotels in Oxford later
this year and Liverpool at the end of 2006.
Occupancy levels at Malmaison rose again during the period by 5% to an average
80%. The average room rate across the Malmaison hotels was just under #100 per
night, and turnover increased by 42% over the comparable period last year, to
#21.5m. There will be an additional boost in the second half from the addition
of the new Belfast Malmaison which opened in December. The early signs are very
encouraging and I will report more fully on this at the year end.
Importantly, Malmaison produced a positive EBITDA of #6.4m at the half year
compared to an EBITDA of #3.8m for the same period a year ago. It is also
pleasing to report that Hotel du Vin has produced positive EBITDA of #1.7m in
the first three months of our ownership to 31st December 2004, and this has
continued in the current year.
The acquisition and integration of Hotel du Vin has gone smoothly. We are
already seeing the benefits from cost savings across the enlarged hotel group
through centralised booking services as well as goods and services purchased on
significantly better terms. This month has seen the opening of the seventh Hotel
du Vin at Henley-on-Thames with further opportunities in the pipeline.
I have already reported on the successful sale of The Howard Hotel on London's
Victoria Embankment for #75m in November. Since the start of the second half of
the year we have commenced marketing The Park Lane Marriott and we anticipate
the sale will be completed by this coming Autumn.
Over the next two to three years we intend selling our other two hotel
investments: the West India Quay Marriott and the Radisson SAS in Argyle Street,
Glasgow. Once both hotels have become established in their respective markets we
will commence marketing aimed at a controlled disposal programme.
Each of these continued to make progress over the six months, increasing both
average occupancy levels and room rates. At the Park Lane Marriott, average
occupancy levels are settling at 85%, whilst room rates have risen over the
period by around 10%. Our Glasgow property is now becoming established and is
successfully penetrating the local conference and exhibitions market, also
seeing a 10% uplift in room rates since June 2004. Our West India Quay Marriott
is making progress, despite the fact it only opened in June of last year. It too
is securing better occupancy levels and room rates than we reported at the year
end and we are confident this spectacular hotel will become a key landmark in
the Canary Wharf market.
Liberty
There have been encouraging signs that the management changes and restructuring
implemented by Iain Renwick, Chief Executive, and Fraser Allan, Finance
Director, are beginning to be translated into improved performance. In the first
six months we produced 11% sales growth over the comparable period a year ago.
This has yet to be reflected in greater profitability as the costs of our
improvements and planning for the future are expensed, although at the EBIT
level the business is now almost at break-even with a loss of #445,000 being
incurred, an improvement over the loss of #711,000 in the comparable period last
year.
Our increasing investment in marketing and brand development as Liberty
re-establishes itself as a destination retailer has held back profits growth.
During the period under review, a number of new concepts were introduced and
resulted in a sales surge of around 20% during September and October. Men's and
Ladies fashions were particularly strong with great improvements seen in both
accessories and beauty.
Trading in the run up to Christmas was extremely encouraging with our flagship
store sales in December up by 14% over the comparable period a year ago. The
post Christmas sale volumes during the first four weeks in January were ahead
again by more than 15% over last year. I am pleased to report that this upward
trend has continued into February of this year, and there has been a strong
start to the second half with improved margins and a clean stock position.
Taking full advantage of increased awareness of Liberty's new look, the store
launched its Spring collections at the beginning of February to great acclaim
and this has been converted into a rise in sales volume from most departments.
Interest charges continue to impact on profitability at Liberty. To that end we
are aiming to eliminate its entire #50m bank debt through the sale of the
freehold of Lasenby House and the sale and leaseback of Regent House, so that
Liberty will be transformed into a debt free business capable of generating
improving levels of profits.
Business Exchange
As with our other divisions I can report that our serviced offices business is
also making progress, with occupancy levels advancing from 67% at the beginning
of the period to 77% at the end of December, a trend which is continuing into
the second half of the year. At the same time revenue generated from available
workstations ("REVPAW") has risen, up from #5,400 at 30th June 2004 to #5,700 at
31st December 2004.
However the period has been more important for the implementation of our new
strategy for MWB Business Exchange, to which we have devoted much time and
energy over the last year. This is reflected in the signing of our first
Operating and Management Agreement for a 30,000 sq ft business centre with
Citigroup at the US group's Canary Wharf headquarters. As part of this new
strategy, Business Exchange's freehold service office centres at Harrow, Hayes
and Kingston were sold for #13.5m. These sales proceeds continued the reduction
in Business Exchange's bank debt from #28m a year ago, to #23m at the June 2004
year end and only #9m at 31st December 2004.
In January 2005, we increased the number of OMAs through the acquisition of a
controlling stake in City Executive Centres which manages 13 buildings covering
140,000 sq ft on behalf of landlords under individual OMAs. These serviced
offices provide approximately 1,600 workstations across the UK and enable
Business Exchange to offer a different level of product aimed at regional
start-ups and small and medium sized enterprises. This takes the total number of
Group serviced office centres to 46 and the number of workstations to 10,600.
Since the start of the second half of the year there has been a noticeable
upturn in leads with a consequent improvement in conversion especially in
businesses looking for up to 10 workstations. This is underpinning Business
Exchange's strategy of maintaining multiple clients rather than relying on a
smaller number of larger clients.
I can also report two further positive indicators: firstly, the initial average
contract term has increased from eight to 12 months and, secondly, pricing has
stabilised at higher levels than we have seen over the last two years.
The result of this activity has been an increase in turnover to #28.6m for the
period against #27.6m for the comparable period last year, after adjusting for
the business centres sold.
Last year we appointed John Spencer as Chief Executive of the serviced offices
business and I am pleased to report he has made substantial progress in
strengthening the management team and improving the culture within Business
Exchange. We see a steady improvement in this division under his leadership and
anticipate an increase in its underlying financial returns.
Conclusion
The signs across our divisions are encouraging, particularly for our Malmaison
and Hotel du Vin hotel operations. All our businesses are making sound progress
and we expect to record continuing growth in underlying value per share as we
mature our businesses ready for sale. I am confident that further advances will
be made by the year end and I therefore look forward to the future success of
the Group.
Brian Myerson
Chairman
29th March 2005
ACCOUNTS REVIEW
for the six months ended 31st December 2004
-------------------------------------------
INTRODUCTION
The Chairman's Statement on pages 3 to 8 provides information on the Group's
operations and the Board's expectations for the future. This Accounts Review
covers in greater depth the more significant features of the accounts for the
six months ended 31st December 2004, which include an independent valuation of
the Group's properties at that date.
EQUITY SHAREHOLDERS' FUNDS
During the six months ended 31st December 2004 there has been an increase in
shareholders' funds from #108.9m at 30th June 2004 to #125.8m at 31st December
2004. As a result, equity shareholders' funds per share have increased during
the period by 16p to 115p per share. This is summarised as follows:-
6 months
6 months ended
ended 31st December
31st December 2004
2004 pence per
#'000 share
Equity shareholders' funds at start of
financial year 108,873 99p
Revaluation surplus on Group properties 20,728 19p
Retained loss for the period (3,304) (3p)
Purchase of ordinary shares for cancellation
and other equity movements (456) -
------- ---
Equity shareholders' funds at end of period 125,841 115p
======= ===
NET ASSET VALUE
The net assets of the Group are financed primarily by equity shareholders' funds
and equity minority interests. At 31st December 2004, and at the previous year
end, these sources of finance were as follows:-
31st December 30th June
2004 2004
#'000 #'000
Equity shareholders' funds 125,841 108,873
Equity minority interests 45,061 40,753
Preference share minority interests 1,193 1,155
------- -------
Net asset value at end of period 172,095 150,781
======= =======
The analysis of net assets across the Group's operations at 31st December 2004,
and at the previous year end is as follows:-
Total assets
less current Equity
liabilities and Minority Shareholders'
provisions Net debt Net assets interests funds
At 31st December 2004 #'000 #'000 #'000 #'000 #'000
Hotels
Malmaison and Hotel du Vin 230,061 (159,594) 70,467 - 70,467
Hotel investments 195,388 (141,261) 54,127 (14,561) 39,566
Liberty 103,042 (43,878) 59,164 (17,418) 41,746
Business Centres 15,776 (18,115) (2,339) - (2,339)
West India Quay 50,128 (20,430) 29,698 (14,185) 15,513
Group debt, less cash and other
assets (1,159) (37,863) (39,022) (90) (39,112)
------- ------- ------- ------ -------
At 31st December 2004 593,236 (421,141) 172,095 (46,254) 125,841
======= ======= ======= ====== =======
Total assets
less current Equity
liabilities and Minority Shareholders'
provisions Net debt Net assets interests funds
At 30th June 2004 #'000 #'000 #'000 #'000 #'000
Hotels
Malmaison 147,767 (91,900) 55,847 - 55,847
Hotel investments 259,453 (184,667) 74,786 (12,520) 62,266
Liberty 98,720 (45,229) 53,491 (17,159) 36,332
Business Centres 22,180 (28,045) (5,865) - (5,865)
West India Quay 91,150 (68,307) 22,843 (12,295) 10,548
Group debt, less cash and other
assets (219) (50,102) (50,321) 66 (50,255)
------- ------- ------- ------ -------
At 30th June 2004 619,051 (468,270) 150,781 (41,908) 108,873
======= ======= ======= ====== =======
31st December 2004 30th June 2004
Pence per Pence per
Equity Shareholders' funds #'000 share #'000 share
Hotels
Malmaison and Hotel du Vin 70,467 65p 55,847 50p
Hotel investments 39,566 36p 62,266 57p
Liberty 41,746 38p 36,332 33p
Business Centres (2,339) (2p) (5,865) (5p)
West India Quay 15,513 14p 10,548 10p
Group debt, less cash and other assets (39,112) (36p) (50,255) (46p)
------- ---- ------- ----
Total Equity Shareholders'funds 125,841 115p 108,873 99p
======= ==== ======= ====
REVIEW OF FIXED ASSETS
Portfolio analysis by division
The Group holds its direct property interests principally as tangible fixed
assets, with smaller amounts held as developments in progress and properties
held for resale. The Group's property interests are disclosed in the
consolidated balance sheet at 31st December 2004 and at the previous year end,
as follows:-
31st December 30th June
2004 2004
#'000 #'000
Tangible fixed assets 593,493 571,598
Properties held for resale 21,125 1,113
Developments in progress - 21,265
------- -------
Total property interests at end of period 614,618 593,976
======= =======
The above interests are analysed as follows:-
Percentage at
31st December 31st December 30th June
2004 2004 2004
#'000 % #'000
Hotels
Eight Malmaison hotels 163,930 27 149,534
Seven Hotel du Vin hotels 70,603 11 -
Hotel investments at Park Lane,
West India Quay and
Argyle Street Glasgow* 220,850 36 276,663
------- --- -------
Total hotel portfolio 455,383 74 426,197
------- --- -------
Liberty
Liberty store and offices 83,250 14 79,250
Other properties 1,540 - 1,856
------- --- -------
Total Liberty portfolio 84,790 14 81,106
------- --- -------
Business Centres
Total Business Exchange portfolio 49,958 8 60,871
------- --- -------
Asset management
Total asset management portfolio 4,512 1 4,537
------- --- -------
West India Quay 19,975 3 21,265
------- --- -------
Total property interests at
31st December 2004 614,618 100 593,976
======= === =======
* = 30th June 2004 includes the Howard hotel.
Due to the onerous cost of related lease obligations, certain of the Group's
short leasehold interests in the Business Centres division had negative values
at 31st December 2004 and at the previous year end. These amounted to #13.2m at
31st December 2004 and #14.8m at the previous year end. These are included in
provisions for liabilities and charges on the consolidated Balance Sheet.
At 31st December 2004 and at the previous year end, the Group's net interests in
properties in the Business Centre division therefore amounted to #36.8m (30th
June 2004: #46.1m) and are summarised as follows:-
31st December 30th June
2004 2004
#'000 #'000
Property values in table above 49,958 60,871
Less provisions for onerous leasehold interests (13,178) (14,799)
------ ------
Net interest in Business Centre properties 36,780 46,072
====== ======
Property revaluation surplus arising in the period
A valuation of the Group's fixed asset property portfolio at 31st December 2004
was undertaken by DTZ Debenham Tie Leung on the basis of Market Value for the
Group's Investment Properties and Existing Use for the Group's Operational
Properties. A similar valuation at interim as well as final period ends will now
be a regular feature of the Group's accounts.
The net surplus arising from the valuation attributable to shareholders for the
six months ended 31st December 2004 was #27.0m and has been included in the
accounts for the period then ended. Surpluses or temporary deficits arising on
valuation of the Group's investment and operational properties are transferred
to revaluation reserve, while impairment of investment and operational
properties to below their historical cost is charged directly to the profit and
loss account. Further details of the revaluation are set out in note 8 to the
accounts.
Developments in progress and properties held for resale are recorded at the
lower of cost and net realisable value and are therefore not revalued in the
Group accounts.
During the years ended 30th June 2002 and 30th June 2003, impairments of
operational properties, principally in relation to the Group's business centre
properties, totalled #86m. As a result of the revaluation at 31st December 2004
referred to above, certain of these impairments which were charged to the profit
and loss account in those years have now been reversed, resulting in a credit to
the profit and loss account for the six months ended 31st December 2004 in the
Business Centre division, totalling #6.2m. Other business centres were valued at
31st December 2004 at an amount that is higher than their historical cost but
lower than their previous book value, and this resulted in a reduction in the
revaluation reserve in respect of those properties of #0.2m. This is amplified
further in the table below.
The total valuation surplus credited to the profit and loss account of #6.2m,
and the valuation surplus credited to the revaluation reserve of #20.7m, arose
as follows:-
Less Net Taken to
previous Less surplus profit & Taken to
Gross book Gross minority to the loss revaluation
valuation value surplus interests Group account reserve
#'000 #'000 #'000 #'000 #'000 #'000 #'000
Hotels
Malmaison 163,569 157,494 6,075 - 6,075 218 5,857
Hotel du Vin 70,584 68,633 1,951 - 1,951 - 1,951
Hotel investments 219,700 205,083 14,617 (4,374) 10,243 - 10,243
Liberty 83,250 79,020 4,230 (1,340) 2,890 - 2,890
Business Centres 36,780 31,147 5,633 - 5,633 5,840 (207)
Asset management 4,509 4,354 155 4 159 165 (6)
------- ------- ------ ----- ------ ------ ------
578,392 545,731 32,661 (5,710) 26,951 6,223 20,728
======= ======= ====== ===== ======
Minority interests - 5,710
------ ------
Gross surplus 6,223 26,438
====== ======
Reflected in the accounts:
As an increase in tangible
fixed assets in note 8 31,384
As a reduction in
provisions in note 11 1,277
------
Gross surplus 32,661
======
The valuations of the Group's hotel interests include value ascribed for plant,
machinery, 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 and no further amount is included in respect of the
book value of such plant and fittings. In the same manner, the valuation of the
Group's retail interests includes value ascribed for plant, machinery and
fittings forming part of the service installation of the building, but excludes
moveable shop fittings.
The Group's business centres are of a type normally sold as fully equipped and
operational entities and are therefore required by the RICS Valuation Manual to
be valued by reference to their trading potential. These values include land and
buildings and also trade fixtures, fittings, furniture, furnishings and
equipment at the properties, rather than valuing the property separately and
including an additional element for the net book value of the fixtures and
equipment. The valuation excludes consumables and stock in trade that form part
of the present occupation of the properties.
REVIEW OF FUNDING AND LOAN FACILITIES
Net debt
The Group's loans, borrowings and cash are included in the consolidated balance
sheet at 31st December 2004, and at the previous year end, as follows:-
31st December 30th June
Composition at period end 2004 2004
#'000 #'000
Total loans and overdrafts in note 10 459,403 509,800
Hire purchase and leasing contracts in notes 9 and 10 5,727 7,485
------- -------
Total loans 465,130 517,285
Less cash (43,989) (49,015)
------- -------
Total net debt at period end 421,141 468,270
======= =======
The Group's loans, borrowings and cash at 31st December 2004, and at the
previous year end had the following maturity profiles:-
31st December 30th June
2004 2004
#'000 #'000
Repayable:
Within one year or on demand 6,921 57,063
Between one and two years 18,183 43,516
Between two and five years 292,650 296,035
After more than five years 147,376 120,671
------- -------
Total loans 465,130 517,285
Less cash (43,989) (49,015)
------- -------
Total net debt at period end 421,141 468,270
======= =======
Movement in net debt during the period
The decrease in total net debt during the six months ended 31st December 2004
arose as follows:-
Six months Year
ended ended
31st December 30th June
2004 2004
#'000 #'000
Total net debt at start of the period 468,270 432,796
Debt drawn down/(repaid) on West India Quay development (34,043) 57,957
Debt drawn down on acquisition of Hotel du Vin 63,307 -
Debt drawn down in hotel division 5,361 36,003
Net proceeds received on sale of properties (88,071) (71,443)
Net cash inflow from other Group operations during
the period 6,317 (2,043)
Increase in listed Unsecured Loan Stock - 15,000
------- -------
Total net debt at period end 421,141 468,270
======= =======
Net debt attributable to Equity Shareholders' Funds
Certain elements of the Group's net debt have been drawn by subsidiaries that
are not wholly owned by the Group. These principally comprise the Group's Park
Lane hotel, West India Quay, Liberty and Business Exchange. The net debt
attributable to Equity Shareholders' Funds at 31st December 2004 amounted to
#355m (30th June 2004: #366m), calculated as follows:-
Six months Year
ended ended
31st December 30th June
2004 2004
#'000 #'000
Total net debt as above 421,141 468,270
Less net debt attributable to minority interests (66,521) (102,043)
------- -------
Total net debt attributable to Equity Shareholders'
Funds 354,620 366,227
======= =======
Gearing
Gearing at 31st December 2004 was 245% based on net assets, and 282% based on
Equity Shareholders' Funds, calculated as follows:-
Six months Year
ended ended
31st December 30th June
2004 2004
#'000 #'000
Total net debt 421,141 468,270
Net assets 172,095 150,781
Gearing based on net assets 245% 311%
======= =======
Total net debt attributable to Equity Shareholders'
Funds 354,620 366,227
Equity Shareholders' Funds 125,841 108,873
Gearing based on Equity Shareholders' Funds 282% 336%
======= =======
REVIEW OF EARNINGS
Earnings before interest, taxation, depreciation and amortisation ("EBITDA") of
the Group
The Board's prime measure of return used to monitor the results of each division
is the level of earnings before interest, taxation, depreciation and
amortisation, or EBITDA. The EBITDA of the Group for the year six months ended
31st December 2004, with comparatives for the previous periods, was as follows:-
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
Malmaison
Operating income 6,355 3,817 8,568
Hotel du Vin
Operating income (3 months from
October 2004) 1,747 - -
Hotel investments
Operating income 7,157 6,409 11,147
Pre-opening costs (470) (547) (995)
Sale of Howard Hotel 3,545 - -
Apartment sales - 92 109
Liberty
Operating income 1,000 542 (1,047)
Business Centres
UK operating income (258) 3,472 4,692
Sale of UK Centres (383) - -
Asset management 442 2,812 10,253
West India Quay 487 (196) 21,373
Head office administration (3,337) (5,582) (9,929)
------ ------ ------
EBITDA for the period 16,285 10,819 44,171
====== ====== ======
Summary of earnings
Profit/(loss) Total
on ordinary recognised
Group activities gains and
Six months ended 31st turnover EBITDA EBIT before tax losses
December 2004 #'000 #'000 #'000 #'000 #'000
Malmaison 21,471 6,355 4,501 1,087 6,949
Hotel du Vin 6,310 1,747 1,421 247 2,198
(3 months from October 2004)
Hotel investments
Operating income 22,521 7,157 4,564 (3,298) 7,910
Pre-opening costs - (470) (470) (470) (470)
Sale of the Howard Hotel - 3,545 3,545 3,545 3,545
Liberty 24,379 1,000 (445) (2,039) 1,418
Business Centres
Operating results 28,602 (258) 4,825 4,222 3,888
Sale of UK Centres - (383) (383) (383) (383)
Asset Management 962 442 530 666 778
West India Quay 6,520 487 487 444 (78)
Group debt less cash and
other assets 1,542 - - (5,112) (4,972)
------- ------ ------ ----- ------
112,307 19,622 18,575 (1,091) 20,783
Head office administration - (3,337) (3,374) (3,374) (3,374)
------- ------ ------ ----- ------
112,307 16,285 15,201 (4,465) 17,409
======= ====== ====== ===== ======
Notes
1. Total recognised gains and losses comprise the revaluation surplus on the
Group's fixed assets for the period, less the retained loss in the Profit and
Loss Account for the period.
2. EBITDA = Earnings before interest, taxation, depreciation and amortisation
3. EBIT = Earnings before interest and tax
Profit/(loss) Total
on ordinary recognised
Group activities gains and
Six months ended 31st turnover EBITDA EBIT before tax losses
December 2003 #'000 #'000 #'000 #'000 #'000
Malmaison 15,136 3,817 2,097 (1,686) (1,333)
Hotel investments
Operating income 15,633 6,409 4,897 (490) (1,161)
Pre-opening costs - (547) (547) (547) (547)
Apartment sales 1,904 92 92 92 92
Liberty 21,924 542 (711) (2,029) (1,690)
Business Centres
Operating results 30,496 3,472 454 (1,204) (1,088)
Asset management 3,980 2,812 2,592 1,058 1,310
West India Quay - (196) (196) (186) 243
Group debt less cash and
other assets 1,761 - - (4,473) (3,457)
------ ------ ----- ------ ------
90,834 16,401 8,678 (9,465) (7,631)
Head office administration - (5,582) (5,763) (5,763) (4,789)
------ ------ ----- ------ ------
90,834 10,819 2,915 (15,228) (12,420)
====== ====== ===== ====== ======
Profit/(loss) Total
on ordinary recognised
Group activities gains and
turnover EBITDA EBIT before tax losses
Year ended 30th June 2004 #'000 #'000 #'000 #'000 #'000
Malmaison 32,628 8,568 4,802 (2,766) (879)
Hotel investments
Operating income 32,136 11,147 7,961 (3,779) 7,212
Pre-opening costs - (995) (995) (995) (995)
Apartment sales 2,590 109 109 109 109
Liberty 40,891 (1,047) (3,492) (6,266) (2,478)
MWB Business Exchange
Operating results 58,625 4,692 (1,290) (4,566) (9,545)
Previous write-downs of
properties now
written back - - 5,546 5,546 5,546
Asset management 5,980 10,253 9,590 6,415 6,813
West India Quay 64,713 21,373 21,373 21,390 18,029
Group debt less cash and
other assets 3,347 - - (8,203) (7,112)
------- ------ ------ ------ ------
240,910 54,100 43,604 6,885 16,700
Head office administration - (9,929) (10,658) (10,168) (10,168)
------- ------ ------ ------ ------
240,910 44,171 32,946 (3,283) 6,532
======= ====== ====== ====== ======
Interest payable
Net interest payable by the Group during the six months ended 31st December 2004
was #21.5m. Of this amount, #1.8m was capitalised in respect of development
expenditure, leaving a net charge to the profit and loss account of #19.7m.
The average cost of borrowing on the Group's loans at 31st December 2004,
inclusive of margin, was 7.4% per annum; slightly lower than the rate of 7.6% at
30th June 2004 due to the lower rate secured on the facility for the acquisition
of Hotel du Vin in October 2004.
Taxation
The net tax charge of #0.1m for the six months ended 31st December 2004 (year to
30th June 2004: (a credit of #1.1m) primarily reflects the tax incurred on the
profits of Liberty's operations in Japan referred to below, reduced by a #0.1m
credit in relation to prior years.
The tax incurred on the Liberty Japanese operations amounted to #0.2m (year to
30th June 2004 #0.7m). Of this amount, 49% is incurred by the minority interest
in the Japanese operations of Liberty, who participate in the after tax profits
of these operations. The Group has a 68% interest in Liberty and thus the net
cost to the Group is only 68% of this net share, or #0.1m (year to 30th June
2004: #0.2m).
Earnings per share
The loss per share for the six months ended 31st December 2004 was 3.0p per
share, compared with a loss of 10.7p per share for the year ended 30th June
2004. Details of the calculation are set out in note 7 to the accounts.
Dividend
As referred to in the circulars to shareholders in May 2002 and February 2004,
the previous dividend policy of the Company ceased once the proposals set out in
the May 2002 circular had been approved by Shareholders in May 2002. The Board
is continuing to direct disposal proceeds to the repayment of debt until net
debt levels have been reduced to lower levels. Thereafter, the Directors will
continue the Cash Distribution Programme approved by Shareholders at the May
2002 Extraordinary General Meeting, involving the distribution of surplus funds
to shareholders under share buy-backs, cash distributions and similar value
distribution programmes.
Cash flow
The consolidated cash flow statement on page 26 shows the funds generated by the
Group, those raised from external sources, the investments made and the effect
thereof on the Group's net debt.
During the six months ended 31st December 2004 the Group spent #14.7m (year
ended 30th June 2004: #33.5m) on the purchase of fixed assets and a further
#64.7m on the acquisition of Hotel du Vin. The profitable sale of the Howard
Hotel for #75m comprises the majority of the disposals totalling #88.1m for the
six months ended 31st December 2004.
Net debt was reduced by #47.1m to #421.1m during the six months ended 31st
December 2004. Further details of the Group's loans and the principal components
of this decrease are set out in the section entitled "Review of Funding and Loan
Facilities" on pages 15 to 17 above.
International Financial Reporting Standards
The reporting of accounts by listed companies in accordance with International
Financial Reporting Standards ("IFRS") came into effect for accounting periods
commencing on or after 1st January 2005.
The first audited accounts of the Group prepared in accordance with IFRS will be
those for the year ending 30th June 2006. These will include information for
that year and for the comparatives for the year ending 30th June 2005 prepared
in accordance with IFRS. The unaudited interim accounts for the six months
ending 31st December 2005 will also be prepared in accordance with IFRS.
The Group's IFRS Committee has identified the additional information required
for the further disclosure and new accounting treatments arising under IFRS. We
expect to report more fully on the effect of this implementation in our accounts
for the year ending 30th June 2005, which will be the last consolidated audited
accounts of the Group to be prepared under UK GAAP.
Andrew Blurton
JOINT FINANCE DIRECTOR
London
29th March 2005
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 31st December 2004
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
Notes #'000 #'000 #'000
------------------------------------------------------------------------------
Turnover 2 112,307 90,834 240,910
Cost of sales (94,362) (79,639) (199,387)
------------------------------------------------------------------------------
Gross profit 17,945 11,195 41,523
Administrative expenses (6,038) (8,280) (15,429)
------------------------------------------------------------------------------
Total operating profit 11,907 2,915 26,094
Profit on disposal of
investment properties and
other fixed assets 3 3,294 - 6,852
------------------------------------------------------------------------------
Profit on ordinary activities
before interest 15,201 2,915 32,946
Net interest payable and
similar items 4 (19,666) (18,143) (36,229)
------------------------------------------------------------------------------
Loss on ordinary activities
before taxation 2 (4,465) (15,228) (3,283)
Taxation (charge)/credit on
loss on ordinary activities 5 (89) 1,611 1,066
------------------------------------------------------------------------------
Loss on ordinary activities
after taxation (4,554) (13,617) (2,217)
Equity minority interests 6 1,289 1,077 (9,608)
Non-equity minority interests (39) 80 65
------------------------------------------------------------------------------
Loss attributable to ordinary
shareholders retained for the
period (3,304) (12,460) (11,760)
==============================================================================
Loss per share 7 (3.0p) (11.3p) (10.7p)
==============================================================================
All results relate to continuing operations.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the six months ended 31st December 2004
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
------------------------------------------------------------------------------
Loss retained for the financial
period (3,304) (12,460) (11,760)
Net revaluation surplus on fixed
assets credited to revaluation
reserve 20,728 - 18,290
Currency translation differences
on foreign currency net
investments (15) 40 2
------------------------------------------------------------------------------
Total recognised gains and losses
for the period 17,409 (12,420) 6,532
==============================================================================
All recognised gains and losses are attributable to equity shareholders'
interests.
RECONCILIATIONS OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
for the six months ended 31st December 2004
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
------------------------------------------------------------------------------
Opening equity shareholders' funds 108,873 102,341 102,341
Loss for the financial period (3,304) (12,460) (11,760)
Net revaluation surplus on fixed
assets for the period credited to
revaluation reserve 20,728 - 18,290
Currency translation differences
on foreign currency net
investments (15) 40 2
Purchase of own shares for
cancellation during the period (441) - -
------------------------------------------------------------------------------
Closing equity shareholders' funds 125,841 89,921 108,873
==============================================================================
CONSOLIDATED BALANCE SHEET
at 31st December 2004
31st December 31st December 30th June
2004 2003 2004
Notes #'000 #'000 #'000
------------------------------------------------------------------------------
Fixed assets
Intangible asset 18,200 18,200 18,200
Tangible assets 8 593,493 609,921 571,598
------------------------------------------------------------------------------
611,693 628,121 589,798
------------------------------------------------------------------------------
Current assets
Developments in progress - 42,156 21,265
Properties held for resale 21,125 1,705 1,113
Stocks 9,455 6,463 7,054
Debtors: amounts falling
due
- after more than one year 1,059 1,309 1,126
- within one year 42,756 42,593 90,637
Cash 43,989 46,158 49,015
------------------------------------------------------------------------------
118,384 140,384 170,210
Creditors: amounts falling
due within one year 9 (79,562) (101,793) (126,633)
------------------------------------------------------------------------------
Net current assets 38,822 38,591 43,577
------------------------------------------------------------------------------
Total assets less current
liabilities 650,515 666,712 633,375
Creditors: amounts falling
due after more than one year 10 (458,255) (524,369) (462,013)
Provisions for liabilities
and charges 11 (20,165) (27,964) (20,581)
------------------------------------------------------------------------------
Net assets 172,095 114,379 150,781
==============================================================================
Capital and reserves
Called up share capital 54,575 54,900 54,900
Share premium account 79,364 79,364 79,364
Capital redemption reserve 12 15,975 15,650 15,650
Revaluation reserve 12 101,177 78,070 105,535
Merger reserve 9,403 9,403 9,403
Other reserves 12 1,553 1,379 1,379
Profit and loss account 12 (136,206) (148,845) (157,358)
-----------------------------------------------------------------------------
Equity shareholders' funds 125,841 89,921 108,873
Equity minority interests 13 45,061 23,338 40,753
Non-equity minority interests 1,193 1,120 1,155
-----------------------------------------------------------------------------
172,095 114,379 150,781
=============================================================================
Equity shareholders' funds
per share 14 115p 82p 99p
=============================================================================
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31st December 2004
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
Notes #'000 #'000 #'000
-----------------------------------------------------------------------------
Net cash inflow/(outflow)
from operating activities 15 63,113 (8,893) (19,453)
Returns on investments and
servicing of finance (21,059) (20,228) (43,858)
Corporation tax paid (223) (537) (686)
Capital expenditure,
financial investment and sales
of fixed assets 16 73,364 (20,869) 40,030
assets
Acquisitions and disposals 17 (64,689) (8,689) (8,651)
-----------------------------------------------------------------------------
Net cash inflow/(outflow)
before financing 50,506 (59,216) (32,618)
Financing 18 (55,532) 53,015 29,274
-----------------------------------------------------------------------------
Decrease in cash during the
period (5,026) (6,201) (3,344)
=============================================================================
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the six months ended 31st December 2004
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
Notes #'000 #'000 #'000
-----------------------------------------------------------------------------
Decrease in cash during the
period 19 (5,026) (6,201) (3,344)
Net decrease in hire purchase
and leasing contracts 19 1,757 7,955 10,767
Net decrease/(increase) in
loans during the period 19 50,398 (61,298) (42,897)
-----------------------------------------------------------------------------
Decrease/(increase) in net
debt during the period 19 47,129 (59,544) (35,474)
Opening net debt 19 (468,270) (432,796) (432,796)
-----------------------------------------------------------------------------
Closing net debt 19 (421,141) (492,340) (468,270)
=============================================================================
NOTES TO THE ACCOUNTS
---------------------
1. BASIS OF CONSOLIDATION AND ACCOUNTING POLICIES
The interim results of the Group for the six months ended 31st December 2004
incorporate the results of the Company and its subsidiary undertakings for the
period then ended. The results have been prepared on the basis of the accounting
policies adopted in the accounts of the Group for the year ended 30th June 2004,
consistently applied in all material respects.
2. DIVISIONAL ANALYSIS
The Group turnover arose follows:-
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
Malmaison 21,471 15,136 32,628
Hotel du Vin 6,310 - -
(3 months from October 2004)
Hotel investments
Operating turnover 22,521 15,633 32,136
Apartment sales - 1,904 2,590
Liberty 24,379 21,924 40,891
Business Centres 28,602 30,496 58,625
Asset management 962 3,980 5,980
West India Quay 6,520 - 64,713
Other 1,542 1,761 3,347
------- ------ -------
112,307 90,834 240,910
======= ====== =======
By geographical origin:
United Kingdom 110,129 88,435 235,325
Japan 2,178 2,399 5,585
------- ------ -------
112,307 90,834 240,910
======= ====== =======
Six Six
months months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
Earnings before interest, taxation,
depreciation and amortisation ("EBITDA")
The EBITDA of the Group is calculated as follows:-
Profit on ordinary activities
before interest for the period 15,201 2,915 32,946
Add depreciation and amortisation 7,307 7,904 16,032
Write-back of property provisions
made in earlier years (6,223) - (4,807)
------ ------ ------
Total EBITDA for the period 16,285 10,819 44,171
====== ====== ======
Six Six
months months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
Analysis of EBITDA
The Group EBITDA for the period
arose as follows:-
Malmaison
Operating income 6,355 3,817 8,568
Hotel du Vin
Operating income 1,747 - -
Hotel investments
Operating income 7,157 6,409 11,147
Pre-opening costs (470) (547) (995)
Sale of the Howard Hotel 3,545 - -
Apartment sales - 92 109
Liberty
Operating income 1,000 542 (1,047)
Business Centres
Operating income (258) 3,472 4,692
Sale of properties (383) - -
Asset management 442 2,812 10,253
West India Quay 487 (196) 21,373
Head office administration (3,337) (5,582) (9,929)
------ ------ ------
Total EBITDA for the period 16,285 10,819 44,171
====== ====== ======
Six Six
months months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
Loss on ordinary activities before taxation
The Group loss on ordinary activities before
taxation arose as follows:-
Malmaison
Operating income 1,087 (1,686) (2,766)
Hotel du Vin
Operating income (3 months from
October 2004) 247 - -
Hotel investments
Operating income (3,298) (490) (3,779)
Pre-opening costs (470) (547) (995)
Sale of Howard Hotel 3,545 - -
Apartment sales - 92 109
Liberty
Operating income (2,039) (2,029) (6,266)
Business Centres
Operating income 4,222 (1,204) 980
Sale of properties (383) - -
Asset management
Operating income 666 1,058 (437)
Sales of properties - - 6,852
West India Quay 444 (186) 21,390
Group debt less cash and other assets (5,112) (4,473) (8,203)
----- ------ ------
(1,091) (9,465) 6,885
Head office administration (3,374) (5,763) (10,168)
----- ------ ------
Loss on ordinary activities before
taxation (4,465) (15,228) (3,283)
===== ====== ======
By geographical origin:
United Kingdom (4,835) (15,782) (4,471)
Japan 370 554 1,188
----- ------- ------
(4,465) (15,228) (3,283)
===== ======= ======
NOTES TO THE ACCOUNTS
2. DIVISIONAL ANALYSIS (continued)
The analyses of the Equity Shareholders' funds, minority interests and net
assets of the Group are as follows:-
Net assets on-equity Equity Equity
31st December minority minority Shareholders'
2004 interests interests funds
Net assets #'000 #'000 #'000 #'000
------------------------------------------------------------------------------
31st December 2004
Malmaison and Hotel du Vin 70,467 - - 70,467
Hotel investments 54,127 - 14,561 39,566
Liberty 59,164 1,190 16,228 41,746
Business Centres (2,339) - - (2,339)
Asset Management 2,491 3 (52) 2,540
West India Quay 29,698 - 14,185 15,513
Group debt less cash
and other assets (41,513) - 139 (41,652)
------- ----- ------ -------
172,095 1,193 45,061 125,841
======= ===== ====== =======
Equity shareholders'
funds per share 115p
=======
Net assets on-equity Equity Equity
31st December minority minority Shareholders'
2004 interests interests funds
Net assets #'000 #'000 #'000 #'000
------------------------------------------------------------------------------
31st December 2003
Malmaison 48,049 - - 48,049
Hotel investments 51,500 - 6,429 45,071
Liberty 52,254 1,117 16,234 34,903
Business Centres (5,657) - - (5,657)
Asset management 15,300 3 (166) 15,463
West India Quay 4,398 - 651 3,747
Group debt less cash
and other assets (51,465) - 190 (51,655)
------- ----- ------ -------
114,379 1,120 23,338 89,921
======= ===== ====== =======
Equity shareholders'
funds per share 82p
======
Net assets on-equity Equity Equity
31st December minority minority Shareholders'
2004 interests interests funds
Net assets #'000 #'000 #'000 #'000
------------------------------------------------------------------------------
30th June 2004
Malmaison 55,847 - - 55,847
Hotel investments 74,786 - 12,520 62,266
Liberty 53,491 1,151 16,008 36,332
Business Centres (5,865) - - (5,865)
West India Quay 22,843 - 12,295 10,548
Group debt less cash and
other assets (50,321) 4 (70) (50,255)
------- ----- ------ -------
150,781 1,155 40,753 108,873
======= ===== ====== =======
Equity shareholders' funds
per share 99p
=======
3. PROFIT ON DISPOSAL OF INVESTMENT PROPERTIES AND OTHER FIXED ASSETS
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
The profit on disposal of investment properties
and other fixed assets arose as follows:-
Profit on disposal of Howard Hotel 3,545 - -
Net loss on disposal of other
fixed assets (251) - -
Profit on disposal of Marble Arch Tower - - 6,852
----- ----- -----
3,294 - 6,852
===== ===== =====
4. NET INTEREST PAYABLE AND SIMILAR ITEMS
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
The net interest payable and similar charges
arose as follows:-
Unsecured Loan Stock 2005/2006, including
redemption premium 2,085 1,959 3,931
Bank loans and overdrafts 17,959 16,811 38,149
Finance leases and hire purchase
contracts 244 302 645
Bank charges, debt issue and debt
repayment costs 1,931 1,736 2,714
------ ------ ------
22,219 20,808 45,439
Less interest receivable and
similar income (763) (579) (1,577)
------ ------ ------
21,456 20,229 43,862
Less interest capitalised before
tax relief (1,790) (2,086) (7,633)
------ ------ ------
Total net interest payable and
similar charges 19,666 18,143 36,229
====== ====== ======
Interest payable is sourced from the Group's operating cash flows and from its
available bank facilities. Payments and receipts from hedging arrangements are
included above with the financing facility to which they relate.
5. TAXATION (CHARGE)/CREDIT ON LOSS ON ORDINARY ACTIVITIES
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
The taxation (charge)/credit for the period
arose as follows:-
UK Corporation tax
Adjustment in respect of prior
years and utilisation of current
year losses in reducing
liabilities of earlier years 128 1,978 1,748
Foreign tax
Tax on profit for the period (186) (367) (483)
Adjustment in respect of prior years (31) - (199)
--- ----- -----
Total corporation tax and similar
taxes (charged)/credited to profit and loss account (89) 1,611 1,066
=== ===== =====
The taxation (charge)/credit on the loss on ordinary activities is higher than
the amount that would arise from applying the prevailing corporation tax rate to
the Group's losses, as follows:-
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
UK corporation tax at 30% on Group
losses before tax 1,339 4,568 985
Excess of depreciation over
capital allowances claimed (2,219) (2,304) (2,689)
Permanently disallowable
expenditure and unrelieved losses (407) (4,006) (4,709)
Difference between taxation on
chargeable gains and on accounting
profits (5,297) - 1,978
Taxation on overseas earnings at
higher rate than UK corporation tax (71) (200) (126)
Non taxable profits and
capitalised expenditure deductible 1,441 108 1,137
Tax losses brought forward and
utilised in period 5,028 1,467 2,941
----- ----- -----
Total corporation tax and similar
taxes charge for the period (186) (367) (483)
Reduction in taxation provisions
in respect of prior years and
utilisation of current year losses
in reducing liabilities of earlier years 97 1,978 1,549
----- ----- -----
Total corporation tax and similar
taxes (charged)/credited to profit
and loss account (89) 1,611 1,066
===== ===== =====
6. EQUITY MINORITY INTERESTS
Equity minority interests in the loss on ordinary activities after taxation
arose in the following divisions of the Group:-
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
Hotels - 140 Park Lane Limited 256 330 570
Hotels - West India Quay (27) - 331
Liberty - Retail Stores plc 838 669 1,998
West India Quay 214 61 (12,705)
Leisure Box Limited 8 (41) 129
Royal Victoria Dock - 58 69
----- ------ ------
1,289 1,077 (9,608)
===== ====== ======
7. LOSS PER SHARE
The loss per share figures are calculated by dividing the loss for the period
after taxation and minority interests, by the weighted 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
2004 2003 2004
#'000 #'000 #'000
Loss on ordinary activities after
taxation and minority interests
minority interests (3,304) (12,460) (11,760)
======= ====== =======
'000 '000 '000
Weighted average number of
ordinary shares
in issue during the period 109,690 109,800 109,800
======= ======= =======
Loss per share (3.0p) (11.3p) (10.7p)
======= ======= =======
8. TANGIBLE FIXED ASSETS
Investment Operational
----------------properties-------------- -----------properties-----------
Plant,
machinery,
Long Short Long Short fixtures &
Freehold leasehold leasehold Freehold leasehold leasehold equipment Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Group
Cost or valuation
At 1st July 2004 2,500 - 8,500 325,156 111,302 80,651 72,090 600,199
Additions 4,413 1,994 - 3,615 751 (542) 4,475 14,706
Acquisition of
subsidiaries - - - 49,291 10,515 - 6,836 66,642
Reclassifications - - - (18,086) - - 18,086 -
Disposals - - - (13,396) (67,697) 611 (4,408) (84,890)
Transfer from/(to)
provisions - - - - - 460 (165) 295
Revaluation 562 - 950 17,937 3,185 4,331 (4,360) 22,605
------ ------ ----- ------- ------- ------ ------ -------
At 31st
December 2004 7,475 1,994 9,450 364,517 58,056 85,511 92,554 619,557
------ ------ ----- ------- ------- ------ ------ -------
Depreciation
At 1st July 2004 - - - - - (116) (28,485) (28,601)
Charge for the
year (11) - - (2,050) (436) (2,058) (4,749) (9,304)
Disposals - - - 67 - (20) 3,015 3,062
Revaluation 11 - - 1,983 436 1,989 4,360 8,779
------ ------ ----- ------- ------- ------ ------ -------
At 31st
December 2004 - - - - - (205) (25,859) (26,064)
------ ------ ----- ------- ------- ------ ------ -------
Net book value
At 31st
December 2004 7,475 1,994 9,450 364,517 58,056 85,306 66,695 593,493
====== ====== ===== ======= ======= ====== ====== =======
At 31st
December 2003 58,391 54,178 - 238,735 152,711 60,189 45,717 609,921
====== ====== ===== ======= ======= ====== ====== =======
At 30th June
2004 2,500 - 8,500 325,156 111,302 80,535 43,605 571,598
====== ====== ===== ======= ======= ====== ====== =======
Investment Operational
----------------properties-------------- -----------properties-----------
Plant,
machinery,
Long Short Long Short fixtures &
Freehold leasehold leasehold Freehold leasehold leasehold equipment Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Analysis of valuation surplus for the
period
Reflected in fixed assets
(note 8)
Surplus
credited to
profit and
loss account - - - 218 165 4,531 - 4,914
Surplus
credited to
revaluation
reserve
(note 12) 573 - 755 14,915 3,456 1,061 - 20,760
Surplus
credited to
minority
interests (note 13) - - 195 4,787 - 728 - 5,710
--- ---- --- ------ ----- ----- ---- ------
Net
revaluation
surplus
reflected
in fixed assets 573 - 950 19,920 3,621 6,320 - 31,384
--- ---- --- ------ ----- ----- ---- ------
Reflected in provisions (note 11)
Surplus/(deficit)
credited/(charged)
to profit and
loss account - - - - - 1,444 (135) 1,309
Deficit
charged to
revaluation
reserve (note 12) - - - - - (32) - (32)
--- ---- --- ------ ----- ----- ---- ------
Net revaluation
surplus reflected
in provisions - - - - - 1,412 (135) 1,277
--- ---- --- ------ ----- ----- ---- ------
Total
revaluation
surplus 573 - 950 19,920 3,621 7,732 (135) 32,661
=== ==== === ====== ===== ===== ==== ======
Valuation
The Group's Investment and Operational properties were valued at 31st December
2004 by qualified professional valuers working for the company of DTZ Debenham
Tie Leung, 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").
All valuations were carried out in accordance with the RICS Appraisal and
Valuation Standards 5th Edition ("the Manual") and the properties were valued on
the basis of Market Value or Existing Use Value of the Properties as
appropriate. Market 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, where the parties had each acted knowledgeably, prudently and without
compulsion. Existing Use Value equates to the value as operating entities of the
Group's properties.
The valuations of the business centres and leisure properties are based on
estimates of the annual maintainable earnings before interest, tax, depreciation
and amortisation ("EBITDA") for each property over a ten year cash flow period.
These estimates are based on the historic, current and budgeted trading
information provided by the Group to DTZ. DTZ also apply a multiplier to the
EBITDA at the end of the cash flow forecast to establish an exit value which
reflects the characteristics of the property at that date. The multiplier
adopted for leasehold properties reflects the term remaining before lease
expiry, the obligations contained within the lease and the possibility that the
landlord might seek repossession on statutory grounds at expiry of the
contracted term.
DTZ apply a market discount rate to the cashflow forecast of the business
centres and leisure properties 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. Where the Group owns business centres and leisure
properties freehold or on a long leasehold basis, the value on a traditional
basis is also calculated by applying a market rent and investment yield assuming
the property was available for alternative office use. Where this value is
greater than the value derived from the EBITDA approach, the Manual requires the
valuer to adopt this higher figure within their valuation, and this has been
followed by DTZ. The DTZ valuation is not qualified by any reference to existing
or alternative use and implies the value to which a property will derive, having
regard to its most valuable use.
In valuing the business centres, leisure properties and hotels, DTZ have had
regard to the valuation of the properties as fully equipped operational
entities, and to their trading potential. The valuation therefore includes the
land and buildings; the trade fixtures, fittings, furniture, furnishings and
equipment; and the market's perception of the trading potential excluding
personal goodwill; together with an assumed ability to renew existing licences,
consents, certificates and permits. The value excludes consumables and stock in
trade.
The valuation excludes any goodwill associated with the management of the
Company or any of its subsidiaries but recognises that the business centre and
hotel assets would probably be sold as trading entities. The valuation also
represents individual property values and does not reflect any premium value
which may be attributable to an acquisition of the properties as a portfolio.
The value of the properties reported by DTZ totalled #578m. This is reflected in
the net book value of fixed assets of #593m and in provisions of #13m in note 11
to the accounts. The valuation resulted in a net surplus attributable to
shareholders for the six months ended 31st December 2004 of #27m, of which
#25.7m is reflected in fixed assets above and #1.3m is reflected in the movement
in provisions in note 11.
9. CREDITORS : amounts falling due within one year
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
Current portion of secured bank
and other loans 2,788 11,247 52,905
Hire purchase and leasing
contracts 4,133 5,111 4,158
Trade creditors 14,128 12,426 13,207
Amounts due to related parties 100 129 227
Deferred consideration on purchase
of properties - 875 -
Other creditors
Corporation tax 1,767 1,751 1,992
Other taxes and social security 8,753 3,178 3,155
Other creditors 23,235 37,593 22,320
Accruals 20,160 25,037 24,590
Deferred income 4,498 4,446 4,079
------ ------- -------
79,562 101,793 126,633
====== ======= =======
10. CREDITORS : amounts falling due after more than one year
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
7.5% Unsecured Loan Stock
2005/2006 31,421 29,398 30,386
Bank loans (secured) 422,377 484,817 424,012
Other loan borrowings 5,665 7,285 6,475
Less issue costs (2,848) (4,546) (3,978)
------- ------- -------
456,615 516,954 456,895
Hire purchase and leasing
contracts 1,594 5,186 3,327
Amount due to related parties - 1,562 1,725
Other creditors 46 667 66
------- ------- -------
458,255 524,369 462,013
======= ======= =======
Analysed as:-
Loans due after more than one year 456,615 516,954 456,895
Other long term liabilities 1,640 7,415 5,118
------- ------- -------
458,255 524,369 462,013
======= ======= =======
The 71/2% Unsecured Loan Stock 2005/2006 pays interest on a semi-annual basis on
30th June and 31st December in each year. The Stock is repayable in full at the
Company's option at the end of any month on or after 30th June 2005 on one
month's notice to Stockholders at a redemption price of 121.6p plus accrued
interest per #1 nominal of Stock, rising by 0.2p per month for each complete
calendar month thereafter. The Stock will be finally repayable by the Company at
a redemption price of 124p plus accrued interest per #1 nominal of Stock on 30th
June 2006, representing a maximum redemption premium payable of 24p for every #1
nominal of Stock. The premium over the nominal value is amortised over the life
of the Stock and is charged as interest payable in the profit and loss account,
thus producing a constant cost of financing over the life of the Stock.
Summary of loans and overdrafts at period end
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
Repayable within one year:
Current portion of secured bank
and other loans 2,788 11,247 52,905
------- ------- -------
Repayable:
In more than one year but not more
than two years 16,589 51,766 40,509
In more than two years but not
more than five years 292,650 342,329 295,715
In more than five years 147,376 122,859 120,671
------- ------- -------
456,615 516,954 456,895
------- ------- -------
Total loans and overdrafts 459,403 528,201 509,800
======= ======= =======
Analysis by division
Hotels
Malmaison and Hotel du Vin 165,064 100,204 98,189
Hotel investments 95,672 140,776 141,192
Liberty 49,765 47,673 49,719
Business Centres 8,843 22,428 22,475
West India Quay 88,709 92,672 122,621
Group 51,350 124,448 75,604
------- ------- -------
459,403 528,201 509,800
======= ======= =======
11. PROVISIONS FOR LIABILITIES AND CHARGES
The movements on the deferred tax balance and other provisions during the six
months ended 31st December 2004 were as follows:-
31st December 31st December 30th June
2004 2003 2004
Group #'000 #'000 #'000
At beginning of period 20,581 37,814 37,814
Transfer to/(from) tangible fixed
assets for properties previously
carried at negative/(positive)
values 295 - (5,994)
Potential tax on short-term timing
differences 235 2,276 3,012
Trading tax losses and accelerated
capital allowances (235) (2,276) (3,012)
Net revaluation surplus on
properties held at negative values (1,277) (9,165) (2,948)
Amortisation and usage during the
period for properties held at
negative values (639) (9,600) (1,661)
Net increase/(decrease) in other
provisions during the period 1,205 8,915 (6,630)
------ ------ ------
At end of period 20,165 27,964 20,581
====== ====== ======
Certain short leasehold interests in the Group's business centre operations had
negative values at 31st December 2004, and at the previous period ends, and are
included in the table above. These principally reflect the onerous cost of
future lease obligations and are recorded as provisions at each period end.
12. MOVEMENT ON RESERVES
Capital Profit
redemption Revaluation Other and loss
reserve reserve reserves account
#'000 #'000 #'000 #'000
Group
At 1st July 2004 15,650 105,535 1,379 (157,358)
Loss retained for the period - - - (3,304)
Revaluation surplus for period - 20,728 - -
Transfer on sale of properties
during period - (24,549) - 24,549
Transfer of depreciation on
revalued tangible fixed assets - (537) - 537
Purchase of ordinary shares for
cancellation 325 - - (441)
Goodwill crystallised - - 174 (174)
Currency translation - - - (15)
differences
------ ------- ----- -------
At 31st December 2004 15,975 101,177 1,553 (136,206)
====== ======= ===== =======
During the six months ended 31st December 2004, there was no movement on either
the share premium account or the merger reserve.
13. EQUITY MINORITY INTERESTS
The movements in equity minority interests of the Group during the six months
ended 31st December 2004 arose as follows:-
Add Less
Add/(less) minority distributions
minority share of and other
At share of valuation movements At 31st
1st July profit/(loss) surplus for during December
2004 for the period the period the period 2004
Group #'000 #'000 #'000 #'000 #'000
Hotels - 140 Park Lane Limited 6,868 (256) 4,141 - 10,753
Hotels - West India Quay 4,441 (866) 233 - 3,808
Liberty - Retail Stores plc 16,008 (838) 1,340 (282) 16,228
West India Quay 13,506 679 - - 14,185
Royal Victoria Dock (52) - - - (52)
Others (18) (8) (4) 169 139
------ ----- ----- --- ------
40,753 (1,289) 5,710 (113) 45,061
====== ===== ===== === ======
14. EQUITY SHAREHOLDERS' FUNDS PER SHARE
The equity shareholders' funds per share figures of the Group are calculated by
dividing the equity shareholders' funds at the period end by the number of
shares in issue at that date. They are calculated as follows:-
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
Equity shareholders' funds per
consolidated balance sheet 125,841 89,921 108,813
======= ======= =======
'000 '000 '000
Number of ordinary shares in issue
at period end 109,150 109,800 109,800
======= ======= =======
Equity shareholders' funds per
share 115p 82p 99p
======= ======= =======
15. NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
Group operating profit 11,907 2,915 26,094
Less write back of provisions
against fixed assets made in prior
years (6,223) - (4,805)
Depreciation of fixed assets and
amortisation of provisions for
properties held at negative values 7,307 7,904 16,032
Decrease/(increase) in properties
held for resale and developments
in progress 2,654 (5,427) 19,634
Decrease /(increase) in debtors 49,062 (2,147) (45,866)
Increase in stock (1,514) (217) (807)
Decrease in creditors (80) (11,921) (29,735)
------ ------ ------
63,113 (8,893) (19,453)
====== ====== ======
16. CAPITAL EXPENDITURE, FINANCIAL INVESTMENT AND SALES OF FIXED ASSETS
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
Purchase of tangible fixed assets (14,707) (20,869) (33,520)
Sale of tangible fixed assets 88,071 - 73,550
------ ------ ------
73,364 (20,869) 40,030
====== ====== ======
17. ACQUISITIONS AND DISPOSALS
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
Acquisition of Hotel du Vin Limited (64,689) - -
Closure of MWB Business Exchange
Europe Limited - (8,689) (8,651)
------ ------ ------
(64,689) (8,689) (8,651)
====== ====== ======
18. FINANCING
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2004 2003 2004
#'000 #'000 #'000
Loans drawn down 71,372 114,543 161,412
Loans repaid (124,458) (53,245) (121,076)
Net decrease in hire purchase and
leasing contracts (1,758) (7,955) (10,767)
Purchase of ordinary shares in the
Company (441) - -
Distributions to equity minority
interests (247) (319) (305)
Investment by non-equity minority
interests - (9) 10
------ ------ ------
(55,532) 53,015 29,274
====== ====== ======
19. INCREASE/(DECREASE) IN CASH DURING THE PERIOD
31st Movement Movement
December during 30th June during 30th June
2004 six months 2004 year 2003
#'000 #'000 #'000 #'000 #'000
Cash 43,989 (5,026) 49,015 (3,344) 52,359
Hire purchase and leasing
contracts (5,728) 1,757 (7,485) 10,767 (18,252)
Bank loans (420,696) 44,123 (464,819) (33,904) (430,915)
Unsecured Loan Stock (31,421) (1,035) (30,386) (16,898) (13,488)
Other loan borrowings (7,285) 7,310 (14,595) 7,905 (22,500)
------ ------ ------- ------ -------
Net debt (421,141) 47,129 (468,270) (35,474) (432,796)
====== ====== ======= ====== =======
20. FINANCIAL INFORMATION
The financial information set out in these interim accounts of the Group for the
six months ended 31st December 2004 includes information for the year ended 30th
June 2004. This information does not constitute the Company's statutory accounts
for the year ended 30th June 2004 but is derived from those accounts. Statutory
accounts for the year ended 30th June 2004 have been delivered to the Registrar
of Companies. The auditors have reported on those accounts; their report was
unqualified and did not contain statements under Section 237(2) or (3) of the
Companies Act 1985.
21. ACCOUNTS AND INTERIM ANNOUNCEMENT
A copy of the above document has been submitted to the UK Listing Authority, and
will be 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.
This interim announcement will be sent to shareholders during April 2004. The
audited accounts of Marylebone Warwick Balfour Group Plc for the year ended 30th
June 2004, further copies of these interim accounts, and the interim accounts
for the six months ended 31st December 2003 are available from the Company
Secretary, City Group P.L.C. at the Company's registered office of 25 City Road,
London EC1Y 1BQ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SELESLSISELD
|