(LBE.L) Liberty PLC Buy/Sell

"In the circumstances, all MWB Group companies have produced extremely creditable results in a difficult business environment. We believe we have the people, the products and services to ride out the current adverse climate and we are well placed to take full advantage of the upturn when it finally appears. To that end I have total confidence in the underlying strength of our businesses but remain cautious in my short term outlook."

Eric Sanderson

Chairman

MALMAISON AND HOTEL DU VIN

"We have the product to maintain our traditional market share as well as penetrating new markets while keeping a tight control on costs. I am confident that we are in the right locations with the right product and service levels to continue to perform well in this challenging trading environment."

Robert B. Cook

Chief Executive

Malmaison and Hotel du Vin Group

MWB BUSINESS EXCHANGE PLC

"Trading for the first six months of 2009 has been ahead of our expectations, given the tough economic climate. We view the future with cautious optimism on the basis we have continued to trade strongly and our cash flow is robust."

John Spencer

Chief Executive

MWB Business Exchange Plc

LIBERTY PLC

"We have already demonstrated our ability to deliver solid progress in difficult market conditions and I have no doubt we have the products, the people and infrastructure in place to take full advantage of any upswing in retail spending."

Geoffroy de La Bourdonnaye

Chief Executive

Liberty Plc

CHAIRMAN'S STATEMENT

The quality of the three businesses comprising the Group, MWB Business Exchange, Liberty and Malmaison and Hotel du Vin, is reflected in our results for the six months to 30 June 2009. Not only can this be seen from the positive operating results achieved but also in terms of the underlying property values within those companies. The fall in values since the December 2008 year-end has been a modest 2% which, I believe, underlines the strength of those operational businesses, especially our hotel operations.

Group revenue for the period was virtually unchanged at £135.7m against £134.1m, and EBITDA was £16.6m compared to £15.1m for the six months to 30 June 2008. Pre-tax losses were at a similar level to last year at £5.1m against £5.4m in the six months to June 2008, while the loss per share improved 8% to 9.0p from 9.8p due to the share buy-backs during the year.

At the end of June 2009, the Group's properties were valued at £552.3m compared to their book value at that date of £562.6m. This confirmed a dramatic slowdown in rate of value diminution, in part reflecting the strong performance of our hotels. In the previous six month period our property values had declined by £42.0m and by £37.0m in the first half of 2008. As a result, and after net debt of £366m, equity shareholders' funds at 30 June 2009, were £108.8m or 150p per share, against £125.9m and 174p per share at 31 December 2008.

Turning to the individual businesses, the period's success story has undoubtedly been Liberty. This iconic British brand and retail emporium has bucked the broad retail trend and delivered exceptional results for the half year with 17% revenue growth to more than £25m, and for the first time in ten years, it has produced positive operating EBITDA.

At the heart of this uplift has been the highly successful Liberty Renaissance launch in February 2009. The revitalised flagship store has attracted increasing numbers of customers and strong media attention. We reported at the time of our 2008 annual results in April this year that the impact of this Renaissance was a very positive sales and margin increase at the store. This improvement continued through the remainder of the first half resulting in the flagship store revenues recording a 12% increase over the comparative 2008 period.

Not only did the flagship store deliver excellent results but also Liberty's fabrics division has continued its strong growth with a further 28% uplift in revenues over the period, producing £2.2m of EBITDA, a 27% growth. This growth reflects the upsurge in interest in Liberty fabrics - both new and old - and the company's designs can now be seen in a wide range of products and clothing.

As we indicated in our December 2008 results, trading at our Liberty of London leasehold shop on Sloane Street had been slower than expected. In June 2009, an unsolicited offer resulted in a £0.7m cash premium being received by Liberty for this lease. By refocusing Liberty of London's retail operations back into the flagship store, there will be future annual cost savings of approximately £0.5m which will result in Liberty of London achieving profitability more quickly now that it operates from a much lower cost base.

Overall, prospects look promising for Liberty as the company moves into its stronger second half and we anticipate a positive outcome for the year, although this is dependent on no further worsening of the economic climate. We do believe we have reached a turning point for Liberty after a number of false dawns. To that end the Liberty Board has appointed advisers to examine strategic ways in which Liberty can grow and develop both at home and internationally.

We anticipated last Autumn that our highly successful hotels business, Malmaison and Hotel du Vin, would encounter much more challenging trading conditions during the first half of 2009; and so it has proved to be. However the Malmaison management team had already implemented a cost savings programme and over the past six months has continued to scrutinise outgoings rigorously without sacrificing service levels.

Despite the adverse economic climate, combined revenue from both Malmaison and Hotel du Vin was virtually unchanged at £52.5m for the first six months against £52.0m for the comparative period a year ago, although the group operated four more hotels at the end of June 2009 than it had a year earlier. Occupancy was down three percentage points for both Malmaison and HdV at 76% and 78% respectively while average room rates fell 12% and 11% respectively. As a result, operating EBITDA was down 15% at £10.4m from £12.2m for the same period last year.

While the business suffered from a slowdown in the corporate market there has been a marked increase over the period in leisure travel bookings from within the UK and Europe, particularly for Malmaison. This shift partly reflects the group's focusing of its marketing efforts towards the leisure travel sector as the weak pound has deterred some people from European travel, while at the same time the strong Euro has made the UK an attractive and relatively inexpensive destination for Europeans.

We have said for some time that 2009 would be a year of consolidation following the past three years of fairly rapid expansion. As a result no new hotels were opened during the period while we focused our efforts on developing the four new properties which were launched in the second half of 2008. Nevertheless, in March 2009, we were successful in securing planning consent for a new HdV in Canterbury and negotiations over the acquisition of a proposed hotel in Chester are nearing completion. At the same time, ways of developing the Malmaison and HdV brands both here and internationally are being continually examined.

While the second half of the year for Malmaison and HdV has started well, trading conditions are likely to remain challenging, although many of the cost-saving measures implemented a year ago are continuing to impact. The re-focused marketing and sales initiatives launched over the past six months, together with high service levels and strong brand recognition, enables the management team to face the challenging climate with confidence.

MWB Business Exchange, our AIM-quoted serviced office business, has also felt the impact of the economic climate over the first half of the year. The management team here foresaw the changing economic climate and took the necessary steps to mitigate the impact as much as possible. Changes in demand characteristics, from larger corporates to start-ups and SMEs, have led to Business Exchange developing a range of value driven services to further differentiate it from its competitors.

However a more competitive serviced office environment led, inevitably, to a downward pressure on rates. As a result, revenue for the six months to 30 June 2009 eased 4% to £57.4m, while EBITDA reduced by 24% to £8.6m and pre-tax profits were £5.7m against £8.8m last year. During the period an interim dividend of 15p per share was paid to Business Exchange shareholders, the majority of which was received by MWB Group.

Over the past two years Business Exchange's strategy has been to focus its expansion within the Greater London market and major provincial centres. As a result the company has become London's dominant serviced office provider following its acquisition of 16 profitable centres from the administrator and former landlords of the MLS Group, taking Business Exchange's total centres in the capital to 45. At the period end the company had a total of 73 centres, covering 1.75m sq ft and providing approximately 20,000 workstations.

Also the company reached agreement for an 11 year Operating and Management Agreement on 32,000 sq ft of space in a prestigious City office building close to Liverpool Street Station. This will provide a further 350 workstations and seven meeting rooms when it opens in September 2009 but will involve no capital expenditure by the group or commitment to landlords.

It is unlikely there will be any significant improvement in market conditions for Business Exchange over the short term but I am confident that, at Business Exchange, we have the management team, infrastructure and product range to compete successfully in the current market while being capable of taking full advantage of the upturn when it arrives.

In the circumstances, all the MWB operating businesses have produced extremely creditable results in a difficult business environment. The covenants included in all our financing facilities at 30 June 2009 were complied with. We are nevertheless aware that, although we consider this to be unlikely, the gearing covenant in respect only of the Group's £30m Unsecured Loan Stock which has an historically lower covenant than all our other facilities, could be affected if there are continued material reductions in property values or trading conditions for the Group are significantly adverse. The Board recognises that in the current adverse market conditions it is difficult to predict future property values with previous levels of accuracy, and we have therefore commented on this in note 1 to our financial statements. The Board is also exploring various options open to the Company with the aim of strengthening the Group's financial structure and will update shareholders at the appropriate time.

In the meantime we believe we have the people, the products and services to ride out the current adverse climate and that we are well placed to take full advantage of the upturn when it finally appears. To that end I have total confidence in the underlying strength of our businesses but remain cautious in my short-term outlook.

Eric Sanderson

Chairman

27 August 2009

MALMAISON AND HOTEL DU VIN OPERATING REVIEW

We said at the time of our results announcement for the year to December 2008, that 2009 was proving to be a challenging business environment. This has continued to be the case during the second and third quarters although there has been some evidence of improved volumes both in room bookings and food and beverage.

Over the six months to 30 June 2009 we have maintained our programme of consolidation that we referred to in the annual statement. At the same time we have been focused on costs and ensuring that all outgoings are closely scrutinised to see whether further savings are achievable. However our strict cost controls have not sacrificed the service levels which our customers have come to expect from our 26 strong Malmaison and Hotel du Vin group.

The impact of the tougher market conditions meant that the first quarter was soft, while the second quarter showed signs of improvement, albeit intermittently. The broad corporate travel market has been slow over the first half of 2009 and, therefore, we have re-focused much of our marketing towards the leisure travel sector both domestically and internationally. The weaker Pound - particularly against the Euro - has had some tangible benefits for both Malmaison and Hotel du Vin during the period.

We have seen a greater level of leisure travel bookings from within the UK and Europe, particularly for Malmaison, as people have been deterred from European travel because of the strong Euro, while the UK has become an attractive and relatively cheap destination for Europeans. To that end we have invested in greater marketing spend aimed at capturing more of the in-bound European leisure and business traveller. We anticipate the results of this marketing will be seen by the beginning of September.

We have also had considerable success in developing business in new sectors as well as growing market share in some of our more established areas. Over the period we have been pleased to attract Government and Government-related bookings for the first time as well as capturing more of the established sport, especially football, and the wider music industry market.

We have spent 30% more on sales and marketing this period, but the result is a better than anticipated occupancy level. Across the group occupancy was 77% for the period, only three percentage points lower than at the year-end. However the real impact of the current adverse economic climate has been felt at the room rates level which is approximately 12% lower than last year at £102 compared to £116 for 2008.

I believe we have adapted well to current market conditions and it is a reflection of our ability to expand our customer base that demonstrates the underlying strength of our business as well as our brands. There have been a number of successful initiatives that have attracted new customers as well as reinforcing brand loyalty within our established client base.

One initiative that has generated an additional 1,200 room nights a month has been our well received Sunday night promotion. Here we have offered customers a room on Sunday nights for only £10 providing they spend at least £75 in the restaurant. Also we have been successful in attracting new restaurant customers by offering customers a meal for £29 including a bottle of wine. This promotion has generated approximately 100,000 additional covers during the six months ended 30 June 2009. Together with extremely tight cost controls, these promotions have helped maintain margins on the Group's food and beverage at 35% over the period.

In the early Summer we benefited from the good weather, particularly in June, where we were able to offer al fresco dining at 20 of our hotels. Also what has proven beneficial is that we have seen an upsurge in bookings, and consequent increase in food and beverage revenue, at those of our hotels which benefit from special social and sporting events such as Cheltenham and Henley.

Similarly we have experienced stronger bookings at those of our hotels which provide spa facilities as a number of our customers have been spending their money on shorter, higher quality breaks within the UK rather than travelling abroad.

As confirmed in our December 2008 annual statement, there have been no new hotel openings during the first six months of 2009 as we look to consolidate our current position and continue to develop the new properties we launched last year. We continue to operate our St Andrews hotel in its original format and will convert it to a Hotel du Vin when the time is right. In March 2009 we secured planning permission for a new HdV in Canterbury while in Chester we are into final negotiations over the acquisition of a site for a proposed new hotel there.

Although market conditions are far from conducive to support further major expansion of the business, we continually examine ways of developing the Malmaison and HdV brands both here in the UK and elsewhere and the situation is kept under review.

The second half of the year has started quite strongly but levels of bookings can be volatile. Traditionally the first two months of the third quarter are relatively quiet for us, particularly in the parts of our business that are orientated towards the corporate market, but our views on the year as a whole remain positive.

I am pleased to report that indications for the second half are good but there is a cost attached to maintaining occupancy levels in the present market as a result of higher third party transaction costs and commissions. We continue to invest heavily in marketing and sales while the competitive nature of the current business environment means that our room rates are under constant pressure. Importantly we are maintaining brand values by ensuring that we continue to offer the standards of quality and service our customers have come to expect as well as surprising new clients on the quality of our offer.

There is little doubt that trading conditions in the second half of the year will continue to be challenging, but I believe we have the product to maintain our traditional market share as well as penetrating new markets while keeping a tight control on costs. To that end, although I view the coming months with caution, I am confident that we are in the right locations with the right product and service levels to continue to perform well in this challenging trading environment.

Robert B. Cook

Chief Executive

Malmaison and Hotel du Vin Group

27 August 2009

MALMAISON AND HOTEL DU VIN - KEY FINANCIAL HIGHLIGHTS

The key performance indicators for the business, together with its trading and balance sheet performance in recent periods, are summarised below:-

Six months Six months
ended ended Year ended
30 June 30 June 31 December

Malmaison

Total revenue £'000 28,830 30,657 62,322
Average occupancy for period % 76 79 79
Average room rate for period £ 100 114 112
Operating EBITDA £'000 6,282 7,984 16,526
Number of operating hotels at 12 11 12

period end

Hotel du Vin

Total revenue £'000 23,669 21,363 45,314
Average occupancy for period % 78 81 81
Average room rate for period £ 109 122 120
Operating EBITDA £'000 4,139 4,249 9,927
Number of operating hotels at 14 11 14

period end

Combined Malmaison and Hotel du Vin
Total revenue £'000 52,499 52,020 107,636
Operating EBITDA £'000 10,421 12,233 26,453
30 June 30 June 31 December

Balance sheet composition
Property, plant and equipment £'000 480,615 509,915 493,311
Debt £'000 (279,612) (261,272) (282,322)

Adjusted equity attributable to
shareholders of MWB Group in
Malmaison and Hotel du Vin £'000 137,152 182,990 147,703

Adjusted equity attributable to
shareholders of MWB Group in
Malmaison and Hotel du Vin,
in pence per MWB Group share Pence 190p 246p 204p

MWB BUSINESS EXCHANGE PLC OPERATING REVIEW

Trading for the first six months of 2009 has been ahead of our expectations, given the tough economic climate. Occupancy remained buoyant at 85%, while the average monthly workstation rate continued to be strong at £590. Revenue per occupied workstation stood at a healthy £9,490 per annum and as a result revenue for the six months was £57.4m.

EBITDA for the period was £8.6m and pre-tax profit for the first half was £5.7m. These figures are lower than the comparable figures for last year, but still very encouraging in light of market conditions. Forward contracted income already accounts for approximately 85% of remaining projections to December 2009. This figure increases to over 90% when including a conservative estimate for anticipated renewals. Our differentiated strategy and emphasis on service excellence continue to have a positive effect on renewal rates, with over 70% of clients renewing at least once.

Following the collapse of one of our principal competitors, the major highlight of the period was the acquisition during the second quarter of 16 of the most profitable and desirable centres of MLS Group PLC. The acquisition was a significant milestone for us. Not only did it increase our network of centres to 73, but it also reinforced our position as London's dominant provider of serviced offices. We now operate 45 centres in Greater London.

As a result of this expansion, Business Exchange's workstations have risen to nearly 20,000, an uplift of over 25%, increasing our portfolio of serviced offices to approximately 1.75m sq ft of space. Of the total 73 centres, 52 are leased, seven are Operating and Management Agreement contracts and the remaining 14 are held under management contracts.

Importantly, the acquisition of the MLS centres has enabled us rapidly to expand our City Executive Centres three-star brand, which targets small start-up businesses looking for a low-cost entry into the convenient flexible office market. We can also present a wider product range to suit the diverse needs of our prospects and clients.

In addition to the MLS deal, we reached agreement for an 11 year Operating and Management Agreement on 32,000 sq ft of space close to Liverpool Street station at 133 Houndsditch EC3. The landlord, Henderson Global Investors, is investing over £2.9m in a refurbishment programme that, on completion, will provide a further 350 workstations and seven meeting rooms. The centre is expected to open in October.

We recognise that the business environment has been difficult for many of our clients and we have focused on ensuring they receive the best possible support from our service teams - enabling them to concentrate solely on their core business activities.

There is little doubt that the more challenging business environment is likely to continue for the rest of 2009. To counter some of the impact of tougher trading conditions we have maintained a strong grip on costs and a number of revenue generating and cost saving initiatives have been implemented over the past six months. As a consequence, our balance sheet remains strong with net assets of £23.2m, cash of £2.9m, no debt and undrawn facilities of £8.0m.

We view the future with cautious optimism on the basis we have continued to trade strongly and our cash flow is robust. We have the management team, infrastructure and product range to compete successfully in the current market and, at the same time, take full advantage of any upturn when it arrives.

John Spencer

Chief Executive

MWB Business Exchange Plc

27 August 2009

MWB BUSINESS EXCHANGE PLC - KEY FINANCIAL HIGHLIGHTS

The key performance indicators for this business and the trading performance and balance sheets in recent periods, are summarised below:-

Six months Six months
ended ended Year ended
30 June 30 June 31 December

Operating statistics

Total revenue £'000 57,384 59,713 118,544
Occupancy at period end* % 85 92 90

Annualised revenue per available workstation ("REVPAW")
at period end* £ 8,055 9,630 8,700

Annualised revenue per occupied workstation ("REVPOW")
at period end* £ 9,490 10,500 9,650
EBITDA £'000 8,596 11,273 18,088
Leased centres at period end Number 52 39 38

Operating and Management Agreement
centres ("OMAs") at period Number 7 4 4

end Management contract centres at
period end Number 14 13 13

Financial performance

Profit before tax £'000 5,658 8,800 14,003
30 June 30 June 31 December

Balance sheet composition

Property, plant and equipment £'000 41,282 41,913 41,535
Net cash £'000 2,959 5,838 16,404

Adjusted equity attributable to
shareholders of MWB Group in
MWB Business Exchange Plc £'000 25,242 34,619 24,415

Adjusted equity attributable to
shareholders of MWB Group in
MWB Business Exchange Plc
in pence per MWB Group share Pence 35p 47p 33p

LIBERTY PLC OPERATING REVIEW

While much has been written about the state of the UK economy and its impact on the retail sector, I am pleased to report that Liberty, Britain's iconic luxury brand, has recorded its best first half for many years. Even more pleasing is the double-digit sales growth we are reporting across the business for the six months to 30 June 2009 and the fact we have recorded positive operating EBITDA, for the first time in the last ten years.

There is little doubt our efforts to raise Liberty's profile as an increasingly global luxury brand are beginning to pay dividends, not only in direct sales but also in reputation as some of the world's leading brands, such as Apple, MAC Cosmetics and Herms have all approached Liberty for collaborations.

Group revenue grew by 17% to £25.6m during the first half compared to £21.8m over the same period a year ago. As a result operating EBITDA was a positive £73,000 against a negative £2.63m for the six months to 30 June 2008, a substantial improvement over the last few years' performance.

But the real story of the first half has been the highly successful Liberty Renaissance launch in February 2009. Liberty's "new look" flagship store and greatly improved offer was unveiled by "Slumdog Millionaire" actress Freida Pinto. With the addition of new brands such as Balmain, Marni and Fendi in ladies ready-to-wear, Paul Morelli and Stephen Dwek in jewellery, Givenchy in handbags and Burberry Prorsum in men's ready-to-wear, Liberty has recaptured its authority in fashion.

The sales upsurge following the Renaissance has resulted in revenue at the flagship store for this six months being 12% higher than 2008 levels. Virtually all product categories recorded healthy sales growth following the Renaissance launch, but in particular, fashion accessories such as scarves, jewellery and gift items, ladies' and men's ready-to-wear, fabrics and furniture were all well received by customers.

Liberty's sales growth has been driven by the domestic market although we continue to benefit from the increase in overseas shoppers, especially those from Europe who are discovering the relative cheapness of the UK in comparison to Euro denominated countries.

Our fabrics division has continued its strong growth with a 28% revenue increase over the period to £9.75m against £7.64m in the first six months of 2008, and produced EBITDA 27% higher at £2.2m. All of this growth has been achieved outside of Japan and reflects the upsurge in interest in Liberty fabrics - both new and old. Apart from some of our collaborations, both with fashion houses and individual artists and designers such as Grayson Perry, Liberty fabrics are being incorporated into a wide range of traditional and other products and clothing.

We continue to make progress with our transactional website which is benefiting from the brand's increasingly higher profile. As the website was only launched in July 2008 there are no meaningful comparatives to prior periods. We will be able to judge performance better, once we have completed six quarters of activity and have a clearer idea of the product range that is most appealing to our international customer base. However, we are pleased with the progress that this part of our business has already made to date.

Liberty of London, our in-house designed luxury brand business, producing leather goods, accessories and scarves, has continued to improve both its product range and distribution. Today, more than 80 stores around the world stock Liberty of London products and there was a slight increase in revenue at £1.4m over the period compared to the 2008 first half.

We announced in late June 2009 that we had surrendered the lease on the Liberty of London Sloane Street shop following an unsolicited offer from a European fashion brand. Liberty received a £0.7m cash premium for the lease and we estimate there will be future annual cost savings of approximately £0.5m by refocusing Liberty of London's retail operation back into the flagship store. As a result, Liberty of London will have greater ability to be profitable as it will operate from a much lower cost base.

While the business has had a strong first half, we are, nevertheless, adopting a cautious approach to the remainder of the year. We believe trading conditions continue to be tough, as the future direction of the economy, both in the UK and abroad, remains uncertain. However, over the past 12 months Liberty's senior management team has worked hard at generating greater efficiencies within the business and as a result there has been an overall reduction of more than 10% in overheads. This has been achieved in some of the back office areas, such as payroll and support services, but at no cost to the important customer service where we continue to see great improvements.

Although recognising the future economic environment is unpredictable we remain committed to ensuring that Liberty generally and the flagship store in particular is one of London's most exciting and innovative shopping experiences. We have developed a number of initiatives that will be launched over the next two months.

As one of the world's leading scarf authorities, Liberty is partnering Herms on an historical collaboration. From September there will be a Herms "pop-up" shop within the flagship store that focuses on this luxury brand's traditional accessories, such as scarves and ties, but with a Liberty twist. To mark the collaboration, Herms has created an exclusive limited edition range of scarves and ties using Liberty's renowned Tana Lawn cottons. The collection will include two different size scarves in six different micro floral prints and a new range of Herms super slim ties.

The second half of the year also sees the renaissance and expansion of Liberty's Beauty offering with the launch of 12 new exclusive beauty and fragrance lines such as Le Mtier de Beaut, Revive, Byredo and Francis Kurkdjian.

With Christmas looming on the horizon we have invited British Fashion Award winner Luella to create this year's festive theme. The flagship store will be Christmas themed from mid-October onwards. This promises to be an exciting backdrop to what we anticipate will be a very busy time for Liberty and there are a number of special events and promotions planned to attract an increasing number of customers into the store.

A world-class team has been assembled since 2007 and is now turning Liberty not only into the most authoritative retail destination for fashion, design and beauty but also one of the fastest growing brands globally in both fashion and retail.

We want to maintain this trend and, as a result, we have appointed advisers to undertake a strategic review of Liberty, with the express aim of identifying ways in which it can be developed and expanded, both within the UK and internationally.

As I have already indicated it is difficult to forecast with certainty what the remaining four months of the year hold for us. We have had an excellent first half and we believe the momentum we have achieved over the past six months will help Liberty buck the adverse market trend. We have already demonstrated our ability to deliver solid progress in difficult market conditions and I have no doubt we have the products, people and infrastructure in place to take full advantage of any upswing in retail spending. Therefore I view the future with a degree of cautious confidence.

Geoffroy de La Bourdonnaye

Chief Executive

Liberty Plc

27 August 2009

LIBERTY PLC - KEY FINANCIAL HIGHLIGHTS

The historical trading and balance sheet performance of Liberty Plc is summarised below:-

Six months Six months
ended ended Year ended
30 June 30 June 31 December

Financial performance

Total revenue £'000 25,612 21,805 50,580

Operating EBITDA before brand expenditure, reorganisation costs
and lease surrender £'000 2,300 274 1,815

Results from operating activities before
brand expenditure,

reorganisation costs
and lease surrender £'000 1,030 (718) (435)
Brand expenditure £'000 (2,227) (1,971) (4,344)
Reorganisation costs £'000 - (936) (1,346)
Gain on lease surrender £'000 85 - -
Loss before taxation £'000 (1,910) (4,146) (6,651)
30 June 30 June 31 December

Balance sheet composition

Intangible asset - brand and £'000 18,382 18,382 18,382

goodwill
Property, plant and equipment £'000 30,381 33,400 31,006
Net debt £'000 (12,369) (12,756) (12,390)

Adjusted equity attributable to
shareholders of MWB Group

Plc
in Liberty £'000 40,163 42,480 34,971

Adjusted equity attributable to
shareholders of MWB Group
in Liberty Plc, in pence per
MWB Group share Pence 55p 57p 49p

INTERIM MANAGEMENT REPORT

for the six months ended 30 June 2009

INTRODUCTION

The Chairman's Statement and Operating Reviews provide information on the Group's principal operations and the Board's expectations for the future. This Interim Management Report covers in greater depth the more significant features of the financial statements for the six months ended 30 June 2009, which include an independent valuation of the Group's properties at that date.

EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF MWB GROUP HOLDINGS PLC

During the six months ended 30 June 2009, operating improvements continued to be achieved across the Group, although the capital values of the Group's property portfolio reduced. Overall, this resulted in a reduction in equity attributable to shareholders during the period from £125.9m to £108.8m at 30 June 2009 equating to a reduction from 174p to 150p per share.

The movement in equity attributable to shareholders of MWB during the period is summarised in the following table:-

Six months ended
30 June 2009
Pence
£'000 per share

Equity attributable to shareholders of MWB Group Holdings Plc
at 1 January 2009 125,881 174p

Movements during the period:
Revaluation of property, plant and equipment, net of tax (8,385) (12p)
Retained loss (6,501) (9p)
Effective portion of changes in fair value of derivative (378) -

financial hedges
Defined benefit pension scheme actuarial gains, net of (1,138) (2p)

tax
Other movements (697) (1p)

Equity attributable to shareholders of MWB Group Holdings Plc
at 30 June 2009 108,782 (150p)

ADJUSTED EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF MWB GROUP HOLDINGS PLC

Under Adopted IFRS, the Company's interests in its two AIM quoted subsidiaries, MWB Business Exchange Plc and Liberty Plc, continue to be consolidated in the Group financial statements inclusive of their freehold and short leasehold properties at current valuation or cost. However, these property valuations reflect only the values of the properties themselves and the financial statements do not reflect the current market value of the Group's shareholdings in these two listed subsidiaries.

Both subsidiaries are quoted on the AIM Market of the London Stock Exchange and, therefore, a market value for the Group's shareholding in each of the two companies is readily available.

In order that shareholders are aware of the underlying value of the Group, the impact to shareholders of MWB Group arising from assessing these two investments by reference to their market value at 30 June 2009, and taking account of incentives that would be payable if these amounts were realised in cash, is set out below:-

30 June 2009 31 December 2008
£'000 Pence £'000 Pence
per per
share share

Equity attributable to shareholders of MWB Group
Holdings Plc per financial 108,782 150p 125,881 174p

statements

Unrealised surplus of market value of
MWB Group's shareholding in
MWB Business Exchange Plc(1) 10,316 14p 76 -

Unrealised surplus of market value of
MWB Group's shareholding in Liberty 12,789 18p 7,967 11p

Plc(2)
131,887 182p 133,924 185p
Less Central Incentive Scheme and (12,804) (18p) (13,235) (18p)

Bonus Plan(3)

Total adjusted equity attributable to
shareholders of MWB Group Holdings 119,083 164p 120,689 167p

Plc

Notes

(1) The unrealised surplus of market value of MWB Group's 71.5% shareholding in MWB Business Exchange Plc is based on the share price of MWB Business Exchange Plc at 30 June 2009 of 74p (31 December 2008: 52p) per share, and is after deducting deferred consideration of £9.5m that would become payable on realisation of the Group's investment in MWB Business Exchange and incentive arrangements in subsidiaries payable on realisation at this value.

(2) The unrealised surplus of market value of MWB Group's 68.3% shareholding in Liberty Plc is based on the share price of Liberty Plc at 30 June 2009 of 260p (31 December 2008: 227p) per share, after deducting divisional bonuses that would become payable on realisation at this value.

(3) These amounts would only become payable on realisation of values as above and if such realised values were distributed to shareholders.

The adjusted equity attributable to shareholders of MWB Group Holdings Plc is analysed as follows:-

30 June 2009 31 December 2008
£'000 Pence £'000 Pence
per per
share share
Malmaison and Hotel du Vin 137,152 190p 147,703 204p
MWB Business Exchange Plc 25,242 35p 24,415 33p
Liberty Plc 40,163 55p 34,971 49p

Group debt and incentives payable, less cash and
other assets (83,474) (116p) (86,400) (119p)

Total adjusted equity attributable to
shareholders of MWB Group Holdings 119,083 164p 120,689 167p

Plc

In addition to the assessment above, shareholders should be aware that the adjusted equity attributable to shareholders of MWB Group Holdings Plc of 164p (31 December 2008: 167p) per share above does not reflect the market value of the Malmaison and Hotel du Vin business, as this is not a listed subsidiary for which a market value can be readily confirmed. The Board is confident that the value of the Group's 82.5% interest in the Malmaison and Hotel du Vin business is significantly higher than the £137.2m or 190p per share for this business within adjusted equity attributable to shareholders of MWB Group Holdings Plc, thus demonstrating a further enhancement in underlying equity value of the Group above the adjusted figure of 164p per share in the table above.

NET ASSET VALUE

The net assets of the Group are financed by equity attributable to shareholders of MWB Group Holdings Plc and minority interests. The sources of finance of the Group at 30 June 2009 in the consolidated balance sheet and at the previous period ends were as follows:-

30 June 30 June 31 December

£'000 £'000 £'000

Total equity attributable to shareholders of
MWB Group Holdings Plc 108,782 157,457 125,881
Minority interests 71,617 83,767 77,918
Net assets at period end 180,399 241,224 203,799

REVIEW OF PROPERTY, PLANT AND EQUIPMENT

Valuation of property portfolio at 30 June 2009

A valuation of the Group's freehold and long leasehold property interests was undertaken at 30 June 2009. The valuation was performed by DTZ and was performed on the basis of Existing Use Value. The net deficit over previous book values before minority interests for the six months ended 30 June 2009 totalled £10.3m, which has been included in these financial statements.

In accordance with normal valuation practice, the valuations of the Group's hotel interests include value ascribed for plant, machinery and fixtures and fittings forming part of the service installations of the building. They therefore represent a valuation of the total interest of the Group in those properties. The valuations exclude the value of any goodwill that may arise from the present occupation of the properties and this is not recorded separately in the financial statements of the Group.

In accordance with normal valuation practice, the valuation of the Group's retail interest includes value ascribed to plant, machinery and fittings forming part of the services and installation of the building, but excludes moveable shop fittings. All property interests owned by MWB Business Exchange Plc are short leasehold interests; these interests are not revalued upwards under Adopted IFRSs at each period end and are therefore recorded at the lower of cost and net realisable value.

Surpluses or deficits arising on valuation of the Group's operational properties are transferred to revaluation reserve, while impairment of operational properties to below their historical cost is charged directly to the Income Statement.

Operational properties in the course of construction are recorded at the lower of cost and net realisable value and are therefore not revalued upwards in the Group financial statements.

The valuation deficit debited to the revaluation reserve during the six months ended 30 June 2009 totalled £8.4m and arose as follows:-

Six months to Gross Less Gross Less Debited to
30 June 2009 valuation previous deficit minority revaluation
book interests reserve
value
£'000 £'000 £'000 £'000 £'000
Malmaison 275,573 275,706 (133) 23 (110)
Hotel du Vin 205,649 215,061 (9,412) 1,647 (7,765)
Liberty Plc 28,800 29,547 (747) 237 (510)
510,022 520,314 (10,292) 1,907 (8,385)

Portfolio analysis by division

At 30 June 2009, the Group held all its direct property interests as non-current assets. These are disclosed in the consolidated balance sheet at that date as follows:-

30 June 31 December

£'000 £'000

Non current assets
Operational properties 489,985 502,644
Operational properties in the course of construction 1,908 1,691
Plant and equipment 60,452 61,597
Total property interests at period end 552,345 565,932

The above interests are analysed as follows:-

Percentage at
30 June 30 June 31 December

£'000 % £'000

Hotels
Malmaison 272,871 49 275,450
Hotel du Vin 207,744 38 217,861
480,615 87 493,311
MWB Business Exchange Plc 41,282 7 41,535
Liberty Plc 30,381 6 31,006
Other 67 - 80
Total property interests at period 552,345 100 565,932

end

REVIEW OF LOAN FACILITIES

Net debt

The Group's loans, borrowings and cash are included in the consolidated balance sheet at 30 June 2009 as follows:-

Composition at period end 30 June 31 December

£'000 £'000
Loans and borrowings in note 8 380,329 387,193
Hire purchase and leasing contracts 182 -
Long leasehold obligations 697 699
Fair value of derivative financial instruments 2,876 1,894
Total loans and borrowings 384,084 389,786
Less net cash and cash equivalents in note 7 (17,625) (32,036)
Total net debt at period end 366,459 357,750

Analysis of debt/(cash) by operating business

Malmaison and Hotel du Vin 279,612 282,322
MWB Business Exchange Plc - cash (2,959) (16,404)
Liberty Plc 12,369 12,390
Central debt 77,437 79,442
366,459 357,750

Cash

The Group's cash was held in the following operating divisions in the Group:-

30 June 31 December

£'000 £'000
Malmaison and Hotel du Vin 7,829 4,860
MWB Business Exchange Plc 3,120 23,333
Liberty Plc 1,968 1,903
Central 4,708 1,940
17,625 32,036

Cash balances are held within the above divisions for utilisation within their businesses. Generally only cash within the Central division and the financing facilities available to the Company are available for use in the Company's own activities.

Movement in net debt during the year

The movement in net debt during the six months ended 30 June 2009 arose as follows:-

Six months Year
ended ended
30 June 31 December

£'000 £'000
Total net debt at start of the period 357,750 308,012
Debt drawn on expansion of Malmaison and Hotel 2,069 38,150

du Vin
Buy back of ordinary shares (2,379) 10,078
Net cash outflow from other Group operations 9,019 1,510

during the period
Total net debt at period end 366,459 357,750

Average cost of borrowings at period end,
inclusive of margin 6.4% 7.4%

On 27 April 2009 the Group extended £348m of its banking facilities provided by Bank of Scotland and Royal Bank of Scotland. The terms of these facilities, comprising three separate loans to Malmaison and Hotel du Vin, MWB Business Exchange and MWB itself, previously ran to the end of 2009, but have now been extended to 31 December 2011. As a result, none of the Group's funding facilities are due to expire in the current financial year to 31 December 2009 and the shortest expiry date is the facility provided to Liberty, whose term runs to 30 September 2010. The covenants included in all our financing facilities were complied with at 30 June 2009.

Net debt relating to Equity attributable to shareholders of MWB

The majority of the Group's net debt has been drawn by subsidiaries that are majority owned, but not wholly owned, by the Group. These comprise the Group's majority interests in its three operating businesses of MWB Malmaison Holdings Limited, MWB Business Exchange Plc and Liberty Plc.

The net debt relating to equity attributable to shareholders of MWB Group Holdings Plc at 30 June 2009 amounted to £314m (31 December 2008: £310m), calculated as follows:-

30 June 31 December

£'000 £'000
Total net debt as above 366,459 357,750
Less net debt attributable to minority interests (52,006) (48,118)

Total net debt attributable to equity shareholders
of MWB Group 314,453 309,632

Gearing

At 30 June 2009, gearing was 203%, calculated as follows:-

30 June 31 December

£'000 £'000
Total net debt 366,459 357,750
Net assets 180,399 203,799
Gearing - total net debt divided by net assets 203% 176%

Summary of earnings

The Board's prime measure of return used to monitor the results of the operating divisions is the level of earnings before interest, taxation, depreciation and amortisation, or EBITDA. The results before minority interests for the six months ended 30 June 2009, together with comparative information for previous periods are summarised below:-

Profit/(loss)
before
Revenue EBITDA EBIT taxation
Six months ended 30 June 2009 £'000 £'000 £'000 £'000

Malmaison and Hotel du Vin
Operating income 52,499 10,421 5,358 (2,544)

MWB Business Exchange Plc
Operating income 57,384 8,596 5,746 5,658

Liberty Plc
Operating income 25,612 2,300 1,030 232
Expenditure on brand - (2,227) (2,227) (2,227)
25,612 73 (1,197) (1,995)
Lease surrender - 85 85 85
Fixtures disposal - 587 - -
25,612 745 (1,112) (1,910)
Others 180 69 69 69
Group debt less cash - - - (3,205)
180 69 69 (3,136)
Head office administration - (3,197) (3,214) (3,214)
180 (3,128) (3,145) (6,350)
135,675 16,634 6,847 (5,146)

Notes

1. EBITDA = Earnings before interest, taxation, depreciation and amortisation.

2. EBIT = Earnings before interest and taxation.
Profit/(loss)
before
Revenue EBITDA EBIT taxation
Six months ended 30 June 2008 £'000 £'000 £'000 £'000

Malmaison and Hotel du Vin
Operating income 52,020 12,233 7,863 (1,134)
Pre-opening costs - (433) (433) (433)
52,020 11,800 7,430 (1,567)

MWB Business Exchange Plc
Operating income 59,713 11,273 8,817 8,800

Liberty Plc
Operating income 20,634 274 (718) (1,239)
Reorganisation costs - (936) (936) (936)
Brand income/(expenditure) 1,171 (1,971) (1,971) (1,971)
21,805 (2,633) (3,625) (4,146)
Others 538 1,226 1,226 1,376
Group debt less cash and other - - - (3,162)

assets
538 1,226 1,226 (1,786)
Head office administration - (6,602) (6,683) (6,683)
538 (5,376) (5,457) (8,469)
134,076 15,064 7,165 (5,382)
Profit/(loss)
before
Revenue EBITDA EBIT taxation
Year ended 31 December 2008 £'000 £'000 £'000 £'000

Malmaison and Hotel du Vin
Operating income 107,636 26,453 17,413 (632)
Property disposals - 710 710 710
Pre-opening costs - (1,266) (1,266) (1,266)
107,636 25,897 16,857 (1,188)

MWB Business Exchange Plc
Operating income 118,544 18,088 13,641 14,003

Liberty Plc
Operating income 50,580 1,815 (435) (961)
Reorganisation costs - (1,346) (1,346) (1,346)
Expenditure on brand - (4,344) (4,344) (4,344)
50,580 (3,875) (6,125) (6,651)
Others 846 1,397 1,397 1,534
Group debt less cash - - - (7,130)
846 1,397 1,397 (5,596)
Head office administration - (10,391) (10,494) (10,494)
846 (8,994) (9,097) (16,090)
277,606 31,116 15,276 (9,926)

Taxation

No UK corporation tax arose on the Group results for the six months ended 30 June 2009 (June 2008: £0.7m). During the same period, a tax charge of £0.3m (June 2008: £0.2m) arose on the Liberty profits earned in Japan. The Group has a deferred tax asset of £10.5m (June 2008: £15.7m) retained on its consolidated balance sheet that is available to offset future corporation tax that would otherwise be payable by the Group in future years.

Loss per share

The loss per share figures have been calculated as follows:-

Six months Six months Year
ended ended ended
30 June 30 June 31 December

Loss for the period attributable
to equity shareholders of
the Company £'000 (6,501) (7,778) (2,718)

Weighted average number of Units
or ordinary shares in issue '000 72,371 79,741 76,291

during period

Loss per share (basic and Pence (9.0p) (9.8p) (3.6p)

diluted)

Dividend

Shareholders approved implementation of the Cash Distribution Programme and associated cessation of annual revenue distributions at a meeting of shareholders held in May 2002. Since then, the Company and the Group's previous holding company, Marylebone Warwick Balfour Group Plc, have purchased approximately 68.7 million Units and shares for cancellation under this programme, representing approximately 50% of the issued share capital at the date of its implementation. This has resulted in the return of approximately £80.4m in cash to Shareholders over the period.

Conclusion

MWB has three good operating businesses. They are all well managed, have good finance and provide excellent products and services. Each business has demonstrated its ability to perform well even in these tough market conditions.

Andrew Blurton

Group Finance Director

27 August 2009

CONSOLIDATED INCOME STATEMENT

for the six months ended 30 June 2009

Six months Six months Year
ended ended ended
30 June 30 June 31 December

Notes £'000 £'000 £'000
Revenue 2 135,675 134,076 277,606
Cost of sales (123,298) (115,576) (239,021)
Gross profit 12,377 18,500 38,585
Administrative expenses (5,615) (8,918) (21,482)
Results from operating 6,762 9,582 17,103

activities

Net gain on sale of property, plant and
equipment - - 635
Net gain on lease surrender 85 - -
Capital reorganisation costs - (2,417) (2,462)
Finance income 253 819 1,694
Finance expenses (12,246) (13,366) (26,896)
Loss before taxation 2 (5,146) (5,382) (9,926)
Taxation 4 (324) (1,506) 10,215
Profit/(loss) for the period (5,470) (6,888) 289

Attributable to:
Equity shareholders of the (6,501) (7,778) (2,718)

Company
Minority interests 1,031 890 3,007
Profit/(loss) for the period (5,470) (6,888) 289
Loss per share (basic and 5 (9.0p) (9.8p) (3.6p)

diluted)

All results relate to continuing operations.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2009

Six months Six months Year
ended ended ended
30 June 30 June 31 December

£'000 £'000 £'000
Profit/(loss) for the period (5,470) (6,888) 289

Other comprehensive income and expenses
for the period net of tax:

Foreign exchange translation differences for foreign
operations (462) (322) 1,076
Revaluation of property, plant (10,292) (37,158) (79,231)

and equipment Effective portion of changes in fair value of
cash flow hedges (458) (42) (2,243)
Defined benefit pension scheme (1,665) (1,595) (2,019)

actuarial losses Other comprehensive loss for the period
net of tax (12,877) (39,117) (82,417)
Total comprehensive loss for (18,347) (46,005) (82,128)

the period

Attributable to:
Equity shareholders of the (16,718) (39,636) (70,089)

Company
Minority interests (1,629) (6,369) (12,039)
Total comprehensive loss for (18,347) (46,005) (82,128)

the period

CONSOLIDATED BALANCE SHEET

at 30 June 2009

30 June 30 June 31 December

Notes £'000 £'000 £'000

Non-current assets
Intangible assets and goodwill 28,723 25,969 25,969
Operational properties 6 489,985 491,759 502,644
Operational properties in the course 6 1,908 38,094 1,691

of construction
Plant and equipment 6 60,452 55,427 61,597
Deferred tax asset 9 10,542 15,673 10,500
Financial instruments - - 341
591,610 626,922 602,742

Current assets
Inventories 11,878 9,527 11,705

Trade and other receivables:
Due after more than one year 2,566 2,430 2,660
Due within one year 33,889 35,792 35,677
Cash and cash equivalents 7 17,625 12,280 32,064
65,958 60,029 82,106
Total assets 657,568 686,951 684,848

Current liabilities
Bank overdrafts 7 - - (28)
Loans and borrowings 8 (4,403) (1,615) (342,632)
Derivative financial instruments (2,876) (35) (2,235)
Trade and other payables (60,517) (65,615) (74,324)
Tax payable (289) (17,352) (157)
(68,085) (84,617) (419,376)

Non-current liabilities
Loans and borrowings 8 (375,926) (345,385) (44,561)
Employee benefits (3,607) (1,855) (2,066)
Trade and other payables (29,551) (13,870) (15,046)
(409,084) (361,110) (61,673)
Total liabilities (477,169) (445,727) (481,049)
Net assets 180,399 241,224 203,799

Equity
Share capital 217 273 217
Other reserves 121,727 166,904 131,152
Retained earnings (13,162) (9,720) (5,488)
Total equity attributable to 10 108,782 157,457 125,881

shareholders of the Company
Minority interests 71,617 83,767 77,918
Total equity 180,399 241,224 203,799

Equity attributable to shareholders of the Company
in pence per share 10 150p 212p 174p

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Share Capital Revaluation Hedging Translation
capital redemption reserve reserve reserve
reserve
Six months ended 30 June 2009 £'000 £'000 £'000 £'000 £'000
At 1 January 2009 217 25 121,234 (1,845) 794

Total comprehensive income for the period:
Retained loss for the period - - - - -
Revaluation of property, plant - - (8,385) - -

and equipment, net of tax
Defined benefit pension scheme - - - - -

actuarial loss
Effective portion of changes - - - (378) -

in fair value of cash flow hedges
Transfer of depreciation on - - (346) - -

revalued properties
Foreign exchange translation - - - - (316)

differences for foreign operations
Total comprehensive income for - - (8,731) (378) (316)

the period Transactions with owners recorded directly in equity Contributions by and distributions to owners
Dividend paid to external - - - - -

shareholders of MWB Business Exchange Plc
Transfer on increase in - - - - -

minority interests in MWB Malmaison Holdings Ltd
and MWB Business Exchange - - - - -

Plc
Issue and purchase of Ordinary - - - - -

Shares
Write back of option cost - - - - -

through equity
Total transactions with owners - - - - -
Share capital and reserves at 217 25* 112,503* (2,223)* 478*

30 June 2009

Merger Other Retained Total equity Minority Total
reserve reserve earnings attributable to interests equity
shareholders
Six months ended 30 June 2009 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2009 9,161 1,783 (5,488) 125,881 77,918 203,799

Total comprehensive income for the period:
Retained loss for the period - - (6,501) (6,501) 1,031 (5,470)
Revaluation of property, plant - - - (8,385) (1,907) (10,292)

and equipment, net of tax
Defined benefit pension scheme - - (1,138) (1,138) (527) (1,665)

actuarial loss
Effective portion of changes - - - (378) (80) (458)

in fair value of cash flow hedges
Transfer of depreciation on - - 346 - - -

revalued properties
Foreign exchange translation - - - (316) (146) (462)

differences for foreign operations
Total comprehensive income for - - (7,293) (16,718) (1,629) (18,347)

the period Transactions with owners recorded directly in equity Contributions by and distributions to owners
Dividend paid to external - - (2,803) (2,803) - (2,803)

shareholders of MWB Business Exchange Plc Transfer on increase in minority interests in Malmaison Holdings Ltd
and MWB Business Exchange - - 4,037 4,037 (4,037) -

Plc
Issue and purchase of Ordinary - - (1,701) (1,701) (678) (2,379)

Shares
Write back of option cost - - 86 86 43 129

through equity
Total transactions with owners - - (381) (381) (4,672) (5,053)
Share capital and reserves at 9,161* 1,783* (13,162) 108,782 71,617 180,399

30 June 2009

Retained earnings at 30 June 2009 comprise the following:-

Scheme of Arrangement April 2008 (10,396)
Increase in retained earnings due to capital reduction 160,883
Accumulated net loss in Consolidated Income Statements to 30 June (83,234)

Purchase by the Company of its own ordinary shares and Units that (80,415)

have subsequently been cancelled
Retained earnings at 30 June 2009 (13,162)
Share Share Capital Revaluation Hedging Translation
capital premium redemption reserve reserve reserve
reserve
Six months ended 30 June 2008 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2008 40,261 79,563 30,663 187,151 5 69
Scheme of Arrangement April 120,864 (79,563) (30,663) - - -

2008 (note 1)
At 1 January 2008 restated for 161,125 - - 187,151 5 69

effect of Scheme of Arrangement Total comprehensive income for the period:
Retained loss for the period - - - - - -
Revaluation of property, plant - - - (30,521) - -

and equipment, net of tax
Defined benefit pension scheme - - - - - -

actuarial loss
Effective portion of changes - - - - (29) -

in fair value of cash flow hedges
Transfer of depreciation on - - - (546) - -

revalued properties
Foreign exchange translation - - - - - (187)

differences for foreign operations
Total comprehensive income for - - - (31,067) (29) (187)

the period Transactions with owners recorded directly in equity Contributions by and distributions to owners
Capital reduction (160,883) - - - - -

Dividend paid to external shareholders of
MWB Business Exchange Plc - - - - - -
Issue and purchase of Ordinary 31 - 18 - - -

Shares
Write back of option cost - - - - - -

through equity
Total transactions with owners (160,852) - 18 - - -
Share capital and reserves at 273 - 18* 156,084* (24)* (118)*

30 June 2008

Merger Other Retained Total equity Minority Total
reserve reserve earnings attributable to interests equity
shareholders
Six months ended 30 June 2008 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2008 9,403 1,783 (144,521) 204,377 91,783 296,160
Scheme of Arrangement April (242) - (10,396) - - -

2008 (note 1)
At 1 January 2008 restated for 9,161 1,783 (154,917) 204,377 91,783 296,160

effect of Scheme of Arrangement Total comprehensive income for the period:
Retained loss for the period - - (7,778) (7,778) 890 (6,888)
Revaluation of property, plant - - - (30,521) (6,637) (37,158)

and equipment, net of tax Transfer on increase in minority interests in Malmaison Holdings Ltd
and MWB Business Exchange - - 1,592 1,592 (1,592) -

Plc
Defined benefit pension scheme - - (1,089) (1,089) (506) (1,595)

actuarial loss
Effective portion of changes - - - (29) (13) (42)

in fair value of cash flow hedges
Transfer of depreciation on - - 546 - -

revalued properties
Foreign exchange translation - - (32) (219) (103) (322)

differences for foreign operations
Total comprehensive income for - - (6,761) (38,044) (7,961) (46,005)

the period Transactions with owners recorded directly in equity Contributions by and distributions to owners
Capital reduction - - 160,883 - - -
Dividend paid to external - - (427) (427) - (427)

shareholders of MWB Business Exchange Plc
Issue and purchase of ordinary - - (8,574) (8,525) (91) (8,616)

shares
Write back of option cost - - 76 76 36 112

through equity
Total transactions with owners - - 151,958 (8,876) (55) (8,931)
Share capital and reserves at 9,161* 1,783* (9,720) 157,457 83,767 241,224

30 June 2008

Retained earnings at 30 June 2008 comprise the following:-

Scheme of Arrangement April 2008 (10,396)
Increase in retained earnings due to capital reduction 160,883
Accumulated net loss in Consolidated Income Statements to 30 June (81,205)

Purchase by the Company of its own ordinary shares and Units that (79,002)

have subsequently been cancelled
Retained earnings at 30 June 2008 (9,720)
Share Share Capital Revaluation Hedging Translation
capital premium redemption reserve reserve reserve
reserve
Year ended 31 December 2008 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2008 40,261 79,563 30,663 187,151 5 69
Scheme of Arrangement April 120,864 (79,563) (30,663) - - -

2008 (note 1)
At 1 January 2008 restated for 161,125 - - 187,151 5 69

effect of Scheme of Arrangement Total comprehensive income for the year:
Retained profit for the year - - - - - -
Revaluation of property, plant - - - (64,867) - -

and equipment, net of tax
Defined benefit pension scheme - - - - - -

actuarial loss
Effective portion of changes - - - - (1,850) -

in fair value of cash flow hedges
Transfer of depreciation on - - - (1,050) - -

revalued properties
Foreign exchange translation - - - - - 725

differences for foreign operations
Total comprehensive income for - - - (65,917) (1,850) 725

the year Transactions with owners recorded directly in equity Contributions by and distributions to owners
Capital reduction (160,883) - - - - -

Dividend paid to external shareholders of
MWB Business Exchange Plc - - - - - -

Transfer on increase in minority interests in
MWB Malmaison Holdings Ltd
and MWB Business Exchange - - - - - -

Plc
Issue and purchase of Ordinary (25) - 25 - - -

Shares
Write back of option cost - - - - - -

through equity
Total transactions with owners (160,908) - 25 - -
Share capital and reserves at 217 - 25* 121,234* (1,845)* 794*

31 December 2008

Merger Other Retained Total equity Minority Total
reserve reserve earnings attributable to interests equity
shareholders
Year ended 31 December 2008 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2008 9,403 1,783 (144,521) 204,377 91,783 296,160
Scheme of Arrangement April (242) - (10,396) - - -

2008 (note 1)
At 1 January 2008 restated for 9,161 1,783 (154,917) 204,377 91,783 296,160

effect of Scheme of Arrangement Total comprehensive income for the year:
Retained profit for the year - - (2,718) (2,718) 3,007 289
Revaluation of property, plant - - - (64,867) (14,364) (79,231)

and equipment, net of tax
Defined benefit pension scheme - - (1,379) (1,379) (640) (2,019)

actuarial loss
Effective portion of changes - - - (1,850) (393) (2,243)

in fair value of cash flow hedges
Transfer of depreciation on - - 1,050 - -

revalued properties
Foreign exchange translation - - - 725 351 1,076

differences for foreign operations
Total comprehensive income for - - (3,047) (70,089) (12,039) (82.128)

the year Transactions with owners recorded directly in equity Contributions by and distributions to owners
Capital reduction - - 160,883 - - -
Dividend paid to external - - (427) (427) - (427)

shareholders of MWB Business Exchange Plc Transfer on increase in minority interests in MWB Malmaison
Holdings Ltd and MWB - - 1,809 1,809 (1,809) -

Business Exchange Plc
Issue and purchase of ordinary - - (9,987) (9,987) (91) (10,078)

shares
Write back of option cost - - 198 198 74 272

through equity
Total transactions with owners - - 152,476 (8,407) (1,826) (10,233)
Share capital and reserves at 9,161* 1,783* (5,488) 125,881 77,918 203,799

31 December 2008

Retained earnings at 31 December 2008 comprise the following:-

Scheme of Arrangement April 2008 (10,396)
Increase in retained earnings due to capital reduction 160,883
Accumulated net loss in Consolidated Income Statements to 31 (75,560)

December 2008
Purchase by the Company of its own ordinary shares and Units that (80,415)

have subsequently been cancelled
Retained earnings at 31 December 2008 (5,488)

CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30 June 2009
Six months Six months Year
ended ended ended
30 June 30 June 31 December

£'000 £'000 £'000
Profit/(loss) for the year (5,470) (6,888) 289

Adjustments
Taxation 324 1,506 (10,215)
Finance income (253) (834) (1,694)
Finance expenses 12,246 13,381 26,896
Gain on sale of property, - - (635)

plant and equipment
Net gain on lease surrender (85) - -
Depreciation of property, 9,200 7,899 15,840

plant and equipment
Currency translation (85) 66 148

differences
Equity settled share-based 129 112 272

payment transactions Cash flows from operations before changes in
working capital 16,006 15,242 30,901
Change in inventories (173) (38) (2,216)
Change in trade and other 3,497 4,776 4,252

receivables
Change in trade and other (5,159) (753) 9,640

payables
Change in provisions and 1,541 - 1,650

employee benefits
Cash generated from operations 15,712 19,227 44,227
Interest paid (11,833) (14,186) (29,445)
Taxation paid (234) (245) (488)
Net cash from operating 3,645 4,796 14,294

activities Cash flows from investing activities
Interest received 317 834 1,674
Proceeds from sale of - - 1,091

property, plant and equipment
Purchase of property, plant (6,433) (23,999) (54,402)

and equipment
Acquisition of business - (2,754) - -

goodwill
Net cash used in investing (8,870) (23,165) (51,637)

activities Cash flows from financing activities
Purchase of own Units, (2,379) (8,616) (10,078)

inclusive of costs
Proceeds from draw down of 4,397 27,063 74,232

borrowings
Borrowings repaid (8,583) (10,256) (17,233)
Payments to minority interests (2,803) (427) (427)
Increase in hire purchase and 182 - -

leasing contracts
Net cash (used in)/from (9,186) 7,764 46,494

financing activities
Net increase in cash and cash (14,411) (10,605) 9,151

equivalents
Opening cash and cash 32,036 22,885 22,885

equivalents
Closing cash and cash 17,625 12,280 32,036

equivalents (note 7)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

Basis of preparation

The Half-Yearly Financial Report of the Group for the six months ended 30 June 2009 has been prepared in accordance with IAS 34: 'Interim Financial Reporting' as adopted for use in the European Union ('EU') and in accordance with the Disclosure and Transparency Rules of the Financial Services Authority. The financial information contained in this Half-Yearly Financial Report has neither been audited nor reviewed by the auditors.

The Half-Yearly Financial Report for the six months ended 30 June 2009 incorporates the results of the Company and its subsidiary undertakings for the period then ended. The results have been prepared on the basis of the accounting policies adopted in the financial statements of the Group for the year ended 31 December 2008, with the addition of new standards that have come into effect during the period under review and which are listed below.

On 7 February 2008, Marylebone Warwick Balfour Group Plc ("Old MWB") announced its intention to re-organise the MWB group of companies. This involved, inter alia, a Court approved Scheme of Arrangement under Section 425 of the Companies Act 1985 (the 'Scheme') with the result of making MWB Group Holdings Plc the new holding company of the Group. In accordance with the sanction from the Court under the Scheme, the issued share capital and the share premium of Old MWB at the effective date of the Scheme were cancelled against its distributable reserves at that date. Under the Scheme, shareholders received one Unit in MWB Group Holdings Plc for each ordinary share previously held in Old MWB. Each Unit comprises one ordinary share and twenty B shares. The B shares do not confer on their holders any rights in relation to income or voting and have only limited rights to participate in capital. The B shares do, however, enable the Company to return cash or cash equivalents to shareholders by their redemption at future dates from the resources of the Group. Every B share is, for all practical purposes, inseparable from an ordinary share. As a consequence, the respective rights of shareholders in the Units in relation to capital, dividend and voting, remained as they would have been had the B shares not been allotted and issued. The Scheme was accounted for as a reverse acquisition in accordance with IFRS 3 'Business Combinations'. As a result, the previous Group has been deemed to acquire MWB Group Holdings Plc, no goodwill arose on the acquisition, and the net assets of the Group remained unaffected. Differences between the restated amounts in the financial statements of MWB Group Holdings Plc and those previously reported in Old MWB represent the merger reserve in MWB Group Holdings Plc shown in these financial statements.

The financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet its liabilities as they fall due for the foreseeable future. The Group is dependent for its working capital requirements on cash generated from operations, cash holdings of £18m at 30 June 2009, bank facilities totalling £363m, unsecured loan stock of £30m and a bank overdraft of £1m (which was undrawn at 30 June 2009). The earliest maturity of the remaining facilities relates to the overdraft which falls due for renewal on 1 September 2010 and the Liberty facility of £15m that has a term that runs to 30 September 2010. The Directors have prepared cash flow projections for the period to 31 December 2010 ('the Projections') which are based on certain assumptions. These show that the Group is capable of operating within the financing arrangements referred to above.

The Directors recognise that in the current economic environment, risks may exist regarding future property values and the achievability of projected occupancy levels, room rates and margins in Malmaison and Hotel du Vin; projected occupancy levels and workstation rates in Business Exchange, and projected sales and margins at Liberty. In evaluating the going concern assumption, the Directors have taken into account various uncertainties including the following: The Group is required to comply with a number of covenants in the Company's Articles of Association, in its bank facilities and in the Trust Deed relating to its Unsecured Loan Stock, including a gearing covenant on the Unsecured Loan Stock restricting net debt attributable to shareholders to four times adjusted capital and reserves. All of these covenants were complied with at 30 June 2009. The Directors are aware that compliance with these covenants could be affected if there are continued reductions in property values or significantly adverse trading conditions. The Directors continue to monitor adherence to these covenants carefully and to ensure adherence at all times. The Directors have tested the impact of variations from the Projections on the ability of the divisions to operate within the financial covenants and their available cash resources, under a combination of different scenarios constructed to reflect reasonably possible downside risks to the assumptions contained within the Projections. In such downside scenarios, the ability of the divisions to continue to operate within the facilities available without further recourse to MWB beyond commitments already made, and maintaining compliance with the financial covenants, would be dependent on implementing various cost saving initiatives and mitigating actions within the timescales required, should these downside scenarios crystallise. These cost saving initiatives and mitigating actions are all under the control of the Group and the Directors consider they would be implemented as required.

The Group receives dividends from its 71.5% owned subsidiary MWB Business Exchange and these along with other financial resource in the Group are used to fund cash requirements elsewhere in the Group. The forecasts show that MWB Business Exchange will have sufficient cash reserves and distributable profits to pay the dividends required, including under reasonable downside scenarios. As referred to in the Chairman's Statement accompanying these financial statements, the Board is exploring various options open to increase the flexibility in the financing of the Group. The Directors are also aware that in view of uncertainty in the market over property values, the gearing covenant in the Company's Unsecured Loan Stock in the period covered by the Company's forecasts, which will be next formally tested as at 31 December 2009, and which had headroom in shareholders' funds at 30 June 2009 of £18.4m, gives rise to a material uncertainty which may require the Group to raise additional funding. In the absence of successfully raising such additional funding, if required, this could cast significant doubt upon the Group's and Company's ability to continue to operate as a going concern for the whole of the period covered by the Projections. In those circumstances, the Group and Company might then be unable to continue realising their assets and discharging their liabilities in the normal course of business.

2. SEGMENT REPORTING

The primary format of the segmental information in respect of the Group's businesses is based on the Group's internal reporting structure. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Inter-segment pricing is determined on an arm's length basis.

Profit/(loss)
before
Revenue EBITDA EBIT taxation
Six months ended 30 June 2009 £'000 £'000 £'000 £'000

Malmaison and Hotel du Vin
Operating income 52,499 10,421 5,358 (2,544)

MWB Business Exchange Plc
Operating income 57,384 8,596 5,746 5,658

Liberty Plc
Operating income 25,612 2,300 1,030 232
Expenditure on brand - (2,227) (2,227) (2,227)
25,612 73 (1,197) (1,995)
Lease surrender - 85 85 85
Fixtures disposal - 587 - -
25,612 745 (1,112) (1,910)
Others 180 69 69 69
Group debt less cash - - - (3,205)
180 69 69 (3,136)
Head office administration - (3,197) (3,214) (3,214)
180 (3,128) (3,145) (6,350)
135,675 16,634 6,847 (5,146)

Notes

1. EBITDA = Earnings before interest, taxation, depreciation and amortisation.

2. EBIT = Earnings before interest and taxation.
Profit/(loss)
before
Revenue EBITDA EBIT taxation
Six months ended 30 June 2008 £'000 £'000 £'000 £'000

Malmaison and Hotel du Vin
Operating income 52,020 12,233 7,863 (1,134)
Pre-opening costs - (433) (433) (433)
52,020 11,800 7,430 (1,567)

MWB Business Exchange Plc
Operating income 59,713 11,273 8,817 8,800

Liberty Plc
Operating income 20,634 274 (718) (1,239)
Reorganisation costs - (936) (936) (936)
Brand income/(expenditure) 1,171 (1,971) (1,971) (1,971)
21,805 (2,633) (3,625) (4,146)
Others 538 1,226 1,226 1,376
Group debt less cash - - - (3,162)
538 1,226 1,226 (1,786)
Head office administration - (6,602) (6,683) (6,683)
538 (5,376) (5,457) (8,469)
134,076 15,064 7,165 (5,382)
Profit/(loss)
before
Revenue EBITDA EBIT taxation
Year ended 31 December 2008 £'000 £'000 £'000 £'000

Malmaison and Hotel du Vin
Operating income 107,636 26,453 17,413 (632)
Property disposals - 710 710 710
Pre-opening costs - (1,266) (1,266) (1,266)
107,636 25,897 16,857 (1,188)

MWB Business Exchange Plc
Operating income 118,544 18,088 13,641 14,003

Liberty Plc
Operating income 50,580 1,815 (435) (961)
Reorganisation costs - (1,346) (1,346) (1,346)
Expenditure on brand - (4,344) (4,344) (4,344)
50,580 (3,875) (6,125) (6,651)
Others 846 1,397 1,397 1,534
Group debt less cash - - - (7,130)
846 1,397 1,397 (5,596)
Head office administration - (10,391) (10,494) (10,494)
846 (8,994) (9,097) (16,090)
277,606 31,116 15,276 (9,926)

The analysis of net assets in the consolidated balance sheet across the Group's operations as revealed by the Consolidated Balance Sheet at 30 June 2009, and at the previous period ends, is as follows:-

At 30 June 2009 Net assets (Debt)/ Net Less Total equity
before cash assets minority attributable to
debt and £'000 £'000 interests shareholders
cash £'000 of MWB Group
£'000 Holdings Plc
£'000
Malmaison and Hotel du Vin 469,804 (279,612) 190,192 (53,040) 137,152
MWB Business Exchange Plc 20,228 2,959 23,187 (8,261) 14,926
Liberty Plc 48,354 (12,369) 35,985 (8,611) 27,374
Group debt, less cash and 8,472 (77,437) (68,965) (1,705) (70,670)

other assets
546,858 (366,459) 180,399 (71,617) 108,782

Equity attributable to shareholders
of MWB Group Holdings Plc in
pence per share 150p
At 30 June 2008 Net assets (Debt)/ Net Less Total equity
before cash assets minority attributable to
debt and £'000 £'000 interests shareholders of
cash £'000 MWB Group Holdings
£'000 Plc
£'000
Malmaison and Hotel du Vin 505,365 (261,272) 244,093 (61,103) 182,990
MWB Business Exchange Plc 23,061 5,838 28,899 (9,143) 19,756
Liberty Plc 50,632 (12,756) 37,876 (11,768) 26,108
Group debt, less cash and (2,377) (67,267) (69,644) (1,753) (71,397)

other assets
576,681 (335,457) 241,224 (83,767) 157,457

Equity attributable to shareholders
of MWB Group Holdings Plc in
pence per share 212p
At 31 December 2008 Net assets (Debt)/ Net Less Total equity
before cash assets minority attributable to
debt and £'000 £'000 interests shareholders
cash £'000 of MWB Group
£'000 Holdings Plc
£'000
Malmaison and Hotel du Vin 484,555 (282,322) 202,233 (54,530) 147,703
MWB Business Exchange Plc 19,249 16,404 35,653 (11,314) 24,339
Liberty Plc 49,763 (12,390) 37,373 (10,369) 27,004

Group debt, less cash and
other assets 7,982 (79,442) (71,460) (1,705) (73,165)
561,549 (357,750) 203,799 (77,918) 125,881

Equity attributable to shareholders
of MWB Group Holdings Plc in
pence per share 174p

3. EARNINGS BEFORE INTEREST, TAXATION, DEPRECIATION AND AMORTISATION ("EBITDA")

Six months Six months Year
ended ended ended
30 June 30 June 31 December

£'000 £'000 £'000

The EBITDA of the Group is calculated
as follows:-

Profit before finance income, finance expenses
and taxation 6,847 7,165 15,276

Add depreciation of property, plant and
equipment for the period 9,200 7,899 15,840
Add depreciation related to 587 - -

disposals
Total EBITDA for the period 16,634 15,064 31,116
4. TAXATION
Six months Six months Year
ended ended ended
30 June 30 June 31 December

£'000 £'000 £'000

Current taxation (charge)/credit UK Corporation tax
Tax on profit/(loss) for the - (1,500) -

period
Adjustment in respect of

prior year provisions
following agreement of (9) 842 16,402

taxation liabilities Foreign tax
Tax on profit for the period (357) (228) (395)
(366) (886) 16,007

Deferred taxation credit/(charge) Deferred tax asset relating to accelerated capital allowances, trading tax losses, unrelieved
capital expenditure and

interest payments,
increased/(utilised) during 42 (620) (5,792)

period
Total taxation (charge)/credit (324) (1,506) 10,215
5. LOSS PER SHARE

Weighted average number of units or shares in issue during the period:-

Six months Six months Year
ended ended ended
30 June 30 June 31 December

'000 '000 '000
Number of units or shares in 72,371 80,522 80,522

issue at start of period

Units purchased by the Company for
cancellation during period
23 April 2008 - (2,153) (2,153)
24 April 2008 - (800) (800)
18 June 2008 - (425) (425)
23 June 2008 - (2,773) (2,773)
2 October 2008 - - (2,000)
Number of units in issue at 72,371 74,371 72,371

end of period

Weighted average number of units or shares in issue
during period 72,371 79,741 76,291

Loss per share

The loss per share figures are calculated by dividing the loss attributable to equity holders of the Company for the period, by the weighted average number of units in issue during the period, as follows:-

Six months Six months Year
ended ended ended
30 June 30 June 31 December

Loss for the period attributable to equity
shareholders of the Company £'000 (6,501) (7,778) (2,718)

Weighted average number of units or
ordinary shares in issue '000 72,371 79,741 76,291

during the period

Loss per share (basic and Pence (9.0p) (9.8p) (3.6p)

diluted)

6. PROPERTY, PLANT AND EQUIPMENT
--------------------Operational properties---------------------
Plant,
In the Operating machinery,
Long course of leasehold fixtures &
Freehold leasehold construction improvements equipment Total
£'000 £'000 £'000 £'000 £'000 £'000

Cost or valuation
At 1 January 2009 334,951 134,153 1,691 39,251 117,572 627,618
Additions 180 (3) 217 844 5,254 6,492
Revaluation (4,578) (7,271) - - - (11,849)
At 30 June 2009 330,553 126,879 1,908 40,095 122,826 622,261

Depreciation
At 1 January 2009 - - - (5,711) (55,975) (61,686)
Charge for the period (1,176) (381) - (1,831) (5,812) (9,200)
Disposals - - - - (587) (587)
Revaluation 1,176 381 - - - 1,557
At 30 June 2009 - - - (7,542) (62,374) (69,916)

Net book value
at 30 June 2009 330,553 126,879 1,908 32,553 60,452 552,345

Analysis of valuation deficit
for the period

Deficit debited to revaluation
reserve (2,701) (5,684) - - - (8,385)

Deficit debited to minority
interests (701) (1,206) - - - (1,907)

Revaluation deficit reflected
in property, plant and
equipment (3,402) (6,890) - - - (10,292)
Operational properties at net book value 30 June 31 December

£'000 £'000
Freehold properties as above 330,553 334,951
Long leasehold properties as above 126,879 134,153
Operating leasehold improvements as above 32,553 33,540
Total operational properties per consolidated balance 489,985 502,644

sheet

-----------------Operational properties---------------------
Plant,
In the Operating machinery,
Long course of leasehold fixtures &
Freehold leasehold construction improvements equipment Total
£'000 £'000 £'000 £'000 £'000 £'000

Cost or valuation
At 1 January 2008 345,521 142,995 26,047 37,139 103,991 655,693
Additions 36,165 1,068 1,608 2,704 14,282 55,827
Reclassification 25,964 - (25,964) (311) 311 -
Disposals (140) - - (281) (1,012) (1,433)
Revaluation (72,559) (9,910) - - - (82,469)
At 31 December 2008 334,951 134,153 1,691 39,251 117,572 627,618

Depreciation
At 1 January 2008 - - - (2,992) (47,068) (50,060)
Charge for the year (2,374) (864) - (2,720) (9,882) (15,840)
Disposals - - - 1 975 976
Revaluation 2,374 864 - - - 3,238
At 31 December 2008 - - - (5,711) (55,975) (61,686)

Net book value
at 31 December 2008 334,951 134,153 1,691 33,540 61,597 565,932

Valuation

The Group's property, plant and equipment is all located in the United Kingdom. The Group's Operational properties were valued at 30 June 2009 by qualified professional valuers working for the company of DTZ, Chartered Surveyors, ("DTZ"), acting in the capacity of External Valuers. All such valuers are Chartered Surveyors, being members of the Royal Institution of Chartered Surveyors ("RICS").

DTZ act as valuers to the MWB Group and undertake half year and year end valuations for accounting purposes. DTZ has been carrying out this valuation instruction for the Group for a continuous period since June 1999 and Paul Wolfenden has been the signatory of Valuation Reports provided to MWB Group for the same period since June 1999. In addition, DTZ provide ad-hoc valuation advice to MWB Group. DTZ is a wholly owned subsidiary of DTZ Holdings plc. In the financial year to 30 April 2009, the proportion of total fees payable by MWB Group to the total fee income of DTZ Holdings plc was less than 5%. It is not anticipated that this situation will vary in terms of the financial year of DTZ to 30 April 2010. DTZ has not received any introductory fees or acquisition fees in respect of any of the properties owned by MWB Group within the 12 months prior to the date of valuation. DTZ has been appointed as valuers in respect of certain of the properties and in the last 12 months they have provided valuation advice for bank lending purposes in relation to certain of the properties.

All valuations were carried out in accordance with the RICS Appraisal and Valuation Standards 6th Edition ("the Manual") and the properties were valued on the basis of Existing Use Value. Existing Use Value is defined in the Manual as the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, wherein the parties had acted knowledgeably, prudently and without compulsion, assuming that the buyer is granted vacant possession of all parts of the property required by the business and disregarding potential alternative uses and any other characteristics of the property that would cause its Market Value to differ from that needed to replace the remaining service potential.

The valuation of the hotels is based on estimates of annual maintainable earnings before interest, tax, depreciation and amortisation ("EBITDA") for each property over a 10 year cash flow period. These estimates are based on the historic, current and budgeted trading information provided by the Group to DTZ. DTZ apply a market discount rate to the cash flow forecast of the hotels to assess the net present value of each property asset. This is in line with the method used by the market for the valuation of this type of property.

In valuing the Group's hotels, DTZ have regard to the valuation of the properties as fully equipped operational entities, and to their trading potential. The valuation therefore includes the land and buildings; the trade fixtures, fittings, furniture, furnishings and equipment; and the market's perception of the trading potential excluding personal goodwill; together with an assumed ability to renew existing licences, consents, certificates and pe