This has been a challenging year for the Group but, as the accompanying results indicate, the management teams in each of our companies have faced up to the challenges presented by the economic climate and have performed well. We believe that each of our companies have outperformed their peer group which demonstrates the quality of our people as well as their products and services.

There is little doubt that all three sectors in which we operate – retail, hotels, and serviced offices – have come under severe pressure as both companies and consumers have cut expenditure. However, against the backdrop of such a difficult business environment we have delivered a good performance.

Liberty, our iconic British brand, has enjoyed a renaissance over the past year with a 20% revenue increase to almost £61m and positive EBITDA of £0.1m, its first for more than a decade. Revenues at the flagship store rose 18% and by 23% in its fabrics division. All this has been achieved within a retail sector that, in many areas, has suffered badly as consumers cut back heavily on spending.

On 15 March 2010 we announced that contracts had been exchanged for the sale and leaseback of the freehold of Liberty’s landmark flagship store in Great Marlborough Street, London W1, subject to approval by Shareholders in General Meeting. The price agreed was £41.5m, some £11m more than the valuation of the building at 31 December 2009. This is clearly highly beneficial. The proceeds from the sale will be used to repay all bank borrowings in Liberty and intergroup debt provided by MWB to Liberty, with the remainder providing working capital. Thereafter, Liberty is leasing the Tudor Building on a 30 year institutional lease at an annual rent of £2.1m with fixed increases every five years.

We also announced on 12 March 2010 that we had received approaches that could lead to an offer being made for Liberty, the company. Discussions resulting from these approaches are continuing and we will report to shareholders when we have further news.

At our boutique hotel business, Malmaison and Hotel du Vin, occupancy was maintained at around 79%, slightly down on the previous year. Despite pressure on rate, total revenue was up from £108m in the previous year to £111m this year, aided by full year contributions from the four hotels that opened in the second half of 2008 and EBITDA remained level with last year at £26.6m. Our hotels’ performance was further boosted, against all odds, by food and beverage revenue which is now running at almost £50m annually, equivalent to a healthy restaurant group in its own right.

MWB Business Exchange outperformed both its peers and market expectations with the “Business Exchange” section of the business generating EBITDA of £12.2m and pre-tax profits of £7.1m, down from £13.9m in the previous year. This is an extremely creditable performance within the context of a difficult commercial property tenant market where demand for space over the period has fallen substantially. Business Exchange made a quantum leap over the period when it took over 16 centres from a distressed competitor and became London’s market leader in the provision of serviced offices, with a total of 45 centres in the capital at the date of this statement.

While very little capital outlay needed to be incurred in the acquisition of these centres, as expected many required investment to bring them up to Business Exchange’s exacting standards. This has had a short term impact on the enlarged Business Exchange’s EBITDA as the new centres become fully integrated and occupancy levels come up to the company’s targets. As a result, EBITDA for the whole of Business Exchange for 2009 was £9.8m against £18.1m for 2008. However, Business Exchange paid a special interim dividend totalling some £9.8m, of which £7m was received by the Group.

At Group level, EBITDA for the 12 months to 31 December 2009 was £28.8m, slightly down on the previous year’s £31.1m, reflecting market conditions. Pre-tax losses for the period widened to £15.4m from £9.9m last year and losses per share amounted to 22.0p compared to 3.6p in 2008.

MWB has benefited from last Autumn’s revival in the property investment market and our total property assets, including plant and equipment stabilised at £559.5m, with £8.2m of the first half decline in values being reversed in the second half, resulting in an overall decline of just £2.1m for the full year. After reflecting the retained loss from earnings and the fall in property values, equity attributable to MWB Group shareholders fell from £125.9m to £104.5m, which translated into 144p per share compared to 174p per share last year.

Towards the end of 2009 we announced a £27.5m equity raising through the placing of 91.7m new Units in MWB Group. At the same time we also announced that we had cut costs within the Group and are continuing to do so during the current year. £7.5m of the new equity was used to redeem the same amount of our Unsecured Loan Stock and the remainder, amounting to £17.1m net of fees, has been used to reduce borrowings and provide working capital. This puts us in a much stronger position going forward.

As part of this cost-cutting exercise Andrew Blurton, our Joint Finance Director, resigned from the Board with effect from 12 January 2010, although he continues to be involved in the Group, on a consultancy basis until the end of June 2010 to ensure an orderly handover. The Board would like to record its appreciation of Andrew’s contribution to the development of the Group since its inception and wish him every success in the future.

Across the Group we are facing another difficult year in the UK economy. Although there are signs and indications that the worst of the recession is behind us, we believe there is still uncertainty in the future. With an imminent General Election, difficulties being experienced by members of the Eurozone, and possible changes to domestic fiscal policies, it is not sensible to predict too far into the future.

However, I continue to believe we have the strength and depth of management as well as excellent products and services within our operating companies, that make us better placed than most to ride out whatever the economy may present us with. All our businesses have started the current year well but we are adopting a cautious approach to this year as a whole until the direction of the UK economy becomes clearer.

Eric Sanderson
Chairman

30 March 2010

It has been another challenging year for our boutique hotel business, as we have had to adapt to changing market conditions and the continuing adverse economic environment putting rates under pressure. In spite of this, occupancy remained stable throughout 2009 at around 79%.

At the half-year we reported that, not unexpectedly, there had been a decline in our corporate customer base and an increase in leisure business, particularly at Malmaison. This shift in our customer base continued throughout the second half of the year. Whilst occupancy remained consistent over the course of the year, we saw a 10% decline in average room rates across the group to £104 against £115. Malmaison, which is more reliant on the corporate market, bore the brunt of this rate drop with a 12% fall from £112 to £99, while Hotel du Vin (“HdV”), which is more leisure orientated, saw rates ease by a more modest 8% to £111 against £120 previously.

What has been incredibly encouraging and extremely positive has been the rise in customer spend on food and beverage (“F&B”). HdV saw a 13% increase in its restaurant business revenues over the year to more than £28m and F&B income now accounts for approximately 55% of total HdV business. Malmaison experienced a 10% uplift in its restaurant revenue to £20.7m which represented 34% of total revenue. Increasingly the group is maximising its position as a great restaurant business with rooms, as food and beverage is now generating annual revenue of almost £50m.

Total revenue across the group for the 12 months to 31 December 2009 was marginally up on the previous year at £111.0m against £107.6m. Malmaison accounted for £60.3m of the total, slightly down on the past year’s £62.3m, while HdV produced a near 12% uplift at £50.8m compared to £45.3m last time. HdV benefited from a full year’s contribution from three new hotels that opened in the second half of 2008: Poole, Newcastle and Edinburgh.

At Malmaison there was only one new hotel making a first full year contribution: Aberdeen, which opened in November 2008 and took off almost immediately, reaching 79% occupancy for the 12 months to 31 December 2009. Aberdeen has been an incredible success, outstripping its budget by some margin; it generated a 24% increase over budgeted revenue for the year and exceeded its food and beverage budget by some 70%.

Group EBITDA was level with last year at £26.6m. Malmaison contributed EBITDA of £15.4m, down from £16.5m, while HdV produced £11.2m against £9.9m, an increase of 13%. On a like-for-like basis HdV’s revenue was slightly down at £41.7m compared to £42.5m but EBITDA was unchanged at £10.5m.

There was regional variation in performance, especially at Malmaison. Leeds, Manchester and Liverpool came under strong room rate pressure although restaurant revenues overall were good, especially at Manchester. Scotland performed better than the other regions, underpinned by the very strong contribution from Aberdeen. London, which had a slow first six months, produced a strong second half performance.

Leisure and social spending were the highlights at HdV. Our hotels at Brighton, Cambridge, Cheltenham, Devonshire Gardens and Harrogate particularly benefited from weddings and events revenue. Devonshire Gardens, for example, was the chosen venue for 84 weddings over the course of the year and advance bookings for the current year are even stronger. The extension at Brighton, comprising 12 extra rooms, completed during the year and also did well.

Conversely our new HdVs at Poole, Edinburgh and Newcastle endured fairly tough trading conditions and they are taking longer to establish themselves in their respective markets than originally envisaged. However, I can report that they are all now trading more strongly and are getting nearer to the revenue levels we originally anticipated.

Our approach to the more challenging market place has been to communicate a clear “value for money” message to existing and potential new customers. To help deliver this message, particularly during the first six months of 2009, we offered a group wide promotion of two courses and a bottle of wine for £29. In only the second month of the promotion we estimated this drove an extra 22,000 covers in all our restaurants. Interestingly, take-up of this promotion has slowed as customers traded up to the full à la carte menu.

The group continues to collect industry awards including the Business Traveller award for “Best Smaller Hotel Chain” in 2009 while the Aberdeen Malmaison won the “Best Architecture – Conversion of an Existing Building” award at the European Hotel Design Awards 2009.

We have decided to sell two of our properties: the Edinburgh Malmaison and the St Andrews hotel which was to be converted into an HdV. The Edinburgh property is our oldest Malmaison and we believe it is better to realise value from this investment and relocate our Edinburgh presence into a city centre property. At St Andrews, whilst the unbranded hotel operates successfully, we believe the cost of converting the hotel into an HdV outweighs the medium term resultant investment value of the property. We will update shareholders as these sales progress.

In the current climate our focus has been on controlling costs without impacting on our award winning service. In a business like ours, the big areas of expenditure are food and labour costs which we have kept under very strict control including finding new lower cost suppliers or re-negotiating existing contracts without sacrificing quality.

Capital expenditure has been deliberately reduced over the course of 2009. However, we have invested in new management software that enables us to monitor the room pricing of comparable hotel groups in a transparent way and allows us to adjust our room rates accordingly.

2010 has started with mixed fortunes. The widespread snow and ice at the start of January had an impact across the group although I am pleased to report that there has been a strong recovery and I am confident we will meet our first quarter’s budget. February is already looking very positive with Malmaison recovering very quickly from the early setbacks.

This year’s restaurant promotions, “The Three Tenners” at Malmaison and “Du Vin or not Du Vin” at HdV, are already proving to be highly successful with revenue ahead of last January, despite the adverse weather.

We anticipate the first part of the year, in the run-up to the General Election, to deliver results comparable to last year but post-election the future is less certain. We believe our corporate market is set to grow again although the leisure market could come under pressure in the third quarter as the impact of proposed Government changes in fiscal policy begin to bite.

This degree of uncertainty leads us to be cautious about the future. However, the lessons from 2009, together with our strong cash flow management and strategies we have put in place over the past year, have put us in an excellent position to take full advantage of market improvements as they occur.

Robert B. Cook
Chief Executive
Malmaison and Hotel du Vin Group

30 March 2010

Business Exchange experienced a successful 2009 by adhering to its well proven strategy of focusing on the London market. Expansion in this market has been our stated goal for some time as we have always believed that concentrating our centres in such a dynamic business environment will generate the most profitable returns.

The highlight of the year was our acquisition of 16 carefully selected centres from MLS, a rival of Business Exchange, which was going into administration. These centres are predominantly located in London. Since the year end we have secured two new Central London centres in Knightsbridge and Paddington. Both centres will open in the first half of 2010 and are in prime locations where there is very little competition.

As a result, Business Exchange has an increasingly dominant footprint in the capital with 47 centres. Today Business Exchange is London’s largest provider of serviced offices with almost 14,000 workstations covering nearly 1.2m sq ft. These centres now account for 64% of our total portfolio of 73 centres across 1.8m sq ft, providing approximately 20,000 workstations.

As is well documented, the market demand for offices in the UK has been extremely weak and, as a consequence, total revenue for the year to 31 December 2009 dropped 5% to £112.4m compared to £118.5m in 2008. This reflected a 9% fall in occupancy to 82% and an 18% decline in rate in our mature centres, offset by the acquisition of the MLS centres. The resulting EBITDA was £9.8m against £18.1m while pre-tax profits declined to £4.2m from £14.0m the previous year. In June 2009 we paid a special interim dividend totalling £9.8m. Even after this, our operations continue to be underpinned by £18.1m of net assets, with no debt.

As a result REVPOW (annualised revenue per occupied workstations) in our mature centres eased some 14% from £9,650 to £8,265 and REVPAW (annualised revenue per available workstation) was down 20% to £6,955 from £8,700. There was also an 18% decline in revenue from our meeting and conference room division which dropped to £9.2m from £11.3m.

Business Exchange, London’s largest provider of serviced offices, offers a powerful mix of product, price and location underpinned by robust internal cost controls that ensure the company has reasonable resilience against the current market conditions. It should be noted that the contracted nature of Business Exchange’s revenue creates a lag of up to 18 months between what occurs in the market and the financial performance reflected in our results. In other words our numbers reflect price reductions that occurred in 2008 and 2009.

In 2009 we continued to see a demand shift in the market towards small and medium sized enterprises (SMEs) as corporates and larger clients reined back their expenditure in both serviced offices and meeting rooms. We, therefore, saw larger higher paying clients move out which were replaced by smaller clients and start-up businesses in a more competitive environment.

Encouragingly, our renewal rates were maintained at 70% and as the year progressed our existing clients accepted rate increases for their workstations on renewal. Equally, new workstation prices stabilised. This was in stark contrast to the end of 2008 and the first half of 2009 when incoming licencees were paying considerably less than those they replaced. The benefit to Business Exchange, therefore, of licence fees hardening will not be seen until the second half of 2011 and thereafter.

Our focus on the SME and business start-up market enables us to spread our risk. Although there is an initial short term revenue fall when a large client moves out there is greater long term benefit from the Group’s improved resilience due to a wider and more diverse client base. At the same time, our provision of high level service and employee engagement, together with the quality of our centres, continue to attract, and, increasingly retain clients. Typically the average number of workstations licensed to a client at 31 December 2009 was six and the average length of stay 25 months (compared to eight and 23 months respectively a year ago).

We continue to ensure the business reflects a broad and dynamic customer base and is not dependent on any one specific sector. Just as importantly, we are constantly reviewing and improving our infrastructure. To that end, the roll out of our new IT and Telephony platform will create new revenue-generating opportunities through a broader product and service offering, as well as meeting the ever evolving demands of our wide client base.

The current year is one of consolidation with the focus on improving the performance of the new and existing centres by driving occupancy and revenue. Already we are seeing the market for serviced offices and meeting rooms improve and demand strengthen. Early indications are that occupancy is increasing and rates are stabilising, particularly in London. Our strategy of maintaining the leading position in Central London will enable us to take full advantage of the improving market conditions forecast by the capital’s leading property consultants. London’s position as a major global financial centre will be reinforced as confidence returns to the financial markets and we move towards the 2012 Olympics.

John Spencer
Chief Executive
MWB Business Exchange Plc

30 March 2010

This has been an historic year for our iconic brand. For the first time in a decade Liberty has produced positive EBITDA against a background of possibly one of the most difficult economic environments the retail sector has experienced since the early 1990’s.

As shareholders know, much of this success has been driven by the highly acclaimed Renaissance of Liberty which was launched in February 2009. Looking back at the launch, which was opened by Slumdog Millionaire actress Freida Pinto, it is clear that the Renaissance was a watershed for both the flagship store and the brand itself.

In many ways the Renaissance re-captured the original spirit of Liberty: quirkiness and cutting edge design, all set in a redesigned store. This not only brought back many of our former customers but attracted many thousands of new ones who began to explore the store and brand for the first time.

Very quickly Liberty became the watchword for new and exciting fashion with many brands being introduced by the store to London for the first time. As well as showcasing established international designers, during 2009 we did much to promote young British designers both the little known and the well known. These included Michael Birch, Lost Property, Alexander McQueen, Stella McCartney, Nudie, Grayson Perry, Barbour and Ronnie Wood.

Once more, Liberty was offering an exciting, eclectic but accessible fashion unavailable elsewhere in London, right across the fashion palette – from scarves to jewellery, from dresses to perfume, and bags to sunglasses. Liberty was even home to Hermès’ first ever pop-up shop which was a tremendous success.

The result was an overall 20% uplift in Liberty’s like-for-like revenues for 2009 to almost £61m against £51m during the previous year. Sales at the flagship store also rose strongly with total revenue for 2009 18% higher at £37.3m against £31.5m a year earlier.

What has been particularly pleasing is that we have maintained the momentum established at the time of the Renaissance launch not only through the 2009 Spring/Summer season but also through Autumn/Winter and into the first quarter of 2010.

2009 also saw the introduction of the Liberty Style Service which has attracted a new group of VIPs to the store. The Style Service offers one-to-one styling advice to individual customers that helps them to select not only the most appropriate range of garments but also the most suitable accessories that complement those choices. It enables the serious customer to access the entire Liberty range in one room and allows them to experiment in a discreet environment as well as enhancing their shopping experience.

While it is often fashion and designers that capture the headlines as well as customers’ hearts, Liberty has made great progress in other areas too. Our well-established fabrics business has had another record year as demand for new designs as well as the back catalogue continues unabated.

Not only have collaborations with designers such as Grayson Perry delivered great results but our fabrics have been used in some unlikely settings, such as recycled coffee bags. This eco-bag from Lost Property took the humble coffee bean bag, lined it with a Liberty print and created another fashion must-have that flew out of the door at £50 a time. We also re-introduced a collection of souvenir items such as mugs and handkerchiefs, all with Liberty prints. These instant gifts, which we brought to the store during Summer 2009, have been extremely successful and we continue to sell them today.

Additionally we have created new, and even more vibrant, prints in a range of different fabrics that have included silk and wool for the first time. This division has been supported by an expanded commercial team.

The end result has been another extremely strong contribution from our fabrics division that saw revenue rise a further 23% to £21.5m compared to £17.4m in 2008, which in itself was a record performance. The Japanese element of our Fabrics division benefited from a strong Yen in comparison to the Pound as it produced a 43% increase in revenue in our Sterling financial statements.

It is also pleasing to see our Internet division making solid progress over the year. Clearly the division is benefiting from the increased exposure the Liberty brand is receiving, both at home and internationally. As we expanded our on-line store it attracted a growing customer base, which was particularly evident in the run-up to Christmas as sales of seasonal gifts grew rapidly. We believe this division has a great future and will be a major component in the business as we go forward.

As shareholders know we took the strategic decision to close our Knightsbridge stand-alone Liberty of London store in the Summer of 2009. The decision was principally taken as we had received an extremely attractive offer for our lease on the shop in Sloane Street. In turn this gave us the opportunity to re-structure the division by re-modelling the brand and product offer across the Liberty range, as well as exploring other opportunities to develop Liberty of London both at home and internationally.

There is no doubt in our mind that 2009 has been a year of great progress for the business with all divisions reporting sustainable growth, at a time when there is great uncertainty in the economy and the political climate. All our operating divisions delivered EBITDA growth and it is satisfying to be able to report that our Internet business, which was only launched in July 2008 is already breaking even at the EBITDA level.

Liberty has demonstrated its ability to buck economic and retail trends by returning to profitability during one of the worst downturns in recent retail history. It has created an environment that is increasingly appealing to an ever widening customer base while at the same time enhancing the brand and the values that it represents. Once more Liberty has become an exciting, eclectic but accessible place to shop and therefore we view the future with confidence.

Geoffroy de La Bourdonnaye
Chief Executive
Liberty Plc

30 March 2010