(BLEY.L) Bailey (C H) PLC Buy/Sell

RNS Number : 5725A Bailey(C.H.) PLC 12 October 2009

C H BAILEY, PLC

PROPOSED SALE OF PROPERTIES IN MALTA

Introduction

The Board of C H Bailey, Plc announces that on 9 October 2009 SGBH, one of the Company's overseas subsidiaries, entered into conditional agreements to sell Dolphin House and the Main Site, the majority of the Group's properties in Malta, to Vic Bon Limited, a company incorporated in Malta.

On the signing of the Dolphin Agreement, the full consideration for the sale, being the sum of EUR2,329,373 (£2,143,023) was paid by the Buyer into an escrow account to be released to SGBH upon satisfaction of certain conditions.

On the signing of the Main Site Agreement, a deposit of EUR815,300 (£750,076) was paid by the Buyer into an escrow account to be released to SGBH upon satisfaction of certain preliminary conditions prior to Completion of the sale. On Completion of the Main Site Sale (which will for some while following the General Meeting remain conditional on receipt by the Buyer of permission for the development of this property), SGBH will receive further cash consideration of EUR28,301,867 giving a total cash consideration for the Main Site of EUR29,117,167 (£26,787,794).

In view of the size of these transactions, both the Dolphin Sale and the Main Site Sale are conditional upon the approval of the Company's Shareholders. A circular will be sent to Shareholders shortly setting out further information on the proposed disposals and convening a General Meeting of the Company at which Shareholder approval will be sought for the disposals.

Background to and reasons for the Dolphin Sale and the Main Site Sale

As Shareholders are aware from statements made regularly in the annual audited accounts of the Company, the Directors have been of the view for some time that the market value of certain freehold and leasehold land and buildings within the Group is significantly in excess of its book value. The Directors have been exploring the possibilities of realising such value in respect of the Group's property interests in Malta and they are satisfied that the Dolphin Sale and the Main Site Sale on the terms agreed with the Buyer are in the best interests of Shareholders.

Information on Dolphin House

The business carried on at Dolphin House is the provision of rooms for use as temporary classrooms to support the provision of accommodation and services to English language students at the Main Site. In the year ended 31 March 2009, this business contributed EUR10,111 (£8,392) of revenue to the total SGBH revenue of EUR834,490 (£692,327). In the same period, SGBH reported an overall operating loss of EUR15,992 (£13,273), but no segmental analysis is available of the operating result attributable to the business carried on at Dolphin House.

Details of the Dolphin Sale

The key terms of the Dolphin Agreement, which is a promise of sale under Maltese law, are as follows:

RNS Number : 2507W
  Bailey(C.H.) PLC
  24 July 2009
   

C H BAILEY PLC

Chairman's statement and financial results for the year ended 31 March 2009

Overview
                                      2009         2008       2007         2006
                                         £            £          £            £

 Revenue - continuing            5,369,623    5,526,195  5,594,850    5,263,729
 operations

 Gross profit - continuing         681,644      912,691  1,133,398      716,484
 operations
 Gross profit margin                12.69%       16.52%     20.26%       13.61%

 Operating loss on continuing    (782,538)    (723,479)  (401,919)    (792,764)
 operations before exceptional
 items, investment activities
 and depreciation

 Profit (loss) for the             276,582  (2,162,787)  (691,436)  (1,228,706)
 financial year

 Earnings (loss) per share from      4.53p     (17.77p)    (2.64p)     (13.74p)
 continuing operations
 Earnings (loss) per share from      3.38p     (26.40p)    (8.44p)     (15.24p)
 total operations

I am pleased to announce that for the year under review, the Group has made a profit of £276,582 (2008 Loss £2,162,787). It must be noted, however, that this profit has arisen principally through a gain on the sale of one of the Group's hotels in Malta.  Whilst it is pleasing to see the Group return to profit, there are still many challenges ahead. 

The Group is trading in possibly the worst affected sectors after banking and finance - namely Engineering and Leisure.  We have put in place various initiatives reducing our central overheads but we are still susceptible to fluctuations in each sector.  

UK Operations

During the latter part of 2008 and into early 2009, the Group had to adapt to an increasingly difficult economic and financial environment. On 3rd October 2008, we announced the closure of Midway Precision in the light of poor trading and its very uncertain prospects. Subsequently, as announced on 30th January 2009, the Group had no other option than to appoint administrators to Modular Automation International Limited and so the design and manufacture of automation systems is included in these results as a discontinued operation. 

The other businesses within the engineering division also experienced difficult trading conditions which has resulted in consolidation into a single company, Bailey Industrial Engineering, redundancies and reduced working hours.  These changes have been implemented through both management and shop floor initiatives which have reduced overhead costs, are improving productivity and offer prospects of recovery in the future.
    
Malta

During the year the Group sold part of the hotel complex. The proceeds were used to reduce borrowings and to provide the Group with additional working capital. This sale has now centred the foreign language student operation onto the main site of the hotel, which will hopefully provide better operational efficiency for the summer season. 

We are also seeing encouraging enquiries and sales for the Palazzo Villa Rosa, as the niche foreign language student market does not seem to have been affected as badly as other leisure markets. We are hopeful that the increased volume of business will fully compensate for the lost revenue and bed stock arising from the sale referred to above.  

Tanzania

We have been pleased with the market's response to the recent reopening of the refurbished Oyster Bay Hotel. This has been listed as one of the 101 leading hotels in the world, is being included in many new publications and recently featured in the House & Garden magazine in South Africa. 

Occupancy and revenues are projected to increase, with the Hotel's newly completed facilities becoming more attractive due to the continued traffic congestion in Dar es Salaam.  We are therefore in discussion with the bank to finance future expansion of the hotel and the services it is offering due to the continued demand and success of the current development.

Beho Beho continues to be seen by the market as the top safari operation in the Selous although this year we did see a drop in bed nights by some 25%.  We are expecting some further drop in bednights in the coming year due to the difficult economic climate.

Mikumi Wildlife Camp has increased revenue with reduced occupancy due to increases in the rates.  We are looking at how to redevelop this operation, which caters primarily for the local family weekend market based in Dar es Salaam. 

Investments

The severe turbulence in financial markets has affected the valuation of the Group's investments. We have seen a modest recovery in the portfolio but we are cautious about predicting further recovery due to the continued uncertainty in global markets.

Current Trading and Outlook

The world recession has had a major impact on all our sectors of operation.  We expect this next year to be more difficult than 2008/09 in many respects but feel confident that we are in a position to be able to ride out the current global economic downturn. 

We have made every effort to maintain revenues and reduce our operational costs throughout the Group and I must thank all our employees for their proactive and flexible efforts over the past year that has helped see the Group through these particularly difficult times.

Charles.H.Bailey

Chairman

24th July 2009
      Consolidated income statement 

Year ended 31 March 2009
                                                             2009         2008
                                                                £            £
                                                                    (restated)
 Continuing operations
 Revenue                                                5,369,623    5,526,195
 Cost of sales                                        (4,687,979)  (4,613,504)

 Gross profit                                             681,644      912,691

 Profit on the sale of property                         1,847,320            -
 Administrative expenses                              (1,890,935)  (1,932,777)

 Trading profit (loss)                                    638,029  (1,020,086)

 Investment activities and other income                   449,557     (35,032)

 Operating profit (loss)                                1,087,586  (1,055,118)

 EBITDA*                                                (280,126)    (758,596)
 Depreciation                                           (412,413)    (266,857)
 Goodwill impairment                                            -     (29,750)
 (Loss) profit on the sale of plant and equipment        (67,195)           85

 Normalised operating profit (loss)                     (759,734)  (1,055,118)
 Profit on sale of property                             1,847,320            -

 Operating profit (loss)                                1,087,586  (1,055,118)

 Finance income                                            18,449        2,766
 Finance costs                                          (337,381)    (212,105)

 Profit (loss) before taxation                            768,654  (1,264,457)
 Taxation                                               (379,556)     (65,010)
 Minority interest                                       (18,295)    (126,694)

 Profit (loss) for the year from continuing               370,803  (1,456,161)
 operations

 Discontinued operations
 (Loss) for the year from discontinued operations        (94,221)    (706,626)

 Profit (loss) for the financial year                     276,582  (2,162,787)

 Earnings (loss) per share from continuing                  4.53p     (17.77p)
 operations
 Earnings (loss) per share from total operations            3.38p     (26.40p)

* Earnings before interest, taxation, depreciation, goodwill impairment, loss on sale of plant and equipment and profit on sale of property.

Consolidated balance sheet at 31 March 2009
                                                           2009         2008
                                                              £            £
 Non-current assets
 Goodwill                                                     -      107,694
 Property, plant and equipment                       11,121,914   10,353,515
 Lease prepayments                                            -       38,474
 Deferred tax asset                                     174,660      524,436

                                                     11,296,574   11,024,119
 Current assets
 Stocks                                                  40,582      156,834
 Trade and other receivables                          1,085,953    2,976,789
 Current asset investments                            1,052,308    1,320,753
 Cash and cash equivalents                              605,494      416,180

                                                      2,784,337    4,870,556
 Current liabilities
 Trade and other payables                           (1,735,594)  (4,050,832)
 Bank loans and overdrafts                          (1,742,463)  (1,517,909)
 Other loans                                          (662,139)    (652,754)
 Obligations under finance leases                      (38,421)     (69,274)
 Provisions                                           (225,000)    (259,180)

                                                    (4,403,617)  (6,549,949)

 Net current assets                                 (1,619,280)  (1,679,393)

 Total assets less current liabilities                9,677,294    9,344,726
 Non-current liabilities
 Bank loans                                         (2,379,627)  (2,007,148)
 Obligations under finance leases                      (35,794)     (79,033)
 Cumulative preference shares                                 -    (530,180)
 Deferred tax liabilities                             (783,762)    (819,303)

 Net assets                                           6,478,111    5,909,062

 Equity
 Called up share capital                                833,541      833,541
 Share premium account                                  609,690      609,690
 Capital redemption reserve                           5,163,332    5,163,332
 Investment in own shares                                     -    (187,528)
 Translation reserve                                    713,232      195,695
 Retained earnings                                    (900,264)    (739,048)

 Surplus attributable to the parent's shareholders    6,419,531    5,875,682
 Minority interest                                       58,580       33,380

 Total equity                                         6,478,111    5,909,062

Consolidated cash flow statement 

Year ended 31 March 2009
                                                        2009         2008
                                                           £            £

 Cash flows from operating activities
 Cash generated from operations                  (1,586,885)    (714,897)
 Interest paid - continuing operations             (337,381)    (212,105)
 Interest paid - discontinued operations            (27,332)      (8,732)
 Overseas tax paid                                 (468,326)            -

 Net cash flow from operating activities         (2,419,924)    (935,734)

 Investing activities
 Sale of property, plant and equipment             3,975,127        8,145
 Purchase of property, plant and equipment       (1,400,743)  (1,921,014)
 Sale of investments                                  19,807      364,224
 Purchase of investments                               (791)    (142,451)
 Interest received - continuing operations            18,449        2,766
 Interest received - discontinued operations               -        2,734

 Net cash flow from investing activities           2,611,849  (1,685,596)

 Financing activities
 Sale of own shares                                   71,216            -
 Movement in bank loans                            (271,942)    1,229,412
 Movement in directors' loans                         16,752      636,292
 Movement in other loans                               9,385        5,419
 Movement in capital element of finance leases      (74,092)        5,987

 Net cash flow from financing activities           (248,681)    1,877,110

 Net decrease in cash and cash equivalents          (56,756)    (744,220)
 Cash and cash equivalents at beginning of year  (1,101,729)    (332,139)
 Exchange differences                                 21,516     (25,370)

 Cash and cash equivalents at end of year        (1,136,969)  (1,101,729)

      Reconciliation of net cash flow to movement in net debt in the year

                                                         2009         2008
                                                            £            £
 Net decrease in cash and cash equivalents           (56,756)    (744,220)
 Cash outflow (inflow) from the increase in debt      336,649  (1,240,818)

 Movement in net debt during the year                 279,893  (1,985,038)
 Net debt at the beginning of the year            (3,909,938)  (1,846,485)
 Exchange differences                               (622,905)     (78,415)

 Net debt at the end of the year                  (4,252,950)  (3,909,938)

Consolidated statement of recognised income and expense

Year ended 31 March 2009
                                                             2009         2008
                                                                £            £
 Profit (loss) for the year attributable to parent's
 equity shareholders                                      276,582  (2,162,787)
 Exchange differences                                     196,051      569,147

 Total recognised income and expense for the year
 attributable to parent's equity shareholders             472,633  (1,593,640)
 Adjustment arising on adoption of IFRS                         -    (859,204)
 Sale of investment in own shares                          71,216            -

 Total recognised income and expense since last annual
 report                                                   543,849  (2,452,844)

Notes

1.    The abridged financial information set out above does not constitute the Group's statutory accounts as defined under Section 240 of the Companies Act 1985.  The auditors have made an unqualified report on the financial statements for the year ended 31 March 2009 from which this financial information is extracted and there was no statement in their report under either section 237(2) or section 237(3).  The report of the auditors on the accounts for the year ended 31 March 2008 was unqualified and there was no statement under either section 237(2) or section 237(3).  Full accounts for the year ended 31 March 2008 have been filed at Companies House.

2.    Copies of the 2009 annual report and accounts will be sent to shareholders shortly, and these can be obtained from the Company's registered office or Website: www.chbaileyplc.co.uk.

Enquiries:

C H Bailey Plc          Charles Bailey 
            Bryan Warren         (Tel: 01633 262961)

Arden Partners plc    Richard Day           (Tel: 020 7398 1632)
            Colin Smith             (Tel: 0121 423 8940)

This information is provided by RNS
The company news service from the London Stock Exchange
 
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