20 Jul 2010 07:00
C H BAILEY PLC
Chairman's statement and financial results
Year ended 31 March 2010
Overview
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| 2010 | 2009 | 2008 | 2007 |
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| £ | £ | £ | £ |
| Revenue - continuing operations | 3,897,260 | 5,369,623 | 5,526,195 | 5,594,850 |
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| Gross profit - continuing operations | 781,182 | 681,644 | 912,691 | 1,133,398 |
| Gross profit margin | 20.04% | 12.69% | 16.52% | 20.26% |
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| Operating (loss) on continuing operations before exceptional items, investment activities and depreciation | (237,573) | (729,683) | (723,479) | (401,919) |
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| Profit (loss) for the financial year | 1,104,481 | 276,582 | (2,162,787) | (691,436) |
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| Earnings (loss) per share from continuing operations | 13.25p | 4.53p | (17.77p) | (2.64p) |
| Earnings (loss) per share from total operations | 13.25p | 3.38p | (26.40p) | (8.44p) |
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The results for the period under review show that the Group has made a profit after tax and minority interests of £1,104,481 (2009: £276,582). Similarly to last year's profit, this has come about from the sale of property assets in Malta. There has also been an increase in the gross profit margin on trading activities from approximately 13% last year to 20% this year. Overall EBITDA (excluding property profits), whilst not yet positive, has been reduced from last year's loss by £238,691.
We anticipated that 2009/10 would be a challenging year for the Group but were confident that we would be in a position to be able to ride out the global economic downturn. I am pleased to report that the initiatives which management put in place last year have borne fruit in reducing overheads and increasing margins. We continue to look at other ways of returning the Group to a trading profit position.
UK Operations
The UK operations were scaled back last year with the Group reducing its exposure in the Engineering sector by closing both Midway Precision and Modular Automation International. Whilst Bailey Industrial Engineering has been significantly affected by the downturn in the UK economy, and the loss of a major customer, management and employees worked together very effectively and were able to retain market share. They are to be congratulated for their efforts in particularly difficult conditions, and customer demand is now beginning to show signs of recovery.
Malta
As announced in October 2009, the Group sold part of the hotel complex and entered into a conditional sale agreement for the remainder of the site in St George's Bay. The sale of part of the hotel complex has now been completed and is reflected in these accounts. The conditional sale for the remainder of the site, which is expected to be completed in March 2013, remains contingent on receipt of planning permission by the purchaser. Meanwhile, the hotel continues to trade profitably and contributes to central overheads.
As reported in my interim statement, the Group settled a longstanding dispute with the Maltese authorities during the year and received compensation of £253,193.
Tanzania
The recent re-opening of the Oyster Bay hotel has been very well received by the market and revenues for the operation overall have doubled. We are currently in discussions with the banks for additional borrowing facilities to enable us to further develop the hotel, and we have already started to clear the site for the developers.
Beho Beho, like most other safari camps, has been affected by the world downturn. However, I am pleased to report that bookings for the coming year are above the previous year's figures and we expect that the level of bookings will continue to improve.
Sales at Mikumi Wildlife Camp were also affected but less so than Beho Beho as the majority of its revenue comes from the local market. We are currently looking at a possible redevelopment of the site to improve the standard of guest services and generally upgrade the camp's facilities.
Investments
The fluctuations in the world financial markets continue and we expect that to continue, which makes it hard to predict when we shall see real recovery happen.
Current Trading and Outlook
The sale of property in Malta has enabled us to strengthen our reserves. With the modest growth being seen in Tanzania and Malta and signs of recovery in the UK engineering business, together with the reduction in overheads, I feel that we are beginning to see benefits from those initiatives that have been introduced across the Group.
I would like to take this opportunity to thank all our employees for their cooperation and their willingness to accept the changes which have been needed over the last year.
Charles H.Bailey
Chairman
20th July 2010
Consolidated income statement
Year ended 31 March 2010
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| 2010 | 2009 |
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| £ | £ |
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| Continuing operations |
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| Revenue | 3,897,260 | 5,369,623 |
| Cost of sales | (3,116,078) | (4,687,979) |
| Gross profit | 781,182 | 681,644 |
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| Profit on the sale of property | 2,013,442 | 1,847,320 |
| Administrative expenses | (1,432,691) | (1,890,935) |
| Trading profit | 1,361,933 | 638,029 |
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| Investment activities and other income | 196,138 | 449,557 |
| Operating profit | 1,558,071 | 1,087,586 |
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| EBITDA* | (41,435) | (280,126) |
| Depreciation | (414,431) | (412,413) |
| Profit (loss) on the sale of plant and equipment | 495 | (67,195) |
| Normalised operating (loss) | (455,371) | (759,734) |
| Profit on sale of property | 2,013,442 | 1,847,320 |
| Operating profit | 1,558,071 | 1,087,586 |
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| Finance income | 10,409 | 18,449 |
| Finance costs | (199,758) | (337,381) |
| Profit before taxation | 1,368,722 | 768,654 |
| Taxation | (241,708) | (379,556) |
| Minority interest | (22,533) | (18,295) |
| Profit for the year from continuing operations | 1,104,481 | 370,803 |
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| Discontinued operations |
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| (Loss) for the year from discontinued operations | - | (94,221) |
| Profit for the financial year | 1,104,481 | 276,582 |
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| Earnings per share from continuing operations | 13.25p | 4.53p |
| Earnings per share from total operations | 13.25p | 3.38p |
* Earnings before interest, taxation, depreciation, loss on sale of plant and equipment and profit on sale of property.
Consolidated statement of comprehensive income
Year ended 31 March 2010
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| 2010 | 2009 |
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| £ | £ |
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| Profit for the financial year | 1,104,481 | 276,582 |
| Exchange differences | 119,050 | 196,051 |
| Sale of investment in own shares | - | 71,216 |
| Total comprehensive income for the year | 1,223,531 | 543,849 |
Consolidated balance sheet at 31 March 2010
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| 2010 | 2009 |
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| £ | £ |
| Non-current assets |
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| Property, plant and equipment | 10,431,270 | 11,121,914 |
| Deferred tax asset | 162,278 | 174,660 |
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| 10,593,548 | 11,296,574 |
| Current assets |
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| Inventory | 31,462 | 40,582 |
| Trade and other receivables | 919,346 | 1,085,953 |
| Current asset investments | 1,544,853 | 1,052,308 |
| Cash and cash equivalents | 1,886,316 | 605,494 |
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| 4,381,977 | 2,784,337 |
| Current liabilities |
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| Trade and other payables | (1,967,095) | (1,735,594) |
| Bank loans and overdrafts | (974,888) | (1,742,463) |
| Other loans | (669,014) | (662,139) |
| Obligations under finance leases | (26,897) | (38,421) |
| Provisions | (225,000) | (225,000) |
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| (3,862,894) | (4,403,617) |
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| Net current assets | 519,083 | (1,619,280) |
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| Total assets less current liabilities | 11,112,631 | 9,677,294 |
| Non-current liabilities |
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| Trade and other payables | (734,178) | - |
| Bank loans | (1,909,535) | (2,379,627) |
| Obligations under finance leases | (10,971) | (35,794) |
| Deferred tax liabilities | (735,862) | (783,762) |
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| Net assets | 7,722,085 | 6,478,111 |
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| Equity |
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| Called up share capital | 833,541 | 833,541 |
| Share premium account | 609,690 | 609,690 |
| Capital redemption reserve | 5,163,332 | 5,163,332 |
| Translation reserve | 769,123 | 713,232 |
| Retained earnings | 267,376 | (900,264) |
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| Surplus attributable to the parent's shareholders | 7,643,062 | 6,419,531 |
| Minority interest | 79,023 | 58,580 |
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| Total equity | 7,722,085 | 6,478,111 |
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Consolidated cash flow statement
Year ended 31 March 2010
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| 2010 | 2009 |
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| £ | £ |
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| Cash flows from operating activities |
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| Cash generated from operations | 135,895 | (1,586,885) |
| Interest paid - continuing operations | (199,758) | (337,381) |
| Interest paid - discontinued operations | - | (27,332) |
| Overseas tax paid | (251,712) | (468,326) |
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| Net cash flow from operating activities | (315,575) | (2,419,924) |
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| Investing activities |
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| Sale of property, plant and equipment | 2,307,972 | 3,975,127 |
| Deferred income on property sale | 734,178 | - |
| Purchase of property, plant and equipment | (338,207) | (1,400,743) |
| Sale of investments | 233,089 | 19,807 |
| Purchase of investments | (390,723) | (791) |
| Interest received | 10,409 | 18,449 |
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| Net cash flow from investing activities | 2,556,718 | 2,611,849 |
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| Financing activities |
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| Sale of own shares | - | 71,216 |
| Movement in bank loans | (336,418) | (271,942) |
| Movement in directors' loans | 158,521 | 16,752 |
| Movement in other loans | 6,875 | 9,385 |
| Movement in capital element of finance leases | (36,347) | (74,092) |
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| Net cash flow from financing activities | (207,369) | (248,681) |
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| Net increase (decrease) in cash and cash equivalents | 2,033,774 | (56,756) |
| Cash and cash equivalents at beginning of year | (1,136,969) | (1,101,729) |
| Exchange differences | 14,623 | 21,516 |
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| Cash and cash equivalents at end of year | 911,428 | (1,136,969) |
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Reconciliation of net cash flow to movement in net debt in the year
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| 2010 | 2009 |
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| £ | £ |
| Net increase (decrease) in cash and cash equivalents | 2,033,774 | (56,756) |
| Cash outflow from the increase in debt | 365,890 | 336,649 |
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| Movement in net debt during the year | 2,399,664 | 279,893 |
| Net debt at the beginning of the year | (4,252,950) | (3,909,938) |
| Exchange differences | 148,297 | (622,905) |
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| Net debt at the end of the year | (1,704,989) | (4,252,950) |
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Consolidated statement of changes in equity
Year ended 31 March 2010
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| Share capital | Share premium account | Capital redemption reserve | Investment In own shares | Translation reserve | Retained earnings | Minority interest | Total |
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| £ | £ | £ | £ | £ | £ | £ | £ |
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| At 1 April 2008 | 833,541 | 609,690 | 5,163,332 | (187,528) | 195,695 | (739,048) | 33,380 | 5,909,062 |
| Sale of investment in own shares | - | - | - | 71,216 | - | - | - | 71,216 |
| Loss on investment in own shares | - | - | - | 116,312 | - | (116,312) | - | - |
| Profit for the financial year | - | - | - | - | - | 276,582 | 18,295 | 294,877 |
| Exchange differences | - | - | - | - | 517,537 | (321,486) | 6,905 | 202,956 |
| At 31 March 2009 | 833,541 | 609,690 | 5,163,332 | - | 713,232 | (900,264) | 58,580 | 6,478,111 |
| Profit for the financial year | - | - | - | - | - | 1,104,481 | 22,533 | 1,127,014 |
| Exchange differences | - | - | - | - | 55,891 | 63,159 | (2,090) | 116,960 |
| At 31 March 2010 | 833,541 | 609,690 | 5,163,332 | - | 769,123 | 267,376 | 79,023 | 7,722,085 |
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Notes
1. The financial information contained in this preliminary announcement does not constitute statutory accounts of C H Bailey Plc as defined in Section 434 of the Companies Act 2006, and is unaudited. The financial information for the year ended 31 March 2009 is extracted from the statutory accounts of the Group for that financial year and does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The report of the auditors was (i) unqualified; (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237 (2) or (3) of the Companies Act 1985.
2. Copies of the 2010 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 7614 5932)
Colin Smith (Tel: 0121 423 8940)