Half Yearly Report

C.H. Bailey plc

Chairman's statement and financial audited results

for the six months ended 30 September 2014 (unaudited)

C.H. Bailey plc ("C.H. Bailey", the "Company" or together with it's subsidiaries the "Group", announces its unaudited interim results for the half year ended 30th September 2014.

Interim Statement and Results

Our interim results for the 6 month period ended 30th September 2014 show a profit after tax of £32,457 (2013: loss £853,850). Revenue has increased by 13% to £2.7m (2013: £2.4m) with cost of sales increasing by 1.47% £1.9m (2013:1.88m). This has resulted in a Gross Profit for the period of £832,638 (2013: £529,852).

The increase in sales has resulted from the operations in Tanzania and an increase in activity in the Industrial division. Sales in Malta have again remained in line with last year due to the operational change of our major customer.

Over the period, the company has continued to review and reduce administrative costs and that is reflected in the accounts £867,429 (2013: £930,389). Income from investments and other activities including exchange gains contributed to £264,647 (2013: loss £329,690) for the period.

As previously been reported, the decision to sell our Mikumi Wildlife camp to a third party was taken and we entered into a conditional sale agreement. During the period we received a deposit from the purchaser and we are hopeful that the sale process will be completed by the end of the current financial year.

Finance costs have increased over the period by 43% £224,406 (2013: £156,880), which is primarily due to the increase in finance charges in Tanzania. Phase III, the final building of the development in Dar-es-salaam, has now been completed and the increases in the finance charges are due to the restructuring and formalisation of the external and internal loans.

UK Operations

Bailey Industrial Engineering based in Newport, South Wales, is the Group's specialist heavy engineering operation. Last year 2013, the company saw a steep downturn in orders of some 30% but I am pleased to report that for the current year 2014, sales are returning to sustainable levels.

We have seen past clients return to use our services and we have had success in attracting business from new markets, which we hope will continue and we are cautiously optimistic for the future of this division.

Tanzania

We have seen a downturn in sales at Beho Beho by some 15% due to the reaction to the Ebola outbreak in West Africa whilst no outbreak has been reported in Tanzania. Overall the safari business in East Africa has been affected with some reports of a drop of 40% on last year. The Oyster Bay hotel has not been affected and sales and occupancy rates have increased. The Oyster Bay Hotel s still No 1 in Dar-es-salaam on Trip Advisor and recently gained prominent recognition in Forbes and the SWISS airlines magazines.

As reported in my interim statement of 2013, our serviced offices and retail space in Dar-es-salaam remains fully let and the construction of the final phase (phase III) of serviced accommodation and offices has now been completed. The revenue from this new property has started to filter through into the financial figures and they will further impact on the full year's accounts.

Malta

Sales in our hotel in Malta have remained flat due to the forthcoming sale of the assets which has impacted on the operational activities of our major customer who changed the type of programme at the hotel. We believe that the second part of the sale is on track and will be completed in March 2015 as agreed. Following the sale, the existing hotel operations will cease.

The group is investigating other investment opportunities in Malta as and when they arise. Malta continues to receive more global recognition and is seen as the Southern boundary of the EU, with Valletta becoming the Cultural capital of the EU in 2018, Malta taking over the EU presidency and its growing importance as a recognised global financial centre.

Outlook

As previously stated we continue to put in place measures to control costs whilst being vigilant about maintaining high levels of client service. We are conscious that there are difficult market conditions associated with the countries and sectors in which the Group operates in and so sales are always difficult to increase in the short term and require a team effort to achieve increases in sustainable markets.

We believe that the strategies put in place to diversify our revenue streams are beginning to bear fruit. We have seen during this period a return to profits for which I would like to thank everybody within the Group for their efforts.

Your Group is a diverse group of international businesses, with investments and operations in leisure, property and engineering with its current key markets being Tanzania, Malta and the UK. I am confident that the Group is well placed in the countries and sectors in which we operate to consolidate its position in order to offer a platform for growth.

Charles Bailey

18 December 2014

C.H. Bailey plc

Consolidated Income Statement

for the six months ended 30 September 2014 (unaudited)

C.H. Bailey plc

Consolidated Statement of

Comprehensive Total Income

for the six months ended 30 September 2014 (unaudited)

C.H. Bailey plc

Consolidated Balance Sheet

as at 30 September 2014 (unaudited)

C.H. Bailey plc

Consolidated Cash Flow Statement

for the six months ended 30 September 2014 (unaudited)

Consolidated Statement of Changes in Equity

for the six months ended 30 September 2014

.

C.H. Bailey plc

Notes to the Consolidated Interim Financial Statements

for the six months ended 30 September 2014 (unaudited)

1. General information

Legal status and country of incorporation

C. H. Bailey plc, company number 190106, is incorporated in England and Wales under the Companies Act 2006.

Basis of preparation

These interim financial statements have been prepared in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as adopted by the European Union and with the Companies Act 2006. Therefore these financial statements comply with the AIM rules.

The interim financial statements are prepared using the historical cost basis of accounting except for:

· Properties held at the date of transition to IFRS which are stated at deemed cost; and

· Assets held for sales which are stated at the lower of fair value less anticipated disposal costs and carrying value.

Going concern

The directors have prepared these financial statements on the fundamental assumption that the group is a going concern and will continue to trade for at least 12 months following the date of approval of the financial statements.

Accounting period

The current period is for the six months ended 30 September 2014 and the comparative period is for the six months ended 30 September 2013.

Functional and presentational currency

The financial statements are presented in pounds sterling because that is the functional currency of the primary economic environment in which the group operates.

2. Significant accounting policies

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its subsidiaries) made up to 30 September 2014. Control is achieved where the company has the power to govern the financial and operating policies of an investee so as to obtain benefits from its activities.

Minority interests in the net assets of consolidated subsidiaries are identified separately from the group's equity therein. Minority interests consist of the amount of those interests at the date of the original business combination (see below) and the minority's share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority's interest in the subsidiary's equity are allocated against the interests of the group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Business combinations and goodwill

The acquisition of subsidiaries is accounted for using the acquisition method. The assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at their acquisition date except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 which are recognised and measured at fair value less costs to sell. Any excess of the cost over the asset valuation as calculated above is recognised as goodwill.

Goodwill arising on consolidation represents the excess of consideration over the group's interest in the fair value of identified assets, liabilities and contingent liabilities recognised. Goodwill is recognised as an asset and is not amortised. It is reviewed for impairment annually as detailed in "impairment of non-financial assets" below.

In accordance with the options that are available under IFRS 1 on transition to IFRS, the group elected not to apply IFRS 3 retrospectively to past business combinations that occurred before the date of transition to IFRS.

Accordingly goodwill that had previously been offset against reserves under UK GAAP has not been recognised in the opening IFRS balance sheet. The interest of any minority shareholders in the acquiree is initially measured at the minority's proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

Investments in associates and trade investments

The results of entities over which the group is not in a position to be able to exercise significant influence despite holding a significant shareholding are not accounted for as associates and therefore are not equity accounted. The companies are classified as trade investments and are carried as available for sale financial assets which are measured at cost, as the directors consider that fair value cannot be reliably measured, other than impairment losses which are recognised in the income statement. Dividend income is recognised in the income statement on a cash basis when received.

Property, plant and equipment

Property is carried at deemed cost at the date of transition to IFRS based on the previous UK GAAP valuations. Plant and equipment held at the date of transition and subsequent additions to property, plant and equipment are stated at purchase cost including directly attributable costs. The group does not have a revaluation policy. Freehold land is not depreciated. Depreciation of other property, plant and equipment is provided on a straight line basis using rates calculated to write down the cost of each asset over its estimated useful life as follows:

Property:

Freehold buildings 1%

Leasehold buildings Period of the lease

Plant and equipment Between 10% and 25%

Annual reviews are made of estimated useful lives and material residual values.

Lessee accounting

Initial rental payments in respect of operating leases are included in current and non-current assets as appropriate and amortised to the income statement over the period of the lease. Ongoing rental payments are charged as an expense in the income statement on a straight line basis until the date of the next rent review. Finance leases are capitalised and depreciated in accordance with the accounting policy for property, plant and equipment. As permitted by IFRS 1 at the date of transition to IFRS, the carrying value of long leasehold properties are based on the previous UK GAAP valuations and this has been taken as deemed cost. Rental costs arising from operating leases are charged as an expense in the income statement on a straight line basis over the period of the lease.

Non-current assets held for sale

Non-current assets are reclassified as assets held for sale if they are immediately available for sale in their current condition and their carrying value will be recovered through a sale transaction on which is highly probable to be completed within 12 months of the initial classification. Assets held for sale are valued at the lower of carrying value at the date of initial classification and fair value less costs to sell.

Impairment of non-financial assets

Goodwill is tested annually for impairment or more frequently if there are any changes in circumstances or events that indicate that a potential impairment may exist. Goodwill impairments cannot be reversed. Property, plant and equipment are reviewed for indications of impairment when events or changes in circumstances indicate that the carrying amount may not be recovered. If there are indications then a test is performed on the asset affected to assess its recoverable amount against carrying value. An asset impaired is written down to the higher of value in use or its fair value less cost to sell.

Deferred and current taxation

The charge for taxation is based on the taxable profit or loss for the year and takes into account taxation deferred because of differences between the treatment of certain items for taxation and for accounting purposes. Full provision is made for the tax effects of these differences. Deferred tax is provided on unremitted earnings from overseas subsidiaries where it is probable that these earnings will be remitted to the UK in the foreseeable future. Deferred tax is measured using tax rates that have been enacted, or substantively enacted, by the year end balance sheet date. The measurement of deferred tax reflects the tax consequences that would follow the manner in which the group expects, at the end of the reporting period, to recover or settle the carrying value of its assets and liabilities. Deferred tax assets and liabilities are not discounted.

The carrying amount of the deferred tax assets is reviewed at each reporting balance sheet date to ensure that it is probable that sufficient taxable profits will be available to allow the asset to be recovered. Assets and liabilities, in respect of both deferred and current tax, are only offset when there is a legally enforceable right to offset and the assets and liabilities relate to taxes levied by the same taxation authority.

Deferred and current tax is charged or credited in the income statement except when it relates to items charged directly to equity in which case the associated tax is also dealt with in equity.

Stocks

Stocks are valued at the lower cost of purchase and net realisable value. Cost comprises actual purchase price and, where applicable, associated direct costs incurred bringing the stock to its present location and condition. Net realisable value is based on estimated selling price less further costs expected to be incurred to completion and disposal. Provision is made for obsolete, slow moving or defective items where appropriate.

Financial instruments

Financial assets and financial liabilities are recognised on the consolidated balance sheet when the group becomes a party to the contractual provisions of the instrument.

Financial assets are recognised and derecognised on a trade date where the purchase or sale of an asset is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned. Financial assets are classified as "loans and receivables", "held to maturity" investments, "available for sale" investments or "assets at fair value through the profit and loss" depending upon the nature and purpose of the financial asset. The classification is determined at the time of the initial recognition.

Financial assets are normally classified as "loans and receivables" and are initially measured at fair value including transaction costs incurred. The only financial assets currently held at "fair value through profit or loss" are the current asset investments.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. Financial liabilities are normally classified as "other financial liabilities" and are initially measured at fair value, normally cost, net of transaction costs.

Loans and receivables

Trade receivables, loans and other receivables are measured on initial recognition at fair value and, except for short term receivables where the recognition of interest would be immaterial, are subsequently re-measured at amortised cost using the effective interest rate method. Allowances for irrecoverable amounts, which are dealt with in the income statement, are calculated based on the difference between the asset's carrying amount and the present value of estimated future cash flows, calculated based on past default experience, discounted at the effective interest rate computed at initial recognition where material.

Derivative financial instruments and hedge accounting

The group's borrowing is subject to floating interest rates based on LIBOR plus the most competitive margin available. The group's policy is not to hedge its international assets with respect to foreign currency balance sheet translation exposure, nor against foreign currency transactions. The group generally does not enter into any forward exchange contracts and it does not use financial instruments for speculative purposes. Derivative financial instruments are initially measured at cost and are remeasured at fair value at the balance sheet date. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income statement as they arise.

Cash and cash equivalents

Cash and cash equivalents includes cash-in-hand, cash at bank and short term highly liquid investments that are readily convertible into known amounts of cash within three months from the date of initial acquisition with an insignificant risk of a change in value.

Impairment of financial assets

Financial assets, other than those designated as "assets at fair value through the profit and loss" are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, the estimated future cash flows of the investment have been impacted.

Other financial liabilities

Other financial liabilities, including trade payables, are measured on initial recognition at fair value and, except for short term payables where the recognition of interest would be immaterial, are subsequently re-measured at amortised cost using the effective interest rate method.

Bank loans

Interest bearing bank loans are recorded at the proceeds received less capital repayments made. Finance charges are accounted for on an accruals basis in the profit and loss account using the effective interest rate method. They are included within accruals to the extent that they are not settled in the period in which they arise.

Provisions

Provisions are created where the group has a present obligation (legal or constructive) as a result of a past event where it is probable that the group will be required to settle that obligation. Provisions are measured at the directors' best estimate of the expenditure required to settle the obligation at the balance sheet date. Provisions are only discounted to present value where the effect is material.

Net debt

Net debt is defined as cash and cash equivalents, bank and other loans including finance lease obligations and derivative financial instruments stated at current fair value.

Revenue recognition

Revenue

Revenue represents the fair value of the consideration received and receivable for services provided and goods supplied to third party customers. In respect of long term contracts and contracts for on-going services, revenue is recognised as the contract progresses on the basis of work completed. Revenue excludes value added tax.

Investment and interest income

Dividend income is recognised in the income statement when the shareholder's right to receive payment has been established. Interest income from bank deposit accounts is accrued on a time basis calculated by reference to the principal on deposit and effective interest rate applicable.

Foreign currencies

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated into pounds sterling at the financial reporting year end rates. Non monetary items that are measured in terms of historical cost in a foreign currency are not re-translated. The results of overseas subsidiary undertakings, associates and trade investments are translated into pounds sterling at average rates for the year unless exchange rates fluctuate significantly during that year in which case exchange rates at the date of transactions are used.

The closing balance sheets are translated at the year end rates and the exchange differences arising are transferred to the group's translation reserve as a separate component of equity and are reported within the consolidated statement of changes in equity. All other exchange differences are included within the consolidated income statement in the year. In accordance with IFRS 1, the translation reserve has been set to zero at the date of transition to IFRS.

Operating profit

Operating profit is defined as the profit for the year from continuing operations after all operating costs and income but before finance income, finance costs, and taxation. Operating profit is disclosed as a separate line on the face of the income statement.

Normalised operating profit is the same as the above but excludes non-recurring items, for example profit on the sale of property. Normalised operating profit is reconciled to operating profit on the face of the income statement.

Other gains and losses

Other gains and losses are material items that arise from unusual non-recurring events. They are disclosed separately, in aggregate, on the face of the income statement after operating profit where, in the opinion of the directors, such disclosure is necessary in order to fairly present the results for the financial period.

Finance costs

Finance costs are recognised in the income statement on the accruals basis in the year in which they are incurred.

3. Segmental information

4. Earnings (loss) per share

The earnings per share has been calculated by reference to the weighted average number of ordinary shares of 10p each in issue of 7,607,755 (2013: 7,607,755) which excludes own shares held. The share options in issue have no dilutive effect on the weighted average number of ordinary shares.

5. Called-up share capital

The company retains as treasury shares 727,658 ordinary shares of 10 pence at a cost of £960,509. The company did not buy back any shares for cancellation during the year. At 30 September 2014, the company has one class of ordinary shares, which carry no right to fixed income.

6. Cash generated from operations

7. Analysis of net funds (debt)

8. Significant investment in subsidiaries

C.H. Bailey plc

Shareholder Information