Interim Results
Camellia PLC
28 September 2005
Camellia Plc
Interim report 2005
Chairman's statement
The pre-tax profit from continuing operations of £2,455,000 for the six months
to the 30 June 2005 compares with a profit of £710,000 for the same period last
year. Results for the half year include nearly £8 million of profits before tax
on disposal of assets and discontinued operations.
The board has declared an interim dividend of 20p per ordinary share payable on
8 November 2005 to shareholders on the register on 14 October 2005.
The company has adopted International Financial Reporting Standards (IFRS) for
its 2005 group accounts as required by European Union Regulations.
The impact of adopting IFRS has been to increase equity shareholders' funds at 1
January 2004 from £186.08 million to £193.86 million. The main reasons are the
increase of £13.84 million in investments to reflect their fair value, the
increase of £5.59 million arising on the treatment of biological assets and the
inclusion of net pension scheme deficits of £11.45 million, the latter two
amounts being after provision for deferred tax. Other significant changes arise
from the provision of £3.50 million deferred tax liability on the share of
distributable reserves of our associate Siegfried Holding AG and an increase in
reserves of £2.90 million on release of negative goodwill.
A summary of the movements from UK Generally Accepted Accounting Practice (UK
GAAP) to IFRS is shown in note 11 to the Interim Statement and in the appendix.
Tea
India
Production is marginally ahead of last year but prices are about 15% lower. Our
tea operations in the Dooars have recently experienced a two week strike that
affected the entire region which, although now settled, will have an adverse
impact on production and profitability for the second half of the year. The
emphasis in India continues to be the policy of producing the highest quality
product possible. The market for orthodox teas continues to be poor because of
low demand from traditional markets.
Bangladesh
Production is 10% ahead of last year and prices have also increased resulting in
a considerably reduced loss for the first six months of the year. The prospects
for Bangladesh appear to be encouraging.
Africa
Tea production in Kenya has been slightly ahead of the levels achieved in 2004,
however prices have fallen by 25 US cents per kg compared with the same period
last year. This fall, combined with a relatively strong Kenyan shilling, has
resulted in disappointing results from our Kenyan operations which made a loss
in the first half of the year.
Production in Malawi is at the same levels as last year, and the fall in prices
has not been so marked. This, together with the impact of a weakening Malawi
kwacha, has resulted in satisfactory profits being achieved. The outlook for the
second half of the year is less clear as the rains received since February are
well below average, and if this trend continues will result in reduced
production levels. In South Africa, where the tea estates were closed last year,
some progress has been made in disposing of plant and machinery. Discussions
continue concerning the disposal of the land assets, but this is likely to be a
long and tortuous exercise.
Citrus
As previously reported, we disposed of our citrus interests in Australia through
the sale of our 70% shareholding in East African Coffee Plantations in March
2005. Our citrus operations in Chile and South Africa both experienced inclement
climatic conditions resulting in a low pack-out for export. The operation in
California is progressing well as the orchards mature.
Edible nuts
This will be an 'off' year for our pistachio production resulting in a
negligible crop. The prospects for the harvest of macadamia nuts in Malawi and
South Africa are encouraging and the crop will be well in excess of last year.
Prices have also been very good although there is some recent evidence of levels
weakening. The orchards in both Malawi and South Africa are currently
experiencing extremely dry conditions, if these continue they may impact on
flowering and fruit set for the 2006 crop.
Other horticulture
Table grape production in South Africa was greatly reduced with a significant
lack of weight in each bunch. Exports were therefore 50% below last year and
this, coupled with weak prices and a strong rand, has resulted in very
disappointing results. Wine grape production was satisfactory both in South
Africa and Chile, but the wine market continues to be very competitive. The
Kakuzi avocado crop appears to be in line with expectations and the building of
a new packing shed has commenced. In Brazil, soya prices have declined
substantially and the exceptional profits over the last two years will not be
repeated this year. In Bangladesh, rubber production continues to increase and
prices are remunerative showing a good improvement over the same period last
year.
Food storage and distribution
Associated Cold Stores & Transport experienced a most unsatisfactory first six
months. Occupancy level in the cold stores was low and the transport operations
suffered from a lack of demand from their major customers. Considerable effort
continues to be devoted to reducing costs. There has been a modest increase in
activity over the last month.
Engineering
Our UK engineering operations are performing ahead of expectations and the
previous year. Most of our operations are busy particularly as a result of
higher activity in the oil industry but margins are continually under pressure.
Banking
The acquisition of Douglas Deakin Young by Duncan Lawrie has had a positive
impact on profits, and their contribution is ahead of expectations. The
prospects for our banking operations remain encouraging.
Pharmaceutical
Although Siegfried's sales revenues for the six months have reduced by 14.8%
compared to 2004, it appears that the considerable restructuring costs incurred
last year are beginning to show a positive benefit. Siegfried is expected to
return to growth during the second half of 2005.
Other associated undertakings
In Bangladesh profitability of both the United Leasing Company and of the United
Insurance Company continues to be satisfactory.
Prospects
The prospects for the group are somewhat clouded by the uncertainties in Kenya
and the poor trading results at Associated Cold Stores & Transport but progress
is being made in returning our engineering operations to profitability. It is
difficult to make any prediction as to the outcome for the full year.
M C Perkins Linton Park
Chairman Linton
Near Maidstone
28 September 2005 Kent ME17 4AB
Consolidated income statement
for the six months ended 30 June 2005
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Notes £'000 £'000 £'000
Continuing operations
Revenue 2 65,930 66,788 149,676
====== ====== =======
Trading (loss)/profit 2 (2,864) (2,938) 3,625
(Loss)/gain arising from changes
in fair value of biological assets (72) 428 1,722
Share of associates' results 3 2,343 2,382 2,924
Profit on disposal of non-current
assets 448 61 1,283
Profit on disposal of
'available-for-sale' investments 1,970 681 695
Profit on part disposal of a
subsidiary 4 795 - -
Profit on part disposal of an
associate - 38 121
Restructuring costs and negative
goodwill 5 - 304 (1,634)
------ ------ ------
Profit from operations 2,620 956 8,736
Investment income 1,415 1,419 2,105
Net finance costs (1,580) (1,665) (2,824)
------- ------ -------
Profit before tax 2,455 710 8,017
Taxation (345) 1,254 (2,486)
------ ----- -------
Profit for the period from
continuing operations 2,110 1,964 5,531
Discontinued operations
Profit/(loss) for the period
from discontinued operations 6 3,058 (799) 1,371
----- ----- -----
Profit for the period 5,168 1,165 6,902
===== ===== =====
Profit attributable to minority
interests 941 400 792
Profit attributable to equity
shareholders' 4,227 765 6,110
----- ----- -----
5,168 1,165 6,902
===== ===== =====
Earnings per share - basic and
diluted 7 166.9p 30.2p 241.2p
Consolidated balance sheet
at 30 June 2005
30 June 30 June 31 December
2005 2004 2004
£'000 £'000 £'000
Non-current assets
Intangible assets 5,766 1,521 1,516
Property, plant and equipment 80,623 95,575 83,252
Biological assets 77,409 80,937 79,646
Prepaid operating leases 968 920 876
Investments in associates 61,263 61,610 62,050
Deferred tax assets 5,080 5,323 4,100
Available-for-sale investments 45,216 40,118 43,367
Retirement benefit surplus 2,430 2,260 2,120
Trade and other receivables 148 108 756
------- ------- -------
278,903 288,372 277,683
======= ======= =======
Current assets
Inventories 20,290 20,172 20,918
Trade and other receivables 56,271 53,426 53,057
Assets held for resale - - 11,157
Cash and cash equivalents (note 10) 175,045 152,388 150,906
------- ------- -------
251,606 225,986 236,038
======= ======= =======
Current liabilities
Borrowings (23,186) (31,422) (28,282)
Trade and other payables (198,266) (171,270) (166,100)
Deferred income from anticipated sale - - (3,591)
Current income tax liabilities (2,162) (1,172) (3,214)
Provisions (1,086) - (436)
------- ------- -------
(224,700) (203,864) (201,623)
------- ------- -------
Net current assets 26,906 22,122 34,415
------- ------- -------
Total assets less current liabilities 305,809 310,494 312,098
Non-current liabilities
Borrowings (11,730) (23,285) (20,541)
Deferred tax liabilities (30,105) (29,348) (29,441)
Retirement benefit obligations (30,312) (23,228) (27,141)
Other non-current liabilities (543) (500) (436)
Provisions (38) - (113)
------- ------- -------
(72,728) (76,361) (77,672)
------- ------- -------
Net assets 233,081 234,133 234,426
======= ======= =======
Capital and reserves
Called up share capital 260 260 260
Reserves 192,325 186,852 189,225
------- ------- -------
Equity shareholders' funds 192,585 187,112 189,485
Minority interests 40,496 47,021 44,941
------- ------- -------
233,081 234,133 234,426
======= ======= =======
Consolidated cash flow statement
for the six months ended 30 June 2005
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Notes £'000 £'000 £'000
Cash generated from operations
Cash flows from operating
activities 8 2,626 982 11,475
Interest paid (1,580) (1,892) (2,785)
Income taxes paid (770) (298) (2,552)
Interest received 542 649 265
Dividends received from associates 1,530 2,202 2,149
----- ----- -----
Net cash flow from continuing
operating activities 2,348 1,643 8,552
Net cash flow from discontinued
operating activities (2,083) (1,599) 6,330
----- ----- -----
Net cash flow from operating activities 265 44 14,882
Cash flows from investing activities
Purchase of intangible assets (24) (36) (70)
Purchase of property, plant and
equipment (2,022) (2,615) (5,328)
Proceeds from sale of non-current
assets 1,490 323 2,244
Disposal of subsidiaries/businesses
(net of cash disposed) 12,883 540 540
Part disposal of a subsidiary 1,673 - -
Acquisition of subsidiary (net of
cash acquired) (4,393) - (108)
Purchase of minority interests - (478) (482)
Proceeds from sale of shares in
associates - - 1,075
Proceeds from sale of investments 2,595 1,788 2,589
Purchase of investments (299) (619) (3,579)
Income from investments 873 876 1,374
Net cash flow from discontinued
operations (1,095) (455) (725)
------ ----- -----
Net cash flow from investing activities 11,681 (676) (2,470)
Cash flows from financing activities
Equity dividends paid - - (2,258)
Dividends paid to minority interests (1,617) (707) (1,871)
Net repayment of debt (8,458) (1,320) (5,328)
Purchase of own shares - (16) (16)
Net cash flow from discontinued
operations - 1,121 (3,879)
Net cash flow from financing activities (10,075) (922) (13,352)
------ ----- ------
Net increase/(decrease) in cash and cash
equivalents 9 1,871 (1,554) (940)
Cash and cash equivalents at
beginning of period (10,619) (9,946) (9,946)
Exchange (losses)/gains on cash (180) (145) 267
------ ----- ------
Cash and cash equivalents at end
of period (8,928) (11,645) (10,619)
====== ====== ======
For the purposes of the cash flow statement, cash and cash equivalents are
included net of overdrafts repayable on demand. These overdrafts are excluded
from the definition of cash and cash equivalents disclosed on the balance sheet.
Statement of recognised income and expense
for the six months ended 30 June 2005
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
£'000 £'000 £'000
Foreign exchange translation differences 3,940 (4,246) (7,470)
Actuarial movement on defined benefit
pension schemes (2,704) (3,246) (8,190)
Movement on deferred tax relating to
defined benefit pension schemes (51) (368) (627)
Available-for-sale investments:
Valuation gains taken to equity 1,011 2,687 5,021
Transferred to profit or loss on sale (1,191) (669) (669)
Share of associate's fair value adjustments (32) - 169
Share of associate's loss on cash flow
hedges (632) - -
----- ----- ------
Net income/(expense) recognised directly
in equity 341 (5,842) (11,766)
Profit for the period 5,168 1,165 6,902
----- ----- ------
Total recognised income and expense for
the period 5,509 (4,677) (4,864)
===== ===== ======
Attributable to:
Minority interests 644 319 (2,760)
Equity shareholders' 4,865 (4,996) (2,104)
----- ----- ------
5,509 (4,677) (4,864)
===== ===== ======
Statement of changes in shareholders' equity
for the six months ended 30 June 2005
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
£'000 £'000 £'000
Profit attributable to equity shareholders 4,227 765 6,110
Dividends (1,765) (1,739) (2,258)
Foreign exchange translation differences 3,659 (4,210) (6,027)
Actuarial movement on defined benefit
pension schemes (2,250) (2,407) (6,246)
Movement on deferred tax relating to
defined benefit pension schemes (51) (291) (462)
Available-for-sale investments:
Valuation gains taken to equity 995 1,816 5,021
Transferred to profit or loss on sale (1,191) (669) (669)
Share of associate's fair value adjustments (24) - 169
Share of associate's loss on cash flow hedges (500) - -
Purchase of own shares - (16) (16)
------- ------- -------
Net movement in shareholders' equity 3,100 (6,751) (4,378)
------- -------
Opening shareholders' equity (as
previously reported under UK GAAP) 186,482 186,482
Prior year adjustment (400) (400)
------- -------
186,082 186,082
Adjustments on adoption of IFRS (note 11) 7,781 7,781
------- -------
Opening shareholders' equity restated 189,485 193,863 193,863
------- ------- -------
Closing shareholders' equity 192,585 187,112 189,485
======= ======= =======
The prior year adjustment of £400,000 reflects the cost of 62,500 Camellia Plc
shares held by its own subsidiaries. These were previously included within
available-for-sale investments.
Notes to the accounts
1 Basis of preparation
The group adopted International Financial Reporting Standards (IFRS) on 1
January 2005 and therefore the financial information contained within the
interim report has been prepared on the basis of the recognition and measurement
requirements of IFRS in issue that either are endorsed by the EU and effective
(or available for early adoption) at 30 June 2005 or are expected to be endorsed
and effective at 31 December 2005, the group's first annual reporting date at
which it is required to use IFRS. It should be noted that the IFRS that will be
effective in the annual financial statements for the year ending 31 December
2005 are still subject to change and to additional interpretations and therefore
cannot be determined with certainty.
Details of accounting policies adopted under IFRS and applied in the preparation
of the interim financial statements and reconciliations of comparative figures
between UK GAAP and IFRS have been included in the appendix. These
reconciliations are unaudited.
The group has not adopted International Accounting Standard (IAS) 34 'Interim
Financial Reporting' in these interim financial statements. This standard is not
mandatory.
The financial information contained in this report has not been audited and does
not constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985. The statutory accounts for 2004, which were prepared under
UK GAAP, have been delivered to the Registrar of Companies. The auditors'
opinion on these accounts was unqualified and does not contain a statement made
under Section 237(2) and Section 237(3) of the Companies Act 1985.
2 Segmental analysis of revenue and trading (loss)/profit
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
£'000 £'000 £'000
Revenue
By activity
Agriculture and horticulture 36,746 40,035 92,650
Food storage and distribution 19,016 20,059 42,007
Engineering 9,705 6,172 13,684
Trading, agency and others 463 522 1,335
------ ------ -------
65,930 66,788 149,676
====== ====== =======
By country of origin
United Kingdom 24,157 21,843 46,764
Continental Europe 4,918 4,576 9,932
India 11,557 9,332 32,159
Kenya 8,948 10,533 22,923
Malawi 7,923 7,536 11,438
Bangladesh 2,974 2,989 7,656
United States of America 252 188 1,468
South Africa 2,830 7,085 14,025
South America 2,371 2,706 3,311
------ ------ -------
65,930 66,788 149,676
====== ====== =======
Trading (loss)/profit
By activity
Agriculture and horticulture (1,204) (436) 7,831
Food storage and distribution (755) (152) (682)
Engineering 458 (893) (582)
Trading, agency and others 562 809 478
Banking 597 448 721
------ ------ ------
(342) (224) 7,766
Net unallocated expenses (2,522) (2,714) (4,141)
------ ------ ------
(2,864) (2,938) 3,625
By country of origin
United Kingdom 883 226 (145)
Continental Europe (30) (35) 22
India (3,644) (3,787) 1,708
Kenya (563) 676 2,775
Malawi 2,928 2,671 3,325
Bangladesh 31 (375) 1,654
United States of America 93 75 984
South Africa (106) (469) (3,402)
South America 66 794 845
------ ------ -----
(342) (224) 7,766
====== ====== ======
3 Share of associates' results
The group's share of the results of associates is analysed below:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
£'000 £'000 £'000
Operating profit 2,823 3,143 4,216
Investment income 14 3 47
Net finance costs 113 (239) (551)
----- ----- -----
Profit before tax 2,950 2,907 3,712
Taxation (607) (525) (788)
----- ----- -----
Profit after tax 2,343 2,382 2,924
===== ===== =====
By activity
Pharmaceutical 2,221 2,217 2,330
Agriculture and horticulture (28) (84) 8
Leasing and Insurance 150 249 586
----- ----- -----
2,343 2,382 2,924
===== ===== =====
4 Profit on part disposal of a subsidiary
A profit of £795,000 was realised following completion of the sale of 1,673,000
ordinary shares (8 per cent.) in Linton Park Plc's subsidiary, Eastern Produce
Kenya Limited. The group's holding is now 70.0 per cent.. The cash consideration
was £1,673,000.
5 Restructuring costs and negative goodwill
The restructuring costs and negative goodwill credit in 2004 related to the
closure of the group's tea operations in South Africa and closure costs relating
to the Birmingham division of British Metal Treatments Limited.
6 Discontinued operations
In March 2005, Linton Park Plc disposed of its 70.5 per cent. holding in East
African Coffee Plantations Limited (EACP), as a result the revenue and results
of the EACP group have been excluded from the income statement and are recorded
in a single line on a post-tax basis.
A breakdown of the results of discontinued operations is shown below:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
£'000 £'000 £'000
Revenue 3,373 7,071 29,231
===== ===== ======
Operating (loss)/profit (499) (962) 2,300
Investment income 69 - -
Finance costs (50) (173) (331)
----- ----- -----
(Loss)/profit before tax (480) (1,135) 1,969
Taxation - 336 (598)
----- ----- -----
(Loss)/profit after tax (480) (799) 1,371
----- ----- -----
Profit on disposal of discontinued
operations 5,167 - -
Taxation in relation to disposal (1,629) - -
----- ----- -----
Profit/(loss) for the period from
discontinued operations 3,058 (799) 1,371
===== ===== =====
7 Earnings per share
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Earnings per share - continuing operations
Earnings per share - basic and diluted 64.7p 53.4p 217.8p
Earnings/(loss) per share - discontinued operations
Earnings/(loss) per share - basic and
diluted 102.2p (23.2)p 23.4p
The weighted average number of shares used in the calculation of both basic and
diluted earnings per share is 2,532,500 (2004: six months 2,532,809 - year
2,532,653).
8 Reconciliation of profit from operations to cash flow
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
£'000 £'000 £'000
Profit from operations 2,620 956 8,736
Share of associates' results (2,343) (2,382) (2,924)
Depreciation and amortisation 3,817 3,682 7,365
Impairment of fixed assets - - 1,254
Loss/(gain) arising from changes in fair
value of biological assets 72 (428) (1,722)
Profit on disposal of non-current assets (448) (24) (1,278)
Profit on part disposal of a subsidiary (795) - -
Profit on disposal of investments (1,970) (681) (695)
Profit on part disposal of an associate - (38) (121)
Restructuring costs and negative goodwill - (304) 1,634
Increase in working capital (1,217) (364) (9,495)
Net decrease in funds of banking
subsidiaries 2,890 565 8,721
----- ----- ------
2,626 982 11,475
===== ===== ======
9 Reconciliation of net cash flow to movement in net debt
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
£'000 £'000 £'000
Increase/(decrease) in cash and cash
equivalents in the period 1,871 (1,554) (940)
Cash outflow from decrease in debt 8,458 200 9,207
------ ------ ------
Decrease/(increase) in net debt
resulting from cash flows 10,329 (1,354) 8,267
Finance lease balances of business acquired - - (19)
Loans of subsidiaries sold 2,002 - -
New finance leases (188) (258) (1,332)
Exchange rate movements (210) 647 716
------ ------ ------
Decrease/(increase) in net debt in the
period 11,933 (965) 7,632
Net debt at beginning of period (36,128) (43,760) (43,760)
------ ------ ------
Net debt at end of period (24,195) (44,725) (36,128)
====== ====== ======
10 Cash and cash equivalents
Included in cash and cash equivalents of £175,045,000 (2004: six months
£152,388,000 - year £150,906,000) are cash and short-term funds, time deposits
with banks and building societies and certificates of deposit amounting to
£164,324,000 (2004: six months £142,407,000 - year £138,228,000), which are held
by banking subsidiaries and which are an integral part of the banking operations
of the group.
11 Adjustments on adoption of IFRS
On adoption of IFRS, the book value of the group's shareholders' equity
increased. The following table explains the increase of £7,781,000 as at 1
January 2004.
£'000
Biological assets 5,587
IAS 41 - Agriculture: Requires the group to fair value its biological
assets.
Pension liability (11,453)
IAS 19 (revised) - Employee benefits: Requires any surplus or deficit in the
fair value of the group's pension schemes assets over their liabilities to be
recognised in the balance sheet.
Leases (1,611)
IAS 17 - Leases: Requires leases to be reclassified subject to their
classification, in particular the requirement to treat leased land as an
operating lease.
Available-for-sale investments 13,840
IAS 39 - Financial Instruments: Requires the group to fair value its
available-for-sale investments.
Goodwill 2,902
IFRS 3 - Business combinations: Requires the credit of previously recognised
negative goodwill.
Property valuation 591
IFRS 1 - First time adoption of IFRS: Permits certain properties to be
recognised at their fair value.
Deferred tax (3,814)
IAS 12 - Income taxes: Requires deferred tax to be provided on all temporary
differences between accounting and tax book values, including the tax impact of
the potential distribution of associate's distributable reserves. The financial
impact of IAS 12 has been included in the adjustments above where appropriate.
Proposed dividend 1,739
IAS 10 - Events after the balance sheet date: Dividends that are declared after
the balance sheet date are not recognised as a liability at the balance sheet
date.
-----
7,781
=====
A copy of the full interim report including the appendix is available on the
company's website at www.camellia.plc.uk.
Press Enquiries: Malcolm Perkins, Chairman
Tel: 01622 746655
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