TIDMCAM
RNS Number : 0568A
Camellia PLC
25 September 2020
CAMELLIA PLC
INTERIM RESULTS
Camellia Plc (AIM:CAM) announces its interim results for the six
months ended 30 June 2020.
Malcolm Perkins, Chairman of Camellia, stated:
"As anticipated, the first half of 2020 has been exceptionally
challenging operationally. Oversupply of tea in Kenya and
disruption due to Covid-19 has impacted prices and hence the
profitability of our tea operations. The pandemic has also had a
direct impact on our engineering and food services businesses in
the UK.
Notwithstanding these challenges, we have made good strategic
progress with plans for our first significant investment in
Tanzania advancing well and the disposal of the Horizon Farm
property announced in August.
The Group is set up in a way that re ects our long-term
approach, with nancial stability and sustainability being at the
heart of our philosophy. We remain nancially strong, with signi
cant net cash, and have the resources to withstand both the current
trading environment and a period of disruption from Covid-19,
whilst continuing to invest for the future. I am therefore pleased
to confirm a special dividend of 102p per share, equivalent to the
2019 postponed dividend. Given the continuing uncertainty,
dividends in respect of 2020 will be considered when the year is
complete.
Once again I should like to thank all our staff across the world
for their continuing contributions both to the business and their
local communities in extremely difficult circumstances."
Financial highlights
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2019 2019
2020
GBP'm GBP'm GBP'm
----------- -------------- -------------
Revenue - continuing operations 114.9 117.3 291.5
----------- -------------- -------------
Underlying (loss)/profit before
tax* (6.0) (4.1) 17.4
----------- -------------- -------------
Significant separately disclosed
items and provision releases (6.9) 8.0 4.9
----------- -------------- -------------
(Loss)/profit after tax for
the period (12.1) 3.6 15.1
----------- -------------- -------------
Net cash and cash equivalents
net of borrowings 72.8 80.6 82.5
----------- -------------- -------------
(Loss)/earnings per share (456.2)p 50.7p 300.5p
----------- -------------- -------------
Dividend per share for the
period 102p 42p 42p
----------- -------------- -------------
* Underlying profit before tax is profit before tax from
continuing operations excluding separately disclosed significant
items (eg provision releases, impairments, costs relating to legal
claims, profit on disposal of property)
-- Underlying loss before tax from continuing operations reflects
the poor tea prices in Bangladesh, Kenya and Malawi, the direct
impact of Covid-19 on the engineering and food services operations
and lower macadamia yields and prices
-- Impairments of GBP3.4m recognised on the Jing Tea brand and plant
and equipment at Abbey Metal Finishing and GBP3.5m of costs related
to legal claims were incurred in the period
-- The Group now expects to record an Underlying profit before tax
for the year
-- Group remains financially strong with net cash resources less
borrowings of GBP72.8 million and an investment portfolio with
a market value of GBP45.8 million at 30 June 2020
-- Payment of a special dividend of 102p per share on 7 November
2020 to shareholders registered at the close of business on 9
October 2020. Given the continuing uncertainty, the 2020 interim
dividend has been deferred and the overall dividend in respect
of 2020 will be considered when the year is complete
Strategic highlights
-- Sustained focus on production efficiencies and expense management
has helped contain costs
-- Sale of the Horizon Farm property, subject to conditions precedent,
for a gross cash consideration of $31m (Group share of proceeds
net of taxes estimated at $18.2 million (approximately GBP14.0
million) is expected to complete during Q4 2020. Estimated pre
tax gain on sale of $18.3 million (approximately GBP14.2 million)
will be reflected in 2020 full year results
-- Further progress made on geographic and crop diversification
and to secure water resources continues to mitigate climate impacts
and exposure to tea price
-- Continued commitment to ESG principles which remain core to Camellia
ethos
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
The interim report will be available to download from the
investor relations section of the Company's website
www.camellia.plc.uk
Enquiries:
Camellia Plc 01622 746655
Tom Franks, CEO
Susan Walker, CFO
Panmure Gordon 0207 886 2500
Nominated Advisor
and Broker
Emma Earl
Erik Anderson
Maitland/AMO
PR
William Clutterbuck 07785 292617
CHAIRMAN'S STATEMENT
It is disappointing to report a first half loss before tax of
GBP12.9 million (2019 H1: GBP3.9 million profit). The weakness in
global tea prices, the impact of extreme weather on our
agricultural production and costs related to legal claims have
taken their toll, whilst the impact of the Covid-19 pandemic has
also had a significant e ect. Lockdowns in our production areas and
the decimation of the aerospace, travel and hospitality industries
have both conspired to influence our half year figures
detrimentally and have required us to recognise an impairment on
some of our operations in those sectors.
The underlying loss before tax for the first half was GBP6.0
million (2019 H1: GBP4.1 million loss).
Dividend
At the time of the final results for 2019, we stated that we
would defer paying a final dividend given the need to preserve cash
in a fast changing situation, particularly in some of the emerging
markets in which we operate. Whilst the path of the virus continues
to evolve, we now have better visibility on the impact and the
Board is pleased to reinstate the final dividend in respect of 2019
by way of a special dividend of 102p per share payable on 7
November 2020 to shareholders registered at the close of business
on 9 October 2020 (2018: 102p). Given the continuing uncertainty,
the Board has decided to defer paying an interim dividend and will
consider the overall dividend in respect of 2020 when the year is
complete.
Strategic objectives
The Group takes a long-term strategic view as to the strategic
development of its businesses. The e ects of Covid-19, along with
the continuing impact of climate change has increased our scrutiny
of our portfolio of operations to ensure that they fit these
long-term goals.
As recently announced, we are in the process of selling our
California joint venture, Horizon Farms. We believe that the
long-term climate projections and the limited availability of water
to Horizon are of critical concern. Other strategic developments
are included in the Operating Review.
Outlook
We have previously stated that our full year results for 2020
would be substantially below those of 2019. This remains the case
due to the weakness of the tea price, particularly in Bangladesh,
Kenya and Malawi; the direct impact of Covid-19 on our engineering
and food service operations; the reduction in the macadamia crop
and prices; and legal costs. However, excluding legal costs,
impairments and before any profit on disposal of the Horizon Farm
property we expect to record an underlying profit before tax.
Camellia is financially strong and the demand for our agricultural
produce is enduring. Looking to the longer term, we remain
optimistic about the future for the Group.
People
Once again, I would like to thank all of our sta around the
world for their continuing e orts in extremely di cult
circumstances.
Malcolm Perkins
Chairman
24 September 2020
OPERATING REVIEW
COVID-19 AND TRADING UPDATE
People
First, I would like to reiterate our gratitude to all of our sta
around the world for their continuing support both within the
business but also for their help within the communities in which
they operate in what have been uniquely challenging times.
Trading
All our agricultural businesses continue to operate, albeit in
modified ways to take account of social distancing. The reach of
the virus continues to expand in certain of our operating
countries, including India and Bangladesh and so we continue to
monitor the situation very carefully and our operations provide
such support as they can to their staff and the local communities.
The impact of the virus on our markets and hence our businesses is
variable. As regards tea, the Indian market which is largely driven
by packet tea, has held up very well during lockdown but the
Bangladesh market, which relies heavily on hot tea stalls, has seen
a significant reduction in demand.
The macadamia market has su ered from reduced demand and
therefore lower prices, as orders from the food service and
hospitality industries have dried up, but the avocado market has
been largely una ected. In the UK all the businesses have seen a
significant impact on trading.
Additional detail on the first half results is set out
below.
Financial Position
The Group has a strong balance sheet with substantial liquidity
which amounted to GBP72.8 million in cash and cash equivalents net
of borrowings as at 30 June 2020 and we continue to conserve cash
wherever possible. In addition, our investment portfolio had a
market value of GBP45.8 million at 30 June 2020. Further detail on
going concern matters is set out in note 3 of the accounts.
FIRST HALF OPERATING RESULTS
Agriculture
Tea
Overall tea production in the first half was 42.0m Kg (H1 2019:
43.2m Kg) and prices continued to weaken, but di erent regions have
experienced markedly di erent conditions.
Full year
H1 2020 H1 2019 2019
Volume Volume Volume
mkg mkg mkg
India 6.7 10.4 32.1
Bangladesh 2.8 4.0 14.2
Kenya 7.9 5.0 12.1
Malawi 11.6 12.6 17.6
------- ------- ---------
Total own estates 29.0 32.0 76.0
Bought leaf production 10.4 9.2 21.1
Managed client production 2.6 2.0 4.3
------- ------- ---------
Total made tea produced 42.0 43.2 101.4
------- ------- ---------
India: Our own crop production was down by 36% but Bought Leaf
production was down by 62%, meaning that total production was down
43%. This was due to the closure of gardens imposed at the start of
the pandemic, the impact of cyclone Amphan and an unusually heavy
monsoon. In Darjeeling, most of the first flush teas were lost as a
result of lockdown.
Prices in the first quarter for old season teas in Dooars were
better than those of 2019, however lower prices were experienced
for Assam and Darjeeling teas in that period. As a result of the
shortage of teas countrywide caused by the pandemic, prices since
March have firmed significantly in Dooars, Assam and Cachar.
Overall our average prices in India were up 12% on H1 2019
prices.
Bangladesh: Our production was down 30% due to dry weather in
the early part of the season, in addition the closure of the hot
tea stall market due to the pandemic has significantly cut demand
and our average prices were down by 43% on the same period of last
year.
Kenya: Our production has been at record levels, up 58% on 2019,
and nationally Kenya also produced record volumes each month from
January to June. This was partly the result of favourable weather
conditions but of greater impact was the rapid expansion of the
smallholder sector where nationally volumes were up by 48%.
As a result of these very high volumes, prices have been under
significant pressure and our average selling price was 10% below
2019 levels for the same period. The low prices continue to have
political repercussions and a set of new regulations for the tea
sector has been released by the Kenyan Government, the implications
of which are still uncertain, but which it is hoped will restrain
production and improve prices.
Malawi: Production in Malawi was down on last year by 8% due to
the drier conditions experienced in the second quarter. Pricing has
also been under pressure, due to the huge volumes in Kenya, and was
4% down on the same period last year.
Macadamia
We estimate that our combined macadamia harvest will be
approximately 25% down on 2019 due to very hot dry weather in South
Africa and Malawi at the end of 2019 which a ected nut development.
South Africa was particularly hard hit down 57% on 2019 full year
volumes. The pandemic has resulted in reduced demand from China,
USA and the food service sector generally and therefore, despite
the reduction in volumes, prices are anticipated to be down 10% on
last year.
Avocado
Production volumes of our Hass crop in H1 were up 47% against
2019. The season is well underway and thus far logistics have
generally worked well despite the challenges presented by the
pandemic. We anticipate exported volumes for the full year to be
approximately 39% above 2019.
Hass prices in the market have been volatile and during June and
July they were impacted by the very large volumes of Peruvian fruit
arriving in the European market. Given available volumes and market
conditions the indications are that our full year average prices
for 2020 season Hass will be lower than those of 2019 but better
than those of 2018.
Speciality Crops
The speciality crops have generally had a good first half and
the following is worth noting:
-- In Brazil the soya crop was up 3%, driven by 9% higher dry
land yields. Prices achieved were up 4%, assisted in part by
the devaluing Real. Sorghum was planted as an alternative to
maize this year and the yield and price achieved have exceeded
expectations.
-- The USA has had an excellent citrus season with both the Murcott
and Navel crops exceeding 2019 for volumes and price. 2020
is an 'on' year for pistachios.
-- As previously stated, the blueberries have developed more slowly
than anticipated when we began the trial and the first major
harvest will not now be until 2021.
Strategic developments
The following strategic developments in the agriculture division
should be noted:
-- The agreed sale of the Horizon Farm property, together with
its growing crop of pistachios and almonds for a gross cash
consideration of $31 million which, subject to certain conditions,
is expected to complete during Q4 2020. The profit before tax
attributable to Horizon Farms in H1 was GBP3.6 million (2019
year - GBP1.8 million) and the net assets relating to the property
and growing crop at 30 June 2020 was GBP9.8 million. The estimated
pre tax gain on sale of the assets is $18.3 million (approximately
GBP14.2 million) (post tax approximately GBP10.0 million) which,
subject to completion, will be reflected in the 2020 full year
results.
-- In Tanzania significant progress on the purchase of the Mgagao
farm has been made with the transfer of land title completed
and awaiting the grant of derivative rights. The avocado plants
are being prepared in the nursery for planting towards the
end of the year.
-- In South Africa, the lease at Wales has expired and we vacated
the estate after completing the final harvest.
-- Also in South Africa, approval of the environmental impact
assessment for Beja farm was received and preparations are
underway to allow planting of avocados to commence in 2021.
Engineering
AJT Engineering had a busy first half in the oilfield services
division. However, the site services division has e ectively been
closed since the middle of March with much of the work postponed
and with the engineers being unable to get on site due to the
lockdown. Despite this, total revenues were up 8% on 2019. We
anticipate a slower second half as the impact of the pandemic on
oil prices is felt in the hydrocarbon production sector.
Revenues from Abbey Metal Finishing and its subsidiary Atfin
were similar to last year at the end of the first quarter, but the
second quarter saw a significant reduction in revenues due to
market disruption. Uncertainty in the aerospace sector is expected
to increase losses in the second half and significant doubts remain
as to when this sector will recover.
Food Service
After a positive start to the year, ACS&T had a di cult
second quarter with supplies of frozen produce to restaurants
collapsing. Trading has begun to improve as the lockdown is lifted
and the out of home dining sector gets busier.
Jing Tea has been largely closed throughout the lockdown with
only the on-line trading platform remaining busy. Recovery for Jing
remains dependent on the recovery of the hotel, restaurant and
tourism sectors.
Investments and Associates
Our investment portfolio, which consists principally of listed
equities, at 30 June 2020 was valued at GBP45.8 million (31
December 2019: GBP47.0 million).
Our share of profits from associates amounted to GBP2.5 million
(H1 2019: GBP3.3 million) reflecting a strong operating result from
BF&M which saw its property & casualty and life &
health businesses perform well, supported by solid investment
performance.
Group claims against African operations
As we stated in our trading update of January 2020, Camellia and
a number of its subsidiary companies have received notification of
claims to be made in the UK relating to allegations made by
multiple individuals concerning two overseas companies' African
operations. The financial impact of these claims is impossible to
quantify, but as previously indicated, the related legal and other
costs are significant and are continuing. Costs incurred during the
first half of 2020 amounted to GBP3.5 million (H1 2019:
GBPnil).
Pensions
The deficit on the Group's defined benefit pension and post
employment benefit schemes increased to GBP30.1 million at 30 June
2020 (31 December 2019: GBP22.0 million) due primarily to the use
of lower discount rates. Of this the UK defined benefit scheme
deficit represented GBP19.5 million (31 December 2019: GBP13.6
million).
The triennial valuation for the UK defined benefit scheme is
ongoing and is expected to show a funding deficit towards which
cash contributions are likely to be required to be made from next
year.
Impairments
The impact of Covid-19 on the outlook for the travel, hotel and
leisure markets has been substantial and is likely to be prolonged.
Impairments of GBP3.4 million were recognised in the period on the
Jing brand and our plant and equipment at Abbey Metal Finishing.
The impairments are driven by a combination of higher discount
rates used to value future cash flows, the losses in 2020 and lower
industry growth rates.
Summary
The first half of the year has been exceptionally challenging
and required enormous dedication and hard work from all our people.
Notwithstanding these circumstances, we have made good strategic
progress; our Tanzanian plans are advancing well and the disposal
of our majority interest in Horizon Farms was announced in
August.
Whilst we are widely diversified by sector, country and crop, a
combination of extreme climate events on top of the pandemic has
made trading di cult across many of our businesses. However, we
have strong market positions in our core crops, we are in sectors
which we expect will generally recover quickly, we remain
financially strong and we continue to maintain the resources to
fulfil our development plans in line with our strategy.
Finally, I am pleased that we have published our 2020 ESG Report
"Custodianship" which sets out both our philosophy and the
practical steps we are taking towards a more sustainable future.
The report is available on our website at www.camellia.plc.uk.
Tom Franks
Chief Executive
24 September 2020
INTERIM MANAGEMENT REPORT
The Chairman's Statement and Operating Review form part of this
report and includes important events that have occurred during the
six months ended 30 June 2020 and their impact on the financial
statements set out herein.
Principal risks and uncertainties
The Report of the Directors in the statutory financial
statements for the year ended 31 December 2019 (the accounts are
available on the Company's website: www.camellia.plc.uk)
highlighted risks and uncertainties that could have an impact on
the Group's businesses. These risks and uncertainties continue to
be relevant for the remainder of the year. In addition, the
Chairman's Statement included in this report refers to certain
specific risks and uncertainties that the Group is presently
facing.
Statement of directors' responsibilities
The Directors confirm that these condensed financial statements
have been prepared in accordance with IAS 34 'Interim Financial
Reporting' as adopted by the European Union, and that the interim
management report herein includes a fair review of the information
required by sections 4.2.7 and 4.2.8 of the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
The Directors of Camellia Plc are listed in the Camellia Plc
statutory financial statements for the year ended 31 December 2019.
There have been no subsequent changes of Directors and a list of
current Directors is maintained on the Group's website at
www.camellia.plc.uk.
By order of the Board
Malcolm Perkins
Chairman
24 September 2020
Condensed consolidated income statement
for the six months ended 30 June 2020
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
Notes GBP'm GBP'm GBP'm
Continuing operations
Revenue 5 114.9 117.3 291.5
Cost of sales (98.8) (92.2) (217.9)
---------- ---------- -----------
Gross profit 16.1 25.1 73.6
Other operating income 0.8 2.3 4.0
Distribution costs (6.2) (6.3) (15.0)
Administrative expenses (25.0) (22.4) (46.1)
---------- ---------- -----------
Trading (loss)/profit 5 (14.3) (1.3) 16.5
Share of associates' results 7 2.5 3.3 4.6
Impairment of intangible assets and property,
plant and equipment 6 (3.4) - -
Profit on disposal of financial assets 0.1 0.2 0.2
---------- ---------- -----------
Operating (loss)/profit (15.1) 2.2 21.3
Investment income 0.4 0.4 0.7
---------- ---------- -----------
Finance income 1.5 2.1 3.9
Finance costs (0.8) (0.6) (2.2)
Net exchange gain/(loss) 1.3 0.2 (0.3)
Employee benefit interest (0.2) (0.4) (1.1)
---------- ---------- -----------
Net finance income 8 1.8 1.3 0.3
---------- ---------- -----------
(Loss)/profit before tax (12.9) 3.9 22.3
-------------------------------------------------------- ----- ---------- ---------- -----------
Comprising
- underlying (loss)/profit before tax 6 (6.0) (4.1) 17.4
- release of provisions for wage increases 6 - 8.0 9.8
- costs related to group claims 6 (3.5) - (1.3)
* impairment of intangible assets and property, pl
ant
and equipment 6 (3.4) - -
* charge to workers profit participation 6 - - (3.6)
(12.9) 3.9 22.3
-------------------------------------------------------- ----- ---------- ---------- -----------
Taxation 9 0.8 (0.3) (7.2)
---------- ---------- -----------
(Loss)/profit for the period (12.1) 3.6 15.1
---------- ---------- -----------
(Loss)/profit attributable to:
Owners of Camellia Plc (12.6) 1.4 8.3
Non-controlling interests 0.5 2.2 6.8
---------- ---------- -----------
(12.1) 3.6 15.1
---------- ---------- -----------
Earnings/(loss) per share - basic and diluted 11 (456.2 )p 50.7p 300.5p
Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2020
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
GBP'm GBP'm GBP'm
(Loss)/profit for the period (12.1) 3.6 15.1
---------- ---------- -----------
Other comprehensive (expense)/income:
Items that will not be reclassified subsequently to
profit or loss:
Financial assets at fair value through other comprehensive
income:
Fair value adjustment released on disposal (0.8) (0.3) (0.3)
Profit on disposal 0.6 1.1 1.2
---------- ---------- -----------
(0.2) 0.8 0.9
Changes in the fair value of financial assets (2.7) 3.5 6.9
Deferred tax movement in relation to fair value adjustments 0.4 (0.4) (0.9)
Remeasurements of post employment benefit obligations (7.3) 3.9 3.5
Deferred tax movement in relation to post employment benefit
obligations - (0.1 ) (0.5 )
---------- ---------- -----------
(9.8) 7.7 9.9
---------- ---------- -----------
Items that may be reclassified subsequently to profit
or loss:
Foreign exchange translation di erences 13.1 (1.8) (16.7)
Share of other comprehensive income of associates 0.1 - 0.3
---------- ---------- -----------
13.2 (1.8) (16.4)
---------- ---------- -----------
Other comprehensive income/(expense) for the
period, net of tax 3.4 5.9 (6.5 )
---------- ---------- -----------
Total comprehensive (expense)/income for the period (8.7) 9.5 8.6
---------- ---------- -----------
Total comprehensive (expense)/income attributable to:
Owners of Camellia Plc (10.3) 8.1 4.2
Non-controlling interests 1.6 1.4 4.4
---------- ---------- -----------
(8.7) 9.5 8.6
---------- ---------- -----------
Condensed consolidated balance sheet
at 30 June 2020
30 June 30 June 31 December
2020 2019 2019
Notes GBP'm GBP'm GBP'm
ASSETS
Non-current assets
Intangible assets 6.9 10.9 10.3
Property, plant and equipment 12 218.6 227.5 222.5
Right-of-use assets 18.5 17.6 18.5
Investment properties 18.9 17.5 18.3
Biological assets 14.3 13.9 14.6
Investments in associates 72.3 67.9 66.0
Deferred tax assets 0.2 0.2 -
Financial assets at fair value
through other comprehensive income 37.6 35.7 37.8
Financial asset at fair value
through profit or loss 5.2 4.7 6.2
Financial assets at amortised
cost 3.0 3.1 3.0
Other investments - heritage
assets 9.8 9.7 9.8
Retirement benefit surplus 16 0.5 0.4 0.7
Trade and other receivables 2.7 2.8 2.8
------- ------- -----------
Total non-current assets 408.5 411.9 410.5
------- ------- -----------
Current assets
Inventories 61.3 64.8 49.3
Biological assets 3.6 4.3 9.1
Trade and other receivables 42.1 44.0 44.3
Financial assets at amortised
cost - 0.1 -
Current income tax assets 3.4 0.8 1.2
Cash and cash equivalents (excluding
bank overdrafts) 82.9 95.8 91.4
------- ------- -----------
193.3 209.8 195.3
Assets classified as held for
sale 13 9.8 0.9 -
------- ------- -----------
Total current assets 203.1 210.7 195.3
------- ------- -----------
LIABILITIES
Current liabilities
Financial liabilities - borrowings 14 (6.9) (8.3) (5.6)
Lease liabilities (1.4) (2.0) (1.2)
Trade and other payables (53.0) (54.2) (48.6)
Current income tax liabilities (5.3) (6.1) (4.2)
Employee benefit obligations 16 (0.9) (1.0) (0.7)
Provisions 15 (13.0) (13.6) (8.9)
----- ----- -----
Total current liabilities (80.5) (85.2) (69.2)
----- ----- -----
Net current assets 122.6 125.5 126.1
----- ----- -----
Total assets less current liabilities 531.1 537.4 536.6
----- ----- -----
Non-current liabilities
Financial liabilities - borrowings 14 (3.2) (6.9) (3.3)
Lease liabilities (11.6) (8.7) (11.8)
Deferred tax liabilities (45.2) (44.3) (47.1)
Employee benefit obligations 16 (29.7) (21.3) (22.0)
----- ----- -----
Total non-current liabilities (89.7) (81.2) (84.2)
----- ----- -----
Net assets 441.4 456.2 452.4
----- ----- -----
EQUITY
Called up share capital 0.3 0.3 0.3
Share premium 15.3 15.3 15.3
Reserves 369.8 385.2 380.1
----- ----- -----
Equity attributable to owners of Camellia Plc 385.4 400.8 395.7
Non-controlling interests 56.0 55.4 56.7
----- ----- -----
Total equity 441.4 456.2 452.4
----- ----- -----
Condensed consolidated statement of cash flows
for the six months ended 30 June 2020
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
Notes GBP'm GBP'm GBP'm
Cash generated from operations
Cash flows from operating activities 17 (3.1) (3.5) 21.2
Interest received 1.5 2.3 4.0
Interest paid (0.8) (0.7) (1.7)
Income taxes paid (3.2) (5.1) (10.9)
---------- ---------- -----------
Net cash flow from operating activities (5.6) (7.0) 12.6
---------- ---------- -----------
Cash flows from investing activities
Purchase of intangible assets - (0.3) (0.1)
Purchase of property, plant and equipment (6.6) (8.0) (18.4)
Proceeds from sale of non-current assets 0.3 0.9 1.7
Additions to investment property (0.6) (0.1) (0.5)
Biological assets: non-current - additions 0.5 - 0.7
Payment for acquisition of a business / subsidiary net of cash
acquired 18 - (9.4) (9.4)
Proceeds from sale of assets held for sale - investment
property - - 0.8
Investment in associates (0.3) (0.7) (1.3)
Dividends received from associates 1.3 1.8 3.1
Purchase of investments (4.9) (7.9) (11.4)
Proceeds from sale of investments 6.0 8.7 10.3
Income from investments 0.4 0.4 0.7
Purchase of other investments - heritage assets - (0.1) (0.3)
---------- ---------- -----------
Net cash flow from investing activities (3.9) (14.7) (24.1)
---------- ---------- -----------
Cash flows from financing activities
Equity dividends paid - - (4.0)
Dividends paid to non-controlling interests (2.3) (2.7) (4.5)
New loans - 4.6 3.6
Loans repaid (0.3) (0.3) (0.6)
Payments of lease liabilities (0.5) (0.2) (0.4)
---------- ---------- -----------
Net cash flow from financing activities (3.1) 1.4 (5.9)
---------- ---------- -----------
Net decrease in cash and cash equivalents (12.6) (20.3) (17.4)
Cash and cash equivalents at beginning of period 89.4 109.6 109.6
Exchange gains/(losses) on cash 2.7 (0.4) (2.8)
---------- ---------- -----------
Cash and cash equivalents at end of period 19 79.5 88.9 89.4
---------- ---------- -----------
For the purposes of the cash flow statement, cash and cash
equivalents are included net of overdrafts repayable on demand.
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2020
Attributable to the owners of Camellia Plc
Non-
Share Share Treasury Retained Other controlling Total
capital premium shares earnings reserves Total interests equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
At 1 January 2019 0.3 15.3 (0.4) 350.7 29.6 395.5 56.8 452.3
Total comprehensive
income for the
period - - - 6.7 1.4 8.1 1.4 9.5
Dividends - - - (2.8) - (2.8) (2.8) (5.6)
------- ------- -------- -------- -------- ----- ----------- ------
At 30 June 2019 0.3 15.3 (0.4) 354.6 31.0 400.8 55.4 456.2
------- ------- -------- -------- -------- ----- ----------- ------
At 1 January 2019 0.3 15.3 (0.4) 350.7 29.6 395.5 56.8 452.3
Total comprehensive
income for the
period - - - 11.9 (7.7) 4.2 4.4 8.6
Dividends - - - (4.0) - (4.0) (4.5) (8.5)
------- ------- -------- -------- -------- ----- ----------- ------
At 31 December 2019 0.3 15.3 (0.4) 358.6 21.9 395.7 56.7 452.4
Total comprehensive
(expense)/income
for the period - - - (18.7) 8.4 (10.3) 1.6 (8.7)
Dividends - - - - - - (2.3) (2.3)
------- ------- -------- -------- -------- ----- ----------- ------
At 30 June 2020 0.3 15.3 (0.4) 339.9 30.3 385.4 56.0 441.4
------- ------- -------- -------- -------- ----- ----------- ------
NOTES TO THE ACCOUNTS
1 Basis of preparation
These financial statements are the interim condensed
consolidated financial statements of Camellia Plc, a company
registered in England, and its subsidiaries (the "Group") for the
six month period ended 30 June 2020 (the "Interim Report"). The
interim report does not include all the notes of the type normally
included in an annual financial report. Accordingly, this report
should be read in conjunction with the Report and Accounts (the
"Annual Report") for the year ended 31 December 2019.
The financial information contained in this interim report has
not been audited and does not constitute statutory accounts within
the meaning of Section 435 of the Companies Act 2006. A copy of the
statutory accounts for the year ended 31 December 2019 has been
delivered to the Registrar of Companies. The auditors' opinion on
these accounts was unqualified and does not contain an emphasis of
matter paragraph or a statement made under Section 498(2) and
Section 498(3) of the Companies Act 2006.
The interim condensed financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") including IAS 34 "Interim Financial Reporting". For these
purposes, IFRS comprise the Standards issued by the International
Accounting Standards Board ("IASB") and Interpretations issued by
the International Financial Reporting Standards Interpretations
Committee ("IFRS IC") that have been adopted by the European
Union.
These interim condensed consolidated financial statements were
approved by the Board of Directors on 24 September 2020. At the
time of approving these financial statements, the Directors have a
reasonable expectation that the Company and the Group have adequate
resources to continue to operate for the foreseeable future. They
therefore continue to adopt the going concern basis of accounting
in preparing the financial statements.
2 Changes to accounting policies
These interim condensed financial statements have been prepared
on the basis of accounting policies consistent with those applied
in the financial statements for the year ended 31 December 2019.
Amendments to IFRSs e ective for the financial year ending 31
December 2020 are not expected to have a material impact on the
Group.
3 Going concern
As set out in the Operating Review, our businesses have been
impacted to varying degrees of severity by Covid-19 and we expect
those conditions to continue for the majority of the period covered
by the going concern statement. Although we now have experience of
managing through the first wave of the pandemic it still remains
hard to predict with precision the continuing and future impact
that Covid-19 may have on our businesses. The major variables
remain the depth and duration of the pandemic and the extent of
action taken by governments in the jurisdictions in which we
operate. We expect our operations will continue to operate wherever
possible with appropriate safety protocols in place and that we
will also be able to continue to sell our produce to customers.
All our businesses have implemented plans aimed at making
operational cost reductions and wherever possible delaying or
cancelling non-critical expenditure.
At 30 June 2020, the Group had cash and cash equivalents net of
borrowings of GBP72.8 million. In addition, the Group had undrawn
short-term loan and overdraft facilities of GBP30.5 million and a
portfolio of liquid investments with a market value of GBP45.8
million.
The Directors, after assessing the principal risks, have
considered the impact of a plausible downside scenario on the
business for the next 15 months including the possibility of
disruption to the production, distribution, demand for and hence
sales of our core crops; tea, macadamia and avocado. We have also
considered the risk of further price reductions during 2020 for our
macadamia and avocado crops.
The potential impact of Brexit has been considered and is not
expected to have a significant e ect on this assessment.
The Directors believe that the Company and the Group are well
placed to manage their financing and other business risks
satisfactorily and have a reasonable expectation that the Company
and the Group will have adequate resources to continue in
operational existence for the foreseeable future. The Directors
therefore continue to adopt the going concern basis in preparing
the financial statements.
4 Cyclical and seasonal factors
Due to climatic conditions the Group's tea operations in India
and Bangladesh produce most of their crop during the second half of
the year. Tea production in Kenya remains at consistent levels
throughout the year but in Malawi the majority of tea is produced
in the first six months.
Soya in Brazil and citrus in California are generally harvested
in the first half of the year. In California the pistachio crop
occurs in the second half of the year and has 'on' and 'o ' years.
The majority of the macadamia crop in Malawi and South Africa is
harvested in the second half of the year but in Kenya the majority
of macadamia is harvested in the first half. Avocados in Kenya are
mostly harvested in the second half of the year.
There are no other cyclical or seasonal factors which have a
material impact on the trading results.
5 Segment reporting
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
Trading Trading Trading
Revenue (loss)/profit Revenue profit/(loss) Revenue profit/(loss)
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Agriculture (see note
6) 91.7 (5.7) 90.5 2.4 238.7 25.2
Engineering 11.0 0.1 10.8 (0.3) 22.1 -
Food Service 11.6 (0.8) 15.6 0.9 29.8 0.8
Other operations 0.6 0.1 0.4 - 0.9 0.1
------- ------------- ------- ------------- ------- -------------
114.9 (6.3) 117.3 3.0 291.5 26.1
------- ------- -------
Unallocated corporate
expenses (8.0 ) (4.3 ) (9.6 )
------------- ------------- -------------
Trading (loss)/(profit) (14.3) (1.3) 16.5
Share of associates'
results 2.5 3.3 4.6
Impairment of
intangible assets and
property, plant and
equipment (3.4) - -
Profit on disposal of
financial assets 0.1 0.2 0.2
Investment income 0.4 0.4 0.7
Net finance income 1.8 1.3 0.3
------------- ------------- -------------
(Loss)/profit before
tax (12.9) 3.9 22.3
Taxation 0.8 (0.3) (7.2)
------------- ------------- -------------
(Loss)/profit after tax (12.1) 3.6 15.1
------------- ------------- -------------
6 Underlying (loss)/profit
The Group seeks to present an indication of the underlying
performance which is not impacted by exceptional items or items
considered non-operational in nature. This measure of profit is
described as 'underlying' and is used by management to measure and
monitor performance.
The following items have been excluded from the underlying
measure and have been separately disclosed:
-- Legal and other costs related to the group claims against
African operations of GBP3.5 million (2019: six months GBPnil
- year GBP1.3 million).
-- Impairment of GBP3.4 million (2019: six months GBPnil -
year GBPnil) of which GBP3.2 million relates to the impairment
of Jing Tea brand and a GBP0.2 million impairment of plant
and equipment owned by Abbey Metal Finishing, both operations
have been adversely a ected as a result of Covid-19's impact
on the hospitality and aerospace sectors respectively.
-- GBPnil (2019: six months GBP8.0 million - year GBP9.8 million
gain) from the release of provisions for wage increases
relating to prior years in our Agriculture operations following
progress on negotiations.
-- A charge of GBPnil (2019: six months GBPnil - year GBP3.6
million) in relation to workers profit participation in
Bangladesh which mainly relates to prior years' obligations
and was recognised as a consequence of regulatory developments
in 2019.
7 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
2020 2019 2019
GBP'm GBP'm GBP'm
Profit before tax 2.8 3.8 5.3
Taxation (0.3) (0.5) (0.7)
---------- ---------- -----------
Profit after tax 2.5 3.3 4.6
---------- ---------- -----------
8 Finance income and costs
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
GBP'm GBP'm GBP'm
Finance costs - interest payable on loans and bank overdrafts (0.4 ) (0.3 ) (1.5 )
Interest payable on leases (0.4) (0.3) (0.7)
---------- ---------- -----------
Finance costs (0.8) (0.6) (2.2)
Finance income - interest income on short-term bank deposits 1.5 2.1 3.9
Net exchange gain/(loss) on foreign currency balances 1.3 0.2 (0.3)
Employee benefit interest (0.2) (0.4) (1.1)
---------- ---------- -----------
Net finance income 1.8 1.3 0.3
---------- ---------- -----------
9 Taxation on (loss)/profit on ordinary activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
GBP'm GBP'm GBP'm
Current tax
Overseas corporation tax 2.4 3.0 6.3
Deferred tax
Origination and reversal of timing differences
Overseas deferred tax (3.2) (2.7) 0.9
---------- ---------- -----------
Tax on (loss)/profit on ordinary activities (0.8) 0.3 7.2
---------- ---------- -----------
Tax on (loss)/profit on ordinary activities for the six months
to 30 June 2020 has been calculated on the basis of the estimated
annual effective rate for the year ending 31 December 2020.
10 Equity dividends
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
GBP'm GBP'm GBP'm
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2019 of nil (2018: 102p)
per share - 2.8 2.8
---------- ---------- -----------
Interim dividend for the year ended 31 December 2019 of 42p per share 1.2
-----------
4.0
-----------
Dividends amounting to GBPnil million (2019: six months GBP0.1 million -
year GBP0.1 million)
have not been included as group companies hold 62,500 issued shares in
the company. These
are classified as treasury shares.
Proposed special interim dividend for the year ended 31 December 2020 of
102p per share 2.9
----------
Proposed interim dividend for the year ended 31 December 2019 of 42p per
share 1.2
----------
The proposed special interim dividend was approved by the Board
of Directors on 24 September 2020 and has not been included as a
liability in these financial statements.
11 Earnings/(loss) per share (EPS)
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
Earnings/(loss) EPS Earnings EPS Earnings EPS
GBP'm Pence GBP'm Pence GBP'm Pence
Attributable to ordinary shareholders (12.6) (456.2) 1.4 50.7 8.3 300.5
--------------- ------ -------- ----- -------- -----
Basic and diluted earnings per share are calculated by dividing
the earnings attributable to ordinary shareholders by the weighted
average number of ordinary shares in issue of 2,762,000 (2019: six
months 2,762,000 - year 2,762,000), which excludes 62,500 (2019:
six months 62,500 - year 62,500) shares held by the Group as
treasury shares.
12 Property, plant and equipment
During the six months ended 30 June 2020 the Group acquired
assets with a cost of GBP6.6 million (2019: six months GBP8.0
million - year GBP18.4 million). Assets with a carrying amount of
GBP0.3 million were disposed of during the six months ended 30 June
2020 (2019: six months GBP0.8 million - year GBP1.2 million).
Assets with a carrying amount of GBP7.2 million were classified as
held for sale as at 30 June 2020 (2019: six months GBPnil - year
GBPnil).
13 Assets classified as held for sale
Horizon Farms partnership in California has agreed (subject to
certain conditions) to the sale of the Horizon Farm property
together with its growing crop of pistachios and almonds for a
gross cash consideration of $31 million to Maricopa Orchards LLC.
Horizon Farms, in which the Group has an 80 per cent. interest
grows pistachios, almonds and citrus fruits. After sale costs,
including withholding and other taxes, it is estimated that the net
cash proceeds to the partnership will be approximately $22.8
million (approximately GBP17.5 million). Property, plant and
equipment and biological assets relating to Horizon Farms have been
classified as held for sale.
14 Borrowings
Borrowings (current and non-current) include loans of GBP6.7
million (loans 2019: six months GBP8.3 million - year GBP6.9
million) and bank overdrafts of GBP3.4 million (2019: six months
GBP6.9 million - year GBP2.0 million). The following were the
movements on the loans during the six months ended 30 June
2020:
GBP'm
Balance at 1 January 2020 6.9
Exchange di erences 0.1
Repayments (0.3)
-----
Balance at 30 June 2020 6.7
-----
15 Provisions
Wages and
salaries Others Total
GBP'm GBP'm GBP'm
At 1 January 2019 17.4 1.1 18.5
Exchange di erences 0.1 - 0.1
Utilised in the period (0.6) (0.1) (0.7)
Provided in the period 3.4 0.3 3.7
Unused amounts reversed in period (8.0) - (8.0)
--------- ------ -----
At 30 June 2019 12.3 1.3 13.6
--------- ------ -----
At 1 January 2019 17.4 1.1 18.5
Exchange di erences (0.5) - (0.5)
Utilised in the period (6.3) (0.1) (6.4)
Provided in the period 6.8 0.3 7.1
Businesses joining the group 0.1 - 0.1
Unused amounts reversed in period (9.8) (0.1) (9.9)
--------- ------ -----
At 31 December 2019 7.7 1.2 8.9
Exchange di erences 0.3 - 0.3
Utilised in the period (1.6) (0.5) (2.1)
Provided in the period 5.5 0.4 5.9
--------- ------ -----
At 30 June 2020 11.9 1.1 13.0
--------- ------ -----
Current:
At 30 June 2020 11.9 1.1 13.0
--------- ------ -----
At 31 December 2019 7.7 1.2 8.9
--------- ------ -----
At 30 June 2019 12.3 1.3 13.6
--------- ------ -----
The wages and salaries provisions are in respect of ongoing wage
and bonus negotiations in India, Kenya and Bangladesh.
Others relate to provisions for claims and dilapidations.
16 Employee benefit obligations
The UK defined benefit pension scheme for the purpose of IAS 19
has been updated to 30 June 2020 from the valuation as at 31
December 2019 by the actuary and the movements have been reflected
in this interim statement. Overseas pension, gratuity and medical
benefit schemes operated in group subsidiaries located in
Bangladesh and India have also been updated to 30 June 2020 from
the valuation as at 31 December 2019 by the actuaries and the
movements have also been reflected in this interim statement.
An actuarial loss of GBP7.3 million was realised in the period
in relation to the Group's employee obligations of which GBP5.8
million related to the UK defined benefit pension scheme. In
relation to the UK defined benefit pension scheme a gain of GBP3.6
million was realised in relation to the scheme assets and a loss of
GBP9.4 million was realised in relation to changes in the
underlying actuarial assumptions. The assumed discount rate has
decreased to 1.40% (31 December 2019: 1.90%), the assumed rate of
inflation (CPI) has decreased to 2.0% (31 December 2019: 2.10%)
There has been no change in the mortality assumptions used.
17 Reconciliation of (loss)/profit to cash flow
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
GBP'm GBP'm GBP'm
(Loss)/profit (15.1) 2.2 21.3
Share of associates' results (2.5) (3.3) (4.6)
Depreciation and amortisation 8.2 8.0 16.2
Depreciation of right-of-use assets 0.6 0.4 0.9
Impairment of assets and provisions 3.4 0.2 0.3
Realised movements on biological assets - non-current - 0.3 (1.4)
Profit on disposal of non-current assets (0.1) (0.1) (0.5)
Profit on disposal of financial assets - (0.2) (0.2)
Movements in provisions 3.8 (4.9) (9.0)
Increase in working capital (1.9) (6.2) (5.1)
Di erence between employee benefit obligations funding contributions
and cost charged 0.5 0.1 3.3
---------- ---------- -----------
Cash (used)/generated (3.1) (3.5) 21.2
---------- ---------- -----------
18 Acquisition of businesses
Acquisitions Acquisitions
Six months Year
ended ended
30 June 31 December
2019 2019
GBP'm GBP'm
Fair value Fair value
Property, plant and equipment 5.7 5.7
Right-of-use asset 3.7 3.7
Deferred tax asset - -
Inventories 0.1 0.1
Trade and other receivables 0.1 0.1
Current income tax assets - -
Cash and cash equivalents - -
Trade and other payables (0.3) (0.3)
Employee benefit obligations (0.5) (0.5)
Deferred tax liability (0.8) (0.8)
------------ ------------
8.0 8.0
Intangible asset - Goodwill 1.4 1.4
------------ ------------
9.4 9.4
------------ ------------
Satisfied by:
Cash consideration and costs 9.4 9.4
------------ ------------
Net cash outflow arising on acquisitions/disposals:
Cash consideration (9.4) (9.4)
------------ ------------
The acquisitions in 2019 relates to tea estates in India which
were purchased by our Indian subsidiaries for cash, funded by local
borrowings.
19 Cash and cash equivalents
For the purposes of the cash flow statement cash and cash
equivalents comprise:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
GBP'm GBP'm GBP'm
Cash and cash equivalents 82.9 95.8 91.4
Overdrafts repayable on demand (included in
current liabilities - borrowings) (3.4) (6.9) (2.0)
---------- ---------- -----------
79.5 88.9 89.4
---------- ---------- -----------
20 Contingent liabilities
In India, assessments have been received for excise duties of
GBP3.9 million, sales and entry tax of GBP0.9 million and of GBP1.1
million for income tax matters. These are being contested on the
basis that they are without technical merit.
In India, a long running dispute between our local subsidiaries
and the Government of West Bengal over the payment of a land tax,
locally called, "Salami", remains unresolved. Lawyers acting for
the Group have advised that payment of Salami does not apply,
accordingly no provisions have been made. The sum in dispute,
excluding fines and penalties, amounts to GBP1.4 million.
The Group operates in certain countries where its operations are
potentially subject to a number of legal claims. When required,
appropriate provisions are made for the expected cost of such
claims.
21 Related party transactions
During the period the Group received rental income from The
Camellia Foundation of GBP18,000 (2019: six months GBP18,000 - year
GBP36,000).
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