TIDMCAM
RNS Number : 7482Y
Camellia PLC
24 August 2018
Camellia Plc
Interim Results
Camellia Plc (AIM:CAM) announces its interim results for the six
months ended 30 June 2018.
Malcolm Perkins, Chairman of Camellia, stated:
"Profits for our continuing operations for the first half of the
year were better than anticipated reflecting the generally benign
weather conditions and favourable markets experienced across our
agricultural operations. We have also made significant progress
with our strategic initiatives to refine our portfolio. We remain
financially strong, with the resources to advance our development
plans."
Financial highlights
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2017 2017
2018
GBP'm GBP'm GBP'm
----------- -------------- -------------
Revenue - continuing operations 127.6 123.6 298.3
----------- -------------- -------------
Profit before tax from continuing
operations 6.1 1.9 27.6
----------- -------------- -------------
(Loss)/profit from discontinued
operation (0.3) 15.8 14.8
----------- -------------- -------------
Profit for the period 3.7 16.3 28.6
----------- -------------- -------------
Earnings per share 18.1p 532.2p 803.8p
----------- -------------- -------------
Earnings/(loss) per share
- continuing operations 29.0p (39.8)p 268p
----------- -------------- -------------
Dividend per share 40p 37p 135p
----------- -------------- -------------
Highlights
-- 1(st) half tea production 39.2m kg, up 7% on same period
of 2017
-- Record shipments in 1(st) half of early avocado crop from
Kenya
-- Strong progress from Engineering North with revenues up 30%
on the same period in 2017
-- Macadamia production expected to be substantially up on 2017;
Kenya tea prices now experiencing significant downward pressure;
avocado selling prices now significantly reduced
-- Closure of Duncan Lawrie now complete with a small additional
provision of GBP0.3 million
-- Portfolio refinement continues
-- Interim dividend increased by 8.1%
-- Cash and cash equivalents at 30 June 2018 were GBP90.8 million
(30 June 2017: GBP98.7 million)
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 on 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
Adam James
Erik Anderson
CHAIRMAN'S STATEMENT
Our results for the first half show a profit before tax from
continuing operations of GBP6.1 million which compares with a
profit of GBP1.9 million for the first half of 2017. Further
details are set out in the Operating review.
Dividend
The Board has declared an interim dividend of 40p (2017: 37p)
payable on 5 October 2018 to shareholders registered at the close
of business on 7 September 2018.
Strategic objectives
We continue to pursue our strategic objectives in line with the
statements made in the 2017 Annual report. We have made a small
number of acquisitions and disposals, some of which were
anticipated in the Annual report, in order to refine our portfolio
of operations. In addition, we are making a number of medium and
long term investments in Agriculture in order to leverage our
expertise and diversify our supply base in certain crops and
countries. Additional information is included in the Operating
review.
Outlook
Given that the majority of trading takes place in the second
half of the year, it is not easy to give guidance for the full year
but we are optimistic following the encouraging first half
result.
Malcolm Perkins
Chairman
23 August 2018
OPERATING REVIEW
The profit before tax from continuing operations in the first
half was GBP6.1 million (H1 2017: GBP1.9 million) on revenues of
GBP127.6 million (H1 2017: GBP123.6 million). This better than
anticipated result reflects the generally benign weather conditions
and favourable markets experienced across most of our agricultural
operations. However, this was offset in part by:
-- A net increase in provisions for wage increases relating to
previous years across our agricultural operations of GBP1.5
million which has been taken to cost of sales
-- The strengthening of sterling against all our major currencies
compared with the first half of 2017 which led to an adverse
impact of approximately GBP0.6 million
The loss from the discontinued operation of GBP0.3 million
reflects provisions for additional claims at Duncan Lawrie, the
private bank which we closed in 2017.
Our cash and cash equivalents balance at the end of the period
stood at GBP90.8 million (31 December 2017: GBP106.8 million).
Agriculture
Tea
Overall our tea production in the first half has been better
than in H1 2017 at 39.2m Kg (H1 2017: 36.7m Kg), although this has
varied geographically. Our average prices in H1 have held up better
than we might have expected given the volumes in the market.
India: Production in the first half of the year was 9% ahead of
last year, helped by the opening of the expanded Jogopur Bought
Leaf factory. Average prices were generally better than last year.
Labour rates have continued to increase leading to margin pressure,
which we have been able to counter through efficiencies. We are
monitoring closely the situation in Assam where there have been
significant changes in tea estate ownership over the last 12 months
and will invest only where we believe the opportunities are right
for the Group. Following last year's strike in Darjeeling, it is
good to see our estates back in full production and achieving
improved prices.
Bangladesh: Production was down by 18% in the first half as very
dry weather was replaced by flooding following the start of the
monsoon; however average prices were 61% ahead of last year.
Kenya: Production (including smallholder and managed client
volumes) was ahead of last year by 16% as a result of the weather
and growing conditions across the country. Whilst this has resulted
in a fall in Mombasa auction prices, our average price in the first
half remained a little above that of the same period in 2017.
Prices have come under significant downward pressure since the end
of June.
Malawi: Production (including smallholder volumes) was ahead of
last year by 7% and average prices in the first half were 5% higher
than the same period last year.
Macadamia
Following two years of drought, I am pleased to report that the
macadamia harvest has been much improved this year with volumes
anticipated to be around 45% higher than in 2017 from our combined
estates. The prices seen last year also appear to be holding at
this stage. As stated in the annual report, we continue to
negotiate for an extension to our lease on the Wales estate in
South Africa.
Avocado
Volumes and prices from the early avocado crop in Kenya have
been above last year in the first half. However as we move into our
main cropping season in the second half, we have seen large
shipments out of Peru into our core European markets which have
significantly depressed prices.
Speciality Crops
Overall, our Speciality Crops have had a mixed start to the year
with some good production being offset by issues largely outside
our control. It is worth noting the following:
Prices for natural rubber, which we grow on those areas of the
tea estates unsuited to tea, have declined slightly in the first
half, and the business remains lossmaking albeit cash
generative.
Wine grape volumes from our estate in South Africa were down by
28% due to the drought in the Western Cape region, sales however
were much improved in the first half.
The soya crop in Brazil has done well, but getting the produce
to market was held up temporarily by the national truck drivers'
strike which impacted the entire sector.
In California, an above expectation season for Navel oranges has
offset a disappointing season for Murcotts. This is an 'on' year
for pistachios but the trade tariffs imposed by China (the largest
market for pistachios) are likely to impact prices in the second
half.
Other strategic developments
As part of our strategy for Agriculture to utilise our estates
to the full, expand our production capability in core crops and
exploit our expertise, we are undertaking the following
initiatives:
-- A trial of blueberries at Kakuzi in Kenya is in progress.
Being grown in a potted medium and in tunnels means that blueberries
can be established on otherwise unproductive land and a 10Ha
trial site is being established with an opportunity to expand
this significantly if it is successful. We anticipate the
first harvest from the trial site in 2019.
-- We have signed a memorandum of understanding to purchase land
in Tanzania for development into avocado and macadamia orchards.
Whilst there is some way to go to completing a transaction,
we believe that this presents an opportunity to increase our
volumes whilst diversifying our sources of avocado and macadamia.
-- The trial planting of avocado near Kitale in Kenya is now
complete and we await the results over the next two years
before making a decision on developing the remainder of the
estate.
Engineering
Engineering North: The business at AJT Engineering continues to
improve with the oil industry and the development of the Site
Services division; revenue in the first half of the year was up 30%
on the first half of last year. In addition, at the beginning of
June we acquired a small company, Black Gold Oil Tools, in line
with our strategy of diversifying the customer base for this
business.
Engineering South: As anticipated in the annual report, the sale
of GU Cutting and Grinding to its management team has now completed
and the BMT (Great Yarmouth) disposal process is continuing. Abbey
Metal Finishing and its subsidiary Atfin traded ahead of the
equivalent period last year.
XiMo: We stated in April that we were seeking partners to
finance further development of this research business. This search
continues, however it is unlikely that any value will be realised
from this process.
Food Service
ACS&T continues to trade well and slightly above last year,
although with margins reduced due to the business mix. Our new
acquisition, Jing Tea, is trading in line with expectations.
Investments and Associates
Our investment portfolio, which consists principally of listed
equities, is now valued at GBP50.8 million (31 December 2017:
GBP47.0 million). We have recently appointed a new manager to run
our portfolio.
Our share of profits from associates amounted to GBP2.2 million
(H1 2017: GBP3.7 million) reflecting lower results at BF&M due
to higher reinsurance costs following the hurricanes in 2017.
Summary
Whilst the majority of trading from Agriculture takes place in
the second half of the year, I am pleased with how the year has
started and that we have continued to push forward successfully
with our strategic initiatives to refine the portfolio and to put
into place development plans for the future. We remain financially
strong, with the resources to see through our development plans
over the coming years, and remain committed to growing the business
in line with our strategy.
Tom Franks
Chief Executive
23 August 2018
INTERIM MANAGEMENT REPORT
The Chairman's statement and Operating review form part of this
report and include important events that have occurred during the
six months ended 30 June 2018 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 2017 (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. As these businesses are widely spread both
in terms of activity and location, it is unlikely that any one
single factor could have a material impact on the Group's
performance. These risks and uncertainties continue to be relevant
for the remainder of the year. In addition, the Operating review
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 2017.
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
23 August 2018
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2018
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
Notes GBP'm GBP'm GBP'm
Continuing operations
Revenue 4 127.6 123.6 298.3
Cost of sales (100.3) (102.1) (219.3)
---------- ---------- -----------
Gross profit 27.3 21.5 79.0
Other operating income 2.1 1.0 2.4
Distribution costs (5.1) (4.9) (13.9)
Administrative expenses (22.1) (20.4) (41.1)
---------- ---------- -----------
Trading profit/(loss) 4 2.2 (2.8) 26.4
Share of associates' results 5 2.2 3.7 2.0
Impairment of property, plant and equipment and
provisions (0.1) - (1.8)
Profit on disposal of financial assets 0.2 0.5 0.7
---------- ---------- -----------
4.5 1.4 27.3
Investment income 0.4 0.4 0.6
---------- ---------- -----------
Finance income 2.0 1.4 3.0
Finance costs (0.1) (0.2) (0.5)
Net exchange (loss)/gain (0.1) 0.1 (0.1)
Employee benefit expense (0.6) (1.2) (2.7)
---------- ---------- -----------
Net finance income/(cost) 6 1.2 0.1 (0.3)
---------- ---------- -----------
Profit before tax from continuing operations 6.1 1.9 27.6
Taxation 7 (2.1) (1.4) (13.8)
---------- ---------- -----------
Profit after tax from continuing operations 4.0 0.5 13.8
(Loss)/profit from discontinued operation 8 (0.3) 15.8 14.8
---------- ---------- -----------
Profit for the period 3.7 16.3 28.6
---------- ---------- -----------
Profit attributable to:
Owners of the parent 0.5 14.7 22.2
Non-controlling interests 3.2 1.6 6.4
---------- ---------- -----------
3.7 16.3 28.6
---------- ---------- -----------
Earnings per share - basic and diluted 10 18.1p 532.2p 803.8p
Earnings/(loss) per share - continuing operations 10 29.0p (39.8p) 268.0p
Earnings/(loss) per share - discontinued operation 10 (10.9p) 572.0p 535.8p
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2018
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
GBP'm GBP'm GBP'm
Profit for the period 3.7 16.3 28.6
---------- ---------- -----------
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of post employment benefit obligations (note 15) 12.1 15.2 34.3
Deferred tax movement in relation to post employment benefit
obligations (0.6) - (1.0)
---------- ---------- -----------
11.5 15.2 33.3
---------- ---------- -----------
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences 1.9 (14.6) (28.4)
Available-for-sale investments:
Valuation gains taken to equity 0.1 6.6 10.9
Transferred to income statement on sale - (0.2) (0.3)
---------- ---------- -----------
2.0 (8.2) (17.8)
---------- ---------- -----------
Other comprehensive income for the period, net of tax 13.5 7.0 15.5
---------- ---------- -----------
Total comprehensive income for the period 17.2 23.3 44.1
---------- ---------- -----------
Total comprehensive income/(expense) attributable to:
Owners of the parent 13.3 23.4 41.1
Non-controlling interests 3.9 (0.1) 3.0
---------- ---------- -----------
17.2 23.3 44.1
---------- ---------- -----------
CONDENSED CONSOLIDATED BALANCE SHEET
at 30 June 2018
30 June 30 June 31 December
2018 2017 2017
Notes GBP'm GBP'm GBP'm
ASSETS
Non-current assets
Intangible assets 12 8.3 1.0 3.2
Property, plant and equipment 11 219.9 223.5 216.3
Investment properties 17.7 17.9 17.6
Biological assets 12.3 12.8 12.8
Prepaid operating leases 0.9 0.9 0.9
Investments in associates 57.2 59.6 55.4
Deferred tax assets 0.3 0.4 0.2
Available-for-sale financial assets 2 - 41.3 47.0
Financial assets at fair value through other comprehensive income 2 42.3 - -
Financial assets at fair value through profit or loss 2 5.2 - -
Financial assets at amortised cost 2 3.3 - -
Other investments - heritage assets 9.4 9.2 9.4
Retirement benefit surplus 15 0.3 0.1 0.3
Trade and other receivables 2.1 2.1 1.9
------- ------- -----------
Total non-current assets 379.2 368.8 365.0
------- ------- -----------
Current assets
Inventories 56.5 55.8 47.4
Biological assets 5.8 3.1 6.6
Trade and other receivables 41.9 40.9 43.7
Current income tax assets 1.5 1.8 0.9
Cash and cash equivalents 94.2 102.0 108.0
------- ------- -----------
199.9 203.6 206.6
Assets classified as held for sale 4.1 7.1 4.9
------- ------- -----------
Total current assets 204.0 210.7 211.5
------- ------- -----------
LIABILITIES
Current liabilities
Borrowings 13 (4.0) (3.9) (1.8)
Trade and other payables (61.0) (56.6) (56.5)
Current income tax liabilities (5.5) (7.0) (7.9)
Employee benefit obligations 15 (1.0) (0.9) (0.7)
Provisions 14 (16.5) (11.5) (15.2)
------- ------- -----------
(88.0) (79.9) (82.1)
------- ------- -----------
Liabilities directly associated with assets classified as held for
sale (1.8) (6.8) (1.8)
------- ------- -----------
Total current liabilities (89.8) (86.7) (83.9)
------- ------- -----------
Net current assets 114.2 124.0 127.6
------- ------- -----------
Total assets less current liabilities 493.4 492.8 492.6
------- ------- -----------
Non-current liabilities
Borrowings 13 (3.7) (4.3) (4.0)
Deferred tax liabilities (40.8) (39.3) (40.2)
Employee benefit obligations 15 (18.3) (50.0) (30.5)
------- ------- -----------
Total non-current liabilities (62.8) (93.6) (74.7)
------- ------- -----------
Net assets 430.6 399.2 417.9
------- ------- -----------
EQUITY
Called up share capital 0.3 0.3 0.3
Share premium 15.3 15.3 15.3
Reserves 363.4 336.0 352.8
------- ------- -----------
Equity attributable to owners of the parent 379.0 351.6 368.4
Non-controlling interests 51.6 47.6 49.5
------- ------- -----------
Total equity 430.6 399.2 417.9
------- ------- -----------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2018
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
Notes GBP'm GBP'm GBP'm
Cash generated from operations
Cash flows from operating activities 16 6.4 (0.1) 40.7
Interest paid (0.1) (0.2) (0.5)
Income taxes paid (5.6) (3.6) (12.3)
Interest received 2.0 1.4 3.0
---------- ---------- -----------
Net cash flow from operating activities 2.7 (2.5) 30.9
---------- ---------- -----------
Cash flows from investing activities
Purchase of intangible assets - - (2.5)
Purchase of property, plant and equipment (10.7) (8.6) (20.6)
Proceeds from sale of non-current assets 0.1 0.4 1.3
Proceeds from sale of assets held for sale 0.7 - -
Investment properties - additions (0.3) (0.1) (0.2)
Biological assets: non-current - additions (0.1) (0.1) (0.2)
Part disposal of subsidiaries - - 0.2
Acquisition of subsidiaries (net of cash acquired) (6.4) - -
Cash balances transferred to assets held for sale - - (0.3)
Investment in associates - - (1.0)
Dividends received from associates 1.6 1.8 2.8
Purchase of investments (3.4) - (4.0)
Proceeds from sale of investments 0.9 1.0 1.8
Income from investments 0.4 0.4 0.6
Purchase of other investments - heritage assets - - (0.2)
---------- ---------- -----------
Net cash flow from investing activities (17.2) (5.2) (22.3)
---------- ---------- -----------
Cash flows from financing activities
Equity dividends paid - - (3.6)
Dividends paid to non-controlling interests (1.9) (1.1) (2.5)
New loans - - 0.1
Loans repaid (0.3) (0.2) (0.6)
---------- ---------- -----------
Net cash flow from financing activities (2.2) (1.3) (6.6)
---------- ---------- -----------
Net (decrease)/increase in cash and cash equivalents from
continued operations (16.7) (9.0) 2.0
Net cash (outflow)/inflow from discontinued operation (0.2) 38.6 38.2
Cash and cash equivalents at beginning of period 106.8 71.8 71.8
Exchange gains/(losses) on cash 0.9 (2.7) (5.2)
---------- ---------- -----------
Cash and cash equivalents at end of period 17 90.8 98.7 106.8
---------- ---------- -----------
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.
The above condensed consolidated statement of cash flows should
be read in conjunction with the accompanying notes.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2018
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 2017 0.3 15.3 (0.4) 272.1 43.5 330.8 48.8 379.6
Total comprehensive
income/(expense)
for the period - - - 31.6 (8.2) 23.4 (0.1) 23.3
Dividends - - - (2.6) - (2.6) (1.1) (3.7)
------- ------- -------- -------- -------- ----- ----------- ------
At 30 June 2017 0.3 15.3 (0.4) 301.1 35.3 351.6 47.6 399.2
------- ------- -------- -------- -------- ----- ----------- ------
At 1 January 2017 0.3 15.3 (0.4) 272.1 43.5 330.8 48.8 379.6
Total comprehensive
income/(expense)
for the period - - - 55.2 (14.1) 41.1 3.0 44.1
Dividends - - - (3.6) - (3.6) (2.5) (6.1)
Non-controlling
interest
subscription - - - - - - 0.2 0.2
Share of associate's
other equity
movements - - - 0.1 - 0.1 - 0.1
------- ------- -------- -------- -------- ----- ----------- ------
At 31 December 2017 0.3 15.3 (0.4) 323.8 29.4 368.4 49.5 417.9
Total comprehensive
income for the
period - - - 12.0 1.3 13.3 3.9 17.2
Companies joining
the group - - - - - - 0.1 0.1
Dividends - - - (2.7) - (2.7) (1.9) (4.6)
------- ------- -------- -------- -------- ----- ----------- ------
At 30 June 2018 0.3 15.3 (0.4) 333.1 30.7 379.0 51.6 430.6
------- ------- -------- -------- -------- ----- ----------- ------
NOTE 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 2018 (the "Interim report"). They
should be read in conjunction with the Report and Accounts (the
"Annual Report") for the year ended 31 December 2017.
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 2017 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 consolidated 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.
(a) A number of new or amended standards became applicable for
the current reporting period and the Group had to change its
accounting policies but did not make any retrospective adjustments
as a result of adopting the following standards:
-- IFRS 9 Financial instruments
-- IFRS 15 Revenue from contracts with customers
The impact of the adoption of these standards are disclosed in
note 2.
(b) Impact of standards issued but not yet applied
-- IFRS 16 Leases - effective from 1 January 2019
IFRS 16 will affect primarily the accounting by lessees and will
result in the recognition of almost all leases on Balance Sheet.
The standard removes the current distinction between operating and
financing leases and requires recognition of an asset (the right to
use the leased item) and a financial liability to pay rentals for
virtually all lease contracts. An optional exemption exists for
short-term and low-value leases.
The Income statement will also be affected because the total
expense is typically higher in the earlier years of a lease and
lower in later years. Additionally, operating expense will be
replaced with interest and depreciation. Operating cash flows will
be higher as cash payments for the principal portion of the lease
liability are classified within financing activities. Only the part
of the payments that reflects interest can continue to be presented
as operating cash flows.
These interim condensed consolidated financial statements were
approved by the Board of Directors on 23 August 2018. 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 Accounting policies
These interim condensed consolidated 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 2017. The adoption of IFRS 9 and IFRS 15 has not had a
material impact on the financial statements of the Group. The
impact of the adoption of IFRS 9 Financial Instruments on the
Group's financial statements is set out below. There was no impact
on the Group's financial statements following the adoption of IFRS
15 Revenue from contracts with customers.
IFRS 9 was adopted without restating comparative information and
its adoption has reclassified the Group's financial assets. At the
date of initial application of IFRS 9, the Group has elected to
apply the fair value through other comprehensive income option for
all of its non-controlling equity interests that were classified as
Available for sale financial assets ("AFS") under IAS 39. This
election results in all gains and losses being presented in Other
comprehensive income except dividend income which is recognised in
profit or loss. This differs from the treatment of AFS instruments
under IAS 39 where gains and losses recognised in Other
comprehensive income are reclassified to profit and loss on
derecognition or impairment. The Group's money market funds have
been reclassified as financial assets at fair value through profit
or loss and the Group's infrastructure bonds and debentures have
been reclassified as financial assets at amortised cost. The
following table shows the adjustments recognised for each
individual line item. Line items that were not affected by the
changes have not been included.
Balance sheet (extract)
Reclassified
31 December 1 January
2017 IFRS 9 2018
GBP'm GBP'm GBP'm
Non-current assets
Available-for-sale financial assets 47.0 (47.0) -
Financial assets at fair value through other comprehensive income - 41.3 41.3
Financial assets at fair value through profit or loss - 2.5 2.5
Financial assets at amortised cost - 3.2 3.2
----------- ------ ------------
47.0 - 47.0
----------- ------ ------------
3 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 'off' years.
The majority of the macadamia sales arise in the second half of the
year. 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.
4 Segment reporting - continuing operations
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
Trading Trading Trading
Revenue profit/(loss) Revenue profit/(loss) Revenue profit/(loss)
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Agriculture 96.6 6.7 96.1 1.5 239.4 35.6
Engineering 10.0 (0.9) 9.5 (1.6) 20.5 (2.6)
Food Service 20.7 0.9 17.8 1.2 37.8 1.8
Other operations 0.3 - 0.2 - 0.6 -
------- ------------- ------- ------------- ------- -------------
127.6 6.7 123.6 1.1 298.3 34.8
------- ------- -------
Unallocated corporate
expenses (4.5) (3.9) (8.4)
------------- ------------- -------------
Trading profit/(loss) 2.2 (2.8) 26.4
Share of associates'
results 2.2 3.7 2.0
Impairment of property,
plant and equipment and
provisions (0.1 ) - (1.8 )
Profit on disposal of
financial assets 0.2 0.5 0.7
Investment income 0.4 0.4 0.6
Net finance income/(cost) 1.2 0.1 (0.3)
------------- ------------- -------------
Profit before tax from
continuing operations 6.1 1.9 27.6
Taxation (2.1) (1.4) (13.8)
------------- ------------- -------------
Profit from continuing
operations after tax 4.0 0.5 13.8
------------- ------------- -------------
The Group has assessed that the disaggregation of revenue by
operating segments is appropriate in meeting disclosure
requirements of IFRS 15 as this is the information regularly
reviewed by the management in order to evaluate the financial
performance of the entity. A disaggregation of revenue based on the
timing of transfer of goods or services (i.e. at a point in time or
over time) has not been presented as the amount of revenue
accounted for on an over time basis is not material.
5 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
2018 2017 2017
GBP'm GBP'm GBP'm
Profit before tax 2.6 4.2 2.0
Taxation (0.4) (0.5) -
---------- ---------- -----------
Profit after tax 2.2 3.7 2.0
---------- ---------- -----------
6 Finance income and costs
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
GBP'm GBP'm GBP'm
Interest payable on loans and bank overdrafts (0.1) (0.2) (0.5)
---------- ---------- -----------
Finance costs (0.1) (0.2) (0.5)
Finance income - interest income on short-term bank deposits 2.0 1.4 3.0
Net exchange (loss)/gain on foreign currency balances (0.1) 0.1 (0.1)
Employee benefit expense (0.6) (1.2) (2.7)
---------- ---------- -----------
Net finance income/(cost) 1.2 0.1 (0.3)
---------- ---------- -----------
7 Taxation on profit on ordinary activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
GBP'm GBP'm GBP'm
Current tax
Overseas corporation tax 2.6 3.6 14.3
Deferred tax
Origination and reversal of timing differences
Overseas deferred tax (0.5) (2.2) (0.5)
---------- ---------- -----------
Tax on profit on ordinary activities 2.1 1.4 13.8
---------- ---------- -----------
Tax on profit on ordinary activities for the six months to 30
June 2018 has been calculated on the basis of the estimated annual
effective rate for the year ending 31 December 2018.
8 Discontinued operation
In 2017, the profit (six months GBP15.8 million - year GBP14.8
million) from the discontinued operation included a gain on sale of
GBP19.2 million relating to the disposal of Duncan Lawrie Asset
Management Limited to Brewin Dolphin Limited. For further
information about the discontinued operation please refer to note
10 in the Group's annual financial statements for the year ended 31
December 2017.
9 Equity dividends
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
GBP'm GBP'm GBP'm
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2017 of 98p (2016: 95p) per
share 2.7 2.6 2.7
---------- ----------
Interim dividend for the year ended 31 December 2017 of 37p per share 1.0
-----------
3.7
-----------
Dividends amounting to GBP0.1 million (2017: 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 interim dividend for the year ended 31 December 2018 of 40p
(2017: 37p) per share 1.1 1.0
---------- ----------
The proposed interim dividend was approved by the Board of
Directors on 23 August 2018 and has not been included as a
liability in these financial statements.
10 Earnings/(loss) per share (EPS)
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
Earnings EPS Earnings EPS Earnings EPS
GBP'm Pence GBP'm Pence GBP'm Pence
Attributable to ordinary shareholders 0.5 18.1 14.7 532.2 22.2 803.8
-------- ----- -------- ----- -------- -----
Attributable to ordinary shareholders -
continuing operations 0.8 29.0 (1.1) (39.8) 7.4 268.0
-------- ----- -------- ----- -------- -----
Attributable to ordinary shareholders -
discontinued operation (0.3) (10.9) 15.8 572.0 14.8 535.8
-------- ----- -------- ----- -------- -----
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 (2016: six
months 2,762,000 - year 2,762,000), which excludes 62,500 (2016:
six months 62,500 - year 62,500) shares held by the Group as
treasury shares.
11 Property, plant and equipment
During the six months ended 30 June 2018 the Group acquired
assets with a cost of GBP10.7 million (2017: six months GBP8.6
million - year GBP20.6 million). Assets with a carrying amount of
GBP0.4 million were disposed of during the six months ended 30 June
2018 (2017: six months GBP0.5 million - year GBP1.2 million).
12 Business combinations
During the reporting period, the Group acquired 80% of the share
capital of Jing Tea Limited, a UK based branded speciality teas
business selling to the retail and food service sectors
internationally and 100% of the share capital of Black Gold Oil
Tools Limited, a company based in Aberdeen which provides
engineering services to the oil and gas sector. In doing so, the
Group acquired identifiable intangible fixed assets of GBP5.3
million.
13 Borrowings
Borrowings (current and non-current) include loans and finance
leases of GBP4.3 million (2017: six months GBP4.9 million - year
GBP4.6 million) and bank overdrafts of GBP3.4 million (2017: six
months GBP3.3 million - year GBP1.2 million). The following loans
and finance leases were repaid during the six months ended 30 June
2018:
GBP'm
Balance at 1 January 2018 4.6
Repayments (0.3)
-----
Balance at 30 June 2018 4.3
-----
14 Provisions
Provisions include wages and salaries provisions in respect of
unresolved wage negotiations in Kenya for the Collective Bargaining
Agreement years of 2014/15 and 2016/17 and ongoing wage
negotiations in India and Bangladesh of GBP15.5 million (30 June
2017: GBP10.6 million - 31 December 2017: GBP14.0 million) and
claims of GBP1.0 million (30 June 2017: GBP0.9 million - 31
December 2017: GBP1.2 million).
15 Employee benefit obligations
The UK defined benefit pension scheme for the purpose of IAS 19
has been updated to 30 June 2018 from the valuation as at 31
December 2017 by the actuary and the movements have been reflected
in this interim statement. Overseas pension schemes operated in
Group subsidiaries located in Bangladesh and India have also been
updated to 30 June 2018 from the valuation as at 31 December 2017
by the actuaries and the movements have also been reflected in this
interim statement. The overseas pension schemes operated in The
Netherlands have not been updated from 31 December 2017 valuations
as it is considered that there have not been any significant
changes.
The gratuity and medical benefit schemes located in Bangladesh
and India have been updated to 30 June 2018 by the actuaries and
the movements have been reflected in this interim statement.
An actuarial gain of GBP12.1 million was realised in the period
in relation to the Group's employee obligations of which GBP10.2
million related to the UK defined benefit pension scheme. In
relation to the UK defined benefit pension scheme a gain of GBP3.7
million was realised in relation to the scheme assets and a gain of
GBP6.5 million was realised in relation to changes in the
underlying actuarial assumptions. The assumed discount rate has
increased to 2.65% (31 December 2017: 2.45%) and the assumed rate
of inflation (CPI) has decreased to 2.1% (31 December 2017: 2.2%).
There has been no change in the mortality assumptions used.
16 Reconciliation of profit from continuing operations to cash flow
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
GBP'm GBP'm GBP'm
Profit from continuing operations 4.5 1.4 27.3
Share of associates' results (2.2) (3.7) (2.0)
Depreciation and amortisation 8.0 7.9 15.4
Impairment of assets and provisions 0.1 - 1.8
Realised movements on biological assets - non-current 1.0 0.4 -
Profit on disposal of non-current assets - (0.1) (0.1)
Profit on disposal of financial assets (0.2) (0.5) (0.7)
(Increase)/decrease in working capital (4.4) (4.7) 1.2
Pensions and similar provisions less payments (0.4) (0.8) (2.2)
---------- ---------- -----------
Cash generated from continuing operations 6.4 (0.1) 40.7
---------- ---------- -----------
17 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
2018 2017 2017
GBP'm GBP'm GBP'm
Cash and cash equivalents 94.2 102.0 108.0
Overdrafts repayable on demand (included in current
liabilities - borrowings) (3.4) (3.3) (1.2)
---------- ---------- -----------
90.8 98.7 106.8
---------- ---------- -----------
18 Contingencies
In India, assessments have been received for excise duties of
GBP3.6 million and of GBP1.2 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 land transfer
tax, locally called, 'salami', remains unresolved. Lawyers acting
for the Group have advised that payment of Salami does not apply.
The sum in dispute, excluding fines and penalties, amounts to
GBP1.3 million. Pending resolution of the dispute (which if
resolved in our favour, will result in the sums being returned),
the Group has agreed to deposit the tax in seven equal annual
instalments in order to allow the normal functioning of the
estates.
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.
19 Related party transactions
There have been no related party transactions that had a
material effect on the financial position or performance of the
Group in the first six months of the financial year.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR PGUCGRUPRGQW
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August 24, 2018 02:00 ET (06:00 GMT)
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