Camellia PLC Trading Update (3797A)
January 21 2020 - 2:00AM
UK Regulatory
TIDMCAM
RNS Number : 3797A
Camellia PLC
21 January 2020
21 January 2020
Camellia Plc
(the "Company")
Trading update
The Board announces the following trading update for the year
ended 31 December 2019.
Agriculture
As we stated in the interim report for the six months ended 30
June 2019, over-production of tea globally in 2018 led to very high
year end inventories and put severe pressure on prices for tea at
the start of 2019. Prices did not improve as the year progressed
and, across all our tea operations during the critical November and
December trading period, were also significantly lower than
expected. The impact of these on profits for the year has been
partially offset by efficiency and other savings. Total group made
tea produced for 2019 was 101mkg (2018: 103.1mkg).
As anticipated, our own estate avocado crop volumes for the year
were approximately 40% lower than those of 2018 and our average
prices have been 140% higher than prior year, despite the market
weakening in November and December on the back of lower demand and
high levels of supply.
Macadamia saleable kernel production volumes were higher than
expected in the second half of the year with full year production
12% higher than in 2018 and average prices up 4%.
The results of our USA business benefited from the receipt of
significant additional revenues in respect of the 2018 pistachio
crop which had not been anticipated.
The remaining agriculture operations have traded broadly in line
with expectations.
Engineering and Food Services
Profits from Engineering and Food Services are broadly in line
with our expectations.
Associates
BF&M, the Bermuda-based insurer in which Camellia owns c37%,
released its third quarter results in December which confirmed a
significant impact on profits from Hurricane Dorian. BF&M is
due to release its full year results in early April and it is
therefore difficult to predict the impact of its full year results
on our own results at this time.
Other
There are a number of other matters which will have an impact on
the year end result but for some of which the financial impact has
yet to be finalised.
-- Following the agreement with the Kenyan Plantation and
Agricultural Workers Union in July 2019 on the principal terms of a
settlement in respect of the previously outstanding Collective
Bargaining Agreement years of 2014/15, 2016/17 and 2018/19, the
final calculations and payments have been made for all categories
of workers and, as previously announced, the 2017 wage award in
West Bengal is also now final. The profit before tax for the year
will reflect a higher level of gains arising from the release of
these provisions in Kenya and India amounting to GBP9.7 million in
aggregate compared to GBP8.0 million included in the 2019 interim
report.
-- In Bangladesh, legislation has been enacted requiring certain
companies to contribute to workers profit participation funds. The
applicability of this legislation to our larger businesses in
Bangladesh is unclear, and the government funds to which payments
are to be made have not yet been established. While the quantum is
uncertain, we anticipate having to make a significant provision in
our 2019 financial statements for historic liabilities.
-- 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 of those
companies' African operations. The allegations are of serious
assault, harassment and sexual misconduct allegedly committed by
certain individuals employed by those two foreign operating
companies. The Company and its wider group takes any complaint of
criminality, misconduct, illegality, or unethical behaviour
extremely seriously. The allegations are being urgently
investigated. We have incurred legal costs during 2019 relating to
this and further expenses are expected in 2020.
-- As is normal during our year end process we are reviewing impairment provisions.
-- IFRIC 23 'Uncertainty over tax treatments' is being
implemented from 1 January 2019. This accounting pronouncement
requires a reassessment of our tax provisions across the Group.
This work is ongoing but we expect a significant adverse impact on
our tax charge for the 2019 tax year.
In aggregate, revenue for the Group for the year ending 31
December 2019 is now expected to be approximately GBP294 million.
Overall, the combination of these items, and particularly the
impact of lower tea prices, means that profits for the Group will
be significantly below expectations for the year ended 31 December
2019. That said, Camellia remains financially strong, with
significant net cash resources. This and our long-term outlook
allows us to trade through difficult periods in the tea cycle and
continue to implement our development plans.
The Company will make further announcements when appropriate on
the matters above when their impact is more certain.
The annual results are expected to be published on 8 April
2020.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
Enquiries
Camellia Plc
01622 746655
Tom Franks, CEO
Susan Walker, CFO
Panmure Gordon
020 7886 2500
Nominated Adviser and Broker
Emma Earl
Erik Anderson
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END
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