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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September 25, 2020 02:00 ET (06:00 GMT)