RNS Number:1884L
Plantation & General Investmnts.PLC
18 April 2005
Plantation & General Investments Plc
18 April 2005
Plantation & General Investments plc
Preliminary statement of the Group's results for the year ended 31 December 2004
Chairman's Statement
The result for the year ended 31 December 2004 shows a small loss before
taxation of #26,000 compared with a profit of #364,000 in 2003.
Eastern Highlands Plantations, the Group's estate in Zimbabwe, had a very poor
result (#2.1 million worse than the previous year), which offset the improvement
in every other Group business. The biggest boost came from the Malawi estates,
where tea production reached record levels and sold for prices above those in
2003.
In Zimbabwe a new system for exchanging foreign currency was introduced by the
Reserve Bank in January 2004. This resulted in a strengthening of the local
currency even though local cost inflation was rampant, averaging, on official
figures, 385 per cent. during the year. Not surprisingly, that combination made
tea exports unprofitable. As I have reported before in recent years, Eastern
Highlands Plantations has received various compulsory acquisition orders.
However, local and central government authorities have periodically and recently
indicated that the current orders will not be implemented and the company
continues to operate the estate without interference.
In December 2004 we announced the acquisition in Zambia of assets from the joint
receivers of Agriflora Ltd, a company that had a well established business
growing vegetables and roses for the European market. The total consideration
amounted to US$2.5 million and the acquisition was completed in January 2005. A
new Zambian subsidiary, Chalimbana Fresh Produce Ltd, was formed to acquire and
develop the assets of the vegetable business, and the rose assets were
transferred to Khal Amazi Ltd.
The Group's net borrowings increased during the year by just over #2 million,
largely due to another expansion at Khal Amazi, the initial payment for the
Zambian assets of Agriflora and the losses at Eastern Highlands Plantations.
The charges for taxation and minority interests were higher than normal due to
non-recurring charges in Indonesia in respect of prior periods. These were
incorporated into the interim figures for prior periods.
The Group will be reporting its financial results in accordance with
International Financial Reporting Standards from 1 January 2005. The main
effects on the Group accounts will be summarised in the Group's published
accounts for 2004.
Current trading and prospects
In February 2005 we announced the proposed acquisition of Jensen, which operates
the business of property investment management and development in the Russian
Federation, and the intention to raise #9 million by way of an equity issue.
Full details of these developments are in the Listing Particulars that will be
circulated to Shareholders today. This significant new venture for the Group
will be led by Steve Wayne, and I am pleased to welcome him to our Board today.
He brings considerable experience of the property business in St. Petersburg and
of the management of property funds.
As a first step, the Board plans to raise a fund of $100 million for the
development of property in the St. Petersburg area. It is proposed to establish
this fund through Jensen Cayman, a new company that will be owned 80 per cent.
by the Company and 20 per cent. by an entity owned by Mr Wayne. In addition,
Jensen Cayman proposes to pursue the possibility of entering into a contract to
manage a 31-hectare property in Sestroretsk, a suburb of St. Petersburg.
To reflect the new development of the Group, the Board proposes to change the
name of the Company to PGI Group Plc. This will be put to shareholders together
with resolutions relating to the proposed rights issue at the EGM which will be
convened for 11 May 2005 by a notice in the Listing Particulars mentioned above.
Following the reshaping of Jacobs Young & Westbury over the last few years, the
business was sold to its two senior executives in March 2005, and its freehold
property was also sold. These disposals, plus the sale of one other property
near Halifax since the year end, produced net proceeds of #750,000.
I will conclude with some brief comments about our agricultural prospects for
2005. The current year has started modestly and the prospects for the Group for
at least the current financial year are currently positive. The exceptional
yields of 2004 in Malawi may be difficult to repeat without ideal weather
conditions, and tea prices have been below the previous years levels. However,
prices of roses and rubber are broadly similar to last year, and the expansion
of Khal Amazi's greenhouses will provide some useful growth. The principal
uncertainty is the exchange rate in Zimbabwe. With continued high inflation, the
local currency will need to decline significantly if Eastern Highlands is to
avoid further large losses.
The Group's employees have once again worked with enthusiasm and commitment, and
I thank them for their wholehearted contribution during the year.
Rupert Pennant-Rea
Chairman
18 April 2005
REVIEW OF ACTIVITIES
Tropical agriculture
The Group's principal division grows tea, roses, macadamia nuts and fresh
vegetables in the Southern African states of Malawi, Zambia and Zimbabwe, and
rubber and tea in Indonesia. Overseas Farmers Group in London markets the
produce of the Group's agricultural operations and provides support services.
The overall operating profit for this division decreased by 26 per cent. to
#2,967,000. This reduction was entirely due to the losses at Eastern Highlands
Plantation, where hyperinflation combined with state control of the exchange
rate resulted in substantial losses. Excluding Eastern Highlands, the profit
improved by over 40 per cent.
The contribution of products and countries to the division's turnover was as
follows:
Tea 71 Malawi 50
Roses 17 Zimbabwe 17
Rubber 9 Zambia 17
Macadamia nuts 3 Indonesia 16
----- -----
100% 100%
Total tea production for the year was 19,913 tonnes of which 1,956 tonnes were
made from the purchase of green leaf from smallholders, a policy we are actively
promoting to support the local community in both Malawi and Zimbabwe. For the
5th year in succession, yield per hectare has increased, and the total tea
production (including smallholder tea) has increased over this period by 28 per
cent. Average market prices for tea were 8 per cent. higher than 2003,
contributing an improvement of about #750,000.
Rose production in Zambia increased by 6 per cent. to 53.9 million stems and
prices again improved with the strengthening Euro. During the year a further 7
hectares were established, which will significantly increase production in 2005.
This brings the total at Khal Amazi to 22 hectares, and the addition of
greenhouses acquired from the joint receivers of Agriflora will, over the next
two years, double the total area under production at Khal Amazi.
In December 2004 some of the newly installed greenhouses were damaged during a
period of exceptionally heavy rain. The manufacturer is currently rebuilding, at
his cost, approximately 5 hectares. This will delay part of the contribution
from the recent additions.
The fresh vegetable business, Chalimbana Fresh Produce, also being established
out of the assets of Agriflora, will begin production for export in the second
quarter of 2005. The acquisition included a 2,500 sq. metres packshed located 16
km from Lusaka airport and a farm of 2,220 hectares of which 300 hectares are
currently irrigable.
The production from the Indonesian rubber estates rose by 3 per cent. to 2,446
tonnes as the plantations continued to mature. Rubber prices have maintained the
improved level of 2003.
Macadamia nut production in Malawi should rise steadily over the next 10 years
as trees come to maturity. The total delivered was 428 tonnes of nut in shell.
The arabica coffee crop, now only grown in Zimbabwe and being phased out,
produced 122 tonnes.
The largest cost category of plantations is labour. By improved practices and
increasing mechanisation, we have again increased overall productivity.
Trading
Jacobs Young & Westbury, the importer of garden furniture and leisure products,
started to rebuild its business after the change in terms of trading imposed by
its major customer. However, since the year end, the business was sold to its
two senior managers.
Manufacturing
The Group's UK wheelbarrow manufacturer, Chillington, completed the overhaul of
its production systems and significantly reduced its losses. However, its
performance was held back by swingeing steel price increases which materially
reduced margins for most of the year. Price increases were achieved towards the
end of the year, but margins remain under pressure.
Investment
The major project, other than the acquisition of Agriflora assets, was the 7
hectare expansion of Khal Amazi. The cost of greenhouses and plantings amounted
to #800,000. Further work on the Bloomfield tea factory in Malawi and the usual
replacement of machinery and vehicles on the plantations brought the total to
#1.8 million (previous year #1.3 million).
Outlook
Tea prices have declined during the first quarter of 2005 to about 10 cents per
kg below last year. This will be partly offset by some improvements in quality,
particularly at Eastern Highlands Plantations. Nevertheless, this factor is
likely to reduce margins for at least the main part of the season.
Political and economic instability in Zimbabwe probably represents the other
notable risk. The March election has taken place relatively peacefully and we
await the possible effects of the outcome on inflation and the exchange rate.
Chalimbana Fresh Produce will increase its sales during the year, but income is
unlikely to exceed operating costs until 2006. Rubber and rose prices are much
as last year and Khal Amazi's expansion should contribute some increase in
earnings.
Richard Clothier
Chief Executive
18 April 2005
Consolidated Profit and Loss Account
for the year ended 31 December 2004
2004 2003
Note #'000 #'000
Turnover
Continuing operations 20,230 19,547
Discontinued operations 2,033 3,366
----- -----
Cost of sales (14,677) (14,242)
----- -----
Gross profit 7,586 8,671
Operating expenses (6,082) (6,651)
----- -----
Continuing operations 1,287 1,861
Discontinued operations 217 159
----- -----
Operating profit and profit before interest 1,504 2,020
Interest (1,576) (1,591)
----- -----
(Loss)/profit after interest (72) 429
Monetary working capital hyper-inflation adjustment 46 (65)
----- -----
(Loss)/profit before taxation (26) 364
Taxation 1 (1,163) (680)
----- -----
Loss after taxation (1,189) (316)
Minority interests (244) 44
----- -----
Loss for the year and amount transferred from reserves (1,433) (272)
pence pence
Loss per ordinary share (Basic) (2.8) (0.5)
Dividends per ordinary share 2 - -
Consolidated Balance Sheet
at 31 December 2004
2004 2003
#'000 #'000
Fixed assets
Intangible assets 270 325
Tangible assets 22,133 22,819
Investments 329 45
----- -----
22,732 23,189
Current assets
Stocks 2,782 2,200
Debtors 1,993 1,806
Cash at bank and in hand 803 399
----- -----
5,578 4,405
Creditors: amounts falling due within one year:
Debt finance (5,507) (2,874)
Other (4,426) (3,866)
----- -----
(9,993) (6,740)
----- -----
Net current (liabilities) (4,335) (2,335)
----- -----
Total assets less current liabilities 18,377 20,854
Creditors: amounts falling due after more than one year:
Debt finance (including amounts relating to
convertible debt) (9,311) (9,494)
Other (673) (346)
Provision for liabilities and charges (269) (147)
----- -----
8,124 10,867
Capital and reserves
Called up share capital 12,950 12,948
Share premium account 11,198 11,248
Capital redemption reserve 250 250
Revaluation reserves 754 781
Profit and loss account (18,057) (15,253)
----- -----
Shareholders funds - equity 7,095 9,974
Minority interests -
Equity 44 286
Non-equity 985 607
----- -----
1,029 893
----- -----
8,124 10,867
Consolidated cash flow statements
for the year ended 31 December 2004
2004 2003
#'000 #'000
Cash flow from operating activities 1,792 3,114
Returns on investments and servicing of finance (1,599) (1,695)
Taxation - Oversea tax paid (361) (39)
Net fixed asset and investment additions (1,989) (1,219)
----- -----
(2,157) 161
Financing
Issue of shares (net of expenses) 1 -
Loans (net of repayments) 3,088 (634)
Capital elements of finance lease rental payable (99) (138)
----- -----
Total financing 2,990 (772)
----- -----
Increase/(decrease) in cash in the year 833 (611)
Reconciliation of net cash flows to movements in net
debt
Increase/(decrease) in cash in the year 833 (611)
Cash (inflow)/outflow from change in debt (3,088) 634
Cash outflow from reduction in finance lease
liabilities 99 138
----- -----
Change in net debt resulting from cash flows (2,156) 161
New finance leases - (13)
Exchange translation differences 110 310
----- -----
Movement in net debt in the year (2,046) 458
----- -----
Net debt at beginning of year (11,969) (12,427)
Net debt at end of year (14,015) (11,969)
(2,046) 458
Reconciliation of operating profit to operating cash
flow
Operating profit 1,504 2,020
Depreciation 923 881
Amortisation of goodwill 55 55
Working capital (increase)/decrease:
Stocks (582) 718
Debtors (187) 895
Creditors 280 (452)
Exchange translation differences on working capital (159) (1,004)
Disposal of tangible fixed assets (72) (23)
Disposal of minority interest 30 -
----- -----
1,792 3,114
Statement of total recognised gains & losses
for the year ended 31 December 2004
2004 2003
#'000 #'000
Loss for the year (1,433) (272)
Monetary working capital hyper-inflation adjustment (46) 65
Revaluation deficit net of minority interests (699) (558)
Exchange differences (702) (2,230)
----- -----
Total recognised losses for the year (2,880) (2,995)
Statement of movement in shareholders' funds
for the year ended 31 December 2004
2004 2003
#'000 #'000
Recognised losses for the year (2,880) (2,995)
Issue of new shares (net of expenses) 1 -
----- -----
Net reduction in shareholders' funds (2,879) (2,995)
Shareholders' funds at beginning of year 9,974 12,969
----- -----
Shareholders' funds at the end of year 7,095 9,974
Segmental analysis - profit/(loss) before taxation
2004 2003
#'000 #'000
By activity:
Continuing operations:
Tropical agriculture 2,967 4,013
Manufacturing (484) (968)
Central costs net of sundry income (1,196) (1,184)
Interest (including monetary working capital
hyper-inflation adjustment) (1,530) (1,656)
----- -----
(243) 205
Discontinued operations:
Trading 217 159
----- -----
(26) 364
Notes to the Preliminary Statements
1. Taxation
2004 2003
#000 #000
UK corporation tax:
Current tax on income for the period 58 66
Double taxation relief (58) (66)
----- -----
- -
----- -----
Foreign tax:
Current tax on income for the period 719 598
Adjustment in respect of prior periods 306 -
Other 4 (51)
----- -----
1,029 547
----- -----
Deferred taxation:
Origination and reversal of timing differences 118 118
Lower rates on overseas earnings - (16)
(Increase)/decrease in discount (43) 31
Adjustment in respect of prior periods 59 -
----- -----
134 133
----- -----
Tax on profit on ordinary activities 1,163 680
2. Dividend
No final dividend is proposed in 2004 (2003: nil)
3. Earnings/(loss) per ordinary share
Basic earnings per ordinary share for the year ended 31 December 2004 is
calculated on a weighted average of 51,795,403 ordinary shares (2003: 51,791,722
ordinary shares). The conversion of convertible loan stock would be
antidilutive.
4. Accounts
The preliminary announcement has been prepared on the basis of the accounting
policies as set out in the most recently published set of annual accounts.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2004 and 2003 but is derived
from the statutory accounts for the year ended 31 December 2003 and the draft
statutory accounts for the year ended 31 December 2004, which have been agreed
with the Company's auditors. Statutory accounts for 2003 have been delivered to
the Registrar of Companies, whereas those for 2004 will be delivered following
the Company's Annual General Meeting. The Auditors have reported on the 2003
accounts; their report was qualified for the same matter as mentioned below and
contained a statement under section 237(3) of the Companies Act 1985, but it did
not contain a statement under Section 237(2) of that Act. The report of the
auditors on the 2004 accounts will be qualified for the following reasons.
Plantations and related assets have been included in the balance sheet at
valuations determined by the directors and not by qualified valuers as the
directors believe reliable full valuations as required by FRS 15 cannot be
obtained. Thus there were no satisfactory audit procedures which could be
adopted in order that the auditors could confirm that these properties were
valued at their depreciated replacement cost at the balance sheet date and the
audit report will be qualified, in respect of this point alone, accordingly.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFWFLASISESL
Pgi Group (LSE:PGI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Pgi Group (LSE:PGI)
Historical Stock Chart
From Jul 2023 to Jul 2024
