RNS Number:4595C
Plantation & General Investmnts.PLC
23 April 2001
Plantation & General Investments plc
Preliminary announcement of results for the year ended 31 December 2000
Extract from the Chairman's Statement
The results for the year ended 31 December 2000 show a profit before tax of
#391,000, compared with a pre-tax loss of #3,547,000 in 1999. Both results
were struck after significant adjustments for the effect of hyper-inflation
in Zimbabwe and Malawi. The 1999 results also included large provisions for
the impairment of fixed assets, notably in Tanzania, which were not repeated
in 2000. Stripping out these adjustments, the underlying performance between
the two years was similar.
Eastern Highlands, in Zimbabwe, faced particularly difficult conditions last
year, and made a significant loss before the inflation adjustment. Local
costs have been increasing sharply for several years, coupled with interest
rates on local currency borrowings that exceeded 60% last year. The local
borrowings by Eastern Highlands had been increased substantially during 1999
to finance a share buyback of the minority and an upgrading of the Wamba tea
factory. A devaluation of the Zimbabwe dollar in August only partly mitigated
the pressure on margins. In September we refinanced a large part of Eastern
Highlands' borrowings by a loan from the UK; this materially reduced Group
interest costs in the last quarter.
As I reported at the half year, a section of Eastern Highlands was listed for
compulsory acquisition in the Zimbabwe Government's Land Reform Programme. We
have since been informed that agro-industrial plantations will be exempt, and
so far there has been no significant disruption to operations on the estate.
The poor performance at Eastern Highlands masked good performances from the
plantations in Malawi and Zambia. The Zambian rose grower, Khal-Amazi,
produced results in line with the demanding targets set when we acquired a
majority stake in 1999. The planting of a further five hectares of roses is
currently taking place. This will increase the operation to 15 hectares,
producing about 100,000 stems per day.
Greatly improved results were achieved at Chillington Manufacturing, the
Group's UK wheelbarrow manufacturer. Following management changes in 1999,
costs were reduced and investment in equipment produced significant
improvements in productivity and service levels. Further development of this
business is likely in the current year.
The development of an internet-based tea auction, eteatrade, has continued
throughout the year. After rigorous testing, the system is expected to go
live later this year. To date, it has cost about #1million in capital
equipment, software and start-up costs, of which #250,000 was charged against
profits in 2000.
We remain committed to our plans to reshape the Group. Last year we sold
several non-core assets, including part of the Brazilian toolmaker
Acotupy/Tarza and a UK industrial property. Since the year end, we have also
sold a small Indonesian plantation.
You will see from the accompanying announcement that we are proposing to
restructure the Group's borrowings by a rights issue of convertible unsecured
loan stock. This will provide us with new medium term finance to replace the
existing loan stock and preference shares, both of which have to be repaid at
the end of 2001.
Looking ahead, the Group continues to be much influenced by commodity prices
and economic conditions in Zimbabwe, Malawi and Zambia. However, we have
achieved some real improvements in the efficiency of the core businesses,
which have created a firm platform for improved performance in the future.
Rupert Pennant-Rea
23 April 2001
Review of Activities
Tropical agriculture
The Group's principal division grows tea, coffee and roses in the Southern
African states of Malawi, Zimbabwe and Zambia and tea and rubber in
Indonesia. Overseas Farmers Group is a trading unit based in London which
markets the produce of the group's agricultural operations and provides
support services. The overall operating profit for the division increased by
36 per cent to #1,440,000.
Tea accounted for 72 per cent of the division's turnover. Total production
for the year was 15,490 tonnes from a mature area of 6,628 hectares. The
yield per hectare rose by 11 per cent. from 1999. Average tea prices improved
by about 10% over those achieved in 1999 although they still remain below the
ten year average.
As a result of additional factory investment, particularly in the Wamba and
Nchima factories, the proportion of tea which sold as prime grades increased
significantly during the year.
Rose production in Zambia totalled 21.7 million stems and contributed 13 per
cent of the division's turnover. During the year 5 hectares of new computer
controlled greenhouses came into production, and orders were placed for a
further 5 hectares to be installed in 2001.
The arabica coffee crop for the year was 857 tonnes, a fall of 16 per cent on
the previous year over half of which was due to a reduction in acreage. This,
combined with the severe fall in coffee prices, reduced the receipts from
coffee by about 42% to #711,000. By hedging a high proportion of the crop on
the futures market we achieved a better result than is likely to be possible
in the coming season. Coffee contributed 9 per cent of the division's
turnover. The acreage to coffee will be further reduced as the dryland
plantings in Malawi are converted to macadamia nuts.The total area under
these trees is now 350 hectares and they will come into production over the
next five years.
The production from the Indonesian rubber estates rose by 10 per cent to
1,375 tonnes as more of the plantation came into production. Rubber prices
remained at about the previous year's level which is at the low end of the
ten year range. The crop contributed 4% of the plantations' turnover.
Trading
The new venture, eteatrade, has been under development for over a year and is
expected to hold its first auction in mid 2001. The system was not ready for
the 2000 season but is expected to be in operation well before the African
markets go into the 2001/2002 season. The objective of the service is to
provide producers with a wider market for their teas and packers with a more
efficient way of sourcing the teas they need.
Jacobs Young & Westbury, the UK importer of furniture and leisure products,
mainly for the garden, suffered a reduction in operating profits due to
retailer price pressure and a rather poor season for garden furniture. This
is being addressed by cost reduction and improvements to product and customer
mix.
Manufacturing
Chillington Manufacturing, the UK's largest wheelbarrow maker, doubled
profits as a result of reorganisation and substantial cost reduction. Another
stage of development of this business is being undertaken in 2001.
The remaining Brazilian hand tool manufacturer, Tarza, incurred losses after
the disposal of its main Acotupy brands. The high residual overhead costs are
the cause of this and it is expected that the remaining business will be sold
in 2001.
At Nicholl & Wood, it was decided to concentrate efforts on restoring the
business to profitability and the substantial redundancy costs contributed to
a loss for the year.
Outlook
Management is concentrating on improving the performance of our ongoing
operations by developing better management processes and by investment in
manufacturing equipment. In addition there is more to be done to complete the
disposal programme. When the group can operate against a background of
reasonable commodity prices, exchange rates and weather, the improving
performance of the
ongoing businesses will be reflected in future results.
Richard Clothier
Group Chief Executive
23 April 2001
Enquires
Plantation & General Investments plc 020 7246 0207
Richard Clothier, Group Chief Executive
Geoff Moores, Finance Direcetor
Consolidated profit & loss account
for the year ended 31 December 2000
Continuing operations
2000 1999
Notes #000 #000
Turnover 40,820 41,431
-------- --------
Cost of sales (31,074) (30,896)
-------- --------
Gross profit 9,746 10,535
Operating expenses (8,607) (9,271)
Exceptional item:
Impairment of fixed assets - (3,117)
-------- --------
Operating profit/(loss) 1,139 (1,853)
Share of result of associated undertaking (15) (12)
Loss on disposal or closure of operations (28) (47)
Profit/(loss) on disposal of investments 34 (80)
-------- --------
Profit/(loss) before interest 1,130 (1,992)
Interest (2,339) (2,207)
Monetary working capital hyper-inflation 1,600 652
adjustment
-------- --------
Profit/(loss) before taxation 391 (3,547)
Taxation 1 (309) (265)
-------- --------
Profit/(loss) after taxation 82 (3,812)
Minority interests (11) 212
-------- --------
Profit/(loss) for the year 71 (3,600)
Dividends (non-equity) (171) (172)
-------- --------
Amount transferred from reserves (100) (3,772)
=== ====
Pence Pence
Loss per ordinary share
Basic (0.2) (7.3)
Dividends per ordinary share 2 - -
Balance sheets at 31 December
2000
Group Company
2000 1999 2000 1999
Fixed assets #000 #000 #000 #000
Intangible assets 490 545 - -
Tangible assets 28,092 28,314 36 69
Investments 126 227 35,532 33,018
-------- -------- -------- --------
28,708 29,086 35,568 33,087
-------- -------- -------- --------
Current assets
Stocks 7,526 8,635 - -
Debtors 6,623 8,098 225 322
Cash at bank and in hand 843 670 634 169
-------- -------- -------- --------
14,992 17,403 859 491
-------- -------- -------- --------
Creditors: amounts falling due (11,852) (8,498) (6,535) (18)
within one year
Debt finance (including amounts
relating to
convertible debt)
Other (8,631) (8,880) (1,436) (1,161)
-------- -------- -------- --------
(20,483) (17,378) (7,971) (1,179)
-------- -------- -------- --------
Net current (liabilities)/assets (5,491) 25 (7,112) (688)
-------- -------- -------- --------
Total assets less current 23,217 29,111 28,456 32,399
liabilities
-------- -------- -------- --------
Creditors: amounts falling due
after more than
one year
Debt finance(1999 including (1,262) (7,310) (63) (4,758)
amounts relating to convertible
debt)
Other (867) (368) (249) (259)
-------- -------- -------- --------
(2,129) (7,678) (312) (5,017)
Provisions for liabilities and (15) (20) - -
charges
-------- -------- -------- --------
Net assets 21,073 21,413 28,144 27,382
-------- -------- -------- --------
Capital and reserves
Called up share capital 14,751 14,751 14,751 14,751
Share premium account 11,375 11,375 11,375 11,375
Capital redemption reserve 250 250 250 250
Revaluation reserves 2,402 3,223 - -
Profit and loss account (9,467) (9,885) 1,768 1,006
-------- -------- -------- --------
Shareholders' funds
Equity 17,506 17,909 26,339 25,577
Non-equity 1,805 1,805 1,805 1,805
-------- -------- -------- --------
19,311 19,714 28,144 27,382
Minority interest -------- -------- -------- --------
Equity 798 790 - -
Non-equity 964 909 - -
-------- -------- -------- --------
1,762 1,699 - -
-------- -------- -------- --------
21,073 21,413 28,144 27,382
===== ===== ===== =====
Consolidated cash flow statement
for the year ended 31 December 2000
2000 1999
#000 #000
Cash flow from operating activities 4,745 1,355
Returns on investments and servicing of finance (2,525) (2,458)
Taxation - UK corporation tax paid (44) (21)
Taxation - Overseas tax paid (272) (615)
Capital expenditure and financial investment (56) (2,913)
Acquisitions and disposals 464 (3,231)
-------- --------
Cash flow before financing 2,312 (7,883)
-------- --------
Financing - Purchase of shares - (25)
- Loan (net of repayments) 895 (863)
- Capital elements of finance lease rentals (257) (199)
payable
- Decrease in other financing - (690)
-------- --------
Total financing 638 (1,777)
-------- --------
Increase/(decrease) in cash in the year 2,950 (9,660)
-------- --------
Reconciliation of net cash flow to movement in net
debt
Increase/(decrease) in cash in the year 2,950 (9,660)
Cash (inflow)/outflow from (increase)/reduction in (895) 863
debt
Cash outflow from reduction in finance lease 257 199
liabilities
-------- --------
Change in net debt resulting from cash flows 2,312 (8,598)
New finance leases (320) (253)
Translation differences 875 120
Acquisition of subsidiaries - (476)
-------- --------
Movement in net debt in the year 2,867 (9,207)
Net debt 1 January (15,138) (5,931)
-------- --------
Net debt 31 December (12,271) (15,138)
-------- --------
Reconciliation of operating profit to operating cash
flow
Operating profit/(loss) 1,139 (1,853)
Depreciation 1,153 1,278
Amortisation of goodwill 55 -
Impairment of fixed assets - 3,117
Working capital (increase)/decrease
Stocks 1,109 (692)
Debtors 1,475 (642)
Creditors 363 335
Translation difference on working capital (174) 386
Working capital derived from disposal of (142) (566)
subsidiary undertakings and divisions
Disposal of tangible fixed assets (233) (8)
-------- --------
4,745 1,355
==== ====
Statement of total recognised gains & losses
for the year ended 31 December 2000
2000 1999
#000 #000
Profit/(loss) for the year 71 (3,600)
Revaluation surplus/(deficit) net of minority 5,754 (797)
interests
Exchange differences (6,013) (833)
-------- --------
Total recognised losses for the year (188) (5,230)
-------- --------
Statement of movement in shareholders' funds
For the year ended 31 December 2000
2000 1999
#000 #000
Recognised losses for the year (188) (5,230)
Dividends (171) (172)
Reversal of capital reserve less goodwill on - (1,048)
Disposals/impairment of fixed assets
Additional costs: purchase of own shares in prior (44) -
years
Shares purchased - (25)
-------- --------
Net reduction in shareholders' funds (403) (6,475)
Shareholders' funds at beginning of year 19,714 26,189
-------- --------
Shareholders' funds at the end of year 19,311 19,714
===== =====
Segmental analysis - Profit/(loss) before taxation
2000 1999
#000 #000
By activity:
Tropical agriculture 1,440 1,056
Trading 264 646
Manufacturing 61 320
Central costs net of sundry income (635) (897)
Interest (net of monetary working capital (739) (1,555)
hyper-inflation adjustment)
Impairment of fixed assets - (3,117)
-------- --------
391 (3,547)
===== =====
NOTES
1. Taxation
2000 1999
#000 #000
UK corporation tax:
Current tax on income for the period 406 232
Double taxation relief (406) (232)
-------- --------
- -
-------- --------
Foreign tax:
Current tax on income for the period 308 387
Group's share of associated company's taxation 1 -
-------- --------
309 387
-------- --------
Deferred tax:
Adjustments in respect of prior periods - (122)
-------- --------
Tax on profit on ordinary activities 309 265
===== =====
2. Dividend
No final dividend is proposed in 2000 (1999: nil).
3. 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 2000 or 1999 but is
derived from those accounts. Statutory accounts for 1999 have been delivered
to the Registrar of Companies, whereas those for 2000 which have been agreed
with Company's Auditors will be delivered following the Company's Annual
General Meeting. The Auditors have reported on the 1999 accounts; their
report was unqualified and did not contain a statement under Section 237(2)
or (3) of the Companies Act 1985. The report of the auditors on the 2000
accounts will be qualified. 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 FRS15 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.
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