TIDMCAM
RNS Number : 0722I
Camellia PLC
25 August 2016
Camellia Plc
Interim results
Camellia Plc (AIM:CAM) announces its interim results for the six
months ended 30 June 2016.
Malcolm Perkins, Chairman of Camellia Plc, stated:
"Profits for the first six months of the year are substantially
higher than the same period last year, once again demonstrating the
strength in the diversity of the group."
"Underlying progress was made by all of our businesses, however
a number have faced truly challenging conditions either due to
weather or markets and the outlook for the group continues to be
mixed. In addition, unpredictable weather makes crop volumes hard
to predict and has a consequential effect on prices. In the short
term the depreciation in sterling against most of our operating
currencies in the agricultural division is likely to have a
positive impact on our full year results. In the UK, the lowering
of the interest rate will inevitably have a detrimental impact on
our banking operations and the continuing uncertainty following the
EU referendum vote has triggered a slowdown in our engineering
businesses. It is too early, and there remain too many
uncertainties, to make any prediction for the full year."
Financial highlights
Year Year Year
ended ended ended
Six months Six months
ended ended
30 June 30 June 31 December
2016 2015 2015
GBP'm GBP'm GBP'm
Restated(1) Restated(1)
Revenue 106.1 102.5 257.8
Headline profit/(loss)
before tax* 4.9 (3.1) 26.5
Profit/(loss) for
the period 2.4 (4.3) 7.2
Earnings per share 29.0 p (188.3) p 50.7 p
Proposed interim
dividend 35 p 34 p
Total dividend
for the year 129 p
(1) Restated to include bearer crops as property, plant and
equipment: to include growing crop of green leaf tea at fair value
and to
include the green leaf element of made tea inventories at fair
value in accordance with IAS 16 and IAS41 (amended). The effect of
the inclusion of fair values for green leaf growing crop and for
green leaf in inventory as required by IAS41 is to accelerate the
recognition of an element of profit which would historically have
been recognised in future periods
* Headline profit is a measure of the underlying performance of
the group which is not impacted by exceptional items or items
considered non-operational in nature
Highlights
-- Agriculture benefitted from strong tea production
volumes in the first half of the year in
India, Kenya and Bangladesh and strong prices
in India, offset in part by lower prices
for our tea in all other jurisdictions and
reduced profits from macadamia primarily
due to drought
-- Duncan Lawrie made progress in implementing
its growth plan however, as for all banks,
the decision by the Bank of England to reduce
interest rates and the uncertainties surrounding
the property market, make the environment
more challenging
-- Abbey Metal Finishing continues to trade
ahead of expectations following its turnaround
last year
-- AJT Engineering continues to be adversely
impacted by conditions in the oil and gas
market and the situation remains under close
review
-- Cash and cash equivalents at 30 June 2016
were GBP53.0 million (30 June 2015 - GBP40.5
million)
This announcement contains inside information for the purpose of
Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
The Interim Report will be available to download from the
investor relations section on the Company's website
www.camellia.plc.uk
Enquiries
Camellia Plc 01622 746655
Tom Franks, CEO
Susan Walker CFO
Panmure Gordon 0207 886 2500
Nominated Advisor and Broker
Andrew Godber
Erik Anderson
Chairman's statement
Our results for the first half show a profit before tax of
GBP4.9 million, compared with a loss (restated) of GBP3.1 million
last year. This is the first year in which our permanent plantings
have been classified under IAS 16 as property, plant and equipment
rather than under IAS 41 as biological assets, which I hope will
make the underlying results clearer for shareholders. We are still
relatively early in the year for the agricultural business and
therefore, as always, the second half will be key to the overall
performance for the year.
The divisional results are discussed in more detail in the
operating review, but once again demonstrate the strength in the
diversity of the group. Weather patterns continue to be erratic
with benign conditions in Kenya leading to record crops but no end
in sight to the drought in South Africa. There is no question that
the uncertainty both before and after the EU referendum vote has
had an impact on the UK economy, and on our UK businesses, but with
most of our earnings coming from outside the UK the depreciation of
sterling following the vote will help our reported result.
Underlying progress was made by all of our businesses in the
first half of the year, however a number have faced truly
challenging conditions either due to weather or markets. In the
2015 Annual Report we set out the strategy for each of our
divisions; strategies which are designed to provide long term value
to shareholders in line with the group's ethos. However, markets
and economic conditions continue to change rapidly and these
strategies will remain under review by the Board and Executive
Committees.
Dividend
The Board has declared an interim dividend of 35p (2015: 34p)
payable on 7 October 2016 to shareholders registered at the close
of business on 8 September 2016.
Outlook
The outlook for the group continues to be mixed. In addition,
unpredictable weather makes crop volumes hard to predict and has a
consequential effect on prices. However in the short term the
depreciation in sterling against most of our operating currencies
in the agricultural division is likely to have a positive impact on
our full year results. In the UK, the lowering of the interest rate
will inevitably have a detrimental impact on our banking operations
and the continuing uncertainty following the EU referendum vote has
triggered a slowdown in our engineering businesses. It is too
early, and there remain too many uncertainties, to make any
prediction for the full year.
Malcolm Perkins
Chairman
24 August 2016
Operating Review
The operating profit for the group in the first half was GBP3.2
million on group revenues that were 3.5% ahead of the same period
last year at GBP106.1 million. As explained in the Chairman's
statement, if the depreciation of Sterling is sustained it will
have a positive impact on reported profits for the full year.
This is the first time that we have reported our bearer crops as
property, plant and equipment. In addition, we have included the
growing crop of green leaf tea at fair value and included the green
leaf element of made tea inventories at fair value as required by
IAS 41, the effect of which is to accelerate the recognition of an
element of profit which would historically have been recognised in
future periods. All numbers including prior years have therefore
been restated.
Agriculture
Tea
India: The tea crop in India in the first 6 months was better
than last year (up approximately 21%), which was heavily drought
affected, and prices were also higher than in the same period last
year. Since 1 July, significant rainfall has caused flooding which
has reduced our crop expectations for July and August and prices
have reduced.
Bangladesh: Conditions in Bangladesh have been excellent for
growing tea in the first half of the year with volumes
significantly up (66.7%) on last year. Given the volumes, prices
have held up relatively well, partly as a result of an increase in
the duty levied on imported teas, although they were marginally
below last year. Since 1 July prices have shown some
improvement.
Kenya: Kenya has seen a record production of tea in the first
half of this year, and our estates have been no exception (up
approximately 50%). However, as we warned in the annual report, tea
prices in Kenya have dropped significantly since the start of the
year and our margins have been materially reduced.
Malawi: The weather in Malawi has been less favourable than in
other tea growing areas and as a result our crop is down 6% in the
first half of the year. Encouragingly however, given the volumes of
tea being produced in Kenya, prices have remained stable in dollar
terms. Our Malawi operations are committed to the revitalisation
programme outlined in the 2015 Annual Report and this is having a
significant impact on overall production costs. We continue to
believe that this is the correct strategy to build a sustainable
future for the Malawi tea industry.
Macadamia
Prices for macadamia have remained firm in the first half of the
year, but the impact of the drought caused by last year's El Nino
on production volumes is only now fully emerging. We currently
estimate that our macadamia kernel volumes for the year will be
down by approximately 50% in South Africa and by 25% to 30% in
Malawi.
On a more positive note, the new macadamia cracking facility in
Kenya has been completed within budget and has now been fully
commissioned and is meeting our expectations.
Avocado
It is early in the season for the main avocado crop but
harvesting has begun and currently looks to be in line with our
expectations.
Speciality crops
Pricing for rubber has marginally improved from the very low
levels of last year, but is unlikely to become commercially
attractive until there is a sustained improvement in the oil
price.
In California, the Murcott harvest was significantly down on
expectations for both volume and price. Although the Navel harvest
was significantly higher than last year, prices were lower and the
net benefit was insufficient to compensate for the lower Murcott
revenues. Harvesting of the almonds and pistachios has yet to
begin. There was a higher rainfall this winter than for some time
which has increased the availability of surface water at the
farm.
The grape harvest in South Africa was poor as a result of the
drought which will inevitably impact volumes and revenues this
year.
Soya yields in Brazil were above expectations.
The remaining speciality crops are performing broadly in line
with expectations.
In total, the Agriculture division made a trading profit of
GBP7.3 million (2015: profit GBP1.6 million) on turnover of GBP75.1
million (2015: GBP65.3 million).
Banking and Financial Services
The first half of the year saw Duncan Lawrie implementing the
first stage of its new strategic plan. Sally Tennant has now been
appointed as Chairman, certain restrictions on bank lending have
been removed and a number of other key appointments have been made.
As with all banks, the decision by the Bank of England to lower
interest rates and the uncertainties surrounding the property
market, make the environment more challenging. The group continues
to monitor the risk environment surrounding the bank.
Of our associated companies, BF&M reported core operating
earnings in the first three months of 2016 ahead of the
corresponding period in 2015. The remaining associates traded in
line with expectations.
In total, the Banking and Financial Services division's
subsidiaries made a trading loss of GBP2.8 million (2015: trading
loss GBP1.2 million) on turnover of GBP6.0 million (2015: GBP6.7
million). In addition, our share of the profits of associates
amounted to GBP2.6 million (2015: GBP0.5 million) reflecting the
inclusion of BF&M as an associate from 1 July 2015.
Engineering
Engineering North: The oil industry in Aberdeen continues to
suffer from the decline in the oil price and uncertainties
surrounding investment in the North Sea. Orders at AJT continue to
be below where we would like them to be and consequently we have
had to take measures including a redundancy programme and the
temporary introduction of reduced working hours in order to contain
overheads. The situation remains under close review.
Engineering South: Abbey Metal Finishing continues to trade
ahead of expectations following its turnaround last year. The
remaining businesses in the division are trading broadly in line
with expectations.
In total, the Engineering division made a trading loss of GBP0.9
million (2015: trading loss GBP3.5 million) on turnover of GBP10.1
million (2015: GBP15.1 million).
Food Service
The Food Service division continues to trade in line with
expectations reporting trading profit of GBP0.1 million for the
year to date (2015: profit GBP0.4 million) on turnover of GBP14.7
million (2015: GBP15.2 million).
Investments
Our Investment portfolio has increased in value from GBP30.6
million at 31 December 2015 to GBP34.2 million, primarily
reflecting the depreciation of sterling against the Japanese Yen
during the period.
Pensions
With expectations for future investment returns remaining at low
levels and in light of the performance of our UK operations, we
have started a statutory 60 day consultation with the active
members of the Linton Park Pension Scheme (2011) on a proposal to
close the defined benefit section to future accrual.
Tom Franks
Chief Executive
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 2016 and their impact on the financial
statements set out herein.
Principal risks and uncertainties
The directors' report in the statutory financial statements for
the year ended 31 December 2015 (the accounts are available on the
company's website: www.camellia.plc.uk) highlighted risks and
uncertainties that could have an impact on the group's businesses.
As these businesses are widely spread both in terms of activity and
location, it is unlikely that any one single factor could have a
material impact on the group's performance. These risks and
uncertainties continue to be relevant for the remainder of the
year. In addition, the 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 2015.
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 August 2016
Consolidated income statement
for the six months ended 30 June 2016
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Notes GBP millions GBP millions GBP millions
Restated Restated
Revenue 5 106.1 102.5 257.8
Cost of sales 6 (76.5) (78.5) (179.2)
------------ ------------ ------------
Gross profit 29.6 24.0 78.6
Other operating income 1.3 0.9 1.9
Distribution costs (3.9) (3.5) (12.9)
Administrative expenses (27.5) (28.3) (58.0)
------------ ------------ ------------
Trading (loss)/profit 5 (0.5) (6.9) 9.6
Share of associates' results 8 2.6 0.5 4.2
Impairment of available-for-sale financial assets - - (0.5)
Impairment of property, plant and equipment and
provisions - - 0.2
Profit on disposal of non-current assets 9 - 0.9 3.7
Profit on disposal of available-for-sale
investments 10 1.1 0.2 0.3
------------ ------------ ------------
Profit/(loss) from operations 3.2 (5.3) 17.5
Investment income 0.3 1.2 1.4
------------ ------------ ------------
Finance income 1.6 1.4 3.1
Finance costs (0.2) (0.3) (0.7)
Net exchange gain 0.5 0.5 0.8
Employee benefit expense (0.5) (0.6) (1.7)
------------ ------------ ------------
Net finance income 11 1.4 1.0 1.5
------------ ------------ ------------
Profit/(loss) before tax 4.9 (3.1) 20.4
--------------------------------------------------- ----- ------------ ------------ ------------
Comprising
- headline profit/(loss) before tax 7 4.9 (3.1) 26.5
- post employment benefits - past service cost 7 - - (6.1)
------------ ------------ ------------
4.9 (3.1) 20.4
--------------------------------------------------- ----- ------------ ------------ ------------
Taxation 12 (2.5) (1.2) (13.2)
------------ ------------ ------------
Profit/(loss) for the period 2.4 (4.3) 7.2
------------ ------------ ------------
Profit/(loss) attributable to:
Owners of the parent 0.8 (5.2) 1.4
Non-controlling interests 1.6 0.9 5.8
------------ ------------ ------------
2.4 (4.3) 7.2
------------ ------------ ------------
Earnings per share - basic and diluted 14 29.0p (188.3 )p 50.7p
Statement of comprehensive income
for the six months ended 30 June 2016
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP millions GBP millions GBP millions
Restated Restated
Profit/(loss) for the period 2.4 (4.3) 7.2
------------ ------------ ------------
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to profit or
loss:
Remeasurements of post employment benefit obligations (note 19) (15.9) 7.2 9.1
Deferred tax movement in relation to post employment benefit
obligations - - 0.6
------------ ------------ ------------
(15.9) 7.2 9.7
------------ ------------ ------------
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences 28.1 (5.7) (12.3)
Available-for-sale investments:
Valuation (losses)/gains taken to equity (0.2) (1.1) 0.2
Transferred to income statement on sale - - (0.2)
Share of other comprehensive income of associates - - (0.1)
------------ ------------ ------------
27.9 (6.8) (12.4)
------------ ------------ ------------
Other comprehensive income/(expense) for the period, net of tax 12.0 0.4 (2.7)
------------ ------------ ------------
Total comprehensive income/(expense) for the period 14.4 (3.9) 4.5
------------ ------------ ------------
Total comprehensive income/(expense) attributable to:
Owners of the parent 9.0 (3.4) 3.7
Non-controlling interests 5.4 (0.5) 0.8
------------ ------------ ------------
14.4 (3.9) 4.5
------------ ------------ ------------
Consolidated balance sheet
at 30 June 2016
30 June 30 June 31 December
2016 2015 2015
Notes GBP millions GBP millions GBP millions
Restated Restated
Non-current assets
Intangible assets 7.7 7.6 7.9
Property, plant and equipment 15 220.3 224.7 203.3
Investment properties 16.0 10.7 15.8
Biological assets 16 12.6 10.0 11.3
Prepaid operating leases 0.9 0.8 0.8
Investments in associates 55.5 8.9 48.9
Deferred tax assets 2.9 0.2 2.5
Available-for-sale financial assets 34.2 63.0 30.6
Held-to-maturity financial assets 4.3 - 27.7
Other investments - heritage assets 9.0 9.0 9.0
Retirement benefit surplus 19 0.2 0.8 0.2
Trade and other receivables 35.3 7.8 22.7
------------ ------------ ------------
Total non-current assets 398.9 343.5 380.7
------------ ------------ ------------
Current assets
Inventories 51.6 42.9 38.1
Biological assets 16 8.7 6.9 7.2
Trade and other receivables 57.1 79.9 55.6
Held-to-maturity financial assets 38.5 - 1.8
Current income tax assets 1.0 1.2 0.8
Cash and cash equivalents 17 218.9 241.8 237.8
------------ ------------ ------------
Total current assets 375.8 372.7 341.3
------------ ------------ ------------
Current liabilities
Borrowings 18 (2.3) (4.1) (5.4)
Trade and other payables (288.6) (266.8) (258.9)
Current income tax liabilities (7.8) (4.4) (9.5)
Employee benefit obligations 19 (1.3) (0.5) (1.0)
Provisions (0.1) (0.4) (0.3)
------------ ------------ ------------
Total current liabilities (300.1) (276.2) (275.1)
------------ ------------ ------------
Net current assets 75.7 96.5 66.2
------------ ------------ ------------
Total assets less current liabilities 474.6 440.0 446.9
------------ ------------ ------------
Non-current liabilities
Borrowings 18 (4.8) (5.4) (5.1)
Trade and other payables (4.2) (3.7) (4.4)
Deferred tax liabilities (38.3) (39.1) (38.0)
Employee benefit obligations 19 (54.7) (34.4) (37.8)
Other non-current liabilities - (0.1) -
------------ ------------ ------------
Total non-current liabilities (102.0) (82.7) (85.3)
------------ ------------ ------------
Net assets 372.6 357.3 361.6
------------ ------------ ------------
Equity
Called up share capital 0.3 0.3 0.3
Share premium 15.3 15.3 15.3
Reserves 313.0 300.4 306.6
------------ ------------ ------------
Equity attributable to owners of the parent 328.6 316.0 322.2
Non-controlling interests 44.0 41.3 39.4
------------ ------------ ------------
Total equity 372.6 357.3 361.6
------------ ------------ ------------
Consolidated cash flow statement
for the six months ended 30 June 2016
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Notes GBP millions GBP millions GBP millions
Restated Restated
Cash generated from operations
Cash flows from operating activities 20 (6.0) (0.8) 39.5
Interest paid (0.3) (0.3) (0.6)
Income taxes paid (7.3) (5.1) (9.4)
Interest received 1.6 1.6 3.1
Dividends received from associates 1.2 0.3 1.2
------------ ------------ ------------
Net cash flow from operating activities (10.8) (4.3) 33.8
Cash flows from investing activities
Purchase of intangible assets (0.1) (0.8) (1.4)
Purchase of property, plant and equipment (6.9) (5.2) (16.3)
Purchase of investment properties (0.2) (8.6) (8.7)
Proceeds from sale of non-current assets 0.1 1.8 6.5
Biological assets - new plantings (0.1) (0.2) (0.4)
Biological assets - disposals 0.3 0.5 0.5
Part disposal of a subsidiary 0.9 0.1 0.3
Purchase of available-for-sale financial assets (1.0) (2.1) (2.3)
Proceeds from sale of available-for-sale financial
assets 1.2 1.0 1.7
Purchase of other investments - heritage assets - (0.1) (0.2)
Income from investments 0.3 1.2 1.4
------------ ------------ ------------
Net cash flow from investing activities (5.5) (12.4) (18.9)
Cash flows from financing activities
Equity dividends paid - - (3.5)
Dividends paid to non-controlling interests (1.5) (1.1) (4.5)
New loans - 6.0 6.0
Loans repaid (0.3) (0.1) (0.4)
------------ ------------ ------------
Net cash flow from financing activities (1.8) 4.8 (2.4)
------------ ------------ ------------
Net (increase)/decrease in cash and cash equivalents (18.1) (11.9) 12.5
Cash and cash equivalents at beginning of period 65.6 54.1 54.1
Exchange gains/(losses) on cash 5.5 (1.7) (1.0)
------------ ------------ ------------
Cash and cash equivalents at end of period 53.0 40.5 65.6
------------ ------------ ------------
For the purposes of the cash flow statement, cash and cash equivalents are included net of
overdrafts repayable on demand. These overdrafts are excluded from the definition of cash
and cash equivalents disclosed on the balance sheet.
For the purposes of the cash flow statement cash and cash equivalents comprise:
Cash and cash equivalents 218.9 241.8 237.8
Less banking operation's funds (164.2) (197.8) (167.4)
Overdrafts repayable on demand (included in current
liabilities - borrowings) (1.7) (3.5) (4.8)
------------ ------------ ------------
53.0 40.5 65.6
------------ ------------ ------------
Statement of changes in equity
for the six months ended 30 June 2016
Non-
Share Share Treasury Retained Other controlling Total
capital premium shares earnings reserves Total interests equity
GBP GBP GBP GBP GBP GBP GBP GBP
millions millions millions millions millions millions millions millions
Restated Restated Restated Restated Restated
At 1 January 2015 0.3 15.3 (0.4) 303.2 3.3 321.7 42.7 364.4
Restatement (note
3) - - - 0.2 - 0.2 0.1 0.3
-------- -------- -------- -------- -------- -------- ----------- --------
At 1 January 2015
restated 0.3 15.3 (0.4) 303.4 3.3 321.9 42.8 364.7
Total
comprehensive
income/(expense)
for the period - - - 2.1 (5.5) (3.4) (0.5) (3.9)
Dividends - - - (2.5) - (2.5) (1.1) (3.6)
Non-controlling
interest
subscription - - - - - - 0.1 0.1
-------- -------- -------- -------- -------- -------- ----------- --------
At 30 June 2015 0.3 15.3 (0.4) 303.0 (2.2) 316.0 41.3 357.3
-------- -------- -------- -------- -------- -------- ----------- --------
At 1 January 2015 0.3 15.3 (0.4) 303.2 3.3 321.7 42.7 364.4
Restatement (note
3) - - - 0.2 - 0.2 0.1 0.3
-------- -------- -------- -------- -------- -------- ----------- --------
At 1 January 2015
restated 0.3 15.3 (0.4) 303.4 3.3 321.9 42.8 364.7
Total
comprehensive
income/(expense)
for the period - - - 11.6 (7.9) 3.7 0.8 4.5
Dividends - - - (3.5) - (3.5) (4.5) (8.0)
Non-controlling
interest
subscription - - - - - - 0.3 0.3
Share of
associate's other
equity movements - - - 0.1 - 0.1 - 0.1
-------- -------- -------- -------- -------- -------- ----------- --------
At 31 December
2015 0.3 15.3 (0.4) 311.6 (4.6) 322.2 39.4 361.6
Total
comprehensive
(expense)/income
for the period - - - (15.2) 24.2 9.0 5.4 14.4
Dividends - - - (2.6) - (2.6) (1.5) (4.1)
Non-controlling
interest
subscription - - - - - - 0.7 0.7
-------- -------- -------- -------- -------- -------- ----------- --------
At 30 June 2016 0.3 15.3 (0.4) 293.8 19.6 328.6 44.0 372.6
-------- -------- -------- -------- -------- -------- ----------- --------
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 2016 (the "Interim Report"). They
should be read in conjunction with the Report and Accounts (the
"Annual Report") for the year ended 31 December 2015.
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 2015 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.
Where necessary, the comparatives have been restated from the
previously reported interim results to take into account any
presentational changes made in the Annual Report.
These interim condensed financial statements were approved by
the board of directors on 24 August 2016. At the time of approving
these financial statements, the directors have a reasonable
expectation that the company and the group have adequate resources
to continue to operate for the foreseeable future. They therefore
continue to adopt the going concern basis of accounting in
preparing the financial statements.
2 Accounting policies
These interim condensed 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 2015. In
addition, the group has implemented the following amended
standards:
IAS 16 and IAS 41 (amendments) Reporting for bearer
plants
A summary of the above amendments was provided on page 48 of the
2015 Annual Report.
IAS 16 and IAS 41 (amendments) amends the reporting for bearer
plants. The group has applied the amendments retrospectively in
accordance with the transition provisions of the standard and the
comparative figures have been restated. The impact on the group has
been in the following areas:
As bearer plants are now accounted for under IAS 16 rather than
IAS 41 in the same way as property, plant and equipment, fair value
adjustments are no longer required and instead the assets will now
be depreciated. The produce on bearer plants will remain in the
scope of IAS 41 and require a fair value adjustment. The effect has
been that the loss before tax for the period to 30 June 2015 has
reduced by GBP5.3 million and profit for the year to 31 December
2015 has decreased by GBP20.1 million.
The effect of these amendments is to increase earnings per share
from a loss of (288.1)p per share to a loss of (188.3)p per share
for the period 30 June 2015 and decease earnings per share from a
profit of 450.7p per share to a profit of 50.7p per share for the
year to 31 December 2015, the effect on the cash flow statement is
immaterial.
3 Restatement - fair value of green leaf tea
As disclosed in the 2015 Annual Report, made tea was included in
inventory at cost as no reliable fair value was available to
reflect the uplift in value arising at the point of harvest of
green leaf. Following a reassessment, the fair value for green leaf
at the point of harvest can now be more reliably calculated. Made
tea inventories now include the fair value of green leaf and the
impact of this change is a GBP0.2 million uplift in opening
reserves and GBP0.1 million uplift in non-controlling interest, at
1 January 2015.
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 and maize in Brazil and citrus in California are generally
harvested in the first half of the year. In California the
pistachio crop occurs in the second half of the year and has 'on'
and 'off' years. The majority of the macadamia 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
2016 2015 2015
Trading Trading Trading
Revenue (loss)/profit Revenue (loss)/profit Revenue profit/(loss)
GBP GBP GBP
millions GBP millions millions GBP millions millions GBP millions
Restated Restated
Agriculture and
horticulture 75.1 7.3 65.3 1.6 186.5 26.8
Engineering 10.1 (0.9) 15.1 (3.5) 25.8 (5.5)
Food storage and
distribution 14.7 0.1 15.2 0.4 31.9 0.7
Banking and
financial services 6.0 (2.8) 6.7 (1.2) 13.1 (3.6)
Other operations 0.2 - 0.2 - 0.5 -
---------- ------------- ---------- ------------- ---------- -------------
106.1 3.7 102.5 (2.7) 257.8 18.4
---------- ---------- ----------
Unallocated
corporate expenses (4.2) (4.2) (8.8)
------------- ------------- -------------
Trading
(loss)/profit (0.5) (6.9) 9.6
Share of associates'
results 2.6 0.5 4.2
Profit on disposal
of non-current
assets - 0.9 3.7
Profit on disposal
of
available-for-sale
investments 1.1 0.2 0.3
Impairment of
available-for-sale
financial assets - - (0.5)
Impairment of
property, plant and
equipment and
provisions - - 0.2
Investment income 0.3 1.2 1.4
Net finance income 1.4 1.0 1.5
------------- ------------- -------------
Profit/(loss) before
tax 4.9 (3.1) 20.4
Taxation (2.5) (1.2) (13.2)
------------- ------------- -------------
Profit/(loss) after
tax 2.4 (4.3) 7.2
------------- ------------- -------------
6 Cost of sales
Included in cost of sales are the following gains/(losses)
arising from changes in fair value of biological assets:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP millions GBP millions GBP millions
Restated Restated
Gain arising from change in fair value of agricultural produce 3.8 3.9 2.9
Gain/(loss) from change in fair value of non-current biological
assets 0.2 (0.2) 1.9
------------ ------------ ------------
4.0 3.7 4.8
------------ ------------ ------------
In addition, included within inventories is a fair value gain of
GBP4.1 million (2015: six months GBP4.1 million gain - year GBP0.4
million gain) relating to the uplift in green leaf tea values at
the point of harvest.
7 Headline profit/(loss)
The group seeks to present an indication of the underlying
performance which is not impacted by exceptional items. This
measure of profit/(loss) is described as 'headline' and is used by
management to measure and monitor performance.
The following item has been excluded from the headline
measure:
- A charge of GBP6.1 million included in
cost of sales for the year ended 31 December
2015 for past service relating to legislation
enacted in Bangladesh which required companies
to make a payment on retirement or other
events terminating employment to all employees,
based upon compensation and length of
service.
8 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
2016 2015 2015
GBP millions GBP millions GBP millions
Profit before tax 3.2 0.8 5.2
Taxation (0.6) (0.3) (1.0)
------------ ------------ ------------
Profit after tax 2.6 0.5 4.2
------------ ------------ ------------
From 1 July 2015, following a re-evaluation of the group's
relationship with BF&M Limited, the directors concluded that
the group is in a position to exercise significant influence over
BF&M Limited. As a result the investment in this company has
been reclassified from available-for-sale financial assets to an
investment in associate. Six months of the group's share of
BF&M's result for the year ending 31 December 2015 have been
included in the above results. In addition, in 2015 GBP22.7 million
was credited to the income statement which reflected the negative
goodwill arising from the recognition of BF&M Limited as an
associate, which was offset by an impairment provision of GBP22.7
million which was provided against the group's equity carrying
value of this investment to reflect its fair value. The net effect
impact of these items on the income statement was GBPnil.
9 Profit on non-current assets
In 2015, a profit of GBP1.6 million was realised in relation to
the property, plant and equipment previously owned by AKD
Engineering Limited which was sold following the closure of the
business at the end of June 2015 and profits of GBP2.1 million
(2015: six months GBP0.9 million) were realised during the year in
relation to the disposal of former sites owned by Abbey Metal
Finishing Company Limited and GU Cutting and Grinding Services
Limited.
10 Profit on disposal of available-for-sale investments
The profit of GBP1.1 million includes a profit of GBP0.9 million
relating to the part disposal of the group's interest in VISA
Europe.
11 Finance income and costs
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP millions GBP millions GBP millions
Interest payable on loans and bank overdrafts (0.2) (0.3) (0.7)
------------ ------------ ------------
Finance costs (0.2) (0.3) (0.7)
Finance income - interest income on short-term bank deposits 1.6 1.4 3.1
Net exchange gain on foreign currency balances 0.5 0.5 0.8
Employee benefit expense (0.5) (0.6) (1.7)
------------ ------------ ------------
Net finance income 1.4 1.0 1.5
------------ ------------ ------------
The above figures do not include any amounts relating to the
banking subsidiaries.
12 Taxation on profit on ordinary activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP millions GBP millions GBP millions
Restated Restated
Current tax
Overseas corporation tax 5.0 3.3 13.4
Deferred tax
Origination and reversal
of timing differences
Overseas deferred tax (2.5) (2.1) (0.2)
------------ ------------ ------------
Tax on profit on ordinary
activities 2.5 1.2 13.2
------------ ------------ ------------
Tax on profit on ordinary activities for the six months to 30
June 2016 has been calculated on the basis of the estimated annual
effective rate for the year ending 31 December 2016.
13 Equity dividends
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP millions GBP millions GBP millions
Amounts recognised as distributions to equity holders in the
period:
Final dividend for the year ended 31 December 2015 of 95.00p (2014:
92.00p) per share 2.6 2.5 2.5
------------ ------------
Interim dividend for the year ended 31 December 2015 of 34.00p per
share 1.0
------------
3.5
------------
Dividends amounting to GBP0.1 million (2015: six months GBP0.1 million - year GBP0.1 million)
have not been included as group companies hold 62,500 issued shares in the company. These
are classified as treasury shares.
Proposed interim dividend for the year ended 31 December 2016 of
35.00p (2015: 34.00p) per
share 1.0 1.0
------------ ------------
The proposed interim dividend was approved by the board of
directors on 24 August 2016 and has not been included as a
liability in these financial statements.
14 Earnings per share (EPS)
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Earnings EPS Earnings EPS Earnings EPS
GBP millions Pence GBP millions Pence GBP millions Pence
Restated Restated Restated Restated
Basic and diluted EPS
Attributable to ordinary
shareholders 0.8 29.0 (5.2) (188.3) 1.4 50.7
------------ ----- ------------ -------- ------------ --------
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 (2015: six
months 2,762,000 - year 2,762,000), which excludes 62,500 (2015:
six months 62,500 - year 62,500) shares held by the group as
treasury shares.
15 Property, plant and equipment
During the six months ended 30 June 2016 the group acquired
assets with a cost of GBP6.9 million (2015: six months GBP5.2
million - year GBP16.3 million). Assets with a carrying amount of
GBP0.1 million were disposed of during the six months ended 30 June
2016 (2015: six months GBP0.9 million - year GBP2.8 million).
16 Biological assets
Non-current biological assets includes the fair value of timber
and livestock. Current biological assets relates to the fair value
of growing crop and agricultural produce for bearer crops.
17 Cash and cash equivalents
Included in cash and cash equivalents of GBP218.9 million (2015:
six months GBP241.8 million - year GBP237.8 million) are cash and
short-term funds, time deposits with banks and building societies
and certificates of deposit amounting to GBP164.2 million (2015:
six months GBP197.8 million - year GBP167.4 million), which are
held by banking subsidiaries and which are an integral part of the
banking operations of the group.
18 Borrowings
Borrowings (current and non-current) include loans and finance
leases of GBP5.4 million (2015: six months GBP6.0 million - year
GBP5.7 million) and bank overdrafts of GBP1.7 million (2015: six
months GBP3.5 million - year GBP4.8 million). The following loans
and finance leases were taken out and repaid during the six months
ended 30 June 2016:
GBP
million
Balance at 1 January 2016 5.7
Repayments - loans (0.3)
--------
Balance at 30 June 2016 5.4
--------
19 Retirement benefit schemes
The UK defined benefit pension scheme for the purpose of IAS 19
has been updated to 30 June 2016 from the valuation as at 31
December 2015 by the actuary and the movements have been reflected
in this interim statement. Overseas schemes have not been updated
from 31 December 2015 valuations as it is considered that there
have been no significant changes.
An actuarial loss of GBP15.9 million was realised in the period,
of which a gain of GBP6.9 million was realised in relation to the
scheme assets, GBP0.4 million was realised in relation to
experience gains on scheme liabilities and a loss of GBP23.2
million was realised in relation to changes in the underlying
actuarial assumptions. The assumed discount rate has decreased to
2.8% (31 December 2015: 3.8%), the assumed rate of inflation (CPI)
has decreased to 1.8% (31 December 2015: 2.0%) and the assumed
inflation rate for salaries decreased to 1.8% (31 December 2015:
2.0%). There has been no change in the mortality assumptions
used.
20 Reconciliation of profit/(loss) from operations to cash flow
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP millions GBP millions GBP millions
Restated Restated
Profit/(loss) from operations 3.2 (5.3) 17.5
Share of associates' results (2.6) (0.5) (4.2)
Depreciation and amortisation 7.6 7.6 14.4
Impairment of assets - - 0.5
Gain arising from changes in fair value of biological assets (8.1) (7.8) (5.2)
Profit on disposal of non-current assets - (0.9) (3.7)
Profit on disposal of investments (1.1) (0.2) (0.3)
Profit on part disposal of subsidiary (0.2) - -
(Increase)/decrease in working capital (2.4) 6.7 16.4
Pensions and similar provisions less payments 3.3 (0.6) 4.0
Net (increase)/decrease in funds of banking subsidiaries (5.7) 0.2 0.1
------------ ------------ ------------
(6.0) (0.8) 39.5
------------ ------------ ------------
21 Related party transactions
There have been no related party transactions that had a
material effect on the financial position or performance of the
group in the first six months of the financial year.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUUPRUPQGQC
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