Last checked at 5 Jun 2008 12:13
Camellia Plc
Chairman's Statement
AGM 5th June 2008
I would now like to take this opportunity to bring shareholders up to date with developments in the current year.
Kenya not only suffered from political tension in the early part of the year but also from a serious drought. The tension has been alleviated by the formation of a power sharing government. It is to be hoped that this government will draft a new constitution that will be satisfactory to all parties and that peace can prevail. The drought has now broken but it is unlikely that the lost crop will be fully recovered. Elsewhere, in Malawi crops have been very satisfactory but India and Bangladesh have experienced a slow start to the season. Generally tea prices are ahead of last year.
The comparative weakness of the dollar continues to have a major impact on the profitability of most of our agricultural and horticultural operations with the exception of avocado exports from Kenya that are mostly sold in Euros. Our costs are increasing on account of very high fertiliser prices which have more than doubled over the last year, and also higher energy costs and the price of foodstuffs that are made available at heavily subsidised rates to our labour. The increasing cost of living will undoubtedly have an effect on wage demands over the next year and the prospects of increased inflation particularly in developing countries is a cause for concern when such increase is not matched by a corresponding fall in the value of the local currency. Although higher food prices, exacerbated by increased demand and the diversion of grains to bio fuels, are to be regretted they do have a positive effect on our food production companies and in particular our farm in Brazil which is enjoying another good year.
Our engineering companies are experiencing mixed fortunes partially due to a slow down in economic activity in the North Sea oil and gas market over the winter. However, prospects are now improved as a result of the continuing high cost of oil. Associated Cold Stores and Transport have now completed their rationalisation process and prospects are more encouraging.
Duncan Lawrie has not suffered from the credit crisis and has no exposure to the sub-prime market or other derivatives of dubious value. Low dealing activity and lower stock market values will have some effect on the profitability of its asset management business, as will one-off integration costs of the Douglas Deakin Young and Hill Martin companies.
The Camellia Group has low borrowings and is in good shape to weather the recession, should it occur. I am however as usual unable to give any indication of the results for the first half of the year.
Further enquiries please contact Camellia Plc
Malcolm Perkins
01622 746655