Camellia Regulatory News (CAM)

28 Apr 2005 15:04

Camellia PLC28 April 2005 Camellia Plc Preliminary Results For Year Ended 31 December 2004 Highlights from the results:- Year ended Year ended 31 December 31 December 2004 2003 £000 £000 Turnover - continuing operations 178,587 170,758 Profit before taxation 8,212 27,522 Profit after taxation 3,361 26,330 Earnings per share - Basic and diluted 130.47 p 999.18 p Dividends 88.00 p 87.00 p Camellia Plc Extract from Chairman's Statement Pre-tax profit for the year ended 31 December 2004 was £8.21 million comparedwith £27.52 million in 2003. The previous year did, of course, include anexceptional profit of £21.20 million in respect of the sale of the group'swarehouse complex at Banbury. The underlying profitability can therefore beconsidered to be satisfactory, notwithstanding restructuring costs in respect ofthe group's tea operations in South Africa. The profit attributable toshareholders was £3.38 million compared with £25.98 million in 2003 and earningsdecreased from 999.18p per share to 130.47p per share. Dividend The board is recommending a final dividend of 68p per share, which, togetherwith the interim dividend already paid of 20p per share, brings the totaldistribution for the year to 88p per share compared with 87p per share in 2003. Agriculture and Horticulture Tea India Weather conditions at the start of the season were unfavourable and this,coupled with the group's policy of producing only quality tea, resulted in acrop of 25.21 million kgs. compared with 28.24 million kgs. in the previous yearand produced a profit before tax of £990,000 compared with a loss of £496,000 in2003. It is encouraging to report that prices have shown a considerableimprovement and all the group's twelve Dooars gardens were included in the toptwenty of the regional averages. Similar satisfactory prices were obtained inAssam. In Darjeeling it is most encouraging to report that the group's gardens havereturned to marginal profitability and this again reflects the emphasis onquality. Useful orders continued to be obtained for the instant tea plant at Aibheel TeaGarden and additional machinery is being installed to increase capacity for whatis now a much sought after product. The law and order situation in Assam hasbecome relatively satisfactory and there have been no major incidents affectingthe group's gardens. Bangladesh Weather conditions were unfavourable at the start of the season and the tenLongbourne gardens have produced a crop of 10.74 million kgs. compared with11.16 million kgs. in the previous year. Prices have been satisfactory althoughat the year end they were 4% lower than in 2003. Africa Climatic conditions in 2004 were generally favourable and subsidiary companiesproduced 41.5 million kgs.. Our operations in Kenya and Malawi performed welland produced satisfactory profits, maintaining good quality with increasedyield. Our involvement in the smallholder sector in both countries also expandedduring the year and now forms a meaningful part of our business on which we hopeto build further in the future. The situation in respect of tea production in South Africa deteriorated furtherin 2004 due to the continuing strength of the rand, the imposition of acomparatively high minimum wage and the withdrawal of duty protection againsttea imports. As foreshadowed in my statements made to shareholders last year,the potential losses that were likely to be incurred in continuing to run ouroperations were of such a magnitude that the board was left with no alternativebut to cease production. The closure costs included in the 2004 accounts amountto a net figure of £2,032,000. Nepal Himalaya Goodricke Private Limited produced a record crop of 333,000 kgs. butwill only show a marginal profit of £5,000. The political situation in Nepalgives great cause for concern but fortunately the workings of the garden havebeen unaffected. Citrus Yandilla Park enjoyed an improved year in Australia with good production andprices. The packing and marketing operations also benefited from increaseddemand. In October, Yandilla Park entered into a contract to sell the majorityof its orchards to an agricultural investment company but will retain themanagement of the properties under a fifteen-year agreement. Co-incidentally, anoffer was received in 2005 for all the share capital of East African CoffeePlantations Limited which was considered to fully value the underlyingoperations and the group decided to accept this offer, which has now beendeclared unconditional, in respect of its 70.5% holding. The citrus orchards in California are progressing well and will shortly providea useful diversification from the effects of the biennial bearing pattern of thepistachios. Production in South Africa and Chile is satisfactory and movingtowards maturity although, as in tea, the strength of the South African rand hasreduced returns in that country. Edible Nuts 2004 was a very good year for the pistachio operations in California with goodyields combining with a strong market price. Our macadamia orchards in both Malawi and South Africa also experienced a goodyear. Drought conditions caused a reduction in yield in South Africa but pricesremain strong and the prospects for this crop are encouraging. We intend todevelop our interests in macadamia and plant further hectarage in South Africaand Malawi. Other Horticulture The pineapple joint venture in Kenya with Del Monte made a valuable contributionto Kakuzi's earnings with production and profits exceeding expected levels.Current arrangements with Del Monte expire in 2008 and we are at presentnegotiating a new agreement that may also encompass further areas of landpreviously utilised by the coffee operations. Avocados made a significantcontribution to Kakuzi's earnings and expansion of the avocado orchards isongoing. Wine grape production in Australia was good but the market has been flooded withsurplus wine, which is a worldwide phenomenon affecting also the market in Chileand South Africa. The strength of the South African rand has also contributed tothe difficulty in exporting wine profitably into European markets. Our SouthAfrican reserve merlot 2001 has however recently been awarded a Grand Gold Medalat the prestigious Concours Mondial de Bruxelles 2005. The rubber operation in Bangladesh continued to be satisfactory and a total of681 tonnes was produced. Prices were 24% higher than in 2003. Brazil again enjoyed a good year with excellent yields and with soya pricescontinuing to benefit from demand from China. Drought will affect production inthe current year and prices have moved downwards particularly as a result of theincreased crop in North America in 2004. Food Storage and Distribution 2004 was another disappointing year for Associated Cold Stores and Transport.The market remains very competitive with rates continuing their downward path asa result of further cost pressure on suppliers from the major retailers.Additional cost reduction measures have taken place and the management team hasbeen restructured. Affish performed well in 2004 although Wylax suffered fromlack of demand from the Dutch restaurant sector. Engineering The poor results for 2004 relate particularly to AKD at Lowestoft where capacityfar exceeded the demand from a depressed oil and gas sector resulting in lowmargins. The effect of the increase in the price of oil is now filtering throughwith a greatly increased rate of enquiries and a fuller order book. Our Scottish engineering operations have been consolidated under one managementstructure that is already proving to be beneficial. Abbey Metal Finishing, British Metal Treatments (Galvanising) and GeneralUtilities all produced satisfactory results for the year. Abbey continues togradually regain business lost following the fire in 2000 and the prospects arenow more encouraging. Property Leasing and Philately Property leasing reflects the very substantial reductions in rents receivable onaccount of the aforementioned sale of our warehouse complex situated at Banbury.Property leasing will henceforth cease to form a meaningful part of the group'soperations. The task of rationalising the philately stock is proving more timeconsuming than originally thought and this will continue through the currentyear. Banking Duncan Lawrie Limited increased its profits further in 2004 and during 2005 hasacquired Douglas Deakin Young, an investment management business which bringsDuncan Lawrie's funds under management to in excess of £400 million. Thisacquisition should enable the bank to offer a considerably enhanced service toits investment management clients. Pharmaceuticals The Siegfried Group experienced a difficult year in 2004 with sales declining12% to SFr. 321.4 million resulting in profit after tax of SFr. 16.4 millioncompared with SFr. 53.3 million in 2003. Excess capacity in the active pharmaceutical ingredients business was theprincipal cause of the decline. The generics and biologics businesses performedto expectations. Cost reduction measures have been implemented over the last fewmonths but it will take a little time for the benefits to show through in theresults of the company. Other Associated Undertakings and Investments The United Leasing Company Limited in Bangladesh had another good year andgenerated a profit before tax of £2.04 million compared with £2.25 million in2003. The group has, over the last few months, rationalised its shareholding inthis company with the result that, whilst it still remains our associate, moreshares have been offered to the general public. United Insurance Company Limited was affected by continuing pressure on marginsbecause of local competition and produced a profit of £263,000 compared with£307,000 in 2003. The Surmah Valley Tea Company Limited, which is wholly owned by UnitedInsurance, had a satisfactory year. Development We continue to invest in the planting of further areas of edible nuts, citrusand wine grapes. Kakuzi is actively involved in planning for the development ofareas taken out of coffee production in 2003. This will include avocados,pineapples and edible nuts as well as increased areas of forestry. Productionfacilities are being increased in the macadamia processing plant in Malawi. Theon-going improvement of the general infrastructure on our plantations remains apriority. Goodbye to an old friend This is the last year that accounts will be presented to you in their presentformat. In future, accounts will have to comply with International FinancialReporting Standards, a significant thrust of which is to account on the basis ofso-called 'fair value'. Movements in the market value of our biological assetswill be required to be included in the profit and loss account. Changes in themarket value of other investments will be adjusted in reserves. To me, thisseems yet another example of short term thinking and has little relevance toan operation such as ours where investments are held for the long term. Toaccount for the fluctuations of such 'market values' will in my view beconfusing and not allow shareholders to really understand the underlyingprofitability and worth of the company. Inter alia, the standards require: a) Leasehold lands to be re-designated as operating leases and not form part offixed assets even if they have up to 900 years until expiry and even though thebuildings situated thereon are still to be classified as fixed assets. b) The valuation of 'biological assets' separately from the land on which theysit. This valuation is again to be related to market value but in the absence ofa readily established market price, the required value will be derived from theestimated future earnings of the asset discounted to reflect the risk attachedto such asset. The necessary valuation will therefore have regard to the likelychanges over the following ten years of weather patterns, yield assumptions,commodity prices, country risk and discount factors. This must surely be muchmore subjective than the historic cost convention and does it really provide abetter basis for the valuation of tea bushes or other growing plants? I doubtit, and to provide for the changes in such valuations through the accounts andthereby suggest that any increase in value is part of the earnings of that year,and thus available for distribution, seems to me to be misleading. c) The provision for deferred capital gains tax on the perceived value ofbiological assets even when capital gains tax would not be payable as, forexample, in Kenya. There are many other aspects of the standards that will henceforth have to beincorporated in the accounts. We will do our best to make the accounts asintelligible as possible. Further consideration will need to be given to themanner in which the accounts are presented so that they give a 'true and fair'view. Staff In thanking our staff throughout the world for their contribution in 2004, Iwould particularly like to mention the following: Firstly, those that have beenrequired to implement the closure of our tea operations in South Africa. Thishas been a traumatic and distressing event for all concerned and has beenhandled by our executives with much fortitude and skill. Secondly, all thosethat have contributed so positively to the success of our Australian operationsthat have now been sold. These operations have been built up over the last 15years to become a leading part of the citrus industry in Australia. I wishAndrew Weigall, Clifford Ashby and their team every success in the future. M C PerkinsChairman28 April 2005 Consolidated Profit and Loss Account for the year ended 31 December 2004 2004 2003 Note £000 £000 Turnover - continuing operations 178,587 170,758 - discontinued operations 187 3,927 --------- --------- 178,774 174,685Cost of sales 137,587 136,944 --------- ---------Gross profit 41,187 37,741 --------- ---------Net operating expenses - normal activities 33,814 37,146 - impairment of assets 1 933 3,304 --------- --------- 34,747 40,450 --------- ---------Operating profit/(loss) - continuing operation 6,457 (1,105) - discontinued operations (17) (1,604) --------- --------- 6,440 (2,709)Share of associates' results before interest 4,217 10,278 --------- ---------Operating profit including associates 10,657 7,569 Investment income 1,378 1,255 Profit on disposal of fixed asset investments 695 668 Profit on disposal of fixed assets 2 1,283 21,799 Restructuring costs 3 (2,689) - Profit on disposal of associated undertakings 121 - Disposal of a subsidiary and businesses 4 - 65 --------- ---------Profit on ordinary activities before interest 11,445 31,356Net finance costs 3,233 3,834 --------- ---------Profit on ordinary activities before taxation 8,212 27,522 Taxation on profit on ordinaryactivities 5 4,851 1,192 --------- ---------Profit on ordinary activities after taxation 3,361 26,330Minority interests (25) 348 --------- ---------Profit for the year 3,386 25,982Equity dividends 6 2,284 2,258 --------- ---------Profit transferred to reserves 1,102 23,724 ========= ========= Earnings per share -basic and diluted 7 130.47 p 999.18 p Consolidated Balance Sheet at 31 December 2004 2004 2003 £000 £000 £000 Fixed assets Intangible assets Goodwill: Positive 936 1,157 Negative (2,393) (3,038) -------- -------- (1,457) (1,881)Tangible assets 135,607 155,946Investments 83,215 83,965 -------- -------- 217,365 238,030 Current assetsStocks 24,936 25,053Debtors 53,803 47,412Assets held for resale 11,157 -Cash and deposits 155,550 162,657 -------- -------- 245,446 235,122 Creditors: due within one year 204,139 198,964 -------- -------- Net current assets 41,307 36,158 -------- -------- Total assets less current liabilities 258,672 274,188 Creditors: due after one year 22,046 27,970Provisions for liabilities and charges 4,651 4,158 -------- -------- 26,697 32,128 -------- -------- 231,975 242,060 ======== ======== Capital and reservesCalled up share capital 260 260Share premium account 423 423Revaluation reserve 34,257 35,092Merger reserve 242 242Profit and loss account 146,768 150,465 -------- --------Equity shareholders' funds 181,950 186,482 Equity minority interests 50,025 55,578 -------- -------- 231,975 242,060 ======== ======== Consolidated Cash Flow Statement for the year ended 31 December 2004 2004 2003 Note £000 £000 £000 Cash flow from operating activities 8 19,444 5,419 Dividends received from associates 2,149 2,371 Returns on investments and servicing of financeInterest received 363 415Interest paid (3,205) (4,360)Income from investments 1,378 1,285Dividends paid to minority shareholders (1,871) (1,866) -------- -------- (3,335) (4,526) Taxation paidUK taxation - (167)Overseas taxation (2,484) (2,030) -------- -------- (2,484) (2,197) Capital expenditure and financial investmentPurchase of tangible fixed assets (7,644) (8,200)Sale of tangible fixed assets 2,320 23,051Purchase of investments (3,579) (1,396)Sale of investments 2,589 942 -------- -------- (6,314) 14,397 Acquisitions and disposalsPurchase of minority interests (482) (349)Acquisition of subsidiary (108) -Sale of shares in associated undertaking 1,075 -Disposal of businesses 540 1,902 -------- -------- 1,025 1,553 Equity dividends paid (2,258) (2,261) -------- --------Cash inflow before financing 8,227 14,756 FinancingNew loans 195 4,107Loan repayments (8,759) (14,660)Finance lease repayments (643) (467)Purchase of own shares (16) (1,229) -------- -------- (9,223) (12,249) -------- --------(Decrease)/increase in cash in period 9 (996) 2,507 ======== ======== Reconciliation of Movement in Shareholders' Funds for the year ended 31 December 2004 2004 2003 £000 £000 Profit for the year 3,386 25,982Dividends (2,284) (2,258) ------- -------Retained profit for the year 1,102 23,724Exchange differences (5,364) (4,530)Purchase of own shares (16) (1,229)Impairments of previously revalued fixed assets (254) (1,112)Release of negative goodwill on impairment of fixed assets - (462)Release of negative goodwill on disposal of a business - (308) -------- --------Net (reduction)/addition to shareholders' funds (4,532) 16,083Opening equity shareholders' funds 186,482 170,399 -------- --------Closing equity shareholders' funds 181,950 186,482 ======== ======= Notes 1 Impairment of assets 2004 2003 £000 £000 Impairment of fixed assets 933 1,968Impairment of current assets - 1,897Negative goodwill transferred from reserves - (462)Negative goodwill transferred from fixed assets - (99) ------- ------- 933 3,304 ======= ======= An impairment of £933,000 has been charged in relation to the fixed assetsassociated with the group's paprika milling and oleoresin extractionoperations in South Africa. A decision was taken to close these operations on31 March 2005. The amount attributable to minority interests is £392,000. 2 Profit on disposal of fixed assets 2004 2003 £000 £000 Profit on disposal of Banbury warehouse - 21,201Profit on disposal of other land and property 1,110 598Profit on disposal of fixed assets associated with the production of coffee 173 - ------- ------- 1,283 21,799 ======= ======= 3 Restructuring costs The charge of £2,689,000 comprises the following: - Redundancy costs of £1,211,000 and an impairment charge of £2,440,000 have been incurred following the decision to close the group's tea operations in South Africa. The tea operations of Sapekoe (Pty) Limited were closed on 10 December 2004. These closure costs have been partially offset by a £1,619,000 write back of negative goodwill relating to these operations. The amount attributable to minority interests is £1,197,000. - Closure costs of £657,000 have been incurred following the closure of the Birmingham division of British Metal Treatments Limited in 2004. The amount attributable to minority interests is £137,000. 4 Disposal of a subsidiary and businesses 2004 2003 £000 £000Profit on disposal of shares in subsidiary undertaking - 288Loss on disposal of a business - (138)Provision for loss on disposal of a business - (445)Negative goodwill transferred from reserves - 308Negative goodwill transferred from fixed assets - 52 ------- ------- - 65 ======= ======= Profit on disposal of a subsidiary and a business in 2003 relates to BritishTraders & Shippers Limited and SWF Citrus Inc. respectively. The provision forloss on disposal of a business and negative goodwill release in 2003 related tothe sale of the business of W.G. White Limited (now known as Feltham OneLimited). 5 Taxation on profit on ordinary activitiesAnalysis of charge in the year 2004 2003 £000 £000 £000 Current taxUK corporation taxUK corporation tax at 30.0 per cent. (2003: 30.0 per cent.) 2,743 2,011Adjustment in respect of prior years 29 (5)Double tax relief (2,646) (1,947) -------- -------- 126 59 Foreign taxCorporation tax 3,760 2,349Adjustment in respect of prior years - (3) -------- -------- 3,760 2,346 -------- --------Total current tax 3,886 2,405 Deferred taxOrigination and reversal of timing differences United Kingdom (1,267) (1,154) Overseas 1,444 (1,498) -------- --------Total deferred tax 177 (2,652) Share of associated undertakings tax 788 1,439 -------- --------Tax on profit on ordinary activities 4,851 1,192 ======== ======== Factors affecting tax charge for the yearProfit on ordinary activities before tax 8,212 27,522Less: share of associated undertakings profit before tax 3,710 9,727 -------- --------Group profit on ordinary activities before tax 4,502 17,795 ======== ======== Tax on ordinary activities at the standard rate of corporation tax in the UK of 30.0 per cent. (2003: 30.0 per cent.) 1,351 5,339Effects of: Adjustment to tax in respect of prior years 29 (8) Expenses not deductible for tax purposes 435 1,050 Tax effect of difference between functional and local currency profits - 39 Adjustment in respect of foreign tax rates (269) 469 Additional tax arising on dividends from overseas companies 414 400 Profit on disposal of non taxable assets (640) (6,735) Other income not charged to tax (485) (78) Depreciation in excess of capital allowances 1,264 1,323 Increase in tax losses carried forward 1,950 792 Negative goodwill write back not taxable (486) - Movement in other timing differences 323 (186) -------- --------Current tax charge for the year 3,886 2,405 ======== ======== 6 The directors have proposed a final dividend of 68.0p per share, payable on5 July 2005 to shareholders on the register of members at the close of businesson 10 June 2005. 7 Earnings per share Earnings per share have been calculated by dividing the weighted averagenumber of ordinary shares in issue for the year of 2,595,153 (2003:2,600,345) into the profit for the year of £3,386,000 (2003:£25,982,000). 8 Reconciliation of operating profit to cash flow from operatingactivities 2004 2003 £000 £000 Operating profit/(loss) 6,440 (2,709)Depreciation 8,646 8,735Asset impairments 933 3,304Amortisation of negative goodwill (207) (351)(Profit)/loss on sale of assets (72) 367Provision against investments 64 -Restructuring costs (1,868) -Other non cash movements (374) (284)(Increase)/decrease in stocks (692) 5,902(Increase)/decrease in debtors (6,249) 5,380Increase/(decrease) in creditors 4,040 (7,726)Net decrease/(increase) in funds of banking subsidiaries 8,783 (7,199) ------ -------Cash flow from operating activities 19,444 5,419 ====== ======= 9 Reconciliation of net cash flow to movement in net debt 2004 2003 £000 £000 Decrease/(increase) in cash in the year (996) 2,507Cash outflow from decrease in debt and lease financing 9,207 11,020 -------- --------Decrease in net debt resulting from cash flows 8,211 13,527Net cash balances of business acquired 56 -Finance lease balances of business acquired (19) -Net overdraft /(cash balances) of businesses sold - 136New finance leases (1,332) (566)Exchange rate movements 716 560 -------- -------Decrease in net debt in the year 7,632 13,657Net debt at 1 January (43,760) (57,417) -------- --------Net debt at 31 December (36,128) (43,760) ======== ======== 10 Subsequent events In March 2005 an offer was made by Chiquita Brands South Pacific Limited forEast African Coffee Plantations Limited, owned 70.5 per cent. by BordureLimited, a wholly owned subsidiary of Linton Park Plc. Bordure Limited hasaccepted the offer which became unconditional on 11 April 2005. On 21 March 2005 Linton Park Plc's subsidiary, John Ingham & Sons Limitedentered into an agreement to sell to Kaitet Tea Estates (1977) Limited 1,673,000ordinary shares (8 per cent.) in Eastern Produce Kenya Limited which will becompleted upon the receipt of the cash consideration of £1,673,000. In February 2005, Duncan Lawrie Holdings Limited acquired 100 per cent. of theissued share capital of Douglas Deakin Young Limited. In March 2005, as a result of an offer for Teather & Greenwood Limited, thecompany sold its investment in that company for a cash consideration of£2,288,000. The information above, which does not constitute full financial statementswithin the meaning of S.240 CA 1985: - Has been extracted from the statutory accounts of Camellia Plc for the year ended 31 December 2004. The auditors have given an unqualified audit report. - Were approved by the directors on 28 April 2005. - Audited financial statements will be posted to shareholders and be available to the public on 6 May 2005. - Will be filed with the Registrar of Companies after the Annual General Meeting on 7 June 2005. Press Enquiries: Malcolm Perkins, ChairmanTel: 01622 746655 This information is provided by RNS The company news service from the London Stock Exchange