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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Camellia Plc | LSE:CAM | London | Ordinary Share | GB0001667087 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 4,510.00 | 4,480.00 | 4,540.00 | 10 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Offices-holdng Companies,nec | 320.9M | -13M | -4.7067 | -9.58 | 124.57M |
From Apr 2019 to Apr 2024
TIDMCAM
RNS Number : 1002J
Camellia PLC
15 August 2019
CAMELLIA PLC
Interim Results
Camellia Plc (AIM:CAM) announces its interim results for the six months ended 30 June 2019.
Malcolm Perkins, Chairman of Camellia, stated:
"The oversupply of tea at the end of 2018 has had a direct impact on global tea prices and hence on the revenues and profitability of our tea operations in the first half. Our increasing agricultural diversity has however helped to temper the impact of the tea market on our results and I am pleased that we are able to increase the interim dividend. The in principle agreement and today's payment of wages in Kenya and India relating back to 2014 has allowed us to release the excess of the associated provisions, resulting in a profit for the period broadly in line with the comparable period of 2018."
Financial highlights
Hot Features
Premium
Six months Six months Year ended
ended ended 31 December
30 June 2019 30 June 2018 2018
GBP'm GBP'm GBP'm
-------------- -------------- -------------
Revenue - continuing operations 117.3 127.6 309.8
-------------- -------------- -------------
Underlying (loss)/profit before
tax* (4.1) 6.1 38.1
-------------- -------------- -------------
Provision releases 8.0 - 14.4
-------------- -------------- -------------
(Loss)/profit from discontinued
operation - (0.3) 0.2
-------------- -------------- -------------
Profit for the period 3.6 3.7 32.3
-------------- -------------- -------------
Cash and cash equivalents net of
loans 80.6 86.6 105.7
-------------- -------------- -------------
Earnings per share 50.7p 18.1p 912.4
-------------- -------------- -------------
Earnings/(loss) per share - continuing
operations 50.7p 29.0p 919.6
-------------- -------------- -------------
Dividend per share 42p 40p 142p
-------------- -------------- -------------
* Underlying profit/(loss) before tax is profit before tax from continuing
operations excluding separately disclosed provision releases
Highlights
-- Results reflect the oversupply of tea in the market and consequential weak prices
-- Good progress with strategic initiatives in Agriculture following:
o completion of Assam garden acquisitions; and
o agreement to acquire additional land in South Africa
-- Provision releases following wage settlements in India and Kenya
-- Significant EPS growth reflects derivation of profits
-- Financial position remains very strong
-- Interim dividend up by 5%
This announcement contains inside information for the purposes 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
Emma Earl
Erik Anderson
CHAIRMAN'S STATEMENT
Our results for the first half show a profit before tax from continuing operations of GBP3.9 million (2018 H1: GBP6.1 million). This includes a gain of GBP8.0 million arising from the release of wage provisions for previous years in Kenya and India. Without these gains, the trading loss reflects the continuing weakness of the tea market in Kenya and Malawi and poor prices for teas brought forward from last season's production in India and Bangladesh.
Dividend
The Board has declared an interim dividend of 42p (2018: 40p) payable on 27 September 2019 to shareholders registered at the close of business on 30 August 2019.
Strategic objectives
We continue to pursue our strategic objectives in line with the statements made in the 2018 Annual report. During the first half we completed the acquisition of two tea estates in Assam and signed an agreement to acquire an additional 466Ha farm in South Africa. We continue to make a number of medium and long-term investments in Agriculture in order to leverage our expertise and diversify our supply base in crops and countries where we believe there to be potential. Additional information is included in the Operating Review. We live with political uncertainty in many of our areas of operation. Inevitably it slows down investment and development and there is no doubt that the uncertainty which continues to surround Brexit is having an impact in the UK.
Outlook
Given that the majority of our agricultural production and sales take place in the second half of the year and the di culty in predicting tea prices in the current market, it is not possible to give meaningful guidance for the full year.
Malcolm Perkins
Chairman
14 August 2019
Operating Review
The underlying loss before tax from continuing operations in the first half was GBP4.1 million (H1 2018: profit before tax GBP6.1 million) on revenues of GBP117.3 million (H1 2018: GBP127.6 million). The factors behind this are set out in the individual business reviews below. Overall the profit before tax was improved by:
-- a signed agreement with the Kenyan Plantation and Agricultural
Workers Union on the principal terms of a settlement in respect
of the previously outstanding Collective Bargaining Agreement
years of 2014/15, 2016/17 and 2018/19. Whilst the final settlement
is subject to registration by the Minister of Labour in Kenya,
we believe that this will occur in due course and we have therefore
today paid the outstanding amounts to all unionisable sta .
The 2017 wage award in West Bengal is also now final. Together
these settlements have led to GBP8.0 million of provisions
relating to previous years being released through cost of sales
-- the weakening of sterling against all our major operating currencies
compared with the first half of 2018 which has led to a beneficial
impact of approximately GBP0.4 million
Our cash and cash equivalents balance at the end of the period stood at GBP88.9 million (31 December 2018: GBP109.6 million). Loans outstanding increased to GBP8.3 million (31 December 2018: GBP3.9 million). The reduction in our net cash position reflects the acquisitions in India and the e ect of trading in the period. Lease liabilities, which are reflected for the first time, amounted to GBP10.7 million. Further details are set out in note 2.
Agriculture
Tea
Overall our tea production in the first half was marginally lower than the same period of 2018 at 43.2m Kg (H1 2018: 43.6m Kg), although this varied widely by geography. Our average prices were significantly lower than 2018 due to an over supplied market resulting from record global crop production in 2018.
India: Production in the first half of the year was 23% ahead of last year, helped by good rainfall and a significant increase in Bought Leaf production. Average prices are 8% lower than last year. This is a result of very low prices achieved for the brought forward stock of 2018 teas and lower prices than last year for new season teas, except in Assam where the market has firmed, particularly for orthodox teas. Significant increases in labour rates during the second half of 2018 also impacted margins, although this was partially o set by increased e ciency.
Bangladesh: Production was up by 29% in the first half due to the combination of the increase in our maturing young tea areas coupled with benign weather conditions. Average prices however were 5% below last year. Prices for new season teas continue to be significantly lower than in 2018 due to high levels of national production and an increase in import volumes.
Kenya: Production (including smallholder and managed client volumes) was 25% below that of last year as a result of the drier weather across the country during the first quarter. Total auction volumes in Mombasa however, have continued at record levels for much of this calendar year due to large stocks carried forward from last year. This has resulted in a 17% reduction in our average price in the first half compared to that of the same period in 2018. Prices improved slightly during May but then declined again in June and have continued at these lower levels.
Malawi: Production (including smallholder volumes) was similar to 2018 but average prices in the first half were 13% lower than for the same period last year.
Macadamia
Our combined macadamia harvest has been better this year with volumes estimated at 6% higher than in 2018. Prices in the market are ahead of those seen last year and appear to be holding at this stage. Discussions with the land claimant community continue at Wales Estate in South Africa with little sign of progress towards signing a new lease. The expectation now is to discontinue operations on the estate after the 2020 season harvest.
An agreement for the purchase of an additional farm close to our estates in the Levubu district of South Africa has been concluded and a clearance certificate is now awaited from the local municipality in order to proceed with the land transfer process. It is our plan to plant 180Ha of macadamia and 120Ha of avocado here over the next 5 years.
Avocado
Production volumes in the period from our own avocado orchards were 8% below last year but average prices have been higher. As we now move into our main Hass cropping season, we have seen the market rise significantly due to the lower volumes of production entering Europe from Peru and South Africa.
Speciality Crops
Overall, our speciality crops have had a mixed start to the year with some good production being o set by issues largely outside our control. It is worth noting the following:
-- prices for natural rubber, which we grow in Bangladesh, have
declined in the first half, and the business remains lossmaking
albeit cash generative.
-- wine grape production volumes from our estate in South Africa
were up 24% on those in the same period of 2018 which was adversely
impacted by the drought in the Western Cape region. Sales however,
were significantly lower in the first half.
-- the soya crop in Brazil has done well, but our maize and oat
crops have been adversely impacted by pest and fungal infections.
-- in California, our Murcott volumes were more than twice those
of last year and volumes of Navels were up 15%. However, our
average citrus prices have been 40% lower. This is an 'o ' year
for pistachios.
Other strategic developments
As part of our strategy for Agriculture to utilise our estates to the full, expand our production capability in core crops and exploit our expertise, we are undertaking the following initiatives:
-- our 10Ha trial of blueberries at Kakuzi in Kenya is progressing
well and we anticipate the first harvest in Q4 of 2019
-- the Simpson dam wall and spillway project on our Mambedi estate
in South Africa is now completed
-- the trial planting of avocado near Kitale in Kenya continues
with encouraging early results
-- we continue to make progress with registration of the land
purchase in Tanzania
Engineering
AJT Engineering continues to improve with the recovery of the oil sector and the development of the Site Services division. Revenue in the first half of the year was up 21% on the same period last year.
Revenues from Abbey Metal Finishing and its subsidiary Atfin are 6% below that of the equivalent period last year. Brexit stockpiling by customers in Q1 followed by uncertainty in the market, led to overall lower sales volumes in the period and is expected to further impact profits in the second half of the year.
Food Service
In the first half ACS&T traded in line with expectations but has seen weaker trading at the start of the second half.
Jing Tea is operating in line with expectations as we continue to invest in the brand and the growth of the business.
Revenue in 2018 included Affish and Wylax which were sold in 2018.
Investments and Associates
Our investment portfolio, which consists principally of listed equities, is now valued at GBP43.5 million (31 December 2018: GBP39.6 million) largely due to strong equity markets and the falling value of Sterling.
Our share of profits from associates is estimated at GBP3.3 million (H1 2018: GBP2.2 million) reflecting significantly improved results at BF&M in the first quarter of 2019. BF&M's improved results were due to the strong performance of its Property and Casualty and Life and Health businesses.
Summary
In Agriculture, the first half of the year was a ected by the global oversupply of tea and the resultant low prices at the auctions. The impact of this was partially mitigated by increases in e ciency, and importantly by our continuing strategy of crop diversification.
Despite the adverse impact of the performance of Agriculture, the performance from our businesses in Engineering and Food Service, together with an improved result from our associate, BF&M, produced an increase in EPS.
We remain financially strong, with significant net cash, and have the resources to complete our development plans in line with our strategy.
Tom Franks
Chief Executive
14 August 2019
Interim management report
The Chairman's Statement and the Operating Review form part of this report and include important events that have occurred during the six months ended 30 June 2019 and their impact on the financial statements set out herein.
Principal risks and uncertainties
The Report of the Directors in the statutory financial statements for the year ended 31 December 2018 (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. These risks and uncertainties continue to be relevant for the remainder of the year. In addition, the Chairman's Statement and the Operating Review 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 2018. 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
14 August 2019
Condensed consolidated income statement
for the six months ended 30 June 2019
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
Notes GBP'm GBP'm GBP'm
Continuing operations
Revenue 4 117.3 127.6 309.8
Cost of sales (92.2) (100.3) (209.2)
---------- ---------- -----------
Gross profit 25.1 27.3 100.6
Other operating income 2.3 2.1 4.0
Distribution costs (6.3) (5.1) (17.2)
Administrative expenses (22.4) (22.1) (45.1)
---------- ---------- -----------
Trading (loss)/profit 4 (1.3) 2.2 42.3
Share of associates' results 6 3.3 2.2 7.6
Provisions and impairment of property,
plant and equipment - (0.1) (0.2)
Loss on disposal of subsidiaries - - (0.4)
---------- ---------- -----------
Profit on disposal of financial assets 0.2 0.2 0.3
Operating profit - continuing operations 2.2 4.5 49.6
Investment income 0.4 0.4 0.8
---------- ---------- -----------
Finance income 2.1 2.0 4.0
Finance costs (0.6) (0.1) (0.6)
Net exchange gain/(loss) 0.2 (0.1) 0.2
Employee benefit expense (0.4) (0.6) (1.5)
---------- ---------- -----------
Net finance income 7 1.3 1.2 2.1
---------- ---------- -----------
Profit before tax from continuing operations 3.9 6.1 52.5
--------------------------------------------------------- ----- ---------- ---------- -----------
Comprising
- underlying (loss)/profit before tax 5 (4.1) 6.1 38.1
- release of provisions for wage increases 5 8.0 - 5.4
* release of provision for post-employment benefit
obligations 5 - - 9.0
3.9 6.1 52.5
--------------------------------------------------------- ----- ---------- ---------- -----------
Taxation 8 (0.3) (2.1) (20.0)
---------- ---------- -----------
Profit after tax from continuing operations 3.6 4.0 32.5
Loss from discontinued operation - (0.3) (0.2)
---------- ---------- -----------
Profit for the period 3.6 3.7 32.3
---------- ---------- -----------
Profit attributable to:
Owners of Camellia Plc 1.4 0.5 25.2
Non-controlling interests 2.2 3.2 7.1
---------- ---------- -----------
3.6 3.7 32.3
---------- ---------- -----------
Earnings per share - basic and diluted 10 50.7p 18.1p 912.4p
Earnings per share - continuing operations 10 50.7p 29.0p 919.6p
Earnings/(loss) per share - discontinued operation 10 -p (10.9)p (7.2)p
Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2019
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'm GBP'm GBP'm
Profit for the period 3.6 3.7 32.3
-------------------- ---------- -----------
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to profit
or loss:
Financial assets at fair value through other comprehensive
income:
Fair value adjustment released on disposal (0.3) - (3.8)
Profit on disposal 1.1 - 3.9
-------------------- ---------- -----------
0.8 - 0.1
Changes in the fair value of financial assets 3.5 0.1 (5.6)
Deferred tax movement in relation to fair value adjustments (0.4) - 1.5
Remeasurements of post employment benefit obligations 3.9 12.1 (0.7)
Deferred tax movement in relation to post employment
benefit obligations (0.1) (0.6) (0.3)
-------------------- ---------- -----------
7.7 11.6 (5.0)
-------------------- ---------- -----------
Items that may be reclassified subsequently to profit or
loss:
Foreign exchange translation di erences (1.8) 1.9 11.6
Share of other comprehensive income of associates - - 0.8
-------------------- ---------- -----------
(1.8) 1.9 12.4
-------------------- ---------- -----------
Other comprehensive income for the period, net of tax 5.9 13.5 7.4
-------------------- ---------- -----------
Total comprehensive income for the period 9.5 17.2 39.7
-------------------- ---------- -----------
Total comprehensive income attributable to:
Owners of Camellia Plc 8.1 13.3 30.7
Non-controlling interests 1.4 3.9 9.0
-------------------- ---------- -----------
9.5 17.2 39.7
-------------------- ---------- -----------
Condensed consolidated balance sheet
at 30 June 2019
30 June 30 June 31 December
2019 2018 2018
Notes GBP'm GBP'm GBP'm
ASSETS
Non-current assets
Intangible assets 10.9 8.3 9.5
Property, plant and equipment 11 227.5 219.9 226.3
Right-of-use assets 2 17.6 - -
Investment properties 17.5 17.7 18.0
Biological assets 13.9 12.3 14.5
Prepaid operating leases - 0.9 1.0
Investments in associates 67.9 57.2 65.7
Deferred tax assets 0.2 0.3 -
Financial assets at fair value
through other comprehensive income 35.7 42.3 32.7
Financial assets at fair value
through profit or loss 4.7 5.2 3.7
Financial assets at amortised cost 3.1 3.3 3.0
Other investments - heritage assets 9.7 9.4 9.5
Retirement benefit surplus 14 0.4 0.3 0.3
Trade and other receivables 2.8 2.1 2.7
------- ------- -----------
Total non-current assets 411.9 379.2 386.9
------- ------- -----------
Current assets
Inventories 64.8 56.5 52.7
Biological assets 4.3 5.8 8.8
Trade and other receivables 44.0 41.9 48.5
Financial assets at amortised cost 0.1 - 0.2
Current income tax assets 0.8 1.5 0.7
Cash and cash equivalents (excluding
bank overdrafts) 95.8 94.2 112.4
------- ------- -----------
209.8 199.9 223.3
Assets classified as held for sale 0.9 4.1 0.2
------- ------- -----------
Total current assets 210.7 204.0 223.5
------- ------- -----------
30 June 30 June 31 December
2019 2018 2018
Notes GBP'm GBP'm GBP'm
LIABILITIES
Current liabilities
Financial liabilities - borrowings 12 (8.3) (4.0) (3.4)
Lease liabilities 2 (2.0) - -
Trade and other payables (54.2) (56.0) (53.5)
Current income tax liabilities (6.1) (5.5) (8.0)
Employee benefit obligations 14 (1.0) (1.0) (1.0)
Provisions 13 (13.6) (21.5) (18.5)
------- ------- -----------
(85.2) (88.0) (84.4)
------- ------- -----------
Liabilities directly associated with assets classified as held for
sale - (1.8) -
------- ------- -----------
Total current liabilities (85.2) (89.8) (84.4)
------- ------- -----------
Net current assets 125.5 114.2 139.1
------- ------- -----------
Total assets less current liabilities 537.4 493.4 526.0
------- ------- -----------
Non-current liabilities
Financial liabilities - borrowings 12 (6.9) (3.6) (3.3)
Lease liabilities 2 (8.7) (0.1) (0.1)
------- ------- -----------
Deferred tax liabilities (44.3) (40.8) (46.3)
------- ------- -----------
Employee benefit obligations 14 (21.3) (18.3) (24.0)
------- ------- -----------
Total non-current liabilities (81.2) (62.8) (73.7)
------- ------- -----------
Net assets 456.2 430.6 452.3
------- ------- -----------
EQUITY
Called up share capital 0.3 0.3 0.3
Share premium 15.3 15.3 15.3
Reserves 385.2 363.4 379.9
------- ------- -----------
Equity attributable to owners of Camellia Plc 400.8 379.0 395.5
Non-controlling interests 55.4 51.6 56.8
------- ------- -----------
Total equity 456.2 430.6 452.3
------- ------- -----------
Condensed consolidated statement of cash flows
for the six months ended 30 June 2019
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
Notes GBP'm GBP'm GBP'm
Cash generated from operations
Cash flows from operating activities 15 (3.5) 6.4 35.3
Interest received 2.3 2.0 3.9
Interest paid (0.7) (0.1) (0.5)
Income taxes paid (5.1) (5.6) (14.2)
---------- ---------- -----------
Net cash flow from operating activities (7.0) 2.7 24.5
---------- ---------- -----------
Cash flows from investing activities
Purchase of intangible assets (0.3) - -
Purchase of property, plant and equipment (8.0) (10.7) (20.5)
Proceeds from sale of non-current assets 0.9 0.1 0.7
Additions to investment property (0.1) (0.3) (0.9)
Biological assets: non-current - additions - (0.1) (0.9)
Payment for acquisition of a business/subsidiary net of cash
acquired 16 (9.4) (6.4) (6.4)
Proceeds from sale of subsidiaries net of cash disposed - - 3.6
Proceeds from sale of assets held for sale - investment
property - 0.7 0.7
Investment in associates (0.7) - (1.0)
Dividends received from associates 1.8 1.6 2.8
Purchase of investments (7.9) (3.4) (7.2)
Proceeds from sale of investments 8.7 0.9 11.4
Income from investments 0.4 0.4 0.8
Purchase of other investments - heritage assets (0.1) - (0.1)
---------- ---------- -----------
Net cash flow from investing activities (14.7) (17.2) (17.0)
---------- ---------- -----------
Cash flows from financing activities
Equity dividends paid - - (3.8)
Dividends paid to non-controlling interests (2.7) (1.9) (3.1)
New loans 4.6 - -
Loans repaid (0.3) (0.3) (0.6)
Payments of lease liabilities (0.2) - -
---------- ---------- -----------
Net cash flow from financing activities 1.4 (2.2) (7.5)
---------- ---------- -----------
Net decrease in cash and cash equivalents from
continued operations (20.3) (16.7) -
Net cash outflow from discontinued operation - (0.2) (0.2)
Cash and cash equivalents at beginning of period 109.6 106.8 106.8
Exchange (losses)/gains on cash (0.4) 0.9 3.0
---------- ---------- -----------
Cash and cash equivalents at end of period 17 88.9 90.8 109.6
---------- ---------- -----------
For the purposes of the cash flow statement, cash and cash equivalents are included net of overdrafts repayable on demand.
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2019
Attributable to the owners of Camellia Plc
Non-
Share Share Treasury Retained Other controlling Total
capital premium shares earnings reserves Total interests equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
At 1 January 2018 0.3 15.3 (0.4) 323.8 29.4 368.4 49.5 417.9
Total comprehensive
income for the
period - - - 12.0 1.3 13.3 3.9 17.2
Dividends - - - (2.7) - (2.7) (1.9) (4.6)
Companies joining the
Group - - - - - - 0.1 0.1
------- ------- -------- -------- -------- ----- ----------- ------
At 30 June 2018 0.3 15.3 (0.4) 333.1 30.7 379.0 51.6 430.6
------- ------- -------- -------- -------- ----- ----------- ------
At 1 January 2018 0.3 15.3 (0.4) 323.8 29.4 368.4 49.5 417.9
Total comprehensive
income for the
period - - - 30.5 0.2 30.7 9.0 39.7
Dividends - - - (3.8) - (3.8) (3.1) (6.9)
Companies joining the
Group - - - - - - 1.4 1.4
Share of associate's
other equity
movements - - - 0.2 - 0.2 - 0.2
------- ------- -------- -------- -------- ----- ----------- ------
At 31 December 2018 0.3 15.3 (0.4) 350.7 29.6 395.5 56.8 452.3
Total comprehensive
income for the
period - - - 6.7 1.4 8.1 1.4 9.5
Dividends - - - (2.8) - (2.8) (2.8) (5.6)
------- ------- -------- -------- -------- ----- ----------- ------
At 30 June 2019 0.3 15.3 (0.4) 354.6 31.0 400.8 55.4 456.2
------- ------- -------- -------- -------- ----- ----------- ------
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 2019 (the "Interim Report"). They should be read in conjunction with the Report and Accounts (the "Annual Report") for the year ended 31 December 2018.
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 2018 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.
The share of associates' results in the condensed consolidated income statement for the six month period ended 30 June 2019 and the investments in associates figure in the condensed consolidated balance sheet include an estimate of BF&M Limited's result for the six months ended 30 June 2019. This estimate incorporates BF&M's actual quarter one result and includes an estimate for quarter two. BF&M Limited's results will not be reported to the Bermuda Stock Exchange until mid September 2019.
(a) A number of new or amended standards became applicable for the current reporting period and the Group had to change its accounting policies but did not make any retrospective adjustments as a result of adopting IFRS 16 Leases standard. The impact of the adoption of the leasing standard and the new accounting policies are disclosed in note 2. The other standards did not have any impact on the Group's accounting policies and did not require retrospective adjustments.
These interim condensed consolidated financial statements were approved by the Board of Directors on 14 August 2019. 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 Changes to accounting policies
This Interim Report has been prepared on the basis of accounting policies consistent with those applied in the financial statements for the year ended 31 December 2018. The Group has adopted IFRS 16 from 1 January 2019, but has not applied it retrospectively, as permitted under the specific transitional provisions in the standard. The reclassifications arising from the new leasing rules are recognised in the opening balance sheet on 1 January 2019.
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as operating leases under the principles of IAS 17 Leases. These right-of-use assets and lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate.
For leases previously classified as finance leases the entity recognised the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right-of-use asset and the lease liability at the date of initial application. The measurement principles of IFRS 16 are only applied after that date.
Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
-- the use of a single discount rate to a portfolio of leases
with reasonably similar characteristics
-- reliance on previous assessments on whether leases are onerous
-- the accounting for operating leases with a remaining lease
term of less than 12 months as at 1 January 2019 as short-term
leases
-- the use of hindsight in determining the lease term where
the contract contains options to extend or terminate the
lease
Adjustments recognised on adoption of IFRS 16
The e ect of adopting IFRS 16 on 1 January 2019 was to recognise additional right-of-use assets and lease liabilities in the sum of GBP10.7 million, and recategorise assets with a carrying amount of GBP3.5 million and finance leases of GBP0.1 million.
In doing so, the Group used incremental borrowing rates of between 4.25% to 10% on lease terms ranging from 1 to 125 years.
Impact of IFRS 16
For the six months to 30 June 2019:
-- depreciation expense increased by GBP0.4 million relating
to the depreciation of additional right-of-use assets recognised
-- rent expense decreased by GBP0.5 million relating to previous
operating leases
-- finance costs increased by GBP0.3 million relating to the
interest expense on additional lease liabilities recognised
-- income tax expense decreased by less than GBP0.1 million
relating to the tax e ect of those changes
-- retained profits decreased by GBP0.2 million relating to
the excess of interest and depreciation over rent expense
and tax
Summary of new accounting policies
Set out below are the new accounting policies of the Group upon adoption of IFRS 16:
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e. those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of o ce equipment that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.
Significant judgement in determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group has the option, under some of its leases to lease the assets for additional terms. The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and a ects its ability to exercise (or not to exercise) the option to renew (e.g. a change in business strategy).
3 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 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 'o ' years. The majority of the macadamia crop is harvested in the first half but processed and sold in the second half of the year. 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.
4 Segment reporting - continuing operations
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
Trading Trading Trading
Revenue profit/(loss) Revenue profit/(loss) Revenue profit/(loss)
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Agriculture (see note 5) 90.5 2.4 96.6 6.7 245.3 51.0
Engineering 10.8 (0.3) 10.0 (0.9) 22.2 (0.6)
Food Service 15.6 0.9 20.7 0.9 41.5 1.6
Other operations 0.4 - 0.3 - 0.8 0.1
------- ------------- ------- ------------- ------- -------------
117.3 3.0 127.6 6.7 309.8 52.1
------- ------- -------
Unallocated corporate
expenses (4.3) (4.5) (9.8)
------------- ------------- -------------
Trading (loss)/profit (1.3) 2.2 42.3
Share of associates'
results 3.3 2.2 7.6
Provisions and impairment
of property, plant and
equipment - (0.1 ) (0.2 )
Loss on disposal of
subsidiaries - - (0.4)
Profit on disposal of
financial assets 0.2 0.2 0.3
Investment income 0.4 0.4 0.8
Net finance income 1.3 1.2 2.1
------------- ------------- -------------
Profit before tax from
continuing operations 3.9 6.1 52.5
Taxation (0.3) (2.1) (20.0)
------------- ------------- -------------
Profit from continuing
operations after tax 3.6 4.0 32.5
------------- ------------- -------------
5 Underlying (loss)/profit
The Group seeks to present an indication of the underlying performance which is not impacted by exceptional items or items considered non-operational in nature. This measure of profit is described as 'underlying' and is used by management to measure and monitor performance.
The following items have been excluded from the underlying (loss)/profit measure and have been separately disclosed:
-- an GBP8.0 million gain (2018: six months GBPnil - year GBP5.4
million gain) from the release of provisions for wage increases
relating to prior years in our Agriculture operations following
progress on negotiations
-- the release of a GBPnil (2018: six months GBPnil - year
GBP9.0 million) provision in Bangladesh for post-employment
benefit obligations from which the tea industry has been
exempted.
6 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
2019 2018 2018
GBP'm GBP'm GBP'm
Profit before tax 3.8 2.6 8.4
Taxation (0.5) (0.4) (0.8)
---------- ---------- -----------
Profit after tax 3.3 2.2 7.6
---------- ---------- -----------
7 Finance income and costs
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'm GBP'm GBP'm
Interest payable on loans and bank overdrafts (0.3) (0.1) (0.6)
Interest on right-of-use assets (0.3) - -
---------- ---------- -----------
Finance costs (0.6) (0.1) (0.6)
Finance income - interest income on short-term bank deposits 2.1 2.0 4.0
Net exchange gain/(loss) on foreign currency balances 0.2 (0.1) 0.2
Employee benefit expense (0.4) (0.6) (1.5)
---------- ---------- -----------
Net finance income 1.3 1.2 2.1
---------- ---------- -----------
8 Taxation on profit on ordinary activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'm GBP'm GBP'm
Current tax
Overseas corporation tax 3.0 2.6 14.1
Deferred tax
Origination and reversal of timing differences
Overseas deferred tax (2.7) (0.5) 5.9
---------- ---------- -----------
Tax on profit on ordinary activities 0.3 2.1 20.0
---------- ---------- -----------
Tax on profit on ordinary activities for the six months to 30 June 2019 has been calculated on the basis of the estimated annual effective rate for the year ending 31 December 2019.
9 Equity dividends
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'm GBP'm GBP'm
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2018 of 102p (2017: 98p)
per share 2.8 2.7 2.8
---------- ---------- -----------
Interim dividend for the year ended 31 December 2018 of 40p per share 1.1
-----------
3.9
-----------
Dividends amounting to GBP0.1 million (2018: 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 2019 of 42p
(2018: 40p) per share 1.2 1.1
---------- ----------
The proposed interim dividend was approved by the Board of Directors on 14 August 2019 and has not been included as a liability in these financial statements.
10 Earnings/(loss) per share (EPS)
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
Earnings/ Earnings/
Earnings EPS (loss) EPS (loss) EPS
GBP'm Pence GBP'm Pence GBP'm Pence
Attributable to ordinary shareholders 1.4 50.7 0.5 18.1 25.2 912.4
-------- ----- --------- ----- --------- -----
Attributable to ordinary shareholders -
continuing operations 1.4 50.7 0.8 29.0 25.4 919.6
-------- ----- --------- ----- --------- -----
Attributable to ordinary shareholders -
discontinued operation - - (0.3) (10.9) (0.2) (7.2)
-------- ----- --------- ----- --------- -----
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 (2016: six months 2,762,000 - year 2,762,000), which excludes 62,500 (2018: six months 62,500 - year 62,500) shares held by the Group as treasury shares.
11 Property, plant and equipment
During the six months ended 30 June 2019 the Group acquired assets with a cost of GBP8.0 million (2018: six months GBP10.7 million - year GBP20.5 million). Assets with a carrying amount of GBP0.8 million were disposed of during the six months ended 30 June 2019 (2018: six months GBP0.4 million - year GBP0.5 million).
12 Borrowings
Borrowings (current and non-current) include loans of GBP8.3 million (loans 2018: six months GBP4.2 million - year GBP3.9 million) and bank overdrafts of GBP6.9 million (2018: six months GBP3.4 million - year GBP2.8 million). The following loans were taken and repaid during the six months ended 30 June 2019:
GBP'm
Balance at 1 January 2019 3.9
Exchange di erences 0.2
New loans 4.6
Repayments (0.4)
-----
Balance at 30 June 2019 8.3
-----
13 Provisions
Wages and
salaries Others Total
GBP'm GBP'm GBP'm
At 1 January 2018 18.5 1.2 19.7
Exchange di erences 0.4 - 0.4
Utilised in the period - (0.3) (0.3)
Provided in the period 1.6 0.1 1.7
--------- ------ -----
At 30 June 2018 20.5 1.0 21.5
--------- ------ -----
At 1 January 2018 18.5 1.2 19.7
Exchange di erences 0.6 - 0.6
Utilised in the period (4.9) (0.6) (5.5)
Provided in the period 8.6 0.6 9.2
Unused amounts reversed in period (5.4) (0.1) (5.5)
--------- ------ -----
At 31 December 2018 17.4 1.1 18.5
Exchange di erences 0.1 - 0.1
Utilised in the period (0.6) (0.1) (0.7)
Provided in the period 3.4 0.3 3.7
Unused amounts reversed in period (8.0) - (8.0)
--------- ------ -----
At 30 June 2019 12.3 1.3 13.6
--------- ------ -----
Current:
At 30 June 2019 12.3 1.3 13.6
--------- ------ -----
At 31 December 2018 17.4 1.1 18.5
--------- ------ -----
At 30 June 2018 20.5 1.0 21.5
--------- ------ -----
The wages and salaries provisions are in respect of ongoing wage and bonus negotiations in India, Bangladesh, and pending registration by the Minister of Labour of the Collective Bargaining Agreements for years 2014/15, 2016/17 and 2018/19, in Kenya.
GBP8.0 million (2018: six months GBPnil - year GBP5.4 million) was reversed from the wages and salaries provision following progress on negotiations in Kenya and India.
Others relate to provisions for claims and dilapidations.
14 Employee benefit obligations
The UK defined benefit pension scheme for the purpose of IAS 19 has been updated to 30 June 2019 from the valuation as at 31 December 2018 by the actuary and the movements have been reflected in this Interim Statement. Overseas pension schemes operated in Group subsidiaries located in Bangladesh and India have also been updated to 30 June 2019 from the valuation as at 31 December 2018 by the actuaries and the movements have also been reflected in this Interim Statement.
The gratuity and medical benefit schemes located in Bangladesh and India have been updated to 30 June 2019 by the actuaries and the movements have been reflected in this Interim Statement.
An actuarial gain of GBP3.9 million was realised in the period in relation to the Group's employee obligations of which GBP5.2 million related to the UK defined benefit pension scheme. In relation to the UK defined benefit pension scheme a gain of GBP19.7 million was realised in relation to the scheme assets and a loss of GBP14.8 million was realised in relation to changes in the underlying actuarial assumptions. The assumed discount rate has decreased to 2.20% (31 December 2018: 2.75%). There has been no change in the inflation and mortality assumptions used.
15 Reconciliation of profit from continuing operations to cash
flow
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'm GBP'm GBP'm
Profit from continuing operations 2.2 4.5 49.6
Share of associates' results (3.3) (2.2) (7.6)
Depreciation and amortisation 8.4 8.0 15.5
Impairment of assets and provisions 0.2 0.1 0.2
Realised movements on biological assets - non-current 0.3 1.0 -
Profit on disposal of non-current assets (0.1) - (0.1)
Loss on disposal of subsidiaries - - 0.4
Profit on disposal of financial assets (0.2) (0.2) (0.3)
Movement in provisions (4.9) 1.8 (1.2)
Increase in working capital (6.2) (6.2) (12.9)
Di erence between employee benefit obligations funding contributions
and cost charged 0.1 (0.4) (8.3)
---------- ---------- -----------
Cash generated from continuing operations (3.5) 6.4 35.3
---------- ---------- -----------
16 Acquisition and disposal of businesses
Acquisitions Acquisitions Acquisitions Disposals
Six months Six months Year Year
ended ended ended ended
30 June 30 June 31 December 31 December
2019 2018 2018 2018
GBP'm GBP'm GBP'm GBP'm
Fair value Fair value Fair value Net book value
Fair value of assets and liabilities
Property, plant and equipment 5.7 0.5 0.5 0.6
Right-of-use assets 3.8 - - -
Deferred tax asset - 1.1 1.1 0.1
Inventories 0.1 0.8 0.8 1.6
Trade and other receivables 0.1 1.5 1.5 0.9
Current income tax assets - - - 0.2
Cash and cash equivalents - 0.4 0.4 0.2
Assets classified as held for sale - - - 2.4
Trade and other payables (0.4) (1.6) (1.6) (1.3)
Employee benefit obligations (0.5) - - (0.3)
Deferred tax liability (0.8) (1.1) (1.1) -
------------ ------------ ------------ --------------
8.0 1.6 1.6 4.4
Identifiable intangible assets - Brands - 6.6 6.6 -
Intangible asset - Goodwill 1.4 - - -
Non-controlling interest - (1.4) (1.4) (0.1)
Loss on disposal - - - (0.5)
------------ ------------ ------------ --------------
9.4 6.8 6.8 3.8
------------ ------------ ------------ --------------
Satisfied by:
Cash consideration and costs 9.4 6.8 6.8 3.8
Net cash outflow arising on
acquisitions/disposals:
Cash consideration (9.4) (6.8) (6.8) 3.8
------------ ------------ ------------ --------------
Less: cash and cash equivalent balances
acquired/(disposed) - 0.4 0.4 (0.2 )
------------ ------------ ------------ --------------
(9.4) (6.4) (6.4) 3.6
------------ ------------ ------------ --------------
The acquisitions in 2019 relates to tea estates in Assam, India which were purchased by our Indian subsidiaries for cash, funded in part by local borrowings.
17 Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'm GBP'm GBP'm
Cash and cash equivalents 95.8 94.2 112.4
Overdrafts repayable on demand (included in current
liabilities - borrowings) (6.9) (3.4) (2.8)
---------- ---------- -----------
88.9 90.8 109.6
---------- ---------- -----------
18 Contingencies
In India, assessments have been received for excise duties of GBP4.1 million and of GBP1.3 million for income tax matters. These are being contested on the basis that they are without technical merit.
In India, a long running dispute between our local subsidiaries and the Government of West Bengal over the payment of a land tax, locally called, "Salami", remains unresolved. Lawyers acting for the Group have advised that payment of Salami does not apply, accordingly no provisions have been made. The sum in dispute, excluding fines and penalties, amounts to GBP1.5 million.
The Group operates in certain countries where its operations are potentially subject to a number of legal claims. When required, appropriate provisions are made for the expected cost of such claims.
19 Related party transactions
There have been no related party transactions that had a material e ect 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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR GGUPGRUPBGQC
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