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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Pgi Grp | LSE:PGI | London | Ordinary Share | GB0006911696 | ORD 25P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 8.75 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:4231S PGI Group PLC 15 April 2008 PGI Group Plc 15 April 2008 Preliminary Statement of the Group's Results for the year ended 31 December 2007 Chairman's Statement The Group profit for the year before tax, biological assets and hyperinflation adjustments amounted to £2,417,000 compared with £1,723,000 for 2006. Including the adjustments for biological assets and Zimbabwe hyperinflation, the group profit before tax was £3,618,000 (2006: £3,199,000). For the reasons I gave in my Chairman's statement last year, I would again encourage shareholders to treat these adjustments with caution. They are shown in a separate column in the profit and loss account, and the hyperinflation adjustments are shown separately on the Group Balance Sheet. Towards the end of 2006, Group borrowings were significantly reduced when all the issued loan stock of £7.5 million was converted into ordinary shares. Consequently, the net interest cost was only £574,000 in 2007, compared with £1,252,000 in 2006. The food group was affected by a fall in tea prices last year, despite tea production holding up well. The decline in prices was mitigated by a better quality of tea in Malawi, the result of improvements we have made over the past few years. The Malawi tea operations were also affected by local cost inflation of around 8%, not matched by any decline in the exchange rate. Our tea operations at Eastern Highlands in Zimbabwe continue to be the most challenging. General economic malaise and soaring hyperinflation have made it impossible to recruit enough labour. With such severe inflation (officially recorded at 66,000% p.a. at the end of 2007) and large but unpredictable movements in the market exchange rate, it is impossible to track the true financial performance of this business. In the circumstances, it is a great credit to the local management that tea production declined by only 5% last year. The Zimbabwe government has recently passed an "Indigenisation and Economic Empowerment Act", which might lead to the compulsory transfer of controlling interests in all Zimbabwe companies to indigenous Zimbabweans. At this stage it is too early to assess what impact this might have on Eastern Highlands. The Group's perishables businesses in Zambia improved considerably in 2007. Rose production at Khal Amazi increased by 26% as it successfully integrated the Sunrose business acquired during 2006. Our vegetable business, Chalimbana, had its first profitable year since it started trading in 2005. Jensen, the Group's Russian property management business, was successful during 2007 in fully committing the US$101 million fund it raised during 2006 to investments. The entire fund is invested in residential, commercial retail and industrial projects in the Saint Petersburg region. In addition to the mixed-use Petrovsky Arsenal project, the Fund compiled a portfolio of high street retail assets throughout central Saint Petersburg and made several land acquisitions outside of Saint Petersburg. In its retail portfolio, Jensen has signed new leases or renegotiated terms with several of the existing tenants, increasing the revenue of the portfolio. Jensen's original smaller fund valuations continue to show strong growth, reflecting the buoyancy of the property market in Saint Petersburg. The results for Jensen include the uplift in the value of the first fund, originally established in 1994. We are recommending an ordinary dividend of 0.25p per share (2006:0.25p, paid January 2007) payable on 5 August 2008 to Shareholders on the register on 2 May 2008. We have started the current year with a mixed performance. Our tea businesses have benefited from higher tea prices and good growing conditions, but in Zambia our estates have suffered from exceptionally high rainfall that has held back rose production. We were saddened to report in December 2007 the death of David Fish in a tragic accident. He had been a Director only for a short time, but we will miss his contribution. Last but not least, I would like to thank all the Group's employees for their work and commitment during the year. Rupert Pennant-Rea Chairman 15 April 2008 Review of activities Food Group This division operates the food and flower business units in Malawi, Zambia and Zimbabwe. The products: tea, roses, fresh vegetables and macadamia nuts are mostly marketed to European supermarkets and food processors. Financial Results The division made an operating profit of £3,388K on a turnover of £17,486K. This is a drop in profitability by 10 % over last year, driven mostly by lower tea prices. The division's turnover is split between: Tea 48 % Cut Flowers 39 % Vegetables 9 % Macadamia nuts 4 % Net operating assets increased by 3 % to £ 17,973K. Capital expenditure was £1,888K which included the purchase of the freehold land of one of our rose greenhouse sites in Zambia. Of the remainder the majority was spent on new field and factory investments in our Malawi tea business. Tea Our tea is grown in Malawi and Zimbabwe. Total tea production increased by 99t to 16,373t over 2006. Lujeri Tea Estates, our Malawi business, produced 12,641t of this total, an increase of 3% over last year. Lujeri continues to replant its older seedling tea with improved tea varieties that are selected for both their yield and quality characteristics. Volumes will continue to rise over the next 5 years as these plantings come to maturity. Our Zimbabwe tea business, Eastern Highlands Plantations Ltd continues to operate though under the most challenging of conditions. Tea production declined by 5% from a failure to attract sufficient workers onto the estate, and this business now accounts for only 6% of the turnover of the division. It is most unlikely that this business will be able to improve its productivity until there is a resolution to the hyper inflationary conditions under which it is operating. In the year the average Malawi auction tea price declined by 17% or 23 US cents per kg. Against this, Lujeri's tea price declined by 6%. This lower decline is a result of the significant investments we have made over the last few years into improving our manufacturing capacity which in turn has allowed us to make a more consistent quality of tea. In Malawi we process tea for 5,500 smallholders. As part of our strategy for maximising their returns we provide them with extension services that have resulted in significant yield and quality improvements. We have now embarked on the process of having them accrediting to "Fairtrade" standards which should result in improved returns to them. Cut Flowers Our Zambian business, Khal Amazi Ltd produced 131 million stems, a 26% increase. This volume growth came from both the new greenhouses we have erected at the Kapwelyomba site and the benefits of the Sunrose acquisition we made in 2006. All our production is the smaller headed roses which are sold across a wide range of northern European supermarkets. Our airfreight forwarding company increased its market share for perishables from Zambia and we expect this to grow further this year Vegetables Chalimbana Fresh Produce operates a farm and packhouse in Zambia. The fresh vegetables produced are all exported to European supermarkets. We have refined the business model further and now concentrate on both conventional and organic peas. This strategy has increased shipments and improved profitability. During the year we changed our UK marketing partner and the new arrangements have increased the availability of our products to UK supermarkets. Macadamia Nuts The new nut cracking factory that we built in 2006 started operations in February 2007 and has processed 277 t of kernel in its first year of operation. The nuts are sourced from our own orchards in Malawi. We have 762ha in the ground and as they mature over the next 6 years crops will double. The market response has been encouraging and we will now look at how we can add value to our nuts at origin. Review of activities (continued) Jensen Group Jensen Group successfully committed Jensen Group I Limited Partnership, a USD100,835,000 fund raised in 2006, to investment projects in Saint Petersburg and the Saint Petersburg region. In addition to its Sestra River Developments mixed use project (renamed Petrovsky Arsenal), the fund has invested in several land sites and has assembled a portfolio of high street retail properties. Petrovsky Arsenal is a property spun out of Sestroretsk Instrument Works, founded by Peter the Great in 1721. On the 13.9 hectare site, the Fund has obtained preliminary permission to build approximately 150,000 square meters of mixed-use space. The property sits in the town of Sestroretsk, inside the Saint Petersburg administrative region and among the most prestigious suburbs in the area. It is anticipated construction on the first phase of the property will begin during the second half of 2008. The land plots acquired by the Fund are located outside of central Saint Petersburg and will take advantage on the growth of the City and the market trend of suburbanization. Most of the land acquired will be developed for residential or industrial uses. The retail portfolio acquired by the Fund includes assets located throughout central Saint Petersburg with a concentration of assets located near the Okhta Center development where Gazprom Neft (the oil division of Gazprom) is planning to build a 300 meter tower to relocate its headquarters from Moscow. In addition to Jensen Group I Limited Partnership, Jensen manages Sestroretsk Instrument Works, a 13.1 hectare territory and eight smaller investment funds which were set up and have been invested since 1994. The earlier funds increased in value during 2007 in addition to earning rent from the largely foreign tenants leasing them. These funds are comprised of residential, commercial and retail properties in the heart of Saint Petersburg along the City's main thoroughfares and canals as well as in the prestigious suburb of Sestroretsk. For management of these investments, Jensen Group receives a management fee and/ or a carried interest on all distributions made after the investors receive their investment capital back plus a preferred return. Consolidated income statement for the year ended 31 December 2007 2007 2006 Result before Result before biological Biological biological Biological assets and assets and assets and assets and hyperinflation hyperinflation hyperinflation hyperinflation Total adjustments Adjustments Total adjustments adjustments Notes £000 £000 £000 £000 £000 £000 Continuing operations Revenue 18,713 (261) 18,452 17,430 (438) 16,992 Cost of sales (8,768) (117) (8,885) (7,897) 171 (7,726) Gross profit 9,945 (378) 9,567 9,533 (267) 9,266 Distribution costs (2,248) (8) (2,256) (2,417) 6 (2,411) Administrative expenses (5,902) (29) (5,931) (5,349) (2) (5,351) Other operating income 154 15 169 636 (8) 628 Fair value adjustment to: - investment properties 916 - 916 497 - 497 - biological assets - 1,438 1,438 - 1,537 1,537 Operating Profit 2,865 1,038 3,903 2,900 1,266 4,166 Finance revenue 88 - 88 156 - 156 Finance costs (668) 6 (662) (1,446) 38 (1,408) Share of associate's results 132 - 132 113 - 113 Monetary working capital hyperinflation adjustments - 157 157 - 172 172 Profit before taxation 3 2,417 1,201 3,618 1,723 1,476 3,199 Taxation 4 (655) (251) (906) (667) (326) (993) Profit for year from continuing operations 1,762 950 2,712 1,056 1,150 2,206 Discontinued operations (Loss) after taxation from discontinued operations - - - (126) - (126) Net (loss) on disposal of operations - - - (88) - (88) Total (loss) for year from discontinued operations - - - (214) - (214) Profit for the year 1,762 950 2,712 842 1,150 1,992 Restated Profit attributable to: Equity holders of the parent 780 682 1,462 171 1,167 1,338 Minority interests 982 268 1,250 671 (17) 654 1,762 950 2,712 842 1,150 1,992 Restated Pence Pence Pence Pence Earnings per ordinary share 5 Basic 0.60 1.13 0.17 1.29 Dividend per ordinary share 6 0.25 - Consolidated balance sheet at 31 December 2007 2007 2006 (Restated) Excluding Including Excluding Including hyperinflation hyperinflation hyperinflation hyperinflation adjustments adjustments* adjustments adjustments* £000 £000 £000 £000 ASSETS Non-current assets Goodwill 2,047 2,047 2,055 2,055 Biological assets 12,984 12,984 12,665 12,665 Property, plant and equipment 10,189 10,189 9,372 9,372 Hyperinflation adjustment - 246 - 642 10,189 10,435 9,372 10,014 Investment properties 2,208 2,208 1,313 1,313 Investments - associate 320 320 200 200 - other 45 45 43 43 27,793 28,039 25,648 26,290 Current assets Inventories 2,128 2,128 2,061 2,061 Hyperinflation adjustment - 134 - 42 2,128 2,262 2,061 2,103 Trade and other receivables 1,983 1,983 1,759 1,759 Other financial assets 17 17 - - Cash and cash equivalents 2,006 2,006 2,840 2,840 6,134 6,268 6,660 6,702 Total assets 33,927 34,307 32,308 32,992 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent company Share capital 32,365 32,365 32,326 32,326 Share premium account 425 425 420 420 Capital redemption reserve 250 250 250 250 Revaluation reserve 457 457 700 700 Retained earnings (17,066) (16,746) (17,124) (16,611) 16,431 16,751 16,572 17,085 Minority interests 3,920 3,920 2,927 2,927 Total equity 20,351 20,671 19,499 20,012 Non-current liabilities Interest bearing loans and borrowings 1,552 1,552 1,383 1,383 Other payables 177 177 275 275 Provision for deferred tax liabilities 2,540 2,540 2,016 2,016 Hyperinflation adjustment - 60 - 171 2,540 2,600 2,016 2,187 Defined pension plan deficit 3,497 3,497 3,764 3,764 7,766 7,826 7,438 7,609 Current liabilities Interest bearing loans and borrowings 3,291 3,291 2,755 2,755 Trade and other payables 2,229 2,229 2,102 2,102 Other financial liabilities 9 9 - - Current tax liabilities 281 281 514 514 5,810 5,810 5,371 5,371 Total liabilities 13,576 13,636 12,809 12,980 Total equity and liabilities 33,927 34,307 32,308 32,992 *These are the Group's Balance Sheets for the years ended 31 December 2007 and 2006. Consolidated cash flow statement for the year ended 31 December 2007 2007 2006 (Restated) Including Including hyperinflation hyperinflation adjustments adjustments £000 £000 Operating activities Profit before tax from continuing operations 3,618 3,199 Profit/(loss) before tax from discontinued - (126) operations Profit before tax 3,618 3,073 Adjustment to reconcile profit before tax to net cash flows Non-cash: Depreciation of property, plant and equipment 823 952 Disposal of property, plant and equipment 53 (38) Additional retirement benefit costs (200) (179) Share based payments 60 - Disposal of shares to minority interests 4 - Net finance costs - continuing operations 574 1,252 Net finance costs - discontinued operations - 44 Fair value adjustments (2,354) (2,034) Share of net profit of associate (132) (113) Hyperinflation indexation adjustment 508 113 Monetary working capital hyperinflation (157) (172) adjustment Working capital adjustments: (Increase)/decrease in inventories (159) 3 (Increase)/decrease in trade and other (241) (329) receivables Increase/(Decrease) in trade and other payables 38 (277) Exchange difference on working capital (881) (1,397) Oversea tax paid (445) (135) Net cash generated from operating activities 1,109 763 Cash flows from investing activities Capital expenditure (1,837) (2,146) Disposal of property, plant and equipment - 58 Acquisition of subsidiaries - (521) Disposal of subsidiaries - 528 Additions to investments (net) 9 16 Net cash from investing activities (1,828) (2,065) Cash flows from financing activities Issue of shares (net of expenses) 44 88 Payment of loans and finance lease liabilities 163 (259) Finance costs, net of bank interest received (454) (1,129) Dividends paid to equity holders of the parent (323) - Dividends and other payments to minority (228) (20) interests (net) Distributions from property fund (net) (1) (2) Net cash from financing activities (799) (1,322) Net (decrease) in cash and cash equivalents (1,518) (2,624) Cash and cash equivalents at beginning of period 959 3,328 Effects of exchange rate changes on cash and 100 255 cash equivalents Cash and cash equivalents at end of period (459) 959 Cash and cash equivalents comprise: Cash 2,006 2,840 Overdrafts (2,465) (1,881) Cash and cash equivalents (459) 959 Interest bearing loans and borrowings due within (3,291) (2,755) one year Less: short term debt 826 874 Overdrafts (2,465) (1,881) Consolidated statement of changes in equity Attributable to equity holders of the Company Share premium & capital Share redemption Revaluation Retained Minority Total capital reserves reserve earnings Total interests equity £000 £000 £000 £000 £000 £000 £000 Balance at 1 January 2007 32,326 670 700 (16,611) 17,085 2,927 20,012 Changes in equity for 2007 Hyperinflation indexation movement - - - 553 553 - 553 Exchange differences on translation of net oversea assets: - before hyperinflation indexation - - (445) (1,549) (1,994) (60) (2,054) - hyperinflation indexation movement - - - (513) (513) - (513) Revaluation of property - - 228 - 228 57 285 Actuarial gain (net) of defined benefits pension plan - - - 187 187 - 187 Deferred tax on property revaluations: - before hyperinflation indexation - - (26) (15) (41) (30) (71) - hyperinflation indexation movement - - - 4 4 - 4 Net (expense)/income recognised directly in equity - - (243) (1,333) (1,576) (33) (1,609) Profit for the year - - - 1,462 1,462 1,250 2,712 Total recognised income and - - (243) 129 (114) 1,217 1,103 (expense) Issue of new ordinary shares (net of expenses): Exercise of share options 39 5 - - 44 - 44 Share-based payment - - - 60 60 - 60 Dividend paid - - - (323) (323) - (323) Dividend paid to minority interests - - - - - (124) (124) Distributions from property fund (net) - - - (1) (1) - (1) Disposal of shares to minority interests - - - - - 4 4 Repayment of advances from non-equity minority interests (net) - - - - - (104) (104) Balance at 31 December 2007 32,365 675 457 (16,746) 16,751 3,920 20,671 Notes to the Preliminary Statement 1. Basis of preparation These financial statements, from which the information in this preliminary statement has been derived, have been prepared in accordance with International Financial Reporting Standards ("IFRS") adopted by the European Union and they therefore comply with Article 4 of the EU IAS Regulation. They have been prepared on the historical cost basis, except for biological assets, freehold land and buildings and investment properties which have been measured at fair value. The consolidated and company financial statements are presented in sterling and all values are rounded to the nearest thousand (£000) except where otherwise indicated. Prior year adjustment Due to a miscalculation of the minority interest percentage on the acquisition of a part of the Jensen Group in 2005, the minority interest and goodwill on acquisition have been restated in 2007. This restatement has been accounted for retrospectively and recognised in the consolidated statement of changes in equity at 1 January 2006. The comparative balance sheet for 2006 has been restated to reflect the changes in minority interests, goodwill and retained earnings. There was no effect on the previously reported profit after taxation for 2006, but the profit attributable to the equity holders of the parent and minority interests have been restated on the income statement. The effect on the basic earnings per share for 2006 is as follows: Results before biological assets and hyperinflation adjustments Total Pence Pence Effect on earnings per ordinary share Basic (0.08) (0.09) The amounts of the corrections on the balance sheet amounts both excluding and including hyperinflation adjustments for 2006 are as follows: £000 Goodwill +154 Retained Earnings -83 Minority Interests +237 2. Status of financial information The financial information contained in this preliminary announcement does not constitute the company's consolidated statutory financial statements for the years ended 31 December 2007 or 2006, but is derived from those financial statements. The comparative figures for the year ended 31 December 2006 are an extract from the full accounts for that year which have been filed with the Registrar of Companies and on which the auditors have made a report under Section 235 of the Companies Act 1985. Notes to the Preliminary Statement (continued) 3. Segmental reporting - Profit before taxation The Group's primary reporting segments are the following business sectors: Food group - Tea, roses, vegetables and macadamia nuts. Investment property management - Properties in St. Petersburg, Russia. The manufacturing segment has been classified as a discontinued operation for the year ended 31 December 2006 Segment results 2007 2006 By activity Result before Result before biological Biological biological Biological assets and assets and assets and assets and hyperinflation hyperinflation hyperinflation hyperinflation adjustments adjustment Total adjustment adjustment Total Continuing Operations: £000 £000 £000 £000 £000 £000 Food group 3,388 1,038 4,426 3,774 1,266 5,040 Investment property management 1,074 - 1,074 663 - 663 Central costs net of sundry income (1,465) - (1,465) (1,424) - (1,424) 2,997 1,038 4,035 3,013 1,266 4,279 Net finance costs (580) 6 (574) (1,290) 38 (1,252) Monetary working capital hyperinflation adjustment - 157 157 - 172 172 Profit before tax 2,417 1,201 3,618 1,723 1,476 3,199 Taxation (655) (251) (906) (667) (326) (993) Profit for the year from continuing operations 1,762 950 2,712 1,056 1,150 2,206 The investment property management segment includes £132,000 (2006: £113,000) in respect of the results of the associated company. 4. Taxation 2007 2006 £000 £000 Continuing operations Current taxation: UK corporation tax 183 71 Double taxation relief (183) (71) - - Foreign tax: Current tax on income for the period 250 483 Adjustment in respect of prior periods (26) 37 224 520 Deferred taxation: Origination and reversal of temporary differences 213 36 Potential tax due on property revaluations and fair value 471 445 adjustments Adjustment in respect of prior periods (2) (8) 682 473 Total tax expense reported in the income statement for continuing 906 993 operations Notes to the Preliminary Statement (continued) 5. Earnings per ordinary share Basic Basic earnings per ordinary share is calculated by dividing the result attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. 2007 2006(Restated) Result before Result before biological biological assets and assets and hyperinflation hyperinflation adjustments Total adjustments Total £000 £000 £000 £000 Profit for the year attributable 780 1,462 171 1,338 to the equity holders of the Company 2007 2006 Thousands Thousands Weighted average number of ordinary shares in issue 129,406 103,470 (restated for 2005 rights issue) pence pence pence pence Basic earnings per ordinary 0.60 1.13 0.17 1.29 share 6. Dividend paid and proposed 2007 2006 £000 £000 Declared and paid during the year Equity dividends on ordinary shares: Interim dividend for 2006 of 0.25p per share, paid in January 2007 323 - A dividend for 2007 of 0.25p per share has been declared in 2008, payable in August 2008. This information is provided by RNS The company news service from the London Stock Exchange END FR BRGDSLXBGGIU
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