RNS Number:3490K
Camellia PLC
24 April 2003
Preliminary Announcement - Year Ended 31st December 2002
Consolidated Profit and Loss Account
for the year ended 31st December 2002
2002 2001
#'000 #'000 #'000 #'000
Restated
Turnover - continuing
operations 169,511 170,996
- discontinued
operations 7,012 32,351
------- -------
176,523 203,347
Cost of sales 134,997 156,851
------- -------
Gross profit 41,526 46,496
Net operating expenses 35,537 34,592
------ ------
Operating profit - continuing
operations 5,853 11,201
- discontinued
operations 136 703
----- ------
5,989 11,904
Share of results of associates 11,670 5,349
------ ------
17,659 17,253
Investment income 1,431 1,453
Profit on disposal of fixed
assets 195 24
Profit on disposal of fixed
asset investments 170 573
Profit on disposal of
subsidiary undertakings 255 424
Goodwill transferred upon part
disposal of a subsidiary - 704
Share of associate's profit on
disposal of a subsidiary - 2,065
------ ------
19,710 22,496
Net interest payable and similar
charges 4,281 4,940
------ ------
Profit on ordinary activities
before taxation 15,429 17,556
Taxation on profit on ordinary
activities 4,827 4,183
------ ------
Profit on ordinary activities
after taxation 10,602 13,373
Interest of minority
shareholders 3,453 3,146
------ ------
Profit for the year 7,149 10,227
Dividends 2,270 2,303
----- ------
Retained profit for the year 4,879 7,924
===== ======
Earnings per share 269.57p 374.48p
======= =======
Consolidated Balance Sheet
as at 31st December 2002
2002 2001
#'000 #'000 #'000 #'000
Restated
Fixed assets
Intangible assets
Goodwill:
Positive 1,265 1,219
Negative (3,648) (4,074)
----- -----
(2,383) (2,855)
Tangible assets 166,232 172,574
Investments 79,387 72,219
------- -------
243,236 241,938
Current assets
Stocks 31,467 34,100
Debtors 56,650 55,514
Cash at banks and in hand 154,738 164,493
------- -------
242,855 254,107
Creditors: amounts falling
due within one
year 210,650 212,562
------- -------
Net current assets 32,205 41,545
------ -------
Total assets less current
liabilities 275,441 283,483
Creditors: amounts falling
due after more
than one year 38,047 39,587
Provisions for liabilities
and charges 7,240 7,595
------- -------
Net assets 230,154 236,301
======= =======
Capital and reserves
Called up share capital 264 271
Share premium account 423 423
Revaluation reserve 37,273 38,280
Profit and loss account 132,197 135,297
Merger reserve 242 242
------- -------
Equity shareholders' funds 170,399 174,513
Minority shareholders'
interest 59,755 61,788
------- -------
230,154 236,301
======= =======
Consolidated Cash Flow Statement
for the year ended 31st December 2002
2002 2001
#'000 #'000 #'000 #'000
Net cash flow from operating
activities 12,810 22,033
Capital distribution/dividends
received from associates 1,031 629
Returns on investments and
servicing of finance
Interest received 682 955
Interest paid (4,514) (5,065)
Income from investments 1,297 1,662
Dividends paid to minority
interests (1,485) (1,632)
----- -----
(4,020) (4,080)
Taxation
UK corporation tax paid (140) (1,548)
Overseas tax paid (2,596) (3,368)
----- -----
(2,736) (4,916)
Capital expenditure and
financial investment
Purchase of tangible fixed
assets (10,428) (10,869)
Sale of tangible fixed assets 1,429 936
Purchase of investments (2,226) (4,338)
Sale of investments 590 1,751
------ ------
(10,635) (12,520)
Acquisitions and disposals
Acquisition of business - (557)
Disposal of businesses 4,030 2,846
Purchase of additional
Siegfried AG shares - (1,439)
Purchase of minority
interests (331) (542)
----- -----
3,699 308
Equity dividends paid (2,287) (2,267)
----- -----
Cash outflow before financing (2,138) (813)
Financing
Loan repayments (5,917) (7,614)
New loans 5,242 9,862
Capital element of finance
lease rental payments (347) (279)
Purchase of own shares (2,079) (1,693)
----- -----
(3,101) 276
----- -----
Decrease in cash in the
period (5,239) (537)
===== =====
Statement of Total Recognised Gains and Losses
for the year ended 31st December 2002
2002 2001
#'000 #'000
Restated
Profit for the year - includes associates #8,386,000
(2001 - #4,476,000) 7,149 10,227
Release of goodwill on disposal of subsidiary
undertaking - 515
Release of goodwill on part disposal of subsidiary
undertaking - (704)
Impairment on previously revalued tangible assets - (384)
Share of associate's fixed asset revaluation - 539
Currency translation differences on foreign currency
net investments
- includes associate's profit #525,000 (2001 -
#505,000) (6,914) (3,008)
----- -----
Total recognised gains and losses for the year 235 7,185
=====
Prior year adjustment (4,515)
-----
Total gains and losses recognised since last annual
report (4,280)
=====
Reconciliation of Movement in Shareholders'Funds
for the year ended 31st December 2002
2002 2001
#'000 #'000
Restated
Profit for the year 7,149 10,227
Dividends (2,270) (2,303)
------ ------
Retained profit for the year 4,879 7,924
Currency translation differences on foreign
currency net investments (6,914) (3,008)
Purchase of own shares (2,079) (1,860)
Release of goodwill on disposal of subsidiary
undertaking - 515
Release of goodwill on part disposal of
subsidiary undertaking - (704)
Impairment on previously revalued tangible
assets - (384)
Share of associate's fixed asset revaluation - 539
----- -----
Net addition in shareholders' funds (4,114) 3,022
Opening shareholders' funds as previously
reported 174,513 177,091
Prior year adjustment (5,600)
Opening shareholders' funds restated 171,491
------- -------
Closing shareholders' funds 170,399 174,513
======= =======
Analysis of turnover, profit and net operating assets
Net operating
Turnover Operating profit assets
2002 2001 2002 2001 2002 2001
#'000 #'000 #'000 #'000 #'000 #'000
By activity
Parent and subsidiary undertakings
Agriculture and
horticulture 111,327 108,955 8,842 9,557 135,773 141,826
Trading and agency 6,894 29,684 498 821 2,946 3,971
Food storage and
distribution 42,791 45,215 576 3,076 30,117 30,398
Engineering 13,122 14,478 421 1,287 12,927 12,521
Fine art trading and
philately 291 2,812 94 411 1,793 2,288
Property leasing 2,068 2,177 1,993 2,088 2,956 4,204
Central management and
miscellaneous 30 26 (5,550) (5,501) 9,656 8,658
------- ------- ----- ------ ------- -------
176,523 203,347 6,874 11,739 196,168 203,866
======= =======
Banking (83) 152 21,310 21,120
Profit on sale of investments to group company
included in banking results (795) - - -
Net interest from group companies (7) 13 - -
----- ------ ------- -------
5,989 11,904 217,478 224,986
======= =======
Associated undertakings
Agriculture and horticulture (44) (34)
Pharmaceutical 10,504 4,218
Insurance and leasing 1,210 1,165
------ ------
Operating profit 17,659 17,253
====== ======
Chairman's Statement
Pre-tax profit for the year ended 31st December 2002 was #15.43 million compared
with #17.56 million in 2001. The profit attributable to shareholders was #7.15
million compared with a restated figure of #10.23 million in 2001 and earnings
declined from 374.48p per share to 269.57p per share.
Siegfried AG again made a substantial contribution to our profits, but
continuing lower tea prices and very weak coffee prices had a detrimental effect
on profits. The situation in India is causing some disquiet and this is
discussed in more detail below.
The concerns expressed last year about another "El Nino" cycle were,
unfortunately, substantiated and this pattern will also affect 2003.
Dividend
The Board is recommending a final dividend of 66p per share which, together with
the interim dividend already paid of 20p per share, brings the total
distribution for the year to 86p per share compared with 85p per share in 2001.
Agriculture and Horticulture
Tea
India
The difficult conditions experienced in 2001 unfortunately continued into 2002.
Factors which are affecting the industry's profitability include sale prices
that are now lower than for many years, lower domestic demand, decreasing
exports and the increasing impact of the production of green leaf from small
growers which is sold to dedicated bought leaf factories. These factories pay
little or no statutory taxes, nor undertake welfare responsibilities and as a
result their end product can be at least 30% cheaper than the organised sector.
The Indian Government has to be prepared to take steps to control these factory
operations or the situation can only deteriorate further. Disruptions occurred
at the year end with the auction system throughout the country as Government
tightened regulations with the reintroduction of a more stringent Tea Marketing
Control Order. The situation is still not fully resolved.
As a result of these factors the Group produced a loss of #418,000 despite a
record crop of 29.62 million kgs, which was an increase of 5% over the previous
year.
On a brighter note, the Instant Tea Factory at Aibheel is working to full
capacity with continuing orders from both overseas and a major multi-national
beverage manufacturer.
The law and order situation throughout the estates has been relatively peaceful,
but precautionary measures remained in place.
Bangladesh
With only average weather conditions, the ten Longbourne Group estates produced
a total of 10.31 million kgs which was 7% behind 2001. However prices, which had
started poorly at the beginning of the season, improved steadily and by the end
of the year were 4% above the previous year. The Group produced a pre-tax profit
of #399,000. The newly acquired Eastland Camellia Limited, which has one estate,
also produced a slightly lower crop than in 2001 but prices were 4% higher. This
estate produces some of the highest priced teas in the country.
The 15,000 square foot extension to the warehouse in Chittagong has been
completed satisfactorily and will allow for the storage of an additional 15,000
packages of tea.
Africa
Tea production by subsidiary undertakings amounted to 35.8 million kgs. Climatic
conditions were generally beneficial in Malawi, but Kenya and South Africa both
suffered from irregular rainfall patterns. "El Nino" started to bite towards the
end of 2002, particularly in South Africa where exceptionally dry conditions
were experienced on the majority of the estates. Sale prices for tea were very
similar to those experienced in 2001, but inevitably the cost of production
increased.
The transition to a new Government in Kenya appears to have gone smoothly and
pronouncements are being made which are consistent with the need to improve the
economic management of the country. In Malawi interest rates for borrowings are
still exorbitantly high, presently 41%, and the Malawi kwacha devalued during
the year. The South African rand strengthened during 2002 to the extent that its
exchange rate against sterling is now higher than the levels witnessed before
the rand's dramatic fall during the latter part of 2001. Interest rates remain
at a relatively high level in South Africa, and these two factors will have an
unfavourable effect on the overall fortunes of our operations.
Nepal
Himalaya Goodricke Private Limited, the Group's associate company in Nepal,
produced a record crop of 306,000 kgs, but will show a small loss of #17,000
compared with a loss of #92,000 in 2001. Further improvements have been made in
the factory and a new large generating set is being installed which will allow
for increased manufacture of bought leaf.
Coffee
Coffee production in Kenya fell, mainly due to the disposal by Kakuzi of its 51%
owned subsidiary, Garton. Nonetheless, prices realised were again lower and
throughout the year we have been selling coffee at below the cost of production.
Considerable efforts have been made to reduce costs, but the short term
prospects are not encouraging. There is simply too much coffee being produced
and until the supply/demand ratio is put into balance, it is difficult to see
how profits can be made by any participants in the production sector of this
business.
The fortunes of our Malawi coffee estates have been affected even more adversely
by the fall in prices and costs have been reduced substantially by taking action
that must inevitably impinge on the long term health of the bushes.
Citrus
Yandilla Park experienced difficult conditions in Australia during the year with
an abundance of small sized fruit which was difficult to pack and market. A
greater than usual proportion of the fruit was destined to go to the juice
market, for which no sale contracts existed, resulting in poor prices being
achieved. The disappointing quality of the fruit was due to adverse climatic
conditions and it is hoped that the 2003 navel harvest will be of a considerably
higher quality, resulting in better marketing opportunities. It is, however,
encouraging to report that the marketing operations of Vitor go from strength to
strength with new opportunities being exploited, particularly in the Pacific Rim
region.
The prospects for the citrus operations in Chile, United States and South Africa
remain encouraging with good progress being made towards maturity. Plans are
being prepared for the extension of our citrus activities in these countries.
Edible Nuts
There was a further increase in the production of macadamia in Malawi and prices
improved over the previous year. The South African macadamia operations also
performed well and the processing facility has now been changed from a wet to
dry operation, hopefully further increasing the quality of the product. In
California the almond orchards have come to the end of their useful life and
have been uprooted; they will almost certainly be replaced by citrus. The
pistachio operations in California enjoyed a very good production season with a
crop considerably in excess of that predicted, even though it was an "on" year
in the alternate bearing cycle.
Other Horticulture
The pineapple joint venture in Kenya with Del Monte was again profitable,
although production was substantially down from the previous year on account of
the harvesting cycle. Prices recovered somewhat in 2002 and the prospects for
2003 are also encouraging due to a potential lack of supply from South East
Asia. In Kenya passion fruit remains disappointing and is gradually being
replaced with further areas of avocado, the existing plantings of which continue
to perform beyond our initial expectations.
Wine grape production in Australia improved over the previous year and prices
were reasonable. The prospect for prices, in particular the red varieties, is
set to decline due to continuing over-production in Australia. In South Africa
the wine grape harvest was satisfactory, but the export market has continued to
be difficult throughout the year with producers offering wine for export at very
low prices and, in some cases, almost certainly below cost of production. We
continue to concentrate our efforts on the premium sector and wine that is not
suitable for this market is sold as bulk rather than bottled. During the year
our Merlot and Shiraz wines were awarded gold medals in the well-respected
"Michelangelo" wine fair. Table grape production in South Africa was
disappointing although prices, mainly due to the weak rand, made up much of the
shortfall.
Rubber, which is planted on eight estates in Bangladesh, had a successful year
and production totalled 600 tonnes, which was in line with budget and a crop of
700 tonnes is anticipated for 2003.
Our operation in Brazil again made a modest profit which would have been
considerably better had it not been for an area-wide infestation of the bean
crop. Assuming reasonable weather conditions and a favourable economic
environment, the prospects for this operation continue to be much improved.
Trading and Agency
The Group's remaining 74.9% interest in British Traders & Shippers was sold in
January 2003, but its results are included for 2002. A profit on the sale of our
shareholding should be realised in 2003.
Food Storage and Distribution
Associated Cold Stores & Transport failed to replace the business of a customer
lost at the end of 2001 with business of a similar value and the extra cost of
providing outside space to accommodate a major customer's requirements impacted
on results. The development and implementation of a new IT system is already
identifying opportunities for cost savings which should help profits to recover.
A further 80% increase in insurance premiums in 2002 also had a significant
effect on profits. 2003 premiums have risen again by a further 36%.
Losses continued at W G White as caviar sales remained depressed and the costs
associated with the new wine distribution business continued to exceed sales
from that activity. Responsibility for international sales of wine from the
Group's vineyards has been transferred to South Africa in the first quarter of
2003, thus reducing ongoing selling costs for W G White. Changes in the pattern
of international air travel and the reduction in tourism to London are holding
back caviar sales.
In the Netherlands, Affish produced a much improved result in 2002. However, due
to a downturn in the Dutch economy, there was a general reduction in eating out
of the home, which adversely affected the results of Wylax, the Group's fish
distribution business which services the Dutch restaurant sector.
Engineering
2002 was the first full year of operations for Abbey Metal Finishing's rebuilt
facility, following the fire which severely damaged its premises in June 2000.
During the year, sales continued to progress whilst profits remained supported
by business interruption insurance income. However, the more constrained civil
aerospace market will make it difficult for the company to recover to the level
of turnover achieved before the fire.
Pressure on margins and the effect on North Sea exploration of the government's
imposition of an additional 10% corporation tax on oil companies had an impact
on the results of AJT Engineering, AKD Engineering and some divisions of British
Metal Treatments. AJT's cold extrusion process again provided a useful addition
to sales in its second year of operation. AKD completed the construction of its
new office building which now enables all staff to be accommodated together. The
company secured its largest ever order, for completion during the first half of
2003. The British Metal Treatments' site at Hove, which had been closed in the
previous December, was sold in July and the profit from this contributed to the
2002 results.
General Utilities reported a small loss in 2002 due to a further downturn in
demand for its profile cutting and precision grinding services. Plans are in
hand to consolidate operations onto a single site during 2003, which will
contribute to an improvement in the profitability of the business.
Property Leasing, Fine Art and Philately
Property leasing enjoyed another good year. As anticipated, fine art trading has
now ceased as the Lumley Cazalet operations were finally liquidated during 2002.
This operation has been very successful for the Group and only comes to a close
due to the retirement of our minority partners, to whom we extend our best
wishes for the future.
Very modest trading within the Group's philately activities continued during the
year.
Banking
The difficulties within the financial services sector resulted in another
disappointing year for Duncan Lawrie Limited. The continuing decline in UK base
rates has an immediate effect on the profitability of the bank, particularly as
our very cautious lending policy dictates that customer deposits should not be
utilised as advances to customers who may wish to borrow. Investment management
activity has also been restricted due to the decline in stock markets and this
also impacts on the management fees earned on portfolio valuations. However,
Duncan Lawrie has conducted an extensive review of its operations and will make
considerable savings on reorganisations that are presently under way, the main
one of which is to move its support staff out of expensive London property into
other property already owned by the Group. A lot of positive changes have been
made over the last 12 months including the continuing up-dating of our computer
systems and other communication systems and we remain confident that a niche
market exists for the services offered by Duncan Lawrie as a private bank and
that we will be able to return to making a reasonable profit when financial
conditions improve generally.
Pharmaceutical
The Siegfried Group increased net turnover by 13.2% to SFr. 399.0 million and
recorded a consolidated profit after tax of SFr. 56.2 million, an increase of
more than 81% over the prior year. This constituted the best result in the 130
year history of the Siegfried Group. Our share of these profits amounts to
#8,148,000. The improvements have come particularly from the "Exclusives"
division, which produces custom manufactured active pharmaceutical ingredients
for multi-national companies and also from the generics side of the business.
The Sidroga division, which markets medicinal and herbal teas, continues to show
improvement in its trading operations.
Other Associated Undertakings and Investments
The United Leasing Company Limited had a good year and generated a profit before
tax of #2.32 million compared with #2.24 million in 2001. The Bangladesh economy
is less buoyant at present and 2003 may be a more difficult year. The United
Insurance Company Limited also had a satisfactory year with a profit of
#329,000. The Surmah Valley Tea Company's three tea estates had a good year with
a crop of 1.90 million kgs and prices considerably ahead of 2001. Duncan
Products Limited had a poor year for sales of both water and packet tea.
However, it is hoped that a new plant recently commissioned in Dhaka for the
production of large commercial jars should improve profitability.
Our investments in Bermuda continue to make a positive contribution and it is
pleasing to report that the Bermuda stock market has not collapsed in the manner
evidenced by most other markets around the globe. Further small purchases have
been made and we are very happy with the prospects of the companies in which we
invest.
Development
The main emphasis on development during the year was to continue to bring
immature plantings towards maturity. The initial results from the avocado
plantings in Kenya and the citrus plantings in California and South Africa are
most encouraging and it is likely that further development will take place in
these areas.
Staff
The plight of the stock market and its effect on the health of pension funds has
been well documented and debated over the last few months. Our own pension
schemes are, unfortunately, not immune from the substantial deterioration in the
performance of equities. The FT all-share index fell 25.6% in 2002, which
compares with a previously assumed actuarial appreciation of 7%. The disclosures
required under FRS 17 show that the pension funds' deficits have increased from
#1,575,000 to #17,496,000 during the year. These deficits do, of course, simply
reflect just one moment in time and it is possible, indeed it is to be hoped
that, a recovery in the stock market will make good these deficits. Of more
immediate importance to us are the triennial actuarial valuations that are being
prepared for our main pension schemes as at 1st January and 5th April 2003. In
this context there is bound to be a significant deterioration since the last
valuations three years ago and company pension contributions as a percentage of
salaries are set to increase. The directors feel strongly that the present
defined benefit schemes should continue, notwithstanding the hopefully temporary
deficit in the schemes. We are fortunate to have a generally stable and long
serving workforce and it seems only right that they should be allowed to enjoy
their well-earned retirement in the knowledge that their post retirement income
will not be subject to the volatility of prevailing stock market conditions and
annuity rates.
2002 was a difficult year in many parts of the Group's operations and on behalf
of the Board I would like to extend my thanks to all employees for dealing with
the problems encountered in a positive manner.
Notes
1. The directors have decided to recommend a final dividend of 66p per ordinary
share payable on 2nd July 2003 to shareholders registered at the close of
business on 6th June 2003.
The total dividend for the year of 86p per ordinary share compares with 85p
per ordinary share paid in the previous year.
2. Earnings per share have been calculated by dividing profit after tax and
minority interests of #7,149,000 (2001 - #10,227,000) by the weighted
average number of shares in issue at 31st December 2002 of 2,652,023 (2001 -
2,731,019).
3. Taxation on profits on ordinary activities includes overseas taxation of
#2.28 million (2001 - #3.06 million), UK corporation tax of #1.44 million
(2001 - #2.21 million) and share of associated undertakings tax of #2.75
million (2001 - #2.35 million).
4. The Annual General Meeting is to be held on Thursday, 29th May 2003.
5. The above figures are an abridged statement from the Group's accounts for
the year ended 31st December 2002. The audit report on these accounts was
unqualified.
The statutory accounts for the year ended 31st December 2001 have been
delivered to the Registrar of Companies and those for the year ended 31st
December 2002 will be delivered after the Annual General Meeting.
6. The Directors Report and Statement of Accounts will be posted to
shareholders on 28th April 2003 on which date copies can be obtained from
the company's registrars:-
Capita IRG Plc,
The Registry,
34 Beckenham Road,
Beckenham
Kent, BR3 4TU
or from the company's registered office:-
Wrotham Place,
Wrotham,
Sevenoaks,
Kent TN15 7AE
Press enquiries to:-
Mr. M.C. Perkins
Telephone No. 01622 746655
P.E. Hill
Company Secretary
24th April 2003
This information is provided by RNS
The company news service from the London Stock Exchange
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