TIDMCAM
RNS Number : 4564K
Camellia PLC
02 September 2021
CAMELLIA PLC
INTERIM RESULTS
Camellia Plc (AIM:CAM) announces its interim results for the six
months ended 30 June 2021.
Malcolm Perkins, Chairman of Camellia, stated:
"As anticipated, the first half of 2021 has been exceptionally
challenging operationally. Increased tea production and improved
pricing in India and Bangladesh helped offset the impact of the
oversupply of tea in Kenya and higher wages in Assam. The pandemic
continues to have a direct impact on our engineering and food
services businesses in the UK.
Notwithstanding these challenges, we have made good strategic
progress, particularly with the acquisition of Bardsley England and
the sale of our aerospace businesses.
Once again I should like to thank all our staff across the world
for their continuing contributions both to the business and their
local communities in extremely difficult circumstances."
Operational highlights
-- Tea production up 5% with strong performances and increased
average prices in India and Bangladesh offset by declines
in African prices and the margin impact from the significant
Assam wage increases
-- Macadamia production volumes expected to be up 20% though
average selling prices are lower
-- Avocado production expected to be significantly lower than
last year though prices are expected to be marginally better
-- Speciality crops generally enjoyed a strong first half
-- Mixed performance from other businesses with improved results
from Associates offset by increases in losses in Engineering
and Food Service
Strategic highlights
-- Acquisition in July of an 80% interest in Bardsley England,
the UK's second largest grower of apples
-- Sale of the Aerospace interests in August
-- Further progress made on geographic and crop diversification
-- First Tanzanian avocado planting complete
-- First major blueberry crop harvesting underway in Kenya
-- Continued commitment to ESG principles with particular focus
on securing and conserving water resources to mitigate climate
impacts
-- Camellia remains financially strong with significant liquid
resources
Financial highlights
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2020 2020
2021
GBP'm GBP'm GBP'm
----------- -------------- -------------
Revenue - continuing operations 105.5 114.9 291.2
----------- -------------- -------------
Underlying (loss)/profit before
tax* (7.3) (6.0) 16.0
----------- -------------- -------------
Significant separately disclosed
items and provision releases (0.5) (6.9) (8.2)
----------- -------------- -------------
(Loss)/profit before tax for
the period (7.8) (12.9) 7.8
----------- -------------- -------------
(Loss) after tax for the period (6.1) (12.1) (0.8)
----------- -------------- -------------
(Loss)/earnings per share (220.9)p (456.2)p (181.0)p
----------- -------------- -------------
Dividend per share for the
period 44p 102p 144p
----------- -------------- -------------
Net cash and cash equivalents
net of borrowings 62.1 72.8 90.1
----------- -------------- -------------
Investment portfolio market
value 51.3 45.8 50.6
----------- -------------- -------------
* Underlying profit before tax is profit before tax from
continuing operations excluding separately disclosed significant
items (eg provision releases, impairments, costs relating to legal
claims, profit on disposal of property)
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 of 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
Maitland/AMO
PR
William Clutterbuck 07785 292617
CHAIRMAN'S STATEMENT
Due to the normal seasonality in our business, we are reporting
a first half loss before tax of GBP7.8 million (2020 H1: GBP12.9
million loss) which is significantly lower than that of the
corresponding period of 2020 reflecting the high level of legal
costs incurred and impairments in H1 2020. The underlying loss
before tax for the first half was GBP7.3 million (2020 H1: GBP6.0
million loss). However H1 2020 also included an underlying profit
before tax of GBP3.6 million from Horizon Farms and therefore, on a
like for like basis, the underlying loss in H1 2021 was
significantly smaller.
Our tea volumes in the period were 5% higher and we also saw
significant improvements in our average selling prices in India and
Bangladesh. However, the benefit of these was in large part o set
by the significant increases in wages in Assam. Despite e orts
being made by both the industry and governments around the world,
the global tea market remains over-supplied and poorly priced and
this can be seen most starkly in the prices achieved for our
African teas. The reduced avocado crop and the extension of
lockdown restrictions have also been unhelpful. Our associates, in
particular BF&M, have made a substantial contribution to our
performance in H1.
Strategy
As announced in the AGM statement in June, the Board of Camellia
is undertaking a series of measures aimed at re-balancing the
Group's portfolio of investments in order to take better advantage
of its strengths, and thereby to improve profitability and share
price performance. These measures include accelerating our
agricultural diversification and divesting of certain assets which
we consider to be non core.
In line with this and as announced in July, we have completed
the acquisition of an 80% stake in Bardsley England, the UK's
second largest apple grower, and disposed of our interests in the
aerospace sector with the sales of Abbey Metal Finishing and
Atfin.
Other strategic developments are included in the Operating
review.
Outlook
Our full year outcome is expected to reflect lower underlying
profit before tax from Agriculture (after adjusting for Horizon
Farms GBP4.5 million full year underlying profit before tax in
2020) and from Engineering due in large part to a softening of
activity in the oil and gas markets and the impact of Covid on the
markets previously served by our aerospace business. This is
expected to be o set in part by improved performance from Food
Service and our associates. As always, our financial results remain
largely dependent on Agriculture where the majority of harvesting
and sales take place in the second half of the year. It is
therefore too early to give a firm indication of the likely results
for 2021.
Dividend
The Board is pleased to declare an interim dividend of 44p per
share (2020 H1: nil) payable on 8 October 2021 to shareholders
registered at the close of business on 10 September 2021 and will
consider the overall dividend in respect of 2021 when the year is
complete.
Board
It is with great sadness that we announced last month the death
of our Deputy Chairman, Senior Independent Director and Chairman of
the audit committee, Chris Relleen. Chris joined the Board in 2006
as a non-executive director, and we will remember Chris's
contribution to the Board and miss his wise counsel, humility and
humour.
The Board has today appointed William Gibson as Senior
Independent Director and Gautam Dalal as Chairman of the audit
committee. Simon Turner will join the nomination and remuneration
committees.
People
Once again, I would like to thank all of our sta around the
world for their continuing e orts in extremely di cult
circumstances.
Malcolm Perkins
Chairman
1 September 2021
OPERATING REVIEW
COVID-19 AND TRADING UPDATE
People
The first half has been very tough for all of our sta and their
communities. The virulent re-emergence of the pandemic in India and
Bangladesh combined with further lockdowns in most of our
production centres and markets have created a demanding operating
environment. Vaccine roll-outs across most of our operating
countries have been slow and di cult, and it is against that
background that I would once again like to thank all of our sta for
their e orts.
Trading
Full details of the trading results for the first half are set
out below but in summary all of our businesses are operational,
albeit in modified ways to take account of social distancing.
The key features that have impacted the first half of this year
relative to H1 2020 have been:
-- A 5% increase in our total tea production volumes, higher
average tea selling prices in India and Bangladesh, o set
in part by the significant wage increase in Assam
-- Continuing over-supply of the tea market and the consequential
impact on prices for Kenya and Malawi
-- Significantly lower avocado volumes coming out of Kenya
but at marginally better prices
-- Increased macadamia volume expectations coupled with lower
average price expectations
-- Slow growth in UK demand for Engineering and Food Service
as a result of the prolonged lockdown
-- No profits from Horizon Farms which was sold in 2020
Additional detail on the first half results is set out
below.
Acquisitions and Disposals
Following the end of the first half we completed three important
strategic transactions. First, we acquired an 80% share in Bardsley
England for GBP15.7 million and have also made a loan to Bardsley
of GBP9.3 million. Bardsley is a major fruit farming business and
the UK's second largest apple grower. The farming operation covers
850 hectares in Kent and grows apples, pears, cherries, plums and
strawberries as well as having a large grading, packing and storage
facility. Bardsley is an innovator in the use of agritech and
regenerative agriculture. Customers include major supermarkets in
the UK.
Bardsley's focus on perennial agriculture, its UK base,
innovative thinking and prospects for immediate and exciting growth
makes this a significant acquisition for the Group.
We also took the decision to dispose of our two interests in the
aerospace sector which had been hit very hard by the downturn in
air travel resulting from the pandemic. We believe that the capital
required to maintain the operations in an uncertain environment
could be better deployed in our core business.
Financial Position
The Group has a strong balance sheet with substantial liquidity
which amounted to GBP62.1 million in cash and cash equivalents net
of borrowings as at 30 June 2021. In order to part fund the
Bardsley acquisition, disposals of easily liquidated assets were
made from the investment portfolio amounting to GBP14.2 million.
The Group may sell certain less liquid, non income generating
assets in order to fund strategically important acquisitions.
FIRST HALF OPERATING RESULTS
Agriculture
The revenue and underlying trading (loss)/profit by crop during
the period is set out below. The Appendix at the end of this
interim report includes details of the revenues and underlying
trading profits for the last 5 financial years.
H1 2021 H1 2020 Full year 2020
GBP'm GBP'm GBP'm
Revenue
Tea 71.7 74.2 198.4
Macadamia 4.5 4.4 13.0
Avocado 1.1 2.6 16.8
Other 7.1 10.5 19.0
------- ------- --------------
84.4 91.7 247.2
------- ------- --------------
Underlying trading (loss)/profit
Tea (7.0) (10.6) 7.9
Macadamia (0.5) 0.3 1.0
Avocado 1.0 1.1 3.9
Other 1.3 3.5 5.5
------- ------- --------------
(5.2) (5.7) 18.3
------- ------- --------------
Note: Please see note 5 for further segmental information and
note 6 for details of the adjustments made to trading profit in
arriving at underlying trading (loss)/profit for the Agriculture
division.
Tea
Overall tea production in the first half was up 5% at 44.1mkg
(H1 2020: 42.0mkg), though di erent regions experienced markedly di
erent conditions. Pricing has been mixed with continued weakening
of average prices in Africa but in India and Bangladesh CTC prices
have firmed while Orthodox prices declined over the same period
last year.
H1 2021 H1 2020 Full year 2020
Volume Volume Volume
mkg mkg mkg
India 8.1 6.7 26.1
Bangladesh 3.5 2.8 12.5
Kenya 7.4 7.9 15.8
Malawi 13.2 11.6 16.8
------- ------- --------------
Total own estates 32.2 29.0 71.2
Bought leaf production 9.6 10.4 23.5
Managed client production 2.3 2.6 4.8
------- ------- --------------
Total made tea produced 44.1 42.0 99.5
------- ------- --------------
India: The Covid situation in India remains deeply concerning
despite the extensive e orts made to keep all our sta safe,
including restricting workforce deployment to 50% in West Bengal.
Production in the first half of the year was 17% up on the same
period last year largely due to less severe lockdowns in the
current year o set in part by the impact of very dry weather early
in the season.
Prices for CTC teas in both the Dooars and Assam have been
higher than H1 2020. Pricing for Assam orthodox teas which
constitute most of our production in that region, are significantly
lower than in H1 2020. As previously announced, wages in Dooars
increased 14.8% for 2021 and in Assam increased 22.75% e ective
from 23 February 2021 which will have a substantial impact on
profitability of tea. It is still very early in the India tea sales
cycle (around 70-75% of sales are made in the second half of the
year) which makes predicting prices for the remainder of the year
inherently uncertain even without the impact of Covid.
Bangladesh: Despite a dry hot start to the season, favourable
weather thereafter led to a record June crop and production was up
25% on H1 2020. Average pricing has also been significantly better
(up 63% in H1).
Kenya: In Kenya, benign weather continues to result in high
volumes of tea production nationally, although below the record
levels of last year. Our estate production for the first half was
11% below that of the same period of 2020 with average prices down
approximately 2%. We continue to see a risk of further downward
price pressure for the remainder of the year.
The low prices continue to have political repercussions and the
implications of the new regulations for the tea sector, published
by the Kenyan Government, remain uncertain. It is hoped the
legislation will restrain production and improve prices.
Malawi: Estate production was approximately 14% higher than the
same period last year due to better growing conditions but sales
have been delayed due to the uncertainty created by the Malawi
Revenue Authority's investigation into the applicability of VAT to
certain tea sales, as reported in our 2020 annual report. This is
expected to be a timing issue as between H1 and H2 sales. Average
tea prices were 2% higher than H1 2020 but due to oversupply in the
Kenyan market, we expect lower prices in the second half.
Macadamia
We estimate that our combined macadamia harvest will be
approximately 21% higher than that of 2020 at 1.3mkg despite the
pest damage in Malawi that we previously reported. Higher volumes
were achieved by all operations, particularly South Africa.
Although the kernel market is active with both demand and prices
improving as the year continues, we expect our average prices to be
16% below those of last year due to the adverse grade mix and the
low value stock lines carried forward from 2020.
Avocado
Production volumes of our estate Hass crop in H1 were down 18%
against H1 2020. The season is well underway and thus far logistics
have generally worked well despite the challenges presented by the
pandemic. The avocado tree has a natural tendency towards alternate
bearing, widely know as 'on' and 'o ' years and 2021 is an 'o '
year. We anticipate total production of estate Hass for the full
year to be approximately 30% below 2020.
Pricing in H1 2021 has been marginally ahead of that of the same
period in 2020. However, European markets are currently over
supplied with avocados and it is too soon to predict prices with
any certainty for the remainder of the year. It is however unlikely
that prices will improve su ciently to o set the lower yield.
Speciality Crops
Our speciality crops have generally had a good first half and
the following is worth noting:
-- In Brazil the soya crop was up 8%, driven by favourable growing
conditions. Prices achieved were up 58%, assisted in part by
the devaluing Real. There has been a highly unusual but severe
incidence of frost on the farm from the end of June which has
a ected the maize, sorghum and wheat crops. The extent of the
impact is not clear other than volumes of sorghum and wheat
will be significantly lower than anticipated. However prices
for maize and sorghum are likely to offset this shortfall.
-- Blueberry volumes are in line with our expectation so far. A
combination of domestic as well as regional markets are being
supplied.
Strategic developments
The following strategic developments in the agriculture division
should be noted:
-- Acquisition of Bardsley England as described above.
-- In Tanzania we have now completed all the legal steps necessary
to acquire the farm at Mgagoa. 50Ha of avocado have been planted
with another 92Ha expected to be planted over the coming months.
-- In South Africa, the first 40Ha of avocado will be planted at
Beja later this year with an additional 40Ha due to be planted
at the start of 2022.
Engineering
The oil and gas services market in Aberdeen has seen some
softening of demand for AJT's Engineering division with a
consequent reduction in margins, while the Site Services division,
which is focused on the renewables sector, has seen a significant
increase in activity over H1 2020.
As previously announced, the sales of Abbey Metal Finishing and
its subsidiary Atfin were completed in the first week of August.
Revenues from these businesses up to that date were disappointing
at GBP1.7 million with losses before taxation at GBP0.8 million. A
further impairment of GBP0.5 million has been recorded as a
consequence of the continued deterioration of their trading
conditions prior to disposal.
Food Service
After a di cult start to the year, ACS&T is showing signs of
improvement as the lockdown is lifted.
Jing Tea has been largely closed throughout the lockdown, with
only the on-line trading platform remaining busy. Recovery for Jing
remains dependent on the recovery of the hotel, restaurant and
tourism sectors.
Investments and Associates
Our investment portfolio, which consists principally of listed
equities, at 30 June 2021 was valued at GBP51.3 million (31
December 2020: GBP50.6 million). Following the disposal programme
during July, the value of the investment portfolio was GBP37.4
million at 31 July 2021.
Our share of profits from associates amounted to GBP3.8 million
(H1 2020: GBP2.5 million) reflecting strong operating results from
BF&M. BF&M recorded net income up 42% at $15.1 million
(2020 H1: $10.6 million) due to a 15% uplift in gross premiums
written in the period compared to H1 of the prior year. This was
driven by increased property premiums in the Caribbean and from
health & annuities premiums in Bermuda. Short term claims and
adjustment expenses increased by 64% and life and health policy
benefits decreased by 43% to $33.7 million.
Pensions
The UK defined benefit scheme is now in surplus by GBP6.6
million (31 December 2020: deficit GBP7.0 million) due to a
combination of better asset returns than projected and higher
discount rates. The deficit on the Group's defined benefit pension
and post employment benefit schemes overall now amounts to GBP4.8
million at 30 June 2021 (31 December 2020: GBP16.6 million).
Safeguarding and Stewardship Committee
We are pleased to report good progress from the newly formed
Safeguarding and Stewardship Committee formed following the human
rights allegations last year and in particular the appointment of
an additional external member, Vinita Singh Phougat. Vinita is
based in India and has extensive experience in empowering
individuals and workers within supply chains across a variety of
sectors, and in helping businesses to understand how they can
contribute to improving working conditions. In addition, Malcolm
Perkins has also joined the committee.
Summary
2021 to date has been an important time for the Group especially
in respect of progress with the implementation of our strategy. The
on-going impact of the pandemic and the continuing weakness in the
price of tea globally, has led the Board to accelerate its plans.
Diversifying our interests in agriculture where we have scale and
expertise and disinvesting those businesses where we have fewer
long-term strategic advantages are key priorities and we have taken
significant steps in their implementation.
The Board believes that the actions that we are taking now will
enhance the long-term value of the Group and provide additional
opportunities for its success.
Tom Franks
Chief Executive
1 September 2021
INTERIM MANAGEMENT REPORT
The Chairman's statement and Operating review form part of this
report and include important events that have occurred during the
six months ended 30 June 2021 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 2020 (available on the
Company's website: www.camellia.plc.uk) highlighted risks and
uncertainties that could have an impact on the Group's businesses.
As these businesses are widely spread both in terms of activity and
location, it is unlikely that any one single factor could have a
material impact on the Group's performance. These risks and
uncertainties continue to be relevant for the remainder of the
year. In addition, the Chairman's Statement 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 consolidated
financial statements have been prepared in accordance with IAS 34
'Interim Financial Reporting', 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 2020.
As reported on 6 August 2021, Senior Independent non-executive
Director Chris Relleen, sadly passed away. There have been no other
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
1 September 2021
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2021
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
Continuing operations Notes GBP'm GBP'm GBP'm
Revenue 5 105.5 114.9 291.2
Cost of sales (91.5) (98.8) (227.7)
---------- ---------- -----------
Gross profit 14.0 16.1 63.5
Other operating income 1.7 0.8 3.0
Distribution costs (5.3) (6.2) (16.2)
Administrative expenses (21.7) (25.0) (59.5)
---------- ---------- -----------
Trading loss 5 (11.3) (14.3) (9.2)
Share of associates' results 7 3.8 2.5 6.1
Profit on disposal of property,
plant and equipment - - 14.4
Impairment of intangible assets
and investment properties,
plant and equipment (0.5) (3.4) (6.5)
Profit on disposal of financial
assets 0.1 0.1 0.2
---------- ---------- -----------
Operating (loss)/profit (7.9) (15.1) 5.0
Investment income 0.4 0.4 0.6
---------- ---------- -----------
Finance income 0.9 1.5 2.3
Finance costs (0.7) (0.8) (1.6)
Net exchange (loss)/gain (0.2) 1.3 2.2
Employee benefit expense (0.3) (0.2) (0.7)
---------- ---------- -----------
Net finance (cost)/income 8 (0.3) 1.8 2.2
---------- ---------- -----------
(Loss)/profit before tax (7.8) (12.9) 7.8
------------------------------------------------------ ----- ---------- ---------- -----------
Comprising
- underlying (loss)/profit
before tax 6 (7.3) (6.0) 16.0
- profit on disposal of property,
plant and equipment 6 - - 14.4
- costs related to group claims 6 - (3.5) (16.1)
* impairment of intangible assets and property,
plant
and equipment 6 (0.5) (3.4) (6.5)
---------- ---------- -----------
(7.8) (12.9) 7.8
------------------------------------------------------ ----- ---------- ---------- -----------
Taxation 9 1.7 0.8 (8.6)
---------- ---------- -----------
Loss for the period (6.1) (12.1) (0.8)
---------- ---------- -----------
(Loss)/profit attributable
to:
Owners of Camellia Plc (6.1) (12.6) (5.0)
Non-controlling interests - 0.5 4.2
---------- ---------- -----------
(6.1) (12.1) (0.8)
---------- ---------- -----------
Loss per share - basic and
diluted 11 (220.9 )p (456.2 )p (181.0 )p
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2021
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'm GBP'm GBP'm
Loss for the period (6.1) (12.1) (0.8)
---------- ---------- -----------
Other comprehensive (expense)/income:
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 (0.9) (0.8) (1.1)
Profit on disposal 1.6 0.6 0.8
---------- ---------- -----------
0.7 (0.2) (0.3)
Changes in the fair value of financial
assets (0.4) (2.7) 2.3
Deferred tax movement in relation to
fair value adjustments - 0.4 (0.7)
Remeasurements of post employment benefit
obligations 12.9 (7.3) 4.3
Deferred tax movement in relation to
post employment benefit obligations (1.5) - 0.6
---------- ---------- -----------
11.7 (9.8) 6.2
---------- ---------- -----------
Items that may be reclassified subsequently
to profit or loss:
Foreign exchange translation di erences (4.2) 13.1 (22.6)
Share of other comprehensive income
of associates - 0.1 0.3
---------- ---------- -----------
(4.2) 13.2 (22.3)
---------- ---------- -----------
Other comprehensive income/(expense)
for the
period, net of tax 7.5 3.4 (16.1)
---------- ---------- -----------
Total comprehensive income/(expense)
for the period 1.4 (8.7) (16.9)
---------- ---------- -----------
Total comprehensive income/(expense)
attributable to:
Owners of Camellia Plc 2.1 (10.3) (16.6)
Non-controlling interests (0.7) 1.6 (0.3)
---------- ---------- -----------
1.4 (8.7) (16.9)
---------- ---------- -----------
CONDENSED CONSOLIDATED BALANCE SHEET
at 30 June 2021
30 June 30 June 31 December
2021 2020 2020
Notes GBP'm GBP'm GBP'm
ASSETS
Non-current assets
Intangible assets 6.4 6.9 6.6
Property, plant and equipment 12 189.4 218.6 198.3
Right-of-use assets 12.8 18.5 16.6
Investment properties 21.0 18.9 19.1
Biological assets 12.3 14.3 12.7
Investments in associates 69.2 72.3 67.6
Deferred tax assets - 0.2 -
Financial assets at fair value
through other comprehensive
income 42.7 37.6 42.6
Financial asset at fair value
through profit or loss 5.9 5.2 5.3
Financial assets at amortised
cost 2.7 3.0 2.7
Other investments - heritage
assets 9.8 9.8 9.8
Retirement benefit surplus 16 6.6 0.5 0.1
Trade and other receivables 2.6 2.7 2.4
------- ------- -----------
Total non-current assets 381.4 408.5 383.8
------- ------- -----------
Current assets
Inventories 61.5 61.3 47.5
Biological assets 5.9 3.6 7.1
Trade and other receivables 31.6 42.1 43.7
Current income tax assets 3.5 3.4 1.7
Cash and cash equivalents (excluding
bank overdrafts) 73.2 82.9 98.5
------- ------- -----------
175.7 193.3 198.5
Assets classified as held for
sale 13 6.2 9.8 -
------- ------- -----------
Total current assets 181.9 203.1 198.5
------- ------- -----------
30 June 30 June 31 December
2021 2020 2020
Notes GBP'm GBP'm GBP'm
LIABILITIES
Current liabilities
Financial liabilities - borrowings 14 (7.0) (6.9) (5.7)
Lease liabilities (1.7) (1.4) (1.2)
Trade and other payables (52.8) (53.0) (50.9)
Current income tax liabilities (2.7) (5.3) (10.3)
Employee benefit obligations 16 (1.5) (0.9) (1.1)
Provisions 15 (13.7) (13.0) (19.0)
------- ------- -----------
(79.4) (80.5) (88.2)
Liabilities related to assets
classified as held for sale 13 (3.0) - -
------- ------- -----------
Total current liabilities (82.4) (80.5) (88.2)
------- ------- -----------
Net current assets 99.5 122.6 110.3
------- ------- -----------
Total assets less current liabilities 480.9 531.1 494.1
------- ------- -----------
Non-current liabilities
Financial liabilities - borrowings 14 (4.1) (3.2) (2.7)
Lease liabilities (7.7) (11.6) (10.3)
Deferred tax liabilities (36.8) (45.2) (39.5)
Employee benefit obligations 16 (9.9) (29.7) (15.6)
------- ------- -----------
Total non-current liabilities (58.5) (89.7) (68.1)
------- ------- -----------
Net assets 422.4 441.4 426.0
------- ------- -----------
EQUITY
Called up share capital 0.3 0.3 0.3
Share premium 15.3 15.3 15.3
Reserves 359.3 369.8 361.0
------- ------- -----------
Equity attributable to owners
of Camellia Plc 374.9 385.4 376.6
Non-controlling interests 47.5 56.0 49.4
------- ------- -----------
Total equity 422.4 441.4 426.0
------- ------- -----------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2021
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
Notes GBP'm GBP'm GBP'm
Cash (used in)/generated from
operations
Cash flows from operating activities 17 (13.5) (3.1) 19.3
Interest received 0.9 1.5 2.4
Interest paid (1.0) (0.8) (1.6)
Income taxes paid (9.2) (3.2) (7.2)
---------- ---------- -----------
Net cash flow from operating
activities (22.8) (5.6) 12.9
---------- ---------- -----------
Cash flows from investing activities
Purchase of intangible assets - - (0.3)
Purchase of property, plant
and equipment (4.9) (6.6) (13.5)
Proceeds from sale of non-current
assets 0.3 0.3 0.5
Proceeds from sale of non-current
assets - non recurring - - 21.6
Additions to investment property (0.2) (0.6) (0.9)
Biological assets: non-current
- disposals 0.3 0.5 0.7
Investment in associates - (0.3) (0.3)
Dividends received from associates 1.8 1.3 3.2
Purchase of investments (4.8) (4.9) (12.4)
Proceeds from sale of investments 4.0 6.0 9.1
Income from investments 0.4 0.4 0.6
---------- ---------- -----------
Net cash flow from investing
activities (3.1) (3.9) 8.3
---------- ---------- -----------
Cash flows from financing activities
Equity dividends paid - - (2.8)
Dividends paid to non-controlling
interests (1.2) (2.3) (7.0)
New loans 1.4 - 1.9
Loans repaid (1.9) (0.3) (3.6)
Payments of lease liabilities (0.6) (0.5) (0.9)
---------- ---------- -----------
Net cash flow from financing
activities (2.3) (3.1) (12.4)
---------- ---------- -----------
Net (decrease)/increase in cash
and cash equivalents (28.2) (12.6) 8.8
Cash and cash equivalents at
beginning of period 94.9 89.4 89.4
Exchange (losses)/gains on cash (0.4) 2.7 (3.3)
---------- ---------- -----------
Cash and cash equivalents at
end of period 18 66.3 79.5 94.9
---------- ---------- -----------
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 2021
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 2020 0.3 15.3 (0.4) 358.6 21.9 395.7 56.7 452.4
Total comprehensive
(expense)/income
for the period - - - (18.7) 8.4 (10.3) 1.6 (8.7)
Dividends - - - - - - (2.3) (2.3)
------- ------- -------- -------- -------- ----- ----------- ------
At 30 June 2020 0.3 15.3 (0.4) 339.9 30.3 385.4 56.0 441.4
------- ------- -------- -------- -------- ----- ----------- ------
At 1 January 2020 0.3 15.3 (0.4) 358.6 21.9 395.7 56.7 452.4
Total comprehensive
income/(expense)
for the period - - - 0.3 (16.9) (16.6) (0.3) (16.9)
Dividends - - - (2.8) - (2.8) (7.0) (9.8)
Share of associate's
other equity
movements - - - 0.3 - 0.3 - 0.3
------- ------- -------- -------- -------- ----- ----------- ------
At 31 December
2020 0.3 15.3 (0.4) 356.4 5.0 376.6 49.4 426.0
Total comprehensive
income/(expense)
for the period - - - 7.6 (5.5) 2.1 (0.7) 1.4
Dividends - - - (4.0) - (4.0) (1.2) (5.2)
Share of associate's
other equity
movements - - - 0.2 - 0.2 - 0.2
------- ------- -------- -------- -------- ----- ----------- ------
At 30 June 2021 0.3 15.3 (0.4) 360.2 (0.5) 374.9 47.5 422.4
------- ------- -------- -------- -------- ----- ----------- ------
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 2021 (the "Interim Report"). The
interim report does not include all the notes of the type normally
included in an annual financial report. Accordingly, this report
should be read in conjunction with the Report and Accounts (the
"Annual Report") for the year ended 31 December 2020.
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 2020 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 consolidated 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").
These interim condensed consolidated financial statements were
approved by the Board of Directors on 1 September 2021. 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
These interim condensed financial statements have been prepared
on the basis of accounting policies consistent with those applied
in the financial statements for the year ended 31 December 2020.
Amendments to IFRSs e ective for the financial year ending 31
December 2021 are not expected to have a material impact on the
Group.
3 Going concern
As set out in the Operating review, our businesses are currently
operating broadly as normal. Our experience over the last year has
given us valuable insight into how the pandemic impacts our markets
and businesses. Despite this, it remains di cult to predict with
any certainty the impact of COVID on the Group during the remainder
of this year. Accordingly, we continue to take actions to conserve
cash by focusing on e ciencies, minimising our operating costs and
focusing capital expenditure across the Group.
The Directors considered the impact of the current COVID
environment on the business for the next 15 months. We have
considered several variables which may impact on revenue, profits
and cash flows. In light of the nature of our business and our
experience of trading through the pandemic so far, we expect our
agriculture businesses will continue to operate broadly as
currently. In the UK we have assumed that the food service market
begins to recover gradually over the course of the next two
years.
At 30 June 2021, the Group had cash and cash equivalents of
GBP66.1 million with loans outstanding of GBP4.2 million. In
addition, the Group had undrawn short-term loan and overdraft
facilities of GBP17.9 million and a portfolio of liquid investments
with a fair market value of GBP51.3 million.
We have modelled various severe but plausible scenarios using
assumptions including the combined e ect of reduced tea prices,
reduced avocado pricing and reduced sales volumes for macadamia.
The revenue and operational impact of such reductions across our
operations would have a substantially negative impact on Group
profitability. We have also considered the risk of volume
reductions for our tea, macadamia and avocado crops.
The Directors believe that the Company and the Group are well
placed to manage their financing and other business risks
satisfactorily and have a reasonable expectation that the Company
and the Group will have adequate resources to continue in
operational existence for the foreseeable future. The Directors
therefore continue to adopt the going concern basis in preparing
the financial statements.
4 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 is generally harvested in the first half of the
year. The majority of the macadamia crop in Malawi and South Africa
is harvested in the second half of the year but in Kenya the
majority of macadamia is harvested in the first half. 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.
5 Segment reporting
Agriculture Engineering Food Service Unallocated Consolidated
Six months Six months Six months Six months Six months
ended ended ended ended ended
30 June 30 June 30 June 30 June 30 June
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Revenue
External sales 84.4 91.7 8.7 11.0 11.8 11.6 0.6 0.6 105.5 114.9
----- ----- ----- ----- ----- ----- ----- ----- ------ -----
Underlying trading (loss)/profit (5.2) (5.7) (0.9) 0.3 (0.9) 2.4 (3.8) (4.4) (10.8) (7.4)
Separately disclosed items - (3.5) (0.5) (0.2) - (3.2) - - (0.5) (6.9)
----- ----- ----- ----- ----- ----- ----- ----- ------ -----
Trading (loss)/profit (5.2) (9.2) (1.4) 0.1 (0.9) (0.8) (3.8) (4.4) (11.3) (14.3)
Share of associates' results - - - - - - 3.8 2.5 3.8 2.5
Impairment of intangible assets,
investment properties and plant
and equipment - (0.5) (0.2) - (3.2) - - (0.5) (3.4)
Profit on disposal of financial
assets 0.1 0.1 - - - - - - 0.1 0.1
----- ----- ----- ----- ----- ----- ----- ----- ------ -----
Operating loss (5.1) (9.1) (1.9) (0.1) (0.9) (4.0) - (1.9) (7.9) (15.1)
----- ----- ----- ----- ----- ----- ----- ----- ------ -----
Comprising
* underlying operating (loss)/profit before tax (5.1) (5.6) (1.4) 0.1 (0.9) (0.8) - (1.9) (7.4) (8.2)
* costs related to group claims - (3.5) - - - - - - - (3.5)
* impairment of intangible assets and property,
plant
and equipment - - (0.5) (0.2) - (3.2) - - (0.5) (3.4)
----- ----- ----- ----- ----- ----- ----- ----- ------ -----
(5.1) (9.1) (1.9) (0.1) (0.9) (4.0) - (1.9) (7.9) (15.1)
---------------------------------------------------- ----- ----- ----- ----- ----- ----- ----- ----- ------ -----
Investment income 0.4 0.4
Net finance (cost)/income (0.3) 1.8
------ -----
Loss before tax (7.8) (12.9)
Taxation 1.7 0.8
------ -----
Loss after tax (6.1) (12.1)
------ -----
Year Ended 31 December 2020
Food
Agriculture Engineering Service Unallocated Consolidated
GBP'm GBP'm GBP'm GBP'm GBP'm
Revenue
External sales 247.2 19.3 23.6 1.1 291.2
----------- ----------- ------- ----------- ------------
Underlying trading
profit/(loss) 18.3 (1.5) (1.7) (8.2) 6.9
Separately disclosed
items (16.1) - - - (16.1)
----------- ----------- ------- ----------- ------------
Trading profit/(loss) 2.2 (1.5) (1.7) (8.2) (9.2)
Share of associates'
results - - - 6.1 6.1
Profit on disposal
of property,
plant and equipment 14.4 - - - 14.4
Impairment of intangible
assets,
investment properties
and plant
and equipment (0.2) (1.6) (3.7) (1.0) (6.5)
Profit on disposal
of financial assets 0.2 - - - 0.2
----------- ----------- ------- ----------- ------------
Operating profit/(loss) 16.6 (3.1) (5.4) (3.1) 5.0
----------- ----------- ------- ----------- ------------
Comprising
* underlying operating profit/(loss) before tax 18.5 (1.5) (1.7) (2.1) 13.2
* profit on disposal of property, plant and equ
ipment 14.4 - - - 14.4
* costs related to group claims (16.1) - - - (16.1)
* impairment of intangible assets and property,
plant
and equipment (0.2) (1.6) (3.7) (1.0) (6.5)
----------- ----------- ------- ----------- ------------
16.6 (3.1) (5.4) (3.1) 5.0
----------------------------------------------------- ----------- ----------- ------- ----------- ------------
Investment income 0.6
Net finance income 2.2
------------
Profit before tax 7.8
Taxation (8.6)
------------
Loss after tax (0.8)
------------
6 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.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'm GBP'm GBP'm
Operating (loss)/profit (7.9) (15.1) 5.0
Exceptions or items considered non-operational:
Profit on disposal of property, plant
and equipment - - 14.4
Costs related to group claims - (3.5) (16.1)
Impairment of intangible assets and
property, plant and equipment (0.5 ) (3.4 ) (6.5 )
---------- ---------- -----------
Underlying operating (loss)/profit
before tax (7.4) (8.2) 13.2
Investment income 0.4 0.4 0.6
Net finance (cost)/income (0.3) 1.8 2.2
---------- ---------- -----------
Underlying (loss)/profit before tax (7.3) (6.0) 16.0
---------- ---------- -----------
The following items have been excluded from the underlying
measure and have been separately disclosed:
-- A profit from the disposal of the property plant and
equipment owned by Horizon Farms of GBPnil (2020: six
months GBPnil - year GBP14.4 million).
-- Legal and other costs relating to the defence of the
litigation concerning our East African operations including
settlements of GBPnil (2020: six months GBP3.5 million
- year GBP16.1 million).
-- Impairment charges of GBP0.5 million (2020: six months
GBP0.2 million - year GBP1.6 million) in relation to
plant and equipment at Abbey Metal Finishing and at
Atfin and impairment charges of GBPnil (2020: six months
GBP3.2 million - year GBP4.9 million) in relation to
the Jing Tea brand investment properties and elsewhere
in the UK.
7 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
2021 2020 2020
GBP'm GBP'm GBP'm
Profit before tax 4.1 2.8 6.7
Taxation (0.3) (0.3) (0.6)
---------- ---------- -----------
Profit after tax 3.8 2.5 6.1
---------- ---------- -----------
8 Finance income and costs
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'm GBP'm GBP'm
Finance costs - interest payable on
loans and bank overdrafts (0.4) (0.4) (0.9)
Interest payable on leases (0.3) (0.4) (0.7)
---------- ---------- -----------
Finance costs (0.7) (0.8) (1.6)
Finance income - interest income on
short-term bank deposits 0.9 1.5 2.3
Net exchange (loss)/gain on foreign
currency balances (0.2) 1.3 2.2
Employee benefit expense (0.3) (0.2) (0.7)
---------- ---------- -----------
Net finance (cost)/income (0.3) 1.8 2.2
---------- ---------- -----------
9 Taxation on (loss)/profit on ordinary activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'm GBP'm GBP'm
Current tax
Overseas corporation tax 1.0 2.4 13.2
Deferred tax
Origination and reversal of timing di
erences
United Kingom (1.6) - (0.7)
Overseas deferred tax (1.1) (3.2) (3.9)
---------- ---------- -----------
Tax on (loss)/profit on ordinary activities (1.7) (0.8) 8.6
---------- ---------- -----------
Tax on (loss)/profit on ordinary activities for the six months
to 30 June 2021 has been calculated on the basis of the estimated
annual e ective rate for the year ending 31 December 2021.
10 Equity dividends
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'm GBP'm GBP'm
Amounts recognised as distributions
to equity holders in the period:
Final dividend for the year ended 31
December 2020 of 144p (2019: nil) per
share 4.0 - -
---------- ----------
Special Interim dividend for the year
ended 31 December 2020 of 102p per share 2.8
-----------
2.8
-----------
Dividends amounting to GBP0.1 million (2020: six months GBPnil
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 2021 of 44p per share 1.2
---
Proposed special interim dividend for
the year ended
31 December 2020 of 102p per share 2.9
---
The proposed interim dividend was approved by the Board of
Directors on 1 September 2021 and has not been included as a
liability in these financial statements.
11 Earnings/(loss) per share (EPS)
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
Loss EPS Loss EPS Loss EPS
GBP'm Pence GBP'm Pence GBP'm Pence
Attributable to ordinary
shareholders (6.1) (220.9) (12.6) (456.2) (5.0) (181.0)
----- ------ ----- ------ ----- ------
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 (2020: six
months 2,762,000 - year 2,762,000), which excludes 62,500 (2020:
six months 62,500 - year 62,500) shares held by the Group as
treasury shares.
12 Property, plant and equipment
During the six months ended 30 June 2021 the Group acquired
assets with a cost of GBP4.9 million (2020: six months GBP6.6
million - year GBP13.5 million). Assets with a carrying amount of
GBP0.3 million were disposed of during the six months ended 30 June
2021 (2020: six months GBP0.3 million - year GBP7.7 million).
Assets with a carrying amount of GBP2.1 million were classified as
held for sale as at 30 June 2021 (2020: six months GBP7.2 million -
year GBPnil).
13 Assets classified as held for sale/Liabilities related to
assets classified as held for sale
At 30 June 2021, the assets and related liabilites of Abbey
Metal Finishing Company Limited and its subsidiary Atfin GmbH were
classified as held for sale. These companies have subsequently been
sold. In addition, two London properties owned by the Group are
currently marketed for sale and have also been classified as held
for sale.
14 Borrowings
Borrowings (current and non-current) include loans of GBP4.2
million (loans 2020: six months GBP6.7 million - year GBP4.8
million) and bank overdrafts of GBP6.9 million (2020: six months
GBP3.4 million - year GBP3.6 million). The following loans were
repaid during the six months ended 30 June 2021:
GBP'm
Balance at 1 January 2021 4.8
Exchange di erences (0.1)
Repayments (1.9)
New loans 1.4
-----
Balance at 30 June 2021 4.2
-----
15 Provisions
Wages
and Legal
salaries claims Others Total
GBP'm GBP'm GBP'm GBP'm
At 1 January 2020 7.7 - 1.2 8.9
Exchange di erences 0.3 - - 0.3
Utilised in the period (1.6) - (0.5) (2.1)
Provided in the period 5.5 - 0.4 5.9
-------- ------ ------ -----
At 30 June 2020 11.9 - 1.1 13.0
-------- ------ ------ -----
At 1 January 2020 7.7 - 1.2 8.9
Exchange di erences (0.5) - - (0.5)
Utilised in the period (7.3) - (0.3) (7.6)
Provided in the period 10.5 8.2 0.2 18.9
Unused amounts reversed in
period (0.7) - - (0.7)
-------- ------ ------ -----
At 31 December 2020 9.7 8.2 1.1 19.0
Exchange di erences (0.2) (0.1) - (0.3)
Utilised in the period (2.6) (6.5) (0.3) (9.4)
Provided in the period 3.8 - 0.6 4.4
-------- ------ ------ -----
At 30 June 2021 10.7 1.6 1.4 13.7
-------- ------ ------ -----
Current:
At 30 June 2021 10.7 1.6 1.4 13.7
-------- ------ ------ -----
At 31 December 2020 9.7 8.2 1.1 19.0
-------- ------ ------ -----
At 30 June 2020 11.9 - 1.1 13.0
-------- ------ ------ -----
The wages and salaries provisions are in respect of ongoing wage
and bonus negotiations in India, Kenya and Bangladesh.
Legal claims related to the expected cost of the defence of the
litigation concerning our East African operations, including
settlements and progressive measures.
Others relate to provisions for claims and dilapidations.
16 Employee benefit obligations
The UK defined benefit pension scheme and the overseas pension,
gratuity and medical benefit schemes operated in Group subsidiaries
located in Bangladesh and India for the purpose of IAS 19 have been
updated to 30 June 2021 from the valuations as at 31 December 2020
by the actuaries and the movements have been reflected in this
interim statement.
An actuarial gain of GBP12.9 million was realised in the period
in relation to the Group's employee obligations of which GBP13.7
million related to the UK defined benefit pension scheme. In
relation to the UK defined benefit pension scheme a gain of GBP2.5
million was realised in relation to the scheme assets and a gain of
GBP11.2 million was realised in relation to changes in the
underlying actuarial assumptions. The assumed discount rate has
increased to 1.80% (31 December 2020: 1.25%), the assumed rate of
inflation (CPI) has increased to 2.30% (31 December 2020 2.05%)
There has been no change in the mortality assumptions used.
17 Reconciliation of (loss)/profit to cash flow
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'm GBP'm GBP'm
(Loss)/profit from operations (7.9) (15.1) 5.0
Share of associates' results (3.8) (2.5) (6.1)
Depreciation and amortisation 6.1 8.2 15.5
Depreciation of right-of-use assets 0.5 0.6 1.0
Impairment of assets and provisions 0.5 3.4 6.5
Realised movements on biological assets
- non-current - - (0.4)
Financial assets fair value through
profit or loss - gain - - (0.1)
(Profit)/loss on disposal of non-current
assets (0.1) (0.1) 0.1
Profit on disposal - non recurring
items - - (14.4)
Profit on disposal of financial assets (0.1) (0.1) (0.2)
Movements in provisions (5.0) 3.8 10.8
Increase in working capital (5.0) (1.8) 6.3
Di erence between employee benefit
obligations funding contributions and
cost charged 1.3 0.5 (4.7)
---------- ---------- -----------
Cash (used in)/generated from operations (13.5) (3.1) 19.3
---------- ---------- -----------
18 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
2021 2020 2020
GBP'm GBP'm GBP'm
Cash and cash equivalents 73.2 82.9 98.5
Overdrafts repayable on demand (included
in current liabilities - borrowings) (6.9) (3.4) (3.6)
---------- ---------- -----------
66.3 79.5 94.9
---------- ---------- -----------
19 Contingent liabilities
In Malawi the Revenue Authority (MRA) recently indicated that it
intended to collect VAT on sales made at auction and under private
treaty for export, in the period since 2017. Tea sales intended for
the export market were subject to an industry wide agreement with
the MRA and the Reserve Bank of Malawi reached at the time the
auction was established, resulting in these deemed exports being
zero rated for VAT. The MRA has raised an assessment for VAT
against Eastern Produce Malawi in connection with this which has
been appealed in light of the historic agreement and
long-established custom and practice of the industry. Following
discussions between the Malawi government, the MRA and the tea
industry, the MRA has undertaken to investigate the sales process
for export teas and to consider the implications of this on the VAT
treatment of these deemed export sales. Pending conclusion of the
review, the MRA has given permission for the auction to continue
with teas deemed as export zero rated for VAT and the assessment
raised against Eastern Produce Malawi has been suspended. Eastern
Produce Malawi's estimated contingent liability for VAT on these
deemed export sales, excluding any penalties and interest, is
approximately GBP7.5 million.
In India, assessments have been received for excise duties of
GBP3.5 million, sales and entry tax of GBP0.9 million and of GBP1.0
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 GBP1.2 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.
20 Related party transactions
During the period the Group received rental income from The
Camellia Foundation of GBP18,000 (2020: six months GBP18,000 - year
GBP36,000).
21 Subsequent events
Subsequent to the period end, the Group purchased an 80% stake
in Bardsley England for GBP15.7 million. The Group has also made a
loan to Bardsley of GBP9.3 million. Bardsley is a major fruit
farming business and the UK's second largest apple grower. The
consideration, which was satisfied from existing resources,
consists of GBP12.7 million which was paid at completion, with the
balance of GBP3 million deferred and payable by July 2022.
Subsequent to the period end, the Group sold a significant
portion of its financial assets at fair value through other
comprehensive income consisting mainly of Japanese and other
international equities. Total consideration received is
approximately GBP14.2 million and the profit on disposal realised
through other comprehensive income is approximately GBP9.2 million.
No tax is expected to be payable on these gains.
Subsequent to the period end, the Group completed the sale of
its interests in Abbey Metal Finishing Company Limited and its
subsidiary Atfin GmbH in Germany.
APPENDIX
Agriculture track record
For the year ending
2020 2019 2018 2017 2016
GBP'm GBP'm GBP'm GBP'm GBP'm
Revenue
Tea 198.4 194.0 198.8 198.4 170.2
Macadamia 13.0 15.9 15.3 10.2 9.7
Avocado 16.8 14.2 15.6 13.6 13.6
Other 19.0 14.6 15.6 17.2 13.6
----- ----- ----- ----- -----
Segment Total 247.2 238.7 245.3 239.4 207.1
----- ----- ----- ----- -----
Underlying trading profit
Tea 7.9 6.7 24.9 25.8 22.7
Macadamia 1.0 5.5 5.3 0.4 0.2
Avocado 3.9 5.3 2.1 5.2 5.4
Other 5.5 1.5 4.3 4.2 1.6
----- ----- ----- ----- -----
Segment Total 18.3 19.0 36.6 35.6 29.9
----- ----- ----- ----- -----
Notes
Underlying trading profit is profit before impairments, profit
on disposals of financial and other assets and before exceptional
items or items considered non-operational in nature.
To be consistent with the statutory accounts for the relevant
year, the following items have been excluded in arriving at the
above underlying trading profit:
- Legal and other costs relating to the defence of the
litigation concerning our East African operations.
- Release of provisions for wage increases relating to prior
years following progress on negotiations.
- A charge in relation to workers profit participation in
Bangladesh which mainly related to prior years obligations.
- The release of provisions in Bangladesh for post-employment
benefit obligations from which the tea industry was exempted.
- Impairments of intangible assets and property, plant and equipment.
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(END) Dow Jones Newswires
September 02, 2021 02:00 ET (06:00 GMT)
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