17:00 Thu 15 Aug 2019
Camellia PLC - Half-year Report
Interim Results
"The oversupply of tea at the end of 2018 has had a direct impact on global tea prices and hence on the revenues and profitability of our tea operations in the first half. Our increasing agricultural diversity has however helped to temper the impact of the tea market on our results and I am pleased that we are able to increase the interim dividend. The in principle agreement and today's payment of wages in
Financial highlights
|
Six months ended |
Six months ended |
Year ended |
|
£'m |
£'m |
£'m |
Revenue - continuing operations |
117.3 |
127.6 |
309.8 |
Underlying (loss)/profit before tax* |
(4.1) |
6.1 |
38.1 |
Provision releases |
8.0 |
- |
14.4 |
(Loss)/profit from discontinued operation |
- |
(0.3) |
0.2 |
Profit for the period |
3.6 |
3.7 |
32.3 |
Cash and cash equivalents net of loans |
80.6 |
86.6 |
105.7 |
Earnings per share |
50.7p |
18.1p |
912.4 |
Earnings/(loss) per share - continuing operations |
50.7p |
29.0p |
919.6 |
Dividend per share |
42p |
40p |
142p |
* Underlying profit/(loss) before tax is profit before tax from continuing operations excluding separately disclosed provision releases |
Highlights
§ Results reflect the oversupply of tea in the market and consequential weak prices
§ Good progress with strategic initiatives in Agriculture following:
o completion of
o agreement to acquire additional land in
§ Provision releases following wage settlements in
§ Significant EPS growth reflects derivation of profits
§ Financial position remains very strong
§ Interim dividend up by 5%
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
The interim report will be available to download from the investor relations section on the Company's website www.camellia.plc.uk
Enquiries:
|
|
01622 746655 |
|
|
0207 886 2500 |
Nominated Advisor and Broker
CHAIRMAN'S STATEMENT
Our results for the first half show a profit before tax from continuing operations of
Dividend
The Board has declared an interim dividend of 42p (2018: 40p) payable on
Strategic objectives
We continue to pursue our strategic objectives in line with the statements made in the 2018 Annual report. During the first half we completed the acquisition of two tea estates in
Outlook
Given that the majority of our agricultural production and sales take place in the second half of the year and the difficulty in predicting tea prices in the current market, it is not possible to give meaningful guidance for the full year.
Chairman
Operating Review
The underlying loss before tax from continuing operations in the first half was
§ |
a signed agreement with the |
§ |
the weakening of sterling against all our major operating currencies compared with the first half of 2018 which has led to a beneficial impact of approximately |
Our cash and cash equivalents balance at the end of the period stood at
Agriculture
Tea
Overall our tea production in the first half was marginally lower than the same period of 2018 at 43.2m Kg (H1 2018: 43.6m Kg), although this varied widely by geography. Our average prices were significantly lower than 2018 due to an over supplied market resulting from record global crop production in 2018.
Macadamia
Our combined macadamia harvest has been better this year with volumes estimated at 6% higher than in 2018. Prices in the market are ahead of those seen last year and appear to be holding at this stage. Discussions with the land claimant community continue at
An agreement for the purchase of an additional farm close to our estates in the Levubu district of
Avocado
Production volumes in the period from our own avocado orchards were 8% below last year but average prices have been higher. As we now move into our main Hass cropping season, we have seen the market rise significantly due to the lower volumes of production entering
Speciality Crops
Overall, our speciality crops have had a mixed start to the year with some good production being offset by issues largely outside our control. It is worth noting the following:
§ |
prices for natural rubber, which we grow in |
§ |
wine grape production volumes from our estate in |
§ |
the soya crop in |
§ |
in |
Other strategic developments
As part of our strategy for Agriculture to utilise our estates to the full, expand our production capability in core crops and exploit our expertise, we are undertaking the following initiatives:
§ |
our 10Ha trial of blueberries at Kakuzi in |
§ |
the Simpson dam wall and spillway project on our Mambedi estate in |
§ |
the trial planting of avocado near Kitale in |
§ |
we continue to make progress with registration of the land purchase in |
Engineering
AJT Engineering continues to improve with the recovery of the oil sector and the development of the Site Services division. Revenue in the first half of the year was up 21% on the same period last year.
Revenues from
Food Service
In the first half ACS&T traded in line with expectations but has seen weaker trading at the start of the second half.
Jing Tea is operating in line with expectations as we continue to invest in the brand and the growth of the business.
Revenue in 2018 included
Investments and Associates
Our investment portfolio, which consists principally of listed equities, is now valued at
Our share of profits from associates is estimated at
Summary
In Agriculture, the first half of the year was affected by the global oversupply of tea and the resultant low prices at the auctions. The impact of this was partially mitigated by increases in efficiency, and importantly by our continuing strategy of crop diversification.
Despite the adverse impact of the performance of Agriculture, the performance from our businesses in Engineering and Food Service, together with an improved result from our associate, BF&M, produced an increase in EPS.
We remain financially strong, with significant net cash, and have the resources to complete our development plans in line with our strategy.
Chief Executive
Interim management report
The Chairman's Statement and the Operating Review form part of this report and include important events that have occurred during the six months ended
Principal risks and uncertainties
The Report of the Directors in the statutory financial statements for the year ended
Statement of directors' responsibilities
The Directors confirm that these condensed financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the
The Directors of
By order of the Board
Chairman
Condensed consolidated income statement
for the six months ended
|
|
|
Six months |
|
|
Six months |
|
|
Year |
|
|
|
|
|
ended |
|
|
ended |
|
|
ended |
|
|
|
|
|
30 June |
|
|
30 June |
|
|
31 December |
|
|
|
|
|
2019 |
|
|
2018 |
|
|
2018 |
|
|
|
Notes |
|
£'m |
|
|
£'m |
|
|
£'m |
|
|
Continuing operations |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
4 |
|
117.3 |
|
|
127.6 |
|
|
309.8 |
|
|
Cost of sales |
|
|
(92.2 |
) |
|
(100.3 |
) |
|
(209.2 |
) |
|
Gross profit |
|
|
25.1 |
|
|
27.3 |
|
|
100.6 |
|
|
Other operating income |
|
|
2.3 |
|
|
2.1 |
|
|
4.0 |
|
|
Distribution costs |
|
|
(6.3 |
) |
|
(5.1 |
) |
|
(17.2 |
) |
|
Administrative expenses |
|
|
(22.4 |
) |
|
(22.1 |
) |
|
(45.1 |
) |
|
Trading (loss)/profit |
4 |
|
(1.3 |
) |
|
2.2 |
|
|
42.3 |
|
|
Share of associates' results |
6 |
|
3.3 |
|
|
2.2 |
|
|
7.6 |
|
|
Provisions and impairment of property, |
|
|
- |
|
|
(0.1 |
) |
|
(0.2 |
) |
|
Loss on disposal of subsidiaries |
|
|
- |
|
|
- |
|
|
(0.4 |
) |
|
Profit on disposal of financial assets |
|
|
0.2 |
|
|
0.2 |
|
|
0.3 |
|
|
Operating profit - continuing operations |
|
|
2.2 |
|
|
4.5 |
|
|
49.6 |
|
|
Investment income |
|
|
0.4 |
|
|
0.4 |
|
|
0.8 |
|
|
Finance income |
|
|
2.1 |
|
|
2.0 |
|
|
4.0 |
|
|
Finance costs |
|
|
(0.6 |
) |
|
(0.1 |
) |
|
(0.6 |
) |
|
Net exchange gain/(loss) |
|
|
0.2 |
|
|
(0.1 |
) |
|
0.2 |
|
|
Employee benefit expense |
|
|
(0.4 |
) |
|
(0.6 |
) |
|
(1.5 |
) |
|
Net finance income |
7 |
|
1.3 |
|
|
1.2 |
|
|
2.1 |
|
|
Profit before tax from continuing operations |
|
|
3.9 |
|
|
6.1 |
|
|
52.5 |
|
|
Comprising |
|
|
|
|
|
|
|
|
|
|
|
- underlying (loss)/profit before tax |
5 |
|
(4.1 |
) |
|
6.1 |
|
|
38.1 |
|
|
- release of provisions for wage increases |
5 |
|
8.0 |
|
|
- |
|
|
5.4 |
|
|
- release of provision for post-employment benefit obligations |
5 |
|
- |
|
|
- |
|
|
9.0 |
|
|
|
|
|
3.9 |
|
|
6.1 |
|
|
52.5 |
|
|
Taxation |
8 |
|
(0.3 |
) |
|
(2.1 |
) |
|
(20.0 |
) |
|
Profit after tax from continuing operations |
|
|
3.6 |
|
|
4.0 |
|
|
32.5 |
|
|
Loss from discontinued operation |
|
|
- |
|
|
(0.3 |
) |
|
(0.2 |
) |
|
Profit for the period |
|
|
3.6 |
|
|
3.7 |
|
|
32.3 |
|
|
Profit attributable to: |
|
|
|
|
|
|
|
|
|
|
|
Owners of |
|
|
1.4 |
|
|
0.5 |
|
|
25.2 |
|
|
Non-controlling interests |
|
|
2.2 |
|
|
3.2 |
|
|
7.1 |
|
|
|
|
|
3.6 |
|
|
3.7 |
|
|
32.3 |
|
|
Earnings per share - basic and diluted |
10 |
|
50.7p |
|
|
18.1p |
|
|
912.4p |
|
|
Earnings per share - continuing operations |
10 |
|
50.7p |
|
|
29.0p |
|
|
919.6p |
|
|
Earnings/(loss) per share - discontinued operation |
10 |
|
-p |
|
|
(10.9)p |
|
|
(7.2)p |
|
|
Condensed consolidated statement of comprehensive income
for the six months ended
|
|
Six months |
|
Six months |
|
Year |
|
|
|
ended |
|
ended |
|
ended |
|
|
|
30 June |
|
30 June |
|
31 December |
|
|
|
2019 |
|
2018 |
|
2018 |
|
|
|
£'m |
|
£'m |
|
£'m |
|
Profit for the period |
|
3.6 |
|
3.7 |
|
32.3 |
|
Other comprehensive income/(expense): |
|
|
|
|
|
|
|
Items that will not be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
Financial assets at fair value through other comprehensive income: |
|
|
|
|
|
|
|
Fair value adjustment released on disposal |
|
(0.3 |
) |
- |
|
(3.8 |
) |
Profit on disposal |
|
1.1 |
|
- |
|
3.9 |
|
|
|
0.8 |
|
- |
|
0.1 |
|
Changes in the fair value of financial assets |
|
3.5 |
|
0.1 |
|
(5.6 |
) |
Deferred tax movement in relation to fair value adjustments |
|
(0.4) |
|
- |
|
1.5 |
|
Remeasurements of post employment benefit obligations |
|
3.9 |
|
12.1 |
|
(0.7 |
) |
Deferred tax movement in relation to post employment |
|
|
|
|
|
|
|
benefit obligations |
|
(0.1 |
) |
(0.6 |
) |
(0.3 |
) |
|
|
7.7 |
|
11.6 |
|
(5.0 |
) |
Items that may be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
Foreign exchange translation differences |
|
(1.8 |
) |
1.9 |
|
11.6 |
|
Share of other comprehensive income of associates |
|
- |
|
- |
|
0.8 |
|
|
|
(1.8 |
) |
1.9 |
|
12.4 |
|
Other comprehensive income for the period, net of tax |
|
5.9 |
|
13.5 |
|
7.4 |
|
Total comprehensive income for the period |
|
9.5 |
|
17.2 |
|
39.7 |
|
Total comprehensive income attributable to: |
|
|
|
|
|
|
|
Owners of |
|
8.1 |
|
13.3 |
|
30.7 |
|
Non-controlling interests |
|
1.4 |
|
3.9 |
|
9.0 |
|
|
|
9.5 |
|
17.2 |
|
39.7 |
|
Condensed consolidated balance sheet
at
|
|
|
30 June |
|
30 June |
|
31 December |
|
|
|
|
2019 |
|
2018 |
|
2018 |
|
|
Notes |
|
£'m |
|
£'m |
|
£'m |
|
ASSETS |
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
Intangible assets |
|
|
10.9 |
|
8.3 |
|
9.5 |
|
Property, plant and equipment |
11 |
|
227.5 |
|
219.9 |
|
226.3 |
|
Right-of-use assets |
2 |
|
17.6 |
|
- |
|
- |
|
Investment properties |
|
|
17.5 |
|
17.7 |
|
18.0 |
|
Biological assets |
|
|
13.9 |
|
12.3 |
|
14.5 |
|
Prepaid operating leases |
|
|
- |
|
0.9 |
|
1.0 |
|
Investments in associates |
|
|
67.9 |
|
57.2 |
|
65.7 |
|
Deferred tax assets |
|
|
0.2 |
|
0.3 |
|
- |
|
Financial assets at fair value through other comprehensive income |
|
|
35.7 |
|
42.3 |
|
32.7 |
|
Financial assets at fair value through profit or loss |
|
|
4.7 |
|
5.2 |
|
3.7 |
|
Financial assets at amortised cost |
|
|
3.1 |
|
3.3 |
|
3.0 |
|
Other investments - heritage assets |
|
|
9.7 |
|
9.4 |
|
9.5 |
|
Retirement benefit surplus |
14 |
|
0.4 |
|
0.3 |
|
0.3 |
|
Trade and other receivables |
|
|
2.8 |
|
2.1 |
|
2.7 |
|
Total non-current assets |
|
|
411.9 |
|
379.2 |
|
386.9 |
|
Current assets |
|
|
|
|
|
|
|
|
Inventories |
|
|
64.8 |
|
56.5 |
|
52.7 |
|
Biological assets |
|
|
4.3 |
|
5.8 |
|
8.8 |
|
Trade and other receivables |
|
|
44.0 |
|
41.9 |
|
48.5 |
|
Financial assets at amortised cost |
|
|
0.1 |
|
- |
|
0.2 |
|
Current income tax assets |
|
|
0.8 |
|
1.5 |
|
0.7 |
|
Cash and cash equivalents (excluding bank overdrafts) |
|
|
95.8 |
|
94.2 |
|
112.4 |
|
|
|
|
209.8 |
|
199.9 |
|
223.3 |
|
Assets classified as held for sale |
|
|
0.9 |
|
4.1 |
|
0.2 |
|
Total current assets |
|
|
210.7 |
|
204.0 |
|
223.5 |
|
|
|
|
30 June |
|
30 June |
|
31 December |
|
|
|
|
2019 |
|
2018 |
|
2018 |
|
|
Notes |
|
£'m |
|
£'m |
|
£'m |
|
LIABILITIES |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Financial liabilities - borrowings |
12 |
|
(8.3 |
) |
(4.0 |
) |
(3.4 |
) |
Lease liabilities |
2 |
|
(2.0 |
) |
- |
|
- |
|
Trade and other payables |
|
|
(54.2 |
) |
(56.0 |
) |
(53.5 |
) |
Current income tax liabilities |
|
|
(6.1 |
) |
(5.5 |
) |
(8.0 |
) |
Employee benefit obligations |
14 |
|
(1.0 |
) |
(1.0 |
) |
(1.0 |
) |
Provisions |
13 |
|
(13.6 |
) |
(21.5 |
) |
(18.5 |
) |
|
|
|
(85.2 |
) |
(88.0 |
) |
(84.4 |
) |
Liabilities directly associated with assets classified as held for sale |
|
|
- |
|
(1.8 |
) |
- |
|
Total current liabilities |
|
|
(85.2 |
) |
(89.8 |
) |
(84.4 |
) |
Net current assets |
|
|
125.5 |
|
114.2 |
|
139.1 |
|
Total assets less current liabilities |
|
|
537.4 |
|
493.4 |
|
526.0 |
|
Non-current liabilities |
|
|
|
|
|
|
|
|
Financial liabilities - borrowings |
12 |
|
(6.9 |
) |
(3.6 |
) |
(3.3 |
) |
Lease liabilities |
2 |
|
(8.7 |
) |
(0.1 |
) |
(0.1 |
) |
Deferred tax liabilities |
|
|
(44.3 |
) |
(40.8 |
) |
(46.3 |
) |
Employee benefit obligations |
14 |
|
(21.3 |
) |
(18.3 |
) |
(24.0 |
) |
Total non-current liabilities |
|
|
(81.2 |
) |
(62.8 |
) |
(73.7 |
) |
Net assets |
|
|
456.2 |
|
430.6 |
|
452.3 |
|
EQUITY |
|
|
|
|
|
|
|
|
Called up share capital |
|
|
0.3 |
|
0.3 |
|
0.3 |
|
Share premium |
|
|
15.3 |
|
15.3 |
|
15.3 |
|
Reserves |
|
|
385.2 |
|
363.4 |
|
379.9 |
|
Equity attributable to owners of |
|
|
400.8 |
|
379.0 |
|
395.5 |
|
Non-controlling interests |
|
|
55.4 |
|
51.6 |
|
56.8 |
|
Total equity |
|
|
456.2 |
|
430.6 |
|
452.3 |
|
|
|
|
|
|
|
|
|
|
Condensed consolidated statement of cash flows |
|
|||||||
for the six months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months |
|
Six months |
|
Year |
|
|
|
|
ended |
|
ended |
|
ended |
|
|
|
|
30 June |
|
30 June |
|
31 December |
|
|
|
|
2019 |
|
2018 |
|
2018 |
|
|
Notes |
|
£'m |
|
£'m |
|
£'m |
|
Cash generated from operations |
|
|
|
|
|
|
|
|
Cash flows from operating activities |
15 |
|
(3.5 |
) |
6.4 |
|
35.3 |
|
Interest received |
|
|
2.3 |
|
2.0 |
|
3.9 |
|
Interest paid |
|
|
(0.7 |
) |
(0.1 |
) |
(0.5 |
) |
Income taxes paid |
|
|
(5.1 |
) |
(5.6 |
) |
(14.2 |
) |
Net cash flow from operating activities |
|
|
(7.0 |
) |
2.7 |
|
24.5 |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Purchase of intangible assets |
|
|
(0.3 |
) |
- |
|
- |
|
Purchase of property, plant and equipment |
|
|
(8.0 |
) |
(10.7 |
) |
(20.5 |
) |
Proceeds from sale of non-current assets |
|
|
0.9 |
|
0.1 |
|
0.7 |
|
Additions to investment property |
|
|
(0.1 |
) |
(0.3 |
) |
(0.9 |
) |
Biological assets: non-current - additions |
|
|
- |
|
(0.1 |
) |
(0.9 |
) |
Payment for acquisition of a business/subsidiary net of cash acquired |
16 |
|
(9.4 |
) |
(6.4 |
) |
(6.4 |
) |
Proceeds from sale of subsidiaries net of cash disposed |
|
|
- |
|
- |
|
3.6 |
|
Proceeds from sale of assets held for sale - investment property |
|
|
- |
|
0.7 |
|
0.7 |
|
Investment in associates |
|
|
(0.7 |
) |
- |
|
(1.0 |
) |
Dividends received from associates |
|
|
1.8 |
|
1.6 |
|
2.8 |
|
Purchase of investments |
|
|
(7.9 |
) |
(3.4 |
) |
(7.2 |
) |
Proceeds from sale of investments |
|
|
8.7 |
|
0.9 |
|
11.4 |
|
Income from investments |
|
|
0.4 |
|
0.4 |
|
0.8 |
|
Purchase of other investments - heritage assets |
|
|
(0.1 |
) |
- |
|
(0.1 |
) |
Net cash flow from investing activities |
|
|
(14.7 |
) |
(17.2 |
) |
(17.0 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Equity dividends paid |
|
|
- |
|
- |
|
(3.8 |
) |
Dividends paid to non-controlling interests |
|
|
(2.7 |
) |
(1.9 |
) |
(3.1 |
) |
New loans |
|
|
4.6 |
|
- |
|
- |
|
Loans repaid |
|
|
(0.3 |
) |
(0.3 |
) |
(0.6 |
) |
Payments of lease liabilities |
|
|
(0.2 |
) |
- |
|
- |
|
Net cash flow from financing activities |
|
|
1.4 |
|
(2.2 |
) |
(7.5 |
) |
Net decrease in cash and cash equivalents from |
|
|
(20.3 |
) |
(16.7 |
) |
- |
|
Net cash outflow from discontinued operation |
|
|
- |
|
(0.2 |
) |
(0.2 |
) |
Cash and cash equivalents at beginning of period |
|
|
109.6 |
|
106.8 |
|
106.8 |
|
Exchange (losses)/gains on cash |
|
|
(0.4 |
) |
0.9 |
|
3.0 |
|
Cash and cash equivalents at end of period |
17 |
|
88.9 |
|
90.8 |
|
109.6 |
|
For the purposes of the cash flow statement, cash and cash equivalents are included net of overdrafts repayable on demand.
Condensed consolidated statement of changes in equity
for the six months ended
|
Attributable to the owners of |
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Non- |
|
|
|
|
Share |
|
Share |
|
|
|
Retained |
|
Other |
|
|
|
controlling |
|
Total |
|
|
capital |
|
premium |
|
shares |
|
earnings |
|
reserves |
|
Total |
|
interests |
|
equity |
|
|
£'m |
|
£'m |
|
£'m |
|
£'m |
|
£'m |
|
£'m |
|
£'m |
|
£'m |
|
At |
0.3 |
|
15.3 |
|
(0.4 |
) |
323.8 |
|
29.4 |
|
368.4 |
|
49.5 |
|
417.9 |
|
Total comprehensive income for the period |
- |
|
- |
|
- |
|
12.0 |
|
1.3 |
|
13.3 |
|
3.9 |
|
17.2 |
|
Dividends |
- |
|
- |
|
- |
|
(2.7 |
) |
- |
|
(2.7 |
) |
(1.9 |
) |
(4.6 |
) |
Companies joining the Group |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
0.1 |
|
0.1 |
|
At |
0.3 |
|
15.3 |
|
(0.4 |
) |
333.1 |
|
30.7 |
|
379.0 |
|
51.6 |
|
430.6 |
|
At |
0.3 |
|
15.3 |
|
(0.4 |
) |
323.8 |
|
29.4 |
|
368.4 |
|
49.5 |
|
417.9 |
|
Total comprehensive income for the period |
- |
|
- |
|
- |
|
30.5 |
|
0.2 |
|
30.7 |
|
9.0 |
|
39.7 |
|
Dividends |
- |
|
- |
|
- |
|
(3.8 |
) |
- |
|
(3.8 |
) |
(3.1 |
) |
(6.9 |
) |
Companies joining the Group |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1.4 |
|
1.4 |
|
Share of associate's other equity movements |
- |
|
- |
|
- |
|
0.2 |
|
- |
|
0.2 |
|
- |
|
0.2 |
|
At 31 December 2018 |
0.3 |
|
15.3 |
|
(0.4 |
) |
350.7 |
|
29.6 |
|
395.5 |
|
56.8 |
|
452.3 |
|
Total comprehensive income for the period |
- |
|
- |
|
- |
|
6.7 |
|
1.4 |
|
8.1 |
|
1.4 |
|
9.5 |
|
Dividends |
- |
|
- |
|
- |
|
(2.8 |
) |
- |
|
(2.8 |
) |
(2.8 |
) |
(5.6 |
) |
At 30 June 2019 |
0.3 |
|
15.3 |
|
(0.4 |
) |
354.6 |
|
31.0 |
|
400.8 |
|
55.4 |
|
456.2 |
|
NOTES TO THE ACCOUNTS
1 |
Basis of preparation |
These financial statements are the interim condensed consolidated financial statements of
The financial information contained in this Interim Report has not been audited and does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. A copy of the statutory accounts for the year ended 31 December 2018 has been delivered to the Registrar of Companies. The auditors' opinion on these accounts was unqualified and does not contain an emphasis of matter paragraph or a statement made under Section 498(2) and Section 498(3) of the Companies Act 2006.
The interim condensed financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") including IAS 34 "Interim Financial Reporting". For these purposes, IFRS comprise the Standards issued by the International Accounting Standards Board ("IASB") and Interpretations issued by the International Financial Reporting Standards Interpretations Committee ("IFRS IC") that have been adopted by the
The share of associates' results in the condensed consolidated income statement for the six month period ended 30 June 2019 and the investments in associates figure in the condensed consolidated balance sheet include an estimate of BF&M Limited's result for the six months ended 30 June 2019. This estimate incorporates BF&M's actual quarter one result and includes an estimate for quarter two. BF&M Limited's results will not be reported to the Bermuda Stock Exchange until mid September 2019.
(a) A number of new or amended standards became applicable for the current reporting period and the Group had to change its accounting policies but did not make any retrospective adjustments as a result of adopting IFRS 16 Leases standard. The impact of the adoption of the leasing standard and the new accounting policies are disclosed in note 2. The other standards did not have any impact on the Group's accounting policies and did not require retrospective adjustments.
These interim condensed consolidated financial statements were approved by the Board of Directors on 14 August 2019. At the time of approving these financial statements, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue to operate for the foreseeable future. They therefore continue to adopt the going concern basis of accounting in preparing the financial statements.
2 |
Changes to accounting policies |
This Interim Report has been prepared on the basis of accounting policies consistent with those applied in the financial statements for the year ended 31 December 2018. The Group has adopted IFRS 16 from 1 January 2019, but has not applied it retrospectively, as permitted under the specific transitional provisions in the standard. The reclassifications arising from the new leasing rules are recognised in the opening balance sheet on 1 January 2019.
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as operating leases under the principles of IAS 17 Leases. These right-of-use assets and lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate.
For leases previously classified as finance leases the entity recognised the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right-of-use asset and the lease liability at the date of initial application. The measurement principles of IFRS 16 are only applied after that date.
Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
§ |
the use of a single discount rate to a portfolio of leases with reasonably similar characteristics |
§ |
reliance on previous assessments on whether leases are onerous |
§ |
the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases |
§ |
the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease |
Adjustments recognised on adoption of IFRS 16
The effect of adopting IFRS 16 on 1 January 2019 was to recognise additional right-of-use assets and lease liabilities in the sum of £10.7 million, and recategorise assets with a carrying amount of £3.5 million and finance leases of £0.1 million.
In doing so, the Group used incremental borrowing rates of between 4.25% to 10% on lease terms ranging from 1 to 125 years.
Impact of IFRS 16
For the six months to 30 June 2019:
§ |
depreciation expense increased by £0.4 million relating to the depreciation of additional right-of-use assets recognised |
§ |
rent expense decreased by £0.5 million relating to previous operating leases |
§ |
finance costs increased by £0.3 million relating to the interest expense on additional lease liabilities recognised |
§ |
income tax expense decreased by less than £0.1 million relating to the tax effect of those changes |
§ |
retained profits decreased by £0.2 million relating to the excess of interest and depreciation over rent expense and tax |
Summary of new accounting policies
Set out below are the new accounting policies of the Group upon adoption of IFRS 16:
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e. those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.
Significant judgement in determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group has the option, under some of its leases to lease the assets for additional terms. The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew (e.g. a change in business strategy).
3 |
Cyclical and seasonal factors |
Due to climatic conditions the Group's tea operations in
Soya in
There are no other cyclical or seasonal factors which have a material impact on the trading results.
4 |
Segment reporting - continuing operations |
|
|
Six months |
|
Six months |
|
Year |
|
||||||
|
|
ended |
|
ended |
|
ended |
|
||||||
|
|
30 June |
|
30 June |
|
31 December |
|
||||||
|
|
2019 |
|
2018 |
|
2018 |
|
||||||
|
|
|
|
Trading |
|
|
|
Trading |
|
|
|
Trading |
|
|
|
Revenue |
|
profit/(loss) |
|
Revenue |
|
profit/(loss) |
|
Revenue |
|
profit/(loss) |
|
|
|
£'m |
|
£'m |
|
£'m |
|
£'m |
|
£'m |
|
£'m |
|
Agriculture (see note 5) |
|
90.5 |
|
2.4 |
|
96.6 |
|
6.7 |
|
245.3 |
|
51.0 |
|
Engineering |
|
10.8 |
|
(0.3 |
) |
10.0 |
|
(0.9 |
) |
22.2 |
|
(0.6 |
) |
Food Service |
|
15.6 |
|
0.9 |
|
20.7 |
|
0.9 |
|
41.5 |
|
1.6 |
|
Other operations |
|
0.4 |
|
- |
|
0.3 |
|
- |
|
0.8 |
|
0.1 |
|
|
|
117.3 |
|
3.0 |
|
127.6 |
|
6.7 |
|
309.8 |
|
52.1 |
|
Unallocated corporate expenses |
|
|
|
(4.3 |
) |
|
|
(4.5 |
) |
|
|
(9.8 |
) |
Trading (loss)/profit |
|
|
|
(1.3 |
) |
|
|
2.2 |
|
|
|
42.3 |
|
Share of associates' results |
|
|
|
3.3 |
|
|
|
2.2 |
|
|
|
7.6 |
|
Provisions and impairment of property, plant and equipment |
|
|
|
- |
|
|
|
(0.1 |
) |
|
|
(0.2 |
) |
Loss on disposal of subsidiaries |
|
|
|
- |
|
|
|
- |
|
|
|
(0.4 |
) |
Profit on disposal of financial assets |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.3 |
|
Investment income |
|
|
|
0.4 |
|
|
|
0.4 |
|
|
|
0.8 |
|
Net finance income |
|
|
|
1.3 |
|
|
|
1.2 |
|
|
|
2.1 |
|
Profit before tax from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation |
|
|
|
(0.3 |
) |
|
|
(2.1 |
) |
|
|
(20.0 |
) |
Profit from continuing operations after tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
5 |
Underlying (loss)/profit |
The Group seeks to present an indication of the underlying performance which is not impacted by exceptional items or items considered non-operational in nature. This measure of profit is described as 'underlying' and is used by management to measure and monitor performance.
The following items have been excluded from the underlying (loss)/profit measure and have been separately disclosed:
§ |
an £8.0 million gain (2018: six months £nil - year £5.4 million gain) from the release of provisions for wage increases relating to prior years in our Agriculture operations following progress on negotiations |
§ |
the release of a £nil (2018: six months £nil - year £9.0 million) provision in |
6 |
Share of associates' results |
The Group's share of the results of associates is analysed below:
|
|
Six months |
|
Six months |
|
Year |
|
|
|
ended |
|
ended |
|
ended |
|
|
|
30 June |
|
30 June |
|
31 December |
|
|
|
2019 |
|
2018 |
|
2018 |
|
|
|
£'m |
|
£'m |
|
£'m |
|
Profit before tax |
|
3.8 |
|
2.6 |
|
8.4 |
|
Taxation |
|
(0.5 |
) |
(0.4 |
) |
(0.8 |
) |
Profit after tax |
|
3.3 |
|
2.2 |
|
7.6 |
|
7 |
Finance income and costs |
|
|
Six months |
|
Six months |
|
Year |
|
|
|
ended |
|
ended |
|
ended |
|
|
|
30 June |
|
30 June |
|
31 December |
|
|
|
2019 |
|
2018 |
|
2018 |
|
|
|
£'m |
|
£'m |
|
£'m |
|
Interest payable on loans and bank overdrafts |
|
(0.3 |
) |
(0.1 |
) |
(0.6 |
) |
Interest on right-of-use assets |
|
(0.3 |
) |
- |
|
- |
|
Finance costs |
|
(0.6 |
) |
(0.1 |
) |
(0.6 |
) |
Finance income - interest income on short-term bank deposits |
|
2.1 |
|
2.0 |
|
4.0 |
|
Net exchange gain/(loss) on foreign currency balances |
|
0.2 |
|
(0.1 |
) |
0.2 |
|
Employee benefit expense |
|
(0.4 |
) |
(0.6 |
) |
(1.5 |
) |
Net finance income |
|
1.3 |
|
1.2 |
|
2.1 |
|
|
|
|
|
|
|
|
|
8 |
Taxation on profit on ordinary activities |
|
|
Six months |
|
Six months |
|
Year |
|
|
|
ended |
|
ended |
|
ended |
|
|
|
30 June |
|
30 June |
|
31 December |
|
|
|
2019 |
|
2018 |
|
2018 |
|
|
|
£'m |
|
£'m |
|
£'m |
|
Current tax |
|
|
|
|
|
|
|
Overseas corporation tax |
|
3.0 |
|
2.6 |
|
14.1 |
|
Deferred tax |
|
|
|
|
|
|
|
Origination and reversal of timing differences |
|
|
|
|
|
|
|
Overseas deferred tax |
|
(2.7 |
) |
(0.5 |
) |
5.9 |
|
Tax on profit on ordinary activities |
|
0.3 |
|
2.1 |
|
20.0 |
|
Tax on profit on ordinary activities for the six months to 30 June 2019 has been calculated on the basis of the estimated annual effective rate for the year ending 31 December 2019.
9 |
Equity dividends |
|
|
Six months |
|
Six months |
|
Year |
|
|
|
ended |
|
ended |
|
ended |
|
|
|
30 June |
|
30 June |
|
31 December |
|
|
|
2019 |
|
2018 |
|
2018 |
|
|
|
£'m |
|
£'m |
|
£'m |
|
Amounts recognised as distributions to equity holders in the period: |
|
|
|
|
|
|
|
Final dividend for the year ended 31 December 2018 of 102p (2017: 98p) per share |
|
2.8 |
|
2.7 |
|
2.8 |
|
Interim dividend for the year ended 31 December 2018 of 40p per share |
|
|
|
|
|
1.1 |
|
|
|
|
|
|
|
3.9 |
|
Dividends amounting to £0.1 million (2018: six months £0.1 million - year £0.1 million) have not been included as Group companies hold 62,500 issued shares in the Company. These are classified as treasury shares. |
|||||||
Proposed interim dividend for the year ended 31 December 2019 of 42p (2018: 40p) per share |
|
1.2 |
|
1.1 |
|
|
|
The proposed interim dividend was approved by the Board of Directors on 14 August 2019 and has not been included as a liability in these financial statements.
10 |
Earnings/(loss) per share (EPS) |
|
|
Six months |
|
Six months |
|
Year |
|
||||||
|
|
ended |
|
ended |
|
ended |
|
||||||
|
|
30 June |
|
30 June |
|
31 December |
|
||||||
|
|
2019 |
|
2018 |
|
2018 |
|
||||||
|
|
Earnings |
|
EPS |
|
Earnings/ |
|
EPS |
|
Earnings/ |
|
EPS |
|
|
|
£'m |
|
Pence |
|
£'m |
|
Pence |
|
£'m |
|
Pence |
|
Attributable to ordinary shareholders |
|
1.4 |
|
50.7 |
|
0.5 |
|
18.1 |
|
25.2 |
|
912.4 |
|
Attributable to ordinary shareholders - continuing operations |
|
1.4 |
|
50.7 |
|
0.8 |
|
29.0 |
|
25.4 |
|
919.6 |
|
Attributable to ordinary shareholders - discontinued operation |
|
- |
|
- |
|
(0.3 |
) |
(10.9 |
) |
(0.2 |
) |
(7.2 |
) |
Basic and diluted earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue of 2,762,000 (2016: six months 2,762,000 - year 2,762,000), which excludes 62,500 (2018: six months 62,500 - year 62,500) shares held by the Group as treasury shares.
11 |
Property, plant and equipment |
During the six months ended 30 June 2019 the Group acquired assets with a cost of £8.0 million (2018: six months £10.7 million - year £20.5 million). Assets with a carrying amount of £0.8 million were disposed of during the six months ended 30 June 2019 (2018: six months £0.4 million - year £0.5 million).
12 |
Borrowings |
Borrowings (current and non-current) include loans of £8.3 million (loans 2018: six months £4.2 million - year £3.9 million) and bank overdrafts of £6.9 million (2018: six months £3.4 million - year £2.8 million). The following loans were taken and repaid during the six months ended 30 June 2019:
|
£'m |
|
Balance at 1 January 2019 |
3.9 |
|
Exchange differences |
0.2 |
|
New loans |
4.6 |
|
Repayments |
(0.4 |
) |
Balance at 30 June 2019 |
8.3 |
|
13 |
Provisions |
|
|
Wages and |
|
|
|
|
|
|
|
salaries |
|
Others |
|
Total |
|
|
|
£'m |
|
£'m |
|
£'m |
|
|
|
|
|
|
|
|
|
At 1 January 2018 |
|
18.5 |
|
1.2 |
|
19.7 |
|
Exchange differences |
|
0.4 |
|
- |
|
0.4 |
|
Utilised in the period |
|
- |
|
(0.3 |
) |
(0.3 |
) |
Provided in the period |
|
1.6 |
|
0.1 |
|
1.7 |
|
At 30 June 2018 |
|
20.5 |
|
1.0 |
|
21.5 |
|
At 1 January 2018 |
|
18.5 |
|
1.2 |
|
19.7 |
|
Exchange differences |
|
0.6 |
|
- |
|
0.6 |
|
Utilised in the period |
|
(4.9 |
) |
(0.6 |
) |
(5.5 |
) |
Provided in the period |
|
8.6 |
|
0.6 |
|
9.2 |
|
Unused amounts reversed in period |
|
(5.4 |
) |
(0.1 |
) |
(5.5 |
) |
At 31 December 2018 |
|
17.4 |
|
1.1 |
|
18.5 |
|
Exchange differences |
|
0.1 |
|
- |
|
0.1 |
|
Utilised in the period |
|
(0.6 |
) |
(0.1 |
) |
(0.7 |
) |
Provided in the period |
|
3.4 |
|
0.3 |
|
3.7 |
|
Unused amounts reversed in period |
|
(8.0 |
) |
- |
|
(8.0 |
) |
At 30 June 2019 |
|
12.3 |
|
1.3 |
|
13.6 |
|
Current: |
|
|
|
|
|
|
|
At 30 June 2019 |
|
12.3 |
|
1.3 |
|
13.6 |
|
At 31 December 2018 |
|
17.4 |
|
1.1 |
|
18.5 |
|
At 30 June 2018 |
|
20.5 |
|
1.0 |
|
21.5 |
|
The wages and salaries provisions are in respect of ongoing wage and bonus negotiations in
£8.0 million (2018: six months £nil - year £5.4 million) was reversed from the wages and salaries provision following progress on negotiations in
Others relate to provisions for claims and dilapidations.
14 |
Employee benefit obligations |
The
The gratuity and medical benefit schemes located in
An actuarial gain of £3.9 million was realised in the period in relation to the Group's employee obligations of which £5.2 million related to the
15 |
Reconciliation of profit from continuing operations to cash flow |
|
|
Six months |
|
Six months |
|
Year |
|
|
|
ended |
|
ended |
|
ended |
|
|
|
30 June |
|
30 June |
|
31 December |
|
|
|
2019 |
|
2018 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
£'m |
|
£'m |
|
£'m |
|
Profit from continuing operations |
|
2.2 |
|
4.5 |
|
49.6 |
|
Share of associates' results |
|
(3.3 |
) |
(2.2 |
) |
(7.6 |
) |
Depreciation and amortisation |
|
8.4 |
|
8.0 |
|
15.5 |
|
Impairment of assets and provisions |
|
0.2 |
|
0.1 |
|
0.2 |
|
Realised movements on biological assets - non-current |
|
0.3 |
|
1.0 |
|
- |
|
Profit on disposal of non-current assets |
|
(0.1 |
) |
- |
|
(0.1 |
) |
Loss on disposal of subsidiaries |
|
- |
|
- |
|
0.4 |
|
Profit on disposal of financial assets |
|
(0.2 |
) |
(0.2 |
) |
(0.3 |
) |
Movement in provisions |
|
(4.9 |
) |
1.8 |
|
(1.2 |
) |
Increase in working capital |
|
(6.2 |
) |
(6.2 |
) |
(12.9 |
) |
Difference between employee benefit obligations funding contributions and cost charged |
|
0.1 |
|
(0.4 |
) |
(8.3 |
) |
Cash generated from continuing operations |
|
(3.5 |
) |
6.4 |
|
35.3 |
|
16 |
Acquisition and disposal of businesses |
|
|
Acquisitions |
|
Acquisitions |
|
Acquisitions |
|
Disposals |
|
|
|
Six months |
|
Six months |
|
Year |
|
Year |
|
|
|
ended |
|
ended |
|
ended |
|
ended |
|
|
|
30 June |
|
30 June |
|
31 December |
|
31 December |
|
|
|
2019 |
|
2018 |
|
2018 |
|
2018 |
|
|
|
£'m |
|
£'m |
|
£'m |
|
£'m |
|
|
|
Fair value |
|
Fair value |
|
Fair value |
|
Net book value |
|
Fair value of assets and liabilities |
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
5.7 |
|
0.5 |
|
0.5 |
|
0.6 |
|
Right-of-use assets |
|
3.8 |
|
- |
|
- |
|
- |
|
Deferred tax asset |
|
- |
|
1.1 |
|
1.1 |
|
0.1 |
|
Inventories |
|
0.1 |
|
0.8 |
|
0.8 |
|
1.6 |
|
Trade and other receivables |
|
0.1 |
|
1.5 |
|
1.5 |
|
0.9 |
|
Current income tax assets |
|
- |
|
- |
|
- |
|
0.2 |
|
Cash and cash equivalents |
|
- |
|
0.4 |
|
0.4 |
|
0.2 |
|
Assets classified as held for sale |
|
- |
|
- |
|
- |
|
2.4 |
|
Trade and other payables |
|
(0.4 |
) |
(1.6 |
) |
(1.6 |
) |
(1.3 |
) |
Employee benefit obligations |
|
(0.5 |
) |
- |
|
- |
|
(0.3 |
) |
Deferred tax liability |
|
(0.8 |
) |
(1.1 |
) |
(1.1 |
) |
- |
|
|
|
8.0 |
|
1.6 |
|
1.6 |
|
4.4 |
|
Identifiable intangible assets - Brands |
|
- |
|
6.6 |
|
6.6 |
|
- |
|
Intangible asset - |
|
1.4 |
|
- |
|
- |
|
- |
|
Non-controlling interest |
|
- |
|
(1.4 |
) |
(1.4 |
) |
(0.1 |
) |
Loss on disposal |
|
- |
|
- |
|
- |
|
(0.5 |
) |
|
|
9.4 |
|
6.8 |
|
6.8 |
|
3.8 |
|
Satisfied by: |
|
|
|
|
|
|
|
|
|
Cash consideration and costs |
|
9.4 |
|
6.8 |
|
6.8 |
|
3.8 |
|
Net cash outflow arising on acquisitions/disposals: |
|
|
|
|
|
|
|
|
|
Cash consideration |
|
(9.4 |
) |
(6.8 |
) |
(6.8 |
) |
3.8 |
|
Less: cash and cash equivalent balances acquired/(disposed) |
|
- |
|
0.4 |
|
0.4 |
|
(0.2 |
) |
|
|
(9.4 |
) |
(6.4 |
) |
(6.4 |
) |
3.6 |
|
The acquisitions in 2019 relates to tea estates in
17 |
Cash and cash equivalents |
For the purposes of the cash flow statement, cash and cash equivalents comprise:
|
|
Six months |
|
Six months |
|
Year |
|
|
|
ended |
|
ended |
|
ended |
|
|
|
30 June |
|
30 June |
|
31 December |
|
|
|
2019 |
|
2018 |
|
2018 |
|
|
|
£'m |
|
£'m |
|
£'m |
|
Cash and cash equivalents |
|
95.8 |
|
94.2 |
|
112.4 |
|
Overdrafts repayable on demand (included in current |
|
(6.9 |
) |
(3.4 |
) |
(2.8 |
) |
|
|
88.9 |
|
90.8 |
|
109.6 |
|
18 |
Contingencies |
In
In
The Group operates in certain countries where its operations are potentially subject to a number of legal claims. When required, appropriate provisions are made for the expected cost of such claims.
19 |
Related party transactions |
There have been no related party transactions that had a material effect on the financial position or performance of the Group in the first six months of the financial year.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the
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