REG - Camellia PLC - AGM Trading Statement

CamelliaAnnouncement

08/06/2023 07:00

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RNS Number : 0180C  Camellia PLC  08 June 2023

8 June 2023

Camellia Plc

(the "Company" or the "Group")

 

AGM trading statement

 

Camellia Plc (CAM.L) has today issued the following update on trading in the
year to date.

 

The Group continues to focus on its core Agriculture operations and is
divesting non-core assets as appropriate opportunities arise.

Trading outlook

Trading in 2023 to date has continued to be mixed albeit it remains very early
in the season for a number of our major businesses.  Although we still expect
revenue to be ahead of that of 2022, taking account of the significant
continuing pressure on macadamia prices (discussed below), we now expect that
the adjusted profit before tax for 2023 will be below that of 2022. With our
substantial cash resources, our investment portfolio and limited gearing, we
continue to be well placed to withstand a further period of disruption to our
operations and sales.

Agriculture - Tea

Tea production in Kenya has started positively in comparison to last year. It
is however of concern to note the violence being perpetrated against large
scale tea operations last month in the Kericho district of Kenya ostensibly as
a protest against the use of mechanical harvesting machines. The Group's
estates have not been affected and it is hoped that the authorities will be
able to maintain order and prevent any repeat of such actions.  Malawi
production is marginally ahead of last year despite the damage caused by
Cyclone Freddy earlier in the year. It is very early in the season for India
and Bangladesh although it is disappointing to report that the Dooars in India
suffered significant hail damage in March and April.

Tea sale prices are generally below those of last year principally on account
of the lack of foreign exchange in the major consuming countries of Egypt,
Pakistan and Iran.

Agriculture - nuts and fruits

The avocado harvest in Kenya has yet to get meaningfully underway. Macadamia
production in Kenya, Malawi and South Africa is in line with expectations with
volumes anticipated to be above those of last year.  However , macadamia sale
prices have reduced further in the last month and remain under significant
pressure.

The continuing high cost of food in the UK is the subject of much media
comment as indeed is the lack of a reasonable price being paid to farmers for
their produce by the major retailers. Intervention by government has yet to
yield any positive assistance to this sector of the economy. The top fruit
harvest in the UK will commence in a few months and it is hoped that the
adverse climate conditions experienced in the last two years will not be
repeated. The plan for the closure of Bardsley England's West Kent operations
and the relocation of all packing to its Howfield property near Canterbury is
proceeding and should be implemented by August. Following an agreement to
terminate the supply contract with its key customer earlier in the year,
Bardsley England is currently tendering its 2023 season fruit for other retail
programmes as well as exploring export opportunities.

Other Agriculture

In Brazil the soya harvest is marginally ahead of last year and it is pleasing
to report that the wine grape harvest in South Africa enjoyed a record year.

Agriculture - costs

The Group's operations worldwide continue to be impacted by the ongoing war in
Ukraine particularly in respect of energy and fertiliser costs.  Wage
negotiations are normally carried out through collective bargaining agreements
directly with the unions or employee representatives involved. There has been
a recent tendency for some governments to impose arbitrary wage awards for
political expediency without fully understanding the implications thereof.
This is a worrying trend.

Other Investments

In March the Group's head office relocated from Linton Park to Wrotham Place
near Sevenoaks, which is a property that has been owned by the Group for many
years. Linton Park has been placed on the market for sale.  This move was
carried out to reduce costs and release capital.

It was announced earlier this week that the Group had entered into an
agreement for the sale of all the Group's shares in BF&M Ltd for a price
of $100 million, subject to regulatory and tax approvals. Although it is
likely to take some time for such approvals to be secured and the exact use of
proceeds may vary depending on circumstances between now and completion, the
funds realised together with the proceeds from the sale of other non-core
assets will give considerable financial strength to the Group and allow it to
accelerate its policy of diversifying its agricultural operations by crop and
geographical location. The objective of disposing of non-core investments is,
with this latest development, well under way.

 

 

This announcement contains inside information for the purposes of the UK
Market Abuse Regulation.

 

Enquiries

 

Camellia Plc
 
01622 746655

Malcolm Perkins, Chairman

Susan Walker, Chief Financial Officer

 

Panmure Gordon
 
020 7886 2500

Nominated Adviser and Broker

Emma Earl

Rupert Dearden

 

H/Advisers Maitland

PR

William Clutterbuck
 
07785 292617

 

 

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