REG - Camellia PLC - Half-year Report
01/09/2023 07:00
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RNS Number : 0168L Camellia PLC 01 September 2023
CAMELLIA PLC
Interim results for the 6 months ended 30 June 2023
H1 2023 Highlights
§ Revenue from continuing operations fell 2% to £110.5 million (2022 H1:
£112.8 million) reflecting lower revenues in Agriculture as a result of
sterling strengthening against the majority of our operating currencies and
from lower macadamia prices.
§ Profit before tax of £4.9 million (2022 H1: loss £16.1 million) reflecting
improved trading at our associate, BF&M and impairment write backs in
relation to BF&M following the agreement to sell our holding
§ Adjusted loss before tax* for continuing operations was significantly reduced
in H1 2023 at £12.5 million on that of H1 2022 (loss £17.6 million) due to
improved trading at our associate, BF&M
§ Adjusted operating loss before tax* for Agriculture increased 42% to £12.8
million in the period
- The result from tea improved in H1 compared to the prior year. Tea
production was up 5% which more than offset the impact of lower average tea
selling prices experienced in almost all regions in H1 and the full period
impact of significant wage increases.
- Profits from avocado were up £2.9 million, being up more than four fold
on prior year
- Losses were recorded for macadamia due to the impact of the current over
supply in the market which has led to c45% lower prices being experienced and
impacted results by £5 million period on period
- Profits from instant tea, branded tea and our arable farm in Brazil were
all significantly lower
- Lower profits from Bardsley England reflecting the impact of inflation
(previously announced) and contracted prices for the 2022 harvest. Contract
now complete.
§ The Board recommends an interim dividend of 44p per share for the Group
Strategic developments
§ Continued investment and investigation into the expansion of our agriculture
activities via diversification of crop and location
§ Sale of non-core associate announced: BF&M for $100m, subject to
regulatory and tax approvals. However, BF&M has implemented a
shareholder rights agreement, the implications of which continue to be
examined in detail by Camellia. Discussions are ongoing to ascertain
BF&M's concerns as regards the sale of our shares to Argus.
§ Marketing of Linton Park and a number of other properties is underway
§ Parts of Bardsley England (the West Kent orchards and others) ceased farming
in January 2023 and the closure of the West Kent packing operation is on track
for completion in September 2023
§ Establishing the baseline data for our Scope 3 emissions to complete the full
Group carbon footprint measurement
§ Establishing the baseline data of our water footprint to assess areas of
emerging high risk due to the changes in climate
Malcolm Perkins, Chairman, stated:
"The first half has been a very challenging period. Generally higher rates
of inflation (particularly in wages) and oversupplied commodity markets in
tea, macadamia and arable crops are contributing to a difficult operating
environment.
Revenues from continuing operations decreased 2% in the period in large part
to the impact of currency movements on the revenues recorded for our
agriculture businesses and due to lower macadamia prices. Due to the nature of
our cropping patterns and sales, we booked an adjusted loss before tax for the
period. The H1 profit before tax at £4.9 million is substantially better than
prior year (2022 H1: Loss £16.1 million) in large part due to improved
results from BF&M and £18m of impairments written back on our holding in
BF&M which when combined more than offset the wider losses in our
agriculture operations.
Our financial results for the full year remain largely dependent on
Agriculture where the majority of harvesting, and sales, takes place in the
second half of the year. However, taking account of current trends, revenue
is expected to be broadly in line with that of last year and the group is
expected to record a single digit adjusted loss for the year.
Once again I should like to thank all our staff across the group for their
continuing contributions both to the business and their local communities in
extremely difficult circumstances."
Financial highlights
Six months ended Six months Year ended
30 June 2023 ended 31 December 2022
30 June 2022
Restated Restated
£'m £'m £'m
Revenue - continuing operations 110.5 112.8 297.2
Adjusted (loss)/profit before tax* (12.5) (17.6) 5.2
Significant separately disclosed items and provision releases 17.4 1.5 (8.3)
Profit/(loss) before tax for the period 4.9 (16.1) (3.1)
Profit/(loss) after tax for the period from continuing operations 3.4 (19.6) (15.3)
Profit for the period from discontinued operations 0.1 0.6 7.6
Profit/(loss) after tax 3.5 (19.0) (7.7)
Earnings/(loss) per share - continuing operations 108.6 (742.2)p (724.1)p
Dividend per share for the period 44p 44p 146p
Net cash and cash equivalents net of borrowings 26.8 37.1 39.8
Investment portfolio market value 37.7 35.5 35.6
* Profit/(loss) before tax excluding separately disclosed significant items,
details of which can be found in note 6 to the Accounts later in this
announcement
This announcement contains inside information for the purpose of Article 7 of
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018.
ENQUIRIES
Camellia Plc 01622 746655
Malcolm Perkins, Chairman
Susan Walker, Chief Financial Officer
Panmure Gordon (UK) Limited 020 7886 2500
Nominated Adviser and Broker
Emma Earl
Rupert Dearden
H/Advisers Maitland
PR
William Clutterbuck 07785 292617
CHAIRMAN'S STATEMENT AND OPERATING REVIEW
TRADING UPDATE
The first half has been a very challenging period for all of our staff and
our communities. Generally higher rates of inflation and oversupplied
commodities markets in tea, macadamia and arable crops are contributing to a
difficult operating environment. It is against this background that we would
once again like to thank all of our staff for their efforts.
Revenue from continuing operations fell 2% to £110.5 million (2022 H1:
£112.8 million) primarily due to the impact of currency movements on revenues
in Agriculture and from lower macadamia pricing. Had we translated our revenue
using the same average rates as H1 2022, our revenue for H1 2023 would have
been higher at £114.3 million.
We are reporting a first half profit before tax of £4.9 million (2022 H1:
loss £16.1 million) which is a significant improvement on that of the
corresponding period of 2022 for the reasons set out below:
§ A return to profitability for our Associates with our share of their results
for H1 2023 being a £3.2 million profit compared to a loss of £4.5 million
for the same period of 2022. This was predominantly due to BF&M's
performance (see below).
§ Impairment write backs of £18.0 million (2022 H1: £nil) in respect of our
holding in BF&M
§ Higher investment income and exchange gains on US dollar currency holdings
§ Improved results from Engineering reflecting increased demand for servicing
and repair work from the oil industry, in part due to the demise of a key
competitor
§ The benefit of these items was partially offset by increased losses in
Agriculture (see below)
The H1 trading loss in Agriculture after provisions for restructuring costs of
£0.7 million was 51% higher than that of H1 of the prior year at a loss of
£13.7 million (2022 H1: loss £9.1 million). Our tea volumes in the period
were 4% higher and we also saw significant improvements to our average selling
prices in Bangladesh. However, these were not sufficient to offset the impact
of wage inflation across all operations, lower average selling prices across
India and Kenya and a significant reduction in macadamia kernel prices because
of high global inventories and reduced demand. H1 2023 also includes a higher
loss for Bardsley England, reflecting the impact of inflation and the
continued servicing of a loss-making contract which ended in August, as well
as the expected costs of the restructuring of that business. The arable
operations in Brazil produced slightly lower volumes of soya and prices in H1
were down on those of H1 last year. The expectation of lower prices for the
balance of the soya crop as well as the winter crops, currently planted, has
led to a lower result for the operation.
Additional detail on the first half results is set out below.
Strategy
The Board of Camellia continues to be focussed on implementing its strategy to
invest in the expansion of the Group's agricultural interests. This is to
diversify both the location of its interests and the crops which it produces -
to assist in mitigating against the impact of adverse weather patterns,
political instability, and commodity price movements. We seek to leverage our
core competencies of developing and managing large scale bearer plant estates.
The further actions taken over recent months to reduce the scale of our
non-agriculture activities and assets and reduce our exposure to loss making
operations is expected to continue. As previously stated, the Group may sell
certain less liquid, non-income generating or under-performing assets in order
to fund strategically important acquisitions and investments.
Progress on refocussing investments
BF&M
On 6 June 2023, we agreed the sale of our 37% holding in BF&M to Bermuda
Life Insurance Company Limited, a subsidiary of Argus Group Holdings Limited
for a cash consideration of $100m, conditional on receipt of a number of
regulatory and tax approvals.
Following the announcement of the proposed disposal, BF&M's board
implemented a shareholder rights agreement, the objective of which was to act
as a 'poison pill' in the event of any new shareholder seeking to register a
more than 15% shareholding without BF&M's consent. The implications of the
shareholder rights agreement are the subject of detailed investigation by
Camellia. Discussions are taking place in an attempt to understand the
concerns of BF&M with respect of the sale of our shares to Argus.
Properties
Linton Park and a number of other properties in London and Bristol are being
marketed for sale. The current property market is generally sluggish.
Collections
A number of items from the manuscript collection are expected to be sold in
the coming months, predominantly at auction.
Strategic investments
The following ongoing investments in the Agriculture division should be noted:
§ In Tanzania, 98Ha of avocado were planted in the first half of the year
bringing the total to 250Ha, with a further 100Ha anticipated to be planted by
the end of the year.
§ In South Africa, 40Ha of avocado to be planted in the last quarter of the year
to replace plants severely damaged by hail in April 2023.
FIRST HALF OPERATING RESULTS
Agriculture
H1 2023 H1 2022 Full year 2022
Revenue £'m £'m £'m
Tea 76.0 77.3 210.1
Nuts and fruits 16.6 17.7 57.1
Other agriculture 10.3 10.7 15.8
102.9 105.7 283.0
Trading (loss)/profit
Tea (11.2 ) (12.8 ) 9.3
Nuts and fruits (2.8 ) 1.3 (0.1 )
Other agriculture 0.3 2.4 6.3
(13.7 ) (9.1 ) 15.5
Note: Please see note 5 of the Accounts for further segmental information
Tea
Tea estate production & Instant tea, branded tea &
manufacturing
tea rooms
H1 H1 Full year H1 H1 Full year
2023 2022 2022 2023 2022 2022
£'m £'m £'m £'m £'m £'m
Revenue 61. 3 61.5 177.6 14.7 15.8 32.5
Adjusted trading (loss)/profit* (10.2 ) (12.6 ) 9.1 (1.0 ) (0.2 ) 0.2
Trading (loss)/profit (10.2 ) (12.6 ) 9.1 (1.0 ) (0.2 ) 0.2
* See note 6 of the Accounts for details of the adjustments
made to trading profit in arriving at adjusted trading (loss)/profit
Tea estate production & manufacturing
Overall tea production in the first half was up 5% at 41.4mkg (H1 2022:
39.6kg). Pricing has been mixed with weaker average prices in India,
particularly for Orthodox teas. Kenyan prices have also been lower than last
year, but in Bangladesh prices firmed, relative to last year.
H1 2023 H1 2022 Full year 2022
Volume Volume Volume
mkg mkg mkg
India 8.5 8.2 26.8
Bangladesh 3.4 3.1 11.4
Kenya 6.5 6.0 13.3
Malawi 12.3 12.5 19.0
Total own estates 30.7 29.8 70.5
Bought leaf production 8.7 7.9 17.8
Managed client production 2.0 1.9 4.6
Total made tea produced 41.4 39.6 92.9
India: Despite severe hail in a number of gardens in the Dooars, production in
the first half of the year was ahead of H1 2022 due to generally improved
growing conditions. Sales volumes in H1 2023 are also up.
Prices for CTC teas in both the Dooars and Assam have been lower than in H1
2022. Prices for Assam orthodox teas, which constitute most of our production
in Assam, are also significantly lower than in H1 2022 as a result of reduced
demand from Iran and an oversupplied domestic market. As previously announced,
wages in West Bengal increased 7.7% for 2023 further impacting results. It is
still very early in the India tea sales cycle (with 70-75% of sales typically
concluded in the second half of the year) which makes predicting prices for
the remainder of the year difficult.
Bangladesh: Production was up 10% on H1 2022 despite a dry start to the
season. Our average pricing was 25% higher than last year. As previously
announced, the 2023 results are being adversely impacted by the 41.7% wage
increase which was effective from August 2022. In addition, significant cost
inflation of fuel, electricity and gas is being experienced in Bangladesh this
year.
In August 2023 the government established a Wages Board for the tea industry
and announced that the next wage increases would be 5% effective from each of
August 2024 and August 2025, bringing much needed stability to the cost base
for the future.
Kenya: Despite a dry start, tea production nationally was 1% higher in the
first half than in H1 2022. Our estate production for the first half was 8%
above that of the same period of 2022 with average prices down approximately
9%. We see a continued risk of downward price pressure for the remainder of
the year due to high stocks of unsold teas in the market and foreign exchange
shortages affecting key markets.
Malawi: Estate production was 2% below that of the same period last year due
to the impact of cyclone Freddy in March and the very dry conditions that
followed. Average prices are broadly in line with last year. Looking forward
to the remainder of the year we see some risk that prices are impacted by the
oversupplied market situation in East Africa. Sales have been delayed due to
foreign currency shortages in certain markets and some logistics challenges as
a legacy of the cyclone. Margins reflect the impact of wage increases of 13%
effective from 1 August 2022 and a further 5% increase effective from
January 2023.
Instant tea, branded tea and tea rooms
India: Branded tea sales volumes are lower than those of last year and, due to
the sales mix, average prices are also down with a corresponding adverse
impact on profitability.
UK: Revenue at Jing Tea in H1 2023 is up 22% on the prior year reflecting new
wins and increased orders from existing customers as the hotels and leisure
markets edge closer to pre-pandemic activity levels. Although margins have
been adversely affected by inflation, particularly on packaging and logistics
costs, overall losses are lower than those experienced in H1 2022.
Nuts and fruits
Macadamia Avocado Other fruits
H1 H1 Full year H1 H1 Full year H1 H1 Full year
2023 2022 2022 2023 2022 2022 2023 2022 2022
£'m £'m £'m £'m £'m £'m £'m £'m £'m
Revenue 2.1 6.0 14.9 1.9 1.4 19.2 12.6 10.3 23.0
Adjusted trading profit/(loss)* (2.5 ) 2.5 2.9 3.7 0.8 2.3 (3.3 ) (2.0 ) (5.3 )
Trading profit/(loss) (2.5 ) 2.5 2.9 3.7 0.8 2.3 (4.0 ) (2.0 ) (5.3 )
* See note 6 of the Accounts for details of the adjustments
made to trading profit in arriving at adjusted trading profit/(loss)
Macadamia
We estimate that our combined macadamia harvest will be approximately 17%
higher than that of 2022 at c1.9mkg. Higher production volumes are being
achieved by all operations.
However, as previously announced, the kernel market is very subdued and there
remains a large inventory of product carried over from last year which is
impacting average prices and profitability of this crop. With China only
recently opened post lockdowns, the level of demand for kernel has not yet
recovered in that market although demand for Nut in Shell (which we do not
produce) has experienced an early revival. Demand for kernel in the USA and
Japan, although improving, is still down on pre-Covid levels. Pricing,
particularly for smaller and commercial grades, continues to be c45% below
that of last year with no sign of recovery for the current season.
Avocado
Production of our estate Hass crop in H1 was lower than that experienced in H1
2022 due to a later start on the back of later maturing fruit. The season is
now reaching its peak and thus far logistics have generally worked well. The
avocado tree has a natural tendency towards alternate or bi-annual bearing,
widely known as 'on' and 'off' years and 2023 is an 'off' year. However we
anticipate, due to improved yields from the increasing maturity of our planted
areas, total production of estate Hass for the full year should be broadly in
line with that of 2022.
Pricing in H1 2023 for the limited sales of estate Hass made in the period has
been above that of the same period in 2022. European markets have been
volatile at time depending on the volumes arriving from Peru. Given the early
stage of the season and the small volumes sold to date, it is too soon to
predict prices with any certainty for the remainder of the year.
The Pinkerton crop production in H1 was well ahead of last year with prices
for fruit sold very much in line with prior year.
Other fruits
Bardsley England
Sales volumes in H1 2023 were 56% higher than in the corresponding period of
2022, however selling prices did not increase in any meaningful way, due to
Bardsley England's contractual commitments. Despite the improved volumes, the
impact of high levels of cost inflation during 2022 and further inflation in
H1 2023 have resulted in a higher loss from this operation in the period. As
previously announced, a restructuring of the business commenced in January
2023 with the closure of farming operations in West Kent and the closure of
the River Farm packhouse which is expected to complete by the end of September
2023. Accordingly, the H1 results include £0.7 million for the costs of this
restructuring. The refurbished packhouse in East Kent will commence operations
in September in time for the new season.
The 2023 crops of cherries and plums are reasonable and prices have been
significantly higher than those of last year.
The 2023 apple and pear crops are expected to be significantly lower in
comparison to last year following the closure of farming operations in West
Kent. In addition, Bardsley England does not expect to purchase any
significant volumes of partner grower fruit from the 2023 harvest. Despite
these two factors we expect a similar sales volume overall for the 2023 full
year for Bardsley due to carried over stock from 2022. It is too soon in the
season to determine how the quality of the 2023 harvest will compare to that
of last year. Negotiations continue on pricing with potential customers in
preparation for the approaching season. Encouraging levels of enquiries for
service provision work are also being received. There remain a number of areas
of inefficiency in the business where we see opportunities to materially
improve performance. As previously indicated, significant additional capital
will be required to develop the field and packing operations, and it will take
longer than anticipated to achieve the levels of profitability we would expect
from this operation.
Other
The grape production season in the Cape ended with another record harvest 37%
up on last year. All the grapes have been sold in a private sale arrangement
to third-party wineries at similar prices to last year.
The Blueberry operation in Kenya is testing a number of new varieties, all of
which are owned and supplied by Driscoll's, and have thus far shown
encouraging yield results. The volume of production this year is anticipated
to be relatively small due to the age profile of these new varieties and will
be sold in the local market.
Other agriculture
The other agricultural crops have had a mixed first half with the following
worth noting:
§ In Brazil the prices achieved for the soya crop in the period were down 6%,
but the harvested crop was up 3%. There was no maize harvesting in the period
(2022 H1: 2,806T). Prices for soya, wheat, maize and sorghum in H2 2023 are
currently expected to be lower than those of last year due to high levels of
production in South America, USA and Russia. However, with grain supplies from
Ukraine continuing to be volatile, it remains difficult to predict with any
certainty how prices in the remainder of the year will develop.
§ Rubber manufactured in H1 was down 70% as tapping was delayed and pricing is
also lower than last year.
Sustainability
Ahead of the 2023 annual report, good progress is being made across the Group
in preparation for the implementation of the recommendations of the Task Force
on Climate-Related Financial Disclosures (TCFD). As part of this effort, the
Group has embarked on measuring its Scope 3 emissions. In conjunction with the
Scope 1 and 2 emission data which we have been monitoring for some time, this
will put us in a position to consider Science Based Targets for emission
reduction. A water foot-printing exercise is also underway.
Investments
Engineering
The oil and gas services market in Aberdeen has seen some improvement with a
corresponding increase in the demand for AJT's Engineering division's
services. Revenue in the Site Services division, which is focused on the
renewables sector, was in line with that of H1 2022 despite a key energy
generation customer postponing maintenance projects in light of the energy
crisis. Overall, losses at AJT Engineering declined in H1 2023 as a result of
the increased activity, improved pricing and tight cost control.
Associates
Our share of the results from associates amounted to a profit of £3.2 million
(H1 2022: loss of £4.5 million). This reflects significantly improved
operating results from BF&M which returned to profitability in Q1 2023 as
financial markets stabilised, having shown a very substantial loss in H1 2022.
Following the agreement for the sale of our holding in BF&M, conditional
on tax and regulatory approvals, it has been re-categorised to 'assets held
for sale' resulting in a release of a previous impairment of £18.0 million.
Going forward it will no longer be equity accounted and any dividends received
in H2 prior to completion of the sale will be recorded as investment income in
Camellia's 2023 full year results.
Investment portfolio
Our investment portfolio, which consists principally of listed equities, at 30
June 2023 was valued at £37.7 million (31 December 2022: £35.6 million).
Financial Position
The Group continues to have a strong balance sheet with substantial liquidity
which amounted to £26.8 million in cash and cash equivalents net of
borrowings as at 30 June 2023.
Pensions
The UK defined benefit scheme, on an IAS19 basis, has a deficit of £2.1
million (31 December 2022: deficit £1.1 million). The increase in the
deficit since year end is due mainly to lower than projected asset returns.
The deficit on the Group's defined benefit pension and post-employment benefit
schemes overall now amounts to £9.4 million at 30 June 2023 (31 December
2022: deficit £8.4 million).
DIVIDEND
The Board is pleased to declare an interim dividend of 44p per share (2022 H1:
44p) payable on 13 October 2023 to shareholders registered at the close of
business on 15 September 2023.
BOARD CHANGES
We were pleased, following a full search process, to confirm the appointment
of Byron Coombs as Chief Executive Officer with effect from 25 September
2023. Camellia's Chairman, Malcolm Perkins, who has also acted as Interim
Chief Executive Officer since 1 July 2022, will continue as Interim Chief
Executive until then.
Malcolm Perkins will retire on 30 November 2023 after 51 years' service and
will be succeeded from 1 December 2023 by Simon Turner, currently a
Non-executive Director of the Company and a nominee of The Camellia Foundation
on the Board.
In due course the Board intends to appoint an additional independent
Non-executive Director to increase the number to three, one of whom will be
appointed as Senior Independent Director.
OUTLOOK
As always, our financial results remain largely dependent on Agriculture where
the largest portion of the production and sales take place in the second half
of the year. It is therefore premature to provide any firm indication of the
likely results for 2023.
However, taking account of current trends, revenue is expected to be broadly
in line with that of last year and the Group is likely to record a singlegit
adjusted loss before tax for the full year.
SUMMARY
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 continue to take significant steps to
accelerate our programme.
The Board continues to believe that the actions that we are taking now will
enhance the long-term value of the Group and provide additional opportunities
for its success.
Malcolm Perkins Graham McLean Susan Walker
Chairman and Interim CEO Director of Agriculture CFO
31 August 2023
INTERIM MANAGEMENT REPORT
The Chairman's Statement and Operating Review form part of this report and it
includes information about important events that have occurred during the six
months ended 30 June 2023 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 2022 (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 and Operating Review 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 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 2022. There have been no
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
31 August 2023
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2023
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Notes £'m £'m £'m
Restated Restated
Continuing operations
Revenue 5 110.5 112.8 297.2
Cost of sales (103.3 ) (103.0 ) (226.7 )
Gross profit 7.2 9.8 70.5
Other operating income 1.5 2.1 4.4
Distribution costs (4.6 ) (5.1 ) (23.0 )
Administrative expenses (23.1 ) (20.4 ) (45.8 )
Trading (loss)/profit 5 (19.0 ) (13.6 ) 6.1
Share of associates' results 7 3.2 (4.5 ) (2.5 )
Profit on disposal of assets classified as held for sale 0.1 1.5 1.8
Impairment of intangible assets, investment properties and property, plant and - - (10.1 )
equipment
Impairment reversal of investment in associate 14 18.0 - -
Profit on disposal and fair value movements on money market investments 0.2 0.1 0.3
Operating profit/(loss) 2.5 (16.5 ) (4.4 )
Investment income 1.1 0.3 0.4
Finance income 1.2 1.1 2.0
Finance costs (1.2 ) (1.0 ) (2.2 )
Net exchange gain 1.6 0.3 1.5
Employee benefit expense (0.3 ) (0.3 ) (0.4 )
Net finance income 8 1.3 0.1 0.9
Profit/(loss) before tax 4.9 (16.1 ) (3.1 )
Comprising
- adjusted (loss)/profit before tax 6 (12.5 ) (17.6 ) 5.2
- profit on disposal of assets classified as held for sale 6 0.1 1.5 1.8
- impairment of intangible assets, investment properties and property, plant 6 - - (10.1 )
and equipment
- impairment reversal of investment in associate 6 18.0 - -
- restructuring costs 6 (0.7 ) - -
4.9 (16.1 ) (3.1 )
Taxation 9 (1.5 ) (3.5 ) (12.2 )
Profit/(loss) for the period from continuing operations 3.4 (19.6 ) (15.3)
Profit for the period from discontinued operations 10 0.1 0.6 7.6
Profit/(loss) after tax 3.5 (19.0 ) (7.7 )
Profit/(loss) attributable to:
Owners of Camellia Plc 3.1 (19.9 ) (12.4 )
Non-controlling interests 0.4 0.9 4.7
3.5 (19.0 ) (7.7 )
Earnings/(loss) per share - basic and diluted
From continuing operations 12 108.6 p (742.2) p (724.1) p
From continuing and discontinued operations 12 112.2 p (720.5) p (449.0) p
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2023
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'m £'m £'m
Restated Restated
Profit/(loss) for the period 3.5 (19.0 ) (7.7 )
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 for the financial assets disposed - - 0.1
Corporation tax arising on financial asset disposals before utilisation of - - (0.2 )
losses
Unwind of deferred tax on financial assets - - 0.2
Changes in the fair value of financial assets 1.8 (4.4 ) (2.6 )
Deferred tax movement in relation to fair value adjustments (0.5 ) 1.0 -
Remeasurements of post employment benefit obligations (0.8 ) (2.1 ) (12.8 )
Deferred tax movement in relation to post employment benefit obligations (0.2 ) 0.6 3.6
Corporation tax movement in relation to post employment benefit obligations 0.1 - (0.4 )
0.4 (4.9 ) (12.1 )
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences (25.1 ) 16.6 9.2
Share of other comprehensive income of associates - - 0.1
(25.1 ) 16.6 9.3
Other comprehensive (expense)/income for the period, net of tax (24.7 ) 11.7 (2.8 )
Total comprehensive (expense)/income for the period (21.2 ) (7.3 ) (10.5 )
Total comprehensive (expense)/income attributable to:
Owners of Camellia Plc (15.6 ) (10.2 ) (16.1 )
Non-controlling interests (5.6 ) 2.9 5.4
(21.2 ) (7.3 ) (10.7 )
CONDENSED CONSOLIDATED BALANCE SHEET
at 30 June 2023
30 June 30 June 31 December
2023 2022 2022
Notes £'m £'m £'m
Restated Restated
ASSETS
Non-current assets
Intangible assets 6.2 10.1 6.3
Property, plant and equipment 13 170.2 205.6 184.5
Right-of-use assets 23.2 28.5 26.1
Investment properties 24.4 24.4 25.4
Biological assets 12.1 13.5 14.1
Investments in associates 14 10.3 69.8 70.2
Equity investments at fair value through other
comprehensive income 29.7 24.4 25.7
Money market investments at fair value through
profit or loss 6.9 8.0 7.3
Debt investments at amortised cost 1.1 1.4 1.3
Other investments - heritage assets 8.8 8.8 8.8
Retirement benefit surplus 18 1.4 9.8 0.8
Trade and other receivables 3.1 2.9 3.1
Total non-current assets 297.4 407.2 373.6
Current assets
Inventories 64.4 64.0 60.4
Biological assets 10.6 9.2 10.8
Trade and other receivables 37.9 47.2 67.6
Money market investments at fair value through profit or loss - 0.3 1.3
Debt investments at amortised cost - 1.4 -
Current income tax assets 0.7 4.5 1.1
Cash and cash equivalents (excluding bank overdrafts) 47.0 49.6 49.3
160.6 176.2 190.5
Assets classified as held for sale 15 81.1 5.0 4.6
Total current assets 241.7 181.2 195.1
30 June 30 June 31 December
2023 2022 2022
Notes £'m £'m £'m
Restated Restated
LIABILITIES
Current liabilities
Financial liabilities - borrowings 16 (16.4 ) (8.0 ) (5.1 )
Lease liabilities (2.0 ) (3.1 ) (2.3 )
Trade and other payables (52.2 ) (61.7 ) (59.8 )
Current income tax liabilities (2.3 ) (6.1 ) (4.4)
Employee benefit obligations 18 (0.9 ) (1.2 ) (1.1 )
Provisions 17 (10.8 ) (17.9 ) (10.8 )
(84.6 ) (98.0 ) (83.5 )
Liabilities related to assets classified as held for sale 15 (2.0 ) (2.0 ) (2.0 )
Total current liabilities (86.6 ) (100.0 ) (85.5 )
Net current assets 155.1 81.2 109.6
Total assets less current liabilities 452.5 488.4 483.2
Non-current liabilities
Financial liabilities - borrowings 16 (3.8 ) (4.5 ) (4.4 )
Lease liabilities (17.2 ) (20.8 ) (19.1 )
Deferred tax liabilities (32.9 ) (36.7 ) (37.0 )
Employee benefit obligations 18 (9.9 ) (6.6 ) (8.1 )
Total non-current liabilities (63.8 ) (68.6 ) (68.6 )
Net assets 388.7 419.8 414.6
EQUITY
Called up share capital 0.3 0.3 0.3
Share premium 15.3 15.3 15.3
Reserves 331.9 357.0 350.2
Equity attributable to owners of Camellia Plc 347.5 372.6 365.8
Non-controlling interests 41.2 47.2 48.8
Total equity 388.7 419.8 414.6
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2023
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Notes £'m £'m £'m
Cash (used in)/generated from operations
Cash flows from operating activities 19 (13.5 ) (5.0 ) 2.6
Interest received 2.5 1.1 2.0
Interest paid (1.9) (0.9 ) (2.2 )
Income taxes paid (3.5 ) (4.5 ) (8.3 )
Net cash flow from operating activities (16.4 ) (9.3 ) (5.9 )
Cash flows from investing activities
Purchase of property, plant and equipment (7.1 ) (6.7 ) (14.4 )
Proceeds from sale of non-current assets 0.4 0.2 0.9
Proceeds from sale of assets held for sale 0.8 3.6 4.5
Purchase of heritage assets - - (0.1 )
Additions to investment property - (1.3 ) (2.5 )
Biological assets: non-current - disposals 0.1 0.2 0.8
Proceeds from the disposal of a subsidiary 10 16.1 - -
Cash leaving the Group on disposal of a subsidiary - - (1.6 )
Payment for acquisition of businesses net of cash acquired - (0.8 ) -
Dividends received from associates 0.9 1.9 3.2
Purchase of investments (4.5 ) (0.4 ) (2.9 )
Proceeds from sale of investments 0.5 1.5 8.5
Income from investments 0.4 0.3 0.4
Net cash flow from investing activities 7.6 (1.5 ) (3.2 )
Cash flows from financing activities
Equity dividends paid - (2.8 ) (4.0 )
Dividends paid to non-controlling interests (2.0 ) (4.4 ) (5.3 )
New loans 3.1 0.4 1.4
Loans repaid - (1.2 ) (1.6 )
Payments of lease liabilities (1.2 ) (1.8 ) (2.6 )
Net cash flow from financing activities (0.1 ) (9.8 ) (12.1 )
Net decrease in cash and cash equivalents
from continuing operations (8.9 ) (20.6 ) (21.2 )
Net cash inflow from discontinued operation - 0.3 3.8
Cash and cash equivalents at beginning of period 45.6 59.9 59.9
Exchange (losses)/gains on cash (1.7 ) 2.9 3.1
Cash and cash equivalents at end of period 20 35.0 42.5 45.6
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 30 June 2023
Attributable to the owners of Camellia Plc
Non-
Share Share Treasury Retained Other controlling Total
capital premium shares earnings reserves Total interests equity
Notes £'m £'m £'m £'m £'m £'m £'m £'m
At 1 January 2022 0.3 15.3 (0.4 ) 377.1 (3.7 ) 388.6 48.7 437.3
Adoption of IFRS 17 by associate 2 - - - (3.3 ) - (3.3 ) - (3.3 )
At 1 January 2022 - (restated) 0.3 15.3 (0.4 ) 373.8 (3.7 ) 385.3 48.7 434.0
Loss for the period (restated) - - - (19.9 ) - (19.9 ) 0.9 (19.0 )
Other comprehensive (expense)/income for the period (restated) - - - (1.0 ) 10.7 9.7 2.0 11.7
Transfer of realised gains on disposal of financial assets - - - 0.2 (0.2 ) - - -
Dividends 11 - - - (2.8 ) - (2.8 ) (4.4 ) (7.2 )
Share of associate's other equity movements - - - 0.3 - 0.3 - 0.3
At 30 June 2022 0.3 15.3 (0.4 ) 350.6 6.8 372.6 47.2 419.8
At 1 January 2022 0.3 15.3 (0.4 ) 377.1 (3.7 ) 388.6 48.7 437.3
Adoption of IFRS 17 by associate 2 - - - (3.3 ) - (3.3 ) - (3.3 )
At 1 January 2022 -restated 0.3 15.3 (0.4 ) 373.8 (3.7 ) 385.3 48.7 434.0
Loss for the period (restated) - - - (12.4 ) - (12.4 ) 4.7 (7.7 )
Other comprehensive (expense)/income for the period (restated) - - - (10.4 ) 6.9 (3.5 ) 0.7 (2.8 )
Transfer of realised gains on disposal of financial assets - - - 1.1 (1.1 ) - - -
Dividends 11 - - - (4.0 ) - (4.0 ) (5.3 ) (9.3 )
Share of associate's other equity movements - - - 0.4 - 0.4 - 0.4
At 31 December 2022 0.3 15.3 (0.4 ) 348.5 2.1 365.8 48.8 414.6
Profit for the period - - - 3.1 - 3.1 0.4 3.5
Other comprehensive (expense)/income for the period - - - (1.3 ) (17.4 ) (18.7 ) (6.0 ) (24.7 )
Dividends 11 - - - (2.8 ) - (2.8 ) (2.0 ) (4.8 )
Share of associate's other equity movements - - - 0.1 - 0.1 - 0.1
At 30 June 2023 0.3 15.3 (0.4 ) 347.6 (15.3 ) 347.5 41.2 388.7
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 2023 (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 2022.
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 2022 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 United Kingdom adopted 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 31 August 2023. 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 2022. The Group's previously
recognised associate company, BF&M Limited has adopted IFRS 17 from 1
January 2023, in accordance with this standard, they have restated their
opening balance sheet as at 1 January 2022 and their results for 2022. In
accordance with our accounting policy to use the equity method accounting for
our associate undertakings, the impact of this restatement, has been to
decrease the carrying value of our investment in associates at 1 January 2022
by £3.3 million, with a corresponding reduction in the Group's reserves. The
share of our associates results for the half year ended 30 June 2022 and for
the full year ended 31 December 2022 has increased by £0.1 million and £0.6
million respectively.
3 Going concern
The Directors considered the impact of the strategy and current trading
environment as set out in the Chairman's Statement and operating review 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, we expect our agriculture businesses will continue to operate
broadly as currently. We have assumed that the leisure and food services
markets continue to recover gradually over the course of the next year.
At 30 June 2023, the Group had cash and cash equivalents of £35.0 million
with loans outstanding of £8.2 million. In addition, the Group had undrawn
short-term loans and overdraft facilities of £12.3 million and a portfolio of
liquid investments with a fair market value of £37.7 million.
The Directors have modelled various severe but plausible scenarios using
assumptions including the combined effect of reduced sales volumes for tea
and reduced sales volumes for macadamia. The revenue and operational impact of
such volume reductions across our operations would have a substantially
negative impact on Group profitability. We have also considered the risk of
price reductions for our tea, macadamia, avocado and apple 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. Apples in the United Kingdom and 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 Unallocated Consolidated
Six months Six months Six months Six months
ended ended ended ended
30 June 30 June 30 June 30 June
2023 2022 2023 2022 2023 2022 2023 2022
£'m £'m £'m £'m £'m £'m £'m £'m
Restated Restated
Continuing operations
Revenue
External sales 102.9 105.7 7.1 6.6 0.5 0.5 110.5 112.8
Adjusted trading loss (13.0 ) (9.1 ) (0.1 ) (0.5 ) (5.2 ) (4.0 ) (18.3 ) (13.6 )
Separately disclosed items (0.7 ) - - - - - (0.7 ) -
Trading loss (13.7) (9.1 ) (0.1 ) (0.5 ) (5.2 ) (4.0 ) (19.0 ) (13.6 )
Share of associates' results - - - - 3.2 (4.5 ) 3.2 (4.5 )
Profit on disposal of assets classified as held for sale - - - - 0.1 1.5 0.1 1.5
Impairment reversal of investment in associate - - - - 18.0 - 18.0 -
Profit on disposal and fair value movements on money market investments 0.2 0.1 - - - - 0.2 0.1
Operating profit/(loss) (13.5 ) (9.0 ) (0.1 ) (0.5 ) 16.1 (7.0 ) 2.5 (16.5 )
Comprising
- adjusted operating loss before tax (12.8 ) (9.0 ) (0.1 ) (0.5 ) (2.0 ) (8.5 ) (14.9 ) (18.0 )
- restructuring costs (0.7 ) - - - - - (0.7 ) -
- profit on disposal of assets classified as held for sale - - - - 0.1 1.5 0.1 1.5
- impairment reversal of investment in associate - - - - 18.0 - 18.0 -
(13.5 ) (9.0 ) (0.1 ) (0.5 ) 16.1 (7.0 ) 2.5 (16.5 )
Investment income 1.1 0.3
Net finance income 1.3 0.1
Profit/(loss) before tax 4.9 (16.1 )
Taxation (1.5 ) (3.5 )
Profit/(loss) for the period from continuing operations 3.4 (19.6 )
Profit for the period from discontinued operations 0.1 0.6
Profit/(loss) after tax 3.5 (19.0 )
Agriculture Engineering Unallocated Consolidated
£'m £'m £'m £'m
Restated Restated
Continuing operations
Revenue
External sales 283.0 13.2 1.0 297.2
Adjusted trading profit/(loss) 15.5 (0.8 ) (8.6 ) 6.1
Separately disclosed items - - - -
Trading profit/(loss) 15.5 (0.8 ) (8.6 ) 6.1
Share of associates' results - - (2.5 ) (2.5 )
Profit on disposal of assets classified as held for sale - - 1.8 1.8
Impairment of intangible assets, investment properties and property, plant (10.0 ) - (0.1 ) (10.1 )
and equipment
Profit on disposal of financial assets 0.3 - - 0.3
Operating profit/(loss) 5.8 (0.8 ) (9.4 ) (4.4 )
Comprising
- adjusted operating profit/(loss) before tax 15.8 (0.8 ) (11.1 ) 3.9
- profit on disposal of assets classified as held for sale - 1.8 1.8
- impairment of intangible assets, investment properties and property, plant (10.0 ) - (0.1 ) (10.1 )
and equipment
5.8 (0.8 ) (9.4 ) (4.4 )
Investment income 0.4
Net finance income 0.9
Loss before tax (3.1 )
Taxation (12.2 )
Loss for the period from continuing operations (15.3 )
Profit for the period from discontinued operations 7.6
Loss after tax (7.7 )
6 Adjusted loss
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 'adjusted' and is used by
management to measure and monitor performance.
Six months Six months
ended ended
30 June 30 June
2023 2022
£'m £'m
Operating profit/(loss) 2.5 (16.5 )
Exceptions or items considered non-operational:
Profit on disposal of assets classified as held for sale 0.1 1.5
Restructuring costs (0.7 ) -
Impairment reversal of investment in associate 18.0 -
Underlying operating loss before tax (14.9 ) (18.0 )
Investment income 1.1 0.3
Net finance income 1.3 0.1
Adjusted loss before tax (12.5 ) (17.6 )
The following items have been excluded in arriving at the adjusted measure and
have been separately disclosed:
§ A profit on disposal of assets classified as held for sale of £0.1 million
(2022: six months £1.5 million - year £1.8 million)
§ Restructuring costs at Bardsley England of £0.7 million (2022: six months
£nil - year £nil)
§ Impairment reversal of the Group's investment in BF&M Limited (note 14) of
£18.0 million (2022: six months £nil - year £nil)
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
2023 2022 2022
£'m £'m £'m
Restated Restated
Profit/(loss) before tax 3.4 (4.2 ) (2.1 )
Taxation (0.2 ) (0.3 ) (0.4 )
Profit/(loss) after tax 3.2 (4.5 ) (2.5 )
8 Finance income and costs
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'m £'m £'m
Finance costs - interest payable on loans and bank overdrafts (0.8 ) (0.6 ) (1.3 )
Interest payable on leases (0.3 ) (0.4 ) (0.8 )
Other interest payable (0.1 ) - (0.1 )
Finance costs (1.2 ) (1.0 ) (2.2 )
Finance income - interest income on short-term bank deposits 1.2 1.1 2.0
Net exchange gain on foreign currency balances 1.6 0.3 1.5
Employee benefit expense (0.3 ) (0.3 ) (0.4 )
Net finance income 1.3 0.1 0.9
9 Taxation on profit/(loss) on ordinary activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'m £'m £'m
Current tax
UK corporation tax
UK corporation tax - - -
Double tax relief - - -
Use of losses to shelter capital gain on disposal of financial assets - - (0.2 )
Adjustment in respect of prior years - - -
- - (0.2 )
Foreign tax
Corporation tax 2.5 3.9 9.1
Adjustment in respect of prior years - - -
2.5 3.9 9.1
Total current tax 2.5 3.9 8.9
Deferred tax
Origination and reversal of timing differences
United Kingdom (0.2 ) 1.8 3.7
Overseas deferred tax (0.8 ) (2.2 ) (0.4 )
Tax on profit/(loss) on ordinary activities 1.5 3.5 12.2
Tax on profit/(loss) on ordinary activities for the six months to 30 June 2023
has been calculated on the basis of the estimated annual effective rate for
the year ending 31 December 2023.
10 Discontinued operations
On 16 December 2022, the Group entered into an unconditional agreement to sell
Associated Cold Stores & Transport Limited, which was the Group's Food
Service operation. The disposal, which completed on 10 January 2023, was
effected in order to support the Group's strategy of focussing its investment
activity on its core agriculture operations and for general working capital
purposes. The effective date of the transaction was 26 November 2022.
The prior year figures in the consolidated income statement and the
consolidated cashflow statement have been restated in accordance with IFRS 5
to report the discontinued operations separately from continuing operations.
The results of the discontinued operations, which have been included in the
profit for the period, were as follows:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'m £'m £'m
Revenue - 13.0 23.7
Cost of sales - (10.2 ) (18.4 )
Gross profit - 2.8 5.3
Administrative expenses - (2.2 ) (4.0 )
Profit on disposal of property, plant and equipment - - 0.5
Net finance costs - - (0.1 )
Profit before tax - 0.6 1.7
Profit on disposal of discontinued operations 0.1 - 3.8
Attributable tax credit - - 2.1
Net profit attributable to discontinued operations (attributable to owners of 0.1 0.6 7.6
the Company)
During the period, Associated Cold Stores & Transport Limited contributed
£nil (2022: six months £0.7 million - year £4.0 million) to the Group's net
operating cash flows, paid £nil (2022: six months £0.2 million - year
£0.3 million) in respect of investing activities and paid £nil million
(2022: six months £0.2 million - year £0.4 million) in respect of financing
activities.
The profit in 2022 of £3.8 million arose on the disposal of Associated Cold
Stores & Transport Limited, being the difference between the proceeds of
disposal and the carrying amount of the subsidiary's net assets at the
effective date of disposal. Following the finalisation of the completion
accounts, an additional £0.1 million profit on disposal has been recognised
in 2023.
11 Equity dividends
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'m £'m £'m
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2022 of 102p (2021: 102p) per 2.8 2.8 2.8
share
Interim dividend for the year ended 31 December 2022 of 44p (2021: 44p) per 1.2
share
4.0
Dividends amounting to £0.1 million (2022: 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 2023 of 44p (2022: 44p) per share 1.2 1.2
The proposed interim dividend was approved by the board of Directors on 31
August 2023 and has not been included as a liability in these financial
statements.
12 Earnings/(loss) per share (EPS)
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Loss EPS Loss EPS Loss EPS
£'m Pence £'m Pence £'m Pence
Restated Restated Restated Restated
Attributable to ordinary shareholders - continuing operations 3.0 108.6 (20.5 ) (742.2 ) (20.0 ) (724.1 )
Attributable to ordinary shareholders - continuing and discontinued operations 3.1 112.2 (19.9 ) (720.5 ) (12.4 ) (449.0 )
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 (2022: six months 2,762,000 - year
2,762,000), which excludes 62,500 (2022: six months 62,500 - year 62,500)
shares held by the Group as treasury shares.
13 Property, plant and equipment
During the six months ended 30 June 2023 the Group acquired assets with a cost
of £6.4 million (2022: six months £7.0 million - year £14.8 million).
Assets with a carrying amount of £0.2 million were disposed of during the six
months ended 30 June 2023 (2022: six months £0.3 million - year £1.1
million). Assets with a carrying amount of £nil million were classified as
held for sale as at 30 June 2023 (2022: six months £0.5 million - year £0.7
million) and assets with a net carrying value of £1.0 million were
reclassified from and to investment properties.
14 Investments in associates
30 June 30 June 31 December
2023 2022 2022
£'m £'m £'m
Restated Restated
At 1 January 99.8 98.9 98.9
Adoption of IFRS 17 (note 2) - (3.3 ) (3.3 )
At 1 January restated 99.8 95.6 95.6
Exchange differences (3.9 ) 9.6 9.4
Share of profit/(loss) (note 7) 3.2 (4.5 ) (2.5 )
Dividends (1.0 ) (1.9 ) (3.2 )
Other equity movements 0.1 0.3 0.5
Reclassification to held for sale (87.9 ) - -
At end of period 10.3 99.1 99.8
Provision for diminution in value
At 1 January 29.6 26.3 26.3
Exchange differences (0.9 ) 3.0 3.3
Reversal of impairment (18.0 ) - -
Reclassification to held for sale (10.7 ) - -
At end of period - 29.3 29.6
Net book value at end of period 10.3 69.8 70.2
On 6 June 2023, the Group entered into an agreement to sell it's entire
holding in BF&M Limited, to Bermuda Life Insurance Company Limited,
subject to regulatory and tax approvals. Net proceeds are estimated to be
approximately US$95.8 million and the transaction is expected in be completed
in Q4 2023. As a result of this, £18.0 million of impairments previously
provided for have been reversed and credited to the income statement. This
investment has now been reclassified as held for sale and is no longer equity
accounted.
15 Assets classified as held for sale/Liabilities related to
assets classified as held for sale
During the period the following assets were transferred to held for sale:
30 June 30 June 31 December
2023 2022 2022
£'m £'m £'m
At 1 January 4.6 6.6 6.6
Reclassified from property, plant and equipment - 0.5 0.7
Reclassified from investments in associates (note 14) 77.2 - -
81.8 7.1 7.3
Disposals during period (0.7 ) (2.1 ) (2.7 )
At end of period 81.1 5.0 4.6
Liabilities related to assets classified as held for sale at end of
the period:
Reclassified from lease liabilities 2.0 2.0 2.0
During the period, properties owned by Bardsley England and a small number of
the Group's heritage assets and other items of art have been sold, realising
cash proceeds of £0.7 million.
16 Borrowings
Borrowings (current and non-current) include loans of £8.2 million (loans
2022: six months £5.4 million - year £5.8 million) and bank overdrafts of
£12.0 million (2022: six months £7.1 million - year £3.7 million). The
following loan movements occurred during the six months ended 30 June 2023:
£'m
Balance at 1 January 2023 5.8
Exchange differences (0.7 )
New loans 3.1
Balance at 30 June 2023 8.2
17 Provisions
Wages and Legal
salaries claims Others Total
£'m £'m £'m £'m
At 1 January 2022 9.1 1.2 1.5 11.8
Exchange differences 0.4 - - 0.4
Utilised in the period (0.8) (0.1 ) (0.1 ) (1.0 )
Provided in the period 8.3 - - 8.3
Unused amounts reversed in period (1.6 ) - - (1.6 )
At 30 June 2022 15.4 1.1 1.4 17.9
At 1 January 2022 9.1 1.2 1.5 11.8
Utilised in the period (6.7 ) (0.3 ) (0.1 ) (7.1 )
Provided in the period 8.5 - - 8.5
Subsidiary leaving the group - - (0.5 ) (0.5 )
Unused amounts reversed in period (1.8 ) - (0.1 ) (1.9 )
At 31 December 2022 9.1 0.9 0.8 10.8
Exchange differences (0.5 ) (0.1 ) - (0.6 )
Utilised in the period (1.7 ) (0.2 ) (0.1 ) (2.0 )
Provided in the period 3.1 - - 3.1
Unused amounts reversed in period (0.5 ) - - (0.5 )
At 30 June 2023 9.5 0.6 0.7 10.8
Current:
At 30 June 2023 9.5 0.6 0.7 10.8
At 31 December 2022 9.1 0.9 0.8 10.8
At 30 June 2022 15.4 1.1 1.4 17.9
The wages and salaries provisions are in respect of ongoing wage and bonus
negotiations in India, Kenya and Bangladesh.
Legal claims relate to the cost of the defence of the litigation concerning
our East African operations, including settlements and the expected cost of
progressive measures.
Others relate to provisions for claims and dilapidations.
18 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 2023 from the
valuations as at 31 December 2022 by the actuaries and the movements have been
reflected in this interim statement.
An actuarial loss of £0.8 million was realised in the period in relation to
the Group's employee obligations of which £1.0 million related to the UK
defined benefit pension scheme. In relation to the UK defined benefit pension
scheme a loss of £6.4 million was realised in relation to the scheme assets
and a gain of £5.4 million was realised in relation to changes in the
underlying actuarial assumptions. The assumed discount rate has increased to
5.25% (31 December 2022: 4.80%), the assumed rate of inflation (CPI) has
increased to 2.40% (31 December 2022: 2.35%). There has been no change in the
mortality assumptions used.
19 Reconciliation of profit/(loss) to cash flow
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'m £'m £'m
Restated Restated
Profit/(loss) from operations 2.5 (16.5 ) (4.4 )
Share of associates' results (3.2 ) 4.5 2.5
Depreciation and amortisation 5.7 5.8 12.2
Depreciation of right-of-use assets 0.9 1.4 2.2
(Impairment reversal)/impairment of assets (18.0 ) - 10.1
Realised movements on biological assets - non-current (0.1 ) - (1.5 )
Money market investments at fair value through profit or loss - gain (0.2 ) (0.1 ) (0.3 )
Profit on disposal of non-current assets (0.1 ) - (0.1 )
Profit on disposal of assets classified as held for sale (0.1 ) (1.5 ) (1.8 )
Profit on disposal of financial assets - (0.1 ) (0.3 )
Movements in provisions 0.6 5.7 (0.7 )
Increase in inventories (9.8 ) (11.5 ) (9.8 )
Increase in biological assets (0.5 ) (0.4 ) (2.3 )
Decrease/(increase) in trade and other receivables 8.0 5.0 (6.5 )
Increase in trade and other payables 0.8 2.5 3.3
Difference between employee benefit obligations funding contributions and - 0.2 -
cost charged
Cash (used in)/generated from operations (13.5 ) (5.0 ) 2.6
20 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
2023 2022 2022
£'m £'m £'m
Cash and cash equivalents 47.0 49.6 49.3
Overdrafts repayable on demand (included in current liabilities - borrowings) (12.0 ) (7.1 ) (3.7 )
35.0 42.5 45.6
21 Contingent liabilities
In Malawi the Revenue Authority (MRA) indicated in 2021 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 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 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 £4.4 million.
In India, assessments have been received for excise duties of £0.2 million,
sales and entry tax of £0.9 million and of £0.8 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 £1.2 million.
In the UK, HM Revenue and Customs in 2022 issued a VAT assessment based on the
application of the partial exemption rules which could result in a potential a
liability of £1.2 million. An amount of £0.2 million has been provided based
on external advice received. In accordance with legal requirements £0.7
million was paid in 2023 in relation to this assessment and has been included
in administrative expenses in the income statement. This assessment is being
contested.
The Group operates in certain countries where its operations are potentially
subject to a number of legal and tax claims. When required, appropriate
provisions are made for the expected cost of such claims.
22 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.
23 Subsequent events
There were no adjusting post balance sheet events.
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