Interim Results

Camellia PLC 28 September 2000 Camellia Plc Chairman's Statement I am pleased to report that the Group's results for the six months to 30th June 2000 are better than those for the same period last year. Pre-tax profit amounted to £3,714,000, compared to 1999's interim loss of £595,000. These improved results are mainly attributable to increased profits from Duncan Lawrie Limited, Lumley Cazalet Limited and Linton Park Plc, and the non-recurrence of last year's Scheme of Arrangement expenses. Climatic conditions affecting our agricultural and horticultural activities have nowhere been ideal and Kenya, in particular, has had to contend with extremes of frost and drought, whilst in Brazil crop losses because of frost have been a temporary set-back to the recovery programme of our farming operation. Average market prices to date for our Indian and Bangladesh teas have been disappointing, but our crops in both areas are running well ahead of last year. The board has declared an interim dividend for 2000 of 20p per ordinary share payable on 7th November 2000 to shareholders on the register on 13th October 2000. United Kingdom Walter Duncan & Goodricke Limited Duncan Lawrie has had a good first half-year. Funds under management have increased significantly and there has been an excellent performance from the Duncan Lawrie Smaller Companies Fund. On the banking side, a number of new customers have been acquired and the Gold Card business is growing. A new personal financial planning department has been set up which is already earning its keep. In WDG Properties Limited, there have been two major rent reviews during the first half-year and there is another in prospect. Fine Art In the six months ended 30th June, thanks to well-timed initiatives on the part of management, Lumley Cazalet benefited from the buoyant art market and achieved record sales and profits. Expectations for the full year envisage further improvement, although it is unlikely that inventory of the quality that has been sold will be easily replaced. During the same period, JPL Fine Arts Limited made modest disposals and has provided a further reserve against the carrying value of the remaining inventory. More recently, further substantial disposals have been made so as to reduce the capital employed in this subsidiary. Linton Park Linton Park's pre-tax profit for the first six months amounted to £6,724,000 compared to £3,583,000 for the same period last year. The following is an extract from the Chairman's Statement dated 19th September 2000: 'Profits for the six months ended 30th June 2000 show a useful increase over the first six months of the previous year. A significant proportion of this increase is attributable to better results from our associate company, Siegfried AG, who experienced buoyant trading conditions in Switzerland, which more than compensated for reduced sales in the USA. Restructuring in the USA will continue in the second half of 2000 and our share of these additional costs could be up to £2,600,000. The results of our tea operations in Kenya were hit by a serious frost at the end of January, followed by one of the worst droughts experienced in the last fifty years. Although the tea districts have now received some rain, the country as a whole is suffering from prolonged periods without electricity due to the lack of hydro-electric power. Tea prices have, however, responded upwards as a result of the shortage of tea in the first six months of the year and this has also helped our operations in Malawi, where normal weather conditions have led to satisfactory tea crops. Despite the lack of rain in Kenya, Kakuzi are enjoying a large early crop of coffee as a result of their irrigation infrastructure. Coffee prices, however, remain at low levels and there appear to be no immediate prospects for an increase. The newly planted avocadoes are showing encouraging results. Our grape operations in South Africa and Chile performed in accordance with our expectations, although the recent torrential rain in Chile led to significant erosion on parts of our farm. Our edible nut operation in California is carrying good crops of almonds and pistachios and the prospects for the year are more encouraging than in 1999. The wine grape harvest in Australia showed an increase on last year and prices have been satisfactory. The international citrus market is in turmoil at present with over supply causing a significant fall in prices. Yandilla Park's contribution to the results for the half year is considerably decreased on the previous year and prospects for the remainder of the year are uncertain. In the UK our engineering activities are experiencing a higher order intake although the volume of work available is still limited in some sectors. It is disappointing to report that Abbey Metal Finishing Company Limited experienced a serious fire at the end of June. It is expected that any losses will be fully covered by insurance. Although limited production has recommenced, it is unlikely that the company will be back in full operation before March 2001. Associated Cold Stores & Transport Limited continue to produce good results, with higher profits being earned from their increased cold storage capacity. Highland Fuels Limited are experiencing the usual difficulties accompanying an escalating oil price with margins continually under pressure. Our other UK food distribution and chemical businesses achieved satisfactory results. Unusual weather conditions and erratic market prices make it impossible to predict the likely outcome for the full year.' British Mohair Holdings Plc On 7th September 2000, Camellia made an offer of 160p per share in cash for the entire share capital of British Mohair Holdings Plc ('BMH') other than the shares already owned by the Camellia Group. The purpose of this offer, which was recommended by the BMH Board, was to protect the underlying value of Camellia's investment in BMH, whilst providing improved value for other BMH shareholders when compared to an earlier offer by Browallia International BV ('Browallia') amounting to 150p per share. Subsequently, however, Camellia agreed to accept an offer from Browallia of 163p per share for its entire shareholding, and that transaction, the proceeds of which amounted to £6.44 million, was completed and announced on 26th September 2000. The sale proceeds will be used for the redemption of debt and appropriate further investments. The net asset value of BMH as at 30th June 2000 was 200.44p per share, and the book loss arising from the above transaction amounting to about £1.7m will be included as an exceptional item in our accounts for the year 2000. India Production by the Group's tea gardens in North India is currently some 14% ahead of 1999. Particularly in recent weeks, prices have experienced a sharp downturn except for the highest quality teas and this may reflect lower domestic consumption coupled with imports of plain tea. An extensive generic promotion campaign is being launched by the industry. As far as our estates are concerned, costs are being carefully controlled and our policy of improving quality remains a priority. Bangladesh Favourable weather conditions have enabled our Longbourne tea estates to increase their production to date by 23% over 1999. Tea prices, on the other hand, have been averaging below even those of last year, but is is hoped that the export market may respond to the 6% devaluation of the Taka which took place last month. Both the United Leasing Company Limited and the United Insurance Company Limited are showing increased profits at the half-year stage. Directors Mr. S.K. Bhasin retired as a director on 29th June 2000. Mr. D.A. Reeves and Mr. A.S.M.O. Subhan became directors of Lawrie Group Plc on 1st July 2000. Prospects 2000 Shareholders know that the Group's interim figures may not be a reliable indication of the full year's results, which will quite largely be determined by tea production and the behaviour of our various markets during the next few months. Nevertheless, the results achieved thus far encourage the Board to be reasonably confident about the outlook for the current year. H.K. FITZGERALD Chairman Consolidated Profit and Loss Account for the six months ended 30th June 2000 ----------------------------------------------------------------------------- Restated Six months Six months Year ended ended ended 30th June 30th June 31st December 2000 1999 1999 Notes £'000 £'000 £'000 Turnover - continuing operations 1 119,321 108,816 233,689 ======= ======= ======= Operating profit - continuing operations 1 2,878 2,203 16,822 Share of results of associates 2,959 206 2,106 ----- ----- ------ 5,837 2,409 18,928 Investment income 474 417 837 Profit on disposal of fixed asset investments 345 36 66 Profit on disposal of subsidiary undertaking - - 268 Expenses of Scheme of Arrangement - (632) (889) ----- ----- ------ 6,656 2,230 19,210 Net interest payable and similar charges 2 2,942 2,825 5,940 ----- ----- ------ Profit/(loss) on ordinary activities before taxation 3,714 (595) 13,270 Taxation on profit on ordinary activities 3 2,332 1,235 4,636 ----- ----- ------ Profit/loss) on ordinary activities after taxation 1,382 (1,830) 8,634 Interest of minority shareholders 838 427 2,924 ----- ----- ----- Attributable profit/(loss) for the period 544 (2,257) 5,710 ----- ----- ----- Dividends 4 562 - 2,266 Earnings/(loss) per share 5 19.31p (79.56)p 201.33p Consolidated Balance Sheet at 30th June 2000 ----------------------------------------------------------------------------- 30th June 30th June 31st December 2000 1999 1999 £'000 £'000 £'000 Fixed assets 240,299 229,188 231,259 Current assets Stocks 30,970 29,838 32,052 Debtors 66,742 62,021 60,975 Investments 50 112 122 Cash at banks and in hand (note 6) 140,234 149,514 140,900 ------- ------- ------- 237,996 241,485 234,049 Creditors: amounts falling due within one year 208,772 212,996 200,505 ------- ------- ------- Net Current Assets 29,224 28,489 33,544 ------- ------- ------- Total assets less current liabilities 269,523 257,677 264,803 Creditors: amounts falling due after more than one year (39,748) (36,699) (39,733) Provisions for liabilities and charges (1,433) (1,821) (1,468) ------- ------- ------- 228,342 219,157 223,602 ======= ======= ======= Capital and reserves Called up share capital 281 283 283 Reserves 174,243 166,051 169,949 ------- ------- ------- Equity shareholders' funds 174,524 166,334 170,232 Minority shareholders' interest 53,818 52,823 53,370 ------- ------- ------- 228,342 219,157 223,602 ======= ======= ======= Consolidated Cash Flow Statement for the six months ended 30th June 2000 ----------------------------------------------------------------------------- Six months Six months Year ended ended ended 30th June 30th June 31st December 2000 1999 1999 £'000 £'000 £'000 Net cash flow from operating activities (note 7) 5,547 8,787 28,216 Expenses of Scheme of Arrangement - (632) (889) Dividends received from associates 855 817 846 Return on investments and servicing of finance (2,443) (2,639) (7,011) Taxation paid (2,695) (3,377) (5,705) Capital expenditure and financial investment (5,341) (6,858) (14,527) Acquisitions and disposals (380) (733) (1,530) Equity dividends paid - - (1,198) ----- ----- ----- Cash outflow before financing (4,457) (4,635) (1,798) Financing New loans 7,326 4,026 8,607 Loan and finance lease payments (4,138) (3,363) (6,617) Purchase of own shares (507) - (143) ----- ----- ----- (Decrease)/increase in cash in the period (1,776) (3,972) 49 ===== ===== ===== Statement of Total Recognised Gains and Losses for the six months ended 30th June 2000 ----------------------------------------------------------------------------- Six months Six months Year ended ended ended 30th June 30th June 31st December 2000 1999 1999 £'000 £'000 £'000 Attributable profit/(loss) for the period 544 (2,257) 5,710 Exchange differences 4,817 (520) (4,102) Unrealised surplus on revaluation of tangible fixed assets - 638 2,560 ----- ----- ----- Total recognised gains and losses for the period 5,361 (2,139) 4,168 ===== ===== ===== Reconciliation of Movement in Shareholders' Funds for the six months ended 30th June 2000 ----------------------------------------------------------------------------- Six months Six months Year ended ended ended 30th June 30th June 31st December 2000 1999 1999 £'000 £'000 £'000 Attributable profit/(loss) for the period 544 (2,257) 5,710 Dividends (562) - (2,266) Exchange differences 4,817 (520) (4,102) Purchase of own shares (507) - (143) Surplus on revaluation of tangible fixed assets - 638 2,560 ------- ------- ------- Net addition/(reduction) in shareholders' funds 4,292 (2,139) 1,759 Opening shareholders' funds 170,232 168,473 168,473 ------- ------- ------- Closing shareholders' funds 174,524 166,334 170,232 ======= ======= ======= Notes to the Accounts ------------------------------------------------------------------------------ 1 Analysis of turnover and operating profit Six months Six months Year ended ended ended 30th June 30th June 31st December 2000 1999 1999 £'000 £'000 £'000 Turnover By activity Agriculture and horticulture 43,369 43,575 97,114 Trading and agency 42,973 35,581 74,848 Food storage and distribution 22,570 21,357 44,907 Engineering 6,424 6,412 12,574 Fine art trading and philately 2,949 972 2,506 Property leasing 999 858 1,714 Central management and miscellaneous 37 61 26 ------- ------- ------- 119,321 108,816 233,689 ======= ======= ======= By country of origin United Kingdom 70,524 60,153 126,287 Continental Europe 4,953 4,671 9,495 India 11,179 13,358 35,166 Kenya 10,975 9,615 21,150 Malawi 7,148 6,050 10,136 Bangladesh 3,395 3,232 7,143 North America 248 249 508 South America and Bermuda 1,147 769 1,151 Australia 8,120 9,392 21,161 South Africa 1,632 1,327 1,492 ------- ------- ------- 119,321 108,816 233,689 ======= ======= ======= Operating Profit By activity Agriculture and horticulture (768) 1,063 13,691 Trading and agency 823 828 417 Food storage and distribution 2,157 1,969 4,563 Engineering 433 455 824 Fine art trading and philately 1,519 138 635 Property leasing 890 723 1,639 Central management and miscellaneous (3,031) (3,074) (5,324) ----- ----- ------ 2,023 2,102 16,445 Banking 856 115 406 Less: Net interest from group companies (1) (14) (29) ----- ----- ------ 2,878 2,203 16,822 Associated undertakings Agriculture and horticulture (113) (116) 36 Textile and other manufacturing 93 (210) (750) Insurance and leasing 411 377 858 Chemical and pharmaceutical 2,568 155 1,962 ----- ----- ------ 5,837 2,409 18,928 ===== ===== ====== By country of origin United Kingdom 3,737 1,223 3,503 Continental Europe 65 25 143 India (4,174) (2,036) 5,268 Kenya 1,824 1,515 4,263 Malawi 2,653 2,141 1,866 Bangladesh (1,061) (716) 848 North America 31 54 (286) South America and Bermuda (540) (569) (1,058) Australia 127 601 2,349 South Africa 216 (35) (74) ----- ----- ------ 2,878 2,203 16,822 ===== ===== ====== 2 Net interest payable includes £324,000 (1999 six months: £202,000 - year: £506,000) in respect of the Group's share of associated undertakings' net interest. 3 Taxation includes overseas taxation of £1,410,000 (1999 six months: £1,447,000 - year: £5,055,000) and share of associated undertakings' taxation charge of £205,000 (1999 six months: credit £203,000 - year: credit £396,000). 4 Dividends Six months Six months Year ended ended ended 30th June 30th June 31st December 2000 1999 1999 £'000 £'000 £'000 Interim of 20p per share (1999: 19p) 562 - 539 Final for 1999 of 61p per share - - 1,727 --- --- ----- 562 - 2,266 --- --- ----- The interim dividend for 1999 of £539,000 was declared on 12th October 1999, after the Scheme of Arrangement became effective. 5 The calculation of earnings/(loss) per share is based on attributable profit/(loss) divided by the weighted average of ordinary shares in issue which was 2,817,611 (1999 six months: 2,836,855 - year: 2,836,188). 6 Included in cash at banks and in hand of £140,234,000 (1999 six months: £149,514,000 - year: £140,900,000) are cash and short-term funds, time deposits with banks and building societies and certificates of deposit amounting to £132,504,000 (1999 six months: £138,735,000 - year: £127,477,000), which are held by banking subsidiaries and which are an integral part of the banking operations of the Group. 7 Reconciliation of operating profit to net cash flow from operating activities Six months Six months Year ended ended ended 30th June 30th June 31st December 2000 1999 1999 £'000 £'000 £'000 Operating profit 2,878 2,203 16,822 Depreciation 4,410 4,159 8,497 Amortisation of goodwill (36) (30) (175) Profit on sale of fixed assets (251) (317) (263) Decrease/(increase) in working capital 3,542 10,031 (300) Net (increase)/decrease in funds of banking subsidiaries (5,027) (7,185) 4,074 Currency adjustment 31 (74) (439) ----- ----- ------ 5,547 8,787 28,216 ===== ===== ====== 8 Reconciliation of net cash flow to movements in net debt Six months Six months Year ended ended ended 30th June 30th June 31st December 2000 1999 1999 £'000 £'000 £'000 (Decrease)/increase in cash in the period (1,776) (3,972) 49 Cash inflow from increase in debt and financing (3,188) (663) (1,990) ----- ----- ----- Change in net debt resulting from cash flows (4,964) (4,635) (1,941) New finance leases - - (184) Translation differences (389) 429 1,110 ----- ----- ----- Change in net debt in the period (5,353) (4,206) (1,015) Net debt at beginning of period (51,991) (50,976) (50,976) ------- ------ ------ Net debt at end of period (57,344) (55,182) (51,991) ======= ====== ====== 9 The profit and loss account to 30th June 1999 has been restated using merger accounting following the implementation of the Scheme of Arrangement, whereby Lawrie Group Plc became a 100 per cent subsidiary of Camellia Plc during 1999. These figures have also been amended to include the share of the results of British Mohair Holdings Plc to 30th June 1999, which were not available in time for publication of Camellia's interim results. 10 The accounts to 30th June 2000 have been prepared on the basis of the accounting policies set out in the financial statements for the year ended 31st December 1999. The six months figures are unaudited and have not been reviewed by the company's auditors. The figures for the year ended 31st December 1999 are an abridged statement from the Group's accounts which have been delivered to the Registrar of Companies. The Auditor's Report on these accounts was unqualified. P.E. HILL Company Secretary 28th September 2000

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