Preliminary announcement

Camellia PLC 24 April 2008 Camellia Plc Preliminary results for year ended 31 December 2007 Highlights from the results:- Year ended Year ended 31 December 31 December 2007 2006 £'000 £'000 Revenue 161,936 160,552 Profit before tax 30,651 19,982 Profit for the year 27,446 15,174 Earnings per share 910.8 p 464.2 p Dividends 92 p 90 p Chairman's statement The profit before tax for 2007 amounted to £30.65 million and compares with the previous year of £19.98 million. The profit for 2007 includes a number of exceptional items, the larger being the profit of £4.80 million on the disposal of our shareholding in Getaz Romang SA and the sale of a surplus London property resulting in a profit of £1.68 million. The profit consolidated in respect of our interest in Siegfried Holding AG also includes exceptional items amounting to £3.68 million. The underlying trading profit of the group is less than that of the previous year, reflecting the weakness of the US dollar and the costs of integrating new businesses within Duncan Lawrie. Dividend The board is recommending a final dividend of 72p per share, which, together with the interim dividend already paid of 20p per share, brings the total distribution for the year to 92p per share compared with 90p per share in respect of 2006. Agriculture and horticulture Tea India Tea production in India amounted to 33.3m kilos, an increase of nearly 9% over the previous year. Weather conditions were reasonably favourable and prices were comparable to the previous year. The market for orthodox tea remained firm. The programme of upgrading factories continues and results have so far been encouraging and fully justify the capital investment. Political disruption in Assam and parts of West Bengal make life difficult for management. Bangladesh Tea production in Bangladesh was the same as for 2006, which is disappointing, as we experienced a major drought at the beginning of that year. Tea prices reduced during the year by 13% resulting in a reduction of profitability. The programme for increasing production and quality continues. The political situation remains quiet and it is expected that elections will be held towards the end of 2008. Africa Both Kenya and Malawi produced excellent crops in 2007. The previous year was, however, impacted by a serious drought in Kenya. Prices drifted downwards during the year but due to the increased production, profitability was satisfactory. The comparatively high cost of labour remains a concern. Tea prices increased substantially at the beginning of 2008 partly as a result of the tense political situation in Kenya. However, an extended period of dry weather resulting in low production seems to be an equally valid reason for the increase in prices, which have in any event recently moderated. The phased sale by Kakuzi of the Siret Tea Company to members of the local community received Presidential Consent in September 2007 and the initial part of this transaction has been implemented. At the time of writing the political impasse regarding the Presidential elections has been resolved by a power sharing agreement. It is to be hoped that this agreement can be fully implemented without further conflict and it is encouraging that, after prolonged negotiations, a new cabinet has been appointed. Our tea estates are operating normally although a small number of our employees were evacuated at the time of the greatest tension. None of our personnel were injured and damage to property was very limited. The logistical problems of moving tea from Malawi have improved. However, there is presently heavy congestion in the Port of Mombasa mainly as a result of delays in moving goods through Mombasa to surrounding countries. Edible nuts 2007 was an 'off' year for pistachio production in California but nonetheless the final output exceeded the budgeted expectation. Macadamia production in Malawi exceeded that in 2006 but in South Africa production declined. Prices continue at low levels but we remain confident of the long term prospects for this crop. Macadamia planting at Kakuzi in Kenya commenced during the year. Other horticulture Kakuzi's gradually maturing avocado orchards in Kenya improved their production and prices were approximately 20% higher than in 2006 resulting in a satisfactory profit. The new packhouse continued to perform well and is currently being expanded to cater for the projected increase in production. Rubber production in Bangladesh increased as a result of maturing plantations and prices increased by approximately 8%. New areas of rubber are being established and the prospects for this crop remain encouraging. In Brazil we benefited from good maize and soya crops with firm prices. Our timber operations also showed good results although we are now entering a period of three years when no timber will be harvested. Our citrus operations in California produced good results with higher production and firm prices. We were unaffected by inclement weather in early 2008 and the prospects for this crop remain encouraging. In South Africa our wine grape harvest was below the previous year due to the removal of vines that had come to the end of their useful productive life. Replanting of these and additional areas has commenced. Table grape production in Chile improved and prices in dollar terms also showed an increase. However, the Chilean currency has appreciated substantially against the US dollar and this gives cause for concern. Food storage and distribution Our food storage and distribution operations in the UK continue to show an improving trend. Substantial reorganisation costs were incurred in 2007 and this should hopefully put the company in a position to make profits from 2008. The cold storage and transport market remains very competitive and increased energy costs remain a concern. The progress made by our two food distribution companies in The Netherlands in 2006 continued into 2007. Engineering It is pleasing to report that our engineering subsidiaries again increased their overall profitability in 2007. Our operations remain busy particularly in the North Sea oil and gas sectors and in the aerospace markets. There remains a distinct shortage of skilled operatives in the engineering sector and this is causing particular problems for our operations both in Aberdeen and Lowestoft. The local cost of labour in Aberdeen continues to escalate and some projects are being diverted to other production areas as Aberdeen has become just too expensive. After many false starts we have at last received planning consent for the development of our galvanising operation at Great Yarmouth. It is hoped that this plant will be operational towards the latter part of 2008. Banking and financial services Duncan Lawrie's profits for 2007 were below those for the previous year. This is principally as a result of additional expenditure in anticipation of the proposed integration of the three operating companies in 2008. The consolidation of the operating subsidiaries will continue throughout 2008 and further expenditure will have to be incurred particularly in respect of premises and IT costs. Duncan Lawrie has no exposure to sub-prime mortgages but the fall in stock market values will have an adverse impact on its investment management fees. Pharmaceuticals The Siegfried Group's primary focus for 2007 was in the development, scale-up and production of active pharmaceutical ingredients and the development and production of complex generics, including those based on inhalation technology in the field of asthma. During the year Siegfried disposed of its Sidroga Division and also its Biologics subsidiary based in Germany. Work has commenced in Zofingen on a new laboratory building which will greatly assist Siegfried in increasing its capability in the pharmaceutical research industry. Other associated undertakings and investments The profitability of United Leasing in Bangladesh was comparable to the previous year. Also in Bangladesh, the profit of United Insurance was reduced on account of a lower contribution from its subsidiary, Surmah Valley Tea Company due to reduced tea prices. The share capital of United Insurance has been increased to comply with government requirements and further increases may be required in due course. BF&M Limited, a Bermudian insurance company, is now treated as an associate company and has recently announced net earnings for the year of 27.3 million Bermudian dollars, a record for the company. All insurance and non insurance lines of business recorded excellent results. The diversification into other countries in lines of business in which they have expertise has opened up new avenues for profitability in future years. Our other investments in Bermuda generally enjoyed another successful year. Development The tea factory development programme in India will continue over the next few years. Kakuzi in Kenya is presently finalising a new development plan which will encompass all the land originally planted to coffee. Our farm in Brazil is expanding its centre pivot irrigation operations and in Chile we have recently opened a new winery for the processing of our own grapes. The success of these developments and indeed our operations generally are being considerably affected by the declining value of the US dollar. Whilst the value of our exports in US dollar is reducing when translated into local currency, the cost of labour, power and fertilisers continues to increase. Pensions During 2007 a number of changes were made to the three UK final salary schemes, including the closure of one scheme to future accrual. Each of these schemes has been closed to new entrants since November 2006. Alternative defined contribution arrangements have been put into place. Management of the liabilities of these schemes will remain a concern particularly against the background of the recent volatility in stock market values and bond pricing. Staff My thanks are due to our staff throughout all the countries in which we operate for their invaluable contribution to another successful year. For those that may not have had the opportunity to read my 2007 interim statement, I repeat with great sadness that our Chairman Emeritus, Mr Keith FitzGerald passed away in September last year. Keith's contribution to the success of the Camellia Group was immeasurable and he will be greatly missed by all his friends and colleagues. M C Perkins Chairman 24 April 2008 Consolidated income statement for the year ended 31 December 2007 2007 2006 Notes £'000 £'000 Revenue 2 161,936 160,552 Cost of sales (107,497) (106,239) ----------- ----------- Gross profit 54,439 54,313 Other operating income 1,631 1,657 Distribution costs (9,665) (8,987) Administrative expenses (37,261) (36,141) ----------- ----------- Trading profit 2 9,144 10,842 Share of associates' results 3 10,568 4,932 Profit on disposal of non-current assets 4 2,029 929 Profit on disposal of non-current assets held for sale 5 327 952 Profit on disposal of available-for-sale investments 6 5,259 364 Profit on part disposal of a subsidiary 7 170 - Gain arising from changes in fair value of biological assets 2,770 1,176 ----------- ----------- Profit from operations 30,267 19,195 Investment income 867 1,606 Finance income 8 701 709 Finance costs 8 (1,921) (2,544) Pension schemes' net financing income 8 737 1,016 ----------- ----------- Net finance costs 8 (483) (819) ----------- ----------- Profit before tax 30,651 19,982 Taxation 9 (3,205) (4,808) ----------- ----------- Profit for the year 27,446 15,174 =========== =========== Profit attributable to minority interests 2,129 2,271 Profit attributable to equity shareholders 25,317 12,903 ----------- ----------- 27,446 15,174 =========== =========== Earnings per share - basic and diluted 11 910.8 p 464.2 p Consolidated balance sheet at 31 December 2007 2007 2006 £'000 £'000 Non-current assets Intangible assets 8,246 7,865 Property, plant and equipment 76,233 76,257 Biological assets 80,633 75,553 Prepaid operating leases 982 969 Investments in associates 90,367 63,672 Deferred tax assets 1,356 1,344 Other investments 41,186 55,466 Retirement benefit surplus 5,766 3,585 Trade and other receivables 634 526 ----------- ----------- Total non-current assets 305,403 285,237 ----------- ----------- Current assets Inventories 20,137 19,067 Trade and other receivables 67,893 52,416 Current income tax assets 1,616 1,786 Cash and cash equivalents 235,612 210,560 ----------- ----------- 325,258 283,829 Non-current assets classified as held for sale - 167 ----------- ----------- Total current assets 325,258 283,996 ----------- ----------- Current liabilities Borrowings (14,771) (16,688) Trade and other payables (275,913) (235,008) Current income tax liabilities (1,786) (2,488) Other employee benefit obligations (169) (142) Provisions (123) (58) ----------- ----------- Total current liabilities (292,762) (254,384) ----------- ----------- Net current assets 32,496 29,612 ----------- ----------- Total assets less current liabilities 337,899 314,849 ----------- ----------- Non-current liabilities Borrowings (11,797) (14,951) Deferred tax liabilities (26,719) (25,161) Retirement benefit obligations (10,608) (17,781) Other employee benefit obligations (1,293) (1,163) Other non-current liabilities (341) (417) Provisions - (112) ----------- ----------- Total non-current liabilities (50,758) (59,585) ----------- ----------- Net assets 287,141 255,264 =========== =========== Equity Called up share capital 284 284 Reserves 265,987 235,677 ----------- ----------- Shareholders' funds 266,271 235,961 Minority interests 20,870 19,303 ----------- ----------- Total equity 287,141 255,264 =========== =========== Consolidated cash flow statement for the year ended 31 December 2007 2007 2006 Notes £'000 £'000 Cash generated from operations Cash flows from operating activities 14 14,171 9,235 Interest paid (2,271) (2,857) Income taxes paid (3,442) (3,416) Interest received 697 665 Dividends received from associates 2,252 1,835 ----------- ----------- Net cash flow from operating activities 11,407 5,462 Cash flows from investing activities Purchase of intangible assets (208) (237) Purchase of property, plant and equipment (6,953) (8,657) Proceeds from sale of non-current assets 2,948 2,564 Proceeds from sale of non-current assets held for sale 489 1,634 Part disposal of a subsidiary 400 - Acquisition of subsidiary (net of cash acquired) (549) (3,670) Purchase of minority interests (193) - Minority share subscription - 541 Purchase of shares in associate (2) (23) Proceeds from sale of investments 8,235 9,596 Purchase of investments (7,915) (4,378) Income from investments 867 1,606 ----------- ----------- Net cash flow from investing activities (2,881) (1,024) Cash flows from financing activities Equity dividends paid (2,502) (2,474) Dividends paid to minority interests (1,132) (1,055) Net (repayment of)/increase in debt (3,625) 4,971 Purchase of own shares - (31) ----------- ----------- Net cash flow from financing activities (7,259) 1,411 ----------- ----------- Net increase in cash and cash equivalents 1,267 5,849 Cash and cash equivalents at beginning of year 13 (542) (6,435) Exchange gains on cash 33 44 ----------- ----------- Cash and cash equivalents at end of year 758 (542) =========== =========== For the purposes of the cash flow statement, cash and cash equivalents are included net of overdrafts repayable on demand. These overdrafts are excluded from the definition of cash and cash equivalents disclosed on the balance sheet. Statement of recognised income and expense for the year ended 31 December 2007 2007 2006 £'000 £'000 Foreign exchange translation differences 5,407 (26,348) Actuarial movement on defined benefit pension schemes 6,030 3,540 Movement on deferred tax relating to defined benefit pension schemes (639) (1,185) Available-for-sale investments: Valuation gains taken to equity 2,044 4,401 Transferred to profit or loss on sale (3,630) (124) Other fair value adjustment - 69 Share of associate's net movement in defined benefit pension schemes 372 257 Share of associates' fair value adjustments 932 (73) Share of associate's (loss)/profit on cash flow hedges (115) 378 Share of associate's income taxes on items recorded in equity (29) (27) ----------- ----------- Net income/(expense) recognised directly in equity 10,372 (19,112) Profit for the year 27,446 15,174 ----------- ----------- Total recognised income and expense for the year 37,818 (3,938) =========== =========== Attributable to: Minority interests 2,505 (1,109) Equity shareholders 35,313 (2,829) ----------- ----------- 37,818 (3,938) =========== =========== 1 General information The consolidated income statement, consolidated balance sheet, consolidated cash flow statement, consolidated statement of recognised income and expense and extracts from the notes to the accounts for 31 December 2007 and 31 December 2006 do not constitute the group's annual report and accounts. The auditors have reported on the group's statutory accounts for each of the years 2007 and 2006 under section 235 of the Companies Act 1985, which do not contain statements under sections 237 (2) or (3) of the Companies Act and are unqualified. The statutory accounts for 2006, which were prepared under International Financial Reporting Standards adopted for use in the EU, have been delivered to the Registrar of Companies. The statutory accounts for 2007, prepared under International Financial Reporting Standards adopted for use in the EU, will be filed with the Registrar in due course. Copies of the annual report and accounts will be posted to shareholders on 1 May 2008. From that date copies will be available from the registered office, Linton Park, Linton, Near Maidstone, Kent ME17 4AB. 2 Business and geographical segments The principal activities of the group are as follows: Agriculture and horticulture Engineering Food storage and distribution Banking and financial services For management reporting purposes these activities form the basis on which the group reports its primary divisions. Segment information about these businesses is presented below: 2007 Agriculture and Engineering Food storage Banking and Other Consolidated horticulture and financial operations distribution services £'000 £'000 £'000 £'000 £'000 £'000 Revenue External sales 89,004 20,109 38,561 13,949 313 161,936 =========== =========== =========== =========== =========== =========== Trading profit Segment profit 9,072 2,124 (133) 1,431 (113) 12,381 ----------- ----------- ----------- ----------- ----------- Unallocated corporate expenses (3,237) ----------- Trading profit 9,144 Share of associates' results (6) 3,882 6,692 10,568 Profit on disposal of non-current assets 2,029 Profit on disposal of assets held for resale 327 Profit on disposal of available-for-sale investments 5,259 Profit on part dispoal of a subsidiary 170 Gain arising from changes in fair value of biological assets 2,770 2,770 Investment income 867 Net finance costs (483) ----------- Profit before tax 30,651 Taxation (3,205) ----------- Profit after tax 27,446 =========== Other information Segment assets 152,009 15,197 26,975 282,259 3,440 479,880 Investments in associates 935 20,721 68,711 90,367 Unallocated assets 60,414 ----------- Consolidated total assets 630,661 =========== Segment liabilities (23,001) (2,828) (7,006) (253,203) (268) (286,306) Unallocated liabilities (57,214) ----------- Consolidated total liabilities (343,520) =========== Capital expenditure 4,189 1,152 1,095 425 Depreciation (3,084) (834) (3,111) (264) (14) Amortisation (31) (4) (348) 2006 Agriculture and Engineering Food storage Banking and Other Consolidated horticulture and financial operations distribution services £'000 £'000 £'000 £'000 £'000 £'000 Revenue External sales 88,549 20,255 39,266 11,096 1,386 160,552 =========== =========== =========== =========== =========== =========== Trading profit Segment profit 12,682 1,744 (512) 1,766 (9) 15,671 ----------- ----------- ----------- ----------- ----------- Unallocated corporate expenses (4,829) ----------- Trading profit 10,842 Share of associates' results 18 395 4,519 4,932 Profit on disposal of non-current assets 929 Profit on disposal of assets held for resale 952 Profit on disposal of available-for-sale investments 364 Profit on part dispoal of a subsidiary - Gain arising from changes in fair value of biological assets 1,176 1,176 Investment income 1,606 Net finance costs (819) ----------- Profit before tax 19,982 Taxation (4,808) ----------- Profit after tax 15,174 =========== Other information Segment assets 144,721 14,347 29,622 241,774 2,686 433,150 Investments in associates 920 2,566 60,186 63,672 Unallocated assets 72,411 ----------- Consolidated total assets 569,233 =========== Segment liabilities (23,284) (2,813) (7,683) (212,355) (151) (246,286) Unallocated liabilities (67,683) ----------- Consolidated total liabilities (313,969) =========== Capital expenditure 3,809 904 1,981 137 102 Depreciation (3,161) (830) (2,997) (214) (16) Amortisation (16) (6) (243) Segment assets consist primarily of intangible assets, property, plant and equipment, biological assets, prepaid operating leases, inventories, trade and other receivables and cash and cash equivalents. Receivables for tax have been excluded. Investments in associates, valued using the equity method, have been shown separately in the segment information. Segment liabilities are primarily those relating to the operating activities and generally exclude liabilities for taxes, short-term loans, finance leases and non-current liabilities. Geographical segments The group operations are based in nine main geographical areas. The United Kingdom is the home country of the parent. The principal geographical areas in which the group operates are as follows: United Kingdom Continental Europe India Kenya Malawi Bangladesh North America and Bermuda South Africa South America The following table provides an analysis of the group's sales by geographical market, irrespective of the origin of the goods/services: 2007 2006 £'000 £'000 United Kingdom 71,682 66,908 Continental Europe 18,174 19,055 India 37,802 35,241 Kenya 11,876 12,908 Malawi 3,120 4,485 Bangladesh 7,057 7,944 North America and Bermuda 1,951 3,390 South Africa 1,718 2,512 South America 3,400 3,184 Other 5,156 4,925 ----------- ----------- 161,936 160,552 =========== =========== The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment, analysed by the geographical area in which the assets are located: Carrying amount of Additions to property, segment assets plant and equipment 2007 2006 2007 2006 £'000 £'000 £'000 £'000 United Kingdom 320,463 280,918 2,550 2,815 Continental Europe 4,219 4,179 111 192 India 46,851 40,495 1,804 825 Kenya 36,788 37,603 661 699 Malawi 26,778 24,955 688 659 Bangladesh 20,170 19,743 229 826 North America and Bermuda 3,924 4,148 8 305 South Africa 7,360 9,495 179 273 South America 13,327 11,614 631 339 ----------- ----------- ----------- ----------- 479,880 433,150 6,861 6,933 =========== =========== =========== =========== 3 Share of associates' results The group's share of the results of associates is analysed below: 2007 2006 £'000 £'000 Operating profit 8,561 6,570 Net finance costs (650) (780) ----------- ----------- Profit before tax 7,911 5,790 Taxation (1,026) (858) ----------- ----------- Profit after tax 6,885 4,932 Net profit from discontinued operations 3,683 - ----------- ----------- 10,568 4,932 =========== =========== The net profit from discontinued operations relates to the disposal by the Siegfried Group of its Sidroga division and its biologics business unit. The profit resulting from the disposal of the Sidroga division of £4,804,000, included in net profit from discontinued operations, is provisional due to an arbitration procedure being initiated by the purchaser. The results include the group's share of the profits of BF&M Limited, a Bermudian based insurance company, which became an associate with effect from 1 January 2007. 4 Profit on disposal of non-current assets 2007 2006 £'000 £'000 Profit on disposal of property 2,029 929 =========== =========== 5 Profit on disposal of non-current assets held for sale A profit of £327,000 (2006: £952,000) was realised in relation to property, plant and equipment of Eastern Produce South Africa (Pty) Limited which had previously been used in the group's production of tea in South Africa and were reclassified as being held for sale in 2005. 6 Profit on disposal of available-for-sale investments The profit of £5,259,000 includes a profit of £4,801,000 relating to the disposal of the group's entire shareholding in Getaz Romang Holding SA, a public quoted company on the SWX Swiss Exchange. 7 Profit on part disposal of a subsidiary A profit of £170,000 was realised in relation to the disposal by Kakuzi Limited of 14 per cent. of its interest in Siret Tea Company Limited to EPK Outgrowers Empowerment Project Company Limited, a company mainly owned by smallholders in Kenya. 8 Finance income and costs 2007 2006 £'000 £'000 Interest payable on loans and bank overdrafts (2,141) (2,341) Interest payable on obligations under finance leases (180) (144) ----------- ----------- Total borrowing costs (2,321) (2,485) Net exchange gain/(loss) on foreign currency borrowings 400 (59) ----------- ----------- Finance costs (1,921) (2,544) Finance income - interest income on short-term bank deposits 701 709 Pension schemes net financing income 737 1,016 ----------- ----------- Net finance costs (483) (819) =========== =========== The above figures do not include any amounts relating to the banking subsidiaries. 9 Taxation on profit on ordinary activities Analysis of charge in the year 2007 2006 £'000 £'000 £'000 Current tax UK corporation tax UK corporation tax at 30.0 per cent. (2006:30.0 per cent.) 1,681 2,004 Adjustment in respect of prior years (14) (152) Double tax relief (1,560) (1,709) ---------- ---------- 107 143 Foreign tax Corporation tax 2,936 3,789 Adjustment in respect of prior years (1) 263 ---------- ---------- 2,935 4,052 ---------- ---------- Total current tax 3,042 4,195 Deferred tax Origination and reversal of timing differences United Kingdom (483) (486) Overseas 646 1,099 ---------- ---------- Total deferred tax 163 613 ---------- ---------- Tax on profit on ordinary activities 3,205 4,808 ---------- ---------- Factors affecting tax charge for the year Profit on ordinary activities before tax 30,651 19,982 Less: share of associated undertakings profit 10,568 4,932 ---------- ---------- Group profit on ordinary activities before tax 20,083 15,050 ---------- ---------- Tax on ordinary activities at the standard rate of corporation tax in the UK of 30.0 per cent. (2006: 30.0 per cent.) 6,025 4,515 Effects of: Adjustment to tax in respect of prior years (15) 111 Expenses not deductible for tax purposes 479 256 Adjustment in respect of foreign tax rates 251 460 Additional tax arising on dividends from overseas companies 316 353 Profit on disposal of non taxable assets (2,173) (702) Other income not charged to tax (1,168) (246) Increase in tax losses carried forward 400 635 Decrease in tax losses carried forward (226) (462) Effect of abolition of industrial buildings allowance on deferred tax (732) - Movement in other timing differences 48 (112) ---------- ---------- Current tax charge for the year 3,205 4,808 ========== ========== 10 Equity dividends 2007 2006 £'000 £'000 Amounts recognised as distributions to equity holders in the period: Final dividend for the year ended 31 December 2006 of 70.00p (2005: 69.00p) per share 1,946 1,918 Interim dividend for the year ended 31 December 2007 of 20.00p (2006: 20.00p) per share 556 556 ----------- ----------- 2,502 2,474 =========== =========== Dividends amounting to £56,000 (2006: £56,000) have not been included as group companies hold 62,500 issued shares in the company. These are classified as treasury shares. Proposed final dividend for the year ended 31 December 2007 of 72.00p (2006: 70.00p) per share 2,046 1,989 ========== =========== The proposed final dividend is subject to approval by the shareholders at the annual general meeting and has not been included as a liability in these financial statements and will be payable on 3 July 2008 to shareholders on the register of members at the close of business on 13 June 2008. 11 Earnings per share (EPS) 2007 2006 Weighted Weighted average average number of number of Earnings shares EPS Earnings shares EPS £'000 Number Pence £'000 Number Pence Basic and diluted EPS Attributable to ordinary shareholders 25,317 2,779,500 910.8 12,903 2,779,784 464.2 ========= ========= ========= ========= ========= ========= 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 during the period, excluding 62,500 held by the group as treasury shares. 12 Investments in associates and other investments With effect from 1 January 2007, the group has representation on the board of BF &M Limited and is in a position to exert significant influence. As a result the investment in this company has been reclassified from other investments to an investment in associate. The result of this reclassification is that investments in associates increase by £14,449,000, being the equity value and other investments decline by £17,231,000, being the market value. The difference of £2,782,000 has been transferred to reserves. 13 Cash and cash equivalents 2007 2006 £'000 £'000 Cash at bank and in hand 203,786 179,318 Short-term bank deposits 3,944 6,696 Short-term liquid investments 27,882 24,546 ----------- ----------- 235,612 210,560 =========== =========== Included in the amounts above are cash and short-term funds, time deposits with banks and building societies and certificates of deposit amounting to £223,849,000 (2006: £198,422,000) which are held by the group's banking subsidiaries and which are an integral part of the banking operations. Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement: 2007 2006 £'000 £'000 Cash and cash equivalents (excluding banking operations) 11,763 12,138 Bank overdrafts (11,005) (12,680) ----------- ----------- 758 (542) =========== =========== 14 Reconciliation of profit from operations to cash flow 2007 2006 £'000 £'000 Profit from operations 30,267 19,195 Share of associates' results (10,568) (4,932) Depreciation and amortisation 7,868 7,673 Impairment of non-current assets - 117 Gain arising from changes in fair value of biological assets (2,770) (1,176) Profit on disposal of non-current assets (2,029) (929) Profit on disposal of non-current assets held for sale (327) (952) Profit on part disposal of a subsidiary (170) - Profit on disposal of investments (5,259) (364) Increase in working capital (7,949) (2,743) Net decrease/(increase) in funds of banking subsidiaries 5,108 (6,654) ----------- ----------- 14,171 9,235 =========== =========== 15 Reconciliation of net cash flow to movement in net debt 2007 2006 £'000 £'000 Increase in cash and cash equivalents in the year 1,266 5,849 Cash outflow/(inflow) from decrease/(increase) in debt 4,310 (3,486) ----------- ----------- Decrease in net debt resulting from cash flows 5,576 2,363 New finance leases (685) (1,734) Exchange rate movements (196) 881 ----------- ----------- Decrease in net debt in the year 4,695 1,510 Net debt at beginning of year (19,500) (21,010) ----------- ----------- Net debt at end of year (14,805) (19,500) =========== =========== Press Enquiries: Malcolm Perkins, Chairman Tel: 01622 746655 This information is provided by RNS The company news service from the London Stock Exchange

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