RNS Number:2917K
Linton Park PLC
24 April 2003
Linton Park Plc
Preliminary Results For Year Ended 31 December 2002
Highlights from the results:-
Year ended Year ended
31 December 31 December
2002 2001
#000 #000
restated
Turnover - continuing operations 125,468 124,474
Profit before taxation 14,614 12,790
Profit after taxation 11,007 9,921
Earnings per share 49.3p 47.4p
Dividends 18.00p 20.25p
Extract from Chairman's Statement
The Group profit before tax for the year amounted to #14,614,000 compared with
#12,790,000 in 2001. The profit attributable to shareholders amounted to
#9,384,000 after deductions for taxation and minority interests and represents
earnings per share of 49.3p.
The Group suffered from difficult trading conditions in 2002, particularly in
the UK, where profits declined from those of the previous year. Associated Cold
Stores & Transport had to contend with difficult market conditions and
increasing insurance premiums, which, coupled with increased operating costs led
to reduced profits. The engineering operations also suffered from a decline in
demand from their UK customers. Overseas, however, profitability improved with a
particularly encouraging result from the newly acquired operations in South
Africa. These overall improvements were made in the context of difficult weather
conditions occasioned by the 'El Nino' phenomenon, which resulted in drought
conditions in Australia and parts of South Africa whilst other parts of the
world, in particular Chile, were affected by excessive rainfall. These
conditions will have a knock on effect into 2003. The various Group operations
are discussed in more detail in the Review of Activities.
Overall profits were maintained by a significantly greater contribution from our
associate company, Siegfried Holding AG. It is most encouraging to report the
continued improvement in the affairs of this company, our shareholding in which
forms such a major part of our investments.
In January 2003, the Group's 74.9% interest in British Traders & Shippers was
sold to its main supplier, Nippon Gohsei, who was previously the minority
shareholder.
Last year I dwelt at some length on the impact to our cash flow of earnings from
our associate, Siegfried Holding AG. The comments I made then are still very
relevant to the current year, with an even greater proportion of our earnings
being produced by Siegfried. The directors are of the opinion, therefore, that
the level of dividend should remain as last year and propose a final dividend
for the year of 13.0p per share.
Review of activities
Agriculture and Horticulture
Tea
Tea production by subsidiary undertakings amounted to 35.8 million kilos.
Climatic conditions were generally beneficial in Malawi, but Kenya and South
Africa both suffered from irregular rainfall patterns. El Nino started to bite
towards the end of 2002, particularly in South Africa where exceptionally dry
conditions were experienced on the majority of the estates. Sale prices for tea
were very similar to those experienced in 2001, but inevitably the cost of
production increased.
The transition to a new Government in Kenya appears to have gone smoothly and
pronouncements are being made which are consistent with the need to improve the
economic management of the country. In Malawi interest rates for borrowings are
still exorbitantly high, presently 41%, and the Malawi kwacha devalued during
the year. The South African rand strengthened during 2002 to the extent that
its exchange rate against sterling is now higher than the levels witnessed
before the rand's dramatic fall during the latter part of 2001. Interest rates
remain at a relatively high level in South Africa, and these two factors will
have an unfavourable effect on the overall fortunes of our operations.
Coffee
Coffee production in Kenya fell, mainly due to the disposal by Kakuzi of its 51%
owned subsidiary, Garton. Nonetheless, prices realised were again lower and
throughout the year we have been selling coffee at below the cost of production.
Considerable efforts have been made to reduce costs, but the short-term
prospects are not encouraging. There is simply too much coffee being produced
and until the supply/demand ratio is put into balance, it is difficult to see
how profits can be made by any participants in the production sector of this
business.
The fortunes of our Malawi coffee estates have been affected even more adversely
by the fall in prices and costs have been reduced substantially by taking action
that must inevitably impinge on the long term health of the bushes.
Citrus
Yandilla Park experienced difficult conditions in Australia during the year with
an abundance of small sized fruit which was difficult to pack and market. A
greater than usual proportion of the fruit was destined to go to the juice
market, for which no sale contracts existed, resulting in poor prices being
achieved. The disappointing quality of the fruit was due to adverse climatic
conditions and it is hoped that the 2003 navel harvest will be of a considerably
higher quality, resulting in better marketing opportunities. It is, however,
encouraging to report that the marketing operations of Vitor go from strength to
strength with new opportunities being exploited, particularly in the Pacific Rim
region.
The prospects for the citrus operations in Chile, United States and South Africa
remain encouraging with good progress being made towards maturity. Plans are
being prepared for the extension of our citrus activities in these countries.
Edible Nuts
There was a further increase in the production of macadamia in Malawi and prices
improved over the previous year. The South African macadamia operations also
performed well and the processing facility has now been changed from a wet to
dry operation, hopefully further increasing the quality of the product. In
California the almond orchards have come to the end of their useful life and
have been uprooted; they will almost certainly be replaced by citrus. The
pistachio operations in California enjoyed a very good production season with a
crop considerably in excess of that predicted, even though it was an "on" year
in the alternate bearing cycle.
Other Horticulture
The pineapple joint venture in Kenya with Del Monte was again profitable,
although production was substantially down from the previous year on account of
the harvesting cycle. Prices recovered somewhat in 2002 and the prospects for
2003 are also encouraging due to a potential lack of supply from South East
Asia. In Kenya passion fruit remains disappointing and is gradually being
replaced with further areas of avocado, the existing plantings of which continue
to perform beyond our initial expectations.
Wine grape production in Australia improved over the previous year and prices
were reasonable. The prospect for prices, in particular the red varieties, is
set to decline due to continuing over-production in Australia. In South Africa
the wine grape harvest was satisfactory, but the export market has continued to
be difficult throughout the year with producers offering wine for export at very
low prices and, in some cases, almost certainly below cost of production. We
continue to concentrate our efforts on the premium sector and wine that is not
suitable for this market is sold as bulk rather than bottled. During the year
our Merlot and Shiraz wines were awarded gold medals in the well-respected
"Michelangelo" wine fair. Table grape production in South Africa was
disappointing although prices, mainly due to the weak rand, made up much of the
shortfall.
General Farming
Our associate's operations in Brazil again made a modest profit which would have
been considerably better had it not been for an area-wide infestation of the
bean crop. Assuming reasonable weather conditions and a favourable economic
environment, the prospects for this operation continue to be much improved.
Engineering
2002 was the first full year of operations for Abbey Metal Finishing's rebuilt
facility, following the fire which severely damaged its premises in June 2000.
During the year, sales continued to progress whilst profits remained supported
by business interruption insurance income. However, the more constrained civil
aerospace market will make it difficult for the company to recover to the level
of turnover achieved before the fire.
Pressure on margins and the effect on North Sea exploration of the government's
imposition of an additional 10% corporation tax on oil companies had an impact
on the results of AJT Engineering, AKD Engineering and some divisions of British
Metal Treatments. AJT's cold extrusion process again provided a useful addition
to sales in its second year of operation. AKD completed the construction of its
new office building which now enables all staff to be accommodated together. The
company secured its largest ever order, for completion during the first half of
2003. The British Metal Treatments site at Hove, which had been closed in the
previous December, was sold in July and the profit from this contributed to the
2002 results.
General Utilities reported a small loss in 2002 due to a further downturn in
demand for its profile cutting and precision grinding services. Plans are in
hand to consolidate operations onto a single site during 2003, which will
contribute to an improvement in the profitability of the business.
Food Storage and Distribution
Associated Cold Stores & Transport failed to replace the business of a customer
lost at the end of 2001 with business of a similar value and the extra cost of
providing outside space to accommodate a major customer's requirements, impacted
results. The development and implementation of a new IT system is already
identifying opportunities for cost savings which should help profits to recover.
A further 80% increase in insurance premiums in 2002 also had a significant
effect on profits. 2003 premiums have risen again by a further 36%.
Losses continued at W. G. White as caviar sales remained depressed and the costs
associated with the new wine distribution business continued to exceed sales
from that activity. Responsibility for international sales of wine from the
Group's vineyards has been transferred to South Africa in the first quarter of
2003, thus reducing ongoing selling costs for W. G. White. Changes in the
pattern of international air travel and the reduction in tourism to London are
holding back caviar sales.
In the Netherlands, Affish produced a much improved result in 2002. However due
to a downturn in the Dutch economy, there was a general reduction in eating out
of the home, which adversely affected the results of Wylax, the Group's fish
distribution business which services the Dutch restaurant sector.
Trading and Agency
The Group's remaining 74.9% interest in British Traders & Shippers was sold in
January 2003, but its results are included for 2002. A profit on the sale of our
shareholding should be realised in 2003.
Pharmaceutical
The Siegfried Group increased net turnover by 13.2% to SFr. 399.0 million and
recorded a consolidated profit after tax of SFr. 56.2 million, an increase of
more than 81% over the prior year. This constituted the best result in the 130
year history of the Siegfried Group. Our share of these profits amounts to
#8,148,000. The improvements have come particularly from the "Exclusives"
division, which produces custom manufactured active pharmaceutical ingredients
for multi-national companies and also from the generics side of the business.
The Sidroga division, which markets medicinal and herbal teas, continues to show
improvement in its trading operations.
Development
The main emphasis on development during the year was to continue to bring
immature plantings towards maturity. The initial results from the avocado
plantings in Kenya and the citrus plantings in California and South Africa are
most encouraging and it is likely that further development will take place in
these areas.
Consolidated profit and loss account
for the year ended 31 December 2002
2002 2001
Note #000 #000
restated
Turnover - continuing operations 125,468 124,474
- discontinued operations 6,761 29,552
------- -------
132,229 154,026
Cost of sales 99,980 118,666
------- -------
Gross profit 32,249 35,360
Net operating expenses 25,689 25,464
------- -------
Operating profit - continuing operations 6,563 9,647
- discontinued operations (3) 249
------- -------
6,560 9,896
Share of associates' results before interest 10,547 4,226
------- -------
Operating profit including associates 17,107 14,122
Profit on disposal of fixed assets 1 195 24
Profit/(loss) on disposal of a subsidiary 2 4 (461)
Goodwill transferred from reserves
upon part disposal of a subsidiary - 524
Share of associate's profit on
disposal of subsidiaries - 2,065
------- -------
Profit on ordinary activities before interest 17,306 16,274
Net interest payable 2,692 3,484
------- -------
Profit on ordinary activities before taxation 14,614 12,790
Taxation on profit on ordinary activities 3 3,607 2,869
------- -------
Profit on ordinary activities after taxation 11,007 9,921
Minority interests 1,623 899
------- -------
Profit for the year 9,384 9,022
Equity dividends 4 3,427 3,855
------- -------
Profit transferred to reserves 5,957 5,167
------- -------
Earnings per share 5 49.3 p 47.4 p
The comparatives have been restated on the adoption of FRS 19 - Deferred tax
Consolidated balance sheet
at 31 December 2002
2002 2001
#000 #000 #000
restated
Fixed assets
Intangible assets (814) (1,216)
Tangible assets 127,706 131,724
Investments 56,341 48,717
------- -------
183,233 179,225
Current assets
Stocks 19,484 19,297
Debtors 21,756 20,849
Cash and deposits 5,740 5,781
------- -------
46,980 45,927
Creditors: due within one year 39,083 36,526
------- -------
Net current assets 7,897 9,401
------- -------
Total assets less current liabilities 191,130 188,626
Creditors: due after one year 29,032 29,260
Provisions for liabilities and charges 5,497 5,753
------- -------
34,529 35,013
------- -------
156,601 153,613
------- -------
Capital and reserves
Called up share capital 9,519 9,519
Share premium account 24,524 24,524
Revaluation reserve 34,186 34,186
Other reserves 2,026 2,026
Profit and loss account 57,216 53,261
------- -------
Equity shareholders' funds 127,471 123,516
Equity minority interests 29,130 30,097
------- -------
156,601 153,613
------- -------
Consolidated cash flow statement
for the year ended 31 December 2002
2002 2001
Note #000 #000 #000
Cash flow from operating activities 6 11,617 15,531
Capital distribution /dividends
received from associates 788 446
Returns on investment and
servicing of finance
Interest received 284 356
Interest paid (2,498) (3,369)
Interest paid on finance leases (51) (35)
Income from investments 244 208
Dividends paid to minority shareholders (701) (491)
------- ------
(2,722) (3,331)
Taxation
UK taxation (140) (717)
Overseas taxation (1,947) (2,366)
------- ------
(2,087) (3,083)
Capital expenditure and financial investment
Purchase of intangible fixed assets (125) -
Purchase of tangible fixed assets (8,936) (7,593)
Sale of tangible fixed assets 1,092 448
Purchase of investments (52) (15)
Sale of investments 264 -
------- ------
(7,757) (7,160)
Acquisitions and disposals
Purchase of additional shares in associate - (28)
Purchase of minority interests (284) -
Cost of acquisition of business - (36)
Disposal of businesses 507 2,846
------- ------
223 2,782
Equity dividends paid (3,427) (4,569)
------- ------
Cash (outflow)/inflow before financing (3,365) 616
Financing
New Loans 5,373 10,531
Loan repayments (4,197) (6,578)
Finance lease repayments (347) (279)
------- ------
829 3,674
------- ------
(Decrease)/increase in cash in period 7 (2,536) 4,290
------- ------
Reconciliation of movement in shareholders' funds
for the year ended 31 December 2002
2002 2001
#000 #000
restated
Profit for the year 9,384 9,022
Dividends (3,427) (3,855)
------- -------
Retained profit for the year 5,957 5,167
Exchange differences (2,002) (3,482)
Impairments of previously revalued fixed assets - (486)
Release of negative goodwill on part disposal of a
subsidiary - (524)
Release of goodwill on part disposal of a subsidiary - 1,263
Share of associate's fixed asset revaluation - 682
------- -------
Net addition to shareholders' funds 3,955 2,620
Opening equity shareholders' funds as previously
reported 123,516 126,302
Prior year adjustment - adoption of FRS 19 (5,406)
-------
Opening equity shareholders' funds restated 120,896
------- -------
Closing equity shareholders' funds 127,471 123,516
------- -------
Notes
1 Profit on disposal of fixed assets
2002 2001
#000 #000
Profit on disposal of assets destroyed by fire - 24
Profit on disposal of property 195 -
------- -------
195 24
------- -------
2 Profit/(loss) on disposal of a subsidiary
2002 2001
#000 #000
Profit on sale of a subsidiary before goodwill adjustment 4 802
Goodwill transferred from reserves previously written off - (1,263)
------- -------
4 (461)
------- -------
3 Taxation on profit on ordinary activities
2002 2001
#000 #000 #000
restated
Analysis of charge in the year
Current tax
UK corporation tax
UK corporation tax at 30.0 per cent.
(2001: 30.0 per cent.) 1,213 1,702
Adjustment in respect of prior years (202) 178
Double tax relief (1,223) (1,368)
------- -------
(212) 512
Foreign tax
Corporation tax 1,778 2,538
Adjustment in respect of prior years (30) 384
Share of associated undertakings tax 1,883 1,620
------- -------
3,631 4,542
------- -------
Total current tax 3,419 5,054
Deferred Tax
Origination and reversal of timing differences
United Kingdom (821) (43)
Overseas 1,009 (2,142)
------- -------
Total deferred tax 188 (2,185)
------- -------
Tax on profit on ordinary activities 3,607 2,869
------- -------
4 The directors have proposed a final dividend of 13.00p per share, payable on
1 July 2003 to shareholders on the register of members at the close of business
on 6 June 2003.
5 Earnings per share
Earnings per share have been calculated by dividing the weighted average
number of Ordinary Shares in issue for the year of 19,038,167 (2001:19,038,167)
into the profit for the year of #9,384,000 (2001: #9,022,000).
6 Reconciliation of operating profit to cash flow from operating activities
2002 2001
#000 #000
Operating profit 6,560 9,896
Depreciation 6,510 6,780
Amortisation of intangible fixed assets (277) (188)
Income from investments (244) (208)
Profit on sale of assets (185) (89)
Other non cash movements 131 162
(Increase)/decrease in stocks (195) 388
(Increase)/decrease in debtors (932) 1,856
Increase / (decrease) in creditors 459 (2,755)
Movement in group operating balances (210) (311)
-------- -------
Cash flow from operating activities 11,617 15,531
-------- -------
7 Reconciliation of net cash flow to movement in net debt
2002 2001
#000 #000
(Decrease)/increase in cash in the year (2,536) 4,290
Cash inflow from increase in debt (829) (3,674)
-------- -------
(Increase)/decrease in net debt resulting
from cash flows (3,365) 616
Cash balances of business acquired - 1,766
Net overdraft/(cash balances) of business sold 713 (1,460)
Loan and finance lease balances of business sold - 238
Exchange rate movements (566) 481
-------- -------
(Increase)/decrease in net debt in the year (3,218) 1,641
Net debt at 1 January (35,754) (37,395)
-------- -------
Net debt at 31 December (38,972) (35,754)
-------- -------
The information above, which does not constitute full financial statements
within the meaning of s.240 CA 1985:
- Has been extracted from the statutory accounts of Linton Park Plc for
the year ended 31 December 2002. The auditors have given an unqualified
audit report. The Group has adopted accounting standard FRS19 - Deferred
tax during the year and comparative figures have been restated.
- Were approved by the directors on 24 April 2003.
- Audited financial statements will be posted to shareholders and be
available to the public on 25 April 2003 and will be filed with the
Registrar of Companies after the Annual General Meeting on 29 May 2003.
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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