6 June 2024
Camellia
Plc
(the
"Company" or the "Group")
Trading
update
Tea
India: Production in May in all
regions has been severely affected by very dry weather which is
also expected to impact yields in June. While there are some
early signs that prices for Assam and Darjeeling teas may be
improving, it is too early in the season to adjust our forecasts.
In the face of a substantial tightening of regulations around the
use of chemicals in the growing process, the India subsidiary
companies have decided to materially reduce bought leaf production
as a risk mitigation strategy.
Bangladesh: Following industry
discussions with the Bangladesh Tea Board, a fair pricing mechanism
is being developed with the objective of improving prices and
margins for producers. Other initiatives to support the
industry, are also under consideration by government. While these
are positive developments they are at an early stage and the scale
of impact is not clear.
Kenya: Favourable weather meant
crops in May were higher than expected. However, as mentioned
in our annual report, significant stocks of tea have been building
up in the Kenya industry over recent years. With the revised
minimum pricing mechanism, these are now being released to the
market for sale with a significantly bigger impact on tea prices in
the last month than expected. It looks like these lower
prices are likely to continue for the remainder of this year.
There is no obvious catalyst for prices to improve and in fact they
may further weaken. Estimating the scale of this and hence
the impact on our prices is difficult at this early stage in the
year. The strength of the Kenya shilling remains a
headwind.
Malawi: Weaker prices in Kenya
have also impacted Malawi tea demand with further softening of
prices in this market too. Production volumes in Malawi
remain in line with expectations.
Other crops
Other crops are performing in line
with the guidance previously given.
BF&M
As mentioned in the annual report,
the disposal of our interest in BF&M to Argus Group has been
more complex and the approval process more protracted than
expected. While we are still confident the sale of our stake
will go ahead, further delays in the regulatory approval process
mean we now expect completion in the latter part of 2024. The
sale of BF&M is expected to result in cash consideration of
$100m payable to Camellia, before expenses.
Bardsley
Progress has been made in the closure
of the Bardsley's operation. We have now exited the two major
leases and negotiations with the remaining landlords are ongoing.
Asset disposals are also underway and we are on track to conclude
the winding up process before the end of the year.
We expect to report a reduced loss
for the year from Bardsley in the range of £3.5-4.5 million (2023:
Loss £15.6 million). This includes the trading loss as well as the
estimated cost of exiting leases, impairments, closure costs and
the results of asset disposals. We expect a net cash recovery from
the closure of £4-5 million. It is expected that Bardsley will be
accounted for as a 'Discontinued operation' in
2024.
Outlook for the year for continuing
operations
Forecasting the outcome for the year
at this stage in the year is difficult, not least because the
majority of our production and sales occurs in the second half of
the year. That said, despite reduced tea production expectations in
India and further reductions in tea prices in Kenya and Malawi we
continue to expect revenue above that of 2023. However, the outlook
for the adjusted loss before tax for continuing operations has
worsened from our previous guidance and is now at between £10-12
million (2023: £2.5 million loss).
Camellia had net cash
of £21.7 million and investment portfolios with a market value of
£38.1 million at 31 March 2024.
This announcement contains
inside information for the purposes of the UK Market Abuse
Regulation.
Enquiries
Camellia Plc
01622 746655
Byron Coombs, CEO
Susan Walker, Chief Financial Officer
Panmure Gordon
020 7886 2500
Nominated Adviser and Broker
Emma Earl
Rupert Dearden
H/Advisors Maitland
PR
William Clutterbuck
07785 292617