JAMES Finlay, the tea to flowers group that began life in Scotland, has doubled profits in its latest year in spite of facing complications in Africa.
The latest accounts for the Scotland-registered company show James Finlay made an operating profit before exceptionals of £13.4 million in 2013 compared with £5.5m in the preceding year.
Writing in the accounts, directors said James Finlay improved performance across most divisions with Horticulture, Tea Estates, Extracts and Beverages all performing ahead of (the) prior year.
Owned by John Swire, the sprawling London-based conglomerate, James Finlay describes itself as the largest independent tea trader in the world. The company produces 46 million kilogrammes of tea per annum from 37,000 acres of estates in Kenya and Sri Lanka. It also grows and packs flowers like Chrysanthemums in countries such as South Africa where the climate allows for year round production.
But, the directors noted: "The main area of shortfall was in our tea trading businesses with falling sale prices in Kenya, disruption in our Middle East markets and an intensity of competition resulting in lower profits than the previous year."
The accounts cover a year when there was widespread political unrest in the Middle East.
The profit was stated after James Finlay recorded a £692,000 charge in respect of a continuing restructuring programme in the horticulture operations in Africa.
In the latest issue of the company magazine managing director Ron Mathison wrote that Finlays operates in a difficult trading environment with a high degree of exposure to oil prices, currency movements and weather.
He noted: "That means we need to remain vigilant and take every opportunity to reduce cost and improve productivity, particularly now that tea prices have collapsed in Kenya, in some cases below the cost of production.
"This sharp fall in tea prices, after six years of rising prices, is a wake-up call for the tea industry highlighting the need to embrace more flexible work practices and technology-led productivity."
In the 2013 accounts, the directors noted: "The Kenyan Revenue Authority are currently reviewing the transfer pricing policies adopted by exporting companies operating within the Kenyan horticultural sector, including that of the group's subsidiary, Finlays Horticulture Kenya Ltd. Finlays Horticulture Kenya is fully cooperating with the KRA in this matter."
Transfer Pricing is an issue which has generated much controversy in recent years amid claims that some international corporations use intra-company sales to funnel profits into low tax territories.
James Finlay saw its total corporate tax bill increase to £8.3m in 2013 from £2.9m in the preceding year.
After-tax losses increased to £1.1m from £0.49m.
James Finlay saw group turnover fall 2 per cent, or £10m, to £547m from £557m. The directors pay bill totalled £1.5m in 2013, up from £1.4m in the preceding year.
The highest paid director on the board earned £788,000 remuneration in the latest year, compared with £819,000 in the preceding year.
James Finlay began life as a cotton trader and manufacturer 250 years ago. It was acquired by John Swire in 2000 for £101m.
The company had 62,000 employees at the time.
The average number of employees increased by 0.6 per cent in 2013, to 37,411 from 37,178.
James Finlays' head office transferred from Glasgow's West George Street to London seven years ago. John Swire also has a substantial oil services business in Scotland.
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