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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Camellia Plc | LSE:CAM | London | Ordinary Share | GB0001667087 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 110.00 | 2.44% | 4,620.00 | 4,560.00 | 4,680.00 | 4,660.00 | 4,540.00 | 4,540.00 | 1,354 | 16:35:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Offices-holdng Companies,nec | 320.9M | -13M | -4.7067 | -9.69 | 125.95M |
From Apr 2019 to Apr 2024
TIDMCAM
RNS Number : 3212M
Camellia PLC
07 May 2020
CAMELLIA PLC
FINAL RESULTS
Camellia Plc (AIM:CAM) Final results for the year ended 31 December 2019.
Malcolm Perkins, Chairman, stated:
"The Group is set up in a way that re ects our long-term approach, with nancial stability and sustainability being at the heart of our philosophy. The current situation with regard to COVID-19 is unprecedented not only in its severity but because we cannot tell at this stage for how long it will last nor what the implications will be. However for now our agricultural operations, with the exception of India, are producing as expected and our non-agricultural businesses continue to trade, albeit some at a significantly reduced rate. The overall impact on prices for our crops will not be known until later in the year.
We remain nancially strong, with signi cant net cash, and have the resources to withstand a period of disruption. The demand for our agricultural produce will remain and we are managing the business in a pragmatic manner which we believe will ensure our future prosperity whilst taking the necessary steps to manage our costs and spending in the short term.
Against this background I should like to thank all our staff across the world for their invaluable contributions both to the business and their local communities."
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FINANCIAL HIGHLIGHTS
Year ended Year ended
31 December 2019 31 December 2018
GBP'm GBP'm
Revenue - continuing operations 291.5 309.8
Underlying profit before tax* 16.1 38.1
Significant provision releases and other separately disclosed items 6.2 14.4
(Loss)/profit from discontinued operation - (0.2)
Profit after tax for the year 15.1 32.3
Earnings per share 300.5 p 912.4 p
Earnings per share - continuing operations 300.5 p 919.6 p
Total dividend for the year 42 p 142 p
* Underlying profit before tax is profit before tax from continuing operations excluding separately disclosed significant items
Financial highlights
-- Underlying profit before tax from continuing operations down
58% reflecting the poor tea prices experienced throughout the
year
-- Significant net provision releases contribute an additional GBP6.2m
of profit before tax
-- Net cash resources less borrowings of GBP77.1m and an investment
portfolio with a market value of GBP43.8m at 31 March 2020
Strategic highlights
-- Significant investment made in crop diversification in recent
years has partially offset weakness in global tea prices
-- Completion of acquisition in India provides enhanced Assam offering
-- Acquisition of farm in South Africa and trials of blueberries
and avocados in Kenya provide long-term growth potential
-- Sustained focus on production efficiencies and expense management
has helped contain costs
-- Continued commitment to ESG principles which remains core to
Camellia ethos
This announcement contains inside information for the purpose of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
The Annual Report will be available on the investor relations section of the Company's website www.camellia.plc.uk
ENQUIRIES
Camellia Plc 01622 746655 Tom Franks, Chief Executive Susan Walker, Chief Financial Officer Panmure Gordon (UK) Limited 020 7886 2500 Nominated Adviser and Broker Erik Anderson Emma Earl Maitland/AMO PR William Clutterbuck 07785 292617
Camellia at a glance
Camellia Plc is an international Group - a global family of diverse companies with a 132-year history employing approximately 78,000 people worldwide. Our operations are in Agriculture, Engineering, Food Service and Investments. From the start, Camellia's ethos has been based on the highest moral and professional integrity, and a commitment to doing the right thing - ethically and commercially, globally and locally. Profits are our lifeblood but not our soul.
Our business is built on two fundamental principles:
-- Long-termism. We see ourselves as custodians, holding our business
in trust for future generations. We believe we have a responsibility
to ensure the stability, security and continuity of all our businesses,
so they can be passed on to the next generation as enduring operations.
We recognise that people and businesses take time to establish
and grow to their full potential and we are happy to wait for
that to happen. We are deeply committed to improving the long-term
stability and well-being of our businesses, the communities and
the environments in which we operate.
-- Sustainability. We are committed not only to the ultimate welfare
of our employees but also to the communities in which they live.
We believe our businesses can and should grow with respect and
care for the environment rather than at the cost of it. We proactively
invest in ensuring that the environments where we do business
are continually protected and improved, and seek to minimise
the impact of our business on the environment.
The profit after tax from continuing operations in the year to 31 December 2019 was GBP15.1 million (2018: profit GBP32.5 million) and the Segment trading profit and loss information set out below is extracted from note 1 on page 62 of the Accounts.
Our business is made up as follows:
AGRICULTURE
2019: Revenue - GBP238.7 million, Segment trading profit - GBP25.2 million
Mature Immature
Area Area
Core crops Locations Ha Ha
India, Bangladesh, Kenya,
Tea Malawi 33,709 2,608
Macadamia Kenya, South Africa, Malawi 2,834 1,019
Avocados Kenya 452 346
Speciality crops
Arable Brazil 3,580 -
Forestry Kenya, Malawi, Brazil 2,176 3,637
Rubber Bangladesh 1,744 231
Citrus USA 177 -
Pistachios USA 131 -
Wine grapes South Africa 60 24
Almonds USA 56 -
Blueberries Kenya - 10*
Other
Joint Projects Kenya 738
Livestock Kenya 4,396 head
* planted in
2019
----------------------------------------------- ---------- --------
ENGINEERING
2019: Revenue - GBP22.1 million, Segment trading profit - GBPNil
Subsidiary Locations Abbey Metal Finishing and Atfin UK, Germany AJT Engineering UK
FOOD SERVICE
2019: Revenue - GBP29.8 million, Segment trading profit - GBP0.8 million
Subsidiary Locations
ACS&T UK
Jing Tea UK
INVESTMENTS
Market value
at
31/12/19
Investment type Locations GBP'm
Investment Portfolio Global 47.0
Investment Property UK, Malawi, Brazil 23.1
Collections UK, India 9.8*
* Collections are stated
at cost
----------------------------- ------------ ------------------------- ------------
ASSOCIATES
2019: Share of results after taxation
- GBP4.6 million
Holding
Location Activity %
Life and Non-life
BF&M Bermuda insurance 37.8
United Finance Bangladesh Banking 38.4
United Insurance Bangladesh Non-life insurance 37.0
------------------------------ ----------------- ------------------- ------------
Directors and advisers
Directors Malcolm Perkins Chairman (iii)
Deputy Chairman, independent
Chris Relleen non-executive
Director and senior independent
Director (i) (ii) (iii)
Tom Franks Chief Executive
Graham Mclean Director of Agriculture
Susan Walker Chief Financial O cer
Jonathon Bond Independent non-executive Director
Independent non-executive Director
Gautam Dalal (i)
Independent non-executive Director
William Gibson (i) (ii) (iii)
Simon Turner Non-executive Director
Frédéric
Vuilleumier Independent non-executive Director
(i) Audit committee
(ii) Remuneration committee
(iii) Nomination committee
Group General Counsel Amarpal Takk
& Company Secretary
Registered office Linton Park
Linton
Maidstone
Kent ME17 4AB
Registered Number 00029559
Nominated adviser Panmure Gordon (UK)
and Limited
broker One New Change
London EC4M 9AF
Registrars Link Asset Services
The Registry
34 Beckenham Road
Kent BR3 4ZF
Independent auditors Deloitte LLP
Statutory Auditors
1 New Street Square
London EC4A 3HQ
PR Maitland/AMO
The HKX Building
3 Pancras Square London
N1C 4AG
Website www.camellia.plc.uk
Chairman's statement
The results for 2019 reflect a profit before tax from continuing operations of GBP22.3 million and include significant provision releases and one o items amounting to GBP6.2 million (2018: profit before tax from continuing operations GBP52.5 million, including provision releases of GBP14.4 million).
In previous years we have talked extensively about the need to diversify our portfolio of businesses, particularly in Agriculture, and to ensure that we are as e cient in our production methods as we can be. The need for this diversification has never been more evident than in 2019, which saw the year open with an over-supply of tea in the market causing prices to fall and from which they never recovered.
Our own tea production fell slightly short of last year's record but at 101.4mkg was our second highest year, reflecting the investment that we have made in replanting and irrigation and the purchase of two additional estates in Assam. Our other core crops also performed well, and with good prices in the market, both macadamia and avocado made a significant contribution to Group profit.
More generally, we saw an increasing number of extreme weather events across our operations, with hurricanes, droughts, floods and excessive temperatures seemingly more frequent and more widespread than they have ever been. In 2019 we published our first ever comprehensive ESG report to demonstrate what we are doing to reduce our own environmental footprint, and to mitigate the impacts of climate change. Whilst we are pleased with our progress in many areas, we are also conscious that we need to do more and therefore we have also introduced an internal fund, to use some of our centrally held resources to enable a step change in our sustainability programmes around the world.
Dividend
The Group is set up in a way that reflects our long-term approach, with financial stability and sustainability being at the heart of our philosophy. The current situation with regard to COVID-19 is unprecedented not only in its severity but because we cannot tell at this stage for how long it will last nor what the implications will be. Your Board has therefore decided not to recommend any additional dividends until we get clarity on the situation. Once we have this clarity and if circumstances so justify, we will declare a special dividend alongside the interim dividend.
Outlook
Never in my years as Chairman has it been so hard to predict the outcome of the coming year. Whilst only a small proportion of our operations are direct to the consumer, the ramifications of the COVID-19 outbreak and the economic fallout arising from it are a ecting all our businesses to some extent, and the ultimate impact will not be clear for some months yet. This matter is discussed in more detail in the Chief Executive's report. It is of course a situation that changes day by day.
However we remain financially strong, with significant net cash, and have the resources to withstand a period of disruption. The demand for our agricultural produce will remain and we are managing the business in a pragmatic manner which we believe will ensure our future prosperity whilst taking the necessary steps to manage our costs and spending in the short term.
Directors
I am delighted to welcome two new Non-Executive Directors onto the Board. Simon Turner, who is president of The Camellia Foundation, our majority shareholder, and Jonathon Bond who holds a number of directorships and has a particular focus on raising standards of governance and performance.
Staff
As always, my thanks go out to all our sta for their e orts in 2019 but in addition I should like to thank them for their continuing support during this very di cult period.
Malcolm Perkins
Chairman
7 May 2020
Chief Executive's Report
COVID-19 AND TRADING UPDATE
People
First, I would like to reiterate our gratitude to all of our sta around the world for their continuing support both within the business but also within the communities in which they operate.
Trading
Agriculture
All our agricultural operations continue to work as close to normal as is possible with the exception of India. Following the shut down in India announced on 24 March there has been a gradual easing of restrictions and currently all tea estates are open but utilising only 25% of their workforce in West Bengal and 50% of the workforce in Assam in order to maintain social distancing. As a consequence, we expect to lose the majority of our lucrative first flush and, if the current restrictions continue, a significant proportion of our second flush crops in India.
Elsewhere the restrictions that we are seeing globally continue to increase with all our countries of operation experiencing some form of lock down. It remains unclear the extent of the impact these restrictions will have on our production levels, our distribution channels, demand for our produce and access to market for our perishable crops such as avocado and citrus. A number of tea auctions have been cancelled in recent weeks although some have since resumed or are scheduled to resume in May. Overall tea prices during the first quarter was exceptionally poor as a result of the very high production levels of 2019, but as a consequence of the current crisis we have seen some signs of increased demand and prices for our teas.
As a result of very dry hot weather in Malawi and South Africa during the fourth quarter of 2019 we are also anticipating a decline in our macadamia production for 2020 and reduced global demand is also likely to adversely impact prices.
Engineering
Our engineering businesses are operating at close to normal. Both AJT Engineering (due to its role in the energy sector) and Abbey Metal Finishing (due to its role for aerospace and military) are deemed to be essential businesses. We are concerned however that issues in the wider economy could mean that demand in the oil, energy and aerospace sectors will be very weak in the second half of the year.
Food Service
ACS&T continues to operate but the reduced demand for its transport services which we mentioned on 1 April, means that profitability in H1 2020 is expected to be significantly lower than that for the same period in 2019. Jing Tea continues to trade at a substantially reduced level. Both businesses' trading results for the remainder of the year are dependent on the timing of any resumption of operations in the hospitality and food service sectors.
Financial Position
The Group has a strong balance sheet with substantial cash liquidity which amounted to GBP77.1 million in cash and cash equivalents net of borrowings as at 31 March 2020. In addition, our investment portfolio had a market value of GBP43.8 million at 31 March 2020. We continue to conserve cash wherever possible against a fast changing and unpredictable backdrop.
Community Action
As a Group we are uniquely placed to be able to assist in this crisis. We currently manage over 100 hospitals and clinics in some of the world's poorest countries where there is little access to public healthcare. Wherever appropriate our operations are working with the local authorities to ensure that these facilities are used for the benefit of the whole community. In addition, we are taking a wide range of steps across di erent businesses to help wherever possible. These steps include work on face masks by our engineering businesses in the UK; bulk purchasing of food in Kenya to ensure that our sta and their families are not forced to pay extortionate prices; purchasing hospital supplies in Malawi; payment of wages and distribution of food to our sta in India, whether in lock down or working and the provision of hygiene and social distancing education.
OVERVIEW
After an exceptional 2018, 2019 was a more challenging year for the Group, if not perhaps as challenging as 2020 is turning out to be.
Our long-term strategy of diversifying our agricultural products continues to impact positively on our results and we have made good progress in furthering this strategy during the year. On the investment side:
-- In Tanzania we make slow but steady progress in completing the
acquisition of our first farm. Whilst waiting for final government
approval we have set up an avocado nursery so that there is
no delay in planting out the trees once the land transfer is
ultimately sanctioned.
-- In Kenya the blueberry trial continues, and we harvested our
first small crop in September 2019 which was in line with volume
expectations with the fruit showing excellent flavour and size.
Our first major crop should be in the autumn of 2020 which will
give us a better insight into the prospects for this operation
and allow Kakuzi to make decisions as to the expansion of this
trial into a commercial operation. Our trial of new avocado
plantings at Kitale is now in its third year and we are beginning
to get some results which will allow us to make a decision as
to whether to turn this into a full commercial operation.
-- In South Africa, we completed the purchase of an additional
466Ha of land close to our existing macadamia operations in
Levubu close to Mambedi estate. This will be developed into
macadamia and avocado orchards.
Overall in 2019, our macadamia volumes continued to grow as the trees matured and prices held up well despite the increased volumes. Our investment in macadamia processing facilities has improved margins and widened our customer base and we are optimistic that whilst macadamia remains a relatively niche product amongst edible nuts, the market continues to grow.
Our avocado harvest was, as anticipated, significantly down after last year's bumper crop but this was more than compensated for by the excellent prices received from the European market. We continue to examine ways to even out the natural tendency of the avocado tree to produce significantly larger crops in alternate years.
The results for our speciality crops were more mixed, edible nuts performed well but we were hit by a number of weather-related issues in our arable operations in Brazil.
However, whilst our diversification strategy has made good progress, we remain the world's largest private grower of black tea which is therefore core to our performance. 2018 saw a record global production of tea at 5.9 million tonnes and we believe this was exceeded in 2019. This growth was driven partially by favorable weather conditions in Asia but more significantly by the relentless growth of the smallholder market. As a result, we witnessed record volumes of tea at the auctions, with consequent weaknesses in the market prices for black tea, from the start of 2019 and which continued throughout the year.
The drivers of this growth in production vary by geography, but good prices in former years, the ability of smallholders to produce tea with fewer of the social and certification costs, and a decrease in regulation have all played their part. There are a number of reasons why this situation will eventually reverse; global consumption will continue to increase, politicians are becoming increasingly concerned over the damage to the industry and to rural livelihoods, and producers themselves will abandon growing tea if there is no money to be made. However, such fundamental changes in the market will take time.
As a result of the above, 2019 turned out to be a di cult year for the Group's tea operations. Whilst our own production volumes were excellent at 101.4mkg, reflecting our investment over the past few years, prices were poor. Although our Indian tea prices were relatively steady, others including Kenya (13% down), Bangladesh (25% down) and Malawi (14% down) su ered steep falls. The start of 2020 saw average prices continue to fall in all markets, although there are signs this is reversing on account of the current crisis.
Despite steep increases in labour costs across all of our tea operations, the significant strides made to improve both e ciency and productivity through technology and structural reform, have enabled us to mitigate these increases to a significant extent.
Outside Agriculture, the performance was mixed. Our UK engineering and food service operations were all constrained by Brexit and other market related issues and our largest associate, BF&M, whilst having strong underlying growth was hit by two hurricanes in the year which held back profits.
Acquisitions and Investments
As reported in last year's Annual Report, at the beginning of 2019 we completed the acquisition of two tea estates in Assam. As stated above we have also completed the purchase of an additional farm close to our estates in the Levubu district of South Africa which will, in due course, help to compensate for the loss of Wales estate, the lease for which expires in 2020.
Financial Performance
The underlying profit before tax from continuing operations (i.e. before taking account of the provision releases and one o items described below) amounts to GBP16.1 million, down 58% on the comparable result for 2018.
We also recorded the following significant items:
-- Gains arising from the release of provisions in Kenya and India
amounting to GBP9.8 million
-- A GBP3.6 million charge in respect of Workers Profit Participation
contributions for prior years in Bangladesh which has been recognised
as a consequence of regulatory changes in 2019 (further details
are included in the CFO's report on page 20)
BUSINESS STRATEGY
The overall Group strategy, which is set out on page 21, remains unchanged with each division expected to perform against an agreed strategy with goals and targets for the short, medium and long-term. These are summarised below.
Agriculture
Core crops. To focus on our core crops of tea, macadamia and avocado where we have scale and geographic diversity. Where appropriate opportunities arise, to add to our production capability in these three crops, as well as to make aligned acquisitions and investments to enable us to capture more of the value chain. To investigate the possibility of a fourth core crop if suitable opportunities present themselves.
Speciality crops. To maintain our portfolio of speciality crops in order to retain the diversity of location and crop which has historically proven so valuable in spreading the Group's political and commodity price risk.
With all our agriculture operations we will have regard to the potential threats arising from politics and the impact of climate change, particularly in water stressed areas and will adapt our portfolio of operations accordingly.
Engineering
AJT Engineering . To maintain our presence in the oil services sector whilst diversifying into adjacent energy related sectors in order to create a sustainably profitable engineering business focused on the wider energy sector.
Abbey Metal Finishing and Atfin. To continue to grow both businesses as quality suppliers to the aerospace industry.
Food Service
ACS&T . To continue to operate as a niche high quality business in the storage and distribution of frozen foods, aiming to achieve critical mass by profitable growth and if appropriate, acquisition.
Jing Tea. To grow the existing respected small brand into a larger, more profitable distributor and retailer of speciality teas internationally.
Investments
Investment Portfolio. The Group has a portfolio, principally of listed investments, the strategy for which remains to invest in high quality companies where we believe that there is long-term value. This portfolio also enables us to balance our geographic risk exposure.
Investment Property . The strategy is to continue to invest in quality assets where an appropriate yield may be realised. The process of developing some of our existing properties to enhance yield will continue.
Collections. The Group has collections of art, philately and manuscripts which are regularly reviewed and are added to or sold as appropriate.
Associates
The Group has three associate companies in the financial services sector of which BF&M, the listed Bermudian insurance business is the most significant. With all our associates, we continually monitor our investment and may increase or decrease our holding in the future.
PERFORMANCE
Agriculture
In total, the Agriculture division made a segment trading profit of GBP25.2 million (2018: GBP51.0 million) on revenue of GBP238.7 million (2018: GBP245.3 million), as set out in note 1 to the Accounts.
Tea Production
2019 saw the Group produce high volumes of tea through our own and managed factories just falling short of 2018's record volumes. Total made tea produced was 101.4mkg (2018: 103.1mkg).
Mature Immature 2019 2018
area area Volume Volume
Ha Ha mkg mkg
India 15,925 1,375 32.1 28.1
Bangladesh 8,660 563 14.2 12.8
Kenya 3,992 161 12.1 14.4
Malawi 5,132 509 17.6 19.1
------ -------- ------ ------
Total own estates 33,709 2,608 76.0 74.4
------ -------- ------ ------
Bought leaf production 21.1 24.2
Managed client production 4.3 4.5
------ ------
Total made tea produced 101.4 103.1
------ ------
Tea pricing and operations
India
Overall, India produced a record volume of tea in 2019 for the second consecutive year. This was principally as a result of improved volumes from our own estates, and the impact of the two estates that we bought in Assam at the start of the year. In total our own estate production was up 14% and bought leaf volumes were relatively stable at 8.2mkg.
Across all our Indian operations the average selling price for the year was 2% down on 2018 primarily due to a drop in the market value for 'old season' teas in the first quarter of 2019.
This and the very significant wage increases that took place during 2018 which totaled 33% in West Bengal and 22% in Assam has led to a significant pressure on margins which could only be partially mitigated by productivity and e ciency improvements.
Having recovered well in 2018 from the general strike in 2017, it is disappointing that for 2019 season teas prices in Darjeeling have slipped back significantly. Darjeeling produces very high quality teas but due to the altitude and topography, volumes are small and production costs are high. We continue to invest in marketing and tourism in the region for this unique product.
Packet tea sales volumes in India grew by 8.5% to 11.3 mkg in a highly competitive market due to continued marketing e orts.
We also opened three new tea lounges in Mumbai, Kolkata and at Mirik Lake in Darjeeling, taking the total to seven. These café/restaurants help to showcase our finest teas to a wider audience and promote tourism in Darjeeling.
The replanting programme continued with 239Ha completed and a further 205Ha uprooted for replanting at a later date.
Politically, the election saw the BJP gain significant ground in both Assam and West Bengal. The National Citizenship Register is causing tension in the border areas which has the potential to impact operations in both India and Bangladesh.
Bangladesh
Our Bangladesh tea crop was up on 2018 by 11% at 14.2mkg, as a result of good weather and the significant progress that we have made on replanting and infilling.
Unfortunately, the increased production resulting from the good weather, together with teas being available from India caused our average prices to drop.
The replanting and extension programme continued with 161Ha of new tea being established in the year and an additional three million bushes planted to infill existing fields.
Kenya
Tea production (including smallholders and managed clients) was down on 2018 by 15% and was our lowest production year since 2012. This was as result of a very dry start to the year from which volumes never recovered. However, frustratingly, these countrywide lower volumes failed to result in the expected increase in prices due to the large carry forward stocks of 2018 teas sent to the auction. As a result, average auction prices fell by 13% during the year.
The collective bargaining agreements covering the period 2014-2019 have now been agreed which has allowed us to make all outstanding payments to our employees and to release certain provisions which we were carrying. These agreements not only set pay levels but also productivity which will enable us to improve e ciency in the future.
The over-production in Kenya is having a severe e ect on the livelihood's of smallholder farmers. This has resulted in the Kenyan government announcing a range of proposed measures to regulate and control the tea market. These measures which are currently out for consultation include the banning of private sales of tea, regulating agency agreements, provisions for the payment of smallholder farmers and ensuring that more value-added activities take place within Kenya. The final form of these proposals and when they might be enacted remains unclear.
We replanted a total of 51Ha in 2019 (2018: 41Ha) and uprooted a further 49Ha for replanting in 2020.
Malawi
Although not at 2018 record levels, Eastern Produce Malawi produced its second highest crop (including smallholders) in the year of 20mkg, down 10% on 2018. However, the Malawi market is linked to the Mombasa tea-auction and the weakness there left our average price for the year down 14%.
Eastern Produce Malawi continues to produce a little over 40% of Malawi's total tea and is therefore a key stakeholder in the MOU 2020 process (a coalition of producers, buyers and NGOs seeking to revitalise the industry and working towards a sustainable wage rate for employees). As I stated last year, the wage negotiations and a collective bargaining agreement were successfully concluded during 2018, awarding 22% wage increases but that such increases were only sustainable with the support of international buyers. The combination of increased costs and reduced prices has resulted in a tea sector in Malawi which is in danger of becoming unsustainable.
Developments included replanting a total of 77Ha in 2019 (2018: 106Ha) and installing additional irrigation at Ruo estate.
Macadamia Production
In line with the overall plan to increase our macadamia production, volumes produced in 2019 increased to 1.3mkg (2018: 1.1mkg).
Mature Immature Volume Volume
area area 2019 2018
Ha Ha Tonnes Tonnes
Malawi 1,326 182 503 472
South Africa 887 426 459 429
Kenya 621 411 313 229
------ -------- ------ ------
Total 2,834 1,019 1,275 1,130
------ -------- ------ ------
Macadamia Pricing
Macadamia prices remained firm during the year and averaged 4% ahead of 2018 which was encouraging given the increase in global supply.
Macadamia Operations
Malawi
Volumes were 6% up on 2018 as a result of benign weather.
South Africa
Volumes were 7% up on 2018 despite the Wales estate being hit by a major hailstorm during flowering which impacted the nut set and reduced volumes by 50% from that estate. Developments included:
-- Completion of the Mambedi dam.
-- Purchase of an additional 466Ha farm at Beja, close to Mambedi
for planting macadamia and avocado.
-- Planting of an additional 61Ha at Mambedi.
-- The incorporation of additional colour sorting capability at
the Zetmac processing facility to increase throughput and e ciencies.
As regards the Wales estate, which amounts to 191Ha of mature macadamia, we have made no significant progress towards renewing the lease for the property, although we will now be able to harvest the 2020 crop before vacating the estate.
Kenya
Production volumes were 36% up on 2018 as the orchards continue to mature. Developments included the installation of optical sorting technology at the processing plant.
Avocado Production
Mature Immature Volume Volume
area area 2019 2018
Ha Ha mkg mkg
Kenya - own estates 452 346 7.1 11.0
- smallholders and outgrowers 1.1 5.0
Avocado Pricing and Operations
Following the bumper crops in 2018, production of Hass from our own orchards was down 35% in 2019 due to the trees going in to an "o " year. This "o " year cycle was experienced in many other producing countries such as Peru, South Africa and Chile. As a result, global supply volumes were down whilst demand continued to increase leading to an undersupplied market and very firm pricing with our estate Hass average prices 152% higher than in 2018.
Smallholder Hass volumes in 2019 were down by 86%, but our outgrowers up by 2%. This was partially due to generally lower production volumes but also due to smallholders supplying other exporters.
A total of 79Ha of new Hass orchards were planted during the year including 9Ha of the Carmen variety of Hass.
Pinkerton volumes were up on the previous year by 77% and prices rose by 24%.
We continue to monitor the 23Ha trial of avocados near Kitale in Kenya which we initiated in 2017.
Speciality Crops Production Mature Immature Volume Volume
area area 2019 2018
Ha Ha Tonnes Tonnes
Arable (Brazil) 3,580 - 27,829 31,445
Rubber (Bangladesh) 1,744 231 650 649
Citrus (USA) 177 - 6,665 3,773
Pistachios (USA) 131 - 10 (*) 712
Wine grapes (South Africa) 60 24 394 317
Almonds (USA) 56 - 131 111
Blueberries (Kenya) - 10 4 -
(m) (3) (m) (3)
Forestry (Kenya, Brazil, Malawi) 2,176 3,637 86,710 (**) 47,767 (**)
N(o) of head N(o) of births N(o) of births
Livestock 4,396 827 948
* 2019 was an 'o ' year for Pistachios
** Volumes quoted are for conversion to value addition products rather than fuel wood for our own use
Speciality Crops, Pricing and Operations
Arable
Our arable operation in Brazil had a di cult year due to a combination of weather and pest and disease related issues. Soya harvest volumes were slightly down (1%) on last year, however prices were up 8%. Both the maize and oat crops su ered from pest and disease attacks and the wheat from unexpected frosts in July. Despite these adversities, the farm continues to generate good profits.
Rubber
Rubber is grown on areas of the Bangladesh tea estates unsuited for growing tea. Volumes produced in 2019 were in line with 2018 and although average prices increased by 4% they remain below cost.
Citrus
Citrus volumes were 77% up on last year but prices were 40% lower due to market over supply.
Pistachios
2019 was an o year for our pistachios so a very small volume was produced.
Wine
The harvest this year was much improved on 2018's drought a ected crop with volumes up 24% but sales continue to disappoint. During the year 11Ha of vines were replanted bringing the total planted area to 84Ha.
Almonds
Almond volumes were 18% ahead of 2018 as the orchards continue to mature; prices remained firm in line with previous years.
Forestry
Production of Eucalyptus in Brazil doubled in the year due to increased demand from the paper industry. Kakuzi also saw a 30% increase in production of forestry products for the market in Kenya.
Livestock
Births were down this year due to the drought conditions experienced during the first quarter of the year which a ected the availability and quality of grazing.
Blueberries
As previously reported, a 10Ha trial of blueberries was established at Kakuzi early in 2019. The first crop was harvested in September 2019 totalling 4 tonnes most of which was sold in the local market. The fruit showed excellent flavour and sizing which is most encouraging at this point. The first main crop is expected in the autumn of 2020. If successful, there are substantial additional areas of Kakuzi which could be developed.
Engineering
In total, the Engineering division reached break even (2018: trading loss GBP0.6 million) on revenue of GBP22.1 million (2018: GBP22.2 million), as set out in note 1 to the Accounts. The division continued to be cash generative.
AJT Engineering had a much better year with sales rising by 15% to GBP16.0 million as the strategy to increase utilisation and diversify into other parts of the energy sector continue to pay o . However increased overheads meant that the business made a small operating loss in the year.
Abbey Metal Finishing and its subsidiary Atfin both had a di cult year as issues in the aerospace supply chain and concerns from European customers over Brexit-impacted sales volumes. Combined revenues were down 9% with a consequent impact on profitability.
Food Service
In total the Food Service division made a segment trading profit of GBP0.8 million (2018: GBP1.6 million) on revenue of GBP29.8 million (2018: GBP41.5 million), as set out in note 1 to the Accounts.
ACS&T saw reduced profitability from lower revenue as production issues at its major customer saw storage volumes fall significantly over the summer.
Jing Tea saw revenues rise by 27%. Shortly before the year end Jing opened its first retail store in St Christopher's Place, London which began trading well but is currently closed.
Investments
Investment Portfolio. The gains on sale for the year were GBP1.1 million (2018: GBP0.4 million). Of this gain GBP0.2 million was reflected in the Income Statement and GBP0.9 million in the Statement of Comprehensive Income. The total value of the portfolio at 31 December 2019 was GBP47.0 million (2018: GBP39.6 million). The increase reflects the strength of global equity markets, particularly in the second half of 2019, in part o set by a number of disposals during the year.
Clearly the market value of the portfolio has fallen significantly in the last few weeks though not as severely as global markets due to the strength of the yen and we estimate the value at 31 March 2020 to be GBP43.8 million.
Investment Property . Work continues on the development of the Linton Park Estate with an additional two properties expected to be completed and available for rental in 2020. In addition, a property in central London was refurbished and has now been let.
Collections. The collections are held at cost. A number of minor additions and disposals were made during the year.
Associates
In total, our share of the results of associates amounted to GBP4.6 million (2018: GBP7.6 million).
Although BF&M was adversely impacted by two major hurricanes in 2019, Dorian which hit the Bahamas and Humberto which hit Bermuda, gross premiums written increased by 12% driven by growth in property premiums in the Caribbean and higher annuity premiums. BF&M's profit for the year was Bermudian Dollar 13.1 million (2018: Bermudian Dollar 18.5 million).
Our two associate companies in Bangladesh, United Insurance and United Finance, produced satisfactory results broadly in line with expectations.
POLITICAL, LEGISLATIVE AND LEGAL ISSUES
The Group is present in many jurisdictions and is subject to local legislation. We previously disclosed that in 2018, the Kenyan National Land Commission was asked by a small number of claimant groups to investigate historical land injustice claims concerning lands registered in the name of Kakuzi and Eastern Produce Kenya. The land claims have been refuted through the Kenyan legal system. A constitutional petition has been filed and also a request to stay the proceedings of the National Land Commission until the legal position has been determined. This matter is on-going and we continue to keep the situation under review.
Group claims against African operations
As we stated in our trading update of January 2020, Camellia and a number of its subsidiary companies have received notification of claims to be made in the UK relating to allegations made by multiple individuals concerning two of those companies' African operations. The allegations are of serious assault, harassment and sexual misconduct allegedly committed by certain individuals employed by those two foreign operating companies. The Company and its wider group takes any complaint of criminality, misconduct, illegality, or unethical behaviour extremely seriously. At this stage the financial impact of these claims is impossible to quantify, but the related legal and other costs will be significant. Costs incurred since notification of these claims in 2019 to the end of March 2020 amount to GBP3.5 million.
Brexit
Brexit and the potential impact across the Group is something for which we have been preparing over the last three years. Whilst there is now clarity as to the dates, the significant uncertainty as to the precise structure of any post-Brexit trading arrangements continues to pose challenges for these preparations.
As we have said previously, whilst we expect there to be some impact on our UK operations, we are confident that the majority of our operations will be largely una ected.
The direct impact of a no-deal Brexit on our Group primarily arises from potential import and export tari s, changes to the way trade flows between the UK and rest of the world and, from a financial perspective, the volatility of exchange rates and the potential risk we could incur additional tax costs.
CAPITAL INVESTMENT AND DEVELOPMENT
We continued to invest in our assets during the year and GBP14.5 million was spent on property, plant, equipment and investment property (2018: GBP17.4 million). Key projects are referred to in the operational reports above. A further GBP4.6 million (2018: GBP4.3 million) was invested in bearer crop and forestry plantings.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Sustainability, whether it is environmental or social is fundamental to the ethos of Camellia. Many of our operations have histories going back over 100 years and we continue to invest in them for the long-term. Ensuring, therefore, that the environments and communities on which we depend are maintained and enhanced is key to our future.
In 2019, for the first time we also published a separate Environmental, Social and Governance report. This ESG report allowed us to add more detail as to the breadth and scale of activities that we undertake in this area and highlight our commitment to it. We intend to publish an updated version during the course of 2020. Further guidance on our approach to Governance, Sustainability and CSR is also set out in the Strategic Report on pages 21 to 27 of this document.
As part of our long-term commitment to the environment we are running a large number of programmes across our operations to mitigate our environmental impact and to reduce our carbon footprint. Clearly the ability of our operations to continue to invest in these initiatives depends on their results which can lead to a stop/start approach to this investment. Furthermore, a number of the potential solutions are untested in the country or on the crop concerned. We have therefore introduced a Chairman's Fund, the aim of which is to utilise some of our centrally held resources to maintain these critical initiatives and to make a step change in the speed and e ectiveness of the programmes. More detail will be available in our 2020 ESG report to be published later this year.
Performance
As part of our environmental impact assessment we measure total energy consumption, carbon emissions, and water usage as set out below.
2019 2018 2017
Energy and Carbon
Total energy consumed (TWh)* 0.76 0.79 0.79
Total carbon emissions (tonnes CO(2)
e) 229,703 217,320 222,775
Water
Total water withdrawal (million m(3)
) 42.7 40.7 40.9
* Historical data has been adjusted to reflect more accurate conversion
factors published each year by the UK Department for Business,
Energy & Industrial Strategy (BEIS).
These numbers set out actual usage, prior years have not been adjusted to reflect acquisitions, disposals nor other corporate activity.
Overall our energy usage dropped during the year but our total carbon emissions were up by 5.6%. This largely reflects the acquisitions of tea estates in India in 2019 which rely on coal as a fuel source. One of the largest uses of energy in the Group is the requirement to process and dry our tea crop and I am pleased to report that the continuing investment we have been making to increase energy e ciency in our tea factories has resulted in a drop in our carbon emissions from 1.48kg to 1.39kg of CO2 per kg of made tea, a reduction of 6%.
SUMMARY
Although 2019 was a less good year financially for the Group compared with the exceptional results in 2018, we continued to make good progress with our core strategy. Our tea operations continued to produce excellent volumes and quality of tea and we made significant improvements in e ciency and productivity. Our two other core crops, macadamia and avocado, once again demonstrated the importance of this diversification, and whilst not yet large enough, are already showing their ability to mitigate the cyclicality of the tea market. The investments that we are making in these areas will improve this situation in the future.
Like all commodities, tea has cycles; cycles which can be long or short depending on a range of factors. However, tea remains the world's most widely consumed drink after water, global consumption continues to increase and inevitably prices will improve albeit it remains unclear as to when.
We continue to invest in sustainability; our first ESG report in 2019 showed o some of the strength and depth of our commitment in this area and was very positively received by our many stakeholders. Our new Chairman's Fund will ensure that we maintain our impetus in this area.
We are fortunate that our balance sheet remains strong with GBP89.4 million of net cash in the Group and money market deposits amounting to GBP6.2 million. However some of this cash is committed for long-term projects and much of it overseas. At this stage there are a number of short-term calls on this cash and therefore until we get some certainty as to the future, we believe that it is prudent to conserve cash wherever we can. We have already put a number of capital projects on hold and have decided not to pay a final dividend for 2019. If circumstances justify, we will declare a special dividend alongside the interim dividend.
2020 is likely to be one of the most challenging years that the Group has yet faced and is already testing our operations across the world. I am delighted by the response of our sta and proud of the e orts that they have made not just in their own business, but in the wider communities where they operate. This has been particularly true in the agricultural operations where the Group's hospitals have been made available to assist local services.
Tom Franks
Chief Executive
7 May 2020
Chief Financial Officer's report
Overview of Results
The profit after tax for the year ended 31 December 2019 was GBP15.1 million (2018: GBP32.3 million).
Profit before tax from our continuing operations in 2019 was GBP22.3 million which includes GBP6.2 million relating to a number of large separately disclosed items (2018: GBP52.5 million, including provision releases of GBP14.4 million). This reduction in profit before tax reflects, inter alia, lower average selling prices for tea, improved volumes and strong prices for our macadamia crop, lower volumes and higher prices for our avocado crop, lower profits at BF&M, and a number of significant items:
-- A GBP9.8 million gain from the release of provisions for wage
increases relating to prior years in our agriculture operations
following progress on wage negotiations.
-- The creation of a GBP3.6 million charge in Bangladesh for workers
profit participation obligations for prior years which has been
recognised as a consequence of regulatory developments during
the year, further details of which are set out below on page
20.
Excluding these items, the underlying profit before tax from continuing operations was GBP16.1 million (2018: GBP38.1 million).
Equity attributable to the owners of Camellia was GBP395.7 million (2018: GBP395.5 million) with net cash and cash equivalents of GBP89.4 million (2018: GBP109.6 million) and financial assets at fair value through profit or loss (ie money market funds) having increased to GBP6.2 million (2018: GBP3.7 million).
COVID-19 impact
As set out in the CEO's Report on page 6, our businesses are currently operating broadly as normal with the exception of our Indian estates. However, the impact of COVID-19 on the Group during the remainder of this year is di cult to predict with any certainty. Accordingly, we have taken actions to conserve our cash during this period of uncertainty by reducing our operating and capital expenditure across the Group and by deciding not to recommend any additional dividends until we have clarity on the situation.
We have undertaken a scenario planning exercise, further details of which are set out in the Report of the Directors on page 30, to assess a range of potential impacts on our profits and cashflows. This has included considering the impact of very substantial sales volume reductions across our major operations and pricing risks for our macadamia and avocado crops as well as the mitigating actions we could take in those circumstances. The impact of these on our revenue, were they to occur would have a substantially negative impact on Group profitability. Further, the scenario modelling indicates that in this event, the Group would, in the absence of material price increases, or significant levels of overseas government support, make a substantial loss during 2020.
However, with our substantial cash resources, our investment portfolio and limited gearing, we are well placed to withstand a period of disruption to our operations and sales.
Currencies
Over the course of the year, Sterling strengthened against all our key operating currencies. This has resulted in a loss on foreign exchange translation of GBP16.7 million (2018: gain GBP11.6 million) which is reflected in the Statement of Comprehensive Income. Had we translated our profit before tax for the year using the same average rates as last year, our results for 2019 would have been GBP0.8 million lower. Our profit before tax from continuing operations includes an exchange loss of GBP0.3 million on transactions during the year (2018: gain GBP0.2 million).
There has been significant currency volatility during 2020 to date, the impact of which will only become clear as the year progresses. We are fortunate that much of our revenue is denominated in hard currencies which provides some hedging against our emerging markets currency risk.
Cash
The Group's net cash position decreased to GBP89.4 million at 31 December 2019 (2018: GBP109.6 million) reflecting, inter alia, lower net cash inflows from continuing operating activities of GBP12.6 million (2018: inflow GBP24.5 million) as a result of the reduced trading results. We spent GBP9.4 million on acquiring businesses and in addition maintained a significant level of investment in our existing operations and in purchasing land (GBP19.0 million). We also increased our holding in BF&M at a cost of GBP1.3 million. The Group has loans outstanding amounting to GBP6.9 million (2018: GBP3.9 million).
As previously highlighted, a number of the Group's key trading subsidiaries have minority shareholders such that when cash is repatriated to the UK by way of dividends, those minorities are entitled to their share of the relevant dividend. In a number of cases, withholding taxes are also payable from our share of those dividends.
Funds are reserved within our subsidiary companies to ensure wherever possible a level of headroom exists against the risk of crop losses and adverse price movements, such as are possible as a result of COVID-19. In addition funds are held for:
-- Long-term development projects related to the planned continued
extension of our core crop portfolio, including in our new locations.
-- Disputed taxation assessments (see below).
-- Other contingent liabilities.
These will reduce the net cash available to the Group in future years as they are spent, resolved, or (in the case of the disputed taxation assessments) if they are not settled in the way we expect.
In light of the impact of COVID-19 on equity markets and on interest rates, it is likely that deficit reduction contributions will be required to our UK defined benefit pension scheme following the completion of our triennial valuation later this year.
Our businesses are conserving cash pending further clarity on the full impact of the COVID-19 situation and we expect capital expenditure to be lower in 2020 than historically.
Taxation
The Group's e ective tax rate of 32.3% (2018: 38.2%) is higher than we would want. The key reason for this is that it reflects the losses which are incurred in the UK for which no tax relief is available and the fact that we are not able to recognise the associated deferred tax asset on our balance sheet until it is su ciently clear when those UK tax losses will be utilised.
Tax and Other Provisions
During the year, the wage negotiations in Kenya were resolved for the Collective Bargaining Agreement years of 2014 to 2019 and payment made to employees. The balance of the provisions which we were carrying have now been released, as have certain provisions for wage increases in India, amounting in aggregate to GBP9.8 million. As is normal at this time of the year, we have ongoing wage negotiations in Bangladesh and India. We consider we have made adequate provision for the likely outcome of these.
We quantify our provisions for tax in accordance with IFRIC 23 (Uncertainty over tax treatments) which we have implemented for the first time this year. The impact of this has not been material to our tax charge for the year. However, there are a number of significant movements in tax provisions due to changes in circumstances.
We have a number of significant uncertain tax situations, the majority of which have been disclosed previously:
-- During the year we released a provision of GBP2.3 million for
taxation arising from assessments raised by the Malawi Revenue
Authority for unpaid taxes from prior years in light of the
assessments having been set aside by a judicial review hearing
and the years in question now falling outside the enquiry window.
-- A provision of GBP1.3 million has been established in respect
of possible withholding taxes on branch remittances from Bangladesh
where the Bangladesh Revenue Authority is contesting the applicable
rate.
-- In India assessments have been received for GBP3.8 million of
excise duties, sales and entry tax GBP0.9 million and GBP1.1
million of income taxes. These are being contested and no provisions
have been made.
-- In India, the long running dispute between our local subsidiaries
and the Government of West Bengal over the payment of a land
tax, locally called 'Salami', remains unresolved. Lawyers have
advised that payment of Salami does not apply, accordingly no
provisions have been made. The sums contested amount to GBP1.3
million excluding penalties.
In some of our jurisdictions, the tax authorities have levied assessments in respect of prior years. In a number of situations, the liability position under statute and case law is clear but unfortunately, in other situations the law is either unclear or underdeveloped and in these instances we make provisions where we consider it is more likely than not that a liability will arise and the quantum of provision is determined in accordance with IFRIC 23.
Pensions and Other Employment Benefits
The Group operates a number of defined benefit pension schemes, the largest of which is in the UK. The triennial valuation of the UK scheme is due to be carried out in 2020. The 2017 triennial valuation for the UK scheme, which was closed to future accrual during 2016, showed a funding surplus of GBP7.1 million. The recent UK interest rate reductions and the major movements in equity market valuations due to COVID-19 will have significantly impacted both the scheme's asset values and its obligations such that were the valuation to be performed today, the scheme would be in a deficit position.
The overseas defined benefit schemes are located in Bangladesh and India. Our businesses in Kenya, India and Bangladesh also have obligations to pay terminal gratuities based on years of service and, in some cases, based on salaries.
In aggregate, our employee benefit schemes currently show deficits on an IAS 19 basis of GBP22.0 million (2018: GBP24.7 million deficit).
Accounting for defined benefit schemes is prescribed by IAS 19 and the quantum of the deficit continues to be highly sensitive to small changes in assumptions as regards inflation and gilt yields in the relevant jurisdictions and to asset performance. This year a net actuarial gain of GBP3.5 million (2018: loss GBP0.7 million) is reflected in the Statement of Comprehensive Income. The net gain this year arises primarily from the UK scheme where strong asset performance was only o set in part by the e ect of lower discount rates and lower inflation assumptions.
Our Income Statement also reflects current and past service costs of GBP1.6 million (2018: net gain GBP5.9 million, including a GBP9.0 million gain re post-employment benefits curtailment gain) and GBP1.1 million (2018: GBP1.5 million) in respect of employee benefit interest.
In addition, GBP3.6 million has been charged to our Income Statement in 2019 in respect of possible workers profit participation obligations for prior years in Bangladesh which has been recognised as a consequence of regulatory changes during the year. As announced previously, legislation has been enacted in Bangladesh requiring certain companies to make workers profit participation payments. The applicability of this legislation to our tea operations in Bangladesh is not wholly clear, and the government fund to which payments are to be made has not yet been established. We consider su cient provision to have been made for these costs.
Susan Walker
Chief Financial Officer
7 May 2020
Strategic report
Business Review
The Company is required to set out in this report a fair review of the business of the Group during the year ended 31 December 2019 and a description of the principal risks and uncertainties facing the Group. A fair review of the business of the Group is incorporated within the Chairman's Statement and the Chief Executive's report on pages 5 to 16. The Chairman's statement and the Chief Executive's report, together with information contained within the report of the Directors, highlight the key factors a ecting the Group's development and performance. Further details of the financial performance and position of the Group are set out in the Chief Financial O cer's report on pages 17 to 20. Other matters are dealt with below.
Group Strategy
The Board has adopted the following strategy for the Group:
-- To develop a worldwide group of businesses requiring management
to take a long-term view.
-- The achievement of long-term shareholder returns through sustained
and targeted investment.
-- Investing in the environment and sustainability of the communities
in which we do business.
-- Setting the principles which the operating companies need to
achieve through their policies and procedures to ensure that
the quality and safety of their products and services meet the
highest international standards.
-- The continuous refinement and improvement of the Group's existing
businesses using our internal expertise and financial strength.
The progress against this strategy during the year is set out in further detail in the Chief Executive's report shown on pages 6 to 16 and within the Report of the Directors.
Business Model
The Group consists of operations engaged in Agriculture, Engineering and Food Service. The Group also holds a range of Investments. Operations are managed on a divisional basis with regular reports made to the Board on performance against the annual budget.
S172 Statement
This section serves as the Company's section 172 statement and should be read in conjunction with the whole of the Strategic Report, the Corporate Governance Report and the Statement of Directors' Responsibilities. Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders in their decision making.
The Directors continue to have regard to the interests of the Company's employees and other stakeholders, including the impact of its activities on the environment and the Company's reputation, when making decisions. Acting in good faith and fairly between members, the Directors consider what is most likely to promote the success of the Company for its members in the long term.
The Board regularly considers the views of its principal stakeholders and how we engage with them. The stakeholder voice is brought into the boardroom throughout the annual cycle through information provided by management presentations, meetings and operational visits.
The Board continues to enhance its methods of engagement with the workforce. For example, during 2019 it was concluded that the most e ective method to measure engagement across the Group's UK sta was to undertake an employee survey, and overseas operations are encouraged to undertake similar steps.
During the year, the Board reviewed our Group Principal Policies, which includes additional steps to prevent modern slavery across the operations. For more information, refer to pages 25 to 26.
Principal Risks and Uncertainties
There are a number of possible risks and uncertainties that could impact the Group's operations. The Group regularly monitors the risks at operational and Group level. Information on the Group's financial risks is disclosed in note 41 of the Accounts. The following material risks relating to the Group's principal operations have been identified.
Agriculture
Risk Potential Impact Mitigation
------------------------------------- ------------------------------------- ------------------------------------
Climate change Current agricultural patterns and Geographical spread of operations to
practices become unsustainable. lessen the impact of extreme weather
Land values and local communities are on the Group as
impacted. a whole.
------------------------------------- ------------------------------------- ------------------------------------
Drought Level of rainfall affecting crop Investment in irrigation, water
yields. storage and drought resistant crop
varieties.
------------------------------------- ------------------------------------- ------------------------------------
Price volatility Fluctuations in commodity prices Use of forward contracts, product
impact profitability each season. In and crop diversification and
the event of a prolonged building long-term strategic
depression in the world tea market relationships with key customers.
the impact on the Group would be
material.
------------------------------------- ------------------------------------- ------------------------------------
Currency fluctuation Profit volatility arising from sales Monitoring of foreign exchange rates
in US Dollars and Euros where there and cash management.
is no natural hedge
against the cost of production in
local currency.
------------------------------------- ------------------------------------- ------------------------------------
Cost of labour Increased cost of production and Introduction of more efficient
lower profitability. labour and field practices and the
increased use of mechanisation
and automation.
------------------------------------- ------------------------------------- ------------------------------------
Long-term political issues over land Paying more for existing property Monitoring local land issues with
ownership in Kenya, Malawi, South (for example if freeholds become the assistance of lawyers and local
Africa and Tanzania leaseholds) or potentially trade associations.
losing access to farms and estates. Maintaining collaborative
relationships with governments at
local and national levels.
------------------------------------- ------------------------------------- ------------------------------------
Civil unrest and political Periodic interruptions to the Increasing security for our workers
instability operation of the businesses at a and operations during times of civil
local level. unrest.
------------------------------------- ------------------------------------- ------------------------------------
Corruption Inability to carry on business in a Strict adherence to anti-bribery
manner which is legal and ethical. legislation and the implementation
of the Group Principal
Polices.
------------------------------------- ------------------------------------- ------------------------------------
Health and safety Vulnerability of the employees to Strict compliance with legislation
injury at work due to the use of and training employees to adopt safe
machinery and chemicals. working practices.
Payment of fines and claims, criminal Regular external compliance reviews.
prosecutions and reputational damage.
------------------------------------- ------------------------------------- ------------------------------------
Engineering
Risk Potential Impact Mitigation
------------------------------------------------ ----------------------------- ------------------------------
Key customer dependence Losing a major customer. Diversification of the
customer base and careful
customer relationship
management.
------------------------------------------------ ----------------------------- ------------------------------
Dependence on the oil and gas and aerospace Changes in market conditions Diversification into other
sectors leading to lower demand for sectors. Close monitoring of
services. the current sectors.
------------------------------------------------ ----------------------------- ------------------------------
Health and safety Vulnerability of the Strict compliance with
employees to injury at work legislation and training
due to the use of machinery employees to adopt safe
and chemicals. working practices.
Payment of fines and claims Regular external compliance
and reputational damage. reviews.
------------------------------------------------ ----------------------------- ------------------------------
Food Service
Risk Potential Impact Mitigation
------------------------------------------------ ----------------------------- ------------------------------
Key customer dependence Losing a major customer. Diversification of the
customer base and careful
customer relationship
management.
------------------------------------------------ ----------------------------- ------------------------------
Health and safety Vulnerability of the Strict compliance with
employees to injury at work legislation and training
due to the use of machinery employees to adopt safe
and chemicals. working practices.
Payment of fines and claims, Regular external compliance
criminal prosecutions and reviews.
reputational damage.
------------------------------------------------ ----------------------------- ------------------------------
Investments
Risk Potential Impact Mitigation
------------------------------------------------ ----------------------------- ------------------------------
Market Decline in the value of Portfolio diversification,
investments and property. careful stock selection, the
regular monitoring of
individual company
stock performance and a
diversified property
portfolio.
------------------------------------------------ ----------------------------- ------------------------------
Group
Risk Potential Impact Mitigation
------------------------------------------------ ----------------------------- ------------------------------
Prolonged impact of a pandemic Interruption to production Implementation of contingency
and/or disruption of supply plans.
to customers. Cost reduction and cash
Volatile equity markets management measures.
impacting the pension Ongoing monitoring of banking
schemes' deficits with a partners and country credit
resultant increase ratings.
in the funding requirement.
Increased risk of bank
failure, and foreign exchange
volatility resulting in
increased costs.
Risk of imposition of
currency controls leading to
the inability to remit funds
from overseas
operations.
------------------------------------------------ ----------------------------- ------------------------------
UK and Overseas Pensions Increase in the pension Regular monitoring of the
Increases in inflation and/or reductions in schemes' deficits with a investment strategy, the
long- term government bond yields resultant increase in the funding position of the
Lower than expected asset return funding requirement. pension schemes
Changes in local laws restricting the investment and investment performance.
choices for the schemes' assets
------------------------------------------------ ----------------------------- ------------------------------
Environmental Contamination of local and Strict compliance with
wider environment due to the legislation, training
use of machinery and employees to adopt safe
chemicals. Payment working practices and
of fines and claims, criminal lessen the impact on the
prosecutions and reputational environment.
damage.
------------------------------------------------ ----------------------------- ------------------------------
Taxation Future adjustments to taxable Tax exposures are considered
Uncertainties in relation to the interpretation income and expenses already individually, and judgements
of complex tax legislation, or arising from recorded or increases to the made with support from
changes in tax legislation Risk that the Group's cash experienced
judgements are challenged by tax authorities tax costs incurred by the tax professionals and external
Group in future. advisors.
------------------------------------------------ ----------------------------- ------------------------------
Legal Group legal risk in relation Monitoring the interpretation
Uncertainties in relation to the application of to the activities of overseas of law and taking appropriate
English or other law or changes in case law operations (including legal advice.
potential
litigation in the UK) and
incurring costs in relation
to the same.
------------------------------------------------ ----------------------------- ------------------------------
IT systems Interruption to services for Implementation of a disaster
customers and the business. recovery plan.
------------------------------------------------ ----------------------------- ------------------------------
Group Principal Policies - GPPs
There are a range of issues that are important to the Group and to all of our operations,
whatever sector they operate in. These are set out in the Group Principal Policies which are
cascaded across the Group. Each operation is required to prescribe its own local policies
based upon the Group Principal Policies. On an annual basis, each significant operation confirms
to Group its adherence with the Group Principal Policies. Ultimately, our individual operations
have experts who are best placed to identify how each policy can be implemented and applied
which in turn enables them to operate responsibly and ethically over the long-term.
Notwithstanding the fact that overall responsibility for the implementation and enforcement
of the GPPs rests with the management of each operating company, certain GPPs (such as the
Anti-Bribery and Corruption GPP, the Modern Slavery GPP and the Tax GPP) include provisions
which are directly e ective. This is the case where observance of these provisions is required
in order for Camellia Plc to comply with its own legal and regulatory obligations.
The GPPs can therefore be grouped into the following four categories:
* The High-level GPPs
* The Compliance GPPs
* The Modern Slavery GPP
* The Tax Principles
The High-level GPPs comprise the Certification and Traceability GPP, the Health and Safety
GPP, the Environment GPP, and the Employee Welfare GPP. The Compliance GPPs comprise the Anti-Bribery
and Corruption GPP, and the Whistleblowing GPP. A summary of each principal policy is set
out below and they are set out in full on our website.
High-level GPPs
Certification and Traceability
As part of our end to end supply chain, our operations are required to meet the requirements
of our customers and suppliers in terms of certifications and traceability. The vast majority
of our tea gardens are RFA certified and all our macadamia, avocado and winery processing
facilities are FSSC 22000 certified. Across the Group, operations have also obtained ISO14001,
ISO9001 and ISO45001 and many other appropriate accreditations.
Health and Safety
We take responsibility for our people by promoting good health and providing a safe and healthy
workplace to protect all employees, contractors, visitors and the public from foreseeable
work hazards. All operations are required to comply with local health and safety legislation,
regulations and to obtain certifications from external authorities.
Environmental
We are mindful of the environment in which we operate, recognising that our operations require
natural resources and that our operations generate emissions and waste. We understand and
comply with current applicable legislation in the jurisdictions in which we operate. Our operations
are each required to commit to policies which reduce their environmental footprint and which
include (where appropriate), carbon, recycling, waste and water.
As part of our wider drive towards greater sustainability, we have developed a range of mid
to long-term targets to reduce, in some cases substantially, the environmental impact of our
operations. As an example, strategic improvements in our usage and sourcing of energy supports
our ambition to align with Science-Based Targets. Targets adopted by the operations to reduce
greenhouse gas emissions are considered 'Science-Based' if they are in line with the level
of de-carbonisation required to keep the global temperature increase below 2 C compared to
pre-industrial temperatures.
Employee Welfare
Our employees are at the heart of what we do, and their welfare is paramount. Operations are
required to have policies and procedures in place which cover equality, health, personal development,
training, diversity, and (where appropriate) education, housing and sanitation.
We consciously and continuously work towards encouraging equality in management positions
across our operations. The Group complies with local regulations to encourage employees with
disabilities to work in our operations and where necessary, makes appropriate adjustments
to working practices.
All our tea estates have a hospital, clinic or dispensary. In addition, in India and Bangladesh
employees have access to central group operated hospitals to which more serious cases can
be referred. We provide medical services, including where appropriate antiretroviral drugs,
in those communities where HIV/AIDS is prevalent. We also give medical support to schools
that are either run locally or by our operations.
We are committed to providing development opportunities for all. We provide education opportunities
in areas where we operate, either by building and running schools or by supporting state educational
projects in our communities. We also provide programmes for skills development and adult education.
Compliance GPPs
Anti-Bribery and Corruption
The Company has adopted an anti-bribery policy which complies primarily with the requirements
of the UK Bribery Act 2010 although the Board also requires compliance with the laws of all
countries in which the Group operates.
All Group employees, o cers and executives, and all those acting for or on the Group's behalf
are strictly prohibited from o ering, paying, soliciting or accepting bribes or kickbacks,
including facilitation payments.
Compliance with the anti-bribery policy is monitored by the individual operations and incidents
are reported to the anti-bribery o cer for such operation.
In addition, the Board has adopted an anti-facilitation of tax evasion policy which complies
with the requirements of the UK Criminal Finances Act 2017. The policy has been introduced
across the Group and its compliance is monitored at Group and by individual operations.
Whistleblowing
Our whistleblowing policy provides guidelines for people who feel they need to raise certain
issues in confidence. It is designed to protect those raising a genuine concern, in line with
the Public Interest Disclosure Act 1998 or other jurisdictional legislation. Each operation
is required to have a designated Local Whistleblowing O cer. Group employees have access to
the whistleblowing o cer for the individual operation, as well as the Group Whistleblowing
O cer or the chairman of the Audit committee.
Modern Slavery GPP
The Group continues to comply with the requirements of the Modern Slavery Act 2015, to ensure
that modern slavery and human tra cking are not taking place either within the Group or in
the supply chains of our operations. A copy of the statement for the year ended 31 December
2019 is available on the Company's website. In some countries, it is both the cultural norm
and permissible for parents to involve their children in the production process, we do not
subscribe to this approach and the use of child labour is prohibited across the Group. Group
operations are required to confirm this statement and adopt local policies and procedures
to ensure continued compliance. This includes setting out codes of conduct when working alongside
customers and suppliers.
Tax Principles
The Group's tax principles include: compliance with applicable tax laws; payment of the correct
tax amounts; interpretation of tax law; undertaking tax planning based on commercial rationale;
and transparency with tax authorities.
Key Financial Performance Indicators
The nature of the Group's principal activities is such that the Board takes a long-term view
of its operations, particularly in Agriculture.
The Board reviews monthly reports with a range of financial and other indicators to monitor
the performance of each division depending on the nature of its operations.
For the Agriculture division, the Board receives monthly data on sales prices and volumes,
cost of production and crop volumes against budget and on a per unit basis. Rainfall and other
climate data are also considered.
For the Engineering and Food Service divisions, the Board receives monthly profit and operating
performance information.
For Investments, the value and performance of the share portfolio is reviewed quarterly.
Certain of the key financial performance indicators are included in the Chief Executive's
report on pages 6 to 16.
Non-Financial Performance Indicators
Each operation has developed non-financial KPIs that are relevant to it, these include:
-- Market trends - including tea auction volumes, demand for each product by country where
available,
supply data and market prices.
-- Health & Safety - including days lost to injury, number of accidents, whistleblowing
incidents
and updates to legislation.
-- Industrial disputes - including days lost to strike action and other significant labour
issues.
-- Land and politics - including elections, material new regulation or case law.
-- Movements in key personnel - including promotions, resignations and retirements of senior
management.
-- Weather and climate - including rainfall, temperatures and long-term meteorological trends.
These are regularly monitored and used by local management. The Board considers such KPIs by exception where local operations notify that significant material issues have emerged.
Employees
The Group keeps employees informed through internal publications, the website and social media on the performance of the Group and on matters a ecting them as employees and arrangements to that end are made by the local management.
It is also the Group's policy that operating companies give due consideration to employment applications received from disabled persons and to give employees who become disabled every opportunity to continue their employment.
The table below provides a breakdown of the gender of the Directors and employees at 31 December 2019.
Men Women
Company Directors 7 1
All employees 38,721 32,569
By order of the Board
Amarpal Takk
Company Secretary
7 May 2020
Report of the directors
The Directors present their report together with the audited consolidated accounts for the year ended 31 December 2019.
Principal Activities
The Company is a public limited company, which is quoted on the AIM Market of the London Stock Exchange and incorporated and domiciled in England and Wales. The principal activities of its subsidiary undertakings comprise:
Agriculture
Engineering
Food Service
Investments
Further details of the Group's activities are included in the Chief Executive's report on pages 6 to 16.
Results and Dividends
The profit after tax for the year amounted to GBP15.1 million (2018: GBP32.3 million). The Board is not proposing a final dividend for the year 2019. Therefore, the total dividend payable for 2019 is 42p per share (2018: 142p per share). Details are shown in note 9 to the Accounts.
Directors
The Directors are listed on page 4. The following Directors had beneficial interests in the shares of the Company.
Camellia Plc ordinary shares of 10p
each: 31 December 1 January
2019 2019
Malcolm Perkins 1,673 1,673
Tom Franks 100 100
Susan Walker 100 100
Under the Company's articles of association all the Directors are required to retire annually. Accordingly, Malcolm Perkins, Tom Franks, Susan Walker, Graham Mclean, Chris Relleen, Frédéric Vuilleumier, William Gibson and Gautam Dalal will retire and, being eligible, will seek re-election at the AGM. Jonathon Bond and Simon Turner were each appointed as a Non-Executive Director effective from 6 March 2020 and will seek election to the Board at the AGM.
None of the Directors or their families had a material interest in any contract of significance with the Company or any subsidiary during, or at the end of, the financial year.
Executive Directors
Malcolm Perkins was appointed a Director in 1999 and Chairman in 2001, having joined Eastern Produce (Holdings) Limited now Linton Park Plc in 1972. He is a chartered accountant and Chairman of the Nomination committee.
Tom Franks was appointed as Chief Executive with effect from 1 September 2015. He joined Camellia as Deputy Chief Executive in October 2014. He is a chartered accountant and a Fellow of the Chartered Institute of Securities and Investment.
Graham Mclean, a qualified agriculturalist, was appointed as Director of Agriculture in October 2014. He was previously regional director of the Group's operations in Africa and has worked for the Group for more than 25 years. He is Chairman and a non-executive director of Kakuzi Plc.
Susan Walker was appointed Chief Financial Officer for the Group on 4 June 2015. She joined Camellia as Finance Director Designate on 1 July 2014. She is a chartered certified accountant and a non-executive director of Goodricke Group Limited and United Finance Limited.
Non-Executive Directors
Chris Relleen was formerly a partner at PricewaterhouseCoopers. He was appointed as an independent
non-executive Director and Deputy Chairman in January 2006 having previously been a non-executive Director of Linton Park Plc. He is senior independent Director, chairman of the Audit committee and a member of the Nomination and Remuneration committees.
William Gibson was appointed as an independent non-executive Director in September 2014. He was previously chairman and managing director of Westminster Press and an executive director of the Financial Times Group. He is chairman of the Remuneration committee and a member of the Audit and Nomination committees.
Frédéric Vuilleumier was appointed as an independent non-executive Director in March 2013. He is a partner of Oberson Abels SA, a law office based in Geneva, Switzerland. He was a member of the Audit committee until April 2019.
Gautam Dalal was appointed as an independent non-executive Director in March 2018. He was previously a partner at KPMG and a founder-director of the UK India Business Council, a member of the Asian Business Association and a director of AMREF Health Africa's International Board. He was appointed a member of the Audit committee in 2019.
Jonathon Bond was appointed as an independent non-executive Director in March 2020. Jonathon has spent 25 years in the private equity industry with a particular focus on raising standards of governance and performance. He is also a senior independent director of Jupiter Fund Management plc, a non-executive director of Standard Life Private Equity Trust plc and Scottish Widows/LLoyds Bank Insurance.
Simon Turner was appointed as a non-executive Director in March 2020. After an earlier career in the legal profession, he is now president of the board of the trustee of The Camellia Foundation.
Company Secretary
Amarpal Takk was appointed as Group General Counsel and Company Secretary in April 2018. He is a qualified solicitor of England and Wales.
Substantial Shareholdings
As at 7 May 2020 the Company has been advised of the following interests in its share capital:
% of total
Beneficial shareholder Shareholder No. of Shares voting rights
Camellia Private Trust
Company Limited Camellia Holding AG 1,427,000 51.67
Lynchwood Nominees
Fide Holding NV* Limited 360,500 13.05
Quaero Capital SA HSBC Global Custody
Nominee (UK) Limited 142,773 5.17
*Controlled by Nokia Pensioenfonds VZW
Share Capital and Purchase of Own Shares
The Company's share capital comprises one class of ordinary shares of 10p per share which carry no restrictions on the transfer of shares or on voting rights (other than as set out in the Company's articles of association). There are no agreements known to the Company between shareholders in the Company which may result in restrictions on the transfer of shares or on voting rights in relation to the Company. Details of the issued share capital are contained in note 35 to the Accounts.
At the AGM in 2019, shareholders gave authority for the Company to purchase up to 276,200 of its own shares. This authority expires at the conclusion of this year's AGM at which a resolution proposing renewal of the authority will be submitted to shareholders.
Auditors
A resolution proposing the reappointment of Deloitte LLP will be put to the AGM.
Each of the persons who were Directors at the time when this Directors' report was approved has confirmed that:
-- So far as each Director is aware, there is no relevant audit
information of which the Company's auditors are unaware.
-- Each Director has taken all the steps that ought to have been
taken as a Director, including making appropriate enquiries of
fellow Directors and of the Company's auditors for that purpose,
in order to be aware of any information needed by the Company's
auditors in connection with preparing their report and to establish
that the Company's auditors are aware of that information.
Employees
Details in relation to employees are set out on page 27.
R&D
The Group undertakes some R&D projects within its operations in order to improve e ciency and grow revenues.
Future Development
Details of future developments are set out in the Chief Executive's report.
Going Concern
As set out in the CEO's Report on page 6, our businesses are currently operating broadly as normal with the exception of our Indian estates.
The Directors, at the time of approving the financial statements and, after assessing the principal risks have considered the impact of a severe but plausible downside scenario for COVID-19, with the major variables being the depth and duration of COVID-19 and the extent of action taken by governments in the jurisdictions in which we operate. The Directors considered the impact of the current COVID-19 environment on the business for the next 15 months.
Whilst the situation evolves daily making scenario planning difficult, we have considered several variables which may impact on revenue, profits and cash flows. In light of the nature of our business and our current approvals/status in our various jurisdictions, we have assumed our operations to be important, essential businesses which will continue to operate wherever possible with appropriate safety protocol in place and on the basis that we will also be able to continue to sell our produce to customers.
Whilst the virus will have an impact on many aspects of the Group's operations, disruption to the production, distribution, demand for and hence sales of our core crops; tea, macadamia and avocado, will have the biggest impact on our cashflows. Within that, as tea is still our major revenue generator (67% of Revenue in 2019) and involves the employment of a large labour force, any disruption to tea production and/or sales activities will have a disproportionately adverse impact on our cashflows.
All our businesses have put in place contingency plans, aimed at making operational cost reductions and wherever possible delaying or cancelling non-critical expenditure.
At 31 December 2019, the Group had cash and cash equivalents of GBP89.4 million with borrowings of GBP6.9 million. In addition, the Group had undrawn short-term loan and overdraft facilities of GBP24.1 million and a portfolio of liquid investments with a fair market value of GBP47.0 million.
We have modelled various scenarios using assumptions including significantly reduced combined sales volumes of up to 30% for tea, up to 40% for avocado exports and up to 25% for macadamia during 2020. The revenue and operational impact of such volume reductions across our operations would have a substantially negative impact on Group profitability. We have also considered the risk of price reductions during 2020 for our macadamia and avocado crops. The scenario modelling indicates that the Group would, in the absence of material price increases, or significant levels of government support, make a substantial loss during 2020. We would however anticipate a recovery in subsequent years as the impact of the virus recedes.
Historically in the tea sector, restrictions on, or reductions in the supply of tea either regionally or globally have led to higher selling prices. It is too soon, and the COVID-19 situation too novel, to determine the extent to which this may occur in 2020. Accordingly, for the purposes of our downside scenario planning we have not reflected increased selling prices.
The Directors believe that the Company and the Group are well placed to manage their financing and other business risks satisfactorily and, have a reasonable expectation that the Company and the Group will have adequate resources to continue in operational existence for the foreseeable future. The Directors therefore continue to adopt the going concern basis in preparing the financial statements.
Corporate Governance
The Company's statement on corporate governance can be found in the Corporate Governance report on pages 32 to 35.
Political Donations
The Company has no political a liations and does not make political donations. Its operations work with governments and other parties around the world on issues that are important to our customers, and stakeholders, communities and to the interests of the business.
Stewart Holl (India) Limited and Amgoorie India Limited, made an aggregate donation in April 2019 of
Indian Rupees INR 400k (equivalent to approximately GBP4,400) to Assam Pradesh Congress Committee.
By order of the Board
Amarpal Takk
Company Secretary
7 May 2020
Corporate governance
Statement of Compliance
The Company fully complies with the Quoted Companies Alliance's Corporate Governance Code for Small and Mid-size Quoted Companies ("QCA Code"). The Chairman considers the application of standards of corporate governance that are appropriate for the Group's nature, status, profile, size and circumstances to be important in ensuring the Group is managed for the long-term benefit of all stakeholders. There are ten principles of the QCA Code which the Company complies with in full. The table on our website sets out how we comply.
The Group consists of a portfolio of businesses which are grouped into independently managed divisions. These divisions report into the Board by function against a variety of metrics including budgets and business plans.
The Board
The Board currently comprises ten Directors, six of whom are non-executive Directors. The remaining Directors are executive Directors, including the Chairman. Chris Relleen, the Deputy Chairman, has been designated as the senior independent Director. The names and brief biographical details of each Director appear on pages 28 and 29.
There is on-going dialogue between the Chairman and the Chief Executive with the majority shareholder whose views are reported to the Board. The Company is also in contact with other significant shareholders.
The Board has established Remuneration, Audit and Nomination committees. Terms of reference of each of the committees can be viewed on the Company's website.
The Board is responsible for managing the Group's business and has adopted a schedule of matters reserved for its approval. The schedule is reviewed periodically and covers, inter alia, the following areas:
-- Strategy -- Acquisitions and disposals -- Financial reporting and control -- Internal controls -- Approval of expenditure above specified limits -- Approval of transactions and contracts above specified limits -- Responsibilities for corporate governance -- Board membership and committees -- Approval of changes to capital structure
A full copy of the schedule is available on the Company's website.
A report summarising the Group's financial and operational performance is provided to Directors each month. Each Director has sufficient information in advance of Board meetings to enable informed judgements to be made on matters referred to the Board. The Board met nine times in 2019.
Attendance by Directors at Board and committee meetings held during the year was as follows:
Director Board Audit Remuneration Nomination Malcolm Perkins 9/9 - - 1/1 Chris Relleen 8/9 3/3 1/1 1/1 Tom Franks 9/9 - - - Graham Mclean 9/9 - - - Susan Walker 9/9 - - - William Gibson 9/9 2/3 1/1 1/1 Frédéric Vuilleumier 9/9 - - - Gautam Dalal 9/9 3/3 - -
Board Evaluation
The Board has agreed to undertake a performance evaluation by way of internal review every three years. The last evaluation was conducted in 2018. Details of the next review will be disclosed when the next review is completed at the end of 2021.
Executive Committees
The Board has established the Strategy Group, consisting of the Chairman and the executive Directors of the Board, and also two Executive Committees. The Agriculture Executive Committee is chaired by the Director of Agriculture and includes the Chief Executive, Chief Financial Officer, the Group General Counsel and heads of all the key agricultural operations. The Engineering and Food Service Executive Committee is chaired by the Chief Executive and includes the Chief Financial O cer, the divisional heads of Engineering North, Engineering South and Food Service, the Managing Director of Jing Tea, the Group General Counsel and the UK Head of HR.
Investments and Associates report directly to the Chief Executive.
Nomination Committee
The committee is chaired by Malcolm Perkins. Its other members are William Gibson and Chris Relleen.
The principal responsibilities of the committee are set out below:
-- Review the balance and composition (including gender and diversity)
of the Board, ensuring that they remain appropriate.
-- Be responsible for overseeing the Board's succession planning
requirements including the identification and assessment of potential
Board candidates and making recommendations to the Board for
its approval.
-- Keep under review the leadership needs of, and succession planning
for, the Group in relation to both its executive and non-executive
Directors and other senior executives.
The committee met once during the year to consider the composition of the Audit committee.
Audit Committee
The committee is chaired by Chris Relleen. The other members of the committee during the year were Frédéric Vuilleumier and William Gibson. Gautam Dalal replaced Frédéric Vuilleumier as a member of the committee from April 2019. During 2019, the committee met on three occasions.
The principal responsibilities of the committee are set out below and were undertaken during the year:
-- Monitor the effectiveness of the Group's risk management practices.
-- Review the effectiveness of the Group's internal control system.
The committee regularly reviews the effectiveness of internal
audit activities carried out by the Group's accounting function
and senior management.
-- Review and monitor the financial statements of the Company and
the audit of those statements and to monitor compliance with
relevant financial reporting requirements and legislation.
-- Monitor the effectiveness and independence of the external auditors.
-- Review non-audit services provided by the external auditors.
Significant issues considered by the Audit Committee
The Audit committee assesses whether suitable accounting policies have been adopted and whether management has made appropriate estimates and judgements. In the year under review, the Audit committee considered the following matters in relation to the financial statements:
Going concern
The committee considered the appropriateness of the going concern principle of accounting used in preparing the financial statements in the context, in particular, of the impact of COVID-19 pandemic on the Group's cash requirements.
Biological assets
One of the key areas of judgement that the committee considered in reviewing the financial statements was the valuation of biological assets in accordance with IAS 41. Valuations are based on discounted cash flows or are carried out by external professional valuers. These were considered for consistency of approach and assumptions agreed as reasonable. For more details see note 17 to the Accounts.
Pensions
A key area of judgement is in relation to the valuation of the pension schemes obligations. Whilst this is conducted by independent actuaries, the size of the obligation means that a relatively minor difference in the assumptions could result in a material change in the quantum of the obligation. The committee considered the competence of the actuaries and the key assumptions adopted and concluded that the work performed is su cient to support the valuation.
Carrying value of intangible assets
The Group's carrying value of the Jing and Tea City brands and of the goodwill relating to the two Assam estates were discussed in light of the trading of those businesses. The committee considered the fair value of the Group's holdings and whether any impairment in the carrying value had occurred and agreed that apart from a GBP0.3m provision impairment of the goodwill relating to the Assam gardens, no impairment was required.
Carrying value of BF&M
The Group's carrying value of BF&M is higher than the share price for BF&M. The committee considered the fair value of the Group's holding and whether any impairment in the carrying value had occurred and in view of the control premium associated with our holding concluded that no impairment is required.
Adoption of IFRIC 23, tax and other provisions
The basis of provisions for material uncertain tax situations were considered by the committee as were the provisions for wage increases in India and in Bangladesh. The committee is satisfied that the provisions represent best estimates of the likely liabilities.
The committee reviewed the implementation of IFRIC 23's guidance for quantifying uncertain tax provisions which was implemented from 1 January 2019.
Adoption of IFRS 16
The Group's leasing arrangements were reviewed in light of the new lease accounting rules in IFRS 16 which was adopted for the first time from 1 January 2019. The standard has affected primarily the accounting for the Group's operating leases and details of the impact on the 2019 financial statements are included on page 58 to the Accounts.
External auditor
To assess the effectiveness of the external audit process, the external auditor is required to report to the Audit committee and confirm their independence in accordance with ethical standards and that they had maintained appropriate internal safeguards to ensure their independence and objectivity. In addition to the steps taken by the Board to safeguard the auditor's objectivity, Deloitte operates a five-year rotation policy for audit partners for a listed entity.
The committee reviewed those non-audit services provided by the external auditor and satisfied itself that the scale and nature of those services were such that the external auditors objectivity and independence were safeguarded.
The committee confirms that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.
Remuneration Committee
The committee is chaired by William Gibson and the other member is Chris Relleen.
The responsibilities of the committee include:
-- The review of the Group's policy relating to remuneration of
the Chairman, executive Directors and the Company Secretary.
-- To determine the terms of employment and remuneration of the
Chairman, executive Directors and Company Secretary with a view
to ensuring that those individuals are fairly and responsibly
rewarded.
-- To approve compensation packages or arrangements following the
severance of any executive Director's service contract.
The Remuneration report appears on pages 37 to 38.
Insurance
The Company purchases insurance to cover its Directors in respect of legal actions against them in their capacity as Directors of the Company. All Directors have access to independent professional advice at the Company's expense.
Share Capital Structure
The share capital of the Company is set out in note 35.
Internal Control and Risk Management Systems
The Directors acknowledge that they are responsible for maintaining a sound system of internal control. During the year, the Audit committee, on behalf of the Board, reviewed the effectiveness of the framework of the Group's system of internal control, the principal features of which are described below.
The key management philosophy of the Company is that the responsibility for efficient day to day operations remains with the local management. Accountability and delegation of authority are clearly defined with regular communication between Group head o ce and the management of the individual operations. Our key operations have internal audit functions reporting to local audit committees. The performance of each operation is continually monitored centrally including a critical review of annual budgets, forecasts and monthly sales, profits and cash reports. Financial results and key operational statistics and variances from approved plans are carefully monitored. Group senior management regularly visit operations. However, any system of internal control can provide only reasonable, and not absolute, assurance against material mis-statement or loss.
By order of the Board
Amarpal Takk
Company Secretary
7 May 2020
Statement of directors' responsibilities
The Directors are responsible for preparing the Annual Report and Accounts in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and Article 4 of the IAS Regulation and have also chosen to prepare the parent company financial statements under IFRSs as adopted by the EU. Under Company law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the Company for that period. In preparing these financial statements, International Accounting Standard 1 requires that Directors:
-- Properly select and apply accounting policies.
-- Present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information.
-- Provide additional disclosures when compliance with the specific
requirements in IFRSs are insu cient to enable users to understand
the impact of particular transactions, other events and conditions
on the entity's financial position and financial performance.
-- Make an assessment of the Company's ability to continue as a
going concern.
The Directors are responsible for keeping adequate accounting records that are su cient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility Statement
We confirm that to the best of our knowledge:
-- The Financial Statements, prepared in accordance with International
Financial Reporting Standards as adopted by the EU, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings included
in the consolidation taken as a whole.
-- The Strategic Report includes a fair review of the development
and performance of the business and the position of the Company
and the undertakings included in the consolidation taken as a
whole, together with a description of the principal risks and
uncertainties that they face.
-- The Annual Report and Accounts, taken as a whole, are fair, balanced
and understandable and provide the information necessary for
shareholders to assess the Company's position and performance,
business model and strategy.
On behalf of the Board
Malcolm Perkins
Chairman
7 May 2020
Remuneration report
This report is drawn up in accordance with the Companies Act 2006 and the AIM Rules for Companies.
Remuneration Committee
Details of the Remuneration committee are set out on page 35.
Policy on Directors' Remuneration
The policy agreed by the committee is as follows:
-- To seek to provide remuneration packages that will attract, retain
and motivate the right people for the roles.
-- So far as is practicable to align the interests of the executives
with those of shareholders.
-- To reflect the overriding remuneration philosophy and the principles
of the wider Group.
In implementing the second point, the Company does not operate profit related bonus, share option or share incentive schemes for Directors as the Group's activities are based largely on agriculture, which is highly dependent on factors outside management control such as the weather and market prices.
The policy is designed to ensure that the Directors manage the Group's businesses for the long-term in line with the strategy of the Group.
In determining this remuneration policy and the remuneration of Directors, consideration has been given to the relevant provisions of the QCA Guidelines.
The remuneration policy was approved by shareholders at the 2017 AGM and applied for a period of
three years until 2020. The committee considers any views of the shareholders expressed on Directors' remuneration.
At the AGM on 6 June 2019, the Remuneration Report for the year to 31 December 2018 was approved by shareholders with 99.99% of the votes cast in favour, 0.01% of the votes cast against and 508 votes withheld.
Service Contracts
Malcolm Perkins, Tom Franks, Graham Mclean and Susan Walker are each employed on rolling service contracts.
Director Date of Service Contract Malcolm Perkins 25 April 2002 Tom Franks 8 April 2015 Graham Mclean 10 April 2015 Susan Walker 14 April 2015
The service contracts are terminable at any time by a one year period of notice from the Company or the Director. Following their initial appointment non-executive Directors may seek re-election by shareholders at each subsequent Annual General Meeting. Non-executive Directors do not have service agreements.
There are no specific contractual provisions for compensation upon early termination of a non-executive Director's employment.
The following sections on Directors' remuneration and pensions have been audited.
Directors' Remuneration
Remuneration Benefits in Kind Total
2019 2018 2019 2018 2019 2018
GBP GBP GBP GBP GBP GBP
Executive
Malcolm Perkins 442,344 442,344 30,172 30,819 472,516 473,163
Tom Franks 594,000 550,000 42,582 65,993 636,582 615,993
Susan Walker 363,000 330,000 34,306 43,211 397,306 373,211
Graham Mclean 390,500 363,000 51,006 29,865 441,506 392,865
Non-executive
William Gibson 49,000 45,991 - - 49,000 45,991
Chris Relleen 53,000 48,696 - - 53,000 48,696
Frédéric Vuilleumier 50,000 43,285 - - 50,000 43,285
Gautam Dalal 46,000 36,071 - - 46,000 36,071
--------- --------- -------- -------- --------- ---------
Total 1,987,844 1,859,387 158,066 169,888 2,145,910 2,029,275
--------- --------- -------- -------- --------- ---------
Notes
(i) The executive Directors' benefits in kind include the value attributed
to medical insurance, permanent health insurance, spouse/partner
travel and cash alternatives to company cars.
(ii) Chris Relleen received an additional annual fee for his Chairmanship
of the Audit committee.
(iii) William Gibson received an additional annual fee for his Chairmanship
of the Remuneration committee.
Directors' Pensions
Malcolm Perkins received no payment for pensionable service during 2019. Tom Franks, Graham Mclean and Susan Walker receive an excess non-pensionable salary supplement equivalent to 10% of base salary.
In addition to the above, an unfunded pension of US$200,000 per annum is paid to Gordon Fox, a former Director of the Company.
By order of the Board
Amarpal Takk
Company Secretary
7 May 2020
Consolidated income statement
for the year ended 31 December 2019
2019
Separately 2018
Underlying disclosed Underlying Separately
profit items profit disclosed
(note
(note 4 ) 4 ) (note 4 ) items
Notes GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Continuing operations
Revenue 2 291.5 - 291.5 309.8 - 309.8
Cost of sales (224.1) 6.2 (217.9) (223.6) 14.4 (209.2)
---------- ---------- ------ ---------- ---------- ------
Gross profit 67.4 6.2 73.6 86.2 14.4 100.6
Other operating
income 4.0 - 4.0 4.0 - 4.0
Distribution costs (15.0) - (15.0) (17.2) - (17.2)
Administrative
expenses 3 (46.1) - (46.1) (45.1) - (45.1)
---------- ---------- ------ ---------- ---------- ------
Trading profit 1,3 10.3 6.2 16.5 27.9 14.4 42.3
Share of associates'
results 5 4.6 - 4.6 7.6 - 7.6
Provisions and
impairment of property,
plant and equipment - - - (0.2) - (0.2)
Loss on disposal
of subsidiaries - - - (0.4) - (0.4)
Profit on disposal
of financial assets 0.2 - 0.2 0.3 - 0.3
---------- ---------- ------ ---------- ---------- ------
Operating profit
- continuing operations 15.1 6.2 21.3 35.2 14.4 49.6
Investment income 0.7 - 0.7 0.8 - 0.8
----- ---------- ---------- ------ ---------- ---------- ------
Finance income 6 3.9 - 3.9 4.0 - 4.0
Finance costs 6 (2.2) - (2.2) (0.6) - (0.6)
Net exchange (loss)/gain 6 (0.3) - (0.3) 0.2 - 0.2
Employee benefit
interest 6 (1.1) - (1.1) (1.5) - (1.5)
----- ---------- ---------- ------ ---------- ---------- ------
Net finance income 6 0.3 - 0.3 2.1 - 2.1
---------- ---------- ------ ---------- ---------- ------
Profit before tax
from continuing
operations 16.1 6.2 22.3 38.1 14.4 52.5
Taxation 7 (7.2) (20.0)
------ ------
Profit after tax
from continuing
operations 15.1 32.5
Loss from discontinued
operation - (0.2)
------ ------
Profit for the year 15.1 32.3
------ ------
Profit attributable
to:
Owners of Camellia
Plc 8.3 25.2
Non-controlling
interests 6.8 7.1
------ ------
15.1 32.3
------ ------
Earnings per share
- basic and diluted 10 300.5p 912.4p
Earnings per share
- continuing operations 10 300.5p 919.6p
Earnings/(loss)
per share - discontinued
operation 10 - (7.2)p
Statement of comprehensive income
for the year ended 31 December 2019
2019 2018
Notes GBP'm GBP'm
Group
Profit for the year 15.1 32.3
----- -----
Other comprehensive income/(expense):
Items that will not be reclassified subsequently
to profit or loss:
Financial assets at fair value through other
comprehensive income:
Fair value adjustment released on disposal 21 (0.3) (3.8)
Profit on disposal 1.2 3.9
----- -----
0.9 0.1
----- -----
Changes in the fair value of financial assets 21 6.9 (5.6)
Deferred tax movement in relation to fair
value adjustments (0.9) 1.5
Remeasurements of post employment benefit
obligations 34 3.5 (0.7)
Deferred tax movement in relation to post
employment benefit obligations 33 (0.5) (0.3)
----- -----
9.9 (5.0)
----- -----
Items that may be reclassified subsequently
to profit or loss:
Foreign exchange translation differences (16.7) 11.6
Share of other comprehensive income of associates 0.3 0.8
(16.4) 12.4
----- -----
Other comprehensive (expense)/income for the
year, net of tax (6.5) 7.4
----- -----
Total comprehensive income for the year 8.6 39.7
----- -----
Total comprehensive income attributable to:
Owners of Camellia Plc 4.2 30.7
Non-controlling interests 4.4 9.0
----- -----
8.6 39.7
----- -----
Company
Profit for the year 4.2 3.9
----- -----
Total comprehensive income for the year 4.2 3.9
----- -----
Consolidated balance sheet
at 31 December 2019
2019 2018
Notes GBP'm GBP'm
ASSETS
Non-current assets
Intangible assets 13 10.3 9.5
Property, plant and equipment 14 222.5 226.3
Right-of-use assets 15 18.5 -
Investment properties 16 18.3 18.0
Biological assets 17 14.6 14.5
Prepaid operating leases 18 - 1.0
Investments in associates 20 66.0 65.7
Financial assets at fair value through
other comprehensive income 21 37.8 32.7
Financial asset at fair value through
profit or loss 22 6.2 3.7
Financial assets at amortised cost 23 3.0 3.0
Other investments - heritage assets 25 9.8 9.5
Retirement benefit surplus 34 0.7 0.3
Trade and other receivables 27 2.8 2.7
Total non-current assets 410.5 386.9
--------------------- -----
Current assets
Inventories 26 49.3 52.7
Biological assets 17 9.1 8.8
Trade and other receivables 27 44.3 48.5
Financial assets at amortised cost 23 - 0.2
Current income tax assets 1.2 0.7
Cash and cash equivalents (excluding bank
overdrafts) 28 91.4 112.4
--------------------- -----
195.3 223.3
Assets classified as held for sale - 0.2
Total current assets 195.3 223.5
--------------------- -----
LIABILITIES
Current liabilities
Financial liabilities - borrowings 30 (5.6) (3.4)
Lease liabilities 31 (1.2) -
Trade and other payables 29 (48.6) (53.5)
Current income tax liabilities (4.2) (8.0)
Employee benefit obligations 34 (0.7) (1.0)
Provisions 32 (8.9) (18.5)
--------------------- -----
Total current liabilities (69.2) (84.4)
--------------------- -----
Net current assets 126.1 139.1
--------------------- -----
Total assets less current liabilities 536.6 526.0
--------------------- -----
Non-current liabilities
Financial liabilities - borrowings 30 (3.3) (3.3)
Lease liabilities 31 (11.8) (0.1)
Deferred tax liabilities 33 (47.1) (46.3)
Employee benefit obligations 34 (22.0) (24.0)
Total non-current liabilities (84.2) (73.7)
--------------------- -----
Net assets 452.4 452.3
--------------------- -----
EQUITY
Called up share capital 35 0.3 0.3
Share premium 15.3 15.3
Reserves 380.1 379.9
--------------------- -----
Equity attributable to owners of Camellia
Plc 395.7 395.5
Non-controlling interests 56.7 56.8
--------------------- -----
Total equity 452.4 452.3
--------------------- -----
COMPANY BALANCE SHEET
at 31 December 2019
2019 2018
Notes GBP'm GBP'm
ASSETS
Non-current assets
Investments in subsidiaries 19 73.5 73.5
Other investments - heritage assets 25 11.0 10.7
----- -----
Total non-current assets 84.5 84.2
----- -----
Current assets
Current income tax asset 0.1 0.1
Cash and cash equivalents 28 - 0.1
----- -----
Total current assets 0.1 0.2
----- -----
LIABILITIES
Current liabilities
Trade and other payables 29 (0.6) (0.6)
Amounts due to group undertakings 44 (17.0) (16.9)
----- -----
Total current liabilities (17.6) (17.5)
----- -----
Net current liabilities (17.5) (17.3)
----- -----
Total assets less current liabilities 67.0 66.9
----- -----
Non-current liabilities
Deferred tax liabilities 33 (0.2) (0.2)
----- -----
Total non-current liabilities (0.2) (0.2)
----- -----
Net assets 66.8 66.7
----- -----
EQUITY
Called up share capital 35 0.3 0.3
Share premium 15.3 15.3
Reserves 51.2 51.1
----- -----
Total equity 66.8 66.7
----- -----
The profit for the company is shown in note 8.
The notes on pages 46 to 113 form part of the financial statements.
The financial statements on pages 39 to 113 were approved on 7 May 2020 by the board of Directors and signed on their behalf by:
M C Perkins
Chairman
Registered Number 00029559
Consolidated cash flow statement
for the year ended 31 December 2019
2019 2018
Notes GBP'm GBP'm
Cash generated from operations
Cash flows from operating activities 36 21.2 35.3
Interest received 4.0 3.9
Interest paid (1.7) (0.5)
Income taxes paid (10.9) (14.2)
----- -------------------
Net cash flow from operating activities 12.6 24.5
----- -------------------
Cash flows from investing activities
Purchase of intangible assets (0.1) -
Purchase of property, plant and equipment (18.4) (20.5)
Proceeds from sale of non-current assets 1.7 0.7
Additions to investment property (0.5) (0.9)
Biological assets: non-current - disposals/(additions) 0.7 (0.9)
Payment for acquisition of a businesses/subsidiary net of cash acquired (9.4) (6.4)
Proceeds from sale of subsidiaries net of cash disposed - 3.6
Proceeds from sale of assets held for sale - investment property 0.8 0.7
Investment in associates (1.3) (1.0)
Dividends received from associates 3.1 2.8
Purchase of investments (11.4) (7.2)
Proceeds from sale of investments 10.3 11.4
Income from investments 0.7 0.8
Purchase of other investments - heritage assets (0.3) (0.1)
----- -------------------
Net cash flow from investing activities (24.1) (17.0)
----- -------------------
Cash flows from financing activities
Equity dividends paid (4.0) (3.8)
Dividends paid to non-controlling interests (4.5) (3.1)
New loans 37 3.6 -
Loans repaid 37 (0.6) (0.6)
Payments of lease liabilities 37 (0.4) -
----- -------------------
Net cash flow from financing activities (5.9) (7.5)
----- -------------------
Net decrease in cash and cash equivalents from
continuing operations (17.4) -
Net cash outflow from discontinued operation - (0.2)
Cash and cash equivalents at beginning of year 28 109.6 106.8
Exchange (losses)/gains on cash (2.8) 3.0
----- -------------------
Cash and cash equivalents at end of year 28 89.4 109.6
----- -------------------
For the purposes of the cash flow statement cash and cash equivalents are included net of overdrafts repayable on demand.
COMPANY CASH FLOW STATEMENT
for the year ended 31 December 2019
2019 2018
Notes GBP'm GBP'm
Cash generated from operations
Profit before tax 8 4.2 3.9
Adjustments for:
Interest income (0.2) (0.2)
Dividends from group companies (5.3) (5.0)
Increase in trade and other payables - 0.4
Net movement in intra-group balances 0.1 (0.3)
----- -----
Cash used in operations (1.2) (1.2)
Interest received 0.2 0.2
Net cash flow from operating activities (1.0) (1.0)
----- -----
Cash flows from investing activities
Purchase of other investments - heritage assets (0.3) (0.1)
Dividends received 5.3 5.0
----- -----
Net cash flow from investing activities 5.0 4.9
----- -----
Cash flows from financing activities
Equity dividends paid (4.1) (3.9)
----- -----
Net cash flow from financing activities (4.1) (3.9)
----- -----
Net movement in cash and cash equivalents (0.1) -
Cash and cash equivalents at beginning of year 28 0.1 0.1
----- -----
Cash and cash equivalents at end of year 28 - 0.1
----- -----
Statement of changes in equity
for the year ended 31 December 2019
Non-
Share Share Treasury Retained Other controlling Total
capital premium shares earnings reserves Total interests equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Group
At 1 January 2018 0.3 15.3 (0.4) 323.8 29.4 368.4 49.5 417.9
Total
comprehensive
income for the
year - - - 30.5 0.2 30.7 9.0 39.7
Dividends - - - (3.8) - (3.8) (3.1) (6.9)
Companies joining
the Group - - - - - - 1.4 1.4
Share of
associate's other
equity movements - - - 0.2 - 0.2 - 0.2
------- ------- -------- -------- -------- ----- ----------- ------------
At 31 December
2018 0.3 15.3 (0.4) 350.7 29.6 395.5 56.8 452.3
Total
comprehensive
income/(expense)
for the year - - - 11.9 (7.7) 4.2 4.4 8.6
Dividends - - - (4.0) - (4.0) (4.5) (8.5)
Share of
associate's other
equity movements - - - - - - - -
------- ------- -------- -------- -------- ----- ----------- ------------
At 31 December
2019 0.3 15.3 (0.4) 358.6 21.9 395.7 56.7 452.4
------- ------- -------- -------- -------- ----- ----------- ------------
Company
At 1 January 2018 0.3 15.3 - 39.0 12.1 66.7 - 66.7
Total
comprehensive
income for the
year - - - 3.9 - 3.9 - 3.9
Dividends - - - (3.9) - (3.9) - (3.9)
------- ------- -------- -------- -------- ----- ----------- ------------
At 31 December
2018 0.3 15.3 - 39.0 12.1 66.7 - 66.7
Total
comprehensive
income for the
year - - - 4.2 - 4.2 - 4.2
Dividends - - - (4.1) - (4.1) - (4.1)
------- ------- -------- -------- -------- ----- ----------- ------------
At 31 December
2019 0.3 15.3 - 39.1 12.1 66.8 - 66.8
------- ------- -------- -------- -------- ----- ----------- ------------
Other reserves of the group include net exchange differences of GBP33.0 million deficit (2018: GBP16.5 million deficit).
Group retained earnings include GBP168.4 million (2018: GBP180.7 million) which would require exchange control permission for remittance as dividends.
Accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.
Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, IFRS IC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS.
The consolidated financial statements have been prepared on the historical cost basis as modified by the revaluation of biological assets, financial assets and financial liabilities and assets held for sale.
Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.
Going concern
The Report of the Directors on page 30 sets out details of the potential substantial risks to our operations and sales arising from COVID-19 and the potential impact on our profitability and cashflows based on our scenario planning.
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue to operate for the foreseeable future. They therefore continue to adopt the going concern basis of accounting in preparing the financial statements.
Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year.
On acquisition, the assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the income statement in the period of acquisition. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated Income Statement from the e ective date of acquisition or disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.
All Intra-Group transactions, balances, income and expenses are eliminated on consolidation.
Associates
An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of that entity.
Investments in associates are accounted for by the equity method of accounting. Under this method the Group's share of the post-acquisition profits or losses of associates is recognised in the Income Statement and its share of post-acquisition movements in reserves is recognised in reserves.
Foreign currency translation
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Translation di erences on non-monetary items carried at fair value are reported as part of the fair value gain or loss. Gains and losses arising on retranslation are included in the income statement, except for exchange di erences arising on non-monetary items where the changes in fair value are recognised directly in equity.
The consolidated financial statements are presented in sterling which is the Company's functional and presentation currency. On consolidation, income statements and cash flows of foreign entities are translated into pounds sterling at average exchange rates for the year and their balance sheets are translated at the exchange rates ruling at the balance sheet date. Exchange di erences arising from the translation of the net investment in foreign entities and of borrowings designated as hedges of such investments, are taken to equity. When a foreign entity is sold such exchange di erences arising since 1 January 2004 are recognised in the Income Statement as part of the gain or loss on disposal.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the exchange rate ruling on the date of acquisition. The Group has elected to treat goodwill and fair value adjustments arising on acquisitions prior to 1 January 2004, the date of the Group's transition from UK GAAP to IFRS, as sterling denominated assets and liabilities.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, value added tax and other sales related taxes and after eliminating intra-group sales.
Revenue from the sale of goods is recognised when all the following conditions are satisfied:
-- Identify contracts with customers
-- Identify the separate performance obligation
-- Determine the transaction price of the contract, and
-- Allocate the transaction price to each of the separate performance
obligations
In respect of agricultural produce, revenue is recognised at the point in time that control of goods is transferred to the customer.
In respect of food storage and distribution services, revenue for handling is recognised at the point that the goods are actually handled.
In respect of engineering services, revenue is recognised based upon the stage of completion and includes costs incurred to date, plus accrued profits.
Investment income
Investment income is recognised when the right to receive payment of a dividend is established.
Segmental reporting
IFRS 8 requires operating segments to be identified on the basis of internal reports used to assess performance and allocate resources by the chief operating decision maker. The chief operating decision maker has been identified as the Strategy Group led by the CEO. Inter segment sales are not significant.
Intangible assets
(i) Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary or associate at the date of acquisition.
Goodwill is recognised as an asset and reviewed for impairment at least annually or more frequently if events or changes in circumstances indicate a potential impairment. Any impairment is recognised immediately in the income statement and is not subsequently reversed.
On disposal of a subsidiary or associate, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
(ii) Identifiable intangible assets
Indefinite life identifiable intangible assets include certain brands acquired. They are not amortised but tested for impairment annually or more frequently if an impairment indicator is triggered, any impairment is charged to the income statement as it arises. The assessment of the classification of intangible assets as indefinite is reviewed annually.
Finite life identifiable intangible assets include certain brands, customer relationships and other intangible assets acquired on the acquisition of subsidiaries. Acquired intangible assets with finite lives are initially recognised at cost and amortised on a straight-line basis over their estimated useful lives, not exceeding 20 years. Intangible assets' estimated lives are re-evaluated annually and an impairment test is carried out if certain indicators of impairment exist.
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
(iii) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Computer software licences are held at cost and are amortised on a straight-line basis over 3 to 7 years.
Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Costs that are directly associated with identifiable and unique software products controlled by the Group and which are expected to generate economic benefits exceeding costs beyond one year, are recognised as an intangible asset and amortised over their estimated useful lives.
Property, plant and equipment
Property, plant and equipment includes biological assets (bearer plants) which are accounted for under IAS 16.
Land and buildings comprises mainly factories and o ces. All property, plant and equipment is shown at cost less subsequent depreciation and impairment, except for land, which is shown at cost less impairment. Cost includes expenditure that is directly attributable to the acquisition of these assets.
On transition to IFRS, the Group followed the transitional provisions and elected that previous UK GAAP revaluations be treated as deemed cost.
Subsequent costs are included in the assets' carrying amount, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
No depreciation is provided on freehold land. Depreciation of other property, plant and equipment is calculated to write o their cost less residual value over their expected useful lives.
The rates of depreciation used for the other assets are as follows:-
Biological assets (Bearer plants) 20 to 50 years Freehold and long leasehold nil to 50 years buildings Other short leasehold land and unexpired term of the buildings lease Plant, machinery, fixtures, 3 to 25 years fittings and equipment
No depreciation is provided on bearer plants until maturity when commercial levels of production have been reached.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
The gain or loss arising on the disposal or retirement of an asset is determined as the di erence between the sales proceeds and the carrying amount of the asset and is included in the Income Statement.
Investment properties
Properties held to earn rental income rather than for the purpose of the Group's principal activities are classified as Investment properties. Investment properties are recorded at cost less accumulated depreciation and any recognised impairment loss. The depreciation policy is consistent with those described for other Group properties.
Income from Investment properties is disclosed in 'Revenue'. The related operating costs are immaterial and are included within administrative expenses.
Biological assets: non-current
Biological assets are measured at each balance sheet date at fair value and are generally valued at each year end by independent professional valuers. Any changes in fair value are recognised in the Income Statement in the year in which they arise. Costs of new areas planted are included as "new planting additions" in the biological assets note. As timber is harvested the value accumulated to the date of harvest is treated as "decrease due to harvesting" and charged to cost of sales in the Income Statement.
Biological assets: current
Produce is valued on the basis of net present values of expected future cash flows and includes certain assumptions about yields, selling prices, costs and discount rates. As the crop is harvested it is transferred to inventory at fair value.
Financial assets
Classification of financial assets
(i) Equity instruments designated as at fair value through other comprehensive income ('FVTOCI')
On initial recognition, the Group made an irrevocable election (on an instrument-by-instrument basis) to designate investments in equity instruments as at FVTOCI.
Investments in equity instruments designated as FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the investment revaluation reserve. The cumulative gain or loss is not reclassified to profit or loss on disposal of the equity investments, instead, it is transferred to retained earnings.
Dividends on these investments in equity instruments are recognised in profit or loss in accordance with IFRS 9, unless the dividends clearly represent a recovery of part of the cost of the investment. Dividends are included as investment income in the consolidated income statement.
(ii) Financial assets at fair value through profit or loss ('FVTPL')
Financial assets that do not meet the criteria for being measured FVTOCI or at amortised cost (see (i) above and (iii) below) are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss to the extent they are not part of a designated hedging relationship.
(iii) Amortised cost and e ective interest method
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the e ective interest method of any di erence between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.
The e ective interest method is a method of calculating the amortised cost and of allocating interest income over the relevant period. Interest income is recognised in profit or loss and is included in the "finance income - interest income" line item (note 6).
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses '(ECL)' on investments in debt instruments that are measured at amortised cost, lease receivables, trade receivables and contract assets. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.
The Group always recognises lifetime ECL for trade receivables, contract assets and lease receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.
For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.
(i) Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or e ort. Forward-looking information considered includes the future prospects of the industries in which the Group's debtors operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the Group's core operations.
In particular, the following information is taken into account when assessing whether credit risk has increased:
-- An actual or expected significant deterioration in the financial
instrument's external (if available) or internal credit rating
-- Significant deterioration in external market indicators of credit
risk for a particular financial instrument
-- Existing or forecast adverse changes in business, financial or
economic conditions that are expected to cause a significant
decrease in the debtor's ability to meet its debt obligations
-- An actual or expected significant deterioration in the operating
results of the debtor
-- Significant increases in credit risk on other financial instruments
of the same debtor
-- An actual or expected significant adverse change in the regulatory,
economic, or technological environment of the debtor that results
in a significant decrease in the debtor's ability to meet its
debt obligations
Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise.
Despite the foregoing, the Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if:
(i) The financial instrument has a low risk of default,
(ii) The debtor has a strong capacity to meet its contractual cash
flow obligations in the near term, and
(ii) Adverse changes in economic and business conditions in the longer
term may, but will not necessarily, reduce the ability of the
borrower to fulfil its contractual cash flow obligations.
The Group considers a financial asset to have low credit risk when the asset has external credit rating of 'investment grade' in accordance with the globally understood definition or if an external rating is not available, the asset has an internal rating of 'performing'. Performing means that the counterparty has a strong financial position and there is no past due amounts.
The Group regularly monitors the e ectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying any significant increase in credit risk before the amount becomes past due.
(ii) Definition of default
The Group considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that financial assets that meet either of the following criteria are generally not recoverable:
-- When there is a breach of financial covenants by the debtor;
or
-- Information developed internally or obtained from external sources
indicates that the debtor is unlikely to pay its creditors,
including the Group, in full (without taking into account any
collateral held by the Group).
Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that di erent default criterion is more appropriate.
(iii) Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:
(a) significant financial di culty of the issuer or the borrower;
(b) a breach of contract, such as a default or past due event (see
(ii) above);
(c) the lender(s) of the borrower, for economic or contractual reasons
relating to the borrower's financial di culty, having granted
to the borrower a concession(s) that the lender(s) would not
otherwise consider;
(d) it is becoming probable that the borrower will enter bankruptcy
or other financial reorganisation; or
(e) a disappearance of an active market for that financial asset
because of financial di culties.
(iv) Write-o policy
The Group writes o a financial asset when there is information indicating that the debtor is in severe financial di culty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over two years past due, whichever occurs sooner. Financial assets written o may still be subject to enforcement activities under the Group's recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
(v) Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above.
As for the exposure at default, for financial assets, this is represented by the assets' gross carrying amount at the reporting date; for financial guarantee contracts, the exposure includes the amount drawn down as at the reporting date, together with any additional amounts expected to be drawn down in the future by default date determined based on historical trend, the Group's understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.
For financial assets, the expected credit loss is estimated as the di erence between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive, discounted at the original e ective interest rate. For a lease receivable, the cash flows used for determining the expected credit losses are consistent with the cash flows used in measuring the lease receivable in accordance with IFRS 16.
The Group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in equity instruments that are measured at FVTOCI, for which the loss allowance is recognised in other comprehensive income and accumulated in reserves, and does not reduce the carrying amount of the financial asset in the balance sheet.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset measured at amortised cost, the di erence between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. In addition, on derecognition of an investment in a debt instrument classified as at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. In contrast, on derecognition of an investment in equity instrument which the Group has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings.
Other investments - heritage assets
Other investments comprise fine art, documents, manuscripts and philately which are measured at cost as fair value cannot be reliably measured.
Investments in subsidiary companies
Investments in subsidiary companies are included at cost plus incidental expenses less any provision for impairment. Impairment reviews are performed when there has been an indication of potential impairment.
Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment and whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. Assets that are subject to amortisation are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets' carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets' fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
Inventories
Agricultural produce included within inventory largely comprises stock of 'black' tea. In accordance with IAS 41, on initial recognition, agricultural produce is required to be measured at fair value less estimated point of sale costs.
Other inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs of completion and selling expenses.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
Discontinued operations and non-current assets held for sale
A discontinued operation is a separate major line of business or geographic area of operation that has either been disposed of, abandoned or is part of a plan to dispose of a major line of business or geographic area. An operation is classified as a discontinued operation in the year that the above criteria are met. In the consolidated Income Statement, profit/loss from discontinued operations is reported separately from the results from continuing operations. The prior period's Income Statement and cash flow are presented on a comparable basis.
Non-current assets classified as held for sale are measured at the lower of the carrying amount and fair value less costs to sell.
Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the e ective interest method.
Borrowings
Interest-bearing bank loans and overdrafts are initially recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis to the Income Statement using the e ective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit di ers from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on di erences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than in a business combination, that at the time of the transaction a ects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related tax asset is realised or the tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary di erences can be utilised. Deferred income tax assets and liabilities are o set when there is a legally enforceable right to o set current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or di erent taxable entities where there is an intention to settle the balances on a net basis.
Deferred tax is provided on temporary di erences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary di erence is controlled by the Group and it is probable that the temporary di erence will not reverse in the foreseeable future.
Employee benefits
(i) Pension obligations
Group companies operate various pension schemes. The schemes are funded through payments to insurance companies or trustee-administered funds. The Group has both defined benefit and defined contribution plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate fund. The Group has no legal or constructive obligations to pay further contributions to the fund. Contributions are recognised as an expense in the Income Statement when they are due.
A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The pension cost for defined benefit schemes is assessed in accordance with the advice of qualified independent actuaries using the "projected unit" funding method.
The liability recognised in the Balance Sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. Independent actuaries calculate the obligation annually using the "projected unit" funding method. Actuarial gains and losses arising from experience adjustments and changes in actuarial adjustments are recognised in full in the period in which they occur, they are not recognised in the Income Statement and are presented in the Statement of Comprehensive Income.
Past service costs are recognised directly in the Income Statement.
(ii) Other post-employment benefit obligations
Some Group companies have unfunded obligations to pay terminal gratuities to employees. Provisions are made for the estimated liability for gratuities as a result of services rendered by employees up to the balance sheet date and any movement in the provision is recognised in the Income Statement.
The estimated monetary liability for employees' accrued annual leave entitlement and workers profit participation at the balance sheet date is recognised as an accrual.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Where any Group company purchases the Company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company's equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax e ects, is included in equity attributable to the Company's equity holders.
Dividend distribution
Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders. Interim dividends are recognised when paid.
Critical accounting judgements and key sources of estimation uncertainty
In the view of the Directors, the following accounting judgements and estimations have been made in the process of applying the Group's accounting policies which have a significant e ect on the amounts recognised in financial statements.
Accounting judgements
Significant judgement in determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group has the option, under some of its leases to lease the assets for additional terms. The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and a ects its ability to exercise (or not to exercise) the option to renew (e.g., a change in business strategy).
Depreciation and amortisation
Depreciation and amortisation is based on management's estimates of the future useful life of bearer plants, property, plant and equipment and intangible assets. Estimates may change due to climate change, technological developments, competition, changes in market conditions and other factors and may result in changes in the estimated useful life and in the depreciation and amortisation charges.
Key sources of estimation uncertainty
Estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting will, by definition, seldom equal the actual results. The estimates and assumptions that have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out below.
(i) Impairment of assets
The Group has significant investments in intangible assets, property, plant and equipment, investment properties, biological assets, associated companies, financial assets and other investments. These assets are tested for impairment when circumstances indicate there may be a potential impairment. Goodwill and intangible assets with an indefinite useful life are tested for impairment at least annually. Factors considered which could trigger an impairment review include a significant fall in market values, significant underperformance relative to historical or projected future operating results, a major change in market conditions or negative cash flows.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease and to the extent that the impairment loss is greater than the related revaluation surplus, the excess impairment loss is recognised in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit ('CGU') in prior years. A reversal of an impairment loss is recognised immediately in profit or loss to the extent that it eliminates the impairment loss which has been recognised for the asset in prior years. Any increase in excess of this amount is treated as a revaluation increase.
Sensitivity analysis
The Group has conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions used to determine the recoverable amount for each of the group of CGUs to which goodwill is allocated. The Directors believe that any reasonably possible change in the key assumptions on which the recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the related CGUs.
The sensitivity of carrying amounts of biological and financial assets is disclosed in notes 17 and 41 respectively.
(ii) Biological assets
Biological assets are carried at fair value less estimated point-of-sale costs. Where meaningful market-determined prices do not exist to assess the fair value of biological assets, the fair value has been determined based on the net present value of expected future cash flows from those assets, discounted at appropriate pre-tax rates. In determining the fair value of biological assets where the discounting of expected future cash flows has been used, the Directors have made certain assumptions about expected life-span of the plantings, yields, selling prices, costs and discount rates. Details of assumptions made and sensitivity analysis are given in note 17.
(iii) Retirement benefit obligations
Pension accounting requires certain assumptions to be made in order to value obligations and to determine the impact on the Income Statement. These figures are particularly sensitive to assumptions for discount rates, mortality, inflation rates and expected long-term rates of return on assets. Details of assumptions made and sensitivity analysis are given in note 34.
(iv) Taxation and other liabilities
Income tax liabilities include a number of provisions based on management's interpretation of country specific tax law and the likelihood of settlement. This can involve a significant amount of judgement as tax legislation can be complex and open to di erent interpretation. Management uses professional firms and previous experience when assessing tax risks. Where actual tax liabilities di er from the provisions, adjustments are made which can have a material impact on the Group's profits for the year. It is not practicable to quantify the range of outcomes with the application of sensitivity analyses. Tax provision movements are disclosed in note 7. Significant unprovided contingent tax liabilities are disclosed in note 40.
Changes in accounting policy and disclosures
(i) New and amended standards adopted by the Group
The Group has adopted the following new and amended IFRSs as of 1 January 2019:
IFRS 16 Leases
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as operating leases under the principles of IAS 17 Leases. These right-of-use assets and lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate.
For leases previously classified as finance leases the entity recognised the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right-of-use asset and the lease liability at the date of initial application. The measurement principles of IFRS 16 are only applied after that date.
The Group has applied IFRS 16 using the cumulative catch-up approach and therefore comparative information has not been restated and is presented under IAS 17.
Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
-- The use of a single discount rate to a portfolio of leases with
reasonably similar characteristics
-- Reliance on previous assessments on whether leases are onerous
-- The accounting for operating leases with a a remaining lease
term of less than 12 months as at
1 January 2019 as short-term leases
-- The use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease
The Group has also elected not to reassess whether a contract is or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the Group relied on its assessment made when applying IAS 17.
Adjustments recognised on adoption of IFRS 16
The e ect of adopting IFRS 16 on 1 January 2019 was to recognise additional right-of-use assets of
GBP11.8 million, investment properties of GBP0.7 million and lease liabilities of GBP12.2 million, and to recategorise assets with a carrying amount of GBP2.9 million.
In doing so, the Group used incremental borrowing rates of between 4.2% to 10.5% on lease terms ranging from 1 to 103 years. This had no impact on retained earnings.
The di erence between lease liabilities of GBP12.2 million and operating lease commitments previously disclosed of GBP26.2 million is the e ect of short-term leases not previously recognised of GBP0.2 million, discounting of GBP17.1 million and extension options not previously included in operating lease commitments of GBP3.3 million.
Impact of IFRS 16
For the year ended 31 December 2019:
-- Depreciation expense increased by GBP0.9 million relating to
the depreciation of additional right-of-use assets recognised
-- Rent expense decreased by GBP0.4 million relating to previous
operating leases
-- Finance costs increased by GBP0.7 million relating to the interest
expense on additional lease liabilities recognised
-- Income tax expense decreased by less than GBP0.1 million relating
to the tax e ect of those changes
-- Retained profits decreased by GBP1.1 million relating to the
excess of interest and depreciation over rent expense and tax
Summary of new accounting policies
Set out below are the new accounting policies of the Group upon adoption of IFRS 16:
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of o ce equipment that are considered of low value (i.e., below GBP0.01 million). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Amendments to IAS 19 Employee Benefits Plan Amendment, Curtailment or Settlement
The amendments clarify that the past service cost (or of the gain or loss on settlement) is calculated by measuring the defined benefit liability (asset) using updated assumptions and comparing benefits o ered and plan assets before and after the plan amendment (or curtailment or settlement) but ignoring the e ect of the asset ceiling (that may arise when the defined benefit plan is in a surplus position). IAS 19 is now clear that the change in the e ect of the asset ceiling that may result from the plan amendment (or curtailment or settlement) is determined in a second step and is recognised in the normal manner in other comprehensive income.
The paragraphs that relate to measuring the current service cost and the net interest on the net defined benefit liability (asset) have also been amended. An entity will now be required to use the updated assumptions from this remeasurement to determine current service cost and net interest for the remainder of the reporting period after the change to the plan. In the case of the net interest, the amendments make it clear that for the period post plan amendment, the net interest is calculated by multiplying the net defined benefit liability (asset) as remeasured under IAS 19 with the discount rate used in the remeasurement (also taking into account the e ect of contributions and benefit payments on the net defined benefit liability (asset)).
The amendments are applied prospectively. They apply only to plan amendments, curtailments or settlements that occur on or after the beginning of the annual period in which the amendments to IAS 19 are first applied.
The amendments to IAS 19 must be applied to annual periods beginning on or after 1 January 2019.
Adoption of this standard did not have a material impact on the consolidated financial statements.
Amendments to IAS 28 Long term Interests in Associates and Joint Ventures
The amendment clarifies that IFRS 9, including its impairment requirements, applies to long term interests. Furthermore, in applying IFRS 9 to long term interests, an entity does not take into account adjustments to their carrying amount required by IAS 28 (i.e. adjustments to the carrying amount of long term interests arising from the allocation of losses of the investee or assessment of impairment in accordance with IAS 28).
The amendments apply retrospectively to annual reporting periods beginning on or after 1 January 2019.
Adoption of this standard did not have a material impact on the consolidated financial statements.
IFRIC 23 Uncertainty over Income Tax Treatments
IFRIC 23 sets out how to determine the accounting tax position when there is uncertainty over income tax treatments. The interpretation provided requires an entity to:
-- Determine whether uncertain tax positions are assessed separately
or as a group; and
-- Assess whether it is probable that a tax authority will accept
an uncertain tax treatment used, or proposed to be used, by an
entity in its income tax filings:
-- If yes, the entity should determine its accounting tax position
consistently with the tax treatment used or planned to be
used in its income tax filings.
-- If no, the entity should reflect the e ect of uncertainty
in determining its accounting tax position. The Interpretation
is e ective for annual periods beginning on or after 1 January
2019. Entities can apply the Interpretation with either full
retrospective application or modified retrospective application
without restatement of comparatives retrospectively or prospectively.
Adoption of this standard did not have a material impact on the consolidated financial statements.
Annual Improvements to IFRS Standards 2015-2017 Cycle
Amendments to IFRS 3 Business Combinations, IFRS 11 Joint Arrangements, IAS 12 Income Taxes and IAS 23 Borrowing Costs
The Annual Improvements includes amendments to:
(i) IAS 12 Income Taxes
The amendments clarify that an entity should recognise the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised the transactions that generated the distributable profits. This is the case irrespective of whether di erent tax rates apply to distributed and undistributed profits.
(ii) IAS 23 Borrowing Costs
The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings.
Amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
The Group elected to early adopt these amendments which clarify the definition of material and how it should be applied by including in the definition guidance that until now has featured elsewhere in IFRS Standards. The amendments ensure that the definition of material is consistent across all IFRS Standards.
(ii) Standards, amendments and interpretations to existing standards that are not yet e ective and have not been adopted early by the Group
Certain new accounting standards and interpretations have been published that are not mandatory for
31 December 2019 reporting periods and have not been early adopted by the Group. The Group's assessment of the impact of these new standards and interpretations is set out below.
IFRS 10 Consolidated Financial Statements and IAS 28 (amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution of assets between an investor and its associate or joint venture. Specifically, the amendments state that gains or losses resulting from the loss of control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method, are recognised in the parent's profit or loss only to the extent of the unrelated investors' interests in that associate or joint venture. Similarly, gains and losses resulting from the remeasurement of investments retained in any former subsidiary (that has become an associate or a joint venture that is accounted for using the equity method) to fair value are recognised in the former parent's profit or loss only to the extent of the unrelated investors' interests in the new associate or joint venture.
The e ective date of the amendments has yet to be set, however, earlier application of the amendments is permitted. The application of these amendments may have an impact on the Group's consolidated financial statements in future periods should such transactions arise.
Notes to the accounts
1 Business and geographical segments
The principal activities of the Group are as follows:
Agriculture
Engineering
Food Service
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:
Other
Agriculture Engineering Food Service operations Consolidated
2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Revenue
External sales 238.7 245.3 22.1 22.2 29.8 41.5 0.9 0.8 291.5 309.8
----- ----- ----- ----- ----- ----- ----- ------- ------ ------
Segment
trading
profit/(loss) 25.2 51.0 - (0.6) 0.8 1.6 0.1 0.1 26.1 52.1
----- ----- ----- ----- ----- ----- ----- -------
Unallocated
corporate
expenses (9.6) (9.8)
Trading profit 16.5 42.3
Share of
associates'
results 4.6 7.6
Provisions and
impairment of
property,
plant and
equipment - (0.2)
Loss on
disposal of
subsidiaries - (0.4)
Profit on
disposal of
financial
assets 0.2 0.3
Investment
income 0.7 0.8
Net finance
income 0.3 2.1
------ ------
Profit before
tax from
continuing
operations 22.3 52.5
Taxation (7.2) (20.0)
------ ------
Profit after
tax from
continuing
operations 15.1 32.5
------ ------
Other
information
Segment assets 364.8 378.9 19.1 14.1 32.9 31.3 19.8 19.6 436.6 443.9
Investments in
associates 66.0 65.7
Unallocated
assets 103.2 100.8
Consolidated
total assets 605.8 610.4
------ ------
Segment
liabilities (49.8) (61.5) (12.1) (6.0) (7.0) (6.2) (2.6) - (71.5) (73.7)
Unallocated
liabilities (81.9) (84.4)
Consolidated
total
liabilities (153.4) (158.1)
------ ------
Capital
expenditure 15.3 16.4 0.6 0.4 2.3 3.2 0.7 1.4 18.9 21.4
Depreciation (13.3) (11.8) (1.5) (1.4) (1.8) (1.9) (0.2) (0.2) (16.8) (15.3)
Amortisation - - - - (0.3) (0.4) - - (0.3) (0.4)
Impairments (0.3) - - - - - - - (0.3) -
Segment assets consist primarily of intangible assets, property, plant and equipment, right-of-use assets, investment properties, 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 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
Bangladesh
India
Kenya
Malawi
North America and Bermuda
South Africa
South America
The Group derives revenue from the transfer of goods and services over time and at a point in time in the following major geographical regions:
At a point in time Over time Total
2019 2018 2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
United Kingdom 56.5 58.7 0.8 0.7 57.3 59.4
Continental Europe 24.0 36.0 - - 24.0 36.0
Bangladesh 23.9 31.7 - - 23.9 31.7
India 92.4 79.2 - - 92.4 79.2
Kenya 30.2 40.7 - - 30.2 40.7
Malawi 11.0 14.0 0.1 0.1 11.1 14.1
North America and Bermuda 14.0 11.8 - - 14.0 11.8
South Africa 3.0 2.2 - - 3.0 2.2
South America 5.9 6.1 - - 5.9 6.1
Other 29.7 28.6 - - 29.7 28.6
--------- --------- ----- ----- ----- -----
290.6 309.0 0.9 0.8 291.5 309.8
--------- --------- ----- ----- ----- -----
The following is an analysis of the carrying amount of segment assets and additions to property, plant and equipment and investment properties, analysed by the geographical area in which the assets are located:
Carrying amount of Additions to property, Additions to
segment assets plant and equipment investment properties
2019 2018 2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
United Kingdom 68.3 62.2 3.0 4.0 0.5 0.9
Continental Europe 1.1 1.4 - 0.1 - -
Bangladesh 68.2 72.0 2.1 2.5 - -
India 103.1 101.4 3.6 4.0 - -
Kenya 99.5 107.0 4.7 5.3 - -
Malawi 54.0 58.6 1.6 2.0 - -
Tanzania 1.3 - - - - -
North America and Bermuda 12.4 13.3 - - - -
South Africa 18.7 16.4 3.1 2.3 - -
South America 10.0 11.6 0.3 0.3 - -
----------- ----------- ------------ ------------ ------------- ------------
436.6 443.9 18.4 20.5 0.5 0.9
----------- ----------- ------------ ------------ ------------- ------------
2 Revenue
An analysis of the Group's revenue is as follows:
2019 2018
GBP'm GBP'm
Sale of goods 242.9 248.5
Distribution and warehousing revenue 25.6 38.2
Engineering services revenue 22.1 22.2
Agency commission revenue - 0.1
Property rental revenue 0.9 0.8
----- -----
Total Group revenue 291.5 309.8
Other operating income 4.0 4.0
Investment income 0.7 0.8
Interest income 3.9 4.0
----- -----
Total Group income 300.1 318.6
----- -----
Disaggregation of revenue from contracts with customers:
At a point in time Over time
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Sale of goods 242.9 248.5 - -
Distribution and warehousing revenue 25.6 38.2 - -
Engineering services revenue 22.1 22.2 - -
Agency commission revenue - 0.1 - -
Property rental revenue - - 0.9 0.8
------------ ----------- -------- -------
Total Group revenue 290.6 309.0 0.9 0.8
------------ ----------- -------- -------
3 Trading profit
2019 2018
GBP'm GBP'm
The following items have been included in arriving at trading profit:
Employment costs (note 11) 118.0 98.5
Inventories:
Cost of inventories recognised as an expense (included in cost of sales) 164.4 162.1
Fair value gain included in Made Tea 0.1 0.2
Depreciation of property, plant and equipment:
Owned assets 15.8 15.1
Under finance leases - 0.1
Right-of-use assets 0.9 -
Amortisation of intangibles (included in administrative expenses) 0.3 0.4
Impairment of intangibles (included in administrative expenses) 0.3 -
Gain from change in fair value of non-current biological assets 1.4 1.5
Profit on disposal of property, plant and equipment 0.5 0.1
Repairs and maintenance expenditure on property, plant and equipment 5.4 5.6
------ -----
Currency exchange (gains)/losses (credited)/charged to income include:
Revenue - (0.1)
Cost of sales - (0.1)
Administrative expenses (0.2) (0.2)
Investment income (0.1) -
Finance income 0.3 (0.2)
------ -----
- (0.6)
------ -----
During the year the Group (including its overseas subsidiaries) obtained the following services
from the Company's auditor and its associates:
Audit services:
Statutory audit:
Parent company and consolidated financial statements 0.2 0.2
Subsidiary companies 0.5 0.5
------ -----
0.7 0.7
Audit - related regulatory reporting 0.1 0.1
Tax compliance services 0.1 -
------ -----
0.9 0.8
------ -----
4 Underlying profit
The Group seeks to present an indication of the underlying performance which is not impacted by exceptional items or items considered non-operational in nature. This measure of profit is described as 'underlying' and is used by management to measure and monitor performance.
The following items have been excluded from the underlying profit measure and have been separately disclosed:
-- A GBP9.8 million gain (2018: GBP5.4 million gain) from the
release of provisions for wage increases relating to prior
years in our Agriculture operations following progress on
negotiations.
-- A charge of GBP3.6 million (2018: GBPnil) in relation to workers
profit participation in Bangladesh which mainly relates to
prior years obligations and has been recognised as a consequence
of regulatory developments in the current year.
-- The release of a GBPnil (2018: GBP9.0 million) provision in
Bangladesh for post-employment benefit obligations from which
the tea industry has been exempted.
5 Share of associates' results
The Group's share of the results of associates is analysed below:
2019 2018
GBP'm GBP'm
Profit before tax 5.3 8.4
Taxation (0.7) (0.8)
----- -----
Profit after tax 4.6 7.6
----- -----
6 Finance income and costs
2019 2018
GBP'm GBP'm
Finance costs - interest payable on loans and bank overdrafts (1.5) (0.6)
Interest payable on leases (0.7) -
----- -----
Finance costs (2.2) (0.6)
Finance income - interest income on short-term bank deposits 3.9 4.0
Net exchange (loss)/gain on foreign cash balances (0.3) 0.2
Employee benefit interest (note 34) (1.1) (1.5)
----- -----
Net finance income 0.3 2.1
----- -----
7 Taxation
Analysis of charge in the year 2019 2018
GBP'm GBP'm GBP'm
Current tax
UK corporation tax
UK corporation tax at 19.0 per cent. (2018: 19.0 per cent.) 0.6 2.8
Double tax relief (0.6) (2.8)
------ -----
- -
Foreign tax
Corporation tax 8.7 14.0
Adjustment in respect of prior years (2.4) 0.1
------ -----
6.3 14.1
----- -----
Total current tax 6.3 14.1
Deferred tax
Origination and reversal of timing differences
United Kingdom (1.1) 1.5
Overseas 2.0 4.4
------ -----
0.9 5.9
----- -----
Tax on profit on ordinary activities 7.2 20.0
----- -----
Factors affecting tax charge for the year
Profit on ordinary activities before tax 22.3 52.3
Share of associated undertakings profit (4.6) (7.6)
----- -----
Adjusted profit on ordinary activities before tax 17.7 44.7
----- -----
Tax on ordinary activities at the standard rate of corporation tax
in the UK of 19.0 per cent. (2018: 19.0 per cent.) 3.4 8.5
Effects of:
Adjustment to tax in respect of prior years (2.4) 0.1
Expenses not deductible for tax purposes 1.0 1.3
Adjustment in respect of foreign tax rates 3.1 7.2
Additional tax arising on dividends from overseas companies 1.0 0.7
Other income not charged to tax (0.5) (1.0)
Increase in tax losses carried forward 1.5 2.8
Movement in other timing di erences 0.1 0.4
----- -----
Total tax charge for the year 7.2 20.0
----- -----
Adjustment to tax in respect of prior years includes a credit of GBP2.3 million relating to a reversal of the provision previously carried relating to assessments raised by the Malawi Revenue Authority which are no longer required.
Included within the tax charge is a provision amounting to GBP0.9 million relating to withholding tax on prior year branch profit remittances from Bangladesh where the applicable rate of withholding tax is being contested.
Also included within the tax charge is a credit to deferred tax of GBP1.3 million relating to the recognition of workers profit participation liabilties in Bangladesh.
The tax charge includes a credit of GBP0.9 million relating to the recognition of deferred tax losses able to be utilised to o set gains in the value of financial assets at fair value through other comprehensive income where the related equal and opposite charge arises in the Statement of Comprehensive Income.
8 Profit for the year
2019 2018
GBP'm GBP'm
The profit of the Company was: 4.2 3.9
----- -----
The Company has taken advantage of the exemption under Section 408 of the Companies Act 2006 not to disclose its income statement.
9 Equity dividends
2019 2018
GBP'm GBP'm
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2018 of 102p
(2017: 98p) per share 2.8 2.7
Interim dividend for the year ended 31 December 2019 of 42p
(2018: 40p) per share 1.2 1.1
4.0 3.8
----- -----
Dividends amounting to GBP0.1 million (2018: GBP0.1 million) 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 2019 of
nil (2018: 102p) per share -2.9
---
10 Earnings/(loss) per share (EPS)
2019 2018
Weighted Weighted
average average
Earnings/ number of number of
(loss) shares EPS Earnings shares EPS
GBP'm Number Pence GBP'm Number Pence
Attributable to ordinary shareholders 8.3 2,762,000 300.5 25.2 2,762,000 912.4
--------- --------- ----- -------- --------- -----
Attributable to ordinary shareholders
- continuing operations 8.3 2,762,000 300.5 25.4 2,762,000 919.6
--------- --------- ----- -------- --------- -----
Attributable to ordinary shareholders
- discontinued operation - 2,762,000 - (0.2) 2,762,000 (7.2)
--------- --------- ----- -------- --------- -----
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 those held by the Group as treasury shares (note 35).
11 Employees
2019 2018
Number Number
Average number of employees by activity:
Agriculture 77,564 77,182
Engineering 257 225
Food Service 313 357
Central Management 31 28
------ ------
78,165 77,792
------ ------
2019 2018
GBP'm GBP'm
Employment costs:
Wages and salaries 103.7 96.2
Social security costs 2.6 2.7
Employee benefit obligations (note 34) - UK 1.7 2.3
- Overseas 6.4 6.3
- Overseas workers profit
participation 3.6 -
- Overseas curtailment gain - (9.0)
------ ------
118.0 98.5
------ ------
Total remuneration paid to key employees who are members of the Executive Committees, excluding Directors of Camellia Plc, amounted to GBP2.6 million (2018: GBP2.9 million).
12 Emoluments of the directors
2019 2018
GBP'm GBP'm
Aggregate emoluments excluding pension contributions 2.1 2.0
----- -----
Emoluments of the highest paid director excluding pension contributions were GBP0.6 million (2018: GBP0.6 million).
Further details of directors' emoluments are set out on pages 37 to 38.
13 Intangible assets
Computer
Goodwill Brands software Total
Group GBP'm GBP'm GBP'm GBP'm
Cost
At 1 January 2018 - 2.3 2.4 4.7
Additions - - 0.1 0.1
Disposals - - (0.3) (0.3)
Subsidiary joining the group - 6.6 - 6.6
-------- ------ -------- -----
At 1 January 2019 - 8.9 2.2 11.1
Exchange di erences - (0.1) - (0.1)
Additions - - 0.1 0.1
Businesses joining the group 1.4 - - 1.4
-------- ------ -------- -----
At 31 December 2019 1.4 8.8 2.3 12.5
-------- ------ -------- -----
Amortisation
At 1 January 2018 - - 1.5 1.5
Charge for the year - - 0.4 0.4
Disposals - - (0.3) (0.3)
-------- ------ -------- -----
At 1 January 2019 - - 1.6 1.6
Charge for the year - - 0.3 0.3
Impairment 0.3 - - 0.3
-------- ------ -------- -----
At 31 December 2019 0.3 - 1.9 2.2
-------- ------ -------- -----
Net book value at 31 December 2019 1.1 8.8 0.4 10.3
-------- ------ -------- -----
Net book value at 31 December 2018 - 8.9 0.6 9.5
-------- ------ -------- -----
Impairment testing
Timing of impairment testing
The Group's impairment test in respect of goodwill is performed as at 31 December each year. In line with the accounting policy, impairment testing is also performed whenever there is an indication that the assets may be impaired. As a result of this testing and following a change in fair value less costs of disposal as assessed by a professional valuation, an impairment of GBP0.3 million was made in the year to 31 December 2019. For the purpose of this impairment testing, the Group's CGU components represent the goodwill on the acquisition of tea estates in India by Goodricke Group Limited and Amgoorie India Limited.
The Group's impairment test in respect of brands allocated to each component of the cash-generating unit ('CGU') is performed as at 31 December each year. In line with the accounting policy, impairment testing is also performed whenever there is an indication that the assets may be impaired. There was no indication of impairment in the year to 31 December 2019. For the purpose of this impairment testing, the Group's CGU components represent the brands owned by Jing Tea Limited and Goodricke Group Limited.
14 Property, plant and equipment
Fixtures,
Bearer Land and Plant and fittings and
plants buildings machinery equipment Total
Group GBP'm GBP'm GBP'm GBP'm GBP'm
Deemed cost
At 1 January 2018 133.6 102.1 106.2 17.1 359.0
Exchange di erences 4.9 1.0 0.4 0.3 6.6
Additions 4.0 6.3 8.5 1.7 20.5
Disposals (0.4) (0.4) (1.8) (0.8) (3.4)
Subsidiaries joining the group - 0.4 0.1 - 0.5
Subsidiaries leaving the group - (1.8) (0.8) (0.6) (3.2)
Reclassification from investment properties - 0.2 - - 0.2
------ --------- --------- ------------ -----
At 1 January 2019 142.1 107.8 112.6 17.7 380.2
Reclassification to right-of-use assets - (2.0) (0.1) - (2.1)
Exchange di erences (6.7) (3.1) (3.8) (0.4) (14.0)
Additions 4.4 5.8 6.6 1.6 18.4
Disposals (1.1) (1.1) (2.6) (0.1) (4.9)
Businesses joining the group 2.6 1.6 1.4 0.1 5.7
------ --------- --------- ------------ -----
At 31 December 2019 141.3 109.0 114.1 18.9 383.3
------ --------- --------- ------------ -----
Depreciation
At 1 January 2018 16.8 50.9 66.6 8.4 142.7
Exchange di erences 0.8 0.3 0.2 0.2 1.5
Charge for the year 5.6 2.3 6.3 1.0 15.2
Disposals (0.2) (0.3) (1.6) (0.8) (2.9)
Subsidiaries leaving the group - (1.5) (0.6) (0.5) (2.6)
------ --------- --------- ------------ -----
At 1 January 2019 23.0 51.7 70.9 8.3 153.9
Reclassification to right-of-use assets - (0.2) - - (0.2)
Exchange di erences (1.2) (1.2) (2.3) (0.3) (5.0)
Charge for the year 5.8 2.7 6.5 0.8 15.8
Disposals (0.9) (0.7) (2.0) (0.1) (3.7)
------ --------- --------- ------------ -----
At 31 December 2019 26.7 52.3 73.1 8.7 160.8
------ --------- --------- ------------ -----
Net book value at
31 December 2019 114.6 56.7 41.0 10.2 222.5
------ --------- --------- ------------ -----
Net book value at 31 December 2018 119.1 56.1 41.7 9.4 226.3
------ --------- --------- ------------ -----
The amount of expenditure for property, plant and equipment in the course of construction (including immature bearer plants) amounted to GBP5.5 million (2018: GBP4.2 million).
15 Right-of-use assets
Land and Plant and
buildings machinery Total
GBP'm GBP'm GBP'm
Group
Deemed cost
Impact on adopting IFRS 16 at 1 January 2019 11.5 0.3 11.8
Reclassification from property, plant and equipment 2.0 0.1 2.1
Reclassification from prepaid operating leases 1.0 - 1.0
Exchange di erences (0.2) - (0.2)
Additions 1.0 0.2 1.2
Businesses joining the group 3.7 - 3.7
--------- --------- ------
At 31 December 2019 19.0 0.6 19.6
--------- --------- ------
Depreciation
Reclassification from property, plant and equipment 0.2 - 0.2
Charge for the year 0.7 0.2 0.9
At 31 December 2019 0.9 0.2 1.1
Net book value at 31 December 2019 18.1 0.4 18.5
--------- --------- ------
The Group leases many assets including land, buildings and plant. The average lease term is 87 years.
Leases that expired in the year and were replaced by new leases for identical or the same underlying assets resulted in additions to right-of-use assets of GBP0.2 million.
The maturity analysis of lease liabilities is presented in note 31.
2019
GBP'm
Amounts recognised in the consolidated income statement:
Interest expense on lease liabilities 0.7
Expense relating to short-term leases 0.1
-----
16 Investment properties
GBP'm
Group
Cost
At 1 January 2018 19.5
Additions 0.9
Transfers from property, plant and equipment (0.2)
Reclassification to assets held for sale (0.4)
-----
At 1 January 2019 19.8
Impact on adopting IFRS 16 at 1 January 2019 0.7
Additions 0.5
Disposals (1.5)
-----
At 31 December 2019 19.5
-----
Depreciation
At 1 January 2018 1.9
Transfers from property, plant and equipment (0.2)
Charge for the year 0.1
-----
At 1 January 2019 1.8
Charge for the year 0.1
Disposals (0.7)
-----
At 31 December 2019 1.2
-----
Net book value at 31 December 2019 18.3
-----
Net book value at 31 December 2018 18.0
-----
Included in revenue is GBP0.9 million (2018: GBP0.8 million) of rental income generated from investment properties. Direct operating expenses relating to the investment property, the majority of which generated rental income in the period, amounted to GBP0.2 million (2018: GBP0.1 million).
At the end of the year the fair value of Investment properties was GBP23.1 million (2018: GBP23.7 million). Investment properties were valued by the Directors (fair value hierarchy Level 2).
17 Biological assets
Non-current: Forestry Livestock Total
GBP'm GBP'm GBP'm
Group
At 1 January 2018 11.9 0.9 12.8
Exchange di erences 0.7 0.1 0.8
Additions 0.3 0.1 0.4
Gains arising from changes
in fair value less estimated point-of-sale costs 1.2 0.3 1.5
Decreases due to harvesting (0.6) (0.4) (1.0)
-------- --------- -----
At 1 January 2019 13.5 1.0 14.5
Exchange di erences (0.6) - (0.6)
Additions 0.2 - 0.2
Gains arising from changes
in fair value less estimated point-of-sale costs 1.0 0.4 1.4
Decreases due to harvesting (0.6) (0.3) (0.9)
-------- --------- -----
At 31 December 2019 13.5 1.1 14.6
-------- --------- -----
Current: 2019 2018
GBP'm GBP'm
Group
Tea 0.4 0.3
Edible nuts 3.6 2.8
Citrus 1.1 1.6
Soya 2.7 3.0
Avocado 1.1 1.0
Other 0.2 0.1
--------- -----
9.1 8.8
--------- -----
Biological assets are carried at fair value. Where meaningful market-determined prices do not exist to assess the fair value of biological assets, the fair value has been determined based on the net present value of expected future cash flows from those assets, discounted at appropriate pre-tax rates. In determining the fair value of biological assets where the discounting of expected future cash flows has been used, the Directors have made certain assumptions about the expected life-span of the plantings, yields, selling prices and costs. There are no individually significant unobservable inputs. The fair value of livestock is based on market prices of livestock of similar age and sex.
New planting additions represent new areas planted to the particular crop at cost.
As at 31 December 2019 the area planted to Forestry amounted to 5,813 Hectares (2018: 5,982) from which 173,867 cubic metres (2018: 156,112) were harvested during the year.
Livestock numbers were 4,396 head (2018: 4,436) at 31 December 2019.
Fair value measurement
Livestock biological assets fall under level 2 and all other biological assets fall under level 3 of the hierarchy defined in IFRS 13.
The basis upon which the valuations are determined is set out in accounting policies on page 49.
Valuations by external professional valuers and those derived from discounted cash flows both make assumptions based on unobservable inputs of: yields, an increase in which will raise the value; costs, an increase in which will decrease the value; market prices, an increase in which will raise the value; life span of the plantings, an increase in which will raise the value; discount rates, an increase in which will decrease the value. These assumptions vary significantly across di erent countries, crops and varieties. In preparing these valuations a long term view is taken on the yields and prices achievable.
The fair value of biological assets is sensitive to these assumptions, the more significant of which are as follows:
Non-current:
- Forestry - a 10% movement in the market price for trees or
volume of trees assumed would result in a GBP1.4 million (2018:
GBP1.4 million) increase/decrease in the fair value of forestry.
Current:
- Macadamia - a 10% increase/decrease in the volumes assumed
would result in a GBP0.6 million (2018: GBP0.6 million) increase/decrease
in the fair value of macadamia growing crop. A 10% increase/decrease
in selling price assumed for macadamia would result in a GBP0.7
million (2018: GBP0.8 million) increase/decrease in the fair
value.
- Avocados - a 10% increase/decrease in the volume or the price
assumed would result in a GBP0.2 million (2018: GBP0.1 million)
increase/decrease in the fair value of Hass avocados growing
crop.
- Soya - a 10% increase/decrease in the volume or the price
assumed would result in a GBP0.3 million (2018: GBP0.3 million)
increase/decrease in the fair value of soya growing crop.
Financial risk management strategies
The Group is exposed to financial risks arising from changes in the prices of the agricultural products it produces. There are no futures markets available for the majority of crops grown by the Group. The Group's exposure to this risk is mitigated by the geographical spread of its operations, selective forward selling in certain instances when considered appropriate, and regular reviews of available market data on sales and production. The Group monitors closely the returns it achieves from its crops and considers replacing its biological assets when yields decline with age or markets change.
Further financial risk arises from changes in market prices of key cost components. Such costs are closely monitored.
18 Prepaid operating leases
GBP'm
Group
Cost
At 1 January 2018 0.9
Exchange di erences 0.1
-----
At 1 January 2019 1.0
Reclassification to right-of-use assets (1.0)
-----
At 31 December 2019 -
-----
Net book value at 31 December 2019 -
-----
Net book value at 31 December 2018 1.0
-----
19 Investments in subsidiaries
2019 2018
GBP'm GBP'm
Company
Cost - At 1 January and 31 December 73.5 73.5
------ ------
20 Investments in associates
2019 2018
GBP'm GBP'm
Group
At 1 January 93.6 81.7
Exchange di erences (3.8) 5.1
Share of profit (note 5) 4.6 7.6
Dividends (3.1) (2.8)
Additions 1.3 1.0
Other equity movements 0.3 1.0
----- -----
At 31 December 92.9 93.6
----- -----
Provision for diminution in value
At 1 January 27.9 26.3
Exchange di erences (1.0) 1.6
----- -----
At 31 December 26.9 27.9
----- -----
Net book value at 31 December 66.0 65.7
----- -----
Details of the Group's associates are shown in note 42.
The Group's share of the results of its principal associates and its share of the assets (including goodwill) and liabilities are as follows:
Country of Interest Market
incorporation Assets Liabilities Revenues Profit held value
GBP'm GBP'm GBP'm GBP'm % GBP'm
2019
Listed
BF&M Bermuda 779.1 (698.9) 74.3 3.6 37.8 52.3
United Finance Limited Bangladesh 73.4 (63.3) 3.4 0.8 38.4 11.1
United Insurance
Company Limited Bangladesh 3.7 (1.1) 0.4 0.2 37.0 8.6
------ ----------- -------- ------ ------
856.2 (763.3) 78.1 4.6 72.0
------ ----------- -------- ------ ------
2018
Listed
BF&M Bermuda 589.5 (508.8) 64.5 6.5 37.2 41.8
United Finance Limited Bangladesh 85.7 (75.3) 3.5 0.9 38.4 12.0
United Insurance
Company Limited Bangladesh 3.4 (0.9) 0.3 0.2 37.0 3.6
------ ----------- -------- ------ ------
678.6 (585.0) 68.3 7.6 57.4
------ ----------- -------- ------ ------
21 Financial assets at fair value through other comprehensive income
Group Company
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Cost or fair value
At 31 December 35.2 - 0.2 -
Adjustment upon application of IFRS 9 - 43.6 - 0.2
----- ----- ------- ------
At 1 January 35.2 43.6 0.2 0.2
Exchange di erences (1.5) 2.1 - -
Fair value adjustment 6.9 (5.6) - -
Additions 0.8 - - -
Disposals (1.1) (1.1) - -
Fair value adjustment for disposal (0.3) (3.8) - -
----- ----- ------- ------
At 31 December 40.0 35.2 0.2 0.2
----- ----- ------- ------
Provision for diminution in value
At 31 December 2.5 - 0.2 -
Adjustment upon application of IFRS 9 - 2.4 - 0.2
----- ----- ------- ------
At 1 January 2.5 2.4 0.2 0.2
Exchange di erences (0.1) 0.1 - -
Disposals (0.2) - - -
----- ----- ------- ------
At 31 December 2.2 2.5 0.2 0.2
----- ----- ------- ------
Net book value at 31 December 37.8 32.7 - -
----- ----- ------- ------
Financial assets at fair value through other comprehensive income include the following:
Group
2019 2018
GBP'm GBP'm
Listed securities:
Equity securities - Bermuda 2.0 2.6
Equity securities - Japan 18.8 17.1
Equity securities - Switzerland 11.3 8.1
Equity securities - US 3.9 3.6
Equity securities - India 0.6 0.6
Equity securities - Europe 0.4 0.4
Equity securities - United Kingdom 0.3 -
Equity securities - Other 0.5 0.3
----- -----
37.8 32.7
----- -----
Financial assets at fair value through other comprehensive income are denominated in the following currencies:
Group
2019 2018
GBP'm GBP'm
Sterling 0.3 -
US Dollar 3.9 3.6
Euro 0.4 0.4
Swiss Franc 11.3 8.1
Indian Rupee 0.6 0.6
Bermudian Dollar 2.0 2.6
Japanese Yen 18.8 17.1
Other 0.5 0.3
----- -----
37.8 32.7
----- -----
22 Financial assets at fair value through profit or loss
Group
2019 2018
GBP'm GBP'm
At 31 December 3.7 -
Adjustment upon application of IFRS 9 - 2.5
-------- -------
At 1 January 3.7 2.5
Exchange di erences (0.3) -
Fair value adjustment - 0.1
Additions 10.6 7.2
Disposals (7.8) (6.1)
-------- -------
At 31 December 6.2 3.7
-------- -------
Financial assets at fair value through profit or loss include the following:
Group
2019 2018
GBP'm GBP'm
Listed securities:
Money market - Bermuda 0.8 -
Money market - US 3.9 -
Money market - India 1.4 3.7
Money market - Switzerland 0.1 -
6.2 3.7
------- ------
Financial assets at fair value through profit or loss are denominated in the following currencies:
Group
2019 2018
GBP'm GBP'm
US Dollar 3.9 -
Indian Rupee 1.4 3.7
Bermudian Dollar 0.8 -
Swiss Franc 0.1 -
6.2 3.7
------ -----
23 Financial assets at amortised cost
Group
2019 2018
GBP'm GBP'm
At 31 December - -
Adjustment upon application of IFRS 9 - 3.3
------ ------
At 1 January 3.2 3.3
Exchange di erences - 0.1
Disposals (0.2) (0.2)
------ ------
At 31 December 3.0 3.2
------ ------
Financial assets at amortised cost comprises:
2019 2018
GBP'm GBP'm
Treasury infrastructure bonds - 12.0% to 12.2% interest payable twice yearly and redeemable
in November 2022 - Kenya 1.5 1.5
Treasury infrastructure bonds - 12.0% to 12.2% interest payable twice yearly and redeemable
in November 2024 - Kenya 1.5 1.5
Debentures with fixed interest of 12.5% and repayable twice yearly
until 31 October 2019 - Kenya - 0.2
----- -----
3.0 3.2
----- -----
Current - 0.2
Non-Current 3.0 3.0
----- -----
3.0 3.2
----- -----
24 Available-for-sale financial assets
Group Company
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Cost or fair value
At 31 December - 49.4 - 0.2
Adjustment upon application of IFRS 9 - (49.4) - (0.2)
----- ----- ----- -----
At 1 January and 31 December - - - -
----- ----- ----- -----
Provision for diminution in value
At 31 December - 2.4 - 0.2
Adjustment upon application of IFRS 9 - (2.4) - (0.2)
At 1 January and 31 December - - - -
----- ----- ----- -----
Net book value at 31 December - - - -
----- ----- ----- -----
25 Other investments - heritage assets
Group Company
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Cost
At 1 January 9.5 9.4 10.7 10.6
Additions 0.3 0.1 0.3 0.1
----- ----- ----- -----
At 31 December 9.8 9.5 11.0 10.7
----- ----- ----- -----
Heritage assets comprise the Group's and Company's investment in fine art, philately, documents and manuscripts. The market value of these collections is expected to be in excess of book value.
26 Inventories
2019 2018
GBP'm GBP'm
Group
Made Tea 28.6 34.6
Other agricultural produce 5.9 2.6
Work in progress 0.1 0.1
Trading stocks 1.5 1.6
Raw materials and consumables 13.2 13.8
----- -----
49.3 52.7
----- -----
Made tea inventories include the fair value of green leaf which includes a fair value uplift of GBP0.1 million (2018: GBP0.2 million).
27 Trade and other receivables
Group
2019 2018
GBP'm GBP'm
Group
Current:
Trade receivables 30.0 34.5
Amounts owed by associated undertakings 0.1 0.1
Other receivables 5.8 6.0
Prepayments and accrued income 8.4 7.9
----- -----
44.3 48.5
----- -----
Non-current:
Other receivables 2.8 2.7
----- -----
The carrying amounts of the Group's trade and other receivables are denominated in the following currencies:
2019 2018
GBP'm GBP'm
Current:
Sterling 13.4 13.0
US Dollar 2.8 6.2
Euro 0.1 0.1
Kenyan Shilling 3.1 3.4
Indian Rupee 18.9 20.0
Malawian Kwacha 2.1 1.7
Bangladesh Taka 1.6 2.2
South African Rand 0.2 0.2
Brazilian Real 1.4 1.1
Other 0.7 0.6
----- -----
44.3 48.5
----- -----
Non-current:
Kenyan Shilling 0.5 0.5
Indian Rupee 1.4 1.5
Malawian Kwacha 0.6 0.4
Bangladesh Taka 0.3 0.3
----- -----
2.8 2.7
----- -----
Included within trade receivables is a provision for doubtful debts of GBP0.5 million (2018: GBP0.4 million). All other trade receivables are with normal trading partners and there is no history of defaults.
Trade receivables include receivables of GBP6.4 million (2018: GBP5.9 million) which are past due at the reporting date against which the Group has not provided, as there has not been a significant change in credit quality and the amounts are still considered recoverable. Ageing of past due but not provided for receivables is as follows:
2019 2018
GBP'm GBP'm
Up to 30 days 2.7 2.5
30-60 days 1.5 1.4
60-90 days 0.5 0.3
Over 90 days 1.7 1.7
----- -----
6.4 5.9
----- -----
28 Cash and cash equivalents (excluding bank overdrafts)
Group Company
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Cash at bank and in hand 31.1 41.3 - 0.1
Short-term bank deposits 59.5 67.5 - -
Short-term liquid investments 0.8 3.6 - -
----- ----- ----- -----
91.4 112.4 - 0.1
----- ----- ----- -----
Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Cash and cash equivalents 91.4 112.4 - 0.1
Bank overdrafts (note 30) (2.0) (2.8) - -
----- ----- ----- -----
89.4 109.6 - 0.1
----- ----- ----- -----
2019 2018 2019 2018
E ective interest rate:
Short-term deposits 0.85 - 12.0% 0.82 - 12.0% - -
Short-term liquid investments 5.0% 7.04% - -
Average maturity period:
Short-term deposits 53 days 59 days - -
Short-term liquid investments 24 days 37 days - -
29 Trade and other payables
Group Company
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Current:
Trade payables 20.6 24.8 - 0.1
Other taxation and social
security 0.9 1.9 - -
Other payables 20.5 17.9 0.2 0.1
Accruals and deferred income 6.6 8.9 0.4 0.4
------ ----- ------- -------
48.6 53.5 0.6 0.6
------ ----- ------- -------
30 Financial liabilities - borrowings
2019 2018
GBP'm GBP'm
Group
Current:
Bank overdrafts 2.0 2.8
Bank loans 3.6 0.6
----- -----
5.6 3.4
----- -----
Current borrowings include the following amounts
secured on property, plant and equipment and
investment properties:
Bank overdrafts 2.0 2.8
Bank loans 3.6 0.6
----- -----
5.6 3.4
----- -----
Non-current:
Bank loans 3.3 3.3
----- -----
Non-current borrowings include the following
amounts secured on plant and equipment and
investment properties:
Bank loans 3.3 3.3
----- -----
The repayment of bank loans and overdrafts
fall due as follows:
Within one year or on demand (included in current
liabilities) 5.6 3.4
Between 1 - 2 years 0.4 3.3
Between 2 - 5 years 1.3 -
After 5 years 1.6 -
----- -----
8.9 6.7
----- -----
The rates of interest payable by the Group ranged between:
2019 2018
% %
2.50 - 2.50 -
Bank overdrafts 18.50 21.00
Bank loans 3.03 3.03
31 Lease liabilities
2019 2018
GBP'm GBP'm
Group
Maturity analysis of lease liabilities is as
follows:
Within one year 1.2 -
Between 1 - 2 years 1.2 0.1
Between 2 - 5 years 2.1 -
Onwards 8.5 -
----- -----
13.0 0.1
----- -----
Analysed as:
Current 1.2 -
Non-current 11.8 0.1
----- -----
13.0 0.1
----- -----
The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within the individual subsidiaries' finance functions.
32 Provisions
Wages and salaries Others Total
GBP'm GBP'm GBP'm
Group
At 1 January 2018 18.5 1.2 19.7
Exchange di erences 0.6 - 0.6
Utilised in the period (4.9) (0.6) (5.5)
Provided in the period 8.6 0.6 9.2
Unused amounts reversed in period (5.4) (0.1) (5.5)
------------------ ------ -----
At 1 January 2019 17.4 1.1 18.5
Exchange di erences (0.5) - (0.5)
Utilised in the period (6.3) (0.1) (6.4)
Provided in the period 6.8 0.3 7.1
Businesses joining the group 0.1 - 0.1
Unused amounts reversed in period (9.8) (0.1) (9.9)
------------------ ------ -----
At 31 December 2019 7.7 1.2 8.9
------------------ ------ -----
Current:
At 31 December 2019 7.7 1.2 8.9
------------------ ------ -----
At 31 December 2018 17.4 1.1 18.5
------------------ ------ -----
The wages and salaries provisions are in respect of ongoing wage and bonus negotiations in India and Bangladesh.
GBP9.8 million (2018: GBP5.4 million) was reversed from the wages and salaries provision following progress on negotiations in Kenya and India.
Others relate to provisions for claims and dilapidations.
33 Deferred tax
The net movement on the deferred tax account is set out below:
Group Company
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
At 1 January 46.3 40.0 0.2 0.2
Exchange di erences (2.3) 1.5 - -
Charged to the income statement 0.9 5.9 - -
Charged/(credited) to other comprehensive
income 1.4 (1.1) - -
Businesses joining the group 0.8 - - -
----- ----- ------- -------
At 31 December 47.1 46.3 0.2 0.2
The movement in deferred tax assets and liabilities is set out below:
Deferred tax liabilities
Accelerated
tax
depreciation Other Total
GBP'm GBP'm GBP'm
At 1 January 2018 48.1 4.9 53.0
Exchange di erences 1.8 0.3 2.1
Charged to the income statement 1.1 0.1 1.2
Credited to other comprehensive income - (1.5) (1.5)
At 1 January 2019 51.0 3.8 54.8
Exchange di erences (2.4) (0.1) (2.5)
Charged/(credited) to the income statement 1.9 (0.3) 1.6
Charged to other comprehensive income - 0.9 0.9
Businesses joining the group 0.8 - 0.8
At 31 December 2019 51.3 4.3 55.6
Deferred tax assets o set (8.5)
Net deferred tax liability after o
set 47.1
Deferred tax assets
Pension
scheme
Tax losses asset Other Total
GBP'm GBP'm GBP'm GBP'm
At 1 January 2018 4.7 3.2 5.1 13.0
Exchange di erences 0.2 0.1 0.3 0.6
Charged to the income statement (1.9) (2.7) (0.1) (4.7)
Charged to other comprehensive
income - (0.3) (0.1) (0.4)
At 1 January 2019 3.0 0.3 5.2 8.5
Exchange di erences - - (0.2) (0.2)
Credited / (charged) to the
income statement 1.5 0.2 (1.0) 0.7
Charged to other comprehensive
income - (0.2) (0.3) (0.5)
At 31 December 2019 4.5 0.3 3.7 8.5
O set against deferred tax
liabilities (8.5)
Net deferred tax asset after
o set -
Deferred tax liabilities of GBP24.9 million (2018: GBP26.9 million) have not been recognised for the withholding tax and other taxes that would be payable on the unremitted earnings of certain subsidiaries. Such amounts are permanently reinvested.
Deferred tax assets are recognised for tax losses carried forward only to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group has not recognised deferred tax assets of GBP11.7 million (2018: GBP6.1 million) in respect of losses that can be carried forward against future taxable income.
34 Employee benefit obligations
(i) Pensions
Certain Group subsidiaries operate defined contribution and funded defined benefit pension schemes. The most significant is the UK funded, defined benefit scheme. The assets of this scheme are administered by trustees and are kept separate from those of the Group. The performance of the assets is monitored on a regular basis by the trustees and their investment advisors. A full actuarial valuation was undertaken as at 1 July 2017 and updated to 31 December 2019 by a qualified independent actuary. The UK defined benefit pension scheme is closed to new entrants and with e ect from 1 November 2016, the scheme was closed to future accruals. Since that date members have participated in a defined contribution scheme.
The overseas schemes are operated in Group subsidiaries located in Bangladesh and India. Actuarial valuations for these schemes have been updated to 31 December 2019 by qualified actuaries.
Assumptions
The major assumptions used in the valuation to determine the present value of the schemes' defined benefit obligations were as follows:
2019 2018
% per annum % per annum
UK schemes
Rate of increase in salaries N/a N/a
Rate of increase to LPI (Limited Price
Indexation) pensions in payment 2.10 - 5.00 2.30 - 5.00
Discount rate applied to scheme liabilities 1.90 2.75
Inflation assumption (CPI/RPI) 2.10/3.10 2.30/3.30
Assumptions regarding future mortality experience are based on advice received from independent actuaries. The current mortality tables used are SAPS 2, males 105% and females 104%, on a year of birth basis, with CMI_2018 future improvement factors and subject to a long term annual rate of future improvement of 1.25% per annum, smoothing parameter of 7.0 and initial addition parameter of 0.25% pa. This results in males and females aged 65 having life expectancies of 21.4 years (2018: 21.6 years) and 22.7 years respectively (2018: 22.9 years).
2019 2018
Overseas schemes % per annum % per annum
Rate of increase in salaries 6.00 - 7.00 6.00 - 7.00
Rate of increase to LPI (Limited Price Indexation)
pensions in payment 0.00 - 3.00 0.00 - 3.00
Discount rate applied to scheme liabilities 7.00 - 9.00 7.50
Inflation assumption 6.00 - 7.00 6.00 - 7.00
(ii) Post-employment benefits
Certain Group subsidiaries located in Kenya, India and Bangladesh have an obligation to pay terminal gratuities, based on years of service. These obligations are estimated annually using the projected unit method by qualified independent actuaries. Schemes operated in India are funded but the schemes operated in Kenya and Bangladesh are unfunded. Operations in India and Bangladesh also have an obligation to pay medical benefits upon retirement. These schemes are unfunded.
Assumptions
The major assumptions used in the valuation to determine the present value of the post-employment benefit obligations were as follows:
2019 2018
% per annum % per annum
Rate of increase in salaries 6.00 - 7.50 6.00 - 10.00
Discount rate applied to scheme liabilities 7.00 - 13.00 7.50 - 13.00
Inflation assumptions 0.00 - 7.50 0.00 - 10.00
(iii) Leave obligations
Certain Group subsidiaries located in India have an obligation to pay leave benefit, based on years of service. These obligations are estimated annually using the projected unit method by qualified independent actuaries. These schemes are unfunded.
(iv) Profit sharing obligations
Certain Group subsidiaries located in Bangladesh may have an obligation to pay sums for workers profit participation for prior years based on a rate of 5 per cent. of post tax profit. Provisions have been made for these sums pending clarification of the appplicability of the legislation.
Sensitivity analysis
The sensitivity of the UK defined benefit obligation to changes in the weighted principal assumptions is:
Impact
on defined
Change benefit
in assumption obligation
Discount rate 0.5% higher 7.1% decrease
Discount rate 0.5% lower 7.6% increase
Rate of RPI inflation 0.25% higher 1.8% increase
Rate of RPI inflation 0.25% lower 1.7% decrease
Life expectancy +1 year 4.5% increase
Life expectancy -1 year 4.5% decrease
The above changes in assumptions may have an impact on the value of the scheme's investment holdings. For example, the scheme holds a proportion of its assets in corporate bonds. A fall in the discount rate as a result of lower UK corporate bond yields would lead to an increase in the value of these assets, thus mitigating the increase in the defined benefit obligation to some extent. The sensitivities have been calculated by changing the key assumption only and leaving all others fixed.
Duration of the scheme liabilities
The weighted average duration of the UK scheme's liabilities is 15 years.
Analysis of scheme liabilities
The liabilities of the UK scheme are split as follows:
%
Deferred pensioners 41
Current pensioners 59
Total membership 100
(v) Actuarial valuations
2019 2018
UK Overseas Total UK Overseas Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Equities and property 87.8 0.9 88.7 77.5 0.9 78.4
Bonds 50.8 18.8 69.6 47.4 18.6 66.0
Diversified growth 39.9 - 39.9 36.4 - 36.4
Cash 1.2 9.1 10.3 0.8 9.0 9.8
Total fair value
of plan assets 179.7 28.8 208.5 162.1 28.5 190.6
Present value of
defined benefit
obligations (193.3) (37.2) (230.5) (178.6) (36.7) (215.3)
Total deficit in
the schemes (13.6) (8.4) (22.0) (16.5) (8.2) (24.7)
Amount recognised
as asset in the
balance sheet - 0.7 0.7 - 0.3 0.3
Amount recognised
as current liability
in the balance sheet - (0.7) (0.7) - (1.0) (1.0)
Amount recognised
as non-current liability
in the balance sheet (13.6) (8.4) (22.0) (16.5) (7.5) (24.0)
(13.6) (8.4) (22.0) (16.5) (8.2) (24.7)
Related deferred
tax asset (note
33) - 0.3 0.3 - 0.3 0.3
Net deficit (13.6) (8.1) (21.7) (16.5) (7.9) (24.4)
Movements in the fair value of scheme assets were as follows:
2019 2018
UK Overseas Total UK Overseas Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
At 1 January 162.1 28.5 190.6 174.3 32.3 206.6
Expected return
on plan assets 4.3 2.1 6.4 4.1 2.0 6.1
Employer contributions - 2.0 2.0 0.2 2.4 2.6
Benefit payments (9.5) (2.4) (11.9) (8.1) (2.9) (11.0)
Businesses joining
the group - 0.7 0.7 - - -
Company leaving
the group - - - - (5.0) (5.0)
Actuarial gains/(losses) 22.8 (0.4) 22.4 (8.4) - (8.4)
Exchange di erences - (1.7) (1.7) - (0.3) (0.3)
At 31 December 179.7 28.8 208.5 162.1 28.5 190.6
Movements in the present value of defined benefit obligations were as follows:
2019 2018
UK Overseas Total UK Overseas Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
At 1 January (178.6) (36.7) (215.3) (188.6) (48.9) (237.5)
Current service
cost - (1.6) (1.6) - (2.0) (2.0)
Past service cost - - - (0.9) (0.2) (1.1)
Interest cost (4.8) (2.7) (7.5) (4.5) (3.1) (7.6)
Curtailment gain - - - - 9.0 9.0
Benefit payments 9.5 2.4 11.9 8.1 2.9 11.0
Businesses joining
the group - (1.2) (1.2) - - -
Company leaving
the group - - - - 5.3 5.3
Actuarial (losses)/gains (19.4) 0.5 (18.9) 7.3 0.4 7.7
Exchange di erences - 2.1 2.1 - (0.1) (0.1)
At 31 December (193.3) (37.2) (230.5) (178.6) (36.7) (215.3)
In 2017, the total fair value of plan assets was GBP206.6 million, the present value of defined benefit obligations was GBP237.5 million and the deficit was GBP30.9 million. In 2016, the total fair value of plan assets was GBP194.1 million, the present value of defined benefit obligations was GBP260.8 million and the deficit was GBP66.7 million and in 2015, the total fair value of plan assets was GBP172.0 million, the present value of defined benefit obligations was GBP210.6 million and the deficit was GBP38.6 million.
Income Statement
The amounts recognised in the Income Statement are as follows:
2019 2018
UK Overseas Total UK Overseas Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Amounts (charged)/credited
to operating profit:Current
service cost - (1.6) (1.6) - (2.0) (2.0)
Past service cost - - - (0.9) (0.2) (1.1)
Curtailment gain - - - - 9.0 9.0
Total operating
(charge)/credit - (1.6) (1.6) (0.9) 6.8 5.9
Amounts charged
to other finance
costs:
Interest expense (0.5) (0.6) (1.1) (0.4) (1.1) (1.5)
Total (charged)/credited
to income statement (0.5) (2.2) (2.7) (1.3) 5.7 4.4
In 2018, the curtailment gain of GBP9.0 million reflected a change to the labour laws in Bangladesh which exempted the tea industry from the requirement to pay certain post-employment benefits.
Employer contributions to defined contribution schemes are charged to profit when payable and the costs charged were GBP6.5 million (2018: GBP5.5 million).
Liabilities for workers profit participation in Bangladesh are charged to profit when the obligation arises. The amount of GBP3.6 million (2018: GBPnil) charged largely related to prior years and has been recognised as a consequence of events in the current year.
Actuarial gains and losses recognised in the Statement of Comprehensive Income
The amounts included in the Statement of Comprehensive Income:
2019 2018
UK Overseas Total UK Overseas Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Remeasurements:
Return on plan assets,
excluding amount
included in interest 22.8 (0.4) 22.4 (8.4) - (8.4)
Gain from changes
in demographic assumptions 2.2 - 2.2 1.0 - 1.0
(Loss)/gain from
changes in financial
assumptions (21.6) 0.4 (21.2) 6.9 1.4 8.3
Experience gains/(losses) - 0.1 0.1 (0.6) (1.0) (1.6)
Actuarial gain/(loss) 3.4 0.1 3.5 (1.1) 0.4 (0.7)
Cumulative actuarial losses recognised in the Statement of Comprehensive Income are GBP22.2 million (2018: GBP25.7 million).
As the UK defined benefit pension scheme is closed to future accrual and active members were transferred to a defined contribution scheme, no employer contributions will be paid for the year commencing 1 January 2020. No additional funding contributions will be made, as the latest actuarial valuation shows a funding surplus of GBP7.1 million.
35 Share capital
2019 2018
GBP'm GBP'm
Authorised: 2,842,000 (2018: 2,842,000) ordinary
shares of 10p each 0.3 0.3
Allotted, called up and fully paid: ordinary shares
of 10p each:
At 1 January and 31 December - 2,824,500 (2018:
2,824,500) shares 0.3 0.3
Group companies hold 62,500 issued shares in the Company. These are classified as treasury shares.
36 Reconciliation of profit from operations to cash flow
2019 2018
GBP'm GBP'm
Group
Profit from continuing operations 21.3 49.6
Share of associates' results (4.6) (7.6)
Depreciation and amortisation 16.2 15.5
Depreciation of right-of-use assets 0.9 -
Impairment of assets and provisions 0.3 0.2
Realised movements on biological assets -
non-current (1.4) (1.5)
Profit on disposal of non-current assets (0.5) (0.1)
Loss on disposal of subsidiaries - 0.4
Profit on disposal of financial assets (0.2) (0.3)
Movement in provisions (9.0) (1.2)
Increase in working capital (5.1) (11.4)
Di erence between employee benefit obligations
funding contributions and cost charged 3.3 (8.3)
Cash generated from continuing operations 21.2 35.3
37 Changes in liabilities arising from financing activities
The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group's consolidated cash flow statement as cash flows from financing activities.
Bank
Bank loans loans Leases Leases
Current Non-current Current Non-current Total
GBP'm GBP'm GBP'm GBP'm GBP'm
At 1 January 2018 0.6 3.9 - 0.1 4.6
Loans repaid (0.6) - - - (0.6)
Transfers 0.6 (0.6) - - -
----------- -----------
At 1 January 2019 0.6 3.3 - 0.1 4.0
On adoption of IFRS
16 - - 1.3 10.9 12.2
Exchange Di erences - - - (0.1) (0.1)
New loans 0.3 3.3 - - 3.6
New finance leases - - 0.1 1.1 1.2
Loans repaid (0.6) - - - (0.6)
Lease repayments - - (0.3) (0.1) (0.4)
Transfers 3.3 (3.3) 0.1 (0.1) -
----------- -----------
At 31 December 2019 3.6 3.3 1.2 11.8 19.9
----------- -----------
The cash flows from bank loans, loans from related parties and other borrowings make up the net amount of proceeds from borrowings and repayments of borrowings in the cash flow statement.
Other changes include interest accruals and prepayments.
38 Acquisition and disposal of businesses
Acquisitions Acquisitions Disposals
2019 2018 2018
GBP'm GBP'm GBP'm
Fair value Fair Net book
value value
Property, plant and equipment 5.7 0.5 0.6
Right-of-use asset 3.7 - -
Deferred tax asset - 1.1 0.1
Inventories 0.1 0.8 1.6
Trade and other receivables 0.1 1.5 0.9
Current income tax assets - - 0.2
Cash and cash equivalents - 0.4 0.2
Assets classified as held for sale - - 2.4
Trade and other payables (0.3) (1.6) (1.3)
Employee benefit obligations (0.5) - (0.3)
Deferred tax liability (0.8) (1.1) -
8.0 1.6 4.4
Identifiable intangible assets -
Brands - 6.6 -
Identifiable intangible assets -
Goodwill 1.4 - -
Non-controlling interest - (1.4) (0.1)
Loss on disposal - - (0.5)
9.4 6.8 3.8
Satisfied by:
Cash consideration and costs 9.4 6.8 3.8
Net cash (outflow)/inflow arising
on acquisitions/disposals:
Cash consideration (9.4) (6.8) 3.8
Less: cash and cash equivalent balances
acquired/disposed - 0.4 (0.2)
(9.4) (6.4) 3.6
The acquisitions in 2019 related to tea estates in India which were purchased by our Indian subsidiaries for cash, funded in part by local borrowings.
The acquisitions in 2018 related to the following:
On 8 February 2018 the Group obtained control of Jing Tea Limited after acquiring 80 per cent. of its share capital for consideration of GBP5.7 million. Jing Tea Limited is a UK based branded speciality teas business selling to the retail and food services sectors internationally.
On 6 June 2018 the Group obtained control of Black Gold Oil Tools Limited after acquiring 100 per cent of its share capital for consideration of GBP1.1 million. Black Gold Oils Limited is a UK based Engineering company specialising in the oil services sector.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table above.
Acquisition-related costs (included in administrative expenses) amount to GBP0.4 million.
Jing Tea Limited contributed GBP3.3 million revenue and loss of GBP0.3 million to the Group's profit for the period between the date of acquisition and 31 December 2018.
Black Gold Oil Tools Limited contributed GBP0.7 million revenue and loss of GBP0.3 million to the Group's profit for the period between the date of acquisition and the reporting date.
The disposals in 2018 related to the following:
In August 2018, the Group sold its 100 per cent. interest in GU Cutting and Grinding Limited.
In October 2018, the Group sold its 100 per cent. interest in British Metal Treatments Limited.
In November 2018, the Group sold its 51 per cent. interest in XiMo AG.
In December 2018, the Group sold its 100 per cent. interest in A sh BV.
39 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:
2019 2018
GBP'm GBP'm
Group
Property, plant and equipment 3.4 1.3
40 Contingent liabilities
Camellia and a number of its subsidiary companies have received notification of claims to be made in the UK relating to allegations made by multiple individuals concerning two of those companies' African operations. The allegations are of serious assault, harassment and sexual misconduct allegedly committed by certain individuals employed by those two foreign operating companies. At this stage it is not practicable to estimate the financial impact of these claims.
In India, assessments have been received for excise duties of GBP3.8 million, sales and entry tax of GBP0.9 million and of GBP1.1 million for income tax matters. These are being contested on the basis that they are without technical merit.
In India, a long running dispute between our local subsidiaries and the Government of West Bengal over the payment of a land tax, locally called, "Salami", remains unresolved. Lawyers acting for the Group have advised that payment of Salami does not apply, accordingly no provisions have been made. The sum in dispute, excluding fines and penalties, amounts to GBP1.3 million.
The Group operates in certain countries where its operations are potentially subject to a number of legal claims. When required, appropriate provisions are made for the expected cost of such claims.
41 Financial instruments
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern, while maximising the return to stakeholders through the optimisation of its debt and equity balance. The capital structure of the Group consists of debt, which includes the borrowings and lease liabilities disclosed in notes 30 and 31, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings.
The Board reviews the capital structure, with an objective to ensure that debt as a percentage of tangible net assets does not exceed 50 per cent..
The ratio at the year end is as follows:
2019 2018
GBP'm GBP'm
Borrowings 8.9 6.7
Lease liabilities 13.0 0.1
Debt 21.9 6.8
Tangible net assets 385.4 386.0
Ratio 5.68% 1.76%
Debt is defined as long- and short-term borrowings and lease liabilities as detailed in notes 30 and 31.
Tangible net assets includes all capital and reserves of the Group attributable to equity holders of the parent less intangible assets.
Debt as a percentage of tangible net assets has increased with the introduction of IFRS 16 Leases and recognition of previously o balance sheet operating leases.
Financial instruments by category
At 31 December 2019
Loans and Financial
receivables assets Total
GBP'm GBP'm GBP'm
Group
Assets as per Balance Sheet
Financial assets at fair value through
other comprehensive income - 37.8 37.8
Financial asset at fair value through
profit or loss - 6.2 6.2
Financial assets at amortised cost -
non-current - 3.0 3.0
Trade and other receivables excluding
prepayments 38.7 - 38.7
Cash and cash equivalents 91.4 - 91.4
130.1 47.0 177.1
Other financial
liabilities
at
amortised
cost Total
GBP'm GBP'm
Group
Liabilities as per Balance Sheet
Borrowings 8.9 8.9
Leases liabilities 13.0 13.0
Trade and other payables 48.6 48.6
70.5 70.5
Company
Trade and other payables 0.6 0.6
At 31 December 2018
Loans Available
and for
receivables sale Total
GBP'm GBP'm GBP'm
Group
Assets as per Balance Sheet
Financial assets at fair value through other
comprehensive income - 32.7 32.7
Financial asset at fair value through profit
or loss - 3.7 3.7
Financial assets at amortised cost - non-current - 3.0 3.0
Trade and other receivables excluding prepayments 43.3 - 43.3
Financial assets at amortised cost - current - 0.2 0.2
Cash and cash equivalents (excluding bank
overdrafts) 112.4 - 112.4
---------------
155.7 39.6 195.3
Other financial
liabilities
at
amortised
cost Total
GBP'm GBP'm
Group
Liabilities as per Balance Sheet
Borrowings 6.8 6.8
Trade and other payables 53.5 53.5
---------------
60.3 60.3
---------------
Company
Trade and other payables 0.6 0.6
---------------
Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method. The di erent levels have been defined as follows:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (Level 1).
-- Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from
prices) (Level 2).
-- Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs) (Level 3).
The following table presents the Group's financial assets and liabilities that are measured at fair value. See note 17 for disclosures of biological assets that are measured at fair value.
At 31 December 2019
Level Level Level
1 2 3 Total
GBP'm GBP'm GBP'm GBP'm
Assets
Financial assets at fair value through
other comprehensive income 37.8 - - 37.8
Financial asset at fair value through
profit or loss 6.2 - - 6.2
Financial assets at amortised cost 3.0 - - 3.0
47.0 - - 47.0
At 31 December 2018
Level Level Level
1 2 3 Total
GBP'm GBP'm GBP'm GBP'm
Assets
Available-for sale financial assets:
- Equity securities 32.7 - - 32.7
Debt investments: 3.7 - - 3.7
- Debentures 3.2 - - 3.2
39.6 - - 39.6
Financial risk management objectives
The Group finances its operations by a mixture of retained profits, bank borrowings, long-term loans and leases. The objective is to maintain a balance between continuity of funding and flexibility through the use of borrowings with a range of maturities. To achieve this, the maturity profile of borrowings and facilities are regularly reviewed. The Group also seeks to maintain su cient undrawn committed borrowing facilities to provide flexibility in the management of the Group's liquidity.
Given the nature and diversity of the Group's operations, the Board does not believe a highly complex use of financial instruments would be of significant benefit to the Group. However, where appropriate, the Board does authorise the use of certain financial instruments to mitigate financial risks that face the Group, where it is e ective to do so.
Various financial instruments arise directly from the Group's operations, for example cash and cash equivalents, trade receivables and trade payables. In addition, the Group uses financial instruments for two main reasons, namely:
-- To finance its operations (to mitigate liquidity risk); and
-- To manage currency risks arising from its operations and arising
from its sources of finance (to mitigate foreign exchange
risk).
The Group did not, in accordance with Group policy, trade in financial instruments throughout the period under review.
(A) Market risk
(i) Foreign exchange risk
The Group has no material exposure to foreign currency exchange risk on currencies other than the functional currencies of the operating entities, with the exception of significant Japanese financial assets. If the exchange rate of the Japanese Yen to Sterling were to move by 5 per cent, the Group's carrying value would increase/decrease by GBP0.9 million (2018: GBP0.9 million).
Currency risks are primarily managed through the use of natural hedging and regularly reviewing when cash should be exchanged into either sterling or another functional currency.
(ii) Price risk
The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated balance sheet as financial assets. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio.
The majority of the Group's equity investments are publicly traded and are quoted on stock exchanges located in Bermuda, India, Japan, Switzerland, UK and US. Should these equity indexes increase or decrease by 5 per cent. with all other variables held constant and all the Group's equity instruments move accordingly, the Group's carrying value would increase/decrease by GBP1.9 million (2018: GBP1.6 million).
The Group's exposure to commodity price risk is not significant.
(iii) Cash flow and interest rate risk
The Group's interest rate risk arises from interest-bearing assets and short and long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group's UK borrowings of GBP3.3 million are at fixed rates.
At 31 December 2019, if interest rates on non-sterling denominated interest-bearing assets and borrowings had been 50 basis points higher/lower with all other variables held constant, post-tax profit for the year would have been GBP0.3 million (2018: GBP0.4 million) higher/lower.
The interest rate exposure of the Group's interest bearing assets and liabilities by currency, at 31 December was:
Assets Liabilities
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Sterling 22.2 28.6 13.3 3.9
US Dollar 24.6 21.7 - -
Euro 0.4 0.6 - -
Kenyan Shilling 16.9 24.9 0.3 -
Indian Rupee 4.2 6.0 7.0 2.7
Malawian Kwacha 0.1 1.3 - -
Bangladesh Taka 15.0 17.7 1.2 0.1
South African Rand 2.2 1.5 0.1 0.1
Brazilian Real 1.3 3.0 - -
Bermudian Dollar 3.4 7.1 - -
Tanzanian Shilling 1.1 - - -
91.4 112.4 21.9 6.8
(B) Credit risk
The Group has policies in place to limit its exposure to credit risk. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. If customers are independently rated, these ratings are used. Otherwise if there is no independent rating, management assesses the credit quality of the customer taking into account its financial position, past experience and other factors and if appropriate holding liens over stock and receiving payments in advance of services or goods as required. Management monitors the utilisation of credit limits regularly.
The Group has a large number of trade receivables, the largest five receivables at the year end comprise 22 per cent. (2018: 17 per cent.) of total trade receivables.
(C) Liquidity risk
Ultimate responsibility for liquidity risk management rests with the board of Directors. The Group manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows and managing the maturity profiles of financial assets and liabilities.
At 31 December 2019, the Group had undrawn committed facilities of GBP24.1 million (2018: GBP23.5 million), all of which are due to be reviewed within one year.
The table below analyses the Group's financial assets and liabilities which will be settled on a net basis into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows.
Less
than Between Between
1 1 and 2 and Over
year 2 years 5 years 5 years Undated Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
At 31 December 2019
Assets
Financial assets at fair
value through other comprehensive
income - - - - 37.8 37.8
Financial asset at fair
value through profit or
loss 6.2 - - - - 6.2
Financial assets at amortised
cost - - 3.0 - - 3.0
Trade and other receivables
excluding prepayments 35.9 2.8 - - - 38.7
Cash and cash equivalents 91.4 - - - - 91.4
133.5 2.8 3.0 - 37.8 177.1
Liabilities
Borrowings 5.6 0.4 1.3 1.6 - 8.9
Lease liabilities 1.2 1.2 2.1 8.5 - 13.0
Trade and other payables
excluding taxation 47.7 - - - - 47.7
54.5 1.6 3.4 10.1 - 69.6
At 31 December 2018
Assets
Financial assets at fair
value through other comprehensive
income - - - - 32.7 32.7
Financial asset at fair
value through profit or
loss 3.7 - - - - 3.7
Financial assets at amortised
cost 0.2 - 1.5 1.5 - 3.2
Trade and other receivables
excluding prepayments 40.6 2.7 - - - 43.3
Cash and cash equivalents 112.4 - - - - 112.4
156.9 2.7 1.5 1.5 32.7 195.3
Liabilities
Borrowings 3.4 3.3 - - - 6.7
Lease liabilities - 0.1 - - - 0.1
Trade and other payables
excluding taxation 51.6 - - - - 51.6
55.0 3.4 - - - 58.4
Included in borrowings due in less than 1 year is GBP2.0 million (2018: GBP2.8 million) repayable on demand.
42 Subsidiary and associated undertakings
Subsidiary undertakings
The subsidiary undertakings of the Group at 31 December 2019, which are wholly owned and incorporated in Great Britain unless otherwise stated, were:
Principal
country
of Registered
operation Office
Agriculture
Amgoorie India Limited (Incorporated in India -
99.8 per cent. holding) India (ii)
Amo Tea Company Limited Bangladesh (i)
C.C. Lawrie Comércio e Participacões Ltda.
(Incorporated in Brazil) Brazil (vi)
Chittagong Warehouse Limited (Incorporated in Bangladesh
- 93.3 per cent. holding) Bangladesh (vii)
Duncan Brothers Limited (Incorporated in Bangladesh) Bangladesh (vii)
Eastern Produce Cape (Pty) Limited (Incorporated
in South Africa) South Africa (viii)
Eastern Produce Estates South Africa (Pty) Limited
(Incorporated in
South Africa - held by Eastern Produce South Africa
(Pty) Limited) South Africa (ix)
Eastern Produce Kenya Limited (Incorporated in Kenya
- 70.0 per cent. holding) Kenya (x)
Eastern Produce Malawi Limited (Incorporated in
Malawi - 73.2 per cent. holding) Malawi (xii)
Eastern Produce South Africa (Pty) Limited (Incorporated
in South Africa -
73.2 per cent. holding) South Africa (ix)
Eastland Camellia Limited (Incorporated in Bangladesh
- 93.8 per cent. holding) Bangladesh (vii)
EP(T) East Africa Limited (Incorporated in Tanzania) Tanzania (xviii)
Goodricke Group Limited (Incorporated in India -
74.0 per cent. holding) India (iii)
Goodricke Tech Limited (Incorporated in India -
99.8 per cent. holding) India (iii)
Horizon Farms (An United States of America general
partnership -
80 per cent. holding) USA (xiii)
Kakuzi Plc (Incorporated in Kenya - 50.7 per cent.
holding) Kenya (xi)
Koomber Tea Company Limited (Incorporated in India) India (iv)
Octavius Steel & Company of Bangladesh Limited (Incorporated
in Bangladesh) Bangladesh (vii)
Robertson Bois Dickson Anderson Limited UK (i)
Stewart Holl (India) Limited (Incorporated in India
- 92.0 per cent. holding) India (v)
Surmah Valley Tea Company Limited Bangladesh (i)
The Allynugger Tea Company Limited Bangladesh (i)
The Chandpore Tea Company Limited Bangladesh (i)
The Lungla (Sylhet) Tea Company Limited Bangladesh (i)
The Mazdehee Tea Company Limited Bangladesh (i)
Victoria Investments Limited (Incorporated in Malawi
- 73.2 per cent. holding) Malawi (xii)
Zetmac (Pty) Limited (Incorporated in South Africa
- 55.8 per cent. held by Eastern Produce Estates
South Africa (Pty) Limited) South Africa (ix)
Engineering
Abbey Metal Finishing Company Limited UK (i)
AJT Engineering Limited UK (xiv)
Atfin GmbH (Incorporated in Germany - 51.0 per cent. Germany (xv)
holding)
Black Gold Oil Tools Limited UK (xiv)
Food Service
Associated Cold Stores & Transport Limited UK (i)
Duncan Products Limited (Incorporated in Bangladesh) Bangladesh (vii)
Jing Tea Limited (82.5 per cent. holding) UK (i) Investment Holding Associated Fisheries (Europe) Limited UK (i) Assam Dooars Investments Limited UK (i) Associated Fisheries Limited UK (i) Borbam Limited (Incorporated in India - 99.8 per cent. holding) India (iii) Bordure Limited UK (i) Duncan Properties Limited (Incorporated in Bangladesh) Bangladesh (vii) Eastern Produce Investments Limited UK (i) Elgin Investments Limited (Incorporated in India - 99.8 per cent. holding) India (iii) Endogram Limited India (iii) EP USA Inc. (Incorporated in the United States of America) USA (xiii) EP California Inc. (Incorporated in the United States of America) USA (xiii) John Ingham & Sons Limited UK (i) Koomber Properties Limited (Incorporated in India - 94.0 per cent. holding) India (iii) Lawrie (Bermuda) Limited (Incorporated in Bermuda) Bermuda (xx) Lawrie Group Plc (Owned directly by the Company) UK (i) Lawrie International Limited (Incorporated in Bermuda) Bermuda (xx) Lebong Investments Limited (Incorporated in India - 94.0 per cent. holding) India (iii) Linton Park Plc (Owned directly by the Company) UK (i) Lintak Investments Limited (Incorporated in Kenya) Kenya (x) Longbourne Holdings Limited Bangladesh (i) Plantation House Investments Limited (Incorporated in Malawi - 50.2 per cent. held by subsidiaries) Malawi (xii) Shula Limited (Incorporated in Isle of Man) (in Isle of liquidation) Man (xix) Unochrome Industries Limited UK (i) Western Dooars Investments Limited UK (i) Other Duncan Lawrie Limited UK (i) Duncan Lawrie Holdings Limited UK (i) Duncan Lawrie International Holdings Limited (Incorporated in Isle of Man) Isle of (in liquidation) Man (xvi) Duncan Lawrie (IOM) Limited (Incorporated in Isle Isle of of Man) (in liquidation) Man (xvi) Duncan Lawrie O shore Services Limited (Incorporated in Isle of Man) Isle of (in liquidation) Man (xvi) Hobart Place Nominees Limited UK (i) Linton Park Services Limited UK (i) Dormant companies ACS&T Gloucester Limited UK (i) ACS&T Grimsby Limited UK (i) ACS&T Humberside Limited UK (i) ACS&T Seamer Limited UK (i) ACS&T Tewkesbury Limited UK (i) ACS&T Wolverhampton Limited UK (i) AKD Engineering Limited UK (i) Alex Lawrie & Company Limited UK (i) Amgoorie Investments Limited UK (i) Assam-Dooars Holdings Limited UK (i) Associated Fisheries (Scotland) Limited UK (xiv) Banbury Tea Warehouses Limited UK (i) Blantyre & East Africa Limited UK (xiv) Blantyre Insurance & General Agencies Limited (Incorporated in Malawi - Eastern Produce Malawi Limited) Malawi (xii) Bonathaba Farms (Pty) Limited (Incorporated in South Africa) South Africa (viii) British African Tea Estates (Holdings) Limited UK (i) British African Tea Estates Limited UK (i) British Heat Treatments Limited UK (i) British Indian Tea Company Limited UK (i) British United Trawlers Limited UK (i) BTS Chemicals Limited UK (i) BUT Engineers (Fleetwood) Limited UK (i) BUT Engineers (Grimsby) Limited UK (i) Camellia Investments Limited UK (i) Chisambo Holdings Limited UK (i) Chisambo Tea Estate Limited UK (i) Cholo Holdings Limited UK (i) Craighead Investments Limited UK (i) David Field Limited UK (i) Dejoo Tea Company Limited UK (i) East African Tea Plantations Limited (Incorporated in Kenya - held by Eastern Produce Kenya Limited) Kenya (x) Eastern Produce Africa Limited UK (i) Eastern Produce Kakuzi Services Limited (Incorporated in Kenya - held by Kakuzi Limited) Kenya (x) EP (RBDA) Limited (Incorporated in Malawi - Eastern Produce Malawi Limited) Malawi (xii) Estate Services Limited (Incorporated in Kenya - held by Kakuzi Limited) Kenya (xi) Feltham One Limited UK (i) Feltham Two Limited UK (i) Fescol Limited UK (i) G. F. Sleight & Sons Limited UK (i) Goodricke Lawrie Consultants Limited UK (i) Gotha Tea Estates Limited UK (i) Granton Transport Limited UK (xiv) Hamstead Village Investments Limited UK (i) Hellyer Bros Limited UK (i) Horace Hickling & Co Limited UK (i) Hudson Brothers Trawlers Limited UK (i) Humber Commercials Limited UK (i) Humber - St. Andrew's Engineering Company Limited UK (i) Jhanzie Tea Association Ltd UK (i) Isa Bheel Tea Company Limited UK (i) Jatel Plc UK (i) Jetinga Holdings Limited UK (i) Jetinga Valley Tea Company Limited UK (i) Kaguru EPZ Limited (Incorporated in Kenya - held by Kakuzi Limited) Kenya (xi) Kapsumbeiwa Factory Company Limited UK (i) Kip Koimet Limited (Incorporated in Kenya - held by Eastern Produce Kenya Limited) Kenya (x) Kumadzi Tea Estates Limited UK (i) Lankapara Tea Company Limited UK (i) Lawrie Bhutan Limited UK (i) Lawrie Plantation Services Limited UK (i) Leasing Investments Limited UK (i) Longai Valley Tea Company Limited UK (i) Nasonia Tea Company Limited (Incorporated in Malawi) Malawi (xii) North West Profiles Limited UK (i) Octavius Steel & Company (London) Limited UK (i) Robert Hudson Holdings Limited UK (i)
Rosehaugh (Africa) Limited UK (i) Ruo Estates Limited UK (i) Ruo Estates Holdings Limited UK (i) Sandbach Export Limited UK (i) Sapekoe Pusela (Pty) Limited (Incorporated in South Africa - held by Eastern Produce South Africa (Pty) Limited) South Africa (ix) Silverthorne-Gillott Limited UK (i) S.I.S. Securities Limited UK (i) Sterling Industrial Securities Limited UK (i) Stewart Holl Investments Limited UK (i) The Amgoorie Tea Estates Limited UK (i) The Bagracote Tea Company, Limited UK (i) The Ceylon Upcountry Tea Estates Limited UK (i) The Dhoolie Tea Company Limited UK (i) The Doolahat Tea Company Limited UK (i) The Eastern Produce and Estates Company Limited UK (i) The Endogram Tea Company Limited UK (i) The Harmutty Tea Company Limited UK (i) The Kapsumbeiwa Tea Company Limited UK (i) The Tyspane Tea Company Limited UK (i) Thyolo Highlands Tea Estates Limited UK (i) Vaghamon (Travancore) Tea Company Limited UK (i) Walter Duncan & Goodricke Limited UK (i) WDG Properties Limited UK (i) Western Dooars Tea Holdings Limited UK (i)
Summarised financial information on subsidiaries with material non-controlling interests
Summarised balance sheet
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited
as at 31 December as at 31 December
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Current
Assets 24.4 33.2 12.9 17.3
Liabilities (13.6) (25.6) (8.9) (10.5)
Total current net assets 10.8 7.6 4.0 6.8
Non-current
Assets 27.8 28.7 38.6 41.4
Liabilities (6.5) (4.3) (11.6) (12.9)
Total non-current net assets 21.3 24.4 27.0 28.5
Net assets 32.1 32.0 31.0 35.3
Eastern Produce Goodricke Group
South Africa Limited Limited
as at 31 December as at 31 December
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Current
Assets 6.1 6.1 33.0 38.3
Liabilities (3.7) (3.2) (22.5) (24.5)
Total current net assets 2.4 2.9 10.5 13.8
Non-current
Assets 9.1 6.8 38.3 34.6
Liabilities (2.0) (1.5) (12.0) (10.4)
Total non-current net assets 7.1 5.3 26.3 24.2
Net assets 9.5 8.2 36.8 38.0
Horizon Farms Kakuzi Plc
as at 31 December as at 31 December
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Current
Assets 5.3 5.4 19.3 17.2
Liabilities (0.2) (0.8) (1.8) (2.4)
Total current net assets 5.1 4.6 17.5 14.8
Non-current
Assets 7.1 7.9 28.8 28.0
Liabilities (1.7) (0.8) (7.5) (6.8)
Total non-current net assets 5.4 7.1 21.3 21.2
Net assets 10.5 11.7 38.8 36.0
Eastern Produce Eastern Produce
Kenya Limited for Malawi Limited
year for year ended
ended 31 December 31 December
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Revenue 34.1 40.4 25.6 29.1
Profit before tax 11.1 10.9 2.0 8.4
Taxation (3.3) (3.3) (0.5) (2.4)
Other comprehensive (expense)/income (0.7) 2.3 (1.6) 1.9
Total comprehensive income 7.1 9.9 (0.1) 7.9
Total comprehensive income allocated
to non-controlling interests 2.1 3.0 - 2.1
Dividends paid to non-controlling
interests 2.1 1.3 1.1 0.6
Eastern Produce
South Africa Limited Goodricke Group
for year ended 31 Limited for year
December ended 31 December
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Revenue 5.6 6.4 90.5 83.6
Profit before tax 1.9 1.7 2.6 2.7
Taxation (0.5) (0.5) (0.2) (1.1)
Other comprehensive expense - (0.8) (2.6) (1.9)
Total comprehensive income/(expense) 1.4 0.4 (0.2) (0.3)
Total comprehensive income/(expense)
allocated to non-controlling interests 0.4 0.1 - (0.1)
Dividends paid to non-controlling
interests - - 0.2 0.3
Horizon Farms Kakuzi Plc for
for year year ended 31
ended 31 December December
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Revenue 4.8 5.2 21.2 21.7
Profit before tax 1.8 2.4 7.8 5.1
Taxation (1.1) (0.8) (2.3) (1.5)
Other comprehensive (expense)/income (0.3) 0.7 (1.2) 2.5
Total comprehensive income 0.4 2.3 4.3 6.1
Total comprehensive income allocated
to
non-controlling interests 0.1 0.5 2.1 3.0
Dividends paid to non-controlling
interests 0.3 0.3 0.7 0.5
Summarised cash flows
Eastern Produce Eastern Produce
Kenya Limited for year Malawi Limited for year
ended 31 December ended 31 December
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Cash flows from operating activities
Cash generated from operations 2.0 9.1 6.4 6.2
Net interest received 1.2 1.6 0.1 0.2
Income tax paid (1.2) (3.8) (1.9) (1.6)
Net cash generated from operating activities 2.0 6.9 4.6 4.8
Net cash used in investing activities (1.4) (1.7) (1.5) (1.9)
Net cash used in financing activities (7.1) (4.2) (4.2) (2.3)
Net (decrease)/increase in cash and cash
equivalents and bank overdrafts (6.5) 1.0 (1.1) 0.6
Cash, cash equivalents and bank overdrafts
at beginning of year 22.8 20.4 1.2 0.5
Exchange (losses)/gains on cash and
cash equivalents (0.6) 1.4 -- 0.1
Cash, cash equivalents and bank overdrafts
at end of year 15.7 22.8 0.1 1.2
Goodricke Group
Eastern Produce Limited for year
South Africa Limited for year ended 31 December ended 31 December
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Cash flows from operating
activities
Cash generated from operations 3.2 2.1 9.1 1.3
Net interest received (0.1) - - -
Income tax paid - - (0.5) (1.0)
Net cash generated from
operating activities 3.1 2.1 8.6 0.3
----------------------
Net cash used in investing
activities (2.8) (1.9) (6.1) (1.8)
----------------------
Net cash used in financing
activities - - (0.8) (1.6)
----------------------
Net increase/(decrease) in
cash and cash
equivalents and bank
overdrafts 0.3 0.2 1.7 (3.1)
Cash, cash equivalents and
bank overdrafts
at beginning of year 2.5 2.5 (1.5) 1.6
Exchange losses on cash and
cash
equivalents - (0.2) (0.1) -
Cash, cash equivalents and
bank overdrafts
at end of year 2.8 2.5 0.1 (1.5)
Horizon Farms Kakuzi Plc for
for year year ended 31
ended 31 December December
2019 2018 2019 2018
GBP'm GBP'm GBP'm GBP'm
Cash flows from operating activities
Cash generated from operations 3.1 1.8 9.3 7.4
Net interest received - - 0.9 0.9
Income tax paid (0.5) (0.7) (0.5) (2.6)
Net cash generated from operating
activities 2.6 1.1 9.7 5.7
Net cash used in investing activities (0.2) - (6.7) (5.8)
Net cash used in financing activities (1.4) (1.6) (1.4) (1.0)
Net increase/(decrease) in cash
and cash equivalents and bank overdrafts 1.0 (0.5) 1.6 (1.1)
Cash, cash equivalents and bank
overdrafts at beginning of year 2.1 2.5 11.6 12.6
Exchange (losses)/gains on cash
and cash equivalents (0.3) 0.1 (0.6) 0.1
Cash, cash equivalents and bank
overdrafts
at end of year 2.8 2.1 12.6 11.6
Associated undertakings
The principal associated undertakings of the Group at 31 December 2019 were:
Group
Principal interest
country Accounting in equity
of Registered date capital
operation Office 2019 per cent.
Insurance and banking
BF&M Limited (Incorporated in
Bermuda -common stock) Bermuda (xvii) 31 December 37.8
United Finance Limited (Incorporated
in Bangladesh - ordinary shares) Bangladesh (vii) 31 December 38.4
United Insurance Company Limited
(Incorporated in Bangladesh
- ordinary shares) Bangladesh (vii) 31 December 37.0
Registered O ces:
(i) Linton Park (viii) Slangrivier Road (xv) Robert-Drosten-Platz
Linton Slangrivier 1
Maidstone Plaas D-82380
Kent Wellington Peissenberg
ME17 4AB 7655 Germany
England South Africa
(ii) Amgoorie Tea Garden (ix) 7 Windsor Street (xvi) First Names House
PO: Amguri Tzaneen Victoria Road
Haloating - 785 850 Douglas
681 Limpopo Province Isle of Man
Dist: Sibsagar South Africa IM2 4DF
Assam
India
(iii) Camellia House (x) New Rehema House (xvii) 112 Pitts Bay
14 Gurusaday Road Rhapta Road Road
Kolkata - 700019 Westlands Pembroke
West Bengal P O Box 45560 Bermuda
India GPO 00100 HM08
Nairobi
Kenya
(iv) Koomber Tea Garden (xi) Main O ce (xviii) 3rd Floor
PO: Kumbhir Punda Milia 180 Msasani Bay
Cachar - 788 108 Road Msasani
Assam Makuyu Dar Es Salaam
India P O Box 24 Tanzania
01000 Thika
Kenya
(v) Sessa Tea Garden (xii) PO Box 53
PO: Dibrugarh - Mulanje
786001 Malawi
Dist: Dibrugarh
Assam
India
(vi) Fazenda Maruque (xiii) 2520 West Shaw
s/n Lane
sala 03 Suite 101
Bairro Maruque Fresno
Itaberá California
São Paulo USA
Brazil
(vii) Camellia House (xiv) Craigshaw Crescent
22 Kazi Nazrul West Tullos
Islam Aberdeen
Avenue AB12 3TB
Dhaka 1000 Scotland
Bangladesh
43 Control of Camellia Plc
Camellia Holding AG continues to hold 1,427,000 ordinary shares of Camellia Plc (representing 51.67 per cent. of the total voting rights). Camellia Holding AG is owned by The Camellia Private Trust Company Limited, a private trust company incorporated under the laws of Bermuda as trustee of The Camellia Foundation ("the Foundation"). The Foundation is a Bermudian trust, the income of which is utilised for charitable, educational and humanitarian causes at the discretion of the trustees.
The activities of Camellia Plc and its group (the "Camellia Group") are conducted independently of the Foundation and other than Simon Turner, who is a director of The Camellia Private Trust Company and the president of the board of the trustee of the Foundation, none of the directors of Camellia Plc are connected with The Camellia Private Trust Company Limited or the Foundation. While The Camellia Private Trust Company Limited as a trustee of the Foundation maintains its rights as a shareholder, it has not participated in, and has confirmed to the board of Camellia Plc that it has no intention of participating in, the day to day running of the business of the Camellia Group. The Camellia Private Trust Company Limited has also confirmed its agreement that where any director of Camellia Plc is for the time being connected with the Foundation, he should not exercise any voting rights as a director of Camellia Plc in relation to any matter concerning the Camellia Group's interest in any assets in which the Foundation also has a material interest otherwise than through Camellia Plc.
44 Related party transactions
Group
During the year the Group received rental income from the Foundation of GBP36,000 (2018: GBP22,804).
Company
The Company receives financial and secretarial services from Linton Park Plc, a directly owned subsidiary undertaking. The amount payable for these services for 2019 was GBP447,121 (2018: GBP402,572). At 31 December 2019 GBP5,943,853 (2018: GBP9,612,337) is owed to Linton Park Plc and is unsecured, interest free and has no fixed terms of repayment.
Amounts due to Lawrie Group Plc, a directly owned subsidiary undertaking of GBP10,876,941 (2018: GBP7,076,105) include an unsecured loan note of GBP4,191,777 (2018: GBP4,191,777). The remaining balance is unsecured, interest free and has no fixed terms of repayment.
Amounts due to other group undertakings of GBP193,187 (2018: GBP193,405) are unsecured, interest free and have no fixed terms of repayment.
45 Subsequent events
COVID-19
Subsequent to the balance sheet date, the World Health Organisation declared a pandemic on 11 March, the UK government moved to a 'delay' phase on 12 March, announced social distancing measures on 16 March, and unprecedented 'stay at home' restrictions on 23 March. The first large falls in stock markets occurred in early March. The Group has therefore concluded that the impact of the virus and the necessity for large scale Government interventions (both in the UK and the other countries in which the Group operates) in response to COVID-19 only became apparent after the balance sheet date and therefore that the consequences of such interventions represent non-adjusting post balance sheet events. The full financial impact of the crisis for 2020 is impossible to predict with any degree of certainty.
However, it is likely that in addition to the impacts on our revenues and profitability in 2020, the values attributed to a number of our balance sheet items may be a ected.
Impairment of intangible asset carrying values
Refer to pages 56 to 57 for details of the Group's impairment methodology, impairment losses and reversals, net carrying value of intangible assets, and key assumptions and sensitivity analysis. Subsequent to the balance sheet date, the Group's Indian operations have seen significant disruption to production but it is unclear whether and to what extent this will continue and hence whether there will be any impact on the brand value carried in respect of the Indian Packet tea operations and the goodwill relating to the two estates in Assam.
Jing Tea has been particularly impacted by the global lockdowns and as a consequence depending on the duration of the disruption, the brand value carried may be impaired.
Financial assets at fair value through other comprehensive income
COVID-19 has had a significant impact on global stock markets and resulted changes to the dividend policies and prospects for the portfolio of equities held by the Group.
Defined benefit pension schemes and other employee benefit arrangements
Review of the key financial assumptions relating to the Group's pension schemes subsequent to the year end indicate movements as a result of changes in the fair value of the assets held in the schemes and as a result of reductions in interest rates. It is too early to assess the impact of COVID-19 upon the Group's long-term life expectancy assumptions. The fair value of plan assets has reduced and is expected to be volatile in the short term due to uncertain market conditions.
Report of the independent auditors
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF CAMELLIA PLC
Report on the audit of the financial statements
Opinion
In our opinion:
-- the financial statements of Camellia Plc (the 'parent company')
and its subsidiaries (the 'Group') give a true and fair view
of the state of the Group's and of the parent company's a airs
as at 31 December 2019 and of the Group's profit for the year
then ended;
-- the Group financial statements have been properly prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union;
-- the parent company financial statements have been properly prepared
in accordance with IFRSs as adopted by the European Union and
as applied in accordance with the provisions of the Companies
Act 2006; and
-- the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
-- the consolidated income statement;
-- the consolidated statement of comprehensive income;
-- the consolidated and parent company balance sheets;
-- the consolidated and parent company statements of changes in
equity;
-- the consolidated and parent company cash flow statements; and
-- the related notes 1 to 45.
The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council's (the 'FRC's') Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is su cient and appropriate to provide a basis for our opinion.
Summary of our audit approach
Key audit The key audit matters that we identified in the
matters current year were:
* Revenue recognition
* Fair value of biological assets under IAS 41
'Agriculture'
* Impairment of factories and bearer plants
* Provisions for tax, legal and employee benefits
* Going concern assessment and related disclosures
Materiality The materiality that we used for the Group financial
statements was GBP1.1m which was determined on
the basis of 5% of profit before tax from continuing
operations.
Scoping Our scoping provides coverage of 91% of the Group's
revenue, 69% of the Group's profit before tax and
86% of the Group's net assets from full scope audit
and specified audit procedures.
Significant We have identified two new key audit matters in
changes in the current year:
our approach (i) Provisions for tax, legal and employee benefits.
This have been included as a key audit matter due
to the judgements and estimates involved in determining
the provisions.
(ii) Going concern assessment and related disclosures.
This have been included as a key audit matter due
to the judgements relating to potential impact
of COVID-19 on going concern. There are no other
significant changes to our audit approach.
Conclusions relating to going concern
We are required by ISAs (UK) to report in respect of the following
matters where:
We have nothing to report in
* the Directors' use of the going concern basis of respect of these matters.
accounting in preparation of the financial statements
is not appropriate; or
* the Directors have not disclosed in the financial
statements any identified material uncertainties that
may cast significant doubt about the Group's or the
parent company's ability to continue to adopt the
going concern basis of accounting for a period of at
least twelve months from the date when the financial
statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest e ect on: the overall audit strategy, the allocation of resources in the audit; and directing the e orts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Revenue recognition
Key audit matter The Group's agricultural operations involve
description a wide range of customer delivery models,
including auction and retail sales. Given
the complexity of the Group's operations
and the terms of business with buyers, there
is a risk of inappropriate cut-o of revenue
recognition around the balance sheet date.
The Group's agricultural revenue of GBP238.7m
is included within Sale of Goods of GBP242.9m
(2018: GBP248.5m) disclosed in note 2 to
the financial statements. Further information
regarding the agricultural revenue recognition
policy is in the principal accounting policies
disclosed in the financial statements.
How our scope of We have performed the following procedures
work responded to in order to address the risk:
the key audit matter * We gained an understanding of the key processes and
controls used to record revenue transactions.
* We performed detailed cut-o testing of revenue
transactions during the period either side of the
balance sheet date with reference to the relevant
terms of business, dispatch or delivery documentation
as appropriate.
* We examined material journal entries that were posted
to revenue accounts and obtained supporting evidence
to test the appropriateness of revenue recognition.
Key observations We have concluded that revenue is appropriately
recognised in the correct accounting period
in accordance with IFRS 15
Fair value of biological assets under IAS 41 'Agriculture'
Key audit matter The Group holds GBP9.1m (2018: GBP8.8m) of
description biological assets as current assets. As required
by IAS 41 'Agriculture', management estimates
the fair value of these assets through the
use of valuation models and recent transaction
prices. Significant judgement is required
for key assumptions for each model, including
the life-span of the plantings, yields, selling
prices, costs and discount rates. The valuation
is sensitive to some of the underlying assumptions.
Biological assets are disclosed in note 17
to the financial statements, the valuation
is discussed as a key source of estimation
uncertainty and the valuation policy is disclosed
in the principal accounting policies.
How our scope of We have performed the following procedures
work responded to in order to address the risk:
the key audit matter * We gained an understanding of key processes and
controls around the valuation of biological assets.
* For a selection of fair value models:
* we assessed the inputs by assessing the historical
accuracy of management's forecasts and comparing to
third-party and market data; and
* we tested the mechanical integrity of each model.
Key observations From the work performed, we are satisfied
that the key assumptions applied in respect
of the valuation of biological assets are
appropriate.
Impairment of factories and bearer plants
Key audit matter The Group holds GBP222.5m (2018: GBP226.3m)
description of property, plant and equipment (PP&E),
which includes factories and bearer plants.
For components in the agriculture segment,
management identified gardens as cash generating
units (CGUs) and performed an annual review
for indicators of impairment. This considered
indicators such as underutilisation, adverse
weather conditions and land use rights. There
is a risk that the indicators of impairment
are not identified appropriately by management
eventually resulting in an impairment charge
not being recognised.
PP&E is disclosed in note 14 to the financial
statements, the valuation is discussed as
sources of estimation uncertainty, and the
valuation policy is disclosed in the principal
accounting policies.
How our scope of We have performed the following procedures
work responded to in order to address the risk:
the key audit matter * We gained an understanding of key processes and
controls around the identification of impairment
indicators for factories and bearer plants.
* We challenged management's assessment as to whether
indicators of impairment exist for factories and
bearer plants with reference to operating losses
incurred, disease or crop damage, long term commodity
price reductions, underutilised plant or warehousing,
loss of key customers, long term failure of water or
power supply, variation in rights to land use, and
significant changes in tax or foreign exchange rates.
* For the CGUs where indicators of impairment were
identified, we also tested management's determination
of the recoverable amount for these CGUs, which
included an assessment of the reasonableness of key
inputs into the valuation and sensitivity analysis
thereon.
Key observations We concur with management that no impairment
of factories and bearer plants is required.
Provision for tax, legal and employee benefits
Key audit matter Given the various jurisdictions in which
description the Group operates, as described in the principal
risks and uncertainties on page 22, there
is a risk relating to uncertainties in relation
to the interpretation of complex tax legislation,
or arising from changes in local regulation
or law including those related to employee
benefits.
Judgement is also applied in estimating amounts
payable to legal, regulatory or tax authorities
in certain jurisdictions. This gives rise
to a risk over the accuracy and disclosure
of provisions and contingent liabilities.
There is also a risk that management may
influence these significant estimates and
judgements in order to meet market expectations.
Contingent liabilities are disclosed in note
40 to the financial statements, their quantification
is discussed as sources of estimation uncertainty,
and the accounting policy for provisions
is disclosed in the principal accounting
policies.
How our scope of We have performed the following procedures
work responded to in order to address the risk:
the key audit matter * We gained an understanding of key processes and
controls around identification of tax, legal and
employee benefits matters across the key components
of the Group.
* We sent confirmations to the Group's legal counsel in
the key jurisdictions as at 31 December 2019. We also
spoke to legal counsel on selected key issues.
* We also reviewed the Group's correspondence with
regulatory and tax authorities and understood
management's interpretation and application of
relevant laws and regulations.
* Where appropriate, working with the legal specialists,
we challenged the appropriateness of the Group's
assumptions and estimates in relation to provisions
and contingent liabilities.
* We also assessed the appropriateness of disclosures
in the financial statements.
Key observations From the work performed, we are satisfied
that the key assumptions applied in respect
of the recognition, measurement and disclosure
of tax, legal and employee benefits matters
are appropriate.
Going concern assessment and related disclosures
Key audit matter The rapid spread and ongoing uncertainty
description surrounding the impact of COVID--19 has increased
the complexity associated with the Directors'
assessment of the Group's and parent company's
ability to continue as a going concern over
a period of at least 12 months from the date
of approval of the Financial Statements.
The key considerations in relation to going
concern are associated with the assessment
of the Group and parent company's capital
solvency and liquidity positions.
In addition, there is an increased risk associated
with the adequacy of disclosures over the
going concern assessment and events after
the reporting date, particularly given that
the majority of economic deterioration in
relation to COVID-19 has occurred subsequent
to the balance sheet date.
In making their assessment, the Directors
consider that the going concern basis of
accounting is appropriate and that there
is no material uncertainty related to going
concern. The Directors have disclosed their
explanations and conclusions on the going
concern basis and the key matters considered,
including judgements in relation to the Group's
ability to maintain production and distribution
of its goods in the event of continuing disruption
as a result of COVID-19. Management's associated
consideration of the impact of COVID--19
on the parent company's and Group's ability
to continue as a going concern is detailed
on pages 30 and 31 within the Directors'
Report. Detail of the impact of events after
the reporting date is presented in note 45.
How our scope of In performing procedures over management's
work responded to going concern assessment, we reviewed and
the key audit matter challenged:
* the scenarios adopted by the Directors to capture
potential downside risks, including the associated
macro-economic assumptions; and the subsequent stress
testing output, with a particular focus on the
headroom available and the Group's cash resources,
under severe but plausible stress scenarios.
* the application of additional downside sensitivities
including consideration of reverse-stress testing.
* Management's business continuity plans and subsequent
changes to those plans as a consequence of a
prolonged impact from the COVID-19 pandemic.
* the extent and nature of intra-Group funding
obligations and ability of the parent company to
repatriate funds from subsidiary companies.
In addition to the above noted procedures,
we held meetings with Senior Management to
discuss the Directors' assessment of going
concern and to challenge matters arising
from the review of Management's going concern
paper.
In order to assess whether the post balance
sheet event disclosures in note 45 were appropriate
we have evaluated Management's assessment
of the impact of the significant business
developments that occurred after the year
end, including the spread of COVID-19 and
the resulting actions taken by Governments
in Bangladesh, India, Kenya and Malawi where
Group's principal crops are grown.
Key observations We concurred with management's going concern
conclusions and consider the disclosures
in relation to going concern and events after
the reporting date to be appropriate.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements Parent company financial
statements
Materiality GBP1.1m GBP0.4m
Basis for determining 5% of adjusted profit before % of net assets, capped
materiality tax at 50% of Group performance
from continuing operations. materiality.
Rationale for We have used a profit based We have used net assets
the benchmark measure given the Group measure given that the
applied is listed and therefore parent company is a
shareholders focus on profitability. holding company, generating
The profit is adjusted no revenue.
to avoid distortion that
could otherwise arise due
to non-recurring items.
Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole. Group performance materiality was set at 70% of Group materiality for the 2019 audit (2018: 70%). In determining performance materiality, we considered our assessment of the control environment and the level of audit adjustments identified in the prior period.
Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit di erences in excess of GBP0.06m (2018: GBP0.07m), as well as di erences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.
An overview of the scope of our audit
The Group undertakes agricultural operations in countries across Africa, North and South America, and Asia, with its principal crops grown in Bangladesh, India, Kenya and Malawi. The Group's engineering and food service operations are located in Europe, principally in the UK. Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls, and assessing the risks of material misstatement at the Group level. Of the Group's 82 principal components, 26 were subject to a full audit and 2 were subject to specified audit procedures where the extent of our testing was based on our assessment of the risks of material misstatement and of the materiality of the Group's operations at those locations.
These 28 components represent the principal business units and account for 89% of the Group's revenue and 69% of the Group's profit before tax and 86% of the Group's net assets.
The Group engagement team worked from the Group's UK head o ce, directing and supervising the work of component auditors. Senior members of the Group audit team visited the Kenya, Bangladesh and India components during the current year to discuss the component auditors' risk assessment, and review the documentation of the findings from their work.
Scope Revenue % Profit before Net assets
tax % %
Full scope 91 70 65
Specified audit procedures - (-1) 21
Review at Group level 9 31 14
Other information
The Directors are responsible for the We have nothing to report other information. The other information in respect of these matters. comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
Responsibilities of directors
As explained more fully in the Directors' responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group's and the parent company's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
-- the information given in the strategic report and the Directors'
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
-- the strategic report and the Directors' report have been prepared
in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and or the parent company and their environment obtained in the course of the audit, we have not identified any material misstatements in the strategic report or the Directors' report.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 We have nothing to report in
we are required to report to respect of these matters.
you if, in our opinion:
* we have not received all the information and
explanations we require for our audit; or
* adequate accounting records have not been kept by the
parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
* the parent company financial statements are not in
agreement with the accounting records and returns.
Directors' remuneration
Under the Companies Act 2006 We have nothing to report in
we are also required to report respect of this matter.
if in our opinion certain disclosures
of Directors' remuneration have
not been made.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Michael Williams, FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
7 May 2020
Five year record
2019 2018 2017 2016 2015
GBP'm GBP'm GBP'm GBP'm GBP'm
Restated Restated
Revenue - continuing operations 291.5 309.8 298.3 257.9 244.7
Profit before tax 22.3 52.5 27.6 26.5 24.0
Taxation (7.2) (20.0) (12.2) (12.4) (13.2)
Profit from continuing operations 15.1 32.5 15.4 14.1 10.8
(Loss)/profit from
discontinued operation - (0.2) 14.8 (20.0) (3.6)
Profit/(loss) attributable to owners
of the parent 8.3 25.2 23.8 (10.7) 1.4
Equity dividends paid 4.0 3.8 3.6 3.6 3.5
Equity
Called up share capital 0.3 0.3 0.3 0.3 0.3
Reserves 395.4 395.2 368.1 330.5 320.6
Total shareholders' funds 395.7 395.5 368.4 330.8 320.9
Earnings/(loss) per share 300.5 p 912.4 p 861.7 p (387.4) p 50.7 p
Earnings per share
- continuing operations 300.5 p 919.6 p 325.9 p 336.7 p 181.0 p
Dividend paid per share 144 p 138 p 132 p 130 p 126 p
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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