TIDMCAM
RNS Number : 3663F
Camellia PLC
24 April 2014
Camellia Plc
Annual financial report for year ended 31
December 2013
Highlights from the
results
Year ended Year ended
31 December 31 December
2013 2012
restated
GBP'000 GBP'000
Revenue 251,267 261,529
Trading profit 31,183 39,798
Profit before tax 59,648 69,710
Headline profit before
tax 38,150 48,975
Profit for the year 37,543 44,048
Earnings per share 1,020.2 p 1,122.9 p
Final dividend 91 p 88 p
Chairman's statement
The headline profit before tax for the year to 31 December 2013
amounted to GBP38.15 million compared with GBP48.98 million in the
previous year. Headline profit is a measure of underlying
performance which is not impacted by exceptional and other items
considered non-operational in nature.
Yet again our accounts are distorted by the inclusion of
exceptional gains mostly arising from changes in the fair value of
biological assets. As in the preceding year the devaluation of the
Malawian Kwacha has resulted in a substantial credit to the income
statement of GBP11.03 million with in effect a corresponding charge
made to reserves.
The International Accounting Standards Board has unfortunately
not yet issued a revised IAS 41 in respect of the treatment of
permanent plantings. The indication is that such plantings will be
treated as fixed assets to be depreciated over their expected
lifespan. The adoption of such a policy will make our accounts that
much easier to understand.
After taking account of exceptional and other one off items the
profit before tax for the year to 31 December 2013 amounted to
GBP59.65 million compared with GBP69.71 million in the previous
year.
Dividend
The board is recommending a final dividend of 91p per share
which, together with the interim dividend already paid of 34p per
share, brings the total distribution for the year to 125p per share
compared with 120p per share in 2012.
Agriculture and horticulture
The group's income principally derives from our agricultural and
horticultural operations. The markets in which we operate have been
beneficial over the last five years and we have enjoyed reasonable
profitability. The continued success of our operations depends not
only on our own expertise and managerial capacity but also on
events that are totally outside our control, the main one of which
is, of course, climatic. There is always a fine balance between the
supply and demand of our commodities and any change in weather
patterns, whether in the short term or indeed as part of any long
term climate change, can distort the market significantly. We
experienced this during 2013 in our operations in Kenya where, as a
result of oversupply, tea prices were below our cost of production
for a few months.
Tea
In 2013, profit from our tea operations was slightly lower than
the previous year.
India
Production of tea from our gardens in India increased
approximately 10 per cent. over the previous year due to better
climatic conditions and the beneficial effect of irrigation
facilities installed over the last three years. The intensive
factory redevelopment programme has now come to an end and the
benefits of the substantial capital investment made to our India
gardens will hopefully manifest themselves in the years to
come.
Bangladesh
Our production of tea for the year was almost exactly the same
as the previous year. Prices were favourable at the beginning of
the year but the government's withdrawal of the supplemental import
tax of 20 per cent. allowed an influx of lower quality cheaper teas
and this depressed the sales price of our own production.
Factory renovations continue and, as in India, we are deploying
considerable resources for the improvement of our irrigation
infrastructure.
Kenya
Our tea production increased in Kenya during the year as did
that for the rest of the tea producing operations in that country.
This led to a surplus of tea on the Mombasa auctions resulting in
considerably reduced prices. During the second half of the year we
were selling our tea at below cost of production, a matter of great
concern. The average sale price of our Kenya production was 60US
cents per kilo below that of the previous year.
Malawi
The recovery from the drought in the latter part of 2012 was
much quicker and more widespread than had been anticipated and
resulted in a substantially increased crop for the year. Sale
prices were also slightly higher than the previous year. As stated
above the further devaluation of the Malawi Kwacha during 2013
against both the US dollar and Sterling has led to a further
exceptional gain of GBP11.03 million in the income statement. The
lack of foreign exchange continued to be a problem making it
difficult to secure essential inputs such as fertilizers and
fuel.
Edible Nuts
2013 was an 'off-year' for our pistachio orchards at Horizon
Farms in California and therefore production was minimal. The new
areas of almonds planted on this farm are showing encouraging
growth.
Our macadamia production in Malawi was ahead of the previous
year but that in South Africa was lower. Further macadamia planting
has taken place in both Kenya and South Africa. Overall, sale
prices remained stable.
Other horticulture
Avocado production at Kakuzi, one of our Kenyan subsidiaries,
declined substantially over the year. This was mainly the result of
inclement weather at the time of fruit set. Sale prices were
however considerably higher than the previous year.
Production and prices of rubber from our Bangladeshi operations
were both lower than the previous year. Theft of latex continues to
be a problem.
Our Brazilian operation reduced its planting in maize and
increased that of soya. Prices for both commodities were reasonable
during the year, however production costs continued to increase. A
Brazilian government committee appointed to review the ownership of
agricultural land by foreigners has yet to report.
Our citrus production at Horizon Farms in California was
slightly in excess of the previous year. Costs declined and sale
prices improved resulting in a satisfactory profit.
The wine grape harvest from our farm in South Africa declined
during the year and the sale of bottled wine remains difficult. We
are however concentrating our marketing effort on our higher value
wine and this will hopefully improve the results of the operation
in the years to come.
Food storage and distribution
In the UK, the profit of Associated Cold Stores and Transport
improved again in 2013 against the background of a continued over
supply of facilities. The results from our food distribution
businesses in the Netherlands improved during the year but are
still considered unsatisfactory. It is hoped that the signs of an
emergence of the Netherlands from recession will improve the future
viability of these businesses.
Engineering
The results of our engineering companies are clearly
unacceptable. The main contributor to this disappointing scenario
is AKD Engineering at Lowestoft. AKD has incurred substantial
losses in completing a large fabrication contract for the North Sea
Oil industry. It is our position that these costs were incurred
mainly due to the non-compliance by our customer of their
contractual obligations and we have therefore issued proceedings
against that customer. Whilst we have been advised that we have a
strong claim, we have not included any potential settlement which
may eventuate from the proceedings in our results for this
period.
The other disappointment continued to be the results of Abbey
Metal Finishing where, as stated last year, it will take more time
than initially anticipated for them to recover the business lost as
a result of fire at their previous premises in 2010. Abbey Metal
does however have state of the art facilities both at Hinckley in
this country and at Atfin in Germany, where the group owns a 51 per
cent. interest. We remain confident this company will return to
profitability in due course.
GU Cutting and Grinding unfortunately suffered from the
premature cancellation of a major contract during the year. This
company continues to develop its wide ranging expertise in the
cutting of materials by water jet machinery. Its other major skill
is grinding, especially of large plate.
On a more positive note, AJT Engineering produced good results
at its three operations in Aberdeen, East Kilbride and Port Glasgow
and the prospects for this company remain encouraging.
Banking and financial Services
With the present lack of ability to secure any reasonable margin
on depositors' funds and the ever increasing cost of compliance it
remains difficult for Duncan Lawrie to make a reasonable return on
its capital. The policy of expanding our customer base and raising
general awareness of Duncan Lawrie has proved to be successful and
facilities are in place to allow this company to prosper when
interest rates return to normal. Duncan Lawrie occupies a prime
position in a niche market which relies on a high level of service
to its customers.
Associates
Despite the difficulty of operating in Bangladesh during the
last year it is encouraging to report United Leasing increased
profitability whilst that at United Insurance was similar to the
previous year.
As previously advised, we are no longer able to exercise
significant influence over BF&M Limited and therefore from 1
January 2013 we have accounted for our shareholding in this company
as an investment rather than as an associate. Accordingly, we have
recognised dividends received in our income statement as opposed to
a share of the profits. We did nonetheless increase our holding in
BF&M during the year as an opportunity arose to simplify our
holdings in Bermudian companies. This increase has not changed our
ability to exercise influence.
Development
We will continue to develop the group by organic growth, which
has been a priority over the last six years, whilst examining
opportunities for acquisitions. We will only make acquisitions if
we are totally convinced that all our required parameters are fully
satisfied. This may take a year, a decade or even longer.
In the meantime we will retain sufficient reserves to ride out
such economic and political storms that seem almost inevitable
until some form of stability returns.
The graveyard of failed corporations is littered with examples
of companies that felt it necessary to 'do a deal' either in
response to short term shareholder pressure or the bonus culture or
to satisfy the ego of the chief executive. Camellia has no
intention of booking a plot in such a graveyard.
Directors
Charles Vaughan-Johnson who has been a director of your company
since 1999 is retiring as the conclusion of the annual general
meeting in June. Charles has made a major contribution to the
deliberation of our board and I am sorry I have been unable to
persuade him to stay on longer. His experience and guidance have
been invaluable.
Staff
The environment in which we operate gets more difficult year by
year and the necessity to comply with the ever increasing burden of
regulation and compliance requires considerable dedication and
expertise. I am pleased to report that our staff continues to rise
to this and many other challenges and have made a great
contribution to our success for which I thank them.
M C Perkins
Chairman
24 April 2014
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 2013
and a description of principal risks and uncertainties facing the
group. A fair review of the business of the group is incorporated
within the chairman's statement on pages 3 to 5. The chairman's
statement together with information contained within the report of
the directors highlight the key factors affecting the group's
development and performance. 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 sustainability, environment and the communities in which we do business,
- ensuring that the quality and safety of our 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 chairman's statement shown on pages 3 to 5
and within the report of the directors.
Business model
The group consists of a portfolio of businesses mainly in
agriculture and horticulture, private banking and financial
services, food storage and distribution and engineering. Each
business is managed at local level with independent management who
report to the board regularly on performance against an annual
budget.
Principal risks and uncertainties
There are a number of possible risks and uncertainties that
could impact the group's businesses. As the group's businesses are
widely spread both in terms of activity and location, it is
unlikely that any one single factor could have a material impact on
the group's long-term performance. The following risks relating to
the group's principal operations have been identified:
Agriculture and horticulture
The group's agricultural based businesses are located in Kenya,
Malawi, South Africa, Bangladesh, India, Brazil and the USA. The
success of these activities is greatly dependent on climatic
conditions, the control of plant disease, the cost of labour and
the market price for the produce. We export a considerable amount
of produce through the port of Mombasa in Kenya. Such exports can
be seriously delayed by inefficiencies in the operation of the
port. In addition, exports from these businesses are subject to
foreign exchange fluctuations as products, particularly those from
Africa, are normally priced in US dollars.
In Kenya, Malawi and South Africa there are long-term issues
concerning land ownership over which the group has little control
but monitors closely.
The board continues to work with local management to monitor
land ownership issues that may impact the group's operations. In
Kenya, the length of the leases owned by non-Kenyan citizens and
corporations has been reduced from 999 years to 99 years in
accordance with the new constitution. In South Africa, on land
where ownership claims have been made, any substantiated claim is
required to be resolved on a willing buyer willing seller basis and
crops are generally only planted following notification to the Land
Claims Commission.
In India, violence from separatist groups which has been a
problem for some years has recently been greatly reduced in Assam,
Darjeeling and the Dooars. In Bangladesh, there have been instances
of civil unrest during 2013 prompted by political protests in the
country. The situation continues to be monitored and the group's
operations in these regions have generally been able to trade
normally.
UK engineering
A number of the UK engineering companies are dependent for a
significant part of their revenue on the aerospace and the oil and
gas industries. A downturn in either of these sectors would have an
impact on the level of activity in these businesses.
Some of the processes used by the companies involved in metal
treatment require high standards of health and safety and
environmental management. Failure to maintain these standards could
give rise to accidents or environmental damage.
Cold storage and transport
Cold storage and transport in the UK is a highly competitive
industry and is largely dependent on the food industry for the
utilisation of cold stores.
Cold stores are heavy users of electricity and any significant
movement in energy costs can affect the operation's profitability.
Similarly, the transport division is affected by sharp movements in
the cost of fuel.
The business is dependent upon a sophisticated computer system.
The failure of this system could have significant consequences for
the business although a disaster recovery plan is in place.
Banking and financial services
Duncan Lawrie Limited is now regulated by the Financial Conduct
Authority (FCA) and the Prudential Regulation Authority (PRA) and
has a well-developed compliance process. The following risks have
been identified:
- compliance risk - the FCA and the PRA have the power to stop
trading activity should there be a serious breach of their
regulations. Following the recent global banking crisis, there have
been moves by the authorities to tighten regulatory standards and
this may lead to a requirement for further capital to be invested
in Duncan Lawrie Limited.
- credit risk - the lending of money gives rise to a credit
risk. It lends money to customers and places money with other banks
and holds interest bearing securities. This credit risk is managed
by strict internal procedures. It limits itself to lending to
customers no more than its share capital and reserves.
- liquidity, interest and foreign exchange rate risk - these
risks are monitored closely and reported upon daily against
conservative exposure limits.
Duncan Lawrie Limited has no exposure to the sub-prime mortgage
market but in periods of low interest rates or low stock market
values its income stream will inevitably be affected. Bank failures
in the jurisdiction within which Duncan Lawrie operates can also
impact its results as a consequence of industry wide compensation
schemes to which it is required to contribute.
Further information on the group's financial risks are disclosed
in note 39 of the accounts.
Investments
The group owns a number of investments including listed
investments. The value of these investments is therefore likely to
fluctuate in line with global stock market movements.
Pension schemes
There is one final salary scheme in the UK, following the merger
of three schemes in 2011. It is closed to new entrants and permits
an element of future accrual for existing members in the defined
benefit section. A material proportion of the assets of the scheme
are invested in equities and the value of these assets will
fluctuate in line with global equity markets. Continuing
improvements in mortality rates may also increase the liabilities
of the scheme.
Credit Risk
Credit control procedures are in place throughout the group but
the risk remains that some customers may have difficulty making
payments.
Social and environmental responsibility
Background
The group has a wide range of businesses operating around the
world in diverse commercial, cultural and regulatory environments.
These businesses encompass a correspondingly wide spectrum of
employment and environmental issues and our main challenge is to
ensure that these are appropriately managed across the group.
The group's businesses have a duty to meet local regulatory
requirements and will always strive to do so. In this respect,
there is a distinction between our UK businesses and our
agricultural and horticultural businesses based mostly in
developing countries. Whilst the UK businesses are subject to
well-developed regulatory regimes in the areas of employment and
environmental protection, this is not necessarily the case
elsewhere. Our agricultural and horticultural businesses have
however more than responded to the increasing amount of relevant
local legislation and to the demands of the marketplace, as many of
our major customers for agricultural products now expect us to meet
their own social and environmental standards, or to achieve
certification against recognised international standards such as
'Fairtrade' labelling.
Particular challenges and opportunities for the group lie in the
following areas:
Child labour: We have a clear policy not to use child labour and
all of our businesses meet local legal requirements. The minimum
legal working age varies around the world and in some countries it
is both the cultural norm and permissible for parents to involve
their children in the productive process. We do not subscribe to
this approach and therefore translating our policy into unambiguous
local rules and enforcing these rules requires vigilance.
Health and safety: Our UK, European and North-American
businesses operate in a strong regulatory climate, and have a good
health and safety culture and record. Achieving equivalent
standards of health and safety management in our operations in some
developing countries is a continuing challenge.
Medical care and education: In some countries, our workers and
their children do not have access to good state provision of
medical or educational services. However, the majority of tea
estates in India and Bangladesh have a hospital and a qualified
doctor and our operations in both these countries have central
group hospitals to which more serious illnesses are referred. A
number of our African businesses report a high incidence of
HIV/AIDS related illnesses. We provide, as a very minimum, basic
medical services including where appropriate antiretroviral drugs,
and give support to schools that are either run by our companies,
or in the local neighbourhood.
Casual labour: Some of our agricultural businesses rely on
seasonal labour, notably at harvest time. Our agricultural
companies give casual and contract workers employment rights in
accordance with local legislation.
Environmental management: Our UK-based engineering businesses
have the greatest potential to create pollution and hazardous waste
and need to meet tight legislative standards. Where appropriate,
our UK businesses have formal environmental management systems in
place and most are independently certified to the international
standard ISO 14001. The enforcement of environmental legislation in
many countries where we operate is poor and our businesses in these
locations have to act on their own initiative to meet international
standards of environmental protection.
Greenhouse Gas (GHG) Emissions
Our emissions have been calculated based on the GHG Protocol
Corporate Standard. Emissions reported correspond with our
financial year.
Our approach
We believe that good management of employment and environmental
issues is essential in ensuring the long-term success of our
businesses. We are therefore committed to devoting the resources
necessary to continually improve our performance with the same
vigour that we apply to other aspects of managing our business.
The board has a corporate social responsibility policy which is
available on the company's website and which has been adopted
across the group.
The board has adopted an anti-bribery policy which complies with
the requirements of the Bribery Act 2010. The policy has being
introduced across the group and its implementation is being
monitored. The board does not permit bribery as part of its
business practices.
Performance
There is no current employment or environmental issues that
prejudice the continuing development of the group. No group
businesses were prosecuted for any significant breach of employment
legislation during the year. Abbey Metal Finishing Limited was
prosecuted for a breach of environmental legislation following the
fire at its former premises. The executive committee has
established a process for ensuring that the corporate social
responsibility policy is enforced across the group.
Key financial performance indicators
Return on segmental assets
The nature of the group's principal activities is such that the
board takes a long-term view on its operations, particularly in
agriculture. It is also concerned to improve the quality of the
group's assets over the long-term and monitors that by reference to
return on segmental assets achieved in the main segments of the
business which are then compared against budget. The returns
achieved in the current and prior year were as follows:
Agriculture and Food storage Banking and
horticulture Engineering and distribution financial services
2013 2012 2013 2012 2013 2012 2013 2012
Segment net assets (GBP'000) 242,981 236,166 19,982 21,645 17,592 15,003 39,045 34,254
Segment trading profit/(loss) (GBP'000) 41,383 45,495 (5,599) (6) 772 127 121 253
Return on segmental net assets (%) 17.03 19.26 (28.02) (0.03) 4.39 0.85 0.31 0.74
Segment net assets (segment assets less segment liabilities) and
segment profit are as reported in the consolidated accounts.
Group borrowings ratio
The board's objective is to ensure that gross borrowings as a
percentage of tangible net assets do not exceed 50 per cent. The
ratio achieved at 31 December 2013 was 0.96% (2012: 1.86%).
Gross borrowings and tangible net assets (share capital and
reserves less goodwill and intangible assets) are derived from the
consolidated accounts.
Key non-financial performance indicators
The following information has been compiled based on data
provided by the group's subsidiary undertakings. The board
considers that this information demonstrates the level of
compliance with important elements of its business principles. The
board will regularly review which key non-financial performance
indicators are most appropriate.
Agriculture and Food storage Banking and
horticulture Engineering and distribution financial services
1 Compliance 2013 2012 2011 2013 2012 2011 2013 2012 2011 2013 2012 2011
a) Prosecutions The number of
prosecutions
brought in the
financial year
by the
official
regulatory
bodies
responsible
for enforcing
regulations in
the areas of:
Employment 1 - 1 - - - - - - - - -
Worker health and safety 1 1 1 - - - - - - - - -
Environmental protection - - - 2 - - - - - - - -
b) Formal The number of
warnings written
warnings
during the
financial year
by the
official
regulatory
bodies
responsible
for enforcing
regulations in
the areas of:
Employment - - 2 - - - - - - - - -
Worker health and safety 1 3 2 - - - - - - - - -
Environmental
protection - - - - - - - - - - - -
2 Child Labour
a) Minimum age The number of
employees who
were less than
15 years old
during the
financial year - - - - - - - - - - - -
b) Access to The number of
education employees who
were younger
than the age
for completing
compulsory
education
in their
country during
the financial
year - - - - - - - - - - - -
3 Accidents
The number of
injuries
received at
work
resulting in
either
absence from
work for more
than
three days,
or the
injured
person being
unable to do
the full
range of
their normal
duties
for more than
a) Injury three days 281 579 565 6 5 1 3 2 11 - - -
4 Health
The number of
employee days
absence as a
result of
sickness
during the
Sickness financial
a) absence year 224,348(i) 228,411(i) 229,637(i) 1,578 2,354 1,563 1,609 1,628 1,550 382 486 571
The number of
claims for
compensation
arising from
occupational
health issues
received
during
the financial
year in
respect of
Sickness continuing
b) claims operations 404 314 389 1 - 2 2 2 2 - - -
(i) This excludes tea garden workers in India who have a
contractual entitlement to fourteen days sickness absence. It
should be noted that in Malawi there is high level of sickness due
to HIV/AIDS related conditions and malaria.
Employees
It is group policy to keep employees informed, through internal
publications and other communications, on the performance of the
group and on matters affecting them as employees and arrangements
to that end are made by the management of individual subsidiary
undertakings.
It is also group policy that proper consideration is given to
applications for employment 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 2013:
Men Women
Company directors (i) 8 0
Other senior managers (ii) 3 1
All employees 42,250 32,740
(i) Company directors consists of the company's board as detailed on page 2.
(ii) "Other senior managers" is as defined in The Companies Act
2006 (Strategic report and directors report) Regulations 2013, and
includes persons responsible for planning, directing or controlling
the activities of the company, or a strategically significant part
of the company, other than company directors and who are members of
the executive committee.
By order of the board
J A Morton
Secretary
24 April 2014
Report of the directors
The directors present their report together with the audited
accounts for the year ended 31 December 2013.
Principal activities
The company is a holding company and its country of
incorporation is England. The principal activities of its
subsidiary and associated undertakings comprise:
Agriculture and horticulture - the production of tea, edible
nuts, citrus, rubber, fruits, other horticultural produce and
general farming
Engineering - metal finishing, fabrication, precision
engineering and heat treatment
Food storage and distribution
Private banking and financial services
The holding of investments
Further details of the group's activities are included in the
chairman's statement on pages 3 to 5.
Results and dividends
The profit for the year amounted to GBP37,543,000 (2012:
GBP44,048,000). The board has proposed a final dividend for the
year of 91p per share payable on 4 July 2014 to holders of ordinary
shares registered at the close of business on 13 June 2014. The
total dividend for 2013 is therefore 125p per share (2012: 120p per
share). Details are shown in note 12.
Directors
The directors of the company are listed on page 2. The following
directors had beneficial interests in the share capital of the
company:
31 December 1 January
2013 2013
Camellia Plc ordinary shares of 10p each:
M C Perkins 1,573 1,573
C P T Vaughan-Johnson 1,000 1,000
C J Ames* 300 -
*C J Ames purchased 100 shares on 2 January 2013 and 200 shares
on 10 September 2013.
Under the company's articles of association all the directors
are required to retire annually. Accordingly, Mr M C Perkins, Mr C
J Relleen, Mr C J Ames, Mr M Dünki, Mr P J Field, Mr A K Mathur, Mr
F Vuilleumier will retire and, being eligible, seek re-election at
the AGM on 5 June 2014. Mr C P T Vaughan-Johnson will not seek
re-election at the next AGM and will retire as a director at the
conclusion of the meeting.
None of the directors or their families had a material interest
in any contract of significance with the company or any subsidiary
during and at the end of the financial year.
Executive directors
Mr M C 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. Mr Perkins is also
chairman of Duncan Lawrie Limited and chairman of the nomination
committee.
Mr C J Ames, a chartered accountant, is a joint managing
director of Camellia Plc, a non-executive director of Kakuzi
Limited and a non-executive director of Duncan Lawrie Limited. He
was previously managing director of Douglas Deakin Young Limited
which was acquired by the Camellia group in 2005. Prior to that he
was a partner of PricewaterhouseCoopers.
Mr P J Field is a joint managing director of Camellia Plc, is
chairman of Goodricke Group Limited and from 30 April 2010 a
non-executive director of Duncan Lawrie Limited. Before joining the
group in 1987, Mr Field was with Grindlays Bank engaged primarily
with their business in the Indian subcontinent.
Mr A K Mathur, is a chartered accountant and joined the group in
1981. He was appointed finance director in 1999 and is also a
director of Goodricke Group Limited.
Non-executive directors
Mr C J Relleen was formerly a partner in PricewaterhouseCoopers.
He was appointed an independent non-executive director and deputy
chairman in January 2006 having previously been a non-executive
director of Linton Park Plc. Mr Relleen is also a non-executive
director of Duncan Lawrie Limited. He is the senior independent
director, chairman of the audit committee and a member of the
nomination and remuneration committees.
Mr M Dünki was appointed a non-executive director on 1 April
2010. Mr Dünki was a director of Rahn & Bodmer Co., a Zurich
based private bank until 31 January 2012. He is also a director of
The Camellia Private Trust Company Limited and a trustee of The
Camellia Foundation and a director of Camellia Holding AG.
Mr C P T Vaughan-Johnson, who was formerly president and chief
executive officer of the Bank of Bermuda, was appointed a director
in 1999. He is chairman of the remuneration committee and a member
of the audit and nomination committees. Mr Vaughan-Johnson was also
a non-executive director of Duncan Lawrie Holdings Limited until 1
June 2011. He will retire as a director from the Board at end of
the AGM on 5 June 2014.
Mr F Vuilleumier was appointed as a non-executive independent
director on 7 March 2013. Mr Vuilleumier is a partner of Oberson
Avocats, a law office based in Geneva, Switzerland. He is also a
Swiss Certified tax expert and a lecturer in tax law at the
University of Lausanne.
Secretary
Mrs J A Morton was appointed as company secretary on 8 September
2011.
Substantial shareholdings
As at 24 April 2014 the company had been advised of the
following interests in the share capital of the company:
Camellia Private Trust Company Limited held through its
subsidiary, Camellia Holding AG 1,427,000 ordinary shares (51.67
per cent. of total voting rights).
Alcatel Bell Pensioenfonds VZW held through HSBC Global Custody
Nominees (UK) Limited 277,000 ordinary shares (10.03 per cent. of
total voting rights).
Taube Hodson Stonex & Partners held through State Street
Nominees Limited 87,946 ordinary shares (3.18 per cent. of total
voting rights).
Share capital and purchase of own shares
The company's share capital comprises one class of ordinary
shares of 10 pence each 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 33 to the accounts.
At the annual general meeting in 2013, shareholders gave
authority for the company to purchase up to 277,950 of its own
shares. Following that AGM, the company has purchased 12,300 of its
own shares for cancellation during the year and a further 5,200
since 1 January 2014. This authority expires at the conclusion of
this year's annual general meeting on 5 June 2014.
Disclosure of information to auditors
PricewaterhouseCoopers LLP has expressed its willingness to
continue as auditors of the company and a resolution proposing
PricewaterhouseCoopers LLP re-appointment will be put to the annual
general meeting.
Each of the persons who were directors at the time when this
directors' report was approved has confirmed that:
(a) so far as each director is aware, there is no relevant
audit information of which the company's auditors are unaware;
and
(b) 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.
Going concern
After reviewing the group's budget for 2014 and other forecasts,
the directors have a reasonable expectation that the group has
adequate resources to continue in operational existence for the
foreseeable future. Therefore they continue to adopt the going
concern basis in preparing the accounts.
Corporate governance
The company's statement on corporate governance can be found in
the corporate governance report on pages 15 to 18.
By order of the board
J A Morton
Secretary
24 April 2014
Corporate governance
Statement of compliance
This statement describes how the company applies the main
principles of UK Corporate Governance Code 2012 ("the Code"). In
implementing the Code, the directors have taken account of the
company's size and structure and the fact that there is a
controlling shareholder.
The company has complied with the relevant provisions set out in
the Code throughout the year with the exception of the following
area of the Code that has not been implemented:
The roles of chairman and chief executive have continued to be
fulfilled during the year by Mr Perkins and not separated as
required by the Code. Mr Ames and Mr Field are joint managing
directors and have responsibility for aspects of the day to day
management of the group.
The board
The board currently comprises eight directors. Four are
non-executive directors, of which three are considered independent.
The remaining directors are executive directors, including the
executive chairman. Mr Relleen, the deputy chairman, has been
designated as the senior independent director. The names and brief
biographical details of each director appear on pages 12 and
13.
Mr Vaughan-Johnson was first appointed to the board in 1999. The
board, having taken into consideration provision B.1.1 of the Code,
considered it is in the best interest of the company for Mr
Vaughan-Johnson to continue to act as a non-executive director. The
board considered that Mr Vaughan-Johnson remained independent
during year and that given the relative complexity and geographical
spread of the group, his experience continues to be of considerable
benefit. Mr Vaughan-Johnson will be retiring from the board
following the forthcoming AGM.
There is on-going dialogue between the chairman and the majority
shareholder whose views are reported to the board. The company is
also in contact with other significant shareholders.
The board has established a nomination committee chaired by Mr
Perkins, the other members being Mr Relleen and Mr
Vaughan-Johnson.
The board has established a remuneration committee, audit
committee and executive committee. Terms of reference of each of
these committees can be viewed on the company's website.
The board undertook a performance evaluation during the year by
way of an internal review.
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 annually 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 including detailed information on each of its
businesses is sent to directors each month. Each director is
provided with sufficient information in advance of board meetings
to enable the directors to make informed judgments on matters
referred to the board. The board met ten times in 2013.
Attendance by directors at board and committee meetings held
during the year was as follows:
Board Audit Remuneration
M C Perkins 10/10 - -
C J Relleen 9/10 3/3 1/1
C J Ames 10/10 - -
M Dünki 9/10 - -
P J Field 10/10 - -
A K Mathur 10/10 3/3 (i) -
D A Reeves 4/10 (ii) 1/3 (ii) -
C P T Vaughan-Johnson 9/10 3/3 1/1
F Vuilleumier 9/10 (iii) 2/3 (iv) -
(i) Mr Mathur attends meetings of the audit committee by
invitation in his capacity as finance director.
(ii) Mr Reeves retired from the Board on 6 June 2013.
(iii) Mr Vuilleumier was appointed as a director on 7 March
2013.
(iv) Mr Vuilleumier was appointed as member of the audit
committee from 1 July 2013.
Executive committee
The board has delegated the day to day management of the group's
operations to the executive committee which is also responsible for
implementing board policy. The members of the committee are:
M C Perkins Chairman
A K Mathur Finance
C J Ames Joint managing director
P J Field Joint managing director
I Ahmed Bangladesh
G A Mclean Kenya, Malawi and South Africa
A Singh India
R J Parry* Group marketing executive
J A Morton Company secretary
*appointed with effect from 1 January 2014.
Nomination committee
The nomination committee is chaired by Mr Perkins. Its other
members are Mr Vaughan-Johnson and Mr Relleen.
The principal responsibilities of the nomination 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 did not meet during the year.
Audit committee
The audit committee is chaired by Mr Relleen. The other members
of the committee are Mr Vuilleumier and Mr Vaughan-Johnson. Mr
Reeves was a member of the committee until he retired from the
board on 6 June 2013. During 2013, the committee met on three
occasions.
Principal responsibilities
The principal responsibilities of the audit committee are set
out below which were undertaken during the year:
- to review and monitor the financial statements of the company
and the audit of those statements - to monitor compliance with
relevant financial reporting requirements and legislation
- to monitor the effectiveness and independence of the external auditor
- to review effectiveness of the group's internal control
system. The committee regularly reviews the effectiveness of
internal audit activities carried out by the company's group
accounting function and senior management
- to review non-audit services provided by the external auditors
Significant issues in relation to financial statements
The audit committee assesses whether suitable accounting
policies have been adopted and whether management have made
appropriate estimates and judgements. In the year under review, the
audit committee considered the following significant matters in
relation to the financial statements:
Biological assets - One of the key areas of judgment that the
committee considered in reviewing the financial statements was the
valuation of biological assets in accordance with IAS 41.
Valuations are carried out by external professional valuers or are
based on discounted cash flows. These were agreed for consistency
of approach and assumptions agreed as reasonable. For more details
see note 18 to the accounts.
Pensions - A key area of judgment is in relation to the value of
the pension scheme obligation. Whilst this is conducted by
independent expert actuaries, the size of the obligation means that
a relatively minor difference in the assumptions could result in a
material change in the obligation. The committee considered the
competence of the actuaries and the assumptions adopted and
concluded that the work performed is sufficient to support the
value.
Goodwill and intangibles - The value of goodwill and intangibles
is inherently complex and relies on judgment and estimation. The
committee consider the performance of the underlying assets and
their ability to continue to support the carrying value. As a
result, the committee is satisfied that the carrying value is
supported.
External auditors
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 auditor objectivity, PwC operates a five
year rotation policy for audit partners for a listed entity.
The company's external audit was last tendered in 2009, which
resulted in a change to PwC at that point. We are aware of the
regulatory developments and transitional arrangements in relation
to audit tendering provisions and will continue to monitor
guidance.
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 comprises the board's two independent
non-executive directors, being Mr Vaughan-Johnson who is chairman
of the committee and Mr Relleen.
The committee's full terms of reference are available on the
company's website. The responsibilities of the committee
include:
- the review of the group's policy relating to remuneration of
the chairman, executive directors and members of the executive
committee
- to determine the terms of employment and remuneration of the
chairman, executive directors and those members of the executive
committee that are employed in the United Kingdom with a view to
ensuring that those individuals are fairly but responsibly
rewarded
- to approve compensation packages or arrangements following the
severance of any executive director's service contract
- at its discretion, the committee may make such enquiries as it
sees fit concerning the remuneration packages of those members of
the executive committee that are employed outside the United
Kingdom
The committee met once during 2013. The remuneration report
appears on pages 20 to 22.
Insurance
The company purchases insurance to cover its directors in
respect of legal actions against them in their capacity as
directors of the company. The level of cover is currently GBP20
million. All directors have access to independent professional
advice at the company's expense.
Share capital structure
The share capital of the group is set out in note 33.
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.
Decentralisation is a key management philosophy with
responsibility for efficient day to day operations delegated to
local management. Accountability and delegation of authority are
clearly defined with regular communication between group head
office and local management. The performance of each company is
continually monitored centrally including a critical review of
annual budgets, revised forecasts and monthly sales, profits and
cash reports. Financial results and key business statistics and
variances from approved plans are carefully monitored. Senior
management regularly visit and review the group's operating units.
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
J A Morton
Secretary
24 April 2014
Statement of directors' responsibilities
The directors are responsible for preparing the annual report,
the directors' remuneration report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare group and parent
company financial statements for each financial year. Under that
law the directors have prepared the group and parent company
financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of both the group and the parent
company and of the profit or loss of the group and company for that
period.
In preparing these financial statements, the directors are
required to:
- select suitable accounting policies and apply them consistently
- make judgements and accounting estimates that are reasonable and prudent
- state whether applicable IFRSs as adopted by the European
Union have been followed, subject to any material departures
disclosed and explained in the financial statements
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and the group and enable them to
ensure that the financial statements and the directors'
remuneration report comply with the Companies Act 2006 and, as
regards the group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets
of the company and the group and hence for taking reasonable steps
for the prevention and detection of fraud and other
irregularities.
Each of the directors, whose names and functions are listed on
page 2 confirm that, to the best of their knowledge:
- the group financial statements, which have been prepared in
accordance with IFRSs as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and profit of
the group
- the strategic report contained on pages 6 to 11 includes a
fair review of the development and performance of the business and
the position of the group, together with a description of the
principal risks and uncertainties that it faces.
In addition, each of the directors considers that the annual
report, 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.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website.
On behalf of the board
M C Perkins
Chairman
24 April 2014
Remuneration report
This report is drawn up in accordance with the Companies Act
2006 and the rules of the UK Listing Authority.
Remuneration committee
A report of the proceedings during 2013 of the remuneration
committee ("the committee") is set out on page 18 and includes
details of the membership of the committee.
Policy on directors' remuneration
In determining remuneration policy and the remuneration of
directors, full consideration has been given to the relevant
provisions of the UK Corporate Governance Code 2012. The committee
seeks to provide remuneration packages that will attract, retain
and motivate the best possible person for each position. The
committee also wishes to align the interests of executives with
shareholders. The group's activities are based largely on
agriculture and horticulture, which are highly dependent on factors
outside management control (e.g. weather and market prices for our
produce), and this is a significant consideration as to why the
company does not operate profit related bonus, share option or
share incentive schemes for directors.
The remuneration policy for executives reflects the overriding
remuneration philosophy and principles of the wider group. When
determining the remuneration policy and arrangements for directors,
the committee considers pay and employment conditions elsewhere in
the group to ensure that pay structures are appropriately aligned
and that levels of remuneration remain appropriate in this context.
It is intended that the remuneration policy, if approved by
shareholders at the forthcoming AGM, will take effect from the date
of this AGM and be applied for a period of 3 years until the AGM in
2017. This policy takes into account any views of the shareholders
expressed to the committee on directors' remuneration.
At the AGM on 6 June 2013, the remuneration report for the year
to 31 December 2012 was approved by shareholders with 98.598% of
the votes cast in favour, 0.002% of the votes cast against and
1.400% of the votes withheld.
Service contracts
Messrs Perkins, Ames, Field and Mathur are each employed on
rolling service contracts. Mr Perkins's service contract is dated
25 April 2002, Mr Mathur's service contract is dated 1 December
2003, Mr Ames's service contract is dated 24 April 2009 and Mr
Field's service contract is dated 19 December 2011. 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
remuneration committee reviews salaries annually and will seek
independent professional advice when appropriate.
The following sections on directors' remuneration and pensions
have been audited.
Directors' remuneration
Basic remuneration Benefits in Employer pension Total
kind contribution
2013 2012 2013 2012 2013 2012 2013 2012
GBP GBP GBP GBP GBP GBP GBP GBP
Executive
M C Perkins 423,094 412,775 62,694 120,531 - - 485,788 533,306
C J Ames 235,654 229,903 25,702 40,137 41,997 40,972 303,353 311,012
P J Field 259,212 246,730 34,637 25,231 - - 293,849 271,961
A K Mathur 242,790 231,544 26,706 25,786 - - 69,496 257,330
Non-executive
M Dünki 35,000 30,000 - - - - 35,000 30,000
D A Reeves 12,961 30,000 - - - - 12,961 30,000
C J Relleen 53,750 47,500 - - - - 53,750 47,500
C P J Vaughan-Johnson 37,500 32,500 18,537 - - - 56,037 32,500
F Vuilleumier 29,462 - - - - - 29,462 -
---------- ---------- -------- -------- --------- -------- ---------- ----------
1,329,423 1,260,952 168,276 211,685 41,997 40,972 1,539,696 1,513,609
---------- ---------- -------- -------- --------- -------- ---------- ----------
Notes:
1. The Executive directors' benefits in kind include the value
attributed to benefits such as medical insurance, permanent
health insurance, spouse/partner travel and cash alternatives
to company cars.
2. A contribution was made by the company to Mr Ames's personal
pension arrangement during the year.
3. Mr Reeves retired as a director on 6 June 2013. Mr Vuilleuimer
was appointed as a director on 7 March 2013.
4. The non-executive directors' benefit in kind includes the
value attributable to spouse/partner travel.
5. Mr Relleen receives an additional annual fee for his chairmanship
of the Audit Committee and for his non-executive directorship
of Duncan Lawrie Limited.
6. Mr Vaughan-Johnson receives an additional annual fee for
his chairmanship of the Remuneration Committee.
Directors' pensions
Most UK employees, including executive directors, are eligible
to join pension schemes operated within the group. Mr Perkins was a
member of The Linton Park Group Pension Scheme up until 28 February
2010. Mr Field and Mr Mathur were members of the Linton Park
Pension Scheme 2011 until 5 April 2012. This Pension Scheme was
formerly the Unochrome Group Pension Scheme and was merged with the
Linton Park Pension Scheme and the Lawrie Group Pension Scheme on 1
July 2011. Under The Linton Park Group Pension Scheme the normal
retirement age was 63 up until 31 December 2003 in respect of
service up until that date. With effect from 1 January 2004 the
normal retirement age was increased to 65.
From 1 May 2007 the normal retirement age of members of The
Lawrie Group Pension Scheme was increased to 65. Pension benefits
accrued prior to that date can be paid at age 63 without actuarial
reduction. In a few cases pensions can be paid from age 60 without
actuarial reduction. The Linton Park Pension Scheme (2011) provides
for a lump sum death in service benefit of four times basic salary
and a spouse's pension of half of the member's pension, based on
prospective service.
All benefits are subject to HM Revenue and Customs limits. Up
until 6 April 2005, under The Linton Park Group Pension Scheme,
post retirement pension increases were based on the annual increase
in the retail price index, subject to a maximum of 5 per cent. From
6 April 2005, the maximum increase reduced to 2.5 per cent. per
annum in respect of pension accrued on or after that date. Also,
under The Linton Park Group Pension Scheme there is a minimum
increase of 3 per cent. per annum in respect of service before 1
January 2002. Under The Lawrie Group Pension Scheme for entrants
prior to 1 January 1996, pension earned prior to April 2003 is
subject to a 5 per cent. increase per annum. From 1 May 2007, the
maximum increase reduced to 2.5 per cent. in respect of pension
accrual on or after that date.
A sum of GBP41,997 was paid to Mr Ames's personal pension
arrangement during the year. Accrual for pension for Messrs
Perkins, Field and Mathur has ceased and there was no pensionable
service for these directors during 2013.
In addition to the above, an unfunded pension of US$200,000 per
annum is paid to Mr G Fox, a former director of the company.
By order of the board
J A Morton
Secretary
24 April 2014
Consolidated income statement
for the year ended 31 December 2013
2013 2012
Notes GBP'000 GBP'000
restated
Revenue 2 251,267 261,529
Cost of sales (162,665) (166,859)
-------- --------
Gross profit 88,602 94,670
Other operating income 2,129 1,699
Distribution costs (12,264) (12,201)
Administrative expenses (47,284) (44,370)
-------- --------
Trading profit 3 31,183 39,798
Share of associates' results 5 980 4,269
Profit on disposal of non-current assets 6 542 1,538
Profit on disposal of a subsidiary 7 - 396
Profit on disposal of available-for-sale investments 1,349 271
Loss on transfer of an associate 8 - (10,045)
Gain arising from changes in fair value of biological assets:
-------- --------
Excluding Malawi Kwacha exceptional gain 10,061 8,690
Malawi Kwacha gain 11,032 21,353
-------- --------
18 21,093 30,043
-------- --------
Profit from operations 55,147 66,270
Investment income 2,417 1,186
-------- --------
Finance income 9 3,417 3,517
Finance costs 9 (878) (825)
Net exchange gain 9 1,031 1,030
Employee benefit expense 9 (1,486) (1,468)
-------- --------
Net finance income 9 2,084 2,254
-------- --------
Profit before tax 59,648 69,710
--------------------------------------------------------------- ----- -------- --------
Comprising
* headline profit before tax 4 38,150 48,975
* exceptional items, gain arising from changes in fair
value
of biological assets and other financing gains and losses 4 21,498 20,735
-------- --------
59,648 69,710
--------------------------------------------------------------- ----- -------- --------
Taxation 10 (22,105) (25,662)
-------- --------
Profit for the year 37,543 44,048
-------- --------
Profit attributable to:
Owners of the parent 28,297 31,210
Non-controlling interests 9,246 12,838
-------- --------
37,543 44,048
-------- --------
Earnings per share - basic and diluted 13 1,020.2p 1,122.9p
Statement of comprehensive income
for the year ended 31 December 2013
2013 2012
Notes GBP'000 GBP'000
restated
Group
Profit for the year 37,543 44,048
------- --------
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of post employment benefit obligations 32 11,611 (6,085)
Deferred tax movement in relation to post employment benefit obligations 31 14 (94)
------- --------
11,625 (6,179)
------- --------
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences (23,888) (36,155)
Release of exchange translation difference on transfer of associate - (3,998)
Release of other reserves movements on transfer of associate - 2,817
Release of exchange translation difference on disposal of subsidiary - 5
Available-for-sale investments:
Valuation gains taken to equity 22 3,367 674
Transferred to income statement on sale 22 (873) (4)
Share of other comprehensive expense of associates - (769)
Tax relating to components of other comprehensive income (142) 46
------- --------
(21,536) (37,384)
------- --------
Other comprehensive expense for the year, net of tax (9,911) (43,563)
------- --------
Total comprehensive income for the year 27,632 485
------- --------
Total comprehensive income/(expense) attributable to:
Owners of the parent 23,143 (4,356)
Non-controlling interests 4,489 4,841
------- --------
27,632 485
------- --------
Company
Profit for the year 4,411 3,755
------- --------
Total comprehensive income for the year 4,411 3,755
------- --------
Consolidated balance sheet
at 31 December 2013
2013 2012
Notes GBP'000 GBP'000
Non-current assets
Intangible assets 16 7,349 7,413
Property, plant and equipment 17 95,840 93,483
Biological assets 18 127,215 119,693
Prepaid operating leases 19 890 910
Investments in associates 21 7,343 6,549
Deferred tax assets 31 212 314
Available-for-sale financial assets 22 60,001 50,501
Other investments 24 8,745 8,598
Retirement benefit surplus 32 653 678
Trade and other receivables 26 4,113 15,174
-------- --------
Total non-current assets 312,361 303,313
-------- --------
Current assets
Inventories 25 38,820 37,575
Trade and other receivables 26 69,754 72,257
Held-to-maturity financial assets 23 1,000 3,993
Current income tax assets 433 822
Cash and cash equivalents 27 289,623 262,174
-------- --------
Total current assets 399,630 376,821
-------- --------
Current liabilities
Borrowings 29 (3,051) (5,590)
Trade and other payables 28 (265,117) (235,636)
Current income tax liabilities (5,965) (5,542)
Employee benefit obligations 32 (448) (409)
Provisions 30 (360) (456)
-------- --------
Total current liabilities (274,941) (247,633)
-------- --------
Net current assets 124,689 129,188
-------- --------
Total assets less current liabilities 437,050 432,501
-------- --------
Non-current liabilities
Borrowings 29 (78) (116)
Trade and other payables 28 (2,451) (9,015)
Deferred tax liabilities 31 (39,318) (36,225)
Employee benefit obligations 32 (21,546) (32,866)
Other non-current liabilities (103) (107)
Provisions 30 (300) (671)
-------- --------
Total non-current liabilities (63,796) (79,000)
-------- --------
Net assets 373,254 353,501
-------- --------
Equity
Called up share capital 33 283 284
Share premium 15,298 15,298
Reserves 316,885 298,228
-------- --------
Equity attributable to owners of the parent 332,466 313,810
Non-controlling interests 40,788 39,691
-------- --------
Total equity 373,254 353,501
-------- --------
Company balance sheet
at 31 December 2013
2013 2012
Notes GBP'000 GBP'000
Non-current assets
Investments in subsidiaries 20 73,508 73,508
Available-for-sale financial assets 22 170 170
Other investments 24 8,750 8,603
------- -------
Total non-current assets 82,428 82,281
------- -------
Current assets
Trade and other receivables 26 - 16
Amounts due from group undertakings 1,512 3,005
Current income tax asset 74 74
Cash and cash equivalents 27 - 9,458
------- -------
Total current assets 1,586 12,553
------- -------
Current liabilities
Trade and other payables 28 (138) (160)
Amounts due to group undertakings (17,578) (28,194)
------- -------
Total current liabilities (17,716) (28,354)
------- -------
Net current liabilities (16,130) (15,801)
------- -------
Total assets less current liabilities 66,298 66,480
------- -------
Non-current liabilities
Deferred tax liabilities 31 (258) (280)
------- -------
Total non-current liabilities (258) (280)
------- -------
Net assets 66,040 66,200
------- -------
Equity
Called up share capital 33 283 284
Share premium 15,298 15,298
Reserves 50,459 50,618
------- -------
Total equity 66,040 66,200
------- -------
The notes on pages 30 to 80 form part of the financial
statements.
The financial statements were approved on 24 April 2014 by the
board of directors and signed on their behalf by:
M C Perkins
Chairman
Consolidated cash flow statement
for the year ended 31 December 2013
2013 2012
Notes GBP'000 GBP'000
Cash generated from operations
Cash flows from operating activities 34 34,247 41,162
Interest paid (1,189) (822)
Income taxes paid (12,653) (12,407)
Interest received 3,393 3,411
Dividends received from associates 203 1,275
------- -------
Net cash flow from operating activities 24,001 32,619
------- -------
Cash flows from investing activities
Purchase of intangible assets (399) (180)
Purchase of property, plant and equipment (17,290) (16,557)
Insurance proceeds for non-current assets 542 1,538
Proceeds from sale of non-current assets 577 429
Biological asset - new planting (4,817) (2,499)
Part disposal of subsidiaries 76 262
Disposal of a subsidiary - 1,264
Purchase of non-controlling interests - (223)
Non-controlling interest subscription 21 -
Purchase of own shares (1,107) -
Proceeds from sale of investments 9,583 7,863
Purchase of investments (14,032) (8,339)
Income from investments 2,417 1,186
------- -------
Net cash flow from investing activities (24,429) (15,256)
------- -------
Cash flows from financing activities
Equity dividends paid (3,388) (3,224)
Dividends paid to non-controlling interests (3,480) (4,106)
New loans 78 154
Loans repaid (56) (230)
Finance lease payments (38) (190)
------- -------
Net cash flow from financing activities (6,884) (7,596)
------- -------
Net (decrease)/increase in cash and cash equivalents (7,312) 9,767
Cash and cash equivalents at beginning of year 27 81,373 72,626
Exchange losses on cash (1,161) (1,020)
------- -------
Cash and cash equivalents at end of year 27 72,900 81,373
------- -------
For the purposes of the cash flow statement, cash and cash
equivalents are included net of overdrafts repayable on demand.
These overdrafts are excluded from the definition of cash and cash
equivalents disclosed on the balance sheet.
Company cash flow statement
for the year ended 31 December 2013
2013 2012
Note GBP'000 GBP'000
Cash generated from operations
Profit before tax 4,389 3,734
Adjustments for:
Interest income (365) (398)
Exchange (gain)/loss on cash (193) 220
Dividends from group companies (6,000) (6,000)
Decrease in trade and other receivables 16 -
(Decrease)/increase in trade and other payables (22) 11
Net movement in intra-group balances (9,123) 2,933
------- -------
Cash used in operations (11,298) 500
Interest received 365 382
------- -------
Net cash flow from operating activities (10,933) 882
------- -------
Cash flows from investing activities
Proceeds from sale of investments 10 -
Purchase of investments (157) (230)
Purchase of own shares (1,107) -
Dividends received 6,000 6,000
------- -------
Net cash flow from investing activities 4,746 5,770
------- -------
Cash flows from financing activities
Equity dividends paid (3,464) (3,297)
------- -------
Net cash flow from financing activities (3,464) (3,297)
------- -------
Net movement in cash and cash equivalents (9,651) 3,355
Cash and cash equivalents at beginning of year 27 9,458 6,323
Exchange gain/(loss) on cash 193 (220)
------- -------
Cash and cash equivalents at end of year 27 - 9,458
------- -------
Statement of changes in equity
for the year ended 31 December 2013
Non-
Share Share Treasury Retained Other controlling Total
capital premium shares earnings reserves Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Group
At 1 January 2012 284 15,298 (400) 264,659 41,751 321,592 40,115 361,707
Total
comprehensive
income/(expense)
for the year - - - 27,129 (31,485) (4,356) 4,841 485
Dividends - - - (3,224) - (3,224) (4,106) (7,330)
Disposal of
subsidiary - - - - - - (1,333) (1,333)
Non-controlling
interest
subscription - - - 71 - 71 226 297
Acquisition of
non-controlling
interest - - - (171) - (171) (52) (223)
Share of
associate's other
equity movements - - - 221 - 221 - 221
Loss on dilution
of interest in
associate - - - (323) - (323) - (323)
------- ------- -------- -------- -------- ------- ----------- -------
At 31 December
2012 284 15,298 (400) 288,362 10,266 313,810 39,691 353,501
Total
comprehensive
income/(expense)
for the year - - - 39,805 (16,662) 23,143 4,489 27,632
Dividends - - - (3,388) - (3,388) (3,480) (6,868)
Non-controlling
interest
subscription - - - 8 - 8 88 96
Purchase of own
shares (1) - - (1,107) 1 (1,107) - (1,107)
------- ------- -------- -------- -------- ------- ----------- -------
At 31 December
2013 283 15,298 (400) 323,680 (6,395) 332,466 40,788 373,254
------- ------- -------- -------- -------- ------- ----------- -------
Company
At 1 January 2012 284 15,298 - 38,028 12,132 65,742 - 65,742
Total
comprehensive
income for the
year - - - 3,755 - 3,755 - 3,755
Dividends - - - (3,297) - (3,297) - (3,297)
------- ------- -------- -------- -------- ------- ----------- -------
At 31 December
2012 284 15,298 - 38,486 12,132 66,200 - 66,200
Total
comprehensive
income for the
year - - - 4,411 - 4,411 - 4,411
Dividends - - - (3,464) - (3,464) - (3,464)
Purchase of own
shares (1) - - (1,107) 1 (1,107) - (1,107)
------- ------- -------- -------- -------- ------- ----------- -------
At 31 December
2013 283 15,298 - 38,326 12,133 66,040 - 66,040
------- ------- -------- -------- -------- ------- ----------- -------
Other reserves of the group and company includes a GBP32,000
(2012: GBP31,000) capital redemption reserve and, in respect of the
group, net exchange differences of GBP46,182,000 deficit (2012:
GBP27,166,000 deficit).
Group retained earnings include GBP137,268,000 (2012:
GBP130,524,000) 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, IFRIC 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, available-for-sale investments, financial assets and
financial liabilities.
Where necessary, comparative figures have been adjusted to
conform with changes in presentation in the current year.
Adoption of IAS 19 (revised)
IAS 19 (revised) amends the accounting for employment benefits.
The group has applied the standard retrospectively in accordance
with the transition provisions of the standard and the comparative
figures in relation to the group's UK defined benefit pension
scheme have been restated. No restatement has been made to the
group's overseas schemes as the impact is immaterial. The impact on
the group has been in the following areas:
The standard requires that only administrative costs relating to
the cost of managing plan assets can be deducted from the actual
return on assets. This has no effect on total comprehensive income
as the increased charge in profit or loss is offset by a credit in
other comprehensive income. The effect has been that the income
statement charge for the year to 31 December 2012 has increased by
GBP171,000.
The standard replaces the interest cost on the defined benefit
obligation and the expected return on plan assets with a net
interest cost based on the net defined benefit asset or liability
and the discount rate, measured at the beginning of the year. There
is no change to determining the discount rate, this continues to
reflect the yield on high-quality corporate bonds. This has
increased the income statement charge as the discount rate applied
to assets is lower than the expected return on assets. This has no
effect on total comprehensive income as the increased charge in
profit or loss is offset by a credit in other comprehensive income.
The effect has been that the income statement charge for the year
to 31 December 2012 has increased by GBP853,000.
The effect of the change in accounting policy is to decrease
earnings per share from 1,159.7p to 1,122.9p for the year to 31
December 2012, the effect on the cash flow statement is
immaterial.
Going concern
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
effective 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 differences 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 differences 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 differences
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 differences 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:
(i) the group has transferred to the buyer the significant
risks and rewards of ownership of the goods;
(ii) the group retains neither continuing managerial involvement
to the degree usually associated with ownership nor effective
control over the goods sold;
(iii) the amount of revenue can be measured reliably;
(iv) it is probable that the economic benefits associated with
the transaction will flow to the entity; and
(v) the costs incurred or to be incurred in respect of the
transaction can be measured reliably.
Invoices are raised when goods are despatched or when the risks
and rewards of ownership otherwise irrevocably pass 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.
In respect of banking and financial services, fees and
commissions are generally recognised on an accrual basis when the
service has been provided.
Investment income
Investment income is recognised when the right to receive
payment of a dividend is established.
Segmental reporting
The adoption of 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 Executive Committee led by the Chairman. Inter segment sales
are not significant.
Exceptional items
Exceptional items are those significant items which are
separately disclosed by virtue of their size or incidence to enable
a full understanding of the group's financial performance. Full
disclosure of exceptional items are set out in notes 6, 7 and
8.
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
Identifiable intangible assets include 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.
(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
Land and buildings comprises mainly factories and offices. 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 off
their cost less residual value over their expected useful
lives.
The rates of depreciation used for the other assets are as
follows:
Freehold and long leasehold buildings nil to 10 per cent. per annum
Other short leasehold land and
buildings unexpired term of the lease
Plant, machinery, fixtures, fittings
and equipment 4 to 33 per cent. per annum
Assets held under finance leases are depreciated over their
expected useful lives on the same basis as owned assets, or, where
shorter, over the term of the relevant lease.
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 difference between the sales proceeds
and the carrying amount of the asset and is included in the income
statement.
Biological assets
Biological assets are measured at each balance sheet date at
fair value. Any changes in fair value are recognised in the income
statement in the year in which they arise. The basis under which
fair value is determined for the group's biological assets are
described below:
Tea and rubber are generally valued at each year end by
independent professional valuers. The valuations take into account
assumptions about expected life span of plantings, yields, selling
prices and sales of similar assets.
Costs of new areas planted are included as "new planting
additions" in the biological assets note. Growing costs for tea and
rubber are accounted for as a cost of inventory in the year in
which they are incurred. The group does not recognise the fair
value of harvested green leaf within cost of sales in the income
statement. The increase in value is in effect offset against the
fair value movement in biological assets.
Annually harvested horticultural assets such as edible nuts,
citrus and avocados are generally valued on the basis of net
present values of expected future cash flows from those assets,
discounted at appropriate pre-tax rates and including certain
assumptions about expected life span of the plantings, yields,
selling prices, costs and discount rates. Growing costs incurred
during the year are treated as "capitalised cultivation costs" in
biological assets. As the crop is harvested and sold these
accumulated costs are shown as "decrease due to harvesting" in
biological assets and charged to cost of sales in the income
statement.
Timber is valued on the basis of expected future cash flows from
scheduled harvesting dates, discounted at appropriate pre-tax rates
and including certain assumptions about expected life span, yields,
selling prices, costs and discount rates. Growing costs incurred
during the year are treated as "new planting additions" in
biological assets. As the trees are harvested the value accumulated
to date of harvest is treated as "decrease due to harvesting" and
charged to cost of sales in the income statement.
Agricultural crops such as soya and maize are valued at
estimated selling price less future anticipated costs. Growing
costs incurred during the year are treated as "capitalised
cultivation costs" in biological assets. As the crops are harvested
the value accumulated to date of harvest is treated as "decrease
due to harvesting" and charged to cost of sales in the income
statement.
Financial assets
The group classifies its financial assets in the following
categories: loans and receivables, available-for-sale and
held-to-maturity. The classification depends on the purpose for
which the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities
greater than 12 months after the end of the reporting period. These
are classified as non-current assets. The group's loans and
receivables comprise 'trade and other receivables' and 'cash and
cash equivalents' in the balance sheet.
Available-for-sale financial assets are non-derivatives that are
either designated in this category or not classified in any of the
other categories. They are included in non-current assets unless
the investment matures or management intends to dispose of it
within 12 months of the end of the reporting period.
Held-to-maturity investments are non-derivative financial assets
with fixed or determinable payments and fixed maturities that the
group's management has the positive intention and ability to hold
to maturity. Were the group to sell other than an insignificant
amount of held-to-maturity assets, the entire category would be
tainted and reclassified as available-for-sale.
Regular purchases and sales of financial assets are recognised
on the trade-date, the date on which the group commits to purchase
or sell the asset. Investments are initially recognised at fair
value plus transaction costs for all financial assets. Financial
assets are derecognised when the rights to receive cash flows from
the investments have expired or have been transferred and the group
has transferred substantially all risks and rewards of
ownership.
Available-for-sale financial assets are subsequently carried at
fair value. Available-for-sale financial assets include shares of
listed and unlisted companies. The fair values of listed shares are
based on current bid values. Shares in unlisted companies are
measured at cost as fair value cannot be reliably measured.
Changes in the fair value of monetary and non-monetary
securities classified as available-for-sale are recognised in other
comprehensive income. When securities classified as
available-for-sale are sold or impaired, the accumulated fair value
adjustments recognised in equity are included in the income
statement as 'Profit/(loss) on disposal of available-for-sale
investments'.
Dividends on available-for-sale equity instruments are
recognised in the income statement as part of investment income
when the group's right to receive payments is established.
Loans and receivables and held to maturity investments are
subsequently carried at amortised cost using the effective interest
method.
Financial assets and liabilities are offset and the net amount
reported in the balance sheet when there is a legally enforceable
right to offset the recognised amounts and there is an intention to
settle on a net basis or realise the asset and settle the liability
simultaneously.
Other investments
Other investments comprise 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 by the directors when there has been an
indication of potential impairment.
Impairment of financial assets
(i) Assets carried at amortised cost
The group assesses at the end of each reporting period whether
there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of
financial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of
the asset (a 'loss event') and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated.
For the loans and receivables category, the amount of the loss
is measured as the difference between the asset's carrying amount
and the present value of estimated future cash flows (excluding
future credit losses that have not been incurred) discounted at the
financial asset's original effective interest rate. The carrying
amount of the asset is reduced and the amount of the loss is
recognised in the consolidated income statement.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised (such as an
improvement in the debtor's credit rating), the reversal of the
previously recognised impairment loss is recognised in the
consolidated income statement.
(ii) Assets classified as available-for-sale
In the case of equity investments classified as
available-for-sale, a significant or prolonged decline in the fair
value of the security below its cost is also evidence that the
assets are impaired. If any such evidence exists for
available-for-sale financial assets, the cumulative loss measured
as the difference between the acquisition cost and the current fair
value, less any impairment loss on that financial asset previously
recognised in profit or loss is removed from equity and recognised
in profit or loss. Impairment losses recognised in the consolidated
income statement on equity instruments are not reversed through the
consolidated income statement. If, in a subsequent period, the fair
value of a debt instrument classified as available-for-sale
increases and the increase can be objectively related to an event
occurring after the impairment loss was recognised in profit or
loss, the impairment loss is reversed through the consolidated
income statement.
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).
Leases
Leases of property, plant and equipment where the group has
substantially all the risks and rewards of ownership are classified
as finance leases. Finance leases are capitalised at the inception
of the lease at the lower of fair value and the estimated present
value of the underlying lease payments. Each lease payment is
allocated between the liability and finance charges so as to
achieve a constant rate of interest on the finance balance
outstanding. The corresponding rental obligations, net of finance
charges, are included in liabilities. The interest element of the
finance cost is charged to the income statement over the lease
period. Property, plant and equipment acquired under finance leases
is depreciated over the shorter of the asset's useful life and the
lease term.
Leases where a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases are charged to the
income statement on a straight-line basis over the period of the
lease.
Inventories
Agricultural produce included within inventory largely comprises
stock of "black" tea. This is valued at the lower of cost and net
realisable value. Cost includes the growing costs of 'green leaf'
up to the date of harvest and factory costs incurred to bring the
tea to its manufactured state.
In accordance with IAS 41, on initial recognition, agricultural
produce is required to be measured at fair value less estimated
point of sale costs. Given that there is no open market for green
leaf, this is recognised in inventory at the lower of cost or net
realisable value.
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.
Trade and other receivables
Trade receivables are carried at original invoice amount less
provision made for impairment of these receivables. A provision for
impairment of trade receivables is established when there is
objective evidence that the group will not be able to collect all
amounts due according to the original terms. The amount of the
provision is recognised in the income statement.
Amounts due from customers of banking subsidiaries consist of
loans and receivables which are non-derivative financial assets
with fixed or determinable payments that are not quoted in an
active market. They arise when the bank provides money, goods or
services directly to a customer with no intention of trading the
receivable and are carried at amortised cost using the effective
interest method.
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. In respect of the group's banking operation,
cash and cash equivalents include cash and non-restricted balances
with central banks, treasury bills and other eligible bills, loans
and advances to banks, amounts due from other banks and short-term
government securities.
Non-current assets held for sale
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 effective
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 effective 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 differs 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
differences 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 affects 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 differences can be utilised. Deferred income tax
assets and liabilities are offset when there is a legally
enforceable right to offset 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 different taxable
entities where there is an intention to settle the balances on a
net basis.
Deferred tax is provided on temporary differences arising on
investments in subsidiaries and associates, except where the timing
of the reversal of the temporary difference is controlled by the
group and it is probable that the temporary difference 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 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.
The provision for onerous lease commitments is based on the
expected vacancy period.
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 effects, 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 estimates and judgements
Estimates and judgements 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
significant 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, biological assets, associated
companies and other investments. These assets are tested for
impairment when circumstances indicate there may be a potential
impairment. Factors considered which could trigger an impairment
review include the 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.
(ii) Depreciation and amortisation
Depreciation and amortisation is based on management estimates
of the future useful life of property, plant and equipment and
intangible assets. Estimates may change due to 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.
(iii) 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.
(iv) 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 are given in note 32.
(v) Taxation
The group is subject to taxes in numerous jurisdictions.
Significant judgement is required in determining worldwide
provisions for taxes. There are many transactions and calculations
during the ordinary course of business for which the ultimate tax
determination is uncertain.
(vi) Identifiable intangible assets - customer relationships
As described in note 16, goodwill and identifiable intangible
assets relating to customer relationships acquired are valued using
industry average multiples of assets under management, with the
assumption being made that the nature of the group's assets under
management are not dissimilar from industry averages and therefore
will be valued in a similar manner. The valuation technique used is
therefore sensitive to this assumption.
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 2013:
Financial statement presentation - effective
IAS 1 (amendment) from 1 July 2012
The main change resulting from these amendments
is a requirement for entities to group items
presented in other comprehensive income on
the basis of whether they are potentially
reclassifiable to profit or loss subsequently.
The amendments do not address which items
are presented in other comprehensive income.
Employee benefits - effective from 1 January
IAS 19 (amendment) 2013
These amendments eliminate the corridor approach
and calculate finance costs on a net funding
basis. A detailed explanation of the impact
of these amendments on the group accounts
has been included on page 30.
Fair value measurement - effective from 1
IFRS 13 January 2013
This standard aims to improve consistency
and reduce complexity by providing a precise
definition of fair value and a single source
of fair value measurement and disclosure
requirements for use across IFRSs. The requirements,
which are largely aligned between IFRSs and
US GAAP, do not extend the use of fair value
accounting but provide guidance on how it
should be applied where its use is already
required or permitted by other standards
within IFRSs or US GAAP.
(ii) Standards, amendments and interpretations to existing
standards that are not yet effective and have not been adopted
early by the group
The following standards and amendments to existing standards
have been published and are mandatory for the group's accounting
periods beginning on or after 1 January 2014 or later periods, but
the group has not adopted them early. None of these standards are
expected to have a material impact on the financial statements of
the group:
IFRS 10 Consolidated financial statements - effective
from 1 January 2013
This standard builds on existing principles
by identifying the concept of control as
the determining factor in which an entity
should be included within the consolidated
financial statements. The standard provides
additional guidance to assist in determining
control where this is difficult to assess.
This standard has been endorsed by the EU
with an effective date of 1 January 2014.
IFRS 12 Disclosures of interests in other entities
- effective from 1 January 2013
This standard includes the disclosure requirements
for all forms of interests in other entities,
including joint arrangements, associates,
structured entities and other off balance
sheet vehicles. This standard has been endorsed
by the EU with an effective date of 1 January
2014.
IAS 27 (revised Separate financial statements - effective
2011) from 1 January 2013
This revision includes the requirements relating
to separate financial statements. This revised
standard has been endorsed by the EU with
an effective date of 1 January 2014.
Notes to the accounts
1 Business and geographical segments
The principal activities of the group are as follows:
Agriculture and horticulture
Engineering
Food storage and distribution
Banking and financial services
For management reporting purposes these activities form the
basis on which the group reports its primary divisions.
Segment information about these businesses is presented
below:
Agriculture and Food storage Banking and Other
horticulture Engineering and distribution financial services operations Consolidated
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
restated
Revenue
External sales 175,116 187,538 29,587 27,675 30,785 32,195 13,568 12,551 2,211 1,570 251,267 261,529
------- ------- ------- ------- ------- ------- -------- -------- ------- ------- -------- --------
Trading profit
Segment
profit/(loss) 41,383 45,495 (5,599) (6) 772 127 121 253 179 62 36,856 45,931
------- ------- ------- ------- ------- ------- -------- -------- ------- -------
Unallocated
corporate
expenses* (5,673) (6,133)
-------- --------
Trading profit 31,183 39,798
Share of
associates'
results 980 4,269 980 4,269
Profit on disposal
of non-current
assets 542 1,538
Profit on disposal
of a subsidiary - 396
Profit on disposal
of
available-for-sale
investments 1,349 271
Loss on transfer of
an associate - (10,045)
Gain arising from
changes in fair
value of
biological assets 21,093 30,043 21,093 30,043
Investment income 2,417 1,186
Net finance income 2,084 2,254
-------- --------
Profit before tax 59,648 69,710
Taxation (22,105) (25,662)
-------- --------
Profit after tax 37,543 44,048
-------- --------
Other information
Segment assets 272,381 268,283 31,843 30,054 23,138 20,270 262,666 238,291 5,865 4,393 595,893 561,291
Investments in
associates 7,343 6,549 7,343 6,549
Unallocated assets 108,755 112,294
-------- --------
Consolidated total
assets 711,991 680,134
-------- --------
Segment liabilities (29,400) (32,117) (11,861) (8,409) (5,546) (5,267) (223,621) (204,037) (1,172) (832) (271,600) (250,662)
Unallocated
liabilities (67,137) (75,971)
-------- --------
Consolidated total
liabilities (338,737) (326,633)
-------- --------
Capital expenditure 10,955 9,495 3,015 2,988 2,435 1,788 589 993 296 1,293 17,290 16,557
Depreciation (4,909) (4,903) (1,835) (1,623) (1,811) (2,155) (345) (368) (167) (189) (9,067) (9,238)
Amortisation (35) (42) (5) (5) (420) (361) (460) (408)
Impairments (22) (440) (22) (440)
Segment assets consist primarily of intangible assets, property,
plant and equipment, biological assets, prepaid operating leases,
inventories, trade and other receivables and cash and cash
equivalents. Receivables for tax have been excluded. Investments in
associates, valued using the equity method, have been shown
separately in the segment information. Segment liabilities are
primarily those relating to the operating activities and generally
exclude liabilities for taxes, short-term loans, finance leases and
non-current liabilities.
*Unallocated corporate expenses include group marketing expenses
of GBP881,000 (2012:GBP1,162,000) incurred of behalf of banking and
financial services and agriculture and horticulture segments.
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 following table provides an analysis of the group's sales by
geographical market, irrespective of the origin of the
goods/services:
2013 2012
GBP'000 GBP'000
United Kingdom 71,320 70,379
Continental Europe 27,548 23,885
Bangladesh 21,437 20,281
India 62,078 70,401
Kenya 24,329 25,563
Malawi 6,107 8,000
North America and Bermuda 11,448 9,620
South Africa 621 724
South America 5,093 5,947
Other 21,286 26,729
------- -------
251,267 261,529
------- -------
The following is an analysis of the carrying amount of segment
assets and additions to property, plant and equipment, analysed by
the geographical area in which the assets are located:
Carrying amount of Additions to property,
segment assets plant and equipment
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
United Kingdom 315,251 285,819 4,539 6,744
Continental Europe 5,812 4,693 1,662 196
Bangladesh 50,257 44,975 1,474 983
India 71,200 77,243 3,574 3,339
Kenya 69,691 70,991 1,508 1,709
Malawi 53,848 43,831 2,526 2,367
North America and Bermuda 8,634 8,430 445 190
South Africa 9,599 12,038 259 223
South America 11,601 13,271 1,303 806
---------- --------- ------------ ------------
595,893 561,291 17,290 16,557
---------- --------- ------------ ------------
Results of banking subsidiaries
2013 2012
GBP'000 GBP'000
Interest receivable third parties 3,303 3,298
Interest payable third parties (332) (600)
group companies (21) (26)
------- -------
Net interest income 2,950 2,672
Fee and commission income 11,067 10,325
Fee and commission expense (470) (472)
Inter-segment net interest 21 26
------- -------
Revenue 13,568 12,551
Other operating income 107 29
------- -------
13,675 12,580
Operating expenses (13,554) (12,327)
------- -------
Segment profit 121 253
------- -------
2 Revenue
An analysis of the group's revenue is as follows:
2013 2012
GBP'000 GBP'000
Sale of goods 176,561 188,595
Distribution and warehousing revenue 30,785 32,195
Engineering services revenue 29,587 27,675
Banking service revenue 13,568 12,551
Agency commission revenue 490 244
Property rental revenue 276 269
------- -------
Total group revenue 251,267 261,529
Other operating income 2,129 1,699
Investment income 2,417 1,186
Interest income 3,417 3,517
------- -------
Total group income 259,230 267,931
------- -------
3 Trading profit
2013 2012
GBP'000 GBP'000
restated
The following items have been included in arriving at trading profit:
Employment costs (note 14) 76,601 74,064
Inventories:
Cost of inventories recognised as an expense (included in cost of sales) 92,136 108,364
Cost of inventories provision recognised as an expense (included in cost of sales) 215 326
Cost of inventories provision reversed (included in cost of sales) (59) (45)
Business interruption income received from insurance claim 600 1,750
Depreciation of property, plant and equipment:
Owned assets 8,910 8,995
Under finance leases 157 243
Amortisation of intangibles (included in administrative expenses) 460 408
Impairment of available-for-sale financial assets (included in administrative expenses) 22 440
Profit on disposal of property, plant and equipment (250) (248)
Operating leases - lease payments:
Plant and machinery 327 321
Property 760 885
Repairs and maintenance expenditure on property, plant and equipment 4,998 4,962
------- --------
Currency exchange (gains)/losses (credited)/charged to income include:
Revenue (803) (1,914)
Cost of sales 25 (51)
Distribution costs (78) (280)
Administrative expenses (721) 2
Finance income (1,031) (1,030)
------- --------
(2,608) (3,273)
------- --------
Included in the above is an exchange gain of GBP1,644,000 (2012:
GBP3,952,000 gain) relating to the Malawian Kwacha.
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 177 166
Subsidiary companies 672 663
----- ---
849 829
Audit - related regulatory reporting 62 59
Tax services:
Compliance services 38 16
Advisory services 12 -
Other services not covered above 62 69
----- ---
1,023 973
----- ---
4 Headline 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 'headline' and is used by management to measure and
monitor performance.
The following items have been excluded from the headline
measure:
- Exceptional items, including profit and losses from
disposal of non-current assets and available-for-sale
investments.
- Gains and losses arising from changes in fair value
of biological assets, which are a non-cash item, and
the directors believe should be excluded to give a
better understanding of the group's underlying performance.
- Financing income and expense relating to retirement
benefits.
Headline profit before tax comprises:
2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
restated restated
Trading profit 31,183 39,798
Share of associates' results 980 4,269
Investment income 2,417 1,186
Net finance income 2,084 2,254
Exclude
* Employee benefit expense 1,486 1,468
------- --------
Headline finance income 3,570 3,722
------- --------
Headline profit before tax 38,150 48,975
------- --------
Non-headline items in profit before tax comprises:
Exceptional items
Profit on disposal of non-current assets 542 1,538
Profit on disposal of a subsidiary - 396
Profit on disposal of available-for-sale investments 1,349 271
Loss on transfer of an associate - (10,045)
------- --------
1,891 (7,840)
Gain arising from changes in fair value of biological assets 21,093 30,043
Employee benefit expense (1,486) (1,468)
------- --------
Non-headline items in profit before tax 21,498 20,735
------- --------
5 Share of associates' results
The group's share of the results of associates is analysed
below:
2013 2012
GBP'000 GBP'000
Operating profit 1,643 4,857
Net finance costs - (114)
------- -------
Profit before tax 1,643 4,743
Taxation (663) (474)
------- -------
Profit after tax 980 4,269
------- -------
The results in 2012 included the group's share of the profits of
BF&M Limited. The group re-evaluated its relationship with
BF&M Limited and although the group's holding is in excess of
20 per cent., the directors concluded that the group was no longer
able to exercise significant influence. With effect from 31
December 2012, the group's holding in BF&M was reclassified
from an associated company to an available-for-sale investment.
6 Profit on non-current assets
A profit of GBP542,000 (2012: GBP1,538,000) has been realised
following part recovery of insurance claims received in relation to
the property, plant and equipment destroyed by the fire in 2011 at
one of the tea processing factories owned by Eastern Produce Malawi
Limited.
7 Profit on disposal of a subsidiary
In 2012, a profit of GBP396,000, after the transfer of GBP5,000
of exchange difference previously included in reserves, was
realised on the disposal by the group (through Kakuzi Limited) of
its remaining 50.5 per cent. interest in Siret Tea Company Limited
to EPK Outgrowers Empowerment Project Company Limited, a company
mainly owned by smallholders in Kenya.
8 Loss on transfer of an associate
In 2012, a loss of GBP10,045,000, after the transfer of
GBP1,181,000 of exchange difference and other movements previously
included in other comprehensive income, was realised in relation to
the reclassification of the group's investment in BF&M Limited
from an associated company.
9 Finance income and costs
2013 2012
GBP'000 GBP'000
restated
Interest payable on loans and bank overdrafts (874) (808)
Interest payable on obligations under finance leases (4) (17)
------- --------
Finance costs (878) (825)
Finance income - interest income on short-term bank deposits 3,417 3,517
Net exchange gain on foreign cash balances 1,031 1,030
Employee benefit expense (note 32) (1,486) (1,468)
------- --------
Net finance income 2,084 2,254
------- --------
The above figures do not include any amounts relating to the
banking subsidiaries.
10 Taxation
Analysis of charge in the year 2013 2012
GBP'000 GBP'000 GBP'000
restated
Current tax
UK corporation tax
UK corporation tax at 23.25 per cent. (2012: 24.5 per cent.) 2,425 2,172
Double tax relief (2,425) (2,172)
------- --------
- -
Foreign tax
Corporation tax 14,014 15,582
Adjustment in respect of prior years (73) (77)
------- --------
13,941 15,505
------- --------
Total current tax 13,941 15,505
Deferred tax
Origination and reversal of timing differences
United Kingdom - -
Overseas 8,164 10,157
------- --------
Total deferred tax 8,164 10,157
------- --------
Tax on profit on ordinary activities 22,105 25,662
------- --------
Factors affecting tax charge for the year
Profit on ordinary activities before tax 59,648 69,710
Share of associated undertakings profit (980) (4,269)
------- --------
Group profit on ordinary activities before tax 58,668 65,441
------- --------
Tax on ordinary activities at the standard rate of corporation tax in the UK of
23.25 per
cent. (2012: 24.5 per cent.) 13,640 16,033
Effects of:
Adjustment to tax in respect of prior years (73) (77)
Expenses not deductible for tax purposes 1,737 1,339
Adjustment in respect of foreign tax rates 5,422 5,598
Additional tax arising on dividends from overseas companies 462 358
Loss on transfer of an associate not allowable for tax - 2,461
Other income not charged to tax (691) (366)
Increase in tax losses carried forward 1,104 248
Movement in other timing differences 504 68
------- --------
Total tax charge for the year 22,105 25,662
------- --------
11 Profit for the year
2013 2012
GBP'000 GBP'000
The profit of the company was 4,411 3,755
------- -------
The company has taken advantage of the exemption under Section
408 of the Companies Act 2006 not to disclose its income
statement.
12 Equity dividends
2013 2012
GBP'000 GBP'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2012 of 88p (2011: 84p) per share 2,446 2,335
Interim dividend for the year ended 31 December 2013 of 34p (2012: 32p) per share 942 889
------- -------
3,388 3,224
------- -------
Dividends amounting to GBP76,000 (2012: GBP73,000) have not been
included as group companies hold 62,500 issued shares in the
company. These are classified as treasury shares.
Proposed final dividend for the year ended 31 December 2013 of 91p
(2012: 88p) per share 2,575 2,501
----- -----
The proposed final dividend is subject to approval by the
shareholders at the annual general meeting and has not been
included as a liability in these financial statements.
13 Earnings per share (EPS)
2013 2012
Weighted Weighted
average average
number of number of
Earnings shares EPS Earnings shares EPS
GBP'000 Number Pence GBP'000 Number Pence
restated restated
Basic and diluted EPS
Attributable to ordinary shareholders 28,297 2,773,762 1,020.2 31,210 2,779,500 1,122.9
-------- --------- ------- -------- --------- --------
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 33).
14 Employees
2013 2012
Number Number
Average number of employees by activity:
Agriculture and horticulture 74,055 70,204
Engineering 451 435
Food storage and distribution 263 260
Banking and financial services 131 123
Central management 21 21
------ ------
74,921 71,043
------ ------
2013 2012
GBP'000 GBP'000
restated
Employment costs:
Wages and salaries 68,177 65,943
Social security costs 3,258 3,087
Employee benefit obligations (see note 32) - UK 1,706 1,560
* Overseas 3,460 3,474
------- --------
76,601 74,064
------- --------
Total remuneration paid to key employees who are members of the
executive committee, excluding directors of Camellia Plc, amounted
to GBP646,000 (2012: GBP602,000).
15 Emoluments of the directors
2013 2012
GBP'000 GBP'000
Aggregate emoluments excluding pension contributions 1,498 1,473
------- -------
Emoluments of the highest paid director excluding pension
contributions were GBP486,000 (2012: GBP533,000).
Further details of directors' emoluments are set out on pages 20
and 21.
16 Intangible assets
Customer Computer
Goodwill relationships software Total
GBP'000 GBP'000 GBP'000 GBP'000
Group
Cost
At 1 January 2012 3,978 4,814 1,934 10,726
Exchange differences - - (16) (16 )
Additions - - 180 180
-------- ------------- -------- -------
At 1 January 2013 3,978 4,814 2,098 10,890
Exchange differences - - (31) (31 )
Additions - - 399 399
-------- ------------- -------- -------
At 31 December 2013 3,978 4,814 2,466 11,258
-------- ------------- -------- -------
Amortisation
At 1 January 2012 - 1,352 1,731 3,083
Exchange differences - - (14) (14 )
Charge for the year - 241 167 408
-------- ------------- -------- -------
At 1 January 2013 - 1,593 1,884 3,477
Exchange differences - - (28) (28 )
Charge for the year - 240 220 460
-------- ------------- -------- -------
At 31 December 2013 - 1,833 2,076 3,909
-------- ------------- -------- -------
Net book value at 31 December 2013 3,978 2,981 390 7,349
-------- ------------- -------- -------
Net book value at 31 December 2012 3,978 3,221 214 7,413
-------- ------------- -------- -------
Impairment testing
Timing of impairment testing
The group's impairment test in respect of intangible assets
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 2013. For the purpose of
this impairment testing, the group's CGU components represent the
wealth management element of the holistic private banking service
provided by Duncan Lawrie.
Basis of the recoverable amount - value in use or fair value
less costs to sell
The recoverable amount of the CGU to which customer
relationships and goodwill have been allocated was assessed at each
respective testing date in 2013 and 2012. The wealth management
component of the CGU is assessed on the basis of the fair value
less costs to sell by applying industry average multiples to the
value of assets under management.
Based on the conditions at the balance sheet date, a change in
any of the key assumptions described above would not cause an
impairment to be recognised in respect of goodwill and customer
relationships. The industry multiple applied would have to reduce
to 1 per cent. before any impairment of goodwill or customer
relationships would arise.
17 Property, plant and equipment
Fixtures,
Land and Plant and fittings and
buildings machinery equipment Total
Group GBP'000 GBP'000 GBP'000 GBP'000
Deemed cost
At 1 January 2012 81,908 95,992 20,629 198,529
Exchange differences (4,629) (7,688) (467) (12,784)
Additions 6,727 8,846 984 16,557
Disposals (382) (1,658) (717) (2,757)
Disposal of subsidiary (632) (981) (41) (1,654)
--------- --------- ------------ -------
At 1 January 2013 82,992 94,511 20,388 197,891
Exchange differences (3,848) (6,144) (325) (10,317)
Additions 4,364 11,989 937 17,290
Disposals (588) (1,332) (591) (2,511)
--------- --------- ------------ -------
At 31 December 2013 82,920 99,024 20,409 202,353
--------- --------- ------------ -------
Depreciation
At 1 January 2012 33,821 58,044 12,089 103,954
Exchange differences (1,452) (3,405) (348) (5,205)
Charge for the year 3,007 5,323 908 9,238
Disposals (323) (1,570) (682) (2,575)
Disposal of subsidiary (302) (661) (41) (1,004)
--------- --------- ------------ -------
At 1 January 2013 34,751 57,731 11,926 104,408
Exchange differences (1,346) (3,197) (235) (4,778)
Charge for the year 2,401 5,930 736 9,067
Disposals (557) (1,038) (589) (2,184)
--------- --------- ------------ -------
At 31 December 2013 35,249 59,426 11,838 106,513
--------- --------- ------------ -------
Net book value at 31 December 2013 47,671 39,598 8,571 95,840
--------- --------- ------------ -------
Net book value at 31 December 2012 48,241 36,780 8,462 93,483
--------- --------- ------------ -------
Land and buildings at net book value comprise:
2013 2012
GBP'000 GBP'000
Freehold 27,162 27,547
Long leasehold 19,416 19,632
Short leasehold 1,093 1,062
------- -------
47,671 48,241
------- -------
Plant and machinery includes assets held under finance leases.
The depreciation charge for the year in respect of these assets was
GBP15,000 (2012: GBP51,000) and their net book value was GBP10,000
(2012: GBP49,000).
The amount of expenditure for property, plant and equipment in
the course of construction amounted to GBP1,811,000 (2012:
GBP905,000).
18 Biological assets
Edible
Tea nuts Timber Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Group
At 1 January 2012 69,573 18,919 11,125 18,563 118,180
Exchange differences (13,777) (9,873) (1,726) (935) (26,311)
New planting additions 1,720 622 157 - 2,499
Capitalised cultivation costs - 2,634 - 4,283 6,917
Gains arising from changes in fair value less estimated
point-of-sale costs 13,257 13,151 2,433 1,202 30,043
Decreases due to harvesting - (3,166) (824) (5,168) (9,158)
Company leaving the group (1,573) - (904) - (2,477)
------- ------- ------- ------- -------
At 1 January 2013 69,200 22,287 10,261 17,945 119,693
Exchange differences (9,308) (5,032) (958) (557) (15,855)
New planting additions 1,804 2,602 411 - 4,817
Capitalised cultivation costs - 726 - 4,718 5,444
Gains arising from changes in fair value less estimated
point-of-sale costs 15,620 3,063 835 1,575 21,093
Decreases due to harvesting - (2,327) (356) (5,294) (7,977)
------- ------- ------- ------- -------
At 31 December 2013 77,316 21,319 10,193 18,387 127,215
------- ------- ------- ------- -------
Other includes avocados, citrus, grapes, livestock, maize,
pineapples, rubber and soya.
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. At 31 December 2013
professional valuations were obtained on a significant proportion
of assets. 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. The
fair value of livestock is based on market prices of livestock of
similar age and sex.
New planting additions represents new areas planted to the
particular crop at cost.
For crops other than tea and rubber capitalised cultivation
costs represent annual growing costs incurred. Growing costs for
tea and rubber are charged directly to inventory which are included
in cost of sales and do not include any uplift on initial
recognition as no appropriate market value can be determined for
green leaf and rubber produced at harvest prior to
manufacturing.
Decreases due to harvesting represent values transferred to cost
of sales at the point of harvest for agricultural produce other
than tea and rubber.
The discount rates used reflect the cost of capital, an
assessment of country risk and the risks associated with individual
crops. The range of discount rates used is:
Edible
Tea nuts Timber Other
% % % %
2013 13.5 12.0 - 17.5 10.5 - 17.5 5.0 - 17.5
2012 13.5 12.0 - 13.5 17.5 5.0 - 17.5
During the year the Malawian kwacha depreciated in value from
544.05 (2012: 254.49) to the pound sterling at 1 January 2013 to
712.19 (2012: 544.05) to the pound sterling at 31 December 2013.
The functional currency of our Malawian subsidiaries is the kwacha.
Our principal assets in Malawi are our agricultural assets. As they
generate revenues in currencies other than the kwacha their value
in hard currency has not fallen in the year. Accordingly, the
revaluation of the agricultural assets in kwacha under IAS 41 at 31
December 2013 has generated a credit of GBP18,631,000 (2012:
GBP26,366,000) including a gain of GBP11,032,000 (2012:
GBP21,353,000) due to the currency devaluation which is included in
the overall gain of GBP21,093,000 (2012: GBP30,043,000) credited to
the income statement. This has been largely offset by a foreign
exchange translation loss charged to reserves.
Fair value measurement
All of the 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 33.
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 different countries, crops
and varieties. In preparing these valuations a long term view is
taken on the yields and prices achieved.
Financial risk management strategies
The group is exposed to financial risks arising from changes in
the prices of the agricultural products it produces. The group does
not anticipate that these prices will decline significantly in the
foreseeable future. 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 review 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.
The estimated fair value of agricultural output from our tea
operations after deducting estimated points of sales costs is
GBP89,092,000 (2012: GBP82,923,000) which includes a gain on
initial recognition at the point of harvest of GBP29,225,000 (2012:
GBP23,169,000).
The areas planted to the various crop types at the end of the
year were:
2013 2012
Hectares Hectares
Tea 34,591 34,591
Macadamia 2,956 2,774
Pistachios 130 130
Timber 6,498 6,253
Arable crops 3,530 2,363
Avocados 414 414
Citrus 178 178
Pineapples 48 45
Rubber 1,901 1,918
Wine grapes 72 70
-------- --------
2013 2012
Head Head
Livestock numbers on hand at the end of the year 4,659 4,237
----- -----
Output of agricultural produce during the year was:
2013 2012
Metric Metric
tonnes tonnes
Tea 70,871 67,363
Macadamia 994 1,033
Pistachios 55 647
Arable crops 16,336 23,530
Avocados 4,247 8,157
Citrus 6,577 6,480
Pineapples 1,478 1,033
Rubber 669 701
Wine grapes 455 616
------ ------
2013 2012
Cubic Cubic
metres metres
Timber 117,463 128,519
------- -------
19 Prepaid operating leases
GBP'000
Group
Cost
At 1 January 2012 1,011
Exchange differences (56)
Company leaving the group (26)
-------
At 1 January 2013 929
Exchange differences (19)
-------
At 31 December 2013 910
-------
Amortisation
At 1 January 2012 19
Exchange differences (1)
Charge for the year 1
-------
At 1 January 2013 19
Charge for the year 1
-------
At 31 December 2013 20
-------
Net book value at 31 December 2013 890
-------
Net book value at 31 December 2012 910
-------
20 Investments in subsidiaries
2013 2012
GBP'000 GBP'000
Company
Cost
At 1 January and 31 December 73,508 73,508
------- -------
21 Investments in associates
2013 2012
GBP'000 GBP'000
Group
At 1 January 6,549 38,077
Exchange differences 17 (1,533)
Impairment on transfer to available-for-sale financial assets - (11,226)
Disposals - (323)
Share of profit (note 5) 980 4,269
Dividends (203) (1,275)
Other equity movements - (769)
Transfer to available-for-sale financial assets - (20,671)
------- -------
At 31 December 7,343 6,549
------- -------
At 31 December 2012, the group re-evaluated its relationship
with BF&M Limited. Although the group's holding is in excess of
20 per cent., the directors concluded that the group is no longer
able to exercise significant influence due to the cumulative result
of, inter alia, the composition of the board of BF&M and the
inability of the group to be a party to important strategic
decisions concerning the operations and development of BF&M.
Accordingly the directors have accounted for the group's holding as
an available-for-sale financial asset with effect from 1 January
2013 and the investment has been reclassified at 31 December 2012.
In conjunction with this reclassification the investment has been
written down to current market value at 31 December 2012 giving
rise to an exceptional charge in 2012 of GBP10,045,000.
Details of the group's associates are shown in note 40.
The group's share of the results of its principal associates and
its share of the assets (including goodwill) and liabilities are as
follows:
Assets Liabilities Revenues Profit Market value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
31 December 2013 43,239 (35,896) 6,101 980 14,657
------- ----------- -------- ------- ------------
31 December 2012 36,195 (29,646) 43,471 4,269 12,533
------- ----------- -------- ------- ------------
22 Available-for-sale financial assets
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
Cost or fair value
At 1 January 52,205 29,868 170 170
Exchange differences (1,646) (1,357) - -
Fair value adjustment 3,367 674 - -
Additions 12,875 4,116 - -
Disposals (5,075) (1,763) - -
Fair value adjustment for disposal (29) (4) - -
Transfer from investment in associates - 20,671 - -
------- ------- ------- -------
At 31 December 61,697 52,205 170 170
------- ------- ------- -------
Provision for diminution in value
At 1 January 1,704 1,323
Exchange differences (30) (59)
Provided during year 22 440
------- -------
At 31 December 1,696 1,704
------- ------- ------- -------
Net book value at 31 December 60,001 50,501 170 170
------- ------- ------- -------
Available-for-sale financial assets include the following:
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
Listed securities:
Equity securities - UK 845 631
Equity securities - Bermuda 36,910 32,499
Equity securities - Japan 9,794 7,735
Equity securities - Switzerland 6,553 5,422
Equity securities - US 2,869 2,343
Equity securities - India 1,230 1,105
Equity securities - Europe 363 267
Equity securities - Other 348 319
Debentures with fixed interest of 12.5% and repayable twice yearly until 31
October 2019 -
Kenya 908 -
Unlisted investments 181 180 170 170
-------- ------- ------- -------
60,001 50,501 170 170
-------- ------- ------- -------
Available-for-sale financial assets are denominated in the
following currencies:
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
Sterling 1,015 801 170 170
US Dollar 2,869 2,343
Euro 363 267
Swiss Franc 6,553 5,422
Indian Rupee 1,230 1,105
Bermudian Dollar 36,910 32,499
Japanese Yen 9,794 7,735
Kenyan Shilling 914 5
Other 353 324
-------- -------- -------- --------
60,001 50,501 170 170
-------- -------- -------- --------
23 Held-to-maturity financial assets
Group
2013 2012
GBP'000 GBP'000
Cost or fair value
At 1 January 3,993 5,829
Additions 1,000 3,993
Disposals (3,993) (5,829)
------- -------
At 31 December 1,000 3,993
------- -------
Net book value comprises:
Bank and building society certificates of deposit 1,000 3,993
------- -------
Bank and building society certificates of deposit are held by
the group's banking operation.
24 Other investments
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 8,598 8,368 8,603 8,373
Additions 157 230 157 230
Disposals (10) - (10) -
------- ------- -------- -------
At 31 December 8,745 8,598 8,750 8,603
------- ------- -------- -------
Other investments comprise the group's and company's investment
in fine art, philately, documents and manuscripts. The market value
of collections is expected to be in excess of book value.
25 Inventories
2013 2012
GBP'000 GBP'000
Group
Made tea 22,734 21,818
Other agricultural produce 828 520
Work in progress 3,096 3,224
Trading stocks 2,416 3,377
Raw materials and consumables 9,746 8,636
------- -------
38,820 37,575
------- -------
Made tea is included in inventory at cost as no reliable fair
value is available to reflect the uplift in value upon initial
recognition of harvested green leaf.
Included within the inventory value of made tea of GBP22,734,000
(2012: GBP21,818,000) are costs associated with the growing and
cultivation of green leaf from our own estates of GBP10,604,000
(2012: GBP10,103,000). This would increase by GBP5,103,000 (2012:
GBP4,042,000) if estimated green leaf fair values at harvest were
applied. The impact on the income statement would be an increase in
profit for the year to 31 December 2013 of GBP1,061,000 (2012:
GBP80,000) and an increase in taxation of GBP370,000 (2012:
GBP25,000).
The year end inventories balance is stated after a write-down
provision of GBP117,000 (2012: GBP214,000).
26 Trade and other receivables
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
Current:
Amounts due from customers of banking subsidiaries 29,930 30,410 - -
Trade receivables 27,137 28,010 - -
Amounts owed by associated undertakings 34 258 - -
Other receivables 6,792 7,527 - -
Prepayments and accrued income 5,861 6,052 - 16
------- ------- ---------- ---------
69,754 72,257 - 16
------- ------- ---------- ---------
Non-current:
Amounts due from customers of banking subsidiaries 3,036 14,096
Other receivables 1,077 1,078
------- -------
4,113 15,174
------- -------
The carrying amounts of the group's trade and other receivables
are denominated in the following currencies:
2013 2012
GBP'000 GBP'000
Current:
Sterling 45,670 42,523
US Dollar 3,176 5,516
Euro 1,104 2,629
Kenyan Shilling 1,538 1,012
Indian Rupee 14,467 15,021
Malawian Kwacha 899 1,784
Bangladesh Taka 2,070 2,684
South African Rand 65 138
Brazilian Real 548 913
Other 217 37
------- -------
69,754 72,257
------- -------
Non-current:
Sterling 1,920 10,487
US Dollar 464 3,016
Euro 652 592
Kenyan Shilling 272 359
Indian Rupee 370 526
Malawian Kwacha 185 -
Bangladesh Taka 250 194
------- -------
4,113 15,174
------- -------
Included within trade receivables is a provision for doubtful
debts of GBP450,000 (2012: GBP391,000).
Trade receivables include receivables of GBP3,710,000 (2012:
GBP4,373,000) 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:
2013 2012
GBP'000 GBP'000
Up to 30 days 2,450 1,791
30-60 days 639 1,654
60-90 days 365 346
Over 90 days 256 582
------- -------
3,710 4,373
------- -------
27 Cash and cash equivalents
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 218,611 181,134 - -
Short-term bank deposits 51,611 56,728 - 9,458
Short-term liquid investments 19,401 24,312 - -
------- ------- --------- ---------
289,623 262,174 - 9,458
------- ------- --------- ---------
Included in the amounts above are cash and short-term funds,
time deposits with banks and building societies, UK treasury bills
and certificates of deposit amounting to GBP213,785,000 (2012:
GBP175,302,000) which are held by the group's banking subsidiaries
and which are an integral part of the banking operations.
Cash, cash equivalents and bank overdrafts include the following
for the purposes of the cash flow statement:
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents (excluding banking operations) 75,838 86,872 - 9,458
Bank overdrafts (note 29) (2,938) (5,499) - -
------------- ------------- ------- --------
72,900 81,373 - 9,458
------------- ------------- ------- --------
2013 2012 2013 2012
Effective interest rate:
Short-term deposits 0.00 - 14.75% 0.00 - 13.75% - 1.05%
Short-term liquid investments 0.00 - 0.80% 0.01 - 0.10% - -
Average maturity period:
Short-term deposits 67 days 92 days - 163 days
Short-term liquid investments 20 days 41 days - -
28 Trade and other payables
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
Current:
Amounts due to customers of banking subsidiaries 219,517 193,715 - -
Trade payables 22,609 22,477 - -
Other taxation and social security 2,061 2,066 - -
Other payables 12,629 12,534 138 160
Accruals 8,301 4,844 - -
------- ------- --------- ---------
265,117 235,636 138 160
------- ------- --------- ---------
Non-current:
Amounts due to customers of banking subsidiaries 2,451 9,015 - -
------- ------- --------- ---------
29 Financial liabilities - borrowings
2013 2012
Group GBP'000 GBP'000
Current:
Bank overdrafts 2,938 5,499
Bank loans 107 63
Finance leases 6 28
------- -------
3,051 5,590
------- -------
Current borrowings include the following amounts secured on biological assets and property,
plant and equipment:
Bank overdrafts 1,164 5,499
Bank loans 107 63
Finance leases 6 28
------- -------
1,277 5,590
------- -------
Non-current:
Bank loans 66 90
Finance leases 12 26
------- -------
78 116
------- -------
Non-current borrowings include the following amounts secured on biological assets and property,
plant and equipment:
Bank loans 66 90
Finance leases 12 26
------- -------
78 116
------- -------
The repayment of bank loans and overdrafts fall due as
follows:
2013 2012
GBP'000 GBP'000
Within one year or on demand (included in current liabilities) 3,045 5,562
Between 1 - 2 years 22 27
Between 2 - 5 years 25 39
After 5 years 19 24
------------ ------------
3,111 5,652
------------ ------------
Minimum finance lease payments fall due as follows:
Within one year or on demand (included in current liabilities) 7 30
Between 1 - 2 years 12 16
Between 2 - 5 years - 12
------------ ------------
19 58
Future finance charges on finance leases (1) (4)
------------ ------------
Present value of finance lease liabilities 18 54
------------ ------------
The present value of finance lease liabilities fall due as follows:
Within one year or on demand (included in current liabilities) 6 28
Between 1 - 2 years 12 15
Between 2 - 5 years - 11
------------ ------------
18 54
------------ ------------
The rates of interest payable by the group ranged between:
2013 2012
% %
Overdrafts 2.25 - 35.00 2.25 - 33.00
Bank loans 9.00 - 13.00 9.00 - 13.00
Finance leases 6.25 - 18.00 7.54 - 18.00
30 Provisions
Onerous lease Others Total
GBP'000 GBP'000 GBP'000
Group
At 1 January 2012 750 64 814
Utilised in the period (150) (8) (158)
Provided in the period 71 400 471
------------- ------- -------
At 1 January 2013 671 456 1,127
Utilised in the period (150) (206) (356)
Provided in the period - 60 60
Unused amounts reversed in period (71) (100) (171)
------------- ------- -------
At 31 December 2013 450 210 660
------------- ------- -------
Current:
At 31 December 2013 150 210 360
------------- ------- -------
At 31 December 2012 150 306 456
------------- ------- -------
Non-current:
At 31 December 2013 300 - 300
------------- ------- -------
At 31 December 2012 521 150 671
------------- ------- -------
The provision for onerous lease relates to three years lease
commitments, which is the expected period of vacancy, for warehouse
premises. The lease expires in 2016.
Others relate to provisions for claims and dilapidations.
31 Deferred tax
The net movement on the deferred tax account is set out
below:
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 35,911 35,237 280 301
Exchange differences (5,097) (8,671) - -
Charged/(credited) to the income statement 8,164 10,157 (22) (21)
Charged to equity 128 48 - -
Company leaving the group - (860) - -
------- ------- -------- -------
At 31 December 39,106 35,911 258 280
------- ------- -------- -------
The movement in deferred tax assets and liabilities is set out
below:
Deferred tax liabilities
Accelerated Pension
tax scheme
depreciation liability Other Total
GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2012 37,287 155 795 38,237
Exchange differences (8,519) (1) (325) (8,845)
Charged/(credited) to the income statement 9,698 218 (33) 9,883
Charged/(credited) to equity - 98 (46) 52
Transfers between categories - (198) - (198)
Company leaving the group (801) - (59) (860)
------------ --------- ------- -------
At 1 January 2013 37,665 272 332 38,269
Exchange differences (5,187) 3 (68) (5,252)
Charged/(credited) to the income statement 8,442 28 (60) 8,410
Credited to equity - (65) - (65)
------------ --------- ------- -------
At 31 December 2013 40,920 238 204 41,362
------------ --------- -------
Deferred tax assets offset (2,044)
-------
Net deferred tax liability after offset 39,318
-------
Deferred tax assets
Pension
scheme
Tax losses asset Other Total
GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2012 929 891 1,180 3,000
Exchange differences (54) (44) (76) (174)
(Charged)/credited to the income statement (612) 249 89 (274)
Credited to equity - 4 - 4
Transfers between categories - (198) - (198)
---------- ------- ------- -------
At 1 January 2013 263 902 1,193 2,358
Exchange differences (45) (57) (53) (155)
(Charged)/credited to the income statement (5) 39 212 246
Charged to equity - (51) (142) (193)
---------- ------- ------- -------
At 31 December 2013 213 833 1,210 2,256
---------- ------- -------
Offset against deferred tax liabilities (2,044)
-------
Net deferred tax asset after offset 212
-------
Included within deferred tax liabilities are GBP35,937,000
(2012: GBP33,396,000) of accelerated tax depreciation relating to
biological assets.
Deferred tax liabilities of GBP10,827,000 (2012: GBP10,142,000)
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 GBP4,858,000 (2012:
GBP4,997,000) in respect of losses that can be carried forward
against future taxable income.
32 Employee benefit obligations
(i) Pensions
Certain group subsidiaries operate defined contribution and
funded defined benefit pension schemes. The most significant is the
UK funded, final salary defined benefit scheme. The assets of this
scheme are administered by trustees and are kept separate from
those of the group. On 1 July 2011, the three UK defined benefit
pension schemes were merged to form the Linton Park Pension Scheme
(2011). A full actuarial valuation was undertaken as at 1 July 2011
and updated to 31 December 2013 by a qualified independent actuary.
The UK final salary defined benefit pension scheme is closed to new
entrants and new employees are eligible to join a group personal
pension plan. Members who formerly belonged to the Unochrome Group
Pension Scheme are closed to future accruals and active members
participate in a defined contribution scheme. From 1 July 2011,
active members of the Linton Park Pension Scheme (2011) earn
accruals at a rate of 1/80th per year of service from a rate of
1/60th per year of service previously earned as members of the
Linton Park Pension Scheme or the Lawrie Group Pension Scheme.
The overseas schemes are operated in group subsidiaries located
in Bangladesh, India and The Netherlands. Actuarial valuations have
been updated to 31 December 2013 by qualified actuaries for these
schemes.
Assumptions
The major assumptions used in the valuation to determine the
present value of the schemes' defined benefit obligations were as
follows:
2013 2012
% per annum % per annum
UK schemes
Rate of increase in salaries 2.50 2.00
Rate of increase to LPI (Limited Price Indexation) pensions in payment 2.50 - 5.00 2.00 - 5.00
Discount rate applied to scheme liabilities 4.50 4.20
Inflation assumption (CPI/RPI) 2.50/3.50 2.00/2.80
Assumptions regarding future mortality experience are based on
advice received from independent actuaries. The current mortality
tables used are S1PA, on a year of birth basis, with CMI_2010
future improvement factors and subject to a long term annual rate
of future improvement of 1% per annum. This results in males and
females aged 65 having life expectancies of 22 years and 24 years
respectively.
Overseas schemes
Rate of increase in salaries 2.00 - 7.00 2.00 - 7.00
Rate of increase to LPI (Limited Price Indexation) pensions in payment 0.00 - 5.00 0.00 - 3.00
Discount rate applied to scheme liabilities 3.50 - 11.50 3.20 - 10.50
Inflation assumption 0.00 - 7.00 0.00 - 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:
2013 2012
% per annum % per annum
Rate of increase in salaries 6.00 - 10.00 5.00 - 10.00
Discount rate applied to scheme liabilities 5.00 - 13.50 8.00 - 12.00
Inflation assumptions 0.00 - 10.00 0.00 - 10.00
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
Pre-retirement discount rate 1.0% lower 4.0% increase
Post-retirement discount rate 0.5% lower 5.0% increase
Salary increase rate 0.2% lower 0.5% decrease
Inflation rate 0.2% lower 2.0% decrease
Long-term rate of improvement of mortality 0.5% higher 3.0% increase
The above sensitivity analysis assumes that each assumption is
changed independently of the others. Therefore, the disclosures are
only a guide because the effect of changing more than one
assumption is not cumulative. The sensitivity analysis was
calculated by rerunning the figures as at the last formal actuarial
valuation at 1 July 2011. Therefore the analysis is only
approximate for the purpose of these IAS19 disclosures as they are
on a different set of assumptions and do not reflect subsequent
scheme experience.
(iii) Actuarial valuations
2013 2012
UK Overseas Total UK Overseas Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Equities and property 99,185 454 99,639 91,471 419 91,890
Bonds 44,370 11,652 56,022 39,334 12,339 51,673
Cash 1,731 3,035 4,766 1,761 2,816 4,577
Other - 3,607 3,607 - 3,420 3,420
-------- -------- -------- -------- -------- --------
Total fair value of plan assets 145,286 18,748 164,034 132,566 18,994 151,560
Present value of defined benefit
obligations (162,294) (23,081) (185,375) (160,427) (23,730) (184,157)
-------- -------- -------- -------- -------- --------
Total deficit in the schemes (17,008) (4,333) (21,341) (27,861) (4,736) (32,597)
-------- -------- -------- -------- -------- --------
Amount recognised as asset in the
balance sheet - 653 653 - 678 678
Amount recognised as current liability
in the balance sheet - (448) (448) - (409) (409)
Amount recognised as non-current
liability in the balance sheet (17,008) (4,538) (21,546) (27,861) (5,005) (32,866)
-------- -------- -------- -------- -------- --------
(17,008) (4,333) (21,341) (27,861) (4,736) (32,597)
Related deferred tax asset (note 31) - 833 833 - 902 902
Related deferred tax liability (note 31) - (238) (238) - (272) (272)
-------- -------- -------- -------- -------- --------
Net deficit (17,008) (3,738) (20,746) (27,861) (4,106) (31,967)
-------- -------- -------- -------- -------- --------
Movements in the fair value of scheme assets were as
follows:
2013 2012
UK Overseas Total UK Overseas Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
restated restated
At 1 January 132,566 18,994 151,560 122,410 17,933 140,343
Expected return on plan assets 5,443 1,345 6,788 5,639 1,290 6,929
Employer contributions 1,780 1,206 2,986 2,196 1,206 3,402
Contributions paid by plan participants - 22 22 - 4 4
Benefit payments (7,704) (1,244) (8,948) (7,058) (1,193) (8,251)
Actuarial gains 13,201 94 13,295 9,379 866 10,245
Exchange differences - (1,669) (1,669) - (1,112) (1,112)
------- -------- ------- -------- -------- --------
At 31 December 145,286 18,748 164,034 132,566 18,994 151,560
------- -------- ------- -------- -------- --------
Movements in the present value of defined benefit obligations
were as follows:
2013 2012
UK Overseas Total UK Overseas Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
restated restated
At 1 January (160,427) (23,730) (184,157) (144,403) (22,832) (167,235)
Current service cost (883) (989) (1,872) (842) (1,262) (2,104)
Past service cost - (266) (266) - (5) (5)
Contributions paid by plan participants - (22) (22) - (4) (4)
Interest cost (6,576) (1,698) (8,274) (6,633) (1,764) (8,397)
Benefit payments 7,704 1,244 8,948 7,058 1,193 8,251
Actuarial gains/(losses) (2,112) 428 (1,684) (15,607) (723) (16,330)
Disposal of subsidiary - - - - 250 250
Exchange differences - 1,952 1,952 - 1,417 1,417
-------- -------- -------- -------- -------- --------
At 31 December (162,294) (23,081) (185,375) (160,427) (23,730) (184,157)
-------- -------- -------- -------- -------- --------
In 2011, the total fair value of plan assets was GBP140,343,000,
present value of defined benefit obligations was GBP167,235,000 and
the deficit was GBP26,892,000. In 2010, the total fair value of
plan assets was GBP145,891,000, present value of defined benefit
obligations was GBP158,260,000 and the deficit was GBP12,369,000
and in 2009, the total fair value of plan assets was
GBP122,063,000, present value of defined benefit obligations was
GBP146,054,000 and the deficit was GBP23,991,000.
Income statement
The amounts recognised in the income statement are as
follows:
2013 2012
UK Overseas Total UK Overseas Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
restated restated
Amounts charged to operating profit:
Current service cost (883) (989) (1,872) (842) (1,262) (2,104)
Past service cost - (266) (266) - (5) (5)
------- -------- ------- -------- -------- --------
Total operating charge (883) (1,255) (2,138) (842) (1,267) (2,109)
Amounts charged to other finance costs:
Interest expense (1,133) (353) (1,486) (994) (474) (1,468)
------- -------- ------- -------- -------- --------
Total charged to income statement (2,016) (1,608) (3,624) (1,836) (1,741) (3,577)
------- -------- ------- -------- -------- --------
Employer contributions to defined contribution schemes are
charged to profit when payable and the costs charged were
GBP3,028,000 (2012: GBP2,925,000).
Actuarial gains and losses recognised in the statement of
comprehensive income
The amounts included in the statement of comprehensive
income:
2013 2012
UK Overseas Total UK Overseas Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
restated restated
Actual return less expected return on
pension scheme assets 13,201 94 13,295 9,379 866 10,245
Experience losses arising on scheme
liabilities (2,398) (612) (3,010) (2,335) (723) (3,058)
Changes in assumptions underlying present
value of scheme liabilities 286 1,040 1,326 (13,272) - (13,272)
------- -------- ------- -------- -------- --------
Actuarial gain/(loss) 11,089 522 11,611 (6,228) 143 (6,085)
------- -------- ------- -------- -------- --------
Cumulative actuarial losses recognised in the statement of
comprehensive income are GBP23,774,000 (2012: GBP35,385,000).
The employer contributions to be paid to the UK defined benefit
pension scheme for the year commencing 1 January 2014 is 19.8% of
pensionable salary for active members plus GBP912,000 additional
contribution to reduce the scheme's funding deficit.
33 Share capital
2013 2012
GBP'000 GBP'000
Authorised: 2,842,000 (2012: 2,842,000) ordinary shares of 10p each 284 284
------- -------
Allotted, called up and fully paid: ordinary shares of 10p each:
At 1 January - 2,842,000 (2012: 2,842,000) shares 284 284
Purchase of own shares - 12,300 (2012: nil) shares (1) -
------- -------
At 31 December - 2,829,700 (2012: 2,842,000) shares 283 284
------- -------
Group companies hold 62,500 issued shares in the company. These
are classified as treasury shares.
On 6 June 2013 the directors were authorised to purchase up to a
maximum of 277,950 ordinary shares and during the period 12,300
shares were purchased. Total consideration was GBP1,107,000 (2012:
GBPnil). Upon cancellation of the shares purchased, a capital
redemption reserve is created representing the nominal value of the
shares cancelled.
34 Reconciliation of profit from operations to cash flow
2013 2012
GBP'000 GBP'000
restated
Group
Profit from operations 55,147 66,270
Share of associates' results (980) (4,269)
Depreciation and amortisation 9,527 9,646
Impairment of non-current assets 22 440
Gain arising from changes in fair value of biological assets (21,093) (30,043)
Profit on disposal of non-current assets (792) (1,786)
Loss on transfer of an associate - 10,045
Profit on disposal of a subsidiary - (396)
Profit on disposal of investments (1,348) (271)
Increase in working capital (671) (10,336)
Pensions and similar provisions less payments (392) (1,294)
Biological assets capitalised cultivation costs (5,444) (6,917)
Biological assets decreases due to harvesting 7,977 9,158
Net (increase)/decrease in funds of banking subsidiaries (7,706) 915
------- --------
34,247 41,162
------- --------
35 Reconciliation of net cash flow to movement in net cash
2013 2012
GBP'000 GBP'000
Group
(Decrease)/increase in cash and cash equivalents in the year (7,312) 9,767
Net cash outflow from decrease in debt 16 266
------- -------
(Decrease)/increase in net cash resulting from cash flows (7,296) 10,033
Exchange rate movements (1,161) (1,014)
------- -------
(Decrease)/increase in net cash in the year (8,457) 9,019
Net cash at beginning of year 81,166 72,147
------- -------
Net cash at end of year 72,709 81,166
------- -------
36 Disposal of business
Group
In 2012 the group disposed of its 50.5 per cent. holding in
Siret Tea Company Limited, a tea company operating in Kenya.
Details of net assets disposed are as follows:
2012
GBP'000
Book value of assets and liabilities:
Property, plant and equipment 650
Biological assets 2,477
Prepaid operating leases 26
Inventories 1,108
Trade and other receivables 631
Cash and cash equivalents 487
Trade and other payables (1,452)
Current income tax liabilities (129)
Employee benefit obligations (250)
Deferred tax liabilities (860)
-------
2,688
Less direct non-controlling interest (1,333)
Profit on disposal 396
-------
1,751
-------
Satisfied by:
Cash consideration 1,751
-------
Net inflow of cash in respect of disposal of business:
Cash consideration 1,751
Net cash and overdrafts of business (487)
-------
1,264
-------
37 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but
not yet incurred is as follows:
2013 2012
GBP'000 GBP'000
Group
Property, plant and equipment 1,812 1,304
------- -------
Operating leasing commitments - minimum lease payments
The group leases land and buildings, plant and machinery under
non-cancellable operating lease arrangements, which have various
terms and renewal rights.
The future aggregate minimum lease payments under
non-cancellable operating leases are as follows:
2013 2012
GBP'000 GBP'000
Group
Land and buildings:
Within 1 year 817 859
Between 1 - 5 years 1,940 2,263
After 5 years 13,675 13,557
------- -------
16,432 16,679
------- -------
Plant and machinery:
Within 1 year 81 104
Between 1 - 5 years 80 101
------- -------
161 205
------- -------
The group's most significant operating lease commitments are
long term property leases with renewal terms in excess of 60
years.
38 Contingencies
During the year, one of the group's trading subsidiaries has
made a legal claim against one of its customers. The customer has
subsequently raised a counter claim. Neither the contingent asset
arising from the claim nor a provision for the counter claim have
been recognised at 31 December 2013.
The group operates in certain countries where its operations are
potentially subject to a number of legal claims including taxation.
When required, appropriate provisions are made for the expected
cost of such claims. At 31 December 2013, the directors do not
anticipate the outcome of any such claim to result in a material
loss.
39 Financial instruments
Capital risk management
The group manages its capital to ensure that the group 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 disclosed in note 29, 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 gross borrowings as a percentage of tangible net assets
does not exceed 50 per cent..
The ratio at the year end is as follows:
2013 2012
GBP'000 GBP'000
Borrowings 3,129 5,706
------- -------
Tangible net assets 325,117 306,397
------- -------
Ratio 0.96% 1.86%
------- -------
Borrowings are defined as current and non-current borrowings, as
detailed in note 29.
Tangible net assets includes all capital and reserves of the
group attributable to equity holders of the parent less intangible
assets.
Financial instruments by category
At 31 December 2013
Loans and Available Held to
receivables for sale maturity Total
GBP'000 GBP'000 GBP'000 GBP'000
Assets as per balance sheet
Available-for-sale financial assets - 60,001 - 60,001
Trade and other receivables excluding prepayments 35,040 - - 35,040
Loans and advances to customers of banking subsidiaries 32,966 - - 32,966
Held-to-maturity financial assets - - 1,000 1,000
Cash and cash equivalents (excluding bank subsidiaries) 75,838 - - 75,838
Loans and advances to banks by banking subsidiaries 213,785 - - 213,785
----------- --------- -------- -------
357,629 60,001 1,000 418,630
----------- --------- -------- -------
Other financial
liabilities at
amortised cost Total
GBP'000 GBP'000
Liabilities as per balance sheet
Borrowings (excluding finance lease liabilities) 3,111 3,111
Finance lease liabilities 18 18
Amounts due to customers of banking subsidiaries 221,968 221,968
Trade and other payables 43,539 43,539
Other non-current liabilities 103 103
--------------- -------
268,739 268,739
--------------- -------
At 31 December 2012
Loans and Available Held to
receivables for sale maturity Total
GBP'000 GBP'000 GBP'000 GBP'000
Assets as per balance sheet
Available-for-sale financial assets - 50,501 - 50,501
Trade and other receivables excluding prepayments 36,873 - - 36,873
Loans and advances to customers of banking subsidiaries 44,506 - - 44,506
Held-to-maturity financial assets - - 3,993 3,993
Cash and cash equivalents (excluding bank subsidiaries) 86,872 - - 86,872
Loans and advances to banks by banking subsidiaries 175,302 - - 175,302
----------- --------- --------------- -------
343,553 50,501 3,993 398,047
----------- --------- --------------- -------
Other financial
liabilities at
amortised cost Total
GBP'000 GBP'000
Liabilities as per balance sheet
Borrowings (excluding finance lease liabilities) 5,652 5,652
Finance lease liabilities 54 54
Amounts due to customers of banking subsidiaries 202,730 202,730
Trade and other payables 39,855 39,855
Other non-current liabilities 107 107
--------------- -------
248,398 248,398
--------------- -------
Fair value estimation
The table below analyses financial instruments carried at fair
value, by valuation method. The different 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 18 for
disclosures of biological assets that are measured at fair
value.
At 31 December 2013
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Available-for sale financial assets:
- Equity securities 58,912 - - 58,912
Debt investments:
- Debentures 908 - - 908
59,820 - - 59,820
------- ------- ------- -------
At 31 December 2012
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Available-for sale financial assets:
- Equity securities 50,321 - - 50,321
------- ------- ------- -------
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
sufficient 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 effective 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);
- To manage currency risks arising from its operations and
arising from its sources of finance (to mitigate foreign exchange
risk).
The group, including Duncan Lawrie, the group's banking
subsidiary, 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 Swiss Franc
cash deposits. A movement by 5 per cent. in the exchange rate of
the Swiss Franc with Sterling would increase/decrease profit and
net assets by GBP675,000 (2012: GBP808,000).
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 available-for-sale. 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, 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
equity balance would increase/decrease by GBP2,946,000 (2012:
GBP2,516,000).
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 has no fixed rate exposure.
At 31 December 2013, 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 GBP296,000 (2012:
GBP340,000) higher/lower.
At 31 December 2013, if interest rates on 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 GBP196,000 (2012: GBP171,000)
higher/lower.
The interest rate exposure of the group's interest bearing
assets and liabilities by currency, at 31 December was:
Assets Liabilities
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
Sterling 176,233 164,912 137,005 130,646
US Dollar 66,953 50,486 55,100 40,988
Euro 20,871 18,729 20,488 18,839
Swiss Franc 19,609 23,104 6,103 6,939
Kenyan Shilling 17,591 19,236 - -
Indian Rupee 6,585 6,622 739 4,716
Malawian Kwacha 44 12 1,055 -
Bangladesh Taka 6,465 5,565 336 190
Australian Dollar 681 978 678 974
South African Rand 1,930 1,821 149 146
Brazilian Real 2,834 4,044 - -
Bermudian Dollar 355 790 - -
Canadian Dollar 460 10,064 459 602
Japanese Yen 959 1,609 962 1,607
Other 2,019 2,791 2,023 2,789
------- ------- ------- -------
323,589 310,763 225,097 208,436
------- ------- ------- -------
(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's approach to customer lending through the group's
banking subsidiaries is risk averse with only 1.5 per cent. of the
customer loan book being unsecured. Collateralised loans are
normally secured against cash or property, with property loans
being restricted to 70 per cent. of recent valuation although
corporate or personal guarantees are also acceptable in some
instances.
The group has a large number of trade receivables, the largest
five receivables at the year end comprise 24 per cent. (2012: 20
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.
The two subsidiary companies which are engaged in banking
activities, Duncan Lawrie Limited and Duncan Lawrie (IOM) Limited
both have restrictions contained in their memorandum and articles
of association which place a ceiling on their levels of customer
lending. Such restrictions effectively limit the customer loan book
to the value of the share capital and reserves of each banking
subsidiary. This fact, in conjunction with the general matching of
maturing customer deposits with market placements and the general
use of liquid assets such as certificates of deposit, results in
significantly reduced liquidity risk for Duncan Lawrie and the
group.
At 31 December 2013, the group had undrawn committed facilities
of GBP23,998,000 (2012: GBP24,078,000), 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.
Between Between
Less 1 and 2 and
than 2 5 Over
1 year years years 5 years Undated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 December 2013
Assets
Available-for-sale
financial assets 151 151 455 151 59,093 60,001
Trade and other receivables 33,963 1,077 - - - 35,040
Loans and advances
to customers of banking
subsidiaries 26,967 928 2,013 95 2,963 32,966
Held-to-maturity
financial assets 1,000 - - - - 1,000
Cash and cash equivalents
(excluding bank subsidiaries) 75,838 - - - - 75,838
Loans and advances
to banks by banking
subsidiaries 213,545 - - - 240 213,785
------- ------- ------- -------- ------- -------
351,464 2,156 2,468 246 62,296 418,630
------- ------- ------- -------- ------- -------
Liabilities
Borrowings (excluding
finance lease liabilities) 3,045 22 25 19 - 3,111
Finance lease liabilities 6 12 - - - 18
Deposits by banks
at banking subsidiaries 2,465 - - - - 2,465
Customer accounts
held at banking subsidiaries 216,989 1,729 627 95 63 219,503
Trade and other payables 43,539 - - - - 43,539
Other non-current
liabilities - - - 103 - 103
------- ------- ------- -------- ------- -------
266,044 1,763 652 217 63 268,739
------- ------- ------- -------- ------- -------
At 31 December 2012
Assets
Available-for-sale
financial assets - - - - 50,501 50,501
Trade and other receivables 35,795 1,078 - - - 36,873
Loans and advances
to customers of banking
subsidiaries 23,201 3,418 10,575 103 7,209 44,506
Held-to-maturity
financial assets 3,993 - - - - 3,993
Cash and cash equivalents
(excluding bank subsidiaries) 86,872 - - - - 86,872
Loans and advances
to banks by banking
subsidiaries 175,084 - - - 218 175,302
------- ------- ------- -------- ------- -------
324,945 4,496 10,575 103 57,928 398,047
------- ------- ------- -------- ------- -------
Liabilities
Borrowings (excluding
finance lease liabilities) 5,562 27 39 24 - 5,652
Finance lease liabilities 28 15 11 - - 54
Deposits by banks
at banking subsidiaries 2,832 - - - - 2,832
Customer accounts
held at banking subsidiaries 190,804 2,123 6,789 103 79 199,898
Trade and other payables 39,855 - - - - 39,855
Other non-current
liabilities - - - 107 - 107
------- ------- ------- -------- ------- -------
239,081 2,165 6,839 234 79 248,398
------- ------- ------- -------- ------- -------
Included in loans and advances to banks by banking subsidiaries
repayable in less than 1 year is GBP196,505,000 (2012:
GBP139,210,000) repayable on demand, GBP15,156,000 (2012:
GBP35,874,000) repayable within 3 months and GBP1,884,000 (2012:
GBPnil) repayable between 3 and 12 months.
Included in loans and advances to customers of banking
subsidiaries repayable in less than 1 year is GBP11,779,000 (2012:
GBP7,615,000) repayable on demand, GBP5,905,000 (2012:
GBP10,438,000) repayable within 3 months and GBP9,283,000 (2012:
GBP5,148,000) repayable between 3 and 12 months.
Included in held-to-maturity financial assets repayable in less
than 1 year is GBP1,000,000 (2012: GBP3,993,000) repayable between
3 and 12 months.
Included in deposits by banks at banking subsidiaries repayable
in less than 1 year is GBP2,268,000 (2012: GBP2,631,000) repayable
on demand and GBP197,000 (2012: GBP201,000) repayable between 3 and
12 months.
Included in customer accounts held at banking subsidiaries
repayable in less than 1 year is GBP163,143,000 (2012:
GBP155,390,000) repayable on demand, GBP47,209,000 (2012:
GBP26,529,000) repayable within 3 months and GBP6,637,000 (2012:
GBP8,885,000) repayable between 3 and 12 months.
Included in borrowings in less than 1 year is GBP2,938,000
(2012: GBP5,499,000) repayable on demand.
40 Principal subsidiary and associated undertakings
Subsidiary undertakings
The principal operating subsidiary undertakings of the group at
31 December 2013, which are wholly owned and incorporated in Great
Britain unless otherwise stated, were:
Principal
country of
operation
Agriculture and horticulture
Amgoorie India Limited (Incorporated in India - 99.8 per cent. holding) India
C.C. Lawrie Comércio e Participacões Ltda. (Incorporated in Brazil) Brazil
Eastern Produce Cape (Pty) Limited (Incorporated in South Africa) South Africa
Eastern Produce Kenya Limited (Incorporated in Kenya - 70.0 per cent. holding) Kenya
Eastern Produce Malawi Limited (Incorporated in Malawi - 73.2 per cent. holding) Malawi
Eastern Produce South Africa (Pty) Limited (Incorporated in South Africa - 73.2 per cent.
holding) South Africa
Goodricke Group Limited (Incorporated in India - 78.2 per cent. holding) India
Horizon Farms (An United States of America general partnership - 80.0 per cent.holding) USA
Kakuzi Limited (Incorporated in Kenya - 50.7 per cent. holding) Kenya
Koomber Tea Company Limited (Incorporated in India) India
Longbourne Holdings Limited Bangladesh
Stewart Holl (India) Limited (Incorporated in India - 92.0 per cent. holding) India
Engineering
Abbey Metal Finishing Company Limited UK
AJT Engineering Limited UK
AKD Engineering Limited UK
Atfin GmbH (Incorporated in Germany - 51.0 per cent. holding) Germany
British Metal Treatments Limited UK
GU Cutting and Grinding Services Limited UK
Loddon Engineering Limited UK
Food storage and distribution
Affish BV (Incorporated in The Netherlands) The Netherlands
Associated Cold Stores & Transport Limited UK
Wylax International BV (Incorporated in The Netherlands) The Netherlands
Trading and agency
Linton Park Services Limited UK
Robertson Bois Dickson Anderson Limited UK
Banking and financial services
Duncan Lawrie Limited UK
Duncan Lawrie Holdings Limited UK
Duncan Lawrie (IOM) Limited (Incorporated in Isle of Man) Isle of Man
Investment holding
Affish Limited UK
Assam Dooars Investments Limited UK
Associated Fisheries Limited UK
Bordure Limited UK
John Ingham & Sons Limited UK
Lawrie (Bermuda) Limited (Incorporated in Bermuda) Bermuda
Lawrie Group Plc (Owned directly by the company) UK
Lawrie International Limited (Incorporated in Bermuda) Bermuda
Linton Park Plc (Owned directly by the company) UK
Unochrome Industries Limited UK
Western Dooars Investments Limited UK
Other
XiMo AG (Incorporated in Switzerland - 51.0 per cent. holding) Switzerland
Associated undertakings
The principal associated undertakings of the group at 31
December 2013 were:
Group
interest
Principal Accounting in equity
country of date capital
operation 2013 per cent.
Insurance and leasing
United Insurance Company Limited
(Incorporated in Bangladesh - ordinary shares) Bangladesh 31 December 37.0
United Leasing Company Limited
(Incorporated in Bangladesh - ordinary shares) Bangladesh 31 December 38.4
41 Control of Camellia Plc
Camellia Holding AG holds 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 Mr M Dünki who is a director of The Camellia Private Trust
Company Limited and acts as a 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.
Report of the independent auditors
Independent auditors' report to the members of Camellia Plc
Report on the financial statements
Our opinion
In our opinion:
- The financial statements, defined below, give a true and fair
view of the state of the group's and of the company's affairs as at
31 December 2013 and of the group's profit and of the group's and
company's cash flows 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 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 and, as regards the
group financial statements, Article 4 of the IAS Regulation.
This opinion is to be read in the context of what we say in the
remainder of this report.
What we have audited
The group financial statements and company financial statements
(the "financial statements"), which are prepared by Camellia Plc,
comprise:
- the consolidated and company balance sheets as at 31 December 2013;
- the consolidated income statement and the group and company
statement of comprehensive income for the year then ended;
- the group and company statements of changes in equity and
consolidated and company statements of cash flows for the year then
ended;
- the accounting policies; and
- the notes to the financial statements.
The financial reporting framework that has been applied in their
preparation comprises applicable law and IFRSs as adopted by the
European Union and, as regards the company, as applied in
accordance with the provisions of the Companies Act 2006.
What an audit of financial statements involves
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) ("ISAs (UK & Ireland)").
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of:
- whether the accounting policies are appropriate to the group's
and company's circumstances and have been consistently applied and
adequately disclosed;
- the reasonableness of significant accounting estimates made by the directors; and
- the overall presentation of the financial statements.
In addition, we read all the financial and non-financial
information in the Annual report to identify material
inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider
the implications for our report.
Overview of our audit approach
Materiality
We set certain thresholds for materiality. These helped us to
determine the nature, timing and extent of our audit procedures and
to evaluate the effect of misstatements both individually and on
the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the group financial statements as a whole to be GBP2.3million.
This represents approximately 5% of the average headline profit
before taxes (as defined in the annual report) over the last three
years.
We agreed with the audit committee that we would report to them
misstatements identified during our audit above GBP0.1m as well as
misstatements below that amount that, in our view, warranted
reporting for qualitative reasons.
Overview of the scope of our audit
The group is structured along four business lines being:
Agriculture and horticulture, Engineering, Food storage and
distribution and Banking and financial services. The group
financial statements are a consolidation of 59 reporting units,
comprising the group's operating businesses and centralised
functions.
In establishing the overall approach to the group audit, we
determined the type of work that needed to be performed at the
reporting units by us, as the group engagement team, or component
auditors within PwC UK and from other PwC network firms and other
firms operating under our instruction. Where the work was performed
by component auditors, we determined the level of involvement we
needed to have in the audit work at those reporting units to be
able to conclude whether sufficient appropriate audit evidence had
been obtained as a basis for our opinion on the group financial
statements as a whole.
Accordingly, of the group's 59 reporting units, 46 reporting
units were subject to an audit of their complete financial
information, either due to their size or their risk
characteristics. Specific audit procedures on certain balances and
transactions were performed at a further reporting unit.
This, together with additional procedures performed at the group
level including testing of the consolidation and audit of pensions
and tax, gave us the evidence we needed for our opinion on the
group financial statements as a whole.
Areas of particular audit focus
In preparing the financial statements, the directors made a
number of subjective judgements, for example in respect of
significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain. We
primarily focused our work in these areas by assessing the
directors' judgements against available evidence, forming our own
judgements, and evaluating the disclosures in the financial
statements.
In our audit, we tested and examined information, using sampling
and other auditing techniques, to the extent we considered
necessary to provide a reasonable basis for us to draw conclusions.
We obtained audit evidence through testing the effectiveness of
controls, substantive procedures or a combination of both.
We considered the following areas to be those that required
particular focus in the current year. This is not a complete list
of all risks or areas of focus identified by our audit. We
discussed these areas of focus with the audit committee. Their
report on those matters that they considered to be significant
issues in relation to the financial statements is set out on page
17.
Area of focus How the scope of our audit addressed
Biological assets valuation the area of focus
We focused on this area due to We developed an understanding of
the significance of biological the valuation model adopted and met
assets to the balance sheet and with management's valuation experts
the change in their valuation to challenge and test their assumptions
during the year, which is dependent and judgements, including life-span
upon a number of key assumptions of the plantings, yields, selling
and judgements determined by prices, costs and discount rates.
management. For biological assets valued using
management's own models, we recalculated
the present value and tested their
inputs and assumptions.
We assessed the consistency of the
judgements made with the group's
accounting policies and compared
to those applied in prior periods.
We also physically inspected a sample
of assets to evaluate their condition
to determine whether the valuation
ascribed to them was supportable.
Risk of fraud in revenue recognition We evaluated the appropriateness
ISAs (UK&I) presume there is of the group's accounting policies
a risk of fraud in revenue recognition with respect to revenue recognition.
because of the pressure management Our audit procedures included:
may feel to achieve the forecasted * Testing relevant financial controls over revenue;
results.
We focussed on the timing and
accuracy of revenue recognition, * Performing certain substantive procedures, including
including whether the right to testing revenue recognised to cash received to test
recognise revenue had been earned, that, on a sample basis, the transactions had
because of the inherent risks occurred;
associated with:
* Showing improved results across all revenue streams
by reporting sales that have not occurred; and * Identifying and testing a sample of material manual
journal adjustments posted to revenue, obtaining
appropriate evidence;
* Risk of recognising revenue in the wrong period,
especially where judgement is required to determine
when contractual obligations have been met. * Reading a sample of contracts to determine whether
revenue was recognised in the correct period based on
the contractual terms; and
* Testing whether transactions recorded around the
financial year end had actually taken place and were
accounted for in the correct period.
Risk of management override of We assessed the overall control environment
internal controls at the group.
ISAs (UK&I) require that we consider We examined the significant accounting
this. estimates and judgements relevant
We assessed the risks arising to the financial statements for evidence
from incentive plans and considered of bias by the senior, individually
whether opportunities arose from and in aggregate, that may represent
any control weaknesses. a risk of material misstatement due
We focused our work on areas to fraud.
with significant accounting estimates We tested key accounts which require
or underlying judgments that subjective judgements to be applied
could potentially be manipulated. in their accounting e.g. biological
assets and tested manual journal
entries.
We tested non-standard or significant
transactions outside the normal course
of business.
We also incorporated an element of
unpredictability into our audit procedures.
Going Concern
Under the Listing Rules we are required to review the directors'
statement, set out on page 14, in relation to going concern. We
have nothing to report having performed our review.
As noted in the directors' statement, the directors have
concluded that it is appropriate to prepare the group's and
company's financial statements using the going concern basis of
accounting. The going concern basis presumes that the group and
company have adequate resources to remain in operation, and that
the directors intend them to do so, for at least one year from the
date the financial statements were signed. As part of our audit we
have concluded that the directors' use of the going concern basis
is appropriate.
However, because not all future events or conditions can be
predicted, these statements are not a guarantee as to the group's
and the company's ability to continue as a going concern.
Opinions on matters prescribed by the Companies Act 2006
In our opinion:
- the information given in the strategic report and the report
of the directors for the financial year for which the financial
statements are prepared is consistent with the financial
statements;
- the part of the directors' remuneration report to be audited
has been properly prepared in accordance with the Companies Act
2006; and
- the information given in the corporate governance statement
set out on pages 15 to 18 in the annual report with respect to
internal control and risk management systems and about share
capital structures is consistent with the financial statements.
Other matters on which we are required to report by
exception
Adequacy of accounting records and information and explanations
received
Under the Companies Act 2006 we are required to report to 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 company,
or returns adequate for our audit have not been received from
branches not visited by us; or
- the company financial statements and the part of the
directors' remuneration report to be audited are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Directors' remuneration
Under the Companies Act 2006 we are required to report to you
if, in our opinion, certain disclosures of directors' remuneration
specified by law have not been made. We have no exceptions to
report arising from these responsibilities.
Corporate Governance Statement
Under the Companies Act 2006, we are required to report to you
if, in our opinion a corporate governance statement has not been
prepared by the company. We have no exceptions to report arising
from this responsibility.
Under the Listing Rules we are required to review the part of
the corporate governance statement relating to the company's
compliance with nine provisions of the UK Corporate Governance Code
('the Code'). We have nothing to report having performed our
review.
On page 19 of the annual report, as required by the Code
Provision C.1.1, the directors state that they consider the annual
report taken as a whole to be fair, balanced and understandable and
provides the information necessary for members to assess the
group's performance, business model and strategy. On page 17, as
required by C.3.8 of the Code, the audit committee has set out the
significant issues that it considered in relation to the financial
statements, and how they were addressed. Under ISAs (UK &
Ireland) we are required to report to you if, in our opinion:- the
statement given by the directors is materially inconsistent with
our knowledge of the group acquired in the course of performing our
audit; or
- the section of the annual report describing the work of the
audit committee does not appropriately address matters communicated
by us to the audit committee.
We have no exceptions to report arising from this
responsibility.
Other information in the Annual Report
Under ISAs (UK & Ireland), we are required to report to you
if, in our opinion, information in the Annual Report is:
- materially inconsistent with the information in the audited financial statements; or
- apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the group and Company acquired
in the course of performing our audit; or
- is otherwise misleading.
We have no exceptions to report arising from this
responsibility.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the statement of directors'
responsibilities set out on page 19, the directors are responsible
for the preparation of the group and company financial statements
and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the
group and company financial statements in accordance with
applicable law and ISAs (UK & Ireland). Those standards require
us to comply with the Auditing Practices Board's Ethical Standards
for Auditors.
This report, including the opinions, has been prepared for and
only for the company's members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We
do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
John Waters (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
24 April 2014
Notes:
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Five year record
2013 2012 2011 2010 2009
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
restated
Revenue - continuing operations 251,267 261,529 246,849 251,181 230,270
-------- -------- -------- -------- -------
Profit before tax 59,648 69,710 58,650 73,141 34,143
Taxation (22,105) (25,662) (16,860) (22,107) (11,702)
-------- -------- -------- -------- -------
Profit from continuing operations 37,543 44,048 41,790 51,034 22,441
-------- -------- -------- -------- -------
Profit attributable to owners of the parent 28,297 31,210 33,086 41,984 15,897
-------- -------- -------- -------- -------
Equity dividends paid 3,388 3,224 3,057 2,891 2,557
-------- -------- -------- -------- -------
Equity
Called up share capital 283 284 284 284 284
Reserves 332,183 313,526 321,308 329,209 293,570
-------- -------- -------- -------- -------
Total shareholders' funds 332,466 313,810 321,592 329,493 293,854
-------- -------- -------- -------- -------
Earnings per share 1,020.2p 1,122.9p 1,190.4p 1,510.5p 571.9p
Dividend paid per share 122p 116p 110p 104p 92p
For further enquiries please contact Camellia Plc
Malcolm Perkins, Chairman
01622 746655
24 April 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
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