TIDMCAM
RNS Number : 0515L
Camellia PLC
23 April 2015
Camellia Plc
Annual financial report for year ended 31 December
2014
Highlights from
the results
Year ended Year ended
31 December 31 December
2014 2013
GBP'000 GBP'000
Revenue 238,868 251,267
Trading profit 11,112 31,183
Profit before tax 21,983 59,648
Headline profit
before tax 17,228 38,150
Profit for the year 8,310 37,543
Earnings per share 102.7 p 1,020.2 p
Final dividend 92 p 91 p
For further enquiries please contact Camellia Plc 01622 746655
Malcolm Perkins, Chairman
Julia Morton, Company Secretary
Charles Stanley Securities (Nominated Adviser and Broker) 020 7149 6000
Russell Cook
Carl Holmes
Notes for editors
AKD Engineering is a wholly owned subsidiary of Camellia Plc and
employs 113 staff at Horn Hill, Lowestoft. It has been in operation
for 60 years, originally manufacturing diesel engines for the local
ship building industry, before becoming an engineering services
provider to the Oil and Gas industry.
Camellia Plc (CAM.L) is a global agriculture and horticulture
group, whose activities also extend to engineering, food storage
and distribution, banking and financial services. The Company
employs approximately 75,000 people globally.
The agriculture and horticulture division is engaged in the
production of tea, edible nuts (macadamias, pistachios and
almonds), citrus fruits, avocado, rubber, forestry, viticulture,
cattle, other horticultural produce and general farming (maize and
soya). The Company is one of the largest private tea producers
world-wide with a total of 65 tea estates and 60 tea factories. The
Company's main operations are in India, Bangladesh, Malawi and
Kenya, where the tea is grown and produced. It also has notable
agricultural operations, other than tea, in Brazil, California,
Kenya, South Africa and Malawi.
The engineering division is engaged in precision engineering,
cutting and grinding, fabrication, heat treatment, galvanising,
powder coating and manufacture of stables, etch inspection and
catalysts. These businesses are predominately UK based and serve
customers in a number of sectors including the offshore oil and gas
and aerospace sectors.
The food storage and distribution division is involved in
frozen, chilled and ambient temperature food supply chain
management providing cold storage, refrigerated transport and
production support to several leading UK food manufacturers. It
also specialises in frozen imports and distributes seafood products
in Europe and supplies food service customers in the Netherlands
with fish products.
The banking and financial services division comprises Duncan
Lawrie, which provides an integrated suite of banking services,
financial planning, investment management and trust and estate
advice.
23 April 2015
Chairman's Statement
The headline profit before tax for the year to 31 December 2014
amounted to GBP17.23 million compared with GBP38.15 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.
Profit before taxation included an amount of GBP8.82 million
(2013: GBP21.09 million) arising from changes in the fair value of
biological assets. It is hoped that the year 2014 will be the last
year in which IAS 41 will be relevant to the majority of our
agricultural operations. It is expected that from 2015 our
permanent plantings will be classified under IAS 16 as property,
plant and equipment to be depreciated over their expected
lifespan.
After taking account of exceptional and other one off items the
profits before tax for the year to 31 December 2014 amounted to
GBP21.98 million compared with GBP59.65 million in the previous
year. This is a particularly disappointing result, reasons for
which may be briefly summarised as very poor tea sales prices in
Kenya, substantial losses associated with two onerous contracts at
AKD, the ever increasing costs of regulation and compliance at
Duncan Lawrie and an exceptional provision against an investment in
Bermuda. These items are explained in more detail below.
Dividend
The board is recommending a final dividend of 92p per share
which, together with the interim dividend already paid of 34p per
share, brings the total distribution for the year to 126p per share
compared with 125p per share in 2013.
Agriculture and horticulture
In my Chairman's Statement last year I warned of the potential
impact of climatic conditions and the imbalance of supply &
demand, particularly for tea, on our profitability. Such
circumstances prevailed in 2014, leading to the profits of our
agricultural operations being 35 per cent. below those of the
previous year.
Tea
India
Adverse climatic conditions prevailed in India, particularly at
the beginning of the year, resulting in a decline in production
which would have been considerably worse if it had not been for our
extensive irrigation facilities. Sale prices increased marginally
over the previous year but the resultant profitability was 36 per
cent. lower than that of the previous year.
Bangladesh
Bangladesh also suffered from very dry conditions at the
beginning of the year and production was significantly reduced. Tea
prices throughout the year were also substantially lower due to the
reduction in import tax, allowing the import of cheap tea from
other origins. The partial reversal of this tax reduction came too
late in the year to have any meaningful impact. As a result
profitability was 64 per cent. below that of the previous year. The
ongoing political unrest in the country is being monitored.
Kenya
Tea production again increased due to benign climatic conditions
but the resulting oversupply resulted in tea prices continuing at a
very low level throughout the year, at times below the cost of
production. We have therefore witnessed a major reduction in the
profits of our Kenya operation over the last two years. The
profitability in 2014 was 48 per cent. lower than prior year.
Malawi
Production was reasonable in Malawi but again prices fell, being
some 16 per cent. below that of the previous year. Profitability
was approximately 40 per cent. lower than last year.
Edible nuts
Production of our pistachio nuts at Horizon Farms in California
were roughly in line with expectations, 2014 being an 'on' year.
The newly planted areas of almonds should produce a meaningful crop
in 2015. California is presently experiencing a major and prolonged
drought and water restrictions have recently been imposed by the
State Governor. The consequences will be severe if the drought, now
in its fourth year, persists much longer.
The macadamia production in Malawi and South Africa was in
accordance with our expectations and prices in dollar terms showed
a reasonable increase. We are seeing pleasing increases in
production from our investment over recent years in macadamia
plantings in Kenya and exported our first kernel with the cracking
of the nuts having been sub-contracted. We intend to continue our
expansion of the planted area and expect to commence construction
of our own cracking facility during 2015.
Other horticulture
Our Avocado production, at Kakuzi, while ahead of the previous
year was below expectations. Sale prices were marginally reduced
from last year.
Adverse climatic conditions impacted on our rubber production in
Bangladesh and prices were significantly lower than the previous
year. This may be a continuing phenomenon whilst low oil prices
increase the competitiveness of synthetic rubber.
Our Brazilian operations harvested mainly soya during the year
and production was good. Prices were also ahead of the previous
year.
Our citrus production at Horizon Farms was better than expected
following the climatic damage suffered in the early part of the
year. Prices were 15 per cent. down on the prior year.
The wine grape harvest on our farm in South Africa improved
during the year and we have been slightly more successful in
marketing our higher value products.
Food storage and distribution
The results from our food storage and distribution businesses
were marginally lower during the year.
In the UK, Associated Cold Stores and Transport had a more
difficult year, with competition in the market place being fierce.
In the Netherlands however trading conditions improved slowly,
partially due to the reduction in the cost of imported product,
which resulted in those operations making a small profit.
Engineering
AKD Engineering at Lowestoft experienced yet another disastrous
year mainly as a result of two large contracts experiencing
substantial losses. These contracts are now largely complete. The
legal proceedings to which I have referred previously were settled
prior to going to court on the basis that the legal costs, both
past and potentially in the future, were totally disproportionate
to the amount of claims that we may have been successful in
establishing.
AKD's business is totally dependent on the North Sea oil and gas
market and due to the low price of crude oil, the orders from the
sector in which AKD operates have completely dried up. The
unfortunate but inevitable decision taken to close this business
was announced on 7 April 2015. The likely losses that we would have
experienced over the forthcoming months, or indeed years, were
deemed to be unsustainable. We expect to incur further losses in
2015 as we target to complete an orderly closure of this business
by the end of the first half of the year.
Abbey Metal Finishing also experienced a difficult year in 2014.
Part of the reason for this is the cost associated with the new
joint venture in Germany, where we are still awaiting final
accreditation from our projected major customer to utilise our
facilities. The facilities at Hinckley are gradually clawing back
previous lost business and the efficiency ratios have increased
during the last few months.
Results of AJT Engineering, although slightly lower than the
previous year were also satisfactory but, again, the effect of low
oil prices on these operations is presently difficult to
anticipate, but likely to be negative.
BMT in Great Yarmouth, GU Cutting and Grinding and Loddon
Engineering all produced results better than the previous year.
As stated above, the impact of low crude oil prices is already
having a major effect on the placement of orders by our customers
in the oil and gas sector. The on-going effect of this on a number
of our engineering subsidiaries cannot yet be quantified but is
certain to be detrimental.
Banking and financial Services
Duncan Lawrie Private Bank has had a difficult year coping with
the twin challenges of very low interest rates and the conservative
risk profile required by the group. This conservative approach to
risk has long been a cornerstone of the group's policy at Duncan
Lawrie, but with the low interest rate environment potentially
extending into the medium term, the group is now reviewing its
options with regard to the ongoing development of Duncan
Lawrie.
Associates and investments
Operations in Bangladesh remain difficult due to the continuing
political unrest but our associated companies United Finance
(previously United Leasing) and United Insurance both produced
reasonable results for the year.
Our listed investments generally performed well during the year
with the exception of an investment in Bermuda, which has now
fallen below our cost and therefore an impairment of GBP2.33
million has had to be provided through the profit and loss
account.
Development
2014 was a difficult year. However, the difficulties have not
prevented us from continuing with the organic development of our
operations and we must continue to invest in areas that will go
towards mitigating the ever increasing costs of production,
particularly in our tea gardens. This is an ongoing commitment and
a substantial part of our profitability is reinvested in our
operations in order to secure their long term future. We continue
to examine possible acquisitions in the sectors in which we
operate, but the influence on the market of venture capital funds
who highly gear their investments and look for a short term exit
make such acquisitions either too expensive or very difficult to
locate. We will continue to invest in good freehold or long
leasehold properties where circumstances are deemed
appropriate.
Directors
Martin Dunki resigned as a director of your company in November
2014. Anil Mathur will retire at the conclusion of the annual
general meeting in June after having completed 35 years of loyal
and valuable service to the group. I would like to express my
thanks to both gentlemen for their tireless contribution to the
group.
William Gibson joined the board as a non-executive director in
September 2014. Tom Franks and Graham Mclean joined the board as
Deputy Chief Executive Officer and Joint Managing Director for
agriculture respectively in October 2014. Susan Walker was
appointed a director on 2 April 2015 and will assume the position
of Finance Director in June following Anil's retirement
Staff
My thanks are due to all our staff throughout the world for
their contribution in 2014.
M C Perkins
Chairman
23 April 2015
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 2014
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 sustainability, the 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
Bangladesh, Brazil, India, Kenya, Malawi, South Africa and the USA.
The success of these activities is greatly dependent on climatic
conditions (including the impact of climate change), the control of
pests and 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 the situation 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 competing 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 were during 2014
and continue to be instances of civil unrest, general strikes and
blockades. The situation continues to be monitored and the group's
operations in these regions have largely 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 and the cost of the implementation of new
regulations for drivers.
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 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 38 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 and the impact of the real rate of
return 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
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 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 minimum, medical
services including where appropriate antiretroviral drugs,
implement immunisation programmes, pre and post natal care 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, social and
environmental issues is essential in ensuring the long-term success
of our businesses. We are therefore committed to devoting the
resources necessary to improve continually 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 been
introduced across the group and its implementation is being
monitored. The board does not permit bribery as part of its
business practices.
Performance
There are 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. 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
2014 2013 2014 2013 2014 2013 2014 2013
Segment net assets
(GBP'000) 259,157 242,981 18,800 19,982 17,190 17,592 37,054 39,045
Segment trading profit/(loss)
(GBP'000) 27,204 41,383 (8,387) (5,599) 943 772 (2,496) 121
Return on segmental
net assets (%) 10.50 17.03 (44.61) (28.02) 5.49 4.39 (6.74) 0.31
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 2014 was 0.92% (2013: 0.96%).
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 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012
The number of
prosecutions
brought in
the financial
year by the
official
regulatory
bodies
responsible
for enforcing
regulations
in the areas
of:
a) Prosecutions Employment - 1 - - - - - - - - - -
Worker health and safety - 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 - - - - - - - - - - - -
Worker health and safety - 1 3 - - - - - - - - -
Environmental protection - - - 1 - - - - - - - -
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 303 281 579 5 6 5 - 3 2 - - -
4 Health
The number of
employee days
absence as a
result of
sickness
during the
Sickness financial
a) absence year 238,487(i) 224,348(i) 228,411(i) 2,374 1,578 2,354 1,722 1,609 1,628 511 382 486
The number of
claims for
compensation
arising from
occupational
health issues
received
during
the financial
year in
respect of
Sickness continuing
b) claims operations 168 404 314 1 1 - - 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:
Men Women
2014 2013 2014 2013
Company directors (i) 9 8 0 0
Other senior managers (ii) 2 3 3 1
All employees 45,769 46,280 33,982 34,140
(i) Company directors consist of the company's board as detailed on page
2, excluding Mrs S A Walker who was appointed as a director on 2 April
2015.
(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
23 April 2015
Report of the directors
The directors present their report together with the audited
accounts for the year ended 31 December 2014.
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, avocados, citrus, rubber, fruits, other horticultural produce
and general farming
Engineering - metal finishing, precision engineering and heat
treatment
Food storage and distribution
Private banking and financial services
The holding of property and 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 GBP8,310,000 (2013:
GBP37,543,000). The board has proposed a final dividend for the
year of 92p per share payable on 3 July 2015 to holders of ordinary
shares registered at the close of business on 12 June 2015. The
total dividend for 2014 is therefore 126p per share (2013: 125p 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
2014 2014
Camellia Plc ordinary shares of 10p each:
M C Perkins 1,573 1,573
C J Ames 300 300
Under the company's articles of association all the directors
are required to retire annually. Accordingly, Mr M C Perkins, Mr C
J Ames, Mr P J Field, Mr C J Relleen, Mr F Vuilleumier will retire
and, being eligible, seek re-election at the AGM on 4 June
2015.
Mr T K Franks, Mr G H Mclean, Mrs S A Walker and Mr W K Gibson,
having been appointed to the board since the last annual general
meeting, will seek election to the board.
Mr A K Mathur 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
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 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. He will retire as a director
at end of the AGM on 4 June 2015.
Mr T K Franks, was appointed Deputy Chief Executive in October
2014. He is a non-executive director of Duncan Lawrie Limited. He
was previously Global Chairman of KPMG Corporate Finance and a
Partner of KPMG LLP having joined KPMG in 1988.
Mr G H Mclean, a qualified agriculturalist, was appointed
Managing Director of Agriculture in October 2014. He was previously
regional director of the Group's operations in Africa and has
worked for the Group for 22 years.
Mrs S A Walker, joined Camellia on 1 July 2014 as Finance
Director Designate. She was appointed executive director in April
2015. She will formally take over as Finance Director on 4 June
2015, when Anil Mathur retires from the Board. Prior to joining
Camellia, she held various positions at KPMG over a 21 year period,
latterly as Director Corporate Finance and more recently was
Director, Plc Advisory at BDO Corporate Finance.
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 W Gibson was appointed as an independent non-executive
director from 1 September 2014. Mr Gibson was previously Chairman
and Managing Director of Westminster Press and an executive
director of the Financial Times Group. He is Chairman of the
Remuneration Committee and a member of the Audit Committee.
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. He is a member of the Audit Committee.
Secretary
Mrs J A Morton was appointed as company secretary on 8 September
2011.
Substantial shareholdings
As at 23 April 2015 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 297,398 ordinary shares (10.76 per cent. of
total voting rights).
Taube Hodson Stonex & Partners held through State Street
Nominees Limited 91,296 ordinary shares (3.31 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 2014, shareholders gave
authority for the company to purchase up to 276,200 of its own
shares. The company has purchased 5,200 of its own shares for
cancellation since 1 January 2014. This authority expires at the
conclusion of this year's annual general meeting on 4 June 2015. A
resolution to renew the authority is being put to shareholders at
the forthcoming AGM.
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 2015 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
23 April 2015
Corporate governance
Statement of compliance
This statement describes how the company applies the main
principles of UK Corporate Governance Code 2014 ("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. At the time of the company's delisting
from the main market of the London Stock Exchange and listing on
AIM in September 2014, it was stated that the board did not
envisage that there would be any significant alteration to the
standards of reporting and governance which the company maintains
currently. AIM companies are not required to comply with the
requirements of the Code. However, the board is committed where
practical to developing and applying high standards of corporate
governance as detailed below.
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 Franks was appointed as Deputy Chief
Executive on 1 October 2014. In addition, Mr Ames, Mr Field and Mr
Mclean are joint managing directors and have responsibility for
aspects of the day to day management of the group.
The board
The board currently comprises ten directors. Three are
non-executive directors, of which all 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.
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 Gibson.
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 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 eleven times in 2014.
Attendance by directors at board and committee meetings held
during the year was as follows:
Board Audit Remuneration Nomination
M C Perkins 11/11 - - 2/2
C J Relleen 11/11 3/3 1/1 2/2
T K Franks 3/11 (iii) - - -
C J Ames 11/11 - - -
P J Field 11/11 - - -
A K Mathur 11/11 3/3 (i) - -
G H Mclean 3/11 (iv) - - -
W Gibson 4/11 (v) 1/3 (vi) 1/1 1/2
M Dünki 10/11 (vii) - - -
C P T Vaughan-Johnson 3/11 (ii) 1/3 (ii) - 1/2 (ii)
F Vuilleumier 10/11 3/3 - -
(i) Mr Mathur attends meetings of the audit committee by invitation in
his capacity as finance director.
(ii) Mr Vaughan-Johnson retired from the Board on 5 June 2014.
(iii) Mr Franks was appointed as a director on 1 October 2014.
(iv) Mr Mclean was appointed as a director on 1 October 2014.
(v) Mr Gibson was appointed as a director on 1 September 2014.
(vi) Mr Gibson was appointed as member of the audit committee from 1 September
2014.
(vii) Mr Dünki resigned from the Board on 24 November 2014.
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
T K Franks(i) Deputy Chief Executive
C J Ames Joint managing director
P J Field Joint managing director
G H Mclean Joint managing director
A K Mathur Finance
S Walker(ii) Finance
I Ahmed Bangladesh
A Singh India
R J Parry Group marketing executive
J A Morton Company secretary
(i) appointed with effect from 1 October 2014
(ii) appointed with effect from 1 July 2014
Nomination committee
The nomination committee is chaired by Mr Perkins. Its other
members are Mr Gibson 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
Audit committee
The audit committee is chaired by Mr Relleen. The other members
of the committee are Mr Vuilleumier and Mr Gibson. Mr
Vaughan-Johnson was a member of the committee until he retired from
the board on 5 June 2014. During 2014, the committee met on three
occasions.
Principal responsibilities
The principal responsibilities of the audit committee which were
undertaken during the year are set out below:
- 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 group's accounting function and senior management
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 the assumptions were determined to be 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 nature 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 Gibson 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 2014. 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
controls, 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
23 April 2015
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
23 April 2015
Remuneration report
This report is drawn up in accordance with the Companies Act
2006 and the AIM Rules for companies.
Remuneration committee
A report of the proceedings during 2014 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 2014. 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 significantly 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.
The remuneration policy was approved by shareholders at the AGM
held on 5 June 2014, and took effect from the date of that AGM,
will 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 5 June 2014, the remuneration report for the year
to 31 December 2013 was approved by shareholders with 99.80 per
cent. of the votes cast in favour, 0.15 per cent. of the votes cast
against and 0.05 per cent. of the votes withheld.
Service contracts
Messrs Perkins, Ames, Field, Mathur, Franks, Mclean and Mrs
Walker are each employed on rolling service contracts. Mr Perkins's
service contract is dated 25 April 2002, Mr Ames's service contract
is dated 24 April 2009, Mr Field's service contract is dated 19
December 2011, Mr Mathur's service contract is dated 1 December
2003, Mr Franks' service contract is dated 8 April 2015, Mr
Mclean's service contract is dated 10 April 2015 and Mrs Walker's
service contract is dated 14 April 2015. The service contracts are
terminable at any time by a one year period of notice from the
company or the director. Following their initial appointment
non-executive directors may seek re-election by shareholders at
each subsequent annual general meeting. Non-executive directors do
not have service agreements. There are no specific contractual
provisions for compensation upon early termination of a
non-executive director's employment. The 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
Employer
Benefits in pension
Basic remuneration kind contribution Total
2014 2013 2014 2013 2014 2013 2014 2013
GBP GBP GBP GBP GBP GBP GBP GBP
Executive
M C Perkins 433,671 423,094 32,519 62,694 - - 466,190 485,788
T K Franks 96,250 - 6,974 - - - 103,224 -
C J Ames 281,007 235,654 26,161 25,702 3,587 41,997 310,755 303,353
P J Field 265,692 259,212 26,113 34,637 - - 291,805 293,849
A K Mathur 248,860 242,790 42,268 26,706 - 291,128 269,496
G H Mclean 65,500 - 89,111 - 5,000 - 159,611 -
Non-executive
M Dünki 35,795 35,000 - - - - 35,795 35,000
W K Gibson 14,167 - - - - - 14,167 -
C J Relleen 62,500 53,750 - - - - 62,500 53,750
C P J
Vaughan-Johnson 18,362 37,500 - 18,537 - - 18,362 56,037
F Vuilleumier 40,000 29,462 - - - 40,000 29,462
--------- ----------- ------- ----------- ----- -------------- --------- ---------
1,561,804 1,316,462 223,146 168,276 8,587 41,997 1,793,537 1,526,735
--------- ----------- ------- ----------- ----- -------------- --------- ---------
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. Mr Mclean
received a payment of GBP82,455 for relocation expenses following
his move from Kenya to the UK.
2. Mr Vaughan-Johnson retired as a director on 5 June 2014. Mr Franks
and Mr Mclean were appointed as directors on 1 October 2014.
3. Mr Relleen receives an additional annual fee for his chairmanship
of the Audit Committee and for his non-executive directorship of Duncan
Lawrie Limited.
4. Mr Gibson 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.
Accrual for pension for Messrs Perkins, Field and Mathur has
ceased and there was no pensionable service for these directors
during 2014.
Mr Franks receives an excess non-pensionable salary supplement
equivalent to 10 per cent. of base salary. Mr Mclean and Mrs Walker
are members of the Linton Park Group Personal Pension Scheme. An
excess non-pensionable salary supplement equivalent to 25 per cent.
of base salary is also paid to Mr Ames.
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
23 April 2015
Consolidated income statement
for the year ended 31 December 2014
2014 2013
Notes GBP'000 GBP'000
Revenue 2 238,868 251,267
Cost of sales (163,728) (162,665)
-------- --------
Gross profit 75,140 88,602
Other operating income 2,179 2,129
Distribution costs (12,700) (12,264)
Administrative expenses (53,507) (47,284)
-------- --------
Trading profit 3 11,112 31,183
Share of associates' results 5 1,092 980
Impairment of available-for-sale financial assets 6 (2,334) -
Impairment of property, plant and equipment and provisions 7 (1,134) -
Profit on disposal of non-current assets 8 - 542
Profit on disposal of available-for-sale investments 447 1,349
Gain arising from changes in fair value of biological assets:
-------- --------
Excluding Malawi Kwacha exceptional gain 7,842 10,061
Malawi Kwacha gain 978 11,032
-------- --------
18 8,820 21,093
-------- --------
Profit from operations 18,003 55,147
Investment income 2,161 2,417
-------- --------
Finance income 9 2,864 3,417
Finance costs 9 (608) (878)
Net exchange gain 9 607 1,031
Employee benefit expense 9 (1,044) (1,486)
-------- --------
Net finance income 9 1,819 2,084
-------- --------
Profit before tax 21,983 59,648
--------------------------------------------------------------- ----- -------- --------
Comprising
* headline profit before tax 4 17,228 38,150
* exceptional items, gain arising from changes in fair
value
of biological assets and other financing gains and losses 4 4,755 21,498
-------- --------
21,983 59,648
--------------------------------------------------------------- ----- -------- --------
Taxation 10 (13,673) (22,105)
-------- --------
Profit for the year 8,310 37,543
-------- --------
Profit attributable to:
Owners of the parent 2,836 28,297
Non-controlling interests 5,474 9,246
-------- --------
8,310 37,543
-------- --------
Earnings per share - basic and diluted 13 102.7p 1,020.2p
Statement of comprehensive income
for the year ended 31 December 2014
2014 2013
Notes GBP'000 GBP'000
Group
Profit for the year 8,310 37,543
------- -------
Other comprehensive (expense)/income:
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of post employment benefit obligations 32 (20,341) 11,611
Deferred tax movement in relation to post employment benefit obligations 31 698 14
------- -------
(19,643) 11,625
------- -------
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences 7,533 (23,888)
Available-for-sale investments:
Valuation gains taken to equity 22 2,822 3,367
Transferred to income statement on sale 22 (364) (873)
Tax relating to components of other comprehensive income 72 (142)
------- -------
10,063 (21,536)
------- -------
Other comprehensive expense for the year, net of tax (9,580) (9,911)
------- -------
Total comprehensive (expense)/income for the year (1,270) 27,632
------- -------
Total comprehensive (expense)/income attributable to:
Owners of the parent (6,801) 23,143
Non-controlling interests 5,531 4,489
------- -------
(1,270) 27,632
------- -------
Company
Profit for the year 3,610 4,411
------- -------
Total comprehensive income for the year 3,610 4,411
------- -------
Consolidated balance sheet
at 31 December 2014
2014 2013
Notes GBP'000 GBP'000
Non-current assets
Intangible assets 16 7,072 7,349
Property, plant and equipment 17 104,923 95,840
Biological assets 18 139,999 127,215
Prepaid operating leases 19 900 890
Investments in associates 21 8,664 7,343
Deferred tax assets 31 184 212
Available-for-sale financial assets 22 63,488 60,001
Other investments 24 8,864 8,745
Retirement benefit surplus 32 805 653
Trade and other receivables 26 23,303 4,113
--------- --------
Total non-current assets 358,202 312,361
--------- --------
Current assets
Inventories 25 41,841 38,820
Trade and other receivables 26 63,292 69,754
Held-to-maturity financial assets 23 - 1,000
Current income tax assets 548 433
Cash and cash equivalents 27 257,164 289,623
--------- --------
Total current assets 362,845 399,630
--------- --------
Current liabilities
Borrowings 29 (2,855) (3,051)
Trade and other payables 28 (258,292) (265,117)
Current income tax liabilities (5,609) (5,965)
Employee benefit obligations 32 (527) (448)
Provisions 30 (636) (360)
--------- --------
Total current liabilities (267,919) (274,941)
--------- --------
Net current assets 94,926 124,689
--------- --------
Total assets less current liabilities 453,128 437,050
--------- --------
Non-current liabilities
Borrowings 29 (42) (78)
Trade and other payables 28 (5,130) (2,451)
Deferred tax liabilities 31 (41,618) (39,318)
Employee benefit obligations 32 (41,885) (21,546)
Other non-current liabilities (98) (103)
Provisions 30 - (300)
--------- --------
Total non-current liabilities (88,773) (63,796)
--------- --------
Net assets 364,355 373,254
--------- --------
Equity
Called up share capital 33 282 283
Share premium 15,298 15,298
Reserves 306,124 316,885
--------- --------
Equity attributable to owners of the parent 321,704 332,466
Non-controlling interests 42,651 40,788
--------- --------
Total equity 364,355 373,254
--------- --------
Company balance sheet
at 31 December 2014
2014 2013
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 8,869 8,750
------- -------
Total non-current assets 82,547 82,428
------- -------
Current assets
Amounts due from group undertakings 4,885 1,512
Current income tax asset 74 74
------- -------
Total current assets 4,959 1,586
------- -------
Current liabilities
Trade and other payables 28 (134) (138)
Amounts due to group undertakings (21,483) (17,578)
------- -------
Total current liabilities (21,617) (17,716)
------- -------
Net current liabilities (16,658) (16,130)
------- -------
Total assets less current liabilities 65,889 66,298
------- -------
Non-current liabilities
Deferred tax liabilities 31 (240) (258)
------- -------
Total non-current liabilities (240) (258)
------- -------
Net assets 65,649 66,040
------- -------
Equity
Called up share capital 33 282 283
Share premium 15,298 15,298
Reserves 50,069 50,459
------- -------
Total equity 65,649 66,040
------- -------
The notes on pages 30 to 83 form part of the financial
statements.
The financial statements were approved on 23 April 2015 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 2014
2014 2013
Notes GBP'000 GBP'000
Cash generated from operations
Cash flows from operating activities 34 17,080 34,247
Interest paid (655) (1,189)
Income taxes paid (11,595) (12,653)
Interest received 2,871 3,393
Dividends received from associates 244 203
------- -------
Net cash flow from operating activities 7,945 24,001
------- -------
Cash flows from investing activities
Purchase of intangible assets (66) (399)
Purchase of property, plant and equipment (19,019) (17,290)
Insurance proceeds for non-current assets - 542
Proceeds from sale of non-current assets 264 577
Biological asset - new planting (5,072) (4,817)
Part disposal of subsidiaries 251 76
Non-controlling interest subscription 88 21
Purchase of own shares (471) (1,107)
Proceeds from sale of investments 1,940 9,583
Purchase of investments (434) (14,032)
Income from investments 2,161 2,417
------- -------
Net cash flow from investing activities (20,358) (24,429)
------- -------
Cash flows from financing activities
Equity dividends paid (3,452) (3,388)
Dividends paid to non-controlling interests (3,990) (3,480)
New loans 157 78
Loans repaid (202) (56)
Finance lease payments (15) (38)
------- -------
Net cash flow from financing activities (7,502) (6,884)
------- -------
Net decrease in cash and cash equivalents (19,915) (7,312)
Cash and cash equivalents at beginning of year 27 72,900 81,373
Exchange gains/(losses) on cash 1,137 (1,161)
------- -------
Cash and cash equivalents at end of year 27 54,122 72,900
------- -------
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.
Cash and cash equivalents held by the group's banking
subsidiaries are excluded.
Company cash flow statement
for the year ended 31 December 2014
2014 2013
Notes GBP'000 GBP'000
Cash generated from operations
Profit before tax 3,592 4,389
Adjustments for:
Loss on disposal of investments 2 -
Interest income (308) (365)
Exchange gain on cash - (193)
Dividends from group companies (5,000) (6,000)
Decrease in trade and other receivables - 16
Decrease in trade and other payables (4) (22)
Net movement in intra-group balances 532 (9,123)
------- -------
Cash used in operations (1,186) (11,298)
Interest received 308 365
------- -------
Net cash flow from operating activities (878) (10,933)
------- -------
Cash flows from investing activities
Proceeds from sale of investments 5 10
Purchase of investments (126) (157)
Purchase of own shares (471) (1,107)
Dividends received 5,000 6,000
------- -------
Net cash flow from investing activities 4,408 4,746
------- -------
Cash flows from financing activities
Equity dividends paid (3,530) (3,464)
------- -------
Net cash flow from financing activities (3,530) (3,464)
------- -------
Net movement in cash and cash equivalents - (9,651)
Cash and cash equivalents at beginning of year 27 - 9,458
Exchange gain on cash - 193
------- -------
Cash and cash equivalents at end of year 27 - -
------- -------
Statement of changes in equity
for the year ended 31 December 2014
Share Share Treasury Retained Other Non-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 2013 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
Total
comprehensive
(expense)/income
for the year - - - (16,458) 9,657 (6,801) 5,531 (1,270)
Dividends - - - (3,452) - (3,452) (3,990) (7,442)
Non-controlling
interest
subscription - - - (38) - (38) 322 284
Purchase of own
shares (1) - - (471) 1 (471) - (471)
------- ------- -------- -------- -------- ------- --------------- -------
At 31 December
2014 282 15,298 (400) 303,261 3,263 321,704 42,651 364,355
------- ------- -------- -------- -------- ------- --------------- -------
Company
At 1 January 2013 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
Total
comprehensive
income for the
year - - - 3,610 - 3,610 - 3,610
Dividends - - - (3,530) - (3,530) - (3,530)
Purchase of own
shares (1) - - (471) 1 (471) - (471)
------- ------- -------- -------- -------- ------- --------------- -------
At 31 December
2014 282 15,298 - 37,935 12,134 65,649 - 65,649
------- ------- -------- -------- -------- ------- --------------- -------
Other reserves of the group and company includes a GBP33,000
(2013: GBP32,000) capital redemption reserve and, in respect of the
group, net exchange differences of GBP39,021,000 deficit (2013:
GBP46,182,000 deficit).
Group retained earnings includes GBP143,122,000 (2013:
GBP137,268,000) 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.
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 4 to 33 per cent. per annum
and equipment
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.
(vii) Investment in BF&M Limited
In 2013, 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, and remain of the opinion, 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 group's holding in BF&M continues to
be accounted for as an available-for-sale financial asset.
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 2014:
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 from 1 January
2011) 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.
(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 2015 or later periods, but
the group has not adopted them early:
IAS 16 and IAS Reporting for bearer plants - effective from 1 January
41 (amendments) 2016
These amendments change the reporting for bearer plants,
such as tea bushes, macadamia and rubber trees. Bearer
plants should be accounted for under IAS 16 in the same
way as property, plant and equipment because their operation
is similar to that of manufacturing. The produce on
bearer plants will remain in the scope of IAS 41. This
standard has been not yet been endorsed by the EU. Once
endorsed early adoption is permitted and will have a
material impact on the results of the group, the effect
of which is currently being assessed.
Annual improvements These annual improvements amend standards from the 2010-2012
2014 reporting cycle and include changes to:
- IFRS 5, 'Non-current assets held for sale and discontinued
operations' regarding methods of disposal.
- IAS 19, 'Employee benefits' regarding discount rates.
- IAS 34, 'Interim financial reporting' regarding disclosure
of information.
The amendments are effective from 1 July 2016 but have
not yet been endorsed by the EU. They are not expected
to have a material impact on the group.
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
and financial
horticulture Engineering distribution services operations Consolidated
2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 164,247 175,116 28,872 29,587 30,941 30,785 12,373 13,568 2,435 2,211 238,868 251,267
-------- --------- -------- ------- ------- -------- -------- ----------- ------- ------- --------- ---------
Trading profit
Segment
profit/(loss) 27,204 41,383 (8,387) (5,599) 943 772 (2,496) 121 131 179 17,395 36,856
-------- --------- -------- ------- ------- -------- -------- ----------- ------- -------
Unallocated
corporate
expenses* (6,283) (5,673)
--------- ---------
Trading profit 11,112 31,183
Share of
associates'
results 1,092 980 1,092 980
Impairment of
available-for-sale
financial assets (2,334) -
Impairment of
property, plant
and equipment and
provisions (1,134) -
Profit on disposal
of non-current
assets - 542
Profit on disposal
of
available-for-sale
investments 447 1,349
Gain arising from
changes in fair
value of
biological assets 8,820 21,093 8,820 21,093
Investment income 2,161 2,417
Net finance income 1,819 2,084
--------- ---------
Profit before tax 21,983 59,648
Taxation (13,673) (22,105)
--------- ---------
Profit after tax 8,310 37,543
--------- ---------
Other information
Segment assets 290,876 272,381 30,907 31,843 23,004 23,138 254,503 262,666 4,704 5,865 603,994 595,893
Investments in
associates 8,664 7,343 8,664 7,343
Unallocated assets 108,389 108,755
--------- ---------
Consolidated total
assets 721,047 711,991
--------- ---------
Segment liabilities (31,719) (29,400) (12,107) (11,861) (5,814) (5,546) (217,449) (223,621) (1,110) (1,172) (268,199) (271,600)
Unallocated
liabilities (88,493) (67,137)
--------- ---------
Consolidated total
liabilities (356,692) (338,737)
--------- ---------
Capital expenditure 8,492 10,955 2,213 3,015 2,734 2,435 193 589 5,387 296 19,019 17,290
Depreciation (4,876) (4,909) (2,033) (1,835) (2,229) (1,811) (354) (345) (167) (167) (9,659) (9,067)
Amortisation (10) (35) (2) (5) (83) (411) (420) (506) (460)
Impairments (824) (2,360) (22) (3,184) (22)
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 GBPnil (2013:GBP881,000) 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:
2014 2013
GBP'000 GBP'000
United Kingdom 67,478 71,320
Continental Europe 21,396 27,548
Bangladesh 16,645 21,437
India 58,828 62,078
Kenya 25,933 24,329
Malawi 6,092 6,107
North America and Bermuda 11,475 11,448
South Africa 1,168 621
South America 5,125 5,093
Other 24,728 21,286
------- -------
238,868 251,267
------- -------
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
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
United Kingdom 304,876 315,251 10,052 4,539
Continental Europe 5,590 5,812 412 1,662
Bangladesh 52,663 50,257 988 1,474
India 79,712 71,200 2,883 3,574
Kenya 66,189 69,691 1,335 1,508
Malawi 62,005 53,848 1,746 2,526
North America and Bermuda 11,170 8,634 670 445
South Africa 10,347 9,599 507 259
South America 11,442 11,601 426 1,303
--------------- -------------- ------------ ------------
603,994 595,893 19,019 17,290
--------------- -------------- ------------ ------------
Results of banking subsidiaries
2014 2013
GBP'000 GBP'000
Interest receivable third parties 2,415 3,303
Interest payable third parties (163) (332)
group companies (17) (21)
------- -------
Net interest income 2,235 2,950
Fee and commission income 10,707 11,067
Fee and commission expense (586) (470)
Inter-segment net interest 17 21
------- -------
Revenue 12,373 13,568
Other operating income 211 107
------- -------
12,584 13,675
Operating expenses (15,080) (13,554)
------- -------
Segment (loss)/profit (2,496) 121
------- -------
2 Revenue
An analysis of the group's revenue is as follows:
2014 2013
GBP'000 GBP'000
Sale of goods 165,768 176,561
Distribution and warehousing revenue 30,941 30,785
Engineering services revenue 28,872 29,587
Banking service revenue 12,373 13,568
Agency commission revenue 644 490
Property rental revenue 270 276
------- -------
Total group revenue 238,868 251,267
Other operating income 2,179 2,129
Investment income 2,161 2,417
Interest income 2,864 3,417
------- -------
Total group income 246,072 259,230
------- -------
3 Trading profit
2014 2013
GBP'000 GBP'000
The following items have been included in arriving at trading profit:
Employment costs (note 14) 82,113 76,601
Inventories:
Cost of inventories recognised as an expense (included in cost of sales) 110,492 92,136
Cost of inventories provision recognised as an expense (included in cost of sales) 411 215
Cost of inventories provision reversed (included in cost of sales) (19) (59)
Business interruption income received from insurance claim - 600
Depreciation of property, plant and equipment:
Owned assets 9,619 8,910
Under finance leases 40 157
Amortisation of intangibles (included in administrative expenses) 506 460
Impairment of available-for-sale financial assets (included in administrative expenses) 26 22
Profit on disposal of property, plant and equipment (125) (250)
Operating leases - lease payments:
Plant and machinery 353 327
Property 938 760
Repairs and maintenance expenditure on property, plant and equipment 4,650 4,998
------- -------
Currency exchange (gains)/losses (credited)/charged to income include:
Revenue (652) (803)
Cost of sales (16) 25
Distribution costs (173) (78)
Administrative expenses 14 (721)
Finance income (607) (1,031)
------- -------
(1,434) (2,608)
------- -------
Included in the amounts above is an exchange gain of
GBP1,879,000 (2013: GBP1,644,000 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 179 177
Subsidiary companies 667 672
--- -----
846 849
Audit - related regulatory reporting 60 62
Tax services:
Compliance services 19 38
Advisory services - 12
Other services not covered above 30 62
--- -----
955 1,023
--- -----
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 and impairments of non-current assets.
- Gains and losses arising from changes in fair value of
biological assets, which are a non-cash item, and which 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:
2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Trading profit 11,112 31,183
Share of associates' results 1,092 980
Investment income 2,161 2,417
Net finance income 1,819 2,084
Exclude
* Employee benefit expense 1,044 1,486
------- -------
Headline finance income 2,863 3,570
------- -------
Headline profit before tax 17,228 38,150
------- -------
Non-headline items in profit before tax comprises:
Exceptional items
Impairment of available-for-sale financial assets (2,334) -
Impairment of property, plant and equipment and
provisions (1,134) -
Profit on disposal of non-current assets - 542
Profit on disposal of available-for-sale investments 447 1,349
------- -------
(3,021) 1,891
Gain arising from changes in fair value of biological assets 8,820 21,093
Employee benefit expense (1,044) (1,486)
------- -------
Non-headline items in profit before tax 4,755 21,498
------- -------
5 Share of associates' results
The group's share of the results of associates is analysed
below:
2014 2013
GBP'000 GBP'000
Profit before tax 1,814 1,643
Taxation (722) (663)
------- -------
Profit after tax 1,092 980
------- -------
6 Impairment of available-for sale financial assets
An impairment provision of GBP2,334,000 has been made against
the group's investment in Ascendant Group, a Bermudian power
company, following a significant long-term decline in the value of
this investment.
7 Impairment of property, plant and equipment and provisions
Following the continuing losses at AKD Engineering Limited, a
wholly owned subsidiary, an assessment of the impact on the
company's balance sheet at 31 December 2014 was undertaken
resulting in a charge of GBP1,134,000 being made. This charge
includes a GBP824,000 impairment provision against property, plant
and equipment and GBP310,000 of provisions including GBP267,000 in
relation to an onerous lease. The continued poor performance has
resulted in the decision by AKD Engineering Limited to close with
effect from the end of June 2015.
8 Profit on non-current assets
In 2013, a profit of GBP542,000 was realised following the 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.
9 Finance income and costs
2014 2013
GBP'000 GBP'000
Interest payable on loans and bank overdrafts (607) (874)
Interest payable on obligations under finance leases (1) (4)
------- -------
Finance costs (608) (878)
Finance income - interest income on short-term bank deposits 2,864 3,417
Net exchange gain on foreign cash balances 607 1,031
Employee benefit expense (note 32) (1,044) (1,486)
------- -------
Net finance income 1,819 2,084
------- -------
The above figures do not include any amounts relating to the
banking subsidiaries.
10 Taxation
Analysis of charge in the year 2014 2013
GBP'000 GBP'000 GBP'000
Current tax
UK corporation tax
UK corporation tax at 21.5 per cent. (2013: 23.25 per cent.) 882 2,425
Double tax relief (882) (2,425)
------- -------
- -
Foreign tax
Corporation tax 10,353 14,014
Adjustment in respect of prior years 646 (73)
------- -------
10,999 13,941
------- -------
Total current tax 10,999 13,941
Deferred tax
Origination and reversal of timing differences
United Kingdom - -
Overseas 2,674 8,164
------- -------
Total deferred tax 2,674 8,164
------- -------
Tax on profit on ordinary activities 13,673 22,105
------- -------
Factors affecting tax charge for the year
Profit on ordinary activities before tax 21,983 59,648
Share of associated undertakings profit (1,092) (980)
------- -------
Group profit on ordinary activities before tax 20,891 58,668
------- -------
Tax on ordinary activities at the standard rate of corporation tax in the UK of
21.5 per cent.
(2013: 23.25 per cent.) 4,492 13,640
Effects of:
Adjustment to tax in respect of prior years 646 (73)
Expenses not deductible for tax purposes 2,477 1,737
Adjustment in respect of foreign tax rates 4,100 5,422
Additional tax arising on dividends from overseas companies 643 462
Other income not charged to tax (1,787) (691)
Increase in tax losses carried forward 3,207 1,104
Movement in other timing differences (105) 504
------- -------
Total tax charge for the year 13,673 22,105
------- -------
11 Profit for the year
2014 2013
GBP'000 GBP'000
The profit of the company was: 3,610 4,411
------- -------
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
2014 2013
GBP'000 GBP'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2013 of
91p (2012: 88p) per share 2,513 2,446
Interim dividend for the year ended 31 December 2014 of
34p (2013: 34p) per share 939 942
------- -------
3,452 3,388
------- -------
Dividends amounting to GBP78,000 (2013: GBP76,000) 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 2014 of
92p (2013: 91p) per share 2,599 2,575
----- -----
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)
2014 2013
Weighted Weighted
average average
number of number of
Earnings shares EPS Earnings shares EPS
GBP'000 Number Pence GBP'000 Number Pence
Basic and diluted EPS
Attributable to ordinary shareholders 2,836 2,762,264 102.7 28,297 2,773,762 1,020.2
-------- --------- ----- -------- --------- -------
Basic and diluted earnings per share are calculated by dividing
the earnings attributable to ordinary shareholders by the weighted
average number of ordinary shares in issue during the period,
excluding those held by the group as treasury shares (note 33).
14 Employees
2014 2013
Number Number
Average number of employees by activity:
Agriculture and horticulture 79,994 79,160
Engineering 390 451
Food storage and distribution 283 263
Banking and financial services 127 131
Central management 23 21
Other 17 14
------ ------
80,834 80,040
------ ------
2014 2013
GBP'000 GBP'000
Employment costs:
Wages and salaries 74,307 68,177
Social security costs 3,626 3,258
Employee benefit obligations (see note 32) - UK 1,872 1,706
* Overseas 2,308 3,460
------- -------
82,113 76,601
------- -------
Total remuneration paid to key employees who are members of the
executive committee, excluding directors of Camellia Plc, amounted
to GBP875,000 (2013: GBP646,000).
Further details of directors' emoluments are set out on pages 20
to 22.
15 Emoluments of the directors
2014 2013
GBP'000 GBP'000
Aggregate emoluments excluding pension contributions 1,785 1,498
------- -------
Emoluments of the highest paid director excluding pension
contributions were GBP466,000 (2013: GBP486,000).
Further details of directors' emoluments are set out on pages 20
to 22.
16 Intangible assets
Customer Computer
Goodwill relationships software Total
GBP'000 GBP'000 GBP'000 GBP'000
Group
Cost
At 1 January 2013 3,978 4,814 2,098 10,890
Exchange differences - - (31) (31)
Additions - - 399 399
-------- ------------- -------- -------
At 1 January 2014 3,978 4,814 2,466 11,258
Exchange differences - - 9 9
Additions - - 66 66
Reclassification from property, plant and equipment - - 2,503 2,503
-------- ------------- -------- -------
At 31 December 2014 3,978 4,814 5,044 13,836
-------- ------------- -------- -------
Amortisation
At 1 January 2013 - 1,593 1,884 3,477
Exchange differences - - (28) (28)
Charge for the year - 240 220 460
-------- ------------- -------- -------
At 1 January 2014 - 1,833 2,076 3,909
Exchange differences - - 8 8
Reclassification from property, plant and equipment - - 2,341 2,341
Charge for the year - 241 265 506
-------- ------------- -------- -------
At 31 December 2014 - 2,074 4,690 6,764
-------- ------------- -------- -------
Net book value at 31 December 2014 3,978 2,740 354 7,072
-------- ------------- -------- -------
Net book value at 31 December 2013 3,978 2,981 390 7,349
-------- ------------- -------- -------
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 2014. 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 2014 and 2013. 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 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 1 January 2014 82,920 99,024 20,409 202,353
Exchange differences 1,036 768 123 1,927
Additions 9,881 8,049 1,089 19,019
Disposals (466) (1,234) (153) (1,853)
Reclassification to intangible assets - - (2,503) (2,503)
--------- --------- ------------ -------
At 31 December 2014 93,371 106,607 18,965 218,943
--------- --------- ------------ -------
Depreciation
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 1 January 2014 35,249 59,426 11,838 106,513
Exchange differences 409 592 78 1,079
Charge for the year 2,383 6,522 754 9,659
Disposals (452) (1,157) (105) (1,714)
Impairment provision 337 461 26 824
Reclassification to intangible assets - - (2,341) (2,341)
--------- --------- ------------ -------
At 31 December 2014 37,926 65,844 10,250 114,020
--------- --------- ------------ -------
Net book value at 31 December 2014 55,445 40,763 8,715 104,923
--------- --------- ------------ -------
Net book value at 31 December 2013 47,671 39,598 8,571 95,840
--------- --------- ------------ -------
Land and buildings at net book value comprise:
2014 2013
GBP'000 GBP'000
Freehold 33,779 27,162
Long leasehold 20,630 19,416
Short leasehold 1,036 1,093
------------ -------
55,445 47,671
------------ -------
Plant and machinery includes assets held under finance leases.
The depreciation charge for the year in respect of these assets was
GBP9,000 (2013: GBP15,000) and their net book value was GBP14,000
(2013: GBP10,000).
The amount of expenditure for property, plant and equipment in
the course of construction amounted to GBP948,000 (2013:
GBP1,811,000).
18 Biological assets
Edible
Tea nuts Timber Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Group
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 1 January 2014 77,316 21,319 10,193 18,387 127,215
Exchange differences 1,759 (380) (67) 548 1,860
New planting additions 1,919 2,602 551 - 5,072
Capitalised cultivation costs - 1,285 - 4,351 5,636
Gains arising from changes
in fair value
less estimated point-of-sale
costs 4,566 4,109 (29) 174 8,820
Decreases due to harvesting - (2,969) (496) (5,139) (8,604)
------- ------- ------- ------- -------
At 31 December 2014 85,560 25,966 10,152 18,321 139,999
------- ------- ------- ------- -------
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 2014
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
% % % %
2014 13.5 12.0 - 17.5 10.5 - 17.5 5.0 - 17.5
2013 13.5 12.0 - 17.5 10.5 - 17.5 5.0 - 17.5
During the year the Malawian kwacha depreciated in value from
712.19 (2013: 544.05) to the pound sterling at 1 January 2014 to
725.05 (2013: 712.19) to the pound sterling at 31 December 2014.
The functional currency of our Malawian subsidiaries is the kwacha.
Our principal assets in Malawi are 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 2014 has generated a credit of GBP6,546,000 (2013:
GBP18,631,000) including a gain of GBP978,000 (2013: GBP11,032,000)
due to the currency devaluation which is included in the overall
gain of GBP8,820,000 (2013: GBP21,093,000) 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 pages 32 and 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
GBP73,457,000 (2013: GBP89,092,000) which includes a gain on
initial recognition at the point of harvest of GBP13,093,000 (2013:
GBP29,225,000).
The areas planted to the various crop types at the end of the
year were:
2014 2013
Hectares Hectares
Tea 34,345 34,591
Macadamia 3,060 2,956
Pistachios 130 130
Almonds 56 56
Timber 5,822 6,498
Arable crops 3,528 3,530
Avocados 414 414
Citrus 178 178
Pineapples 50 48
Rubber 1,901 1,901
Wine grapes 75 72
-------- --------
2014 2013
Head Head
Livestock numbers on hand at the end of the year 3,874 4,659
----- -----
Output of agricultural produce during the year was:
2014 2013
Metric Metric
tonnes tonnes
Tea 67,855 70,871
Macadamia 1,222 994
Pistachios 621 55
Arable crops 12,838 16,336
Avocados 6,339 4,247
Citrus 5,618 6,577
Pineapples 1,552 1,478
Rubber 601 669
Wine grapes 718 455
------ ------
2014 2013
Cubic Cubic
metres metres
Timber 122,768 117,463
------- -------
19 Prepaid operating leases
GBP'000
Group
Cost
At 1 January 2013 929
Exchange differences (19)
At 1 January 2014 910
Exchange differences 11
-------
At 31 December 2014 921
-------
Amortisation
At 1 January 2013 19
Charge for the year 1
At 1 January 2014 20
Charge for the year 1
-------
At 31 December 2014 21
-------
Net book value at 31 December 2014 900
-------
Net book value at 31 December 2013 890
-------
20 Investments in subsidiaries
2014 2013
GBP'000 GBP'000
Company
Cost
At 1 January and 31 December 73,508 73,508
------- -------
21 Investments in associates
2014 2013
GBP'000 GBP'000
Group
At 1 January 7,343 6,549
Exchange differences 473 17
Share of profit (note 5) 1,092 980
Dividends (244) (203)
At 31 December 8,664 7,343
------- -------
Details of the group's associates are shown in note 39.
The group's share of the results of its principal associates and
its share of the assets (including goodwill) and liabilities are as
follows:
Country
of Interest Market
incorporation Assets Liabilities Revenues Profit held value
GBP'000 GBP'000 GBP'000 GBP'000 % GBP'000
2014
Listed
United Finance
Limited* Bangladesh 49,411 (42,455) 5,942 949 38.4 10,607
United Insurance
Company Limited Bangladesh 2,269 (561) 270 143 37.0 3,709
------- ----------- -------- ------- -------
51,680 (43,016) 6,212 1,092 14,316
------- ----------- -------- ------- -------
2013
Listed
United Finance
Limited* Bangladesh 41,152 (35,358) 5,832 817 38.4 10,212
United Insurance
Company Limited Bangladesh 2,087 (538) 269 163 37.0 4,445
------- ----------- -------- ------- -------
43,239 (35,896) 6,101 980 14,657
------- ----------- -------- ------- -------
* In November 2014, United Leasing Company Limited changed its
name to United Finance Limited.
22 Available-for-sale financial assets
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Cost or fair value
At 1 January 61,697 52,205 170 170
Exchange differences 3,793 (1,646) - -
Fair value adjustment 2,822 3,367 - -
Additions 308 12,875 - -
Disposals (486) (5,075) - -
Fair value adjustment for disposal (364) (29) - -
------- ------- ------- -------
At 31 December 67,770 61,697 170 170
------- ------- ------- -------
Provision for diminution in value
At 1 January 1,696 1,704
Exchange differences 226 (30)
Provided during year 2,360 22
------- -------
At 31 December 4,282 1,696
------- -------
Net book value at 31 December 63,488 60,001 170 170
------- ------- ------- -------
Available-for-sale financial assets include the following:
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Listed securities:
Equity securities - UK 862 845
Equity securities - Bermuda 39,101 36,910
Equity securities - Japan 11,269 9,794
Equity securities - Switzerland 6,092 6,553
Equity securities - US 2,719 2,869
Equity securities - India 1,809 1,230
Equity securities - Europe 351 363
Equity securities - Other 338 348
Debentures with fixed interest of 12.5% and repayable twice yearly
until 31 October 2019 -
Kenya 766 908
Unlisted investments 181 181 170 170
------- ------- --------- ---------
63,488 60,001 170 170
------- ------- --------- ---------
Available-for-sale financial assets are denominated in the
following currencies:
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Sterling 1,032 1,015 170 170
US Dollar 2,719 2,869
Euro 351 363
Swiss Franc 6,092 6,553
Indian Rupee 1,809 1,230
Bermudian Dollar 39,101 36,910
Japanese Yen 11,269 9,794
Kenyan Shilling 772 914
Other 343 353
-------- ------- --------- ---------
63,488 60,001 170 170
-------- ------- --------- ---------
23 Held-to-maturity financial assets
Group
2014 2013
GBP'000 GBP'000
Cost or fair value
At 1 January 1,000 3,993
Additions - 1,000
Disposals (1,000) (3,993)
------- -------
At 31 December - 1,000
------- -------
Net book value comprises:
Bank and building society certificates of deposit - 1,000
------- -------
Bank and building society certificates of deposit are held by
the group's banking operation.
24 Other investments
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 8,745 8,598 8,750 8,603
Additions 126 157 126 157
Disposals (7) (10) (7) (10)
-------- ------- --------- --------
At 31 December 8,864 8,745 8,869 8,750
-------- ------- --------- --------
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
2014 2013
GBP'000 GBP'000
Group
Made tea 24,417 22,734
Other agricultural produce 979 828
Work in progress 2,773 3,096
Trading stocks 2,659 2,416
Raw materials and consumables 11,013 9,746
------- -------
41,841 38,820
------- -------
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 GBP24,417,000
(2013: GBP22,734,000) are costs associated with the growing and
cultivation of green leaf from our own estates of GBP12,095,000
(2013: GBP10,604,000). This would increase by GBP2,516,000 (2013:
GBP5,103,000) if estimated green leaf fair values at harvest were
applied. The impact on the income statement would be a decrease
(2013 increase) in profit for the year to 31 December 2014 of
GBP2,587,000 (2013: GBP1,061,000) and a decrease (2013 increase) in
taxation of GBP900,000 (2013: GBP370,000).
The year end inventories balance is stated after a write-down
provision of GBP104,000 (2013: GBP117,000).
26 Trade and other receivables
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Group
Current:
Amounts due from customers of banking subsidiaries 16,688 29,930 - -
Trade receivables 28,976 27,137 - -
Amounts owed by associated undertakings - 34 - -
Other receivables 8,532 6,792 - -
Prepayments and accrued income 9,096 5,861 - -
------- ------- -------- -------
63,292 69,754 - -
------- ------- -------- -------
Non-current:
Amounts due from customers of banking subsidiaries 22,066 3,036
Other receivables 1,237 1,077
------- -------
23,303 4,113
------- -------
The carrying amounts of the group's trade and other receivables
are denominated in the following currencies:
2014 2013
GBP'000 GBP'000
Current:
Sterling 33,501 45,670
US Dollar 5,791 3,176
Euro 1,487 1,104
Kenyan Shilling 1,741 1,538
Indian Rupee 16,188 14,467
Malawian Kwacha 1,183 899
Bangladesh Taka 2,144 2,070
South African Rand 127 65
Brazilian Real 508 548
Other 622 217
------- -------
63,292 69,754
------- -------
Non-current:
Sterling 21,912 1,920
US Dollar 154 464
Euro - 652
Kenyan Shilling 340 272
Indian Rupee 403 370
Malawian Kwacha 230 185
Bangladesh Taka 264 250
------- -------
23,303 4,113
------- -------
Included within trade receivables is a provision for doubtful
debts of GBP595,000 (2013: GBP450,000).
Trade receivables include receivables of GBP3,797,000 (2013:
GBP3,710,000) 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:
2014 2013
GBP'000 GBP'000
Up to 30 days 2,308 2,450
30-60 days 510 639
60-90 days 496 365
Over 90 days 483 256
------- -------
3,797 3,710
------- -------
27 Cash and cash equivalents
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Group
Cash at bank and in hand 190,542 218,611 - -
Short-term bank deposits 36,290 51,611 - -
Short-term liquid investments 30,332 19,401 - -
-------- ------- --------- ---------
257,164 289,623 - -
-------- ------- --------- ---------
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 GBP200,285,000 (2013:
GBP213,785,000) 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:
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents (excluding banking operations) 56,879 75,838 - -
Bank overdrafts (note 29) (2,757) (2,938) - -
------------- ------------- ------- -------
54,122 72,900 - -
------------- ------------- ------- -------
2014 2013
Effective interest rate:
Short-term deposits 0.40 - 12.00% 0.00 - 14.75%
Short-term liquid investments 0.00 - 0.77% 0.00 - 0.80%
Average maturity period:
Short-term deposits 77 days 67 days
Short-term liquid investments 16 days 20 days
28 Trade and other payables
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Current:
Amounts due to customers of banking subsidiaries 209,677 219,517 - -
Trade payables 23,913 22,609 - -
Other taxation and social security 2,304 2,061 - -
Other payables 14,640 12,629 134 138
Accruals 7,758 8,301 - -
------- ------- --------- ---------
258,292 265,117 134 138
------- ------- --------- ---------
Non-current:
Amounts due to customers of banking subsidiaries 5,130 2,451 - -
------- ------- --------- ---------
29 Financial liabilities - borrowings
2014 2013
Group GBP'000 GBP'000
Current:
Bank overdrafts 2,757 2,938
Bank loans 94 107
Finance leases 4 6
------- -------
2,855 3,051
------- -------
Current borrowings include the following amounts secured on biological assets and property,
plant and equipment:
Bank overdrafts 1,429 1,164
Bank loans 94 107
Finance leases 4 6
------- -------
1,527 1,277
------- -------
Non-current:
Bank loans 42 66
Finance leases - 12
------- -------
42 78
------- -------
Non-current borrowings include the following amounts secured on biological assets and
property,
plant and equipment:
Bank loans 42 66
Finance leases - 12
------- -------
42 78
------- -------
The repayment of bank loans and overdrafts fall due as
follows:
2014 2013
GBP'000 GBP'000
Within one year or on demand (included in current liabilities) 2,851 3,045
Between 1 - 2 years 12 22
Between 2 - 5 years 14 25
After 5 years 16 19
------------ ------------
2,893 3,111
------------ ------------
Minimum finance lease payments fall due as follows:
Within one year or on demand (included in current liabilities) 4 7
Between 1 - 2 years - 12
------------ ------------
4 19
Future finance charges on finance leases - (1)
------------ ------------
Present value of finance lease liabilities 4 18
------------ ------------
The present value of finance lease liabilities fall due as follows:
Within one year or on demand (included in current liabilities) 4 6
Between 1 - 2 years - 12
------------ ------------
4 18
------------ ------------
The rates of interest payable by the group ranged between:
2014 2013
% %
Overdrafts 2.25 - 36.00 2.25 - 35.00
Bank loans 9.00 - 13.00 9.00 - 13.00
Finance leases 18.00 6.25 - 18.00
30 Provisions
Onerous lease Others Total
GBP'000 GBP'000 GBP'000
Group
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 1 January 2014 450 210 660
Utilised in the period (450) - (450)
Provided in the period 267 159 426
------------- ------- -------
At 31 December 2014 267 369 636
------------- ------- -------
Current:
At 31 December 2014 267 369 636
------------- ------- -------
At 31 December 2013 150 210 360
------------- ------- -------
Non-current:
At 31 December 2014 - - -
------------- ------- -------
At 31 December 2013 300 - 300
------------- ------- -------
The provision for onerous lease of GBP450,000 brought forward
related to a lease commitment for vacant warehouse premises and
during the period the property was subleased.
In the year, provision for an onerous lease totalling GBP267,000
has been made following continuing losses at AKD Engineering which
led to an assessment of the company balance sheet at 31 December
2014.
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
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 39,106 35,911 258 280
Exchange differences 424 (5,097) - -
Charged/(credited) to the income statement 2,674 8,164 (18) (22)
(Credited)/charged to equity (770) 128 - -
------- ------- --------- --------
At 31 December 41,434 39,106 240 258
------- ------- --------- --------
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 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 1 January 2014 40,920 238 204 41,362
Exchange differences 421 13 4 438
Charged/(credited) to the income statement 3,784 102 (208) 3,678
Credited to equity - (71) - (71)
------------ --------- ------- -------
At 31 December 2014 45,125 282 - 45,407
------------ --------- ------- -------
Deferred tax assets offset (3,789)
-------
Net deferred tax liability after offset 41,618
-------
Deferred tax assets
Pension
scheme
Tax losses asset Other Total
GBP'000 GBP'000 GBP'000 GBP'000
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 1 January 2014 213 833 1,210 2,256
Exchange differences 15 16 (17) 14
Credited/(charged) to the income statement 497 (579) 1,086 1,004
Credited to equity - 627 72 699
------------ --------- ------- -------
At 31 December 2014 725 897 2,351 3,973
------------ --------- -------
Offset against deferred tax liabilities (3,789)
-------
Net deferred tax asset after offset 184
-------
Included within deferred tax liabilities are GBP39,495,000
(2013: GBP35,937,000) of accelerated tax depreciation relating to
biological assets.
Deferred tax liabilities of GBP11,782,000 (2013: GBP10,827,000)
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 GBP8,054,000 (2013:
GBP4,858,000) 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 2014 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. 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 2014 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:
2014 2013
% per annum % per annum
UK schemes
Rate of increase in salaries 2.00 2.50
Rate of increase to LPI (Limited Price 2.50 -
Indexation) pensions in payment 2.00 - 5.00 5.00
Discount rate applied to scheme liabilities 3.50 4.50
Inflation assumption (CPI/RPI) 2.00/3.00 2.50/3.50
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 cent. 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 - 5.00
Discount rate applied to scheme liabilities 2.10 - 11.50 3.50 - 11.50
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:
2014 2013
% per annum % per annum
Rate of increase in salaries 6.00 - 10.00 6.00 - 10.00
Discount rate applied to scheme liabilities 8.00 - 13.50 5.00 - 13.50
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.
Duration of the scheme liabilities
The weighted average duration of the UK defined benefit
obligation is 15 years.
Analysis of scheme liabilities
As at 1 July 2011 the allocation of the present value of the UK
scheme liabilities was as follows:
%
Active members 16
Deferred pensioners 23
Current pensioners 61
---
Total membership 100
---
(iii) Actuarial valuations
2014 2013
UK Overseas Total UK Overseas Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Equities and property 93,247 494 93,741 99,185 454 99,639
Bonds 52,088 11,826 63,914 44,370 11,652 56,022
Cash 4,359 4,197 8,556 1,731 3,035 4,766
Other - 3,421 3,421 - 3,607 3,607
-------- ----------- -------- -------- ------------ --------
Total fair value of plan assets 149,694 19,938 169,632 145,286 18,748 164,034
Present value of defined
benefit obligations (184,326) (26,913) (211,239) (162,294) (23,081) (185,375)
-------- ----------- -------- -------- ------------ --------
Total deficit in the schemes (34,632) (6,975) (41,607) (17,008) (4,333) (21,341)
-------- ----------- -------- -------- ------------ --------
Amount recognised as asset in
the balance sheet - 805 805 - 653 653
Amount recognised as current
liability in the balance sheet - (527) (527) - (448) (448)
Amount recognised as
non-current liability in the
balance sheet (34,632) (7,253) (41,885) (17,008) (4,538) (21,546)
-------- ----------- -------- -------- ------------ --------
(34,632) (6,975) (41,607) (17,008) (4,333) (21,341)
Related deferred tax asset
(note 31) - 897 897 - 833 833
Related deferred tax liability
(note 31) - (282) (282) - (238) (238)
-------- ----------- -------- -------- ------------ --------
Net deficit (34,632) (6,360) (40,992) (17,008) (3,738) (20,746)
-------- ----------- -------- -------- ------------ --------
Movements in the fair value of scheme assets were as
follows:
2014 2013
UK Overseas Total UK Overseas Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 145,286 18,748 164,034 132,566 18,994 151,560
Expected return on plan assets 6,406 1,514 7,920 5,443 1,345 6,788
Employer contributions 1,531 635 2,166 1,780 1,206 2,986
Contributions paid by plan
participants - 22 22 - 22 22
Benefit payments (7,410) (1,336) (8,746) (7,704) (1,244) (8,948)
Actuarial gains 3,881 (106) 3,775 13,201 94 13,295
Exchange differences - 461 461 - (1,669) (1,669)
------- ---------- ------- ------- ----------- -------
At 31 December 149,694 19,938 169,632 145,286 18,748 164,034
------- ---------- ------- ------- ----------- -------
Movements in the present value of defined benefit obligations
were as follows:
2014 2013
UK Overseas Total UK Overseas Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January (162,294) (23,081) (185,375) (160,427) (23,730) (184,157)
Current service cost (769) (909) (1,678) (883) (989) (1,872)
Past service cost - 711 711 - (266) (266)
Contributions paid by plan
participants - (22) (22) - (22) (22)
Interest cost (7,137) (1,827) (8,964) (6,576) (1,698) (8,274)
Benefit payments 7,410 1,336 8,746 7,704 1,244 8,948
Actuarial gains/(losses) (21,536) (2,580) (24,116) (2,112) 428 (1,684)
Exchange differences - (541) (541) - 1,952 1,952
-------- ----------- -------- -------- ------------ --------
At 31 December (184,326) (26,913) (211,239) (162,294) (23,081) (185,375)
-------- ----------- -------- -------- ------------ --------
In 2012, the total fair value of plan assets was GBP151,560,000,
present value of defined benefit obligations was GBP184,157,000 and
the deficit was GBP32,597,000. 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
and 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.
Income statement
The amounts recognised in the income statement are as
follows:
2014 2013
UK Overseas Total UK Overseas Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Amounts charged to operating
profit:
Current service cost (769) (909) (1,678) (883) (989) (1,872)
Past service cost - 711 711 - (266) (266)
------- ----------- ------- ------- ------------ -------
Total operating charge (769) (198) (967) (883) (1,255) (2,138)
Amounts charged to other finance
costs:
Interest expense (731) (313) (1,044) (1,133) (353) (1,486)
------- ----------- ------- ------- ------------ -------
Total charged to income statement (1,500) (511) (2,011) (2,016) (1,608) (3,624)
------- ----------- ------- ------- ------------ -------
Employer contributions to defined contribution schemes are
charged to profit when payable and the costs charged were
GBP3,213,000 (2013: GBP3,028,000).
Actuarial gains and losses recognised in the statement of
comprehensive income
The amounts included in the statement of comprehensive
income:
2014 2013
UK Overseas Total UK Overseas Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Actual return less expected return
on pension scheme assets 3,881 (106) 3,775 13,201 94 13,295
Experience losses arising on scheme
liabilities (2,501) (312) (2,813) (2,398) (612) (3,010)
Changes in assumptions underlying
present value of scheme liabilities (19,035) (2,268) (21,303) 286 1,040 1,326
------- ----------- ------- ------- ----------- -------
Actuarial (loss)/gain (17,655) (2,686) (20,341) 11,089 522 11,611
------- ----------- ------- ------- ----------- -------
Cumulative actuarial losses recognised in the statement of
comprehensive income are GBP44,115,000 (2013: GBP23,774,000).
The employer contributions to be paid to the UK defined benefit
pension scheme for the year commencing 1 January 2015 is 19.8 per
cent. for the period to 31 March 2015 and 20.0 per cent. from 1
April 2015 of pensionable salary for active members plus GBP915,000
additional contribution to reduce the scheme's funding deficit.
33 Share capital
2014 2013
GBP'000 GBP'000
Authorised: 2,842,000 (2013: 2,842,000) ordinary shares of 10p each 284 284
------- -------
Allotted, called up and fully paid: ordinary shares of 10p each:
At 1 January - 2,829,700 (2013: 2,842,000) shares 283 284
Purchase of own shares - 5,200 (2013: 12,300) shares (1) (1)
------- -------
At 31 December - 2,824,500 (2013: 2,829,700) shares 282 283
------- -------
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 5,200
shares were purchased. Total consideration was GBP471,000 (2013:
GBP1,107,000). 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
2014 2013
GBP'000 GBP'000
Group
Profit from operations 18,003 55,147
Share of associates' results (1,092) (980)
Depreciation and amortisation 10,165 9,527
Impairment of assets 3,494 22
Gain arising from changes in fair value of biological assets (8,820) (21,093)
Profit on disposal of non-current assets (125) (792)
Profit on disposal of investments (447) (1,348)
Profit on part disposal of subsidiary (56) -
Increase in working capital (6,326) (671)
Pensions and similar provisions less payments (1,235) (392)
Biological assets capitalised cultivation costs (5,636) (5,444)
Biological assets decreases due to harvesting 8,604 7,977
Net decrease/(increase) in funds of banking subsidiaries 551 (7,706)
------- -------
17,080 34,247
------- -------
35 Reconciliation of net cash flow to movement in net cash
2014 2013
GBP'000 GBP'000
Group
Decrease in cash and cash equivalents in the year (19,915) (7,312)
Net cash outflow from decrease in debt 60 16
------- -------
Decrease in net cash resulting from cash flows (19,855) (7,296)
Exchange rate movements 1,128 (1,161)
------- -------
Decrease in net cash in the year (18,727) (8,457)
Net cash at beginning of year 72,709 81,166
------- -------
Net cash at end of year 53,982 72,709
------- -------
36 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but
not yet incurred is as follows:
2014 2013
GBP'000 GBP'000
Group
Property, plant and equipment 824 1,812
------- -------
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:
2014 2013
GBP'000 GBP'000
Group
Land and buildings:
Within 1 year 826 817
Between 1 - 5 years 2,206 1,940
After 5 years 12,875 13,675
------- -------
15,907 16,432
------- -------
Plant and machinery:
Within 1 year 99 81
Between 1 - 5 years 128 80
------- -------
227 161
------- -------
The group's most significant operating lease commitments are
long term property leases with renewal terms in excess of 60
years.
37 Contingencies
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.
The Malawi Revenue Authority has made a claim of Malawi kwacha
K1.5 billion (GBP2,069,000) against Eastern Produce Malawi Limited
for underpaid tax in prior years. The group has assessed the claim
and provided for GBP680,000 of the amount in the current year tax
charge. The remaining GBP1,389,000 is strongly contested on the
basis that the directors believe it is without technical merit, and
accordingly, no provision has been made.
38 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:
2014 2013
GBP'000 GBP'000
Borrowings 2,897 3,129
------- -------
Tangible net assets 314,632 325,117
------- -------
Ratio 0.92% 0.96%
------- -------
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 2014
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 - 63,488 - 63,488
Trade and other receivables excluding prepayments 38,745 - - 38,745
Loans and advances to customers of banking subsidiaries 38,754 - - 38,754
Cash and cash equivalents (excluding bank subsidiaries) 56,879 - - 56,879
Loans and advances to banks by banking subsidiaries 200,285 - - 200,285
----------- --------- -------- -------
334,663 63,488 - 398,151
----------- --------- -------- -------
Other financial
liabilities at
amortised cost Total
GBP'000 GBP'000
Liabilities as per balance sheet
Borrowings (excluding finance lease liabilities) 2,893 2,893
Finance lease liabilities 4 4
Amounts due to customers of banking subsidiaries 214,807 214,807
Trade and other payables 46,311 46,311
Other non-current liabilities 98 98
--------------- -------
264,113 264,113
--------------- -------
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
--------------- -------
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 2014
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Available-for sale financial assets:
* Equity securities 62,541 - - 62,541
Debt investments:
* Debentures 766 - - 766
------- ------- ------- -------
63,307 - - 63,307
------- ------- ------- -------
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
------- ------- ------- -------
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 Bermudian and
Japanese available-for-sale financial assets. A movement by 5 per
cent. in the exchange rate of the Bermudian Dollar and Japanese Yen
with Sterling would increase/decrease profit and net assets by
GBP1,955,000 (2013: GBP1,846,000) and GBP563,000 (2013: GBP490,000)
respectively.
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 GBP3,127,000 (2013:
GBP2,946,000).
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 2014, 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 GBP215,000 (2013:
GBP296,000) higher/lower.
At 31 December 2014, 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 GBP176,000 (2013: GBP196,000)
higher/lower.
The interest rate exposure of the group's interest bearing
assets and liabilities by currency, at 31 December was:
Assets Liabilities
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Sterling 178,831 176,233 143,660 137,005
US Dollar 52,105 66,953 42,165 55,100
Euro 19,403 20,871 18,666 20,488
Swiss Franc 9,827 19,609 5,231 6,103
Kenyan Shilling 11,915 17,591 2 -
Indian Rupee 7,873 6,585 807 739
Malawian Kwacha 38 44 785 1,055
Bangladesh Taka 4,066 6,465 248 336
Australian Dollar 527 681 522 678
South African Rand 1,359 1,930 151 149
Brazilian Real 3,346 2,834 - -
Bermudian Dollar 1,153 355 - -
Canadian Dollar 603 460 598 459
Japanese Yen 407 959 404 962
Other 4,465 2,019 4,465 2,023
--------- -------- ----------- -----------
295,918 323,589 217,704 225,097
--------- -------- ----------- -----------
(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 21 per cent. (2013: 24
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 2014, the group had undrawn committed facilities
of GBP24,995,000 (2013: GBP23,998,000), 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.
Less than Between Over
1 1 Between 2 5
year and 2 years and 5 years years Undated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 December 2014
Assets
Available-for-sale financial
assets 153 153 460 - 62,722 63,488
Trade and other receivables 37,508 1,237 - - - 38,745
Loans and advances to
customers of banking
subsidiaries 14,345 5,998 15,163 905 2,343 38,754
Cash and cash equivalents
(excluding bank subsidiaries) 56,879 - - - - 56,879
Loans and advances to
banks by banking subsidiaries 200,131 - - - 154 200,285
--------- ----------- ----------- ------- ------- -------
309,016 7,388 15,623 905 65,219 398,151
--------- ----------- ----------- ------- ------- -------
Liabilities
Borrowings (excluding
finance lease liabilities) 2,851 12 14 16 - 2,893
Finance lease liabilities 4 - - - - 4
Deposits by banks at
banking subsidiaries 1,023 1,160 - - - 2,183
Customer accounts held
at banking subsidiaries 208,620 970 2,916 84 34 212,624
Trade and other payables 46,311 - - - - 46,311
Other non-current liabilities - - - 98 - 98
--------- ----------- ----------- ------- ------- -------
258,809 2,142 2,930 198 34 264,113
--------- ----------- ----------- ------- ------- -------
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
--------- ----------- ----------- ------- ------- -------
Included in loans and advances to banks by banking subsidiaries
repayable in less than 1 year is GBP170,486,000 (2013:
GBP196,505,000) repayable on demand, GBP29,645,000 (2013:
GBP15,156,000) repayable within 3 months and GBPnil (2013:
GBP1,884,000) repayable between 3 and 12 months.
Included in loans and advances to customers of banking
subsidiaries repayable in less than 1 year is GBP3,723,000 (2013:
GBP11,779,000) repayable on demand, GBP2,209,000 (2013:
GBP5,905,000) repayable within 3 months and GBP8,420,000 (2013:
GBP9,283,000) repayable between 3 and 12 months.
Included in held-to-maturity financial assets repayable in less
than 1 year is GBPnil (2013: GBP1,000,000) repayable between 3 and
12 months.
Included in deposits by banks at banking subsidiaries repayable
in less than 1 year is GBP815,000 (2013: GBP2,268,000) repayable on
demand and GBP208,000 (2013: GBP197,000) repayable between 3 and 12
months.
Included in customer accounts held at banking subsidiaries
repayable in less than 1 year is GBP179,179,000 (2013:
GBP163,143,000) repayable on demand, GBP25,871,000 (2013:
GBP47,209,000) repayable within 3 months and GBP3,570,000 (2013:
GBP6,637,000) repayable between 3 and 12 months.
Included in borrowings in less than 1 year is GBP2,757,000
(2013: GBP2,938,000) repayable on demand.
39 Principal subsidiary and associated undertakings
Subsidiary undertakings
The principal operating subsidiary undertakings of the group at
31 December 2014, 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 - 77.5 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
Summarised financial information on subsidiaries with material
non-controlling interests
Set out below are the summarised financial information for each
subsidiary that has non-controlling interests that are material to
the group.
Summarised balance sheet
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited
as at 31 December as at 31 December
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Current
Assets 17,573 23,760 9,333 9,708
Liabilities (9,802) (10,177) (12,811) (9,991)
-------------- -------------- -------------- -------------
Total current net assets/(liabilities) 7,771 13,583 (3,478) (283)
-------------- -------------- -------------- -------------
Non-current
Assets 25,108 24,383 52,158 44,838
Liabilities (6,861) (6,507) (14,756) (12,933)
-------------- -------------- -------------- -------------
Total non-current net assets 18,247 17,876 37,402 31,905
-------------- -------------- -------------- -------------
Net assets 26,018 31,459 33,924 31,622
-------------- -------------- -------------- -------------
Eastern Produce Goodricke Group
South Africa Limited Limited
as at 31 December as at 31 December
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Current
Assets 3,682 2,979 28,589 25,065
Liabilities (643) (326) (14,463) (13,619)
--------------- -------------- -------------- --------------
Total current net assets 3,039 2,653 14,126 11,446
--------------- -------------- -------------- --------------
Non-current
Assets 5,371 5,334 23,627 21,498
Liabilities (1,345) (1,342) (6,787) (4,647)
--------------- -------------- -------------- --------------
Total non-current net assets 4,026 3,992 16,840 16,851
--------------- -------------- -------------- --------------
Net assets 7,065 6,645 30,966 28,297
--------------- -------------- -------------- --------------
Horizon Farms Kakuzi Limited
as at 31 December as at 31 December
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Current
Assets 2,633 1,360 8,256 8,083
Liabilities (318) (411) (1,316) (1,089)
-------------- ------------- -------------- -------------
Total current net assets 2,315 949 6,940 6,994
-------------- ------------- -------------- -------------
Non-current
Assets 8,536 7,274 19,095 17,956
Liabilities (829) (781) (4,924) (4,662)
-------------- ------------- -------------- -------------
Total non-current net assets 7,707 6,493 14,171 13,294
-------------- ------------- -------------- -------------
Net assets 10,022 7,442 21,111 20,288
-------------- ------------- -------------- -------------
Summarised income statement
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited
for year ended for year ended
31 December 31 December
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 27,783 32,000 18,113 20,100
------------- ------------ ------------- ------------
Profit before tax 4,936 9,084 10,858 27,362
Taxation (1,537) (2,754) (3,279) (8,101)
Other comprehensive (expense)/income (127) 248 - -
------------- ------------ ------------- ------------
Total comprehensive income 3,272 6,578 7,579 19,261
------------- ------------ ------------- ------------
Total comprehensive income allocated to
non-controlling interests 982 1,973 2,031 5,162
Dividends paid to non-controlling interests 2,686 1,872 698 686
Eastern Produce Goodricke Group
South Africa Limited Limited
for year ended for year ended
31 December 31 December
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 4,448 3,629 59,569 62,777
-------------- -------------- ------------ -----------
Profit before tax 975 222 5,157 5,162
Taxation (306) (130) (1,509) (1,872)
Other comprehensive expense - - (1,206) -
-------------- -------------- ------------ -----------
Total comprehensive income 669 92 2,442 3,290
-------------- -------------- ------------ -----------
Total comprehensive income allocated to
non-controlling interests 179 25 782 718
Dividends paid to non-controlling interests - - 211 203
Horizon Farms Kakuzi Limited
as at 31 December as at 31 December
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 5,101 4,111 10,101 8,385
-------------- ------------- -------------- -------------
Profit before tax 3,246 2,565 1,607 1,769
Taxation (1,243) (907) (501) (549)
Other comprehensive (expense)/income - - (41) 83
-------------- ------------- -------------- -------------
Total comprehensive income 2,003 1,658 1,065 1,303
-------------- ------------- -------------- -------------
Total comprehensive income allocated to
non-controlling interests 401 332 525 643
Dividends paid to non-controlling interests - 318 250 268
Summarised cash flows
Eastern Produce
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited South Africa Limited
for year ended for year ended for year ended
31 December 31 December 31 December
2014 2014 2014
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 4,272 4,602 9
Net interest received 831 815 64
Income tax paid (1,462) (1,335) -
--------------- --------------- --------------------
Net cash generated from operating activities 3,641 4,082 73
--------------- --------------- --------------------
Net cash used in investing activities (856) (1,655) (461)
--------------- --------------- --------------------
Net cash (used in)/generated from financing
activities (8,954) (2,605) 13
--------------- --------------- --------------------
Net increase in cash and cash equivalents and bank
overdrafts (6,169) (178) (375)
Cash, cash equivalents and bank overdrafts at
beginning of year 16,194 (113) 2,221
Exchange gains/(losses) on cash and cash
equivalents 266 9 (82)
--------------- --------------- --------------------
Cash, cash equivalents and bank overdrafts at end
of year 10,291 (282) 1,764
--------------- --------------- --------------------
Goodricke Group Limited Horizon Farms Kakuzi Limited
for year ended for year ended for year ended
31 December 31 December 31 December
2014 2014 2014
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 3,929 1,939 3,196
Net interest received - - 585
Income tax paid (1,659) (1,243) (326)
----------------------- -------------- --------------
Net cash generated from operating activities 2,270 696 3,455
----------------------- -------------- --------------
Net cash used in investing activities (1,511) (856) (2,419)
----------------------- -------------- --------------
Net cash used in financing activities (1,269) - (507)
----------------------- -------------- --------------
Net increase in cash and cash equivalents and bank
overdrafts (510) (160) 529
Cash, cash equivalents and bank overdrafts at
beginning of year 341 1,005 6,330
Exchange gains on cash and cash equivalents 1 53 37
----------------------- -------------- --------------
Cash, cash equivalents and bank overdrafts at end
of year (168) 898 6,896
----------------------- -------------- --------------
Associated undertakings
The principal associated undertakings of the group at 31
December 2014 were:
Group
interest
Principal Accounting in equity
country of date capital
operation 2014 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
40 Control of Camellia Plc
Camellia Holding AG continues to hold 1,427,000 ordinary shares
of Camellia Plc (representing 51.67 per cent. of the total voting
rights). Camellia Holding AG is owned by The Camellia Private Trust
Company Limited, a private trust company incorporated under the
laws of Bermuda as trustee of The Camellia Foundation ("the
Foundation"). The Foundation is a Bermudian trust, the income of
which is utilised for charitable, educational and humanitarian
causes at the discretion of the trustees.
The activities of Camellia Plc and its group (the "Camellia
Group") are conducted independently of the Foundation and 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.
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
2014 and of the group's profit and the group's and the 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 International Financial Reporting Standards ("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 sheet as at 31 December 2014;
- the consolidated income statement and the group and company statement
of comprehensive income for the year then ended;
- the consolidated and company cash flow statement and company cash flow
statement for the year then ended;
- the group and company statement of changes in equity for the year then
ended;
- the accounting policies; and
- the notes to the financial statements, which include other explanatory
information.
The financial reporting framework that has been applied in their
preparation is applicable law and IFRSs as adopted by the European
Union and, as regards the company financial statements, as applied
in accordance with the provisions of the Companies Act 2006.
In applying the financial reporting framework, the directors
have made a number of subjective judgements, for example in respect
of significant accounting estimates. In making such estimates, they
have made assumptions and considered future events.
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 the
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 Report and accounts 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.
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.
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 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 are not made. 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 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
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 Ellis (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
23 April 2015
Five year record
2014 2013 2012 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue - continuing operations 238,868 251,267 261,529 246,849 251,181
------- ------- ------- ------- -------
Profit before tax 21,983 59,648 69,710 58,650 73,141
Taxation (13,673) (22,105) (25,662) (16,860) (22,107)
------- ------- ------- ------- -------
Profit from continuing operations 8,310 37,543 44,048 41,790 51,034
------- ------- ------- ------- -------
Profit attributable to owners of the parent 2,836 28,297 31,210 33,086 41,984
------- ------- ------- ------- -------
Equity dividends paid 3,452 3,388 3,224 3,057 2,891
------- ------- ------- ------- -------
Equity
Called up share capital 282 283 284 284 284
Reserves 321,422 332,183 313,526 321,308 329,209
------- ------- ------- ------- -------
Total shareholders' funds 321,704 332,466 313,810 321,592 329,493
------- ------- ------- ------- -------
Earnings per share 102.7 p 1,020.2p 1,122.9 p 1,190.4 p 1,510.5 p
Dividend paid per share 125 p 122p 116 p 110 p 104 p
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR QLLFLEZFLBBK
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