TIDMCAM
RNS Number : 5763W
Camellia PLC
28 April 2016
Camellia Plc
Final results
Camellia Plc (AIM:CAM) announces its final results for the year
ended 31 December 2015.
Malcolm Perkins, Chairman of Camellia Plc, stated:
"2015 saw substantial improvements in the underlying trading of
our businesses led by the performance of our Kenyan tea business
and by the steps which we have taken to address the issues in
Engineering."
"The strength and diversity of our operations, the investments
we continue to make in Agriculture, the success we have had in
bringing in new management, and the ongoing turnaround, sale or
closure of our loss making companies, all point to a more
successful future. However conditions in many of our markets remain
challenging. In particular, the start of 2016 has seen record tea
production in Kenya which has resulted in a significant fall in the
market price and the continuing low oil price provides a challenge
to certain of our engineering businesses."
Financial highlights
Year ended Year ended
31 December 31 December
2015 2014
GBP'm GBP'm
Revenue 257.8 238.9
Headline profit
before tax 23.9 17.2
Profit for the
year 21.9 8.3
Earnings per share 450.7 p 102.7 p
Proposed final
dividend 95 p 92 p
* Headline profit is a measure of the underlying performance of
the group which is not impacted by exceptional items or items
considered non-operational in nature
Highlights
-- Agriculture benefitted from strong prices
for tea in Kenya but was impacted by a GBP6.1
million provision for past service costs
arising on a new post-employment benefit
obligation in Bangladesh
-- The strategic review of Duncan Lawrie was
completed and a plan to invest in and grow
the business over the next few years is being
implemented
-- Abbey Metal Finishing is expected to return
to profitability under new management with
increased focus on customers and improved
delivery performance
-- The closure of AKD Engineering and the sale
of Loddon Engineering were completed during
the year
-- AJT Engineering was adversely impacted by
conditions in the oil and gas market
-- A number of changes were made to the Group
reporting structure in order to increase
skills, create clarity and ensure proper
accountability
-- Continued investment in the development of
our assets with GBP19.4 million spent on
property, plant and equipment and investment
property
-- Cash and cash equivalents increased to GBP65.6
million reflecting strong operational cash
inflows from operations of GBP33.7 million
Enquiries
Camellia Plc 01622 746655
Tom Franks, CEO
Susan Walker, CFO
Panmure Gordon 0207 8862500
Nominated Advisor and Broker
Andrew Godber
Erik Anderson
Camellia at a glance
Camellia Plc is an international Group - a global family of
diverse companies with a 128-year heritage employing approximately
76,000 people worldwide. Our operating divisions include
Agriculture, Banking and Financial Services, Engineering, Food
Service and Investments. From the start, Camellia's ethos has been
based on the highest moral and professional integrity, and a
commitment to doing the right thing - ethically and commercially,
globally and locally. Profits are our lifeblood but not our
soul.
Our business is built on two fundamental principles:
-- Long-termism. We see ourselves as custodians,
holding our businesses in trust for future
generations. We believe we have a responsibility
to ensure the stability, security and continuity
of all our businesses, so they can be passed
on to the next generation as enduring operations.
We recognise that people and businesses take
time to establish and grow to their full
potential and we are happy to wait for that
to happen. We are deeply committed to improving
the long-term stability and well-being of
our businesses, the communities and the environments
in which we are involved.
-- Sustainability. We are committed not only
to the ultimate welfare of our employees
but also to the communities in which they
live. We believe our businesses can and should
grow with respect and care for the environment
rather than at the cost of it. We proactively
invest in ensuring that the environments
where we do business are continually protected
and improved, and seek to minimise any damage
our activities may cause.
Our business is made up of five divisions:
AGRICULTURE
2015: Turnover - GBP186.5 million, Trading profit - GBP26.3
million, Return on capital - 9.9%
Mature Immature
area area
Core crops Locations Ha. Ha.
India, Bangladesh, Kenya,
Tea Malawi 31,991 2,626
Kenya, South Africa,
Macadamia Malawi 2,165 1,173
Avocados Kenya 412 39
Speciality
crops
Rubber Bangladesh 1,622 346
Citrus USA 169 8
Arable Brazil 3,374 -
Pineapples Kenya 55 -
Wine grapes South Africa 62 11
Pistachios USA 131 -
Almonds USA - 56
Forestry Kenya, Malawi, Brazil 2,972 3,279
Other
Joint Projects Kenya 1,299 -
Cattle Kenya 4,500 head
BANKING AND FINANCIAL SERVICES
2015: Subsidiaries Turnover - GBP13.1 million, Trading loss -
GBP3.6 million
2015: Associates Share of results after taxation - GBP4.2
million (including 6 months results for BF&M)
Subsidiary Locations Activity
UK, Isle of Private banking and
Duncan Lawrie Man wealth management
Associates Location Activity Holding
%
BF&M Bermuda Non life insurance 36.1
United Finance Bangladesh Banking 38.4
United Insurance Bangladesh Non life insurance 37.0
ENGINEERING
2015: Turnover - GBP18.6 million, Trading loss - GBP1.2
million*
Subsidiary Locations
Abbey Metal UK, Germany
Finishing
AJT Engineering UK
British Metal UK
Treatments
GU Cutting and UK
Grinding
* adjusted to exclude AKD Engineering and Loddon
Engineering as they are no longer part of the
Group.
FOOD SERVICE
2015: Turnover - GBP31.9 million, Trading profit - GBP0.7
million, Return on capital - 4.0%
Subsidiary Locations
ACS&T UK
Affish The Netherlands
Wylax The Netherlands
INVESTMENTS
Market value
at
31/12/15
Investment
type Locations GBP'm
Investment
Portfolio Global 30.6
Investment UK, Malawi, Isle of Man,
Property Brazil 21.4
Collections UK, India 9.0*
* Collections are stated at cost
Chairman's statement
Our results for the year reflect once again the diversity of our
operations and the unpredictability of global markets. Excluding
the adjustment for the revaluation of biological assets, which I am
pleased to report will have a much reduced impact on our accounts
going forward, and the significant provision for post-employment
benefits that we have been required to make in Bangladesh, headline
profits were GBP23.9 million compared to GBP17.2 million in 2014.
This result reflects the difficulties that our subsidiaries in the
oil services sector have been facing; but also reflects the
improved tea prices in Kenya and the improved profitability of our
agricultural operations more generally.
2015 was a transitional year for your Group, with the
appointment of Tom Franks as the Chief Executive, Graham Mclean as
Managing Director of Agriculture and Susan Walker as the Chief
Financial Officer and the retirement of a number of longstanding
executive directors. As a result there have been consequential
changes to both roles and responsibilities and also the
organisation of the Group which are set out in the Chief
Executive's and corporate governance reports. A detailed statement
which shareholders will hopefully find interesting and informative
is included as the Chief Executive's report and we have also
included substantially more information in the annual accounts to
assist shareholders with getting a better understanding of our
Group.
(MORE TO FOLLOW) Dow Jones Newswires
April 28, 2016 02:00 ET (06:00 GMT)
Notwithstanding these changes, I am pleased to report that the
overriding principles of the Group remain constant. We are
committed to the development of the business over the long term and
to the sustainability of our businesses, the environments and
communities in which we operate.
As announced previously we took the step during the year of
closing one of our subsidiaries, AKD Engineering, following many
years of substantial losses. This was not a decision that your
Board took lightly, being well aware of the social and other
implications of this move, but was unfortunately unavoidable given
the trading conditions. We sold the Loddon Engineering business
towards the end of the year to the De Swart Group, an owner in a
better position to ensure the long term future of that business.
Despite these changes, the Group has continued its policy of
organic growth and development, further details of which are
contained in the Chief Executive's report.
Dividend
Your Board is recommending a final dividend of 95p per share
which, together with the interim dividend already paid of 34p per
share, brings the total distribution for the year to 129p per share
compared with 126p per share in 2014.
Directors
During the year Anil Mathur, Chris Ames and Peter Field resigned
as directors of the company. I would like to thank them all again
for their contribution to the Group, and I am pleased that Peter
Field will continue to contribute as Chairman of our operations in
India and Bangladesh.
Outlook
The outlook for 2016 is challenging. Climate change, and in
particular erratic rainfall patterns, makes predicting crop volumes
difficult. The start of 2016 has seen record tea production in
Kenya which has resulted in a significant fall in the market price.
The continuing low oil price provides a challenge to our
engineering businesses and low interest rates restrict returns in
banking. However, the strength and diversity of our operations, the
success we have had in bringing in new management where
appropriate, and the ongoing turnaround, sale or closure of our
loss making companies, all point to a more successful future.
Staff
As always, my thanks go out to all our staff for their efforts
in 2015.
Malcolm Perkins
Chairman
27 April 2016
Chief Executive's Report
I am delighted to present to you my first report as Chief
Executive. This year we are making significant additional
disclosures which I hope will enhance shareholders understanding of
the Group and its strategy. As is inevitable in a Group of this
size and diversity, there have been many performance highlights
this year but also some areas of the business which have found
markets more challenging.
Of particular note was the success of our operations in Kenya
where a combination of good yields and improved prices delivered
significant additional profit. However, the introduction of new
post-employment benefits legislation in Bangladesh has meant that
we have made a significant provision of GBP6.4 million this year
against this liability and the fall in the oil price hit our
subsidiaries (AKD Engineering and AJT Engineering) in that sector
very hard. Unfortunately, the continuing weakness in the oil price
and the resulting lack of orders for major capital equipment from
AKD Engineering meant that we had to close the company in July
2015. We also sold our interest in Loddon Engineering, a Norfolk
based stable manufacturer, to a subsidiary of the De Swart
Group.
MANAGEMENT
During the year we reviewed the management of the business.
Camellia is diverse and complex in both its markets and geographies
and therefore having the right management in place is fundamental
to driving performance. We have made a number of changes to
management and to reporting lines in order to increase skills,
create clarity and ensure proper accountability in the trading
businesses. As a result the Group is now managed on a divisional
rather than geographic basis. A summary of the new structure
together with the revised remit and membership of the executive
committees is set out in the corporate governance report.
BUSINESS STRATEGY
Whilst the overall Group strategy, which is set out on page 15,
remains unchanged, each division is now expected to perform against
an agreed divisional strategy which sets out the goals and targets
for the short and medium term.
The divisional strategies may be summarised as follows:
Agriculture. The Agriculture division has an exceptional
collection of high quality assets spread across a variety of
geographies and crops. There are however certain crops where we
have scale and geographic spread and therefore the opportunity to
build a significant market presence. These are tea, macadamia and
avocados. Here we will continue to expand the planted area, enlarge
our geographic spread and where appropriate move up the value chain
to protect future margins. For the remaining crops, where
developing a significant market presence is not practicable but
where there are opportunities for profitable investment, we will
continue to acquire assets in line with the broader Group
strategy.
Banking and Financial Services. During the year, the Group
performed a strategic review of Duncan Lawrie to establish the best
future path for the business. As a result of that review, the Group
has approved a new growth strategy to invest in, and expand, Duncan
Lawrie. Key components of the new strategy include building the
banking operations by increasing both lending and deposits; growing
the wealth management business by substantially increasing the
assets under management and investing in people and infrastructure
to ensure a market leading suite of products and services for our
clients. This strategy will require, inter alia, further investment
in the business and we have relaxed certain lending restrictions
previously imposed by the Group.
I anticipate that the strategy will take a number of years to
execute and I am pleased to report the appointment of Sally Tennant
as the new Chair of Duncan Lawrie, subject to the appropriate
regulatory approval, to assist the management team in implementing
that strategy.
The Group also has three associated companies in the financial
services sector, one of which, BF&M, is included as an
associate from 1 July 2015 following a purchase of additional
shares by the Group and a reassessment of our relationship with
BF&M. The Group will continue to monitor its investments in
these companies and may increase or decrease its holdings as
appropriate.
Engineering
Engineering North. AJT Engineering has been a strongly
profitable business for the Group in the past but is currently
impacted by the low oil price and its effect on investment in the
North Sea oil industry. As a result, AJT Engineering has had to
amend its strategy so as to react to the new environment. This has
included taking steps to reduce costs and diversify its customer
base. AJT Engineering remains committed to providing a full service
to its customers and anticipates emerging from the current hiatus
strongly positioned for the future.
Engineering South. The principal driver of growth in Engineering
South will be Abbey Metal Finishing (Amfin) and its joint venture
in Germany, Atfin. Under its new management team, Amfin has taken
significant steps in the last 12 months to focus its customer base,
improve its delivery performance and return to profitability. The
plan is to complete these steps during 2016 and for Amfin to
provide the Group with a return on the significant investments made
since the fire in 2010. Atfin is taking steps to diversify its
customer base and is now moving towards profitability.
The remaining businesses in Engineering South are expected to
grow organically over the coming years.
Food Service
UK. ACS&T will continue to operate as a niche high quality
operator in the storage and distribution of frozen foods together
with some ambient food service provision as demand and space
allows. The business will expand and invest where appropriate to
continue to serve the needs of its customers.
Netherlands. Affish and Wylax, our fish trading and distribution
businesses in the Netherlands, have struggled to grow in tough
economic conditions. However, following the recent appointment of a
new managing director and sales director, these businesses are now
looking to expand both their product offering and customer
base.
Investments
Investment Portfolio. The Group has a portfolio, principally of
listed investments, under the management of a full time investment
manager. The strategy remains to invest for the long term in high
quality companies where we believe that there is hidden value.
Investment Property. The Group is disclosing for the first time
this year the current market value of the investment property
portfolio (page 59). The strategy is to continue to invest in
quality assets where an appropriate yield may be realised.
Collections. The Group has collections of art, philately and
manuscripts under the management of a curating team. These assets
are regularly reviewed and are added to or sold as appropriate in
order to enhance the collections.
PERFORMANCE
Agriculture
Tea Production
Mature Immature Volume Volume
area area 2015* 2014*
Ha. Ha. mkg mkg
India 14,242 1,481 25.8 25.9
Bangladesh 7,927 1,110 10.3 10.5
Kenya 4,157 - 12.9 14.3
Malawi 5,665 35 14.4 16.9
------ -------- ------ ------
Total 31,991 2,626 63.4 67.6
------ -------- ------ ------
*Estate volumes only, in addition 14.7 million kg of tea was
produced for smallholders (2014 - 15.5 million kg)
Tea pricing and operations
India
(MORE TO FOLLOW) Dow Jones Newswires
April 28, 2016 02:00 ET (06:00 GMT)
Average tea prices in 2015 were up 3.8% in Rupees against 2014
levels, reflecting particularly good performances from our Assam
teas, but costs of production were also up, reflecting labour rate
increases which impacted margins. A new blending and packing
facility for export teas was commissioned in Kolkata during the
year with an annual capacity of approximately 4 million kgs per
annum.
Packet tea sale volumes were up 13.6% on 2014 in this
competitive but growing sector of the Indian local tea market.
Instant Tea production was down 25% on 2014 with prices also
slightly down. During the year, a solar water heating unit was
installed at the plant in order to reduce energy costs.
Rainforest Alliance Certification was achieved on all Assam and
Darjeeling estates along with FSSC 22000 certification in the
factories; ISO 22000 certification was achieved for the Dooars'
factories.
Bangladesh
Pricing was up 11% on the previous year due to improved demand
at auction and a resumption of high duty tariffs on imported
tea.
A project to create capacity for irrigation on two gardens
commenced during the second quarter having been delayed as a result
of political disturbances. Total replanting achieved in the year
was 115 Ha leaving a total of 385 Ha under rehabilitation at the
end of the year in preparation for future replanting.
Kenya
As a result of lower production volumes across Kenya as a whole,
tea prices were up 35.7% from the previous year's levels. The
market for Kenya teas is largely an export one and prices are
subject to significant volatility linked to production volumes.
Fluctuations in the tea price have a major impact on Group
profitability.
We continue to produce good quality hand plucked tea, and
mechanical harvesting continues on a trial basis. During 2015, we
established our first large-scale solar project. Significant
reductions in carbon emissions have been achieved as well as a
reduction in power costs.
All the estates and smallholders remain Rainforest Alliance
certified and all factories are ISO 22000 compliant.
Malawi
In Malawi we experienced highly erratic weather conditions which
had a significant adverse effect on crop volumes. The operations
experienced serious flooding following drought conditions at the
start of the year and then drought conditions re-emerged for most
of the year thereafter.
Pricing in 2015 was up 3% on 2014 levels but costs per kg
increased significantly due to the lower crop, inflationary
pressure through substantial currency devaluation and significant
wage increases. These circumstances contributed to a substantial
decline in the profitability of the tea operations in 2015.
The Tea Association of Malawi, of which we are a leading member,
in conjunction with the Ethical Tea Partnership, signed up to an
extensive five-year revitalisation programme for the industry aimed
at addressing workers' wages, smallholder sustainability, product
quality and replanting.
All estates and smallholders are Rainforest Alliance certified.
All factories are Fairtrade certified and two factories continued
with UTZ certification.
Macadamia Production
Mature Immature Volume Volume
area area 2015 2014
Ha. Ha. Tonnes Tonnes
Malawi 1,202 230 530 583
South Africa 778 271 574 474
Kenya 185 672 52 28
------ -------- ------ ------
Total 2,165 1,173 1,156 1,085
------ -------- ------ ------
Macadamia Pricing
Pricing for macadamia in 2015 was up 15.3% on 2014 levels and
set a record level for the global macadamia kernel market due to
continuing demand from China.
Macadamia Operations
Malawi
Production of macadamia nuts was down 9.0% on the previous year
due to the impact of dry weather conditions. The processing
facility once again achieved ISO 22000 certification.
South Africa
Volumes in 2015 were significantly ahead of last year. The
development of Mambedi Estate to macadamia orchards continues with
98 Ha planted in 2015. A further 80 Ha has been prepared for
planting. The processing factory successfully completed the first
phase of upgrading to a modern state-of-the-art cracking facility.
The plant was also recertified under ISO 22000 for the 2015
season.
Kenya
New plantings continued with 158 Ha being planted in the year.
Construction of a new cracking facility began in April and good
progress has been made to date. The facility is expected to open in
June 2016.
Avocado Production
Mature Immature Volume Volume
area area 2015* 2014*
Ha. Ha. mkg mkg
Kenya 412 39 7.1 6.3
* Estate volumes only. In addition 2.3 million kg of smallholder
fruit was packed (2014 - 2.7 million kg)
Avocado Pricing and Operations
A record volume of 1.9 million cartons were exported: 17% up on
2014. The smallholder fruit volumes were slightly lower than last
year as a result of tight quality controls and lower availability
of acceptably sized fruit. Despite this, excellent returns were
generated for growers from the fruit exported. The smallholder
initiative continues to gain momentum with the number of registered
growers increasing each year. Pricing in 2015 was at record levels
(up 64% on 2014) as a result of demand from the European
market.
Speciality Crops Production
Mature Immature Volume Volume
area area 2015 2014
Ha. Ha. Tonnes Tonnes
Rubber (Bangladesh) 1,622 346 629 601
Citrus (USA) 169 8 4,844 5,618
Arable (Brazil) 3,374 - 25,888 17,234
Pineapples (Kenya) 55 - 1,752 1,552
Wine grapes (South Africa) 62 11 625 718
Pistachio (USA) 131 - 31* 621
Almonds (USA) - 56 47 -
m3 m3
Forestry 2,972 3,279 17,042** 13,766**
* 2015 was an 'off year' for Pistachios
** Volumes quoted are for conversion to value addition products
rather than own use as fuel wood
Speciality Crops Pricing and Operations
Pricing for rubber in 2015 was 24.4% below 2014 due to the drop
in oil prices making synthetic rubber more price competitive than
natural latex. There are also significant inventories of natural
rubber building in South East Asia which are contributing to the
downward pressure on price.
Prices for California citrus were slightly up in the year.
Reduced volumes in the year reflect the effect of the decision to
replace an area of mandarins with a different variety of
citrus.
Both the maize and soya crops in Brazil sold at higher levels
than anticipated.
Prices for fresh pineapple production in Kenya were marginally
up.
Wine grape production in the Western Cape, South Africa was down
13% on last year but bottled wine production and sale volumes were
up. Results were in line with expectation although slightly down on
the previous year.
Pricing for pistachios in 2015 was 28% up on 2014 levels due to
demand in the global market.
Almond prices were also high but no contribution was attributed
to Group profit in 2015 given the immature nature of the trees.
Revenues from almonds will be attributed to Group profit for
2016.
Forestry operations continued to produce satisfactory volumes
for fuel wood and value addition products.
We continue to raise cattle on those areas of the Kakuzi Estate
in Kenya unsuitable for crop development.
In total, the Agriculture division made a trading profit of
GBP26.3 million (2014: GBP27.2 million) on turnover of GBP186.5
million (2014: GBP164.2 million).
Banking and Financial Services
The low interest rate environment together with restrictions on
lending imposed by the Group and costs associated with adjusting to
new regulatory requirements, have led to several years of losses at
Duncan Lawrie. As a result, the Group undertook a strategic review
of the bank during the year, the result of which is the
implementation of the growth strategy described above. In 2015 the
bank made losses which were significantly above those incurred in
2014, reinforcing the need to execute the new strategy. These
losses are likely to continue into 2016 as the bank invests in
clients, staff and systems.
Our two associated companies in Bangladesh, United Insurance and
United Finance, both had a reasonable year with profits marginally
ahead of 2014.
From 1 July 2015 we are accounting for BF&M, a Bermuda based
insurance company, as an associate. BF&M had a strong year in
2015 reporting a profit before tax of Bermudian Dollar 30.1 million
(2014: Bermudian Dollar 26.7 million).
In total, the Banking and Financial Services division's
subsidiaries made a trading loss of GBP3.6m (2014: trading loss
GBP2.5m) on turnover of GBP13.1 million (2014: GBP12.4 million). In
addition, our share of the results of associates amounted to GBP4.2
million (2014: GBP1.1 million).
Engineering
Engineering North
Engineering North had a difficult year with the fall in the oil
price resulting in AJT Engineering in Aberdeen struggling to fill
its order book. Turnover at AJT Engineering fell from GBP12.0
million in 2014 to GBP9.6 million in 2015. In the current climate
it is hard to predict the oil price and the impact that it may have
on the industry in Aberdeen and therefore the company is braced for
another difficult year.
Engineering South
(MORE TO FOLLOW) Dow Jones Newswires
April 28, 2016 02:00 ET (06:00 GMT)
Engineering South had a transitional year with the sale and
closure of Loddon Engineering and AKD Engineering respectively, and
new management teams appointed at Abbey Metal Finishing, Atfin and
GU Cutting and Grinding. The continuing turnaround at Abbey Metal
Finishing and the disposal of the other loss making businesses
means that we anticipate a significantly improved performance in
the coming year.
In total, the Engineering division made a trading loss of GBP5.5
million (2014: trading loss GBP8.4 million) on turnover of GBP24.1
million (GBP28.9 million). GBP4.3 million of the trading loss in
2015 related to AKD Engineering and Loddon Engineering.
In addition, during the year we sold three properties and
certain assets which were surplus to the requirements of the
Engineering division generating a net profit on sale of
GBP3.7million (2014: nil).
Food Service
ACS&T had a better year than 2014 with turnover increasing
by 7.5%, although the market remains competitive in both the
storage and distribution areas and as a result profits were
marginally down. During the year we also took possession of a new
office building in Wolverhampton and implemented a new IT system at
all our facilities to manage logistics. In the Netherlands, both
Affish and Wylax experienced challenging trading conditions.
In total the Food Service division made a trading profit of
GBP0.7 million (2014: GBP0.9 million) on turnover of GBP31.9
million (2014: GBP30.9 million).
Investments
Investment Portfolio. Despite the significant fluctuations in
both global equity and currency markets there was little change in
the value of the portfolio. The total value of the portfolio is
GBP30.6 million (2014: GBP63.5 million) reflecting the
reclassification of our holding in BF&M as an associate.
Investment Property. The Group is disclosing for the first time
this year the current market value of the investment property
portfolio (page 59). The Group took the opportunity during the year
to acquire further land and buildings at Linton Park.
Collections. The value of the collections is held at cost. A
number of minor additions and disposals were made during the
year.
LEGISLATIVE CHANGES
The Group is present in many jurisdictions, and is subject to
local legislation. The following two issues either have had, or are
likely to have, a material impact on the Group.
-- During 2015, a post-employment benefits law
was introduced in Bangladesh entitling workers
to a lump sum payment on retirement or termination
of employment based upon earnings and length
of service. As a result we have made a provision
of GBP6.4 million to cover the potential liability
of which GBP6.1 million relates to past service
costs.
-- At the start of 2016, the Government of Malawi
put forward new legislation which proposes,
inter alia, the conversion of all freehold property
into 50 year leaseholds. The proposed legislation
is under discussion and has yet to be passed
into law and many of the key provisions such
as the costs of the leaseholds and the right
to renew leases are as yet unclear. The impact
on the Group is therefore hard to assess at
this time.
DEVELOPMENT
During 2015 we continued to invest in the development of our
assets and GBP19.4 million was spent on property, plant and
equipment and investment property (2014: GBP19.0 million) including
the following key projects:
-- Extension of the macadamia dehusking facility
and the commencement of the building of the
new macadamia cracking plant in Kenya
-- Phase 1 of the upgrading of the macadamia cracking
facility in South Africa
-- Improvements at four of our tea factories and
to the packet tea and instant tea facilities
-- Solar energy facilities in Kenya and India
-- Significant irrigation projects across all of
the agricultural operations
-- Construction of a new office building for ACS&T
and an IT upgrade
-- Continuing improvement of our labour housing
and facilities for our staff
-- The acquisition of investment properties in
the UK adjacent to our head office at Linton
Park.
In addition to our continuous programme of replanting our tea
areas, a programme to extend our planted areas has been underway
for a number of years and in 2015:
-- 36 Ha of new avocado plantings were carried
out in Kenya
-- 158 Ha of new macadamia plantings were carried
out in Kenya and 81 Ha in South Africa.
SUSTAINABILITY AND CSR
The Group has always had a strong focus on social and
environmental responsibility and this is something we intend to
maintain and grow. The key aspects of that policy are set out on
page 17.
The Group strives to develop the workforce through training and
to improve housing, healthcare, and education across the Group and
in the communities that we work in.
This year we have been involved in the tea revitalisation
project in Malawi, solar projects in India and Kenya, and have
embarked on major housing renewal projects in Malawi, Kenya and
India. In addition, I am pleased to report that every operating
company in the UK has now been accredited by the Living Wage
Foundation as a Living Wage Employer.
Tom Franks
Chief Executive
27 April 2016
Chief Financial Officer's Report
Overview of results
After taking account of the provision for past service costs
relating to changes in Bangladesh to post-employment benefit
entitlements of GBP6.1 million, gains arising from changes in the
fair value of biological assets of GBP20.6 million (2014: GBP8.8
million), exceptional and other one off items, the profit before
tax for the year to 31 December 2015 amounted to GBP40.5 million
compared with GBP22.0 million in the previous year.
The Group has net assets of GBP372.8 million (2014: GBP364.4
million) and net cash and cash equivalents of GBP65.6 million
(2014: GBP54.1 million), excluding balances relating to our banking
operations.
Headline profit
The headline profit before tax for the year to 31 December 2015
was 39.0% higher than previous year at GBP23.9 million (2014:
GBP17.2 million). Headline profit is a measure of underlying
performance which is not impacted by exceptional and other items
considered non-operational in nature and is designed to make clear
the underlying trading performance of the Group.
Accounting policies and practices
We increased our holding in BF&M to 36.1% during the year
and, having reassessed our relationship, consider that it is now
appropriate to account for it as an associate company rather than
as an available for sale financial asset. This has resulted in our
proportionate share of BF&M's profit after tax for the period
from 1 July 2015 of GBP2.9 million being included in our results
for the year instead of the dividends we received.
Following further acquisition of property in the UK during 2015,
our investment property holdings are now shown as a separate asset
class which continues to be carried at cost. In the interests of
providing further clarity for shareholders, the estimated market
value is disclosed in note 18 to the financial statements.
Impact of changes to the accounting treatment of biological
assets (IAS 41 amendments)
This is the last year in which IAS 41 will be relevant to the
majority of our agricultural operations and from 1 January 2016 our
permanent plantings will be classified under IAS 16 as property,
plant and equipment to be depreciated over their expected useful
life. If the new standard had applied to our 2015 results it would
have had the following estimated effect on our reported
profits:
2015
GBP'm
Reported profit before tax 40.5
Exclude gain arising from changes in fair value of biological assets reclassified as bearer
crops (18.7)
Depreciation of bearer plants (4.4)
Fair value adjustments for growing crop 2.6
-----
Restated 2015 profit before tax 20.0
-----
Currencies
The Group's operations in Africa and Brazil have seen
significant devaluation of their functional currencies during the
year. This together with the high rates of inflation in these
countries places substantial pressure on our cost base,
particularly in Malawi. However, our operations in Africa benefit
from the fact that the majority of their sales are in hard
currencies, typically US dollars or Euros, which provides some
protection. Over the course of the year to 31 December 2015, the
Malawi Kwacha weakened by 35.7%, the Kenya Shilling by 6.5%, the
South African Rand by 26.5% and the Brazilian Real by 41.3% against
Sterling.
Cashflow
The Group's net cash position increased to GBP65.6 million at 31
December 2015 (2014: GBP54.1 million) (excluding net cash balances
held within our banking subsidiaries) reflecting strong net cash
inflows from operations of GBP33.7 million (2014: inflow GBP7.9
million).
Taxation
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The Group's effective tax rate of 45.9% (2014: 62.2%) reflects
the continuing losses incurred in the UK which we are currently
unable to relieve against profits elsewhere in the Group. It also
reflects a provision for taxation in Malawi arising from
assessments raised by the Malawi Revenue Authority for unpaid taxes
from prior years. We continue to be of the view that the claim is
without technical merit.
Pensions and post-employment benefits
The Group operates a number of defined benefit pension schemes,
the largest of which is in the UK. The overseas schemes are located
in Bangladesh, India and the Netherlands. The UK scheme has been
closed to new entrants for a number of years and of our UK based
work force, approximately 15% are members of this scheme. Our
businesses in Kenya, India and Bangladesh also have obligations to
pay terminal gratuities, based on years of service and, in some
cases based on salaries.
Our employee benefit schemes currently show net deficits of
GBP38.6 million (2014: GBP41.6 million net deficit). Accounting for
defined benefit schemes is prescribed by IAS 19 and the quantum of
the deficit continues to be volatile and sensitive to small changes
in assumptions as regards inflation and gilt yields in the relevant
jurisdictions. This year a net actuarial gain of GBP9.1 million
(net actuarial loss in 2014 of GBP20.3 million) is reflected in the
Statement of comprehensive income.
In addition, GBP8.4 million (2014: GBP1.0 million) has been
charged to our income statement in respect of employee benefit
obligations. GBP6.4 million of the increase in cost relates to
obligations for post-employment benefits arising from recently
enacted legislation in Bangladesh, of which GBP6.1 million relates
to relevant employees service with the Group in years prior to the
current financial year. The cash flow impact of this legislation
will arise over a number of years as staff retire or otherwise
leave the business.
Contributions to the externally funded defined benefit schemes
are determined after consultation with the respective trustees and
actuaries. In the UK, additional annual contributions of GBP0.9
million are being made to reduce the scheme's funding deficit.
Shareholders' funds
Equity attributable to Camellia's shareholders at the 2015 year
end was GBP330.4 million (2014: GBP321.7 million). A reconciliation
is set out in the Group statement of changes in equity.
Susan Walker
Chief Financial Officer
27 April 2016
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 2015
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 and the Chief Executive's report on
pages 5 to 12. The Chairman's statement and the Chief Executive's
report, together with information contained within the report of
the directors, highlight the key factors affecting the Group's
development and performance. Other matters are dealt with
below:
Group strategy
The Board has adopted the following strategy for the Group:
-- to develop a worldwide group of businesses
requiring management to take a long term
view
-- the achievement of long-term shareholder
returns through sustained and targeted investment
-- investing in the environment and sustainability
of 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 Chief Executive's report shown on pages 6 to
12 and within the report of the directors.
Business model
The Group consists of businesses engaged in Agriculture, Banking
and Financial Services, Engineering, Food Service and Investment.
Businesses are managed on a divisional basis with regular reports
made to the Board on performance against the 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
The Group's agricultural based businesses are located in Kenya,
Malawi, South Africa, Bangladesh, India, Brazil and the USA. The
success of these activities is greatly dependent on climatic
conditions, controlling plant disease, the cost of labour and the
market price. 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 or Euros.
In Kenya, Malawi and South Africa there are long-term political
issues concerning land ownership over which the Group has little
control or influence. The Board continues to work with local
management and with the assistance of lawyers to monitor land
ownership issues that may impact the Group's operations. In Kenya,
the length of the leases owned by non-Kenyan citizens and
corporations has been reduced from 999 years to 99 years in
accordance with the new constitution. In South Africa, on land
where ownership claims have been made, any substantiated claim is
required to be resolved on a willing buyer willing seller basis and
crops are generally only planted following notification to the Land
Claims Commission. In Malawi, a bill is currently being debated in
the parliament on the foreign ownership of land which could see the
freehold land interest being converted to 50 year leasehold.
In India, violence from separatist Groups which has been a
problem for some years has reduced in Assam, Darjeeling and the
Dooars. In Bangladesh, there have been instances of civil unrest
and political instability. The situation continues to be monitored
and the Group's operations in these regions have generally been
able to trade normally.
A fourth consecutive year of drought in California brought about
a state imposed 25% reduction in water usage by urban consumers.
Ground and surface water resources remain scarce and continue to
decline, imposing a challenge to management to ensure sufficient
water resources are made available for the crops. This was achieved
in 2015 because of our investment in irrigation infrastructure over
several years, but remains a concern for the future.
Engineering
A number of the engineering companies are dependent for a
significant part of their revenue on the aerospace and the oil and
gas industries. As we saw in 2015, a downturn in either of these
sectors would have and has had 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.
Food Service
Food Service is a highly competitive industry with low operating
margins 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.
ACS&T 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 global banking crisis, there
have been continual moves by the authorities
to tighten regulatory standards and this
may lead to a requirement for further capital
to be invested in Duncan Lawrie
-- credit risk - the lending of money gives
rise to a credit risk. Duncan Lawrie lends
money to customers and places money with
other banks and holds interest bearing securities.
This credit risk is managed by strict internal
procedures
-- liquidity, interest and foreign exchange
rate risk - these risks are monitored closely
and reported upon daily against conservative
exposure limits.
Bank failures in the jurisdictions within which Duncan Lawrie
operates can also impact its results as a consequence of industry
wide compensation schemes to which it is required to
contribute.
Further information on the Group's financial risks are disclosed
in note 39 of the accounts.
Investments
The Group owns a number of investments including listed
investments. The value of these investments is therefore likely to
fluctuate in line with global stock market movements.
Pension schemes
There is one final salary scheme in the UK which is closed to
new entrants and permits an element of future accrual for existing
members in the defined benefit section. A material proportion of
the assets of the scheme are invested in equities and the value of
these assets will fluctuate in line with global equity markets.
Continuing improvements in mortality rates may also increase the
liabilities of the scheme.
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The Group's overseas subsidiaries make pension provision for
certain employees in accordance with relevant local legislation.
Some risk remains if there are changes to the governing
legislation, requiring the companies to make larger contributions
to these schemes. Some of these pension plans are final salary
based and not fully funded.
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 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
businesses meet the standards expected by the Group, local
legislation and by our customers.
Particular challenges and opportunities for the Group lie in the
following areas:
Child labour: the use of child labour is prohibited by all of
our businesses. 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 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 however improvements have been
achieved during the year.
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 our 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, basic medical
services including where appropriate antiretroviral drugs. We also
give support to schools that are either run locally or by our
companies.
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 the requirements of 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. Our agricultural businesses
carry out activities that could impact the environment. These
businesses have adopted rigorous procedures to reduce the
environmental impact of the operations.
Greenhouse Gas (GHG) Emissions
Our emissions have been calculated based on the GHG Protocol
Corporate Standard. Emissions reported correspond with our
financial year.
Our approach
We believe that good management of employment and environmental
issues is essential in ensuring the long-term success of our
businesses. We are therefore committed to devoting the necessary
resources to improve continually our performance in these
areas.
The Group has a corporate social responsibility policy which is
available on the company's website.
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.
The Board is currently devising a policy to comply with the
requirements of the Modern Slavery Act 2015 which will be in place
by the end of 2016.
Performance
There are no current employment or environmental issues that
prejudice the continuing development of the Group. None of the
Group's businesses were prosecuted for any significant breach of
employment legislation during the year. The Board 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 net 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:
Banking
and
Financial
Agriculture Services Engineering Food Service
2015 2014 2015 2014 2015 2014 2015 2014
Return on segmental
net assets (%) 9.9 10.4 n/a n/a n/a n/a 4.0 5.5
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 at 31 December 2015 was 3.3% (2014: 0.9%).
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 the Group's principles. The
Board will regularly review which key non-financial performance
indicators are most appropriate.
1 Compliance 2015 (ii) 2014 2013
a) Prosecutions The number of prosecutions brought in the
financial year by the official regulatory bodies
responsible for enforcing regulations in the
areas of:
Employment - - 1
Worker health and safety - - 1
Environmental protection - - 2
b) Formal warnings The number of written warnings during the
financial year year by the official regulatory
bodies
responsible for enforcing regulations in the
areas of:
Employment - - -
Worker health and safety 3 - 1
Environmental protection - - -
2 Child Labour
a) Minimum age The number of employees who were less than 15
years old during the financial year - - -
b) Access to education The number of 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
a) Injury for more than three days 317 308 8
4 Health
The number of employee days absence as a result
a) Sickness absence of sickness during the financial year 238,160 (i) 243,094 (i) 227,917 (i)
The number of claims for compensation arising
from occupational health issues received during
the financial year in respect of continuing
b) Sickness claims operations 20 167 406
(i) This excludes tea garden workers in India
who have a contractual entitlement to fourteen
days sickness absence. In Malawi there is
high level of sickness due to HIV/AIDS related
conditions and malaria.
(ii) This excludes figures from AKD Engineering
due to its closure during the year and Loddon
Engineering which was sold at the end of year.
Employees
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The Group keeps 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 2015:
Men Women
Company directors (i) 6 1
Other senior managers (ii) 7 2
All employees 42,259 34,124
(i) Company directors consists of the company's
Board as detailed on page 4.
(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.
By order of the Board
Julia Morton
Secretary
27 April 2016
Report of the directors
The directors present their report together with the audited
accounts for the year ended 31 December 2015.
Principal activities
The company is a public limited company, which is quoted on the
AIM Market of the London Stock Exchange and incorporated and
domiciled in England and Wales. The principal activities of its
subsidiary and associated undertakings comprise:-
Agriculture
Banking and Financial Services
Engineering
Food Service
Investments
Further details of the Group's activities are included in the
Chairman's statement and the Chief Executive's report on pages 5 to
12.
Results and dividends
The profit after taxation for the year amounted to GBP21.9
million (2014: GBP8.3 million). The Board has proposed a final
dividend for the year of 95p per share payable on 1 July 2016 to
holders of the ordinary shares registered at the close of business
on 10 June 2016. The total dividend for 2016 is therefore 129p per
share (126p per share). Details are shown in note 12.
Directors and Secretary
The directors are listed on page 4. The following directors had
beneficial interests in the shares of the company.
31 December 1 January
2015 2015
Camellia Plc ordinary shares of 10p each:
Malcolm Perkins 1,673 1,573
Under the company's articles of association all the directors
are required to retire annually. Accordingly, Malcolm Perkins, Tom
Franks, Susan Walker, Graham Mclean, Chris Relleen, Frédéric
Vuilleumier and William Gibson will retire and, being eligible will
seek re-election at the AGM on 2 June 2016.
None of the directors or their families had a material interest
in any contract of significance with the company or any subsidiary
during, or at the end of, the financial year.
Executive directors
Malcolm Perkins was appointed a director in 1999 and Chairman in
2001 having joined Eastern Produce (Holdings) Limited now Linton
Park Plc in 1972. He is a chartered accountant and Chairman of the
Nomination Committee.
Tom Franks was appointed as Chief Executive with effect from 1
September 2015. He joined Camellia as Deputy Chief Executive in
October 2014. He is chairman and a non-executive director of Duncan
Lawrie Limited and Duncan Lawrie Asset Management Limited.
Graham Mclean, a qualified agriculturalist, was appointed as
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. He is a non-executive director
of Kakuzi Limited.
Susan Walker was appointed Chief Financial Officer for the Group
on 4 June 2015 having joined Camellia in 2014 as Finance Director
Designate and was appointed as an executive director on 2 April
2015. She is a chartered certified accountant and a non-executive
director of Goodricke Group Limited, United Finance Limited and
Duncan Lawrie Limited.
Non-Executive directors
Chris Relleen was formerly a partner in PricewaterhouseCoopers.
He was appointed as independent non-executive director and deputy
chairman in January 2006 having previously been a non-executive
director of Linton Park Plc. He is a non-executive director and
chairman of the Audit Committee of Duncan Lawrie Limited. He is
senior independent director, chairman of the Audit Committee and a
member of the Nomination and Remuneration committees.
William Gibson was appointed as an independent non-executive
director in September 2014. He was previously chairman and managing
director of Westminster Press and an executive director of the
Financial Times Group. He is chairman of the Remuneration Committee
and a member of the Audit and Nomination committees.
Frédéric Vuilleumier was appointed as an independent
non-executive director in March 2013. He is partner of Oberson
Abels SA, a law office based in Geneva, Switzerland. He is a member
of the Audit Committee.
Secretary
Julia Morton has been company secretary since September
2011.
Substantial shareholdings
As at 27 April 2016 the company has been advised of the
following interests in the share capital of the company:
% of total
voting
Beneficial shareholder Shareholder No of Shares rights
Camellia Private Trust
Company Limited Camellia Holding AG 1,427,000 51.67
Alcatel Bell Pensioenfonds
VZW Lynchwood Nominees Limited 153,600 5.56
Fide Holding NV Lynchwood Nominees Limited 150,000 5.43
HSBC Global Custody Nominee
Quaero Capital SA (UK) Limited 92,800 3.36
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 34 to the accounts.
At the annual general meeting in 2015, shareholders gave
authority for the company to purchase up to 276,200 of its own
shares. This authority expires at the conclusion of this year's
annual general meeting. A resolution proposing renewal of the
authority will be submitted to shareholders at the next annual
general meeting.
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.
Future development
Details of future development are set out in the Chief
Executive's report.
Going concern
After reviewing the Group's budget for 2016 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 25 to 28.
By order of the Board
Julia Morton
Secretary
27 April 2016
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 admission to
trading 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 maintained
at that time. AIM companies are not required to comply with the
requirements of the Code. However, the Board has chosen to follow
the Code for the year to 31 December 2015.
The Group consists of a portfolio of businesses which are
grouped into independently managed divisions. These divisions
report into the Board by function against a variety of metrics
including budgets and business plans.
The Board
The Board currently comprises seven directors, three of whom are
independent non-executive directors. The remaining directors are
executive directors, including the executive Chairman. Chris
Relleen, the Deputy Chairman, has been designated as the senior
independent director. The names and brief biographical details of
each director appear on pages 22 and 23.
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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 remuneration committee, audit
committee and nomination committee. Terms of reference of each of
the committees can be viewed on the company's website.
The Board undertook a performance evaluation during the year by
way of an internal review.
The Board is responsible for managing the Group's business and
has adopted a schedule of matters reserved for its approval. The
schedule is reviewed annually and covers, inter alia, the following
areas:
-- Strategy
-- Acquisitions and disposals
-- Financial reporting and control
-- Internal controls
-- Approval of expenditure above specified limits
-- Approval of transactions and contracts above
specified limits
-- Responsibilities for corporate governance
-- Board membership and committees
-- Approval of changes to capital structure.
A full copy of the schedule is available on the company's
website.
A report summarising the Group's financial and operational
performance including detailed information on each of its
businesses is sent to directors each month. Each director is
provided with sufficient information in advance of Board meetings
to enable the directors to make informed judgments on matters
referred to the Board. The Board met eleven times in 2015.
Attendance by directors at Board and committee meetings held
during the year was as follows:
Director Board Audit Remuneration
Malcolm Perkins 11/11 - -
Chris Relleen 10/11 3/3 3/3
Tom Franks 11/11 - -
Graham Mclean 11/11 - -
Susan Walker 9/9 2/2 -
William Gibson 10/11 3/3 3/3
Frédéric Vuillieumer 10/11 3/3 -
Anil Mathur 4/4 1/1 -
Chris Ames 5/5 - -
Peter Field 11/11 - -
(i) Anil Mathur attended meetings of the audit
committee by invitation in his capacity as
finance director until his retirement as a
director on 4 June 2015.
(ii) Chris Ames resigned from the Board on 10 July
2015.
(iii) Susan Walker was appointed as a director on
2 April 2015 and attends meetings of the audit
committee by invitation in her capacity as
Chief Financial Officer.
Executive committees
The Board has established the Strategy Group, consisting of the
Chairman and the executive directors of the Board, and two
Executive Committees. The Agriculture Executive Committee is
chaired by the Managing Director of Agriculture and includes the
Chief Executive, Chief Financial Officer and heads of all the key
agricultural operations. The Engineering and Food Service Executive
Committee is chaired by the Chief Executive and includes the Chief
Financial Officer, the divisional heads of Engineering North,
Engineering South and Food Service, the Company Secretary and the
Group Head of HR.
Banking and Financial Services (being primarily Duncan Lawrie)
and Investments report direct to the Chief Executive.
Nomination committee
The nomination committee is chaired by Malcolm Perkins. Its
other members are William Gibson and Chris Relleen.
The principal responsibilities of the nomination committee are
set out below:
-- review the balance and composition (including
gender and diversity) of the Board, ensuring
that they remain appropriate
-- be responsible for overseeing the Board's
succession planning requirements including
the identification and assessment of potential
Board candidates and making recommendations
to the Board for its approval
-- keep under review the leadership needs of,
and succession planning for, the Group in
relation to both its executive and non-executive
directors and other senior executives.
The committee did not meet during the year.
Audit committee
The audit committee is chaired by Chris Relleen. The other
members of the committee are Frédéric Vuilleumier and William
Gibson. During 2015, the committee met on three occasions.
Principal responsibilities
The principal responsibilities of the audit committee are set
out below and were undertaken during the year:
-- to review and monitor the financial statements
of the company and the audit of those statements
- to monitor compliance with relevant financial
reporting requirements and legislation
-- to monitor the effectiveness and independence
of the external auditor
-- to review effectiveness of the Group's internal
control system. The committee regularly reviews
the effectiveness of internal audit activities
carried out by the company's Group accounting
function and senior management
-- to review non-audit services provided by the
external auditors.
Significant issues in relation to financial statements
The audit committee assesses whether suitable accounting
policies have been adopted and whether management has made
appropriate estimates and judgements. In the year under review, the
audit committee considered the following significant matters in
relation to the financial statements:
Biological assets - One of the key areas of judgment that the
committee considered in reviewing the financial statements was the
valuation of biological assets in accordance with IAS 41.
Valuations are carried out by external professional valuers or are
based on discounted cash flows. These were agreed for consistency
of approach and assumptions agreed as reasonable. For more details
see note 19 to the accounts.
Pensions - A key area of judgment is in relation to the value of
the pension scheme obligation. Whilst this is conducted by
independent expert actuaries, the size of the obligation means that
a relatively minor difference in the assumptions could result in a
material change in the obligation. The committee considered the
competence of the actuaries and the assumptions adopted and
concluded that the work performed is sufficient to support the
value.
Goodwill and intangibles - The value of goodwill and intangibles
is inherently complex and relies on judgment and estimation. The
committee consider the performance of the underlying assets and
their ability to continue to support the carrying value. As a
result, the committee is satisfied that the carrying value is
supported.
External auditors
To assess the effectiveness of the external audit process, the
external auditor is required to report to the audit committee and
confirm their independence in accordance with ethical standards and
that they had maintained appropriate internal safeguards to ensure
their independence and objectivity. In addition to the steps taken
by the Board to safeguard auditor objectivity,
PricewaterhouseCoopers 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 PricewaterhouseCoopers at that point. The
audit committee is currently undertaking a review of the Group's
external audit requirements following a change in the rules on
audit rotation in India. The outcome of the review will be
announced in due course.
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 remuneration committee is chaired by William Gibson and the
other member is Chris Relleen.
The responsibilities of the committee include:
-- the review of the Group's policy relating to
remuneration of the chairman, executive directors
and the company secretary
-- to determine the terms of employment and remuneration
of the chairman, executive directors and company
secretary with a view to ensuring that those
individuals are fairly but responsibly rewarded
-- to approve compensation packages or arrangements
following the severance of any executive director's
service contract.
The remuneration report appears on pages 30 to 32.
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 34.
Internal control and risk management systems
The directors acknowledge that they are responsible for
maintaining a sound system of internal control. During the year,
the audit committee, on behalf of the Board, reviewed the
effectiveness of the framework of the Group's system of internal
control, the principal features of which are described below.
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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, 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
Julia Morton
Secretary
27 April 2016
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.
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
Malcolm Perkins
Chairman
27 April 2016
Remuneration report
This report is drawn up in accordance with the Companies Act
2006 and the AIM Rules for Companies.
Remuneration committee
Details of the remuneration committee ("the committee") are set
out on page 28.
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 largely on
agriculture, which is 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, approved by shareholders at the AGM held
on 5 June 2014, took effect from the date of that AGM and will be
applied for a period of three 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 4 June 2015, the remuneration report for the year
to 31 December 2014 was approved by shareholders with 99.97% of the
votes cast in favour, 0.02% of the votes cast against and 0.01% of
the votes withheld.
Service contracts
Malcolm Perkins, Tom Franks, Graham Mclean and Susan Walker are
each employed on rolling service contracts.
Director Date of Service Contract
Malcolm Perkins 25 April 2002
Tom Franks 8 April 2015
Graham Mclean 10 April 2015
Susan Walker 14 April 2015
The service contracts are terminable at any time by a one year
period of notice from the company or the director. Following their
initial appointment non-executive directors may seek re-election by
shareholders at each subsequent annual general meeting.
Non-executive directors do not have service agreements. There are
no specific contractual provisions for compensation upon early
termination of a non-executive director's employment. The
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 Loss of Pension
Basic Remuneration Kind Office Contribution Total
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
Executive
Malcolm Perkins 442,344 433,671 32,680 32,519 - - 475,024 466,190
Tom Franks 426,800 96,250 49,112 6,974 - - - - 475,912 103,224
Susan Walker 175,963 - 80,153 - - - 14,077 - 270,193 -
Graham Mclean 255,000 65,500 26,074 89,111 - - 20,400 5,000 301,474 159,611
Chris Ames 161,890 281,007 13,962 26,161 368,896 - - 3,587 544,748 310,755
Peter Field 271,006 265,692 26,231 26,113 - - - - 297,237 291,805
Anil Mathur 109,671 248,860 26,285 42,268 - - - - 135,956 291,128
Non-executive
Martin
Dünki - 35,795 - - - - - - - 35,795
William Gibson 42,500 14,167 - - - - - - 42,500 14,167
Chris Relleen 62,500 62,500 - - - - - - 62,500 62,500
Charles
Vaughan-Johnson - 18,362 - - - - - - - 18,362
Frederic
Vuilleumier 40,000 40,000 - - - - - - 40,000 40,000
--------- --------- ------- --------- ------- ----- ------- ------ --------- ---------
Totals 1,987,674 1,561,804 254,497 223,146 368,896 - 34,477 8,587 2,645,544 1,793,537
--------- --------- ------- --------- ------- ----- ------- ------ --------- ---------
Notes
1. The Executive directors' benefits in kind
include the value attributed to medical insurance,
permanent health insurance, spouse/partner
travel and cash alternatives to company cars.
Susan Walker received a payment of GBP50,000
for relocation expenses. She was appointed
as a director on 2 April 2015.
2. Anil Mathur retired as a director on 4 June
2015.
3. Chris Ames resigned from the board on 10 July
2015 and received a payment of GBP368,896
for loss of office. This included a payment
in lieu of notice equivalent to 12 months
of base salary and benefits in kind.
4. Chris Relleen receives an additional annual
fee for his chairmanship of the Audit Committee
and for his non-executive directorship of
Duncan Lawrie Limited.
5. William Gibson receives an additional annual
fee for his chairmanship of the Remuneration
Committee.
6. Martin Dünki resigned as a director on
24 November 2014.
7. Charles Vaughan-Johnson retired as director
on 5 June 2014.
Directors' pensions
UK employees, including executive directors, are eligible to
join pension schemes operated within the Group. Malcolm Perkins was
a member of The Linton Park Group Pension Scheme up until 28
February 2010. Peter Field and Anil Mathur were members of the
Linton Park Pension Scheme 2011 until 5 April 2012.
There was no pensionable service for Malcolm Perkins, Peter
Field and Anil Mathur during 2015.
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Tom Franks receives an excess non-pensionable salary supplement
equivalent to 10% of base salary. Chris Ames received an excess
non-pensionable salary supplement equivalent to 25% of base salary.
Graham Mclean and Susan Walker are members of the Linton Park Group
Personal Pension Scheme which is a defined contribution based
scheme.
In addition to the above, an unfunded pension of US$200,000 per
annum is paid to Gordon Fox, a former director of the company.
By order of the Board
Julia Morton
Secretary
27 April 2016
Consolidated income statement
for the year ended 31 December 2015
2015 2014
Separately Separately
Headline disclosed Headline disclosed
profit items Total profit items Total
(note 4) (note 4)
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2 257,800 - 257,800 238,868 - 238,868
Cost of sales 3 (173,606) (6,056) (179,662) (163,728) - (163,728)
-------- ---------- -------- -------- ---------- --------
Gross profit 84,194 (6,056) 78,138 75,140 - 75,140
Other operating income 1,872 - 1,872 2,179 - 2,179
Distribution costs (12,954) - (12,954) (12,700) - (12,700)
Administrative expenses (58,004) - (58,004) (53,507) - (53,507)
-------- ---------- -------- -------- ---------- --------
Trading profit 3 15,108 (6,056) 9,052 11,112 - 11,112
Share of associates'
results 5 4,182 - 4,182 1,092 - 1,092
Impairment of
available-for-sale
financial assets 6 - (516) (516) - (2,334) (2,334)
Impairment of property,
plant and equipment and
provisions 7 - 230 230 - (1,134) (1,134)
Profit on disposal of
non-current assets 8 - 3,687 3,687 - - -
Profit on disposal of
available-for-sale
investments - 353 353 - 447 447
Gain arising from changes
in fair value of
biological assets:
Excluding Malawi
-------- --------
Kwacha exceptional
gain 4,419 7,842
Malawi Kwacha
exceptional gain 16,220 978
-------- --------
19 - 20,639 20,639 - 8,820 8,820
-------- ---------- -------- -------- ---------- --------
Profit from operations 19,290 18,337 37,627 12,204 5,799 18,003
Investment income 1,440 - 1,440 2,161 - 2,161
-------- --------
Finance income 9 3,045 2,864
Finance costs 9 (687) (608)
Net exchange gain 9 798 607
Employee benefit expense 9 (1,699) (1,044)
-------- --------
Net finance income 9 3,156 (1,699) 1,457 2,863 (1,044) 1,819
-------- ---------- -------- -------- ---------- --------
Profit before tax 23,886 16,638 40,524 17,228 4,755 21,983
Taxation 10 (18,590) (13,673)
-------- --------
Profit for the year 21,934 8,310
-------- --------
Profit attributable to:
Owners of the parent 12,449 2,836
Non-controlling interests 9,485 5,474
-------- --------
21,934 8,310
-------- --------
Earnings per share -basic
and diluted 13 450.7p 102.7p
Statement of comprehensive income
for the year ended 31 December 2015
2015 2014
Notes GBP'000 GBP'000
Group
Profit for the year 21,934 8,310
------- -------
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of post employment benefit obligations 33 9,115 (20,341)
Deferred tax movement in relation to post employment benefit obligations 32 619 698
------- -------
9,734 (19,643)
------- -------
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences (15,535) 7,533
Available-for-sale investments:
Valuation gains taken to equity 23 211 2,822
Transferred to income statement on sale 23 (161) (364)
Share of other comprehensive income of associates (51) -
Tax relating to components of other comprehensive income (29) 72
------- -------
(15,565) 10,063
------- -------
Other comprehensive expense for the year, net of tax (5,831) (9,580)
------- -------
Total comprehensive income/(expense) for the year 16,103 (1,270)
------- -------
Total comprehensive income/(expense) attributable to:
Owners of the parent 12,157 (6,801)
Non-controlling interests 3,946 5,531
------- -------
16,103 (1,270)
------- -------
Company
Profit for the year 4,095 3,610
------- -------
Total comprehensive income for the year 4,095 3,610
------- -------
Consolidated balance sheet
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at 31 December 2015
2015 2014
Notes GBP'000 GBP'000
Non-current assets
Intangible assets 16 7,915 7,072
Property, plant and equipment 17 92,894 104,923
Investment properties 18 15,751 -
Biological assets 19 144,821 139,999
Prepaid operating leases 20 840 900
Investments in associates 22 48,882 8,664
Deferred tax assets 32 2,534 184
Available-for-sale financial assets 23 30,594 63,488
Held-to-maturity financial assets 24 27,661 -
Other investments - heritage assets 25 9,020 8,864
Retirement benefit surplus 33 176 805
Trade and other receivables 27 22,734 23,303
-------- --------
Total non-current assets 403,822 358,202
-------- --------
Current assets
Inventories 26 37,749 41,841
Trade and other receivables 27 55,554 63,292
Held-to-maturity financial assets 24 1,849 -
Current income tax assets 772 548
Cash and cash equivalents 28 237,772 257,164
-------- --------
Total current assets 333,696 362,845
-------- --------
Current liabilities
Borrowings 30 (5,366) (2,855)
Trade and other payables 29 (258,894) (258,292)
Current income tax liabilities (9,346) (5,609)
Employee benefit obligations 33 (1,017) (527)
Provisions 31 (267) (636)
-------- --------
Total current liabilities (274,890) (267,919)
-------- --------
Net current assets 58,806 94,926
-------- --------
Total assets less current liabilities 462,628 453,128
-------- --------
Non-current liabilities
Borrowings 30 (5,131) (42)
Trade and other payables 29 (4,392) (5,130)
Deferred tax liabilities 32 (42,481) (41,618)
Employee benefit obligations 33 (37,793) (41,885)
Other non-current liabilities - (98)
-------- --------
Total non-current liabilities (89,797) (88,773)
-------- --------
Net assets 372,831 364,355
-------- --------
Equity
Called up share capital 34 282 282
Share premium 15,298 15,298
Reserves 314,850 306,124
-------- --------
Equity attributable to owners of the parent 330,430 321,704
Non-controlling interests 42,401 42,651
-------- --------
Total equity 372,831 364,355
-------- --------
Company balance sheet
at 31 December 2015
2015 2014
Notes GBP'000 GBP'000
Non-current assets
Investments in subsidiaries 21 73,508 73,508
Available-for-sale financial assets 23 170 170
Other investments - heritage assets 25 10,213 8,869
------- -------
Total non-current assets 83,891 82,547
------- -------
Current assets
Amounts due from group undertakings 10,535 4,885
Current income tax asset 74 74
Cash and cash equivalents 28 2,202 -
------- -------
Total current assets 12,811 4,959
------- -------
Current liabilities
Trade and other payables 29 (133) (134)
Amounts due to group undertakings (30,168) (21,483)
------- -------
Total current liabilities (30,301) (21,617)
------- -------
Net current liabilities (17,490) (16,658)
------- -------
Total assets less current liabilities 66,401 65,889
------- -------
Non-current liabilities
Deferred tax liabilities 32 (216) (240)
------- -------
Total non-current liabilities (216) (240)
------- -------
Net assets 66,185 65,649
------- -------
Equity
Called up share capital 34 282 282
Share premium 15,298 15,298
Reserves 50,605 50,069
------- -------
Total equity 66,185 65,649
------- -------
The notes on pages 40 to 95 form part of the financial
statements.
The financial statements on pages 33 to 95 were approved on 27
April 2016 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 2015
2015 2014
Notes GBP'000 GBP'000
Cash generated from operations
Cash flows from operating activities 35 39,384 17,080
Interest paid (614) (655)
Income taxes paid (9,368) (11,595)
Interest received 3,081 2,871
Dividends received from associates 1,185 244
------- -------
Net cash flow from operating activities 33,668 7,945
------- -------
Cash flows from investing activities
Purchase of intangible assets (1,362) (66)
Purchase of property, plant and equipment (10,686) (19,019)
Proceeds from sale of non-current assets 6,542 264
Purchase of investment property (8,700) -
Biological asset - new planting (5,612) (5,072)
Part disposal of subsidiaries 299 251
Non-controlling interest subscription - 88
Purchase of own shares - (471)
Purchase of available-for-sale financial assets (2,288) (308)
Proceeds from sale of available-for-sale financial assets 1,677 1,935
Income from investments 1,440 2,161
Purchase of other investments - heritage assets (164) (126)
Proceeds from sale of other investments - heritage assets 12 5
------- -------
Net cash flow from investing activities (18,842) (20,358)
------- -------
Cash flows from financing activities
Equity dividends paid (3,480) (3,452)
Dividends paid to non-controlling interests (4,495) (3,990)
New loans 6,000 157
Loans repaid (397) (202)
Finance lease payments (4) (15)
------- -------
Net cash flow from financing activities (2,376) (7,502)
------- -------
Net increase/(decrease) in cash and cash equivalents 12,450 (19,915)
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Cash and cash equivalents at beginning of year 28 54,122 72,900
Exchange (losses)/gains on cash (966) 1,137
------- -------
Cash and cash equivalents at end of year 28 65,606 54,122
------- -------
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 2015
2015 2014
Notes GBP'000 GBP'000
Cash generated from operations
Profit before tax 4,071 3,592
Adjustments for:
(Profit)/loss on disposal of investments (21) 2
Interest income (315) (308)
Dividends from group companies (5,500) (5,000)
Decrease in trade and other payables (1) (4)
Net movement in intra-group balances 3,035 532
------- -------
Cash used in operations 1,269 (1,186)
Interest received 315 308
------- -------
Net cash flow from operating activities 1,584 (878)
------- -------
Cash flows from investing activities
Proceeds from sale of investments 32 5
Purchase of other investments - heritage assets (1,355) (126)
Purchase of own shares - (471)
Dividends received 5,500 5,000
------- -------
Net cash flow from investing activities 4,177 4,408
------- -------
Cash flows from financing activities
Equity dividends paid (3,559) (3,530)
------- -------
Net cash flow from financing activities (3,559) (3,530)
------- -------
Net movement in cash and cash equivalents 2,202 -
Cash and cash equivalents at beginning of year 28 - -
Exchange gain on cash - -
------- -------
Cash and cash equivalents at end of year 28 2,202 -
------- -------
Statement in changes in equity
for the year ended 31 December 2015
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 2014 283 15,298 (400) 323,680 (6,395) 332,466 40,788 373,254
Total
comprehensive
income/(expense)
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
Total
comprehensive
(expense)/income
for the year - - - 22,160 (10,003) 12,157 3,946 16,103
Dividends - - - (3,480) - (3,480) (4,495) (7,975)
Non-controlling
interest
subscription - - - (35) - (35) 299 264
Share of
associate's
other equity
movements - - - 101 - 101 - 101
Loss on dilution
of interest in
associate - - - (17) - (17) - (17)
------- ------- -------- -------- -------- ------- --------------- -------
At 31 December
2015 282 15,298 (400) 321,990 (6,740) 330,430 42,401 372,831
------- ------- -------- -------- -------- ------- --------------- -------
Company
At 1 January 2014 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
Total
comprehensive
income for the
year - - - 4,095 - 4,095 - 4,095
Dividends - - - (3,559) - (3,559) - (3,559)
------- ------- -------- -------- -------- ------- --------------- -------
At 31 December
2015 282 15,298 - 38,471 12,134 66,185 - 66,185
------- ------- -------- -------- -------- ------- --------------- -------
Other reserves of the group and company includes a GBP33,000
(2014: GBP33,000) capital redemption reserve and, in respect of the
group, net exchange differences of GBP49,298,000 deficit (2014:
GBP39,021,000 deficit).
Group retained earnings includes GBP140,684,000 (2014:
GBP143,122,000) 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, IFRS IC interpretations and the Companies Act
2006 applicable to companies reporting under IFRS.
The consolidated financial statements have been prepared on the
historical cost basis as modified by the revaluation of biological
assets, 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.
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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 Strategy Group led by the CEO. 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 nil to 10 per cent.
buildings per annum
Other short leasehold land unexpired term of the
and buildings lease
Plant, machinery, fixtures, 4 to 33 per cent. per
fittings and equipment annum
Assets held under finance leases are depreciated over their
expected useful lives on the same basis as owned assets, or, where
shorter, over the term of the relevant lease.
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date.
The gain or loss arising on the disposal or retirement of an
asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is included in the income
statement.
Investment properties
Properties held to earn rental income rather than for the
purpose of the group's principal activities are classified as
Investment properties. Investment properties are recorded at cost
less accumulated depreciation and any recognised impairment loss.
The depreciation policy is consistent with those described for
other group properties.
Income from investment properties is disclosed in 'Revenue'. The
related operating costs are immaterial and are included within
administrative expenses.
Biological assets
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 the 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.
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Annually harvested agricultural 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 - heritage assets
Other investments comprise fine art, documents, manuscripts and
philately which are measured at cost as fair value cannot be
reliably measured.
Investments in subsidiary companies
Investments in subsidiary companies are included at cost plus
incidental expenses less any provision for impairment. Impairment
reviews are performed by the directors when there has been an
indication of potential impairment.
Impairment of financial assets
(i) Assets carried at amortised costs
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.
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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 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
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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 33.
(v) Taxation
The group is subject to taxes in numerous jurisdictions.
Significant judgement is required in determining worldwide
provisions for taxes. There are many transactions and calculations
during the ordinary course of business for which the ultimate tax
determination is uncertain.
(vi) Identifiable intangible assets - customer
relationships
As described in note 16, goodwill and identifiable intangible
assets relating to customer relationships acquired are valued using
industry average multiples of assets under management, with the
assumption being made that the nature of the group's assets under
management are not dissimilar from industry averages and therefore
will be valued in a similar manner. The valuation technique used is
therefore sensitive to this assumption.
Changes in accounting policy and disclosures
(i) New and amended standards adopted by the
group
There are no new standards, amendments or interpretations with a
material impact on the group for the year ended 31 December
2015.
(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 2016 or later periods, but
the group has not adopted them early:
A number of new standards and amendments to standards and
interpretations are effective for annual periods beginning on or
after 1 January 2016, and have not been applied in preparing these
consolidated financial statement. None of these is expected to have
a significant effect on the consolidated financial statements of
the group, except the following set out below:
IAS 16 and IAS Reporting for bearer plants-
41 (amendments) effective from 1 January 2016
These amendments change the reporting
for bearer plants, such as tea
bushes, avocados, 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 endorsed by
the EU with an effective date
of 1 January 2016. This will
have a material impact on the
results of the group, the impact
of which is illustrated on page
13.
IFRS 15 Revenue from contracts with customers
- effective from 1 January 2018
This standard will replace IAS
18 which covers contracts for
good and services and IAS 11
which covers construction contracts.
The new standard is based on
the principle that revenue is
recognised when control of a
good or service transfers to
a customer - so the notion of
control replaces the existing
notion of risks and rewards.
The standard permits a modified
retrospective approach for the
adoption. Under this approach
entities will recognise transitional
adjustments in retained earnings
on the date of initial application
(eg 1 January 2018), ie without
restating the comparative period.
They will only need to apply
the new rules to contracts that
are not completed as of the date
of initial application. At this
stage, the group is not able
to estimate the impact of the
new rules on the financial statements.
This standard has not yet been
endorsed by the EU.
Notes to the accounts
1 Business and geographical segments
The principal activities of the group are as follows:
Agriculture
Engineering
Food Service
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:
Banking and
Agriculture Engineering Food Service Financial Services Other operations Consolidated
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
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 186,547 164,247 24,126 28,872 31,903 30,941 13,077 12,373 2,147 2,435 257,800 238,868
------- ------- ------- ------- ------- ------- -------- -------- ------- ------- -------- --------
Trading profit
Segment
profit/(loss) 26,300 27,204 (5,462) (8,387) 723 943 (3,644) (2,496) (103) 131 17,814 17,395
------- ------- ------- ------- ------- ------- -------- -------- ------- -------
Unallocated
corporate expenses (8,762) (6,283)
-------- --------
Trading profit 9,052 11,112
Share of
associates'
results 4,182 1,092 4,182 1,092
Impairment of
available-for-sale
financial assets (516) (2,334)
Impairment of
property, plant
and equipment and
provisions 230 (1,134)
Profit on disposal
of non-current
assets 3,687 -
Profit on disposal
of
available-for-sale
investments 353 447
Gain arising from
changes in fair
value of
biological assets 20,639 8,820 20,639 8,820
Investment income 1,440 2,161
Net finance income 1,457 1,819
-------- --------
Profit before tax 40,524 21,983
Taxation (18,590) (13,673)
-------- --------
Profit after tax 21,934 8,310
-------- --------
Other information
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Segment assets 311,406 293,750 21,018 30,907 22,817 23,004 247,179 254,503 1,620 1,830 604,040 603,994
Investments in
associates 48,882 8,664 48,882 8,664
Unallocated assets 84,596 108,389
-------- --------
Consolidated total
assets 737,518 721,047
-------- --------
Segment liabilities (45,399) (32,252) (4,336) (12,107) (4,533) (5,814) (211,100) (217,449) (516) (577) (265,884) (268,199)
Unallocated
liabilities (98,803) (88,493)
-------- --------
Consolidated total
liabilities (364,687) (356,692)
-------- --------
Capital expenditure 7,593 8,492 853 2,213 1,640 2,734 175 193 9,125 5,387 19,386 19,019
Depreciation (4,967) (4,876) (1,989) (2,033) (2,011) (2,229) (305) (354) (252) (167) (9,524) (9,659)
Amortisation (6) (10) (7) (2) (111) (83) (392) (411) (516) (506)
Impairments (824) (552) (2,360) (552) (3,184)
Segment assets consist primarily of intangible assets, property,
plant and equipment, investment properties, biological assets,
prepaid operating leases, inventories, trade and other receivables
and cash and cash equivalents. Receivables for tax have been
excluded. Investments in associates, valued using the equity
method, have been shown separately in the segment information.
Segment liabilities are primarily those relating to the operating
activities and generally exclude liabilities for taxes, short-term
loans, finance leases and non-current liabilities.
Geographical segments
The group operations are based in nine main geographical areas.
The United Kingdom is the home country of the parent. The principal
geographical areas in which the group operates are as follows:
United Kingdom
Continental Europe
Bangladesh
India
Kenya
Malawi
North America and Bermuda
South Africa
South America
The following table provides an analysis of the group's sales by
geographical market, irrespective of the origin of the
goods/services:
2015 2014
GBP'000 GBP'000
United Kingdom 62,054 67,478
Continental Europe 30,512 21,396
Bangladesh 17,875 16,645
India 63,495 58,828
Kenya 34,618 25,933
Malawi 5,860 6,092
North America and Bermuda 8,991 11,475
South Africa 1,368 1,168
South America 3,738 5,125
Other 29,289 24,728
------- -------
257,800 238,868
------- -------
The following is an analysis of the carrying amount of segment
assets and additions to property, plant and equipment and
investment properties, analysed by the geographical area in which
the assets are located:
Carrying amount of segment Additions to property, Additions to
assets plant and equipment investment properties
2015 2014 2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
United Kingdom 292,022 304,876 2,939 10,052 8,700 -
Continental Europe 4,923 5,590 147 412 - -
Bangladesh 59,308 52,663 745 988 - -
India 84,897 79,712 2,676 2,883 - -
Kenya 73,041 66,189 2,750 1,335 - -
Malawi 59,498 62,005 591 1,746 - -
North America and
Bermuda 11,793 11,170 238 670 - -
South Africa 9,883 10,347 387 507 - -
South America 8,675 11,442 213 426 - -
----------------- ----------------- ----------- ----------- ----------- -----------
604,040 603,994 10,686 19,019 8,700 -
----------------- ----------------- ----------- ----------- ----------- -----------
Results of banking subsidiaries 2015 2014
GBP'000 GBP'000
Interest receivable third parties 3,157 2,415
group companies 32 -
Interest payable third parties (576) (163)
group companies (24) (17)
------- -------
Net interest income 2,589 2,235
Fee and commission income 11,418 10,707
Fee and commission expense (922) (586)
Inter-segment net interest (8) 17
------- -------
Revenue 13,077 12,373
Other operating income 45 211
------- -------
13,122 12,584
Operating expenses (16,766) (15,080)
------- -------
Segment loss (3,644) (2,496)
------- -------
2 Revenue
An analysis of the group's revenue is as follows:
2015 2014
GBP'000 GBP'000
Sale of goods 187,712 165,768
Distribution and warehousing revenue 31,903 30,941
Engineering services revenue 24,126 28,872
Banking service revenue 13,077 12,373
Agency commission revenue 523 644
Property rental revenue 459 270
------- -------
Total group revenue 257,800 238,868
Other operating income 1,872 2,179
Investment income 1,440 2,161
Interest income 3,045 2,864
------- -------
Total group income 264,157 246,072
------- -------
3 Trading profit
2015 2014
GBP'000 GBP'000
The following items have been included in arriving at trading profit:
Employment costs (note 14)* 100,167 82,113
Inventories:
Cost of inventories recognised as an expense (included in cost of sales) 124,013 110,492
Cost of inventories provision recognised as an expense (included in cost of sales) 520 411
Cost of inventories provision reversed (included in cost of sales) (22) (19)
Depreciation of property, plant and equipment:
Owned assets 9,371 9,619
Under finance leases 114 40
Amortisation of intangibles (included in administrative expenses) 516 506
Impairment of available-for-sale financial assets (included in administrative expenses) 36 26
Profit on disposal of property, plant and equipment (138) (125)
Operating leases - lease payments:
Plant and machinery 780 353
Property 711 938
Repairs and maintenance expenditure on property, plant and equipment 4,505 4,650
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------- -------
* Includes a charge of GBP6,056,000 (2014: GBPnil)
in cost of sales for past service relating
to recently enacted legislation in Bangladesh
which requires companies to make a payment
on retirement or other events terminating
employment, based upon compensation and length
of service.
Currency exchange (gains)/losses (credited)/charged to income include:
Revenue (1,747) (652)
Cost of sales 70 (16)
Distribution costs 18 (173)
Administrative expenses (52) 14
Finance income (798) (607)
------ ------
(2,509) (1,434)
------ ------
Included in the amounts above is an exchange gain of
GBP1,792,000 (2014: GBP1,879,000 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 184 179
Subsidiary companies 755 691
----- ---
939 870
Audit - related regulatory reporting 71 60
Tax services:
Compliance services 25 19
Advisory services 105 -
Other services not covered above 288 30
----- ---
1,428 979
----- ---
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
and have been separately disclosed:
- Provision for past service costs in Bangladesh.
- 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 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.
5 Share of associates' results
The group's share of the results of associates is analysed
below:
2015 2014
GBP'000 GBP'000
Profit before tax 5,188 1,814
Taxation (1,006) (722)
------- -------
Profit after tax 4,182 1,092
------- -------
Following a re-evaluation of the group's relationship with
BF&M Limited (note 22), six months of the group's share of
BF&M's result for the period ending 31 December 2015 have been
included in the above results. In addition, GBP22,677,000 has been
credited to the income statement which reflected the negative
goodwill arising from the recognition of BF&M Limited as an
associate, this has been offset by an impairment provision of
GBP22,677,000 which has been provided against the group's equity
carrying value of this investment to reflect its fair value. The
net effect of these two items on the income statement is
GBPnil.
6 Impairment of available-for-sale financial assets
Impairment provisions of GBP279,000 (2014: GBP2,334,000) and
GBP237,000 (2014: GBPnil) have been made against the group's
investments in Ascendant Group, a Bermudian power company and
Bermuda Press Holdings, a Bermudian newspaper publishing and
commercial printing company respectively, following significant
long-term declines in the value of these investments.
7 Impairment of property, plant and equipment and provisions
Following the closure of AKD Engineering Limited in June 2015
and the subsequent sale of the property, plant and equipment, the
provisions made in 2014 have now been utilised resulting in a
GBP230,000 credit of excess amounts. In 2014, a total provision of
GBP1,134,000 was made, which included a GBP824,000 impairment
provision against property, plant and equipment and GBP310,000 of
provisions including GBP267,000 in relation to an onerous
lease.
8 Profit on disposal of non-current assets
A profit of GBP1,613,000 was realised in relation to the
property, plant and equipment previously owned by AKD Engineering
Limited which was sold following the closure of the business at the
end of June 2015.
Profit of GBP2,074,000 was realised during the year in relation
to the disposal of former sites owned by Abbey Metal Finishing
Company Limited and GU Cutting and Grinding Services Limited.
9 Finance income and costs
2015 2014
GBP'000 GBP'000
Interest payable on loans and bank overdrafts (687) (607)
Interest payable on obligations under finance leases - (1)
------- -------
Finance costs (687) (608)
Finance income - interest income on short-term bank deposits 3,045 2,864
Net exchange gain on foreign cash balances 798 607
Employee benefit expense (note 33) (1,699) (1,044)
------- -------
Net finance income 1,457 1,819
------- -------
The above figures do not include any amounts relating to the
banking subsidiaries.
10 Taxation
Analysis of charge in the year 2015 2014
GBP'000 GBP'000 GBP'000
Current tax
UK corporation tax
UK corporation tax at 20.25 per cent. (2014: 21.50 per cent.) 152 882
Double tax relief (152) (882)
-------- -------
- -
Foreign tax
Corporation tax 11,723 10,353
Adjustment in respect of prior years 1,536 646
-------- -------
13,259 10,999
------- -------
Total current tax 13,259 10,999
Deferred tax
Origination and reversal of timing differences
Overseas 5,331 2,674
------- -------
Tax on profit on ordinary activities 18,590 13,673
------- -------
Factors affecting tax charge for the year
Profit on ordinary activities before tax 40,524 21,983
Share of associated undertakings profit (4,182) (1,092)
------- -------
Group profit on ordinary activities before tax 36,342 20,891
------- -------
Tax on ordinary activities at the standard rate of corporation tax in the UK of
20.25 per
cent. (2014: 21.5 per cent.) 7,359 4,492
Effects of:
Adjustment to tax in respect of prior years 1,536 646
Expenses not deductible for tax purposes 1,765 2,477
Adjustment in respect of foreign tax rates 4,991 4,100
Additional tax arising on dividends from overseas companies 1,244 643
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Other income not charged to tax (1,295) (1,787)
Increase in tax losses carried forward 2,350 3,207
Movement in other timing differences 640 (105)
------- -------
Total tax charge for the year 18,590 13,673
------- -------
11 Profit for the year
2015 2014
GBP'000 GBP'000
The profit of the company was: 4,095 3,610
------- -------
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
2015 2014
GBP'000 GBP'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2014 of
92p (2013: 91p) per share 2,541 2,513
Interim dividend for the year ended 31 December 2015 of
34p (2014: 34p) per share 939 939
------- -------
3,480 3,452
------- -------
Dividends amounting to GBP79,000 (2014: GBP78,000) 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 2015 of
95p (2014: 92p) per share 2,683 2,599
----- -----
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)
2015 2014
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 12,449 2,762,000 450.7 2,836 2,762,264 102.7
-------- --------- ----- -------- --------- -----
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 34).
14 Employees
2015 2014
Number Number
Average number of employees by activity:
Agriculture 77,552 79,994
Engineering 319 390
Food Service 307 283
Banking and Financial Services 154 127
Central Management 22 23
Other 21 17
------- -------
78,375 80,834
------- -------
2015 2014
GBP'000 GBP'000
Employment costs:
Wages and salaries 84,280 74,307
Social security costs 3,540 3,626
Employee benefit obligations (see note 33) - UK 2,138 1,872
- Overseas 10,209 2,308
------- -------
100,167 82,113
------- -------
Total remuneration paid to key employees who are members of the
Executive Committees and who are key employees of Duncan Lawrie,
excluding directors of Camellia Plc, amounted to GBP844,000 (2014:
GBP875,000).
Further details of directors' emoluments are set out on pages 30
to 31.
15 Emoluments of the directors
2015 2014
GBP'000 GBP'000
Aggregate emoluments excluding pension contributions 2,611 1,785
------- -------
Emoluments of the highest paid director excluding pension
contributions were GBP476,000 (2014: GBP466,000).
Further details of directors' emoluments are set out on pages 30
to 31.
16 Intangible assets
Customer Computer
Goodwill relationships software Total
GBP'000 GBP'000 GBP'000 GBP'000
Group
Cost
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 1 January 2015 3,978 4,814 5,044 13,836
Exchange differences - - (1) (1)
Additions - - 1,362 1,362
Disposals - - (43) (43)
-------- ------------- -------- -------
At 31 December 2015 3,978 4,814 6,362 15,154
-------- ------------- -------- -------
Amortisation
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 1 January 2015 - 2,074 4,690 6,764
Exchange differences - - 2 2
Disposals - - (43) (43)
Charge for the year - 241 275 516
-------- ------------- -------- -------
At 31 December 2015 - 2,315 4,924 7,239
-------- ------------- -------- -------
Net book value at 31 December 2015 3,978 2,499 1,438 7,915
-------- ------------- -------- -------
Net book value at 31 December 2014 3,978 2,740 354 7,072
-------- ------------- -------- -------
Impairment testing
Timing of impairment testing
The group's impairment test in respect of goodwill and customer
relationships 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
2015. 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
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The recoverable amount of the CGU to which customer
relationships and goodwill have been allocated was assessed at each
respective testing date in 2015 and 2014. 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 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 1 January 2015 93,371 106,607 18,965 218,943
Exchange differences (1,672) (3,846) (164) (5,682)
Additions 4,189 5,323 1,174 10,686
Disposals (3,775) (3,480) (952) (8,207)
Reclassification to investment properties (7,750) - - (7,750)
Reclassification to other investments - heritage assets - - (94) (94)
--------- --------- ------------ -------
At 31 December 2015 84,363 104,604 18,929 207,896
--------- --------- ------------ -------
Depreciation
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 1 January 2015 37,926 65,844 10,250 114,020
Exchange differences (486) (1,715) (119) (2,320)
Charge for the year 2,592 5,924 969 9,485
Disposals (1,719) (3,095) (676) (5,490)
Reclassification to investment properties (608) - - (608)
Reclassification to other investments - heritage assets - - (85) (85)
--------- --------- ------------ -------
At 31 December 2015 37,705 66,958 10,339 115,002
--------- --------- ------------ -------
Net book value at 31 December 2015 46,658 37,646 8,590 92,894
--------- --------- ------------ -------
Net book value at 31 December 2014 55,445 40,763 8,715 104,923
--------- --------- ------------ -------
Land and buildings at net book value comprise:
2015 2014
GBP'000 GBP'000
Freehold 25,363 33,779
Long leasehold 20,794 20,630
Short leasehold 501 1,036
------------ -------
46,658 55,445
------------ -------
Plant and machinery includes assets held under finance leases.
The depreciation charge for the year in respect of these assets was
GBPnil (2014: GBP9,000) and their net book value was GBPnil (2014:
GBP14,000).
The amount of expenditure for property, plant and equipment in
the course of construction amounted to GBP1,901,000 (2014:
GBP948,000).
18 Investment properties
GBP'000
Group
Cost
At 1 January 2015 -
Exchange differences (61)
Additions 8,700
Transfers from property, plant and equipment 7,750
-------
At 31 December 2015 16,389
-------
Depreciation
At 1 January 2015 -
Exchange differences (9)
Charge for the year 39
Transfers from property, plant and equipment 608
-------
At 31 December 2015 638
-------
Net book value at 31 December 2015 15,751
-------
Included in revenue is GBP459,000 of rental income generated
from investment properties. Direct operating expenses arising on
the investment property, the majority of which generated rental
income in the period, amount to GBP238,000.
At the end of the year the fair value of investment properties
was GBP21,446,000. Investment properties were valued by the
directors (fair value hierarchy Level 2).
19 Biological assets
Edible
Tea nuts Timber Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Group
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 1 January 2015 85,560 25,966 10,152 18,321 139,999
Exchange differences (8,002) (7,847) (1,757) (534) (18,140)
New planting additions 2,487 2,602 523 - 5,612
Capitalised cultivation costs - 1,788 - 4,323 6,111
Gains arising from changes in fair value less estimated
point-of-sale costs 5,199 12,217 1,748 1,475 20,639
Decreases due to harvesting - (4,009) (465) (4,926) (9,400)
------- ------- ------- ------- -------
At 31 December 2015 85,244 30,717 10,201 18,659 144,821
------- ------- ------- ------- -------
Other includes avocados, citrus, grapes, livestock, maize,
pineapples, rubber and soya.
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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 2015
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
% % % %
12.0 10.5 5.0
2015 13.5 - 17.5 - 17.5 - 17.5
12.0 10.5 5.0
2014 13.5 - 17.5 - 17.5 - 17.5
During the year the Malawian kwacha depreciated in value from
725.05 (2014: 712.19) to the pound sterling at 1 January 2015 to
984.22 (2014: 725.05) to the pound sterling at 31 December 2015.
The functional currency of our Malawian subsidiaries is the kwacha.
The 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 2015 has generated a credit of GBP17,917,000 (2014:
GBP6,546,000) including a gain of GBP16,220,000 (2014: GBP978,000)
due to the currency devaluation which is included in the overall
gain of GBP20,639,000 (2014: GBP8,820,000) credited to the income
statement. This has been largely offset by a foreign exchange
translation loss charged to reserves.
Fair value measurement
All of the biological assets fall under level 3 of the hierarchy
defined in IFRS 13.
The basis upon which the valuations are determined is set out in
accounting policies on page 43.
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
GBP79,438,000 (2014: GBP73,457,000) which includes a gain on
initial recognition at the point of harvest of GBP14,128,000 (2014:
GBP13,093,000).
The areas planted to the various crop types at the end of the
year were:
2015 2014
Hectares Hectares
Tea 34,617 34,345
Macadamia 3,338 3,060
Pistachios 131 130
Almonds 56 56
Timber 6,251 5,822
Arable crops 3,374 3,528
Avocados 451 414
Citrus 177 178
Pineapples 55 50
Rubber 1,968 1,901
Wine grapes 73 75
-------- --------
2015 2014
Head Head
Livestock numbers at the end of the year 4,500 3,874
-------- --------
Output of agricultural produce during the year was:
2015 2014
Metric Metric
tonnes tonnes
Tea 63,366 67,555
Macadamia 1,156 1,085
Pistachios 31 621
Arable crops 22,981 12,838
Avocados 7,084 6,339
Citrus 4,844 5,618
Pineapples 1,752 1,552
Rubber 629 601
Wine grapes 625 718
-------- --------
2015 2014
Cubic Cubic
metres metres
Timber 125,557 122,768
-------- --------
20 Prepaid operating leases
GBP'000
Group
Cost
At 1 January 2014 910
Exchange differences 11
-------
At 1 January 2015 921
Exchange differences (60)
-------
At 31 December 2015 861
-------
Amortisation
At 1 January 2014 20
Charge for the year 1
-------
At 1 January 2015 21
Exchange differences (1)
Charge for the year 1
-------
At 31 December 2015 21
-------
Net book value at 31 December 2015 840
-------
Net book value at 31 December 2014 900
-------
21 Investments in subsidiaries
2015 2014
GBP'000 GBP'000
Company
Cost
At 1 January and 31 December
73,508 73,508
------- -------
22 Investments in associates
2015 2014
GBP'000 GBP'000
Group
At 1 January 8,664 7,343
Exchange differences 4,231 473
Transfer from available-for-sale financial assets 34,435 -
Negative goodwill on initial recognition as an associate (note 5) 22,677 -
Share of profit (note 5) 4,182 1,092
Dividends (1,185) (244)
Other equity movements 33 -
------- -------
At 31 December 73,037 8,664
------- -------
Provision for diminution in value
At 1 January - -
Exchange differences 1,478 -
Provided during year (note 5) 22,677 -
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------- -------
At 31 December 24,155 -
------- -------
Net book value at 31 December 48,882 8,664
------- -------
From 1 July 2015, following a re-evaluation of the group's
relationship with BF&M Limited, the directors concluded that
the group is in a position to exercise significant influence over
BF&M Limited. As a result the investment in this company has
been reclassified from available-for-sale financial assets to an
investment in associate. The result of this reclassification is
that investments in associates increase by GBP57,112,000 reflecting
the group's equity interest in BF&M Limited and
available-for-sale financial assets decline by GBP34,435,000, being
the market value of the group's shareholding. The difference of
GBP22,677,000 has been transferred to the income statement, this is
offset by an impairment provision of GBP22,677,000 which has been
made against the group's equity carrying value of this investment,
due to the significant difference between the equity value of the
investment and the market value at 1 July 2015.
Details of the group's associates are shown in note 40.
The group's share of the results of its principal associates and
its share of the assets (including goodwill) and liabilities are as
follows:
Country of Interest Market
incorporation Assets Liabilities Revenues Profit held value
GBP'000 GBP'000 GBP'000 GBP'000 % GBP'000
2015
Listed
BF&M Limited Bermuda 411,850 (348,899) 60,231 2,946 36.1 35,932
United Finance Limited Bangladesh 63,566 (55,359) 6,355 1,083 38.4 10,653
United Insurance
Company Limited Bangladesh 2,477 (598) 283 153 37.0 3,197
------- ----------- -------- ------- -------
477,893 (404,856) 66,869 4,182 49,782
------- ----------- -------- ------- -------
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
------- ----------- -------- ------- -------
23 Available-for-sale financial assets
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Cost or fair value
At 1 January 67,770 61,697 170 170
Exchange differences 1,328 3,793 - -
Transfer to investments in associates (34,435) - - -
Fair value adjustment 211 2,822 - -
Additions 2,288 308 - -
Disposals (1,324) (486) - -
Fair value adjustment for disposal (161) (364) - -
-------- ------- ----------- ----------
At 31 December 35,677 67,770 170 170
-------- ------- ----------- ----------
Provision for diminution in value
At 1 January 4,282 1,696
Exchange differences 249 226
Provided during year 552 2,360
-------- -------
At 31 December 5,083 4,282
-------- -------
Net book value at 31 December 30,594 63,488 170 170
-------- ------- ----------- ----------
Available-for-sale financial assets include the following:
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Listed securities:
Equity securities - UK 939 862
Equity securities - Bermuda 5,210 39,101
Equity securities - Japan 12,162 11,269
Equity securities - Switzerland 6,645 6,092
Equity securities - US 2,107 2,719
Equity securities - India 1,033 1,809
Equity securities - Europe 366 351
Equity securities - Other 329 338
Debentures with fixed interest of 12.5% and repayable twice yearly
until 31 October 2019 -
Kenya 573 766
Unlisted investments 1,230 181 170 170
-------- -------- ---------- ----------
30,594 63,488 170 170
-------- -------- ---------- ----------
Available-for-sale financial assets are denominated in the
following currencies:
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Sterling 2,159 1,032 170 170
US Dollar 2,107 2,719
Euro 366 351
Swiss Franc 6,645 6,092
Indian Rupee 1,034 1,809
Bermudian Dollar 5,210 39,101
Japanese Yen 12,162 11,269
Kenyan Shilling 580 772
Other 331 343
--------- --------- ----------- ----------
30,594 63,488 170 170
--------- --------- ----------- ----------
24 Held-to-maturity financial assets
Group
2015 2014
GBP'000 GBP'000
Cost or fair value
At 1 January - 1,000
Additions 29,510 -
Disposals - (1,000)
--------- --------
At 31 December 29,510 -
--------- --------
Net book value comprises:
Debt securities 29,510 -
--------- --------
Current element 1,849 -
Non-current element 27,661 -
--------- --------
29,510 -
--------- --------
Debt securities are held by the group's banking operation and
are readily tradable in the London markets.
25 Other investments - heritage assets
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 8,864 8,745 8,869 8,750
Additions 164 126 1,355 126
Disposals (17) (7) (11) (7)
Transfers from property, plant and equipment 9 - - -
--------- -------- ---------- ---------
At 31 December 9,020 8,864 10,213 8,869
--------- -------- ---------- ---------
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Heritage assets comprise the group's and company's investment in
fine art, philately, documents and manuscripts. The market value of
these collections is expected to be in excess of book value.
26 Inventories
2015 2014
GBP'000 GBP'000
Group
Made tea 23,557 24,417
Other agricultural produce 1,423 979
Work in progress 1,831 2,773
Trading stocks 1,818 2,659
Raw materials and consumables 9,120 11,013
------- -------
37,749 41,841
------- -------
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 GBP23,557,000
(2014: GBP24,417,000) are costs associated with the growing and
cultivation of green leaf from our own estates of GBP12,311,000
(2014: GBP12,095,000). This would increase by GBP2,580,000 (2014:
GBP2,516,000) if estimated green leaf fair values at harvest were
applied. The impact on the income statement would be a decrease in
profit for the year to 31 December 2015 of GBP64,000 (2014:
GBP2,587,000) and a decrease in taxation of GBP22,000 (2014:
GBP900,000).
The year end inventories balance is stated after a write-down
provision of GBP181,000 (2014: GBP104,000).
27 Trade and other receivables
Group
2015 2014
GBP'000 GBP'000
Group
Current:
Amounts due from customers of banking subsidiaries 14,263 16,688
Trade receivables 25,617 28,976
Amounts owed by associated undertakings 11 -
Other receivables 7,854 8,532
Prepayments and accrued income 7,809 9,096
-------- --------
55,554 63,292
-------- --------
Non-current:
Amounts due from customers of banking subsidiaries 21,570 22,066
Other receivables 1,164 1,237
-------- --------
22,734 23,303
-------- --------
The carrying amounts of the group's trade and other receivables
are denominated in the following currencies:
2015 2014
GBP'000 GBP'000
Current:
Sterling 27,581 33,501
US Dollar 3,129 5,791
Euro 1,230 1,487
Kenyan Shilling 2,420 1,741
Indian Rupee 17,835 16,188
Malawian Kwacha 814 1,183
Bangladesh Taka 1,244 2,144
South African Rand 152 127
Brazilian Real 610 508
Other 539 622
------- -------
55,554 63,292
------- -------
Non-current:
Sterling 21,490 21,912
US Dollar 81 154
Kenyan Shilling 325 340
Indian Rupee 421 403
Malawian Kwacha 158 230
Bangladesh Taka 259 264
------- -------
22,734 23,303
------- -------
Included within trade receivables is a provision for doubtful
debts of GBP947,000 (2014: GBP595,000) and all other trade
receivables are with normal trading partners and there is no
history of defaults.
Trade receivables include receivables of GBP6,613,000 (2014:
GBP3,797,000) 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:
2015 2014
GBP'000 GBP'000
Up to 30 days 4,411 2,308
30-60 days 1,417 510
60-90 days 251 496
Over 90 days 534 483
------- -------
6,613 3,797
------- -------
28 Cash and cash equivalents
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 157,157 190,542 2,202 -
Short-term bank deposits 40,149 36,290 - -
Short-term liquid investments 40,466 30,332 - -
--------- -------- ----------- -----------
237,772 257,164 2,202 -
--------- -------- ----------- -----------
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 GBP167,413,000 (2014:
GBP200,285,000) which are held by the group's banking subsidiaries
and which are an integral part of the banking operations.
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents (excluding banking operations) 70,359 56,879 2,202 -
Bank overdrafts (note 30) (4,753) (2,757) - -
------------- ------------- ------- -------
65,606 54,122 2,202 -
------------- ------------- ------- -------
2015 2014 2015 2014
Effective interest rate:
Short-term deposits 4.00 - 20.00% 0.40 - 12.00% - -
Short-term liquid investments 0.07 - 0.47% 0.00 - 0.77% - -
Average maturity period:
Short-term deposits 103 days 77 days - -
Short-term liquid investments 40 days 16 days - -
29 Trade and other payables
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Current
Amounts due to customers of banking subsidiaries 204,200 209,677 - -
Trade payables 26,468 23,913 - -
Other taxation and social security 2,671 2,304 - -
Other payables 20,175 14,640 133 134
Accruals 5,380 7,758 - -
-------- -------- ---------- ----------
258,894 258,292 133 134
-------- -------- ---------- ----------
Non-current:
Amounts due to customers of banking subsidiaries 4,392 5,130 - -
-------- -------- ---------- ----------
30 Financial liabilities - borrowings
The repayment of bank loans and overdrafts fall due as
follows:
2015 2014
GBP'000 GBP'000
Group
Current:
Bank overdrafts 4,753 2,757
Bank loans 613 94
Finance leases - 4
------- -------
5,366 2,855
------- -------
Current borrowings include the following amounts secured on biological assets and property,
plant and equipment:
Bank overdrafts 3,833 1,429
Bank loans 613 94
Finance leases - 4
------- -------
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Present value of finance lease liabilities 4,446 1,527
------- -------
Non-current:
Bank loans 5,131 42
------- -------
Non-current borrowings include the following amounts secured on biological assets and investment
property:
Bank loans 5,131 42
------- -------
The repayment of bank loans and overdrafts fall due as follows:
Within one year or on demand (included in current liabilities) 5,366 2,851
Between 1 - 2 years 609 12
Between 2 - 5 years 4,514 14
After 5 years 8 16
------- -------
10,497 2,893
------- -------
Minimum finance lease payments fall due as follows:
Within one year or on demand (included in current liabilities) - 4
------- -------
Present value of finance lease liabilities - 4
------- -------
The present value of finance lease liabilities fall due as
follows:
2015 2014
GBP'000 GBP'000
Within one year or on demand (included in current liabilities) - 4
------------ -----------
The rates of interest payable by the group ranged between:
2015 2014
% %
Overdrafts 2.25 - 36.00 2.25 - 36.00
Bank loans 3.03 9.00 - 13.00
Finance leases - 18.00
31 Provisions
Onerous lease Others Total
GBP'000 GBP'000 GBP'000
Group
At 1 January 2014 450 210 660
Utilised in the period (450) - (450)
Provided in the period 267 159 426
------------- ------- -------
At 1 January 2015 267 369 636
Utilised in the period (63) (306) (369)
Provided in the period - 230 230
Unused amounts reversed in period (204) (26) (230)
------------- ------- -------
At 31 December 2015 - 267 267
------------- ------- -------
Current:
At 31 December 2015 - 267 267
------------- ------- -------
At 31 December 2014 267 369 636
------------- ------- -------
Others relate to provisions for claims and dilapidations.
32 Deferred tax
The net movement on the deferred tax account is set out
below:
Group Company
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 41,434 39,106 240 258
Exchange differences (6,228) 424 - -
Charged/(credited) to the income statement 5,331 2,674 (24) (18)
Credited to equity (590) (770) - -
--------- -------- ----------- ----------
At 31 December 39,947 41,434 216 240
--------- -------- ----------- ----------
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 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 1 January 2015 45,125 282 - 45,407
Exchange differences (6,316) 2 (17) (6,331)
Charged to the income statement 7,165 81 95 7,341
Credited/(charged) to equity 5 (341) - (336)
------------ --------- ------- -------
At 31 December 2015 45,979 24 78 46,081
------------ --------- ------- -------
Deferred tax assets offset (3,600)
-------
Net deferred tax liability after offset 42,481
-------
Deferred tax assets
Pension
scheme
Tax losses asset Other Total
GBP'000 GBP'000 GBP'000 GBP'000
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
Charged to equity - 627 72 699
------------ --------- ------- -------
At 1 January 2015 725 897 2,351 3,973
Exchange differences 4 4 (111) (103)
(Charged)/credited to the income statement (254) (14) 2,278 2,010
Credited/(charged) to equity - 278 (24) 254
------------ --------- ------- -------
At 31 December 2015 475 1,165 4,494 6,134
------------ --------- -------
Offset against deferred tax liabilities (3,600)
-------
Net deferred tax asset after offset 2,534
-------
Included within deferred tax liabilities are GBP40,768,000
(2014: GBP39,495,000) of accelerated tax depreciation relating to
biological assets.
Deferred tax liabilities of GBP20,718,000 (2014: GBP21,415,000)
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 GBP7,045,000 (2014:
GBP8,054,000) in respect of losses that can be carried forward
against future taxable income.
33 Employee benefit obligations
(i) Pensions
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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. A full actuarial valuation was undertaken as at
1 July 2014 and updated to 31 December 2015 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. Active members earn accruals at
a rate of 1/80th per year of service.
The overseas schemes are operated in group subsidiaries located
in Bangladesh, India and the Netherlands. Actuarial valuations have
been updated to 31 December 2015 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:
2015 2014
% per annum % per annum
UK schemes
Rate of increase in salaries 2.00 2.00
Rate of increase to LPI (Limited Price Indexation) pensions in payment 2.00 - 5.00 2.00 - 5.00
Discount rate applied to scheme liabilities 3.50 3.50
Inflation assumption (CPI/RPI) 2.00/3.00 2.00/3.00
Assumptions regarding future mortality experience are based on
advice received from independent actuaries. The current mortality
tables used are S2PA, on a year of birth basis, with CMI_2013
future improvement factors and subject to a long term annual rate
of future improvement of 1.25% per annum. This results in males and
females aged 65 having life expectancies of 22 years (2014: 22
years) and 24 years respectively (2014: 24 years).
Overseas schemes
Rate of increase in salaries 1.50 - 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 2.30 - 9.0 2.10 - 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:
2015 2014
% 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 - 14.00 8.00 - 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 0.5% lower 1.8% increase
Post-retirement discount rate 0.5% lower 5.7% increase
Salary increase rate 0.25% lower 0.2% decrease
Inflation rate 0.25% lower 1.5% decrease
Long-term rate of improvement of mortality 0.25% higher 1.4% 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 re-running the figures as at the last formal
actuarial valuation at 1 July 2014. 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 2014 the allocation of the present value of the UK
scheme liabilities was as follows:
%
Active members 11
Deferred pensioners 28
Current pensioners 61
---
Total membership 100
---
(iii) Actuarial valuations
2015 2014
UK Overseas Total UK Overseas Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Equities and property 89,640 493 90,133 93,247 494 93,741
Bonds 53,069 12,848 65,917 52,088 11,826 63,914
Cash 6,939 5,356 12,295 4,359 4,197 8,556
Other - 3,682 3,682 - 3,421 3,421
-------- -------- -------- -------- -------- --------
Total fair value of plan assets 149,648 22,379 172,027 149,694 19,938 169,632
Present value of defined benefit
obligations (174,129) (36,532) (210,661) (184,326) (26,913) (211,239)
-------- -------- -------- -------- -------- --------
Total deficit in the schemes (24,481) (14,153) (38,634) (34,632) (6,975) (41,607)
-------- -------- -------- -------- -------- --------
Amount recognised as asset in the
balance sheet - 176 176 - 805 805
Amount recognised as current liability
in the balance sheet - (1,017) (1,017) - (527) (527)
Amount recognised as non-current
liability in the balance sheet (24,481) (13,312) (37,793) (34,632) (7,253) (41,885)
-------- -------- -------- -------- -------- --------
(24,481) (14,153) (38,634) (34,632) (6,975) (41,607)
Related deferred tax asset (note 32) - 1,165 1,165 - 897 897
Related deferred tax liability (note 32) - (24) (24) - (282) (282)
-------- -------- -------- -------- -------- --------
Net deficit (24,481) (13,012) (37,493) (34,632) (6,360) (40,992)
-------- -------- -------- -------- -------- --------
Movements in the fair value of scheme assets were as
follows:
2015 2014
UK Overseas Total UK Overseas Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 149,694 19,938 169,632 145,286 18,748 164,034
Expected return on plan assets 5,125 1,997 7,122 6,406 1,514 7,920
Employer contributions 1,490 2,417 3,907 1,531 635 2,166
Contributions paid by plan participants - 24 24 - 22 22
Benefit payments (8,041) (1,826) (9,867) (7,410) (1,336) (8,746)
Actuarial gains/(losses) 1,380 (301) 1,079 3,881 (106) 3,775
Exchange differences - 130 130 - 461 461
------- -------- ------- ------- -------- -------
At 31 December 149,648 22,379 172,027 149,694 19,938 169,632
------- -------- ------- ------- -------- -------
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Movements in the present value of defined benefit obligations
were as follows:
2015 2014
UK Overseas Total UK Overseas Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January (184,326) (26,913) (211,239) (162,294) (23,081) (185,375)
Current service cost (800) (1,507) (2,307) (769) (909) (1,678)
Past service cost - (6,056) (6,056) - 711 711
Contributions paid by plan participants - (24) (24) - (22) (22)
Interest cost (6,311) (2,480) (8,791) (7,137) (1,827) (8,964)
Benefit payments 8,041 1,826 9,867 7,410 1,336 8,746
Actuarial gains/(losses) 9,267 (1,231) 8,036 (21,536) (2,580) (24,116)
Exchange differences - (147) (147) - (541) (541)
-------- -------- -------- -------- -------- --------
At 31 December (174,129) (36,532) (210,661) (184,326) (26,913) (211,239)
-------- -------- -------- -------- -------- --------
In 2013, the total fair value of plan assets was GBP164,034,000,
present value of defined benefit obligations was GBP185,375,000 and
the deficit was GBP21,341,000. 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
and 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.
Income statement
The amounts recognised in the income statement are as
follows:
2015 2014
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 (800) (1,507) (2,307) (769) (909) (1,678)
Past service cost - (6,056) (6,056) - 711 711
------- -------- -------- ------- -------- -------
Total operating charge (800) (7,563) (8,363) (769) (198) (967)
Amounts charged to other finance costs:
Interest expense (1,186) (483) (1,669) (731) (313) (1,044)
------- -------- -------- ------- -------- -------
Total charged to income statement (1,986) (8,046) (10,032) (1,500) (511) (2,011)
------- -------- -------- ------- -------- -------
The past service cost of GBP6,056,000 relates to recently
enacted legislation in Bangladesh which requires companies to make
a payment to employees on retirement or other events terminating
employment, based upon compensation and length of service. Current
service costs for the overseas operations included GBP376,000
arising from these changes.
Employer contributions to defined contribution schemes are
charged to profit when payable and the costs charged were
GBP3,984,000 (2014: GBP3,213,000).
Actuarial gains and losses recognised in the statement of
comprehensive income
The amounts included in the statement of comprehensive
income:
2015 2014
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 1,380 (301) 1,079 3,881 (106) 3,775
Experience gains/(losses) arising on scheme
liabilities 2,307 (840) 1,467 (2,501) (312) (2,813)
Changes in assumptions underlying present
value of scheme liabilities 6,960 (391) 6,569 (19,035) (2,268) (21,303)
------- -------- ------- ------- -------- -------
Actuarial gain/(loss) 10,647 (1,532) 9,115 (17,655) (2,686) (20,341)
------- -------- ------- ------- -------- -------
Cumulative actuarial losses recognised in the statement of
comprehensive income are GBP35,000,000 (2014: GBP44,115,000).
The employer contributions to be paid to the UK defined benefit
pension scheme for the year commencing 1 January 2016 is 20.0% of
pensionable salary for active members plus GBP918,000 additional
contribution to reduce the scheme's funding deficit.
34 Share capital
2015 2014
GBP'000 GBP'000
Authorised: 2,842,000 (2014: 2,842,000) ordinary shares of 10p each 284 284
------- -------
Allotted, called up and fully paid: ordinary shares of 10p each:
At 1 January - 2,824,500 (2014: 2,829,700) shares 282 283
Purchase of own shares - nil (2014: 5,200) shares - (1)
------- -------
At 31 December - 2,824,500 (2014: 2,824,500) shares 282 282
------- -------
Group companies hold 62,500 issued shares in the company. These
are classified as treasury shares.
35 Reconciliation of profit from operations to cash flow
2015 2014
GBP'000 GBP'000
Group
Profit from operations 37,627 18,003
Share of associates' results (4,182) (1,092)
Depreciation and amortisation 10,040 10,165
Impairment of assets 552 3,494
Gain arising from changes in fair value of biological assets (20,639) (8,820)
Profit on disposal of non-current assets (3,825) (125)
Profit on disposal of investments (353) (447)
Profit on part disposal of subsidiary (30) (56)
Increase/(decrease) in working capital 12,812 (6,326)
Pensions and similar provisions less payments 4,025 (1,235)
Biological assets capitalised cultivation costs (6,111) (5,636)
Biological assets decreases due to harvesting 9,400 8,604
Net decrease in funds of banking subsidiaries 68 551
------- -------
Cash generated from operations 39,384 17,080
------- -------
36 Reconciliation of net cash flow to movement in net cash
2015 2014
GBP'000 GBP'000
Group
Increase/(decrease) in cash and cash equivalents in the year 12,450 (19,915)
Net cash (inflow)/outflow from (increase)/decrease in debt (5,599) 60
------- -------
Increase/(decrease) in net cash resulting from cash flows 6,851 (19,855)
Exchange rate movements (971) 1,128
------- -------
Increase/(decrease) in net cash in the year 5,880 (18,727)
Net cash at beginning of year 53,982 72,709
------- -------
Net cash at end of year 59,862 53,982
------- -------
37 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but
not yet incurred is as follows:
2015 2014
GBP'000 GBP'000
Group
Property, plant and equipment 1,316 824
Biological assets 51 -
------- -------
1,367 824
------- -------
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.
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The future aggregate minimum lease payments under
non-cancellable operating leases are as follows:
2015 2014
GBP'000 GBP'000
Group
Land and buildings:
Within 1 year 1,367 826
Between 1 - 5 years 2,569 2,206
After 5 years 15,017 12,875
------- -------
18,953 15,907
------- -------
Plant and machinery:
Within 1 year 187 99
Between 1 - 5 years 224 128
------- -------
411 227
------- -------
The group's most significant operating lease commitments are
long term property leases with renewal terms in excess of 60
years.
38 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.
39 Financial instruments
Capital risk management
The group manages its capital to ensure that the group will be
able to continue as a going concern, while maximising the return to
stakeholders through the optimisation of its debt and equity
balance. The capital structure of the group consists of debt, which
includes the borrowings disclosed in note 30, 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:
2015 2014
GBP'000 GBP'000
Borrowings 10,497 2,897
------- -------
Tangible net assets 322,515 314,632
------- -------
Ratio 3.25% 0.92%
------- -------
Borrowings are defined as current and non-current borrowings, as
detailed in note 30.
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 2015
Loans and Available for Held to
receivables sale maturity Total
GBP'000 GBP'000 GBP'000 GBP'000
Group
Assets as per balance sheet
Available-for-sale financial assets - 30,594 - 30,594
Held-to-maturity financial assets - - 29,510 29,510
Trade and other receivables excluding prepayments 34,646 - - 34,646
Loans and advances to customers of banking subsidiaries 35,833 - - 35,833
Cash and cash equivalents (excluding bank subsidiaries) 70,359 - - 70,359
Loans and advances to banks by banking subsidiaries 167,413 - - 167,413
----------- ------------- -------- -------
308,251 30,594 29,510 368,355
----------- ------------- -------- -------
Company
Available-for-sale financial assets - 170 - 170
Cash and cash equivalents 2,202 - - 2,202
----------- ------------- -------- -------
2,202 170 - 2,372
----------- ------------- -------- -------
Other financial
liabilities at
amortised cost Total
GBP'000 GBP'000
Group
Liabilities as per balance sheet
Borrowings 10,497 10,497
Amounts due to customers of banking subsidiaries 208,592 208,592
--------------- -------
Trade and other payables 52,023 52,023
--------------- -------
271,112 271,112
Company
Trade and other payables 133 133
--------------- -------
At 31 December 2014
Loans and Available for Held to
receivables sale maturity Total
GBP'000 GBP'000 GBP'000 GBP'000
Group
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
----------- ------------- --------------- -------
Company
Available-for-sale financial assets - 170 - 170
----------- ------------- --------------- -------
Other financial
liabilities at
amortised cost Total
GBP'000 GBP'000
Group
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
--------------- -------
Company
Trade and other payables 134 134
--------------- -------
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).
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The following table presents the group's financial assets and
liabilities that are measured at fair value. See note 19 for
disclosures of biological assets that are measured at fair
value.
At 31 December 2015
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Available-for sale financial assets:
- Equity securities 28,791 - 1,230 30,021
Debt investments:
- Debentures 573 - - 573
Held-to-maturity financial assets 29,510 - - 29,510
------- ------- ------- -------
58,874 - 1,230 60,104
------- ------- ------- -------
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 - 181 62,722
Debt investments:
- Debentures 766 - - 766
------- ------- ------- -------
63,307 - 181 63,488
------- ------- ------- -------
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 Japanese
available-for-sale financial assets. A movement by 5 per cent. in
the exchange rate of the Japanese Yen with Sterling, would
increase/decrease the group's equity balance by GBP608,000 (2014:
GBP563,000).
Currency risks are primarily managed through the use of natural
hedging and regularly reviewing when cash should be exchanged into
either sterling or another functional currency.
(ii) Price risk
The group is exposed to equity securities price risk because of
investments held by the group and classified on the consolidated
balance sheet as available-for-sale. To manage its price risk
arising from investments in equity securities, the group
diversifies its portfolio.
The majority of the group's equity investments are publicly
traded and are quoted on stock exchanges located in Bermuda, Japan,
Switzerland, UK and US. Should these equity indexes increase or
decrease by 5 per cent. with all other variables held constant and
all the group's equity instruments move accordingly, the group's
equity balance would increase/decrease by GBP1,440,000 (2014:
GBP3,127,000).
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 2015, 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 GBP266,000 (2014:
GBP215,000) higher/lower.
At 31 December 2015, 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 GBP7,000 (2014: GBP176,000)
higher/lower.
The interest rate exposure of the group's interest bearing
assets and liabilities by currency, at 31 December was:
Assets Liabilities
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Sterling 136,675 178,831 135,356 143,660
US Dollar 76,232 52,105 59,126 42,165
Euro 13,136 19,403 12,714 18,666
Swiss Franc 4,482 9,827 4,151 5,231
Kenyan Shilling 15,712 11,915 - 2
Indian Rupee 11,424 7,873 512 807
Malawian Kwacha 36 38 919 785
Bangladesh Taka 8,198 4,066 3,175 248
Australian Dollar 361 527 353 522
South African Rand 1,545 1,359 106 151
Brazilian Real 2,226 3,346 - -
Bermudian Dollar 898 1,153 - -
Canadian Dollar 2,104 603 2,104 598
Japanese Yen 70 407 69 404
Other 506 4,465 504 4,465
---------- --------- ------------- ------------
273,605 295,918 219,089 217,704
---------- --------- ------------- ------------
(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 30 per cent. (2014: 21
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
seek to match maturing customer deposits with market placements and
to use liquid assets such as certificates of deposit. This results
in reduced liquidity risk for Duncan Lawrie and the group.
At 31 December 2015, the group had undrawn committed facilities
of GBP22,247,000 (2014: GBP24,995,000), 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 1 Between 1 Between 2 Over 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 2015
Assets
Available-for-sale financial assets 143 143 287 - 30,021 30,594
Held-to-maturity financial assets 1,849 9,352 12,667 5,642 - 29,510
Trade and other receivables 33,482 1,164 - - - 34,646
Loans and advances to customers of
banking subsidiaries 14,167 6,698 14,656 216 96 35,833
Cash and cash equivalents (excluding
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bank subsidiaries) 70,359 - - - - 70,359
Loans and advances to banks by banking
subsidiaries 167,211 - - - 202 167,413
----------- ----------- ----------- ------- ------- -------
287,211 17,357 27,610 5,858 30,319 368,355
----------- ----------- ----------- ------- ------- -------
Liabilities
Borrowings (excluding finance lease
liabilities) 5,366 609 4,514 8 - 10,497
Deposits by banks at banking
subsidiaries 1,482 - 700 - - 2,182
Customer accounts held at banking
subsidiaries 202,677 1,493 2,118 81 41 206,410
Trade and other payables 52,023 - - - - 52,023
----------- ----------- ----------- ------- ------- -------
261,548 2,102 7,332 89 41 271,112
----------- ----------- ----------- ------- ------- -------
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
----------- ----------- ----------- ------- ------- -------
Included in loans and advances to banks by banking subsidiaries
repayable in less than 1 year is GBP120,627,000 (2014:
GBP170,486,000) repayable on demand, GBP43,084,000 (2014:
GBP29,645,000) repayable within 3 months and GBP3,500,000 (2014:
GBPnil) repayable between 3 and 12 months.
Included in loans and advances to customers of banking
subsidiaries repayable in less than 1 year is GBP5,031,000 (2014:
GBP3,723,000) repayable on demand, GBP4,445,000 (2014:
GBP2,202,000) repayable within 3 months and GBP4,691,000 (2014:
GBP8,420,000) repayable between 3 and 12 months.
Included in held-to-maturity financial assets repayable in less
than 1 year is GBP1,849,000 (2014: GBPnil) repayable between 3 and
12 months.
Included in deposits by banks at banking subsidiaries repayable
in less than 1 year is GBP363,000 (2014: GBP815,000) repayable on
demand and GBP1,119,000 (2014: GBP208,000) repayable between 3 and
12 months.
Included in customer accounts held at banking subsidiaries
repayable in less than 1 year is GBP176,736,000 (2014:
GBP179,179,000) repayable on demand, GBP22,457,000 (2014:
GBP25,871,000) repayable within 3 months and GBP3,484,000 (2014:
GBP3,570,000) repayable between 3 and 12 months.
Included in borrowings in less than 1 year is GBP4,753,000
(2014: GBP2,757,000) repayable on demand.
40 Subsidiary and associated undertakings
Subsidiary undertakings
The subsidiary undertakings of the group at 31 December 2015,
which are wholly owned and incorporated in Great Britain unless
otherwise stated, were:
Principal
country of
operation
Agriculture
Amgoorie India Limited (Incorporated in India - 99.8% holding) India
Amo Tea Company Limited Bangladesh
C.C. Lawrie Comércio e Participacões Ltda. (Incorporated in Brazil) Brazil
Chittagong Warehouse Limited (Incorporated in Bangladesh - 93.3% holding) Bangladesh
Duncan Brothers Limited (Incorporated in Bangladesh) Bangladesh
Eastern Produce Cape (Pty) Limited (Incorporated in South Africa) South Africa
Eastern Produce Kenya Limited (Incorporated in Kenya - 70.0% holding) Kenya
Eastern Produce Malawi Limited (Incorporated in Malawi - 73.2% holding) Malawi
Eastern Produce South Africa (Pty) Limited (Incorporated in South Africa - 73.2% holding) South Africa
Eastland Camellia Limited (Incorporated in Bangladesh - 93.8% holding) Bangladesh
Goodricke Group Limited (Incorporated in India - 76.5% holding) India
Eastern Produce Estates South Africa (Pty) Limited (Incorporated in South Africa - held by
Easten Produce South Africa (Pty) Limited) South Africa
Horizon Farms (An United States of America general partnership - 80% holding) USA
Kakuzi Limited (Incorporated in Kenya - 50.7% holding) Kenya
Koomber Tea Company Limited (Incorporated in India) India
Octavius Steel & Company of Bangladesh Limited (Incorporated in Bangladesh) Bangladesh
Robertson Bois Dickson Anderson Limited UK
Stewart Holl (India) Limited (Incorporated in India - 92.0% holding) India
Surmah Valley Tea Company Limited (Incorporated in Bangladesh) Bangladesh
The Allynugger Tea Company Limited Bangladesh
The Chandpore Tea Company Limited Bangladesh
The Lungla (Sylhet) Tea Company Limited Bangladesh
The Mazdehee Tea Company Limited Bangladesh
Victoria Investments Limited (Incorporated in Malawi- 73.2% holding) Malawi
Zetmac (Pty) Limited (Incorporated in South Africa - 55.8% held by Easten Produce
Estates South Africa (Pty) Limited) South Africa
Engineering
Abbey Metal Finishing Company Limited UK
AJT Engineering Limited UK
AKD Engineering Limited UK
Atfin GmbH (Incorporated in Germany - 51.0% holding) Germany
British Metal Treatments Limited UK
GU Cutting and Grinding Services Limited UK
Unochrome Investments Limited (formerly Loddon Engineering Limited) UK
Food Service
Affish BV (Incorporated in Holland) The Netherlands
Associated Cold Stores & Transport Limited UK
Duncan Products Limited (Incorporated in Bangladesh) Bangladesh
Wylax International BV (Incorporated in Holland) The Netherlands
Banking and Financial Services
DDY Nominees Limited UK
Duncan Lawrie Limited UK
Duncan Lawrie Asset Management Limited UK
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Duncan Lawrie Holdings Limited UK
Duncan Lawrie International Holdings Limited (Incorporated in Isle of Man) Isle of Man
Duncan Lawrie (IOM) Limited (Incorporated in Isle of Man) Isle of Man
Duncan Lawrie Offshore Services Limited (Incorporated in Isle of Man) Isle of Man
Dunlaw Nominees Limited UK
Dunman Nominees Limited (Incorporated in Isle of Man) Isle of Man
Havelock Nominees Limited (Incorporated in Isle of Man) Isle of Man
Hobart Place Nominees Limited UK
Mount Havelock Directors Limited (Incorporated in Isle of Man) Isle of Man
Mount Havelock Investments Limited (Incorporated in Isle of Man) Isle of Man
Mount Havelock Secretaries 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
Duncan Properties Limited (Incorporated in Bangladesh) Bangladesh
Eastern Produce Investments Limited UK
EP USA Inc. (Incorporated in the United States of America) USA
EP California Inc. (Incorporated in the United States of America) USA
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
Lintak Investments Limited (Incorporated in Kenya) Kenya
Longbourne Holdings Limited Bangladesh
Plantation House Investments Limited Malawi
(Incorporated in Malawi - 50.2% held by subsidiaries)
Shula Limited (Incorporated in Isle of Man) Isle of Man
Unochrome Industries Limited UK
Western Dooars Investments Limited UK
Other
Linton Park Services Limited UK
XiMo AG (Incorporated in Switzerland - 51.0% holding) Switzerland
Dormant companies
ACS&T Gloucester Limited UK
ACS&T Grimsby Limited UK
ACS&T Humberside Limited UK
ACS&T Seamer Limited UK
ACS&T Tewkesbury Limited UK
ACS&T Wolverhampton Limited UK
Alex Lawrie & Company Limited UK
Amgoorie Investments Limited UK
Assam-Dooars Holdings Limited UK
Associated Fisheries (Scotland) Limited UK
Banbury Tea Warehouses Limited UK
Blantyre & East Africa Limited UK
Blantyre Insurance & General Agencies Limited (Incorporated in Malawi) Malawi
Bonathaba Farms (Pty) Limited (Incorporated in South Africa) South Africa
British African Tea Estates (Holdings) Limited UK
British African Tea Estates Limited UK
British Heat Treatments Limited UK
British Indian Tea Company Limited UK
British United Trawlers Limited UK
BTS Chemicals Limited UK
BUT Engineers (Fleetwood) Limited UK
BUT Engineers (Grimsby) Limited UK
Camellia Investments Limited UK
Chisambo Holdings Limited UK
Chisambo Tea Estate Limited UK
Cholo Holdings Limited UK
Craighead Investments Limited UK
David Field Limited UK
East African Tea Plantations Limited (Incorporated in Kenya - held by Eastern Produce Kenya
Limited) Kenya
Eastern Produce Africa Limited UK
Eastern Produce Kakuzi Services Limited (Incorporated in Kenya - held by Kakuzi Limited) Kenya
EP (RBDA) Limited (Incorporated in Malawi - Eastern Produce Malawi Limited) Malawi
Estate Services Limited (Incorporated in Kenya - held by Kakuzi Limited) Kenya
Feltham 1 Limited UK
Feltham 2 Limited UK
Fescol Limited UK
G. F. Sleight & Sons Limited UK
Goodricke Lawrie Consultants Limited UK
Gotha Tea Estates Limited UK
Granton Transport Limited UK
Hamstead Village Investments Limited UK
Hellyer Brothers Limited UK
Horace Hickling & Co. Limited UK
Hudson Brothers Trawlers Limited UK
Humber Commercials Limited UK
Humber St. Andrew's Engineering Company Limited UK
Isa Bheel Tea Company Limited UK
Jatel Plc UK
Jetinga Holdings Limited UK
Jetinga Valley Tea Company Limited UK
Kaguru EPZ Limited (Incorporated in Kenya - held by Kakuzi Limited) Kenya
Kapsumbeiwa Factory Company Limited UK
Kip Koimet Limited (Incorporated in Kenya - held by Eastern Produce Kenya Limited) Kenya
Kumadzi Tea Estates Limited UK
Lankapara Tea Company Limited UK
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Lawrie Bhutan Limited UK
Lawrie Plantation Services Limited UK
Leasing Investments Limited UK
Nasonia Tea Company Limited (Incorporated in Malawi) Malawi
North West Profiles Limited UK
Octavius Steel & Company (London) Limited UK
Robert Hudson Holdings Limited UK
Rosehaugh (Africa) Limited UK
Ruo Estates Limited UK
Ruo Estates Holdings Limited UK
Sandbach Export Limited UK
Sapekoe Pusela (Pty) Limited (Incorporated in South Africa - held by Easten Produce
South Africa (Pty) Limited) South Africa
Silverthorne-Gillott Limited UK
SIS Securities Limited UK
Sterling Industrial Securities Limited UK
Stewart Holl Investments Limited UK
The Amgoorie Tea Estates Limited UK
The Bagracote Tea Company, Limited UK
The Ceylon Upcountry Tea Estates Limited UK
The Dejoo Tea Company Limited UK
The Dhoolie Tea Company Limited UK
The Doolahat Tea Company Limited UK
The Eastern Produce & Estates Company Limited UK
The Endogram Tea Company Limited UK
The Harmutty Tea Company Limited UK
The Jhanzie Tea Association Limited UK
The Kapsumbeiwa Tea Company Limited UK
The Longai Valley Tea Company Limited UK
The Tyspane Tea Company Limited UK
Thyolo Highlands Tea Estates Limited UK
Vaghamon (Travancore) Tea Company Limited UK
Walter Duncan & Goodricke Limited UK
WDG Properties Limited UK
Western Dooars Tea Holdings Limited UK
Summarised financial information on subsidiaries with material
non-controlling interests
Summarised balance sheet
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited
as at 31 December as at 31 December
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Current
Assets 24,074 17,573 7,075 9,333
Liabilities (18,516) (9,802) (8,963) (12,811)
-------------- -------------- ------------- ------------
Total current net assets/(liabilities) 5,558 7,771 (1,888) (3,478)
-------------- -------------- ------------- ------------
Non-current
Assets 24,075 25,108 53,069 52,158
Liabilities (6,152) (6,861) (15,932) (14,756)
-------------- -------------- ------------- ------------
Total non-current net assets 17,923 18,247 37,137 37,402
-------------- -------------- ------------- ------------
Net assets 23,481 26,018 35,249 33,924
-------------- -------------- ------------- ------------
Eastern Produce Goodricke Group
South Africa Limited Limited
as at 31 December as at 31 December
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Current
Assets 4,562 3,682 30,181 28,589
Liabilities (1,135) (643) (16,866) (14,463)
--------------- -------------- --------------- --------------
Total current net assets 3,427 3,039 13,315 14,126
--------------- -------------- --------------- --------------
Non-current
Assets 4,829 5,371 24,258 23,627
Liabilities (1,251) (1,345) (6,316) (6,787)
--------------- -------------- --------------- --------------
Total non-current net assets 3,578 4,026 17,942 16,840
--------------- -------------- --------------- --------------
Net assets 7,005 7,065 31,257 30,966
--------------- -------------- --------------- --------------
Horizon Farms Kakuzi Limited
as at 31 December as at 31 December
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Current
Assets 2,531 2,633 10,027 8,256
Liabilities (647) (318) (2,500) (1,316)
-------------- -------------- ---------------- ---------------
Total current net assets 1,884 2,315 7,527 6,940
-------------- -------------- ---------------- ---------------
Non-current
Assets 9,262 8,536 20,155 19,095
Liabilities (875) (829) (4,912) (4,924)
-------------- -------------- ---------------- ---------------
Total non-current net assets 8,387 7,707 15,243 14,171
-------------- -------------- ---------------- ---------------
Net assets 10,271 10,022 22,770 21,111
-------------- -------------- ---------------- ---------------
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Summarised income statement
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited
for year ended for year ended
31 December 31 December
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 39,280 27,783 15,538 18,113
------------- ------------ -------------- -------------
Profit before tax 13,227 4,936 21,037 10,858
Taxation (4,008) (1,537) (7,267) (3,279)
Other comprehensive income/(expense) 25 (127) - -
------------- ------------ -------------- -------------
Total comprehensive income 9,244 3,272 13,770 7,579
------------- ------------ -------------- -------------
Total comprehensive income allocated to
non-controlling interests 2,773 982 3,690 2,031
Dividends paid to non-controlling interests 3,026 2,686 597 698
Eastern Produce Goodricke Group
South Africa Limited Limited
for year ended for year ended
31 December 31 December
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 4,866 4,448 67,461 59,569
------------ ----------- ----------- ----------
Profit before tax 2,478 975 2,241 5,157
Taxation (748) (306) (1,059) (1,509)
Other comprehensive expense - - (118) (1,206)
------------ ----------- ----------- ----------
Total comprehensive income 1,730 669 1,064 2,442
------------ ----------- ----------- ----------
Total comprehensive income allocated to
non-controlling interests 511 179 241 782
Dividends paid to non-controlling interests 68 - 224 211
Horizon Farms Kakuzi Limited
as at 31 December as at 31 December
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 4,052 5,101 14,726 10,101
-------------- -------------- ------------- ------------
Profit before tax 1,620 3,246 5,105 1,607
Taxation (616) (1,243) (1,581) (501)
Other comprehensive income/(expense) - - 33 (41)
-------------- -------------- ------------- ------------
Total comprehensive income 1,004 2,003 3,557 1,065
-------------- -------------- ------------- ------------
Total comprehensive income allocated to
non-controlling interests 201 401 1,754 525
Dividends paid to non-controlling interests 262 - 242 250
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
2015 2014 2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 16,421 4,272 3,489 4,602 854 9
Net interest received 1,284 831 (284) 815 72 64
Income tax paid (1,847) (1,462) (1,289) (1,335) (233) -
------- ------- ------- ------- ---------- ---------
Net cash generated from operating
activities 15,858 3,641 1,916 4,082 693 73
------- ------- ------- ------- ---------- ---------
Net cash used in investing activities (945) (856) (581) (1,655) (288) (461)
------- ------- ------- ------- ---------- ---------
Net cash used in financing activities (10,085) (8,954) (2,229) (2,605) (45) 13
------- ------- ------- ------- ---------- ---------
Net increase/(decrease) in cash and cash
equivalents and bank overdrafts 4,828 (6,169) (894) (178) 360 (375)
Cash, cash equivalents and bank
overdrafts at beginning of year 10,291 16,194 (282) (113) 1,764 2,221
Exchange (losses)/gains on cash and cash
equivalents (236) 266 272 9 (426) (82)
------- ------- ------- ------- ---------- ---------
Cash, cash equivalents and bank
overdrafts at end of year 14,883 10,291 (904) (282) 1,698 1,764
------- ------- ------- ------- ---------- ---------
Goodricke Group Limited Horizon Farms Kakuzi Limited
for year ended for year ended for year ended
31 December 31 December 31 December
2015 2014 2015 2014 2015 2014
GBP'000 GBP'00 GBP'000 GBP'00 GBP'00 GBP'000
Cash flows from operating activities
Cash generated from operations 4,267 3,929 3,312 1,939 5,788 3,196
Net interest received - - - - 509 585
Income tax paid (855) (1,659) (307) (1,243) (536) (326)
------------ --------- -------- ------ ------- -------
Net cash generated from operating
activities 3,412 2,270 3,005 696 5,761 3,455
------------ --------- -------- ------ ------- -------
Net cash used in investing activities (1,359) (1,511) (403) (856) (3,997) (2,419)
------------ --------- -------- ------ ------- -------
Net cash used in financing activities (1,255) (1,269) (1,309) - (491) (507)
------------ --------- -------- ------ ------- -------
Net increase in cash and cash
equivalents and bank overdrafts 798 (510) 1,293 (160) 1,273 529
Cash, cash equivalents and bank
overdrafts at beginning of year (168) 341 898 1,005 6,896 6,330
Exchange gains/(losses) on cash and
cash equivalents 2 1 96 53 (388) 37
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April 28, 2016 02:00 ET (06:00 GMT)
------------ --------- -------- ------ ------- -------
Cash, cash equivalents and bank
overdrafts at end of year 632 (168) 2,287 898 7,781 6,896
------------ --------- -------- ------ ------- -------
Associated undertakings
The principal associated undertakings of the group at 31
December 2015 were:
Group
interest
Principal Accounting in equity
country
of date capital
per
operation 2015 cent.
Insurance and banking
BF&M Limited (Incorporated
in Bermuda - common stock) Bermuda 31 December 36.1
United Insurance Company
Limited (Incorporated in
Bangladesh - ordinary shares) Bangladesh 31 December 37.0
United Finance Limited (Incorporated
in Bangladesh - ordinary
shares) Bangladesh 31 December 38.4
41 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.
Report of the independent auditors
Independent auditors' report to the members of Camellia Plc
Report on the financial statements
Our opinion
In our opinion:
-- Camellia Plc's group financial statements and
company financial statements (the "financial
statements") give a true and fair view of the
state of the group's and of the company's affairs
as at 31 December 2015 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 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.
What we have audited
The financial statements, included within the Annual Report,
comprise:
-- the Consolidated and Company balance sheet
as at 31 December 2015;
-- the Consolidated income statement and Statement
of comprehensive income for the year then ended;
-- the Consolidated and Company cash flow statement
for the year then ended;
-- the Group and Company Statements of changes
in equity for the year then ended;
-- the accounting policies; and
-- the notes to the financial statements, which
include other explanatory information.
Certain required disclosures have been presented elsewhere in
the Annual Report, rather than in the notes to the financial
statements. These are cross-referenced from the financial
statements and are identified as audited.
The financial reporting framework that has been applied in their
preparation is applicable law and IFRSs as adopted by the European
Union, and applicable law, 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.
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 29, 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
International Standards on Auditing (UK & Ireland) ("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.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK and 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.
We primarily focus our work in these areas by assessing the
directors' judgements against available evidence, forming our own
judgements, and evaluating the disclosures in the financial
statements.
We test and examine information, using sampling and other
auditing techniques, to the extent we consider necessary to provide
a reasonable basis for us to draw conclusions. We obtain audit
evidence through testing the effectiveness of controls, substantive
procedures or a combination of both.
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.
John Ellis (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
27 April 2016
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April 28, 2016 02:00 ET (06:00 GMT)
Five year record
2015 2014 2013 2012 2011
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue - continuing operations 257,800 238,868 251,267 261,529 246,849
Profit before tax 40,524 21,983 59,648 69,710 58,650
Taxation (18,590) (13,673) (22,105) (25,662) (16,860)
Profit from continuing operations 21,934 8,310 37,543 44,048 41,790
Profit attributable to owners of the parent 12,449 2,836 28,297 31,210 33,086
Equity dividends paid 3,480 3,452 3,388 3,224 3,057
Equity
Called up share capital 282 282 283 284 284
Reserves 330,148 321,422 332,183 313,526 321,308
Total shareholders' funds 330,430 321,704 332,466 313,810 321,592
Earnings per share 450.7p 102.7p 102.2p 1,122.9p 1,190.4p
Dividend paid per share 126p 125p 122p 116p 110p
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR QDLFLQZFZBBK
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April 28, 2016 02:00 ET (06:00 GMT)
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