TIDMCAM
RNS Number : 3293X
Camellia PLC
04 May 2021
CAMELLIA PLC
FINAL RESULTS
Camellia Plc (AIM:CAM) Final results for the year ended 31
December 2020.
Malcolm Perkins, Chairman, stated:
"2020 was a tough year for all of our operations, people and
communities globally. The consequences of the pandemic were
unpredictable and have at times tested our resilience. However, it
is testament to the quality of our management teams, our employees
and our financial prudence that we ended 2020 with an underlying
operating profit.
"While the UK is returning to normality to the benefit of some
of our UK based businesses, we have concerns about further waves of
the pandemic across India, Bangladesh and East Africa. We do not
believe that normal trading conditions will emerge until 2022, and
some businesses will continue to feel the effect of the pandemic
for some time thereafter."
Financial highlights
Year ended Year ended
31 December 2020 31 December 2019
GBP'm GBP'm
Revenue 291.2 291.5
Underlying profit before tax* 16.0 17.4
Separately disclosed significant items (8.2) 4.9
Profit before tax 7.8 22.3
(Loss)/profit after tax for the year (0.8) 15.1
(Loss)/earnings per share (181.0) p 300.5 p
Total dividend for the year 144 p 144** p
* Profit before tax excluding separately disclosed significant
items
** Including the special dividend of 102p declared in September
2020
-- Stable revenue, despite the pandemic, with growth in Agriculture,
which now accounts for 85% of group sales.
-- Underlying profit before tax from continuing operations down
8%.
-- GBP8.2m net charge resulting from legal and other expenses
relating to the settlement of claims concerning our East
African operations and largely pandemic-related impairment
charges offset in part by gain on sale of Horizon farm property.
-- Net cash of GBP76.0m and an investment portfolio with a market
value of GBP48.7m at 31 March 2021.
-- Dividend maintained at 144p.
Strategic highlights
-- Continued investment in core crops of tea, macadamia and
avocados including planting acreage in South Africa and at
our new farm in Tanzania; continuation of trials of blueberries
and avocados in Kenya.
-- Overhaul of governance procedures with focus on Safeguarding
and Human Rights.
-- Sale of Horizon farm property in USA.
-- Sustained focus on production efficiencies and expense management
has helped contain costs.
This announcement contains inside information for the purpose of
Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
ENQUIRIES
Camellia Plc 01622 746655
Tom Franks, Chief Executive
Susan Walker, Chief Financial Officer
Panmure Gordon (UK) Limited 020 7886 2500
Nominated Adviser and Broker
Erik Anderson
Emma Earl
Maitland/AMO
PR
William Clutterbuck 07785 292617
CAMELLIA AT A GLANCE
Camellia Plc is an international Group - a global family of
diverse companies with a 133-year history employing approximately
76,000 people worldwide. Our operations are in Agriculture,
Engineering, Food Service and Investments. From the start,
Camellia's ethos has been based on the highest moral and
professional integrity, and a commitment to doing the right thing -
ethically and commercially, globally and locally.
Our business is built on two fundamental principles:
-- Long-termism. We are custodians, holding our business in
trust for future generations. We have a responsibility to promote
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. We are committed to
improving the long-term stability and well-being of our businesses,
the communities and the environments in which we operate.
-- Sustainability. We are committed not only to the welfare of
our employees but also to the communities in which they live. Our
businesses can and should grow with respect and care for the
environment rather than at a cost to it. We proactively invest in
ensuring that the places where we operate are protected and
improved, and seek to minimise the impact of our business on the
environment.
The Segment trading profit and loss information set out below,
including details of underlying profit is extracted from note 1 on
page 64 of the Accounts.
Our business is made up as follows:
AGRICULTURE
2020: Revenue - GBP247.2 million, Segment underlying trading
profit - GBP18.3 million, Segment trading profit - GBP2.2
million
Mature Immature
Area Area
Core crops Locations Ha Ha
India, Bangladesh, Kenya,
Tea Malawi 33,354 2,936
Macadamia Kenya, Malawi, South Africa, 2,802 896
Avocados Kenya 532 373
Speciality crops
Arable Brazil 3,616 -
Forestry Kenya, Malawi, Brazil 2,344 3,533
Rubber Bangladesh 1,610 365
Wine grapes South Africa 66 18
Blueberries Kenya - 10
Other
Joint Projects Kenya 836
Livestock Kenya 4,529 head
----------------- ----------------------------- ---------- --------
ENGINEERING
2020: Revenue - GBP19.3 million, Segment trading loss - GBP1.5
million
Subsidiary Locations
Abbey Metal Finishing
and Atfin UK, Germany
AJT Engineering UK
FOOD SERVICE
2020: Revenue - GBP23.6 million, Segment trading loss - GBP1.7
million
Subsidiary Locations
ACS&T UK
Jing Tea UK
INVESTMENTS
Market value at
31/12/20
Investment type Locations GBP'm
Investment Portfolio Global 50.6
Investment Property UK, Malawi, Brazil 23.9
Collections UK, India 9.8*
* Collections are stated
at cost
---------------------------------------------- ---------------
ASSOCIATES
2020: Share of results after taxation - GBP6.1 million
Holding
Location Activity %
Life and Non-life
BF&M Bermuda insurance 37.6
United Finance Bangladesh Banking 38.4
United Insurance Bangladesh Non-life insurance 37.0
----------------- ----------- ------------------- -------
DIRECTORS AND ADVISERS
Directors Malcolm Perkins Chairman (iii)
Deputy Chairman, independent
Chris Relleen non-executive
Director and senior independent
Director (i) (ii) (iii)
Tom Franks Chief Executive
Graham Mclean Director of Agriculture
Susan Walker Chief Financial O cer
Independent non-executive
Jonathon Bond Director (iv)
Independent non-executive
Gautam Dalal Director (i)
Independent non-executive
William Gibson Director (i) (ii) (iii) (iv)
Simon Turner Non-executive Director
Frédéric Independent non-executive
Vuilleumier Director
(i) Audit committee
(ii) Remuneration
committee
(iii) Nomination committee
(iv) Safeguarding and Stewardship committee
Group General Amarpal Takk (iv)
Counsel & Company
Secretary
Registered o ce Linton Park
Linton
Maidstone
Kent ME17 4AB
Registered Number 00029559
Nominated adviser Panmure Gordon (UK)
and Limited
broker One New Change
London EC4M 9AF
Registrars Link Group
10(th) Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Independent auditors Deloitte LLP
Statutory Auditors
1 New Street Square
London EC4A 3HQ
PR Maitland/AMO
The HKX Building
3 Pancras Square
London N1C 4AG
Website www.camellia.plc.uk
CHAIRMANS STATEMENT
2020 was a deeply challenging year for all of our operations,
people and communities globally. The consequences of the pandemic
have been unpredictable and have at times tested our resilience.
However, it is testament to the quality of our management teams,
our employees and our financial prudence that we came through 2020
with an underlying operating profit before tax of GBP13.2 million.
The vast majority of our income arises from growing basic
commodities and foodstu s for which there will always be a
demand.
2020 was marked by the very serious human rights abuse
allegations made against our operations at Kakuzi in Kenya and in
Malawi. We settled these claims and more importantly, have taken
the opportunity to review the policies and procedures across the
Group to ensure that they reflect international best practice. The
relationship with the local communities across all our agricultural
operations is critical to both our ethos and success; we continue
to nurture them and have taken extensive steps to improve work
practices and safeguarding measures (further discussed later in
this report). The Board's deep commitment to ensuring we live up to
our aspirations in this area for the benefit of all our employees
and communities will be greatly assisted by our decision to
establish a new Safeguarding and Stewardship Committee (involving
independent experts) and a network of new grievance mechanisms on
the ground.
Climate change remains a major concern to the Group and
continues to influence our long-term strategy. Reflecting this, we
disposed of our interest in Horizon Farms in California. Concerns
over water availability and long-term climate projections made this
a good time to sell and we were pleased with the price achieved.
Other strategic developments are covered in the Operational
report.
The results for 2020 reflect a profit before tax of GBP7.8
million after significant one o net costs amounting to GBP8.2
million (2019: profit before tax from continuing operations GBP22.3
million, including provision releases and one-o items of GBP4.9
million).
Dividend
The Group is set up in a way that reflects our long-term
approach, with financial stability and sustainability at the heart
of our philosophy. I was pleased that, having deferred the 2019
final dividend until we could assess more clearly the impact of the
pandemic, we were able to pay it in full. Your Board is
recommending a final dividend in respect of the year ended 31
December 2020 of 144p per share.
Outlook
At this stage, whilst there are signs of the world returning
closer to normality with the roll out of vaccines, we do not
believe that normal trading conditions will emerge until 2022, and
certain businesses will continue to feel the e ect of the pandemic
for some time thereafter.
We remain financially strong, with significant net cash, and
have the resources to withstand a further period of disruption. The
demand for our agricultural produce will remain and we are managing
the business in a manner which we believe will ensure our future
prosperity, whilst taking the necessary steps to manage our costs
in the short term.
Directors
Jonathon Bond, who joined the Board on 6 March 2020, is taking
up a new executive role which necessitates him retiring from the
Board at the AGM. I should like to thank him for his contribution
and wish him well for the future.
Sta
My gratitude and sincere thanks go out to all our sta for their
e orts in 2020. It is thanks to their resilience, hard work and
loyalty in this unprecedented and challenging year that the Group
remains in such a strong position.
Malcolm Perkins
Chairman
3 May 2021
OPERATIONAL REPORT
OVERVIEW
2020 was a di cult year as a combination of the pandemic,
litigation against the Group arising from allegations against our
East African operations, poor tea prices and a possible no deal
Brexit all had the potential to impact trading. Despite this, sales
in our agriculture division grew and underlying profits saw only a
marginal decline. We also continued to implement our strategy of
investing for long term growth and refining our portfolio of
businesses.
COVID
Whilst all our businesses were able to keep trading throughout
the pandemic, they were all hit to some extent, whether through
lockdowns preventing operations, or markets closing. However, I am
proud of the e orts that have been made by all of our employees to
ensure continuity of operations no matter how tough the challenges.
Whilst there is optimism that the impact of the vaccine will start
to return things to normal, there remains no doubt that 2021 will
also be challenging for some operations.
Litigation concerning our East African operations
In January 2020, the Company announced that it and certain UK
subsidiary companies faced legal claims in the UK based on
allegations against two businesses in its African operations,
namely Kakuzi in Kenya and EPM in Malawi. These claims have now
been resolved (without any admission of liability) through
settlements of up to GBP4.6 million in relation to the Kenyan
claims and GBP2.3 million in relation to the Malawian claims. These
are in addition to GBP9.2 million of legal and other costs
associated with the defence of these allegations which are also
reflected in the 2020 results. We have also put in place
significant progressive measures around employee and community
welfare, details of which are set out in the Environmental and
Social report below. Such measures include, for example, building
social centres, establishing a specialist female leadership
programme and appointing female safety marshalls. Up to date
information on progress on these measures can be found on the
Camellia Group website.
The serious human rights claims the Group faced relating to its
operations in Kenya led to a number of European supermarket chains
suspending Kakuzi as a supplier of avocados. We are proactively
working to address these customer concerns, including with the
assistance of leading human rights advisers and are pleased that a
number of our customers intend to resume trade in the new season.
Eastern Produce Malawi has established and Kakuzi is establishing
an Operational-level Grievance Mechanism (OGM), as defined by the
UN Guiding Principles and by Human Rights specialists.
Consequently, the claimants' UK law firm has agreed it will not
bring or support any other claims relating to or in connection with
the Camellia Group's operations in Kenya or Malawi for a
substantial period of time. This reflects their confidence in the
development of the Group's OGMs.
Tea prices
The pandemic has interrupted both the supply and demand for tea
in di erent ways in di erent countries. However, the world remains
over-supplied with tea which, combined with a desire across the
industry to raise wages and living standards could lead to a
long-term decline in the profitability of tea growing. We are
pleased to see the major producing countries begin to take steps to
help address this imbalance for the good of the industry and the
hundreds of thousands of people who work in it and whose
livelihoods depend on it.
Brexit
Our UK businesses in particular made extensive preparations for
the impact of Brexit. Things have now settled down and we do not
anticipate any material e ect on our trading operations.
INVESTMENTS AND DIVESTMENTS
Despite the di culties in doing business in 2020, we continued
our strategy of diversifying our agricultural products and
production base.
During the year we replanted a total of 316Ha of tea, and
established a further 98Ha of avocado and 36Ha of macadamia. Since
the start of 2021 we have planted an additional 37Ha of avocado in
Tanzania and 174Ha of tea in our India and Bangladesh
operations.
We continued to invest in our assets during the year and GBP10.7
million was spent on property, plant, equipment and investment
property (2019: GBP14.5 million). Key projects are referred to in
the operational reports below. A further GBP3.7 million (2019:
GBP4.6 million) was invested in bearer crop and forestry
plantings.
We also announced the sale of our Horizon Farms property in
California for a total cash consideration of $31 million. This was
brought about by concerns over the long-term future of the farm
given the scarcity of reliable sources of water.
PERFORMANCE
Agriculture
In total, the Agriculture division made a segment trading profit
of GBP2.2 million (2019: GBP23.9 million) on revenue of GBP247.2
million (2019: GBP238.7 million), as set out in note 1 to the
Accounts. This includes costs of GBP16.1 million (2019: GBP1.3
million) in respect of legal and other costs associated with the
allegations arising from our East African operations. Agriculture's
underlying trading profit was GBP18.3 million (2019: GBP19.0
million).
Tea Production
2020 saw the Group produce slightly lower volumes of tea, due in
part to the lockdown of the tea estates in India at the start of
the pandemic although this was partially o set by record production
in Kenya.
Mature Immature 2020 2019
area area Volume Volume
Ha Ha mkg mkg
India 15,940 1,373 26.1 32.1
Bangladesh 8,339 844 12.5 14.2
Kenya 3,943 215 15.8 12.1
Malawi 5,132 509 16.8 17.6
------ -------- ------ ------
Total own estates 33,354 2,941 71.2 76.0
------ -------- ------ ------
Bought Leaf production 23.5 21.1
Managed Client production 4.8 4.3
------ ------
Total made tea produced 99.5 101.4
------ ------
Tea pricing and operations
India
Our own production in India was down by 19% against a national
reduction of 22%. This was a result of a complete lockdown of all
tea gardens in the early weeks of the pandemic followed by cyclone
Amphan and an unusually severe monsoon season. The smallholder
sector was particularly impacted and our Bought Leaf production was
down by 40%.
Prices for CTC teas however improved significantly as domestic
demand rose and supply fell. In the Dooars, prices were up 32% and
in Assam 13%. In Darjeeling however, the loss of the lucrative
first flush due to the lockdown resulted in average prices 12% down
on the prior year.
Exports were well down on normal years as a result of strong
local demand and the very high volumes emerging from Kenya.
Due to the many disruptions to the estate operations as a result
of COVID, it was agreed by all parties that wage increases would be
suspended for 2020. Interim wage increases for West Bengal has been
agreed at 14.8% for 2021 and in Assam the wage increase is subject
to a court process.
Packet tea sales volumes in India grew by 16% to 13.1mkg,
reflecting our continued marketing e orts. The high price of
purchased tea however impacted margins.
The replanting programme continued with 164Ha completed (2019:
239Ha) and a further 62Ha uprooted for replanting at a later date.
In 2021 a total of 117Ha of replanting has been completed in the
first quarter.
Bangladesh
Our crop in Bangladesh was down by 12% as a result of a very
slow start to the season caused by dry hot weather, followed by
torrential downpours from cyclone Amphan.
Average prices were down by 17% as tea consumption in Bangladesh
relies heavily on the hot tea stalls, many of which were closed for
a significant part of the year.
A wage award was agreed in the fourth quarter of 2020 with a
17.6% increase in the daily rate e ective from 1 January 2019 with
the possible introduction of improved productivity measures later
in 2021.
The replanting and extension programme was scaled back in favour
of infilling young tea areas which had lost a high number of plants
as a result of a very dry start to the year. A total of 105Ha of
tea was planted in the year (2019: 161Ha) of which 95Ha was
replanting and 10Ha of new planting. A total of 3.8 million bushes
were planted to infill existing fields. In the first quarter of
2021 a total of 57Ha of replanting has been completed.
Kenya
Production (including smallholder and managed client volumes)
was up by 36% which broke all records and was 11% above our
previous best year in 2016. 2021 production volumes in the first
quarter are lower than last year, particularly in the West of Rift
region. Pricing remains under pressure with average prices in
quarter one of 2021 3% below the same period last year.
The greatest gains were seen in the smallholder sector where our
2020 production was up 51% whilst our own estate volumes were up
34%. This picture was reflected across Kenya where smallholder
volumes were up 25% overall against 23% from the commercial
plantation sector.
Such a huge supply of tea put significant pressure on prices and
our average price was down 12% on last year. However, our factories
performed well in relative terms, with prices 17% above the average
commercial plantation sector auction pricing.
To help control the levels of production and prices, new tea
regulations were proposed in early 2020 and resulted in the signing
of the Tea Act 2020 in December. The new Act makes a number of
significant changes to the way in which the tea auction system and
export markets work in Kenya and we await to see how they will
impact the industry.
There were no wage increases agreed with the unions during the
year and discussions are ongoing.
We replanted a total of 47Ha in 2020 (2019: 51Ha) and uprooted a
further 50Ha for replanting in 2021.
Malawi
Production (including smallholder volumes) was down on 2019 by
5% due to the drier conditions experienced, particularly in the
second quarter. Our production levels for the first quarter of 2021
are 7% higher than last year.
With the very large volumes of tea available in Kenya, pricing
has been under pressure, and sales through the auction were
suspended in April 2020. On resumption of the auction, prices
improved significantly in July and overall average prices for the
year were in line with 2019 levels. Pricing in 2021 is slightly
higher than the same period in 2020.
The newly elected Government of Malawi announced the
implementation of a new minimum wage from the start of 2021. A wage
increase reflecting this was subsequently agreed with the unions at
19% for 2021 alongside certain productivity improvements.
As a result of cash conservation measures, no replanting nor any
new irrigation schemes were carried out during the year.
Macadamia Production
Macadamia kernel volumes produced in 2020 decreased to 1.1mkg
(2019: 1.3mkg). This 17% drop on 2019 was due to a period of very
hot weather in Malawi and South Africa at the end of 2019 which a
ected flowering and nut set. Kenya's volumes reflected an increase
of 45% as the orchards continued to mature and benefited from
benign weather conditions throughout the year.
Mature Immature Volume Volume
area area 2020 2019
Ha Ha Tonnes Tonnes
Malawi 1,388 140 403 503
South Africa 716 (1) 422 196 459
Kenya 698 334 455 313
------ -------- ------ ------
Total 2,802 896 1,054 1,275
------ -------- ------ ------
(1) Excludes 191Ha relating to Wales Estate which was vacated post completion of the 2020 harvest
Macadamia Pricing
The pandemic has resulted in reduced demand from tourism and the
food service sector. Imports into two of our main markets (USA and
Japan) were down significantly. Despite this being partially o set
by increased demand from retail, macadamia kernel prices fell and
averaged 4% below those of 2019.
Due to the reduced demand in 2020, we believe that inventories
of kernel from the 2020 season are higher than normal. Production
in 2021 is also anticipated to be increasing which could bring
prices under pressure for the new season depending on the speed of
recovery in the hospitality sector.
Macadamia Operations
In total we planted another 36Ha of macadamia in South Africa,
to which an additional 6Ha has been added in the first quarter of
2021. We harvested our 2020 crop from Wales estate before vacating
the property as planned and previously reported.
Early indications from the 2021 season in Malawi show that
kernel quality has been adversely impacted by pest and disease
damage which could result in lower production volumes and reduced
average prices. There are currently no indications of similar
damage to the crop in Kenya and South Africa. Initial assessments
of our overall production volumes from our orchards for the 2021
season indicate a higher crop than 2020.
Avocado Production
Avocado volumes from our own estates in 2020 increased to
10.9mkg (2019: 7.1mkg). This increase reflects the increase in
mature hectarage and 2020 being an 'on' year for avocado.
Mature Immature Volume Volume
area area 2020 2019
Ha Ha mkg mkg
Kenya * own estates 532 373 10.9 7.1
* smallholders and outgrowers 1.1 1.1
Avocado Pricing and Operations
Average prices for Hass avocados (which made up 95% of our
volumes) were down 41% on the record levels that we saw in 2019,
partly due to the closure of the hotel and restaurant sector, but
also due to record volumes of fruit from Peru overwhelming the
European market during the summer. Prices recovered rapidly in the
autumn once the excess fruit was sold.
A total of 98Ha (2019: 79Ha) of avocado orchards were planted
during the year of which 34Ha was the Carmen variety.
We continue to monitor the 23Ha trial of avocados near Kitale in
Kenya which we initiated in 2017. The first export crop was
completed in the year with satisfactory results. The timing of the
production and harvest indicates a later market window than the
Kakuzi fruit which will be beneficial for prices. We expect to take
a decision next year on whether to move forward with the full
development.
In Tanzania, the purchase of the Mgagao farm is complete. The
first 13Ha of avocado were planted in 2020 with an additional 37Ha
planted in early 2021.
In South Africa the land clearance on the new farm reported last
year is under way and the first 80Ha of avocado will be planted in
2022.
Speciality Crops Production
Mature Immature Volume Volume
area area 2020 2019
Ha Ha Tonnes Tonnes
Arable (Brazil) 3,616 - 34,979 27,829
Rubber (Bangladesh) 1,610 365 659 650
Citrus (USA)(1) - - 7,262 6,665
Wine grapes (South Africa) 66 18 594 394
Blueberries (Kenya) - 10 13 4
Pistachios (USA)(1) - - - 10
Almonds (USA)(1) - - - 131
m (3) m (3)
Forestry (Kenya, Brazil, Malawi) 116,672 * 86,710 *
N(o) N(o) N(o)
of head of births of births
Livestock 4,529 956 827
* Volumes quoted are for conversion to value addition products
rather than fuel wood for our own use
(1) Sold in 2020
Speciality Crops, Pricing and Operations
Arable
We grow a variety of annual crops in Brazil including soya,
sorghum, wheat, maize and barley. In 2020 all crops grew well and
achieved good prices, assisted in part by the devaluation of the
Brazilian Real.
Rubber
Rubber is grown on areas of the Bangladesh tea estates unsuited
for growing tea. Volumes produced in 2020 were in line with 2019,
as were average prices which remain below cost.
Wine
Although grape production was up 51% and wine sales up 63%
compared with 2019, the continuing losses of the operation have
necessitated implementing a restructuring process. In 2021 all
grape production will be sold to third party wineries and branded
sales will continue under an agency agreement.
Blueberries
The blueberry trial continues - the first commercial crop was
harvested this year but, as previously indicated, volumes achieved
were below expectations due to cool, wet weather and the crop was
sold locally.
Citrus, pistachios and almonds
2020 was an excellent citrus season for both the Murcott and
Navel Orange crops. Following the sale of Horizon Farms during
2020, this will be the final crop of citrus and there will be no
further production of pistachios and almonds.
Forestry
Production of Eucalyptus in Brazil increased 53% in the year due
to continued strong demand from the paper industry. Kakuzi saw a
17% decline in production of forestry products for the market in
Kenya due to a reduction in demand resulting from COVID
restrictions.
Livestock
Births were up this year due to benign weather conditions
leading to excellent volumes of good quality grazing which ensured
the cattle were in peak condition.
Engineering
In total, the Engineering division recorded a segment trading
loss of GBP1.5 million (2019: GBPNil million) on revenue of GBP19.3
million (2019: GBP22.1 million), as set out in note 1 to the
Accounts.
AJT Engineering had a successful year in the oilfield services
division. However, the site services division was largely closed
from the middle of March 2020 until the end of the year, with much
of the work postponed and with the engineers being unable to get on
site. Despite this, total revenues were up by 1% to GBP15.2
million. Abbey Metal Finishing and its subsidiary Atfin both had a
di cult year as COVID related disruption to the aerospace market
significantly impacted demand and sales volumes. Combined revenues
were down 33% with a consequent impact on profitability.
Food Service
In total the Food Service division made a segment trading loss
of GBP1.7 million (2019: GBP0.8 million profit) on revenue of
GBP23.6 million (2019: GBP29.8 million), as set out in note 1 to
the Accounts.
ACS&T saw reduced profitability from 26% lower transport
revenues as demand for frozen products from the restaurant sector
fell.
Jing Tea saw total revenues fall by 42% following closure of the
hotel, restaurant and tourism sectors. However, sales through its
online platform have increased by 33%.
Investments
Investment Portfolio. The loss on sales for the year was GBP0.1
million (2019: GBP1.1 million). Of this a gain of GBP0.2 million
was reflected in the Income Statement and a loss of GBP0.3 million
in the Statement of Comprehensive Income. The total value of the
portfolio at 31 December 2020 was GBP50.6 million (2019: GBP47.0
million). The increase reflects the strength of global equity
markets, particularly in the second half of 2020.
Investment Property. Work continues on the development of the
Linton Park Estate with an additional three properties redeveloped
and let in 2020.
Collections. The collections are held at cost. A number of minor
additions and disposals were made during the year.
Associates
In total, our share of the results of associates amounted to
GBP6.1 million (2019: GBP4.6 million).
BF&M benefited from a significantly reduced claims
experience in its property, casualty, life and health businesses
due to the impact of COVID and the lack of any major hurricane
damage in the year. Gross premiums written decreased by 7% to
Bermudian Dollar 308.1 million, driven by an expected shift of
health premiums between the company and the amounts allocated to
the Bermuda Government as part of Bermuda's health financing
reforms, along with lower property and casualty premiums and life
premiums. BF&M's profit for the year was Bermudian Dollar 21.6
million (2019: Bermudian Dollar 13.1 million). Looking ahead,
BF&M expects to see an increase in claims activity as
vaccination programmes are rolled out.
Our two associate companies in Bangladesh, United Insurance and
United Finance, produced lower results reflecting more challenging
economic conditions in Bangladesh due to COVID.
ON-GOING LITIGATION
We previously disclosed that in 2018, the Kenyan National Land
Commission was asked by a small number of claimant groups to
investigate historical land injustice claims concerning lands
registered in the name of Kakuzi and Eastern Produce Kenya. The
land claims have been refuted through the Kenyan legal system. A
constitutional petition has been filed by us and also a request to
stay the proceedings of the National Land Commission until the
legal position has been determined. This matter is on-going and we
continue to keep the situation under review.
SUMMARY
2020 was a di cult year for the Group for all the reasons set
out above and 2021 to date continues to show some market
disruption. We remain in hope that the impact of the vaccines will
result in a return to normality but anticipate that this will not
be possible in many countries before the end of next year.
However, I am very pleased that we have been able to stay true
to our strategy and to continue to invest for the future. I am also
enormously grateful for the way that our people have tackled the
pandemic and the significant challenges that it has brought with
it.
We continue to invest in sustainability; our ESG report in 2020
showed the strength and depth of our commitment in this area and
the steps that have been taken following the claims in Kenya and
Malawi has helped strengthen our Human Rights processes and
governance. Our balance sheet remains strong with GBP76.0 million
of net cash in the Group and money market deposits amounting to
GBP5.1 million at 31 March 2021. Whilst some of this cash is
committed to long-term projects it gives us the scope and financial
resilience to continue to develop Camellia for the benefit of all
our stakeholders.
Tom Franks
Chief Executive
3 May 2021
FINANCIAL REPORT
Overview of Results
Revenue in Agriculture increased 3.5% to GBP247.2 million (2019:
GBP238.7 million) in 2020 reflecting higher prices in India,
increases in packet tea sales volumes and prices in India, and
increased sales volumes of avocado, citrus and cereals. However,
revenue from Food Service and Engineering were both adversely a
ected by the pandemic which o set the gains in Agriculture leaving
total revenue at GBP291.2 million (2019: GBP291.5 million).
Underlying profit before tax was GBP16.0 million (2019: GBP17.4
million). Underlying profit before tax is before a GBP8.2 million
loss relating to a number of large separately disclosed items
(2019: separately disclosed profit of GBP4.9 million).
Profit before tax in 2020 was GBP7.8 million (2019: GBP22.3
million). This reduction in profit before tax reflects, inter alia,
generally lower average selling prices for tea, lower volumes and
lower prices for our macadamia crop, higher volumes and lower
prices for our avocado crop, improved profits at BF&M, and a
number of separately disclosed items:
-- A GBP14.4 million profit on the sale of the property plant
and equipment at Horizon Farms.
-- GBP16.1 million of legal and other costs relating to the
defence of the litigation concerning our East African operations,
including the settlements of up to GBP4.6 million in relation
to the Kenyan claims and GBP2.3 million in relation to the
Malawian claims.
-- Impairment charges in relation to the Jing Tea brand, investment
properties, plant and equipment at Abbey Metal Finishing
and elsewhere in the UK totaling GBP6.5 million.
The loss after tax for the year ended 31 December 2020 was
GBP0.8 million (2019: Profit after tax GBP15.1 million).
Equity attributable to the owners of Camellia was GBP376.6
million (2019: GBP395.7 million) with net cash and cash equivalents
of GBP94.9 million (2019: GBP89.4 million) and financial assets at
fair value through profit or loss (ie money market funds) of GBP5.3
million (2019: GBP6.2 million).
Impairments
The impairments to the Jing Tea brand, investment properties
plant and equipment at Abbey Metal Finishing and elsewhere in the
UK have arisen following revisions to our estimates of the future
profits and cashflows arising from those assets predominantly as a
consequence of the impact of COVID. Key assumptions made in
quantifying the scale of the impairments at Jing Tea and Abbey
Metal Finishing relate to the speed of recovery of the travel and
leisure and food service markets.
COVID Impact
As set out in the Operational report on page 6, our businesses
are currently operating broadly as normal with the exception of our
Food Service and Aerospace businesses. Our experience over the last
year has given us valuable insight into how the pandemic impacts
our markets and businesses. Despite this, it remains di cult to
predict with any certainty the impact of COVID on the Group during
the remainder of this year. Accordingly, we continue to take
actions to conserve cash by focusing on e ciencies, minimising our
operating costs and focusing capital expenditure across the
Group.
However, with our substantial cash resources, our investment
portfolio and limited gearing, we are well placed to withstand a
further period of disruption to our operations and sales.
Currencies
Over the course of the year, Sterling strengthened against the
majority of our operating currencies. This has resulted in a loss
on foreign exchange translation of GBP22.6 million (2019: loss
GBP16.7 million) which is reflected in the Statement of
Comprehensive Income. Had we translated our profit before tax for
the year using the same average rates as last year, our results for
2020 would have been GBP1.3 million higher. Our profit before tax
includes an exchange gain of GBP2.2 million on transactions during
the year (2019: loss GBP0.3 million).
Cash
The Group's net cash position increased to GBP94.9 million at 31
December 2020 (2019: GBP89.4 million) reflecting, inter alia, net
cash inflows from continuing operating activities of GBP12.9
million (2019: inflow GBP12.6 million) and the receipt of the
proceeds of GBP21.6 million from the sale of Horizon Farms
property. We spent GBP14.7 million on investment in our existing
operations. We also increased our holding in BF&M at a cost of
GBP0.3 million. The Group has loans outstanding of GBP4.8 million
(2019: GBP6.9 million).
We expect capital expenditure in 2021 to be closer to historical
levels as we continue to invest in our key strategic growth
priorities.
As previously highlighted, a number of the Group's key trading
subsidiaries have minority shareholders such that when cash is
repatriated to the UK by way of dividends, those minorities are
entitled to their share of the relevant dividend. In a number of
cases, withholding taxes are also payable from our share of those
dividends.
Funds are reserved within our subsidiary companies to ensure
wherever possible a level of headroom exists against the risk of
crop losses and adverse price movements, such as are possible as a
result of COVID. In addition, funds are held for:
-- Long-term development projects related to the planned continued
extension of our core crop portfolio, including in our new
locations.
-- Disputed taxation assessments (see below).
-- Other contingent liabilities.
These will reduce the net cash available to the Group in future
years as they are spent or, in the case of the disputed tax
assessments and contingent liabilities, if settlement is made.
Taxation
The Group's e ective tax rate of 110.3% (2019: 32.3%) reflects
the significant losses which were incurred in the UK due to the
pandemic, the cost of group legal claims in the UK for which no
immediate tax relief is available and not being able to recognise
the associated deferred tax asset on our balance sheet until it is
su ciently clear when these UK tax losses will be utilised.
Tax and Other Provisions
As is normal at this time of the year, we have ongoing wage
negotiations in Kenya, Bangladesh (some of which have since
concluded) and India. We consider we have made adequate provision
for the likely outcome of these.
Provisions also include the estimates for the agreed settlements
in respect of the litigation in East Africa and other costs related
to the litigation which are expected to be paid in 2021 but which
arise from events occuring prior to the year end.
We continue to have a number of significant uncertain tax
situations, which have been disclosed previously:
-- A provision of GBP1.3 million is held in respect of possible
withholding taxes on branch remittances from Bangladesh
where the Bangladesh Revenue Authority is contesting the
applicable rate.
-- In India assessments have been received for GBP3.5 million
of excise duties, sales and entry tax GBP0.9 million and
GBP1.1 million of income taxes. These are being contested
and no provisions have been made.
-- In India, the long running dispute between our local subsidiaries
and the Government of West Bengal over the payment of a
land tax, locally called 'Salami', remains unresolved. Lawyers
have advised that payment of Salami does not apply, accordingly
no provisions have been made. The sums contested amount
to GBP1.2 million excluding penalties.
In Malawi the Revenue Authority (MRA) recently indicated that it
intended to collect VAT on sales made at auction and under private
treaty for export, in the period since 2017. Tea sales intended for
the export market were subject to an industry wide agreement with
the MRA and the Reserve Bank of Malawi reached at the time the
auction was established, resulting in these deemed exports being
zero rated for VAT. The MRA has raised an assessment for VAT
against Eastern Produce Malawi in connection with this which has
been appealed in light of the historic agreement and
long-established custom and practice of the industry. Following
discussions between the Malawi government, the MRA and the entire
tea industry, the MRA has undertaken to investigate the sales
process for export teas and to consider the implications of this on
the VAT treatment of these deemed export sales. Pending conclusion
of the review, the MRA has given permission for the auction to
continue with teas deemed as export zero rated for VAT and the
assessment raised against Eastern Produce Malawi has been
suspended. Eastern Produce Malawi's estimated contingent liability
for VAT on these deemed export sales, excluding any penalties and
interest, is approximately GBP7.8 million.
Pensions and Other Employment Benefits
The Group operates a number of defined benefit pension schemes,
the largest of which is in the UK.
The 2020 triennial valuation for the UK scheme, which was closed
to future accrual during 2016, has now been concluded and shows a
funding surplus and no contributions are currently required to be
made to the scheme for the next 3 years.
The overseas defined benefit schemes are located in Bangladesh
and India. Our businesses in Kenya, India and Bangladesh also have
obligations to pay terminal gratuities based on years of service
and, in some cases, based on salaries.
In aggregate, our employee benefit schemes currently show
deficits on an IAS 19 basis of GBP16.6 million
(2019: GBP22.0 million deficit).
Accounting for defined benefit schemes is prescribed by IAS 19
and the quantum of the deficit continues to be highly sensitive to
small changes in assumptions as regards wage inflation and gilt
yields in the relevant jurisdictions and to asset performance. This
year a net actuarial gain of GBP4.3 million (2019: gain GBP3.5
million) is reflected in the Statement of Comprehensive Income. The
net gain this year arises primarily from the UK scheme where strong
asset performance was only o set in part by the e ect of lower
discount rates and lower inflation assumptions.
Our Income Statement also reflects current and past service
costs of GBP2.2 million (2019: net cost GBP1.6 million) and GBP0.7
million (2019: GBP1.1 million) in respect of employee benefit
interest cost.
Susan Walker
Chief Financial O cer
3 May 2021
ENVIRONMENTAL AND SOCIAL REPORT
At Camellia, ESG is integral to our business. We believe that
the success of all our operations is fundamentally connected to the
communities and environments, including the wider supply chains, in
which we operate. Our Group report (Custodianship) illustrates not
only the ESG initiatives undertaken across the Group but also
explains the Group's approach to each of these principles. We have
aligned ourselves to seven of the United Nations Sustainable
Development Goals (SDGs):
-- SDG 3: Good health and well being
-- SDG 4: Quality education
-- SDG 5: Gender equality
-- SDG 6: Clean water and sanitation
-- SDG 8: Decent work and economic growth
-- SDG 13: Climate action
-- SDG 15: Life on land
The Group's ESG initiatives are based on our fundamental belief
that we are custodians of our operations, ensuring they undergo a
process of continuous improvement. This enables them to be passed
on to the next generation whilst caring for the environments in
which they are based and for those communities who depend on
them.
The Group's approach to ESG is the responsibility of the
Strategy Group (as described on page 36) which is supported in
certain key areas by the Safeguarding and Stewardship Committee
which is described in more detail below. The boards of the Group's
operating companies closely consider their respective governance
protocols and the environmental impact of their ongoing operations
and investment decisions, with regard to both Group requirements
and local regulations and legislation.
Environmental
Climate change is a significant risk to the Group's agricultural
operations which it a ects in di erent ways and to di ering
extents. We seek to mitigate this impact by diversifying our
agricultural production by both origin and crop. We are also
planting more drought resistant crop varieties and using other
initiatives, such as restorative farming methods and sustainable
irrigation, to manage the impact of climate change.
We are committed to our goal of protecting the environment and
minimising our environmental footprint. This is achieved through a
range of resource e ciency initiatives with the ultimate intention
of setting carbon reduction targets across our operations. In
addition to minimising our environmental impact, we protect and
enhance natural habitats such as forests and water bodies for local
flora and fauna.
The material environmental impacts that arise from the Group's
operations fall broadly into three categories: (i) greenhouse gas
emissions from on-site combustion of fuels to power the tea factory
driers; (ii) use of fertilisers; and (iii) extraction of water for
irrigation of crops. Water is extracted from a variety of sources,
but we seek to maximise rainwater capture by creating large
reservoirs from which to irrigate sustainably.
The Group also oversees c.11,100Ha of indigenous forests and
conservation areas plus a further 7,500Ha of commercial forestry.
These areas, in combination with the large areas of perennial
crops, have the potential to sequester significant amounts of
carbon and act as an important o set against the Group's carbon
emissions. We have estimated the impact of sequestration on our
core crops and our managed eucalyptus estates. We provide more
detail on this below.
We use appropriate partners to support the Group in achieving
our environmental protection and environmental footprint
initiatives. As an example, in 2020 an initiative between our Kenya
tea operations and Cambridge University was established to
investigate possible savings in thermal and electrical energy usage
and thus a reduction in carbon emissions, in the manufacture of
tea. The seed funding to launch this project was provided by our
Chairman's Fund which has allowed the initiative to proceed.
Excellent progress has been made to identify possible significant
savings in both thermal and electrical energy usage in the two
factories being trialled in the exercise.
Environmental reporting
During the financial year we reported to the Environment Agency
under ESOS (Energy Savings Opportunity Scheme), which included
energy audits of our UK operations and the identification of
potential energy saving initiatives and investments. The Group's UK
operations are considering such initiatives and have included a
selection in their future investment plans as set out below.
2020 is also the first year for which the Group is required to
report under SECR (Streamlined Energy & Carbon Reporting)
Regulations, which is set out in the rest of this section. The
Group has not been subject to any environmental fines during the
reporting period.
Global GHG emissions and energy use data for period 1 January
2020 to 31 December 2020
2020 2019
Global Global
(excluding (excluding
UK and UK and UK and UK and
o shore o shore) o shore o shore)
Emissions from activities which
the company owns or controls
including combustion of fuel
& operation of facilities (Scope
1) (tCO(2) e) 5,435 166,247 7,147 181,692
Emissions from purchase of electricity,
heat, steam and cooling purchased
for own use (Scope 2, location-
based) (tCO(2) e) 5,130 43,115 5,316 48,910
Total gross Scope 1 & Scope
2 emissions (tCO(2) e) 10,565 209,362 12,463 230,602
Energy consumption used to calculate
above
emissions: (Scope 1) (kWh) 24.6m 678.3m 31.8m 704.0m
Energy consumption used to calculate
above
emissions (Scope 2) (kWh) 22.0m 91.2m 21.5m 97.4m
Intensity ratio: Kg CO(2) e/Kg
of made tea Not available 1.40 Not available 1.51
Emissions from purchase of electricity,
heat, steam and cooling purchased
for own use (Scope 2, market-based)
(tCO(2) e*) 32 42,963 Not available Not available
2019 was restated as a result of improvements in data quality
and completeness
* Note: 2020 is the first reporting period for which we reported
our scope 2 market-based emissions
Methodology
The scope of the reporting for SECR purposes was determined by
including the businesses in which the Group owns majority holdings.
It includes GHG (Greenhouse Gas) emissions and energy use of
businesses that were divested during the reporting period up to the
date of transfer of risk and reward pertaining to those businesses.
The reporting period aligns with the Group's financial reporting
period. The reported figures are an aggregation of emissions and
energy consumption of the Group's reporting units. A reporting unit
is defined as a geographically located operating entity or group of
entities. For example, the Goodricke group of companies is defined
as one reporting unit. Within a reporting unit distinction is made
between di erent sites, field operations and factory
operations.
The emission factors used in calculating the Group's emissions
are as per those published by the UK Department for Business,
Energy & Industrial Strategy and the UK Department for
Environment, Food and Rural A airs, which are in line with the GHG
Protocol guidance. The non-UK electricity emission factors are
sourced from the International Energy Agency for Scope 2
location-based reporting. For Scope 2 market-based reporting they
are sourced directly from the electricity suppliers, where
available.
A standardised reporting tool is used to capture the Group's
environmental and energy data. Year on year trends in the data are
analysed and understood. Where estimates are used these are
disclosed and assessed in terms of magnitude as part of the overall
data quality.
Every e ort is made to ensure the environmental data that we
report is accurate. However should more accurate or complete data
be available for prior years, we will restate if it results in a
movement of at least 5% in the reported data. We may restate carbon
emissions even when there is no change in consumption data, due to
corrections to the emissions factors provided by Defra. In relation
to the 2019 data some improvements were made in terms of quality
and completeness, which resulted in a 6% increase.
Changes in Scope 1 and Scope 2 emissions
The Group's Scope 1 and 2 emissions reduced during the reporting
period primarily due to lower production in India and Bangladesh.
Total made tea production in India was down by 22% in 2020 and
since these tea factories are primarily fueled by coal, this
reduction in production represents 59% of the drop in the Group's
total carbon footprint. The Group's Bangladesh operations saw made
tea production reduce by 12%. These tea factories are primarily
fueled by natural gas and this reduction in production represents a
further 14% of the drop in the Group's carbon footprint.
One of the largest uses of energy in the Group is the
requirement to process and dry our tea crop. We include the made
tea intensity ratio (kg CO(2) e per kg of made tea) and we continue
to invest to increase the carbon e ciency of our tea factories. We
are happy to report that in 2020 there has been a 7% improvement in
the Group's made tea intensity ratio, mainly as a result of e
ciency measures implemented at our Kenya and Malawi tea operations
supported by a significant increase in production by our Kenyan
operations and lower production in India. This was partially o set
by the increased use of coal in India per kilo of Made Tea.
As mentioned above, the Group's perennial crops, sequester
significant amounts of carbon. Recently, we conducted a study using
Ricardo Plc to estimate the amount the Group's core crops and
managed forestry sequester through the soil. On average, for our
tea crop sequestration by the soil is estimated to o set c.43% of
the carbon emissions from field production and land use change.
Similarly, for our avocado and macadamia crops we estimate that
soil sequestration o sets c.64% and 28% of the 2020 carbon
emissions from field production respectively. There is also a large
carbon stock that sits in the soil and that has built up over many
years, which, as a Group, we have a duty to protect through the use
of sustainable practices such as restorative agriculture
techniques. We will continue to review our operations' practices
regarding the protection and enhancement of our soils and assess
where we can make improvements.
Environmental certifications
All of the Group's engineering businesses and ACS&T are ISO
140001 certified and many of our international operations are
subject to stringent certifications that include environmental
impact requirements.
Energy e ciency action taken
As noted above, an initiative between our Kenya tea operations
and Cambridge University was established to investigate possible
savings in thermal and electrical energy, and thus a reduction in
energy use, in the manufacture of tea.
In the period covered by the report, the Group's operations have
also implemented a range of other energy e ciency initiatives. We
set out some of the key ones below:
Expected Saving
Operation Energy Saving Initiatives per annum
Eastern Produce Installation of variable speed drives
Kenya on the 72 MWh
air inlet fans on the tea driers
at one factory
Upgrading storage lighting to LED
ACS&T at one cold store 213 MWh
Installation of five fast close doors
ACS&T at five cold stores 375 MWh
Review of temperature set-points
AJT of radiant heaters 82 MWh
in main workshop spaces
In aggregate, we expect the above energy saving initiatives and
a number of smaller initiatives to result in
873 MWh saving in energy per annum.
In addition, the Group is continuing with its programme of
replacing existing energy sources with renewable energy sources,
which amounted to a further 490 MWh in 2020. The main initiatives
taken to date include the installation of solar generation at a
number of Duncan Brother's tea estates, EPK in Kenya and at the
Group's farm in Brazil as well as the installation of hydro
turbines at a number of Goodricke's tea estates. All our UK
operations have green tari electricity contracts.
The Group's operations have also made an assessment of potential
energy e ciency initiatives that can be implemented over the next
five years. The implementation of these initiatives is subject to
approval by the respective operations' boards and the Group's
annual budgeting process. We set out some of the key initiatives
below:
Operation Energy Saving Initiatives
Eastern Produce Installation of new, more energy e cient driers
Malawi at a number of its tea factories
Eastern Produce Upgrading to lighter weight withering fans
Malawi at a number of its tea factories and lighter
weight fans at its macadamia factory
ACS&T Installation of fast close doors at cold stores,
reducing the amount of ambient air flow
ASC&T Enhanced transport fleet training on driver
behaviour and fuel consumption
Goodricke Upgrading steam traps at a number of its tea
factories, reducing steam losses and increasing
e ciency
Eastern Produce Installation of heat exchangers to recycle
Kenya hot air from the boiler flue gases, in order
to preheat the air entering the driers at
several its tea factories
Eastern Produce Installation of improved fuelwood storage
Kenya at a number of its tea factories
We expect the above initiatives to provide significant savings
in energy over the next five years. The Group will continue to
replace existing energy sources with renewable energy sources where
possible. Our ultimate intention is to set energy reduction targets
across our operations.
SOCIAL
The Group's businesses are fundamentally connected to the
welfare of the communities and environments in which we operate. We
proactively invest to ensure these environments are protected and
improved. Our focus is on the long-term stability, security and
continuity of our businesses and those communities. We support and
integrate the SDGs into our sustainability strategy, which forms a
key pillar in our overall strategy.
The majority of our operations are based in developing
countries. We make progress every year, not only in trying to
increase wages, but also in improving housing, education and
healthcare, all of which are important to improving livelihoods. To
this end we are working with our supply chain, customers, national
governments, trade unions and NGOs to improve living conditions of
employees.
The Group's response to COVID
The pandemic continues to be a global crisis and the situation
remains uncertain but the increasing rate of vaccinations is
encouraging. The Group's operations reacted to the outbreak of the
pandemic swiftly to protect its employees and communities. We have
worked closely with local governments, communities and the Group's
clients.
Measures and initiatives put in place have focused on training
and education on sanitation, social distancing measures and the
provision of medical and other equipment. Providing a safe place to
work and supporting the Group's local communities have been
particularly important over the past year. Further information is
available from the Group's various social media platforms.
Healthcare
The majority of our tea estates in India and Bangladesh have a
hospital and a qualified doctor, and our operations in these
countries also have central hospitals. Our African operations run
dispensaries established on their estates, o ering medical services
and care to employees, their dependents and people from surrounding
communities. These are manned by qualified medical personnel from
our operations and services are free to employees and their
dependents. The Group provides medical services including, where
appropriate, antiretroviral drugs in those communities where HIV
and AIDS are a concern. Medical support is also provided to schools
that are either run locally or by our operations.
Across the Group we own and/or operate 50 hospitals and 85
dispensaries. In 2020, the Group performed 878,744 patient
treatments, of which 499,734 treatments were for Group employees,
at its hospitals. The Group also owns and/or operates 176 nurseries
and creches, 147 primary schools and 14 secondary schools. In total
we educated more than 30,000 children. The Group owns c.48,000
houses and houses c.294,000 people, of which c.68,000 are
employees.
Human Rights
We are determined to safeguard Human Rights across our own
operations and supply chains. Many of the operations are subject to
audit and certification, where Human Rights are one aspect of such
process.
Following the allegations made against our East African
operations, the Board decided to enhance the Group's governance and
safeguarding oversight functions to comply with the UN Guiding
Principles on Business and Human Rights. The Board has established
a Safeguarding and Stewardship committee which is further described
on page 38. The committee shall promote the highest standards in
protecting and promoting Human Rights across the Group and has
appointed an internationally respected firm of specialists to
review the Human Rights position of our larger operations and to
make recommendations for improvements where necessary.
In addition, we have started the process of putting in place
Operational-level Grievance Mechanisms in many of our major
countries of operation, which will be compliant with UN Guiding
Principles and overseen by independent third-parties. We continue
to review our Group Principal Policies to identify what, if any,
changes should be made. We expect our investee companies similarly
to review their own policies and procedures, including policies
designed to ensure that support is provided to complainants where
allegations of Human Rights violations arise.
Progressive measures
As described below, the Group has also implemented a significant
number of progressive measures in both Kenya and Malawi to help
protect the rights of its employees and their communities. Up to
date information on these measures and other initiatives
implemented across the Group are set out on the Camellia Group
website.
Eastern Produce Malawi has established a Women's Empowerment
Initiative which will fund projects to improve the skills,
employment opportunities, and educational attainment of women and
girls in and around its operations. These include:
-- Gender Equality Scholarships for women.
-- A specialist female leadership training programme to support
the career progression of women into more senior positions.
-- Funding community civic education programmes concentrating
on Sexual Harassment and Gender Equality.
-- Relocating and upgrading primary school facilities to include
a community meeting hall.
-- Maintaining boreholes in locations designed to benefit women
and children locally to the estates.
-- Establishing three new victim support units at local police
stations.
In Kenya, Kakuzi has confirmed that it will be putting in place
certain measures, for the benefit of the communities on and around
its estate. These include:
-- The provision of charcoal kilns and access to firewood so
local communities can produce and sell sustainable charcoal
for their own income generation.
-- Building two social centres for community meetings.
-- Employing predominantly female safety marshalls to give
visible reassurance to those using access routes.
-- Building three new roads accessible to the community without
any requirement to obtain a licence to give people better
access to local amenities.
-- The establishment of a group to survey and demarcate land
which has been previously donated by Kakuzi.
-- The design and implementation of a Human Rights defenders
policy.
Kakuzi has also engaged an additional independent Human Rights
consultancy to conduct a Human Rights impact assessment of its
operations, so that local communities and commercial partners can
have confidence in Kakuzi's commitment to the highest standards of
business and Human Rights.
Approved by the Board
Amarpal Takk
Company Secretary
3 May 2021
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 2020
and a description of the principal risks and uncertainties facing
the Group. A fair review of the business of the Group is
incorporated within the Chairman's Statement and the Operational
report on pages 6 to 12. The Chairman's Statement and the
Operational report, together with information contained within the
report of the Directors, highlight the key factors a ecting the
Group's development and performance. Further details of the
financial performance and position of the Group are set out in the
Financial report on pages 13 to 15. Other matters are dealt with
below.
Group Strategy
The Board has adopted the following strategy for the Group:
-- To develop a worldwide group of businesses requiring management
to take a long-term view.
-- The achievement of long-term shareholder returns through
sustained and targeted investment.
-- Investing in the environment and sustainability of the communities
in which we do business.
-- Setting the principles which the operating companies need
to achieve through their policies and procedures to ensure
that the quality and safety of their products and services
meet the highest international standards.
-- The continuous refinement and improvement of the Group's
existing businesses using our internal expertise and financial
strength.
The progress against this strategy during the year is set out in
further detail in the Operational report, the Environment and
Social report, and within the Report of the Directors.
Business Model
The Group consists of operations engaged in Agriculture,
Engineering and Food Service. The Group also holds a range of
Investments. Operations are managed on a divisional basis with
regular reports made to the Board on performance against the annual
budget. Each division is expected to perform against an agreed
strategy with goals and targets for the short, medium and
long-term. These are summarised below.
Agriculture
Core crops. To focus on our core crops of tea, macadamia and
avocado where we have scale and geographic diversity. Where
appropriate opportunities arise, to add to our production
capability in these three crops, as well as to make aligned
acquisitions and investments to enable us to capture more of the
value chain. To investigate the possibility of a fourth core crop
if suitable opportunities present themselves.
Speciality crops. To maintain our portfolio of speciality crops
in order to retain the diversity of location and crop which has
historically proven so valuable in spreading the Group's political
and commodity price risk.
With all our agriculture operations we will have regard to the
potential threats arising from politics and the impact of climate
change, particularly in water stressed areas and will adapt our
portfolio of operations accordingly.
Engineering
AJT Engineering. To maintain our presence in the oil services
sector whilst diversifying into adjacent energy related sectors in
order to create a sustainably profitable engineering business
focused on the wider energy sector.
Abbey Metal Finishing and Atfin . To continue to grow both
businesses as quality suppliers to the aerospace industry. The
impact of the pandemic on the aerospace industry may render this
strategy unachievable and wider strategic options are being
assessed.
Food Service
ACS&T. To continue to operate as a niche high quality
business in the storage and distribution of frozen foods, aiming to
achieve critical mass by profitable growth and if appropriate,
acquisition.
Jing Tea. To grow the existing respected small brand into a
larger, more profitable distributor and retailer of speciality teas
internationally.
Investments
Investment Portfolio. The Group has a portfolio, principally of
listed investments, the strategy for which remains to invest in
high quality companies where we believe that there is long-term
value. This portfolio also enables us to balance our geographic
risk exposure.
Investment Property. The strategy is to continue to invest in
quality assets where an appropriate yield may be realised. The
process of developing some of our existing properties to enhance
yield will continue.
Collections. The Group has collections of art, philately and
manuscripts which are regularly reviewed and are added to or sold
as appropriate.
Associates
The Group has three associate companies in the financial
services sector of which BF&M, the listed Bermudian insurance
business is the most significant. With all our associates, we
continually monitor our investment and may increase or decrease our
holding in the future.
S172 Statement
This section serves as the Company's section 172 statement and
should be read in conjunction with the whole of the Environmental
and Social report, the Strategic report, the Corporate Governance
report and the Statement of Directors' Responsibilities. Section
172 of the Companies Act 2006 requires Directors to take into
consideration the interests of stakeholders in their decision
making.
The Directors continue to have regard to the interests of the
Company's employees and other stakeholders, including the impact of
its activities on the environment and the Company's reputation,
when making decisions. Acting in good faith and fairly between
members, the Directors consider what is most likely to promote the
success of the Company for its members in the long-term.
The Board regularly considers the views of its principal
stakeholders and how we engage with them. The stakeholder voice is
brought into the boardroom throughout the annual cycle through
information provided by management presentations, meetings and
operational visits. There is on-going dialogue between members of
the Board and significant shareholders whose views are also
reported to the Board.
The Board continues to enhance its methods of engagement with
the workforce. During 2019 it was concluded that the most e ective
method to measure engagement across the Group's UK sta was to
undertake an employee survey. This survey was conducted in 2020. We
invited all UK employees to participate in an anonymous employee
engagement survey called "Your Voice". It asked a series of
questions relating to recognition, development, leadership,
wellbeing and opinions on how the companies are responding to the
COVID pandemic. The results generated a number of follow up
initiatives which have been raised with the boards of the
respective operations. These include more opportunity for middle
management development and enhanced Group-communications. The
survey will be repeated in 2021 to track progress, monitor
engagement levels, implement new initiatives, and promote a culture
of ongoing feedback.
Principal Risks and Uncertainties
There are a number of possible risks and uncertainties that
could impact the Group's operations. The Group regularly monitors
the risks at operational and Group level. Information on the
Group's financial risks is disclosed in note 42 of the Accounts.
The following material risks relating to the Group's principal
operations have been identified.
Agriculture
Risk Potential Impact Mitigation
Climate change Current agricultural patterns and Geographical spread of operations
practices become unsustainable. to lessen the impact of extreme
Land values and local communities are weather on the Group as
impacted. a whole.
Flooding/ drought affecting crop Investment in irrigation, water
yields. storage and drought resistant
crop varieties.
Price volatility Fluctuations in commodity prices impact Use of forward contracts, product
profitability each season. In the event and crop diversification and
of a prolonged building long-term strategic
depression in the world tea market the relationships with key customers.
impact on the Group would be material.
Currency fluctuation Profit volatility arising from sales in Monitoring of foreign exchange
US Dollars and Euros where there is no rates and cash management.
natural hedge
against the cost of production in local
currency.
Cost of production Increased cost of production and lower Introduction of more efficient
profitability. working practices and the
increased use of mechanisation
and
automation.
Long-term political issues over Potentially losing access to farms and Monitoring changes to local land
land ownership estates or paying more for existing legislation with the assistance
property (for example of lawyers and local trade
if freeholds become leaseholds). associations. Maintaining
collaborative relationships with
governments at local and national
levels.
Civil unrest and political Periodic interruptions to the operation Increasing security for our
instability of the businesses at a local level. workers and operations during
times of civil unrest.
Corruption Inability to carry on business in a Strict adherence to anti-bribery
manner which is legal and ethical. legislation and the
implementation of the Group
Principal
Polices.
Health and safety Vulnerability of the employees to Strict compliance with
injury at work due to the use of legislation and training
machinery and chemicals. employees to adopt safe working
Payment of fines and claims, criminal practices.
prosecutions and reputational damage. Regular external compliance
reviews.
Human Rights Adverse impact on financial results On-going training and raising
(current and historic) from legal and reputational costs. awareness across the employees.
Media and political Providing appropriate mechanisms
pressure impacting operations or to bring forward any allegations
customers preparedness to buy products. and redress (such as
whistleblowing and
Operational-level
Grievance Mechanisms).
---------------------------------- --------------------------------------- ---------------------------------
Engineering
Risk Potential Impact Mitigation
Key customer dependence Losing a major customer. Diversification of the customer
base and careful customer
relationship management.
Dependence on the oil and gas and Changes in market conditions leading to Diversification into other
aerospace sectors lower demand for services. sectors. Close monitoring of the
current sectors.
Health and safety Vulnerability of the employees to Strict compliance with
injury at work due to the use of legislation and training
machinery and chemicals. employees to adopt safe working
Payment of fines and claims and practices.
reputational damage. Regular external compliance
reviews.
---------------------------------- --------------------------------------- ---------------------------------
Food Service
Risk Potential Impact Mitigation
Key customer dependence Losing a major customer. Diversification of the customer
base and careful customer
relationship management.
Health and safety Vulnerability of the employees to Strict compliance with legislation
injury at work due to the use of and training employees to adopt
machinery and chemicals. safe working practices.
Payment of fines and claims, Regular external compliance
criminal prosecutions and reviews.
reputational damage.
---------------------------------- ----------------------------------- ---- -----------------------------------
Investments
Risk Potential Impact Mitigation
Market Decline in the value of investments Portfolio diversification, careful
and property. stock selection, the regular
monitoring of individual company
stock performance and a diversified
property portfolio.
---------------------------------- ----------------------------------- ---- -----------------------------------
Group
Risk Potential Impact Mitigation
Prolonged impact of a pandemic Interruption to production and/or Implementation of contingency
disruption of supply to customers. plans.
Volatile equity markets impacting Cost reduction and cash management
the pension schemes' deficits with measures.
a resultant increase Ongoing monitoring of banking
in the funding requirement. partners and country credit
Increased risk of bank failure, and ratings.
foreign exchange volatility
resulting in increased costs.
Risk of imposition of currency
controls leading to the inability
to remit funds from overseas
operations.
UK and Overseas Pensions Increase in the pension schemes' Regular monitoring of and
Increases in inflation and/or deficits with a resultant increase improvement to the investment
reductions in long-term government in the funding requirement. strategy, the funding position of
bond yields the pension schemes and investment
Lower than expected asset return performance.
Changes in local laws restricting
the investment choices
for the schemes' assets
Environmental Contamination of local and wider Strict compliance with legislation,
environment due to the use of training employees to adopt safe
machinery and chemicals. Payment working practices and
of fines and claims, criminal lessen the impact on the
prosecutions and reputational environment.
damage.
Taxation Uncertainties in relation Future adjustments to taxable Tax exposures are considered
to the interpretation of complex tax income and expenses already individually, and judgements made
legislation, or arising recorded or increases to the cash with support from experienced
from changes in tax legislation tax costs incurred by the Group in tax professionals and external
Risk that the Group's judgements are future. advisors.
challenged by tax authorities
Legal Group legal risk in relation to the Monitoring the interpretation of
Uncertainties in relation to the activities of overseas operations law and taking appropriate legal
application of English or other law (including potential advice.
or changes in case law litigation in the UK) and incurring
costs in relation to the same.
Potential cyber-threats such as Loss or theft of data. Developing our technology systems.
computer viruses Interruption to services for Investing in developing the IT
IT malfunctions or external customers and the business. skills and capabilities of our
cyber-attacks people.
Actively monitoring and mitigating
any cyber-threats and suspicious IT
activity.
Implementation of disaster recovery
plans for business critical
systems.
------------------------------------ ----------------------------------- -----------------------------------
Group Principal Policies - GPPs
There are a range of issues that are important to the Group and
to all of our operations, whatever sector they operate in. These
are set out in the Group Principal Policies which are cascaded
across the Group. Each operation is required to prescribe its own
local policies based upon the Group Principal Policies. On an
annual basis, each significant operation confirms to Group its
adherence with the Group Principal Policies. Ultimately, our
individual operations have experts who are best placed to identify
how each policy can be implemented and applied which in turn
enables them to operate responsibly and ethically over the
long-term.
Notwithstanding the fact that overall responsibility for the
implementation and enforcement of the GPPs rests with the
management of each operating company, certain GPPs (such as the
Anti-Bribery and Corruption GPP, the Modern Slavery GPP and the Tax
GPP) include provisions which are directly e ective. This is the
case where observance of these provisions is required in order for
Camellia Plc to comply with its own legal and regulatory
obligations.
The GPPs can therefore be grouped into the following four
categories:
-- The High-level GPPs
-- The Compliance GPPs
-- The Modern Slavery GPP
-- The Tax Principles
The High-level GPPs comprise the Certification and Traceability
GPP, the Health and Safety GPP, the Environment GPP, and the
Employee Welfare GPP. The Compliance GPPs comprise the Anti-Bribery
and Corruption GPP, and the Whistleblowing GPP. A summary of each
principal policy is set out below and they are set out in full on
our website.
High-level GPPs
Certification and Traceability
As part of our end to end supply chain, our operations are
required to meet the requirements of our customers and suppliers in
terms of certifications and traceability. The vast majority of our
tea gardens are RFA certified and all our macadamia, avocado and
winery processing facilities are FSSC 22000 certified. Across the
Group, operations have also obtained ISO14001, ISO9001 and ISO45001
and many other appropriate accreditations.
Health and Safety
We take responsibility for our people by promoting good health
and providing a safe and healthy workplace to protect all
employees, contractors, visitors and the public from foreseeable
work hazards. All operations are required to comply with local
health and safety legislation, regulations and to obtain
certifications from external authorities.
Environmental
We are mindful of the environment in which we operate,
recognising that our operations require natural resources and that
our operations generate emissions and waste. We understand and
comply with current applicable legislation in the jurisdictions in
which we operate. Our operations are each required to commit to
policies which reduce their environmental footprint and which
include (where appropriate), carbon, recycling, waste and
water.
As part of our wider drive towards greater sustainability, we
are developing a range of mid to long-term targets to reduce the
environmental impact of our operations. As an example, strategic
improvements in our usage and sourcing of energy supports our
ambition to align with Science-Based Targets. Targets adopted by
the operations to reduce greenhouse gas emissions are considered
'Science-Based' if they are in line with the level of
de-carbonisation required to keep the global temperature increase
below 2 C compared to pre-industrial temperatures.
Employee Welfare
Our employees are at the heart of what we do, and their safety
and welfare is paramount, as described in Environmental and Social
report. Operations are required to have policies and procedures in
place which cover equality, health, personal development, training,
diversity, and (where appropriate) education, housing and
sanitation.
We consciously and continuously work towards encouraging
equality in management positions across our operations. The Group
complies with local regulations to encourage employees with
disabilities to work in our operations and where necessary, makes
appropriate adjustments to working practices.
Compliance GPPs
Anti-Bribery and Corruption
The Company has adopted an anti-bribery policy which complies
primarily with the requirements of the UK Bribery Act 2010 although
the Board also requires compliance with the laws of all countries
in which the Group operates.
All Group employees, o cers and executives, and all those acting
for or on the Group's behalf are strictly prohibited from o ering,
paying, soliciting or accepting bribes or kickbacks, including
facilitation payments.
Compliance with the anti-bribery policy is monitored by the
individual operations and incidents are reported to the
anti-bribery o cer for such operation.
In addition, the Board has adopted an anti-facilitation of tax
evasion policy which complies with the requirements of the UK
Criminal Finances Act 2017. The policy has been introduced across
the Group and its compliance is monitored at Group and by
individual operations.
Whistleblowing
Our whistleblowing policy provides guidelines for people who
feel they need to raise certain issues in confidence. It is
designed to protect those raising a genuine concern, in line with
the Public Interest Disclosure Act 1998 or other jurisdictional
legislation. Each operation is required to have a designated Local
Whistleblowing O cer. Group employees have access to the
whistleblowing o cer for the individual operation, as well as the
Group Whistleblowing O cer or the chairman of the Audit
committee.
Modern Slavery GPP
The Group continues to comply with the requirements of the
Modern Slavery Act 2015, to ensure that modern slavery and human
tra cking are not taking place either within the Group or in the
supply chains of our operations. A copy of the statement for the
year ended 31 December 2020 is available on the Company's website.
In some countries, it is both the cultural norm and permissible for
parents to involve their children in the production process. We do
not subscribe to this approach and the use of child labour is
prohibited across the Group. All Group operations are required to
confirm this statement and adopt local policies and procedures to
ensure continued compliance. This includes setting out codes of
conduct when working alongside customers and suppliers.
Tax Principles
The Group's tax principles include: compliance with applicable
tax laws; payment of the correct tax amounts; interpretation of tax
law; undertaking tax planning based on commercial rationale; and
transparency with tax authorities.
Key Financial Performance Indicators
The nature of the Group's principal activities is such that the
Board takes a long-term view of its operations, particularly in
Agriculture.
The Board reviews monthly reports with a range of financial and
other indicators to monitor the performance of each division
depending on the nature of its operations.
For the Agriculture division, the Board receives monthly data on
sales prices and volumes, costs of production and crop volumes
against budget and on a per unit basis. Rainfall and other climate
data are also considered.
For the Engineering and Food Service divisions, the Board
receives monthly profit and operating performance information.
For Investments, the value and performance of the share
portfolio is reviewed quarterly.
Certain of the key financial performance indicators are included
in the Operational report on pages 6 to 12.
Non-Financial Performance Indicators
Each operation has developed non-financial KPIs that are
relevant to it, these include:
-- Market trends - including tea auction volumes, demand for
each product by country where available, supply data and
market prices.
-- Health & Safety - including days lost to injury, number
of accidents and fatalities, whistleblowing incidents and
updates to legislation.
-- Industrial disputes - including days lost to strike action
and other significant employee issues.
-- Land and politics - including elections, material new regulation
or case law.
-- Movements in key personnel - including promotions, resignations
and retirements of senior management.
-- Weather and climate - including rainfall, temperatures and
long-term meteorological trends.
These are regularly monitored and used by local management. The
Board considers such KPIs by exception where local operations
notify that significant material issues have emerged.
Employees
The Group keeps employees informed through internal
publications, the website and social media on the performance of
the Group and on matters a ecting them as employees and
arrangements to that end are made by the local management.
As set out in the Group's Employee Welfare Policy, it is the
Group's policy that operating companies give due consideration to
employment applications received from disabled persons and to give
employees who become disabled every opportunity to continue their
employment.
The table below provides a breakdown of the gender of the
Directors and employees at 31 December 2020.
Men Women
Company Directors 9 1
All employees 40,513 36,708
Approved by the Board
Amarpal Takk
Company Secretary
3 May 2021
REPORT OF THE DIRECTORS
The Directors present their report together with the audited
consolidated accounts for the year ended
31 December 2020.
Principal Activities
The Company is a public company limited by shares, which is
quoted on the AIM Market of the London Stock Exchange and
incorporated and domiciled in England and Wales. The principal
activities of its subsidiary undertakings comprise:
Agriculture
Engineering
Food Service
Investments
Further details of the Group's activities are included in the
Operational report on pages 6 to 12.
Results and Dividends
The loss after tax for the year amounted to GBP0.8 million
(2019: profit after tax GBP15.1 million). The Board is proposing a
final dividend for the year 2020 of 144p per share. Therefore, the
total dividend payable for 2020 is 144p per share (2019: 42p per
share). Details are shown in note 11 to the Accounts.
Directors
The Directors are listed on page 4. The following Directors had
beneficial interests in the shares of the Company.
Camellia Plc ordinary shares of 10p each: 31 December 1 January
2020 2020
Malcolm Perkins 1,673 1,673
Tom Franks 200 100
Susan Walker 220 100
Under the Company's articles of association all the Directors
are required to retire annually. Accordingly, Malcolm Perkins, Tom
Franks, Susan Walker, Graham Mclean, Chris Relleen, Frédéric
Vuilleumier, William Gibson, Gautam Dalal and Simon Turner will
retire and, being eligible, will seek re-election at the AGM.
Jonathon Bond is not seeking re-election as he will be taking up
a new executive post which necessitates him stepping down from the
Board. 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 e ect from 1
September 2015. He joined Camellia as Deputy Chief Executive in
October 2014. He is a chartered accountant and a Fellow of the
Chartered Institute of Securities and Investment.
Graham Mclean, a qualified agriculturalist, was appointed as
Director of Agriculture in October 2014. He was previously regional
director of the Group's operations in Africa and has worked for the
Group for more than 25 years. He is a non-executive director of
Kakuzi PLC.
Susan Walker was appointed Chief Financial O cer for the Group
on 4 June 2015. She joined Camellia as Finance Director Designate
on 1 July 2014. She is a chartered certified accountant and a
non-executive director of Goodricke Group Limited and United
Finance Limited.
Non-Executive Directors
Chris Relleen was formerly a partner at PricewaterhouseCoopers.
He was appointed as an independent non-executive Director and
Deputy Chairman in January 2006 having previously been a
non-executive Director of Linton Park Plc. He is senior independent
Director, chairman of the Audit committee and a member of the
Nomination and Remuneration committees.
William Gibson was appointed as an independent non-executive
Director in September 2014. He was previously chairman and managing
director of Westminster Press and an executive director of the
Financial Times Group. He is chairman of the Remuneration
committee, chairman of the Safeguarding and Stewardship committee
(appointed in December 2020), and a member of the Audit and
Nomination committees.
Frédéric Vuilleumier was appointed as an independent
non-executive Director in March 2013. He is a partner of Oberson
Abels SA, a law o ce based in Geneva, Switzerland. He was a member
of the Audit committee until April 2019.
Gautam Dalal was appointed as an independent non-executive
Director in March 2018. He was previously a partner at KPMG and a
founder-director of the UK India Business Council, a member of the
Asian Business Association and a director of AMREF Health Africa's
International Board. He is a member of the Audit committee.
Jonathon Bond was appointed as an independent non-executive
Director in March 2020. Jonathon has spent 25 years in the private
equity industry with a particular focus on raising standards of
governance and performance. He is also a senior independent
director of Jupiter Fund Management plc, a non-executive director
of Standard Life Private Equity Trust plc and Scottish
Widows/Lloyds Bank Insurance. He was appointed a member of the
Safeguarding and Stewardship committee in December 2020.
Simon Turner was appointed as a non-executive Director in March
2020. After an earlier career in the legal profession, he is now
president of the board of the trustee of The Camellia
Foundation.
Company Secretary
Amarpal Takk was appointed as Group General Counsel and Company
Secretary in April 2018. He is a qualified solicitor of England and
Wales. He was appointed a member of the Safeguarding and
Stewardship committee in December 2020.
Substantial Shareholdings
As at 6 April 2021 the Company has been advised of the following
interests in its share capital:
% of total
Beneficial shareholder Shareholder No. of Shares voting rights
Camellia Private Trust
Company Limited Camellia Holding AG 1,427,000 51.67
Lynchwood Nominees
Fide Holding NV* Limited 360,500 13.05
Quaero Capital SA HSBC Global Custody
Nominee (UK) Limited 147,598 5.34
* Controlled by Nokia Pensioenfonds VZW
Share Capital and Purchase of Own Shares
The Company's share capital comprises one class of ordinary
shares of 10p per share which carry no restrictions on the transfer
of shares or on voting rights (other than as set out in the
Company's articles of association). There are no agreements known
to the Company between shareholders in the Company which may result
in restrictions on the transfer of shares or on voting rights in
relation to the Company. Details of the issued share capital are
contained in note 36 to the Accounts.
At the AGM in 2020, shareholders gave authority for the Company
to purchase up to 276,200 of its own shares. This authority expires
at the conclusion of this year's AGM at which a resolution
proposing renewal of the authority will be submitted to
shareholders.
Auditors
A resolution proposing the reappointment of Deloitte LLP will be
put to the AGM.
Each of the persons who were Directors at the time when this
Directors' report was approved has confirmed that:
-- So far as each Director is aware, there is no relevant audit
information of which the Company's auditors are unaware.
-- Each Director has taken all the steps that ought to have
been taken as a Director, including making appropriate enquiries
of fellow Directors and of the Company's auditors for that
purpose, in order to be aware of any information needed by
the Company's auditors in connection with preparing their
report and to establish that the Company's auditors are aware
of that information.
Energy and Carbon Disclosure
In compliance with the SECR requirements, our greenhouse gas
emissions, energy consumption and energy reduction initiatives are
reported within the Environment and Social report on pages 16 to
21.
Employees
Details in relation to employees are set out on page 30.
R&D
The Group undertakes some R&D projects within its operations
in order to improve e ciency and grow revenues.
Future Development
Details of future developments are set out in the Operational
report.
Going Concern
The Directors, at the time of approving the financial
statements, considered the Group's business activities together
with the main trends and factors likely to a ect the Group, the
most recent business performance of the Group, including the
impacts of the pandemic, as described in the Operational report on
pages 6 to 12.
The Directors considered the impact of the current COVID
environment on the business for the next 15 months.
We have considered several variables which may impact on
revenue, profits and cash flows. In light of the nature of our
business and our experience of trading through the pandemic over
the last year, we expect our agriculture businesses will continue
to operate broadly as currently. In the UK we have assumed that the
food service market begins to recover gradually over the course of
the next two years and that the aerospace market recovery to
pre-COVID levels is delayed until 2026.
At 31 December 2020, the Group had cash and cash equivalents of
GBP94.9 million with loans outstanding of GBP4.8 million. In
addition, the Group had undrawn short-term loan and overdraft
facilities of GBP23.7 million and a portfolio of liquid investments
with a fair market value of GBP50.6 million.
We have modelled various severe but plausible scenarios using
assumptions including the combined e ect of reduced sales volumes
for tea, reduced avocado exports and reduced sales volumes for
macadamia during 2021. The revenue and operational impact of such
volume reductions across our operations would have a substantially
negative impact on Group profitability. We have also considered the
risk of price reductions during 2021 for our tea, macadamia and
avocado crops.
Historically in the tea sector, restrictions on, or reductions
in the supply of tea either regionally or globally have led to
higher selling prices and this was borne out in India during 2020.
However, for prudence for the purposes of our downside scenario
planning we have not reflected increased selling prices for tea nor
any significant reduction to our operating cost base.
Under both the base case and the downside scenario, the Group is
expected to continue to have su cient headroom relative to the
funding available to it.
The Directors believe that the Company and the Group are well
placed to manage their financing and other business risks
satisfactorily and, have a reasonable expectation that the Company
and the Group will have adequate resources to continue in
operational existence for the foreseeable future. The Directors
therefore continue to adopt the going concern basis in preparing
the financial statements.
Financial Risk Management
Information on the Group's financial risk management objectives
and policies and on the exposure of the Group to relevant risks in
respect of financial instruments is set out in note 42 of the
accounts.
Corporate Governance
The Company's statement on corporate governance can be found in
the Corporate Governance report on pages 35 to 39.
Political Donations
The Company has no political a liations and does not make
political donations. Its operations work with governments and other
parties around the world on issues that are important to our
customers, and stakeholders, communities and to the interests of
the business.
Approved by the Board
Amarpal Takk
Company Secretary
3 May 2021
CORPORATE GOVERNANCE
Statement of Compliance
The Company fully complies with the Quoted Companies Alliance's
Corporate Governance Code for Small and Mid-size Quoted Companies
("QCA Code"). The Chairman considers the application of standards
of corporate governance that are appropriate for the Group's
nature, status, profile, size and circumstances to be important in
ensuring the Group is managed for the long-term benefit of all
stakeholders. There are ten principles of the QCA Code which the
Company complies with in full. The table on our website sets out
how we comply.
The Group consists of a portfolio of businesses which are
grouped into independently managed divisions. These divisions
report into the Board by function against a variety of metrics
including budgets and business plans.
The Board
The Board currently comprises ten Directors, six of whom are
non-executive Directors. The remaining Directors are executive
Directors, including the Chairman. Chris Relleen, the Deputy
Chairman, has been designated as the senior independent Director.
The names and brief biographical details of each Director appear on
pages 31 and 32.
The Board has established Remuneration, Audit and Nomination
committees. Terms of reference of each of the committees can be
viewed on the Company's website. The Board has also established the
Safeguarding and Stewardship committee.
The Board is responsible for managing the Group's business and
has adopted a schedule of matters reserved for its approval. The
schedule is reviewed periodically and covers, inter alia, the
following areas:
-- Strategy
-- Acquisitions and disposals
-- Financial reporting and control
-- Internal controls
-- Approval of expenditure above specified limits
-- Approval of transactions and contracts above specified limits
-- Responsibilities for corporate governance
-- Board membership and committees
-- Approval of changes to capital structure
A full copy of the schedule is available on the Company's
website.
A report summarising the Group's financial and operational
performance is provided to Directors each month. Each Director has
su cient information in advance of Board meetings to enable
informed judgements to be made on matters referred to the Board.
The Board met 10 times in 2020.
Attendance by Directors at Board and committee meetings held
during the year was as follows:
Director Board Audit Remuneration Nomination
Malcolm Perkins 10/10 - - 1/1
Chris Relleen 10/10 4/4 2/2 1/1
Tom Franks 10/10 - - -
Graham Mclean 10/10 - - -
Susan Walker 10/10 - - -
William Gibson 10/10 4/4 2/2 1/1
Frédéric Vuilleumier 10/10 - - -
Gautam Dalal 10/10 4/4 - -
Simon Turner 9/10 - - -
Jonathon Bond 9/10 - - -
Board Evaluation
The Board has agreed to undertake a performance evaluation by
way of internal review every three years. The last evaluation was
conducted in 2018. Details of the next review will be disclosed
when the next review is completed at the end of 2021.
Executive Committees
The Board has established the Strategy Group, consisting of the
Chairman, the executive Directors of the Board and the Group
General Counsel. The Board has also established two Executive
Committees. The Agriculture Executive Committee is chaired by the
Director of Agriculture and includes the Chief Executive, Chief
Financial O cer, the Group General Counsel and heads of all the key
agricultural operations. The Engineering and Food Service Executive
Committee is chaired by the Chief Executive and includes the Chief
Financial O cer, the Managing Directors of UK businesses, the Group
General Counsel, the UK Investment Manager and the UK Head of
HR.
Investments and Associates report directly to the Chief
Executive.
Nomination Committee
The committee is chaired by Malcolm Perkins. Its other members
are William Gibson and Chris Relleen.
The principal responsibilities of the committee are set out
below:
-- Review the balance and composition (including gender and
diversity) of the Board, ensuring that they remain appropriate.
-- Be responsible for overseeing the Board's succession planning
requirements including the identification and assessment
of potential Board candidates and making recommendations
to the Board for its approval.
-- Keep under review the leadership needs of, and succession
planning for, the Group in relation to both its executive
and non-executive Directors and other senior executives.
The committee met once during the year to consider the
composition of the Audit committee.
Audit Committee
The committee is chaired by Chris Relleen. The other members of
the committee during the year were Gautam Dalal and William Gibson.
During 2020, the committee met on three occasions.
The principal responsibilities of the committee are set out
below and were undertaken during the year:
-- Monitor the e ectiveness of the Group's risk management
practices.
-- Review the e ectiveness of the Group's internal control
system. The committee regularly reviews the e ectiveness
of internal audit activities carried out by the Group's
accounting function and senior management.
-- Review and monitor the financial statements of the Company
and the audit of those statements and to monitor compliance
with relevant financial reporting requirements and legislation.
-- Monitor the e ectiveness and independence of the external
auditors.
-- Review non-audit services provided by the external auditors.
Significant issues considered by the Audit Committee
The Audit committee assesses whether suitable accounting
policies have been adopted and whether management has made
appropriate estimates and judgements. In the year under review, the
Audit committee considered the following matters in relation to the
financial statements:
Going concern
The committee considered the appropriateness of the going
concern principle of accounting used in preparing the financial
statements in the context, in particular, of the ongoing impact of
the pandemic on the Group's cash requirements.
Biological assets
One of the key areas of judgement that the committee considered
in reviewing the financial statements was the valuation of
biological assets in accordance with IAS 41. Valuations are based
on discounted cash flows or are carried out by external
professional valuers. These were considered for consistency of
approach and assumptions agreed as reasonable. For more details see
note 19 to the Accounts.
Pensions
A key area of judgement is in relation to the valuation of the
pension schemes obligations. Whilst this is conducted by
independent actuaries, the size of the obligation means that a
relatively minor di erence in the assumptions could result in a
material change in the quantum of the obligation. The committee
considered the competence of the actuaries and the key assumptions
adopted and concluded that the work performed is su cient to
support the valuation.
Carrying value of intangible assets
The Group's carrying value of the Jing and Tea City brands and
of the goodwill relating to the two Assam estates purchased in 2019
were discussed in light of the trading of those businesses and the
uncertainties regarding timing of recovery from the impact of COVID
and future revenue growth rates for Jing. The committee considered
the fair value of the Group's holdings and whether any impairment
in the carrying value had occurred and agreed that apart from a
GBP3.5 million provision for impairment of the Jing brand, no
impairment provision was required.
Carrying value of tangible assets
The committee considered the fair value of the Group's
investment property portfolio, the carrying value of plant and
equipment at the engineering subsidiaries, and other fixtures and
fittings in the UK in the context of COVID and third party
valuations and agreed that an impairment of GBP3.0 million had
occurred.
Carrying value of BF&M
The Group's carrying value of BF&M was higher than the share
price for BF&M at 31 December 2020. The committee considered
the fair value of the Group's holding and whether any impairment in
the carrying value had occurred and in view of the increase in the
share price post year end and the control premium associated with
our holding concluded that no impairment is required.
Costs relating to the litigation relating to East Africa
The committee considered the recognition criteria,
quantification and accounting treatment of the expected legal and
other costs of the litigation relating to Kakuzi and Eastern
Produce Malawi, with reference to costs incurred to 31 December
2020, the agreed settlements in each case and the legal costs
expected to be incurred during 2021 in finalising and withdrawing
the court action. This included consideration of the appropriate
classification of the expected liabilities between trade creditors,
accruals and provisions.
Provisions
The basis of provisions for material uncertain tax situations
were considered by the committee as were the provisions for wage
increases in Kenya, Bangladesh and India. Consideration was given
to the accounting implications of the recent VAT changes in Malawi
and management's judgement that it should be disclosed as a
contingent liability. The committee is satisfied that the
provisions represent best estimates of the likely liabilities.
External auditor
To assess the e ectiveness of the external audit process, the
external auditor is required to report to the Audit committee and
confirm their independence in accordance with ethical standards and
that they had maintained appropriate internal safeguards to ensure
their independence and objectivity. In addition to the steps taken
by the Board to safeguard the auditor's objectivity, Deloitte
operates a five-year rotation policy for audit partners for a
listed entity.
The committee reviewed those non-audit services provided by the
external auditor and satisfied itself that the scale and nature of
those services were such that the external auditors objectivity and
independence were safeguarded.
The committee confirms that the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company's
performance, business model and strategy.
Remuneration Committee
The committee is chaired by William Gibson and the other member
is Chris Relleen.
The responsibilities of the committee include:
-- The review of the Group's policy relating to remuneration
of the Chairman, executive Directors and the Company Secretary.
-- To determine the terms of employment and remuneration of
the Chairman, executive Directors and Company Secretary
with a view to ensuring that those individuals are fairly
and responsibly rewarded.
-- To approve compensation packages or arrangements following
the severance of any executive Director's service contract.
The Remuneration report appears on pages 41 to 42.
Safeguarding & Stewardship Committee
In 2020, the Company established a Safeguarding and Stewardship
Committee to promote its mission to meeting the highest standards
in protecting and promoting Human Rights across the Group. The
committee meets regularly throughout the year and is chaired by
William Gibson. Other members of the committee are Jonathon Bond,
Amarpal Takk and Louise Nicholls (the former head of Human Rights
and food sustainability at a leading UK supermarket). Malcolm
Perkins will join the committee in June, following the resignation
of Jonathon Bond.
The principal objectives of the committee are set out below:
-- Identify and mitigate significant social and governance
risks.
-- Monitor the management of personal and process safety risk,
security and environment risks.
-- Work with industry experts to put in place processes to
identify and mitigate such social and governance risks which
are appropriate in their design and e ective in their implementation.
Insurance
The Company purchases insurance to cover its Directors and o
cers, and those of its subsidiaries in respect of legal actions
against them in their capacity as Directors of the Company. All
Directors have access to independent professional advice at the
Company's expense.
Share Capital Structure
The share capital of the Company is set out in note 36.
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 e
ectiveness of the framework of the Group's system of internal
control, the principal features of which are described below.
The key management philosophy of the Company is that the
responsibility for e cient day to day operations remains with the
local management. Accountability and delegation of authority are
clearly defined with regular communication between Group head o ce
and the management of the individual operations. Our key operations
have internal audit functions reporting to local audit committees.
The performance of each operation is continually monitored
centrally including a critical review of annual budgets, forecasts
and monthly sales, profits and cash reports. Financial results and
key operational statistics and variances from approved plans are
carefully monitored. Group senior management regularly visit
operations. However, any system of internal control can provide
only reasonable, and not absolute, assurance against material
mis-statement or loss.
Approved by the Board
Amarpal Takk
Company Secretary
3 May 2021
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and Accounts in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Group financial statements in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006. The financial
statements also comply with International Financial Reporting
Standards (IFRSs) as issued by the IASB. Under Company law the
Directors must not approve the accounts unless they are satisfied
that they give a true and fair view of the state of a airs of the
company and of the profit or loss of the Company for that period.
In preparing these financial statements, International Accounting
Standard 1 requires that Directors:
-- Properly select and apply accounting policies.
-- Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information.
-- Provide additional disclosures when compliance with the
specific requirements in IFRSs are insu cient to enable
users to understand the impact of particular transactions,
other events and conditions on the entity's financial position
and financial performance.
-- Make an assessment of the Company's ability to continue
as a going concern.
The Directors are responsible for keeping adequate accounting
records that are su cient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may di er from
legislation in other jurisdictions.
Responsibility Statement
We confirm that to the best of our knowledge:
-- The Financial Statements, prepared in accordance with International
Financial Reporting Standards, give a true and fair view
of the assets, liabilities, financial position and profit
or loss of the Company and the undertakings included in the
consolidation taken as a whole.
-- The Strategic report includes a fair review of the development
and performance of the business and the position of the Company
and the undertakings included in the consolidation taken
as a whole, together with a description of the principal
risks and uncertainties that they face.
-- The Annual Report and Accounts, taken as a whole, are fair,
balanced and understandable and provide the information necessary
for shareholders to assess the Company's position and performance,
business model and strategy.
Approved by the Board
Malcolm Perkins
Chairman
3 May 2021
REMUNERATION REPORT
This report is drawn up in accordance with the Companies Act
2006 and the AIM Rules for Companies.
Remuneration Committee
Details of the Remuneration committee are set out on page
38.
Policy on Directors' Remuneration
The policy agreed by the committee is as follows:
-- To seek to provide remuneration packages that will attract,
retain and motivate the right people for the roles.
-- So far as is practicable to align the interests of the executives
with those of shareholders.
-- To reflect the overriding remuneration philosophy and the
principles of the wider Group.
-- In implementing the second point, the Company does not operate
profit related bonus, share option or share incentive schemes
for Directors as the Group's activities are based largely
on agriculture, which is highly dependent on factors outside
management control such as the weather and market prices.
The policy is designed to ensure that the Directors manage the
Group's businesses for the long-term in line with the strategy of
the Group.
In determining this remuneration policy and the remuneration of
Directors, consideration has been given to the relevant provisions
of the QCA Guidelines.
The remuneration policy was approved by shareholders at the 2017
AGM and applied for a period of three years until 2020. The
committee considers any views of the shareholders expressed on
Directors' remuneration.
At the AGM on 10 June 2020, the Remuneration Report for the year
to 31 December 2019 was approved by shareholders with 99.97% of the
votes cast in favour, 0.03% of the votes cast against and 585 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. The Company
has in place appropriate director's and o cers' liability insurance
cover in respect of legal action against its executive and
non-executive Directors, amongst others.
There are no specific contractual provisions for compensation
upon early termination of a non-executive Director's
employment.
The following sections on Directors' remuneration and pensions
have been audited.
Directors' Remuneration
Benefits in
Remuneration Kind Total
2020 2019 2020 2019 2020 2019
GBP GBP GBP GBP GBP GBP
Executive
Malcolm Perkins 261,006 442,344 15,140 30,172 276,146 472,516
Tom Franks 611,820 594,000 38,453 42,582 650,273 636,582
Susan Walker 373,890 363,000 28,057 34,306 401,947 397,306
Graham Mclean 402,215 390,500 29,866 51,006 432,081 441,506
Non-executive
William Gibson 50,470 49,000 - - 50,470 49,000
Chris Relleen 54,590 53,000 - - 54,590 53,000
Frédéric
Vuilleumier 51,500 50,000 - - 51,500 50,000
Gautam Dalal 47,380 46,000 - - 47,380 46,000
Simon Turner 38,815 - - - 38,815 -
Jonathon Bond 38,815 - - - 38,815 -
--------- --------- -------- -------- --------- ---------
Total 1,930,501 1,987,844 111,516 158,066 2,042,017 2,145,910
--------- --------- -------- -------- --------- ---------
Notes
(i) The executive Directors' benefits in kind include the value
attributed to medical insurance, permanent health insurance,
spouse/partner travel and cash alternatives to company
cars.
(ii) Chris Relleen received an additional annual fee for his
Chairmanship of the Audit committee.
(iii) William Gibson received an additional annual fee for his
Chairmanship of the Remuneration committee.
Directors' Pensions
Malcolm Perkins received no payment for pensionable service
during 2020. Tom Franks, Graham Mclean and Susan Walker receive an
excess non-pensionable salary supplement equivalent to 10% of base
salary.
In addition to the above, an unfunded pension of US$200,000 per
annum is paid to Gordon Fox, a former Director of the Company.
Approved by the Board
Amarpal Takk
Company Secretary
3 May 2021
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2020
2020 2019
Separately Separately
disclosed disclosed
Underlying items Underlying items
(note (note (note (note
4 ) 4 ) 4 ) 4 )
Notes GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Continuing operations
Revenue 2 291.2 - 291.2 291.5 - 291.5
Cost of sales (227.7) - (227.7) (224.1) 6.2 (217.9)
---------- ---------- -------- ---------- ---------- ------
Gross profit 63.5 - 63.5 67.4 6.2 73.6
Other operating income 3.0 - 3.0 4.0 - 4.0
Distribution costs (16.2) - (16.2) (15.0) - (15.0)
Administrative expenses 3 (43.4) (16.1) (59.5) (44.8) (1.3) (46.1)
---------- ---------- -------- ---------- ---------- ------
Trading (loss)/profit 1,3 6.9 (16.1) (9.2) 11.6 4.9 16.5
Share of associates'
results 5 6.1 - 6.1 4.6 - 4.6
Profit on disposal
of
property, plant and
equipment 6 - 14.4 14.4 - - -
Impairments of
intangible
assets, investment
properties and plant
and
equipment 7 - (6.5) (6.5) - - -
Profit on disposal
of
financial assets 0.2 - 0.2 0.2 - 0.2
---------- ---------- -------- ---------- ---------- ------
Operating profit 13.2 (8.2) 5.0 16.4 4.9 21.3
Investment income 0.6 - 0.6 0.7 - 0.7
---------- ---------- -------- ---------- ---------- ------
Finance income 8 2.3 - 2.3 3.9 - 3.9
Finance costs 8 (1.6) - (1.6) (2.2) - (2.2)
Net exchange
gain/(loss) 8 2.2 - 2.2 (0.3) - (0.3)
Employee benefit
expense 8 (0.7) - (0.7) (1.1) - (1.1)
---------- ---------- -------- ---------- ---------- ------
Net finance income 8 2.2 - 2.2 0.3 - 0.3
---------- ---------- -------- ---------- ---------- ------
Profit before tax 16.0 (8.2) 7.8 17.4 4.9 22.3
Taxation 9 (8.6) (7.2)
-------- ------
(Loss)/profit after
tax (0.8) 15.1
-------- ------
(Loss)/profit attributable
to:
Owners of Camellia
Plc (5.0) 8.3
Non-controlling
interests 4.2 6.8
-------- ------
(0.8) 15.1
-------- ------
(Loss)/earnings per
share - basic and
diluted 12 (181.0)p 300.5p
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2020
2020 2019
Notes GBP'm GBP'm
Group
(Loss)/profit for the year (0.8) 15.1
----- -----
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to profit or loss:
Financial assets at fair value through other comprehensive income:
Fair value adjustment released on disposal 23 (1.1) (0.3)
Profit on disposal 0.8 1.2
----- -----
(0.3) 0.9
----- -----
Changes in the fair value of financial assets 23 2.3 6.9
Deferred tax movement in relation to fair value adjustments (0.7) (0.9)
Remeasurements of post-employment benefit obligations 35 4.3 3.5
Deferred tax movement in relation to post employment benefit obligations 34 0.6 (0.5)
----- -----
6.2 9.9
----- -----
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation di erences (22.6) (16.7)
Share of other comprehensive income of associates 0.3 0.3
----- -----
(22.3) (16.4)
----- -----
Other comprehensive expense for the year, net of tax (16.1) (6.5)
----- -----
Total comprehensive (expense)/income for the year (16.9) 8.6
----- -----
Total comprehensive (expense)/income attributable to:
Owners of Camellia Plc (16.6) 4.2
Non-controlling interests (0.3) 4.4
----- -----
(16.9) 8.6
----- -----
Company
Profit for the year 4.5 4.2
----- -----
Total comprehensive income for the year 4.5 4.2
----- -----
CONSOLIDATED BALANCE SHEET
at 31 December 2020
2020 2019
Notes GBP'm GBP'm
ASSETS
Non-current assets
Intangible assets 15 6.6 10.3
Property, plant and equipment 16 198.3 222.5
Right-of-use assets 17 16.6 18.5
Investment properties 18 19.1 18.3
Biological assets 19 12.7 14.6
Investments in associates 22 67.6 66.0
Financial assets at fair value through other comprehensive income 23 42.6 37.8
Financial asset at fair value through profit or loss 24 5.3 6.2
Financial assets at amortised cost 25 2.7 3.0
Other investments - heritage assets 26 9.8 9.8
Retirement benefit surplus 35 0.1 0.7
Trade and other receivables 28 2.4 2.8
----- -----
Total non-current assets 383.8 410.5
----- -----
Current assets
Inventories 27 47.5 49.3
Biological assets 19 7.1 9.1
Trade and other receivables 28 43.7 44.3
Current income tax assets 1.7 1.2
Cash and cash equivalents (excluding bank overdrafts) 29 98.5 91.4
Total current assets 198.5 195.3
----- -----
LIABILITIES
Current liabilities
Financial liabilities - borrowings 31 (5.7) (5.6)
Lease liabilities 32 (1.2) (1.2)
Trade and other payables 30 (50.9) (48.6)
Current income tax liabilities (10.3) (4.2)
Employee benefit obligations 35 (1.1) (0.7)
Provisions 33 (19.0) (8.9)
----- -----
Total current liabilities (88.2) (69.2)
----- -----
Net current assets 110.3 126.1
----- -----
Total assets less current liabilities 494.1 536.6
----- -----
Non-current liabilities
Financial liabilities - borrowings 31 (2.7) (3.3)
Lease liabilities 32 (10.3) (11.8)
Deferred tax liabilities 34 (39.5) (47.1)
Employee benefit obligations 35 (15.6) (22.0)
----- -----
Total non-current liabilities (68.1) (84.2)
----- -----
Net assets 426.0 452.4
----- -----
EQUITY
Called up share capital 36 0.3 0.3
Share premium 15.3 15.3
Reserves 361.0 380.1
----- -----
Equity attributable to owners of Camellia Plc 376.6 395.7
Non-controlling interests 49.4 56.7
----- -----
Total equity 426.0 452.4
----- -----
COMPANY BALANCE SHEET
at 31 December 2020
2020 2019
Notes GBP'm GBP'm
ASSETS
Non-current assets
Investments in subsidiaries 21 73.5 73.5
Other investments - heritage assets 26 11.0 11.0
----- -----
Total non-current assets 84.5 84.5
----- -----
Current assets
Trade and other receivables 28 0.6 -
Current income tax asset 0.1 0.1
Amounts due from group undertakings 2.2 -
----- -----
Total current assets 2.9 0.1
----- -----
LIABILITIES
Current liabilities
Trade and other payables 30 (0.8) (0.6)
Amounts due to group undertakings (16.1) (17.0)
Provisions 33 (1.9) -
----- -----
Total current liabilities (18.8) (17.6)
----- -----
Net current liabilities (15.9) (17.5)
----- -----
Total assets less current liabilities 68.6 67.0
----- -----
Non-current liabilities
Deferred tax liabilities 34 (0.2) (0.2)
----- -----
Total non-current liabilities (0.2) (0.2)
----- -----
Net assets 68.4 66.8
----- -----
EQUITY
Called up share capital 36 0.3 0.3
Share premium 15.3 15.3
Reserves 52.8 51.2
----- -----
Total equity 68.4 66.8
----- -----
The profit for the company is shown in note 10.
The notes on pages 50 to 116 form part of the financial
statements.
The financial statements on pages 43 to 116 were approved on 3
May 2021 by the board of Directors and signed on their behalf
by:
M C Perkins
Chairman
Registered Number 00029559
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2020
2020 2019
Notes GBP'm GBP'm
Cash generated from operations
Cash flows from operating activities 37 19.3 21.2
Interest received 2.4 4.0
Interest paid (1.6) (1.7)
Income taxes paid (7.2) (10.9)
----- -----
Net cash flow from operating activities 12.9 12.6
----- -----
Cash flows from investing activities
Purchase of intangible assets (0.3) (0.1)
Purchase of property, plant and equipment (13.5) (18.4)
Proceeds from sale of non-current assets 0.5 1.7
Proceeds from sale of non-current assets - non recurring 21.6 -
Additions to investment property (0.9) (0.5)
Biological assets: non-current - disposals /(additions) 0.7 0.7
Payment for acquisition of a businesses/subsidiary net of cash acquired - (9.4)
Proceeds from sale of assets held for sale - investment property - 0.8
Investment in associates (0.3) (1.3)
Dividends received from associates 3.2 3.1
Purchase of investments (12.4) (11.4)
Proceeds from sale of investments 9.1 10.3
Income from investments 0.6 0.7
Purchase of other investments - heritage assets - (0.3)
----- -----
Net cash flow from investing activities 8.3 (24.1)
----- -----
Cash flows from financing activities
Equity dividends paid (2.8) (4.0)
Dividends paid to non-controlling interests (7.0) (4.5)
New loans 38 1.9 3.6
Loans repaid 38 (3.6) (0.6)
Payments of lease liabilities 38 (0.9) (0.4)
----- -----
Net cash flow from financing activities (12.4) (5.9)
----- -----
Net increase/(decrease) in cash and cash equivalents 8.8 (17.4)
Cash and cash equivalents at beginning of year 29 89.4 109.6
Exchange losses on cash (3.3) (2.8)
----- -----
Cash and cash equivalents at end of year 29 94.9 89.4
----- -----
For the purposes of the cash flow statement, cash and cash
equivalents are included net of overdrafts repayable on demand.
COMPANY CASH FLOW STATEMENT
for the year ended 31 December 2020
2020 2019
Notes GBP'm GBP'm
Cash generated from operations
Profit before tax 4.5 4.2
Adjustments for:
Interest income (0.2) (0.2)
Dividends from group companies (10.0) (5.3)
Increase in trade and other receivables (0.6) -
Increase in trade and other payables 0.2 -
Movement in provisions 1.9 -
Net movement in intra-group balances (3.1) 0.1
----- -----
Cash used in operations (7.3) (1.2)
Interest received 0.2 0.2
----- -----
Net cash flow from operating activities (7.1) (1.0)
----- -----
Cash flows from investing activities
Purchase of other investments - heritage assets - (0.3)
Dividends received 10.0 5.3
----- -----
Net cash flow from investing activities 10.0 5.0
----- -----
Cash flows from financing activities
Equity dividends paid (2.9) (4.1)
----- -----
Net cash flow from financing activities (2.9) (4.1)
----- -----
Net movement in cash and cash equivalents - (0.1)
Cash and cash equivalents at beginning of year 29 - 0.1
----- -----
Cash and cash equivalents at end of year 29 - -
----- -----
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2020
Non-
Share Share Treasury Retained Other controlling Total
capital premium shares earnings reserves Total interests equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Group
At 1 January 2019 0.3 15.3 (0.4) 350.7 29.6 395.5 56.8 452.3
Total comprehensive
income/(expense)
for the year - - - 11.9 (7.7) 4.2 4.4 8.6
Dividends - - - (4.0) - (4.0) (4.5) (8.5)
------- ------- -------- -------- -------- ----- ----------- ------
At 31 December 2019 0.3 15.3 (0.4) 358.6 21.9 395.7 56.7 452.4
Total comprehensive
income/(expense)
for the
year - - - (0.3) (16.9) (16.6) (0.3) (16.9)
Dividends - - - (2.8) - (2.8) (7.0) (9.8)
Share of associate's
other equity
movements - - - 0.3 - 0.3 - 0.3
------- ------- -------- -------- -------- ----- ----------- ------
At 31 December 2020 0.3 15.3 (0.4) 356.4 5.0 376.6 49.4 426.0
------- ------- -------- -------- -------- ----- ----------- ------
Company
At 1 January 2019 0.3 15.3 - 39.0 12.1 66.7 - 66.7
Total comprehensive
income for
the year - - - 4.2 - 4.2 - 4.2
Dividends - - - (4.1) - (4.1) - (4.1)
------- ------- -------- -------- -------- ----- ----------- ------
At 31 December 2019 0.3 15.3 - 39.1 12.1 66.8 - 66.8
Total comprehensive
income for
the year - - - 4.5 - 4.5 - 4.5
Dividends - - - (2.9) - (2.9) - (2.9)
------- ------- -------- -------- -------- ----- ----------- ------
At 31 December 2020 0.3 15.3 - 40.7 12.1 68.4 - 68.4
------- ------- -------- -------- -------- ----- ----------- ------
Other reserves of the group include net exchange di erences of
GBP50.8 million deficit (2019: GBP33.0 million deficit).
Group retained earnings includes GBP157.3 million (2019:
GBP168.4 million) which would require exchange control permission
for remittance as dividends.
ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all years presented, unless otherwise
stated.
Basis of preparation
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS),
IFRS interpretations Committee (IFRS IC) and the Companies Act 2006
applicable to companies reporting under IFRS. The consolidated
financial statements comply with IFRS as issued by the
International Accounting Standards Board (IASB).
The consolidated financial statements have been prepared on the
historical cost basis as modified by the revaluation of biological
assets, financial assets and financial liabilities and assets held
for sale.
Where necessary, comparative figures have been adjusted to
conform with changes in presentation in the current year. In
current year, comparative figure of GBP1.3 million has been
represented as a separately disclosed item within administrative
expenses to be consistent with the treatment in 2020 of the
disclosure of the legal and other costs relating to the defence of
the litigation concerning our East African operations. As a result
of this presentational change underlying profit before tax for 2019
has changed from GBP16.1 million as previously reported to GBP17.4
million. The representation had no impact upon the net profit for
the period.
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.
See additional disclosure on page 33.
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 the acquiree's
identifiable net assets.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated Income Statement from the e
ective date of acquisition or disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group.
All Intra-Group transactions, balances, income and expenses are
eliminated on consolidation.
Associates
An associate is an entity over which the Group is in a position
to exercise significant influence, but not control or joint
control, through participation in the financial and operating
policy decisions of that entity.
Investments in associates are accounted for by the equity method
of accounting. Under this method the Group's share of the
post-acquisition profits or losses of associates is recognised in
the Income Statement and its share of post-acquisition movements in
reserves is recognised in reserves.
Foreign currency translation
Transactions in currencies other than pounds sterling are
recorded at the rates of exchange prevailing on the dates of the
transactions. At each balance sheet date, monetary assets and
liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the balance sheet date.
Translation di erences on non-monetary items carried at fair value
are reported as part of the fair value gain or loss. Gains and
losses arising on retranslation are included in the income
statement, except for exchange di erences arising on non-monetary
items where the changes in fair value are recognised directly in
equity.
The consolidated financial statements are presented in sterling
which is the Company's functional and presentation currency. On
consolidation, income statements and cash flows of foreign entities
are translated into pounds sterling at average exchange rates for
the year and their balance sheets are translated at the exchange
rates ruling at the balance sheet date. Exchange di erences arising
from the translation of the net investment in foreign entities and
of borrowings designated as hedges of such investments, are taken
to equity. When a foreign entity is sold such exchange di erences
arising since 1 January 2004 are recognised in the Income Statement
as part of the gain or loss on disposal.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the exchange rate ruling on the
date of acquisition. The Group has elected to treat goodwill and
fair value adjustments arising on acquisitions prior to 1 January
2004, the date of the Group's transition from UK GAAP to IFRS, as
sterling denominated assets and liabilities.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for goods
and services provided in the normal course of business, net of
discounts, value added tax and other sales related taxes and after
eliminating intra-group sales.
Revenue from the sale of goods is recognised when the following
five core principles of the model framework have been
delivered:
-- the identifion of contract(s) with customers;
-- the identification of the performance obligations in the
contract;
-- the determination of the transaction price;
-- the allocation of the transaction price to the performance
obligations in the contract; and
-- the recognition of revenue when (or as) a performance obligation
has been satisfied.
In respect of agricultural produce, revenue is recognised at the
point in time that control of goods is transferred to the
customer.
In respect of food storage and distribution services, revenue
for handling is recognised at the point that the goods are actually
handled.
In respect of engineering services, revenue is recognised at
either the point in time that the customer has accepted return of
the asset or control of the asset has been re-established and there
is a present obligation to pay for services rendered or revenue is
recognised based upon the stage of completion and includes costs
incurred to date, plus accrued profits.
In respect of rental income, revenue is recognised on a
straight-line basis over the lease term.
Investment income
Investment income is recognised when the right to receive
payment of a dividend is established.
Segmental reporting
IFRS 8 requires operating segments to be identified on the basis
of internal reports used to assess performance and allocate
resources by the chief operating decision maker. The chief
operating decision maker has been identified as the Strategy Group
led by the CEO. Inter segment sales are not significant.
Government grants
Government grants are recognised when there is reasonable
assurance that the conditions associated with the grants have been
complied with and the grants will be received.
Government grants are recognised in the Income Statement within
other operating income so as to match with the related costs for
which they are intended to compensate. Grants for the purchase or
construction of property, plant and equipment are deducted from the
cost of the related assets and reduce future depreciation expense
accordingly.
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.
Intangible assets
(i) Goodwill
Goodwill arising on consolidation represents the excess of the
cost of acquisition over the Group's interest in the fair value of
the identifiable assets, liabilities and contingent liabilities of
a subsidiary or associate at the date of acquisition.
Goodwill is recognised as an asset and reviewed for impairment
at least annually or more frequently if events or changes in
circumstances indicate a potential impairment. Any impairment is
recognised immediately in the income statement and is not
subsequently reversed.
On disposal of a subsidiary or associate, the attributable
amount of goodwill is included in the determination of the profit
or loss on disposal.
(ii) Identifiable intangible assets
Indefinite life identifiable intangible assets include certain
brands acquired. They are not amortised but tested for impairment
annually or more frequently if an impairment indicator is
triggered, any impairment is charged to the income statement as it
arises. The assessment of the classification of intangible assets
as indefinite is reviewed annually.
Finite life identifiable intangible assets include certain
brands, customer relationships and other intangible assets acquired
on the acquisition of subsidiaries. Acquired intangible assets with
finite lives are initially recognised at cost and amortised on a
straight-line basis over their estimated useful lives, not
exceeding
20 years. Intangible assets' estimated lives are re-evaluated
annually and an impairment test is carried out if certain
indicators of impairment exist.
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
(iii) Computer software
Acquired computer software licences are capitalised on the basis
of the costs incurred to acquire and bring to use the specific
software. Computer software licences are held at cost and are
amortised on a straight-line basis over 3 to 7 years.
Costs associated with developing or maintaining computer
software programmes are recognised as an expense as incurred. Costs
that are directly associated with identifiable and unique software
products controlled by the Group and which are expected to generate
economic benefits exceeding costs beyond one year, are recognised
as an intangible asset and amortised over their estimated useful
lives.
Property, plant and equipment
Property, plant and equipment includes biological assets (bearer
plants) which are accounted for under IAS 16.
Land and buildings comprises mainly factories and o ces. All
property, plant and equipment is shown at cost less subsequent
depreciation and impairment, except for land, which is shown at
cost less impairment. Cost includes expenditure that is directly
attributable to the acquisition of these assets.
On transition to IFRS, the Group followed the transitional
provisions and elected that previous UK GAAP revaluations be
treated as deemed cost. On the application of the amendments to IAS
41 Agriculture and IAS 16 Property, plant and equipment the
Directors elected to state the Group's bearer plants at deemed cost
being the fair value recognised as at 1 January 2015 less the fair
value at that date of the growing produce which is disclosed in
current assets under biological assets. Additions after that date
are recognised at historical cost.
Subsequent costs are included in the assets' carrying amount,
only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can
be measured reliably. Repairs and maintenance are charged to the
income statement during the financial period in which they are
incurred.
No depreciation is provided on freehold land. Depreciation of
other property, plant and equipment is calculated to write o their
cost less residual value over their expected useful lives.
The rates of depreciation used for the other assets are as
follows:-
Biological assets (Bearer plants) 20 to 50 years
Freehold and long leasehold nil to 50 years
buildings
Other short leasehold land and unexpired term of the
buildings lease
Plant, machinery, fixtures, 3 to 25 years
fittings and equipment
No depreciation is provided on bearer plants until maturity when
commercial levels of production have been reached.
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date.
The gain or loss arising on the disposal or retirement of an
asset is determined as the di erence between the sales proceeds and
the carrying amount of the asset and is included in the Income
Statement.
Investment properties
Properties held to earn rental income rather than for the
purpose of the Group's principal activities are classified as
Investment properties. Investment properties are recorded at cost
less accumulated depreciation and any recognised impairment loss.
The depreciation policy is consistent with those described for
other Group properties.
Income from Investment properties is disclosed in 'Revenue'. The
related operating costs are immaterial and are included within
administrative expenses.
Biological assets: non-current
Biological assets are measured at each balance sheet date at
fair value and are generally valued at each year end by independent
professional valuers. Any changes in fair value are recognised in
the Income Statement in the year in which they arise. Costs of new
areas planted are included as "new planting additions" in the
biological assets note. As timber is harvested the value
accumulated to the date of harvest is treated as "decrease due to
harvesting" and charged to cost of sales in the Income
Statement.
Biological assets: current
Produce is valued on the basis of net present values of expected
future cash flows and includes certain assumptions about yields,
selling prices, costs and discount rates. As the crop is harvested
it is transferred to inventory at fair value.
Financial assets
Classification of financial assets
(i) Equity instruments designated as at fair value through other
comprehensive income (FVTOCI)
On initial recognition, the Group made an irrevocable election
(on an instrument-by-instrument basis) to designate investments in
equity instruments as at FVTOCI.
Investments in equity instruments designated as FVTOCI are
initially measured at fair value plus transaction costs.
Subsequently, they are measured at fair value with gains and losses
arising from changes in fair value recognised in other
comprehensive income and accumulated in the investment revaluation
reserve. The cumulative gain or loss is not reclassified to profit
or loss on disposal of the equity investments, instead, it is
transferred to retained earnings.
Dividends on these investments in equity instruments are
recognised in profit or loss in accordance with
IFRS 9, unless the dividends clearly represent a recovery of
part of the cost of the investment. Dividends are included as
investment income in the consolidated income statement.
(ii) Financial assets at fair value through profit or loss
(FVTPL)
Financial assets that do not meet the criteria for being
measured FVTOCI or at amortised cost (see (i) above and (iii)
below) are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end
of each reporting period, with any fair value gains or losses
recognised in profit or loss to the extent they are not part of a
designated hedging relationship.
(iii) Amortised cost and e ective interest method
The amortised cost of a financial asset is the amount at which
the financial asset is measured at initial recognition minus the
principal repayments, plus the cumulative amortisation using the e
ective interest method of any di erence between that initial amount
and the maturity amount, adjusted for any loss allowance. The gross
carrying amount of a financial asset is the amortised cost of a
financial asset before adjusting for any loss allowance.
The e ective interest method is a method of calculating the
amortised cost and of allocating interest income over the relevant
period. Interest income is recognised in profit or loss and is
included in the "finance income - interest income" line item (note
8).
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses
(ECL) on investments in debt instruments that are measured at
amortised cost, lease receivables, trade receivables and contract
assets. The amount of expected credit losses is updated at each
reporting date to reflect changes in credit risk since initial
recognition of the respective financial instrument.
Lifetime ECL represents the expected credit losses that will
result from all possible default events over the expected life of a
financial instrument. In contrast, 12-month ECL represents the
portion of lifetime ECL that is expected to result from default
events on a financial instrument that are possible within 12 months
after the reporting date.
The Group always recognises lifetime ECL for trade receivables,
contract assets and lease receivables. The expected credit losses
on these financial assets are estimated using a provision matrix
based on the Group's historical credit loss experience, adjusted
for factors that are specific to the debtors, general economic
conditions and an assessment of both the current as well as the
forecast direction of conditions at the reporting date, including
time value of money where appropriate.
For all other financial instruments, the Group recognises
lifetime ECL when there has been a significant increase in credit
risk since initial recognition. However, if the credit risk on the
financial instrument has not increased significantly since initial
recognition, the Group measures the loss allowance for that
financial instrument at an amount equal to 12-month ECL.
(i) Significant increase in credit risk
In assessing whether the credit risk on a financial instrument
has increased significantly since initial recognition, the Group
compares the risk of a default occurring on the financial
instrument at the reporting date with the risk of a default
occurring on the financial instrument at the date of initial
recognition. In making this assessment, the Group considers both
quantitative and qualitative information that is reasonable and
supportable, including historical experience and forward-looking
information that is available without undue cost or e ort.
Forward-looking information considered includes the future
prospects of the industries in which the Group's debtors operate,
obtained from economic expert reports, financial analysts,
governmental bodies, relevant think-tanks and other similar
organisations, as well as consideration of various external sources
of actual and forecast economic information that relate to the
Group's core operations.
In particular, the following information is taken into account
when assessing whether credit risk has increased:
-- An actual or expected significant deterioration in the financial
instrument's external (if available) or internal credit
rating
-- Significant deterioration in external market indicators
of credit risk for a particular financial instrument
-- Existing or forecast adverse changes in business, financial
or economic conditions that are expected to cause a significant
decrease in the debtor's ability to meet its debt obligations
-- An actual or expected significant deterioration in the operating
results of the debtor
-- Significant increases in credit risk on other financial
instruments of the same debtor
-- An actual or expected significant adverse change in the
regulatory, economic, or technological environment of the
debtor that results in a significant decrease in the debtor's
ability to meet its debt obligations
Irrespective of the outcome of the above assessment, the Group
presumes that the credit risk on a financial asset has increased
significantly since initial recognition when contractual payments
are more than 30 days past due, unless the Group has reasonable and
supportable information that demonstrates otherwise.
Despite the foregoing, the Group assumes that the credit risk on
a financial instrument has not increased significantly since
initial recognition if the financial instrument is determined to
have low credit risk at the reporting date. A financial instrument
is determined to have low credit risk if:
(i) The financial instrument has a low risk of default,
(ii) The debtor has a strong capacity to meet its contractual
cash flow obligations in the near term, and
(iii) Adverse changes in economic and business conditions in the
longer term may, but will not necessarily, reduce the ability
of the borrower to fulfil its contractual cash flow obligations.
The Group considers a financial asset to have low credit risk
when the asset has external credit rating of 'investment grade' in
accordance with the globally understood definition or if an
external rating is not available, the asset has an internal rating
of 'performing'. Performing means that the counterparty has a
strong financial position and there is no past due amounts.
The Group regularly monitors the e ectiveness of the criteria
used to identify whether there has been a significant increase in
credit risk and revises them as appropriate to ensure that the
criteria are capable of identifying any significant increase in
credit risk before the amount becomes past due.
(ii) Definition of default
The Group considers the following as constituting an event of
default for internal credit risk management purposes as historical
experience indicates that financial assets that meet either of the
following criteria are generally not recoverable:
-- When there is a breach of financial covenants by the debtor;
or
-- Information developed internally or obtained from external
sources indicates that the debtor is unlikely to pay its
creditors, including the Group, in full (without taking
into account any collateral held by the Group).
Irrespective of the above analysis, the Group considers that
default has occurred when a financial asset is more than 90 days
past due unless the Group has reasonable and supportable
information to demonstrate that di erent default criterion is more
appropriate.
(iii) Credit-impaired financial assets
A financial asset is credit-impaired when one or more events
that have a detrimental impact on the estimated future cash flows
of that financial asset have occurred. Evidence that a financial
asset is credit-impaired includes observable data about the
following events:
(a) significant financial di culty of the issuer or the borrower;
(b) a breach of contract, such as a default or past due event
(see (ii) above);
(c) the lender(s) of the borrower, for economic or contractual
reasons relating to the borrower's financial di culty,
having granted to the borrower a concession(s) that the
lender(s) would not otherwise consider;
(d) it is becoming probable that the borrower will enter
bankruptcy or other financial reorganisation; or
(e) a disappearance of an active market for that financial
asset because of financial di culties.
(iv) Write-o policy
The Group writes o a financial asset when there is information
indicating that the debtor is in severe financial di culty and
there is no realistic prospect of recovery, e.g. when the debtor
has been placed under liquidation or has entered into bankruptcy
proceedings, or in the case of trade receivables, when the amounts
are over two years past due, whichever occurs sooner. Financial
assets written o may still be subject to enforcement activities
under the Group's recovery procedures, taking into account legal
advice where appropriate. Any recoveries made are recognised in
profit or loss.
(v) Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the
probability of default, loss given default (i.e. the magnitude of
the loss if there is a default) and the exposure at default. The
assessment of the probability of default and loss given default is
based on historical data adjusted by forward-looking information as
described above.
As for the exposure at default, for financial assets, this is
represented by the assets' gross carrying amount at the reporting
date; for financial guarantee contracts, the exposure includes the
amount drawn down as at the reporting date, together with any
additional amounts expected to be drawn down in the future by
default date determined based on historical trend, the Group's
understanding of the specific future financing needs of the
debtors, and other relevant forward-looking information.
For financial assets, the expected credit loss is estimated as
the di erence between all contractual cash flows that are due to
the Group in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at the original e
ective interest rate. For a lease receivable, the cash flows used
for determining the expected credit losses is consistent with the
cash flows used in measuring the lease receivable in accordance
with IAS 17 Leases.
The Group recognises an impairment gain or loss in profit or
loss for all financial instruments with a corresponding adjustment
to their carrying amount through a loss allowance account, except
for investments in debt instruments that are measured at FVTOCI,
for which the loss allowance is recognised in other comprehensive
income and accumulated in reserves, and does not reduce the
carrying amount of the financial asset in the balance sheet.
Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity. If the
Group neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the
Group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues to recognise
the financial asset and also recognises a collateralised borrowing
for the proceeds received.
On derecognition of a financial asset measured at amortised
cost, the di erence between the asset's carrying amount and the sum
of the consideration received and receivable is recognised in
profit or loss. In addition, on derecognition of an investment in a
debt instrument classified as at FVTOCI, the cumulative gain or
loss previously accumulated in the investments revaluation reserve
is reclassified to profit or loss. In contrast, on derecognition of
an investment in equity instrument which the Group has elected on
initial recognition to measure at FVTOCI, the cumulative gain or
loss previously accumulated in the investments revaluation reserve
is not reclassified to profit or loss, but is transferred to
retained earnings.
Other investments - heritage assets
Other investments comprise fine art, documents, manuscripts and
philately which are measured at cost as fair value cannot be
reliably measured.
Investments in subsidiary companies
Investments in subsidiary companies are included at cost plus
incidental expenses less any provision for impairment. Impairment
reviews are performed by the Directors when there has been an
indication of potential impairment.
Impairment of non-financial assets
The Group has significant investments in intangible assets,
property, plant and equipment, investment properties, biological
assets, associated companies, financial assets and other
investments. These assets are tested for impairment when
circumstances indicate there may be a potential impairment.
Goodwill and intangible assets with an indefinite useful life are
tested for impairment at least annually. Factors considered which
could trigger an impairment review include a significant fall in
market values, significant underperformance relative to historical
or projected future operating results, a major change in market
conditions or negative cash flows.
Recoverable amount is the higher of fair value less costs of
disposal and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs. When
a reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating
units, or otherwise they are allocated to the smallest group of
cash-generating units for which a reasonable and consistent
allocation basis can be identified.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease and to the extent that the impairment loss is
greater than the related revaluation surplus, the excess impairment
loss is recognised in profit or loss.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit or loss
to the extent that it eliminates the impairment loss which has been
recognised for the asset in prior years. Any increase in excess of
this amount is treated as a revaluation increase.
Inventories
Agricultural produce included within inventory largely comprises
stock of 'black' tea. In accordance with IAS 41, on initial
recognition, agricultural produce is required to be measured at
fair value less estimated point of sale costs.
Other inventories are stated at the lower of cost and net
realisable value. Cost comprises direct materials and, where
applicable, direct labour costs and those overheads that have been
incurred in bringing the inventories to their present location and
condition. Cost is calculated using the weighted average method.
Net realisable value represents the estimated selling price less
all estimated costs of completion and selling expenses.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with banks, other short-term highly liquid investments with
original maturities of three months or less, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities
on the balance sheet.
Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the e ective interest
method.
Borrowings
Interest-bearing bank loans and overdrafts are initially
recorded at the proceeds received, net of direct issue costs.
Finance charges, including premiums payable on settlement or
redemption and direct issue costs, are accounted for on an accrual
basis to the Income Statement using the e ective interest method
and are added to the carrying amount of the instrument to the
extent that they are not settled in the period in which they
arise.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit di ers from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet
date.
Deferred tax is the tax expected to be payable or recoverable on
di erences between the carrying amount of assets and liabilities in
the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
liability method. Deferred tax is not accounted for if it arises
from initial recognition of an asset or liability in a transaction,
other than in a business combination, that at the time of the
transaction a ects neither accounting nor taxable profit or loss.
Deferred tax is determined using tax rates and laws that have been
enacted or substantively enacted by the balance sheet date and are
expected to apply when the related tax asset is realised or the tax
liability is settled.
Deferred tax assets are recognised to the extent that it is
probable that future taxable profit will be available against which
the temporary di erences can be utilised. Deferred income tax
assets and liabilities are o set when there is a legally
enforceable right to o set current tax assets against current tax
liabilities and when the deferred income taxes assets and
liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or di erent taxable
entities where there is an intention to settle the balances on a
net basis.
Deferred tax is provided on temporary di erences arising on
investments in subsidiaries and associates, except where the timing
of the reversal of the temporary di erence is controlled by the
Group and it is probable that the temporary di erence will not
reverse in the foreseeable future.
Employee benefits
(i) Pension obligations
Group companies operate various pension schemes. The schemes are
funded through payments to insurance companies or
trustee-administered funds. The Group has both defined benefit and
defined contribution plans.
A defined contribution plan is a pension plan under which the
Group pays fixed contributions into a separate fund. The Group has
no legal or constructive obligations to pay further contributions
to the fund. Contributions are recognised as an expense in the
Income Statement when they are due.
A defined benefit plan is a pension plan that defines an amount
of pension benefit that an employee will receive on retirement,
usually dependent on one or more factors such as age, years of
service and compensation. The pension cost for defined benefit
schemes is assessed in accordance with the advice of qualified
independent actuaries using the "projected unit" funding
method.
The liability recognised in the Balance Sheet in respect of
defined benefit pension plans is the present value of the defined
benefit obligation at the balance sheet date less the fair value of
plan assets. Independent actuaries calculate the obligation
annually using the "projected unit" funding method. Actuarial gains
and losses arising from experience adjustments and changes in
actuarial adjustments are recognised in full in the period in which
they occur, they are not recognised in the Income Statement and are
presented in the Statement of Comprehensive Income.
Past service costs are recognised directly in the Income
Statement.
(ii) Other post-employment benefit obligations
Some Group companies have unfunded obligations to pay terminal
gratuities to employees. Provisions are made for the estimated
liability for gratuities as a result of services rendered by
employees up to the balance sheet date and any movement in the
provision is recognised in the Income Statement.
The estimated monetary liability for employees' accrued annual
leave entitlement and workers profit participation at the balance
sheet date is recognised as an accrual.
Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources will be required to settle
the obligation and the amount has been reliably estimated.
Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Where any Group company purchases the Company's equity share
capital (treasury shares), the consideration paid, including any
directly attributable incremental costs (net of income taxes) is
deducted from equity attributable to the Company's equity holders
until the shares are cancelled or reissued. Where such shares are
subsequently reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related
income tax e ects, is included in equity attributable to the
Company's equity holders.
Dividend distribution
Dividend distribution to the Company's shareholders is
recognised as a liability in the Group's financial statements in
the period in which the dividends are approved by the Company's
shareholders. Interim dividends are recognised when paid.
Critical accounting judgements and key sources of estimation
uncertainty
In the view of the Directors, the following accounting
judgements and estimations have been made in the process of
applying the Group's accounting policies which have a significant e
ect on the amounts recognised in financial statements.
Critical judgements in applying the Group's accounting
policies
The following are critical judgements not being judgements
involving estimations (which are dealt with below) that the
Directors have made in the process of applying the Group's
accounting policies.
Accounting judgments
Significant judgement in determining the lease term of contracts
with renewal options
The Group determines the lease term as the non-cancellable term
of the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised, or
any periods covered by an option to terminate the lease, if it is
reasonably certain not to be exercised.
The Group has the option, under some of its leases to lease the
assets for additional terms. The Group applies judgement in
evaluating whether it is reasonably certain to exercise the option
to renew. That is, it considers all relevant factors that create an
economic incentive for it to exercise the renewal. After the
commencement date, the Group reassesses the lease term if there is
a significant event or change in circumstances that is within its
control and a ects its ability to exercise (or not to exercise) the
option to renew (e.g., a change in business strategy).
Key sources of estimation uncertainty
Estimates are continually evaluated and are based on historical
experience and other factors, including expectations of future
events that are believed to be reasonable under the
circumstances.
The Group makes estimates and assumptions concerning the future.
The resulting accounting will, by definition, seldom equal the
actual results. The estimates and assumptions that have a risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are set out below.
(i) Impairment of assets
The assessment of the recoverable amount for each group of CGUs
is subject to a number of assumptions.
The Group has conducted an analysis of the sensitivity of the
impairment test to changes in the key assumptions used to determine
the recoverable amount for each of the group of CGUs to which
intangible and tangible assets are allocated.
The sensitivity of carrying amounts of intangible brand is set
out at note 15 and of biological and financial assets at notes 19
and 42 respectively.
(ii) Biological assets
Biological assets are carried at fair value less estimated
point-of-sale costs. Where meaningful market-determined prices do
not exist to assess the fair value of biological assets, the fair
value has been determined based on the net present value of
expected future cash flows from those assets, discounted at
appropriate pre-tax rates. In determining the fair value of
biological assets where the discounting of expected future cash
flows has been used, the Directors have made certain assumptions
about expected life-span of the plantings, yields, selling prices,
costs and discount rates. Details of assumptions made and
sensitivity analysis are given in note 19.
(iii) Retirement benefit obligations
Pension accounting requires certain assumptions to be made in
order to value obligations and to determine the impact on the
Income Statement. These figures are particularly sensitive to
assumptions for discount rates, life expectancy and inflation
rates. Details of assumptions made and sensitivity analysis are
given in note 35.
(iv) Taxation
Income tax liabilities include a number of provisions based on
management's interpretation of country specific tax law and the
likelihood of settlement. This can involve a significant amount of
judgement as tax legislation can be complex and open to di erent
interpretation. Management uses professional firms and previous
experience when assessing tax risks. Where actual tax liabilities
di er from the provisions, adjustments are made which can have a
material impact on the Group's profits for the year. It is not
practicable to quantify the range of outcomes with the application
of sensitivity analyses. Tax provision movements are disclosed in
note 9. Significant unprovided contingent tax liabilities are
disclosed in note 41.
(v) Provisions and other liabilities
Provisions include a number of provisions in respect of ongoing
wage and bonus negotiations which are based on management's
judgement of the expected outcome of these negotiations. Where
actual wage and bonus awards di er from the provisions, adjustments
are made which can have a material impact on the Group's profits
for the year. Provision movements are disclosed in note 33.
(vi) COVID
In addition in light of the current ongoing impact of the COVID
pandemic, valuations of certain assets and liabilities are
necessarily more subjective.
Changes in accounting policy and disclosures
(i) New and amended standards adopted by the Group
The Group has adopted the following new and amended IFRSs as of
1 January 2020:
Amendments to IFRS 3 Definition of a business
The amendments clarify that while businesses usually have
outputs, outputs are not required for an integrated set of
activities and assets to qualify as a business. To be considered a
business an acquired set of activities and assets must include, at
a minimum, an input and a substantive process that together
significantly contribute to the ability to create outputs.
Additional guidance is provided that helps to determine whether
a substantive process has been acquired.
The amendments introduce an optional concentration test that
permits a simplified assessment of whether an acquired set of
activities and assets is not a business. Under the optional
concentration test, the acquired set of activities and assets is
not a business if substantially all of the fair value of the gross
assets acquired is concentrated in a single identifiable asset or
group of similar assets. The amendments are applied prospectively
to all business combinations and asset acquisitions for which the
acquisition date is on or after 1 January 2020.
Amendments to IAS 1 and IAS 8 Definition of material
The Group has adopted the amendments to IAS 1 and IAS 8 for the
first time in the current year. The amendments make the definition
of material in IAS 1 easier to understand and are not intended to
alter the underlying concept of materiality in IFRS Standards. The
concept of 'obscuring' material information with immaterial
information has been included as part of the new definition. The
threshold for materiality influencing users has been changed from
'could influence' to 'could reasonably be expected to influence'.
The definition of material in IAS 8 has been replaced by a
reference to the definition of material in IAS 1. In addition, the
IASB amended other Standards and the Conceptual Framework that
contain a definition of 'material' or refer to the term 'material'
to ensure consistency.
(ii) Standards, amendments and interpretations to existing
standards that are not yet e ective and have not been adopted early
by the Group
At the date of authorisation of these financial statements, the
Group has not applied the following new and revised IFRS Standards
that have been issued but are not yet e ective:
IFRS 17 Insurance contracts
Amendments to IAS 1 Classification of Liabilities
as Current or Non-current
Amendments to IFRS 3 Reference to the Conceptual Framework
Amendments to IAS 16 Property,
Plant and Equipment Proceeds before Intended Use
Amendments to IFRS 9, IAS 39,
IFRS 7,
IFRS 4 and IFRS 16 Interest Rate Benchmark Reform
- Phase 2
Annual Improvements to IFRS 2018-2020
The Directors do not expect that the adoption of the Standards
listed above will have a material impact on the financial
statements of the Group in future periods, except as noted
below:
Amendments to IAS 1 - Classification of Liabilities as Current
or Non-current
The amendments to IAS 1 a ect only the presentation of
liabilities as current or non-current in the statement of financial
position and not the amount or timing of recognition of any asset,
liability, income or expenses, or the information disclosed about
those items. The amendments clarify that the classification of
liabilities as current or non-current is based on rights that are
in existence at the end of the reporting period, specify that
classification is una ected by expectations about whether an entity
will exercise its right to defer settlement of a liability, explain
that rights are in existence if covenants are complied with at the
end of the reporting period, and introduce a definition of
'settlement' to make clear that settlement refers to the transfer
to the counterparty of cash, equity instruments, other assets or
services.
The amendments are applied retrospectively for annual periods
beginning on or after 1 January 2023, with early application
permitted.
Amendments to IFRS 3 - Reference to the Conceptual Framework
The amendments update IFRS 3 so that it refers to the 2018
Conceptual Framework instead of the 1989 Framework. They also add
to IFRS 3 a requirement that, for obligations within the scope of
IAS 37, an acquirer applies IAS 37 to determine whether at the
acquisition date a present obligation exists as a result of past
events. For a levy that would be within the scope of IFRIC 21
Levies, the acquirer applies IFRIC 21 to determine whether the
obligating event that gives rise to a liability to pay the levy has
occurred by the acquisition date. Finally, the amendments add an
explicit statement that an acquirer does not recognise contingent
assets acquired in a business combination. The amendments are e
ective for business combinations for which the date of acquisition
is on or after the beginning of the first annual period beginning
on or after 1 January 2022. Early application is permitted if an
entity also applies all other updated references (published
together with the updated Conceptual Framework) at the same time or
earlier.
The amendments are e ective for annual periods beginning on or
after 1 January 2022, with early application permitted.
Annual Improvements to IFRS Standards 2018-2020
The Annual Improvements include amendments to four
Standards.
IFRS 9 Financial Instruments
The amendment clarifies that in applying the '10 per cent' test
to assess whether to derecognise a financial liability, an entity
includes only fees paid or received between the entity (the
borrower) and the lender, including fees paid or received by either
the entity or the lender on the other's behalf. The amendment is
applied prospectively to modifications and exchanges that occur on
or after the date the entity first applies the amendment.
The amendment is e ective for annual periods beginning on or
after 1 January 2022, with early application permitted.
IFRS 16 Leases
The amendment removes the illustration of the reimbursement of
leasehold improvements. As the amendment to IFRS 16 only regards an
illustrative example, no e ective date is stated.
IAS 41 Agriculture
The amendment removes the requirement in IAS 41 for entities to
exclude cash flows for taxation when measuring fair value. This
aligns the fair value measurement in IAS 41 with the requirements
of IFRS 13 Fair Value Measurement to use internally consistent cash
flows and discount rates and enables preparers to determine whether
to use pre-tax or post-tax cash flows and discount rates for the
most appropriate fair value measurement. The amendment is applied
prospectively, i.e. for fair value measurements on or after the
date an entity initially applies the amendment.
The amendment is e ective for annual periods beginning on or
after 1 January 2022, with early application permitted.
NOTES TO THE ACCOUNTS
1 Business and geographical segments
The principal activities of the Group are as follows:
Agriculture
Engineering
Food Service
For management reporting purposes these activities form the
basis on which the Group reports its primary divisions.
In addition, the Group holds a number of investments.
Segment information about these businesses is presented
below:
Agriculture Engineering Food Service Unallocated Consolidated
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Revenue
External sales 247.2 238.7 19.3 22.1 23.6 29.8 1.1 0.9 291.2 291.5
----- ----- ----- ----- ------ ----- ----- ----- ------- ------
Underlying
trading
profit/(loss) 18.3 19.0 (1.5) - (1.7) 0.8 (8.2) (8.2) 6.9 11.6
Separately
disclosed
items (16.1) 4.9 - - - - - - (16.1) 4.9
----- ----- ----- ----- ------ ----- ----- ----- ------- ------
Trading
(loss)/profit (2.2) 23.9 (1.5) - (1.7) 0.8 (8.2) (8.2) (9.2) 16.5
Share of
associates'
results - - - - - - 6.1 4.6 6.1 4.6
Profit on
disposal of
property,
plant and
equipment 14.4 - - - - - - - 14.4 -
Impairment of
intangible
assets,
investment
properties and
plant
and equipment (0.2) - (1.6) - (3.7) - (1.0) - (6.5) -
Profit on
disposal of
financial
assets 0.2 0.2 - - - - - - 0.2 0.2
----- ----- ----- ----- ------ ----- ----- ----- ------- ------
Operating
profit/(loss) 16.6 24.1 (3.1) - (5.4) 0.8 (3.1) (3.6) 5.0 21.3
-------------- ----- ----- ----- ----- ------ ----- ----- ----- ------- ------
Comprising
- underlying
operating
profit/(loss)
before tax 18.5 19.2 (1.5) - (1.7) 0.8 (2.1) (3.6) 13.2 16.4
- Profit on
disposal of
property,
plant and
equipment 14.4 - - - - - - - 14.4 -
- costs
related to
group claims (16.1) (1.3) - - - - - - (16.1) (1.3)
- impairment
of intangible
assets and
property,
plant and
equipment (0.2) - (1.6) - (3.7) - (1.0) - (6.5) -
- release of
provisions
for wage
increases - 9.8 - - - - - - - 9.8
- charge to
workers
profit
participation - (3.6) - - - - - - - (3.6)
----- ----- ----- ----- ------ ----- ----- ----- ------- ------
16.6 24.1 (3.1) - (5.4) 0.8 (3.1) (3.6) 5.0 21.3
-------------- ----- ----- ----- ----- ------ ----- ----- ----- ------- ------
Investment
income 0.6 0.7
Net finance
income 2.2 0.3
------- ------
Profit before
tax 7.8 22.3
Taxation (8.6) (7.2)
------- ------
(Loss)/profit
after tax (0.8) 15.1
------- ------
Other
information
Segment assets 354.2 364.8 16.6 19.1 27.9 32.9 20.5 19.8 419.2 436.6
Investments in
associates 67.6 66.0
Unallocated
assets 95.5 103.2
------- ------
Consolidated
total assets 582.3 605.8
------- ------
Segment
liabilities (60.3) (49.8) (11.8) (12.1) (6.4) (7.0) (2.9) (2.6) (81.4) (71.5)
Unallocated
liabilities (74.9) (81.9)
------- ------
Consolidated
total
liabilities (1.56.3) (153.4)
------- ------
Capital
expenditure 11.3 15.3 0.6 0.6 1.3 2.3 1.2 0.7 14.4 18.9
Depreciation (12.5) (13.3) (1.4) (1.5) (2.1) (1.8) (0.2) (0.2) (16.2) (16.8)
Amortisation - - - - - (0.3) (0.3) - (0.3) (0.3)
Impairments (0.2) (0.3) (1.6) - (3.7) - (1.0) - (6.5) (0.3)
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
South Africa
South America
The Group derives revenue from the transfer of goods and
services over time and at a point in time in the following major
geographical regions:
At a point in
time Over time Total
2020 2019 2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
United Kingdom 49.8 56.5 1.0 0.8 50.8 57.3
Continental Europe 26.6 24.0 - - 26.6 24.0
Bangladesh 23.3 23.9 - - 23.3 23.9
India 99.9 92.4 - - 99.9 92.4
Kenya 32.0 30.2 - - 32.0 30.2
Malawi 13.7 11.0 0.1 0.1 13.8 11.1
North America 14.7 14.0 - - 14.7 14.0
South Africa 2.2 3.0 - - 2.2 3.0
South America 6.4 5.9 - - 6.4 5.9
Other 21.5 29.7 - - 21.5 29.7
-------- -------- ------ ----- ----- -----
290.1 290.6 1.1 0.9 291.2 291.5
-------- -------- ------ ----- ----- -----
The following is an analysis of the carrying amount of segment
assets and additions to property, plant and equipment and
investment properties, analysed by the geographical area in which
the assets are located:
Carrying amount of Additions to property, Additions to investment
segment assets plant and equipment properties
2020 2019 2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
United Kingdom 62.1 68.3 2.2 3.0 0.9 0.5
Continental
Europe 0.8 1.1 - - - -
Bangladesh 64.4 68.2 1.7 2.1 - -
India 102.9 103.1 2.7 3.6 - -
Kenya 89.4 99.5 3.7 4.7 - -
Malawi 48.0 54.0 0.4 1.6 - -
Tanzania 3.7 1.3 1.5 - - -
North America 24.7 12.4 - - - -
South Africa 14.2 18.7 1.0 3.1 - -
South America 9.0 10.0 0.3 0.3 - -
------------- -------------- ------------- ------------- -------------- --------------
419.2 436.6 13.5 18.4 0.9 0.5
------------- -------------- ------------- ------------- -------------- --------------
2 Revenue
An analysis of the Group's revenue is as follows:
2020 2019
GBP'm GBP'm
Sale of goods 247.2 242.9
Distribution and warehousing revenue 23.6 25.6
Engineering services revenue 19.3 22.1
Property rental revenue 1.1 0.9
----- -----
Total Group revenue 291.2 291.5
Other operating income 3.0 4.0
Investment income 0.6 0.7
Interest income 2.3 3.9
----- -----
Total Group income 297.1 300.1
----- -----
Disaggregation of revenue from contracts with customers:
At a point in time Over time
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Sale of goods 247.2 242.9 - -
Distribution and warehousing revenue 23.6 25.6 - -
Engineering services revenue 19.3 22.1 - -
Property rental revenue - - 1.1 0.9
----------- ----------- ------- ------
Total Group revenue 290.1 290.6 1.1 0.9
----------- ----------- ------- ------
3 Trading (loss)/profit
2020 2019
GBP'm GBP'm
The following items have been included in arriving at trading (loss)/profit:
Employment costs (note 13) 108.1 118.0
Inventories:
Cost of inventories recognised as an expense (included in cost of sales) 163.9 164.4
Cost of inventories provision recognised as an expense
(included in cost of sales) 0.9 -
Fair value gain included in Made Tea 0.1 0.1
Depreciation of property, plant and equipment:
Owned assets 15.2 15.8
Right-of-use assets 1.0 0.9
Amortisation of intangibles (included in administrative expenses) 0.3 0.3
Impairment of intangibles (included in administrative expenses) - 0.3
Gain from change in fair value of non-current biological assets 0.4 1.4
(Loss)/profit on disposal of property, plant and equipment (0.1) 0.5
Repairs and maintenance expenditure on property, plant and equipment 2.1 5.4
Government grant income (included in other operating income) 0.8 -
---------- ----------
During the year the Group benefitted from GBP0.8 million (2019:
GBPnil) of government grants in the form of the UK Coronavirus Job
Retention Scheme. In accordance with our accounting policy this
credit is included in other operating income within the Income
Statement over the same period as the sta costs for which it
compensates.
Currency exchange (gains)/losses (credited)/charged to income include:
Revenue (0.1) -
Distribution costs (0.1) -
Administrative expenses (0.1) (0.2)
Investment income - (0.1)
Finance income and costs (2.2) 0.3
---- ----
(2.5) -
---- ----
During the year the Group (including its overseas subsidiaries)
obtained the following services from the Company's auditor and its
associates:
Audit services:
Statutory audit:
Parent company and consolidated financial statements 0.2 0.2
Subsidiary companies 0.6 0.5
--- ---
0.8 0.7
Audit related assurance services - 0.1
Tax compliance services 0.1 0.1
--- ---
0.9 0.9
--- ---
4 Underlying performance
The Group's income statement and segmental analysis separately
identify a number of Alternative Performance Measures (APMs) in
addition to those reported under IFRS. The Directors believe that
the presentation of the results in this way, which is not meant to
be a substitute for or superior to IFRS measures, is relevant to an
understanding of the Group's underlying trends, financial
performance and position. These APMs are also used to enhance the
comparability of information between reporting periods and the
Group's divisions, by adjusting for non-recurring or uncontrollable
factors which a ect IFRS measures, to aid the user in understanding
the underlying performance. Our KPIs are aligned to our strategy.
Consequently, APMs are consistent with how the business performance
is planned and reported internally to the Board and Operating
Committees to aid their decision making.
The following items have been excluded in arriving at the
underlying profit measure and have been separately disclosed:
-- A GBP14.4 million profit from the disposal of the property,
plant and equipment owned by Horizon Farms.
-- GBP16.1 million (2019: GBP1.3 million) of legal and other
costs relating to the defence of the litigation concerning
our East African operations, including the settlements
of up to GBP4.6 million in relation to the Kenyan claims
and GBP2.3 million in relation to the Malawian claims.
-- Impairment charges in relation to the Jing Tea brand,
investment properties, plant and equipment at Abbey Metal
Finishing and at Atfin and elsewhere in the UK totaling
GBP6.5 million. See note 7.
5 Share of associates' results
The Group's share of the results of associates is analysed
below:
2020 2019
GBP'm GBP'm
Profit before tax 6.7 5.3
Taxation (0.6) (0.7)
----- -----
Profit after tax 6.1 4.6
----- -----
6 Profit on disposal of property, plant and equipment
A GBP14.4 million profit was realised from the disposal of the
property, plant and equipment owned by Horizon Farms in California.
Total cash consideration was GBP21.6 million.
7 Impairments of intangible assets, investment properties and plant and equipment
Jing Tea is a UK subsidiary that operates within the global
tourism and hospitality sector and also has a retail operation.
These operations were severely a ected in 2020 by the pandemic and
the measures taken to contain it. These measures, which included a
significant lockdown period, constituted a triggering event leading
to an impairment test in the interim condensed financial statements
for the six months ended 30 June 2020, which resulted in a brand
impairment of GBP3.2 million. The Group tests the carrying value of
brands annually in December and this resulted in a further
impairment of GBP0.3 million (2019: GBPnil). The assumptions used
in performing the interim impairment test have been updated to
reflect lower expected earnings in 2021-23 than previously assumed
and a delay in the return to the pre-pandemic levels of turnover in
the out of home market until 2023. A sensitivity analysis in
relation to the brand impairment is set out in note 15. In
addition, a GBP0.2 million impairment of fixtures and fittings
relating to their retail store was also provided.
Abbey Metal Finishing is a UK subsidiary and its German
subsidiary Atfin provide specialist coating services for the
aerospace sector. These companies operations were severely a ected
in 2020 by the pandemic and the measures taken to contain it. These
measures, which included a significant lockdown period and
curtailments to travel, constituted a triggering event leading to
an impairment test in the interim condensed financial statements
for the six months ended 30 June 2020, which resulted in a plant
and equipment impairment of GBP0.2 million. The Group tests for
impairment triggers annually in December and this resulted in a
further impairment of GBP1.4 million. The assumptions used in
performing the interim impairment test have been updated to reflect
an extended period of recovery and a delay in the return to the
pre-pandemic levels of turnover until 2026.
In addition, a GBP0.2 million impairment provision has been
included in investment properties in relation to recently developed
UK investment properties, a GBP0.8 million impairment on other UK
fixture and fittings and a GBP0.2 million impairment on fixture and
fixtures at EP Cape in South Africa.
8 Finance income and costs
2020 2019
GBP'm GBP'm
Interest payable on loans and bank overdrafts (0.9) (1.5)
Interest payable on leases (0.7) (0.7)
----- -----
Finance costs (1.6) (2.2)
Finance income - interest income on short-term
bank deposits 2.3 3.9
Net exchange gain/(loss) on foreign cash balances 2.2 (0.3)
Employee benefit expense (note 35) (0.7) (1.1)
----- -----
Net finance income 2.2 0.3
----- -----
9 Taxation
Analysis of charge in the year 2020 2019
Current tax GBP'm GBP'm GBP'm
UK corporation tax
UK corporation tax at 19.0 per cent. (2019: 19.0 per cent.) 0.3 0.6
Double tax relief (0.3) (0.6)
------- -----
Foreign tax - -
Corporation tax 13.2 8.7
Adjustment in respect of prior years - (2.4)
------- -----
13.2 6.3
------ -----
Total current tax 13.2 6.3
Deferred tax
Origination and reversal of timing di erences
United Kingdom (0.7) (1.1)
Overseas (3.9) 2.0
------- -----
(4.6) 0.9
------ -----
Tax on profit on ordinary activities 8.6 7.2
------ -----
Factors a ecting tax charge for the year
Profit on ordinary activities before tax 7.8 22.3
Share of associated undertakings profit (6.1) (4.6)
------ -----
Group profit on ordinary activities before tax 1.7 17.7
------ -----
Tax on ordinary activities at the standard rate of corporation tax
in the UK of 19.00 per cent. (2019: 19.00 per cent.) 0.3 3.4
E ects of:
Adjustment to tax in respect of prior years - (2.4)
Expenses not deductible for tax purposes 0.3 1.0
Adjustment in respect of foreign tax rates 2.5 3.1
Additional tax arising on dividends from overseas companies 0.5 1.0
Other income not charged to tax (0.6) (0.5)
Increase in tax losses carried forward 6.0 1.5
Movement in other timing di erences (0.4) 0.1
------ -----
Total tax charge for the year 8.6 7.2
------ -----
In 2020, losses arising in the UK, including legal and other
costs relating to the defense of the litigation concerning our East
African operations, gave rise to a significant increase in losses
carried forward which cannot be recognised as a deferred tax
asset.
In 2020, a GBP14.4 million profit on disposal of the property,
plant and equipment owned by Horizon Farms gave rise to a
corporation tax charge of GBP5.6 million o set by a release of
deferred tax of GBP1.7 million.
In 2019, adjustment to tax in respect of prior years includes a
credit of GBP2.3 million relating to a reversal of the provision
previously carried relating to assessments raised by the Malawi
Revenue Authority which are no longer required.
In 2019, included within the tax charge is a provision amounting
to GBP0.9 million relating to withholding tax on prior year branch
profit remittances from Bangladesh where the applicable rate of
withholding tax is being contested.
In 2019, also included within the tax charge is a credit to
deferred tax of GBP1.3 million relating to the recognition of
workers profit participation liabilities in Bangladesh.
The tax charge includes a credit of GBP0.7 million (2019: GBP0.9
million) relating to the recognition of deferred tax losses able to
be utilised to o set gains in value of financial assets at fair
value through other comprehensive income where the related equal
and opposite charge arises in the Statement of Comprehensive
Income.
10 Profit for the year
2020 2019
GBP'm GBP'm
The profit of the Company was: 4.5 4.2
----- -----
The Company has taken advantage of the exemption under Section
408 of the Companies Act 2006 not to disclose its income
statement.
11 Equity dividends
2020 2019
GBP'm GBP'm
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2019 of
nil (2018: 102p) per share - 2.8
Interim dividend for the year ended 31 December 2020 of
nil (2019: 42p) per share - 1.2
Special interim dividend for the year ended 31 December 2020 of
102p (2019: nil) per share 2.8 -
----- -----
2.8 4.0
----- -----
Dividends amounting to GBP0.1 million (2019: GBP0.1 million)
have not been included as group companies hold 62,500 issued shares
in the Company. These are classified as treasury shares.
Proposed final dividend for the year ended 31 December 2020 of
144p (2019: nil) per share 4.1 -
---
The proposed final dividend is subject to approval by the
shareholders at the AGM and has not been included as a liability in
these financial statements.
12 Earnings /(loss) per share (EPS)
2020 2019
Weighted Weighted
average average
number number
Earnings/ of Earnings/ of
(loss) shares EPS (loss) shares EPS
Basic and diluted
EPS GBP'm Number Pence GBP'm Number Pence
Attributable to
ordinary
shareholders (5.0) 2,762,000 (181.0) 8.3 2,762,000 300.5
--------- --------- ------ --------- --------- -----
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 36).
13 Employees
2020 2019
Number Number
Average number of employees by activity:
Agriculture 75,522 77,564
Engineering 223 257
Food Service 282 313
Central Management 33 31
------ ------
76,060 78,165
------ ------
2020 2019
GBP'm GBP'm
Employment costs:
Wages and salaries 97.1 103.7
Social security costs 2.4 2.6
Employee benefit obligations (note 35) - UK 1.8 1.7
- Overseas 6.8 6.4
- Overseas workers profit
participation - 3.6
----- -----
108.1 118.0
----- -----
Total remuneration paid to key employees who are members of the
Executive Committees, excluding Directors of Camellia Plc, amounted
to GBP2.5 million (2019: GBP2.6 million).
14 Emoluments of the directors
2020 2019
GBP'm GBP'm
Aggregate emoluments excluding pension contributions 2.0 2.1
----- -----
Emoluments of the highest paid director excluding pension
contributions were GBP0.7 million
(2019: GBP0.6 million).
Further details of directors' emoluments are set out on pages 41
to 42.
15 Intangible assets
Computer
Goodwill Brands software Total
Group GBP'm GBP'm GBP'm GBP'm
Cost
At 1 January 2019 - 8.9 2.2 11.1
Exchange di erences - (0.1) - (0.1)
Additions - - 0.1 0.1
Disposals - - - -
Businesses joining the
group 1.4 - - 1.4
-------- ------ -------- -----
At 1 January 2020 1.4 8.8 2.3 12.5
Exchange di erences (0.1) (0.1) - (0.2)
Additions - - 0.3 0.3
-------- ------ -------- -----
At 31 December 2020 1.3 8.7 2.6 12.6
-------- ------ -------- -----
Amortisation
At 1 January 2019 - - 1.6 1.6
Charge for the year - - 0.3 0.3
Impairment 0.3 - - 0.3
-------- ------ -------- -----
At 1 January 2020 0.3 - 1.9 2.2
Charge for the year - - 0.3 0.3
-------- ------ -------- -----
Impairment provision - 3.5 - 3.5
-------- ------ -------- -----
At 31 December 2020 0.3 3.5 2.2 6.0
-------- ------ -------- -----
Net book value at 31 December
2020 1.0 5.2 0.4 6.6
-------- ------ -------- -----
Net book value at 31 December
2019 1.1 8.8 0.4 10.3
-------- ------ -------- -----
The Group's impairment test in respect of goodwill is performed
as at 31 December each year. In line with the accounting policy,
impairment testing is also performed whenever there is an
indication that the assets may be impaired. There was no indication
of impairment in the year to 31 December 2020 (2019: GBP0.3
million). For the purpose of this impairment testing, the Group's
cash-generating unit (CGU) components represent the goodwill on the
acquisition of tea estates in India by Goodricke Group Limited and
Amgoorie India Limited.
The Group's impairment test in respect of brands allocated to
each component of the 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. As a result of this testing, an impairment of GBP3.5
million was made in the year to 31 December 2020 (2019: GBPnil).
The carrying amount of this asset is now GBP3.2 million. For the
purpose of this impairment testing, the Group's CGU components
represent the brands owned by Jing Tea Limited and Goodricke Group
Limited.
Sensitivity analysis
The fair value of the brand owned by Jing Tea was calculated
using the Royalty Forgiven methodology. The key assumptions and
sensitivities are set out below:
Change in assumption
Assumption Impact on impairment
+ 1% - 1%
GBP'm GBP'm
Royalty rate 4.30% (0.7) 0.7
Discount rate 10.07% 0.2 (0.2)
If forecasted revenues were to change by +/- 1 per cent. in
every year it would have the e ect of a decrease/increase in the
impairment of GBP0.2 million. If the post-pandemic recovery were to
take one year longer than forecasted, it would increase the
impairment by GBP0.3 million.
16 Property, plant and equipment
Fixtures,
Plant fittings
Bearer Land and and and
plants buildings machinery equipment Total
Group GBP'm GBP'm GBP'm GBP'm GBP'm
Deemed cost
At 1 January 2019 142.1 107.8 112.6 17.7 380.2
Reclassification to right-of-use
assets - (2.0) (0.1) - (2.1)
Exchange di erences (6.7) (3.1) (3.8) (0.4) (14.0)
Additions 4.4 5.8 6.6 1.6 18.4
Disposals (1.1) (1.1) (2.6) (0.1) (4.9)
Businesses joining the
group 2.6 1.6 1.4 0.1 5.7
------ --------- --------- --------- -----
At 1 January 2020 141.3 109.0 114.1 18.9 383.3
Exchange di erences (8.5) (4.6) (5.7) (0.7) (19.5)
Additions 3.7 4.0 4.3 1.5 13.5
Disposals (5.7) (1.1) (6.8) (0.6) (14.2)
Reclassification to investment
properties - (0.1) - - (0.1)
------ --------- --------- --------- -----
At 31 December 2020 130.8 107.2 105.9 19.1 363.0
------ --------- --------- --------- -----
Depreciation
At 1 January 2019 23.0 51.7 70.9 8.3 153.9
Reclassification to
right-of-use assets - (0.2) - - (0.2)
Exchange di erences (1.2) (1.2) (2.3) (0.3) (5.0)
Charge for the year 5.8 2.7 6.5 0.8 15.8
Disposals (0.9) (0.7) (2.0) (0.1) (3.7)
------ --------- --------- --------- -----
At 1 January 2020 26.7 52.3 73.1 8.7 160.8
Exchange di erences (2.0) (1.7) (3.5) (0.4) (7.6)
Charge for the year 5.3 2.5 6.4 1.0 15.2
Disposals (1.4) (0.2) (4.7) (0.2) (6.5)
Impairment provision - - 1.6 1.2 2.8
------ --------- --------- --------- -----
At 31 December 2020 28.6 52.9 72.9 10.3 164.7
------ --------- --------- --------- -----
Net book value at 31
December 2020 102.2 54.3 33.0 8.8 198.3
------ --------- --------- --------- -----
Net book value at 31
December 2019 114.6 56.7 41.0 10.2 222.5
------ --------- --------- --------- -----
The plant and machinery impairment provision of GBP1.6 million
relates to Abbey Metal Finishing and its subsidiary company Atfin
and has arisen due to the impact of COVID-19 on the aerospace
industry. Details of the other impairments are set out in note
7.
The amount of expenditure for property, plant and equipment in
the course of construction (including immature bearer plants)
amounted to GBP4.7 million (2019: GBP5.5 million).
Sensitivity analysis
The carrying amount of the property, plant and equipment owned
by Abbey Metal Finishing was calculated using the value-in-use
methodology. The key assumptions and sensitivities are set out
below:
Change in assumption
Assumption Impact on impairment
+ 1% - 1%
GBP'm GBP'm
Discount rate 10.54% 0.5 (0.6)
If projected revenues in each year were to increase by 1 per
cent. it would decrease the impairment by GBP0.4 million. If
forecasted revenues were to decrease by 1 per cent. the impairment
would increase by GBP0.1 million.
17 Right-of-use assets
Land and Plant and
buildings machinery Total
GBP'm GBP'm GBP'm
Group
Deemed cost
Impact on adopting IFRS 16 at 1
January 2019 11.5 0.3 11.8
Reclassification from property,
plant and equipment 2.0 0.1 2.1
Reclassification from prepaid operating
leases 1.0 - 1.0
Exchange di erences (0.2) - (0.2)
Additions 1.0 0.2 1.2
Businesses joining the group 3.7 - 3.7
--------- --------- -----
At 1 January 2020 19.0 0.6 19.6
Exchange di erences (0.5) - (0.5)
Additions 0.4 0.1 0.5
Disposals (1.0) (0.1) (1.1)
--------- --------- -----
At 31 December 2020 17.9 0.6 18.5
--------- --------- -----
Depreciation
Reclassification from property,
plant and equipment 0.2 - 0.2
Charge for the year 0.7 0.2 0.9
--------- --------- -----
At 1 January 2020 0.9 0.2 1.1
Exchange di erences (0.1) - (0.1)
Charge for the year 0.8 0.2 1.0
Disposals (0.1) - (0.1)
--------- --------- -----
At 31 December 2020 1.5 0.4 1.9
--------- --------- -----
Net book value at 31 December 2020 16.4 0.2 16.6
--------- --------- -----
Net book value at 31 December 2019 18.1 0.4 18.5
--------- --------- -----
The Group leases many assets including land, buildings and
plant. The average lease term is 99 years (2019: 87 years).
Leases that expired in the year and were replaced by new leases
for identical or the same underlying assets resulted in additions
to right-of-use assets of GBP0.1 million (2019: GBP0.2
million).
The maturity analysis of lease liabilities is presented in note 32.
2020 2019
GBP'm GBP'm
Amounts recognised in the consolidated income statement:
Interest expense on lease liabilities 0.7 0.7
Expense relating to short-term leases 0.1 0.1
----- -----
18 Investment properties
GBP'm
Group
Cost
At 1 January 2019 19.8
Impact on adopting IFRS 16 at 1 January 2019 0.7
Additions 0.5
Disposals (1.5)
-----
At 1 January 2020 19.5
Additions 0.9
Reclassification from property, plant and equipment 0.1
-----
At 31 December 2020 20.5
-----
Depreciation
At 1 January 2019 1.8
Charge for the year 0.1
Disposals (0.7)
-----
At 1 January 2020 1.2
Charge for the year -
Impairment provision 0.2
-----
At 31 December 2020 1.4
-----
Net book value at 31 December 2020 19.1
-----
Net book value at 31 December 2019 18.3
-----
Included in revenue is GBP1.1 million (2019: GBP0.9 million) of
rental income generated from investment properties. Direct
operating expenses relating to the investment property, the
majority of which generated rental income in the period, amounted
to GBP0.1 million (2019: GBP0.2 million).
At the end of the year the fair value of Investment properties
was GBP23.9 million (2019: GBP23.1 million). Investment properties
were valued by the Directors (fair value hierarchy Level 2).
19 Biological assets
Non-current: Forestry Livestock Total
GBP'm GBP'm GBP'm
Group
At 1 January 2019 13.5 1.0 14.5
Exchange di erences (0.6) - (0.6)
Additions 0.2 - 0.2
Gains arising from changes
in fair value less estimated
point-of-sale costs 1.0 0.4 1.4
Decreases due to harvesting (0.6) (0.3) (0.9)
-------- --------- -----
At 1 January 2020 13.5 1.1 14.6
Exchange di erences (1.4) (0.1) (1.5)
Additions 0.2 - 0.2
Gains arising from changes
in fair value less estimated
point-of-sale costs 0.1 0.3 0.4
Decreases due to harvesting (0.7) (0.3) (1.0)
-------- --------- -----
At 31 December 2020 11.7 1.0 12.7
-------- --------- -----
Current: 2020 2019
GBP'm GBP'm
Group
Tea 0.4 0.4
Edible nuts 2.0 3.6
Citrus - 1.1
Soya 2.9 2.7
Avocado 1.8 1.1
Other - 0.2
--------- -----
7.1 9.1
--------- -----
Biological assets are carried at fair value. Where meaningful
market-determined prices do not exist to assess the fair value of
biological assets, the fair value has been determined based on the
net present value of expected future cash flows from those assets,
discounted at appropriate pre-tax rates. In determining the fair
value of biological assets where the discounting of expected future
cash flows has been used, the Directors have made certain
assumptions about the expected life-span of the plantings, yields,
selling prices and costs. There are no individually significant
unobservable inputs. The fair value of livestock is based on market
prices of livestock of similar age and sex.
New planting additions represent new areas planted to the
particular crop at cost.
As at 31 December 2020 the area planted to Forestry amounted to
5,877 Hectares (2019: 5,813) from which 203,541 cubic metres (2019:
173,867) were harvested during the year.
Livestock numbers were 4,529 head (2019: 4,396) at 31 December
2020.
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 53.
Valuations by external professional valuers and those derived
from discounted cash flows both make assumptions based on
observable inputs of: yields, an increase in which will raise the
value; costs, an increase in which will decrease the value; market
prices, an increase in which will raise the value; life span of the
plantings, an increase in which will raise the value; discount
rates, an increase in which will decrease the value. These
assumptions vary significantly across di erent countries, crops and
varieties. In preparing these valuations a long term view is taken
on the yields and prices achievable.
The fair value of biological assets is sensitive to these
assumptions, the more significant of which are as follows:
Non-current:
- Forestry - a 10% movement in the market price for trees or
volume of trees assumed would result in a GBP1.2 million (2019:
GBP1.4 million) increase/decrease in the fair value of
forestry.
Current:
- Macadamia - a 10% increase/decrease in the volumes assumed
would result in a GBP0.9 million (2019: GBP0.6 million)
increase/decrease in the fair value of macadamia growing crop. A
10% increase/decrease in selling price assumed for macadamia would
result in a GBP0.9 million (2019: GBP0.7 million) increase/decrease
in the fair value.
- Avocados - a 10% increase/decrease in the volume or the price
assumed would result in a GBP0.2 million (2019: GBP0.2 million)
increase/decrease in the fair value of Hass avocados growing
crop.
- Soya - a 10% increase/decrease in the volume or the price
assumed would result in a GBP0.3 million (2019: GBP0.3 million)
increase/decrease in the fair value of soya growing crop.
Financial risk management strategies
The Group is exposed to financial risks arising from changes in
the prices of the agricultural products it produces. There are no
futures markets available for the majority of crops grown by the
Group. The Group's exposure to this risk is mitigated by the
geographical spread of its operations, selective forward selling in
certain instances when considered appropriate, and regular reviews
of available market data on sales and production. The Group
monitors closely the returns it achieves from its crops and
considers replacing its biological assets when yields decline with
age or markets change.
Further financial risk arises from changes in market prices of
key cost components. Such costs are closely monitored.
20 Prepaid operating leases
GBP'm
Group
Cost
At 1 January 2019 1.0
Reclassification to right-of-use assets (1.0)
-----
At 1 January 2020 and 31 December 2020 -
-----
Net book value at 31 December 2020 -
-----
Net book value at 31 December 2019 -
-----
21 Investments in subsidiaries
2020 2019
GBP'm GBP'm
Company
Cost
At 1 January and 31 December 73.5 73.5
----- -----
22 Investments in associates
2020 2019
GBP'm GBP'm
Group
At 1 January 92.9 93.6
Exchange di erences (3.0) (3.8)
Share of profit (note 5) 6.1 4.6
Dividends (3.2) (3.1)
Additions 0.3 1.3
Other equity movements 0.6 0.3
----- -----
At 31 December 93.7 92.9
----- -----
Provision for diminution in value
At 1 January 26.9 27.9
Exchange differences (0.8) (1.0)
----- -----
At 31 December 26.1 26.9
----- -----
Net book value at 31 December 67.6 66.0
----- -----
Details of the Group's associates are shown in note 43.
The Group's share of the results of its principal associates and
its share of the assets (including goodwill) and liabilities are as
follows:
Country of Interest Market
incorporation Assets Liabilities Revenues Profit held value
GBP'm GBP'm GBP'm GBP'm % GBP'm
2020
Listed
BF&M Bermuda 630.2 (549.0) 68.1 5.2 37.6 49.7
United Finance Limited Bangladesh 70.7 (60.8) 2.8 0.7 38.4 11.0
United Insurance
Company Limited Bangladesh 4.0 (1.4) 0.4 0.2 37.0 7.8
------ ----------- -------- ------ ------
704.9 (611.2) 71.3 6.1 68.5
------ ----------- -------- ------ ------
2019
Listed
BF&M Bermuda 779.1 (698.9) 74.3 3.6 37.8 52.3
United Finance Limited Bangladesh 73.4 (63.3) 3.4 0.8 38.4 11.1
United Insurance
Company Limited Bangladesh 3.7 (1.1) 0.4 0.2 37.0 8.6
------ ----------- -------- ------ ------
856.2 (763.3) 78.1 4.6 72.0
------ ----------- -------- ------ ------
23 Financial assets at fair value through other comprehensive income
Group Company
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Cost or fair value
At 1 January 40.0 35.2 0.2 0.2
Exchange di erences (1.5) (1.5) - -
Fair value adjustment 2.3 6.9 - -
Additions 6.5 0.8 - -
Disposals (2.4) (1.1) - -
Fair value adjustment for disposal (1.1) (0.3) - -
----- ----- ------ -----
At 31 December 43.8 40.0 0.2 0.2
----- ----- ------ -----
Provision for diminution in value
At 1 January 2.2 2.5 0.2 0.2
Exchange di erences - (0.1) - -
Disposals (1.0) (0.2) - -
----- ----- ------ -----
At 31 December 1.2 2.2 0.2 0.2
----- ----- ------ -----
Net book value at 31 December 42.6 37.8 - -
----- ----- ------ -----
Financial assets at fair value through other comprehensive
income include the following:
Group
2020 2019
GBP'm GBP'm
Listed securities:
Equity securities - Bermuda 0.8 2.0
Equity securities - Japan 19.1 18.8
Equity securities - Switzerland 12.7 11.3
Equity securities - US 4.0 3.9
Equity securities - India 0.7 0.6
Equity securities - Europe 0.1 0.4
Equity securities - United Kingdom 4.7 0.3
Equity securities - Other 0.5 0.5
----- -----
42.6 37.8
----- -----
Financial assets at fair value through other comprehensive
income are denominated in the following currencies:
Group
2020 2019
GBP'm GBP'm
Sterling 4.7 0.3
US Dollar 4.0 3.9
Euro 0.1 0.4
Swiss Franc 12.7 11.3
Indian Rupee 0.7 0.6
Bermudian Dollar 0.8 2.0
Japanese Yen 19.1 18.8
Other 0.5 0.5
----- -----
42.6 37.8
----- -----
24 Financial assets at fair value through profit or loss
Group
2020 2019
GBP'm GBP'm
At 1 January 6.2 3.7
Exchange differences (0.2) (0.3)
Fair value adjustment 0.1 -
Additions 5.9 10.6
Disposals (6.7) (7.8)
----- -----
At 31 December 5.3 6.2
----- -----
Financial assets at fair value through profit or loss include
the following:
Group
2020 2019
GBP'm GBP'm
Listed securities:
Money market - Bermuda 1.6 0.8
Money market - US - 3.9
Money market - India 3.6 1.4
Money market - Switzerland 0.1 0.1
----- -----
5.3 6.2
----- -----
Financial assets at fair value through profit or loss are
denominated in the following currencies:
Group
2020 2019
GBP'm GBP'm
US Dollar 1.7 4.8
Indian Rupee 3.6 1.4
----- -----
5.3 6.2
----- -----
25 Financial assets at amortised cost
Group
2020 2019
GBP'm GBP'm
At 1 January 3.0 3.2
Exchange di erences (0.3) -
Disposals - (0.2)
----- -----
At 31 December 2.7 3.0
----- -----
Financial assets at amortised cost comprises:
2020 2019
GBP'm GBP'm
Treasury infrastructure bonds - 12.0% to 12.2%
interest payable twice yearly
and redeemable in November 2022 - Kenya 1.4 1.5
Treasury infrastructure bonds - 12.0% to 12.2%
interest payable twice yearly
and redeemable in November 2024 - Kenya 1.3 1.5
----- -----
2.7 3.0
----- -----
Non-Current 2.7 3.0
----- -----
2.7 3.0
----- -----
26 Other investments - heritage assets
Group Company
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Cost
At 1 January 9.8 9.5 11.0 10.7
Additions - 0.3 - 0.3
----- ----- ------ -----
At 31 December 9.8 9.8 11.0 11.0
----- ----- ------ -----
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.
27 Inventories
2020 2019
GBP'm GBP'm
Group
Made Tea 28.3 28.6
Other agricultural produce 4.7 5.9
Work in progress 0.1 0.1
Trading stocks 0.5 1.5
Raw materials and consumables 13.9 13.2
----- -----
47.5 49.3
----- -----
Made tea inventories include the fair value of green leaf which
includes a fair value uplift of GBP0.1 million (2019: GBP0.1
million).
28 Trade and other receivables
Group Company
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Group
Current:
Trade receivables 31.3 30.0 - -
Amounts owed by associated
undertakings 0.1 0.1 - -
Other receivables 5.4 5.8 0.6 -
Prepayments and accrued income 6.9 8.4 - -
----- ----- ------ -----
43.7 44.3 0.6 -
----- ----- ------ -----
Non-current:
Other receivables 2.4 2.8 - -
----- ----- ------ -----
2.4 2.8 - -
----- ----- ------ -----
The carrying amounts of the Group's trade and other receivables
are denominated in the following currencies:
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Current:
Sterling 11.6 13.4 0.6 -
US Dollar 4.8 2.8 - -
Euro 0.3 0.1 - -
Kenyan Shilling 2.3 3.1 - -
Indian Rupee 19.7 18.9 - -
Malawian Kwacha 1.5 2.1 - -
Bangladesh Taka 2.0 1.6 - -
South African Rand 0.2 0.2 - -
Brazilian Real 0.7 1.4 - -
Other 0.6 0.7 - -
----- ----- ----- -----
43.7 44.3 0.6 -
----- ----- ----- -----
Non-current:
Kenyan Shilling 0.5 0.5
Indian Rupee 1.2 1.4
Malawian Kwacha 0.4 0.6
Bangladesh Taka 0.3 0.3
----- -----
2.4 2.8
----- -----
Included within trade receivables is a provision for doubtful
debts of GBP0.6 million (2019: GBP0.5 million). All other trade
receivables are with normal trading partners and there is no
history of defaults.
Trade receivables include receivables of GBP5.1 million (2019:
GBP6.4 million) which are past due at the reporting date against
which the Group has not provided, as there has not been a
significant change in credit quality and the amounts are still
considered recoverable. Ageing of past due but not provided for
receivables is as follows:
2020 2019
GBP'm GBP'm
Up to 30 days 2.2 2.7
30-60 days 0.6 1.5
60-90 days 0.7 0.5
Over 90 days 1.6 1.7
----- -----
5.1 6.4
----- -----
29 Cash and cash equivalents (excluding bank overdrafts)
Group
2020 2019
GBP'm GBP'm
Cash at bank and in hand 57.8 31.1
Short-term bank deposits 39.6 59.5
Short-term liquid investments 1.1 0.8
----- -----
98.5 91.4
----- -----
Cash, cash equivalents and bank overdrafts include the following
for the purposes of the cash flow statement:
2020 2019
GBP'm GBP'm
Cash and cash equivalents 98.5 91.4
Bank overdrafts (note 31) (3.6) (2.0)
------- -------
94.9 89.4
------- -------
2020 2019
E ective interest rate:
0.01 - 0.85 -
Short-term deposits 9.00% 12.00%
2.50 -
Short-term liquid investments 7.00% 5.00%
Average maturity period:
Short-term deposits 73 days 53 days
Short-term liquid investments 31 days 24 days
30 Trade and other payables
Group Company
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Current:
Trade payables 22.4 20.6 0.1 -
Other taxation and social
security 1.1 0.9 - -
Other payables 20.2 20.5 0.1 0.2
Accruals and deferred income 7.2 6.6 0.6 0.4
----- ----- ------ -----
50.9 48.6 0.8 0.6
----- ----- ------ -----
Included in other taxation and social security is GBP0.7 million
(2019: GBPnil) of VAT payable by the UK operations which was
deferred from Q1 2020 as part of the UK Government deferral scheme
in relation to COVID, of which GBP0.2 million was repaid by April
2021 and GBP0.5 million will be repaid using the deferral payment
scheme during 2021.
31 Financial liabilities - borrowings
2020 2019
GBP'm GBP'm
Group
Current:
Bank overdrafts 3.6 2.0
Bank loans 2.1 3.6
----- -----
5.7 5.6
----- -----
Current borrowings include the following amounts
secured on property, plant and equipment and
investment properties:
Bank overdrafts 2.0 2.0
Bank loans 2.1 3.6
----- -----
4.1 5.6
----- -----
Non-current:
Bank loans 2.7 3.3
----- -----
Non-current borrowings include the following
amounts secured on plant and
equipment and investment properties:
Bank loans 2.7 3.3
----- -----
The repayment of bank loans and overdrafts
fall due as follows:
Within one year or on demand (included in current
liabilities) 5.7 5.6
Between 1 - 2 years 0.4 0.4
Between 2 - 5 years 1.2 1.3
After 5 years 1.1 1.6
----- -----
8.4 8.9
----- -----
The rates of interest payable by the Group ranged between:
2020 2019
% %
1.60 - 2.50 -
Bank overdrafts 17.50 18.50
3.03 - 3.03 -
Bank loans 8.50 9.10
32 Lease liabilities
2020 2019
GBP'm GBP'm
Group
Maturity analysis of lease liabilities is as
follows:
Within one year 1.2 1.2
Between 1 - 2 years 1.1 1.2
Between 2 - 5 years 2.3 2.1
Onwards 6.9 8.5
----- -----
11.5 13.0
----- -----
Analysed as:
Current 1.2 1.2
Non-current 10.3 11.8
----- -----
11.5 13.0
----- -----
The Group does not face a significant liquidity risk with regard
to its lease liabilities. Lease liabilities are monitored within
the individual subsidiaries' finance functions.
33 Provisions
Wages and Legal
salaries claims Others Total
GBP'm GBP'm GBP'm GBP'm
Group
At 1 January 2019 17.4 - 1.1 18.5
Exchange di erences (0.5) - - (0.5)
Utilised in the period (6.3) - (0.1) (6.4)
Provided in the period 6.8 - 0.3 7.1
Businesses joining the group 0.1 - - 0.1
Unused amounts reversed in
period (9.8) - (0.1) (9.9)
--------- ------ ------ -----
At 1 January 2020 7.7 - 1.2 8.9
Exchange di erences (0.5) - - (0.5)
Utilised in the period (7.3) (0.3) (7.6)
Provided in the period 10.5 8.2 0.2 18.9
Unused amounts reversed in
period (0.7) - - (0.7)
--------- ------ ------ -----
At 31 December 2020 9.7 8.2 1.1 19.0
--------- ------ ------ -----
Current:
At 31 December 2020 9.7 8.2 1.1 19.0
--------- ------ ------ -----
At 31 December 2019 7.7 - 1.2 8.9
--------- ------ ------ -----
The wages and salaries provisions are in respect of ongoing wage
and bonus negotiations in India, Kenya and Bangladesh, the majority
of which are expected to be utilised during 2021.
Legal claims relate to the expected cost of the defence of the
litigation concerning our East African operations, including
settlements and progressive measures.
Others relate to provisions for claims and dilapidations.
Legal claims Total
GBP'm GBP'm
Company
At 1 January 2020 - -
Provided in the period 1.9 1.9
------------ -----
At 31 December 2020 1.9 1.9
------------ -----
Current:
At 31 December 2020 1.9 1.9
------------ -----
At 31 December 2019 - -
------------ -----
Legal claims relate to the defense of the litigation concerning
our East African operations.
34 Deferred tax
The net movement on the deferred tax account is set out
below:
Group Company
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
At 1 January 47.1 46.3 0.2 0.2
Exchange di erences (3.1) (2.3) - -
(Credited)/charged to the
income statement (4.6) 0.9 - -
Charged to other comprehensive
income 0.1 1.4 - -
Businesses joining the group - 0.8 -
----- ----- ------ -----
At 31 December 39.5 47.1 0.2 0.2
----- ----- ------ -----
The movement in deferred tax assets and liabilities is set out
below:
Deferred tax liabilities
Accelerated
tax
depreciation Other Total
GBP'm GBP'm GBP'm
At 1 January 2019 51.0 3.8 54.8
Exchange di erences (2.4) (0.1) (2.5)
Charged/(credited) to the income statement 1.9 (0.3) 1.6
Charged to other comprehensive income - 0.9 0.9
Businesses joining the group 0.8 - 0.8
------------ ----- -----
At 1 January 2020 51.3 4.3 55.6
Exchange di erences (3.6) 0.1 (3.5)
Credited to the income statement (3.4) (0.7) (4.1)
Charged to other comprehensive income - 0.7 0.7
------------ ----- -----
At 31 December 2020 44.3 4.4 48.7
------------ ----- -----
Deferred tax assets o set (9.2)
-----
Net deferred tax liability after o
set 39.5
-----
Deferred tax assets
Pension
scheme
Tax losses asset Other Total
GBP'm GBP'm GBP'm GBP'm
At 1 January 2019 3.0 0.3 5.2 8.5
Exchange di erences - - (0.2) (0.2)
Credited/(charged) to the
income statement 1.5 0.2 (1.0) 0.7
Charged to other comprehensive
income - (0.2) (0.3) (0.5)
---------- ------- ----- -----
At 1 January 2020 4.5 0.3 3.7 8.5
Exchange di erences - (0.1) (0.3) (0.4)
Credited/(charged) to the
income statement 0.3 (0.4) 0.6 0.5
Credited to other comprehensive
income - 0.6 - 0.6
---------- ------- ----- -----
At 31 December 2020 4.8 0.4 4.0 9.2
---------- ------- ----- -----
O set against deferred tax
liabilities (9.2)
-----
Net deferred tax asset after
o set -
-----
Deferred tax liabilities of GBP25.5 million (2019: GBP24.9
million) have not been recognised for the withholding tax and other
taxes that would be payable on the unremitted earnings of certain
subsidiaries. Such amounts are permanently reinvested.
Deferred tax assets are recognised for tax losses carried
forward only to the extent that the realisation of the related tax
benefit through future taxable profits is probable. The Group has
not recognised deferred tax assets of GBP15.5 million (2019:
GBP11.7 million) in respect of losses that can be carried forward
against future taxable income.
35 Employee benefit obligations
(i) Pensions
Certain Group subsidiaries operate defined contribution and
funded defined benefit pension schemes. The most significant is the
UK funded, defined benefit scheme. The assets of this scheme are
administered by trustees and are kept separate from those of the
Group. The performance of the assets is monitored on a regular
basis by the trustees and their investment advisors. A full
actuarial valuation was undertaken as at 1 July 2017 and updated to
31 December 2020 by a qualified independent actuary. The UK defined
benefit pension scheme is closed to new entrants and with e ect
from 1 November 2016, the scheme was closed to future accruals.
Since that date members have participated in a defined contribution
scheme.
The overseas schemes are operated in Group subsidiaries located
in Bangladesh and India. Actuarial valuations for these schemes
have been updated to 31 December 2020 by qualified actuaries.
Assumptions
The major assumptions used in the valuation to determine the
present value of the schemes' defined benefit obligations were as
follows:
2020 2019
% per annum % per annum
UK schemes
Rate of increase in salaries N/a N/a
Rate of increase to LPI (Limited Price Indexation) 2.10 -
pensions in payment 2.05 - 5.00 5.00
Discount rate applied to scheme liabilities 1.25 1.90
Inflation assumption (CPI/RPI) 2.05/2.75 2.10/3.10
Assumptions regarding future mortality experience are based on
advice received from independent actuaries. The current mortality
tables used are SAPS 3, males 113%/106% and females 112%/108%, on a
year of birth basis, with CMI_2018 future improvement factors and
subject to a long term annual rate of future improvement of 1.25%
per annum, smoothing parameter of 7.0 and initial addition
parameter of 0.25% pa. This results in males and females aged 65
having life expectancies of 21.6 years (2019: 21.4 years) and 22.5
years respectively (2019: 22.7 years).
2020 2019
Overseas schemes % per annum % per annum
6.00 -
Rate of increase in salaries 3.00 - 6.00 7.00
Rate of increase to LPI (Limited Price Indexation) 0.00 -
pensions in payment 0.00 - 3.00 3.00
7.00 -
Discount rate applied to scheme liabilities 5.80 - 6.25 9.00
6.00 -
Inflation assumption 3.00 - 6.00 7.00
(ii) Post-employment benefits
Certain Group subsidiaries located in Kenya, India and
Bangladesh have an obligation to pay terminal gratuities, based on
years of service. These obligations are estimated annually using
the projected unit method by qualified independent actuaries.
Schemes operated in India are funded but the schemes operated in
Kenya and Bangladesh are unfunded. Operations in India and
Bangladesh also have an obligation to pay medical benefits upon
retirement. These schemes are unfunded.
Assumptions
The major assumptions used in the valuation to determine the
present value of the post-employment benefit obligations were as
follows:
2020 2019
% per annum % per annum
3.00 - 6.00 -
Rate of increase in salaries 20.00 7.50
5.80 - 7.00 -
Discount rate applied to scheme liabilities 13.30 13.00
0.00 - 0.00 -
Inflation assumptions 6.00 7.50
(iii) Leave obligations
Certain Group subsidiaries located in India have an obligation
to pay leave benefit, based on years of service. These obligations
are estimated annually using the projected unit method by qualified
independent actuaries. These schemes are unfunded.
(iv) Profit sharing obligations
Certain Group subsidiaries located in Bangladesh may have an
obligation to pay sums for workers profit participation for prior
years based on a rate of 5 per cent. of post tax profit. Provisions
have been made for these sums pending clarification of the
applicability of the legislation.
Sensitivity analysis
The sensitivity of the UK defined benefit obligation to changes
in the weighted principal assumptions is:
Impact
on defined
Change benefit
in assumption obligation
Discount rate 0.5% higher 6.4% decrease
Discount rate 0.5% lower 6.8% increase
Rate of RPI inflation 0.25% higher 1.6% increase
Rate of RPI inflation 0.25% lower 1.5% decrease
Life expectancy +1 year 4.5% increase
Life expectancy -1 year 4.5% decrease
The above changes in assumptions may have an impact on the value
of the scheme's investment holdings. For example, the scheme holds
a proportion of its assets in corporate bonds. A fall in the
discount rate as a result of lower UK corporate bond yields would
lead to an increase in the value of these assets, thus mitigating
the increase in the defined benefit obligation to some extent. The
sensitivities have been calculated by changing the key assumption
only and leaving all others fixed.
Duration of the scheme liabilities
The weighted average duration of the UK scheme's liabilities is
15 years.
Analysis of scheme liabilities
The liabilities of the UK scheme are split as follows:
%
Deferred pensioners 48
Current pensioners 52
---
Total membership 100
---
(v) Actuarial valuations
2020 2019
UK Overseas Total UK Overseas Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Equities and property 57.0 1.9 58.9 87.8 0.9 88.7
Bonds 74.4 23.0 97.4 50.8 18.8 69.6
Diversified growth 42.9 - 42.9 39.9 - 39.9
Cash 21.7 15.2 36.9 1.2 9.1 10.3
------ -------- ------ ------ -------- ------
Total fair value
of plan assets 196.0 40.1 236.1 179.7 28.8 208.5
Present value of
defined benefit obligations (203.0) (49.7) (252.7) (193.3) (37.2) (230.5)
------ -------- ------ ------ -------- ------
Total deficit in
the schemes (7.0) (9.6) (16.6) (13.6) (8.4) (22.0)
------ -------- ------ ------ -------- ------
Amount recognised
as asset in the balance
sheet - 0.1 0.1 - 0.7 0.7
Amount recognised
as current liability
in the balance
sheet - (1.1) (1.1) - (0.7) (0.7)
Amount recognised
as non-current liability
in the balance sheet (7.0) (8.6) (15.6) (13.6) (8.4) (22.0)
------ -------- ------ ------ -------- ------
(7.0) (9.6) (16.6) (13.6) (8.4) (22.0)
Related deferred
tax asset (note 34) - 0.4 0.4 - 0.3 0.3
------ -------- ------ ------ -------- ------
Net deficit (7.0) (9.2) (16.2) (13.6) (8.1) (21.7)
------ -------- ------ ------ -------- ------
Movements in the fair value of scheme assets were as
follows:
2020 2019
UK Overseas Total UK Overseas Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
At 1 January 179.7 28.8 208.5 162.1 28.5 190.6
Reclassified from
creditors* - 6.9 6.9 - - -
Expected return on
plan assets 3.3 3.0 6.3 4.3 2.1 6.4
Employer contributions - 3.1 3.1 - 2.0 2.0
Contributions paid
by plan participants - 0.3 0.3 - - -
Benefit payments (8.7) (2.7) (11.4) (9.5) (2.4) (11.9)
Businesses joining
the group - - - - 0.7 0.7
Other adjustment - 0.4 0.4 - - -
Actuarial gains/(losses) 21.7 2.3 24.0 22.8 (0.4) 22.4
Exchange di erences - (2.0) (2.0) - (1.7) (1.7)
----- -------- ----- ----- -------- -----
At 31 December 196.0 40.1 236.1 179.7 28.8 208.5
----- -------- ----- ----- -------- -----
Movements in the present value of defined benefit obligations
were as follows:
2020 2019
UK Overseas Total UK Overseas Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
At 1 January (193.3) (37.2) (230.5) (178.6) (36.7) (215.3)
Reclassified from
creditors* - (7.0) (7.0) - - -
Current service cost - (2.1) (2.1) - (1.6) (1.6)
Past service cost (0.1) - (0.1) - - -
Interest cost (3.6) (3.4) (7.0) (4.8) (2.7) (7.5)
Contributions paid
by plan participants - (0.3) (0.3) - - -
Benefit payments 8.7 2.7 11.4 9.5 2.4 11.9
Businesses joining
the group - - - - (1.2) (1.2)
Actuarial (losses)/gains (14.7) (5.0) (19.7) (19.4) 0.5 (18.9)
Exchange di erences - 2.6 2.6 - 2.1 2.1
------ -------- ------ ------ -------- ------
At 31 December (203.0) (49.7) (252.7) (193.3) (37.2) (230.5)
------ -------- ------ ------ -------- ------
* GBP0.1 million has been reclassified from other payables in
relation to the provident fund schemes operated by some of the
Group's Indian subsidiaries.
In 2018, the total fair value of plan assets was GBP190.6
million, the present value of defined benefit obligations was
GBP215.3 million and the deficit was GBP24.7 million. In 2017, the
total fair value of plan assets was GBP206.6 million, the present
value of defined benefit obligations was GBP237.5 million and the
deficit was GBP30.9 million and in 2016, the total fair value of
plan assets was GBP194.1 million, the present value of defined
benefit obligations was GBP260.8 million and the deficit was
GBP66.7 million.
Income Statement
The amounts recognised in the Income Statement are as
follows:
2020 2019
UK Overseas Total UK Overseas Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Amounts (charged)/credited
to operating profit:
Current service cost - (2.1) (2.1) - (1.6) (1.6)
Past service cost (0.1) - (0.1) - - -
----- -------- ----- ----- -------- -----
Total operating (charge)/credit (0.1) (2.1) (2.2) - (1.6) (1.6)
Amounts charged to
other finance costs:
Interest expense (0.3) (0.4) (0.7) (0.5) (0.6) (1.1)
----- -------- ----- ----- -------- -----
Total (charged)/credited
to income statement (0.4) (2.5) (2.9) (0.5) (2.2) (2.7)
----- -------- ----- ----- -------- -----
Employer contributions to defined contribution schemes are
charged to profit when payable and the costs charged were GBP6.4
million (2019: GBP6.5 million).
Liabilities for workers profit participation in Bangladesh are
charged to profit when the obligation arises.
Actuarial gains and losses recognised in the Statement of
Comprehensive Income
The amounts included in the Statement of Comprehensive
Income:
2020 2019
UK Overseas Total UK Overseas Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Remeasurements:
Return on plan assets,
excluding amount included
in interest 21.7 2.3 24.0 22.8 (0.4) 22.4
Gain from changes
in demographic assumptions (0.7) - (0.7) 2.2 - 2.2
(Loss)/gain from changes
in financial assumptions (14.0) (6.1) (20.1) (21.6) 0.4 (21.2)
Experience gains - 1.1 1.1 - 0.1 0.1
----- -------- ----- ----- -------- -----
Actuarial gain/(loss) 7.0 (2.7) 4.3 3.4 0.1 3.5
----- -------- ----- ----- -------- -----
Cumulative actuarial losses recognised in the Statement of
Comprehensive Income are GBP17.9 million (2019: GBP22.2
million).
As the UK defined benefit pension scheme is closed to future
accrual and active members were transferred to a defined
contribution scheme, no employer contributions will be paid for the
year commencing 1 January 2021. No additional funding contributions
will be made, as the latest actuarial valuation shows a funding
surplus.
36 Share capital
2020 2019
GBP'm GBP'm
Authorised: 2,842,000 (2019: 2,842,000) ordinary
shares of 10p each 0.3 0.3
----- -----
Allotted, called up and fully paid: ordinary
shares of 10p each:
At 1 January and 31 December - 2,824,500 (2019:
2,824,500) shares 0.3 0.3
----- -----
Group companies hold 62,500 issued shares in the Company. These
are classified as treasury shares.
37 Reconciliation of profit from operations to cash flow
2020 2019
GBP'm GBP'm
Group
Profit from operations 5.0 21.3
Share of associates' results (6.1) (4.6)
Depreciation and amortisation 15.5 16.2
Depreciation of right-of-use assets 1.0 0.9
Impairment of assets and provisions 6.5 0.3
Realised movements on biological assets - non-current (0.4) (1.4)
Financial assets fair value through profit
or loss - gain (0.1) -
Loss/(profit) on disposal of non-current assets 0.1 (0.5)
Profit on disposal - non recurring items (14.4) -
Profit on disposal of financial assets (0.2) (0.2)
Movement in provisions 10.8 (9.0)
Decrease/(increase) in working capital 6.3 (5.1)
Difference between employee benefit obligations
funding contributions and cost charged (4.7) 3.3
----- -----
Cash generated from operations 19.3 21.2
----- -----
38 Changes in liabilities arising from financing activities
The table below details changes in the Group's liabilities
arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are those
for which cash flows were, or future cash flows will be, classified
in the Group's consolidated cash flow statement as cash flows from
financing activities.
Finance Finance
Bank loans Bank loans leases leases
Current Non-current Current Non-current Total
GBP'm GBP'm GBP'm GBP'm GBP'm
At 1 January 2019 0.6 3.3 - 0.1 4.0
On adoption of IFRS
16 - - 1.3 10.9 12.2
Exchange di erences - - - (0.1) (0.1)
New loans 0.3 3.3 - - 3.6
New finance leases - - 0.1 1.1 1.2
Loans repaid (0.6) - - - (0.6)
Lease payments - - (0.3) (0.1) (0.4)
Transfers 3.3 (3.3) 0.1 (0.1) -
---------- ----------- ------- ----------- -----
At 1 January 2020 3.6 3.3 1.2 11.8 19.9
Exchange di erences (0.3) (0.1) - (0.2) (0.6)
New loans 1.9 - - - 1.9
New finance leases - - 0.5 0.5 1.0
Loans repaid (0.9) (2.7) - - (3.6)
Lease payments - - (1.4) - (1.4)
Lease disposal - - - (0.9) (0.9)
Transfers (2.2) 2.2 0.9 (0.9) -
---------- ----------- ------- ----------- -----
At 31 December 2020 2.1 2.7 1.2 10.3 16.3
---------- ----------- ------- ----------- -----
The cash flows from bank loans, loans from related parties and
other borrowings make up the net amount of proceeds from borrowings
and repayments of borrowings in the cash flow statement.
Other changes include interest accruals and prepayments.
39 Acquisition of businesses
2019
GBP'm
Fair value of assets and liabilities
Property, plant and equipment 5.7
Right of use asset 3.7
Inventories 0.1
Trade and other receivables 0.1
Trade and other payables (0.3)
Employee benefit obligations (0.5)
Deferred tax liability (0.8)
-----
8.0
Identifiable intangible assets - Goodwill 1.4
-----
9.4
-----
Satisfied by:
Cash consideration and costs 9.4
-----
Net cash outflow arising on acquisitions
Cash consideration (9.4)
-----
The acquisitions in 2019 related to tea estates in India which
were purchased by our Indian subsidiaries for cash, funded in part
by local borrowings.
40 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but
not yet incurred is as follows:
2020 2019
GBP'm GBP'm
Group
Property, plant and equipment 0.8 3.4
----- -----
41 Contingencies
In Malawi the Revenue Authority (MRA) recently indicated that it
intended to collect VAT on sales made at auction and under private
treaty for export, in the period since 2017. Tea sales intended for
the export market were subject to an industry wide agreement with
the MRA and the Reserve Bank of Malawi reached at the time the
auction was established, resulting in these deemed exports being
zero rated for VAT. The MRA has raised an assessment for VAT
against Eastern Produce Malawi in connection with this which has
been appealed in light of the historic agreement and
long-established custom and practice of the industry. Following
discussions between the Malawi government, the MRA and the entire
tea industry, the MRA has undertaken to investigate the sales
process for export teas and to consider the implications of this on
the VAT treatment of these deemed export sales. Pending conclusion
of the review, the MRA has given permission for the auction to
continue with teas deemed as export zero rated for VAT and the
assessment raised against Eastern Produce Malawi has been
suspended. Eastern Produce Malawi's estimated contingent liability
for VAT on these deemed export sales, excluding any penalties and
interest, is approximately GBP7.8 million.
In India, assessments have been received for excise duties of
GBP3.5 million, sales and entry tax of GBP0.9 million and of GBP1.1
million for income tax matters. These are being contested on the
basis that they are without technical merit.
In India, a long running dispute between our local subsidiaries
and the Government of West Bengal over the payment of a land tax,
locally called, "Salami", remains unresolved. Lawyers acting for
the Group have advised that payment of Salami does not apply,
accordingly no provisions have been made. The sum in dispute,
excluding fines and penalties, amounts to GBP1.2 million.
The Group operates in certain countries where its operations are
potentially subject to a number of legal claims. When required,
appropriate provisions are made for the expected cost of such
claims.
42 Financial instruments
Capital risk management
The Group manages its capital to ensure that it will be able to
continue as a going concern, while maximising the return to
stakeholders through the optimisation of its debt and equity
balance. The capital structure of the Group consists of debt, which
includes the borrowings and lease liabilities disclosed in notes 31
and 32, cash and cash equivalents and equity attributable to equity
holders of the parent, comprising issued capital, reserves and
retained earnings.
The Board reviews the capital structure, with an objective to
ensure that debt as a percentage of tangible net assets does not
exceed 50 per cent..
The ratio at the year end is as follows:
2020 2019
GBP'm GBP'm
Borrowings 8.4 8.9
Lease liabilities 11.5 13.0
Debt 19.9 21.9
Tangible net assets 370.0 385.4
Ratio 5.38% 5.68%
Debt is defined as long and short-term borrowings and lease
liabilities as detailed in notes 31 and 32.
Tangible net assets includes all capital and reserves of the
Group attributable to equity holders of the parent less intangible
assets.
Debt as a percentage of tangible net assets has increased with
the introduction of IFRS 16 Leases and recognition of previously o
balance sheet operating leases.
Financial instruments by category
At 31 December 2020
Loans and Financial
receivables assets Total
GBP'm GBP'm GBP'm
Group
Assets as per Balance Sheet
Financial assets at fair value through
other comprehensive income - 42.6 42.6
Financial asset at fair value through
profit or loss - 5.3 5.3
Financial assets at amortised cost
- non-current - 2.7 2.7
Trade and other receivables excluding
prepayments 39.2 - 39.2
Cash and cash equivalents 98.5 - 98.5
137.7 50.6 188.3
Other financial
liabilities
at
amortised
cost Total
GBP'm GBP'm
Group
Liabilities as per Balance Sheet
Borrowings 8.4 8.4
Leases liabilities 11.5 11.5
Trade and other payables 50.9 50.9
70.8 70.8
Company
Trade and other payables 0.8 0.8
At 31 December 2019
Loans and Available
receivables for sale Total
GBP'm GBP'm GBP'm
Group
Assets as per Balance Sheet
Financial assets at fair value through
other comprehensive
income - 37.8 37.8
Financial asset at fair value through
profit or loss - 6.2 6.2
Financial assets at amortised cost
- non-current - 3.0 3.0
Trade and other receivables excluding
prepayments 38.7 - 38.7
Cash and cash equivalents (excluding
bank overdrafts) 91.4 - 91.4
130.1 47.0 177.1
Other financial
liabilities
at
amortised
cost Total
GBP'm GBP'm
Group
Liabilities as per Balance Sheet
Borrowings 8.9 8.9
Leases liabilities 13.0 13.0
Trade and other payables 48.6 48.6
70.5 70.5
Company
Trade and other payables 0.6 0.6
Fair value estimation
The table below analyses financial instruments carried at fair
value, by valuation method. The di erent levels have been defined
as follows:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (Level 1).
-- Inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is,
derived from prices) (Level 2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs)
(Level 3).
The following table presents the Group's financial assets and
liabilities that are measured at fair value. See note 19 for
disclosures of biological assets that are measured at fair
value.
At 31 December 2020
Level 1 Level 2 Level 3 Total
GBP'm GBP'm GBP'm GBP'm
Assets
Financial assets at fair value
through
other comprehensive income 42.6 - - 42.6
Financial asset at fair value
through profit or loss 5.3 - - 5.3
Financial assets at amortised
cost 2.7 - - 2.7
50.6 - - 50.6
At 31 December 2019
Level 1 Level 2 Level 3 Total
GBP'm GBP'm GBP'm GBP'm
Assets
Available-for sale financial
assets:
- Equity securities 37.8 - - 37.8
Debt investments: 6.2 - - 6.2
- Debentures 3.0 - - 3.0
47.0 - - 47.0
Financial risk management objectives
The Group finances its operations by a mixture of retained
profits, bank borrowings, long-term loans and leases. The objective
is to maintain a balance between continuity of funding and
flexibility through the use of borrowings with a range of
maturities. To achieve this, the maturity profile of borrowings and
facilities are regularly reviewed. The Group also seeks to maintain
su cient undrawn committed borrowing facilities to provide
flexibility in the management of the Group's liquidity.
Given the nature and diversity of the Group's operations, the
Board does not believe a highly complex use of financial
instruments would be of significant benefit to the Group. However,
where appropriate, the Board does authorise the use of certain
financial instruments to mitigate financial risks that face the
Group, where it is e ective to do so.
Various financial instruments arise directly from the Group's
operations, for example cash and cash equivalents, trade
receivables and trade payables. In addition, the Group uses
financial instruments for two main reasons, namely:
-- To finance its operations (to mitigate liquidity risk);
-- To manage currency risks arising from its operations and
arising from its sources of finance (to mitigate foreign
exchange risk).
The Group did not, in accordance with Group policy, trade in
financial instruments throughout the period under review.
(A) Market risk
(i) Foreign exchange risk
The Group has a significant exposure to the US Dollar
arising from a number of our operations having a significant
trading exposure to the Dollar and as a consequence the
Group holds significant US Dollar funds and Dollar denominated
investments. If the exchange rate of the Dollar to Sterling
were to move by 5 per cent, the Group's carrying value
would increase/decrease by GBP2.0 million (2019: GBP1.6
million). In addition, the Group has significant Japanese
and Swiss financial assets, if the exchange rates of
the Japanese Yen and Swiss Franc to Sterling were to
move by 5 per cent, the Group's carrying value would
increase/decrease by GBP1.0 million (2019: GBP0.9 million)
and GBP0.6 million (2019: GBP0.6 million) respectively.
Currency risks are primarily managed through the use
of natural hedging and regularly reviewing when cash
should be exchanged into either sterling or another functional
currency.
(ii) Price risk
The Group is exposed to equity securities price risk
because of investments held by the Group and classified
on the consolidated balance sheet as financial assets.
To manage its price risk arising from investments in
equity securities, the Group diversifies its portfolio.
The majority of the Group's equity investments are publicly
traded and are quoted on stock exchanges located in Bermuda,
India, Japan, Switzerland, UK and US. Should these equity
indexes increase or decrease by 5 per cent. with all
other variables held constant and all the Group's equity
instruments move accordingly, the Group's carrying value
would increase/decrease by GBP2.1 million (2019: GBP1.9
million).
The Group's exposure to commodity price risk is not significant.
(iii) Cash flow and interest rate risk
The Group's interest rate risk arises from interest-bearing
assets and short and long-term borrowings. Borrowings
issued at variable rates expose the Group to cash flow
interest rate risk.
At 31 December 2020, if interest rates on non-sterling
denominated interest-bearing assets and borrowings had
been 50 basis points higher/lower with all other variables
held constant, post-tax profit for the year would have
been GBP0.3 million (2019: GBP0.3 million) higher/lower.
The interest rate exposure of the Group's interest bearing
assets and liabilities by currency, at
31 December was:
Assets Liabilities
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Sterling 21.7 22.2 8.9 13.3
US Dollar 35.0 24.6 - -
Euro 5.3 0.4 - -
Kenyan Shilling 11.9 16.9 0.2 0.3
Indian Rupee 4.9 4.2 8.0 7.0
Malawian Kwacha 0.1 0.1 1.6 -
Bangladesh Taka 14.1 15.0 1.2 1.2
South African Rand 1.2 2.2 - 0.1
Brazilian Real 1.9 1.3 - -
Bermudian Dollar 1.4 3.4 - -
Tanzanian Shilling 1.0 1.1 - -
98.5 91.4 19.9 21.9
(B) Credit risk
The Group has policies in place to limit its exposure to credit
risk. Credit risk arises from cash and cash equivalents, deposits
with banks and financial institutions, as well as credit exposures
to customers, including outstanding receivables and committed
transactions. If customers are independently rated, these ratings
are used. Otherwise if there is no independent rating, management
assesses the credit quality of the customer taking into account its
financial position, past experience and other factors and if
appropriate holding liens over stock and receiving payments in
advance of services or goods as required. Management monitors the
utilisation of credit limits regularly.
The Group has a large number of trade receivables, the largest
five receivables at the year end comprise 22 per cent. (2019: 22
per cent.) of total trade receivables.
(C) Liquidity risk
Ultimate responsibility for liquidity risk management rests with
the board of Directors. The Group manages liquidity risk by
maintaining adequate reserves and banking facilities by
continuously monitoring forecast and actual cash flows and managing
the maturity profiles of financial assets and liabilities.
At 31 December 2020, the Group had undrawn committed facilities
of GBP23.7 million (2019: GBP24.1 million), all of which are due to
be reviewed within one year.
The table below analyses the Group's financial assets and
liabilities which will be settled on a net basis into relevant
maturity groupings based on the remaining period at the balance
sheet date to the contractual maturity date. The amounts disclosed
are the contractual undiscounted cash flows.
Less than Between Between Over
1 1 2 5
and 2 and 5
year years years years Undated Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
At 31 December 2020
Assets
Financial assets
at fair
value through other
comprehensive income - - - - 42.6 42.6
Financial asset
at fair value
through profit
or loss 5.3 - - - - 5.3
Financial assets
at amortised
cost - 1.4 1.3 - - 2.7
Trade and other
receivables
excluding prepayments 36.8 2.4 - - - 39.2
Cash and cash equivalents 98.5 - - - - 98.5
140.6 3.8 1.3 - 42.6 188.3
Liabilities
Borrowings 5.7 0.4 1.2 1.1 - 8.4
Lease liabilities 1.2 1.1 2.3 6.9 - 11.5
Trade and other
payables
excluding taxation 49.8 - - - - 49.8
56.7 1.5 3.5 8.0 - 69.7
At 31 December 2019
Assets
Financial assets
at fair
value through other
comprehensive income - - - - 37.8 37.8
Financial asset
at fair value
through profit
or loss 6.2 - - - - 6.2
Financial assets
at amortised
cost - - 3.0 - - 3.0
Trade and other
receivables
excluding prepayments 35.9 2.8 - - - 38.7
Cash and cash equivalents 91.4 - - - - 91.4
133.5 2.8 3.0 - 37.8 177.1
Liabilities
Borrowings 5.6 0.4 1.3 1.6 - 8.9
Lease liabilities 1.2 1.2 2.1 8.5 - 13.0
Trade and other
payables
excluding taxation 47.7 - - - - 47.7
54.5 1.6 3.4 10.1 - 69.6
Included in borrowings due in less than 1 year is GBP3.6 million
(2019: GBP2.0 million) repayable on demand.
43 Subsidiary and associated undertakings
Subsidiary undertakings
The subsidiary undertakings of the Group at 31 December 2020,
which are wholly owned and incorporated in Great Britain by
ordinary share capital unless otherwise stated, were:
Principal
country
of Registered
operation O ce
Agriculture
Amgoorie India Limited (Incorporated in India
- 99.8 per cent. holding) India (ii)
Amo Tea Company Limited Bangladesh (i)
C.C. Lawrie Comércio e Participacões
Ltda. (Incorporated in Brazil) Brazil (vi)
Chittagong Warehouse Limited (Incorporated
in Bangladesh -
93.3 per cent. holding) Bangladesh (vii)
Duncan Brothers Limited (Incorporated in Bangladesh) Bangladesh (vii)
Eastern Produce Cape (Pty) Limited (Incorporated
in South Africa) South Africa (viii)
Eastern Produce Estates South Africa (Pty)
Limited (Incorporated in
South Africa - held by Eastern Produce South
Africa (Pty) Limited) South Africa (ix)
Eastern Produce Kenya Limited (Incorporated
in Kenya -
70.0 per cent. holding) Kenya (x)
Eastern Produce Malawi Limited (Incorporated
in Malawi -
73.2 per cent. holding) Malawi (xii)
Eastern Produce Regional Services Limited (Incorporated
in Kenya) Kenya (x)
Eastern Produce South Africa (Pty) Limited
(Incorporated in
South Africa - 73.2 per cent. holding) South Africa (ix)
Eastland Camellia Limited (Incorporated in
Bangladesh -
93.8 per cent. holding) Bangladesh (vii)
EP(T) East Africa Limited (Incorporated in
Tanzania) Tanzania (xviii)
Goodricke Group Limited (Incorporated in India
- 74.0 per cent. holding) India (iii)
Goodricke Tech Limited (Incorporated in India
- 99.8 per cent. holding) India (iii)
Horizon Farms (An United States of America
general partnership -
80 per cent. holding) USA (xiii)
Kakuzi Plc (Incorporated in Kenya - 50.7 per
cent. holding) Kenya (xi)
Koomber Tea Company Limited (Incorporated in
India) India (iv)
Octavius Steel & Company of Bangladesh Limited
(Incorporated in Bangladesh) Bangladesh (vii)
Robertson Bois Dickson Anderson Limited UK (i)
Stewart Holl (India) Limited (Incorporated
in India - 92.0 per cent. holding) India (v)
Surmah Valley Tea Company Limited Bangladesh (i)
The Allynugger Tea Company Limited Bangladesh (i)
The Chandpore Tea Company Limited Bangladesh (i)
The Lungla (Sylhet) Tea Company Limited Bangladesh (i)
The Mazdehee Tea Company Limited Bangladesh (i)
Victoria Investments Limited (Incorporated
in Malawi -
73.2 per cent. holding) Malawi (xii)
Zetmac (Pty) Limited (Incorporated in South
Africa - 55.8 per cent.
held by Eastern Produce Estates South Africa
(Pty) Limited) South Africa (ix)
Engineering
Abbey Metal Finishing Company Limited UK (i)
AJT Engineering Limited UK (xiv)
Atfin GmbH (Incorporated in Germany - 51.0
per cent. holding) Germany (xv)
Black Gold Oil Tools Limited UK (xiv)
Food Service
Associated Cold Stores & Transport Limited UK (i)
Duncan Products Limited (Incorporated in Bangladesh) Bangladesh (vii)
Jing Tea Limited (82.5 per cent. holding) UK (i)
Investment Holding
Associated Fisheries (Europe) Limited UK (i)
Assam Dooars Investments Limited UK (i)
Associated Fisheries Limited UK (i)
Borbam Limited (Incorporated in India - 99.8
per cent. holding) India (iii)
Bordure Limited UK (i)
Duncan Properties Limited (Incorporated in
Bangladesh) Bangladesh (vii)
Eastern Produce Investments Limited UK (i)
Elgin Investments Limited (Incorporated in
India - 99.8 per cent. holding) India (iii)
Endogram Limited India (iii)
EP USA Inc. (Incorporated in the United States
of America) USA (xiii)
EP California Inc. (Incorporated in the United
States of America) USA (xiii)
John Ingham & Sons Limited UK (i)
Koomber Properties Limited (Incorporated in
India - 94.0 per cent. holding) India (iii)
Lawrie (Bermuda) Limited (Incorporated in Bermuda) Bermuda (xvii)
Lawrie Group Plc (Owned directly by the Company) UK (i)
Lawrie International Limited (Incorporated
in Bermuda) Bermuda (xvii)
Lebong Investments Limited (Incorporated in
India - 94.0 per cent. holding) India (iii)
Linton Park Plc (Owned directly by the Company) UK (i)
Lintak Investments Limited (Incorporated in
Kenya) Kenya (x)
Longbourne Holdings Limited UK (i)
Plantation House Investments Limited
(Incorporated in Malawi - 50.2 per cent. held
by subsidiaries) Malawi (xii)
Unochrome Industries Limited UK (i)
Western Dooars Investments Limited UK (i)
Other
Hobart Place Limited (formerly Duncan Lawrie
Limited) (in liquidation) UK (i)
Hobart Place Holdings Limited (formerly Duncan
Lawrie Holdings Limited)
(in liquidation) UK (i)
Hobart Place Nominees Limited UK (i)
Linton Park Services Limited UK (i)
Dormant companies
ACS&T Gloucester Limited UK (i)
ACS&T Grimsby Limited UK (i)
ACS&T Humberside Limited UK (i)
ACS&T Seamer Limited UK (i)
ACS&T Tewkesbury Limited UK (i)
ACS&T Wolverhampton Limited UK (i)
AKD Engineering Limited UK (i)
Alex Lawrie & Company Limited UK (i)
Amgoorie Investments Limited UK (i)
Assam-Dooars Holdings Limited UK (i)
Associated Fisheries (Scotland) Limited UK (xiv)
Banbury Tea Warehouses Limited UK (i)
Blantyre & East Africa Limited UK (xiv)
Blantyre Insurance & General Agencies Limited
(Incorporated in Malawi -
Eastern Produce Malawi Limited) Malawi (xii)
Bonathaba Farms (Pty) Limited (Incorporated
in South Africa) South Africa (viii)
British African Tea Estates (Holdings) Limited UK (i)
British African Tea Estates Limited UK (i)
British Heat Treatments Limited (in liquidation) UK (i)
British Indian Tea Company Limited UK (i)
British United Trawlers Limited UK (i)
BTS Chemicals Limited (in liquidation) UK (i)
BUT Engineers (Fleetwood) Limited UK (i)
BUT Engineers (Grimsby) Limited UK (i)
Camellia Investments Limited UK (i)
Chisambo Holdings Limited UK (i)
Chisambo Tea Estate Limited UK (i)
Cholo Holdings Limited UK (i)
Craighead Investments Limited UK (i)
David Field Limited UK (i)
East African Tea Plantations Limited (Incorporated
in Kenya -
held by Eastern Produce Kenya Limited) Kenya (x)
Eastern Produce Africa Limited UK (i)
Eastern Produce Kakuzi Services Limited (Incorporated
in Kenya -
held by Kakuzi Limited) Kenya (x)
EP (RBDA) Limited (Incorporated in Malawi -
Eastern Produce Malawi Limited) Malawi (xii)
Estate Services Limited (Incorporated in Kenya
- held by Kakuzi Limited) Kenya (xi)
Feltham One Limited (in liquidation) UK (i)
Feltham Two Limited (in liquidation) UK (i)
Fescol Limited (in liquidation) UK (i)
G. F. Sleight & Sons Limited UK (i)
Goodricke Lawrie Consultants Limited UK (i)
Gotha Tea Estates Limited UK (i)
Granton Transport Limited UK (xiv)
Hamstead Village Investments Limited UK (i)
Hellyer Bros Limited UK (i)
Horace Hickling & Co. Limited UK (i)
Hudson Brothers Trawlers Limited UK (i)
Humber Commercials Limited UK (i)
Humber - St. Andrew's Engineering Company Limited UK (i)
Isa Bheel Tea Company Limited UK (i)
Jatel Plc UK (i)
Jetinga Holdings Limited UK (i)
Jetinga Valley Tea Company Limited UK (i)
Kaguru EPZ Limited (Incorporated in Kenya -
held by Kakuzi Limited) Kenya (xi)
Kapsumbeiwa Factory Company Limited UK (i)
Kip Koimet Limited (Incorporated in Kenya -
held by Eastern Produce
Kenya Limited) Kenya (x)
Kumadzi Tea Estates Limited UK (i)
Lankapara Tea Company Limited UK (i)
Lawrie Bhutan Limited (in liquidation) UK (i)
Lawrie Plantation Services Limited UK (i)
Leasing Investments Limited (in liquidation) UK (i)
Nasonia Tea Company Limited (Incorporated in
Malawi) Malawi (xii)
North West Profiles Limited (in liquidation) UK (i)
Octavius Steel & Company (London) Limited UK (i)
Robert Hudson Holdings Limited (in liquidation) UK (i)
Rosehaugh (Africa) Limited UK (i)
Ruo Estates Limited UK (i)
Ruo Estates Holdings Limited UK (i)
Sandbach Export Limited UK (i)
Sapekoe Pusela (Pty) Limited (Incorporated
in South Africa - held by
Eastern Produce South Africa (Pty) Limited) South Africa (ix)
Silverthorne-Gillott Limited UK (i)
S.I.S. Securities Limited UK (i)
Sterling Industrial Securities Limited UK (i)
Stewart Holl Investments Limited UK (i)
The Amgoorie Tea Estates Limited UK (i)
The Bagracote Tea Company, Limited UK (i)
The Ceylon Upcountry Tea Estates Limited UK (i)
Dejoo Tea Company Limited UK (i)
The Dhoolie Tea Company Limited UK (i)
The Doolahat Tea Company Limited UK (i)
The Eastern Produce and Estates Company Limited UK (i)
The Endogram Tea Company Limited UK (i)
Jhanzie Tea Association Ltd UK (i)
The Harmutty Tea Company Limited UK (i)
The Kapsumbeiwa Tea Company Limited UK (i)
Longai Valley Tea Company Limited UK (i)
The Tyspane Tea Company Limited UK (i)
Thyolo Highlands Tea Estates Limited UK (i)
Vaghamon (Travancore) Tea Company Limited UK (i)
Walter Duncan & Goodricke Limited UK (i)
WDG Properties Limited UK (i)
Western Dooars Tea Holdings Limited UK (i)
Summarised financial information on subsidiaries with material
non-controlling interests
Summarised balance sheet
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited
as at 31 December as at 31 December
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Current
Assets 19.9 24.4 11.7 12.9
Liabilities (14.6) (13.6) (10.2) (8.9)
Total current net assets 5.3 10.8 1.5 4.0
Non-current
Assets 28.5 27.8 33.8 38.6
Liabilities (5.3) (6.5) (10.0) (11.6)
Total non-current net assets 23.2 21.3 23.8 27.0
Net assets 28.5 32.1 25.3 31.0
Summarised balance sheet
Eastern Produce Goodricke Group
South Africa Limited Limited
as at 31 December as at 31 December
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Current
Assets 3.2 6.1 36.2 33.0
Liabilities (3.7) (3.7) (24.2) (22.5)
Total current net (liabilities)/assets (0.5) 2.4 12.0 10.5
Non-current
Assets 8.8 9.1 36.0 38.3
Liabilities (1.2) (2.0) (11.1) (12.0)
Total non-current net assets 7.6 7.1 24.9 26.3
Net assets 7.1 9.5 36.9 36.8
Horizon Farms Kakuzi Plc
as at 31 December as at 31 December
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Current
Assets 8.3 5.3 19.4 19.3
Liabilities (6.8) (0.2) (2.5) (1.8)
Total current net assets 1.5 5.1 16.9 17.5
Non-current
Assets - 7.1 26.8 28.8
Liabilities - (1.7) (7.0) (7.5)
Total non-current net assets - 5.4 19.8 21.3
Net assets 1.5 10.5 36.7 38.8
Summarised income statement
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited
for year for year
ended 31 December ended 31 December
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Revenue 39.4 34.1 23.1 25.6
Profit/(loss) before tax 4.7 11.1 (3.7) 2.0
Taxation (1.1) (3.3) 1.1 (0.5)
Other comprehensive expense (3.1) (0.7) (2.0) (1.6)
Total comprehensive income/(expense) 0.5 7.1 (4.6) (0.1)
Total comprehensive income/(expense)
allocated to non-controlling
interests 0.2 2.1 (1.2) -
Dividends paid to non-controlling
interests 1.2 2.1 0.3 1.1
Eastern Produce Goodricke Group
South Africa Limited Limited
for year for year
ended 31 December ended 31 December
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Revenue 3.8 5.6 90.6 90.5
(Loss)/profit before tax (2.2) 1.9 2.7 2.6
Taxation 0.6 (0.5) (0.5) (0.2)
Other comprehensive expense (0.2) - (2.1) (2.6)
Total comprehensive (expense)/income (1.8) 1.4 0.1 (0.2)
Total comprehensive (expense)/income
allocated to non-controlling
interests (0.7) 0.4 - -
Dividends paid to non-controlling
interests - - - 0.2
Summarised income statement
Horizon Farms Kakuzi Plc
for year ended for year ended
31 December 31 December
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Revenue 7.9 4.8 25.3 21.2
Profit before tax 18.9 1.8 5.3 7.8
Taxation (5.3) (1.1) (1.4) (2.3)
Other comprehensive (expense)/income 0.2 (0.3) (4.0) (1.2)
Total comprehensive income/(expense) 13.8 0.4 (0.1) 4.3
Total comprehensive income/(expense)
allocated to non-controlling
interests 2.8 0.1 (0.1) 2.1
Dividends paid to non-controlling
interests 4.6 0.3 1.0 0.7
Summarised cash flows
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited
for year ended for year ended
31 December 31 December
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Cash flows from operating activities
Cash generated from operations 6.6 2.0 1.1 6.4
Net interest received/(paid) 0.7 1.2 (0.1) 0.1
Income tax paid (0.8) (1.2) (1.0) (1.9)
Net cash generated from operating
activities 6.5 2.0 - 4.6
Net cash used in investing
activities (5.3) (1.4) (0.3) (1.5)
Net cash used in financing
activities (4.1) (7.1) (1.1) (4.2)
Net decrease in cash and cash
equivalents and bank overdrafts (2.9) (6.5) (1.4) (1.1)
Cash, cash equivalents and
bank overdrafts
at beginning of year 15.7 22.8 0.1 1.2
Exchange (losses)/gains on
cash and cash
equivalents (0.5) (0.6) 0.1 -
Cash, cash equivalents and
bank overdrafts
at end of year 12.3 15.7 (1.2) 0.1
Summarised cashflows
Eastern Produce Goodricke Group
South Africa Limited Limited
for year ended for year ended
31 December 31 December
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Cash flows from operating activities
Cash generated from operations (0.2) 3.2 2.4 9.1
Net interest received (0.1) (0.1) - -
Income tax paid - - (0.7) (0.5)
Net cash (used in)/generated
from operating
activities (0.3) 3.1 1.7 8.6
Net cash used in investing
activities (0.7) (2.8) (2.0) (6.1)
Net cash generated from/(used
in) financing
activities - - 0.7 (0.8)
Net (decrease)/increase in
cash and cash
equivalents and bank overdrafts (1.0) 0.3 0.4 1.7
Cash, cash equivalents and
bank overdrafts
at beginning of year 2.8 2.5 0.1 (1.5)
Exchange (losses)/gains on
cash and cash
equivalents (0.4) - - (0.1)
Cash, cash equivalents and
bank overdrafts
at end of year 1.4 2.8 0.5 0.1
Kakuzi Plc
Horizon Farms
for year for year ended
ended 31 December 31 December
2020 2019 2020 2019
GBP'm GBP'm GBP'm GBP'm
Cash flows from operating
activities
Cash generated from operations 3.1 3.1 8.9 9.3
Net interest received - - 0.6 0.9
Income tax paid - (0.5) (1.5) (0.5)
Net cash generated from operating
activities 3.1 2.6 8.0 9.7
Net cash generated from/(used
in) investing
activities 24.2 (0.2) (6.7) (6.7)
Net cash used in financing
activities (22.8) (1.4) (2.0) (1.4)
Net increase/(decrease) in
cash and cash
equivalents and bank overdrafts 4.5 1.0 (0.7) 1.6
Cash, cash equivalents and bank overdrafts
at beginning of year 2.8 2.1 12.6 11.6
Exchange losses on cash and
cash equivalents (0.3) (0.3) (0.7) (0.6)
Cash, cash equivalents and
bank overdrafts
at end of year 7.0 2.8 11.2 12.6
Associated undertakings
The principal associated undertakings of the Group at 31 December
2020 were:
Group
interest
Principal Accounting in equity
country
of Registered date capital
operation O ce 2020 per cent.
Insurance and banking
BF&M Limited (Incorporated
in Bermuda -
common stock) Bermuda (xvi) 31 December 37.6
United Finance Limited
(Incorporated in Bangladesh
-
ordinary shares) Bangladesh (vii) 31 December 38.4
United Insurance Company Limited
(Incorporated in Bangladesh
-
ordinary shares) Bangladesh (vii) 31 December 37.0
Registered O ces:
(i) Linton Park (viii) Slangrivier Road (xv) Robert-Drosten-Platz
Linton Slangrivier Plaas 1
Maidstone Wellington D-82380
Kent 7655 Peissenberg
ME17 4AB South Africa Germany
England
(ii) Amgoorie Tea Garden (ix) 7 Windsor Street (xvi) 112 Pitts Bay
PO: Amguri Tzaneen Road
Haloating - 785 850 Pembroke
681 Limpopo Province Bermuda
Dist: Sibsagar South Africa HM08
Assam
India
(iii) Camellia House (x) New Rehema House (xvii) Clarendon House
14 Gurusaday Road Rhapta Road 2 Church Street
Kolkata - 700019 Westlands Hamilton
West Bengal P O Box 45560 Bermuda
India GPO 00100 HM11
Nairobi
Kenya
(iv) Koomber Tea Garden (xi) Main O ce (xviii) 3rd Floor
PO: Kumbhir Punda Milia Road 180 Msasani Bay
Cachar - 788 108 Makuyu Msasani
Assam P O Box 24 Dar es salaam
India 01000 Thika Tanzania
Kenya
(v) Sessa Tea Garden (xii) PO Box 53
PO: Dibrugarh - Mulanje
786001 Malawi
Dist: Dibrugarh
Assam
India
(vi) Fazenda Maruque (xiii) 1368 W Herndon
s/n Ave
sala 03 #103
Bairro Maruque Fresno
Itaberá California 93711
São Paulo USA
Brazil
(vii) Camellia House (xiv) Craigshaw Crescent
22 Kazi Nazrul West Tullos
Islam Aberdeen
Avenue AB12 3TB
Dhaka 1000 Scotland
Bangladesh
44 Control of Camellia Plc
Camellia Holding AG continues to hold 1,427,000 ordinary shares
of Camellia Plc (representing 51.67 per cent. of the total voting
rights). Camellia Holding AG is owned by The Camellia Private Trust
Company Limited, a private trust company incorporated under the
laws of Bermuda as trustee of The Camellia Foundation ("the
Foundation"). The Foundation is a Bermudian trust, the income of
which is utilised for charitable, educational and humanitarian
causes at the discretion of the trustees.
The activities of Camellia Plc and its group (the "Camellia
Group") are conducted independently of the Foundation and other
than Simon Turner, who is a director of The Camellia Private Trust
Company and is the president of the board of the trustee of 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.
45 Related party transactions
Group
During the year the Group received rental income from the
Foundation of GBP36,000 (2019: GBP36,000).
During the year the Group paid contributions to the overseas
pension and post-employment benefit schemes of GBP3,101,125 (2019:
GBP1,984,029).
Company
The Company receives financial and secretarial services from
Linton Park Plc, a directly owned subsidiary undertaking. The
amount payable for these services for 2020 was GBP466,659 (2019:
GBP447,121). At 31 December 2020 GBP8,351,312 (2019: GBP5,943,853)
is owed to Linton Park Plc and is unsecured, interest free and has
no fixed terms of repayment
Amounts due to Lawrie Group Plc, a directly owned subsidiary
undertaking of GBP7,556,941 (2019: GBP10,876,941) include an
unsecured loan note of GBP4,191,777 (2019: GBP4,191,777). The
company received interest of GBP167,671 (2019: GBP167,671) on this
unsecured loan note. The remaining balance is unsecured, interest
free and has no fixed terms of repayment.
Balances receivable and payable from/to other Group companies at
31 December 2020 amounted to GBP2,223,733 (2019: GBPnil) and
GBP193,187 (2019: GBP193,187) respectively and are unsecured,
interest free and have no fixed terms of repayment.
46 Subsequent events
There were no adjusting post balance sheet events.
REPORT OF THE INDEPENT AUDITORS
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF CAMELLIA PLC
Report on the audit of the financial statements
1. Opinion
In our opinion the financial statements of Camellia Plc (the
'parent company') and its subsidiaries (the 'Group'):
-- give a true and fair view of the state of the Group's and
of the parent company's affairs as at 31 Dec 2020 and of
the Group's loss for the year then ended;
-- the Group financial statements have been properly prepared
in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006;
and
-- the parent company financial statements have been prepared
in accordance with the requirements of the Companies Act
2006.
We have audited the financial statements which comprise:
-- the consolidated income statement;
-- the consolidated statement of comprehensive income;
-- the consolidated and parent company balance sheets;
-- the consolidated and parent company statements of changes
in equity;
-- the consolidated cash flow statement; and
-- the related notes 1 to 46.
The financial reporting framework that has been applied in their
preparation is applicable law and international accounting
standards in conformity with the requirements of the Companies Act
2006.
2. Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
auditor's responsibilities for the audit of the financial
statements section of our report.
We are independent of the Group and the parent company in
accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the
Financial Reporting Council's (the 'FRC's') Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters The key audit matters that we identified in the
current year were:
* Revenue recognition;
* Fair value of biological assets under IAS 41
'Agriculture';
* Impairment of intangibles, factories and bearer
plants;
* Provisions for tax, legal matters and employee
benefits.
Within this report, key audit matters are identified
as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality The materiality that we used for the group financial
statements was GBP0.9m, which was determined on
the basis of revenue.
Scoping We consider the principal business units to reflect
the components of the Group as this is how management
monitor and control the business. Our scope covered
39 components of the Group. Of these, 29 were subjected
to a full-scope audit whilst the 10 remaining were
subject to specific procedures on certain account
balances
Our scoping provides coverage of 99% of the Group's
revenue, 95% of the Group's profit before tax and
95% of the Group's net assets from full scope audit
and specified audit procedures.
Significant changes Materiality: In the current year, we have changed
in our approach the basis for materiality. We have moved from a
profit before tax measure to revenue. Our rationale
for this is that revenue has remained more stable
than adjusted profit before tax and is more representative
of the size of the business.
Component Scoping: The following components of
the scope have come into scope this year to perform
full scope procedures and specific procedures on
certain account balances:
* Eastern Produce South Africa (Pty) Limited
* C.C. Lawrie Comércio e Participacões Ltda
* Eastern Produce Cape (Pty) Limited
* EP(T) East Africa Limited
* Horizon Farms
Key audit matters:
* Our Key audit matter in relation to impairment of
assets was updated to include intangible assets and
was specifically focussed to key assumptions involved
in the assessment of impairment in relation to (i)
brand value relating to Jing Tea Limited and (ii)
goodwill on the acquisition of tea estates in India
by Goodricke Group Limited and Amgoorie India
Limited.
* Considering the current impact of Coronavirus
pandemic (COVID) on the Group and the headroom in
management's going concern assessment, we no longer
consider going concern to be a key audit matter.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the Directors' assessment of the Group's and
parent company's ability to continue to adopt the going concern
basis of accounting included:
-- Assessing the latest cash flow forecasts of the Group to
determine whether these are consistent with the forecasts
used during the impairment review; and assess the Directors'
going concern assessment;
-- Assessing copies of any existing and new facilities and
assessing the Group's cash forecasts against available facilities
and the required repayment profiles of debt and interest;
-- Assessing the facilities and their availability and compliance
with covenants;
-- Evaluating each of the sensitivities adopted by management
and assessing downside scenarios of cash headroom over the
forecast period by performing our own sensitivity analyses
to gain adequate assurance regarding the solvency of the
Group over the going concern review period. Our sensitivities
included consideration of the impact of COVID lockdowns;
-- Assessing the reasonability of the assumptions that management
have used in their cash forecasts; and
-- Assessing the appropriateness of the financial statement
disclosures in relation to going concern.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group's and parent company's ability to continue as a going concern
for a period of at least twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
5.1. Revenue Recognition
Key audit matter The Group's agricultural operations involve a wide
description range of customer delivery models, including auction
and retail sales. Given the complexity of the Group's
operations and the terms of business with buyers,
there is a risk of inappropriate cut-off of revenue
recognition around the balance sheet date.
The Group's agricultural revenue is included within
Sale of Goods of GBP247.2 million (2019: GBP242.9
million) disclosed in note 2 to the financial statements.
Further information regarding the agricultural revenue
recognition policy is in the principal accounting
policies disclosed in the financial statements.
How the scope We have performed the following procedures in order
of our audit to address the key audit matter:
responded to * We gained an understanding of the key processes and
the key audit controls used to record revenue transactions.
matter
* We assessed commercial arrangements to determine the
correct point of revenue recognition of different
type of shipments.
* We performed detailed cut-off testing of revenue
transactions during the period either side of the
balance sheet date with reference to the relevant
terms of business, dispatch or delivery documentation
as appropriate.
* We examined material journal entries that were posted
to revenue accounts and obtained supporting evidence
to test the appropriateness of revenue recognition.
Key observations From the work performed, we are satisfied that revenue
is appropriately recognised in the correct accounting
period.
5.2. Fair Value of biological assets under IAS 41 'Agriculture'
Key audit matter The Group holds GBP7.1 million (2019: GBP9.1 million)
description of biological assets as current assets. As required
by IAS 41 'Agriculture', management estimates the
fair value of these assets through the use of valuation
models and recent transaction prices.
Significant judgement is required for key assumptions
for each model, including the life-span of the plantings,
yields, selling prices, costs and discount rates.
The valuation is sensitive to some of the underlying
assumptions.
Biological assets are disclosed in note 19 to the
financial statements, the valuation is discussed
as a key source of estimation uncertainty and the
valuation policy is disclosed in the principal accounting
policies.
How the scope We have performed the following procedures in order
of our audit to address the key audit matter:
responded to * We gained an understanding of key processes and
the key audit controls around the valuation of biological assets.
matter
* We made enquiries of management to understand the
rationale applied in the determination of key
assumptions and any changes in the year;
* We assessed the appropriateness of the logic and
mechanical accuracy of the valuation models prepared
and the valuation methodology applied
* For the fair value models,
* we assessed the inputs by assessing the historical
accuracy of management's forecasts and comparing to
third-party and market data (where appropriate);
* assessed the completeness and accuracy of disclosures
made within the financial statements in accordance
with IAS 41.
Key observations From the work performed, we are satisfied that the
key assumptions applied in respect of the valuation
of biological assets and the associated disclosures
are appropriate.
5.3. Impairment of intangibles, factories and bearer plants
Key audit matter The Group holds GBP6.6 million (2019: GBP10.3 million)
description of Intangibles and GBP198.3 million (2019: GBP222.5
million) of property, plant and equipment (PP&E),
which includes factories and bearer plants.
For components in the Agriculture segment, management
identified each estate as a cash generating unit
(CGUs), which includes the associated factories
and bearer plants and performed an annual review
for indicators of impairment. The process for measuring
and recognising impairment under IAS 36: 'Impairment
of Assets' is complex and requires significant judgement,
including consideration of indicators such as underutilisation,
adverse weather conditions and land use rights.
The uncertainties inherent within the current economic
environment caused by the Coronavirus pandemic have
been included within management's consideration
of qualitative and qualitative impairment indicators.
The risk in relation to intangibles is specifically
focussed to (i) brand value relating to Jing Tea
Limited where the operations were unable to trade
for a significant period as a result of the COVID
pandemic and (ii) goodwill on the acquisition of
tea estates in India by Goodricke Group Limited
and Amgoorie India Limited.
There is a risk that these cash generating units
(CGUs) or groups of CGUs may not achieve the anticipated
business performance to support their carrying value,
or that the estimated fair value of the CGUs may
not support their carrying value. This could lead
to an impairment charge that has not been recognised
by management.
Intangible assets are disclosed in note 15 PP&E
is disclosed in note 16 to the financial statements,
the valuation is discussed as sources of estimation
uncertainty, and the valuation policy is disclosed
in the principal accounting policies.
How the scope We have performed the following procedures in order
of our audit to address the risk:
responded to * We gained an understanding of key processes and
the key audit controls around the identification of impairment
matter indicators for intangibles, factories and bearer
plants.
* We challenged management's assessment as to whether
indicators of impairment exist for factories and
bearer plants through our consideration of operating
losses incurred, disease or crop damage, long term
commodity price reductions, underutilised plant or
warehousing, loss of key customers, long term failure
of water or power supply, variation in rights to land
use, and significant changes in tax or foreign
exchange rates.
* For the CGUs where there were indicators of
impairment identified, we performed detailed testing
to further assess and corroborate the key inputs to
the valuations, which were utilised to determine the
recoverable amount of the CGUs (which includes
goodwill, intangibles and other allocated assets).
Our challenge focused on:
* obtaining an understanding of controls used in the
preparation of the model;
* assessing the appropriateness of the CGUs identified
against IAS 36 Impairment of Assets through
challenging management;
* assessing and challenging the appropriateness of the
discount rate used by independently benchmarking the
discount rate against the wider peer group;
* assessing the appropriateness of cash flow
projections relative to previous performance, current
order book and general economic outlook for
respective business sectors.
* analysing the historical accuracy of budgets to
actual results to determine whether forecast cash
flows are reliable based on past experience.
* testing the mechanical accuracy and integrity of the
models, performing our own sensitivity analyses, and
working with our internal valuation specialists to
assist in the assessment of the appropriateness of
the discount rates.
* where recoverable value has been determined based on
fair value of the assets, considering the evidence
available as to whether the recoverable amount
represents an appropriate estimate of a market
participant's valuation of the CGU by challenging the
valuation reports issued by external valuers by
comparing them with similar market transactions in
past. We also held discussions with the valuers to
challenge the methods used for determining fair
value.
* For Jing Tea, understanding and evaluating the
economic recovery assumptions, comparing the
forecasted sales to actual experience, contract wins
and churn rates and the GBP3.5 million impairment
recognised in the period.
* We also assessed the appropriateness of the Group's
disclosures including the need to disclose further
sensitivities for CGUs where a reasonably possible
change in a key assumption would cause an impairment.
Key observations From the work performed, we concur with management's
assessment of impairments recorded during the year.
5.4. Provision for tax, legal matters and employee benefits
Key audit matter Given the various jurisdictions in which the Group
description operates, as described in the principal risks and
uncertainties on page 24 and 25, there is a risk
relating to uncertainties in relation to the interpretation
of complex tax legislation, or arising from changes
in local regulation or law including those related
to employee benefits.
Judgement is also applied in estimating amounts
payable to legal regulatory or tax authorities in
certain jurisdictions and relating to human rights
issues. This gives rise to a risk over the accuracy
and disclosure of provisions and contingent liabilities.
There is also a risk that management may influence
these significant estimates and judgements in order
to meet market expectations.
At 31 December 2020, the Group has provided GBP8.2
million (2019: GBPNil) in respect of the settled
legal claims in the UK relating to allegations against
its East African operations, namely Kakuzi in Kenya
and EPM in Malawi.
In addition, in certain overseas jurisdictions,
interpreting and complying with taxation laws and
regulations are complex. There is inherent judgment
associated both with assessing and quantifying probable
outcomes in relation to ongoing tax claims and with
determining any exposure (and the need for provision)
in areas where legal requirements are open to interpretation.
In addition, possible outcomes need to be considered
for disclosure as contingent liabilities. Unexpected
adverse outcomes could materially impact the Group's
financial performance and position. A contingent
liability of GBP6.7 million in respect of India
and GBP7.8 million in Malawi has been disclosed
as relating to tax claims at 31 December 2020 (2019:
GBP7.1 million in respect of India).
Impact of litigation concerning the East African
operations within the Operational Report disclosed
on page 6 and Contingent liabilities are disclosed
in note 41 to the financial statements, their quantification
is discussed as sources of estimation uncertainty,
and the accounting policy for provisions is disclosed
in the principal accounting policies.
How the scope We have performed the following procedures in order
of our audit to address the risk:
responded to * We gained an understanding of key processes and
the key audit controls around identification of tax, legal and
matter employee benefits matters across the key components
of the Group.
* We obtained and assessed management's year end
listing, tracking all litigations and reconciled this
to the provisions recorded in order to check for
completeness of provisions and contingent
liabilities.
* We challenged the appropriateness of the Group's
assumptions and estimates in relation to provisions
and contingent liabilities, industry practice and the
period to which any provision amounts relate.
* We sent confirmations to the Group's legal counsel in
the key jurisdictions as at 31 December 2020. We also
spoke to legal counsel on selected key issues.
* We also assessed the Group's correspondence with
regulatory and tax authorities and understood
management's interpretation and application of
relevant laws and regulations.
* With respect to litigation concerning the East
African operations, in addition to the above
procedures, we have obtained documentary evidence of
the settlement agreements to test the completeness
off the total settlement cost and related accruals
for ongoing commitments.
* We also assessed the appropriateness of disclosures
in the financial statements.
Key observations From the evidence obtained, we were satisfied with
(i) the adequacy of the Group's provisions made
at 31 December 2020 for the risks identified in
the context of the Group financial statements taken
as a whole and (ii) the appropriateness of the contingent
liability disclosures given the status, materiality
and likely outcome of and exposures in areas where
employee, legal and taxation requirements are open
to interpretation.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our
audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Group financial statements Parent company financial statements
Materiality GBP0.9 million (2019: GBP1.1 million) GBP0.3 million (2019: GBP0.4 million)
Basis for determining materiality 0.4% of Revenue (2019: 5% of adjusted 2% of net assets, capped at 35% of group
profit before tax as disclosed in note materiality (2019: 2% of net assets,
4.) capped at 35%
of group materiality)
Rationale for the benchmark applied We have changed our basis for We have used net assets measure given
materiality for the current year, that the parent company is a holding
moving from a profit before company, generating
tax measure to a revenue measure by no revenue
taking into account the previous two
years and the current
year forecasted revenue. Despite the
fall in profit before tax, we note that
the overall size
of the business, demonstrated by
revenue, has remained broadly
consistent with the prior year
therefore the change in basis for
materiality was deemed appropriate.
Revenue is deemed an
important benchmark for users to
determine growth and performance of the
Group.
6.2. Performance materiality
We set performance materiality at a level lower than materiality
to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the financial
statements as a whole.
Group financial statements Parent company financial statements
Performance materiality 70% (2019: 70%) of group materiality 70% (2019: 70%) of parent company
materiality
Basis and rationale for determining In determining performance materiality, we have considered the following
performance materiality factors:
* There have been no changes to the business in their
operation or financial reporting process.
* The Group has a history of correcting most of the
identified misstatements and the remaining
uncorrected misstatements are historically below
performance materiality.
* The quality of the control environment, including
impact of COVID, hence the decreased likelihood of
significant misstatements occurring.
6.3 Error reporting threshold
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of GBP45,000 (2019:
GBP52,500), as well as differences below that threshold that, in
our view, warranted reporting on qualitative grounds. We also
report to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the financial
statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our group audit was scoped by obtaining an understanding of the
Group and its environment, including group-wide controls, and
assessing the risks of material misstatement at the group level.
The Group undertakes agricultural operations in countries across
Africa, North and South America, and Asia, with its principal crops
grown in Bangladesh, India, Kenya and Malawi. The Group's
engineering and food service operations are located in Europe,
principally in the UK. Our Group audit was scoped by obtaining an
understanding of the Group and its environment, including
Group-wide controls, and assessing the risks of material
misstatement at the Group level. Of the Group's 55 principal
components, 29 were subject to a full audit and 10 were subject to
specified audit procedures where the extent of our testing was
based on our assessment of the risks of material misstatement and
of the materiality of the Group's operations at those
locations.
Our audit work on components in addition to the parent entity
was executed to lower levels of materiality of GBP0.32 million
(35%) of group materiality (2019: GBP0.4 million (35%)). The parent
company is located in the UK and audited directly by the group
audit team. At the parent entity level we tested the consolidation
process and carried out analytical procedures to confirm our
conclusion that there were no significant risks of material
misstatement of the aggregated financial information of the
remaining components not subject to audit or audit of specified
account balances.
These 39 components represent the principal business units and
account for 99% of the Group's revenue and 95% of the Group's
profit (based on absolute numbers) and 95% of the Group's net
assets. The remaining components were subject to analytical review
procedures by the group audit team.
7.2. Our consideration of the control environment
Our risk assessment procedures include obtaining an
understanding of relevant controls to the audit.
Consistent with previous years, we have obtained an
understanding of relevant controls on the following areas:
-- Financial reporting process;
-- Legal and regulatory reviews; and
-- Impairment of intangibles.
This covered some of the key accounting and reporting tools that
are used by management and the interface between various
systems.
7.3. Working with other auditors
Throughout the audit, we ensured that we held frequent
discussions with our component teams. In September 2020, we held a
group-wide planning meeting, in which we set out the materiality
and scoping for component teams, as well as considering significant
risks across the Group. We also held planning meetings with each of
our specialists, involving our component teams where relevant.
During our interim and year-end audit, we held regular catch-up
meetings with components to monitor progress and highlight any
issues arising.
The Senior Statutory Auditor participated in all of the final
close meetings of the Group's significant components. The Senior
Statutory Auditor or another senior members of the group audit team
carried out a review of the component auditor files.
Our oversight of component auditors focused on the planning of
their audit work and key judgements made. In particular, our
supervision and direction focused on the work performed in relation
to key audit matters by component teams including revenue
recognition,fair value of biological assets, impairment of
intangibles, factories and bearer plants, provisions for tax, legal
and employee benefits and going concern assessments.
As part of our monitoring of component auditors, we have also
attended key audit close meetings remotely through video calls.
8. Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The Directors are responsible for the
other information contained within the annual report.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in
doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be
materially misstated.
If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we
are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of Directors
As explained more fully in the Directors' responsibilities
statement, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group's and the parent company's
ability to continue as a going concern, disclosing as applicable,
matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the
Group or the parent company or to cease operations, or have no
realistic alternative but to do so.
10. Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC's website at:
www.frc.org.uk/auditorsresponsibilities . This description forms
part of our auditor's report.
11. Extent to which the audit was considered capable of
detecting irregularities, including fraud.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below.
11.1 Identifying and assessing potential risks related to
irregularities
In identifying and assessing risks of material misstatement in
respect of irregularities, including fraud and non-compliance with
laws and regulations, we considered the following:
-- the nature of the industry and sector, control environment
and business performance including the design of the Group's
remuneration policies, key drivers for Directors' remuneration,
bonus levels and performance targets;
-- results of our enquiries of management and the Audit Committee
about their own identification and assessment of the risks
of irregularities;
-- any matters we identified having obtained and reviewed the
Group's documentation of their policies and procedures relating
to: - identifying, evaluating and complying with laws and
regulations and whether they were aware of any instances
of noncompliance; - detecting and responding to the risks
of fraud and whether they have knowledge of any actual,
suspected or alleged fraud; and - the internal controls
established to mitigate risks of fraud or non-compliance
with laws and regulations; and
-- the matters discussed among the audit engagement team including
significant component audit teams and relevant internal
specialists, including tax, valuations, IT and pensions
specialists regarding how and where fraud might occur in
the financial statements and any potential indicators of
fraud.
As a result of these procedures, we considered the opportunities
and incentives that may exist within the organisation for fraud and
identified the greatest potential for fraud in the following areas:
revenue recognition and impairment of intangibles, factories and
bearer plants. In common with all audits under ISAs (UK), we are
also required to perform specific procedures to respond to the risk
of management override. We also obtained an understanding of the
legal and regulatory framework that the Group operates in, focusing
on provisions of those laws and regulations that had a direct
effect on the determination of material amounts and disclosures in
the financial statements. The key laws and regulations we
considered in this context included the UK Companies Act, pensions
and tax legislation.
In addition, we considered provisions of other laws and
regulations that do not have a direct effect on the financial
statements but compliance with which may be fundamental to the
Group's ability to operate or to avoid a material penalty. Those
that are fundamental to the operations of the Group included the
Bribery Act, employee laws, carbon reduction regulations, and
health, safety and environment matters.
11.2 Audit response to risks identified
As a result of performing the above, we identified revenue
recognition, impairment of intangibles, factories and bearer plants
as key audit matters related to the potential risk of fraud. The
key audit matters section of our report explains the matters in
more detail and also describes the specific procedures we performed
in response to those key audit matters. In addition to the above,
our procedures to respond to risks identified included the
following:
-- reviewing the financial statement disclosures and testing
to supporting documentation to assess compliance with provisions
of relevant laws and regulations described as having a direct
effect on the financial statements;
-- enquiring of management, the Audit Committee and in-house
legal counsel concerning actual and potential litigation
and claims;
-- performing analytical procedures to identify any unusual
or unexpected relationships that may indicate risks of material
misstatement due to fraud;
-- reading minutes of meetings of those charged with governance;
and
-- in addressing the risk of fraud through management override
of controls, testing the appropriateness of journal entries
and other adjustments; assessing whether the judgements
made in making accounting estimates are indicative of a
potential bias; and evaluating the business rationale of
any significant transactions that are unusual or outside
the normal course of business.
We also communicated relevant identified laws and regulations
and potential fraud risks to all engagement team members including
internal specialists and significant component audit teams, and
remained alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
12. Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the Strategic report and the Directors'
report for the financial year for which the financial statements
are prepared is consistent with the financial statements;
and
-- the Strategic report and the Directors' report have been
prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and
the parent company and their environment obtained in the course of
the audit, we have not identified any material misstatements in the
Strategic report or the Directors' report.
13. Matters on which we are required to report by exception
13.1. Adequacy of explanations received and accounting
records
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 parent
company, or returns adequate for our audit have not been
received from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns.
We have nothing to report in respect of these matters.
13.2. Directors' remuneration
Under the Companies Act 2006 we are also required to report if
in our opinion certain disclosures of Directors' remuneration have
not been made.
We have nothing to report in respect of this matter.
14. Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Makhan Chahal ACA (Senior Statutory Auditor)
Deloitte LLP
Statutory Auditor
London, United Kingdom
3 May 2021
FIVE YEAR RECORD
2020 2019 2018 2017 2016
GBP'm GBP'm GBP'm GBP'm GBP'm
Restated
Revenue-continuing
operations 291.2 291.5 309.8 298.3 257.9
Profit before tax 7.8 22.3 52.5 27.6 26.5
Taxation (8.6) (7.2) (20.0) (12.2) (12.4)
(Loss)/profit from
continuing operations (0.8) 15.1 32.5 15.4 14.1
(Loss)/profit from
discontinued operation - - (0.2) 14.8 (20.0)
(Loss)/profit attributable
to owners
of the parent (5.0) 8.3 25.2 23.8 (10.7)
Equity dividends paid 2.8 4.0 3.8 3.6 3.6
Equity
Called up share capital 0.3 0.3 0.3 0.3 0.3
Reserves 376.3 395.4 395.2 368.1 330.5
Total shareholders'
funds 376.6 395.7 395.5 368.4 330.8
(Loss)/earnings per (181.0) (387.4)
share p 300.5 p 912.4 p 861.7 p p
(Loss)/earnings per
share
(181.0)
- continuing operations p 300.5 p 919.6 p 325.9 p 336.7 p
Dividend paid per share 102 p 144 p 138 p 132 p 130 p
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END
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