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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