REG - Camellia PLC - Final Results
31/05/2022 07:00
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RNS Number : 3100N Camellia PLC 31 May 2022
CAMELLIA PLC
Final results for the year ended 31 December 2021
2021 Highlights
§ Adjusted profits before tax were significantly lower in 2021 than in 2020:
- Overall, the Group's average tea selling price was higher in 2021 but
avocado volumes and prices were significantly down
- Profits from macadamia and our arable farm in Brazil were higher
- Profits were significantly affected by strategic changes to the
Agriculture portfolio:
Bardsley England, a significant apple producer, was purchased at the end of
July 2021. Significant steps are being taken to restructure and cut costs so
that the business can reach its full profit potential and also allow Camellia
to reduce its high corporation tax rate. In the comparative period, Horizon
Farms in California, which generated £4.5 million profit in 2020 but was
subject to severe climate risk, was sold.
- Profits from Instant tea, branded tea and tea rooms improved despite the
continuing impact of Covid lockdowns on demand for our Jing branded teas
§ Net cash of £46.5 million and an investment portfolio with a market value of
£35.8 million at 30 April 2022
Strategic developments
§ Continued investment to expand agriculture via diversification of crop and
location, including the purchase of Bardsley England
§ Sale of non-core loss making businesses: Abbey Metal Finishing, Atfin and BMT
§ Sale underway of other non-core assets: sale of residential property and items
from the collections generated net proceeds of £3.8 million so far in 2022
and a gain on sale of £1.4 million. These will be reflected in the 2022
results.
Outlook
§ The Board recommends a final dividend of 102p per share increasing the total
dividend for the year to 146p, reflecting its confidence in the outlook for
the Group
§ Outlook for 2022 is positive overall with both revenues and profits expected
to be ahead of 2021 as previously reported
Malcolm Perkins, Chairman, stated:
"Camellia withstood a range of challenges in 2021, several of which were
unprecedented. The combination of these and the long-term decision in 2020
to exit Horizon Farms in climate challenged California, and the purchase of
Bardsley England in the UK in 2021 meant that Group profit was significantly
impacted. That said, the resilience and commitment of our people has enabled
us to continue to focus on our strategy of expansion in areas of expertise
while divesting non-core businesses.
2022 has started well with good prices being achieved in the Kenya tea market
and a strong opening for India and Bangladesh, albeit early in the season.
The remaining crops are developing in line with our expectations for the stage
of the growing cycle with volumes ahead of those of 2021. The impact of
substantial rises in energy prices and in fertiliser costs is being felt
across all our agriculture operations and we expect rising inflation to also
lead to further increases in wages. Overall however, we expect higher
profits in the year ahead."
Financial highlights
Year ended Year ended
31 December 2021 31 December 2020
£'m £'m
Revenue 277.2 291.2
Adjusted profit before tax* 8.8 16.0
Separately disclosed significant items (1.7) ( ) (8.2)
Profit before tax 7.1 7.8
Profit/(loss) after tax for the year 4.5 (0.8)
Earnings/(loss) per share 83.3 p (181.0) p
Total dividend for the year 146 p 144 p
* Profit before tax excluding separately disclosed significant items, details
of which can be found in note 1 and note 4 to the Accounts later in this
announcement
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
Malcolm Perkins, Chairman
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
We are an international Group - a global family of companies focussed on
agriculture across the world. Headquartered in the UK we are passionate about
our produce, our communities and sustainable agriculture worldwide.
We grow healthy life-enhancing products for a world hungry for ethically
produced natural food.
Our purpose
We are committed to doing the right thing: ethically and commercially,
globally and locally.
We invest for the long-term:
§ Delivering performance for investors - but not at the expense of
sustainability long-term
§ Treating our customers and suppliers fairly
§ Acting as a custodian of our agricultural resources
§ Being a responsible and forward-thinking employer
§ Behaving as a good citizen in the countries in which we operate
Sustainability
Our businesses can and should grow with respect and care for the environment
and the communities in which we operate rather than at a cost to them. We
invest in innovative technology and cutting-edge agricultural practices to
ensure that these environments and communities are protected and enhanced.
Innovation
Research into, and development of, agricultural techniques and technology
allows us to continually improve efficiency and sustainability within our
operations. Innovation is not only a driving force for improved profitability
but also a powerful tool to reduce our environmental impact and benefit our
communities.
Long-termism
We see ourselves as custodians, holding our business in trust for future
generations. We have a responsibility to ensure the growth and continuity of
all our businesses.
Economic contribution
Each of our operations plays a significant role in its local economy,
infrastructure and community. Our contribution includes employee wages and
benefits, smallholder crop procurement, training in agronomic practices,
contracting local service providers, capital investment, taxes, community
projects and exports.
Our business is made up as follows:
Agriculture
2021: Revenue - £238.8 million, adjusted trading profit* £13.1 million,
trading profit £13.2 million
Mature Immature
Area Area
Tea Locations Ha Ha
Production & Manufacturing India, Bangladesh, Kenya, Malawi 34,097 2,485
Instant Tea, Branded Tea & India, UK
Tea Rooms
Nuts & fruits
Macadamia Kenya, Malawi, South Africa 2,906 786
Avocado Kenya, Tanzania 623 377
Apple, Pear, Blueberry, Plum,
Cherry, Apricot, Grapes UK, Kenya, South Africa 798 103
Other agriculture
Forestry Kenya, Malawi, Brazil 1,981 2,685
Arable Brazil 3,888 -
Rubber Bangladesh 1,822 153
Livestock Kenya 4,332 head
Other investments
Food Service and Engineering
2021: Revenue - £37.3 million, adjusted trading loss* £2.3 million, trading
loss £2.3 million
Locations
AJT Engineering UK
ACS&T UK
Market value
at 31/12/2021
Investments Locations £'m
Investment Portfolio Global 40.2
Investment Property UK, Malawi, Brazil 34.4
Collections UK, India 8.7 **
Associates
2021: Share of results after taxation - £7.2 million
Market value
at 31/12/2021
Locations Holding % £'m
BF&M (Life & Non-life insurance) Bermuda 37.4 57.7
United Finance (Banking) Bangladesh 38.4 13.0
United Insurance
(Non-life insurance) Bangladesh 37.0 9.3
* Figures quoted above are extracted from note 1 to the Accounts
** Collections are stated at cost
DIRECTORS AND ADVISERS
Directors Malcolm Perkins Chairman (iii) (iv)
Tom Franks Chief Executive
Graham Mclean Director of Agriculture
Susan Walker Chief Financial Officer
Stephen Buckland* Non-executive Director (i)
Gautam Dalal Independent non-executive Director (i)
William Gibson Senior independent non-executive Director** (i) (ii) (iii) (iv)
Simon Turner Non-executive Director (ii) (iii)
Frédéric Vuilleumier Independent non-executive Director
Chris Relleen*** Senior independent non-executive Director
Jonathan Bond**** Independent non-executive Director (iv)
Rachel English***** Independent non-executive Director
(i) Audit committee
(ii) Remuneration committee
(iii) Nomination committee
(iv) Safeguarding and Stewardship committee
*From 1 November 2021
**From 11 August 2021
***Until 5 August 2021
****Until 3 June 2021
*****From 6 May 2022
Group General Counsel Amarpal Takk (iv)
& Company Secretary
Registered office Linton Park
Linton
Maidstone
Kent ME17 4AB
Registered Number 00029559
Nominated adviser and Panmure Gordon (UK) Limited
broker One New Change
London EC4M 9AF
Registrars Link Group
10th 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
CHAIRMAN'S STATEMENT
2021 has been another challenging year for all our staff and the communities
in which we operate as they have continued to work through the pandemic and
the on-going impact it has had on operations globally. We have seen inspiring
collaboration with local governments and communities as they have pulled
together to deal with the consequences of the pandemic.
The results for 2021 reflect a profit before tax of £7.1 million after a
number of one off items with an aggregate net costs of £1.7 million (2020:
profit before tax of £7.8 million after one off net costs of £8.2
million). Profits were also impacted by the important long-term strategic
changes made in the last two financial years to the Agriculture portfolio.
Strategy
Despite the unprecedented challenges, the resilience and commitment of our
people has enabled us to continue to focus on our strategy of expansion in
areas of expertise, while divesting non-core businesses. We noted in our 2021
Interim Report that the Board was undertaking a series of measures aimed at
re-balancing the Group's portfolio of investments in order to take better
advantage of its strengths, and thereby improve profitability and share price
performance. Significant steps have been taken to diversify our interests in
agriculture where we have scale and expertise, and sell those businesses where
we have fewer long-term strategic advantages.
Further details are provided in the Operational report.
Dividend
Reflecting confidence in the Group's long-term future, the Board is
recommending a final dividend in respect of the year ended 31 December 2021 of
102p per share increasing the total dividend for the year to 146p per share.
Outlook
With significant uptake of vaccines, there are signs of the world returning to
normality, but we do not believe that normal trading conditions will emerge
until 2023 at the earliest, and may be further delayed by the disastrous war
in Ukraine.
The substantial rise in energy prices will continue to affect our global
supply chain, with an increase in the cost of shipping affecting us and our
customers alike. Linked to the increasing price of natural gas, fertiliser
prices have increased substantially with the impact being felt in the cost of
production across all our agricultural operations. Furthermore, rising
inflation will to lead to further increases in wages.
On a more positive note, the year has started well for our agricultural
operations with good prices being achieved in the Kenya tea market and a
strong opening for India and Bangladesh, albeit it is very early in the
season. The remaining crops are developing in line with what we would expect
at this stage in the growing cycle.
Directors
We were deeply saddened by the passing of Chris Relleen, Senior independent
non-executive Director, in August 2021. We shall all remember Chris'
contribution to the Board and miss his wise counsel, humility and humour.
I am delighted to welcome our new non-executive Directors, Rachel English and
Stephen Buckland. Rachel English, a chartered accountant, has extensive
international and general management experience, having founded and served on
the board of several significant businesses. She has a particular focus on ESG
matters. Stephen Buckland is a trustee of The Sir Percival Griffiths' Tea
Planters Trust and also The Camellia Foundation, a UK charity whose primary
donor of the same name is the ultimate majority shareholder of Camellia Plc.
Stephen previously held positions within the Camellia Group's agricultural and
banking businesses.
As announced previously, Tom Franks, having substantially achieved the
objective of focusing the Group's investments into the core activities of
agriculture and food and beverage distribution, has indicated his
wish not to stand for re-election at the forthcoming Annual General Meeting in
June. I would like to thank Tom for his contribution to the business through a
challenging few years and we wish him well for the future. The Board is
initiating a search process to identify a new CEO.
In addition, and as previously announced, two of our independent non-executive
Directors, William Gibson and Gautam Dalal, have also indicated that they will
not be standing for re-election at the forthcoming Annual General Meeting. I
would like to thank both of them for their contributions to the business.
Further appointments of new non-executive Directors to the Board will be
announced in due course.
Staff
I am grateful to our staff around the world for their continued hard work and
dedication in challenging circumstances, and for the progress we have made
together.
Malcolm Perkins
Chairman
30 May 2022
OPERATIONAL REPORT
Overview
2021 was a challenging year, with the COVID pandemic continuing to impact
trading. Poor weather conditions in India and lower production in Kenya
resulted in lower bought leaf volumes which contributed to Group tea
production being slightly lower than in 2020. Avocado revenues significantly
reduced due to lower volumes and prices. These falls were in part offset by
revenues generated by Bardsley England, which was acquired during the year but
which saw volumes impacted by the late frost earlier in the season. Revenue
for 2020 included the results for Horizon Farm, which was sold during that
year. Profits were impacted by these important strategic changes to the
Agriculture portfolio.
Strategic matters
As previously announced, the Group continues to focus on its strategy to
expand the Agriculture division continuing the further diversification of crop
and location, and on disposing of non-core assets.
Acquisitions and divestments
At the end of July 2021 the Group acquired an 80% controlling stake in
Bardsley England with the remaining 20% stake purchased in November. The
Group's expertise in managing large scale bearer crops and its existing
relationships with Bardsley England's customer base and other major UK
retailers will provide synergies. The acquisition provides a larger Group
footprint in the UK, which will in time reduce our effective corporation tax
rate. The market for UK apples has good potential to grow significantly due to
increasing demand for local produce and a resulting reduction in apple
imports.
In line with the Group's strategy to focus on agriculture, the Group sold its
interests in Abbey Metal Finishing Company Limited in August 2021 and its
subsidiary Atfin GmbH in Germany in July 2021. In late December 2021, the BMT
division of AJT Engineering was sold to its management. Part of the Camellia
Collection was sold at auction in the early part of 2022 with further items
due to be sold later in the year.
Ukraine
We have all been deeply disturbed by the reports coming out of Ukraine, and I
am pleased to say that our Bardsley England operation in Kent has successfully
accommodated a number of refugees and provided employment.
The war is impacting the Group in a number of ways of which the following are
the most significant at this stage:
§ The price of energy has risen significantly since before the start of the war
and continues to rise. This is impacting directly on fuel and heating costs,
and indirectly on the costs of other inputs, such as fertiliser, which rely on
natural gas as a raw material.
§ Shipping routes and supply chains which were already chaotic following the
pandemic have been thrown into further disarray with both shipping times and
costs rising dramatically.
§ For the last few years Russia has been the world's third largest importer of
tea. Whilst there does not appear to have been any impact on tea prices at
this stage it remains early in the season for India and the impact that
sanctions will have on the market remains uncertain.
COVID
Whilst our businesses were able to keep trading throughout the pandemic, they
were all affected to some extent, whether through lockdowns and absences
interrupting operations, or market disruption. The Group's operations
continued to protect employees and communities, whilst taking account of a
wide variation in national and cultural responses to the pandemic. All our
operations have continued to work closely with local governments, communities
and the Group's clients in their response to the COVID pandemic.
Human Rights
As a consequence of the allegations faced by the Group in 2020/21 which have
now been finalised, we have further enhanced our Human Rights commitment
including greater governance, reporting and training and we have established
significant measures around employee and community welfare. Current
information on these measures can be found on the Camellia Plc website.
Brexit
Extensive preparations were undertaken ahead of Brexit to mitigate the impact
on our UK businesses in 2021 and although the supply to the EU of our Jing
branded tea was affected, we did not experience any material effect on our
trading operations as a whole.
Performance
Agriculture
In total, Agriculture made a trading profit of £13.2 million (2020: £nil) on
revenue of £238.8 million (2020: £249.6 million), as set out in note 1 to
the Accounts. The release of provisions for wage agreements offset by the
restructuring costs for Bardsley England amounted to a net gain of £0.1
million (2020: £nil). Our 2020 results were also impacted by a number of one
off items, the largest of which were costs of £16.1 million in respect of
legal and other costs associated with the allegations arising from the actions
of certain of our African operations.
Agriculture's adjusted trading profit* was £13.1 million (2020: £16.1
million).
Tea
Tea estate production Instant tea, branded
& manufacturing
tea & tea rooms
2021 2020 2021 2020
£'m £'m £'m £'m
Revenue 161.5 163.9 34.7 37.0
Adjusted trading profit/(loss)* 10.7 7.1 (0.5) (1.4)
Trading profit/(loss) 11.3 (5.5) (0.5) (1.4)
* See note 1 to the Accounts
Estate production & manufacturing
Group tea production in 2021 was 99.1mkg, marginally down on 2020 levels
(2020: 99.5mkg) due to lower bought leaf volumes in India. However, we
achieved record production in Bangladesh where the impact of our investment in
irrigation and replanting provided positive returns. Kenya and Malawi
experienced high crops, both nationally and at the Group's operations.
Mature Immature 2021 2020
area area Volume Volume
Ha Ha mkg mkg
India 16,400 1,125 26.1 26.1
Bangladesh 8,591 683 14.4 12.5
Kenya 3,891 267 14.9 15.8
Malawi 5,215 410 20.0 16.8
Total own estates 34,097 2,485 75.4 71.2
Bought leaf production 19.2 23.5
Managed client production 4.5 4.8
Total made tea production 99.1 99.5
Pricing and operations
Tea pricing for most operations was above that of last year, with our estates
being rewarded for concentrating their efforts on the production of high
quality teas. Total sales volumes were lower.
Shipping logistics have been a challenge throughout the year with many
delivery delays experienced by customers. With volatile trading conditions
persisting into 2022, shipping logistics will take some considerable time to
settle, particularly with the recent flooding impact at Durban Port in South
Africa in April 2022.
India
Our estate crop for 2021 was on par with last year. The impact of continued
poor and varied weather meant that our crop did not recover to 2019 levels.
Our net selling prices firmed significantly for both Dooars and Assam CTC teas
from demand in the internal packet tea market, up over 10% against the prior
year. Darjeeling prices were up on prior year by 11%, due to good quality and
improved first flush volumes. 2022 has seen the last of the limited tea stocks
left over from 2021 sold and the first auction of the new season opened in
March 2022 with strong pricing. The market has remained firm for the early
part of the new season and going forward pricing will be determined by
regional production volumes and demand.
The Assam Orthodox (rolled leaf tea) market, however, was down 3% on prior
year as it continued to be impacted by ongoing political and economic
volatility in Iran which subdued demand and kept prices relatively flat.
North India market pricing overall has remained strong due to limited supply
and is supported by 100% import tariffs. North India export volumes were down
c.9%, with prices in the export market remaining under pressure with reduced
sales of Orthodox tea.
State elections were held in Assam and West Bengal in March 2021, with no
change to the incumbent Governments in each State. Wage negotiations were
concluded in both States resulting in 22% and 15% increases in Assam and West
Bengal respectively.
Investment in replanting continued with 167Ha of planting completed (2020:
164Ha) and a further 120Ha uprooted in preparation for future planting.
Bangladesh
Despite a slow, dry start to the season, Bangladesh reported a record crop up
15% on the prior year. The impact of several years of investment in replanting
and irrigation contributed to our improved yields.
Our average net selling price remained strong through the season, up 20% on
prior year, with limited COVID restrictions allowing local demand to flourish
whilst being supported by very low volumes of imports.
National production achieved record levels at 12% up on prior year,
principally as a result of a 40% increase in bought leaf volumes. The
continued rapid escalation of the bought leaf sector volumes, if left
unchecked, presents challenges to the market with a risk that potential
oversupply results in downward pressure on pricing.
2022 has seen prices remain under pressure for prior season teas due to the
high volumes of inventory carried forward. The market for new season teas has
started firm and is expected to remain relatively stable as stocks are now
depleted and the new season production has yet to gain momentum. Pricing
thereafter will be driven by the level of production over the summer months.
Wage negotiations for 2021/2022 are ongoing between the Bangladesh Tea
Association and the Trade Unions and are due to be settled imminently.
Provisions have been made for expected increases relating to 2021.
Having reduced replanting in 2020 to concentrate on infilling young tea areas,
the total area planted in 2021 was increased to 143Ha (2020: 105Ha), of which
131Ha was replanting and 12Ha was newly planted areas.
Kenya
Our Kenyan estates produced their second highest ever crop in 2021, albeit
down 8% on the previous year. The national crop was also the second highest on
record.
As a part of many ongoing initiatives to address structural issues within the
tea industry in Kenya, the Government in July implemented a reserve pricing
mechanism for The Kenya Tea Development Agency ("KTDA") teas which make up
over c.66% of the national production. This intervention has had a positive
impact on prices for higher quality teas within the Kenyan market, including
those produced by the Group. The "all average price" at Mombasa auction was 3%
up on 2020, driven principally by improved quality teas. Export levels were
c.9% up on 2020 with strong demand from Pakistan, Egypt, Russia, UAE and
Sudan. Low retail pricing and increased competition from other beverages in
western markets continues to be a challenge for the industry.
Our average selling price in 2021 was up on prior year by 6%. We have
continued to outperform our commercial grower competitors in the district with
a price differential of 16%, by concentrating on quality. In 2022 our prices
continued to firm initially but then weakened towards the end of the first
quarter with predictions of a normal long rains season. In aggregate, our
average selling prices in the five months to the end of May 2022 were
significantly higher than the same period of 2021 though the benefit of this
has been partially offset by lower production volumes. Pricing levels looking
forward will depend on production volumes and the impact of the reserve
pricing policy for KTDA teas.
Wage rates increased by 7% for 2020 and 2021 and negotiations are ongoing for
2022 and 2023.
We replanted a total of 50Ha (2020: 47Ha) whilst uprooting 52Ha for replanting
in 2022.
Malawi
Our Malawi crop in 2021 was the second highest on record, up 15% on 2020, with
strong cropping throughout the year and good out of season rains at the
mid-year point.
Fertiliser prices in 2021 increased by 45%. The impact of this on the cost of
production was mitigated by careful management of usage.
Malawi prices remained under pressure for much of the year with teas from the
plainer West of Rift Kenyan's still proving a value substitute to buyers. Our
average selling price was 3% down on 2020 due to the lag effect of prices
responding to an improving Kenyan market. The auction was temporarily
suspended in the early part of 2021 due to the previously reported lack of
clarity around interpretation of VAT rules on local sales for export.
Global logistics issues, including a lack of containers and delayed shipping
times, has resulted in deliveries taking much longer to reach customers.
While selling prices in 2022 in Malawi have firmed, they are below those of
the same period of 2021. The market is expected to be volatile for a period
due to uncertainty relating to logistics and will also be influenced by the
general direction of the Kenya market. Our production volumes in Malawi for
the year so far are in line with that of last year.
A minimum wage was implemented for the tea industry in Malawi in January 2021.
Negotiations are ongoing with the union, with further increases expected from
August 2022.
On 26 May 2022, the Reserve Bank of Malawi announced that it will stop
supporting the currency and allow the exchange rate to reflect market
fundamentals. This is expected to result in a devaluation of the Kwacha of
c.25%.
There was no replanting in Malawi for a second successive year, a decision
taken to conserve resources in light of difficult trading conditions.
Instant tea, branded tea & tea rooms
India
Sales volumes of our packet tea in India fell by 14%, whilst net prices
increased by 11%. Despite increasing demand for tea, packet sales have come
under pressure due to fierce competition in the branded market. However, the
packet tea operation has continued to innovate with new product development
and the release of new product lines in Ready to Drink, fortified (health)
teas and premium tea bags.
Instant tea production in 2021 was up marginally on the previous year. Sales
volumes and average prices however were both down 10% due to lower demand from
a key customer, leading to a lower contribution from the operation.
Due to COVID lockdowns, our tea lounges and kiosks were closed periodically
during 2021. These outlets continue to be developed as part of the India
marketing and value addition strategy.
UK
Trading improved for Jing Tea as COVID restrictions were eased in many of its
markets, but revenue remained below pre-pandemic levels. Supplies into the EU
have also been impacted by Brexit with the business contracting for EU
warehousing space during the year to alleviate import complexities. Jing
launched its Ready to Drink Jasmine Pearls Sparkling Tea in 2021, which has
gained initial positive traction in the market.
Nuts & fruits
Macadamia Avocado Other fruits
2021 2020 2021 2020 2021 2020
£'m £'m £'m £'m £'m £'m
Revenue 10.8 13.0 11.1 16.8 9.3 8.7
Adjusted trading profit/(loss)* 2.7 1.0 (0.5) 3.9 (4.1) 2.9
Trading profit/(loss) 2.7 (0.1) (0.5) 1.9 (4.6) 2.9
* See note 1 to the Accounts
Macadamia
Mature Immature
Area Area 2021 2020
Ha Ha Tonnes Tonnes
Malawi 1,388 125 438 403
South Africa 751 396 375 196
Kenya 767 265 492 455
Total 2,906 786 1,305 1,054
The Group's production volumes increased 24% on 2020 due to improved weather
in South Africa, and an increased crop in Kenya with further areas of maturing
orchard coming into bearing and increasing maturity of existing orchards.
Overall, our average net selling price was down 16% on 2020, which was in part
due to the large volume of nuts of industrial grade from the Group's Malawian
operation. Sales volumes were up 60% on 2020. Profits benefitted from the
efficiencies generated by higher production and favourable sales mix.
Harvesting of the 2022 crop is underway and the indications are that volumes
will be ahead of 2021 levels.
Global production volumes were up on prior year with the two major producers,
Australia and South Africa up 10% and 11% respectively. Higher carryover
stocks from Australia and Kenya are anticipated in 2022 with downward pressure
on prices, particularly on grades for the ingredients market.
The Nut in Shell market in China was over supplied and prices declined
mid-year leading to surplus kernel supply, particularly for the ingredients
grades which further suppressed the market.
The global macadamia kernel market remains under pressure due to the ongoing
impact of COVID on certain market segments. In the USA, import levels were
similar to 2020 but remain approximately 30% below 2018/19 levels.
Avocado
Mature Immature
Area Area 2021 2020
Ha Ha mkg mkg
Kenya - Estate Hass 560 257 7.5 10.1
Kenya - Estate Pinkerton 63 70 1.0 0.8
Tanzania - Estate Hass - 50 - -
Total own estate production 623 377 8.5 10.9
Smallholder and outgrowers 0.6 1.1
Our own Avocado production was down 22% on last year, due in large part to the
biannual nature of the production and this also impacted the volumes packed
for smallholders and outgrowers. Our pricing was down 9% on last year, due to
high volumes in the market from Peru and Colombia during a critical sales
window. Unfortunately, due to the lower volumes the season could not be
extended to take advantage of improved pricing at the end of Q3.
The Pinkerton harvest is well advanced with volumes ahead of 2021, however we
expect prices to be lower. The Hass season has now started with volumes
expected to be significantly ahead of 2021 reflecting the fact that it is an
'on year' for Hass.
We continue to strengthen our avocado growth strategy by diversifying our
origin portfolio, with further plantings in Tanzania and Kenya. We planted
37Ha (2020: 13Ha) at our new farm in Tanzania and a further 44Ha (2020: 85Ha)
in Kenya. In 2022 to date 96Ha have been planted in Tanzania. At Beja farm in
South Africa 80Ha has been prepared to be planted in 2022, of which 38Ha has
already been planted.
Other fruits
Mature Immature
Area Area 2021 2020
Ha Ha Tonnes Tonnes
Apples - own estate 404 61 11,845 n/a
Apples - partner growers 1,428 n/a
Pears - own estate 96 2 1,395 n/a
Pears - partner growers 266 n/a
Cherries 20 - 106 n/a
Grapes 71 18 644 594
Blueberries 10 - 42 13
Other 197 22
Apples & Pears
Bardsley England was acquired at the end of July and we have taken significant
steps to improve costs and profitability including closing one of its two
packhouses and streamlining its administrative operations. The benefit of
these will be seen in 2022. The orchards were severely affected in April 2021
by frost resulting in a lower than expected level of apple production. Partner
grower crops were also similarly adversely affected.
The last of the 2021 season stock is being sold at prices in line with our
expectations. It is too early to predict the crop profile for 2022.
Grapes
Grape production at our South African operation was up 8% on 2020. The grapes
were high quality and were sold to local commercial-scale winemakers. The 2022
harvest in South Africa has resulted in a record production, well ahead of
expectation.
Blueberries
2021 was the second year of full production of our 10Ha trial in Kenya, with
production rising steadily, although it is still below where we would like it
to be. The majority of the crop was sold locally at good prices.
Indications from the trial are that the variety planted does not perform
optimally in Kenyan conditions and that other varieties will have to be
considered. There are already other varieties being trialled in small areas
and at least one of these is showing much greater potential than the current
dominant variety planted. The reason for establishing a trial was to test
plant establishment, agronomy practices and varieties and this is being
achieved very successfully, particularly on the initial two objectives. The
results indicate further work is required on optimal variety selection, which
will continue to be the focus going forward.
Other agriculture
2021: Revenue - £11.4 million (2020: £10.2 million), trading profit £4.8
million (2020: £2.2 million)
Mature Immature
Area Area 2021 2020
Ha Ha Tonnes Tonnes
Arable 3,888 - 34,769 34,979
Rubber 1,822 153 690 659
m(3) m(3)
Forestry 1,981 2,685 46,079 116,672
Livestock 799 Births 956 Births
Arable
Despite some challenging weather, we were overall very pleased with our soya,
maize and sorghum crop production results. Prices for our soya crop were 60%
higher than the prior year and our sorghum prices more than doubled,
reflecting global markets. This led to substantially increased profits for our
operation in Brazil.
Rubber
Production was up 5%, with pricing up 39% on last year, due to increased
demand from manufacturing sectors and also an increased price for
petroleum-based synthetic rubber products. However, prices remain lower than
the cost of production.
Forestry
Kakuzi's forestry volumes were on par with last year with the main focus on
fence post sales. The production of quality timber products are also being
investigated as a potential diversified and value-added product line.
Our Brazil operations had no eucalyptus timber sales during the year but
expects to restart these in 2022. Pine timber sales were more than double the
previous year and resin sales continued throughout the year, both providing a
useful contribution to profits.
Livestock
Births were down significantly on last year, however, revenues were up on last
year as COVID restrictions were eased.
Goat production was introduced at Kakuzi during the year. It is anticipated
that the herd will provide a diversified source of revenue to complement beef
sales.
Other investments
Engineering - AJT Engineering, Abbey Metal Finishing and Atfin
A trading loss of £2.3 million (2020: £1.5 million loss) on revenue of
£15.3 million (2020: £19.3 million) was recorded across this group of
companies, as set out in note 1 to the Accounts.
AJT Engineering has continued to experience lower activity from the oil and
gas sector, but its site services division has seen an increase in trading as
COVID related restrictions were lifted and access to client sites was
restored.
In line with our strategy, the Group sold its interests in Abbey Metal
Finishing Company Limited and its subsidiary Atfin GmbH in Germany during the
year.
AJT Engineering's BMT division was sold to its management in December 2021.
Food Service - ACS&T
ACS&T broke even in the year (2020: £0.5 million trading profit) on
revenue of £22.0 million (2020: £21.2 million).
ACS&T's trading was challenging as a result of the impact of the COVID
pandemic on the UK food service sector. The national LGV driver shortage in
the UK has also affected margins in its transport division, though volumes
have increased. 2022 has started much stronger following the lifting of COVID
restrictions.
Associates
2021 Share of results: 7.2 million
BF&M
BF&M made a substantial contribution to our performance in 2021 recording
net income up 19% at Bermudian $25.7 million (2020: Bermudian $21.6 million)
due to a 15% uplift in gross premiums written in the period compared to the
prior year. This was driven by increased property and group health premiums
and new business. Short term claims and adjustment expenses increased by 53%
to Bermudian $14.8 million while life and health policy benefits decreased by
24% to Bermudian $77.5 million.
United Finance and United Insurance
Our two associate companies in Bangladesh, United Insurance and United
Finance, produced lower results reflecting more challenging economic
conditions in Bangladesh due to the COVID pandemic.
The underwriting profit for United Insurance decreased due to a decrease in
gross premiums, higher claims and increased cost of reinsurance.
While United Finance's net operating income was 6% higher than that of the
prior year due to an increase in the number of new loans sanctioned and lower
borrowing costs, margins were impacted due to the effect of inflation on the
overhead base.
Investment portfolio
The total value of the portfolio at 31 December 2021 was £40.2 million (2020:
£50.6 million). During the year a net £12.4 million was realised from the
investment portfolio in part to fund the acquisition and refinancing of
Bardsley England.
Investment property
Work continues on the development of the Linton Park estate. The development
of two properties into three residential units started in May 2021 and these
are due for completion by mid-2022. Following refurbishment in 2020, a further
investment property in central London was let during the year.
Renovation work commenced at Wrotham Place during the year to convert it to
residential use.
In terms of the Group's London property portfolio, the decision was made
during the year to close the Group's offices at 1 Hobart Place. A residential
property in central London was sold in February 2022. Both these properties
were categorised as "held for sale" at 31 December 2021.
Collections
Part of the art and manuscript collection with a net book value of £2.7
million was classified as held for sale on the Group's balance sheet at the
end of 2021, and is scheduled for sale during 2022. To date, a portion of this
has been sold realising proceeds of £3.0 million and generating a gain on
sale of £1.0 million which will be reflected in our 2022 results.
Tom Franks
Chief Executive
30 May 2022
FINANCIAL REPORT
Overview of results
Revenue for the Group fell to £277.2 million from £291.2 million in 2020.
This reflected the 4% reduction in revenue in Agriculture to £238.8 million
(2020: £249.6 million) as a result of lower tea crops, reduced packet tea
sales volumes at improved prices in India, and reduced production volumes and
prices of avocado, offset in part by the revenues of Bardsley England acquired
part way through the year. 2020 revenue also reflected the results of Horizon
Farms which was sold during that year. Revenue at ACS&T improved in the
year despite the challenges presented by COVID lockdowns. Revenue from
Engineering was down reflecting the sales of Abbey Metal Finishing and Atfin.
Adjusted profit before tax was £8.8 million (2020: £16.0 million). Adjusted
profit before tax is before net costs of £1.7 million relating to a number of
large separately disclosed items, further details of which are set out in note
4 to the Accounts and below. (2020: separately disclosed net loss of £8.2
million also relating to a number of large separately disclosed items).
Profit before tax in 2021 was £7.1 million (2020: £7.8 million). This
decrease in profit before tax reflects, inter alia, the effect of the lower
profits from avocado and the impact of the Bardsley England acquisition offset
in part by improved profits from tea and at BF&M. The 2020 results
included profits for Horizon Farms of £4.5 million which was sold during 2020
due to concerns about the severe climate risks in California. In addition 2021
profit before tax reflects a number of separately disclosed items:
§ Restructuring costs at Bardsley England of £0.5 million
§ Costs of acquisition of Bardsley England of £1.2 million
§ A gain resulting from wage provision releases following wage agreements
reached in the year of £0.6 million
§ Impairment charges in relation to the property, plant and equipment relating
to Abbey Metal Finishings and a related loss on sale of that business as
reported in our interim results, totalling £0.6 million
The profit after tax for the year ended 31 December 2021 was £4.5 million
(2020: Loss after tax £0.8 million).
In addition, our financial assets recorded at fair value through other
comprehensive income (part of the investment portfolio) recorded a post tax
gain of £1.8 million which has been reflected in Other Comprehensive Income.
Equity attributable to the owners of Camellia was up at £389.8 million (2020:
£376.6 million) with net cash and cash equivalents net of borrowings of
£54.0 million (2020: £90.1 million) and financial assets at fair value
through profit or loss (money market funds) of £7.2 million (2020: £5.3
million).
Acquisition
The acquisition and subscription for new shares to obtain an 80% interest in
Bardsley England on 31 July 2021 resulted in goodwill arising on acquisition
of £3.6 million. £2.2 million of the purchase price is deferred with part
payable in 2022 and the balance due in 2023.
In November 2021, the remaining 20% was acquired for £1.7 million in cash. At
the same time, a loan due to Bardsley England by BX Technologies (previously
part of the Bardsley family's group) of £1.1 million was repaid.
Impairments
The impairment to the goodwill relating to Abbey Metal Finishing arises from
the losses incurred in the period prior to sale.
COVID and Ukraine impacts
As set out in the Operational report on page 7, our businesses are currently
operating broadly as normal despite the ongoing pandemic and the uncertainty
arising from the war in Ukraine. Our experience over the last two years has
given us valuable insight into how the pandemic impacts our markets and our
operations. Although the war in Ukraine has had limited impact on the Group to
date, there remains uncertainty about how it might impact the tea market and
input costs going forwards. Accordingly, we continue to take actions to
conserve cash by focusing on efficiencies, minimising our operating costs and
focusing capital expenditure across the Group.
However, with our substantial cash resources, our investment portfolio and
limited gearing, we continue to be 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 £4.0 million (2020: loss £22.6 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 2021
would have been £1.7 million higher. Our profit before tax includes an
exchange gain of £0.4 million on transactions during the year (2020: gain
£2.2 million).
On 26 May 2022, the Reserve Bank of Malawi announced that it will stop
supporting the currency and allow the exchange rate to reflect market
fundamentals. This is expected to result in a devaluation of the Kwacha of
c.25%.
Cash
The Group's net cash position reduced to £59.9 million at 31 December 2021
(2020: £94.9 million) reflecting, inter alia, net cash outflows from
continuing operating activities of £11.9 million (2020: inflow £12.9
million).
We spent £11.6 million on investment in our existing operations and
investment property and incurred a net cash outflow in the year of £9.6
million acquiring 100% of Bardsley England. Investment portfolio disposals net
of reinvestments contributed £12.4 million to financing cashflows in the
year.
Group borrowings in the form of loans amounted to £5.9 million at the end of
the year (2020: £4.8 million).
We expect capital expenditure in 2022 to be higher than our depreciation
charge and in excess of recent 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 and the Ukraine conflict
and to fund long-term development projects.
Taxation
The Group's effective tax rate of 36.6% (2020: 110.3%) reflects the use of
current year UK trading losses to offset taxable gains arising on investment
disposals. The tax charge also reflects the recognition of a significant
deferred tax liability relating to the surplus on the UK Pension Scheme.
The acquisition of Bardsley England will bring a UK profit stream for the
Group which is expected to assist in reducing the Group's effective tax rate
in future.
Following discussions with the Bangladesh Revenue Authority regarding the
withholding tax rate applicable to branch remittances, this liability has
increased to £3.4 million. These discussions have facilitated the remittance
of significant funds to the UK.
Tax and other provisions
As is normal at this time of the year, we have ongoing wage negotiations
relating to prior periods in Bangladesh and India. We consider we have made
adequate provision for their likely outcome.
Despite progress being made during 2021, we continue to have a number of
significant uncertain tax situations totalling £13.7 million, which have been
disclosed previously and which are detailed in note 41 to the Accounts.
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, concluded early in 2021, shows
a funding surplus and no contributions are required to be made to the scheme
for the next three years. On an IAS 19 basis, at the end of 2021 the UK scheme
had a surplus of £14.7 million.
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 a net surplus on an
IAS 19 basis of £5.1 million (2020: £16.6 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
£20.4 million (2020: gain £4.3 million) is reflected in the Statement of
Comprehensive Income. The net gain this year arises primarily from the UK
scheme where strong asset performance and the effect of higher interest rates
benefited the Scheme.
Our Income Statement also reflects current and past service costs of £1.8
million (2020: net cost £2.2 million) and £0.8 million (2020: £0.7 million)
in respect of employee benefit interest cost.
Susan Walker
Chief Financial Officer
30 May 2022
ENVIRONMENTAL AND SOCIAL REPORT
At Camellia, ESG (Environmental, Social and Governance) 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 ESG report ("Custodianship") published
in 2020 illustrates not only the ESG initiatives undertaken across the Group
but also explains the Group's approach to each of these principles. We intend
to publish our next edition of Custodianship later this year. 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 40) 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. The Group's approach to Governance is
set out in the Corporate Governance report.
Environmental
Climate change is a significant risk to the Group's agricultural operations.
We seek to mitigate the impact of this risk by diversifying our agricultural
production in both origin and crop. We also continue to plant more drought
resistant crop varieties and use other initiatives, such as restorative
farming methods and sustainable irrigation.
In addition to minimising our environmental impact, we protect and enhance
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
wherever possible from which to irrigate sustainably.
The Group also oversees c.11,100Ha of indigenous forests and conservation
areas and a further 7,500Ha of commercial forestry (eucalyptus, pine,
cypress). These areas, in combination with fields of perennial crops sequester
significant amounts of carbon and act as an important carbon sink, which once
quantified will offset some of the Group's emissions. We have estimated
sequestration of our core crops and our managed eucalyptus estates, which we
comment on in more detail below.
We use appropriate partners to support the Group in achieving environmental
protection and emission footprint reduction initiatives and are continuously
exploring technologies that can reduce our environmental footprint. In
addition to minimising our environmental impact, we protect and enhance
forests and water bodies for local flora and fauna.
Environmental reporting
The Group continues 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 (excluding UK) and energy use data for the year to 31
December
Reporting year 2021 2020*** 2019***
Group sectors reported Global Global Global
(Excluding UK) (Excluding UK) (Excluding UK)
Emissions from combustion of LPG and Natural gas (Scope 1) (tCO(2)e) 24,008 21,555 25,350
Emissions from combustion of diesel and petrol for transport and onsite 14,866 15,324 17,501
combustion (Scope 1) (tCO(2)e)
Emissions from the combustion of coal (Scope 1) (tCO(2)e) 71,000 80,217 88,377
Emissions from combustion of firewood and other fuels (Scope 1) (tCO(2)e) 3,816 3,819 3,558
Emissions from fertilisers, waste, livestock, land use change and refrigerants 43,163 43,312 46,290
(Scope 1) (tCO(2)e)
Emissions from purchase of electricity for own use (Scope 2, location-based) 41,958 42,717 47,625
(tCO(2)e)
Emissions from purchase of electricity for own use (Scope 2, market-based*) 41,942 42,717 47,625
(tCO(2)e)
Emissions from purchase of electricity, heat, steam, and cooling purchased for 41,958 42,717 47,625
own use (Scope 2, location- based) (tCO(2)e)
Emissions from business travel in rental cars or employee-owned vehicles where 132 n/a n/a
company is responsible for purchasing the fuel (Scope 3) (tCO(2)e)**
Total gross Scope 1 & Scope 2 emissions (location-based) (tCO(2)e) 198,811 206,944 228,701
Total gross Scope 1 & Scope 2 emissions (market-based) (tCO(2)e) 198,795 206,944 228,701
Intensity ratio: Kg CO(2)e/Kg of made tea 1.29 1.40 1.51
Energy equivalent from combustion of LPG and Natural gas (Scope 1) (GWh) 130.5 117.0 137.2
Energy equivalent from combustion of diesel and petrol for transport and 61.5 62.8 71.0
onsite combustion (Scope 1) (GWh)
Energy equivalent from the combustion of coal (Scope 1) (GWh) 219.4 250.4 266.3
Energy equivalent from combustion of firewood and other fuels (Scope 1) (GWh) 250.9 247.2 227.7
Electricity purchased for own use (Scope 2) (GWh) 91.4 90.5 95.5
Renewable electricity generated for own use (Scope 2) (Gwh) 0.9 0.9 0.6
Energy equivalent from business travel in rental cars or employee-owned 0.5 n/a n/a
vehicles where company is responsible for purchasing the fuel (Scope 3)
(GWh)**
* 2020 is the first reporting period for which we reported our scope 2
market-based emissions
** 2021 is the first reporting period for which we reported our scope 3
business travel in rental cars or employee-owned vehicles
*** Due to increased granularity of our Scope 1 and 2 reporting we have
restated 2019 and 2020
Changes in Scope 1 & Scope 2 emissions
The Group's Scope 1 & 2 location-based emissions (excluding UK) reduced by
4% during the reporting period. This was primarily due to a reduction in
volumes of made tea produced in India, partially offset by an increase in
volumes in Bangladesh. In the tea drying process the Indian operations rely on
coal and the Bangladesh operations rely on natural gas. Where possible, and
with infrastructure permitting, cleaner fuel sources and efficiency
improvements are being implemented. For example, installation of natural gas
turbines, and investments in hydro-electric generators.
We report the made tea intensity ratio (2021:1.29kg CO(2)e per kg of made tea;
2020: 1.40kg) and we continue to invest to improve the carbon efficiency of
our tea factories. We are happy to report that in 2021 there has been an 8%
decrease in the Group's location-based made tea carbon intensity, mainly due
to lower production in India. We are also pleased to observe that our Kenyan
and Malawian tea operations have continued to improve both thermal and
electrical energy efficiency in their tea factories.
As mentioned above, the Group's perennial crops sequester significant amounts
of carbon. In last year's annual report, we reported that we conducted a study
with Ricardo Plc to estimate the volume of carbon sequestered by the Group's
key crops and managed forestry. Sequestration forms an integral part of the
Group's ambitions to become net zero and we are assessing how to implement
this.
UK GHG emissions and energy use data for the year to 31 December
Reporting year 2021 2020 2019
Group sectors reported UK UK UK
Emissions from combustion of LPG and Natural gas (Scope 1) (tCO(2)e) 1,202 1,591 1,939
Emissions from combustion of diesel and petrol for transport and onsite 4,087 3,744 5,069
combustion (Scope 1) (tCO(2)e)
Emissions from combustion of other fuels (Scope 1) (tCO(2)e) 362 88 122
Emissions from fertilisers, waste, livestock, land use change, and 67 13 17
refrigerants (Scope 1) (tCO(2)e)
Emissions from purchase of electricity for own use (Scope 2, location-based) 4,408 5,130 5,316
(tCO(2)e)
Emissions from purchase of electricity for own use (Scope 2, market-based*) 1,171 32 n/a
(tCO(2)e)
Emissions from purchase of electricity, heat, steam and cooling purchased for 4,408 5,130 5,316
own use (Scope 2, location- based) (tCO(2)e)
Emissions from business travel in rental cars or employee-owned vehicles where 15 n/a n/a
company is responsible for purchasing the fuel**(Scope 3) (tCO(2)e)
Total gross Scope 1 & Scope 2 emissions (location-based) (tCO(2)e) 10,126 10,566 12,463
Total gross Scope 1 & Scope 2 emissions (market-based) (tCO(2)e) 6,889 5,468 n/a
Energy equivalent from combustion of LPG and Natural gas (Scope 1) (GWh) 6.5 8.6 10.5
Energy equivalent from combustion of diesel and petrol for transport and 17.3 15.6 20.8
onsite combustion (Scope 1) (GWh)
Energy equivalent from combustion of other fuels (Scope 1) (GWh) 1.4 0.3 0.5
Electricity purchased for own use (Scope 2) (GWh) 20.8 22.0 21.5
Energy equivalent from business travel in rental cars or employee-owned 0.01 n/a n/a
vehicles where company is responsible for purchasing the fuel (Scope 3) (GWh)
* 2020 is the first reporting period for which we reported our Scope 2
market-based emissions. The increase in market-based emissions in 2021 was
primarily due to the inclusion of Bardsley England.
** 2021 is the first reporting period for which we reported our Scope 3
business travel in rental cars or employee-owned vehicles.
Environmental certifications
AJT Engineering and ACS&T are ISO 14001 certified. The framework of which
helps the entities improve building energy efficiency, reduce waste streams,
and increases awareness of potential environmental risk factors. Many of our
global operations are Rainforest Alliance certified and some are Global G.A.P.
certified.
Energy efficiency action taken
In the period covered by the report, the Group's operations have implemented a
range of energy efficiency initiatives. We set out some of the key examples
below:
Expected Saving
per annum
Operation Energy Saving Initiatives (MWh)
Kenya Installation of a heat exchanger to recycle hot air from the boiler
chimney, preheating the air entering driers at one of its tea factories 680
UK Installation of fast close doors at cold stores, reducing the amount of
ambient air flow 600
Kenya Variable speed drives fitted to air inlet fans on tea driers at four of its 249
tea factories
India Upgrading steam traps at one tea estate, reducing steam losses,
and increasing efficiency 230
In aggregate, we expect the above energy saving initiatives and several
smaller initiatives to result in 2.3 GWh saving in energy per annum.
In addition, the Group is continuing with its programme of replacing existing
energy sources with renewable energy sources, amounting to an additional 227
MWh in 2021. The main initiatives to date include the installation of solar
generation at several operations in India, Bangladesh, Kenya and Brazil, as
well as the installation of hydro turbines in India. In the UK most sites are
on green tariff electricity contracts. The Group's operations have also
assessed potential energy efficiency initiatives that can be implemented over
the next five years. We set out examples of the key initiatives below:
Operation Energy Saving Initiatives
Malawi Replacing steel withering fans with lightweight alternatives
Malawi Introduction of more energy efficient driers at its tea factories
Kenya Improved fuelwood management and site suitability at all tea factories
Kenya Variable speed drives fitted to air inlet fans for tea driers
Kenya Installation of heat exchangers to recycle exhaust heat
Kenya Conversion of inefficient irrigation water pumps to energy efficient units
India Replacement of lighting with more energy efficient LED lighting
UK Replacement of the transport fleet with more fuel-efficient vehicles
UK Installation of fast close doors at cold stores, reducing the amount of
ambient air flow
We expect the above initiatives to provide significant savings in energy over
the next five years. The Group will continue with its program of replacing
existing energy sources with renewable energy sources where possible. Our
ultimate intention is to set energy use 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. To this end we are working with our supply chain, customers,
national governments, trade unions and NGOs to improve of the livelihoods of
our employees and their communities.
Healthcare, education and housing
Healthcare, education and housing continue to be integral parts of the Group's
operations. For example, the majority of our tea estates in India and
Bangladesh have a hospital and a qualified doctor, in addition to central
referral hospitals owned and managed by the operations. Our African businesses
run dispensaries established on their estates, offering 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. Across the Group we
continue to operate 50 hospitals and 85 dispensaries that we either own and/or
operate. In 2021, the Group performed 880,000 patient treatments, of which
515,000 treatments were for Group employees, at its hospitals.
In many of our operations we provide childcare and education to our employee's
families from nursery up to secondary school. During the year we continued to
run 178 nurseries and creches, 76 primary schools and six secondary schools.
In total we educated more than 32,000 children. In certain circumstances, our
operations will provide land or other resources to contribute to the running
of local schools which are not owned and/or operated by us.
We also provide housing to a large number of employees and their families. The
housing is owned and managed by our Group operations and is provided and
maintained in line with widely recognised international certifications. The
Group owns c.48,000 houses accommodating c.291,000 people, of whom c.67,000
are employed.
2021 continued to be a year impacted by the effects of the COVID pandemic. Our
operations have made significant efforts to provide safe working and living
environments for our employees as well as the wider communities in which we
operate. More information on these initiatives is contained in our ESG report.
Human Rights
We are determined to promote the safeguarding of Human Rights across our Group
and its supply chains.
The Board has decided to enhance its governance and safeguarding oversight
functions to comply with the UN Guiding Principles on Business and Human
Rights and has established a Safeguarding and Stewardship committee which is
further described on page 42. The purpose of the committee is to promote the
highest standards in protecting and promoting Human Rights across the Group
and an internationally respected firm of specialists has been appointed to
enable our larger Group companies to review their Human Rights positions and
to assist them in making improvements where necessary. Our Group wide Human
Rights Policy and Social Code of Conduct is also designed to support Group
companies in their efforts to continually improve the development and
operation of their individual policies and procedures in this regard.
Approved by the Board
Amarpal Takk
Company Secretary
30 May 2022
Appendix to Environmental & Social report
SECR reporting methodology
The scope of the reporting for SECR purposes was determined by including the
businesses in which the Group owns majority holdings and/or fully operates. It
includes GHG (Greenhouse Gas) emissions and energy use by businesses that were
divested during the reporting period up to the date of transfer of risk and
reward pertaining to those businesses. Similarly, it includes business that
were acquired during the reporting period from 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 by the Group's reporting
units. A reporting unit is defined as a geographically located operating
entity or group of entities. For example, the India group of companies is
defined as one reporting unit. Within a reporting unit distinction is made
between different sites, field operations and factory operations.
The conversion and 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
Affairs (Defra), 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. For
global (excluding UK) market-based emissions in regions where renewable energy
certificate ("REC") systems are not developed, market-based emission factors
are calculated using location-based grid average emission factors. For UK
market-based emissions, where supplier specific emission rates could not be
determined due to unavailability of data, UK residual mix emission factors
were used.
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 effort 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.
The Scope 3 element pertaining to energy use and CO2e emissions from rental
cars or employee-owned vehicles where the company is responsible for
purchasing the fuel or where the company reimburses the employee for the fuel
has been estimated based on an estimate of the kilometres travelled by
employees under this category. We did not estimate this category for prior
years since its share of the Group's total carbon footprint is relatively
immaterial.
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 2021 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 5 to 18. The Chairman's statement and the
Operational report, together with information contained within the report of
the Directors, highlight the key factors affecting 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 16 to 18. 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 Environmental and Social report, and
within the Report of the Directors.
Business model
The Group consists of operations engaged in Agriculture, Other Investments and
Associates. These operations are managed on a divisional basis with regular
reports made to the Board on performance against the annual budget. Each
operation is expected to perform against an agreed strategy with goals and
targets for the short, medium and long-term. These are summarised below.
Agriculture
To focus on our tea, macadamia, avocado and newly acquired apple crops, where
we have scale and geographic diversity, and further maintain our portfolio of
crops and products 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. Where appropriate opportunities arise, to add to our
production capability in bearer plant agriculture, as well as to make aligned
acquisitions and investments to enable us to capture more of the value chain.
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.
Other investments & Associates
AJT Engineering. To keep our presence in the oil services sector under review,
in line with our strategy of expansion in areas of expertise, while divesting
in non-core businesses.
ACS&T. To keep our presence in the cold storage and transport sector under
review in line with our Group strategy to focus on core areas of expertise.
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. Maintain the existing portfolio and maximise returns from
it. Part of the portfolio may be sold to accelerate the Group's investment in
agriculture.
Collections. The Group has collections of art, philately and manuscripts, part
of which may be realised to facilitate the increased focus on our core
agricultural business.
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 172 statement should be read in conjunction with the
Environmental and Social report, this Strategic report, the Corporate
Governance report and the Statement of Directors' Responsibilities.
In performing their duty under section 172(1) (a) to (f) of the Companies Act
2006, Directors have acted in a way that they have considered, in good faith,
to promote the success of the Group as a whole, whilst carefully considering
the interests of shareholders and other stakeholders which have an impact on
the long-term success and sustainability of the Group, including suppliers,
customers, employees, the communities in which the Group operates and the
impact on the environment.
Long-term
The Board has undertaken a series of measures aimed at re-balancing the
Group's portfolio of investments in order to take better advantage of its
strengths, and thereby to improve profitability. This included investment in
social and environmental initiatives, in particular, to mitigate the impact of
climate change. These measures include accelerating agricultural
diversification and divesting of certain assets which we consider to be
non-core, details of which are covered elsewhere in this report. Key risks,
potential impact and mitigations are included in the "Principal Risks and
Uncertainties" section below.
Stakeholders
The Board recognises the value of stakeholder relationships and the key role
that these play in the Group's sustainability and success over the longer
term. Good progress has been reported from the Safeguarding and Stewardship
committee as it continues to support members of the Group in initiatives to
protect and promote Human Rights and a peaceful, long-term and mutually
beneficial relationship between the activities of businesses within the Group
and the communities affected by them. Many environmental and social
initiatives are initiated by staff in our operations each year, which we
highlight on our website, various social media platforms and in the Group's
ESG report. Further information can be found in the Environmental and Social
report.
In order to track progress made, and in line with our culture of ongoing
feedback, a second annual employee engagement survey, Your Voice, was
undertaken during 2021. The survey gathered anonymous and open feedback from
employees to support local management decisions as well as to provide Board
insights. All employees in the UK were invited to respond, including from
Bardsley England. Key questions from the survey were also put to a proportion
of employees in our largest companies outside of the UK, which provided
further insight. The results of the survey are continuing to be used to plan
key initiatives and track progress on key areas such as recognition,
development, leadership, mental health and wellbeing and feedback on how
employees feel their company has continued to respond to the COVID pandemic.
The positive trends identified included confidence in the communications and
working practices related to the COVID pandemic, understanding of company
goals and values and how individual performance contributes to the success of
the Group. Opportunities to improve were agreed in partnership with employees
at a company level and examples include continued clear and open
communication, ongoing performance management and feedback, and a continued
focus on learning and development. Your Voice will be repeated in 2022 to
continue the momentum of ongoing employee feedback.
We have worked closely with our suppliers and customers to manage the
challenges and disruption caused by the COVID pandemic and have continued to
develop our relationship with these stakeholders across our operations through
consistent engagement and regular meetings.
Further examples of how the views of stakeholders are provided to the Board
include the annual cycle of information from management reporting, committees
and meetings and operational visits in the UK and abroad. The Board conducts
regular reviews of how to continue to engage effectively with stakeholders and
there is on‑going dialogue between members of the Board and stakeholders.
Principal risks and uncertainties
There are a number of possible risks and uncertainties that could impact the
Group's operations. The Group regularly monitors these risks at operational
and Group level, i.e. operational risks are raised by the operations directly
to members of the Strategy group; Group risks are reviewed by the Group
General Counsel and raised to the Audit committee; and risks considered and
raised to the Strategy group are further raised to the Board. Information on
the Group's financial risks is disclosed in note 42 of the Accounts.
Material risks relating to the Group's principal operations, with additions
and updates for 2021, are noted in the table below. Whilst there has been a
decrease in the overall risk and potential impact to the Group in relation to
UK and Overseas Pensions, Legal & Regulation and prolonged impact of a
pandemic, the Group considers that there has been an increase in overall risk
and potential impact in relation to the cost of production (increased cost of
fuel and fertiliser) and from the war in Ukraine. The overall materiality of
individual risks or magnitude of impact on the Group as a whole in other areas
has not changed significantly from the previous year.
Agriculture
Risk Potential Impact Mitigation
Climate change Current agricultural patterns and practices become unsustainable. Geographical spread of operations to lessen the impact of extreme weather on
the Group as a whole.
Land values and local communities are impacted.
Investment in irrigation, water storage and drought resistant crop varieties.
Flooding/drought/frost affecting crop yields.
Investment in sustainable water solutions, soil management, energy saving
initiatives and renewable energy sources.
Price volatility Fluctuations in commodity prices impact profitability each season. In the Use of forward contracts, product and crop diversification and building
event of a prolonged depression in the world tea market the impact on the long-term strategic relationships with key customers.
Group would be material.
Currency fluctuation Profit volatility arising from sales in US Dollars and Euros where there is Monitoring of foreign exchange rates and cash management.
no natural hedge against the cost of production in local currency.
Cost of production Increased wage costs, cost of inputs and other costs of production resulting Introduction of more efficient working practices and the increased use of
in lower profitability. mechanisation and automation.
Wage costs and inputs have been included in 2021. Securing fertiliser and chemical supply contracts in advance of delivery
requirement has been included in 2021.
Long-term political issues over land ownership Potentially losing access to farms and estates or paying more for existing Monitoring changes to local land legislation with the assistance of lawyers
property (for example if freeholds become leaseholds). and local trade associations. Maintaining collaborative relationships with
governments at local and national levels.
Civil unrest, political instability and war Periodic interruptions to the operation of the businesses at a local level. Increasing security for our workers and operations during times of civil
unrest.
War has been included as a potential risk in 2021 Supply chain disruption, lack of availability of key inputs.
Maintain market supply options and carrying buffer stocks.
Reduced demand for products.
Maintaining diverse customer base.
Corruption Inability to carry on business in a manner which is legal and ethical. Strict adherence to anti-bribery legislation and the implementation of the
Group Principal Polices.
Health and safety Vulnerability of the employees to injury at work due to the use of machinery Strict compliance with legislation and training employees to adopt safe
and chemicals. Payment of fines and claims, criminal prosecutions and working practices. Regular external compliance reviews.
reputational damage.
Human Rights Adverse impact on financial results from legal and reputational costs. Media The following has been updated in 2021:
(current and historic) and political pressure impacting operations or customers preparedness to buy
products. Understanding the salient Human Rights risks (via audits and assessments).
Implementing measures to mitigate and prevent such risks from crystalising.
Provide on-going training and raising awareness across the Group and
communities.
Strengthening governance protocols, by way of policies and increased
reporting.
Providing appropriate mechanisms to bring forward any allegations and redress
(such as whistleblowing and operational-level grievance mechanisms).
AJT 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 sector Changes in market conditions leading to lower demand for services. Diversification into other sectors. Close monitoring of the oil and gas
sector.
Health and safety Vulnerability of the employees to injury at work due to the use of machinery Strict compliance with legislation and training employees to adopt safe
and chemicals. Payment of fines and claims and reputational damage. working practices. Regular external compliance reviews.
ACS&T
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 injury at work due to the use of machinery Strict compliance with legislation and training employees to adopt safe
and chemicals. Payment of fines and claims, criminal prosecutions and working practices. Regular external compliance reviews.
reputational damage.
Investments & Associates
Risk Potential Impact Mitigation
Market Decline in the value of investments and property. Portfolio diversification, careful stock selection, the regular monitoring of
individual company stock performance and a diversified property portfolio.
Adverse weather events in the Caribbean Risk of substantial claims materially reducing profits. Maintaining strong capital base and use of underwriting and reinsurance to
reduce risk.
Group
Risk Potential Impact Mitigation
Prolonged impact of a pandemic Interruption to production and/or disruption of supply to customers. Implementation of contingency plans.
Volatile equity markets impacting the pension schemes' deficits with a Cost reduction and cash management measures.
resultant increase in the funding requirement.
Ongoing monitoring of banking partners and country credit ratings.
Increased risk of bank failure, and 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' deficits with a resultant increase in the The following has been updated in 2021:
funding requirement.
Increases in inflation and/or reductions in long-term government bond yields Regular monitoring of the funding position of the pension schemes and their
investment performance. Improvement to the investment strategy and hedging key
Lower than expected asset return exposures when appropriate.
Changes in local laws restricting the investment choices for the schemes'
assets
Environmental Contamination of local and wider environment due to the use of machinery and Strict compliance with legislation, training employees to adopt safe working
chemicals. Payment of fines and claims, criminal prosecutions and reputational practices and lessen the impact on the environment.
damage.
Proactively seek to reduce our impact on the environment.
Taxation Uncertainties in relation to the interpretation of complex tax Future adjustments to taxable income and expenses already recorded or Tax exposures are considered individually, and judgements made with support
legislation, or arising from changes in tax legislation increases to the cash tax costs incurred by the Group in future. from experienced tax professionals and external advisors.
Risk that the Group's judgements are challenged by tax authorities
Legal & Regulation Uncertainties in relation to the application of English Group legal risk in relation to the activities of overseas operations The following has been updated in 2021:
or other law or changes in case law (including potential litigation in the UK) and incurring costs in relation to
the same. Monitoring the interpretation of law and taking appropriate advice and
monitoring and auditing compliance with new developments.
Potential cyber- threats such as computer viruses Loss or theft of data. Developing our technology systems.
IT malfunctions or external cyber-attacks Interruption to services for customers and the business. Investing in developing the IT skills and capabilities of our 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 periodically 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 effective.
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:
§ High-level GPPs
§ Compliance GPPs
§ Modern Slavery GPP
§ Tax Principles
The High-level GPPs comprise the Certification and Traceability GPP, the
Health and Safety GPP, the Environment GPP, the Employee Welfare GPP and
Social Code of Conduct 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, many operations have also obtained ISO14001,
ISO9001 and ISO45001 and many other appropriate accreditations, such as Red
Tractor for our Bardsley England operation.
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.
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.
Social code of conduct
As an international Group, we have interests in companies in various countries
with very different levels of income and education. We believe that it is
critical that we respect the cultures of the people of those countries but we
also recognise the important role our Group companies and their suppliers play
in helping us to source sustainably and responsibly. Our social code of
conduct ('Code') provides the foundation for our engagement with our Group and
its supply chains. It sets out our broad expectations for their independently
developed policies and procedures regarding basic compliance with applicable
law, respect for the workforce and their Human Rights, environmental
management and anti-corruption.
Human Rights
We respect and support Group companies' efforts to respect the dignity,
wellbeing and Human Rights of the Group's employees, the communities in which
the Group operates and those who may be impacted by the Group's operations.
Our commitment to respecting internationally recognised Human Rights in line
with the principles and guidance contained in the UN Guiding Principles on
Business and Human Rights is set out in our Human Rights Policy, which
underpins principles of internationally recognised Human Rights as relevant to
our Group's operations, including those set out in the International Bill of
Human Rights and the International Labour Organisation's Declaration on
Fundamental Principles and Rights at Work and OECD Guidelines for
Multinational Enterprises. We recognise that while states have a duty to
protect Human Rights, companies have a responsibility to respect Human Rights
and this means acting with due diligence to avoid infringing the Human Rights
of others and addressing the adverse impacts companies may have caused, be
connected to, or be linked to.
Respecting Human Rights is not only important to us and Group employees but is
of importance to all of our shareholders, investors, customers, consumers, the
communities where the Group operates and civil society groups. There is both a
business and a moral case for supporting the promotion of Human Rights across
the Group and its supply chain and our Group-wide Human Rights Policy is
therefore designed to support Group companies in their development and
operation of policies and procedures addressing these standards. We understand
that Human Rights often compete, and that the resolution of these conflicts
may be impossible for Group companies to achieve to everyone's satisfaction.
We also understand that no amount of work on the part of the Group in
promoting Human Rights can wholly eradicate the risk of Human Rights being
breached by someone intent on causing harm, or careless as to whether harm is
caused. We therefore recognise this is a journey and that our performance will
evolve as we mature our practices. Despite the possibility of imperfect
outcomes we will continuously seek to improve our Human Rights efforts.
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, officers and executives, and all those acting for or on
the Group's behalf are strictly prohibited from offering, 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 officer 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 Officer. Group employees have access to the
whistleblowing officer for the individual operation, as well as the Group
Whistleblowing Officer 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 trafficking 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 2021 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 profit and operating
performance information, 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.
For Associates, the Board receives revenue and profitability information when
those companies release information to their respective shareholders.
Certain of the key financial performance indicators are included in the
Operational report on pages 7 to 15.
Non-financial performance indicators
Operations have developed non-financial KPIs that are relevant to it, these
are regularly monitored and 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
§ Grievances - including employee, welfare and social issues
§ Industrial disputes - including days lost to strike action and other
significant employee issues
§ Land and politics - including elections, material new regulation or case law
§ Changes in key personnel - including promotions, resignations and retirements
of senior management
§ Weather and climate - including rainfall, temperatures and long-term
meteorological trends
The Board, or the Strategy group (as appropriate), considers such KPIs by
exception where local operations notify that significant material issues have
emerged.
Employees
Employees are kept informed on matters affecting them and the performance of
the Group by their local management as well as through internal publications,
the Camellia Plc website, social media and operational visits. A new
communication tool was implemented at the Camellia Head Office and two UK
companies in 2021, which provides a portal of news, updates, policies and
social media feeds, as well as the opportunity to book annual leave and access
key work related information on an automated system. Kenyan and Indian
operations have social media platforms which support employee engagement and
Kakuzi uses YouTube videos to communicate news and information about staff
and their roles within the operation.
As set out in the Group's Employee Welfare Policy, operating companies give
due consideration to employment applications received from disabled persons
and 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 on 31 December 2021.
Men Women
Company Directors 9 1
All employees 65,229 72,931
Approved by the Board
Amarpal Takk
Company Secretary
30 May 2022
REPORT OF THE DIRECTORS
The Directors present their report together with the audited consolidated
accounts for the year ended 31 December 2021.
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
§ Other Investments and Associates
Fostering business relationships is of paramount importance to the Directors,
as set out in the s172 Statement in the Strategic report. Further details of
the Group's activities are included in the Strategic report and the
Operational report.
Results and dividends
The profit after tax for the year amounted to £4.5 million (2020: loss after
tax £0.8 million). The Board is proposing a final dividend for the year 2021
of 102p per share payable on 29 July 2022 to holders of the ordinary shares
registered at the close of business on 8 July 2022. Therefore, the total
dividend payable for 2021 is 146p per share (2020: 144p 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
2021 2021
Malcolm Perkins 1,673 1,673
Tom Franks 200 200
Susan Walker 220 220
Under the Company's articles of association all the Directors are required to
retire annually. Accordingly, Malcolm Perkins, Susan Walker, Graham Mclean,
Frédéric Vuilleumier, Simon Turner and Stephen Buckland will retire and,
being eligible, will seek re-election at the forthcoming Annual General
Meeting ("AGM"). Tom Franks, William Gibson and Gautam Dalal have indicated
that they do not wish to stand for re-election at the AGM. Rachel English was
appointed as an independent non-executive Director effective from 6 May 2022
and will seek election to the Board at the AGM.
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, a member of the Safeguarding and Stewardship committee
and Chairman of the Nomination committee.
Tom Franks, a chartered accountant, was appointed as Chief Executive with
effect from 1 September 2015. He joined Camellia as Deputy Chief Executive
in October 2014.
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 Officer 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
William Gibson was appointed as an independent non-executive Director in
September 2014 and was appointed as the senior independent non-executive
director in September 2021. 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, 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 office 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 was appointed
chairman of the Audit committee in September 2021.
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. He became a member of the Remuneration
and Nomination committees in September 2021.
Stephen Buckland was appointed as a non-executive Director in November 2021.
He previously held positions within the Camellia Group's agricultural and
banking businesses. He is a trustee of two charities: The Sir Percival
Griffiths' Tea Planters Trust and The Camellia Foundation, a UK charity whose
primary donor of the same name is the ultimate majority shareholder of
Camellia Plc. He became a member of the Audit committee in December 2021.
Rachel English was appointed as an independent non-executive Director in May
2022. She is a chartered accountant and has extensive international and
general management experience, having founded and served on the board of
several significant businesses, including as chair of Acacia, a FTSE 250
company, and previously served on the audit committee of the UK Department for
International Development. She has substantial experience and interest in ESG
matters.
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 May 2022 the Company has been advised of the following interests in
its share capital:
% of total
Shareholder No. of Shares voting rights
Camellia Holding AG 1,427,000 51.67
Fide Holding NV 360,500 13.05
Quaero Capital SA 151,098 5.47
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 2021, 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 19 to 24.
Employees & stakeholders
The Directors have had regard to the need to foster the Company's business
relationships with employees, suppliers, customers and others, and the effect
of that regard, including on the principal decisions taken by the Company
during the financial year. Details in relation to employees and stakeholders
are set out in the s172 Statement on page 26 and the Employee section on page
34.
R&D
The Group invests in research and development projects within its operations
in order to improve efficiency and grow revenues. In Kenya, Malawi and India
technical departments are focussed on various projects to improve harvesting
efficiency, pest and disease identification and control, energy efficiency and
implement colour sorting technology. New agricultural technologies are also
being trialled where possible, including the use of drones, robotics and
automated manufacturing systems.
We continue to collaborate with various organisations, for example, the
Cambridge Environmental Sustainability Strategy committee and working with the
Gatsby Foundation on potential value-added ventures. In Kenya we use precision
specification eucalyptus trees for furniture and other construction
applications. In Kenya we are running a commercial blueberry trial to evaluate
the viability of different varieties. In Brazil, research and development is
ongoing into water saving irrigation systems, and satellite imaging for soil,
nutrient and crop profiling help to identify climate impact and plant nutrient
requirements. These initiatives will help to inform our decisions on the
implementation of precision farming technologies.
Future development
Details of future developments are set out in the Operational report and the
Strategic 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 affect the Group, the most recent business performance of the
Group, including the impacts of the pandemic, as described in the Operational
report on pages 7 to 15.
The Directors considered the impact of the current COVID environment and the
Ukraine conflict on the business for the next 15 months.
The Directors 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 two years, we expect
our Agriculture businesses will continue to operate broadly as currently. In
the UK we have assumed that the food service market recovers gradually over
the course of the next year.
At 31 December 2021, the Group had cash and cash equivalents net of borrowings
of £54.0 million. In addition, the Group had undrawn short-term loan and
overdraft facilities of £23.7 million and a portfolio of liquid investments
with a fair market value of £40.2 million.
The Directors have modelled various severe but plausible scenarios using
assumptions including the combined effect of reduced sales volumes for tea,
reduced avocado exports, reduced sales volumes for macadamia and reduced
partner grower apple volumes during 2022. 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 2022 for our tea, macadamia and avocado crops combined
with higher than expected energy and fertiliser costs across all operations.
Historically in the Tea division 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 and 2021 and in Bangladesh in 2021.
However, for prudence for the purposes of our downside scenario planning we
have not reflected increased selling prices for tea nor any significant
mitigating reductions to our operating cost base in our tea operations. We
have however assumed that in certain scenarios aspects of our investment
programme would be curtailed.
Under both the base case and the downside scenario, the Group is expected to
continue to have sufficient 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 39 to 43.
Political donations
The Company has no political affiliations 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
30 May 2022
CORPORATE GOVERNANCE
Statement of compliance
The Company is committed to complying with the Quoted Companies Alliance's
("QCA") 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. The table on our website sets out how
we comply with the ten principles of the QCA Code.
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 as set out on page 4.
The remaining Directors are executive Directors, including the Chairman.
William Gibson has been designated as the senior independent non-executive
Director. The names and brief biographical details of each Director appear on
pages 35 and 36. Following the decision of three Directors not to stand for
re-election at the AGM, a recruitment process is underway.
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 Board 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 sufficient information in
advance of Board meetings to enable informed judgements to be made on matters
referred to the Board. The Board met 13 times in 2021.
Attendance by Directors at Board and committee meetings held during the year
was as follows:
Director Board Audit Remuneration* Nomination
Malcolm Perkins 13/13 - - 1/1
Chris Relleen 8/13 1/3 0/3 -
Tom Franks 13/13 - - -
Graham Mclean 13/13 - - -
Susan Walker 13/13 - - -
William Gibson 12/13 3/3 2/3 1/1
Frédéric Vuilleumier 13/13 - - -
Gautam Dalal 13/13 3/3 - -
Simon Turner 13/13 - 2/3 1/1
Jonathan Bond 5/13 - - -
Stephen Buckland 2/13 1/3
* Where a meeting was not quorate, decisions were raised to and approved by
the Board.
Board evaluation
An internal review, led by the Company Secretary and the Chairman, was
undertaken this year. This was based upon a series of questions and each
Director had the opportunity to contribute and challenge, which enabled a
constructive and quality debate during Board meetings. In order to enhance and
further strengthen the Board, the decision was taken to appoint a new
independent non-executive Director.
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 Officer, 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 Officer,
the Managing Directors of the UK businesses, the Group General Counsel, the UK
Investment Manager and the UK Head of Human Resources.
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 Simon Turner.
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 appointment of Stephen
Buckland. Other matters were raised to and approved by the Board.
Audit committee
The committee is chaired by Gautam Dalal (Chris Relleen chaired the committee
up to 5 August 2021). The other members of the committee during the year were
Stephen Buckland and William Gibson. During 2021, the committee met on three
occasions.
The principal responsibilities of the committee are set out below and were
undertaken during the year:
§ Monitor the effectiveness of the Group's risk management practices
§ Review the effectiveness of the Group's internal control system. The
committee regularly reviews the effectiveness of internal audit activities
carried out by the Group's accounting function and senior management
§ Review and monitor the financial statements of the Company and the audit of
those statements and monitor compliance with relevant financial reporting
requirements and legislation
§ Monitor the effectiveness and independence of the external auditors
§ Review non-audit services provided by the external auditors
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 potential impact of the pandemic and the conflict in
Ukraine 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
The valuation of the pension schemes obligations is conducted by independent
actuaries and due to the size of the obligation a relatively minor change to
the assumptions made 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 sufficient to
support the valuation.
Accounting for the acquisition of Bardsley England
A detailed exercise was undertaken to identify and allocate a fair value to
the separately identifiable assets and liabilities relating to the Bardsley
England business at the date of acquisition. The committee considered the
assumptions made and concluded that the basis of allocation of the purchase
price to the assets and liabilities acquired was appropriate.
Carrying value of intangible assets
The Group's carrying values 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. In particular consideration was
given to the uncertainties regarding timing of recovery from the impact of
COVID and the range of future revenue growth rates for Jing.
The carrying value of the goodwill relating to Bardsley England which arose on
the acquisition of that group of companies during 2021 was also considered in
context of the future expectations of growth rates for partner grower volumes
and the potential impact of inflation on margins.
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
the £0.5 million impairment in respect of Abbey Metal Finishing, no
impairment provisions were 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 the carrying value of certain of the Indian and Bangladeshi
estates in the context of COVID impacts on trading and third party valuations
and agreed that no impairment had occurred during the year.
Carrying value of BF&M
The Group's carrying value of BF&M was lower than the share price for
BF&M at 31 December 2021. 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 expected control premium associated with our holding
concluded that no impairment is required.
Provisions
The bases of provisions for material uncertain tax situations were considered
by the committee as were the provisions for wage increases in Bangladesh and
India. Consideration was given to the accounting implications of the recent
VAT assessment in Malawi and management's judgement that it should continue to
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 effectiveness of the external audit process, the external
auditor is required to report to the Audit committee and confirm their
independence in accordance with ethical standards and that they had maintained
appropriate internal safeguards to ensure their independence and objectivity.
In addition to the steps taken by the Board to safeguard 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 Simon
Turner (Chris Relleen was a member up to 5 August 2021).
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 45 to 46.
Safeguarding & Stewardship committee
The Safeguarding and Stewardship committee has continued to promote its
mission of 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 Malcolm
Perkins and Amarpal Takk. Louise Nicholls and Vinita Singh are independent
members of the committee. Louise is the managing director of a Human Rights
and sustainability management consultancy in the UK, prior to which she was
the head of sustainability for a large UK supermarket and Vinita has
previously worked on empowering individuals and workers within supply chains
based in India and across a variety of sectors, including helping businesses
to understand how they can contribute to improving working conditions.
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
effective in their implementation
Insurance
The Company purchases insurance to cover its Directors and officers, 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 effectiveness 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
efficient day to day operations remains with the local management at the
operational level. Accountability and delegation of authority are clearly
defined with regular communication between Group head office 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
30 May 2022
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 United Kingdom adopted 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. The Directors have also chosen to prepare the
parent company financial statements under United Kingdom adopted international
accounting standards. 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 affairs 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 insufficient 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
sufficient 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 differ from legislation in other
jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
§ The financial statements, prepared in accordance with IFRSs, 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
This responsibility statement was approved by the Board of Directors on 30 May
2022.
Malcolm Perkins
Chairman
30 May 2022
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 42.
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 2020 AGM and
applies for a period of three years until 2023. The committee considers any
views expressed by shareholders on Directors' remuneration.
At the AGM on 3 June 2021, the Remuneration Report for the year to 31 December
2020 was approved by shareholders with 99.90% of the votes cast in favour,
0.03% of the votes cast against and 508 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 officers'
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
Remuneration Benefits in Kind Total
2021 2020 2021 2020 2021 2020
£ £ £ £ £ £
Executive
Malcolm Perkins 200,560 261,006 11,525 15,140 212,085 276,146
Tom Franks 611,820 611,820 38,269 38,453 650,089 650,273
Susan Walker 373,890 373,890 28,010 28,057 401,900 401,947
Graham Mclean 402,215 402,215 29,792 29,866 432,007 432,081
Non-executive
William Gibson 53,470 50,470 - - 53,470 50,470
Chris Relleen (up to 31 August 2021) 36,393 54,590 - - 36,393 54,590
Frédéric Vuilleumier 51,500 51,500 - - 51,500 51,500
Gautam Dalal 49,047 47,380 - - 49,047 47,380
Simon Turner 47,380 38,815 - - 47,380 38,815
Jonathon Bond (up to 3 June 2021) 21,573 38,815 - - 21,573 38,815
Stephen Buckland 7,897 - - - 7,897 -
(from 1 November 2021)
Total 1,855,745 1,930,501 107,596 111,516 1,963,341 2,042,017
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) Gautam Dalal 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 and the Safeguarding and
Stewardship committee
Directors' pensions
Malcolm Perkins received no payment for pensionable service during 2021. Tom
Franks, Graham Mclean and Susan Walker receive an excess non-pensionable
salary supplement equivalent to 10% of base salary.
Approved by the Board
Amarpal Takk
Company Secretary
30 May 2022
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2021
2021 2020
Notes Adjusted Separately £'m Adjusted Separately £'m
profit disclosed profit disclosed
(note 4) items (note 4) items
£'m (note 4) £'m (note 4)
£'m £'m
Continuing operations
Revenue 2 277.2 - 277.2 291.2 - 291.2
Cost of sales (215.7 ) 0.3 (215.4 ) (227.7 ) - (227.7 )
Gross profit 61.5 0.3 61.8 63.5 - 63.5
Other operating income 2.6 - 2.6 3.0 - 3.0
Distribution costs (14.5 ) - (14.5 ) (16.2 ) - (16.2 )
Administrative expenses 3 (47.6 ) (1.4 ) (49.0 ) (43.4 ) (16.1 ) (59.5 )
Trading profit/(loss) 1,3 2.0 (1.1 ) 0.9 6.9 (16.1 ) (9.2 )
Share of associates' results 5 7.2 - 7.2 6.1 - 6.1
Profit on disposal of property, plant and equipment 6 - - - - 14.4 14.4
Impairments of intangible assets, investment properties and property, plant 7 - (0.5 ) (0.5 ) - (6.5 ) (6.5 )
and equipment
Loss on disposal of subsidiaries - (0.1 ) (0.1 ) - - -
Profit on disposal of financial assets 0.2 - 0.2 0.2 - 0.2
Operating profit 9.4 (1.7 ) 7.7 13.2 (8.2 ) 5.0
Investment income 0.5 - 0.5 0.6 - 0.6
Finance income 8 2.2 - 2.2 2.3 - 2.3
Finance costs 8 (2.9 ) - (2.9 ) (1.6 ) - (1.6 )
Net exchange gain 8 0.4 - 0.4 2.2 - 2.2
Employee benefit expense 8 (0.8 ) - (0.8 ) (0.7 ) - (0.7 )
Net finance (costs)/income 8 (1.1 ) - (1.1 ) 2.2 - 2.2
Profit before tax 8.8 (1.7 ) 7.1 16.0 (8.2 ) 7.8
Taxation 9 (2.6 ) (8.6 )
Profit/(loss) after tax 4.5 (0.8 )
Profit/(loss) attributable to:
Owners of Camellia Plc 2.3 (5.0 )
Non-controlling interests 2.2 4.2
4.5 (0.8 )
Earnings/(loss) per share - basic and diluted 12 83.3p (181.0 )p
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2021
2021 2020
Notes £'m £'m
Group
Profit/(loss) for the year 4.5 (0.8 )
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 for the financial assets disposed 1.0 (0.3 )
Corporation tax arising on financial asset disposals before utilisation (2.2 ) -
of losses
Unwind of deferred tax on financial assets 2.2 -
Changes in the fair value of financial assets 22 0.8 2.3
Deferred tax movement in relation to fair value adjustments - (0.7 )
Remeasurements of post employment benefit obligations 35 20.4 4.3
Deferred tax movement in relation to post employment benefit 34 (3.9 ) 0.6
obligations
18.3 6.2
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences (4.0 ) (22.6 )
Share of other comprehensive income of associates 0.2 0.3
(3.8 ) (22.3 )
Other comprehensive income/(expense) for the year, net of tax 14.5 (16.1 )
Total comprehensive income/(expense) for the year 19.0 (16.9 )
Total comprehensive income/(expense) attributable to:
Owners of Camellia Plc 18.4 (16.6 )
Non-controlling interests 0.6 (0.3 )
19.0 (16.9 )
Company
Profit for the year 6.5 4.5
Total comprehensive income for the year 6.5 4.5
CONSOLIDATED BALANCE SHEET
at 31 December 2021
2021 2020
Notes £'m £'m
ASSETS
Non-current assets
Intangible assets 15 10.1 6.6
Property, plant and equipment 16 202.1 198.3
Right-of-use assets 17 28.8 16.6
Investment properties 18 23.1 19.1
Biological assets 19 13.4 12.7
Investments in associates 21 72.6 67.6
Financial assets at fair value through other comprehensive income 22 27.7 42.6
Financial asset at fair value through profit or loss 23 7.2 5.3
Financial assets at amortised cost 24 1.3 2.7
Other investments - heritage assets 25 8.7 9.8
Retirement benefit surplus 35 14.8 0.1
Trade and other receivables 27 2.7 2.4
Total non-current assets 412.5 383.8
Current assets
Inventories 26 51.7 47.5
Biological assets 19 7.8 7.1
Trade and other receivables 27 48.5 43.7
Financial asset at fair value through profit or loss 23 2.7 -
Financial assets at amortised cost 24 1.3 -
Current income tax assets 0.6 1.7
Cash and cash equivalents (excluding bank overdrafts) 28 61.8 98.5
174.4 198.5
Assets classified as held for sale 29 6.6 -
Total current assets 181.0 198.5
LIABILITIES
Current liabilities
Financial liabilities - borrowings 31 (3.3 ) (5.7 )
Lease liabilities 32 (3.2 ) (1.2 )
Trade and other payables 30 (59.2 ) (50.9 )
Current income tax liabilities (3.0 ) (10.3 )
Employee benefit obligations 35 (1.1 ) (1.1 )
Provisions 33 (11.8 ) (19.0 )
(81.6 ) (88.2 )
Liabilities related to assets classified as held for sale 29 (2.0 ) -
Total current liabilities (83.6 ) (88.2 )
Net current assets 97.4 110.3
Total assets less current liabilities 509.9 494.1
Non-current liabilities
Financial liabilities - borrowings 31 (4.5 ) (2.7 )
Lease liabilities 32 (21.5 ) (10.3 )
Deferred tax liabilities 34 (38.0 ) (39.5 )
Employee benefit obligations 35 (8.6 ) (15.6 )
Total non-current liabilities (72.6 ) (68.1 )
Net assets 437.3 426.0
EQUITY
Called up share capital 36 0.3 0.3
Share premium 15.3 15.3
Reserves 373.0 361.0
Equity attributable to owners of Camellia Plc 388.6 376.6
Non-controlling interests 48.7 49.4
Total equity 437.3 426.0
COMPANY BALANCE SHEET
at 31 December 2021
2021 2020
Notes £'m £'m
ASSETS
Non-current assets
Investments in subsidiaries 20 73.5 73.5
Other investments - heritage assets 25 8.8 11.0
Total non-current assets 82.3 84.5
Current assets
Trade and other receivables 27 0.2 0.6
Current income tax asset 0.1 0.1
Amounts due from group undertakings 1.9 2.2
Cash and cash equivalents 28 0.7 -
2.9 2.9
Assets classified as held for sale 29 2.1 -
Total current assets 5.0 2.9
LIABILITIES
Current liabilities
Trade and other payables 30 (0.9 ) (0.8 )
Amounts due to group undertakings (16.6 ) (16.1 )
Provisions 33 - (1.9 )
Total current liabilities (17.5 ) (18.8 )
Net current liabilities (12.5 ) (15.9 )
Total assets less current liabilities 69.8 68.6
Non-current liabilities
Deferred tax liabilities 34 (0.2 ) (0.2 )
Total non-current liabilities (0.2 ) (0.2 )
Net assets 69.6 68.4
EQUITY
Called up share capital 36 0.3 0.3
Share premium 15.3 15.3
Reserves 54.0 52.8
Total equity 69.6 68.4
The profit for the company is shown in note 10.
The notes on pages 54 to 124 form part of the financial statements.
The financial statements on pages 47 to 124 were approved on 30 May 2022 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 2021
2021 2020
Notes £'m £'m
Cash generated from/(used in) operations
Cash flows from operating activities 37 1.9 19.3
Interest received 2.1 2.4
Interest paid (2.9 ) (1.6 )
Income taxes paid (13.1 ) (7.2 )
Net cash flow from operating activities (12.0 ) 12.9
Cash flows from investing activities
Purchase of intangible assets - (0.3 )
Purchase of property, plant and equipment (10.7 ) (13.5 )
Proceeds from sale of non-current assets 0.7 0.5
Proceeds from sale of non-current assets - non recurring - 21.6
Proceeds from sale of heritage assets 0.1 -
Additions to investment property (0.9 ) (0.9 )
Biological assets: non-current - disposals 0.5 0.7
Payment for acquisition of a businesses/subsidiary net of cash acquired 39 (3.7 ) -
Purchase of non-controlling interest 39 (5.9 ) -
Investment in associates - (0.3 )
Dividends received from associates 3.0 3.2
Purchase of investments (8.9 ) (12.4 )
Proceeds from sale of investments 21.3 9.1
Income from investments 0.5 0.6
Net cash flow from investing activities (4.0 ) 8.3
Cash flows from financing activities
Equity dividends paid (5.2 ) (2.8 )
Dividends paid to non-controlling interests (1.9 ) (7.0 )
New loans 38 3.8 1.9
Loans repaid 38 (13.1 ) (3.6 )
Payments of lease liabilities 38 (2.0 ) (0.9 )
Net cash flow from financing activities (18.4 ) (12.4 )
Net (decrease)/increase in cash and cash equivalents (34.4 ) 8.8
Cash and cash equivalents at beginning of year 28 94.9 89.4
Exchange losses on cash (0.6 ) (3.3 )
Cash and cash equivalents at end of year 28 59.9 94.9
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 2021
2021 2020
Notes £'m £'m
Cash generated from operations
Profit before tax 10 6.5 4.5
Adjustments for:
Interest income (0.3 ) (0.2 )
Dividends from group companies (8.0 ) (10.0 )
Decrease/(increase) in trade and other receivables 0.4 (0.6 )
Increase in trade and other payables 0.1 0.2
Movement in provisions (1.9 ) 1.9
Net movement in intra-group balances 0.8 (3.1 )
Cash used in operations (2.4 ) (7.3 )
Interest received 0.3 0.2
Net cash flow from operating activities (2.1 ) (7.1 )
Cash flows from investing activities
Proceeds from sale of other investments - heritage assets 0.1 -
Dividends received 8.0 10.0
Net cash flow from investing activities 8.1 10.0
Cash flows from financing activities
Equity dividends paid (5.3 ) (2.9 )
Net cash flow from financing activities (5.3 ) (2.9 )
Net movement in cash and cash equivalents 0.7 -
Cash and cash equivalents at beginning of year 28 - -
Cash and cash equivalents at end of year 28 0.7 -
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
Non-
Share Share Treasury Retained Other controlling Total
capital premium shares earnings reserves Total interests equity
Notes £'m £'m £'m £'m £'m £'m £'m £'m
Group
At 1 January 2020 0.3 15.3 (0.4 ) 358.6 21.9 395.7 56.7 452.4
Loss for the year - - - (5.0 ) - (5.0 ) 4.2 (0.8 )
Other comprehensive
income/(expense) for the year - - - 5.3 (16.9 ) (11.6 ) (4.5 ) (16.1 )
Dividends 11 - - - (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
Profit for the year - - - 2.3 - 2.3 2.2 4.5
Other comprehensive income/(expense) for the year - - - 13.8 2.3 16.1 (1.6 ) 14.5
Transfer of realised gains on disposal of financial assets - - - 11.0 (11.0 ) - - -
Dividends 11 - - - (5.2 ) - (5.2 ) (1.9 ) (7.1 )
Companies joining the Group 39 - - - - - - 5.3 5.3
Adjustment arising from change in non-controlling interest - - - (1.4 ) - (1.4 ) 1.4 -
Purchase of non-controlling interests 39 - - - 0.2 - 0.2 (6.1 ) (5.9 )
At 31 December 2021 0.3 15.3 (0.4 ) 377.1 (3.7 ) 388.6 48.7 437.3
Company
At 1 January 2020 0.3 15.3 - 39.1 12.1 66.8 - 66.8
Profit for the year - - - 4.5 - 4.5 - 4.5
Other comprehensive income for the year - - - - - - - -
Dividends - - - (2.9 ) - (2.9 ) - (2.9 )
At 31 December 2020 0.3 15.3 - 40.7 12.1 68.4 - 68.4
Profit for the year - - - 6.5 - 6.5 - 6.5
Other comprehensive income for the year - - - - - - - -
Dividends 11 - - - (5.3 ) - (5.3 ) - (5.3 )
At 31 December 2021 0.3 15.3 - 41.9 12.1 69.6 - 69.6
In relation to the reserves of the Company, £41.9 million is distributable.
Other reserves of the Company include capital redemption and revaluation
reserves.
Other reserves of the Group include fair value reserves and net exchange
differences of £53.5 million deficit (2020: £50.8 million deficit).
Group retained earnings includes £162.1 million (2020: £157.3 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
United Kingdom adopted 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 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 the current year, Jing Tea has
been included in agriculture instead of food service and comparative figures
in note 1 have been adjusted. This reclassification 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.
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. Subsidiaries are those entities over which the Group
has control. The Group controls an entity when the Group is exposed to, or has
rights to, variable returns through its power over the entity. Subsidiaries
are fully consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
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. Any difference that arises from the acquisition of additional
shares of an already consolidated subsidiary is taken directly to equity.
The results of subsidiaries acquired or disposed of during the year are
included in the consolidated Income Statement from the effective date of
acquisition or disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used
by the Group.
All Intra-Group transactions, balances, income and expenses are eliminated on
consolidation.
Associates
An associate is an entity over which the Group is in a position to exercise
significant influence, but not control or joint control, through participation
in the financial and operating policy decisions of that entity.
Investments in associates are accounted for by the equity method of
accounting. Under this method the Group's share of the post-acquisition
profits or losses of associates is recognised in the Income Statement and its
share of post-acquisition movements in reserves is recognised in reserves.
Foreign currency translation
Transactions in currencies other than pounds sterling are recorded at the
rates of exchange prevailing on the dates of the transactions. At each balance
sheet date, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates prevailing on the balance sheet date.
Translation differences on non-monetary items carried at fair value are
reported as part of the fair value gain or loss. Gains and losses arising on
retranslation are included in the income statement, except for exchange
differences arising on non-monetary items where the changes in fair value are
recognised directly in equity.
The consolidated financial statements are presented in sterling which is the
Company's functional and presentation currency. On consolidation, income
statements and cash flows of foreign entities are translated into pounds
sterling at average exchange rates for the year and their balance sheets are
translated at the exchange rates ruling at the balance sheet date. Exchange
differences arising from the translation of the net investment in foreign
entities are taken to equity. When a foreign entity is sold such exchange
differences arising since 1 January 2004 are recognised in the Income
Statement as part of the gain or loss on disposal.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the exchange rate ruling on the date of acquisition. The Group
has elected to treat goodwill and fair value adjustments arising on
acquisitions prior to 1 January 2004, the date of the Group's transition from
UK GAAP to IFRS, as sterling denominated assets and liabilities.
Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods and services provided
in the normal course of business, net of discounts, value added tax and other
sales related taxes and after eliminating intra-group sales.
Revenue from the sale of goods is recognised when the following five core
principles of the model framework have been delivered:
§ The identification 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
§ The recognition of revenue when (or as) a performance obligation has been
satisfied
In respect of agricultural produce, revenue is recognised when the performance
obligations have been satisfied, which is once control of the produce has
transferred from the Group to the buyer. Revenue is measured based on the
consideration specified in the contract with a customer and excludes amounts
collected on behalf of third parties. Revenue related to the sale of produce
is recognised when the product is delivered to the destination specified by
the customer, which is typically the vessel on which it is shipped, the
destination port or the customer's premises and the buyer has gained control
through their ability to direct the use of and obtain substantially all the
benefits from the asset.
In respect of warehousing 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. Contingent rent, being lease payments that are based on
the future amount of a factor that changes other than with the passage of
time, is recognised when it is received or receivable.
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.
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.
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 that they are intended
to compensate for. Grants for the purchase or production of property, plant
and equipment are deducted from the cost of the related assets and reduce
future depreciation expense accordingly.
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 offices. All property, plant
and equipment is shown at cost less subsequent depreciation and impairment,
except for land and assets under construction, which are 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 off 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 buildings nil to 50 years
Other short leasehold land and buildings unexpired term of the lease
Plant, machinery, fixtures, fittings and equipment 3 to 25 years
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 difference between the sales proceeds and the carrying
amount of the asset and is included in the Income Statement.
Right-of-use assets
The Group recognises right-of-use assets for land and buildings and plant and
machinery at the commencement date of the lease. Right-of-use assets are
measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any re-measurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made at or before the
commencement date, less any lease incentives received. Unless the Group
is reasonably certain to obtain ownership of the leased asset at the end of
the lease term, the recognised
right-of-use asset is depreciated over the shorter of its estimated useful
life and lease term.
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 effective 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 effective interest method of any
difference 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 effective 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 effort. 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 effectiveness 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 different
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 difficulty 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 difficulty, 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 difficulties.
(iv) Write-off policy
The Group writes off a financial asset when there is information indicating
that the debtor is in severe financial difficulty 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 off 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 difference
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 effective 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
IFRS 16 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
difference 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, which are integral to the Group's
cash management activities. Bank overdrafts are shown within borrowings in
current liabilities on the balance sheet.
Assets classified as held for sale
Assets classified as held for sale are measured at the lower of the carrying
amount and fair value less costs to sell.
Assets are classified as held for sale if their carrying amount will be
recovered through a sale transaction rather than through continuing use. This
condition is regarded as met only when the sale is highly probable and the
asset is available for immediate sale in its present condition. Management
must be committed to the sale which should be expected to qualify for
recognition as a completed sale within one year from the date of
classification.
Trade payables
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if payment is due within one year or
less. If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method.
Borrowings
Interest-bearing bank loans and overdrafts are initially recorded at the
proceeds received, net of direct issue costs. Finance charges, including
premiums payable on settlement or redemption and direct issue costs, are
accounted for on an accrual basis to the Income Statement using the effective
interest method and are added to the carrying amount of the instrument to the
extent that they are not settled in the period in which they arise.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the liability method. Deferred tax is not
accounted for if it arises from initial recognition of an asset or liability
in a transaction, other than in a business combination, that at the time of
the transaction affects neither accounting nor taxable profit or loss.
Deferred tax is determined using tax rates and laws that have been enacted or
substantively enacted by the balance sheet date and are expected to apply when
the related tax asset is realised or the tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that
future taxable profit will be available against which the temporary
differences can be utilised. Deferred income tax assets and liabilities are
offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income taxes
assets and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities
where there is an intention to settle the balances on a net basis.
Deferred tax is provided on temporary differences arising on investments in
subsidiaries and associates, except where the timing of the reversal of the
temporary difference is controlled by the Group and it is probable that the
temporary difference will not reverse in the foreseeable future.
Employee benefits
(i) Pension obligations
Group companies operate various pension schemes. The schemes are funded
through payments to insurance companies or trustee-administered funds. The
Group has both defined benefit and defined contribution plans.
A defined contribution plan is a pension plan under which the Group pays fixed
contributions into a separate fund. The Group has no legal or constructive
obligations to pay further contributions to the fund. Contributions are
recognised as an expense in the Income Statement when they are due.
A defined benefit plan is a pension plan that defines an amount of pension
benefit that an employee will receive on retirement, usually dependent on one
or more factors such as age, years of service and compensation. The pension
cost for defined benefit schemes is assessed in accordance with the advice of
qualified independent actuaries using the "projected unit" funding method.
The liability recognised in the Balance Sheet in respect of defined benefit
pension plans is the present value of the defined benefit obligation at the
balance sheet date less the fair value of plan assets. Independent actuaries
calculate the obligation annually using the "projected unit" funding method.
Actuarial gains and losses arising from experience adjustments and changes in
actuarial adjustments are recognised in full in the period in which they
occur, they are not recognised in the Income Statement and are presented in
the Statement of Comprehensive Income.
Past service costs are recognised directly in the Income Statement.
(ii) Other post-employment benefit obligations
Some Group companies have unfunded obligations to pay terminal gratuities to
employees. Provisions are made for the estimated liability for gratuities as a
result of services rendered by employees up to the balance sheet date and any
movement in the provision is recognised in the Income Statement.
The estimated monetary liability for employees' accrued annual leave
entitlement 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 effects, is included in equity attributable to the Company's
equity holders.
Dividend distribution
Dividend distribution to the Company's shareholders is recognised as a
liability in the Group's financial statements in the period in which the
dividends are approved by the Company's shareholders. Interim dividends are
recognised when paid.
Critical accounting 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 effect 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.
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 affects 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) Estimation of useful lives of bearer plants
Estimates and assumptions made to determine bearer plants carrying values and
related depreciation are significant to the Group's financial position and
performance. The annual depreciation charge is determined after estimating an
asset's expected useful life and its residual value at the end of its life.
The useful lives and residual values of the Group's assets are determined by
management at the time the asset is acquired or bearer plant is planted and
reviewed annually for appropriateness. The Group derives useful economic lives
based on experience of similar assets, including use of third party experts at
the time of acquisition of assets. Emerging governmental policies relating to
climate change are also considered when reviewing the appropriateness of
useful economic lives. A decrease in the average useful life by 10% would
result in additional depreciation of £0.5 million.
(ii) Fair value of assets acquired and liabilities assumed in a business
combination
Business combinations are recorded in accordance with IFRS 3 using the
acquisition method. The Group estimates the excess purchase price in
accordance with IFRS3 as the difference of the consideration paid for the
acquisition and the net asset of the target company at the acquisition date.
Under this method, the identifiable assets acquired and the liabilities
assumed are recognised at their fair value at the acquisition date. Therefore,
through a number of different approaches and with the assistance of external
independent valuation experts for acquisitions as considered appropriate by
management, the Group identifies what it believes is the fair value of the
assets acquired and liabilities assumed at the acquisition date. These
valuations involve the use of judgement and include a number of estimates.
Specifically in relation to the value of bearer plants this includes
assumptions on useful lives, yield profiles, costs and future selling prices
of the produce.
(iii) 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.
(iv) 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.
(v) 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.
(vi) Taxation and other liabilities
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 different interpretation. Management uses professional
firms and previous experience when assessing tax risks. Where actual tax
liabilities differ 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.
(vii) 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 differ 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.
Changes in accounting policy and disclosures
(i) New and amended standards adopted by the Group
There were no new or amended IFRSs effective for the current year which had a
material impact on the financial statements of the Group.
The IFRS interpretations committee (IFRIC) published an agenda decision which
clarified how a customer should account for the costs of configuring or
customising the suppliers application software in a software as a service
arrangement. As a result the Group has revised its accounting policy. This had
no material impact on the results.
(ii) Standards, amendments and interpretations to existing standards that
are not yet effective 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 effective:
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 IFRS 10 and IAS 28 Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
Amendments to IAS 16 Property, Plant and Equipment Proceeds before Intended Use
Amendments to IAS 37 Cost of fulfilling a contract
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 affect only the presentation of liabilities as
current or non-current in the balance sheet 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 unaffected
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 10 and IAS 28 - Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
The amendments to IFRS 10 and IAS 28 deal with situations where there is a
sale or contribution of assets between an investor and its associate or joint
venture. Specifically, the amendments state that gains or losses resulting
from the loss of control of a subsidiary that does not contain a business in a
transaction with an associate or a joint venture that is accounted for using
the equity method, are recognised in the parent's profit or loss only to the
extent of the unrelated investors' interests in that associate or joint
venture. Similarly, gains and losses resulting from the remeasurement of
investments retained in any former subsidiary (that has become an associate or
a joint venture that is accounted for using the equity method) to fair value
are recognised in the former parent's profit or loss only to the extent of the
unrelated investors' interests in the new associate or joint venture.
The effective date of the amendments has yet to be set by the Board; however,
earlier application of the amendments is permitted. The Directors of the
Company anticipate that the application of these amendments may have an impact
on the Group's consolidated financial statements in future periods should such
transactions arise.
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 effective 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.
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 effective 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 effective 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 effective for annual periods beginning on or after 1 January
2022, with early application permitted.
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice
Statement 2 Making Materiality Judgements-Disclosure of Accounting Policies
The amendments change the requirements in IAS 1 with regard to disclosure of
accounting policies. The amendment replaces all instances of the term
'significant accounting policies' with 'material accounting policy
information'. Accounting policy information is material if, when considered
together with other information included in an entity's financial statements,
it can reasonably be expected to influence decisions that the primary users of
general purpose financial statements make on the basis of those financial
statements.
The supporting paragraphs in IAS 1 are also amended to clarify that accounting
policy information that relates to immaterial transactions, other events or
conditions is immaterial and need not be disclosed. Accounting policy
information may be material because of the nature of the related transactions,
other events or conditions, even if the amounts are immaterial. However, not
all accounting policy information relating to material transactions, other
events or conditions is itself material.
The Board has also developed guidance and examples to explain and demonstrate
the application of the 'four-step materiality process' described in IFRS
Practice Statement 2.
The amendments to IAS 1 are effective for annual periods beginning on or
after 1 January 2023, with earlier application permitted and are applied
prospectively. The amendments to IFRS Practice Statement 2 do not contain an
effective date or transition requirements.
Amendments to IAS 8 Accounting Policies Changes in Accounting Estimates and
Errors-Definition of Accounting Estimates
The amendments replaces the definition of a change in accounting estimates
with a definition of accounting estimates. Under the new definition,
accounting estimates are "monetary amounts in financial statements that are
subject to measurement uncertainty".
The definition of a change in accounting estimates was deleted. However, the
IASB retained the concept of changes in accounting estimates in the Standard
with the following clarifications:
- A change in accounting estimate that results from new information or new
developments is not the correction of an error; and
- The effects of a change in an input or a measurement technique used to
develop an accounting estimate are changes in accounting estimates if they do
not result from the correction of prior period errors.
The IASB added two examples (Examples 4-5) to the Guidance on implementing IAS
8, which accompanies the Standard. The IASB has deleted one example (Example
3) as it could cause confusion in light of the amendments.
The amendments are effective for annual periods beginning on or after 1
January 2023 to changes in accounting policies and changes in accounting
estimates that occur on or after the beginning of that period, with earlier
application permitted.
Amendments to IAS 12 Income Taxes-Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
The amendments introduce a further exception from the initial recognition
exemption. Under the amendments, an entity does not apply the initial
recognition exemption for transactions that give rise to equal taxable and
deductible temporary differences.
Depending on the applicable tax law, equal taxable and deductible temporary
differences may arise on initial recognition of an asset and liability in a
transaction that is not a business combination and affects neither accounting
nor taxable profit. For example, this may arise upon recognition of a lease
liability and the corresponding right-of-use asset applying IFRS 16 at the
commencement date of a lease.
Following the amendments to IAS 12, an entity is required to recognise the
related deferred tax asset and liability, with the recognition of any deferred
tax asset being subject to the recoverability criteria in IAS 12.
The IASB also added an illustrative example to IAS 12 that explains how the
amendments are applied.
Following the amendments to IAS 12, an entity is required to recognise the
related deferred tax asset and liability, with the recognition of any deferred
tax asset being subject to the recoverability criteria in IAS 12.
The amendments apply to transactions that occur on or after the beginning of
the earliest comparative period presented. In addition, at the beginning of
the earliest comparative period an entity recognises:
- A deferred tax asset (to the extent that it is probable that taxable profit
will be available against which the deductible temporary difference can be
utilised) and a deferred tax liability for all deductible and taxable
temporary differences associated with:
§ Right-of-use assets and lease liabilities
§ Decommissioning, restoration and similar liabilities and the corresponding
amounts recognised as part of the cost of the related asset
- The cumulative effect of initially applying the amendments as an adjustment
to the opening balance of retained earnings (or other component of equity, as
appropriate) at that date
The amendments are effective for annual reporting periods beginning on or
after 1 January 2023, with earlier 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. Following a
change in management reporting the figures for 2020 have been restated to move
results for Jing Tea to Agriculture from Food Service.
Agriculture Engineering Food Service Unallocated Consolidated
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
£'m £'m £'m £'m £'m £'m £'m £'m £'m £'m
Restated Restated
Revenue
External sales 238.8 249.6 15.3 19.3 22.0 21.2 1.1 1.1 277.2 291.2
Adjusted trading profit/(loss) 13.1 16.1 (2.3 ) (1.5 ) - 0.5 (8.8 ) (8.2 ) 2.0 6.9
Separately disclosed items 0.1 (16.1 ) - - - - (1.2 ) - (1.1 ) (16.1 )
Trading profit/(loss) 13.2 - (2.3 ) (1.5 ) - 0.5 (10.0 ) (8.2 ) 0.9 (9.2 )
Share of associates' results - - - - - - 7.2 6.1 7.2 6.1
Profit on disposal of property, plant and equipment - 14.4 - - - - - - - 14.4
Impairment of intangible assets, investment properties and plant and equipment - (0.2 ) (0.5 ) (1.6 ) - (3.7 ) - (1.0 ) (0.5 ) (6.5 )
Loss on disposal of subsidiaries - - (0.1 ) - - - - - (0.1 ) -
Profit on disposal of financial assets 0.2 0.2 - - - - - - 0.2 0.2
Operating profit/(loss) 13.4 14.4 (2.9 ) (3.1 ) - (3.2 ) (2.8 ) (3.1 ) 7.7 5.0
Comprising
- adjusted operating profit/(loss) before tax 13.3 16.3 (2.3 ) (1.5 ) - 0.5 (1.6 ) (2.1 ) 9.4 13.2
- profit on disposal of property, plant and equipment - 14.4 - - - - - - - 14.4
- costs related to group claims - (16.1 ) - - - - - - - (16.1 )
- impairment of intangible assets and property, plant and equipment - (0.2 ) (0.5 ) (1.6 ) - (3.7 ) - (1.0 ) (0.5 ) (6.5 )
- Loss on disposal of subsidiaries - - (0.1 ) - - - - - (0.1 ) -
- release of provisions for wage increases 0.6 - - - - - - - 0.6 -
- acquisition costs - - - - - - (1.2 ) - (1.2 ) -
- restructuring costs (0.5 ) - - - - - - - (0.5 ) -
13.4 14.4 (2.9 ) (3.1 ) - (3.2 ) (2.8 ) (3.1 ) 7.7 5.0
Investment income 0.5 0.6
Net finance (costs)/income (1.1 ) 2.2
Profit before tax 7.1 7.8
Taxation (2.6 ) (8.6 )
Profit/(loss) after tax 4.5 (0.8 )
Other information
Segment assets 385.4 355.9 10.6 16.6 18.9 26.2 24.5 20.5 439.4 419.2
Investments in associates 72.6 67.6
Unallocated assets 81.5 95.5
Consolidated total assets 593.5 582.3
Segment liabilities (77.7 ) (61.0 ) (8.0 ) (11.8 ) (5.7 ) (5.7 ) (0.8 ) (2.9 ) (92.2 ) (81.4 )
Unallocated liabilities (64.0 ) (74.9 )
Consolidated total liabilities (156.2 ) (156.3 )
Capital expenditure 9.4 11.4 0.3 0.6 0.9 1.2 1.0 1.2 11.6 14.4
Depreciation (11.9 ) (12.7 ) (1.0 ) (1.4 ) (1.9 ) (1.9 ) (0.1 ) (0.2 ) (14.9 ) (16.2 )
Amortisation - - - - (0.1 ) - - (0.3 ) (0.1 ) (0.3 )
Impairments - (0.2 ) (0.5 ) (1.6 ) - (3.7 ) - (1.0 ) (0.5 ) (6.5 )
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 eight 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
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
2021 2020 2021 2020 2021 2020
£'m £'m £'m £'m £'m £'m
United Kingdom 52.1 49.8 1.0 1.0 53.1 50.8
Continental Europe 20.2 26.6 - - 20.2 26.6
Bangladesh 24.0 23.3 - - 24.0 23.3
India 97.9 99.9 - - 97.9 99.9
Kenya 32.2 32.0 - - 32.2 32.0
Malawi 13.1 13.7 0.1 0.1 13.2 13.8
North America 7.0 14.7 - - 7.0 14.7
South Africa 1.5 2.2 - - 1.5 2.2
South America 8.5 6.4 - - 8.5 6.4
Other 19.6 21.5 - - 19.6 21.5
276.1 290.1 1.1 1.1 277.2 291.2
The following is an analysis of the carrying amount of segment assets and
additions to property, plant and equipment and investment properties, analysed
by the geographical area in which the assets are located:
Carrying amount of segment assets Additions to property, plant and equipment Additions to investment properties
2021 2020 2021 2020 2021 2020
£'m £'m £'m £'m £'m £'m
United Kingdom 113.0 62.1 1.5 2.2 0.9 0.9
Continental Europe - 0.8 - - - -
Bangladesh 64.3 64.4 1.9 1.7 - -
India 97.2 102.9 2.2 2.7 - -
Kenya 89.5 89.4 2.7 3.7 - -
Malawi 46.8 48.0 0.1 0.4 - -
Tanzania 2.8 3.7 0.9 1.5 - -
North America 0.1 24.7 - - - -
South Africa 14.6 14.2 1.1 1.0 - -
South America 11.1 9.0 0.3 0.3 - -
439.4 419.2 10.7 13.5 0.9 0.9
2 Revenue
An analysis of the Group's revenue is as follows:
2021 2020
£'m £'m
Sale of goods 238.8 247.2
Distribution and warehousing revenue 22.0 23.6
Engineering services revenue 15.3 19.3
Property rental revenue 1.1 1.1
Total Group revenue 277.2 291.2
Other operating income 2.6 3.0
Investment income 0.5 0.6
Interest income 2.2 2.3
Total Group income 282.5 297.1
Disaggregation of revenue from contracts with customers:
At a point in time Over time
2021 2020 2021 2020
£'m £'m £'m £'m
Sale of goods 238.8 247.2 - -
Distribution and warehousing revenue 22.0 23.6 - -
Engineering services revenue 15.3 19.3 - -
Property rental revenue - - 1.1 1.1
Total Group revenue 276.1 290.1 1.1 1.1
3 Trading profit/(loss)
2021 2020
£'m £'m
The following items have been included in arriving at trading profit/(loss):
Employment costs (note 13) 117.0 108.1
Inventories:
Cost of inventories recognised as an expense (included in cost of sales) 163.7 163.9
Cost of inventories provision recognised as an expense 0.2 0.9
(included in cost of sales)
Fair value gain included in Made Tea 0.2 0.1
Depreciation of property, plant and equipment:
Owned assets 13.3 15.2
Right-of-use assets 1.6 1.0
Amortisation of intangibles (included in administrative expenses) 0.1 0.3
Gain from change in fair value of non-current biological assets 1.5 0.4
Loss on disposal of property, plant and equipment - (0.1 )
Repairs and maintenance expenditure on property, plant and equipment 7.9 2.1
Government grant income (included in other operating income) 0.4 0.8
During the year the Group benefited from £0.4 million (2020: £0.8 million)
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
staff costs for which it compensates.
Currency exchange (gains)/losses (credited)/charged to income include:
Revenue - (0.1 )
Distribution costs - (0.1 )
Administrative expenses 0.2 (0.1 )
Finance income and costs (0.4 ) (2.2 )
(0.2 ) (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 0.3 0.2
Subsidiary companies 0.8 0.6
1.1 0.8
Tax compliance services - 0.1
1.1 0.9
4 Adjusted profit
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 affect 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 from the adjusted profit measure and
have been separately disclosed:
§ Restructuring costs at Bardsley England of £0.5 million
§ Costs of acquisition of Bardsley England of £1.2 million
§ A gain resulting from wage provision releases following wage agreements
reached in the year of £0.6 million
§ Impairment charges in relation to the property, plant and equipment relating
to Abbey Metal Finishing and a related loss on sale of that business as
reported in our interim results, totalling £0.6 million
In 2020, the following items were excluded from the adjusted profit measure
and have been separately disclosed:
§ A £14.4 million profit from the disposal of the property, plant and equipment
owned by Horizon Farms
§ £16.1 million of legal and other costs relating to the defence of the
litigation concerning our East African operations, including the settlements
of up to £4.6 million in relation to the Kenyan claims and £2.3 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 totalling £6.5 million
5 Share of associates' results
The Group's share of the results of associates is analysed below:
2021 2020
£'m £'m
Profit before tax 7.6 6.7
Taxation (0.4 ) (0.6 )
Profit after tax 7.2 6.1
6 Profit on disposal of property, plant and equipment
In 2020, a £14.4 million profit was realised from the disposal of the
property, plant and equipment owned by Horizon Farms in California. Total cash
consideration was £21.6 million.
7 Impairments of intangible assets, investment properties and
property, plant and equipment
Abbey Metal Finishing was a UK subsidiary and with its German subsidiary Atfin
provided specialist coating services for the aerospace sector. These companies
operations continued to be affected in 2021 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 2021, which resulted in a property, plant and equipment
impairment of £0.5 million (2020: £1.6 million). These companies were
subsequently sold in the second half of 2021.
In 2020, £4.9 million of impairment charges were recognised in relation to
the Jing Tea brand, investment properties and property, plant and equipment
elsewhere in the UK.
8 Finance income and costs
2021 2020
£'m £'m
Interest payable on loans and bank overdrafts (1.1 ) (0.9 )
Interest payable on leases (0.7 ) (0.7 )
Other interest payable (1.1 ) -
Finance costs (2.9 ) (1.6 )
Finance income - interest income on short-term bank deposits 2.2 2.3
Net exchange gain on foreign cash balances 0.4 2.2
Employee benefit expense (note 35) (0.8 ) (0.7 )
Net finance (costs)/income (1.1 ) 2.2
Other interest payable relates to interest on unpaid withholding taxes.
9 Taxation
Analysis of charge in the year 2021 2020
Current tax £'m £'m £'m
UK corporation tax
UK corporation tax at 19.00 per cent. (2020: 19.00 per cent.) 0.2 0.3
Double tax relief (0.2 ) (0.3 )
Use of losses to shelter capital gain on disposal of financial assets (2.2 ) -
Adjustment in respect of prior years (0.2 ) -
-
Foreign tax (2.4 )
Corporation tax 6.3 13.2
Adjustment in respect of prior years 0.9 -
7.2 13.2
Total current tax 4.8 13.2
Deferred tax
Origination and reversal of timing differences
United Kingdom (1.5 ) (0.7 )
Overseas (0.7 ) (3.9 )
(2.2 ) (4.6 )
Tax on profit on ordinary activities 2.6 8.6
Factors affecting tax charge for the year
Profit on ordinary activities before tax 7.1 7.8
Share of associated undertakings profit (7.2 ) (6.1 )
Group profit on ordinary activities before tax (0.1 ) 1.7
Tax on ordinary activities at the standard rate of corporation tax
in the UK of 19.00 per cent. (2020: 19.00 per cent.) - 0.3
Effects of:
Adjustment to tax in respect of prior years 0.7 -
Expenses not deductible for tax purposes 1.2 0.3
Adjustment in respect of foreign tax rates 0.9 2.5
Additional tax arising on dividends from overseas companies 0.5 0.5
Other income not charged to tax (0.3 ) (0.6 )
Change in deferred tax not recognised (3.7 ) -
Increase in tax losses carried forward 3.1 6.0
Movement in other timing differences 0.2 (0.4 )
Total tax charge for the year 2.6 8.6
In 2021, the tax charge includes a deferred tax credit of £3.7m relating to
the recognition of deferred tax losses able to be utilised to offset tax on
gains in the UK pension scheme surplus recognised through other comprehensive
income where the related equal and opposite charge arises in the Statement of
Comprehensive Income.
The tax charge includes a credit of £0.1 million (2020: £0.7 million)
relating to the recognition of deferred tax losses able to be utilised to
offset 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.
In 2021 the current tax charge includes a credit of £2.2 million arising from
the use of losses to offset gains on disposal of financial assets held at
fair value through other comprehensive income. The deferred tax charge
includes an equal and opposite charge to reflect the impact of utilising
previously unrecognised losses in the Statement of Comprehensive Income.
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 £14.4 million profit on disposal of the property, plant and
equipment owned by Horizon Farms gave rise to a corporation tax charge of
£5.6 million offset by a release of deferred tax of £1.7 million.
10 Profit for the year
2021 2020
£'m £'m
The profit of the Company was: 6.5 4.5
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
2021 2020
£'m £'m
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2020 of 144p
(2019: nil) per share 4.0 -
Interim dividend for the year ended 31 December 2021 of 44p
(2020: nil) per share 1.2 -
Special interim dividend for the year ended 31 December 2021 of
nil (2020: 102p) per share - 2.8
5.2 2.8
Dividends amounting to £0.1 million (2020: £0.1 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 2021 of
102p (2020: 144p) per share 2.8 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)
2021 2020
Weighted Weighted
average average
number of number of
Earnings shares EPS Loss shares EPS
Basic and diluted EPS £'m Number Pence £'m Number Pence
Attributable to ordinary
shareholders 2.3 2,762,000 83.3 (5.0 ) 2,762,000 (181.0 )
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
2021 2020
Number Number
Average number of employees by activity:
Agriculture 77,982 75,522
Engineering 204 223
Food Service 296 282
Central Management 32 33
78,514 76,060
2021 2020
£'m £'m
Employment costs:
Wages and salaries 106.5 97.1
Social security costs 2.5 2.4
Employee benefit obligations (note 35) - UK 1.4 1.8
- Overseas 6.6 6.8
117.0 108.1
Total remuneration paid to key employees who are members of the Executive
Committees, excluding Directors of Camellia Plc, amounted to £2.4 million
(2020: £2.5 million).
14 Emoluments of the directors
2021 2020
£'m £'m
Aggregate emoluments excluding pension contributions 2.0 2.0
Emoluments of the highest paid director excluding pension contributions were
£0.7 million (2020: £0.7 million).
Further details of directors' emoluments are set out on pages 45 to 46.
15 Intangible assets
Computer
Goodwill Brands software Total
Group £'m £'m £'m £'m
Cost
At 1 January 2020 1.4 8.8 2.3 12.5
Exchange differences (0.1 ) (0.1 ) - (0.2 )
Additions - - 0.3 0.3
At 1 January 2021 1.3 8.7 2.6 12.6
Subsidiaries joining the group 3.6 - - 3.6
Disposals - - (1.3 ) (1.3 )
At 31 December 2021 4.9 8.7 1.3 14.9
Amortisation
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 1 January 2021 0.3 3.5 2.2 6.0
Charge for the year - - 0.1 0.1
Disposals - - (1.3 ) (1.3 )
At 31 December 2021 0.3 3.5 1.0 4.8
Net book value at 31 December 2021 4.6 5.2 0.3 10.1
Net book value at 31 December 2020 1.0 5.2 0.4 6.6
In accordance with the Group's accounting policy, goodwill and intangible
assets are tested annually for impairment. There was no indication of
impairment for the year to 31 December 2021 (2020: £nil).
Goodwill consists of the following:
2021 2020
Segment Cash Generating Unit (CGU) Net Book Net Book
Value Value
£'m £'m
Agriculture Tea estates acquired in Assam, India 1.0 1.0
Bardsley England 3.6 -
4.6 1.0
Bardsley England
The valuation of Bardsley England has been assessed and the recoverable value
was considered to exceed the carrying value by £4.3m. The valuation is based
on discounted cash flows, is sensitive to input assumptions particularly in
relation to the rate of growth of partner grower volumes and net margins. The
key assumptions and sensitivities are set out below:
Assumption Change in assumption
Impact on impairment
+1% -1%
£'m £'m
Rate of growth of partner grower volumes 5.0% 0.7 (0.7
)
Discount rate 9.8% 2.3 (3.0 )
If forecasted margins were to change by +/-1 % in every year it would have the
effect of a decrease/increase in the impairment of £3.3 million.
Tea estates acquired in Assam, India
The recoverable value was considered to exceed the carrying value by £0.3
million. The valuation is based on multiples of the annual average production
of the relevant estates. The multiple would need to decrease by 8% for any
impairment to arise.
Intangibles comprise brands owned relating to Jing Tea with a net book value
of £3.6 million and £1.6 million for the Indian packet tea operations. The
brands are assessed to have indefinite lives.
Indian brands
The fair value less costs to sell of the Indian packet tea brands were
significantly in excess of the carrying value. No reasonably possible change
in the key assumptions would result in a recoverable amount that was lower
than the carrying amount.
Jing Tea
The fair value of the brand owned by Jing Tea was calculated using the Royalty
Forgiven methodology. This is sensitive to input assumptions, particularly in
relation to future growth, notably customer demand growth. A range of
scenarios has been considered and the recoverable amount derived from these
shows a recoverable amount in excess of the carrying value. The key
assumptions and sensitivities are set out below:
Assumption Change in assumption
Impact on impairment
+1% -1%
£'m £'m
Royalty rate 4.2% (0.8 ) 0.8
Discount rate 10.2% 0.4 (0.4 )
If forecasted revenues were to change by +/-1 % in every year it would have
the effect of a decrease/increase in the impairment of £0.1 million.
16 Property, plant and equipment
Fixtures,
Bearer Land and Plant and fittings and
plants buildings machinery equipment Total
Group £'m £'m £'m £'m £'m
Deemed cost
At 1 January 2020 141.3 109.0 114.1 18.9 383.3
Exchange differences (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 1 January 2021 130.8 107.2 105.9 19.1 363.0
Exchange differences (3.0 ) (1.2 ) (1.6 ) (0.2 ) (6.0 )
Additions 4.5 2.0 3.5 0.7 10.7
Disposals - (0.1 ) (2.5 ) (0.5 ) (3.1 )
Transfer between categories 0.3 0.6 0.7 (1.6 ) -
Subsidiaries joining the group 3.0 10.2 5.8 0.5 19.5
Reclassification to investment
properties - (3.1 ) - - (3.1 )
Reclassification to right-of-use assets - (1.2 ) (0.4 ) - (1.6 )
Reclassification to held for sale - (3.6 ) (8.1 ) (1.9 ) (13.6 )
At 31 December 2021 135.6 110.8 103.3 16.1 365.8
Depreciation
At 1 January 2020 26.7 52.3 73.1 8.7 160.8
Exchange differences (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 1 January 2021 28.6 52.9 72.9 10.3 164.7
Exchange differences (0.8 ) (0.3 ) (0.8 ) (0.2 ) (2.1 )
Charge for the year 4.4 2.3 5.8 0.8 13.3
Disposals - (0.1 ) (2.1 ) (0.4 ) (2.6 )
Transfer between categories - 1.4 (0.4 ) (1.0 ) -
Reclassification to right-of-use assets - - (0.3 ) - (0.3 )
Reclassification to held for sale - (1.5 ) (8.1 ) (0.2 ) (9.8 )
Impairment provision - - 0.5 - 0.5
At 31 December 2021 32.2 54.7 67.5 9.3 163.7
Net book value at 31 December 2021 103.4 56.1 35.8 6.8 202.1
Net book value at 31 December 2020 102.2 54.3 33.0 8.8 198.3
The plant and machinery impairment provision of £0.5 million related to Abbey
Metal Finishing and its subsidiary company Atfin and arose due to the impact
of COVID on the aerospace industry. Assets were subsequently reclassified to
held for sale.
The amount of expenditure for property, plant and equipment in the course of
construction (including immature bearer plants) amounted to £4.7 million
(2020: £4.7 million).
Reclassification to right-of-use assets arose from changes in land
registration in Tanzania.
17 Right-of-use assets
Land and Plant and
buildings machinery Total
£'m £'m £'m
Group
Deemed cost
At 1 January 2020 19.0 0.6 19.6
Exchange differences (0.5 ) - (0.5 )
Additions 0.4 0.1 0.5
Businesses joining the group (1.0 ) (0.1 ) (1.1 )
At 1 January 2021 17.9 0.6 18.5
Exchange differences (0.1 ) - (0.1 )
Additions 0.6 1.0 1.6
Disposals (0.5 ) (0.2 ) (0.7 )
Reclassification from property, plant and equipment 1.2 0.4 1.6
Reclassification to held for sale (3.6 ) - (3.6 )
Subsidiaries joining the group 14.0 0.6 14.6
At 31 December 2021 29.5 2.4 31.9
Depreciation
At 1 January 2020 0.9 0.2 1.1
Exchange differences (0.1 ) - (0.1 )
Charge for the year 0.8 0.2 1.0
Disposals (0.1 ) - (0.1 )
At 1 January 2021 1.5 0.4 1.9
Charge for the year 1.2 0.4 1.6
Disposals (0.4 ) (0.1 ) (0.5 )
Reclassification from property, plant and equipment - 0.3 0.3
Reclassification to held for sale (0.2 ) - (0.2 )
At 31 December 2021 2.1 1.0 3.1
Net book value at 31 December 2021 27.4 1.4 28.8
Net book value at 31 December 2020 16.4 0.2 16.6
The Group leases many assets including land, buildings and plant. The average
lease term is 69 years (2020: 99 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
£1.0 million (2020: £0.1 million).
The maturity analysis of lease liabilities is presented in note 32.
2021 2020
£'m £'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
£'m
Group
Cost
At 1 January 2020 19.5
Additions 0.9
Reclassification from property, plant and equipment 0.1
At 1 January 2021 20.5
Additions 0.9
Reclassification from property, plant and equipment 3.1
At 31 December 2021 24.5
Depreciation
At 1 January 2020 1.2
Charge for the year -
Impairment provision 0.2
At 1 January 2021 1.4
Charge for the year -
At 31 December 2021 1.4
Net book value at 31 December 2021 23.1
Net book value at 31 December 2020 19.1
Included in revenue is £1.1 million (2020: £1.1 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 £0.2 million (2020: £0.1 million).
At the end of the year the fair value of Investment properties was £34.4
million (2020: £23.9 million) based on vacant possession. Investment
properties were valued by the Directors (fair value hierarchy Level 2).
19 Biological assets
Non-current: Forestry Livestock Total
£'m £'m £'m
Group
At 1 January 2020 13.5 1.1 14.6
Exchange differences (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 1 January 2021 11.7 1.0 12.7
Exchange differences (0.3 ) - (0.3 )
Additions 0.4 - 0.4
Gains arising from changes in fair value less estimated
point-of-sale costs 1.1 0.4 1.5
Decreases due to harvesting (0.5 ) (0.4 ) (0.9 )
At 31 December 2021 12.4 1.0 13.4
Agricultural activity is exposed to financial risks arising from adverse
climatic events, changes in market price and crop yields. The Group's largely
overseas activities also give exposure to foreign currency movement risk. The
Group takes reasonable steps to ensure that harvests are not affected by
climatic and natural events, pest and disease or any other factors that may
negatively impact on the quality and yields obtained.
Current:
2021 2020
£'m £'m
Group
Tea 0.2 0.4
Edible nuts 2.2 2.0
Soya 3.6 2.9
Avocado 1.5 1.8
Other 0.3 -
7.8 7.1
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 2021 the area planted to Forestry amounted to 5,788 Hectares
(2020: 5,877) from which 157,687 cubic metres (2020: 203,541) were harvested
during the year.
Livestock numbers were 4,332 head (2020: 4,529) at 31 December 2021.
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 58.
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 different 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 £1.2 million (2020: £1.2 million)
increase/decrease in the fair value of forestry.
Current:
- Macadamia - a 10% increase/decrease in the volumes assumed would result in a
£0.9 million (2020: £0.9 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 £0.9 million (2020: £0.9 million)
increase/decrease in the fair value.
- Avocados - a 10% increase/decrease in the volume or the price assumed would
result in a £0.2 million (2020: £0.2 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 £0.4 million (2020: £0.3 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 Investments in subsidiaries
2021 2020
£'m £'m
Company
Cost
At 1 January and 31 December 73.5 73.5
21 Investments in associates
2021 2020
£'m £'m
Group
At 1 January 93.7 92.9
Exchange differences 0.8 (3.0 )
Share of profit (note 5) 7.2 6.1
Dividends (3.0 ) (3.2 )
Additions - 0.3
Other equity movements 0.2 0.6
At 31 December 98.9 93.7
Provision for diminution in value
At 1 January 26.1 26.9
Exchange differences 0.2 (0.8 )
At 31 December 26.3 26.1
Net book value at 31 December 72.6 67.6
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
£'m £'m £'m £'m % £'m
2021
Listed
BF&M Bermuda 684.2 (597.9 ) 58.1 6.4 37.4 57.7
United Finance Limited Bangladesh 84.6 (74.7 ) 2.8 0.7 38.4 13.0
United Insurance Bangladesh 4.3 (1.6 ) 0.3 0.1 37.0 9.3
Company Limited
773.1 (674.2 ) 61.2 7.2 80.0
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 Bangladesh 4.0 (1.4 ) 0.4 0.2 37.0 7.8
Company Limited
704.9 (611.2 ) 71.3 6.1 68.5
22 Financial assets at fair value through other comprehensive income
Group Company
2021 2020 2021 2020
£'m £'m £'m £'m
At 1 January 43.8 40.0 0.2 0.2
Exchange differences - (1.5 ) - -
Fair value adjustment 0.8 2.3 - -
Additions 3.5 6.5 - -
Disposals (8.1 ) (2.4 ) - -
Fair value adjustment for disposal (11.6 ) (1.1 ) - -
At 31 December 28.4 43.8 0.2 0.2
Provision for diminution in value
At 1 January 1.2 2.2 0.2 0.2
Exchange differences - - - -
Disposals (0.5 ) (1.0 ) - -
At 31 December 0.7 1.2 0.2 0.2
Net book value at 31 December 27.7 42.6 - -
Disposals arose to support Group strategy.
Financial assets at fair value through other comprehensive income include the
following:
Group
2021 2020
£'m £'m
Listed securities:
Equity securities - Bermuda 0.6 0.8
Equity securities - Japan 8.3 19.1
Equity securities - Switzerland 9.0 12.7
Equity securities - US 2.7 4.0
Equity securities - India 0.8 0.7
Equity securities - Europe 0.4 0.1
Equity securities - United Kingdom 5.3 4.7
Equity securities - Other 0.6 0.5
27.7 42.6
Financial assets at fair value through other comprehensive income are
denominated in the following currencies:
Group
2021 2020
£'m £'m
Sterling 5.3 4.7
US Dollar 2.7 4.0
Euro 0.4 0.1
Swiss Franc 9.0 12.7
Indian Rupee 0.8 0.7
Bermudian Dollar 0.6 0.8
Japanese Yen 8.3 19.1
Other 0.6 0.5
27.7 42.6
23 Financial assets at fair value through profit or loss
Group
2021 2020
£'m £'m
At 1 January 5.3 6.2
Exchange differences - (0.2 )
Fair value adjustment 0.1 0.1
Additions 5.4 5.9
Disposals (0.9 ) (6.7 )
At 31 December 9.9 5.3
Financial assets at fair value through profit or loss include the following:
Group
2021 2020
£'m £'m
Listed securities:
Money market - Bermuda 1.6 1.6
Money market - India 8.3 3.6
Money market - Switzerland - 0.1
9.9 5.3
Financial assets at fair value through profit or loss are denominated in the
following currencies:
Group
2021 2020
£'m £'m
US Dollar 1.6 1.7
Indian Rupee 8.3 3.6
9.9 5.3
Current 2.7 -
Non-Current 7.2 5.3
9.9 5.3
24 Financial assets at amortised cost
Group
2021 2020
£'m £'m
At 1 January 2.7 3.0
Exchange differences (0.1 ) (0.3 )
Disposals - -
At 31 December 2.6 2.7
Financial assets at amortised cost comprises:
2021 2020
£'m £'m
Treasury infrastructure bonds - 12.2% to 12.5% interest payable twice yearly 1.3 1.4
and redeemable in November 2022 - Kenya
Treasury infrastructure bonds - 12.2% to 12.5% interest payable twice yearly 1.3 1.3
and redeemable in November 2024 - Kenya
2.6 2.7
Current 1.3 -
Non-Current 1.3 2.7
2.6 2.7
25 Other investments - heritage assets
Group Company
2021 2020 2021 2020
£'m £'m £'m £'m
Cost
At 1 January 9.8 9.8 11.0 11.0
Disposals (0.1 ) - (0.1 ) -
Reclassification to held for sale (1.0 ) - (2.1 ) -
At 31 December 8.7 9.8 8.8 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.
26 Inventories
2021 2020
£'m £'m
Group
Made Tea 25.7 28.3
Other agricultural produce 7.8 4.7
Work in progress 0.1 0.1
Trading stocks 1.1 0.5
Raw materials and consumables 17.0 13.9
51.7 47.5
Made tea inventories include the fair value of green leaf which includes a
fair value uplift of £0.2 million (2020: £0.1 million).
27 Trade and other receivables
Group Company
2021 2020 2021 2020
£'m £'m £'m £'m
Group
Current:
Trade receivables 32.7 31.3 - -
Amounts owed by associated undertakings 0.1 0.1 - -
Other receivables 4.8 5.4 - 0.6
Prepayments and accrued income 10.9 6.9 0.2 -
48.5 43.7 0.2 0.6
Non-current:
Other receivables 2.7 2.4 - -
2.7 2.4 - -
The carrying amounts of the Group's trade and other receivables are
denominated in the following currencies:
2021 2020 2021 2020
Current: £'m £'m £'m £'m
Sterling 17.8 11.6 0.2 0.6
US Dollar 3.5 4.8 - -
Euro 0.8 0.3 - -
Kenyan Shilling 2.6 2.3 - -
Indian Rupee 16.8 19.7 - -
Malawian Kwacha 1.5 1.5 - -
Bangladesh Taka 2.1 2.0 - -
South African Rand 0.2 0.2 - -
Brazilian Real 2.5 0.7 - -
Other 0.7 0.6 - -
48.5 43.7 0.2 0.6
Non-current:
Sterling 0.3 -
Kenyan Shilling 0.5 0.5
Indian Rupee 1.4 1.2
Malawian Kwacha 0.3 0.4
Bangladesh Taka 0.2 0.3
2.7 2.4
Included within trade receivables is a provision for expected credit losses of
£0.8 million (2020: £0.6 million). All other trade receivables are with
normal trading partners and there is no history of defaults.
Trade receivables include receivables of £6.4 million (2020: £5.1 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:
2021 2020
£'m £'m
Up to 30 days 4.1 2.2
30-60 days 0.8 0.6
60-90 days 0.3 0.7
Over 90 days 1.2 1.6
6.4 5.1
28 Cash and cash equivalents (excluding bank overdrafts)
Group Company
2021 2020 2021 2020
£'m £'m £'m £'m
Cash at bank and in hand 25.9 57.8 0.7 -
Short-term bank deposits 35.3 39.6 - -
Short-term liquid investments 0.6 1.1 - -
61.8 98.5 0.7 -
Cash, cash equivalents and bank overdrafts include the following for the
purposes of the cash flow statement:
2021 2020 2021 2020
£'m £'m £'m £'m
Cash and cash equivalents 61.8 98.5 0.7 -
Bank overdrafts (note 31) (1.9 ) (3.6 ) - -
59.9 94.9 0.7 -
2021 2020
Effective interest rate:
Short-term deposits 0.01 - 10.25% 0.01 - 9.00%
Short-term liquid investments 3.00 - 4.00% 2.50 - 7.00%
Average maturity period:
Short-term deposits 67 days 73 days
Short-term liquid investments 32 days 31 days
29 Assets classified as held for sale/liabilities related to assets
classified as held for sale
During the year the following assets were transferred to held for sale:
Group Company
2021 2020 2021 2020
£'m £'m £'m £'m
Reclassified from property, plant and equipment 3.8 - - -
Reclassified from right-of-use assets 3.4 - - -
Reclassified from heritage assets 1.0 - 2.1 -
Reclassified from current assets 0.7 - - -
8.9 - 2.1 -
Disposal of subsidiaries during year (2.3 ) - - -
At 31 December 6.6 - 2.1 -
Liabilities related to assets classified as held for sale as at 31 December:
Reclassified from lease liabilities 2.0 - - -
At 31 December 2021, the assets and related lease liability of two London
properties owned by the Group have been classified as held for sale. Since the
year end, one of these properties has been sold. In addition, a number of the
Group's and Company's heritage assets and other items of art are being
marketed for sale during 2022.
30 Trade and other payables
Group Company
2021 2020 2021 2020
£'m £'m £'m £'m
Current:
Trade payables 18.1 22.4 0.1 0.1
Other taxation and social security 4.8 1.1 - -
Other payables 26.8 20.2 0.2 0.1
Accruals and deferred income 9.5 7.2 0.6 0.6
59.2 50.9 0.9 0.8
Included in other taxation and social security is £0.1 million (2020: £0.7
million) 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 and was
fully repaid by the end of February 2022.
31 Financial liabilities - borrowings
2021 2020
£'m £'m
Group
Current:
Bank overdrafts 1.9 3.6
Bank loans 1.4 2.1
3.3 5.7
Current borrowings include the following amounts secured on
property, plant and equipment and investment properties:
Bank overdrafts 0.3 2.0
Bank loans 1.4 2.1
1.7 4.1
Non-current:
Bank loans 4.5 2.7
Non-current borrowings include the following amounts secured on
plant and equipment and investment properties:
Bank loans 4.5 2.7
The repayment of bank loans and overdrafts fall due as follows:
Within one year or on demand (included in current liabilities) 3.3 5.7
Between 1 - 2 years 0.7 0.4
Between 2 - 5 years 1.2 1.2
After 5 years 2.6 1.1
7.8 8.4
The rates of interest payable by the Group ranged between:
2021 2020
% %
Bank overdrafts 3.25 - 16.50 1.60 - 17.50
Bank loans 6.90 - 7.55 3.03 - 8.50
32 Lease liabilities
2021 2020
£'m £'m
Group
Maturity analysis of lease liabilities is as follows:
Within one year 3.2 1.2
Between 1 - 2 years 2.3 1.1
Between 2 - 5 years 5.0 2.3
Onwards 14.2 6.9
24.7 11.5
Analysed as:
Current 3.2 1.2
Non-current 21.5 10.3
24.7 11.5
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
£'m £'m £'m £'m
Group
At 1 January 2020 7.7 - 1.2 8.9
Exchange differences (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 1 January 2021 9.7 8.2 1.1 19.0
Exchange differences (0.1 ) (0.1 ) - (0.2 )
Utilised in the period (7.6 ) (6.9 ) (0.4 ) (14.9 )
Provided in the period 7.7 - 0.3 8.0
Subsidiaries joining the group - - 0.5 0.5
Unused amounts reversed in period (0.6 ) - - (0.6 )
At 31 December 2021 9.1 1.2 1.5 11.8
Current:
At 31 December 2021 9.1 1.2 1.5 11.8
At 31 December 2020 9.7 8.2 1.1 19.0
The wages and salaries provisions are in respect of ongoing wage and bonus
negotiations in India and Bangladesh, the majority of which are expected to be
utilised during 2022.
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
£'m £'m
Company
At 1 January 2020 - -
Provided in the period 1.9 1.9
At 1 January 2021 1.9 1.9
Utilised in the period (1.9 ) (1.9 )
At 31 December 2021 - -
Current:
At 31 December 2021 - -
At 31 December 2020 1.9 1.9
Legal claims related to the defence 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
2021 2020 2021 2020
£'m £'m £'m £'m
At 1 January 39.5 47.1 0.2 0.2
Exchange differences (1.0 ) (3.1 ) - -
Credited to the income statement (2.2 ) (4.6 ) - -
Charged to other comprehensive income 1.7 0.1 - -
At 31 December 38.0 39.5 0.2 0.2
The movement in deferred tax assets and liabilities is set out below:
Deferred tax liabilities
Accelerated Pension Other Total
tax
scheme
depreciation
liabilities
£'m £'m £'m £'m
At 1 January 2020 51.3 - 4.3 55.6
Exchange differences (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 1 January 2021 44.3 - 4.4 48.7
Exchange differences (1.1 ) - (0.1 ) (1.2 )
(Credited)/charged to the income statement (0.7 ) - 0.2 (0.5 )
Charged/(credited) to other comprehensive income - 3.7 (2.2 ) 1.5
At 31 December 2021 42.5 3.7 2.3 48.5
Deferred tax assets offset (10.5 )
Net deferred tax liability after offset 38.0
Deferred tax assets
Tax Pension scheme asset Other Total
losses
£'m £'m £'m £'m
At 1 January 2020 4.5 0.3 3.7 8.5
Exchange differences - (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 1 January 2021 4.8 0.4 4.0 9.2
Exchange differences (0.1 ) - (0.1 ) (0.2 )
Credited/(charged) to the income statement 1.7 0.1 (0.1 ) 1.7
Charged to other comprehensive income - (0.2 ) - (0.2 )
At 31 December 2021 6.4 0.3 3.8 10.5
Offset against deferred tax liabilities (10.5 )
Net deferred tax asset after offset -
Deferred tax liabilities of £14.7 million (2020: £25.5 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
£18.4 million (2020: £15.5 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 2020 and updated to 31
December 2021 by a qualified independent actuary. The UK defined benefit
pension scheme is closed to new entrants and with effect 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 2021 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:
2021 2020
% per annum % per annum
UK schemes
Rate of increase in salaries N/a N/a
Rate of increase to LPI (Limited Price Indexation) pensions in payment 2.50 - 5.00 2.05 - 5.00
Discount rate applied to scheme liabilities 1.75 1.25
Inflation assumption (CPI/RPI) 2.50/3.20 2.05/2.75
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_2020
future improvement factors and subject to a long-term annual rate of future
improvement of 1.25% per annum, smoothing parameter of 7.0, initial addition
parameter of 0.25% pa and w2020 parameter of 10%. This results in males and
females aged 65 having life expectancies of 21.5 years (2020: 21.6 years) and
22.3 years respectively (2020: 22.5 years).
2021 2020
% per annum % per annum
Overseas schemes
Rate of increase in salaries 6.00 3.00- 6.00
Rate of increase to LPI (Limited Price Indexation) pensions in payment 0.00 - 3.00 0.00 - 3.00
Discount rate applied to scheme liabilities 6.50- 6.80 5.80- 6.25
Inflation assumption 3.00- 6.00 3.00- 6.00
(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:
2021 2020
% per annum % per annum
Rate of increase in salaries 6.00 - 8.89 3.00 - 20.00
Discount rate applied to scheme liabilities 6.50 - 13.70 5.80 - 13.30
Inflation assumptions 0.00 - 6.00 0.00 - 6.00
(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:
Change Impact
in assumption on defined
benefit
obligation
Discount rate 0.5% higher 6.7% decrease
Discount rate 0.5% lower 7.5% increase
Rate of RPI inflation 0.25% higher 1.4% increase
Rate of RPI inflation 0.25% lower 1.6% 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.
During the year, the UK funded scheme transferred a significant amount of its
Bond investments into a liability-driven investment to reduce overall
volatility.
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 40
Current pensioners 60
Total membership 100
(v) Actuarial valuations
2021 2020
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
Equities and property 57.9 2.8 60.7 57.0 1.9 58.9
Bonds 16.3 23.5 39.8 74.4 23.0 97.4
Liability-driven investment 60.8 - 60.8 - - -
Diversified growth 45.4 - 45.4 42.9 - 42.9
Insurance related products - 3.2 3.2 - - -
Cash 18.9 12.5 31.4 21.7 15.2 36.9
Total fair value of plan assets 199.3 42.0 241.3 196.0 40.1 236.1
Present value of defined benefit obligations (184.6 ) (51.6 ) (236.2 ) (203.0 ) (49.7 ) (252.7 )
Total surplus/(deficit) in the schemes 14.7 (9.6 ) 5.1 (7.0 ) (9.6 ) (16.6 )
Amount recognised as asset in the balance sheet 14.7 0.1 14.8 - 0.1 0.1
Amount recognised as current liability in the balance sheet - (1.1 ) (1.1 ) - (1.1 ) (1.1 )
Amount recognised as non-current liability in the balance sheet - (8.6 ) (8.6 ) (7.0 ) (8.6 ) (15.6) )
14.7 (9.6 ) 5.1 (7.0 ) (9.6 ) (16.6
Related deferred tax (liability)/asset (note 34) (3.7) 0.3 0.3 - 0.4 0.4
Net surplus/(deficit) 11.0 (9.3 ) 5.4 (7.0 ) (9.2 ) (16.2 )
Movements in the fair value of scheme assets were as follows:
2021 2020
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
At 1 January 196.0 40.1 236.1 179.7 28.8 208.5
Reclassified from creditors* - - - - 6.9 6.9
Expected return on plan assets 2.4 2.3 4.7 3.3 3.0 6.3
Employer contributions - 3.8 3.8 - 3.1 3.1
Contributions paid by plan participants - 0.4 0.4 - 0.3 0.3
Benefit payments (7.9 ) (4.9 ) (12.8 ) (8.7 ) (2.7 ) (11.4 )
Other adjustment - 0.1 0.1 - 0.4 0.4
Actuarial gains 8.8 0.5 9.3 21.7 2.3 24.0
Exchange differences - (0.3 ) (0.3 ) - (2.0 ) (2.0 )
At 31 December 199.3 42.0 241.3 196.0 40.1 236.1
Movements in the present value of defined benefit obligations were as follows:
2021 2020
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
At 1 January (203.0 ) (49.7 ) (252.7 ) (193.3 ) (37.2 ) (230.5)
Reclassified from creditors* - - - - (7.0 ) (7.0 )
Current service cost - (1.8 ) (1.8 ) - (2.1 ) (2.1 )
Past service cost - - - (0.1 ) - (0.1 )
Interest cost (2.5 ) (3.0 ) (5.5 ) (3.6 ) (3.4 ) (7.0 )
Contributions paid by plan participants - (0.4 ) (0.4 ) - (0.3 ) (0.3 )
Benefit payments 7.9 4.9 12.8 8.7 2.7 11.4
Actuarial gains/(losses) 13.0 (1.9 ) 11.1 (14.7 ) (5.0 ) (19.7 )
Exchange differences - 0.3 0.3 - 2.6 2.6
At 31 December (184.6 ) (51.6 ) (236.2 ) (203.0 ) (49.7 ) (252.7 )
* a net £0.1 million was reclassified in 2020 from other payables in relation
to the provident fund schemes operated by some of the Group's Indian
subsidiaries.
In 2019, the total fair value of plan assets was £208.5 million, the present
value of defined benefit obligations was £230.5 million and the deficit was
£22.0 million. In 2018, the total fair value of plan assets was £190.6
million, the present value of defined benefit obligations was £215.3 million
and the deficit was £24.7 million and in 2017, the total fair value of plan
assets was £206.6 million, the present value of defined benefit obligations
was £237.5 million and the deficit was £30.9 million.
Income Statement
The amounts recognised in the Income Statement are as follows:
2021 2020
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
Amounts (charged)/credited to operating profit:
Current service cost - (1.8 ) (1.8 ) - (2.1 ) (2.1 )
Past service cost - - - (0.1 ) - (0.1 )
Total operating (charge)/credit - (1.8 ) (1.8 ) (0.1 ) (2.1 ) (2.2 )
Amounts charged to other finance costs:
Interest expense (0.1 ) (0.7 ) (0.8 ) (0.3 ) (0.4 ) (0.7 )
Total (charged)/credited to income statement (0.1 ) (2.5 ) (2.6 ) (0.4 ) (2.5 ) (2.9 )
Employer contributions to defined contribution schemes are charged to profit
when payable and the costs charged were £6.2 million (2020: £6.4 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:
2021 2020
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
Remeasurements:
Return on plan assets, excluding amount included in interest 8.8 0.5 9.3 21.7 2.3 24.0
Gain/(loss) from changes in demographic assumptions 0.9 - 0.9 (0.7 ) - (0.7 )
Gain/(loss) from changes in financial assumptions 8.5 (1.2 ) 7.3 (14.0 ) (6.1 ) (20.1 )
Experience gains/(losses) 3.6 (0.7 ) 2.9 - 1.1 1.1
Actuarial gain/(loss) 21.8 (1.4 ) 20.4 7.0 (2.7 ) 4.3
Cumulative actuarial gain recognised in the Statement of Comprehensive Income
are £2.5 million (2020: £17.9 million losses).
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 2022. No
additional funding contributions will be made, as the latest actuarial
valuation shows a funding surplus.
36 Share capital
2021 2020
£'m £'m
Authorised: 2,842,000 (2020: 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 (2020: 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
2021 2020
£'m £'m
Group
Profit from operations 7.7 5.0
Share of associates' results (7.2 ) (6.1 )
Depreciation and amortisation 13.4 15.5
Depreciation of right-of-use assets 1.6 1.0
Impairment of assets and provisions 0.5 6.5
Realised movements on biological assets - non-current (1.5 ) (0.4 )
Financial assets fair value through profit or loss - gain (0.1 ) (0.1 )
Loss on disposal of non-current assets - 0.1
Profit on disposal - non recurring items - (14.4 )
Loss on disposal of subsidiaries 0.1 -
Profit on disposal of financial assets (0.2 ) (0.2 )
Movement in provisions (7.0 ) 10.8
(Increase)/decrease in working capital (3.5 ) 6.3
Difference between employee benefit obligations funding contributions and (1.9 ) (4.7 )
cost charged
Cash generated from operations 1.9 19.3
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
£'m £'m £'m £'m £'m
At 1 January 2020 3.6 3.3 1.2 11.8 19.9
Exchange differences (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 1 January 2021 2.1 2.7 1.2 10.3 16.3
Exchange differences - (0.1 ) - - (0.1 )
Companies joining the Group 10.5 - 1.7 13.2 25.4
Transferred to held for sale - - (0.1 ) (1.9 ) (2.0 )
New loans 1.0 2.8 - - 3.8
New finance leases - - 1.9 0.4 2.3
Loans repaid (13.0 ) (0.1 ) - - (13.1 )
Lease payments - - (1.6 ) (0.4 ) (2.0 )
Transfers 0.8 (0.8 ) 0.1 (0.1 ) -
At 31 December 2021 1.4 4.5 3.2 21.5 30.6
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 Business combinations - acquisition and disposal of businesses
Acquisitions Disposals
2021 2021
£'m £'m
Fair Net book
value value
Property, plant and equipment 19.5 -
Right of use asset 14.6 -
Inventories 0.7 -
Biological assets - current 3.1 -
Trade and other receivables 4.0 -
Cash and cash equivalents (excluding bank overdrafts) 0.1 -
Assets classified as held for sale - 1.6
Financial liabilities - borrowings - bank overdraft (0.8 ) (0.3 )
Financial liabilities - borrowings - loans (10.5 ) -
Lease liabilities (14.9 ) -
Trade and other payables (8.9 ) -
Amounts due to group undertakings - (0.6 )
Liabilities related to assets classified as held for sale - (0.4 )
6.9 0.3
Identifiable intangible assets - Goodwill 3.6 -
Non-controlling interest (5.3 ) -
Loss on disposal - (0.1 )
5.2 0.2
Consideration transferred:
Cash consideration and costs 3.0 (0.1 )
Deferred consideration 2.2 0.3
Total consideration 5.2 0.2
Net cash (outflow)/inflow arising on acquisitions/disposals:
Cash consideration and costs (3.0 ) (0.1 )
Less: cash and cash equivalent balances acquired/disposed (0.7 ) 0.3
(3.7 ) 0.2
Acquisition in 2021 - Bardsley England
On 31 July 2021, the Group acquired 60.5% of the share capital of Bardsley
Horticulture Limited, the parent company of the Bardsley England group for
consideration of £5.2 million, of which £3.0 million was paid at completion
with the balance of £2.2 million deferred and payable by July 2022. Bardsley
England is a major fruit farming business and one of the UK's largest apple
growers. The farming operation covers 850 hectares (2,100 acres) in Kent and
includes 27 orchards growing apples, pears, cherries, plums and grapes as well
as a large grading, packing and storage facility. The transaction arises from
the Group's strategy to expand the agriculture operations and to diversify our
product and geographical portfolio.
The Group has a one year measurement period, from the date of acquisition to
finalise the acquisition accounting. Provisional fair values of the
identifiable assets acquired, liabilities assumed and non-controlling interest
at the date of acquisition are set out above.
Fair values of the acquired property, plant and equipment, pre existing
contractual relationships and biological assets are inherently judgemental and
involve a high degree of estimation. Valuations have been performed by
specialists, using appropriate methodologies and information. No new
information is expected to become available in the next financial year that
would be relevant for the acquisition date fair values, therefore these
valuations are not expected to be revisited.
Also on 31 July 2021, the Group subscribed for additional shares in Bardsley
Horticulture Limited for £9.7 million which diluted the non-controlling
interest by 19.5%. Bardsley Horticulture Limited, on the same date, acquired
the remaining 50% interest in Bardsley Fruit Enterprises Limited that it did
not own for £4.2 million.
On 17 November 2021, the Group acquired the remaining 20% of the share capital
of Bardsley Horticulture Limited for consideration of £1.7 million. A gain of
£0.2 million has been recognised in equity, being the difference between
consideration paid and the non-controlling interest share of the net assets
carrying amount.
The goodwill acquired in relation to Bardsley England comprises certain
intangible assets that cannot be separately identified. This includes the
skills and experience of the assembled workforce. None of the goodwill
recognised is expected to be deductible for income tax purposes.
From the date of acquisition, Bardsley England has contributed £8.7 million
of revenue and a £4.7 million loss before tax including restructuring costs.
It has not been practicable to disclose results for Bardsley England for the
pre-acquisition period as Bardsley England had not adopted IFRS and other
Group accounting policies.
Disposal in 2021 - Abbey Metal Finishing Limited
On 5 August 2021, the Group disposed of its interests in Abbey Metal Finishing
Company Limited and its subsidiary Atfin GmbH in Germany to a newly
incorporated company set up by GIL Investments for the purpose of the
acquisition and Aerotech GmbH respectively. The transaction arises from the
Group's strategy of focusing on agriculture.
Until the date of acquisition, the disposed companies had contributed £1.7
million of revenue and £1.3 million loss before tax.
40 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet
incurred is as follows:
2021 2020
£'m £'m
Group
Property, plant and equipment 0.9 0.8
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 £7.4 million
In India, assessments have been received for excise duties of £3.6 million,
sales and entry tax of £0.9 million and of £0.6 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 £1.2 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:
2021 2020
£'m £'m
Borrowings 7.8 8.4
Lease liabilities 24.7 11.5
Debt 32.5 19.9
Tangible net assets 378.5 370.0
Ratio 8.59% 5.38%
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 acquisition
of Bardsley England.
Financial instruments by category
At 31 December 2021
Financial Financial
assets at fair asset at fair Financial
value through value through assets at
other comprehensive profit or amortised
income loss cost Total
£'m £'m £'m £'m
Group
Assets as per Balance Sheet
Equity investments 27.7 - - 27.7
Money market investments - 9.9 - 9.9
Bond investments - - 2.6 2.6
Trade and other receivables excluding prepayments - - 40.3 40.3
Cash and cash equivalents - - 61.8 61.8
27.7 9.9 104.7 142.3
Other financial
liabilities at
amortised cost Total
£'m £'m
Group
Liabilities as per Balance Sheet
Borrowings 7.8 7.8
Lease/liabilities 24.7 24.7
Trade and other payables 59.2 59.2
91.7 91.7
Company
Trade and other payables 0.9 0.9
At 31 December 2020
Financial Financial
assets at fair asset at fair Financial
value through value through assets at
other comprehensive profit or amortised
income loss cost Total
£'m £'m £'m £'m
Group
Assets as per Balance Sheet
Equity investments 42.6 - - 42.6
Money market investments - 5.3 - 5.3
Bond investments - - 2.7 2.7
Trade and other receivables excluding
prepayments - - 39.2 39.2
Cash and cash equivalents - - 98.5 98.5
42.6 5.3 140.4 188.3
Other financial
liabilities at
amortised cost Total
£'m £'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
Fair value estimation
The table below analyses financial instruments carried at fair value, by
valuation method. The different levels have been defined as follows:
- Quoted prices (unadjusted) in active markets for identical assets or
liabilities (Level 1).
- Inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices) (Level 2).
- Inputs for the asset or liability that are not based on observable market data
(that is, unobservable inputs) (Level 3).
The following table presents the Group's financial assets and liabilities that
are measured at fair value. See note 19 for disclosures of biological assets
that are measured at fair value.
At 31 December 2021
Level 1 Level 2 Level 3 Total
£'m £'m £'m £'m
Assets
Financial assets at fair value through
other comprehensive income 27.7 - - 27.7
Financial asset at fair value through profit or loss 9.9 - - 9.9
Financial assets at amortised cost 2.6 - - 2.6
40.2 - - 40.2
At 31 December 2020
Level 1 Level 2 Level 3 Total
£'m £'m £'m £'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
Financial risk management objectives
The Group finances its operations by a mixture of retained profits, bank
borrowings, long-term loans and leases. The objective is to maintain a balance
between continuity of funding and flexibility through the use of borrowings
with a range of maturities. To achieve this, the maturity profile of
borrowings and facilities are regularly reviewed. The Group also seeks to
maintain sufficient undrawn committed borrowing facilities to provide
flexibility in the management of the Group's liquidity.
Given the nature and diversity of the Group's operations, the Board does not
believe a highly complex use of financial instruments would be of significant
benefit to the Group. However, where appropriate, the Board does authorise the
use of certain financial instruments to mitigate financial risks that face the
Group, where it is effective to do so.
Various financial instruments arise directly from the Group's operations, for
example cash and cash equivalents, trade receivables and trade payables. In
addition, the Group uses financial instruments for two main reasons, namely:
- To finance its operations (to mitigate liquidity risk)
- To manage currency risks arising from its operations and arising from its
sources of finance (to mitigate foreign exchange risk)
The Group 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 £1.0
million (2020: £2.0 million). In addition, the Group has significant Indian,
Japanese and Swiss financial assets, if the exchange rates of the Indian
Rupee, Japanese Yen and Swiss Franc to Sterling were to move by 5 per cent,
the Group's carrying value would increase/decrease by £0.5 million (2020:
£0.2 million), £0.4 million (2020: £1.0 million) and £0.5 million (2020:
£0.6 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 £1.4
million (2020: £2.1 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 20201 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 £0.2 million (2020: £0.3 million) higher/lower.
The interest rate exposure of the Group's interest bearing assets and
liabilities by currency, at
31 December was:
Assets Liabilities
2021 2020 2021 2020
£'m £'m £'m £'m
Sterling 13.0 21.7 22.5 8.9
US Dollar 16.4 35.0 - -
Euro 0.4 5.3 - -
Kenyan Shilling 14.4 11.9 0.3 0.2
Indian Rupee 2.4 4.9 5.0 8.0
Malawian Kwacha 0.2 0.1 1.6 1.6
Bangladesh Taka 11.5 14.1 1.2 1.2
South African Rand 1.0 1.2 1.9 -
Brazilian Real 1.8 1.9 - -
Bermudian Dollar 0.4 1.4 - -
Japanese Yen 0.3 - - -
Tanzanian Shilling - 1.0 - -
61.8 98.5 32.5 19.9
(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 21 per cent. (2020: 22 per cent.) of
total trade receivables.
The Group has investments in Kenyan infrastructure bonds which have an S&P
rating of B at the year end.
(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 2021, the Group had undrawn committed facilities of £23.7
million (2020: £23.7 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 1 Between 1 Between 2 Over 5
year and 2 years and 5 years years Undated Total
£'m £'m £'m £'m £'m £'m
At 31 December 2021
Assets
Financial assets at fair - - - - 27.7 27.7
value through other
comprehensive income
Financial asset at fair value
through profit or loss 2.7 7.2 - - - 9.9
Financial assets at amortised
cost 1.3 1.3 - - - 2.6
Trade and other receivables
excluding prepayments 37.6 2.7 - - - 40.3
Cash and cash equivalents 61.8 - - - - 61.8
103.4 11.2 - - 27.7 142.3
Liabilities
Borrowings 3.3 0.7 1.2 2.6 - 7.8
Lease liabilities 3.2 2.3 5.0 14.2 - 24.7
Trade and other payables
excluding taxation 54.4 - - - - 54.4
60.9 3.0 6.2 16.8 - 86.9
At 31 December 2020
Assets
Financial assets at fair - - - - 42.6 42.6
value through other
comprehensive income
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
Included in borrowings due in less than 1 year is £1.9 million (2020: £3.6
million) repayable on demand.
43 Subsidiary and associated undertakings
Subsidiary undertakings
The subsidiary undertakings of the Group at 31 December 2021, which are wholly
owned and incorporated in Great Britain unless otherwise stated, were:
Principal
country of Registered
Agriculture operation Office
Amgoorie India Limited (Incorporated in India - 99.8 per cent. holding) India (ii)
Amo Tea Company Limited Bangladesh (i)
Bardsley & Sons Limited UK (i)
Bardsley Fruit Enterprises Limited UK (i)
Bardsley Fruit Farming Limited UK (i)
Bardsley HiCo Limited UK (i)
Bardsley Horticulture Limited UK (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 (xvii)
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)
Jing Tea Limited (95.0 per cent. holding) UK (i)
Kakuzi Plc (Incorporated in Kenya - 50.7 per cent. holding) Kenya (xi)
Koomber Tea Company Limited (Incorporated in India) India (iv)
Newmafruit Limited UK (i)
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
AJT Engineering Limited UK (xiv)
Black Gold Oil Tools Limited UK (xiv)
Food Service
Associated Cold Stores & Transport Limited UK (i)
Duncan Products Limited (Incorporated in Bangladesh) Bangladesh (vii)
Investment Holding
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 (xvi)
Lawrie Group Plc (Owned directly by the Company) UK (i)
Lawrie International Limited (Incorporated in Bermuda) Bermuda (xvi)
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 Bangladesh (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 Nominees Limited UK (i)
Linton Park Services Limited UK (i)
Dormant companies
ACS&T Gloucester Limited (in liquidation) UK (i)
ACS&T Grimsby Limited (in liquidation) UK (i)
ACS&T Humberside Limited (in liquidation) UK (i)
ACS&T Seamer Limited (in liquidation) UK (i)
ACS&T Tewkesbury Limited (in liquidation) UK (i)
ACS&T Wolverhampton Limited (in liquidation) UK (i)
Alex Lawrie & Company Limited UK (i)
Amgoorie Investments Limited UK (i)
Assam-Dooars Holdings Limited UK (i)
Associated Fisheries (Europe) Limited UK (i)
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 Indian Tea Company Limited UK (i)
British United Trawlers Limited UK (i)
BUT Engineers (Fleetwood) Limited (in liquidation) 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 - Malawi (xii)
Eastern Produce Malawi Limited)
Estate Services Limited (Incorporated in Kenya - held by Kakuzi Limited) Kenya (xi)
Feltham Two Limited (in liquidation) UK (i)
Fescol Limited (in liquidation) UK (i)
G. F. Sleight & Sons Limited (in liquidation) UK (i)
Goodricke Lawrie Consultants Limited UK (i)
Gotha Tea Estates Limited UK (i)
Granton Transport Limited (in liquidation) UK (xiv)
Hamstead Village Investments Limited UK (i)
Hellyer Bros Limited UK (i)
Horace Hickling & Co. Limited UK (i)
Hudson Brothers Trawlers Limited (in liquidation) UK (i)
Humber Commercials Limited (in liquidation) 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 Plantation Services Limited 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 sheets
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited
as at 31 December as at 31 December
2021 2020 2021 2020
£'m £'m £'m £'m
Current
Assets 24.0 19.9 14.8 11.7
Liabilities (14.6 ) (14.6 ) (11.9 ) (10.2 )
Total current net assets 9.4 5.3 2.9 1.5
Non-current
Assets 27.8 28.5 31.2 33.8
Liabilities (5.3 ) (5.3 ) (9.4 ) (10.0 )
Total non-current net assets 22.5 23.2 21.8 23.8
Net assets 31.9 28.5 24.7 25.3
Eastern Produce Goodricke Group
South Africa Limited Limited
as at 31 December as at 31 December
2021 2020 2021 2020
£'m £'m £'m £'m
Current
Assets 4.1 3.2 32.3 36.2
Liabilities (3.7 ) (3.7 ) (20.2 ) (24.2 )
Total current net assets/(liabilities) 0.4 (0.5 ) 12.1 12.0
Non-current
Assets 8.8 8.8 35.8 36.0
Liabilities (2.9 ) (1.2 ) (12.5 ) (11.1 )
Total non-current net assets 5.9 7.6 23.3 24.9
Net assets 6.3 7.1 35.4 36.9
Kakuzi Plc
as at 31 December
2021 2020
£'m £'m
Current
Assets 18.7 19.4
Liabilities (2.5 ) (2.5 )
Total current net assets 16.2 16.9
Non-current
Assets 26.3 26.8
Liabilities (6.8 ) (7.0 )
Total non-current net assets 19.5 19.8
Net assets 35.7 36.7
Summarised income statements
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited
for year ended for year ended
31 December 31 December
2021 2020 2021 2020
£'m £'m £'m £'m
Revenue 36.5 39.4 25.3 23.1
Profit/(loss) before tax 7.0 4.7 1.2 (3.7 )
Taxation (2.1 ) (1.1 ) (0.6 ) 1.1
Other comprehensive expense (0.8 ) (3.1 ) (1.2 ) (2.0 )
Total comprehensive income/(expense) 4.1 0.5 (0.6 ) (4.6 )
Total comprehensive income/(expense)
allocated to non-controlling interests 1.2 0.2 (0.2 ) (1.2 )
Dividends paid to non-controlling interests 0.2 1.2 - 0.3
Eastern Produce Goodricke Group
South Africa Limited Limited
for year for year
ended 31 December ended 31 December
2021 2020 2021 2020
£'m £'m £'m £'m
Revenue 3.4 3.8 84.6 90.6
(Loss)/profit before tax (0.4 ) (2.2 ) 0.6 2.7
Taxation 0.1 0.6 (0.1 ) (0.5 )
Other comprehensive expense (0.5 ) (0.2 ) (1.4 ) (2.1 )
Total comprehensive (expense)/income (0.8 ) (1.8 ) (0.9 ) 0.1
Total comprehensive expense
allocated to non-controlling interests (0.2 ) (0.7 ) (0.2 ) -
Dividends paid to non-controlling interests - - 0.2 -
Kakuzi Plc
for year ended
31 December
2021 2020
£'m £'m
Revenue 21.8 25.3
Profit before tax 3.3 5.3
Taxation (1.1 ) (1.4 )
Other comprehensive expense (0.9 ) (4.0 )
Total comprehensive income/(expense) 1.3 (0.1 )
Total comprehensive income/(expense)
allocated to non-controlling interests 0.6 (0.1 )
Dividends paid to non-controlling interests 1.2 1.0
Summarised cash flows
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited
for year ended for year ended
31 December 31 December
2021 2020 2021 2020
Cash flows from operating activities £'m £'m £'m £'m
Cash generated from operations 4.4 6.6 1.7 1.1
Net interest received/(paid) 0.7 0.7 (0.5 ) (0.1 )
Income tax paid (2.1 ) (0.8 ) (0.7 ) (1.0 )
Net cash generated from operating activities 3.0 6.5 0.5 -
Net cash used in investing activities (1.0 ) (5.3 ) (0.1 ) (0.3 )
Net cash used in financing activities (0.7 ) (4.1 ) - (1.1 )
Net increase/(decrease) in cash
and cash equivalents and bank overdrafts 1.3 (2.9 ) 0.4 (1.4 )
Cash, cash equivalents and bank overdrafts
at beginning of year 12.3 15.7 (1.2 ) 0.1
Exchange (losses)/gains on cash and cash
equivalents - (0.5 ) 0.2 0.1
Cash, cash equivalents and bank overdrafts 13.6 12.3 (0.6 ) (1.2 )
at end of year
Eastern Produce Goodricke Group
South Africa Limited Limited
for year ended for year ended
31 December 31 December
2021 2020 2021 2020
Cash flows from operating activities £'m £'m £'m £'m
Cash generated from operations (0.8 ) (0.2 ) 4.3 2.4
Net interest paid (0.2 ) (0.1 ) - -
Income tax paid - - (0.1 ) (0.7 )
Net cash (used in)/generated from (1.0 ) (0.3 ) 4.2 1.7
operating activities
Net cash used in investing activities (1.1 ) (0.7 ) (1.0 ) (2.0 )
Net cash generated from/(used in) 2.0 - (2.5 ) 0.7
financing activities
Net (decrease)/increase in cash and cash
equivalents and bank overdrafts (0.1 ) (1.0 ) 0.7 0.4
Cash, cash equivalents and bank overdrafts
at beginning of year 1.4 2.8 0.5 0.1
Exchange losses on cash and cash equivalents (0.2 ) (0.4 ) - -
Cash, cash equivalents and bank overdrafts 1.1 1.4 1.2 0.5
at end of year
Kakuzi Plc
for year ended
31 December
2021 2020
Cash flows from operating activities £'m £'m
Cash generated from operations 8.5 8.9
Net interest received 0.5 0.6
Income tax paid (0.9 ) (1.5 )
Net cash generated from operating activities 8.1 8.0
Net cash generated used in investing activities (6.0 ) (6.7 )
Net cash used in financing activities (2.3 ) (2.0 )
Net decrease in cash and cash equivalents and bank overdrafts (0.2 ) (0.7 )
Cash, cash equivalents and bank overdrafts at beginning of year 11.2 12.6
Exchange losses on cash and cash equivalents (0.2 ) (0.7 )
Cash, cash equivalents and bank overdrafts at end of year 10.8 11.2
Associated undertakings
The principal associated undertakings of the Group at 31 December 2021 were:
Group
interest
Principal Accounting in equity
country of Registered date capital
operation Office 2021 per cent.
Insurance and banking
BF&M Limited (Incorporated in Bermuda -
common stock) Bermuda (xvi) 31 December 37.4
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 Offices:
(i) Linton Park (ix) 7 Windsor Street (xvii) 3rd Floor
Linton Tzaneen 180 Msasani Bay
Maidstone 850 Msasani
Kent Limpopo Province Dar Es salaam
ME17 4AB South Africa Tanzania
England
(ii) Amgoorie Tea Garden (x) New Rehema House
PO: Amguri Rhapta Road
Haloating - 785 681 Westlands
Dist: Sibsagar P O Box 45560
Assam GPO 00100
India Nairobi
Kenya
(iii) Camellia House (xi) Main Office
14 Gurusaday Road Punda Milia Road
Kolkata - 700019 Makuyu
West Bengal P O Box 24
India 01000 Thika
Kenya
(iv) Koomber Tea Garden (xii) PO Box 53
PO: Kumbhir Mulanje
Cachar - 788 108 Malawi.
Assam
India
(v) Sessa Tea Garden (xiii) 1368 W Herndon
PO: Dibrugarh - 786001 Ave #103
Dist: Dibrugarh Fresno
Assam California 93711
India USA
(vi) Fazenda Maruque (xiv) Craigshaw Crescent
s/n sala 03 West Tullos
Bairro Maruque Aberdeen
Itaberá AB12 3TB
São Paulo Scotland
Brazil
(vii) Camellia House (xv) 112 Pitts Bay Road
22 Kazi Nazrul Islam Pembroke
Avenue Bermuda
Dhaka 1000 HM08
Bangladesh
(viii) Slangrivier Road (xvi) Clarendon House
Slangrivier Plaas 2 Church Street
Wellington Hamilton
7655 Bermuda
South Africa HM11
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. Other than Simon Turner (a director
of The Camellia Private Trust Company and the president of the board of the
trustee of the Foundation) and Stephen Buckland (a trustee of The Camellia
Foundation, a UK charity whose primary donor of the same name is the ultimate
majority shareholder of Camellia Plc), none of the Directors of Camellia Plc
are connected with The Camellia Private Trust Company Limited or the
Foundation. While The Camellia Private Trust Company Limited as 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, that director 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
£18,620 (2020: £36,000).
During the year the Group paid contributions to the overseas pension and
post-employment schemes of £3,775,062 (2020: £3,101,125).
Company
The Company receives financial and secretarial services from Linton Park Plc,
a directly owned subsidiary undertaking. The amount payable for these services
for 2021 was £433,300 (2020: £466,659). At 31 December 2021 £3,029,941
(2020: £8,351,312) 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
£13,409,492 (2020: £7,556,941) include an unsecured loan note of £4,191,777
(2020: £4,191,777). The company received interest of £167,671 (2020:
£167,671) 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
2021 amounted to £1,879,504 (2020: £2,223,733) and £193,187 (2020:
£193,187) 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 INDEPENDENT DIRECTORS
INDEPENDENT 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 December 2021 and of the
Group's profit for the year then ended;
§ the Group financial statements have been properly prepared in accordance with
United Kingdom adopted international accounting standards and International
Financial Reporting Standards (IFRSs) as issued by the International
Accounting Standards Board (IASB);
§ the parent company financial statements have been properly prepared in
accordance with United Kingdom adopted international accounting standards and
as applied in accordance with the provisions of the Companies Act 2006; and
§ the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
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;
§ the basis of preparation and statement of accounting policies;
§ the notes 1 to 46 related to the consolidated financial statements; and
§ the notes 1 to 46 related to the parent company financial statements.
The financial reporting framework that has been applied in the preparation of
the group financial statements is applicable law, United Kingdom adopted
international accounting standards and IFRSs as issued by the IASB. The
financial reporting framework that has been applied in the preparation of the
parent company financial statements is applicable law and United Kingdom
adopted international accounting standards and as applied in accordance with
the provisions 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 intangible assets and goodwill
§ Acquisition accounting: Fair value adjustments arising on acquisition
§ Provisions for uncertain tax positions and legal matters
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 £0.9m
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 57 components of the Group. Of these, 34 were subjected to a
full-scope audit whilst the 21 remaining were subject to specified audit
procedures. These components provide coverage of 99% of the Group's revenue,
86% of the Group's profit before tax and 87% of the Group's net assets.
Significant changes in our approach Changes in component scoping:
The acquisition of Bardsley Horticulture Ltd and subsidiaries (collectively
the "Bardsley Group") have come into scope this year and were subject to
full-scope audit.
Changes in key audit matters:
§ Arising from the acquisition of Bardsley Group during the year, we
identified a new key audit matter relating to acquisition accounting and the
corresponding fair value adjustments arising on acquisition.
§ Our key audit matter in relation to impairment of assets was updated to:
§ include our consideration of the goodwill arising on acquisition of
Bardsley Group; and
§ remove the Impairment of Bearer plants due to the reduction in complexities
and judgements involved. Impairment indicators such as underutilisation,
adverse weather conditions and land use rights, and in particular
uncertainties caused by the Coronavirus pandemic were considered, and no
impairment indicators were identified.
Materiality
The materiality that we used for the Group financial statements was £0.9m
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 57 components of the Group. Of these, 34 were subjected to a
full-scope audit whilst the 21 remaining were subject to specified audit
procedures. These components provide coverage of 99% of the Group's revenue,
86% of the Group's profit before tax and 87% of the Group's net assets.
Significant changes in our approach
Changes in component scoping:
The acquisition of Bardsley Horticulture Ltd and subsidiaries (collectively
the "Bardsley Group") have come into scope this year and were subject to
full-scope audit.
Changes in key audit matters:
§ Arising from the acquisition of Bardsley Group during the year, we
identified a new key audit matter relating to acquisition accounting and the
corresponding fair value adjustments arising on acquisition.
§ Our key audit matter in relation to impairment of assets was updated to:
§ include our consideration of the goodwill arising on acquisition of
Bardsley Group; and
§ remove the Impairment of Bearer plants due to the reduction in complexities
and judgements involved. Impairment indicators such as underutilisation,
adverse weather conditions and land use rights, and in particular
uncertainties caused by the Coronavirus pandemic were considered, and no
impairment indicators were identified.
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;
§ 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 its 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 regarding the solvency of the Group over the going
concern review period.
§ Assessing the reasonability of the assumptions that management have used in
their cash forecasts; and
§ Assessing the adequacy 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 description The Group's agricultural operations involve a wide 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 £238.8m
(2020: £247.2m) 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 of our audit responded to the key audit matter We have performed the following procedures in response to the key audit
matter:
§ Obtained an understanding of the processes and relevant controls used to
record revenue transactions.
§ Reviewed and assessed commercial arrangements to determine the point of
revenue recognition for different type of shipments.
§ Assessed whether revenue was recorded in the correct period and whether
cut-off of revenue is appropriate by agreeing a sample of revenue transactions
during the period either side of the balance sheet date to the relevant terms
of business, dispatch or delivery documentation as appropriate.
§ 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 have concluded that revenue is appropriately
recognised in the correct accounting period in accordance with IFRS 15.
5.2. Fair value of biological assets under IAS 41 'Agriculture'
Key audit matter description The Group holds £7.8m (2020: £7.1m) of biological assets as current assets
and £13.4m (2020: £12.7m) as non-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 of our audit responded to the key audit matter We have performed the following procedures in response to the key audit
matter:
§ Obtained an understanding of processes and relevant controls around the
valuation of biological assets.
§ Made enquiries of management to understand the rationale applied in the
determination of key assumptions and any changes in the year.
§ Assessed the appropriateness of the logic and mechanical accuracy of the
valuation models prepared and the valuation methodology applied.
§ For the fair value models:
§ Challenged 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 intangible assets and goodwill
Key audit matter description The Group holds £10.1m (2020: £6.6m) of intangible assets including £4.6m
(2020: £1m) allocated to goodwill. Please also refer to the Critical
accounting estimates and judgements within accounting policies and Note 15 to
the accounts.
The risk in relation to intangibles relates to the (i) Brand value relating to
Jing Tea Limited where the operations experienced reduced demand as a result
of the COVID-19 pandemic and (ii) Goodwill on the past acquisition of tea
estates in India by Goodricke Group Limited and Amgoorie India Limited and
(iii) Goodwill related to the current year acquisition of Bardsley Group.
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.
The Group's impairment assessment of CGUs to which goodwill is allocated in
accordance with IAS 36 Impairment of Assets involves fair value less costs to
sell calculations which require estimates, including significant assumptions
regarding future royalty rates, discount rates and cashflows.
Intangible assets are disclosed in note 15 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 of our audit responded to the key audit matter We have performed the following procedures in response to the key audit
matter:
§ Obtained an understanding of the processes and relevant controls related to
the impairment review of intangible assets and goodwill.
§ Checked the arithmetical accuracy of the value in use calculations. We
evaluated the current year changes to the key assumptions and assessed
retrospectively whether prior year assumptions were appropriate.
§ Involved our valuation specialists in evaluating management's discount
rates. We benchmarked the discount rate to comparable assets and considered
the underlying assumptions based on our knowledge of the group and its
industry.
§ Assessed the accuracy of management's cash flow projections by comparing
historical forecasts with actual cash flows. We assesed whether forecast cash
flows were consistent with Board approved forecasts. We also performed
sensitivity analysis as part of our overall evaluation of forecast cash flows.
§ Assessed the valuation reports issued by third party external valuers and
compared them with similar market transactions. We also held discussions with
the valuers to challenge the methods and assumptions used for determining fair
value.
§ Assessed the financial statements disclosures in relation to the impairment
assessments performed.
§ Also assessed the adequacy of the Group's disclosures including the need to
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 impairment
during the year and that no impairments were required.
5.4. Acquisition accounting: Fair value adjustments arising on
acquistion
Key audit matter description During the year, the Group acquired a 60.5% interest in the Bardsley Group for
a consideration of £5.2m. Accounting for acquisitions is complex, with
judgement required in both the identification of assets acquired (including
any intangible assets), and the valuation of those assets and liabilities
assumed, in accordance with IFRS 3 'Business Combinations'.
The calculation of fair value is subjective due to the inherent uncertainty
involved in the valuation of assets and liabilities, and this requires the
application of judgement by management and technical expertise. In particular
the method of valuation, future forecasts (including cash-flow forecasts) and
underlying assumptions may all have a material impact on the valuation of
assets and liabilities, notably on the valuation of property, plant and
equipment, biological assets and intangible assets, which represents the most
significant assets acquired.
Business combinations are disclosed in note 39 to the financial statements and
the key judgements and assumptions related to the fair value of assets and
liabilities assumed are disclosed within accounting policies.
How the scope of our audit responded to the key audit matter We have performed the following procedures in response to the key audit
matter:
§ Obtained an understanding of the processes and relevant controls related to
the business combination accounting including fair value adjustments
preparation, review and approval.
§ Read the sale and purchase agreement ("SPA") associated with the
acquisition and identified assets acquired, including assessing whether any
potential intangible assets were not identified by management. We agreed the
consideration paid to bank statements and the sale and purchase agreements.
§ Involved our specialists in our audit of the valuation of assets acquired
and liabilities assumed. Our work included assessment of the appropriateness
of the valuation models used, assessment of the discount rate used in the
models by reference to comparable assets, and the evaluation of future cash
flow forecasts for each of the power plants acquired.
§ Assessed the completeness of disclosures for each acquisition against the
requirements of the relevant accounting standards.
Key observations From the work performed, we found that the judgements made surrounding the
identification, classification and valuation of assets and liabilities
acquired were appropriate.
5.5. Provision for uncertain tax positions and legal matters
Key audit matter description In the ordinary course of business, the Group is subject to actual or
potential liabilities arising from litigations and claims, including
contractual disputes brought by government bodies (including regulators and
tax authorities). Management review such litigation and claims on a
case-by-case basis to determine the likely outcome and to estimate the
possible magnitude and timing of any resultant payments from adverse outcomes.
Matters of this nature are inherently uncertain and as such management apply
significant judgement in determining the likely outcome of such matters as
well as the potential effect on future operations and the financial statements
as described in the principal risks and uncertainties on pages 27 to 30.
Judgement is also applied in estimating amounts payable to legal, regulatory
or tax authorities in certain jurisdictions and including human rights issues
- assessing and quantifying probable outcomes in relation to ongoing claims
and determining any exposure (and the need for provision) in areas where legal
requirements are open to interpretation. This gives rise to a risk over the
accuracy and disclosure of provisions recognised and contingent liabilities
disclosed.
The impact of litigation concerning the Group's East African operations on the
2020 results is disclosed on page 8 and the accounting policy for provisions
is disclosed in the principal accounting policies.
At 31 December 2021, the Group continues to carry £1.2m (2020: £8.2m) in
respect of the legal claims in the UK based upon allegations against its East
African operations, namely Kakuzi in Kenya and EPM in Malawi. Following
discussion with Group lawyers, these allegations have now been finalised and
no further liabilities are expected to arise, therefore no contingent
liabilities are disclosed.
In addition, specifically in India, interpreting and complying with taxation
laws and regulations are complex, therefore uncertain tax positions were also
considered as part of this key audit matter.
Other 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 of our audit responded to the key audit matter We have performed the following procedures in response to the key audit
matter:
§ Obtained an understanding of processes and relevant controls around
identification of tax and legal matters across the key components of the
Group.
§ Assessed the completeness of provisions and contingent liabilities by
reviewing the board minutes and reviewing management's listing, tracking all
litigations and reconciled this to the provisions recorded.
§ Challenged the appropriateness of the Group's assumptions and estimates in
relation to provisions and contingent liabilities, by reference to industry
practice and the period to which any provision amounts relate.
§ Obtained legal confirmations from the Group's legal counsel in the key
jurisdictions as at 31 December 2021. We also spoke to legal counsel on
selected key issues.
§ Reviewed the Group's correspondence with regulatory and tax authorities and
understood management's interpretation and application of relevant laws and
regulations.
§ Assessed the appropriateness of disclosures in the financial statements.
Key observations We did not identify any further litigation or claims that had not already been
disclosed to us. From the evidence obtained, we were satisfied with the
adequacy of the Group's provisions made as at 31 December 2021 for the risks
identified in the context of the Group financial statements taken as a whole.
We were also satisfied with the appropriateness of the contingent liability
disclosures given the status, materiality and likely outcome of and exposures
in areas where 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 £0.9m (2020: £0.9m) £0.3m (2020: £0.3m)
Basis for determining materiality 0.3% of Revenue (2020: 0.4% of revenue.) 2% of net assets, capped at 35% of group materiality (2020: 2% of net assets,
capped at 35% of group materiality)
Rationale for the benchmark applied We note that the overall size of the business, demonstrated by revenue, has We have used net assets measure given that the parent company is a holding
remained broadly consistent with the prior year therefore we conclude that the company, generating no revenue.
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% (2020: 70%) of group materiality 70% (2020: 70%) of parent company materiality
Basis and rationale for determining performance materiality In determining performance materiality, we have considered the following
factors:
§ There have been no changes to the business in their operation or financial
reporting process.
§ The Group has a history of correcting identified misstatements and the
remaining uncorrected misstatements are historically below performance
materiality.
§ The quality of the control environment, 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 £43,000 (2020: £45,000), 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, South America, and Asia, with its
principal crops grown in Bangladesh, India, Kenya and Malawi. The Group's
engineering and food service operations as well as recently acquired apple and
pear orchards are located in the UK. Of the Group's 57 principal components,
34 were subject to a full audit scope (including newly acquired Bardsley Group
in the UK) and 21 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.
These 55 components represent the principal business units and account for 99%
(2020: 99%) of the Group's revenue and 86% (2020: 95%) of the Group's profit
before tax and 87% (2020: 95%) of the Group's net assets. The remaining
components were subject to analytical review procedures by the group audit
team or were scoped out on the basis of being dormant or immaterial. Our audit
work on these components in addition to the parent entity was executed to
lower levels of materiality of £0.3m to (35%) of Group materiality (2020:
£0.32m (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.
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 including new
consolidation software.
7.3. Working with other auditors
The group audit team are responsible for the scope and direction of the audit
process and provide direct oversight, review, and coordination of our
component audit teams. We interacted regularly with the component teams during
each stage of the audit and reviewed key working papers. In September 2021 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
member 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 intangible assets and goodwill acquisition accounting,
provisions for uncertain tax positions and legal matters and going concern
assessments.
As part of our monitoring of component auditors, we have also attended key
audit close meetings.
7.4. Climate change
Management has considered transition and physical risks when factoring in
climate change as part of their risk assessment process when considering the
principal risks and uncertainties facing the Group. This is set out in the
strategic report on pages 25 to 34 and the principal risks set out on pages 27
to 30. From the financial statements' perspective, these risks have been
focused on the valuation of goodwill and other intangible assets and
biological assets. This is consistent with our evaluation of the
climate-related risks facing the Group and is linked to the key audit matter
as highlighted in sections 5.2 and 5.3 above, where we have described both the
risks related to these assumptions and our audit procedures in relation to the
challenge of these assumptions. In addition, we have:
§ Challenged how the Directors considered climate change in their impact
assessment on the Group's operations based on our understanding of the
business environment and by benchmarking relevant assumptions with market
data.
§ Read the climate risk disclosures included throughout the strategic report
section of the annual report to consider whether they are materially
consistent with the financial statements and our knowledge obtained in the
audit.
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
(http://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 non-compliance;
§ detecting and responding to the risks of fraud and whether they have
knowledge of any actual, suspected or alleged fraud;
§ the internal controls established to mitigate risks of fraud or
non-compliance with laws and regulations;
§ the matters discussed among the audit engagement team including significant
component audit teams and relevant internal specialists, including tax,
valuations, pensions, and IT 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 area - recognition of revenue,
impairment of intangible assets and goodwill and fair value adjustments
arising on acquisition of Bardsley Group. 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 legislation
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. These included the group's health, safety and environmental
regulations (carbon reduction, etc), Bribery Act and employee laws.
11.2. Audit response to risks identified
As a result of performing the above, we identified revenue recognition,
impairment of goodwill and intangible assets and acquisition accounting: fair
value adjustments arising on acquisition 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, reviewing
internal audit reports; 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
component audit teams, and remained alert to any indications of fraud or
non-compliance with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
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 these matters.
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 FCA (Senior Statutory Auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
30 May 2022
FIVE YEAR RECORD
2021 2020 2019 2018 2017
£'m £'m £'m £'m £'m
Restated
Revenue - continuing operations 277.2 291.2 291.5 309.8 298.3
Profit before tax 7.1 7.8 22.3 52.5 27.6
Taxation (2.6 ) (8.6 ) (7.2 ) (20.0 ) (12.2 )
Profit/(loss) from continuing operations 4.5 (0.8 ) 15.1 32.5 15.4
(Loss)/profit from
discontinued operation - - - (0.2 ) 14.8
Profit/(loss) attributable to
owners of the parent 2.3 (5.0 ) 8.3 25.2 23.8
Equity dividends paid 5.2 2.8 4.0 3.8 3.6
Equity
Called up share capital 0.3 0.3 0.3 0.3 0.3
Reserves 388.3 376.3 395.4 395.2 368.1
Total shareholders' funds 388.6 376.6 395.7 395.5 330.8
Earnings/(loss) per share 83.3 p (181.0 )p 300.5 p 912.4 p 861.7 p
Earnings/(loss) per share
- continuing operations 83.3 p (181.0 )p 300.5 P 919.6 p 325.9 p
Dividend paid per share 188 p 102 p 144 p 138 p 132 p
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