REG - Camellia PLC - Final Results
04/05/2023 07:00
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RNS Number : 3433Y Camellia PLC 04 May 2023
CAMELLIA PLC
Final results for the year ended 31 December 2022
2022 Highlights
§ Adjusted operating profit before tax for Agriculture increased 20% to £15.8
million in the year
- Average tea selling prices in all regions, except Darjeeling in India and
Malawi, were higher in 2022 but aggregate tea volumes were down 6%
- Profits from macadamia, avocado, instant tea, branded tea and our arable
farm in Brazil were higher
- Profits were affected by adverse trading at Bardsley England and by
increased distribution costs, particularly on exports out of Africa
§ Adjusted operating profit before tax for continuing operations was
significantly lower in 2022 at £3.3 million than in 2021 (£9.3 million) due
to trading losses from our associate, BF&M, reflecting volatility in
financial markets
§ Significant profit of £7.6 million recorded in relation to ACS&T's
trading and its disposal
§ Impairment charges of £10.1m incurred, primarily in relation to Bardsley
England due to exceptional cost inflation, from the impact of the Ukraine war,
coupled with severe customer price sensitivity
§ Net cash of £44.7 million and an investment portfolio with a market value of
£34.5 million at 31 March 2023
Strategic developments
§ Continued investment to expand agriculture activities via diversification of
crop and location
§ Sale of non-core business completed: ACS&T
§ Sale underway of other non-core assets: items from the collections and sale of
a residential property generated net proceeds of £3.6 million in 2022 with a
gain on sale of £1.8 million.
§ Marketing of Linton Park and a number of other properties is underway
§ Part of Bardsley England (the West Kent orchards) ceased farming in January
2023 and consultation is underway on a proposed restructuring of packing
operations to mitigate future losses.
§ Establishing the baseline data for our Scope 3 emissions to complete the
full Group carbon footprint measurement.
Outlook
§ The Board recommends a final dividend of 102p per share bringing the total
dividend for the year to 146p, reflecting its confidence in the outlook for
the Group
§ Outlook for 2023 is mixed with revenues expected to be ahead of 2022 but with
trading profits lower in large part due to the effect of inflation on costs,
including wages
§ With financial markets currently more stable than in 2022, BF&M should
return to profit, resulting in the Group's expectation that adjusted profit
before tax will be ahead of 2022
Malcolm Perkins, Chairman, stated:
"Camellia withstood a range of challenges in 2022, including the impact of
inflation on input and distribution costs as a result of the Ukraine war,
volatility in financial markets, the cost of living crisis in the UK as well
as adverse weather in India and prolonged strikes in Bangladesh. The
combination of these meant that the Group's profitability 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.
Trading in 2023 to date has been mixed, with higher production volumes in
Kenya offsetting the lower prices being achieved in that market. There has
been a positive opening for new season teas in Bangladesh but prices in India
are significantly lower than last year, albeit for both countries it is very
early in the season. The remaining crops are developing in line with our
expectations for the stage of the growing cycle with volumes of macadamia
expected to be ahead of those of 2023. However, higher global inventories
are continuing to put downward pressure on macadamia kernel prices with the
result that orders and pricing for 2023 are well below prior year. The impact
of substantial rises in wages and energy prices continue to be felt across all
our agriculture operations and are expected to impact margins. Overall,
however, with financial markets less volatile than in the recent past, we
expect adjusted profit before tax to be ahead of that of 2022."
Financial highlights
Year ended Year ended
31 December 2022 31 December 2021
£'m £'m
Continuing operations
Revenue 297.2 255.3
Adjusted operating profit before tax * 3.3 9.3
Separately disclosed significant items (8.3) ( ) (1.7)
(Loss)/Profit before tax (3.7) ( ) 7.1
Profit for the year from discontinued operations 7.6 ( ) -
Taxation (12.2) (2.6)
(Loss)/profit after tax for the year (8.3) 4.5
(Loss)/earnings per share from continuing (745.8) p 83.3 p
operations
(Loss)/earnings per share from continuing and (470.7) 83.3
discontinued operations
Total dividend for the year 146 p 146 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 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018.
ENQUIRIES
Camellia Plc 01622 746655
Malcolm Perkins, Chairman
Susan Walker, Chief Financial Officer
Panmure Gordon (UK) Limited 020 7886 2500
Nominated Adviser and Broker
Emma Earl
Rupert Dearden
H/Advisers Maitland
PR
William Clutterbuck 07785 292617
Camellia at a glance
We are an international Group headquartered in the UK, a global family of
companies focused on agriculture, and are passionate about our produce and our
communities.
We are committed to doing the right thing: ethically and commercially,
globally and locally. We are custodians, operating sustainable businesses in
trust for future generations. We seek to improve the long-term stability and
wellbeing of these businesses and the communities and environments in which
they operate.
We seek to use sustainable agricultural practices to ensure that the
environments and communities in which we operate are protected and enhanced.
This allows us to continually improve operational efficiency and
sustainability which is not only a driving force for enhancing profitability
but also a powerful tool to reduce our environmental impact, benefit our
communities and support our ultimate ambition to reach net zero.
Purpose and strategy
We aim to generate long-term value for our shareholders and our stakeholders
which include our employees, customers, suppliers and local communities in
which we operate.
The Group's strategy is to focus on the sustainable production of its core
crops (tea, nuts and fruit) whilst continuously assessing opportunities to
diversify by both crop and origin.
Execution of this strategy will involve divesting non-agriculture assets as
appropriate opportunities arise.
Our business is made up as follows:
Agriculture
2022: Revenue - £283.0 million, trading profit £15.5 million
Mature Immature
Area Area
Locations Ha Ha
Tea
Production and Manufacturing India, Bangladesh, Kenya, Malawi 34,298 2,282
Instant tea, branded tea and tea lounges India, UK
Nuts and fruits
Macadamia Kenya, Malawi, South Africa 3,149 630
Avocado Kenya, Tanzania, South Africa 741 509
Other fruits UK, Kenya, South Africa 539 87
Other agriculture
Forestry Kenya, Malawi, Brazil 2,993 2,805
Arable Brazil 3,779 -
Rubber Bangladesh 1,790 138
Livestock (head) Kenya 4,246
Other investments
Engineering
2022: Revenue - £13.2 million, trading loss £0.8 million
Location
AJT Engineering UK
Investments
Market value at
31/12/2022
Locations £'m
Investment Portfolio Global 35.6
Investment Property UK, Malawi, Brazil 25.4
Collections (stated at cost) UK, India 8.8
Associates
2022: Share of results after taxation - £3.1 million loss
Market value
at 31/12/2022
Locations Holding % £'m
BF&M (Life and Non-life insurance) Bermuda 36.9 59.3
United Finance (Banking) Bangladesh 38.4 9.2
United Insurance (Non-life insurance) Bangladesh 37.0 6.1
Directors and advisers
Directors Malcolm Perkins Chairman and Interim Chief Executive
Graham Mclean Director of Agriculture
Susan Walker Chief Financial Officer
Stephen Buckland Non-executive Director
Rachel English Independent non-executive Director
Simon Turner Non-executive Director
Frédéric Vuilleumier Independent non-executive Director
Board committee memberships are detailed on pages 32 and 33
Group General Counsel and Amarpal Takk
Company Secretary
Registered office Wrotham Place
Bull Lane
Wrotham
Near Sevenoaks
Kent TN15 7AE
Registered Number 00029559
Nominated adviser and broker Panmure Gordon (UK) Limited
40 Gracechurch Street
London
EC3V 0BT
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 H Advisors Limited
3 Pancras Square
London N1C 4AG
Website www.camellia.plc.uk
Chairman's statement and operational report
Overview of financial results
Revenue from continuing operations for the Group increased to £297.2 million
from £255.3 million in 2021. This included an 18% increase in revenue in
Agriculture to £283.0 million (2021: £238.9 million) reflecting a full year
of trading from Bardsley England, higher tea prices in almost all
jurisdictions, albeit on lower crops, higher avocado volumes at reduced
selling prices, increased macadamia sales volumes at reduced prices and
improved arable prices. This was offset in part by reduced packet tea
revenues in India. Revenue from Engineering was lower in 2022 reflecting the
sale of Abbey Metal and Amfin during 2021.
Revenue from the discontinued operation (ACS&T) improved in the period up
to the date of sale reflecting increased activity in the UK food service
sector as COVID restrictions eased.
The results for 2022 show a loss before tax for continuing operations of £3.7
million (2021: £7.1 million profit) reflecting significantly lower results
from BF&M and a large impairment charge in respect of Bardsley England.
However, taking account of non recurring separately disclosed items the
adjusted profit before tax for continuing operations is £4.6 million (2021:
£8.8 million). Adjusted profit before tax for continuing operations is before
separately disclosed items, primarily impairments, further details of which
are set out in note 4 to the Accounts.
The Agriculture division showed improved trading profits in 2022 due to a
strong focus on consistent quality to maximise prices, cost control and
efficiency initiatives as well as through volume growth in macadamia and
avocado and from improved pricing for our arable crops. The improved
profitability for the division was achieved despite poor weather in India, a
prolonged labour strike in Bangladesh, significantly higher distribution costs
for our products, especially from Africa, significant inflation in energy and
input costs as a result of the Ukraine war, the UK cost of living crisis and
the after effects of the COVID pandemic continuing to indirectly impact
certain aspects of our trading.
Due to the very high inflation experienced in the UK fruit sector, coupled
with severe customer price sensitivity, the combination of which has impacted
our view of the future for Bardsley England, an impairment of £10.0 million
has been recognised in the 2022 results (see page 73).
Our Engineering division's results also improved in 2022 through a strong
focus on cost control and efficiency initiatives and reflecting the benefits
of the sale of loss making businesses in 2021.
Our results were however also adversely impacted by the poor performance of
our associate, BF&M, which was severely affected by the volatility in
financial markets and recorded a significant loss, our share of which was
£3.6 million, primarily as a result of marking investments to market values.
In contrast in 2021 BF&M made a significant contribution to profits of
£6.4 million.
In addition to the loss from our continuing operations, we recorded a
significant profit from discontinued operations (i.e. our Food Service
segment) of £7.6 million (2021: £nil), inclusive of the gain on sale of
ACS&T of £3.8 million.
Dividend
Reflecting continued confidence in the Group's long-term future, the Board is
recommending a final dividend in respect of the year ended 31 December 2022 of
102p per share bringing the total dividend for the year to 146p per share
(2021: 146p per share).
Strategic matters
The Group comprises businesses that produce nutritious and healthy food.
Increasing global demand for sustainable and healthy diets drives our
continued strategy of evolving to meet the changing needs of our customers,
smallholder growers and others. Alongside generating returns for our
shareholders we have a role to ensure we use resources responsibly, build
strong rural economies and ensure thriving healthy communities by drawing upon
everything we have learnt over many decades as a tea, macadamia, and avocado
producer.
We noted in our 2022 Interim Report that the Board was undertaking a series of
measures aimed at re‑balancing the Group's portfolio of investments to take
better advantage of its strengths, and thereby improve profitability and share
price performance. This exercise continues.
The Group continues to focus on its key strengths in agriculture and the
further diversification of crop and origin, facilitated through disposing of
non-core assets.
During 2022, the diversification strategy for the Group's core crops has
continued with the ongoing expansion of its macadamia and avocado footprints.
We have progressed new avocado developments in three of our origins in Africa
looking to build on our experience in Kenya and our market knowledge and
scale. The developments in Tanzania and South Africa also diversify origin to
take advantage of the different climatic and water benefits that these
locations present, and which ultimately will lead to a longer market window
for fruit deliveries into the various key markets we supply.
Macadamia developments continued in Kenya with both commercial and trial
plantings to maximise existing site potential and test alternative sites for
future viability with an objective of creating further options for
diversification of crop and origin for the future.
Blueberry expansion and development into a possible significant potential core
crop for the Group, continues to be a strong ambition given the availability
and diversity of location and water supply. As explained later, the experience
being gained from the current commercial blueberry trial in Kenya will be
invaluable in converting a possibility into reality.
Sustainability and safeguarding
The work initiated by the Stewardship and Safeguarding committee (SSC) has
progressed across the Group with the assistance of international specialist
consultants. Group subsidiaries have continued to review their social and
grievance procedures, and where appropriate, to establish operational-level
grievance mechanisms in accordance with the UN Guiding Principles on Business
and Human Rights. Group subsidiaries have also enhanced local reporting and
training by raising awareness across their management, employees and local
communities.
The Board remains committed to further enhancing the Group's environmental and
sustainability practices, and has expanded the remit of the SSC. Consequently,
that committee has been reconstituted as the Sustainability and Safeguarding
committee and reports to the Board. More details of this committee are set out
in the corporate governance section on page 40.
The Group strives to use water sustainably, reduce waste, protect the
ecosystems within which it operates, and works to ensure estates and
smallholders are resilient to climate change. Ahead of the 2023 annual report,
the Group is preparing to implement the recommendations of the Task Force on
Climate-Related Financial Disclosures (TCFD) which is an important step in
that process. As part of this effort, the Group has embarked on measuring its
Scope 3 emissions. In conjunction with Scope 1 and 2 emission data, this will
put us in a position to consider Science Based Targets for emission reduction.
Investment activities
Capital expenditure in 2022 for continuing operations amounted to £16.9
million. Within this, substantial investment was made in Kenya, Tanzania and
South Africa, expanding our macadamia and avocado orchards with a total of
251Ha of new avocado and 97Ha of new macadamia planted. 293Ha of tea was
replanted across the Group in the year.
The development of three residential properties on the Linton Park estate was
completed and these have been let.
We expect capital expenditure in 2023 to be in line with recent historical
levels as we continue to invest in our key strategic growth priorities.
Progress on refocusing investments
ACS&T
Consistent with our strategy, we sold ACS&T at the end of December for
£16.6 million with the funds received at the start of January 2023. This also
released £3.8 million of cash by way of a pre-sale dividend from that
operation. This was the last component of our Food Services division which is
now shown as a discontinued operation in our results for 2022. ACS&T
contributed £1.7 million of profit before tax in the year and its disposal
generated a gain on sale of £3.8 million.
Properties
A residential property in central London was sold in February 2022. We
continue to consider opportunities to realise our investment in properties and
are currently marketing properties in London and Bristol, others may be sold
in due course.
As a consequence of changes in work practices and office requirements, we
relocated our head office to a Group owned property at Wrotham in Kent in
March 2023. Planning consent has been achieved to convert Linton Park to
residential use and the property is being marketed for sale.
Collections
Part of the Camellia Collection was sold at auction during 2022 generating net
cash proceeds of £3.6 million and a gain on sale of £1.4 million. Further
items are due to be auctioned during 2023.
Performance
Agriculture
In total, Agriculture made a trading profit of £15.5 million (2021: £13.1
million) on revenue of £283.0 million (2021: £238.9 million), as set out in
note 1 to the Accounts.
Tea
Tea estate production Instant tea, branded
and manufacturing tea and tea lounges
2022 2021 2022 2021
£'m £'m £'m £'m
Revenue 177.6 161.5 32.5 34.7
Adjusted trading profit/(loss)* 9.1 10.7 0.2 (0.5 )
Trading profit/(loss) 9.1 11.3 0.2 (0.5 )
* See note 1 to the Accounts
Estate production and manufacturing
Group tea production in 2022 was 92.9mkg, down 6% on 2021 levels (2021:
99.1mkg) due to lower production in most jurisdictions resulting mainly from
adverse weather, and in Bangladesh, a prolonged strike.
2022 2021
Mature Immature Production Production
area area Volume Volume
Ha Ha mkg mkg
India 16,466 992 26.8 26.1
Bangladesh 8,648 690 11.4 14.4
Kenya 3,843 315 13.3 14.9
Malawi 5,341 285 19.0 20.0
Total own estates 34,298 2,282 70.5 75.4
Bought leaf production 17.8 19.2
Managed client production 4.6 4.5
Total made tea production 92.9 99.1
Pricing and operations
Tea pricing for all regions, except Darjeeling in India and Malawi, was above
that of last year, with our estates being rewarded for concentrating their
efforts on the consistent production of high quality teas. As with total
production, our sales volumes were also lower.
Shipping logistics have continued to be a challenge throughout the year though
this has improved in more recent months. We continue to experience inflation
in key input costs, particularly wages, fertiliser, energy and logistics.
Distribution costs, particularly from Africa, increased substantially in the
year and this in combination with reduced volumes has impacted margins.
India
Our estate crop for 2022 was up 3% on last year. The impact of continued poor
weather meant that our production volumes did not recover to pre-pandemic
levels.
Our net selling prices firmed for both Dooars and Assam CTC teas due to demand
in the internal packet tea market and improved quality, up on prior year by 8%
for Dooars and 3% for Assam CTC teas. Darjeeling prices were down 8% over the
same period, due to reduced demand. Our Assam Orthodox (rolled leaf tea)
prices were up 27% on prior year as the market continued to benefit from
severely reduced production entering world markets from Sri Lanka.
North India market pricing overall remained strong in 2022 for quality teas
due to limited supply and supported by 100% import tariffs. North India
export volumes were up c.26%, with prices in this market on a par with last
year.
2023 has seen the last of the limited 2022 tea stocks sold at significantly
lower prices than in the corresponding period last year and the first auctions
of the new season also opened substantially lower. Going forward pricing will
be determined by regional production volumes and demand.
As previously announced, wages in West Bengal increased 15% for 2022 and Assam
wages increased 13% effective from August 2022. A further esclation in wages
of 7.7% has recently been announced in West Bengal, on which we await
clarification.
Investment in replanting continued with 122Ha of planting completed (2021:
167Ha) and a further 182Ha uprooted in preparation for future planting.
Bangladesh
Due to a very dry start to the season, then very wet weather and flooding
coupled with a national strike over wages during the peak season, the
Bangladesh operations reported a 21% lower crop than prior year.
Our average net selling price was up 3% on prior year, due to an increased
concentration on quality and improved grade mix, though this was insufficient
to compensate for the reduced volume and significant wage inflation discussed
below.
National production was 3% down on prior year but was the third highest crop
on record, principally as a result of a 22% increase in bought leaf volumes,
the production of which was not affected by the strike. The bought leaf
sector has grown 140% in 5 years and its continued rapid escalation, if left
unchecked, presents challenges to the market with a risk that potential
oversupply results in downward pressure on pricing.
2023 has seen reasonable prices for prior season teas in the initial sale.
Forthcoming pricing will be driven by the level of production over the summer
months.
Following strike action and intervention by the government, a wage increase of
41.7% was mandated and agreed by the unions effective from August 2022. In
addition, a lump sum payment of Tk11,000 per permanent worker was agreed,
payable in 2023. The significant wage increase has substantially impacted the
ongoing cost of production and requires a meaningful increase in productivity
and selling prices if tea production in Bangladesh is to be sustainable
long-term.
The total area planted in 2022 was 145Ha (2021: 143Ha) of which 118Ha was
replanting and 27Ha was newly planted areas.
Kenya
Following a cool, dry first and last quarter, our Kenyan estates' crop
production was down 12% on the previous year. Total factory volumes were down
9%. The national crop was only down c.1%, which is indicative of increasing
production levels from smallholders.
Our average selling price in 2022 was up on prior year by 17%. We have
continued to outperform our commercial grower competitors in the district by
concentrating on quality with a price differential of 7% above the average
and our average prices were the highest of the commercial growers.
The "all average price" at Mombasa auction was 18% up on 2021, driven
principally by the sale of improved quality teas. There were large volumes of
medium quality teas which did not sell, building a large stock of inventory.
Export levels were c.27% down on 2021 with demand from Pakistan and Egypt
lower due to the lack of availability of hard currency with which to purchase
tea. Demand from the UK was also down due to lower consumption. Increased
competition from other beverages and low retail pricing in western markets
continues to be a challenge for the industry as is the oversupply of low to
medium quality CTC teas for which there is a limited market.
In 2023 our prices to date have been significantly below that of the same
period of 2022 reflecting a continuing reduced demand from Kenya's largest two
buyers, Pakistan and Egypt. Pricing levels looking forward will depend on
production volumes and quality as well as the continued shortage of hard
currency in these regions. However, our crop for Q1 2023 was significantly
ahead of the same period last year.
Following the conclusion of the CBA negotiations wages are expected to
increase by 7% in 2023.
We replanted a total of 53Ha (2021: 50Ha) whilst uprooting 52Ha for replanting
in 2023.
Malawi
Our Malawi crop in 2022 was 3% down on that of 2021 following a slow start to
the season due to the late arrival of the rains.
Sales in the first half of 2022 experienced some delays due to the logistics
challenges arising from a scarcity of containers and flooding disruption at
Durban port in South Africa. However, the situation has significantly improved
in recent months.
Malawi prices remained under pressure for much of the year with the plainer
teas from West of Rift Kenya still proving an attractive value substitution to
buyers. Malawi, being land locked, is at a considerable disadvantage to most
of its neighbours due to the additional costs of transport to markets. Our
average selling price was 2% below that of 2021.
As previously announced, a wage increase of 13% was agreed effective from
August 2022. A further increase of 5% applied from January 2023.
On 26 May 2022, the Reserve Bank of Malawi announced that it would stop
supporting the currency and allowed the exchange rate to reflect market
fundamentals. This resulted in a devaluation of the Kwacha of c.25%. Despite
this, the availability of foreign exchange is very limited posing challenges
to importers.
There was no replanting in Malawi for a third successive year, a decision
taken to conserve resources considering trading conditions.
Selling prices in 2023 in Malawi are marginally above those of the same period
of 2022. The market is expected to be volatile for a period due to uncertainty
influenced by the general direction of the Kenya market. A lack of foreign
exchange in a few key markets also adds to the expected volatility. Our
production volumes in Malawi for Q1 2023 are below those of last year.
In mid-March 2023 cyclone Freddy hit southern Malawi with torrential rain and
strong winds causing loss of life and extensive damage to property and
infrastructure. Sadly, we had one fatality that occurred in our eastern
Mulanje operations where the worst of the weather was experienced and where a
landslide destroyed approximately 12Ha of tea, irrigation equipment and other
water supply systems. Electricity supply has since been reinstated to all
factories and roads and bridges have been repaired so access to all estates
has been restored. Production has continued throughout, although at lower than
expected levels.
The impact on the surrounding communities has been more significant with loss
of life, housing and the destruction of many hectares of food crops. We are
supporting the community and providing assistance where possible. Nationally
there is a great deal of damage to infrastructure in and around the urban
centre of Blantyre which will take time to rebuild.
Instant tea, branded tea and tea lounges
India
Sales volumes of our packet tea in India fell by 9%, and net prices also
reduced by 5%. Despite increasing demand for tea, packet tea sales continue to
suffer from competitive pressure in the branded market as well as reduced
demand for private label teas. However, the operation has continued to
innovate with new product development and the release of new product lines in
Single Estate premium teas and five varieties of Ready to Drink bottled iced
teas.
Instant tea production in 2022 was up 17% on the previous year. Sales volumes
increased 36% with average prices also up by 5% reflecting increased demand
and product mix changes, leading to a significantly improved contribution from
the operation.
UK
Revenue recovered close to pre-pandemic levels and trading improved for Jing
Tea as COVID restrictions were further eased in all markets except China.
Although margins have been adversely affected by inflation, particularly on
packaging and logistics costs, overall losses are lower than those experienced
in 2021. Additional warehousing has been established in Dubai to serve the
Middle East markets more efficiently and new customers have been successfully
secured for 2023.
Nuts and fruits
Macadamia Avocado Other fruits
2022 2021 2022 2021 2022 2021
£'m £'m £'m £'m £'m £'m
Revenue 14.9 10.8 19.2 11.1 23.0 9.3
Adjusted trading profit/(loss)* 2.9 2.7 2.3 (0.5 ) (5.3 ) (4.1 )
Trading profit/(loss) 2.9 2.7 2.3 (0.5 ) (5.3 ) (4.6 )
* See note 1 to the Accounts
Macadamia
Mature Immature 2022 2021
area area Production Production
Ha Ha Tonnes Tonnes
Malawi 1,417 96 540 438
South Africa 822 315 486 375
Kenya 910 219 660 492
Total 3,149 630 1,686 1,305
The Group's kernel production volumes increased by 29% in 2022 due to improved
growing conditions in Southern Africa generally, enhanced pest control in
Malawi and our Kenya crop has increased over 30% on the previous year. The
Kenya crop is increasing as further areas of maturing orchard come into
bearing alongside the increasing maturity of existing orchards.
However, our average net selling price was down 10% on 2021 reflecting high
inventories and continuing subdued market demand for kernel post COVID,
particularly from China, but also the USA and Japan and exacerbated by
increased worldwide production. Sales volumes were however up 18% on 2021 and
profits benefitted from the additional volumes, related efficiencies and a
favourable sales grade mix despite higher distribution costs.
Harvesting of the 2023 crop is underway and volume indications at this stage
are encouraging. The macadamia harvest in Malawi was virtually complete before
cyclone Freddy arrived in country, so there has been no significant impact on
production volumes and processing continues.
Global production volumes in 2022 were above prior year with the two major
producers, Australia and South Africa up 7% and 28% respectively. China's
production volumes also increased by an estimated 44% reducing their demand
for imports. Higher global inventory going into 2023 is continuing to put
downward pressure on prices, particularly on kernel grades for the ingredients
market.
This situation is expected to persist for some time. Orders and pricing in
2023 so far are well below prior year as buyers assess the current market
conditions.
Avocado
Mature Immature 2022 2021
area area Production Production
Ha Ha mkg mkg
Kenya - Estate Hass 608 278 12.4 7.5
Kenya - Estate Pinkerton 133 - 2.0 1.0
Tanzania - Estate Hass - 152 - -
South Africa - Estate Hass - 79 - -
Total own estate production 741 509 14.4 8.5
Smallholders 1.2 0.6
Our estate avocado production was up 70% on last year, due in large part to
the bi-annual nature of the production which also resulted in higher volumes
packed for smallholders The avocado tree has a natural tendency towards
alternate or bi-annual bearing, widely known as 'on' and 'off' years and 2022
was an 'on' year. Our estate Hass pricing was up 2% on prior year, due to a
firm market for the majority of our fruit arrivals.
There was an excellent Pinkerton season with export volumes up 143% and
pricing up 6% on the previous year leading to a significant contribution from
that crop to profits despite higher distribution costs.
The 2023 Pinkerton harvest is well advanced with volumes ahead of 2022 and we
expect prices to be higher. The Hass season has now started with volumes
expected to be significantly behind those of 2022 reflecting the fact that it
is an 'off year' for Hass.
We continue our avocado expansion strategy by diversifying our origin
portfolio, with further plantings in Tanzania, Kenya and South Africa. We
planted 102Ha (2021: 37Ha) at our farm in Tanzania, a further 69Ha (2021:
44Ha) in Kenya and 78Ha (2021: nil) in South Africa. In 2023 to date a further
98Ha have been planted in Tanzania.
During the year Kakuzi in Kenya achieved GLOBALG.A.P. "SPRING" Certificate of
Conformity for the sustainable management of water resources.
Other fruits
Mature Immature 2022 2021
area area Production Production
Ha Ha Tonnes Tonnes
Apples - own estate 396 94 17,610 11,845
Apples - partner growers 8,650 1,428
Pears - own estate 88 4 1,470 1,395
Pears - partner growers 470 266
Stone fruit 44 0 666 205
Grapes 82 11 774 644
Blueberries 7 - 28 42
Apples and pears
Bardsley England is the Group's only agricultural investment in the UK and to
date it has failed to perform to expectation incurring a pre-tax loss of £5.7
million in 2022. A combination of factors has contributed to this unacceptable
outcome. These include higher than anticipated labour costs, due to government
policy on pay for seasonal workers which had a consequent impact on wage rates
for permanent workers, as well as very high inflation in electricity,
fertiliser, chemicals and fuel costs as a result of the Ukraine war which also
had an indirect inflationary impact on other costs. The UK apple season in
2022 saw very high volumes of production with the market oversupplied thus
applying significant downward pressure on prices in a rising cost environment.
Although consumers have experienced significant food inflation, key retail
customers have resisted any meaningful selling price increases. Studies have
estimated inflation for apple growers in the UK at 23% in contrast to average
industry selling price increases of 0.8% (Source: British Grower Association
Survey). Attempts to mitigate cost increases through the restructuring
undertaken in December 2021 and other efficiency and cost reduction
initiatives have had limited impact.
The record breaking heat in the summer coupled with harvesting delays due to
heavy rain led to a 49% increase in production volumes but a combination of
smaller fruit and significant quality issues further compounded the impacts of
high cost inflation and low pricing.
Many producers in the UK top fruit sector are also experiencing difficulties
and some producers have ceased farming with replanting significantly scaled
back. However, consumers continue to demand locally sourced produce and UK
fruit remains competitively priced. Despite the challenges in the short term,
it is our view that the UK top fruit sector is likely to present opportunities
in the coming years for growth and margin recovery for producers.
Considering the trading environment, a decision has been made to further
restructure and significantly reduce the scale of Bardsley England's
operations. As a result, the uneconomical West Kent orchards were closed in
January 2023 and discussions to exit the related leases remain ongoing.
In March 2023, Bardsley England agreed with its key customer that the existing
supply contract will be terminated at the end of the current season. Bardsley
England intends is participating in the re-tendering of this contract.
The potential closure of the West Kent packhouse operation was announced on 30
March 2023 and the employee consultation is ongoing with packing from that
site expected to continue until early August 2023 to fulfil current contracts.
The business is expected to be consolidated on a single site in East Kent
which has large fruit storage facilities and is well located for access to key
transport routes. This will allow for transport and other operational
efficiencies to be achieved and for future overhead cost savings.
An impairment charge of £10.0 million has been recognised in respect of
Bardsley England's assets and goodwill in 2022 as a result of the reduced
expectations for the business in the current economic and sectoral
environment. Restructuring costs in the range of approximately £1 million to
£1.25 million are expected to be incurred and recognised in the 2023 results.
Due to the ongoing contractual commitments for 2023, in conjunction with
restructuring costs, we expect Bardsley England to also record a significant
loss in 2023.
Grapes
Grape production at our South African operation ended with a record harvest
17% up on that of 2021. The grapes were high quality and were sold to local
commercial-scale winemakers. The 2023 harvest in South Africa has resulted in
a further record production, well ahead of expectation. Pricing is in line
with 2022.
Blueberries
2022 was the third year of full production of our 10Ha trial in Kenya.
As previously stated, the indications from the trial are that the variety
planted initially does not perform optimally in Kenyan conditions. Other
varieties have been trialed in small areas during 2022 and at least two of
these are showing much greater potential than the current dominant variety
planted. The reason for establishing this commercial scale trial was to test
plant establishment, agronomy practices and varieties and this is being
achieved very successfully. During 2023 the most promising varieties from the
trial will be planted in the 10Ha area.
Production in 2022 fell by 33% reflecting the transition of the trial out of
one variety pending the establishment of the others as explained above. The
majority of the crop produced was sold locally.
Other agriculture
2022: Revenue - £15.8 million (2021: £11.4 million), trading profit £6.3
million (2021: £4.8 million)
Mature Immature 2022 2021
area area Production Production
Ha Ha Tonnes Tonnes
Arable 3,779 - 40,621 34,769
Rubber 1790 138 658 690
m(3) m(3)
Forestry 2,993 2,805 45,354* 46,079*
Births Births
Livestock 681 799
* Volumes quoted are for conversion to value addition products rather than
fuel wood for own use.
Arable
Our soya and maize crop production was higher than that of prior year with
excellent quality being achieved. Prices for the soya crop were 37% higher
than the prior year and maize prices increased by 4%, reflecting the impact of
the Ukraine war on global food grain markets. Wheat stocks carried over from
2021 also achieved good prices. This led to substantially increased profits
for our operation in Brazil.
Rubber
Production was down 5%, with pricing down 1% on last year and prices remain
lower than the cost of production. A number of initiatives are being pursued
with the aim of reducing the losses from this crop.
Forestry
Kakuzi's forestry volumes were slightly ahead of last year with the main focus
on fence post sales. The production of quality timber products is also being
investigated as a potential diversified and value-added product line.
Our Brazil operation restarted its eucalyptus timber sales during the year but
no significant pine timber sales were made. Pine resin sales continued
throughout the year, providing a useful contribution to profits.
Livestock
Births were down significantly on last year, leading to lower revenues.
There are now some 600Ha under grass production for baling and sale into the
local market which will also provide a diversified source of revenue for the
livestock operation.
Other investments
Engineering - A JT Engineering
A trading loss of £0.8 million (2021: £2.3 million loss) on revenue of
£13.2 million (2021: £15.3 million) was recorded, as set out in note 1 to
the Accounts. The loss in 2022 was lower than prior year due to tight cost
control and a focus on efficiency and improving terms with customers.
Market conditions in both the oil and gas and hydro sectors were flat during
2022. The surge in orders during the autumn of 2022 subsequently abated due to
government policies affecting the confidence of the oil majors to increase
production from the North Sea and the energy crisis causing the key customer
for Site Services to postpone planned projects. Order intake and enquires in
2023 to date for both divisions are encouraging.
Associates
2022 Share of results: Loss of £3.1 million (2021: Profit of £7.2 million)
BF&M
BF&M recorded a shareholders' net loss of Bermudian $8.8 million as
compared to shareholders' net income of Bermudian $25.2 million for 2021.
Significant increases in interest rates resulted in short-term fluctuations in
the values of BF&M's fixed income portfolio. Both bond and equity asset
prices declined, resulting in unrealised losses of Bermudian $19 million (loss
of 7.4%). A non-recurring, goodwill impairment charge of Bermudian $5 million
was also recorded.
Net income from operations, excluding fair value movements in investments and
the goodwill impairment, was Bermudian $11.5 million versus Bermudian $22.0
million in 2021. Gross premiums written for the period increased by 3% from
the prior year, driven by increased property premiums offset by the
non-renewal of a large account which was fully reinsured. Short term P&C
claims and adjustment expenses increased by 6.8% to Bermudian $15.8 million.
Excluding the fair value impact, life and health policy benefits increased by
9% to Bermudian $96.8 million. Group health claims remained elevated just
above pre-pandemic levels with a return to normalised levels expected in 2023.
Volatility in financial markets impacted overall assets under management,
however the pension and annuity businesses remain well-positioned as these
markets recover.
United Finance and United Insurance
Our two associate companies in Bangladesh, United Finance and United
Insurance, produced lower results reflecting continued challenging economic
conditions in Bangladesh.
While United Finance's net operating income was 13% higher than that of the
prior year due to an increase in the number of new loans sanctioned, margins
were impacted by the effect of inflation on the overhead base and an increase
in the costs of non-performing loans.
The underwriting profit for United Insurance decreased due to a decrease in
gross premiums, higher claims and increased cost of reinsurance.
Investment portfolio
The total value of the portfolio at 31 December 2022 was £35.6 million (2021:
£40.2 million). During the year a net £5.6 million was realised from the
investment portfolio.
Currencies
Over the course of the year, Sterling weakened against the majority of our
operating currencies. This has resulted in a gain on foreign exchange
translation of £9.3 million (2021: loss £4.0 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 2022
would have been £0.2 million lower. Our profit before tax includes an
exchange gain of £1.5 million on transactions during the year (2021: gain
£0.4 million).
Tax and other provisions
The Group's tax charge reflects the losses in the UK and impairment charges
which are not deductible for tax. The tax charge also reflects the reversal of
a significant deferred tax liability as a result of movements in the surplus
on the UK Pension Scheme.
As is normal at this time of the year, we have ongoing wage negotiations
relating to prior periods in India. We consider we have made adequate
provision for their likely outcome.
Despite progress being made during 2022, we continue to have a number of
significant uncertain tax situations totaling £12.5 million, which have been
disclosed previously and which are detailed in note 42 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. On an IAS 19 basis, at the end of 2022 the UK scheme had
a deficit of £1.1 million. No contributions are currently being made to the
scheme. The next triennial valuation is due in 2023.
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 loss after
tax of £9.3 million (2021: post tax net gain £16.5 million) is reflected in
the Statement of Comprehensive Income. The net loss this year arises primarily
from the UK scheme where asset performance was lower than expected.
Outlook
Trading in 2023 year to date has been mixed with higher production volumes in
Kenya offsetting the lower prices being achieved in that market. There has
been a positive opening for new season teas in Bangladesh but prices in India
are significantly lower than last year, albeit for both countries it is very
early in the season. Macadamia volumes are also significantly ahead of those
of 2022 but pricing continues to be under significant pressure and sales
volumes are below prior year. The remaining crops are developing in line with
what we would expect at this stage in the growing cycle.
There remains residual uncertainty about how the war in Ukraine might impact
the tea market and input costs more broadly going forward. High energy prices
will continue to affect our margins. Fertiliser prices also remain
relatively high with the impact continuing to be felt in the cost of
production across all our agricultural operations. Furthermore, rising
inflation is leading to continuing increases in wage demands.
Overall, however, with financial markets less volatile than in the recent
past, we expect adjusted profit before tax for 2023 to be ahead of that of
2022 and 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.
We thank all of our staff for the way in which they responded to the many
challenges of the year in what has been a fast-changing business environment.
The passion for our products, our skills and the professionalism of our people
are key to our success.
Malcolm Perkins Susan Walker Graham Mclean
Chairman and Interim Chief Executive CFO Director of Agriculture
3 May 2023
Environmental and social report
At Camellia, ESG (Environmental, Social and Governance) is integral to our
business. This is based on our fundamental belief that we are custodians of
our operations and must ensure a process of continuous improvement across all
that we do. This enables our assets to be passed on to future generations
whilst caring for the environments in which they are based and for those
communities who depend on them. We believe that the success of all our
operations is intrinsically connected to the communities, the environments and
wider supply chains in which they operate.
During the year we developed a Group sustainability strategy consisting of
five guiding pillars which are set out below, with the United Nations 10
Sustainable Development Goals (SDGs) to which they align:
Group guiding pillars SDG*
Environment 6, 13 and 15
Emissions 3, 7, 12, 13 and 15
Social Sustainability 3, 4, 5, 6 and 8
Safeguarding 5, 8, 12 and 16
Health and safety 3 and 8
* SDG 3 (Good health and wellbeing); SDG 4 (Quality education); SDG 5 (Gender
equality); SDG 6 (Clean water and sanitation); SDG 7 (Affordable and clean
energy); SDG 8 (Decent work and economic growth); SDG 12 (Responsible
consumption and production); SDG 13 (Climate action); SDG 15 (Life on land)
and SDG 16 (Peace, justice, and strong institutions).
Within these five guiding pillars we have identified five key focus areas for
which the Group's operations will create timebound action plans and
initiatives to actively create strategies and seek solutions which address the
various challenges facing the Group:
§ Water stewardship
§ Climate action and decarbonisation
§ Access to clean drinking water and sanitation
§ Safeguarding
§ Health and safety
We realise that these are highly complex areas and it will take time to
devise, as well as implement, plans to achieve our desired outcomes. In some
areas solutions may not yet exist but we intend to actively seek and trial
possibilities where practically and economically feasible.
The Group undertakes a variety of ESG projects and initiatives, examples of
which are set out in this report and on our website (www.camellia.plc.uk).
The Group's approach to ESG is described in detail in this section and is the
responsibility of the Board which is supported by the Sustainability and
Safeguarding committee. The boards of the Group's operating companies closely
consider their respective governance protocols and the environmental and
social 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 the most significant long-term risk to the Group's
agricultural operations. We seek to mitigate the impact of this risk by
diversifying our agricultural production by both origin and crop. We also
continue to plant more drought resistant crop varieties and use other
initiatives, such as regenerative farming methods and sustainable irrigation.
In addition to our efforts to minimise our environmental impact, we work to
protect and enhance forests and water bodies to promote biodiversity. 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 oversees c.9,000Ha of indigenous forests and conservation areas and
a further 7,200Ha of commercial forestry (eucalyptus, pine and 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 further
below.
We use specialist 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.
Environmental reporting
The Group continues to report under the Streamlined Energy & Carbon
Reporting Regulations (SECR), which is set out in the rest of this section.
The Group's 2023 annual report will include the Group's reporting in line with
the Taskforce on Climate-Related Financial Disclosures (TCFD) reporting
framework.
Based on prior year Scope 1 and Scope 2 carbon footprint investigation and
analysis, the Group has determined that our priority for the reduction in
emissions should be the thermal and electrical energy requirements of tea
manufacture. Thermal energy demand reflects the highest levels of emissions
and accordingly initiatives have been targeted towards reducing the quantity
of fuel (coal, gas, wood) consumed.
Global GHG* emissions (excluding UK) and energy use data for the year to 31
December
2022 2021 2020 2019
Global Global Global Global
Reporting year (Excluding UK) (Excluding UK) (Excluding UK) (Excluding UK)
Group sectors reported
Emissions from the combustion of fuels,
fertilisers, waste, livestock, land use
change and refrigerants (Scope 1) (tCO(2)e)** 154,508 156,853 164,227 181,076
Emissions from purchase of electricity,
heat, steam, and cooling purchased for
own use (Scope 2, location- based) (tCO(2)e) 40,434 41,958 42,717 47,625
Total gross Scope 1 and Scope 2 emissions
(location-based) (tCO(2)e) 194,942 198,811 206,944 228,701
Intensity ratio: Kg CO(2)e/Kg of made tea 1.36 1.29 1.40 1.51
* Greenhouse gas
** tCO(2)e - tonnes of carbon dioxide equivalent
Refer to Appendix 1 for more detailed data and Appendix 3 for the methodology.
There is no market-based data available for global (excluding UK).
Changes in Scope 1 and Scope 2 emissions
The Group's Scope 1 and Scope 2 location-based emissions (excluding UK)
reduced by 1.9% during the reporting period. This was primarily due to a
reduction in volumes of made tea produced in Bangladesh and a lower national
grid emission factor for Kenya. This was partially offset by higher
electricity usage in South Africa due to an increase in the area under
irrigation. In the tea drying process the Indian operations rely on coal
whilst Bangladesh uses natural gas. Where possible, and with infrastructure
permitting, cleaner fuel sources and efficiency improvements are being
implemented, although progress is at an early stage.
We report the made tea intensity ratio (2022:1.36 kg CO(2)e per kg of made
tea; 2021:1.29kg CO(2)e per kg of made tea) and we continue to invest to
improve the carbon efficiency of our tea factories. There has been a 5.9%
increase in the Group's location-based made tea carbon intensity, mainly due
to less carbon efficient production in Bangladesh. Green leaf volumes received
into factories reduced during the period leading up to the industrial action
so factory capacity was not optimised. Following the strike, leaf was longer,
resulting in leaf volumes taking longer to process. We are also pleased to
observe that our Kenyan and Malawian tea operations have continued to improve
their thermal energy efficiency in their tea factories.
As mentioned above, the Group's perennial crops sequester significant amounts
of carbon. We previously reported that we conducted an external study 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 continue to assess how to reflect this as part of the
Group's sustainability strategy. We await further direction from the GHG
Protocol, under its land sector removals guidance, in relation to the
accounting for carbon stocks.
UK GHG emissions and energy use data for the year to 31 December
Reporting year 2022 2021 2020 2019
Group sectors reported UK UK UK UK
Emissions from the combustion of fuels, fertilisers,
waste, livestock, land use change and refrigerants
(Scope 1) (tCO(2)e) 5,937 5,718 5,436 7,147
Emissions from purchase of electricity, heat,
steam and cooling purchased for own use
(Scope 2, location-based) (tCO(2)e) 4,125 4,408 5,130 5,316
Total gross Scope 1 and Scope 2 emissions
(location-based) (tCO(2)e) 10,062 10,126 10,566 12,463
Refer to Appendix 2 for more detailed data including market-based data and
Appendix 3 for the methodology.
Environmental certifications
AJT Engineering is 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 GlobalG.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 Improved fuelwood management and site suitability at all tea factories 3,534
Kenya Installing new more energy efficient irrigation pumps 150
UK Installation of fast close doors at cold stores, reducing the amount of 146
ambient air flow
Kenya Installation of variable flow controllers on irrigation pumps 100
Kenya Variable speed drives fitted to air inlet fans at two of its tea factories 100
2021 Key examples were:
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 4.1 GWh (2021: 2.3 GWh) saving in energy
per annum.
In addition, the Group is continuing with its programme of replacing existing
energy sources with renewables and in 2022 installed additional capacity
expected to produce 430 MWh. 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 a number of our 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 to provide significant
savings. We set out examples of the key initiatives below:
Operation Energy Saving Initiatives
Tea Replacing inefficient withering fans
Continuous green leaf withering to improve the efficiency of the withering
process
Introduction of more energy efficient driers at its tea factories
Testing alternative steam trap systems
Variable frequency drives fitted to green leaf maceration equipment
Variable speed drives fitted to air inlet fans for tea driers
Improved fuelwood management and site suitability
Installation of heat exchangers to recycle exhaust heat
Avocado Installation of more efficient cold rooms
Agriculture Variable speed drives fitted to irrigation pumps
Replacement of lighting with more energy efficient LED lighting
The Group will continue with its program of replacing existing energy sources
with renewables where possible with a focus on increasing installed solar
capacity. Our ultimate intention is to set energy use and emission reduction
targets across our operations.
Social
The Group's businesses are fundamentally connected to the welfare of the
communities and environments in which they operate. They 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 our subsidiaries are working with supply chains,
customers, national governments, trade unions and NGOs to help improve the
livelihoods of their 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 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 operations 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 own and/or operate. In 2022,
the Group performed 1million patient treatments, of which 564,000 were for
employees.
Many of our Group's operations provide childcare and education to their
employees' families from nursery up to secondary school. During the year we
continued to run 175 nurseries and creches, 72 primary schools and six
secondary schools. In total we educated more than 23,000 children. In certain
circumstances, our Group's operations will provide land or other resources to
contribute to the running of local schools which are not owned and/or operated
by them.
We also provide housing to a large number of employees and their families. The
housing is owned and managed by our Group's operations and is provided and
maintained in line with widely recognised international certifications. The
Group's operations own c.48,000 houses accommodating c.293,000 people, of whom
c.66,000 are employed.
2022 continued to be a year impacted by the effects of the COVID pandemic.
Our Group's operations have made significant efforts to provide safe working
and living environments for our employees as well as the wider communities in
which they operate.
Approved by the Board
Amarpal Takk
Company Secretary
3 May 2023
Strategic report
The Strategic report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the information
available to them up to the time of their approval of this report and such
statements should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any such
forward-looking information.
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 2022 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
operational report on pages 5 to 15. The Chairman's statement and operational
report, together with information contained within the Report of the
Directors, highlights the key factors affecting the Group's development,
performance and the financial performance of the Group (see pages 5 to 15 of
the Chairman's statement and operational report). Other matters are dealt with
below.
Group strategy
The Board has adopted the following strategy for the Group:
§ To generate long-term value for our shareholders and our stakeholders which
include our employees, customers, suppliers and the communities in which we
operate
§ To develop a worldwide group of businesses that requires management to take a
long-term view
§ To focus on the sustainable production of its core crops whilst continuously
assessing opportunities to diversify the Agriculture division by both crop and
origin
§ 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 Chairman's statement and operational report, the Environmental
and social report, and within the Report of the Directors.
Business model
The Group is engaged in Agriculture, Other investments and Associates.
Camellia operates a decentralised business model which empowers the management
teams in its subsidiaries to run their businesses with the scope and
accountability to identify and implement initiatives that create value for the
Group. Our devolved approach enables decisions to be made by those closest to
the issues and the stakeholders that may be affected, thereby fostering
resilience and flexibility in planning and enabling timely responses to
impacts and opportunities.
Regular reports are made to the Board on performance against the annual budget
and each operation is expected to perform against an agreed strategy with
goals and targets for the short, medium and long-term.
Agriculture
To focus on our tea, macadamia and avocado crops, where we have scale and
geographic diversity. To maintain and selectively expand 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.
All our agriculture operations have regard to the potential threats arising
from politics and the impact of climate change, particularly in water stressed
areas, and will adapt their portfolio of operations accordingly.
Other investments and Associates
AJT Engineering. To keep our presence in the energy sector under review, in
line with our strategy of expansion in areas of expertise, while divesting in
non-core businesses.
Investment portfolio. To have 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. Parts of the portfolio may be sold to accelerate the
Group's investment in agriculture.
Collections. Parts of the art, philately and manuscripts collections 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.
Principal risks and uncertainties
The Group is exposed to a variety of possible risks and uncertainties that
could impact the Group's operations and future performance. The Group
regularly monitors these risks at operational and Group level.
Our decentralised operating model enables Group company management teams to
identify, evaluate and manage risks that are relevant to their geographic
location and markets. The Strategy group considers risks identified to it by
the Group companies, and where appropriate raises them to the Board and/or the
Audit committee. Information on the Group's financial risks is disclosed in
note 43 of the Accounts.
The Board has carried out an assessment of the material risks and
uncertainties relating to the Group's principal operations, with key
mitigations and assessment of change in risk year-on-year. These are set out
in the table below.
# increased risk
1 unchanged risk
$ decreased risk
Agriculture
Risk Assessment of change in risk year-on-year 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 n The effect of climate change on crop volumes and/or a prolonged depression in Use of forward contracts, product and crop diversification and building
the world tea, macadamia or avocado markets, either individually or in long-term strategic relationships with key customers.
combinations, would have a material impact on Group profitability.
Production of value-added products to access and supply markets to address
particular customer demands whilst having a much greater control over pricing.
Currency fluctuation n 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 h Increased wage costs, cost of inputs and other costs of production resulting Introduction of more efficient and productive working practices and the
in lower profitability. increased use of mechanisation and automation.
Reduction of energy consumption and/or increased use of renewable energy.
Long-term political issues over land ownership h 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 n Periodic interruptions to the operation of the businesses at a local level. Increasing security for our workers and operations during times of civil
unrest.
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 n 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.
Training of staff.
Health and safety n 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 (current and historic) n Adverse impact on financial results from legal and reputational costs. Media Continuing to implement human rights strategies to protect, respect and
and political pressure impacting operations or customers preparedness to buy remedy. Understanding the salient human rights risks (via audits and
products. assessments). Implementing measures to mitigate and prevent such risks from
crystalising.
Providing 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).
Engineering
Risk Assessment of change in risk year-on-year Potential Impact Mitigation
Key customer dependence n Losing a major customer. Seeking to diversify the customer base and careful customer relationship
management.
Dependence on the oil and gas sector n 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 h 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.
Investments and Associates
Risk Assessment of change in risk year-on-year Potential Impact Mitigation
Market n 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 h Risk of substantial claims materially reducing profits. Maintaining strong capital base and use of underwriting and reinsurance to
reduce risk.
Group
Risk Assessment of change in risk year-on-year Potential Impact Mitigation
Prolonged impact of a pandemic i Interruption to production and/or disruption of supply to customers. Contingency plans.
Volatile equity markets impacting the pension schemes' deficits with a Ongoing monitoring of banking partners and country credit ratings.
resultant increase in the funding requirement.
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 n Increase in the pension schemes' deficits with a resultant increase in the Regular monitoring of the funding position of the pension schemes and their
funding required from the Group. investment performance.
Increases in inflation and/or reductions in long-term government bond yields
Improvement to the investment strategy and hedging key exposures when
appropriate.
Lower than expected asset return
Changes in local laws restricting the investment choices for the schemes'
assets
Environmental n Contamination of local and wider environment due to the use of machinery and Strict compliance with legislation, training employees to adopt safe working
chemicals. practices and lessen the impact on the environment.
Payment of fines and claims, criminal prosecutions and reputational damage. Proactively seek to reduce our impact on the environment.
Uncertainties in the interpretation of complex tax legislation, or arising n Future adjustments to taxable income and/or expense deductions previously Tax exposures are considered individually, and judgements made with support
from changes in tax legislation recorded or 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 and regulation uncertainties in relation to the application of English h Group legal risk in relation to the activities of overseas operations Monitoring the interpretation of law and taking appropriate advice and
or other law or changes in case law (including potential litigation in the UK) and incurring costs in relation to monitoring and auditing compliance with new developments.
the same.
Potential cyber- threats such as computer viruses n Loss or theft of data. Developing our technology systems.
Interruption to services for customers and the business.
IT malfunctions or external cyber-attacks Investing in developing the IT skills and capabilities of our people.
Actively monitoring and mitigating any cyber-threats and suspicious IT
activity.
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 GPPs
which are periodically cascaded across the Group. Each operation is required
to prescribe its own local policies based upon the GPPs. On an annual basis,
each significant operation confirms to Group its adherence with the GPPs.
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, Employee Welfare GPP and Human
Rights 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 Rainforest Alliance
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.
Human rights
Camellia Plc and its operating companies believe that businesses flourish
where human rights are protected and respected, with remedy available. The
Group is committed to protecting and respecting the dignity, well being and
human rights of the Group's employees, the communities in which the Group
operates and those with whom we have relationships or who may be impacted by
the Group's operations.
The Group is committed to upholding internationally recognised human rights in
line with the principles and guidance contained in the UN Guiding Principles
on Business and Human Rights, 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. Where national law and
international human rights standards differ, we follow the higher standard;
where they are in conflict, we adhere to national law, while seeking ways to
respect international human rights to the greatest extent possible.
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. Employees have access to the whistleblowing
officer for the individual operation, as well as the Group whistleblowing
officer or the chair 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 2022 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 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 division, 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
Chairman's statement and operational report on pages 5 to 15.
Non-financial performance indicators
Operations have developed non-financial KPIs that are relevant to it, these
are regularly monitored and include:
n Market trends - including tea auction volumes, demand for each product by
country where available, supply data and market prices
n Health and Safety - including days lost to injury, number of accidents and
fatalities, whistleblowing incidents and updates to legislation
n Grievances - including employee, welfare and social issues
n Industrial disputes - including days lost to strike action and other
significant employee issues
n Land and politics - including elections, material new regulation or case law
n Changes in key personnel - including promotions, resignations and retirements
of senior management
n 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.
Section 172 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 is 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 to improve profitability. This includes investment in
social and environmental initiatives, in particular, to mitigate the impact of
climate change. This also includes 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 continues to be made across 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 projects
are initiated by staff in our subsidiaries each year, which we highlight on
our website and various social media platforms. Further information can be
found in the Environmental and social report.
Views of stakeholders are provided to the Board through the information from
management reporting, committees and meetings and operational visits. The
Board conducts regular reviews of how to continue to engage effectively with
stakeholders and there is ongoing dialogue between members of the Board and
stakeholders.
Employees
In order to track progress made, and in line with our culture of seeking
ongoing feedback, another annual employee engagement survey, Your Voice, was
undertaken during 2022. The survey gathered anonymous and open feedback from
employees to inform local management decisions as well as to provide Board
insights. All employees in the UK were invited to respond and the results of
the survey are continuing to be used to plan key initiatives and track
progress.
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. 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 business.
As set out in the Group's Employee Welfare Policy, operating companies are
expected to 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 2022.
Men Women
Company Directors 5 2
All employees 50,965 55,793
Approved by the Board
Amarpal Takk
Company Secretary
3 May 2023
Report of the directors
The Directors present their report together with the audited consolidated
accounts for the year ended 31 December 2022.
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 activity of Camellia Plc is a holding company and the
principal activities of its subsidiary undertakings comprise:
n Agriculture
n 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 Chairman's
statement and operational report.
Results and dividends
The loss after tax for the year amounted to £8.3 million (2021: Profit after
tax £4.5 million). The Board is proposing a final dividend for the year 2022
of 102p per share payable on 26 July 2023 to holders of the ordinary shares
registered at the close of business on 16 June 2023. Therefore, the total
dividend payable for 2022 is 146p per share (2021: 146p per share). Details
are shown in note 12 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
2022 2022
Malcolm Perkins 1,673 1,673
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, Rachel English and Stephen Buckland will
retire and, being eligible, will seek re-election at the forthcoming Annual
General Meeting (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 and chairman of the Nomination committee.
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 of United Finance Limited.
Non-executive directors
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 holds an executive position within The Camellia
Foundation, a UK charity whose primary donor of the same name is the ultimate
majority shareholder of Camellia Plc. He is a member of the Audit committee.
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. She became the chair of the Audit and Remuneration committees and
joined the Nomination committee on 8 June 2022.
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 is a member of the Remuneration 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 became a member the Audit, Remuneration and Nomination
committees on 8 June 2022.
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.
Substantial shareholdings
As at 6 April 2023 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
Nokia Bell Pensioenfonds OFP 361,500 13.09
Quaero Capital SA 143,148 5.18
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 37 to the Accounts.
At the AGM in 2022, 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:
n So far as each Director is aware, there is no relevant audit information of
which the Company's auditors are unaware.
n Each Director has taken all the steps that ought to have been taken as a
Director, including making appropriate enquiries of fellow Directors and of
the Company's auditors for that purpose, in order to be aware of any
information needed by the Company's auditors in connection with preparing
their report and to establish that the Company's auditors are aware of that
information.
Energy and carbon disclosure
In compliance with the SECR requirements, our greenhouse gas emissions, energy
consumption and energy reduction initiatives are reported within the
Environment and Social report on pages 16 to 20.
Employees and 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 section 172 Statement on pages 30 to 31.
Research and development
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 in conjunction with specialised departmental teams are
focused on numerous projects to improve operational efficiencies (both field
and factory), pest and disease identification and control, improving energy
efficiency and utilisation and the implementation of new technologies to
enhance automation.
We continue to collaborate with various organisations, for example, the
Cambridge Environmental Sustainability Strategy committee, the Carbon Trust,
and the Gatsby Foundation on various areas of future business strategy. 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 decisions on the
implementation of precision farming technologies.
Future development
Details of future developments are set out in the Chairman's statement and
operational report and in 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, and the most recent business performance of the
Group as described in the Chairman's statement and operational report on pages
5 to 15.
They also considered the potential impact of the current operating 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 and the Ukraine conflict, we expect
our Agriculture businesses will continue to operate broadly as set out in the
Chairman's statement and operational report. We have assumed that the leisure
and food services markets continue to recover gradually over the course of the
next year.
At 31 December 2022, the Group had cash and cash equivalents net of borrowings
of £45.6 million. In addition, the Group had undrawn short-term loan and
overdraft facilities of £22.4 million and a portfolio of liquid investments
with a fair market value of £35.6 million. In early January 2023, £16.6
million in cash was received from the sale of ACS&T.
The Directors have modelled various severe but plausible scenarios using
assumptions including the combined effect of reduced sales volumes for tea,
and reduced sales volumes for macadamia during 2023. 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 2023 for our tea, macadamia and
avocado crops.
Historically in the Tea operations, restrictions on, or reductions in, the
supply of tea either regionally or globally have led to higher selling prices.
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 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 43 of the Accounts.
Corporate governance
The Company's statement on corporate governance can be found in the Corporate
Governance report on pages 36 to 40.
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, stakeholders, communities
and to the interests of the business.
Approved by the Board
Amarpal Takk
Company Secretary
3 May 2023
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 seven Directors, four of whom are non-executive
Directors as set out on page 4. The remaining Directors are executive
Directors, including the Chairman. The names and brief biographical details of
each Director appear on pages 32 and 33.
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 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:
n Strategy
n Acquisitions and disposals
n Financial reporting and control
n Internal controls
n Approval of expenditure above specified limits
n Approval of transactions and contracts above specified limits
n Responsibilities for corporate governance
n Board membership and Board committees
n 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.
Board diversity
The Group has an Employee Welfare GPP which Group companies are expected to
subscribe to (see page 28). In addition, the Company has a Dignity at Work and
Equal Opportunities policy. The Board of Directors has overall responsibility
for the effective operation of this policy and for ensuring compliance with
discrimination law. Day-to-day operational responsibility for this policy,
including regular review of this policy, has been delegated to the UK HR
Manager.
The key principle of the Dignity at Work and Equal Opportunities policy is
that there should be equal opportunities for employees to reach their
potential and this is achieved by empowering people to excel in their careers
regardless of race, gender, ethnicity, cognitive or personal strengths, sexual
orientation or socio-economic background. Our objective is that all staff
should feel respected, valued and included.
The above objectives apply to the Group as a whole but equally to the Board
and to its Nomination, Audit and Remuneration committees. Such diversity and
inclusion objectives for senior appointments are achieved through the
engagement of specialist external executive recruitment firms. The most recent
example was the appointment of Rachel English, as a non-executive Director.
Attendance by Directors at Board and committee meetings held during the year
was as follows:
Director Board(*) Audit(*/**) Remuneration(*/**/***) Nomination(*/**)
Malcolm Perkins 9/9 - - 2/2
Tom Franks 4/4
Graham Mclean 9/9 - - -
Susan Walker 9/9 - - -
Stephen Buckland 9/9 3/3 - -
Gautam Dalal 4/4 1/1 - -
Rachel English 6/6 2/2 2/2 1/1
William Gibson 3/4 1/1 1/1 1/1
Simon Turner 9/9 - 3/3 2/2
Frédéric Vuilleumier 9/9 2/2 2/2 1/1
* Tom Franks, William Gibson and Gautam Dalal's attendance reflects the period
up to 30 June 2022 and Rachel English's attendance reflects the period from 6
May 2022.
** Frédéric Vuilleumier's attendance reflects the period from 8 June 2022.
*** Where a meeting was not quorate, decisions were raised to and approved by
the Board.
Board evaluation
The Board has agreed to undertake a performance evaluation by way of internal
review every three years. The last evaluation was conducted in 2021. Details
of the next review will be disclosed when the next review is completed at the
end of 2024.
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 an Agriculture Executive Committee which is chaired by the
Director of Agriculture and includes the Chairman (as interim Chief
Executive), Chief Financial Officer, the Group General Counsel and heads of
all the key agricultural operations.
Investments and Associates report directly to the Chairman.
Nomination committee
The committee is chaired by Malcolm Perkins. Its other members are Rachel
English, Frederic Vuilleumier and Simon Turner.
The principal responsibilities of the committee are set out below:
n Review the balance and composition (including gender and diversity) of the
Board, ensuring that they remain appropriate
n 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
n Keep under review the leadership needs of, and succession planning for, the
Group in relation to both its executive and non-executive Directors and other
senior executives
Audit committee
The committee is chaired by Rachel English (Gautam Dalal chaired the committee
up to 8 June 2022). The other members of the committee during the year were
Stephen Buckland and Frederic Vuilleumier.
The principal responsibilities of the committee are set out below and were
undertaken during the year:
n Monitor the effectiveness of the Group's risk management practices
n Review the effectiveness of the Group's internal control system. The
committee reviews the effectiveness of internal audit activities carried out
by the Group's accounting function and senior management
n 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
n Monitor the effectiveness and independence of the external auditors
n 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.
Ensuring the integrity of the financial statements and associated
announcements is a fundamental responsibility of the Audit Committee. During
the year it formally reviewed the Group's interim and annual reports. These
reviews considered:
n The description of performance in the Annual report to ensure it was fair,
balanced and understandable and that it provides the information necessary for
shareholders to assess the Company's performance, business model and strategy
n The accounting principles, policies and practices adopted in the Group's
financial statements, any proposed changes to them, and the adequacy of their
disclosure
n Important accounting issues or areas of complexity, the actions, estimates and
judgements of management in relation to financial reporting and in particular
the assumptions underlying the going concern statement
n Any significant adjustments to financial reporting arising from the audit
n Tax contingencies and compliance with statutory tax obligations
A key responsibility of the Audit committee is to consider the significant
areas of complexity, management judgement and estimation that have been
applied in the preparation of the financial statements. The Committee has,
with support from Deloitte LLP (Deloitte) as external auditor, reviewed the
suitability of the accounting policies which have been adopted and whether
management has made appropriate estimates and judgements. Set out below are
the significant areas of accounting judgement or management estimation and a
description of how the Committee concluded that such judgements and estimates
were appropriate.
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.
Carrying value of intangible assets
The Group's carrying values of the Jing Tea 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 likely future yield profile of the Assam estates 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 was discussed in context of the
current inflationary environment's impact on margins and the expected
continuing challenging market conditions as well as the expected reduction in
scale of the business. In light of the significantly lower expectations for
the profitability of the business in the foreseeable future, the committee
agreed that an impairment of £3.6 million had occurred.
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 impairment of assets related to Bardsley England, no other impairment
provisions were required in respect of intangible assets.
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 recent trading and third party valuations and agreed
that no impairment had occurred during the year. The carrying value of the
underlying property, plant and equipment assets used in Bardsley England
business was also considered in light of the expectation of a period of
continuing losses for that business in the current trading environment and the
committee agreed that an impairment of £6.4 million had occurred.
Carrying value of BF&M
The Group's carrying value of BF&M was higher than the share price for
BF&M at 31 December 2022. 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,
Kenya and India. The committee is satisfied that the provisions represent best
estimates of the likely liabilities. Consideration was given to the accounting
implications of the VAT assessment received in Malawi in 2021 and management's
judgement that it should continue to be disclosed as a contingent liability.
The committee considered the implications of the VAT assessment received in
the UK which indicated a liability of £1.2 million. In light of external
advice it is being appealed and the committee concluded that the provision
held was reasonable.
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.
Remuneration committee
The committee is chaired by Rachel English (William Gibson was chair up to 8
June 2022) and the other members are Simon Turner and Frederic Vuilleumier.
The responsibilities of the committee include:
n The review of the Group's policy relating to remuneration of the Chairman,
executive Directors and the Company Secretary
n 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
n To approve compensation packages or arrangements following the severance of
any executive Director's service contract
The Remuneration report appears on pages 41 to 42.
Sustainability and Safeguarding committee
The Board has expanded the remit of the previously established Safeguarding
and Stewardship committee to include not only the promotion of human rights
across the Group, but to further enhance the Group's environmental and
sustainability practices. Consequently, the committee has been reconstituted
to the Sustainability and Safeguarding committee and reports to the Board. The
committee is chaired by Rachel English. Other members are the Chairman (in his
capacity as Interim CEO), the Director of Agriculture, the Group General
Counsel and the Head of Strategy. The committee advises the Board on strategy
in these areas and monitors and reports on progress against the agreed
strategy.
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 37.
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
3 May 2023
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 pages 39 and 40.
Policy on Directors' remuneration
The policy agreed by the committee is as follows:
n To seek to provide remuneration packages that will attract, retain and
motivate the right people for the roles
n So far as is practicable to align the interests of the executives with those
of shareholders
n 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. The remuneration policy shall be
reconsidered for shareholder approval at the AGM in 2023. The committee
considers any views expressed by shareholders on Directors' remuneration.
At the AGM on 30 June 2022, the Remuneration Report for the year to 31
December 2021 was approved by shareholders with 99.81% of the votes cast in
favour, 0.19% of the votes cast against and 641 votes withheld.
Service contracts
Malcolm Perkins, Graham Mclean and Susan Walker are each employed on rolling
service contracts.
Director Date of Service Contract
Malcolm Perkins 25 April 2002
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 Loss of Office Total
2022 2021 2022 2021 2022 2021 2022 2021
Executive £ £ £ £ £ £ £ £
Malcolm Perkins 414,785 200,560 19,210 11,525 - - 433,995 212,085
Tom Franks 318,146 611,820 17,580 38,269 661,443 - 997,169 650,089
Susan Walker 408,288 373,890 28,908 28,010 - - 437,196 401,900
Graham Mclean 439,219 402,215 29,881 29,792 - - 469,100 432,007
Non-executive
Stephen Buckland 49,276 7,897 - - - - 49,276 7,897
(from 1 November 2021)
Rachel English 49,494 - 1,955 - - - 51,449 -
(from 6 May 2022)
Simon Turner 49,276 47,380 - - - - 49,276 47,380
Frédéric Vuilleumier 53,560 51,500 - - - - 53,560 51,500
Gautam Dalal 27,238 49,047 - - - - 27,238 49,047
(up to 30 June 2022)
William Gibson 27,805 53,470 - - - - 27,805 53,470
(up to 30 June 2022)
Jonathon Bond - 21,573 - - - - - 21,573
(up to 3 June 2021)
Chris Relleen - 36,393 - - - - - 36,393
(up to 31 August 2021)
Total 1,837,087 1,855,745 97,534 107,596 661,443 - 2,596,064 1,963,341
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) Rachel English received an additional fee for her role as chair of
the Audit committee, the Remuneration committee and the Sustainability and
Safeguarding committee (from 6 May)
(iii) William Gibson received an additional fee for his chairmanship of the
Remuneration committee and the Sustainability and Safeguarding committee (up
to 30 June 2022)
(iv) Tom Franks resigned from the board on 30 June 2022 and received a
payment of £661,443 for loss of office. This included a payment in lieu of
notice equivalent to 12 months of base salary and benefits in kind
Directors' pensions
Malcolm Perkins received no payment for pensionable service during 2022. Tom
Franks, Graham Mclean and Susan Walker received an excess non-pensionable
salary supplement equivalent to 10% of base salary.
Approved by the Board.
Amarpal Takk
Company Secretary
3 May 2023
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 International Accounting Standards Board. 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:
n Properly select and apply accounting policies
n Present information, including accounting policies, in a manner that provides
relevant, reliable, comparable and understandable information
n 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
n 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:
n 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
n 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
n 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 3 May
2023.
Malcolm Perkins
Chairman
3 May 2023
Consolidated income statement
for the year ended 31 December 2022
2022 2021
Notes £'m £'m
Continuing operations
Revenue 2 297.2 255.3
Cost of sales (226.7 ) (197.8 )
Gross profit 70.5 57.5
Other operating income 4.4 2.5
Distribution costs (23.0 ) (14.5 )
Administrative expenses 3 (45.8 ) (44.7 )
Trading profit 1,3 6.1 0.8
Share of associates' results 5 (3.1 ) 7.2
Profit on disposal of assets classified as held for sale 6 1.8 -
Impairments of intangible assets, investment properties
and property, plant and equipment 7 (10.1 ) (0.5 )
Loss on disposal of subsidiaries - (0.1 )
Profit on disposal of financial assets 0.3 0.2
Operating (loss)/profit (5.0 ) 7.6
Investment income 0.4 0.5
Finance income 8 2.0 2.2
Finance costs 8 (2.2 ) (2.8 )
Net exchange gain 8 1.5 0.4
Employee benefit expense 8 (0.4 ) (0.8 )
Net finance income/(costs) 8 0.9 (1.0 )
(Loss)/profit before tax (3.7 ) 7.1
Taxation 9 (12.2 ) (2.6 )
(Loss)/profit for the year from continuing operations (15.9 ) 4.5
Discontinued operations
Profit for the year from discontinued operations 10 7.6 -
(Loss)/profit after tax (8.3 ) 4.5
(Loss)/profit attributable to:
Owners of Camellia Plc (13.0 ) 2.3
Non-controlling interests 4.7 2.2
(8.3 ) 4.5
(Loss)/earnings per share - basic and diluted
From continuing operations 13 (745.8 ) p 83.3 p
From continuing and discontinued operations 13 (470.7 ) p 83.3 p
Statement of comprehensive income
for the year ended 31 December 2022
2022 2021
Notes £'m £'m
Group
(Loss)/profit for the year (8.3 ) 4.5
Other comprehensive (expense)/income:
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 0.1 1.0
Corporation tax arising on financial asset disposals
before utilisation of losses 0.2 (2.2 )
Unwind of deferred tax on financial assets 0.2 2.2
Changes in the fair value of financial assets 23 (2.6 ) 0.8
Remeasurements of post employment benefit obligations 36 (12.8 ) 20.4
Deferred tax movement in relation to post employment
benefit obligations 35 3.6 (3.9 )
Corporation tax movement in relation to post employment
benefit obligations (0.4 ) -
(12.1 ) 18.3
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences 9.6 (4.0 )
Share of other comprehensive income of associates 0.1 0.2
9.7 (3.8 )
Other comprehensive (expense)/income for the year, net of tax (2.4 ) 14.5
Total comprehensive (expense)/income for the year (10.7 ) 19.0
Total comprehensive (expense)/income attributable to:
Owners of Camellia Plc (16.1 ) 18.4
Non-controlling interests 5.4 0.6
(10.7 ) 19.0
Company
(Loss)/profit for the year 11 (1.6 ) 6.5
Total comprehensive (expense)/income for the year (1.6 ) 6.5
Consolidated balance sheet
at 31 December 2022
2022 2021
Notes £'m £'m
ASSETS
Non-current assets
Intangible assets 16 6.3 10.1
Property, plant and equipment 17 184.5 202.1
Right-of-use assets 18 26.1 28.8
Investment properties 19 25.4 23.1
Biological assets 20 14.1 13.4
Investments in associates 22 73.3 72.6
Equity investments at fair value through other comprehensive income 23 25.7 27.7
Money market investments at fair value through profit or loss 24 7.3 7.2
Debt investments at amortised cost 25 1.3 1.3
Other investments - heritage assets 26 8.8 8.7
Retirement benefit surplus 36 0.8 14.8
Trade and other receivables 28 3.1 2.7
Total non-current assets 376.7 412.5
Current assets
Inventories 27 60.4 51.7
Biological assets 20 10.8 7.8
Trade and other receivables 28 67.6 48.5
Money market investments at fair value through profit or loss 24 1.3 2.7
Debt investments at amortised cost 25 - 1.3
Current income tax assets 1.1 0.6
Cash and cash equivalents (excluding bank overdrafts) 29 49.3 61.8
190.5 174.4
Assets classified as held for sale 30 4.6 6.6
Total current assets 195.1 181.0
LIABILITIES
Current liabilities
Financial liabilities - borrowings 32 (5.1 ) (3.3 )
Lease liabilities 33 (2.3 ) (3.2 )
Trade and other payables 31 (59.8 ) (59.2 )
Current income tax liabilities (4.4 ) (3.0 )
Employee benefit obligations 36 (1.1 ) (1.1 )
Provisions 34 (10.8 ) (11.8 )
(83.5 ) (81.6 )
Liabilities related to assets classified as held for sale 30 (2.0 ) (2.0 )
Total current liabilities (85.5 ) (83.6 )
Net current assets 109.6 97.4
Total assets less current liabilities 486.3 509.9
Non-current liabilities
Financial liabilities - borrowings 32 (4.4 ) (4.5 )
Lease liabilities 33 (19.1 ) (21.5 )
Deferred tax liabilities 35 (37.0 ) (38.0 )
Employee benefit obligations 36 (8.1 ) (8.6 )
Total non-current liabilities (68.6 ) (72.6 )
Net assets 417.7 437.3
EQUITY
Called up share capital 37 0.3 0.3
Share premium 15.3 15.3
Reserves 353.3 373.0
Equity attributable to owners of Camellia Plc 368.9 388.6
Non-controlling interests 48.8 48.7
Total equity 417.7 437.3
Company balance sheet
at 31 December 2022
2022 2021
Notes £'m £'m
ASSETS
Non-current assets
Investments in subsidiaries 21 73.5 73.5
Other investments - heritage assets 26 8.9 8.8
Total non-current assets 82.4 82.3
Current assets
Trade and other receivables 28 0.2 0.2
Current income tax asset 0.1 0.1
Amounts due from group undertakings 2.1 1.9
Cash and cash equivalents 29 0.1 0.7
2.5 2.9
Assets classified as held for sale 30 0.5 2.1
Total current assets 3.0 5.0
LIABILITIES
Current liabilities
Trade and other payables 31 (1.0 ) (0.9 )
Amounts due to group undertakings (20.3 ) (16.6 )
Total current liabilities (21.3 ) (17.5 )
Net current liabilities (18.3 ) (12.5 )
Total assets less current liabilities 64.1 69.8
Non-current liabilities
Deferred tax liabilities 35 (0.2 ) (0.2 )
Total non-current liabilities (0.2 ) (0.2 )
Net assets 63.9 69.6
EQUITY
Called up share capital 37 0.3 0.3
Share premium 15.3 15.3
Reserves 48.3 54.0
Total equity 63.9 69.6
The (loss)/profit for the Company is shown in note 11.
The notes on pages 51 to 123 form part of the financial statements.
The financial statements on pages 44 to 123 were approved on 3 May 2023 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 2022
2022 2021
Notes £'m £'m
Cash generated from operations
Cash flows from operating activities 38 2.6 1.2
Interest received 2.0 2.1
Interest paid (2.2 ) (2.8 )
Income taxes paid (8.3 ) (13.0 )
Net cash flow from operating activities (5.9 ) (12.5 )
Cash flows from investing activities
Purchase of property, plant and equipment (14.4 ) (9.9 )
Proceeds from sale of non-current assets 0.9 0.7
Proceeds from sale of assets held for sale 4.5 -
Proceeds from sale of heritage assets - 0.1
Purchase of heritage assets (0.1 ) -
Additions to investment property (2.5 ) (0.9 )
Biological assets: non-current - disposals 0.8 0.5
Cash leaving the Group on disposal of subsidiary 40 (1.6 ) -
Payment for acquisition of a businesses/subsidiary
net of cash acquired 40 - (3.7 )
Purchase of non-controlling interest 40 - (5.9 )
Dividends received from associates 3.2 3.0
Purchase of investments (2.9 ) (8.9 )
Proceeds from sale of investments 8.5 21.3
Income from investments 0.4 0.5
Net cash flow from investing activities (3.2 ) (3.2 )
Cash flows from financing activities
Equity dividends paid (4.0 ) (5.2 )
Dividends paid to non-controlling interests (5.3 ) (1.9 )
New loans 39 1.4 3.8
Loans repaid 39 (1.6 ) (13.1 )
Payments of lease liabilities (2.6 ) (1.7 )
Net cash flow from financing activities (12.1 ) (18.1 )
Net decrease in cash and cash equivalents from continuing
operations (21.2 ) (33.8 )
Net cash inflow/(outflow) from discontinued operation 10 3.8 (0.6 )
Cash and cash equivalents at beginning of year 29 59.9 94.9
Exchange gains/(losses) on cash 3.1 (0.6 )
Cash and cash equivalents at end of year 29 45.6 59.9
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 2022
2022 2021
Notes £'m £'m
Cash generated from operations
(Loss)/profit before tax (1.6 ) 6.5
Adjustments for:
Interest income (0.3 ) (0.3 )
Profit on disposal of assets held for sale (0.4 ) -
Dividends from group companies - (8.0 )
Increase in trade and other receivables 0.2 0.4
Increase in trade and other payables 0.1 0.1
Movement in provisions - (1.9 )
Net movement in intra-group balances 3.5 0.8
Cash generated from/(used in) operations 1.5 (2.4 )
Interest received 0.3 0.3
Net cash flow from operating activities 1.8 (2.1 )
Cash flows from investing activities
Purchase of other investments - heritage assets (0.1 ) -
Proceeds from sale of other investments - heritage assets - 0.1
Proceeds from sale of assets held for sale 1.8 -
Dividends received - 8.0
Net cash flow from investing activities 1.7 8.1
Cash flows from financing activities
Equity dividends paid (4.1 ) (5.3 )
Net cash flow from financing activities (4.1 ) (5.3 )
Net movement in cash and cash equivalents (0.6 ) 0.7
Cash and cash equivalents at beginning of year 29 0.7 -
Cash and cash equivalents at end of year 29 0.1 0.7
Statement of changes in equity
for the year ended 31 December 2022
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 2021 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 12 - - - (5.2 ) - (5.2 ) (1.9 ) (7.1 )
Companies joining the Group 40 - - - - - - 5.2 5.2
Adjustment arising from change in non-controlling interest 40 - - - (1.4 ) - (1.4 ) 1.4 -
Purchase of non-controlling interests 40 - - - 0.2 - 0.2 (6.0 ) (5.8 )
At 31 December 2021 0.3 15.3 (0.4 ) 377.1 (3.7 ) 388.6 48.7 437.3
Loss for the year - - - (13.0 ) - (13.0 ) 4.7 (8.3 )
Other comprehensive (expense)/income for the year - - - (10.0 ) 6.9 (3.1 ) 0.7 (2.4 )
Transfer of realised gains on disposal of financial assets - - - 1.1 (1.1) - - -
Dividends 12 - - - (4.0 ) - (4.0 ) (5.3 ) (9.3 )
Share of associate's other equity movements - - - 0.4 - 0.4 - 0.4
At 31 December 2022 0.3 15.3 (0.4 ) 351.6 2.1 368.9 48.8 417.7
Company
At 1 January 2021 0.3 15.3 - 40.7 12.1 68.4 - 68.4
Total comprehensive income for the year - - - 6.5 - 6.5 - 6.5
Dividends - - - (5.3 ) - (5.3 ) - (5.3 )
At 31 December 2021 0.3 15.3 - 41.9 12.1 69.6 - 69.6
Total comprehensive expense for the year - - - (1.6 ) - (1.6 ) - (1.6 )
Dividends 12 - - - (4.1 ) - (4.1 ) - (4.1 )
At 31 December 2022 0.3 15.3 - 36.2 12.1 63.9 - 63.9
In relation to the reserves of the Company, £36.2 million (2021: £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 £44.1 million deficit (2021: £53.5 million deficit).
Group retained earnings includes £155.4 million (2021: £162.1 million) which
would require exchange control permission for remittance as dividends.
Accounting policies
Camellia Plc (the Company) is a public Company limited by shares incorporated
in the United Kingdom under the Companies Act 2006 and is registered in
England and Wales. The registered office can be found on page 4 and its
principal activity is included in the Directors report.
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.
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:
n The identification of contract(s) with customers
n The identification of the performance obligations in the contract
n The determination of the transaction price
n The allocation of the transaction price to the performance obligations in the
contract
n 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, which is shown at cost less impairment. Cost includes
expenditure that is directly attributable to the acquisition of these assets.
On transition to IFRS, the Group followed the transitional provisions and
elected that previous UK GAAP revaluations be treated as deemed cost. On the
application of the amendments to IAS 41 Agriculture and IAS 16 Property, plant
and equipment the Directors elected to state the Group's bearer plants at
deemed cost being the fair value recognised as at 1 January 2015 less the fair
value at that date of the growing produce which is disclosed in current assets
under biological assets. Additions after that date are recognised at
historical cost.
Subsequent costs are included in the assets' carrying amount, only when it is
probable that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably. Repairs and
maintenance are charged to the income statement during the financial period in
which they are incurred.
No depreciation is provided on freehold land and on assets in the course of
construction. Depreciation of other property, plant and equipment is
calculated to write off their cost less residual value over their expected
useful lives on a straight-line basis.
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.
Assets in the course of construction for production, supply or administrative
purposes, or for the purposes not yet determined, are carried at cost, less
any recognised impairment loss.
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 future 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:
n An actual or expected significant deterioration in the financial instrument's
external (if available) or internal credit rating
n Significant deterioration in external market indicators of credit risk for a
particular financial instrument
n 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
n An actual or expected significant deterioration in the operating results of
the debtor
n Significant increases in credit risk on other financial instruments of the
same debtor
n 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:
n When there is a breach of financial covenants by the debtor; or
n 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. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.
Discontinued operations and assets classified as held for sale
A discontinued operation is a separate major line of business or geographic
area of operation that has either been disposed of, abandoned or is part of a
plan to dispose of a major line of business or geographic area. An operation
is classified as a discontinued operation in the year that the above criteria
are met. In the consolidated Income Statement, profit/loss from discontinued
operations is reported separately from the results from continuing operations.
Prior periods Income Statement and cash flow are presented on a comparable
basis.
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.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities
measured at the present value of lease payments to be made over the lease
term. The lease payments include fixed payments (including in‑substance
fixed payments) less any lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts expected to be paid under
residual value guarantees. The lease payments also include the exercise price
of a purchase option reasonably certain to be exercised by the Group and
payments of penalties for terminating a lease, if the lease term reflects the
Group exercising the option to terminate. The variable lease payments that do
not depend on an index or a rate are recognised as expense in the period on
which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the
incremental borrowing rate at the lease commencement date if the interest rate
implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a modification, a change
in the lease term, a change in the in-substance fixed lease payments or a
change in the assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term
leases of machinery and equipment (i.e. those leases that have a lease term of
12 months or less from the commencement date and do not contain a purchase
option). It also applies the lease of low-value assets recognition exemption
to leases of office equipment that are considered of low value (i.e. below
£0.01 million ). Lease payments on short-term leases and leases of low-value
assets are recognised as expense on a straight-line basis over the lease term.
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 bearer plants are
determined by management at the time of acquisition or planting 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. Climate change will also impact useful lives. In the
short-term, increases in the volatility of weather patterns have the potential
to increase plant deaths. Long-term these factors could reduce useful lives by
suppressing yields and/or increasing the cost of taking mitigating actions.
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 for all our bearer plants in aggregate by 10% or 20% would
result in additional depreciation of £0.5 million or £1.0 million
respectively.
(ii) Impairment of assets
The assessment of the recoverable amount for each group of CGUs is subject to
a number of assumptions.
Management performs periodic reviews of goodwill and other intangible and
tangible assets for indications of impairment. The Group estimates the value
in use of the cash-generating units to which the goodwill, intangible and
tangible assets with indefinite/finite useful life are allocated. Estimating
the value in use requires the Group, with the help of independent professional
valuers where applicable, to make an estimate of the expected future cash
flows from the cash-generating units and also to choose suitable discount
rates in order to calculate the present value of those cash flows. Impairment
tests are sensitive to forecasted EBITDA, growth rates and discount rates and
changes in these assumptions may result in changes in recoverable values. In
determining appropriate assumptions consideration is given to the impact of
weather patterns on future yields and operating costs. The carrying amount of
the Group's goodwill and indefinite/finite life intangible assets at the
balance sheet date is disclosed in note 16.
(iii) Biological assets
Biological assets are carried at fair value less estimated point-of-sale
costs. Where meaningful market‑determined prices do not exist to assess the
fair value of biological assets, the fair value has been determined based on
the net present value of expected future cash flows from those assets,
discounted at appropriate pre-tax rates. In determining the fair value of
biological assets where the discounting of expected future cash flows has been
used, the Directors have made certain assumptions about expected life-span of
the plantings, yields, selling prices, costs and discount rates. Details of
assumptions made and sensitivity analysis are given in note 20.
(iv) Retirement benefit obligations
Pension accounting requires certain assumptions to be made in order to value
obligations and to determine the impact on the Income Statement. These figures
are particularly sensitive to assumptions for discount rates, life expectancy
and inflation rates. Details of assumptions made and sensitivity analysis are
given in note 36.
(v) Taxation and other liabilities
Income tax liabilities include a number of provisions including in respect of
open tax years 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. The Group records reasoned estimates of
uncertain tax positions where it is assessed on the balance of probabilities
that an adjustment is likely. 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 42.
(vi) 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 34.
Changes in accounting policy and disclosures
(i) New and amended standards adopted by the Group
In the current year, the Group has applied a number of amendments to IFRS
Accounting Standards issued by the International Accounting Standards Board
(IASB) that are mandatorily effective for an accounting period that begins on
or after 1 January 2022. Their adoption has not had any material impact on the
disclosures or on the amounts reported in these financial statements.
Amendments to IFRS 3 - Reference to the Conceptual Framework
The Group has adopted the amendments to IFRS 3 Business Combinations for the
first time in the current year. 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
Provisions, Contingent Liabilities and Contingent Assets, 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.
Amendments to IAS 16 Property, Plant and Equipment-Proceeds before Intended
Use
The Group has adopted the amendments to IAS 16 for the first time in the
current year. The amendments prohibit deducting from the cost of an item of
property, plant and equipment any proceeds from selling items produced before
that asset is available for use, i.e. proceeds while bringing the asset to the
location and condition necessary for it to be capable of operating in the
manner intended by management. Consequently, an entity recognises such sales
proceeds and related costs in profit or loss. The entity measures the cost of
those items in accordance with IAS 2 Inventories.
The amendments also clarify the meaning of 'testing whether an asset is
functioning properly'. IAS 16 now specifies this as assessing whether the
technical and physical performance of the asset is such that it is capable of
being used in the production or supply of goods or services, for rental to
others, or for administrative purposes.
If not presented separately in the statement of comprehensive income, the
financial statements shall disclose the amounts of proceeds and cost included
in profit or loss that relate to items produced that are not an output of the
entity's ordinary activities, and which line item(s) in the statement of
comprehensive income include(s) such proceeds and cost.
Annual Improvements to IFRS Standards 2018-2020
The Group has adopted the amendments included in the Annual Improvements to
IFRS Accounting Standards 2018-2020 Cycle for the first time in the current
year. The Annual Improvements include amendments to four standards.
IFRS 1 First-time Adoption of International Financial Reporting Standards
The amendment provides additional relief to a subsidiary which becomes a
first-time adopter later than its parent in respect of accounting for
cumulative translation differences. As a result of the amendment,
a subsidiary that uses the exemption in IFRS 1:D16(a) can now also elect to
measure cumulative translation differences for all foreign operations at the
carrying amount that would be included in the parent's consolidated financial
statements, based on the parent's date of transition to IFRS Accounting
Standards, if no adjustments were made for consolidation procedures and for
the effects of the business combination in which the parent acquired the
subsidiary. A similar election is available to an associate or joint venture
that uses the exemption in IFRS 1:D16(a).
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.
IFRS 16 Leases
The amendment removes the illustration of the reimbursement of leasehold
improvements.
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.
(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 (including the June 2020 and Insurance contracts
December 2021 Amendments to IFRS 17)
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture
Amendments to IAS 1 Classification of Liabilities as Current or Non‑current
Amendments to IAS 1 and IFRS Practice Statement 2 Classification of Liabilities as Current or Non‑current Disclosure of
Accounting Policies
Amendments to IAS 8 Definition of Accounting Estimates
Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single
Transaction
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 if indicated below.
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 IAS 1 - Classification of Liabilities as Current or Non-current
The amendments to IAS 1, published in January 2020, affect only the
presentation of liabilities as current or non-current in the statement of
financial position and not the amount or timing of recognition of any asset,
liability, income or expenses, or the information disclosed about those items.
The amendments clarify that the classification of liabilities as current or
non-current is based on rights that are in existence at the end of the
reporting period, specify that classification is 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. The IASB is currently
considering further amendments to the requirements in IAS 1 on classification
of liabilities as current or non-current, including deferring the application
of the January 2020 amendments.
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 IASB 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 replace 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:
n a change in accounting estimate that results from new information or new
developments is not the correction of an error; and
n 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.
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:
n 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;
n 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.
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.
Notes to the accounts
1 Business and geographical segments
The principal activities of the Group are as follows:
Agriculture Engineering
For management reporting purposes these activities form the basis on which the
Group reports its primary divisions. Geographic operations in the
Agriculture segment have been aggregated as they are either producing primary
crops or processing those crops to completed products.
In addition, the Group holds a number of investments.
Segment information about these businesses is presented below:
Agriculture Engineering Unallocated Consolidated
Continuing operations 2022 2021 2022 2021 2022 2021 2022 2021
£'m £'m £'m £'m £'m £'m £'m £'m
Revenue
External sales 283.0 238.9 13.2 15.3 1.0 1.1 297.2 255.3
Adjusted trading profit/(loss) 15.5 13.0 (0.8 ) (2.3 ) (8.6 ) (8.8 ) 6.1 1.9
Separately disclosed items (note 4) - 0.1 - - - (1.2 ) - (1.1 )
Trading profit/(loss) 15.5 13.1 (0.8 ) (2.3 ) (8.6 ) (10.0 ) 6.1 0.8
Share of associates' results - - - - (3.1 ) 7.2 (3.1 ) 7.2
Profit on disposal of assets classified as held for sale - - - - 1.8 - 1.8 -
Impairment of intangible assets, investment properties and plant and equipment (10.0 ) - - (0.5 ) (0.1 ) - (10.1 ) (0.5 )
Loss on disposal of subsidiaries - - - (0.1 ) - - - (0.1 )
Profit on disposal of financial assets 0.3 0.2 - - - - 0.3 0.2
Operating (loss)/profit 5.8 13.3 (0.8 ) (2.9 ) (10.0 ) (2.8 ) (5.0 ) 7.6
Comprising
- adjusted operating profit/(loss) before tax 15.8 13.2 (0.8 ) (2.3 ) (11.7 ) (1.6 ) 3.3 9.3
- profit on disposal of assets classified as held for sale - - - - 1.8 - 1.8 -
- impairment of intangible assets and property, plant and equipment (10.0 ) - - (0.5 ) (0.1 ) - (10.1 ) (0.5 )
- loss on disposal of subsidiaries - (0.1 ) - - - (0.1 )
- release of provisions for wage increases - 0.6 - - - - 0.6
- acquisition deal costs - - - - - (1.2 ) - (1.2 )
- restructuring costs - (0.5 ) - - - - - (0.5 )
5.8 13.3 (0.8 ) (2.9 ) (10.0 ) (2.8 ) (5.0 ) 7.6
Investment income 0.4 0.5
Net finance income/(costs) 0.9 (1.0 )
(Loss)/profit before tax (3.7 ) 7.1
Taxation (12.2 ) (2.6 )
(Loss)/profit for the year from continuing operations (15.9 ) 4.5
Profit for the year from discontinued operations 7.6 -
(Loss)/profit after tax (8.3 ) 4.5
Other information
Segment assets 373.9 386.3 10.8 10.6 384.7 396.9
Investments in associates 73.3 72.6
Unallocated assets 113.8 106.0
Discontinued operations - 18.0
Consolidated total assets 571.8 593.5
Segment liabilities (82.7 ) (77.8 ) (7.4 ) (8.0 ) (90.1 ) (85.8 )
Unallocated liabilities (64.0 ) (64.8 )
Discontinued operations - (5.6 )
Consolidated total liabilities (154.1 ) (156.2 )
Agriculture Engineering Unallocated Consolidated
2022 2021 2022 2021 2022 2021 2022 2021
£'m £'m £'m £'m £'m £'m £'m £'m
Capital expenditure Continuing 14.1 9.4 0.3 0.3 2.5 1.0 16.9 10.7
Total 17.3 11.6
Depreciation Continuing (13.8 ) (11.9 ) (0.5 ) (1.0 ) (0.1 ) (0.1 ) (14.4 ) (13.0 )
Total (16.1 ) (14.9 )
Amortisation Continuing (0.1 ) - - - - - (0.1 ) -
Total (0.1 ) (0.1 )
Impairments Continuing (10.0 ) - - (0.5 ) (0.1 ) - (10.1 ) (0.5 )
Total (0.5 )
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
South Africa
Tanzania
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
2022 2021 2022 2021 2022 2021
£'m £'m £'m £'m £'m £'m
United Kingdom 54.1 30.2 0.9 1.0 55.0 31.2
Continental Europe 29.9 20.2 - - 29.9 20.2
Bangladesh 24.2 24.0 - - 24.2 24.0
India 97.5 97.9 - - 97.5 97.9
Kenya 38.0 32.2 - - 38.0 32.2
Malawi 6.9 13.1 0.1 0.1 7.0 13.2
South Africa 2.0 1.5 - - 2.0 1.5
North America 8.4 7.0 - - 8.4 7.0
South America 13.4 8.5 - - 13.4 8.5
Other 21.8 19.6 - - 21.8 19.6
296.2 254.2 1.0 1.1 297.2 255.3
The following is an analysis of the carrying amount of segment assets and
additions to property, plant and equipment and investment properties, analysed
by the geographical area in which the assets are located:
Carrying amount of Additions to property, Additions to
segment assets plant and equipment investment properties
2022 2021 2022 2021 2022 2021
£'m £'m £'m £'m £'m £'m
United Kingdom 55.9 71.7 1.6 0.6 2.5 0.9
Bangladesh 50.9 63.4 2.4 1.9 - -
India 101.1 97.2 2.8 2.2 - -
Kenya 96.4 89.5 3.8 2.7 - -
Malawi 45.3 46.5 0.6 0.1 - -
South Africa 15.9 14.6 1.4 1.1 - -
Tanzania 4.1 2.8 1.1 0.9 - -
North America - 0.1 - - - -
South America 15.1 11.1 0.7 0.3 - -
Continuing 384.7 396.9 14.4 9.8 2.5 0.9
Discontinued - United Kingdom - 18.0 0.4 0.9 - -
384.7 414.9 14.8 10.7 2.5 0.9
2 Revenue
An analysis of the Group's revenue is as follows:
2022 2021
£'m £'m
Sale of goods 283.0 238.9
Engineering services revenue 13.2 15.3
Property rental revenue 1.0 1.1
Total Group revenue 297.2 255.3
Other operating income 4.4 2.6
Investment income 0.4 0.5
Interest income 2.0 2.2
Total Group income 304.0 260.6
Disaggregation of revenue from contracts with customers:
At a point in time Over time
2022 2021 2022 2021
£'m £'m £'m £'m
Sale of goods 283.0 238.9 - -
Engineering services revenue 13.2 15.3 - -
Property rental revenue - - 1.0 1.1
Total Group revenue 296.2 254.2 1.0 1.1
3 Trading profit
2022 2021
£'m £'m
The following items have been included in arriving at trading profit:
Employment costs (note 14) 118.1 108.7
Inventories:
Cost of inventories recognised as an expense (included in cost of sales) 181.8 163.7
Cost of inventories provision recognised as an expense (included in 2.7 0.2
cost of sales)
Fair value gain included in Made Tea inventory - 0.2
Depreciation of property, plant and equipment:
Owned assets 13.4 13.3
Right-of-use assets 2.7 1.6
Amortisation of intangibles (included in administrative expenses) 0.1 0.1
Gain from change in fair value of non-current biological assets 1.5 1.5
Profit on disposal of property, plant and equipment 0.1 -
Repairs and maintenance expenditure on property, plant and equipment 9.9 7.9
Government grant income (included in other operating income) - 0.4
During the year the Group benefited from £nil (2021: £0.4 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 (0.4 ) -
Cost of sales 0.3 -
Distribution costs (0.2 ) -
Administrative expenses - 0.2
Other operating income (0.1 ) -
Finance income and costs (1.5 ) (0.4 )
(1.9 ) (0.2 )
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 0.5 0.3
Subsidiary companies 0.9 0.8
1.4 1.1
Tax compliance services - -
1.4 1.1
4 Adjusted (loss)/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 (loss)/profit measure
and have been separately disclosed:
n During the year, assets previously classified as held for sale including a
London property and a number of the Group's heritage assets and other items of
art have been sold, realising a profit of £1.8 million
n Impairment charges of £10.0 million in relation to the goodwill and property,
plant and equipment relating to Bardsley England which arose from lower than
expected profitability of the operation due to the effects of inflation
arising from the Ukraine war
n An impairment charge of £0.1 million in relation to one of the Group's
investment properties
In 2021, the following items were excluded from the adjusted profit measure
and have been separately disclosed:
n Restructuring costs at Bardsley England of £0.5 million
n Costs of acquisition of Bardsley England of £1.2 million
n A gain resulting from wage provision releases following wage agreements
reached in the year of £0.6 million
n 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
5 Share of associates' results
The Group's share of the results of associates is analysed below:
2022 2021
£'m £'m
(Loss)/profit before tax (2.7 ) 7.6
Taxation (0.4 ) (0.4 )
(Loss)/Profit after tax (3.1 ) 7.2
6 Profit on disposal of assets classified as held for sale
During the year, assets previously classified as held for sale including a
London property and a number of the Group's heritage assets and other items of
art have been sold, realising a profit of £1.8 million. Proceeds in relation
to these disposals amounted to £4.5 million.
7 Impairments of intangible assets, investment properties and
property, plant and equipment
Impairment charges relating to Bardsley England of £10.0 million were
recognised. Of this £3.6 million relates to goodwill bringing the carrying
value to £nil and £6.4 million relates to property, plant and equipment.
These have arisen due to the expected continuing impact of the downturn in the
profitability of that business due to the effects of inflation arising from
the Ukraine war as further discussed on page 12.
In addition, an impairment charge of £0.1 million was incurred in relation to
one of the Group's investment properties.
In 2021, £0.5 million of impairment charges were recognised in relation to
the property, plant and equipment of Abbey Metal Finishing and its German
subsidiary Atfin. These companies were subsequently sold in the second half of
2021.
8 Finance income and costs
2022 2021
£'m £'m
Interest payable on loans and bank overdrafts (1.3 ) (1.1 )
Interest payable on leases (0.8 ) (0.6 )
Other interest payable (0.1 ) (1.1 )
Finance costs (2.2 ) (2.8 )
Finance income - interest income on short-term bank deposits 2.0 2.2
Net exchange gain on foreign cash balances 1.5 0.4
Employee benefit expense (note 36) (0.4 ) (0.8 )
Net finance income/(costs) 0.9 (1.0 )
9 Taxation
Analysis of charge in the year 2022 2021
£'m £'m £'m
Current tax
UK corporation tax
UK corporation tax at 19.00 per cent. (2021: 19.00 per cent.) - 0.2
Double tax relief - (0.2 )
Use of losses to shelter capital gain on disposal of financial assets (0.2 ) (2.2 )
Adjustment in respect of prior years - (0.2 )
(0.2 ) (2.4 )
Foreign tax
Corporation tax 9.1 6.3
Adjustment in respect of prior years - 0.9
9.1 7.2
Total current tax 8.9 4.8
Deferred tax
Origination and reversal of timing differences
United Kingdom 3.7 (1.5 )
Overseas (0.4 ) (0.7 )
3.3 (2.2 )
Tax on (loss)/profit from ordinary activities 12.2 2.6
Factors affecting tax charge for the year
(Loss)/profit on ordinary activities before tax (3.7 ) 7.1
Share of associated undertakings loss/(profit) 3.1 (7.2 )
Group (loss)/profit on ordinary activities before tax (0.6 ) (0.1 )
Tax on ordinary activities at the standard rate of corporation (0.1 ) -
tax in the UK of 19.00 per cent. (2021: 19.00 per cent.)
Effects of:
Adjustment to tax in respect of prior years (0.7 ) 0.7
Expenses not deductible for tax purposes 0.3 1.1
Impairments not deductible for tax purposes 1.9 0.1
Adjustment in respect of foreign tax rates 0.8 0.9
Additional tax arising on dividends from overseas companies 1.7 0.5
Profits on disposals not subject to tax (0.2 ) -
Other income not charged to tax (0.4 ) (0.3 )
Change in deferred tax not recognised 3.7 (3.7 )
Increase in tax losses carried forward 3.7 3.1
Movement in other timing differences 1.5 0.2
Total tax charge for the year 12.2 2.6
The tax charge includes a deferred tax charge of £3.7 million (2021: credit
of £3.7 million) relating to the reversal (2021: recognition) of deferred tax
losses able to be utilised to offset losses (2021: 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 £0.4 million (2021: £0.1 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.
The current tax charge includes a credit of £0.2m (2021: £2.2m) arising from
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.
10 Discontinued operations
On 16 December 2022, the Group entered into an unconditional agreement to sell
Associated Cold Stores & Transport Limited, which was the Group's Food
Service operation. The disposal, which completed on 10 January 2023, was
effected in order to support the Group's strategy of focussing its investment
activity on its core agriculture operations and for general working capital
purposes. The effective date of the transaction is 26 November 2022. Details
of the assets and liabilities disposed of, and the calculation of the profit
or loss on disposal, are disclosed in note 40.
The prior year figures in the consolidated income statement and the
consolidated cashflow statement have been restated in accordance with IFRS 5
to report the discontinued operations separately from continuing operations.
The results of the discontinued operations, which have been included in the
profit for the year, were as follows:
Period ending Year ending
26 November 31 December
2022 2021
£'m £'m
Revenue 23.7 21.9
Cost of sales (18.4 ) (17.6 )
Gross profit 5.3 4.3
Other operating income - 0.1
Administrative expenses (4.0 ) (4.3 )
Profit on disposal of property, plant and equipment 0.5 -
Net finance costs (0.1 ) (0.1 )
Profit before tax 1.7 -
Profit on disposal of discontinued operations 3.8 -
Attributable tax credit 2.1 -
Net profit attributable to discontinued operations 7.6 -
(attributable to owners of the Company)
During the year, Associated Cold Stores & Transport Limited contributed
£4.0 million (2021: £0.5 million) to the Group's net operating cash flows,
paid £0.3 million (2021: £0.9 million) in respect of investing activities
and paid £0.4 million (2021: £0.3 million) in respect of financing
activities.
A profit of £3.8 million arose on the disposal of Associated Cold Stores
& Transport Limited, being the difference between the proceeds of
disposal and the carrying amount of the subsidiary's net assets at the
effective date of disposal.
11 (Loss)/profit for the year
2022 2021
£'m £'m
The (loss)/profit of the Company was: (1.6 ) 6.5
The Company has taken advantage of the exemption under Section 408 of the
Companies Act 2006 not to disclose its income statement.
12 Equity dividends
2022 2021
£'m £'m
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2021 of
102p (2020: 144p) per share 2.8 4.0
Interim dividend for the year ended 31 December 2022 of
44p (2021: 44p) per share 1.2 1.2
4.0 5.2
Dividends amounting to £0.1 million (2021: £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 2022 of
102p (2021: 102p) per share 2.8 2.8
The proposed final dividend for 2022 is subject to approval by the
shareholders at the AGM and has not been included as a liability in these
financial statements.
13 (Loss)/earnings per share (EPS)
2022 2021
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 - continuing operations (20.6 ) 2,762,000 (745.8 ) 2.3 2,762,000 83.3
Attributable to ordinary shareholders - continuing and discontinued operations (13.0 ) 2,762,000 (470.7 ) 2.3 2,762,000 83.3
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 37).
14 Employees
Continuing Continuing and
operations discontinued
operations
2022 2021 2022 2021
Number Number Number Number
Average number of employees by activity:
Agriculture 79,447 78,041 79,447 78,041
Engineering 132 204 132 204
Food Service - - 246 237
Central Management 35 32 35 32
79,614 78,277 79,860 78,514
2022 2021 2022 2021
£'m £'m £'m £'m
Employment costs:
Wages and salaries 107.9 99.5 115.1 106.5
Social security costs 2.2 1.8 2.9 2.5
Employee benefit obligations (note 36) - UK 0.6 0.8 1.2 1.4
7.4 6.6 7.4 6.6
- Overseas
118.1 108.7 126.6 117.0
Total remuneration paid to key employees who are members of the Executive
Committees, excluding Directors of Camellia Plc, amounted to £1.9 million
(2021: £2.4 million).
15 Emoluments of the directors
2022 2021
£'m £'m
Aggregate emoluments excluding pension contributions 2.6 2.0
Emoluments of the highest paid director excluding pension contributions were
£1.0 million (2021: £0.7 million), which included a loss of office payment
of £0.7 million (2021: £nil).
Further details of directors' emoluments are set out on pages 41 to 42.
16 Intangible assets
Computer
Goodwill Brands software Total
Group £'m £'m £'m £'m
Cost
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 1 January 2022 4.9 8.7 1.3 14.9
Subsidiary leaving the group - - (0.7 ) (0.7 )
At 31 December 2022 4.9 8.7 0.6 14.2
Amortisation
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 1 January 2022 0.3 3.5 1.0 4.8
Charge for the year 0.1 0.1
Subsidiary leaving the group - - (0.6 ) (0.6 )
Impairment provision 3.6 - - 3.6
At 31 December 2022 3.9 3.5 0.5 7.9
Net book value at 31 December 2022 1.0 5.2 0.1 6.3
Net book value at 31 December 2021 4.6 5.2 0.3 10.1
Included in the carrying value of brands is £2.0 million and £3.2 million
relating to the Indian tea brands acquired by Goodricke in 2017 and the Jing
tea brand acquired by the Group in 2018 respectively. Both of these have
been assessed as having an indefinite life. These are considered to have an
indefinite useful life due to the continuing investment in maintaining their
value.
In accordance with the Group's accounting policy, goodwill and intangible
assets are tested annually for impairment. As a result of this testing, an
impairment of £3.6 million was made in the year to 31 December 2022 in
relation to the goodwill on acquisition of Bardsley England.
Goodwill consists of the following:
2022 2021
Net Book Net Book
Value Value
Segment Cash Generating Unit (CGU) £'m £'m
Agriculture Tea estates acquired in Assam, India 1.0 1.0
Bardsley England - 3.6
1.0 4.6
Bardsley England
The valuation of the goodwill associated with Bardsley England has been
re-assessed due to the impact of inflation arising from the Ukraine war on the
expected profitability of the business. The recoverable value of the goodwill
was considered to be £nil.
Tea estates acquired in Assam, India
The recoverable value was considered to exceed the carrying value by £0.4
million. The valuation is based on multiples of the annual average production
of the relevant estates. The multiple would need to decrease by 5% 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 fair value
of the brand
+1% -1%
£'m £'m
Royalty rate 4.2% (0.8 ) 0.8
Discount rate 10.8% 0.4 (0.4 )
If forecasted revenues were to change by +/-5 % in every year it would have
the effect of a decrease/increase in the fair value of the brand of £0.2
million.
17 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 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 1 January 2022 135.6 110.8 103.3 16.1 365.8
Exchange differences (4.1 ) 0.1 0.3 0.1 (3.6 )
Additions 5.7 2.9 5.3 0.9 14.8
Disposals (0.2 ) (0.6 ) (3.8 ) (0.3 ) (4.9 )
Transfer between categories - (0.1 ) 0.1 - -
Subsidiary leaving the group - (31.4 ) (15.7 ) (2.4 ) (49.5 )
Reclassification to held for sale - (0.8 ) - - (0.8 )
At 31 December 2022 137.0 80.9 89.5 14.4 321.8
Depreciation
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 1 January 2022 32.2 54.7 67.5 9.3 163.7
Exchange differences (1.3 ) (0.1 ) 0.2 0.1 (1.1 )
Charge for the year 4.5 2.4 5.7 0.8 13.4
Disposals (0.1 ) (0.3 ) (3.1 ) (0.3 ) (3.8 )
Subsidiary leaving the group - (26.1 ) (13.6 ) (1.5 ) (41.2 )
Reclassification to held for sale - (0.1 ) - - (0.1 )
Impairment provision 2.7 0.6 3.0 0.1 6.4
At 31 December 2022 38.0 31.1 59.7 8.5 137.3
Net book value at 31 December 2022 99.0 49.8 29.8 5.9 184.5
Net book value at 31 December 2021 103.4 56.1 35.8 6.8 202.1
Assets in the course of construction included in the above:
2021
Additions 3.3 0.4 0.9 0.1 4.7
Net book value at 31 December 2021 10.2 0.6 0.6 - 11.4
2022
Additions 3.9 0.9 1.4 0.2 6.4
Net book value at 31 December 2022 9.7 0.7 0.9 - 11.3
The impairment of £6.4 million relates to Bardsley England and arose due to
the impact of inflation arising from the Ukraine war on expected profitability
of the operation.
In 2021, 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.
In 2021, the reclassification to right-of-use assets arose from changes in
land registration in Tanzania.
18 Right-of-use assets
Land and Plant and
buildings machinery Total
£'m £'m £'m
Group
Deemed cost
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 1 January 2022 29.5 2.4 31.9
Exchange differences 0.1 - 0.1
Additions 0.3 1.4 1.7
Disposals (0.2 ) (0.4 ) (0.6 )
Subsidiary leaving the group (1.3 ) (1.1 ) (2.4 )
At 31 December 2022 28.4 2.3 30.7
Depreciation
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 1 January 2022 2.1 1.0 3.1
Charge for the year 1.9 0.8 2.7
Disposals (0.1 ) (0.2 ) (0.3 )
Subsidiary leaving the group (0.5 ) (0.4 ) (0.9 )
At 31 December 2022 3.4 1.2 4.6
Net book value at 31 December 2022 25.0 1.1 26.1
Net book value at 31 December 2021 27.4 1.4 28.8
The Group leases many assets including land, buildings and plant. The average
lease term is 74 years (2021: 69 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
£1.4 million (2021: £1.0 million).
The maturity analysis of lease liabilities is presented in note 33.
2022 2021
£'m £'m
Amounts recognised in the consolidated income statement:
Interest expense on lease liabilities 0.8 0.7
Expense relating to short-term leases 0.2 0.1
19 Investment properties
£'m
Group
Cost
At 1 January 2021 20.5
Additions 0.9
Reclassification from property, plant and equipment 3.1
At 1 January 2022 24.5
Additions 2.5
At 31 December 2022 27.0
Depreciation
At 1 January 2021 1.4
Charge for the year -
At 1 January 2022 1.4
Charge for the year 0.1
Impairment provision 0.1
At 31 December 2022 1.6
Net book value at 31 December 2022 25.4
Net book value at 31 December 2021 23.1
Included in revenue is £1.0 million (2021: £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 £0.3 million (2021: £0.2 million).
At the end of the year the fair value of Investment properties was £35.1
million (2021: £34.4 million) based on vacant possession. Investment
properties were valued by the Directors (fair value hierarchy Level 2).
20 Biological assets
Non-current: Forestry Livestock Total
£'m £'m £'m
Group
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 1.1 0.4 1.5
in fair value less estimated point-of-sale costs
Decreases due to harvesting (0.5 ) (0.4 ) (0.9 )
At 1 January 2022 12.4 1.0 13.4
Exchange differences (0.1 ) - (0.1 )
Additions 0.2 - 0.2
Gains arising from changes 1.1 0.4 1.5
in fair value less estimated point-of-sale costs
Decreases due to harvesting (0.6 ) (0.3 ) (0.9 )
At 31 December 2022 13.0 1.1 14.1
Current: 2022 2021
£'m £'m
Group
Tea 0.4 0.2
Edible nuts 2.5 2.2
Soya 5.3 3.6
Avocado 2.5 1.5
Other 0.1 0.3
10.8 7.8
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 2022 the area planted to Forestry amounted to 5,798 Hectares
(2021: 5,788) from which 145,856 cubic metres (2021: 157,687) were harvested
during the year.
Livestock numbers were 4,246 head (2021: 4,332) at 31 December 2022.
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 55.
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 £1.3 million (2021: £1.2 million)
increase/decrease in the fair value of forestry.
Current:
- Macadamia - a 10% increase/decrease in the volumes or the prices assumed would
result in a £1.1 million (2021: £0.9 million) increase/decrease in the fair
value of macadamia growing crop.
- Avocados - a 10% increase/decrease in the volumes assumed would result in a
£0.2 million (2021: £0.2 million) increase/decrease in the fair value of
Hass avocados growing crop. A 10% increase/decrease in selling price assumed
would result in a £0.3 million (2021: £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 £0.6 million (2021: £0.4 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.
21 Investments in subsidiaries
2022 2021
£'m
£'m
Company
Cost
At 1 January and 31 December 73.5 73.5
22 Investments in associates
2022 2021
Group £'m £'m
At 1 January 98.9 93.7
Exchange differences 9.8 0.8
Share of (loss)/profit (note 5) (3.1 ) 7.2
Dividends (3.2 ) (3.0 )
Other equity movements 0.5 0.2
At 31 December 102.9 98.9
Provision for diminution in value
At 1 January 26.3 26.1
Exchange differences 3.3 0.2
At 31 December 29.6 26.3
Net book value at 31 December 73.3 72.6
Details of the Group's associates are shown in note 44.
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 (Loss)/ Interest Market
incorporation Assets Liabilities Revenues profit held value
£'m £'m £'m £'m % £'m
2022
Listed
BF&M Bermuda 665.5 (574.4 ) 41.2 (3.7 ) 36.9 59.3
United Finance Limited Bangladesh 83.8 (74.6 ) 3.1 0.5 38.4 9.2
United Insurance Company Limited Bangladesh 4.4 (1.8 ) 0.3 0.1 37.0 6.1
753.7 (650.8 ) 44.6 (3.1 ) 74.6
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 Company Limited Bangladesh 4.3 (1.6 ) 0.3 0.1 37.0 9.3
773.1 (674.2 ) 61.2 7.2 80.0
23 Equity investments at fair value through other comprehensive income
Group Company
2022 2021 2022 2021
£'m £'m £'m £'m
Cost or fair value
At 1 January 28.4 43.8 0.2 0.2
Exchange differences 2.7 - - -
Fair value adjustment (2.6 ) 0.8 - -
Additions 0.1 3.5 - -
Disposals (1.1 ) (8.1 ) - -
Fair value adjustment for disposal (1.1 ) (11.6 ) - -
At 31 December 26.4 28.4 0.2 0.2
Provision for diminution in value
At 1 January 0.7 1.2 0.2 0.2
Exchange differences 0.1 - - -
Disposals (0.1 ) (0.5 ) - -
At 31 December 0.7 0.7 0.2 0.2
Net book value at 31 December 25.7 27.7 - -
Equity investments at fair value through other comprehensive income include
the following:
Group
2022 2021
£'m £'m
Listed securities:
Equity securities - Bermuda 0.9 0.6
Equity securities - Japan 7.2 8.3
Equity securities - Switzerland 8.5 9.0
Equity securities - US 2.0 2.7
Equity securities - India 0.8 0.8
Equity securities - Europe 0.5 0.4
Equity securities - United Kingdom 5.4 5.3
Equity securities - Other 0.4 0.6
25.7 27.7
Equity investments at fair value through other comprehensive income are
denominated in the following currencies:
Group
2022 2021
£'m £'m
Sterling 5.4 5.3
US Dollar 2.0 2.7
Euro 0.5 0.4
Swiss Franc 8.5 9.0
Indian Rupee 0.8 0.8
Bermudian Dollar 0.9 0.6
Japanese Yen 7.2 8.3
Other 0.4 0.6
25.7 27.7
24 Money market investments at fair value through profit or loss
Group
2022 2021
£'m £'m
At 1 January 9.9 5.3
Exchange differences 0.2 -
Fair value adjustment 0.3 0.1
Additions 2.8 5.4
Disposals (4.6 ) (0.9 )
At 31 December 8.6 9.9
Money market investments at fair value through profit or loss include the
following:
Group
2022 2021
£'m £'m
Listed securities:
Money market - Bermuda 0.1 1.6
Money market - Brazil 0.6 -
Money market - India 7.9 8.3
8.6 9.9
Money market investments at fair value through profit or loss are denominated
in the following currencies:
Group
2022 2021
£'m £'m
US Dollar 0.1 1.6
Brazil Real 0.6 -
Indian Rupee 7.9 8.3
8.6 9.9
Current 1.3 2.7
Non-Current 7.3 7.2
8.6 9.9
25 Debt investments at amortised cost
Group
2022 2021
£'m £'m
At 1 January 2.6 2.7
Exchange differences 0.1 (0.1 )
Disposals (1.4 ) -
At 31 December 1.3 2.6
Debt investments at amortised cost comprises:
2022 2021
£'m £'m
Treasury infrastructure bonds - 12.2% to 12.5% interest payable twice yearly
and redeemable in November 2022 - Kenya - 1.3
Treasury infrastructure bonds - 12.5% interest payable twice yearly and
redeemable in November 2024 - Kenya 1.3 1.3
1.3 2.6
Current - 1.3
Non-Current 1.3 1.3
1.3 2.6
26 Other investments - heritage assets
Group Company
2022 2021 2022 2021
£'m £'m £'m £'m
Cost
At 1 January 8.7 9.8 8.8 11.0
Additions 0.1 - 0.1 -
Disposals - (0.1 ) - (0.1 )
Reclassification to held for sale - (1.0 ) - (2.1 )
At 31 December 8.8 8.7 8.9 8.8
Heritage assets comprise the Group's and Company's investment in fine art,
philately, documents and manuscripts. The market value of these collections is
expected to be in excess of book value.
27 Inventories
2022 2021
£'m £'m
Group
Made Tea 26.3 25.7
Other agricultural produce 13.3 7.8
Work in progress 0.1 0.1
Trading stocks 1.3 1.1
Raw materials and consumables 19.4 17.0
60.4 51.7
Made tea inventories include the fair value of green leaf which includes a
fair value uplift of £nil million (2021: £0.2 million). Other agricultural
produce is net of a £2.7 million (2021: £0.2 million) provision which has
been recognised as an expense.
28 Trade and other receivables
Group Company
2022 2021 2022 2021
£'m £'m £'m £'m
Group
Current:
Trade receivables 29.2 32.7 - -
Amounts owed by associated 0.1 0.1 - -
undertakings
Other receivables* 23.6 4.8 - -
Prepayments and accrued income 14.7 10.9 0.2 0.2
67.6 48.5 0.2 0.2
* Included within other receivables is £16.6 million of deferred
consideration which was received in January 2023 in relation to the disposal
of Associated Cold Stores & Transport Limited, see note 40.
Non-current:
Other receivables 3.1 2.7 - -
3.1 2.7 - -
The carrying amounts of the Group's trade and other receivables are
denominated in the following currencies:
2022 2021 2022 2021
£'m £'m £'m £'m
Current:
Sterling 29.5 17.8 0.2 0.2
US Dollar 7.7 3.5 - -
Euro 0.9 0.8 - -
Kenyan Shilling 2.3 2.6 - -
Indian Rupee 17.9 16.8 - -
Malawian Kwacha 1.7 1.5 - -
Bangladesh Taka 3.4 2.1 - -
South African Rand 0.2 0.2 - -
Brazilian Real 3.1 2.5 - -
Other 0.8 0.7 - -
67.5 48.5 0.2 0.2
Non-current:
Sterling 0.3 0.3
Kenyan Shilling 0.6 0.5
Indian Rupee 1.6 1.4
Malawian Kwacha 0.4 0.3
Bangladesh Taka 0.2 0.2
3.1 2.7
Trades receivables - days past due
Up to 31-60 61-90 Over
Current 30 days days days 91 days Total
As at 31 December 2021 £'m £'m £'m £'m £'m £'m
Gross carrying amount -
trade receivables 27.1 4.1 0.8 0.3 1.2 33.5
Expected credit loss rate - 4.9% 25.0% 66.7% 16.7% 2.4%
Lifetime ECL - 0.2 0.2 0.2 0.2 0.8
Net carrying amount 27.1 3.9 0.6 0.1 1.0 32.7
Trades receivables - days past due
Up to 31-60 61-90 Over
Current 30 days days days 91 days Total
As at 31 December 2022 £'m £'m £'m £'m £'m £'m
Gross carrying amount -
trade receivables 24.2 3.4 0.7 0.4 1.3 30.0
Expected credit loss rate - 2.9% 0.0% 0.0% 53.8% 2.7%
Lifetime ECL - 0.1 - - 0.7 0.8
Net carrying amount 24.2 3.3 0.7 0.4 0.6 29.2
The closing loss allowances for trade receivables reconciles to the opening
loss allowance as follows:
2022 2021
£'m £'m
Opening loss allowance 0.8 0.6
Increase in loss allowance recognised in profit and loss during the year 0.1 0.2
Receivables written off during the year as uncollectable (0.1 ) -
Closing loss allowance 0.8 0.8
29 Cash and cash equivalents (excluding bank overdrafts)
Group Company
2022 2021 2022 2021
£'m £'m £'m £'m
Cash at bank and in hand 20.0 25.9 0.1 0.7
Short-term bank deposits 28.6 35.3 - -
Short-term liquid investments 0.7 0.6 - -
49.3 61.8 0.1 0.7
Cash, cash equivalents and bank overdrafts include the following for the
purposes of the cash flow statement:
2022 2021 2022 2021
£'m £'m £'m £'m
Cash and cash equivalents 49.3 61.8 0.1 0.7
Bank overdrafts (note 32) (3.7 ) (1.9 ) - -
45.6 59.9 0.1 0.7
2022 2021
Effective interest rate:
Short-term deposits 1.30 - 11.00% 0.01 - 10.25%
Short-term liquid investments 5.00% 3.00 - 4.00%
Average maturity period:
Short-term deposits 50 days 67 days
Short-term liquid investments 32 days 32 days
30 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
2022 2021 2022 2021
£'m £'m £'m £'m
At 1 January 6.6 - 2.1 -
Reclassified from property, plant and equipment 0.7 3.8 - -
Reclassified from right-of-use assets - 3.4 - -
Reclassified from heritage assets - 1.0 - 2.1
Reclassified from current assets - 0.7 - -
7.3 8.9 2.1 2.1
Disposals during the year (2.7 ) (1.6 ) -
Disposal of subsidiaries during year - (2.3 ) - -
At 31 December 4.6 6.6 0.5 2.1
Liabilities related to assets classified as held for sale as at 31 December:
Reclassified from lease liabilities 2.0 2.0 - -
During the year, a London property and a number of the Group's heritage assets
and other items of art have been sold, realising cash proceeds of £4.5
million.
31 Trade and other payables
Group Company
2022 2021 2022 2021
£'m £'m £'m £'m
Current:
Trade payables 22.2 18.1 0.1 0.1
Other taxation and social security 2.4 4.8 - -
Other payables 26.4 26.8 0.2 0.2
Accruals and deferred income 8.8 9.5 0.7 0.6
59.8 59.2 1.0 0.9
Included in other taxation and social security is £nil (2021: £0.1 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.
32 Financial liabilities - borrowings
2022 2021
£'m £'m
Group
Current:
Bank overdrafts 3.7 1.9
Bank loans 1.4 1.4
5.1 3.3
Current borrowings include the following amounts
secured on property, plant and equipment and investment properties:
Bank overdrafts 0.6 0.3
Bank loans 1.4 1.4
2.0 1.7
Non-current:
Bank loans 4.4 4.5
Non-current borrowings include the following amounts
secured on plant and equipment and investment properties:
Bank loans 4.4 4.5
The repayment of bank loans and overdrafts fall due as follows:
Within one year or on demand (included in current liabilities) 5.1 3.3
Between 1 - 2 years 1.1 0.7
Between 2 - 5 years 1.1 1.2
After 5 years 2.2 2.6
9.5 7.8
The rates of interest payable by the Group ranged between:
2022 2021
% %
Bank overdrafts 5.00 - 21.90 3.25 - 16.50
Bank loans 7.60 - 10.50 6.90 - 7.55
33 Lease liabilities
2022 2021
£'m £'m
Group
Maturity analysis of lease liabilities is as follows:
Within one year 2.3 3.2
Between 1 - 2 years 2.3 2.3
Between 2 - 5 years 5.4 5.0
Onwards 11.4 14.2
21.4 24.7
Analysed as:
Current 2.3 3.2
Non-current 19.1 21.5
21.4 24.7
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.
34 Provisions
Wages and Legal
salaries claims Others Total
£'m £'m £'m £'m
Group
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 1 January 2022 9.1 1.2 1.5 11.8
Utilised in the period (6.7 ) (0.3 ) (0.1 ) (7.1 )
Provided in the period 8.5 - - 8.5
Subsidiary leaving the group - - (0.5) (0.5 )
Unused amounts reversed in period (1.8 ) - (0.1 ) (1.9 )
At 31 December 2022 9.1 0.9 0.8 10.8
Current:
At 31 December 2022 9.1 0.9 0.8 10.8
At 31 December 2021 9.1 1.2 1.5 11.8
The wages and salaries provisions are in respect of ongoing wage and bonus
negotiations in India, Kenya and Bangladesh, the majority of which are
expected to be utilised during 2023.
Legal claims relate to the cost of the defence of the litigation concerning
our East African operations, including settlements and the expected costs of
progressive measures.
Others relate to provisions for claims and dilapidations.
Legal claims Total
£'m £'m
Company
At 1 January 2021 1.9 1.9
Utilised in the period (1.9 ) (1.9 )
At 1 January 2022 - -
Utilised in the period - -
At 31 December 2022 - -
Current:
At 31 December 2022 - -
At 31 December 2021 - -
Legal claims related to the defence of the litigation concerning our East
African operations.
35 Deferred tax
The net movement on the deferred tax account is set out below:
Group Company
2022 2021 2022 2021
£'m £'m £'m £'m
At 1 January 38.0 39.5 0.2 0.2
Exchange differences (0.7 ) (1.0 ) - -
Charged/(credited) to the income statement 3.3 (2.2 ) - -
(Credited)/charged to other comprehensive income (3.6 ) 1.7 - -
At 31 December 37.0 38.0 0.2 0.2
The movement in deferred tax assets and liabilities is set out below:
Deferred tax liabilities
Accelerated Pension
tax scheme
depreciation liabilities Other Total
£'m £'m £'m £'m
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 1 January 2022 42.5 3.7 2.3 48.5
Exchange differences (0.6 ) - (0.1 ) (0.7 )
Charged/(credited) to the income statement 0.2 (0.1 ) 1.5 1.6
Credited to other comprehensive income - (3.5 ) - (3.5 )
At 31 December 2022 42.1 0.1 3.7 45.9
Deferred tax assets offset (8.9 )
Net deferred tax liability after offset 37.0
Deferred tax assets
Pension
scheme
Tax losses asset Other Total
£'m £'m £'m £'m
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 1 January 2022 6.4 0.3 3.8 10.5
(Charged)/credited to the income statement (2.1 ) (0.1 ) 0.5 (1.7 )
Credited to other comprehensive income - 0.1 - 0.1
At 31 December 2022 4.3 0.3 4.3 8.9
Offset against deferred tax liabilities (8.9 )
Net deferred tax asset after offset -
Deferred tax liabilities of £13.7 million (2021: £14.7 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
£26.4 million (2021: £18.4 million) in respect of losses that can be carried
forward against future taxable income.
36 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 2022 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:
2022 2021
% 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 2.35 - 5.00 2.50 - 5.00
Discount rate applied to scheme liabilities 4.80 1.75
Inflation assumption (CPI/RPI) 2.35/3.05 2.50/3.20
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_2021
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 15%. This results in males and
females aged 65 having life expectancies of 21.4 years (2021: 21.5 years) and
22.2 years respectively (2021: 22.3 years).
2022 2021
% per annum % per annum
Overseas schemes
Rate of increase in salaries 6.00 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 - 8.00 6.50 - 6.80
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:
2022 2021
% per annum % per annum
Rate of increase in salaries 6.00 - 10.95 6.00 - 8.89
Discount rate applied to scheme liabilities 7.25 - 14.20 6.50 - 13.70
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:
Impact
on defined
Change benefit
in assumption obligation
Discount rate 0.5% higher 5.1% decrease
Discount rate 0.5% lower 5.5% increase
Rate of RPI inflation 0.25% higher 3.0% increase
Rate of RPI inflation 0.25% lower 3.1% decrease
Life expectancy +1 year 5.4% increase
Life expectancy -1 year 5.4% 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 12 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
2022 2021
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
Equities and property 45.8 3.2 49.0 57.9 2.8 60.7
Bonds 13.0 25.5 38.5 16.3 23.5 39.8
Liability-driven investment 45.3 - 45.3 60.8 - 60.8
Diversified growth 17.0 - 17.0 45.4 - 45.4
Insurance related products - 3.6 3.6 - 3.2 3.2
Cash 5.6 10.1 15.7 18.9 12.5 31.4
Total fair value of plan assets 126.7 42.4 169.1 199.3 42.0 241.3
Present value of defined benefit
obligations (127.8 ) (49.7 ) (177.5 ) (184.6 ) (51.6 ) (236.2 )
Total (deficit)/surplus in the schemes (1.1 ) (7.3 ) (8.4 ) 14.7 (9.6 ) 5.1
Amount recognised as asset in
the balance sheet - 0.8 0.8 14.7 0.1 14.8
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 (1.1 ) (7.0 ) (8.1 ) - (8.6 ) (8.6 )
(1.1 ) (7.3 ) (8.4 ) 14.7 (9.6 ) 5.1
Related deferred tax
asset/(liability) (note 35) - 0.2 0.2 (3.7 ) 0.3 (3.4 )
Net (deficit)/surplus (1.1 ) (7.1 ) (8.2 ) 11.0 (9.3 ) 1.7
Movements in the fair value of scheme assets were as follows:
2022 2021
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
At 1 January 199.3 42.0 241.3 196.0 40.1 236.1
Expected return on plan assets 3.4 2.7 6.1 2.4 2.3 4.7
Employer contributions - 2.0 2.0 - 3.8 3.8
Contributions paid by
plan participants - 0.4 0.4 - 0.4 0.4
Benefit payments (8.6 ) (4.2 ) (12.8 ) (7.9 ) (4.9 ) (12.8 )
Other adjustment - 0.3 0.3 - 0.1 0.1
Actuarial (losses)/gains (67.4 ) (0.8 ) (68.2 ) 8.8 0.5 9.3
Exchange differences - - - - (0.3 ) (0.3 )
At 31 December 126.7 42.4 169.1 199.3 42.0 241.3
Movements in the present value of defined benefit obligations were as follows:
2022 2021
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
At 1 January (184.6 ) (51.6 ) (236.2 ) (203.0 ) (49.7 ) (252.7 )
Current service cost - (2.1 ) (2.1 ) - (1.8 ) (1.8 )
Interest cost (3.1 ) (3.4 ) (6.5 ) (2.5 ) (3.0 ) (5.5 )
Contributions paid by
plan participants - (0.4 ) (0.4 ) - (0.4 ) (0.4 )
Benefit payments 8.6 4.2 12.8 7.9 4.9 12.8
Other adjustment - (0.3 ) (0.3 ) - - -
Actuarial gains/(losses) 51.3 4.1 55.4 13.0 (1.9 ) 11.1
Exchange differences - (0.2 ) (0.2 ) - 0.3 0.3
At 31 December (127.8 ) (49.7 ) (177.5 ) (184.6 ) (51.6 ) (236.2 )
In 2020, the total fair value of plan assets was £236.1 million, the present
value of defined benefit obligations was £252.7 million and the deficit was
£16.6 million. 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 and 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.
Income Statement
The amounts recognised in the Income Statement are as follows:
2022 2021
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
Amounts credited/(charged) to
operating profit:
Current service cost - (2.1 ) (2.1 ) - (1.8 ) (1.8 )
Past service cost - - - - - -
Total operating (charge)/credit - (2.1 ) (2.1 ) - (1.8 ) (1.8 )
Amounts charged to other
finance costs:
Interest income/(expense) 0.3 (0.7 ) (0.4 ) (0.1 ) (0.7 ) (0.8 )
Total credited/(charged) to
income statement 0.3 (2.8 ) (2.5 ) (0.1 ) (2.5 ) (2.6 )
Employer contributions to defined contribution schemes are charged to profit
when payable and the costs charged were £5.9 million (2021: £5.6 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:
2022 2021
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
Remeasurements:
Return on plan assets, excluding amount included in interest (67.4 ) (0.8 ) (68.2 ) 8.8 0.5 9.3
Gain/(loss) from changes in demographic assumptions 0.6 - 0.6 0.9 - 0.9
Gain/(loss) from changes in financial assumptions 55.5 5.3 60.8 8.5 (1.2 ) 7.3
Experience (losses)/gains (4.8 ) (1.2 ) (6.0 ) 3.6 (0.7 ) 2.9
Actuarial (loss)/gain (16.1 ) 3.3 (12.8 ) 21.8 (1.4 ) 20.4
Cumulative actuarial losses recognised in the Statement of Comprehensive
Income are £10.3 million (2021: £2.5 million gain).
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 2023. No
additional funding contributions will be made, as the latest actuarial
valuation shows a funding surplus.
37 Share capital
2022 2021
£'m £'m
Authorised: 2,842,000 (2021: 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 (2021: 2,824,500) shares 0.3 0.3
Group companies hold 62,500 issued shares in the Company. These are classified
as treasury shares.
38 Reconciliation of (loss)/profit from operations to cash flow
2022 2021
£'m £'m
Group
(Loss)/profit from operations (5.0 ) 7.6
Share of associates' results 3.1 (7.2 )
Depreciation and amortisation 12.2 11.7
Depreciation of right-of-use assets 2.2 1.3
Impairment of assets 10.1 0.5
Realised movements on biological assets - non-current (1.5 ) (1.5 )
Financial assets fair value through profit or loss - gain (0.3 ) (0.1 )
Profit on disposal of non-current assets (0.1 ) -
Profit on disposal of assets classified as held for sale (1.8 ) -
Loss on disposal of subsidiaries - 0.1
Profit on disposal of financial assets (0.3 ) (0.2 )
Movement in provisions (0.7 ) (7.0 )
Increase in inventories (9.8 ) (4.6 )
(Increase)/decrease in biological assets (2.3 ) 2.1
Increase in trade and other receivables (6.5 ) (1.4 )
Increase in trade and other payables 3.3 1.8
Difference between employee benefit obligations funding contributions and - (1.9 )
cost charged
Cash generated from operations 2.6 1.2
39 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 2021 2.1 2.7 1.2 10.3 16.3
Exchange differences - (0.1 ) - - (0.1 )
Subsidiaries 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 1 January 2022 1.4 4.5 3.2 21.5 30.6
Exchange differences - 0.1 - - 0.1
Subsidiary leaving the group - - (0.5 ) (1.0 ) (1.5 )
New loans 0.6 0.8 - - 1.4
New finance leases - - 0.7 1.1 1.8
Loans repaid (1.6 ) - - - (1.6 )
Lease payments - - (2.8 ) (0.6 ) (3.4 )
Lease disposal - - - (0.2 ) (0.2 )
Transfers 1.0 (1.0 ) 1.7 (1.7 ) -
At 31 December 2022 1.4 4.4 2.3 19.1 27.2
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.
40 Business combinations - disposals and acquisitions of businesses
Disposals Acquisitions Disposals
2022 2021 2021
£'m £'m £'m
Net book Fair Net book
value value value
Intangible assets 0.1 - -
Property, plant and equipment 8.3 19.5 -
Right of use asset 1.5 14.6 -
Deferred tax asset 2.1 - -
Inventories 0.1 0.7 -
Biological assets - current - 3.1 -
Trade and other receivables 4.1 4.0 -
Cash and cash equivalents (excluding bank overdrafts) 1.6 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 (1.6 ) (14.9 ) -
Trade and other payables (3.4 ) (8.9 ) -
Provisions (0.5 ) - -
Amounts due to group undertakings - - (0.6 )
Liabilities related to assets classified as held for sale - - (0.4 )
12.3 6.9 0.3
Identifiable intangible assets - Goodwill - 3.6 -
Non-controlling interest - (5.3 ) -
Profit/(loss) on disposal 3.8 - (0.1 )
16.1 5.2 0.2
Consideration transferred:
Cash consideration and costs (0.5 ) 3.0 (0.1 )
Deferred consideration 16.6 2.2 0.3
Total consideration 16.1 5.2 0.2
Net cash (outflow)/inflow arising on disposals/acquisitions:
Cash consideration and costs (0.5 ) (3.0 ) (0.1 )
Less: cash and cash equivalent balances disposed/acquired (1.6 ) (0.7 ) 0.3
(2.1 ) (3.7 ) 0.2
Disposal in 2022 - Associated Cold Stores & Transport Limited
As referred to in note 10, on 26 November 2022 the Group effectively disposed
of its interest in Associated Cold Stores & Transport Limited.
The cash consideration was paid on 10 January 2023.
The impact of Associated Cold Stores & Transport Limited on the Group's
results in the current and prior years is disclosed in note 10. The gain on
disposal is included in the profit for the year from discontinued operations
(see note 10).
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 Bardsley England for consideration
of £5.2 million, of which £3.0 million which was paid at completion with the
balance of £2.2 million deferred with the final instalment payable by July
2023. Bardsley England is a major fruit farming business and one of the UK's
largest apple growers.
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 the
consideration paid and the non-controlling interests share of the net assets
carrying amount.
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.
41 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet
incurred is as follows:
2022 2021
£'m £'m
Group
Property, plant and equipment 0.8 0.9
42 Contingencies
In Malawi the Revenue Authority (MRA) indicated in 2021 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 tea industry, 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 £4.8 million.
In India, assessments have been received for excise duties of £3.7 million,
sales and entry tax of £0.9 million and of £0.7 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.
In the UK, HM Revenue and Customs has issued a VAT assessment based on the
application of the partial exemption rules which could result in a potential
liability of £1.2 million. An amount of £0.2 million has been proved based
on external advice received and this assessment is being contested.
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.
43 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 32 and 33, 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:
2022 2021
£'m £'m
Borrowings 9.5 7.8
Lease liabilities 21.4 24.7
Debt 30.9 32.5
Tangible net assets 362.6 378.5
Ratio 8.52% 8.59%
Debt is defined as long and short-term borrowings and lease liabilities as
detailed in notes 32 and 33.
Tangible net assets includes all capital and reserves of the Group
attributable to equity holders of the parent less intangible assets.
Financial instruments by category
At 31 December 2022
Financial Financial
assets asset
at fair value at fair value Financial
through other through assets at
comprehensive profit amortised
income or loss cost Total
£'m £'m £'m £'m
Group
Assets as per Balance Sheet
Equity investments 25.7 - - 25.7
Money market investments - 8.6 - 8.6
Bond investments - - 1.3 1.3
Trade and other receivables excluding prepayments - - 56.0 56.0
Cash and cash equivalents - - 49.3 49.3
25.7 8.6 106.6 140.9
Other financial
liabilities at
amortised cost Total
£'m £'m
Group
Liabilities as per Balance Sheet
Borrowings 9.5 9.5
Lease liabilities 21.4 21.4
Trade and other payables 59.8 59.8
90.7 90.7
Company
Trade and other payables 1.0 1.0
At 31 December 2021
Financial Financial
assets asset
at fair value at fair value Financial
through other through assets at
comprehensive profit amortised
income or 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 - - 40.3 40.3
excluding prepayments
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
Leases 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
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 20 for disclosures of biological assets
that are measured at fair value.
At 31 December 2022
Level 1 Level 2 Level 3 Total
£'m £'m £'m £'m
Assets
Equity investments 25.7 - - 25.7
Money market investments 8.6 - - 8.6
Bond investments 1.3 - - 1.3
35.6 - - 35.6
At 31 December 2021
Level 1 Level 2 Level 3 Total
£'m £'m £'m £'m
Assets
Equity investments 27.7 - - 27.7
Money market investments 9.9 - - 9.9
Bond investments 2.6 - - 2.6
40.2 - - 40.2
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:
n To finance its operations (to mitigate liquidity risk)
n 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
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 £1.2
million (2021: £1.0 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 £0.6 million (2021:
£0.5 million), £0.4 million (2021: £0.4 million) and £0.4 million (2021:
£0.5 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 £1.3
million (2021: £1.4 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 2022 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 £0.1 million (2021: £0.2 million) higher/lower.
The interest rate exposure of the Group's interest bearing assets and
liabilities by currency, at 31 December was:
Assets Liabilities
2022 2021 2022 2021
£'m £'m £'m £'m
Sterling 9.7 13.0 18.8 22.5
US Dollar 21.6 16.4 - -
Euro 0.2 0.4 - -
Kenyan Shilling 10.0 14.4 0.2 0.3
Indian Rupee 2.9 2.4 7.0 5.0
Malawian Kwacha 0.7 0.2 0.5 1.6
Bangladesh Taka 2.6 11.5 1.1 1.2
South African Rand 0.8 1.0 3.3 1.9
Brazilian Real 0.4 1.8 - -
Bermudian Dollar 0.2 0.4 - -
Japanese Yen 0.1 0.3 - -
Swiss Franc 0.1 - - -
49.3 61.8 30.9 32.5
(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 25 per cent. (2021: 21 per cent.) of
total trade receivables.
(C) Liquidity risk
Ultimate responsibility for liquidity risk management rests with the board of
Directors. The Group manages liquidity risk by maintaining adequate reserves
and banking facilities by continuously monitoring forecast and actual cash
flows and managing the maturity profiles of financial assets and liabilities.
At 31 December 2022, the Group had undrawn committed facilities of £22.4
million (2021: £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 2022
Assets
Financial assets at fair value through other comprehensive income - - - - 25.7 25.7
Financial asset at fair value through profit or loss 1.3 7.3 - - - 8.6
Financial assets at amortised - 1.3 - - - 1.3
cost
Trade and other receivables excluding prepayments 52.9 3.1 - - - 56.0
Cash and cash equivalents 49.3 - - - - 49.3
103.5 11.7 - - 25.7 140.9
Liabilities
Borrowings 5.1 1.1 1.1 2.2 - 9.5
Lease liabilities 2.3 2.3 5.4 11.4 - 21.4
Trade and other payables excluding taxation 57.4 - - - - 57.4
64.8 3.4 6.5 13.6 - 88.3
At 31 December 2021
Assets
Financial assets at fair value through other comprehensive income - - - - 27.7 27.7
Financial asset at fair value through profit or loss 2.7 7.2 - - - 9.9
Financial assets at amortised 1.3 1.3 - - - 2.6
cost
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
Included in borrowings due in less than 1 year is £3.7 million (2021: £1.9
million) repayable on demand.
44 Subsidiary and associated undertakings
Subsidiary undertakings
The subsidiary undertakings of the Group at 31 December 2022, are set out
below and are wholly owned and incorporated in Great Britain unless otherwise
stated. The holdings are in ordinary shares or equivalent unless otherwise
stated.
Principal
country of Registered
operation Office
Agriculture
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 Bangladesh (vii)
(Incorporated in Bangladesh - 93.3 per cent. holding)
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 (ix)
South Africa - held by Eastern Produce South Africa (Pty) Limited)
Eastern Produce Kenya Limited (Incorporated in Kenya - 70.0 per cent. holding) Kenya (x)
Eastern Produce Malawi Limited Malawi (xii)
(Incorporated in Malawi- 73.2 per cent. holding)
Eastern Produce Regional Services Limited (Incorporated in Kenya) Kenya (x)
Eastern Produce South Africa (Pty) Limited South Africa (ix)
(Incorporated in South Africa - 73.2 per cent. holding)
Eastland Camellia Limited Bangladesh (vii)
(Incorporated in Bangladesh - 93.8 per cent. holding)
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)
Kakuzi Plc (Incorporated in Kenya - 50.7 per cent. holding) Kenya (xi)
Koomber Tea Company Limited (Incorporated in India) India (iv)
Jing Tea Limited (95.0 per cent. holding) UK (i)
Newmafruit Limited UK (i)
Octavius Steel & Company of Bangladesh Limited Bangladesh (vii)
(Incorporated in Bangladesh)
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 Malawi (xii)
(Incorporated in Malawi - 73.2 per cent. holding)
Zetmac (Pty) Limited (Incorporated in South Africa - 55.8 per cent. held by South Africa (ix)
Eastern Produce Estates South Africa (Pty) Limited)
Engineering
AJT Engineering Limited UK (xiv)
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 Malawi (xii)
(Incorporated in Malawi - 50.2 per cent. held by subsidiaries)
Unochrome Industries Limited UK (i)
Western Dooars Investments Limited UK (i)
Other
Duncan Products Limited (Incorporated in Bangladesh) Bangladesh (vii)
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)
Black Gold Oil Tools Limited (in liquidation) UK (xiv)
Blantyre & East Africa Limited UK (xiv)
Blantyre Insurance & General Agencies Limited (Incorporated in Malawi - Malawi (xii)
Eastern Produce Malawi Limited)
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 (ordinary and preference shares) 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 - Kenya (x)
held by Eastern Produce Kenya Limited)
Eastern Produce Africa Limited UK (i)
Eastern Produce Kakuzi Services Limited (Incorporated in Kenya - Kenya (x)
held by Kakuzi Limited)
EP (RBDA) Limited (Incorporated in Malawi - Eastern Produce Malawi Limited) Malawi (xii)
Estate Services Limited (Incorporated in Kenya - held by Kakuzi Limited) Kenya (xi)
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 (ordinary and preference shares) 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 - Kenya (x)
held by Eastern Produce Kenya Limited)
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)
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 - South Africa (ix)
held by Eastern Produce South Africa (Pty) Limited)
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 (ordinary and preference shares) 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 (ordinary and preference shares) UK (i)
Summarised financial information on subsidiaries with material non-controlling
interests
Summarised balance sheet
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited
as at 31 December as at 31 December
2022 2021 2022 2021
Current £'m £'m £'m £'m
Assets 23.7 24.0 18.2 14.8
Liabilities (19.0 ) (14.6 ) (14.1 ) (11.9 )
Total current net assets 4.7 9.4 4.1 2.9
Non-current
Assets 28.2 27.8 26.8 31.2
Liabilities (5.4 ) (5.3 ) (8.8 ) (9.4 )
Total non-current net assets 22.8 22.5 18.0 21.8
Net assets 27.5 31.9 22.1 24.7
Eastern Produce Goodricke Group
South Africa Limited Limited
as at 31 December as at 31 December
2022 2021 2022 2021
£'m £'m £'m £'m
Current
Assets 3.6 4.1 35.2 32.3
Liabilities (4.4 ) (3.7 ) (23.9 ) (20.2 )
Total current net (liabilities)/assets (0.8 ) 0.4 11.3 12.1
Non-current
Assets 10.3 8.8 36.5 35.8
Liabilities (3.3 ) (2.9 ) (11.6 ) (12.5 )
Total non-current net assets 7.0 5.9 24.9 23.3
Net assets 6.2 6.3 36.2 35.4
Kakuzi Plc
as at 31 December
2022 2021
£'m £'m
Current
Assets 21.6 18.7
Liabilities (2.6 ) (2.5 )
Total current net assets 19.0 16.2
Non-current
Assets 27.6 26.3
Liabilities (7.8 ) (6.8 )
Total non-current net assets 19.8 19.5
Net assets 38.8 35.7
Summarised income statement
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited
for year for year
ended 31 December ended 31 December
2022 2021 2022 2021
£'m £'m £'m £'m
Revenue 40.6 36.5 30.1 25.3
Profit before tax 9.9 7.0 0.7 1.2
Taxation (3.2 ) (2.1 ) (0.6 ) (0.6)
Other comprehensive income/(expense) 1.1 (0.8) (2.6 ) (1.2 )
Total comprehensive income/(expense) 7.8 4.1 (2.5 ) (0.6 )
Total comprehensive income/(expense) 2.3 1.2 (0.7 ) (0.2 )
allocated to non-controlling interests
Dividends paid to non-controlling interests 3.7 0.2 - -
Eastern Produce Goodricke Group
South Africa Limited Limited
for year ended for year ended
31 December 31 December
2022 2021 2022 2021
£'m £'m £'m £'m
Revenue 5.5 3.4 90.5 84.6
(Loss)/profit before tax (0.8 ) (0.4 ) 0.4 0.6
Taxation 0.2 0.1 (0.3 ) (0.1 )
Other comprehensive income/(expense) 0.4 (0.5 ) 1.4 (1.4 )
Total comprehensive (expense)/income (0.2 ) (0.8 ) 1.5 (0.9 )
Total comprehensive (expense)/income - (0.2 ) 0.4 (0.2 )
allocated to non-controlling interests
Dividends paid to non-controlling interests - - 0.2 0.2
Kakuzi Plc
for year ended
31 December
2022 2021
£'m £'m
Revenue 30.5 21.8
Profit before tax 7.3 3.3
Taxation (2.3 ) (1.1 )
Other comprehensive income/(expense) 1.1 (0.9 )
Total comprehensive income 6.1 1.3
Total comprehensive income 3.0 0.6
allocated to non-controlling interests
Dividends paid to non-controlling interests 1.5 1.2
Summarised cash flows
Eastern Produce Eastern Produce
Kenya Limited Malawi Limited
for year ended for year ended
31 December 31 December
2022 2021 2022 2021
£'m £'m £'m £'m
Cash flows from operating activities
Cash generated from operations 14.0 4.4 2.6 1.7
Net interest received/(paid) 0.9 0.7 (0.5 ) (0.5 )
Income tax paid (3.0 ) (2.1 ) 0.4 (0.7 )
Net cash generated from operating activities 11.9 3.0 2.5 0.5
Net cash used in investing activities (0.5 ) (1.0 ) (0.6 ) (0.1 )
Net cash used in financing activities (12.3 ) (0.7 ) - -
Net (decrease)/increase in cash and cash (0.9 ) 1.3 1.9 0.4
equivalents and bank overdrafts
Cash, cash equivalents and bank overdrafts 13.6 12.3 (0.6 ) (1.2 )
at beginning of year
Exchange gains on cash and cash equivalents 1.2 - 0.2 0.2
Cash, cash equivalents and bank overdrafts 13.9 13.6 1.5 (0.6 )
at end of year
Eastern Produce Goodricke
South Africa Limited Group Limited
for year ended for year ended
31 December 31 December
2022 2021 2022 2021
£'m £'m £'m £'m
Cash flows from operating activities
Cash generated from operations 0.6 (0.8 ) 1.1 4.3
Net interest paid (0.3 ) (0.2 ) - -
Income tax paid - - (0.1 ) (0.1 )
Net cash generated/(used in) from 0.3 (1.0 ) 1.0 4.2
operating activities
Net cash used in investing activities (1.4 ) (1.1 ) (1.6 ) (1.0 )
Net cash generated from/(used in) 1.2 2.0 (1.9 ) (2.5 )
financing activities
Net increase/(decrease) in cash and 0.1 (0.1 ) (2.5 ) 0.7
cash equivalents and bank overdrafts
Cash, cash equivalents and bank 1.1 1.4 1.2 0.5
overdrafts at beginning of year
Exchange gains/(losses) on cash 0.1 (0.2 ) 0.1 -
and cash equivalents
Cash, cash equivalents and bank 1.3 1.1 (1.2 ) 1.2
overdrafts at end of year
Kakuzi Plc for year
ended 31 December
2022 2021
£'m £'m
Cash flows from operating activities
Cash generated from operations 11.6 8.5
Net interest received 0.5 0.5
Income tax paid (1.4 ) (0.9 )
Net cash generated from operating activities 10.7 8.1
Net cash generated used in investing activities (10.0 ) (6.0 )
Net cash used in financing activities (3.0 ) (2.3 )
Net decrease in cash and cash equivalents and bank overdrafts (2.3) (0.2 )
Cash, cash equivalents and bank overdrafts at beginning of year 10.8 11.2
Exchange gains/(losses) on cash and cash equivalents 1.0 (0.2 )
Cash, cash equivalents and bank overdrafts at end of year 9.5 10.8
Associated undertakings
The principal associated undertakings of the Group at 31 December 2022 were:
Group
interest
Principal in equity
country of Registered Accounting capital
operation Office date 2022 per cent.
Insurance and banking
BF&M Limited (Incorporated in Bermuda - Bermuda (xv) 31 December 36.9
common stock)
United Finance Limited (Incorporated in Bangladesh - ordinary shares) Bangladesh (vii) 31 December 38.4
United Insurance Company Limited (Incorporated in Bangladesh - Bangladesh (vii) 31 December 37.0
ordinary shares)
Registered Offices:
(i) Wrotham Place (vii) Camellia House (xiii) 1368 W Herndon Ave
Bull Lane 22 Kazi Nazrul Islam #103
Wrotham Avenue Fresno
Near Sevenoaks Dhaka 1000 California 93711
Kent Bangladesh USA
TN15 7AE
England
(ii) Amgoorie Tea Garden (viii) Slangrivier Road (xiv) Craigshaw Crescent
PO: Amguri Slangrivier Plaas West Tullos
Haloating - 785 681 Wellington Aberdeen
Dist: Sibsagar 7655 AB12 3TB
Assam South Africa Scotland
India
(iii) Camellia House (ix) 7 Windsor Street (xv) 112 Pitts Bay Road
14 Gurusaday Road Tzaneen Pembroke
Kolkata - 700019 850 Bermuda
West Bengal Limpopo Province HM08
India South Africa
(iv) Koomber Tea Garden (x) New Rehema House (xvi) Clarendon House
PO: Kumbhir Rhapta Road 2 Church Street
Cachar - 788 108 Westlands Hamilton
Assam P O Box 45560 Bermuda
India GPO 00100 HM11
Nairobi
Kenya
(v) Sessa Tea Garden (xi) Main Office (xvii) 3rd Floor
PO: Dibrugarh - 786001 Punda Milia Road 180 Msasani Bay
Dist: Dibrugarh Makuyu Msasani
Assam P O Box 24 Dar Es salaam
India 01000 Thika Tanzania
Kenya
(vi) Fazenda Maruque s/n (xii) PO Box 53
sala 03 Mulanje
Bairro Maruque Malawi
Itaberá
São Paulo
Brazil
45 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. Simon Turner, who is a Director of
Camellia Plc, is also a director of The Camellia Private Trust Company and the
president of the board of the trustee of the Foundation. While The Camellia
Private Trust Company Limited as a trustee of the Foundation maintains its
rights as a shareholder, it has not participated in, and has confirmed to the
board of Camellia Plc that it has no intention of participating in, the day to
day running of the business of the Camellia Group. The Camellia Private Trust
Company Limited has also confirmed its agreement that where any director of
Camellia Plc is for the time being connected with the Foundation, he should
not exercise any voting rights as a director of Camellia Plc in relation to
any matter concerning the Camellia Group's interest in any assets in which the
Foundation also has a material interest otherwise than through Camellia Plc.
46 Related party transactions
Group
During the year the Group received rental income from the Foundation of £nil
(2021: £18,620).
During the year the Group paid contributions to the overseas pension and
post-employment schemes of £1,930,199 (2021: £3,775,062).
Company
The Company receives financial and secretarial services from Linton Park Plc,
a directly owned subsidiary undertaking. The amount payable for these services
for 2022 was £422,081
(2021: £433,300). At 31 December 2022 £3,621,361 (2021: £3,029,941) 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
£16,519,492 (2021: £13,409,492) include an unsecured loan note of
£4,191,777 (2021: £4,191,777). The company received interest of £167,671
(2021: £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
2022 amounted to £2,052,715 (2021: £1,879,504) and £193,185 (2021:
£193,187) respectively and are unsecured, interest free and have no fixed
terms of repayment.
47 Subsequent events
There were no adjusting post balance sheet events.
Report of the independent auditors
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CAMELLIA PLC
Report on the audit of the financial statements
1. Opinion
In our opinion:
n 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 2022 and of the
Group's loss for the year then ended;
n 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);
n 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
n the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
n the consolidated income statement;
n the consolidated statement of comprehensive income;
n the consolidated and parent company balance sheets;
n the consolidated and parent company statements of changes in equity;
n the consolidated and parent company cash flow statement;
n the basis of preparation and statement of accounting policies;
n the notes 1 to 47 related to the consolidated financial statements; and
n the notes 1 to 47 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:
n Revenue recognition;
n Impairment of goodwill and intangible assets.
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 £1.28m
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 46 components of the Group. Of these, 35 were subjected to a
full-scope audit whilst the 11 remaining were subject to specific audit
procedures.
Our scoping provides coverage of 100% of the Group's revenue, 93% of the
Group's result before tax and 72% of the Group's net assets.
Significant changes in our approach Changes in component scoping:
We performed full scope audit on Brazil component in current year (2021:
specified audit procedures). The component contributed over 10% of results
before tax.
Changes in key audit matters:
n In prior year, acquisition accounting was considered a key audit matter but
we no longer report this as a key audit matter as there have been no new
acquisitions in the year.
n In the prior year, Provisions for uncertain tax positions and legal matters
was considered to be a key audit matter due to impact of litigation concerning
the Group's East African operations first identified in 2020. There are no
significant provisions or contingent liabilities remaining from this issue.
Other than the ongoing legacy matters, we have not identified any further
significant potential litigation and therefore, we no longer report this as a
key audit matter in current year.
n In the prior year the Fair value of biological assets was considered to be a
key audit matter due to complexities and judgements involved. We no longer
report this as a key audit matter based upon prior year audit experience.
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:
n Assessing the latest cash flow forecasts of the Group to determine whether
these are consistent with the forecasts used during the impairment review; and
assess the Directors' going concern assessment.
n 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.
n Assessing the facilities and its availability and compliance with covenants.
n Evaluating each of the sensitivities adopted by management and assessing
downside scenarios of cash headroom over the forecast period by performing our
own sensitivity analyses to assess the solvency of the Group over the going
concern review period.
n Assessing the reasonability of the assumptions that management have used in
their cash forecasts; and
n 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 £283.0m
(2021: £238.9m) 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 order to address the key audit
matter:
§ Obtained an understanding of the processes and controls used to record
revenue transactions.
§ Assessed commercial arrangements to determine the correct point of revenue
recognition of 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.
5.2 Impairment of goodwill and intangible assets
Key audit matter description The Group holds £6.3m (2021: £10.1m) of intangible assets including £1.0m
(2021: £4.6m) allocated to goodwill and £3.6m (2021: £3.6m) allocated to
Jing Tea brand. Please also refer to the Critical accounting estimates and
judgments within accounting policies and Note 16 to the accounts.
The risk in relation to intangibles relates to (i) Brand value relating to
Jing Tea Limited, (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 prior year acquisition of Bardsley Group.
There is 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 are determined based upon value in
use calculations and where relevant fair value less costs to sell calculations
and are performed by management with the help pf external valuers where
applicable. The estimates and assumptions used within the cashflow projections
require estimates, including significant assumptions regarding future royalty
rates, discount rates and cashflows.
Intangible assets are disclosed in note 16 to the financial statements, the
valuation is discussed as sources of estimation uncertainty, and the valuation
policy is disclosed in the principal accounting policies.
How the scope 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 and Fair value less
cost to sell 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 royalty and
discount rates. We benchmarked the royalty rate and discount rate to
comparable companies and considered the underlying assumptions based on our
knowledge of the group and its industry.
§ Assessed the accuracy of management's revenue and 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 by
comparing them with similar market transactions. We also held discussions with
the valuers to challenge the methods and assumptions used for determining the
fair value.
§ Evaluated the competence, capabilities and objectivity of third party
external valuers.
§ 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
disclose further sensitivities for CGUs where a reasonably possible change in
a key assumption would cause an impairment.
§ We have considered the key potential impacts of climate change
Key observations From the work performed, we have concluded that impairment of goodwill and
intangible assets is appropriately recognised in accordance with IAS 36. In
addition the relevant disclosures are appropriate based on the results of our
work.
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 £1.28m (2021: £0.9m) £0.4m (2021: £0.3m)
Basis for determining materiality 0.4% of Revenue (2021: 0.3% of revenue). 2% of net assets, capped at 35% of group materiality (2021: 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% (2021: 70%) of group materiality 70% (2021: 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 £64,000 (2021: £43,000), 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 operations as well as apple and pears orchards, acquired in prior
year, are located in the UK. Of the Group's 55 principal components, 35 were
subject to a full audit and 11 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. We performed a full scope audit on the Brazil component in
current year (2021: specified audit procedures). The component contributed
over 10% of results before tax.
These 46 components represent the principal business units and account for
100% (2021: 99%) of the Group's revenue and 98% (2021: 86%) of the Group's
results before tax and 72% (2021: 87%) 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 £0.4m to (35%) of group materiality (2021:
£0.3m (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:
n Financial reporting process; and
n Impairment of intangibles.
This covered some of the key accounting and reporting tools that are used by
management and the interface between various systems.
7.3 Working with other auditors
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 team during
each stage of the audit and reviewed key working papers. In September 2022, we
held a group-wide planning meeting, in which we set out the materiality and
scoping for component teams, as well as considering significant risks across
the Group. We also held planning meetings with each of our specialists,
involving our component teams where relevant.
During our interim and year-end audit, we held regular catch-up meetings with
components to monitor progress and highlight any issues arising. The Senior
Statutory Auditor participated in all of the final close meetings of the
group's significant components. The Senior Statutory Auditor or another senior
members of the group audit team carried out a review of the component auditor
files.
Our oversight of component auditors focused on the planning of their audit
work and key judgements made. In particular, our supervision and direction
focused on the work performed in relation to key audit matters by component
teams including revenue recognition and impairment of intangible assets and
goodwill.
As part of our monitoring of component auditors, we have also attended key
audit close meetings.
7.4. Our consideration of climate-related risks
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 21 to 31 and the principal risks set out on pages 22
to 27. The areas of the financial statements that are notably impacted by
climate-related matters are associated with future forecasts in the medium to
long term. 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 section 5.2 above. In addition, we have:
n assessed the key financial statement line items and estimates which are more
likely to be materially impacted by climate change risks given the more
notable impacts of climate change on the business are expected to arise in the
medium to long term.
n challenged how the Directors considered climate change in their assessment on
the Group's operations based on our understanding of the business environment
and by benchmarking relevant assumptions with market data.
n involved our Environmental Social and Governance (ESG) specialist in
challenging the group's climate risk assessments.
n 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. 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, including those
that are specific to the Group's sector;
§ 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, ESG 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 - revenue recognition. 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 as a
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 that key audit
matters.
In addition to the above, our procedures to respond to risks identified
included the following:
n 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;
n enquiring of management, the Audit Committee and in-house legal counsel
concerning actual and potential litigation and claims;
n performing analytical procedures to identify any unusual or unexpected
relationships that may indicate risks of material misstatement due to fraud;
n reading minutes of meetings of those charged with governance, reviewing
internal audit reports; and
n in addressing the risk of fraud through management override of controls,
testing the appropriateness of journal entries and other adjustments;
assessing whether the judgements made in making accounting estimates are
indicative of a potential bias; and evaluating the business rationale of any
significant transactions that are unusual or outside the normal course of
business.
We also communicated relevant identified laws and regulations and potential
fraud risks to all engagement team members including internal specialists and
significant component audit teams, and remained alert to any indications of
fraud or non-compliance with laws and regulations throughout the audit.
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
n 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
n 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:
n we have not received all the information and explanations we require for our
audit; or
n 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
n the parent company financial statements are not in agreement with the
accounting records and returns.
We have nothing to report in respect of these matters.
13.2 Directors' remuneration
Under the Companies Act 2006 we are also required to report if in our opinion
certain disclosures of directors' remuneration have not been made.
We have nothing to report in respect of this matter.
14. Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Makhan Chahal ACA (Senior Statutory Auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
3 May 2023
FIVE YEAR RECORD
2022 2021 2020 2019 2018
£'m £'m £'m £'m £'m
*Restated *Restated *Restated *Restated
Revenue-continuing operations 297.2 255.3 270.1 266.0 281.3
(Loss)/profit before tax (3.7 ) 7.1 7.2 20.5 50.3
Taxation (12.2 ) (2.6) (8.6 ) (7.2 ) (20.0 )
(Loss)/profit from continuing (15.9 ) 4.5 (1.4 ) 13.3 30.3
operations
Profit from discontinued 7.6 - 0.6 1.8 2.0
operations
Profit/(loss) attributable to owners (13.0 ) 2.3 (5.0 ) 8.3 25.2
of the parent
Equity dividends paid 4.0 5.2 2.8 4.0 3.8
Equity
Called up share capital 0.3 0.3 0.3 0.3 0.3
Reserves 368.6 388.3 376.3 395.4 395.2
Total shareholders' funds 368.9 388.6 376.6 395.7 395.5
Earnings/(loss) per share
- continuing operations (745.8 ) p 83.3 p (202.8 ) p 235.3 p 839.9 p
Earnings/(loss) per share
- continuing and discontinued
operations (470.7 ) p 83.3 p (181.0 ) p 300.5 p 912.4 p
Dividend paid per share 146 p 188 p 102 p 144 p 138 p
* The comparative figures have been restated following the disposal of
Associated Cold Stores & Transport Limited
APPENDICES
Appendix 1: Global (excluding UK) GHG emissions and energy use data for the
year to 31 December
2022 2021 2020 2019
Reporting year Global Global Global Global
Group sectors reported (Excluding UK) (Excluding UK) (Excluding UK) (Excluding UK)
Emissions from combustion of LPG 22,867 24,008 21,555 25,350
and Natural gas (Scope 1) (tCO(2)e)
Emissions from combustion of diesel 15,030 14,866 15,324 17,501
and petrol for transport and onsite
combustion (Scope 1) (tCO(2)e)
Emissions from the combustion 72,343 71,000 80,217 88,377
of coal (Scope 1) (tCO(2)e)
Emissions from combustion of firewood 3,386 3,816 3,819 3,558
and other fuels (Scope 1) (tCO(2)e)
Emissions from fertilisers, waste,( 40,833 43,163 43,312 46,290
) livestock, land use change and
refrigerants (Scope 1) (tCO(2)e)
Emissions from purchase of electricity 40,434 41,958 42,717 47,625
for own use (Scope 2,
location-based) (tCO(2)e)
Emissions from purchase of electricity 40,434 41,942 42,717 47,625
for own use (Scope 2,
market-based*) (tCO(2)e)
Emissions from purchase of electricity, 40,434 41,958 42,717 47,625
heat, steam, and cooling purchased
for own use (Scope 2,
location-based) (tCO(2)e)
Emissions from business travel in 180 132 n/a n/a
rental cars or employee-owned vehicles
where company is responsible for
purchasing the fuel (Scope 3) (tCO(2)e)**
Total gross Scope 1 and Scope 2 194,942 198,811 206,944 228,701
emissions (location-based) (tCO(2)e)
Total gross Scope 1 and Scope 2 194,942 198,795 206,944 228,701
emissions (market-based) (tCO(2)e)
Intensity ratio: Kg CO(2)e/Kg of made tea 1.36 1.29 1.40 1.51
Energy equivalent from combustion of 124.6 130.5 117.0 137.2
LPG and Natural gas (Scope 1) (GWh)
Energy equivalent from combustion of 61.5 61.5 62.8 71.0
diesel and petrol for transport and
onsite combustion (Scope 1) (GWh)
Energy equivalent from the combustion 222.9 219.4 250.4 266.3
of coal (Scope 1) (GWh)
Energy equivalent from combustion of 234.9 250.9 247.2 227.7
firewood and other fuels (Scope 1) (GWh)
Electricity purchased for own use 92.0 91.4 90.5 95.5
(Scope 2) (GWh)
Renewable electricity generated for own 1.0 0.9 0.9 0.6
use (Scope 2) (Gwh)
Energy equivalent from business travel 0.5 0.5 n/a n/a
in rental cars or employee-owned 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 was the first reporting period for which we reported our scope 3
business travel in rental cars or employee-owned vehicles
Appendix 2: UK GHG emissions and energy use data for the year to 31 December
Reporting year 2022 2021 2020 2019
Group sectors reported UK UK UK UK
Emissions from combustion of LPG 799 1,202 1,591 1,939
and Natural gas (Scope 1) (tCO(2)e)
Emissions from combustion of diesel and 4,344 4,087 3,744 5,069
petrol for transport and onsite combustion
(Scope 1) (tCO(2)e)
Emissions from combustion of other fuels 549 362 88 122
(Scope 1) (tCO(2)e)
Emissions from fertilisers, waste, livestock, 245 67 13 17
land use change, and refrigerants
(Scope 1) (tCO(2)e)
Emissions from purchase of electricity for 4,125 4,408 5,130 5,316
own use (Scope 2, location-based) (tCO(2)e)
Emissions from purchase of electricity for ( 991 1,171 32 n/a
) own use (Scope 2, market-based*) (tCO(2)e)
Emissions from purchase of electricity, heat, 4,125 4,408 5,130 5,316
steam and cooling purchased for own use
(Scope 2, location- based) (tCO(2)e)
Emissions from business travel in rental cars 68 15 n/a n/a
or employee-owned vehicles where
company is responsible for purchasing
the fuel** (Scope 3) (tCO(2)e)
Total gross Scope 1 and Scope 2 emissions 10,062 10,126 10,566 12,463
(location-based) (tCO(2)e)
Total gross Scope 1 and Scope 2 emissions 6,928 6,889 5,468 n/a
(market-based) (tCO(2)e)
Energy equivalent from combustion of LPG 4.3 6.5 8.6 10.5
and Natural gas (Scope 1) (GWh)
Energy equivalent from combustion of 17.0 17.3 15.6 20.8
diesel and petrol for transport and onsite
combustion (Scope 1) (GWh)
Energy equivalent from combustion of other 2.1 1.4 0.3 0.5
fuels (Scope 1) (GWh)
Electricity purchased for own use 21.3 20.8 22.0 21.5
(Scope 2) (GWh)
Energy equivalent from business travel in 0.3 0.0 n/a n/a
rental cars or employee-owned 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 was the first reporting period for which we reported our Scope 3
business travel in rental cars or employee-owned vehicles.
Appendix 3: 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. We
are working to capture anything that falls outside this boundary within the
Group's reporting of its Scope 3 emissions, which is under development.
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 and
Industrial Strategy and the UK Department for Environment, Food and Rural
Affairs (Defra) and the Intergovernmental Panel on Climate Change (IPCC),
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 CO(2)e 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.
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