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9
Camellia Plc
2009
122
Camellia Plc
Report and accounts 2009
Contents
Directors and advisers
Chairman’s statement
Report of the directors
Corporate governance
Statement of directors’ responsibilities
Remuneration report
Consolidated income statement
Statement of comprehensive income
Consolidated balance sheet
Balance sheet
Consolidated cash flow statement
Cash flow statement
Statement of changes in equity
Accounting policies
Notes to the accounts
Report of the auditors
Five year record
page
2
3
6
13
16
17
20
21
22
23
24
25
26
27
35
73
75
1
Chairman (iii)
Deputy chairman, independent non-executive
director and senior independent director (i) (ii)
(iii)
Joint managing director
Non-executive director
Joint managing director
Finance director
Non-executive director (i)
Non-executive director
Independent non-executive director (i) (ii) (iii)
Chairman
Finance
Joint managing director
Joint managing director
Bangladesh
Corporate secretarial and administration
Kenya, Malawi and South Africa
India
Camellia Plc
Directors and advisers
Directors
M C Perkins, FCA
C J Relleen, FCA
C J Ames, MA FCA
M Dünki
P J Field
A K Mathur, FCA
D A Reeves, MSc
Dr B A Siegfried
C P T Vaughan-Johnson, FCIB
(i) Member of audit committee
(ii) Member of remuneration committee
(iii) Member of nomination committee
Secretary
M D Conway, FCIS
Executive committee
Registered office
Registrars
Auditors
M C Perkins
A K Mathur
C J Ames
P J Field
I Ahmed
M D Conway
G A Mclean
A Singh
Linton Park
Linton
Near Maidstone
Kent ME17 4AB
Registered Number 29559
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Website
www.camellia.plc.uk
2
Chairman’s statement
The profit before tax for the year to 31 December 2009 amounted to £34.14 million compared with £24.04 million in the
previous year. The group enjoyed another successful year in 2009 and the underlying trading profit increased from £23.20
million in 2008 to £35.36 million in 2009.
Dividend
The board is recommending a final dividend of 74p per share, which together with the interim dividend already paid of 20p
per share, brings the total distribution for the year to 94p per share compared with 92p per share in respect of 2008.
Agriculture and horticulture
Tea
In 2009 all of our tea operations benefitted from an increase in demand over supply resulting in widespread sale price increases
and greatly improved profitability.
India
Tea production in India amounted to 31.1 million kilos compared with 32.4 million kilos in the previous year. This decline
was the result of dry weather conditions at the beginning of the year particularly in the Dooars region of West Bengal. The
factory up-grade programme justifies the ongoing capital investment and will continue for the next two years. In view of the
persistent droughts in the early part of recent years we are developing our irrigation infrastructure as fully as possible, having
regard to the water resources available.
The political situation in Darjeeling remains unresolved and continues to present difficulties in the orderly management of our
tea gardens in that district.
Bangladesh
Tea production in Bangladesh was similar to the previous year at 12.0 million kilos, which is commendable given the extensive
drought at the beginning of the year. The drought inevitably affected the success of the ongoing replanting programme and
increased irrigation is considered a priority.
Kenya
Generally good weather conditions together with increased smallholder throughput helped production increase in Kenya
during the year to 21.4 million kilos from 20.5 million kilos in 2008. The market remained strong throughout the year with
Pakistan continuing to be a major buyer. A proposed new constitution with major changes in the devolution of power has been
passed through Parliament and this is scheduled to go to a referendum in the second half of this year. Ambiguities on land
tenure give cause for concern.
A further tranche of shares in the Siret Tea Company was sold by Kakuzi to the local community during the year and their
interest now stands at 41%.
Malawi
Production in Malawi recovered from the previous drought year to a very satisfactory 19.5 million kilos compared with
15.3 million kilos in 2008. It is important that our operations in Malawi strive to maintain the highest possible quality and to
this end we are carrying out a programme of improvements to our factories. The Malawi Kwacha remains unrealistically firm
and did not weaken as predicted after the elections in 2009.
Edible nuts
2009 was an ‘off-year’ in the biennial bearing pattern of the pistachio orchards of Horizon Farms in California and production
was minimal.
Macadamia production in both Malawi and South Africa suffered from reduced production and relatively poor sale prices.
Malawi encountered adverse weather conditions at the time of nut set resulting in decreased volumes and smaller than optimal
nut size. There have been recent signs of an uplift in the sale price of macadamia nuts which is encouraging.
3
Camellia Plc
Camellia Plc
Chairman’s statement
Other horticulture
Kakuzi’s avocado production in Kenya reduced but profitability increased due to substantially higher sale prices. The Mombasa
Port and other shipping difficulties are a cause for concern particularly for a perishable crop such as avocado. Very dry weather
conditions put pressure on our strategic water reserves for irrigation and investment is currently being made to reduce such
exposure in the future.
Rubber production in Bangladesh was higher than the previous year but prices were somewhat lower. A further 87 hectares of
rubber was planted during the year.
After a number of successful years CC Lawrie in Brazil suffered from lower production and, in the case of maize, lower prices.
Weather conditions have been difficult with too much rain at crucial times of the year and some crops could not be harvested.
The continuing maturity of the citrus orchards in California now enables Horizon Farms to be profitable even during an off-
year for pistachio production. Citrus production was on par with last year and sale prices increased. New water sources have
been developed on the farm which will go some way to protecting the existing plantings from water shortages and possibly
allow for further development.
A review of our operations in Chile concluded that the farm would not be profitable for a number of years and would require
significant further capital injections. Consequently we decided that a sale of the property was the correct course of action and
this was completed towards the end of 2009.
A replanting programme of wine grapes in South Africa has had the effect of reducing production on a temporary basis. The
quality of wine produced is however pleasing and considerable effort is now being directed towards improved marketing.
Food storage and distribution
Associated Cold Stores and Transport enjoyed a reasonably profitable year in 2009 in the face of continuing over capacity in
the marketplace. Debt has been substantially reduced in this operation over the last few years and the company is well placed to
take advantage of any increase in rates even though this may not happen for some time. At the moment however customers are
being enticed with opportunities to move their business elsewhere by being offered unrealistically low rates which can surely
only be maintained at the cost of a vastly inferior service and then only for a short time.
The restaurant business in the Netherlands which is crucial for our operations in that country was severely impacted by the
recession in 2009 but our distribution company again produced satisfactory profits.
Engineering
2009 was a year of mixed fortunes for our UK based engineering companies. Profit overall was marginally decreased which
is considered encouraging in the very difficult circumstances prevailing throughout the year. Destocking by our customers
continued and there was no obvious impact from export orders as a result of the decline in value of sterling. AKD Engineering
enjoyed a good year partly as a result of their involvement in the decommissioning of redundant oil rigs in the North Sea, for
which highly specialised experience is required. General Utilities, which may be considered to be towards the front end of the
manufacturing chain and thus a barometer for the future fortunes of the UK engineering industry, encountered very difficult
market conditions throughout the year which is particularly disappointing after such a good year in 2008.
A serious fire occurred at the Nuneaton premises of Abbey Metal Finishing on the morning of 22 April 2010. Loss adjustors
have been appointed but it is too soon to assess when the facility will be capable of becoming operational again.
Banking and financial services
Duncan Lawrie made a loss in 2009 almost entirely due to payments that were required to be made under various depositor
compensation schemes, which payments may perhaps be seen as a ‘tax’ on banks that are run in a prudent manner as opposed
to those that are not, and also due to Duncan Lawrie’s policy of only lending out shareholders’ funds and not customers’
deposits. These deposits are placed with the most highly rated counterparties and, with interest rates at historic lows, it is
virtually impossible to make any margin on this service. Duncan Lawrie occupies a niche position in a sector of the banking
industry that offers wealth protection and service to its customers and these are their main priorities. Duncan Lawrie will not
be diverted from this policy even if it is not able to make what would be considered to be an adequate return on its assets
during this period of low interest rates that must correct itself within a reasonable time-scale. In the meantime Duncan Lawrie
must live with the ever-increasing regulatory burden in the hope that it is operating on a level playing field with banks that are
not managed in the same conservative manner.
4
Chairman’s statement
Pharmaceuticals
Siegfried Holding AG made an operating loss in 2009 of £6.30 million. In addition Siegfried incurred a further impairment
provision of £9.62 million and our share of their total loss amounted to £6.75 million.
The directors of Siegfried have implemented a strategy for the future which requires additional capital to be made available for
their ongoing operations and development. We concluded that we did not wish to participate in this capital raising exercise
which would have necessitated a substantial further investment in Siegfried. We also concluded that we did not wish our
shareholding percentage to be diluted by remaining a shareholder without contributing to the increased capital. It has always
been our policy to support the management of Siegfried but we have made it clear to their board and management that if our
joint aspirations for the company were to diverge, then we would not stand in the way of the introduction of a new shareholder
or shareholders who shared their vision for the future. As a result we were introduced to a number of potential shareholders
with whom sale agreements were subsequently negotiated. These agreements were completed on 15 April 2010 and resulted in
proceeds of £48.85 million. The effect of this transaction will be reflected in our 2010 annual accounts.
Other associated undertakings and investments
United Leasing and United Insurance in Bangladesh both saw an increase in profits for 2009 when translated into sterling. The
profits for United Leasing remained static in local currency terms. Bangladesh continues to be a difficult market for both these
companies with a lack of major new investments in the commercial sector and a general slowdown in economic activity.
BF&M Limited in Bermuda again increased its gross premiums written but net earnings decreased slightly due to higher policy
benefits being paid and increased operating expenses.
The share prices of our other investments in Bermuda have suffered from the impact of the global financial crisis and from
the decline and partial relocation elsewhere of the reinsurance sector which represents the major commercial business of that
country.
Development
The year 2009 started in very uncertain circumstances. The recession was seriously beginning to bite, the banking system
was still undergoing difficult times and general prospects encompassed the possibility of a depression. Even so we were able
to continue with our development programmes and thanks to good results from our agricultural operations and the sale of
our shares in Siegfried we now have the advantage of a strong financial situation with no net debt and considerable funds for
investment. We will not however be in a hurry to deploy these funds but will examine the many ways in which we can develop
the companies and investments that are already part of the group before looking at pastures new.
Directors
It is with great sadness that I have to inform you that Peter Leggatt passed away in November 2009. Peter’s contribution to our
operations in India and Bangladesh was substantial and he will be greatly missed by his many friends and colleagues.
I also have to inform you that Dr Bernard Siegfried will be standing down from the board at the conclusion of the annual
general meeting in June. Dr Siegfried has made a major contribution to the affairs of the group including, of course, our
investment in Siegfried Holding AG.
I am pleased to welcome to the board Martin Dünki, who as a director of Camellia Holding AG is already well known to us.
Peter Field and Chris Ames have been appointed joint managing directors of Camellia Plc with effect from 1 April 2010.
Staff
It is again my pleasure to thank all our staff for the very professional manner in which they have discharged their duties over
the past year.
M C Perkins
Chairman
29 April 2010
5
Camellia Plc
Report of the directors
The directors present their report together with the audited accounts for the year ended 31 December 2009.
Principal activities
The company is a holding company and its country of incorporation is England. The principal activities of its subsidiary and
associated undertakings comprise:
Agriculture and horticulture – the production of tea, citrus, edible nuts, rubber, fruits, other horticultural produce and general
farming
Engineering – metal finishing, fabrication, precision engineering and heat treatment
Food storage and distribution
Insurance
Private banking and financial services
The holding of investments
Further details of the group’s activities are included in the chairman’s statement on pages 3 to 5.
Results and dividends
The profit for the year amounted to £22,441,000 (2008: £16,493,000). The board has proposed a final dividend for the year
of 74p per share payable on 2 July 2010 to holders of ordinary shares registered at the close of business on 11 June 2010. The
total dividend for 2009 is therefore 94p per share (2008: 92p per share).
Directors
The directors of the company are listed on page 2. The following directors had beneficial interests in the share capital of the
company:
Camellia Plc ordinary shares of 10p each:
M C Perkins
C P T Vaughan-Johnson
31 December
2009
1 January
2009
1,573
1,000
1,573
1,000
There have been no changes in the interests of directors between 31 December 2009 and the date of this report.
Mr M Dünki was appointed to the board as a non-executive director on 1 April 2010. Mr P A Leggatt passed away on
28 November 2009.
6
Report of the directors
Under the company’s articles of association all the directors are required to retire annually. Dr. B A Siegfried will not be
seeking re-election at the annual general meeting. Accordingly, Mr M C Perkins, Mr C J Relleen, Mr C J Ames, Mr P J Field,
Mr A K Mathur, Mr D A Reeves, and Mr C P T Vaughan-Johnson retire and, being eligible, seek re-election. In addition,
Mr M Dünki having been appointed to the board since the last annual general meeting, will retire and seek re-election.
None of the directors or their families had a material interest in any contract of significance with the company or any
subsidiary during and at the end of the financial year.
Executive directors
Mr M C 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. Mr Perkins is also chairman of Duncan Lawrie Holdings
Limited and chairman of the nomination committee.
Mr C J Ames, a Chartered Accountant, is a joint managing director of Camellia Plc and a non-executive director of Duncan
Lawrie Holdings Limited. He was previously Managing Director of Douglas Deakin Young Limited which was acquired by the
Camellia group in 2005. Prior to that he was a partner of PricewaterhouseCoopers.
Mr P J Field is a joint managing director of Camellia Plc and chairman of Goodricke Group Limited. From 30 April 2010,
Mr Field will become non-executive chairman of Duncan Lawrie Limited and Duncan Lawrie Asset Management Limited and
continue as a director of Duncan Lawrie Holdings Limited but in a non-executive capacity. Before joining the group in 1987,
Mr Field was with Grindlays Bank engaged primarily with their business in the Indian subcontinent.
Mr A K Mathur, is a chartered accountant and joined the group in 1981. He was appointed finance director in 1999 and is
also a director of Goodricke Group Limited.
Non-executive directors
Mr C J Relleen was formerly a partner in PricewaterhouseCoopers. He was appointed an independent non-executive director
and deputy chairman in January 2006 having previously been a non-executive director of Linton Park Plc. Mr Relleen is also
a non-executive director of Duncan Lawrie Holdings Limited. He is the senior independent director, chairman of the audit
committee and a member of the nomination and remuneration committees.
Mr M Dünki is a director of Rahn & Bodmer Co., a Zurich based private bank. He is also a director of The Camellia Private
Trust Company Limited and a trustee of The Camellia Foundation and a director of Camellia Holding AG.
Mr D A Reeves was appointed a director in 2001. Following a long career with the Bank of England, Mr Reeves joined the
group in 1998 and was managing director of Duncan Lawrie Limited. He became a non-executive director of the company in
2002 and is a member of the audit committee. Mr Reeves is a director of The Camellia Private Trust Company Limited and a
trustee of The Camellia Foundation.
Mr C P T Vaughan-Johnson, who was formerly president and chief executive officer of the Bank of Bermuda, was appointed
a director in 1999. He is chairman of the remuneration committee and a member of the audit and nomination committees.
Mr Vaughan-Johnson is also a non-executive director of Duncan Lawrie Holdings Limited.
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
2009 and a description of principal risks and uncertainties facing the group. A fair review of the business of the group is
incorporated within the chairman’s statement on pages 3 to 5. The chairman’s statement together with information contained
within the report of the directors highlight the key factors affecting the group’s development and performance. Other matters
are dealt with below:
Principal risks and uncertainties
There are a number of possible risks and uncertainties that could impact the group’s businesses. As the group’s businesses are
widely spread both in terms of activity and location, it is unlikely that any one single factor could have a material impact on the
group’s long-term performance. The following risks relating to the group’s principal operations have however been identified:
7
Camellia Plc
Report of the directors
Agriculture and horticulture
The group’s agricultural based businesses are located in Kenya, Malawi, South Africa, Bangladesh, India, Brazil and the USA.
The success of these activities is greatly dependent on climatic conditions, plant disease, the cost of labour and the market price
for the produce. In addition, exports from these businesses are subject to foreign exchange fluctuations as products, particularly
those from Africa, are normally priced in US dollars.
Developing countries such as Bangladesh, Kenya and Malawi tend to be politically less stable. In Kenya, Malawi and South
Africa there are long-term issues concerning land ownership over which the group has little control but monitors closely.
In India, separatist groups have for many years been involved in episodes of violence in Assam. Whilst this is a matter of major
concern, the group’s operations in this region have generally been able to trade normally. Over the last two years, there has
been an increase in activity by a separatist group in Darjeeling and the Dooars.
UK engineering
A number of the UK engineering companies are dependent for a significant part of their revenue on the aerospace and the oil
and gas industries. A downturn in either of these sectors would have an impact on the level of activity in these businesses.
Some of the processes used by the companies involved in metal treatment require high standards of health and safety and
environmental management. Failure to maintain these standards could give rise to accidents or environmental damage.
Cold storage and transport
Cold storage and transport in the UK is a highly competitive industry and is largely dependent on the food industry for the
utilisation of cold stores.
Cold stores are heavy users of electricity and any significant movement in energy costs can affect the operation’s profitability.
Similarly, the transport division is affected by sharp movements in the cost of fuel.
The business is dependent upon a sophisticated computer system. The failure of this system could have significant
consequences for the business although a disaster recovery plan is in place.
Banking and financial services
Duncan Lawrie Limited is regulated by the Financial Services Authority (FSA) and consequently has a well developed
compliance process. The following risks have however been identified:
–
–
–
compliance risk – the FSA has the power to stop trading activity should there be a serious breach of its regulations.
Following the recent global banking crisis, there have been moves by the authorities to tighten regulatory standards and
this may lead to a requirement for further capital to be invested in Duncan Lawrie Limited.
credit risk – the lending of money gives rise to a credit risk. The company lends money to customers and places money
with other banks and holds interest bearing securities. This credit risk is managed by strict internal procedures. The
company limits itself to lending no more than its share capital and reserves.
liquidity, interest and foreign exchange rate risk – these risks are monitored closely and reported upon daily against
conservative exposure limits.
Duncan Lawrie Limited has no exposure to the sub-prime mortgage market but in periods of low interest rates and low stock
market values its income stream will inevitably be affected.
Further information on the group’s financial risks are disclosed in note 37 of the accounts.
Investments
The group owns a number of investments including listed investments. The value of these investments is therefore likely to
fluctuate in line with global stock market movements.
Pension schemes
There are three final salary schemes in the UK. These are all closed to new entrants and one scheme has been closed to future
accrual. A material proportion of the assets of each of these schemes is invested in equities and the value of these assets will
fluctuate in line with global equity markets. Continuing improvements in mortality rates may also increase the liabilities of the
schemes.
8
Report of the directors
Credit Risk
The global economic recession may affect some of the group’s customers. Credit control procedures are in place but a risk
remains that some customers may have difficulty making payments.
Social and environmental responsibility
Background
The group has a wide range of businesses operating around the world in diverse commercial, cultural and regulatory
environments. These businesses encompass a correspondingly wide spectrum of employment and environmental issues and our
main challenge is to ensure that these are consistently managed across the group.
The group’s businesses have a duty to meet local regulatory requirements and will always strive to do so. In this respect,
there is a distinction between our UK businesses and our agricultural and horticultural businesses based mostly in developing
countries. Whilst the UK businesses are subject to well developed regulatory regimes in the areas of employment and
environmental protection, this is not necessarily the case elsewhere. Our agricultural and horticultural businesses have however
more than responded to the increasing amount of relevant local legislation and to the demands of the marketplace, as many
of our major customers for agricultural products now expect us to meet their own social and environmental standards, or to
achieve certification against recognised international standards such as ‘Fairtrade’ labelling.
Particular challenges and opportunities for the group lie in the following areas:
Child labour: We have a clear policy not to use child labour and all of our businesses meet local legal requirements. The
minimum legal working age varies around the world and in some countries it is both the cultural norm and permissible for
parents to involve their children in the productive process. We do not subscribe to this approach and therefore translating our
policy into unambiguous local rules and enforcing these rules requires vigilance.
Health and safety: Our UK and North-American businesses operate in a strong regulatory climate, and have a good health
and safety culture and record. Achieving equivalent standards of health and safety management in our operations in some
developing countries is a continuing challenge.
Medical care and education: In some countries, our workers and their children do not have access to good state provision of
medical or educational services. However, every tea estate in India and Bangladesh has a hospital and a qualified doctor and
our operations in both these countries have central group hospitals to which more serious illnesses are referred. A number
of our African businesses report a high incidence of HIV/Aids. We provide, as a very minimum, basic medical services
including where appropriate retroviral drugs, and give support to schools that are either run by our companies, or in the local
neighbourhood.
Casual labour: Some of our agricultural businesses rely on seasonal labour, notably at harvest time. Our agricultural companies
give casual and contract workers employment rights in accordance with local legislation.
Environmental management: Our UK-based engineering businesses have the greatest potential to create pollution and hazardous
waste and need to meet tight legislative standards. Where appropriate, our UK businesses have formal environmental
management systems in place and most are independently certified to the international standard ISO 14001. The enforcement
of environmental legislation in many countries where we operate is poor and our businesses in these locations have to act on
their own initiative to meet international standards of environmental protection.
Our approach
We believe that good management of employment and environmental issues is essential in ensuring the long-term success of
our businesses. We are therefore committed to devoting the resources necessary to continually improve our performance with
the same vigour that we apply to other aspects of managing our business.
In 2009, the board adopted a new Corporate Social Responsibility Policy to replace the Statement of Business Principles that
had been in place since 2005. The Corporate Social Responsibility Policy is now available on the company’s website and it will
be adopted across the group during 2010.
Performance
There are no current employment or environmental issues that prejudice the continuing development of the group. No group
businesses were prosecuted for any breach of employment or environmental legislation during 2009.
9
Camellia Plc
Report of the directors
In 2006 the group commissioned independent advisors to review the implementation of the business principles in seventeen
of our companies across the agriculture and horticulture, engineering, food storage and distribution and banking and financial
services divisions. Based on their findings, the group has sought to ensure ongoing adherence to the business principles. In
2010, the executive committee will be looking to establish a process for ensuring that the new Corporate Social Responsibility
Policy is adopted across the group.
– Members of the executive committee must ensure that the businesses for which they are responsible adopt the business
principles and have implementation plans in place.
– A more formal structure for business reporting and data collection against the requirements of the business principles has
been established.
– A set of key non-financial performance indicators has been developed to enable better measurement of group
performance.
Key financial performance indicators
Return on segmental assets
The nature of the group’s principal activities is such that the board takes a long-term view on its operations, particularly in
agriculture. It is also concerned to improve the quality of the group’s assets over the long-term and monitors that by reference
to return on segmental assets achieved in the main segments of the business which are then compared against budget. The
return achieved in the current and prior year was as follows:
Segment net assets (£’000)
Segment profit/(loss) (£’000)
Return on segmental assets (%)
Agriculture and
horticulture
2009
187,118
37,949
20.28
2008
185,707
23,349
12.57
Engineering
2009
12,091
1,608
13.30
2008
11,991
1,814
15.13
Food storage and
distribution
2009
19,451
985
5.06
2008
20,689
1,156
5.59
Banking and financial
services
2009
28,264
(925)
(3.27)
2008
29,124
666
2.29
Segment net assets (segment assets less segment liabilities) and segment profit are as reported in the consolidated accounts.
Group borrowings ratio
The board’s objective is to ensure that gross borrowings as a percentage of tangible net assets do not exceed 50%. The ratio
achieved was 5.57%. (2008: 10.16%).
Gross borrowings and tangible net assets (share capital and reserves less goodwill and intangible assets) are derived from the
consolidated accounts.
10
Report of the directors
Key non-financial performance indicators
The following information has been compiled based on data provided by a majority of the group’s subsidiary undertakings.
The board considers that this information demonstrates the level of compliance with important elements of the business
principles. The board will regularly review which key non-financial performance indicators are most appropriate.
KPI definition
Agriculture
and
horticulture
Engineering
Food
storage and
distribution
Banking and
financial
services
1 Compliance
2009
2008
2007
2009
2008
2007
2009
2008
2007
2009
2008
2007
a) Prosecutions The number of prosecutions
brought in the financial year
by the official regulatory bodies
responsible for enforcing
regulations in the areas of:
b) Formal
warnings
Employment
Worker health and safety
Environmental protection
The number of written
warnings during the financial
year by the official regulatory
bodies responsible for
enforcing regulations in the
areas of:
Employment
Worker health and safety
Environmental protection
2 Child Labour
a) Minimum age The number of employees who
were less than 15 years old
during the financial year
The number of employees
who were younger than the
age for completing compulsory
education in their country
during the financial year
b) Access to
education
3 Accidents
a) Injury
4 Health
a) Sickness
absence
b) Sickness
claims
–
–
–
–
–
2
–
–
–
–
–
–
2
–
–
–
–
–
–
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The number of injuries
received at work resulting in
either:
Absence from work for more
than three days, or the injured
person being unable to do
the full range of their normal
duties for more than three days
The number of employee days
absence as a result of sickness
during the financial year
The number of claims for
compensation arising from
occupational health issues
received during the financial
year in respect of continuing
operations
128
78
145
1
1
2
4
11
12
–
–
1
165,520 (i)148,776 (i) 153,877 (i)
3,580
3,869
2,945
2,431
2,854
3,235
870
566
166
246
248
126
2
–
–
1
1
3
–
–
–
(i)
This excludes tea garden workers in India who have a contractual entitlement to fourteen days sickness absence. This year the operations in Malawi are
included whereas they were excluded in previous years. It should be noted however that in Malawi there is high level of sickness due to HIV/AIDS related
conditions and malaria.
11
Camellia Plc
Report of the directors
Substantial shareholdings
As at 29 April 2010 the company had been advised of the following interests in the share capital of the company:
Camellia Private Trust Company Limited held through its subsidiary, Camellia Holding AG 1,427,000 ordinary shares
(51.34 per cent. of total voting rights).
Taube Hodson Stonex & Partners Limited held (through State Street Nominees Limited) 227,176 ordinary shares
(8.17 per cent. of total voting rights).
Alcatel Bell Pensioenfonds VZW held (through HSBC Global Custody Nominees (UK) Limited) 223,015 ordinary shares
(8.023 per cent. of total voting rights).
Events after the balance sheet date
On 15 April 2010, the group completed the disposal of its entire shareholding in Siegfried Holding AG. Further details of the
transaction can be found in note 40 to the accounts.
Charitable contributions
During the year the group made charitable donations totalling £4,768 (2008: £4,770). Of this amount £1,330 was paid to
arts, sports and education related charities and £3,438 was paid to local hospitals and health related charities.
Employees
It is group policy to keep employees informed, through internal publications and other communications, on the performance
of the group and on matters affecting them as employees and arrangements to that end are made by the management of
individual subsidiary undertakings.
It is also group policy that proper consideration is given to applications for employment received from disabled persons and to
give employees who become disabled every opportunity to continue their employment.
Payment of creditors
It is group policy to agree payment terms with suppliers when negotiating business transactions and to pay suppliers in
accordance with contractual or other legal obligations. The company has no trade creditors. Group trade creditors at
31 December 2009 represented 34 days (2008: 35 days) of annual purchases.
Share capital and purchase of own shares
The company’s share capital comprises one class of ordinary shares of 10 pence each which carry no restrictions on the transfer
of shares or on voting rights (other than as set out in the company’s articles of association). There are no agreements known to
the company between shareholders in the company which may result in restrictions on the transfer of shares or on voting rights
in relation to the company. Details of the issued share capital are contained in note 31 to the accounts.
At the annual general meeting in 2009, shareholders gave authority for the company to purchase up to 277,950 of its own
shares. This authority expires at the conclusion of this year’s annual general meeting on 3 June 2010.
Auditors
Following the review of the group’s audit arrangements referred to on page 15, the board appointed PricewaterhouseCoopers
LLP as auditors for the group. The board wish to acknowledge with thanks the services provided by Moore Stephens LLP as
auditors over a significant number of years.
PricewaterhouseCoopers LLP has expressed its willingness to continue as auditors of the company and a resolution proposing
PricewaterhouseCoopers LLP re-appointment will be put to the annual general meeting.
Each of the persons who were directors at the time when this directors’ report was approved has confirmed that:
a)
b)
so far as each director is aware, there is no relevant audit information of which the company’s auditors are unaware; and
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.
By order of the board
M D Conway
Secretary
29 April 2010
12
Corporate governance
Statement of compliance
This statement describes how the company applies the main principles of The Combined Code on Corporate Governance
(“the Code”). In implementing the Code, the directors have taken account of the company’s size and structure and the fact
that there is a controlling shareholder.
The company has complied with the Code throughout the year with the exception of the following areas of the Code that have
not been implemented:
(i)
the audit committee comprises one non-executive and two independent non-executive directors;
(ii) formal evaluation procedures for the board, its committees and directors have not been established;
(iii) during 2009 a nomination committee had not been established but during 2010 the board has constituted a nomination
committee.
The board
The board currently comprises nine directors. Dr Siegfried will not be seeking re-election at the forthcoming annual general
meeting. Currently two are independent non-executive directors and three are non-executive directors. The remaining directors
are executive directors, including the executive chairman. Mr Relleen, the deputy chairman, has been designated as the senior
independent director. In April 2010, Mr Dünki was appointed to the board as a non-executive director. The names and brief
biographical details of each director appears on page 7.
Mr Vaughan-Johnson was first appointed to the board in 1999. The board, having taken into consideration provision A.7.2
of the Code, considers it is in the best interest of the company for Mr Vaughan-Johnson to continue to act as an independent
non-executive director. The board considers that Mr Vaughan-Johnson remains independent and that given the relative
complexity and geographical spread of the group, Mr Vaughan-Johnson’s experience continues to be of considerable benefit.
There is ongoing dialogue between the chairman and the majority shareholder whose views are reported to the board. The
company is also in contact with other major shareholders. During the year, the senior independent director met with an
institutional investor to discuss governance issues.
In April 2010, Mr Ames and Mr Field were appointed joint managing directors of Camellia Plc and consequently they will
assume responsibility for aspects of the day to day management of the group. In 2010, the board established a nomination
committee chaired by Mr Perkins, the other members being Mr Relleen and Mr Vaughan-Johnson.
The board has established a remuneration committee, audit committee and executive committee. Terms of reference of each of
these 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 annually and covers, inter alia, the following areas:
–
Strategy
– Acquisitions and disposals
–
–
Financial reporting and control
Internal controls
– Approval of expenditure above specified limits
– Approval of transactions and contracts above specified limits
– Responsibilities for corporate governance
– Board membership and committees
– Approval of changes to capital structure
A full copy of the schedule is available on the company’s website.
A report summarising the group’s financial and operational performance including detailed information on each of its
businesses is sent to directors each month. Each director is provided with sufficient information in advance of board meetings
to enable the directors to make informed judgements on matters referred to the board. The board met nine times in 2009.
13
Camellia Plc
Corporate governance
Attendance by directors at board and committee meetings held during the year was as follows:
M C Perkins
C J Relleen
C J Ames
P J Field
A K Mathur
D A Reeves
Dr B A Siegfried
C P T Vaughan-Johnson
Board
9/9
8/9
9/9
9/9
9/9
9/9
6/9
7/9
Audit Remuneration
–
2/2
–
–
–
–
–
2/2
–
3/3
–
–
3/3(i)
3/3
–
3/3
(i) Mr Mathur attends meetings of the audit committee by invitation in his capacity as finance director.
The board has not established formal performance evaluation procedures of itself, the directors or its committees. The board
will continue to review whether implementation of such procedures is appropriate.
Executive committee
The board has delegated the day to day management of the group’s operations to the executive committee which is also
responsible for implementing board policy. The members of the committee are:
M C Perkins
A K Mathur
C J Ames
P J Field
I Ahmed
M D Conway
G Mclean
A Singh
Audit committee
Chairman
Finance
Joint managing director
Joint managing director
Bangladesh
Corporate secretarial and administration
Kenya, Malawi and South Africa
India
The audit committee is chaired by Mr Relleen. The other members of the committee are Mr Reeves and Mr Vaughan-
Johnson. Mr Reeves, a non-executive director, serves as a member of the audit committee as the board considers that his
experience gained from a long career at the Bank of England is of considerable benefit. During 2009, the committee met on
three occasions.
The principal responsiblities of the audit committee are:
–
–
–
–
to review and monitor the financial statements of the company and the audit of those statements
to monitor compliance with relevant financial reporting requirements and legislation
to monitor the effectiveness and independence of the external auditor
to review effectiveness of the group’s internal control system. The committee regularly reviews the effectiveness of internal
audit activities carried out by the company’s group accounting function and senior management
–
to review non-audit services provided by the external auditors
During the year the committee’s work included discharging these responsibilities and, in addition, it reviewed its terms of
reference taking into account the Guidance on Audit Committees issued by the Financial Reporting Council.
14
Corporate governance
During the latter half of 2009 the committee reviewed the arrangements for the audit of the group and its subsidiary
companies. Moore Stephens LLP, the previous group auditor and PricewaterhouseCoopers LLP, the auditor of a significant
proportion of the group’s overseas subsidiaries, were asked to present to the committee for the ongoing audit responsibilities.
As a result of this process, the committee recommended to the board that PricewaterhouseCoopers LLP be appointed auditor
for the group and all its subsidiary companies. This decision was based on the wide experience that PricewaterhouseCoopers
LLP possess in their audits of listed companies in the United Kingdom, and the extensive network of their practice in overseas
countries. PricewaterhouseCoopers LLP were duly appointed in place of Moore Stephens LLP in September 2009.
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 auditors’ objectivity and independence was safeguarded.
Remuneration committee
The committee comprises the board’s two independent non-executive directors, being Mr Vaughan-Johnson who is chairman
of the committee and Mr Relleen.
The committee’s full terms of reference are available on the company’s website. The responsibilities of the committee include:
–
–
–
–
the review of the group’s policy relating to remuneration of the chairman, executive directors and members of the
executive committee
to determine the terms of employment and remuneration of the chairman, executive directors and those members of the
executive committee that are employed in the United Kingdom with a view to ensuring that those individuals are fairly
but responsibly rewarded
to approve compensation packages or arrangements following the severance of any executive director’s service contract
at its discretion, the committee may make such enquiries as it sees fit concerning the packages of those members of the
executive committee that are employed outside the United Kingdom
The committee met twice during 2009. The remuneration report appears on pages 17 to 19.
Insurance
The company purchases insurance to cover its directors in respect of legal actions against them in their capacity as directors of
the company. The level of cover is currently £20 million. All directors have access to independent professional advice at the
company’s expense.
Internal control
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.
Decentralisation is a key management philosophy with responsibility for efficient day to day operations delegated to local
management. Accountability and delegation of authority are clearly defined with regular communication between group head
office and local management. The performance of each company is continually monitored centrally including a critical review
of annual budgets, revised forecasts and monthly sales, profits and cash reports. Financial results and key business statistics and
variances from approved plans are carefully monitored. Senior management regularly visit and review the group’s operating
units. However, any system of internal control can provide only reasonable, and not absolute, assurances against material mis-
statement or loss.
Going concern
After reviewing the group’s budget for 2010 and other forecasts the directors have a reasonable expectation that the group has
adequate resources to continue in operational existence for the foreseeable future. Therefore they continue to adopt the going
concern basis in preparing the accounts.
By order of the board
M D Conway
Secretary
29 April 2010
15
Camellia Plc
Statement of directors’ responsiblities
The directors are responsible for preparing the annual report and the group and parent company financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare group and parent company financial statements for each financial year. The
directors are required to prepare the group financial statements in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union and applicable law and Article 4 of the IAS Regulation and have elected to prepare
company financial statements in accordance with IFRSs.
The group and parent company financial statements are required by law to give a true and fair view of the state of affairs of
both the group and the parent company and of the profit or loss of the group and company for that period.
In preparing those financial statements, the directors are required to:
–
select suitable accounting policies and apply them consistently
– make judgements and estimates that are reasonable and prudent
–
–
state whether applicable accounting standards have been followed, subject to any material departures being disclosed and
explained in the financial statements
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will
continue in business
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the
financial position of the parent company and the group 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 group and company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are also responsible for preparing a directors’ report, directors’ remuneration report and corporate governance
statement that comply with company law.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
company’s website.
By order of the board
M C Perkins
Chairman
29 April 2010
16
Remuneration report
This report is drawn up in accordance with the Companies Act 2006 and the rules of the UK Listing Authority.
Policy on directors’ remuneration
In determining remuneration policy and the remuneration of directors, full consideration has been given to the relevant
provisions of the Combined Code. The board seeks to provide remuneration packages that will attract, retain and motivate the
best possible person for each position. The board also wishes to align the interests of executives with shareholders. The group’s
activities are based largely on agriculture and horticulture, which are highly dependent on factors outside management control
(e.g. weather, market prices for our produce etc.), and is a significant consideration as to why the company does not operate
profit related bonus, share option or share incentive schemes for directors.
Service contracts
Messrs Perkins, Ames and Mathur are each employed by Linton Park Plc on rolling service contracts. Mr Field is employed
by Duncan Lawrie Limited. Mr Perkins’ service contract is dated 25 April 2002, Mr Mathur’s service contract is dated 1
December 2003, Mr Ames’s service contract is dated 24 April 2009 and Mr Field’s service contract is dated 25 September
2002. The service contracts are terminable at any time by a one year period of notice from the company or the director.
Following their initial appointment non-executive directors may seek re-election by shareholders at each subsequent annual
general meeting. Non-executive directors do not have service agreements. There are no specific contractual provisions for
compensation upon early termination of a non-executive director’s employment. The remuneration committee reviews salaries
annually and will seek independent professional advice when appropriate.
The following sections on directors’ remuneration and pensions have been audited.
Directors’ remuneration
Executive
M C Perkins
C J Ames
P J Field
P A Leggatt (up until 28 November 2009)
A K Mathur
Non-executive
D A Reeves
C J Relleen
Dr B A Siegfried
C P T Vaughan-Johnson
Basic
remuneration
2009
£
371,708
192,400
192,400
123,237
192,400
20,000
37,500
10,000
32,500
Benefits
in kind
2009
£
24,611
21,246
14,598
16,882
22,151
–
–
–
–
Total
2009
£
396,319
213,646
206,998
140,119
214,551
20,000
37,500
10,000
32,500
Total
2008
£
372,456
50,932
49,970
147,064
193,055
20,000
37,500
10,000
32,500
1,172,145
99,488
1,271,633
913,477
Benefits in kind include the value attributed to benefits such as medical insurance, accommodation, permanent health
insurance, spouse/partner travel and cash alternatives to company cars.
17
Camellia Plc
Remuneration report
Directors’ pensions
Most UK employees, including executive directors, are eligible to join pension schemes operated within the group. Mr Perkins
was a member of The Linton Park Group Pension Scheme up until 28 February 2010. Mr Field and Mr Mathur are members
of The Lawrie Group Pension Scheme. Members of The Lawrie Group Pension Scheme contribute 6 per cent. of their basic
salary. Members of The Linton Park Group Pension Scheme contributed 8 per cent. of their basic salary. Pension accrues at
the rate of 1/60th of basic final salary per year of service for Messrs Perkins, Field and Mathur. Under The Linton Park Group
Pension Scheme the normal retirement age was 63 up until 31 December 2003 in respect of service up until that date. With
effect from 1 January 2004 the normal retirement age was increased to 65.
From 1 May 2007 the normal retirement age of members of The Lawrie Group Pension Scheme was increased to 65. Pension
benefits accrued prior to that date can be paid at age 63 without actuarial reduction. In a few cases pensions can be paid from
age 60 without actuarial reduction. Both schemes provide for a lump sum death in service benefit of four times basic salary and
a spouse’s pension of half of the member’s pension, based on prospective service.
All benefits are subject to H M Revenue & Customs limits. Up until 6 April 2005, under The Linton Park Group Pension
Scheme, post retirement pension increases were based on the annual increase in the retail price index, subject to a maximum
of 5 per cent. From 6 April 2005, the maximum increase reduced to 2.5 per cent. per annum in respect of pension accrued on
or after that date. Also, under The Linton Park Group Pension Scheme there is a minimum increase of 3 per cent. per annum
in respect of service before 1 January 2002. Under The Lawrie Group Pension Scheme for entrants prior to 1 January 1996,
pension earned prior to April 2003 is subject to a 5 per cent. increase per annum. From 1 May 2007, the maximum increase
reduced to 2.5 per cent. in respect of pension accrual on or after that date. In respect of service before 1 March 1999 Mr
Perkins was a member of a group defined contribution pension scheme. A sum of £34,119 was paid to Mr Ames’s personal
pension arrangement during the year.
Further information on pension arrangements:
Defined benefit pension schemes
Pension
accrued in
year
£
Pension
accrued in
the year net
of inflation
£
Pension
accrued to
31 Dec
2009
£
Transfer
value of
pension
accrued in
the year net
of inflation
£
Transfer
value of
pension
accrued
at 31 Dec
2008
£
Transfer
value of
pension
accrued
at 31 Dec
2009
£
Increase/
(decrease)
in transfer
value in the
year net of
directors’
contributions
£
6,780
4,880
4,530
6,780
4,880
4,530
57,100
65,810
77,710
83,902
41,200
52,740
903,617
1,375,000
2,111,900
1,007,179
1,413,100
1,985,300
78,262
28,400
(136,300)
Age
65
59
62
M C Perkins
P J Field
A K Mathur
The increase in transfer value and the transfer value of pension accrued in the year are stated net of directors’ contributions.
Notes:
The accrued pension is the amount that would be paid if the director left service at the relevant date. The pension in respect of service after 1 May 2007
would be paid from age 65 based on the recent change in pension provision.
The transfer values have been calculated in accordance with the guidance published by the Pensions Regulator, which came into effect from 1 October 2008.
A different calculation methodology is used in respect of Mr Mathur which results in a lower transfer value at the end of the year.
1.
2.
3.
18
Remuneration report
Performance review
The following graph shows the total return on an investment in the company’s shares over the 5 years ended 31 December
2009 compared with the return achieved by the FTSE SmallCap index. This index has been selected as there is no specific
index that is comparable to the activities of the company.
180
160
140
120
100
’
)
s
0
0
0
£
(
S
N
R
U
T
E
R
L
A
T
O
T
80
60
60
40
2005
CAMELLIA
FTSE SMALL CAP PRICE INDEX
FTSE SMALL CAP - PRICE INDEX
2006
2007
2008
2009
Source: DATASTREAM
By order of the board
M D Conway
Secretary
29 April 2010
19
Camellia Plc
Consolidated income statement
for the year ended 31 December 2009
Revenue
Cost of sales
Gross profit
Other operating income
Distribution costs
Administrative expenses
Trading profit
Share of associates’ results
Loss on disposal of a subsidiary
Profit on part disposal of a subsidiary
Profit on disposal of available-for-sale investments
Profit on disposal of an associate
Profit on disposal of non-current assets
Gain arising from changes in fair value of biological assets
Profit from operations
Investment income
Finance income
Finance costs
Pension schemes’ net financing (expense)/income
Net finance costs
Profit before tax
Taxation
Profit for the year
Profit attributable to minority interests
Profit attributable to equity shareholders
Notes
2009
£’000
2008
£’000
2
3
4
5
6
7
17
8
8
8
8
9
230,270
(148,506)
81,764
1,698
(9,061)
(39,041)
35,360
(2,966)
(674)
135
28
–
–
2,746
34,629
1,106
1,103
(1,566)
(1,129)
(1,592)
34,143
(11,702)
22,441
6,544
15,897
22,441
190,551
(123,203)
67,348
2,206
(8,765)
(37,588)
23,201
(8,612)
–
104
390
50
280
8,916
24,329
1,070
643
(2,500)
498
(1,359)
24,040
(7,547)
16,493
5,449
11,044
16,493
Earnings per share – basic and diluted
12
571.9p
397.3p
20
Statement of comprehensive income
for the year ended 31 December 2009
Group
Profit for the year
Other comprehensive (expense)/income:
Foreign exchange translation differences
Release of exchange translation difference on disposal of subsidiary
Actuarial movement on defined benefit pension schemes (note 29)
Available-for-sale investments:
Valuation losses taken to equity
Share of other comprehensive income/(expense) of associates
Tax relating to components of other comprehensive income
Other comprehensive (expense)/income for the year, net of tax
Total comprehensive (expense)/income for the year
Total comprehensive (expense)/income attributable to:
Minority interests
Owners of the parent
Company
Profit for the year
Other comprehensive income:
Available-for-sale investments:
Valuation gains taken to equity
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
2009
£’000
2008
£’000
22,441
16,493
(24,276)
(294)
(2,657)
(729)
3,075
(1,276)
(26,157)
(3,716)
4,163
(7,879)
(3,716)
67,513
–
(21,926)
(7,025)
(5,384)
1,784
34,962
51,455
10,437
41,018
51,455
3,376
3,869
16
16
–
–
3,392
3,869
21
Camellia Plc
Consolidated balance sheet
at 31 December 2009
Non-current assets
Intangible assets
Property, plant and equipment
Biological assets
Prepaid operating leases
Investments in associates
Deferred tax assets
Other investments
Retirement benefit surplus
Trade and other receivables
Total non-current assets
Current assets
Inventories
Trade and other receivables
Other investments
Current income tax assets
Cash and cash equivalents
Total current assets
Current liabilities
Borrowings
Trade and other payables
Current income tax liabilities
Other employee benefit obligations
Provisions
Total current liabilities
Net current assets
Total assets less current liabilities
Non-current liabilities
Borrowings
Trade and other payables
Deferred tax liabilities
Retirement benefit obligations
Other employee benefit obligations
Other non-current liabilities
Total non-current liabilities
Net assets
Equity
Called up share capital
Reserves
Shareholders’ funds
Minority interests
Total equity
22
Notes
15
16
17
18
20
28
21
29
23
22
23
21
24
26
25
30
27
26
25
28
29
30
31
2009
£’000
8,584
80,491
106,067
1,074
97,364
103
30,153
3,054
19,646
346,536
28,279
55,197
12,420
763
229,574
326,233
restated
2008
£’000
9,059
85,787
114,220
1,171
109,883
183
33,668
3,101
21,235
378,307
30,771
55,704
5,436
1,481
276,198
369,590
(12,761)
(254,346)
(5,353)
(268)
(150)
(18,629)
(304,167)
(4,605)
(247)
(123)
(272,878)
(327,771)
53,355
41,819
399,891
420,126
(3,119)
(11,227)
(30,449)
(27,045)
(1,623)
(118)
(11,354)
(12,347)
(32,678)
(27,063)
(2,052)
(131)
(73,581)
(85,625)
326,310
334,501
284
293,570
293,854
32,456
326,310
284
303,816
304,100
30,401
334,501
Balance sheet
at 31 December 2009
Non-current assets
Investments in subsidiaries
Other investments
Total non-current assets
Current assets
Amounts due from group undertakings
Current income tax asset
Total current assets
Current liabilities
Trade and other payables
Amounts due to group undertakings
Total current liabilities
Net current liabilities
Total assets less current liabilities
Non-current liabilities
Deferred tax liabilities
Total non-current liabilities
Net assets
Equity
Called up share capital
Reserves
Shareholders’ funds
Approved on 29 April 2010 by the board of
directors and signed on their behalf by:
M C Perkins
Chairman
Registered Number 29559
Notes
19
21
25
28
31
2009
£’000
73,683
7,512
81,195
5,702
74
5,776
(18)
(21,275)
(21,293)
(15,517)
65,678
(337)
(337)
2008
£’000
73,683
7,316
80,999
5,123
74
5,197
(20)
(21,275)
(21,295)
(16,098)
64,901
(337)
(337)
65,341
64,564
284
65,057
65,341
284
64,280
64,564
23
Camellia Plc
Consolidated cash flow statement
for the year ended 31 December 2009
Cash generated from operations
Cash flows from operating activities
Interest paid
Income taxes paid
Interest received
Dividends received from associates
Net cash flow from operating activities
Cash flows from investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Proceeds from sale of non-current assets
Part disposal of a subsidiary
Disposal of a subsidiary
Acquisition of subsidiary (net of cash acquired)
Purchase of minority interests
Proceeds from sale of associate
Proceeds from sale of investments
Purchase of investments
Income from investments
Net cash flow from investing activities
Cash flows from financing activities
Equity dividends paid
Dividends paid to minority interests
New loans
Repayment of debt
Net cash flow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange (losses)/gains on cash
Cash and cash equivalents at end of year
2009
£’000
48,038
(1,747)
(10,074)
1,189
2,297
39,703
(192)
(10,111)
697
579
3,843
–
–
–
5,509
(12,683)
1,106
restated
2008
£’000
29,087
(2,503)
(4,720)
579
2,884
25,327
(602)
(8,091)
852
302
–
(4,120)
(177)
83
7,188
(7,185)
1,070
(11,252)
(10,680)
(2,557)
(2,610)
788
(4,883)
(9,262)
19,189
9,919
(477)
28,631
(2,557)
(896)
738
(4,356)
(7,071)
7,576
758
1,585
9,919
Notes
32
34
34
24
24
For the purposes of the cash flow statement, cash and cash equivalents are included net of overdrafts repayable on demand.
These overdrafts are excluded from the definition of cash and cash equivalents disclosed on the balance sheet.
24
Cash flow statement
for the year ended 31 December 2009
Cash generated from operations
Profit before tax
Adjustments for:
Gain on disposal of investments
Interest income
Dividend income
Dividends from group companies
Decrease in trade and other payables
Net movement in intra-group balances
Cash used in operations
Interest received
Net cash flow from operating activities
Cash flows from investing activities
Proceeds from sale of investments
Purchase of investments
Dividends received
Net cash flow from investing activities
Cash flows from financing activities
Equity dividends paid
Net cash flow from financing activities
Net movement in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2009
£’000
3,376
(17)
(62)
–
(4,000)
(2)
(579)
(1,284)
62
(1,222)
37
(200)
4,000
3,837
(2,615)
(2,615)
–
–
–
2008
£’000
3,869
(56)
(280)
(12)
(4,000)
–
(1,217)
(1,696)
280
(1,416)
119
(100)
4,012
4,031
(2,615)
(2,615)
–
–
–
25
Camellia Plc
Statement of changes in equity
for the year ended 31 December 2009
Group
At 1 January 2008
Total comprehensive (expense)/income for the year
Dividends
Reclassification of investment to an associate
Minority interest subscription
Change in composition of group
Share of associate’s change in treasury shares
Share of associates’ other equity movements
Loss on dilution of interest in associate
At 31 December 2008
Total comprehensive (expense)/income for the year
Dividends
Minority interest subscription
Share of associate’s change in treasury shares
Share of associate’s other equity movements
Loss on dilution of interest in associate
At 31 December 2009
Company
At 1 January 2008
Total comprehensive income for the year
Dividends
At 31 December 2008
Total comprehensive income for the year
Dividends
At 31 December 2009
Share
capital
£’000
Share Treasury Retained
earnings
shares
£’000
£’000
premium
£’000
Other
reserves
£’000
Minority
interest
£’000
Total
£’000
Total
equity
£’000
284
–
–
–
–
–
–
–
–
284
–
–
–
–
–
–
284
284
–
–
284
–
–
284
15,298
–
–
–
(400)
–
–
–
212,286
(14,265)
(2,557)
–
38,803
55,283
–
(653)
266,271
41,018
(2,557)
(653)
20,870
10,437
(896)
–
287,141
51,455
(3,453)
(653)
–
–
–
–
–
15,298
–
–
–
–
–
–
15,298
15,298
–
–
15,298
–
–
15,298
–
–
–
–
–
–
126
(49)
268
(324)
–
–
–
–
–
–
126
(49)
268
(324)
(400)
–
–
–
–
–
–
195,485
14,926
(2,557)
–
200
27
(37)
93,433
(22,805)
–
–
–
–
–
304,100
(7,879)
(2,557)
–
200
27
(37)
260
(270)
–
–
–
30,401
4,163
(2,610)
502
–
–
–
260
(144)
(49)
268
(324)
334,501
(3,716)
(5,167)
502
200
27
(37)
(400)
208,044
70,628
293,854
32,456
326,310
–
–
–
–
–
–
–
35,596
3,869
(2,615)
36,850
3,392
(2,615)
12,132
–
–
12,132
–
–
63,310
3,869
(2,615)
64,564
3,392
(2,615)
37,627
12,132
65,341
–
–
–
–
–
–
–
63,310
3,869
(2,615)
64,564
3,392
(2,615)
65,341
Other reserves of the group and company includes a £31,000 (2008: £31,000) capital redemption reserve and, in respect of the group,
net exchange differences of £27,258,000 surplus (2008: £49,310,000 surplus).
Exchange differences are stated net of exchange gains of £321,000 (2008: £1,369,000 losses) on foreign currency borrowings used to
provide a hedge against foreign equity investments.
Group retained earnings includes £75,563,000 (2008: £60,253,000) which would require exchange control permission for remittance
as dividends.
26
Accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have
been consistently applied to all years presented, unless otherwise stated.
Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS) as adopted by the EU.
The consolidated financial statements have been prepared on the historical cost basis as modified by the revaluation of land
and buildings, biological assets, agricultural produce, available-for-sale investments, financial assets and financial liabilities
held-for-trading.
Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.
Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of the company and entities controlled by the
company (its subsidiaries) made up to 31 December each year.
On acquisition, the assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess
of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of
the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the
income statement in the period of acquisition. The interest of minority shareholders is stated at the minority’s proportion of
the fair values of the assets and liabilities recognised.
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 and of borrowings designated as hedges of such
investments, are taken to shareholders’ 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 as sterling denominated assets and liabilities.
27
Camellia Plc
Accounting policies
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.
Interest income and expense arising through the group’s banking operations are recognised in the income statement for all
instruments measured at amortised cost using the effective interest method and is stated net of interest paid.
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and
of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when
appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the
effective interest rate, the group estimates cash flows considering all contractual terms of the financial instrument (for example,
prepayment options) but does not consider future credit losses. The calculation includes all fees and points paid or received
between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or
discounts. Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss,
interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the
impairment loss.
Fees and commissions are for portfolio and other management advisory services and are recognised based on the applicable
service contracts, usually on a time-apportioned basis.
In respect of engineering services, revenue is recognised based upon the stage of completion and includes costs incurred to date,
plus accrued profits.
Invoices are raised when goods are despatched or when the risks and rewards of ownership otherwise irrevocably pass to the
customer.
Segmental reporting
The adoption of IFRS 8 requires operating segments to be identified on the basis of internal reports used to assess performance
and allocate resources by the chief operating decision maker. The chief operating decision maker has been identified as the
Executive Committee led by the Chairman. The adoption of this standard has not resulted in any change to the segments
reported previously with ‘trading profit’ maintained as the reportable measure of profit or loss. Inter segment sales are not
significant.
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 and liabilities of a subsidiary or associate at the date of acquisition.
Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in
the income statement and is not subsequently reversed.
On disposal of a subsidiary or associate, the attributable amount of goodwill is included in the determination of the profit or
loss on disposal.
(ii) Identifiable intangible assets
Identifiable intangible assets include customer relationships and other intangible assets acquired on the acquisition of
subsidiaries. Acquired intangible assets with finite lives are amortised on a straight-line basis over their estimated useful lives,
not exceeding 20 years. Intangible assets’ estimated lives are re-evaluated annually and an impairment test is carried out if
certain indicators of impairment exist.
(iii) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific
software. Computer software licences are held at cost and are amortised on a straight-line basis over 3 to 7 years.
Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred.
Costs that are directly associated with identifiable and unique software products controlled by the group and which are
expected to generate economic benefits exceeding costs beyond one year, are recognised as an intangible asset and amortised
over their estimated useful lives.
28
Accounting policies
Property, plant and equipment
Land and buildings comprises mainly factories and offices. All property, plant and equipment is shown at cost less subsequent
depreciation and impairment, except for land, which is shown at cost less impairment. Cost includes expenditure that is
directly attributable to the acquisition of these assets.
On transition to IFRS, the group followed the transitional provisions and elected that previous UK GAAP revaluations be
treated as deemed cost.
Subsequent costs are included in the asset’s carrying amount, only when it is probable that future economic benefits associated
with the item will flow to the group and the cost of the item can be measured reliably. Repairs and maintenance are charged to
the income statement during the financial period in which they are incurred.
No depreciation is provided on freehold land. Depreciation of other fixed assets is calculated to write off their cost less residual
value over their expected useful lives.
The rates of depreciation used for the other assets are as follows:-
Freehold and long leasehold buildings
Other short leasehold land and buildings
Plant, machinery, fixtures, fittings and equipment
nil to 10 per cent. per annum
unexpired term of the lease
4 to 33 per cent. per annum
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets, or, where
shorter, over the term of the relevant lease.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and
the carrying amount of the asset and is included in the income statement.
Biological assets
Biological assets are measured on initial recognition and at each balance sheet date at fair value. Any changes in fair value are
recognised in the income statement in the year in which they arise.
The fair value of livestock is based on market prices of livestock of similar age and sex. Where meaningful market-determined
prices do not exist to assess the fair value of the group’s other biological assets, the fair value is determined based on the net
present value of expected cash flows, discounted at appropriate current market-determined pre-tax rates.
Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment and whenever
events or changes in circumstance indicate that the carrying amount may not be recoverable. Assets that are subject to
amortisation are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-
generating units).
Investments
Investments are recognised and de-recognised on a trade date when a purchase or sale of an investment is under a contract
whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially
measured at cost, including transaction costs.
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities
that the group’s management has the positive intention and ability to hold to maturity. Were the group to sell other than an
insignificant amount of held-to-maturity assets, the entire category would be tainted and reclassified as available-for-sale.
Available-for-sale financial assets include shares of listed and unlisted companies. Listed shares are measured at subsequent
reporting dates at fair value. The fair values of listed shares are based on current bid values. Other investments such as shares of
unlisted companies, documents, manuscripts and philately are measured at cost as fair value cannot be reliably measured.
29
Camellia Plc
Accounting policies
Investments (continued)
Gains and losses arising from changes in fair value are recognised directly in equity, until the investment is disposed of or is
determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the net
profit or loss for the period.
Investments in subsidiary companies are included at cost.
Leases
Leases of property, plant and equipment where the group has substantially all the risks and rewards of ownership are classified
as finance leases. Finance leases are capitalised at the inception of the lease at the lower of fair value and the estimated present
value of the underlying lease payments. Each lease payment is allocated between the liability and finance charges so as to
achieve a constant rate of interest on the finance balance outstanding. The corresponding rental obligations, net of finance
charges, are included in liabilities. The interest element of the finance cost is charged to the income statement over the lease
period. Property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and
the lease term.
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the
lease.
Inventories
Agricultural produce at the point of harvest is measured at fair value less estimated point-of-sale costs. Any changes arising on
initial recognition of agricultural produce at fair value less estimated point-of-sale costs are recognised in the income statement
in the year in which they arise.
Other inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable,
direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and
condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less
all estimated costs of completion and selling expenses.
Trade and other receivables
Trade receivables are carried at original invoice amount less provision made for impairment of these receivables. A provision
for impairment of trade receivables is established when there is objective evidence that the group will not be able to collect all
amounts due according to the original terms. The amount of the provision is recognised in the income statement.
Amounts due from customers of banking subsidiaries consist of loans and receivables which are non-derivative financial assets
with fixed or determinable payments that are not quoted in an active market. They arise when the bank provides money, goods
or services directly to a customer with no intention of trading the receivable and are carried at amortised cost using the effective
interest method.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments
with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current
liabilities on the balance sheet. In respect of the group’s banking operation, cash and cash equivalents include cash and non-
restricted balances with central banks, treasury bills and other eligible bills, loans and advances to banks, amounts due from
other banks and short-term government securities.
Non-current assets held for sale
Non-current assets classified as held for sale are measured at the lower of the carrying amount and fair value less costs to sell.
Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than
through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for
immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for
recognition as a completed sale within one year from the date of classification.
30
Accounting policies
Borrowings
Interest-bearing bank loans and overdrafts are initially recorded at the proceeds received, net of direct issue costs. Finance
charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis
to the income statement using the effective interest method and are added to the carrying amount of the instrument to the
extent that they are not settled in the period in which they arise.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The group liability for current tax is calculated using tax rates that have been enacted
or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for
using the liability method. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a
transaction, other than in a business combination, that at the time of the transaction affects neither accounting nor taxable
profit or loss. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related tax asset is realised or the tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred 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 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.
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.
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 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.
(ii) Other post-employment benefit obligations
Some group companies have unfunded obligations to pay terminal gratuities to employees. Provisions are made for the
estimated liability for gratuities as a result of services rendered by employees up to the balance sheet date and any movement in
the provision is recognised in the income statement.
The estimated monetary liability for employees’ accrued annual leave entitlement at the balance sheet date is recognised as an
accrual.
Provisions
Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
The provision for onerous lease commitments is based on the expected vacancy period.
31
Camellia Plc
Accounting policies
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The group makes estimates and assumptions concerning the future. The resulting accounting will, by definition, seldom equal
the actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are set out below.
Impairment of assets
The group has significant investments in intangible assets, property, plant and equipment, biological assets, associated
companies and other investments. These assets are tested for impairment when circumstances indicate there may be a potential
impairment. Factors considered which could trigger an impairment review include the significant fall in market values,
significant underperformance relative to historical or projected future operating results, a major change in market conditions or
negative cash flows.
Depreciation and amortisation
Depreciation and amortisation is based on management estimates of the future useful life of property, plant and equipment
and intangible assets. Estimates may change due to technological developments, competition, changes in market conditions
and other factors and may result in changes in the estimated useful life and in the depreciation and amortisation charges.
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.
Retirement benefit obligations
Pension accounting requires certain assumptions to be made in order to value obligations and to determine the impact on
the income statement. These figures are particularly sensitive to assumptions for discount rates, mortality, inflation rates and
expected long-term rates of return on assets. Details of assumptions made are given in note 29.
Taxation
The group is subject to taxes in numerous jurisdictions. Significant judgement is required in determining worldwide provisions
for taxes. There are many transactions and calculations during the ordinary course of business for which the ultimate tax
determination is uncertain.
Identifiable intangible assets – customer relationships
Customer relationships acquired are valued using discounted cash flow techniques and amortised over their estimated useful
lives. In determining their value and their subsequent useful life, management are required to make assumptions in relation to
expected cash flows, applicable discount factors, and client attrition rates.
32
Accounting policies
Changes in accounting policy and disclosures
(i) New and amended standards adopted by the group
The group has adopted the following new and amended IFRSs as of 1 January 2009:
IAS 1 (revised)
Presentation of financial statements – effective 1 January 2009
The revisions to this standard prohibits the presentation of items of income and expenditure
within the statement of changes in equity. All items of income and expenditure are required
to be shown in a performance statement, but entities can choose whether to present one
performance statement (the ‘statement of comprehensive income’) or two statements (the
‘income statement’ and ‘statement of comprehensive income’). The group has opted for the two
statement option. Also, where entities restate or reclassify comparative information, they will
be required to present a restated balance sheet as at the beginning of the comparative period in
addition to the current requirement to present balance sheets at the end of the current period
and the comparative period. As the change in accounting policy only impacts presentation
aspects, there is no impact on earnings per share.
IAS 19 (amendment)
Employee benefits – effective 1 January 2009
The principal effect of the amendment is to clarify that a plan amendment that results in
a change in the extent to which benefit promises are affected by future salary increases is a
curtailment, while an amendment that changes benefits attributable to past service gives rise to
a negative past service cost if it results in a reduction in the present value of the defined benefit
obligation. This amendment has no material impact.
IAS 23 (revised)
Borrowing costs – effective 1 January 2009
The revisions to this standard require capitalisation of borrowing costs incurred on qualifying
assets together with transitional provisions for companies who have previously written off such
costs. In respect of borrowing costs relating to qualifying assets for which the commencement
date for capitalisation is on or after 1 January 2009, the group capitalises borrowing costs
directly attributable to the acquisition, construction or production of a qualifying asset as part
of the cost of that asset. The group previously recognised all borrowing costs as an expense
immediately, in accordance with the transition provisions of the standard; comparative figures
have not been restated. The change in accounting policy had no material impact on earnings
per share.
IAS 41 (revised)
Agriculture – effective 1 January 2009
The revisions to this standard now allow the use of either pre or post tax discount rates when
measuring fair values. The IASB has also clarified that the impact of additional biological
transformation or harvest may be taken into account in determining cash flows for the purpose
of estimating fair values. This revision has no material impact.
IFRS 8
Operating segments – effective 1 January 2009
The adoption of this standard 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 adoption of this standard has not resulted in any change to the segments reported
previously with ‘trading profit’ maintained as the reportable measure of profit or loss.
33
Camellia Plc
Accounting policies
Changes in accounting policy and disclosures (continued)
(ii) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the group
The following standards and amendments to existing standards have been published and are mandatory for the group’s
accounting periods beginning on or after 1 January 2010 or later periods, but the group has not early adopted them:
IFRIC 17
Distribution of non-cash assets to owners – effective on or after 1 July 2009
The interpretation was published in November 2008. This interpretation provides guidance
on accounting for arrangements whereby an entity distributes non-cash assets to shareholders
either as a distribution of reserves or as dividends. IFRS 5 has also been amended to require that
assets are classified as held for distribution only when they are available for distribution in their
present condition and the distribution is highly probable. The group and company will apply
IFRIC 17 from 1 January 2010. It is not expected to have a material impact on the group or
company’s financial statements.
IAS 27 (revised)
Consolidated and separate financial statements – effective from 1 July 2009
The revisions to this standard requires that a change in the ownership interest of a subsidiary
(without loss of control) is accounted for as an equity transaction. Therefore, such transactions
will no longer give rise to goodwill, nor will they give rise to a gain or loss. The standard also
specifies the accounting when control is lost. Any remaining interest in the entity is re-measured
to fair value, and a gain or loss is recognised in profit or loss. The group will apply IAS 27
(revised) prospectively to transactions with non-controlling interests from 1 January 2010.
IFRS 3 (revised)
Business combinations – effective from 1 July 2009
The revised standard continues to apply the acquisition method to business combinations, with
some significant changes. For example, all payments to purchase a business are to be recorded
at fair value at the acquisition date, with contingent payments classified as debt subsequently
re-measured through the income statement. There is a choice on an acquisition-by-acquisition
basis to measure the non-controlling interest in the acquiree either at fair vale or at the non-
controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related
costs should be expensed. The group will apply IFRS 3 (revised) prospectively to all business
combinations from 1 January 2010.
IAS 38 (amendment)
Intangible assets
The amendment is part of the IASB’s annual improvements project published in April 2009
and the group will apply IAS 38 (amendment) from the date IFRS 3 (revised) is adopted. The
amendment clarifies guidance in measuring the fair value of an intangible asset acquired in a
business combination and it permits the grouping of intangible assets as a single asset if each
asset has a similar useful economic life. The amendment is not expected to have a material
impact on the group’s financial statements.
IFRS 5 (amendment) Non-current assets held for sale and discontinued operations – effective from 1 January 2010
The amendment is part of the IASB’s annual improvements project published in April 2009.
The amendment provides clarification that IFRS 5 specifies the disclosures required in respect
of non-current assets (or disposal groups) classified as held for sale or discontinued operations.
It also clarifies that the general requirement of IAS 1 still apply, particularly paragraph 15 (to
achieve a fair presentation) and paragraph 125 (sources of estimation uncertainty) of IAS 1. It is
not expected to have a material impact on the group or company’s financial statements.
34
Notes to the accounts
1
Business and geographical segments
The principal activities of the group are as follows:
Agriculture and horticulture
Engineering
Food storage and distribution
Banking and financial services
For management reporting purposes these activities form the basis on which the group reports its primary divisions.
Segment information about these businesses is presented below:
Agriculture and
horticulture
Engineering
Food storage
and distribution
Banking and
financial services
Other operations
Consolidated
2009
£’000
2008
£’000
2009
£’000
2008
£’000
2009
£’000
2008
£’000
2009
£’000
2008
£’000
2009
£’000
2008
£’000
2009
£’000
2008
£’000
156,974
116,297
24,028
23,019
37,434
36,922
11,347
13,930
487
383
230,270 190,551
Revenue
External sales
Trading profit
Segment profit/(loss)
37,949
23,349
1,608
1,814
985
1,156
(925)
666
181
75
39,798
27,060
Unallocated corporate expenses
Trading profit
(4,438)
(3,859)
35,360
23,201
Share of associates’ results
139
3,805
3,324
(6,771)
(12,075)
(2,966)
(8,612)
Loss on disposal of a subsidiary
Profit on part disposal of a
subsidiary
Profit on disposal of available-
for-sale investments
Profit on disposal of an associate
Profit on disposal of non-
current assets
Gain arising from changes in
fair value of biological assets
Investment income
Net finance costs
Profit before tax
Taxation
Profit after tax
Other information
Segment assets
Investments in associates
Unallocated assets
Consolidated total assets
2,746
8,916
(674)
–
135
104
28
–
–
390
50
280
2,746
1,106
8,916
1,070
(1,592)
(1,359)
34,143
24,040
(11,702)
(7,547)
22,441
16,493
218,370 222,915
15,455
15,725
23,951
26,421
261,062 312,596
3,987
3,344
522,825 581,001
31,681
32,891
65,683
76,992
97,364 109,883
52,580
57,013
672,769 747,897
Segment liabilities
(31,252)
(37,208)
(3,364)
(3,734)
(4,500)
(5,732) (232,798) (283,472)
(55)
(462) (271,969) (330,608)
Unallocated liabilities
Consolidated total liabilities
(74,490)
(82,788)
(346,459) (413,396)
Capital expenditure
6,816
6,304
1,739
1,071
1,359
777
Depreciation
Amortisation
(3,917)
(3,563)
(937)
(840)
(2,783)
(2,951)
(43)
(27)
(6)
(5)
147
(343)
(537)
290
(291)
(445)
50
103
10,111
8,545
(119)
(173)
(8,099)
(7,818)
(586)
(477)
Segment assets consist primarily of intangible assets, property, plant and equipment, 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.
35
Camellia Plc
Notes to the accounts
1
Business and geographical segments (continued)
Geographical segments
The group operations are based in nine main geographical areas. The United Kingdom is the home country of the
parent. The principal geographical areas in which the group operates are as follows:
United Kingdom
Continental Europe
India
Kenya
Malawi
Bangladesh
North America and Bermuda
South Africa
South America
The following table provides an analysis of the group’s sales by geographical market, irrespective of the origin of the
goods/services:
United Kingdom
Continental Europe
India
Kenya
Malawi
Bangladesh
North America and Bermuda
South Africa
South America
Other
2009
£’000
76,088
24,100
62,258
20,159
9,309
16,530
4,627
3,908
4,878
8,413
2008
£’000
70,995
23,099
46,958
16,042
4,059
9,921
4,230
2,510
5,387
7,350
230,270
190,551
The following is an analysis of the carrying amount of segment assets and additions to property, plant and equipment,
analysed by the geographical area in which the assets are located:
Carrying amount of
segment assets
Additions to property,
plant and equipment
2009
£’000
296,088
5,244
61,835
56,179
37,072
38,173
6,297
10,995
10,942
2008
£’000
348,694
5,799
58,155
55,276
39,576
41,137
7,428
10,279
14,657
2009
£’000
3,096
168
4,070
575
547
510
452
91
602
2008
£’000
2,053
173
2,893
931
813
192
149
152
1,189
522,825
581,001
10,111
8,545
United Kingdom
Continental Europe
India
Kenya
Malawi
Bangladesh
North America and Bermuda
South Africa
South America
36
Notes to the accounts
1
Business and geographical segments (continued)
Results of banking subsidiaries
Interest receivable
third parties
group companies
Interest payable
third parties
group companies
Net interest income
Fee and commission income
Fee and commission expense
Inter-segment net interest
Revenue
Other operating income
Operating expenses
Segment (loss)/profit
2 Revenue
An analysis of the group’s revenue is as follows:
Sale of goods
Distribution and warehousing revenue
Engineering services revenue
Banking service revenue
Agency commission revenue
Property rental revenue
Other operating income
Investment income
Interest income
Total group revenue
2009
£’000
3,214
7
3,221
(1,393)
(61)
1,767
9,925
(399)
54
11,347
148
11,495
(12,420)
2008
£’000
14,304
43
14,347
(10,438)
(291)
3,618
10,820
(756)
248
13,930
169
14,099
(13,433)
(925)
666
2009
£’000
156,974
37,434
24,028
11,347
191
296
230,270
1,698
1,106
1,103
2008
£’000
116,297
36,922
23,019
13,930
139
244
190,551
2,206
1,070
643
234,177
194,470
37
Camellia Plc
Notes to the accounts
3
Trading profit
The following items have been included in arriving at trading profit:
Employment costs (note 13)
Inventories:
Cost of inventories recognised as an expense (included in cost of sales)
Cost of inventories provision recognised as an expense (included in cost of sales)
Cost of inventories provision reversed (included in cost of sales)
Depreciation of property, plant and equipment:
Owned assets
Under finance leases
Amortisation of intangibles (included in administrative expenses)
Impairment of investments (included in administrative expenses)
Profit on disposal of property, plant and equipment
Operating leases – lease payments:
Plant and machinery
Property
Repairs and maintenance expenditure on property, plant and equipment
Currency exchange losses/(gains) charged/(credited) to income include:
Revenue
Cost of sales
Distribution costs
Administrative expenses
Other operating income
Finance costs
Amounts paid to the group’s auditors comprised:
Audit services:
Statutory audit
Audit – related regulatory reporting
Tax services:
Compliance services
Advisory services
Other services not covered above
2009
£’000
2008
£’000
65,518
61,165
99,224
311
(11)
93,535
200
(28)
7,195
904
586
204
(264)
471
707
4,112
79
56
11
146
(6)
(160)
126
732
35
17
33
36
853
6,747
1,071
477
350
(239)
661
647
3,830
58
142
(286)
(45)
(7)
262
124
710
24
16
37
26
813
Included in the above group audit fees and expenses is £718,000 (2008: £358,000) paid to PricewaterhouseCoopers
LLP and its associates for statutory audit services, £35,000 (2008: £24,000) for audit related regulatory reporting,
£34,000 (2008: £33,000) for taxation services and £12,000 (2008: £19,000) for other services.
The 2008 figures include amounts paid to the previous auditors, Moore Stephens LLP and its associates.
38
Notes to the accounts
4
Share of associates’ results
The group’s share of the results of associates is analysed below:
Operating profit
Net finance costs
Impairment
Loss before tax
Taxation
Loss after tax
2009
£’000
2,516
(2,653)
(3,103)
(3,240)
274
(2,966)
2008
£’000
6,448
(825)
(15,691)
(10,068)
1,456
(8,612)
The impairment charge of £3,103,000 relates to development projects of the Siegfried Group. In 2008, the impairment
charge of £15,691,000 related to goodwill and non-financial assets of the Siegfried Group.
The results include the group’s share of the profits of West Hamilton Holdings Limited, a Bermudian based property
company, which became an associate with effect from 1 July 2008.
5
Loss on disposal of a subsidiary
Loss on disposal of a subsidiary
Release of exchange differences from reserves upon disposal
2009
£’000
(968)
294
(674)
2008
£’000
–
–
–
This relates to the disposal of the group’s 100 per cent. Chilean subsidiary, Hacienda Chada S.A.
6
7
Profit on part disposal of a subsidiary
A profit of £135,000 (2008: £104,000) was realised on the disposal by Kakuzi Limited of a further 17 per cent. (2008:
10 per cent.) of its interest in Siret Tea Company Limited to EPK Outgrowers Empowerment Project Company
Limited, a company mainly owned by smallholders in Kenya.
Profit on disposal of an associate
In 2008, the group realised a net profit of £50,000 on the disposal of its associate interest in Himalaya Goodricke PVT.
Limited.
39
Camellia Plc
Notes to the accounts
8
Finance income and costs
Interest payable on loans and bank overdrafts
Interest payable on obligations under finance leases
Total borrowing costs
Net exchange gain/(loss) on foreign currency borrowings
Finance costs
Finance income – interest income on short-term bank deposits
Pension schemes’ net financing (expense)/income (note 29)
Net finance costs
The above figures do not include any amounts relating to the banking subsidiaries.
2009
£’000
(1,586)
(140)
(1,726)
160
(1,566)
1,103
(1,129)
(1,592)
2008
£’000
(2,057)
(181)
(2,238)
(262)
(2,500)
643
498
(1,359)
40
Notes to the accounts
9
Taxation on profit on ordinary activities
Analysis of charge in the year
Current tax
UK corporation tax
UK corporation tax at 28.0 per cent. (2008: 28.0 per cent.)
Adjustment in respect of prior years
Double tax relief
Foreign tax
Corporation tax
Adjustment in respect of prior years
Total current tax
Deferred tax
Origination and reversal of timing differences
United Kingdom
Overseas
Total deferred tax
Tax on profit on ordinary activities
Factors affecting tax charge for the year
Profit on ordinary activities before tax
Share of associated undertakings loss
Group profit on ordinary activities before tax
Tax on ordinary activities at the standard rate
of corporation tax in the UK of 28.0 per cent. (2008: 28.0 per cent.)
Effects of:
Adjustment to tax in respect of prior years
Expenses not deductible for tax purposes
Adjustment in respect of foreign tax rates
Additional tax arising on dividends from overseas companies
Loss /(profit) on disposal of non taxable assets
Other income not charged to tax
Increase in tax losses carried forward
Decrease in tax losses carried forward
Movement in unremitted earnings of overseas associates
Movement in other timing differences
Current tax charge for the year
2009
£’000
£’000
2008
£’000
3,555
135
(3,548)
11,648
204
(1,782)
1,490
2,474
(61)
(2,459)
(46)
7,021
(239)
6,782
6,736
(2,310)
3,121
811
7,547
24,040
(8,612)
32,652
142
11,852
11,994
(292)
11,702
34,143
(2,966)
37,109
10,391
9,143
339
2,066
1,149
327
143
(633)
359
(14)
(2,637)
212
11,702
(300)
413
45
188
(86)
(214)
887
(167)
(2,223)
(139)
7,547
The standard rate of corporation tax in the UK changed from 30 per cent. to 28 per cent. with effect from 1 April 2008.
41
Camellia Plc
Notes to the accounts
10
Profit for the year
The profit of the company was
2009
£’000
2008
£’000
3,376
3,869
The company has taken the exemption under Section 408 of the Companies Act 2006 not to disclose the company’s
income statement.
11
Equity dividends
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2008 of
72.00p (2007: 72.00p) per share
Interim dividend for the year ended 31 December 2009 of
20.00p (2008: 20.00p) per share
2009
£’000
2008
£’000
2,001
2,001
556
2,557
556
2,557
Dividends amounting to £58,000 (2008: £58,000) have not been included as group companies hold 62,500 issued
shares in the company. These are classified as treasury shares.
Proposed final dividend for the year ended 31 December 2009 of
74.00p (2008: 72.00p) per share
2,103
2,046
The proposed final dividend is subject to approval by the shareholders at the annual general meeting and has not been
included as a liability in these financial statements.
12
Earnings per share (EPS)
2009
Weighted
average
number of
shares
Number
Earnings
£’000
2008
Weighted
average
number
of shares
Number
EPS
Pence
EPS
Pence
Earnings
£’000
Basic and diluted EPS
Attributable to ordinary
shareholders
15,897
2,779,500
571.9
11,044
2,779,500
397.3
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 31).
42
Notes to the accounts
13
Employees
Average number of employees by activity:
Agriculture and horticulture
Engineering
Food storage and distribution
Banking and financial services
Central management
Employment costs:
Wages and salaries
Social security costs
Other pension costs (see note 29)
– UK
– Overseas
2009
Number
2008
Number
72,313
367
370
133
21
73,204
2009
£’000
58,006
2,588
1,636
3,288
65,518
69,424
392
399
137
24
70,376
2008
£’000
54,007
2,652
1,803
2,703
61,165
Total remuneration paid to key employees, excluding directors of Camellia Plc, amounted to £503,000 (2008:
£650,000).
14
Emoluments of the directors
2009
£’000
2008
£’000
Aggregate emoluments excluding pension contributions
1,272
913
Emoluments of the highest paid director excluding pension contributions were £396,000 (2008: £372,000).
Further details of directors’ emoluments are set out on pages 17 and 18.
43
Camellia Plc
Notes to the accounts
15
Intangible assets
Group
Cost
At 1 January 2008
Exchange differences
Additions
At 1 January 2009
Exchange differences
Adjustment
Additions
Disposals
Disposal of subsidiary
At 31 December 2009
Amortisation
At 1 January 2008
Exchange differences
Charge for the year
At 1 January 2009
Exchange differences
Charge for the year
Disposals
Disposal of subsidiary
At 31 December 2009
Goodwill
£’000
Customer
relationships
£’000
Licenses, patents
and trade marks
£’000
Computer
software
£’000
3,283
–
661
3,944
–
34
–
–
–
3,978
–
–
–
–
–
–
–
–
–
4,814
–
–
4,814
–
–
–
–
–
4,814
389
–
241
630
–
240
–
–
870
Total
£’000
9,353
41
1,263
10,657
12
34
192
(7)
(248)
10,640
1,107
14
477
1,598
9
586
(7)
(130)
2,056
8,584
9,059
258
16
3
277
25
–
–
–
(235)
67
154
7
9
170
13
7
–
(123)
67
–
107
998
25
599
1,622
(13)
–
192
(7)
(13)
1,781
564
7
227
798
(4)
339
(7)
(7)
1,119
662
824
Net book value at 31 December 2009
Net book value at 31 December 2008
3,978
3,944
3,944
4,184
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The carrying amount of
the goodwill relates to the banking and financial services segment. Goodwill arising in 2008 relates to additional
consideration paid as a result of the acquisition of Hill Martin Limited in 2006, which was dependent upon revenues in
Hill Martin Limited for the three years ending 30 June 2008.
The group tests goodwill annually for impairment by comparing the carrying value of the cash generating units with
their value in use. The assessment of recoverability of goodwill is based on normal market valuation criteria such
as a multiple of revenue for financial planning business and the percentage of funds under management for asset
management business.
44
Notes to the accounts
16
Property, plant and equipment
Group
Deemed cost
At 1 January 2008
Exchange differences
Additions
Acquisition of subsidiary
Disposals
At 1 January 2009
Exchange differences
Additions
Disposal of subsidiary
Disposals
At 31 December 2009
Depreciation
At 1 January 2008
Exchange differences
Charge for the year
Disposals
Acquisition of subsidiary
At 1 January 2009
Exchange differences
Charge for the year
Disposal of subsidiary
Disposals
At 31 December 2009
Net book value at 31 December 2009
Net book value at 31 December 2008
Land and buildings at net book value comprise:
Freehold
Long leasehold
Short leasehold
Land and
buildings
£’000
Plant and
machinery
£’000
Fixtures,
fittings and
equipment
£’000
69,396
7,384
1,700
1,757
(866)
79,371
(2,794)
2,930
(4,288)
(122)
75,097
27,629
2,835
1,923
(769)
416
32,034
(1,215)
1,987
(926)
(71)
31,809
43,288
47,337
72,614
6,658
6,127
883
(1,474)
84,808
(2,129)
6,334
(1,570)
(3,111)
84,332
47,218
3,929
4,819
(1,252)
580
55,294
(1,485)
4,996
(385)
(2,722)
55,698
28,634
29,514
17,603
1,033
718
113
(108)
19,359
(422)
847
(51)
(321)
19,412
8,533
810
1,076
(94)
98
10,423
(344)
1,116
(33)
(319)
10,843
8,569
8,936
2009
£’000
32,910
8,984
1,394
43,288
Total
£’000
159,613
15,075
8,545
2,753
(2,448)
183,538
(5,345)
10,111
(5,909)
(3,554)
178,841
83,380
7,574
7,818
(2,115)
1,094
97,751
(3,044)
8,099
(1,344)
(3,112)
98,350
80,491
85,787
2008
£’000
35,139
10,264
1,934
47,337
Plant and machinery includes assets held under finance leases. The depreciation charge for the year in respect of these
assets was £670,000 (2008: £829,000) and their net book value was £1,768,000 (2008: £2,568,000).
The amount of expenditure during the year for property, plant and equipment in the course of construction amounted
to £581,000 (2008: £1,086,000).
45
Camellia Plc
Notes to the accounts
17 Biological assets
Group
At 1 January 2008
Exchange differences
Increases due to purchases
Gains arising from changes in fair value
less estimated point-of-sale costs
Decreases due to harvesting
Companies joining the group
At 1 January 2009
Exchange differences
Increases due to purchases
Gains/(losses) arising from changes in
fair value less estimated point-of-sale costs
Decreases due to harvesting
Companies leaving the group
Tea
£’000
48,427
12,910
1,175
5,185
–
2,199
69,896
(6,958)
1,528
100
–
–
Citrus
£’000
2,207
906
579
58
(392)
–
3,358
(352)
680
(285)
(544)
(50)
Edible
nuts
£’000
10,089
3,149
1,890
1,809
(1,496)
–
15,441
(983)
2,763
1,472
(2,248)
–
Other
£’000
19,910
4,343
4,302
1,864
(5,036)
142
25,525
(1,125)
4,092
1,459
(5,869)
(1,833)
Total
£’000
80,633
21,308
7,946
8,916
(6,924)
2,341
114,220
(9,418)
9,063
2,746
(8,661)
(1,883)
At 31 December 2009
64,566
2,807
16,445
22,249
106,067
Other includes grapes, avocados, pineapples, plums, livestock, forestry, rubber production and arable crops.
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. At 31 December 2008
professional valuations were obtained on a significant proportion of assets which had previously been valued using the
net present value of expected future cash flows. The valuations have been updated by professional valuers at
31 December 2009. In determining the fair value of biological assets where the discounting of expected future cash flows
has been used, the directors have made certain assumptions about the expected life-span of the plantings, yields, selling
prices and costs. The fair value of livestock is based on market prices of livestock of similar age and sex.
The discount rates used reflect the cost of capital, an assessment of country risk and the risks associated with individual
crops. The range of discount rates used is:
Citrus
%
Edible
nuts
%
Other
%
12.0 – 12.5
12.0 – 12.5
12.0 – 13.5
12.0 – 13.5
5.0 – 17.5
5.0 – 17.5
Tea
%
13.5
13.5
2009
2008
46
Notes to the accounts
17 Biological assets (continued)
The areas planted to the various crop types at the end of the year were:
Tea
Macadamia
Table grapes
Wine grapes
Citrus
Avocados
Pineapples
Plums
Pistachios
Timber
Rubber
Arable crops
2009
Hectares
2008
Hectares
34,841
2,560
–
84
178
377
48
–
136
6,002
1,847
3,407
2009
Head
34,629
2,293
82
214
227
367
48
17
136
5,995
1,760
3,546
2008
Head
Livestock numbers on hand at the end of the year
4,738
4,458
Output of agricultural produce during the year was:
Tea
Macadamia
Table grapes
Wine grapes
Citrus
Avocados
Pineapples
Plums
Pistachios
Rubber
Arable crops
Timber
2009
Metric
tonnes
70,272
925
2,041
2,157
4,122
6,319
1,332
335
21
817
19,192
2009
Cubic
metres
2008
Metric
tonnes
72,987
1,185
2,093
1,771
4,188
5,983
26,628
346
651
731
29,204
2008
Cubic
metres
71,419
59,277
2009
£’000
2008
£’000
Fair value of agricultural output after deducting estimated point-of-sale costs
114,368
93,976
47
Camellia Plc
Notes to the accounts
18 Prepaid operating leases
Group
Cost
At 1 January 2008
Exchange differences
At 1 January 2009
Exchange differences
At 31 December 2009
Amortisation
At 1 January 2008
Exchange differences
Charge for the year
At 1 January 2009
Exchange differences
Charge for the year
At 31 December 2009
Net book value at 31 December 2009
Net book value at 31 December 2008
19
Investments in subsidiaries
Company
Cost
At 1 January and 31 December
48
£’000
996
194
1,190
(98)
1,092
14
4
1
19
(2)
1
18
1,074
1,171
2009
£’000
2008
£’000
73,683
73,683
Notes to the accounts
20
Investments in associates
Group
At 1 January
Exchange differences
Reclassification from financial assets
Effect of an associate becoming a subsidiary
Disposals
Share of loss (note 4)
Dividends
Other equity movements
At 31 December
2009
£’000
109,883
(10,521)
–
–
(37)
(2,966)
(2,297)
3,302
2008
£’000
90,367
34,616
2,043
(261)
(33)
(8,612)
(2,884)
(5,353)
97,364
109,883
In 2008, West Hamilton Holdings Limited was reclassified from other investments to an investment in associate.
Details of the group’s associates are shown in note 38.
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
incorporation
Assets
£’000
Liabilities
£’000
Revenues Profit/(loss) Interest held
£’000
£’000
%
2008
Listed
Siegfried Holding AG
BF&M Limited
West Hamilton Holdings Limited
United Leasing Company Limited
United Insurance Company Limited*
2009
Listed
Siegfried Holding AG
BF&M Limited
West Hamilton Holdings Limited
United Leasing Company Limited
United Insurance Company Limited
Switzerland
Bermuda
Bermuda
Bangladesh
Bangladesh
112,792
119,938
3,741
33,621
2,126
(38,541)
(92,491)
(1,000)
(29,499)
(804)
46,711
26,351
130
2,785
673
(12,106)
3,022
31
405
51
Switzerland
Bermuda
Bermuda
Bangladesh
Bangladesh
92,236
114,063
5,603
29,910
1,627
(28,947)
(87,647)
(3,209)
(25,860)
(412)
54,190
33,270
267
4,036
192
(6,751)
3,164
(20)
573
68
32.3
25.2
28.2
38.4
37.0
32.3
25.2
28.2
38.4
37.0
Market
value
£’000
53,738
23,369
2,262
6,774
6,556
50,346
19,571
2,026
13,763
12,438
On 15 April 2010, the group disposed of its entire shareholding in Siegfried Holding AG, an associated undertaking.
The proceeds on disposal are £48,850,000 (CHF 79,571,000) and the estimated profit before tax on disposal is
£200,000.
* Includes its wholly owned subsidiary, the Surmah Valley Tea Company Limited. On 14 December 2008, United
Insurance Company Limited sold its interest in Surmah Valley Tea Company Limited to group companies.
49
Camellia Plc
Notes to the accounts
21 Other investments
Group
Cost or fair value
At 1 January
Exchange differences
Fair value adjustment
Additions
Transfer to investment in associates
Disposals
At 31 December
Provision for diminution in value
At 1 January
Exchange differences
Provided during year
At 31 December
Net book value at 31 December
Net book value comprises:
Held-to-maturity investments:
UK Treasury bills
Bank and building society certificates of deposit
Available-for-sale financial assets:
Listed investments
Unlisted investments
Collections
Current element
Non-current element
2009
£’000
39,690
(2,848)
(729)
12,683
–
(5,481)
43,315
586
(48)
204
742
restated*
2008
£’000
41,336
7,687
(7,025)
7,185
(2,696)
(6,797)
39,690
150
86
350
586
42,573
39,104
4,988
7,432
12,420
22,613
223
22,836
7,317
42,573
12,420
30,153
42,573
–
5,436
5,436
26,284
247
26,531
7,137
39,104
5,436
33,668
39,104
Collections comprise the group’s and company’s investment in fine art, philately, documents and manuscripts. The
market value of collections is expected to be in excess of book value.
UK Treasury bills and bank and building society certificates of deposit are held by the group’s banking operation.
With effect from 1 July 2008, the group has representation on the board of West Hamilton Holdings Limited and is in
a position to exert significant influence. As a result, in 2008, the investment in this company was reclassified from other
investments to an investment in associate. The result of this reclassification was that investments in associates increased
by £2,043,000, being the equity value and other investments declined by £2,696,000, being the market value. The
difference of £653,000 was transferred to reserves.
*Within the 2008 comparative amounts, £5,436,000 have been reclassified from cash and cash equivalents to
held-to-maturity investments.
50
Notes to the accounts
21 Other investments (continued)
Company
Cost or fair value
At 1 January
Fair value adjustment
Additions
Disposals
At 31 December
Cost or fair value comprises:
Listed investments
Unlisted investments
Collections
22
Inventories
Group
Raw materials and consumables
Work in progress
Produce on hand
Finished goods
2009
£’000
7,316
16
200
(20)
7,512
20
170
7,322
7,512
2009
£’000
7,595
993
12,859
6,832
28,279
The year end inventories balance includes a write-down provision of £258,000 (2008: £205,000).
23 Trade and other receivables
Group
Due within one year:
Amounts due from customers of banking subsidiaries
Trade debtors
Amounts owed by associated undertakings
Other debtors
Prepayments and accrued income
Due after one year:
Amounts due from customers of banking subsidiaries
Other debtors
2009
£’000
21,833
23,222
260
5,758
4,124
55,197
18,718
928
19,646
2008
£’000
7,279
–
100
(63)
7,316
4
170
7,142
7,316
2008
£’000
8,959
1,002
14,027
6,783
30,771
restated*
2008
£’000
19,840
24,642
346
6,126
4,750
55,704
20,256
979
21,235
Included within trade debtors is a provision for doubtful debts of £534,000 (2008: £375,000).
*Within the 2008 comparative amounts, £20,256,000 have been reclassified from amounts due within one year to
amounts due after one year.
51
Camellia Plc
Notes to the accounts
23 Trade and other receivables (continued)
Trade debtors include receivables of £4,134,000 (2008: £5,151,000) which are past due at the reporting date against
which the group has not provided, as there has not been a significant change in credit quality and the amounts are still
considered recoverable. Ageing of past due but not provided for receivables is as follows:
Up to 30 days
30-60 days
60-90 days
Over 90 days
24 Cash and cash equivalents
Group
Cash at bank and in hand
Short-term bank deposits
Short-term liquid investments
2009
£’000
2,637
952
252
293
4,134
2009
£’000
157,102
21,117
51,355
229,574
2008
£’000
3,700
639
370
442
5,151
restated*
2008
£’000
249,185
11,951
15,062
276,198
Included in the amounts above are cash and short-term funds, time deposits with banks and building societies, UK
treasury bills and certificates of deposit amounting to £193,434,000 (2008: £251,423,000) which are held by the
group’s banking subsidiaries and which are an integral part of the banking operations.
*Within the 2008 comparative amounts, £5,436,000 relating to the banking operations have been reclassified from cash
at bank and in hand to other investments.
Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:
Cash and cash equivalents (excluding banking operations)
Bank overdrafts (note 26)
Effective interest rate:
Short-term deposits
Short-term liquid investments
Average maturity period:
Short-term deposits
Short-term liquid investments
52
2009
£’000
36,140
(7,509)
28,631
2008
£’000
24,775
(14,856)
9,919
2009
%
2008
%
0.20 – 10.50
0.40 – 2.30
1.00 – 13.70
1.70 – 2.60
57 days
35 days
57 days
21 days
Notes to the accounts
25 Trade and other payables
Group
Company
Due within one year:
Amounts due to customers of banking subsidiaries
Trade creditors
Other taxation and social security
Other creditors
Accruals
2009
£’000
219,909
18,005
1,256
10,580
4,596
254,346
restated*
2008
£’000
268,993
17,160
1,412
11,490
5,112
304,167
Due after one year:
Amounts due to customers of banking subsidiaries
11,227
12,347
2009
£’000
2008
£’000
–
–
–
18
–
18
–
–
–
–
20
–
20
–
*Within the 2008 comparative amounts, £12,347,000 have been reclassified from amounts due within one year to
amounts due after one year.
53
Camellia Plc
Notes to the accounts
26
Financial liabilities – borrowings
Group
Current
Bank overdrafts
Bank loans
Finance leases
Current borrowings include the following amounts secured
on biological assets and property, plant and equipment:
Bank overdrafts
Bank loans
Finance leases
Non-current
Bank loans
Finance leases
Non-current borrowings include the following amounts secured
on biological assets and property, plant and equipment:
Bank loans
Finance leases
The repayment of bank loans and overdrafts fall due as follows:
Within one year or on demand (included in current liabilities)
Between 1 – 2 years
Between 2 – 5 years
After 5 years
Minimum finance lease payments fall due as follows:
Within one year or on demand (included in current liabilities)
Between 1 – 2 years
Between 2 – 5 years
Future finance charges on finance leases
Present value of finance lease liabilities
54
2009
£’000
7,509
4,526
726
12,761
6,296
706
726
7,728
2,444
675
3,119
2,444
675
3,119
12,035
616
858
970
14,479
805
516
214
1,535
(134)
1,401
2008
£’000
14,856
2,884
889
18,629
13,639
2,384
889
16,912
10,002
1,352
11,354
5,260
1,352
6,612
17,740
5,972
1,116
2,914
27,742
1,016
780
715
2,511
(270)
2,241
Notes to the accounts
26
Financial liabilities – borrowings (continued)
The present value of finance lease liabilities fall due as follows:
Within one year or on demand (included in current liabilities)
Between 1 – 2 years
Between 2 – 5 years
The rates of interest payable by the group ranged between:
Overdrafts
Bank loans
Finance leases
27
Provisions
Group
At 1 January 2008
Provided in the period
Utilised in the period
At 1 January 2009
Provided in the period
Utilised in the period
At 31 December 2009
Current
At 31 December 2009
At 31 December 2008
2009
£’000
726
473
202
2008
£’000
889
702
650
1,401
2,241
2009
%
2008
%
3.10 – 17.50
1.38 – 13.50
3.25 – 18.00
3.00 – 15.50
1.88 – 13.00
3.25 – 18.00
Onerous lease
£’000
123
123
(123)
123
150
(123)
150
150
123
The provision for onerous lease relates to warehouse premises operated by Associated Cold Stores & Transport Limited,
and relates to twelve months rental which is the expected period of vacancy. The lease expires in 2016.
55
Camellia Plc
Notes to the accounts
28 Deferred tax
The net movement on the deferred tax account is set out below:
At 1 January
Exchange differences
(Credited)/charged to the income statement
Charged/(credited) to equity
Companies joining the group
At 31 December
Group
2009
£’000
32,495
(3,133)
(292)
1,276
–
30,346
The movement in deferred tax assets and liabilities is set out below:
Deferred tax liabilities
Accelerated
tax
depreciation
£’000
Unremitted
earnings of
overseas
associates
£’000
26,074
6,442
2,167
–
357
310
35,350
(3,045)
1,522
–
33,827
3,300
1,560
(2,223)
–
–
–
2,637
–
(2,637)
–
–
At 1 January 2008
Exchange differences
(Credited)/charged to the
income statement
Credited to equity
Companies joining the group
Transfer between categories
At 1 January 2009
Exchange differences
(Credited)/charged to the
income statement
Charged to equity
At 31 December 2009
Deferred tax assets offset
Net deferred tax liability after offset
2008
£’000
25,363
7,748
811
(1,784)
357
32,495
Pension
scheme
liability
£’000
1,793
135
129
(1,069)
–
–
988
(74)
(48)
69
935
Company
2009
£’000
2008
£’000
337
–
–
–
–
337
Other
£’000
60
(3)
242
–
–
–
299
13
(240)
–
72
337
–
–
–
–
337
Total
£’000
31,227
8,134
315
(1,069)
357
310
39,274
(3,106)
(1,403)
69
34,834
(4,385)
30,449
56
Notes to the accounts
28 Deferred tax (continued)
Deferred tax assets
Decelerated
tax
depreciation
£’000
Tax losses
£’000
329
(13)
(302)
–
307
321
–
175
–
496
1,770
58
(112)
–
27
1,743
191
(107)
–
1,827
Pension
scheme
asset
£’000
3,065
141
(462)
715
(4)
3,455
(81)
(1,285)
(1,207)
882
Other
£’000
700
200
380
–
(20)
1,260
(83)
106
–
1,283
Total
£’000
5,864
386
(496)
715
310
6,779
27
(1,111)
(1,207)
4,488
(4,385)
103
At 1 January 2008
Exchange differences
(Charged)/credited to the
income statement
Credited to equity
Transfer between categories
At 1 January 2009
Exchange differences
(Charged)/credited to the
income statement
Charged to equity
At 31 December 2009
Offset against deferred tax liabilities
Net deferred tax asset after offset
Deferred tax liabilities of £5,403,000 (2008: £21,941,000) have not been recognised for the withholding tax and
other taxes that would be payable on the unremitted earnings of certain subsidiaries. Such amounts are permanently
reinvested.
Deferred tax assets are recognised for tax losses carried forward only to the extent that the realisation of the related tax
benefit through future taxable profits is probable. The group has not recognised deferred tax assets of £4,943,000 (2008:
£5,801,000) in respect of losses that can be carried forward against future taxable income.
57
Camellia Plc
Notes to the accounts
29
Pensions
Certain group subsidiaries operate defined contribution and funded defined benefit pension schemes. The most
significant are the UK funded, final salary defined benefit schemes. The assets of these schemes are administered by
trustees and are kept separate from those of the group. Valuations of the three UK defined benefit pension schemes are
produced and updated annually to 31 December by qualified independent actuaries. The UK final salary defined benefit
pension schemes are closed to new entrants and new employees are eligible to join a group personal pension plan. The
Unochrome Group Pension Scheme is closed to future accruals and former active members participate in a defined
contribution scheme.
The overseas schemes are operated in group subsidiaries located in Bangladesh, India and The Netherlands. Actuarial
valuations have been updated to 31 December 2009 by qualified actuaries for these schemes.
Assumptions
The major assumptions used in this valuation to determine the present value of the schemes’ defined benefit obligations
were as follows:
UK schemes
Rate of increase in salaries
Rate of increase to LPI (Limited Price Indexation) pensions in payment
Discount rate applied to scheme liabilities
Inflation assumption
2009
% per annum
2008
% per annum
3.70
2.50 – 5.00
5.70
3.60
2.85 – 3.00
2.50 – 5.00
6.25
2.75
Assumptions regarding future mortality experience are based on advice received from independent actuaries. The current
mortality tables used are PCA00 and PNA00 with medium cohort improvement factors and subject to a minimum rate
of improvement of 1% per annum, projected by year of birth and with an age rating of +1.5 years and +2 years.
Overseas schemes
Rate of increase in salaries
Rate of increase to LPI (Limited Price Indexation) pensions in payment
Discount rate applied to scheme liabilities
Inflation assumption
2.00 – 7.00
0.00 – 3.00
5.31 – 8.75
0.00 – 7.00
2.00 – 7.00
0.00 – 3.00
5.30 – 11.70
0.00 – 7.00
The major assumptions used to determine the expected future return on the schemes’ assets were as follows:
UK schemes
Equities and property
Bonds
Cash
Overseas schemes
Bonds
Cash
Other
58
7.40
5.00
0.50
7.10
5.00
2.00
7.06 – 12.50
7.06 – 12.50
5.31 – 5.36
7.79 – 12.50
7.79 – 12.50
5.30 – 5.60
Notes to the accounts
29
Pensions (continued)
Actuarial valuations
Equities and property
Bonds
Cash
Other
UK
£’000
76,981
25,999
1,550
–
2009
Overseas
£’000
312
13,388
1,907
1,926
Total
£’000
77,293
39,387
3,457
1,926
UK
£’000
63,567
23,249
1,354
–
2008
Overseas
£’000
300
12,681
3,183
1,808
Total
£’000
63,867
35,930
4,537
1,808
Total fair value of plan assets
Present value of defined benefit obligations
104,530
(128,720)
17,533
(17,334)
122,063
(146,054)
88,170
(111,819)
17,972
(18,285)
106,142
(130,104)
Total (deficit)/surplus in the schemes
(24,190)
199
(23,991)
(23,649)
(313)
(23,962)
Amount recognised as asset
in the balance sheet
Amount recognised as liability
in the balance sheet
Related deferred tax asset (note 28)
Related deferred tax liability (note 28)
Net (deficit)/surplus
–
3,054
3,054
–
3,101
3,101
(24,190)
(2,855)
(27,045)
(23,649)
(3,414)
(27,063)
(24,190)
–
–
(24,190)
199
882
(935)
146
(23,991)
882
(935)
(23,649)
2,435
–
(313)
1,020
(988)
(23,962)
3,455
(988)
(24,044)
(21,214)
(281)
(21,495)
Movements in the fair value of scheme assets were as follows:
At 1 January
Expected return on plan assets
Employer contributions
Contributions paid by plan participants
Benefit payments
Actuarial gains/(losses)
Exchange differences
UK
£’000
88,170
5,512
4,989
435
(5,953)
11,377
–
2009
Overseas
£’000
17,972
1,338
439
8
(960)
82
(1,346)
Total
£’000
UK
£’000
106,142
6,850
5,428
443
(6,913)
11,459
(1,346)
112,367
7,209
3,060
425
(5,923)
(28,968)
–
2008
Overseas
£’000
14,670
1,153
1,070
9
(1,364)
(94)
2,528
Total
£’000
127,037
8,362
4,130
434
(7,287)
(29,062)
2,528
At 31 December
104,530
17,533
122,063
88,170
17,972
106,142
59
Camellia Plc
Notes to the accounts
29
Pensions (continued)
Movements in the present value of defined benefit obligations were as follows:
At 1 January
Current service cost
Contributions paid by plan participants
Interest cost
Benefit payments
Actuarial gains/(losses)
Exchange differences
UK
£’000
(111,819)
(895)
(435)
(6,836)
5,953
(14,688)
–
2009
Overseas
£’000
(18,285)
(829)
(8)
(1,143)
960
572
1,399
Total
£’000
UK
£’000
(130,104)
(1,724)
(443)
(7,979)
6,913
(14,116)
1,399
(118,488)
(1,140)
(425)
(6,864)
5,923
9,175
–
2008
Overseas
£’000
(13,391)
(636)
(9)
(1,000)
1,364
(2,040)
(2,573)
Total
£’000
(131,879)
(1,776)
(434)
(7,864)
7,287
7,135
(2,573)
At 31 December
(128,720)
(17,334)
(146,054)
(111,819)
(18,285)
(130,104)
In 2007, the total fair value of plan assets was £127,037,000, present value of defined benefit obligations was
£131,879,000 and the deficit was £4,842,000. In 2006, the total fair value of plan assets was £122,836,000, present
value of defined benefit obligations was £137,032,000 and the deficit was £14,196,000 and in 2005, the total fair value
of plan assets was £116,235,000, present value of defined benefit obligations was £134,885,000 and the deficit was
£18,650,000.
Income statement
The amounts recognised in the income statement are as follows:
Amounts charged to operating profit:
Current service cost
Total operating charge
Amounts charged/(credited) to other finance costs:
Expected return on pension scheme assets
Interest on pension scheme liabilities
Net financing (charge)/income (note 8)
Total charged to income statement
UK
£’000
(895)
(895)
5,512
(6,836)
(1,324)
(2,219)
2009
Overseas
£’000
(829)
(829)
1,338
(1,143)
195
(634)
Total
£’000
(1,724)
(1,724)
6,850
(7,979)
(1,129)
(2,853)
UK
£’000
(1,140)
(1,140)
7,209
(6,864)
345
(795)
2008
Overseas
£’000
(636)
(636)
Total
£’000
(1,776)
(1,776)
1,153
(1,000)
8,362
(7,864)
153
498
(483)
(1,278)
Contributions to defined contribution schemes are charged to profit when payable and the costs charged were
£3,027,000 (2008: £2,730,000).
60
Notes to the accounts
29
Pensions (continued)
Actuarial gains and losses recognised in the statement of comprehensive income
The amounts included in the statement of comprehensive income:
Actual return less expected return on
pension scheme assets
Experience gains/(losses) arising on scheme
liabilities
Changes in assumptions underlying
present value of scheme liabilities
UK
£’000
11,377
2,654
2009
Overseas
£’000
82
572
Total
£’000
UK
£’000
2008
Overseas
£’000
Total
£’000
11,459
(28,968)
(94)
(29,062)
3,226
194
(2,040)
(1,846)
(17,342)
–
(17,342)
8,981
–
8,981
Actuarial (loss)/gain
Taxation on actuarial movement
Net actuarial (loss)/gain
(3,311)
(1,148)
(4,459)
654
(128)
526
(2,657)
(1,276)
(19,793)
1,137
(2,134)
647
(21,927)
1,784
(3,933)
(18,656)
(1,487)
(20,143)
History of experience gains and losses
Difference between expected and actual return on scheme assets:
Amount (£’000)
Percentage of scheme assets
Experience gains and losses on scheme liabilities:
Amount (£’000)
Percentage of present value of scheme liabilities
Effects to changes in assumptions underlying the present value
of the scheme liabilities:
Amount (£’000)
Percentage of present value of scheme liabilities
Total amount recognised:
Amount (£’000)
Percentage of present value of scheme liabilities
2009
Overseas
UK
Total
UK
2008
Overseas
Total
UK
2007
Overseas
Total
11,377
10.9%
2,654
2.1%
82
0.5%
572
3.3%
11,459
(28,968)
9.4% (32.9%)
(94)
(0.5%)
(29,062)
(27.4%)
(1,636)
(1.5%)
(511)
(3.5%)
(2,147)
(1.7%)
3,226
2.2%
194
(2,040)
0.2% (11.2%)
(1,846)
(1.4%)
(1,114)
(0.9%)
(589)
(4.4%)
(1,703)
(1.3%)
(17,342)
(13.5%)
–
–
(17,342)
(11.9%)
8,981
8.0%
–
–
8,981
6.9%
9,880
8.3%
–
–
9,880
7.5%
(3,311)
(2.6%)
654
3.8%
(2,657)
(1.8%)
(19,793)
(17.7%)
(2,134)
(11.7%)
(21,927)
(16.9%)
7,130
6.0%
(1,100)
(8.2%)
6,030
4.6%
Difference between expected and actual return on scheme assets:
Amount (£’000)
Percentage of scheme assets
Experience gains and losses on scheme liabilities:
Amount (£’000)
Percentage of present value of scheme liabilities
Effects to changes in assumptions underlying the present value
of the scheme liabilities:
Amount (£’000)
Percentage of present value of scheme liabilities
Total amount recognised:
Amount (£’000)
Percentage of present value of scheme liabilities
2006
Overseas
UK
Total
UK
2005
Overseas
Total
2,127
1.9%
1,416
1.1%
65
0.5%
2,192
1.8%
11,960
11.7%
(130)
(0.9%)
11,830
10.2%
1,790
15.9%
3,206
2.3%
(2,541)
(2.1%)
(1,031)
(7.6%)
(3,572)
(2.6%)
(1,858)
(1.5%)
–
–
(1,858)
(1.4%)
(3,948)
(3.3%)
–
–
(3,948)
(2.9%)
1,685
1.3%
1,855
16.5%
3,540
2.6%
5,471
4.5%
(1,161)
(8.6%)
4,310
3.2%
The current best estimate of employer contributions to be paid to UK defined benefit pension schemes for the year
commencing 1 January 2010 is £5,285,000.
61
Camellia Plc
Notes to the accounts
30 Other employee benefit obligations
The movement in other employee benefit obligations is as follows:
Group
At 1 January
Exchange differences
Charged to the income statement
Payments made
At 31 December
Current element
Non-current element
31
Share capital
2009
£’000
2,299
(169)
228
(467)
1,891
268
1,623
1,891
2008
£’000
1,462
335
676
(174)
2,299
247
2,052
2,299
2009
£’000
2008
£’000
Authorised: 2,842,000 (2008: 2,842,000) ordinary shares of 10p each
284
284
Allotted, called up and fully paid: ordinary shares of 10p each:
At 1 January and 31 December – 2,842,000 (2008: 2,842,000) shares
284
284
Group companies hold 62,500 issued shares in the company. These are classified as treasury shares.
62
Notes to the accounts
32 Reconciliation of profit from operations to cash flow
Group
Profit from operations
Share of associates’ results
Depreciation and amortisation
Impairment of non-current assets
Gain arising from changes in fair value of biological assets
Profit on disposal of non-current assets
Profit on disposal of an associate
Loss on disposal of a subsidiary
Profit on part disposal of a subsidiary
Profit on disposal of investments
Increase in working capital
Net decrease/(increase) in funds of banking subsidiaries
33 Reconciliation of net cash flow to movement in net cash/(debt)
Group
Increase in cash and cash equivalents in the year
Net cash outflow from decrease in debt
Decrease in net debt resulting from cash flows
New finance leases
Disposal/(acquisition) of a subsidiary
Exchange rate movements
Decrease in net debt in the year
Net debt at beginning of year
Net cash/(debt) at end of year
2009
£’000
34,629
2,966
8,685
204
(2,746)
(260)
–
674
(135)
(28)
(3,741)
7,790
48,038
2009
£’000
19,189
4,095
23,284
(65)
1,868
381
25,468
(5,208)
20,260
restated
2008
£’000
24,329
8,612
8,294
350
(8,916)
(519)
(50)
–
(104)
(390)
(2,335)
(184)
29,087
restated
2008
£’000
7,576
3,618
11,194
(453)
(184)
(960)
9,597
(14,805)
(5,208)
63
Camellia Plc
Notes to the accounts
34 Disposal and acquisition of businesses
Group
In 2009, the group disposed of its 100 per cent. owned Chilean subsidiary, Hacienda Chada S.A.
Details of net assets disposed/acquired are as follows:
Fair value of assets and liabilities:
Intangible assets
Property, plant and equipment
Biological assets
Inventories
Trade and other receivables
Cash and cash equivalents
Borrowings – current – overdrafts
Borrowings – current – loans
Trade and other payables
Current income tax liabilities
Borrowings – non current
Deferred tax liabilities
Net effect of associates acquisition/disposal
Satisfied by:
Cash consideration and acquisition costs
Net inflow/(outflow) of cash in respect of disposal and acquisition of businesses:
Cash consideration and acquisition costs
Loans repaid
Costs of disposal
Net cash and overdrafts of businesses
Disposal
2009
£’000
Acquisition
2008
£’000
118
4,565
1,883
93
26
20
–
(1,848)
(26)
–
–
–
–
4,831
–
1,660
2,342
436
244
531
(1,234)
(48)
(184)
(203)
(136)
(357)
(295)
2,756
6,497
2,756
6,497
(1,848)
(786)
(20)
3,843
(2,756)
–
–
(703)
(3,459)
In 2008, the group acquired 100 per cent. of the share capital of Surmah Valley Tea Company Limited, a tea company
operating in Bangladesh. The company was acquired from United Insurance Company, an associate company.
In 2006, the group acquired 100 per cent. of the issued share capital of Hill Martin Holdings Limited and Hill Martin
Limited (together “Hill Martin”). In 2008, the group paid a further £661,000 in respect of this acquisition.
64
Notes to the accounts
35 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:
Group
Property, plant and equipment
Biological assets
2009
£’000
1,467
–
1,467
2008
£’000
2,281
47
2,328
Operating leasing commitments – minimum lease payments
The group leases land and buildings, plant and machinery under non-cancellable operating lease arrangements, which
have various terms and renewal rights.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
Group
Land and buildings:
Within 1 year
Between 1 – 5 years
After 5 years
Plant and machinery:
Within 1 year
Between 1 – 5 years
2009
£’000
2008
£’000
534
1,789
16,006
18,329
118
273
391
533
1,898
16,997
19,428
123
565
688
36 Contingent liabilities
The group operates in certain countries where its operations are potentially subject to a number of legal claims including
taxation. When required, appropriate provisions are made for the expected cost of such claims. At 31 December 2009,
the directors do not anticipate the outcome of any such claim to result in a material loss.
65
Camellia Plc
Notes to the accounts
37
Financial instruments
Capital risk management
The group manages its capital to ensure that the group will be able to continue as a going concern, while maximising
the return to stakeholders through the optimisation of its debt and equity balance. The capital structure of the group
consists of debt, which includes the borrowings disclosed in note 26, cash and cash equivalents and equity attributable to
equity holders of the parent, comprising issued capital, reserves and retained earnings.
The board reviews the capital structure, with an objective to ensure that gross borrowings as a percentage of tangible net
assets does not exceed 50 per cent..
The ratio at the year end is as follows:
Borrowings
Tangible net assets
Ratio
2009
£’000
15,880
2008
£’000
29,983
285,270
295,041
5.57%
10.16%
Borrowings are defined as current and non-current borrowings, as detailed in note 26.
Tangible net assets includes all capital and reserves of the group attributable to equity holders of the parent less
intangible assets.
Categories of financial instruments
Carrying value
Financial assets
Cash and cash equivalents (excluding bank subsidiaries)
Loans and advances to banks by banking subsidiaries
Loans and advances to customers of banking subsidiaries
Trade and other receivables
Other investments
Financial liabilities
Amounts due to customers of banking subsidiaries
Trade and other payables
Borrowings
Provisions
Other non-current liabilities
2009
£’000
36,140
193,434
40,551
30,168
35,256
335,549
231,136
34,437
15,880
150
118
281,721
restated
2008
£’000
24,775
251,423
40,096
32,093
31,967
380,354
281,340
35,174
29,983
123
131
346,751
Fair values
Financial assets and liabilities, are subject to market variations in respect of price, exchange and interest rates. The group
assesses fair values based on available market data and does not make use of valuation techniques.
The fair value of the group’s financial assets and liabilities are not materially different to their carrying value.
66
Notes to the accounts
37
Financial instruments (continued)
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
debtors and trade creditors. In addition, the group uses financial instruments for two main reasons, namely:
– To finance its operations (to mitigate liquidity risk);
–
To manage currency risks arising from its operations and arising from its sources of finance (to mitigate foreign
exchange risk).
The group, including Duncan Lawrie, the group’s banking subsidiary, did not, in accordance with group policy, trade in
financial instruments throughout the period under review.
(A) Market risk
(i) Foreign exchange risk
The group has no material exposure to foreign currency exchange risk on currencies other than the functional currencies
of the operating entities.
Currency risks are primarily managed through the use of natural hedging and regularly reviewing when cash should be
exchanged into either sterling or another functional currency.
(ii) Price risk
The group is exposed to equity securities price risk because of investments held by the group and classified on the
consolidated balance sheet as available-for-sale. To manage its price risk arising from investments in equity securities, the
group diversifies its portfolio.
The majority of the group’s equity investments are publicly traded and are included on the Bermudian, Swiss and
Japanese stock exchanges. Should these equity indexes increase or decrease by 5 per cent. with all other variables held
constant and all the group’s equity instruments move accordingly, the group’s equity balance would increase/decrease by
£1,131,000 (2008: £1,314,000).
The group’s exposure to commodity price risk is not significant.
(iii) Cash flow and interest rate risk
The group’s interest rate risk arises from interest-bearing assets and short and long-term borrowings. Borrowings issued
at variable rates expose the group to cash flow interest rate risk. The group has no fixed rate exposure.
At 31 December 2009, 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 £118,000
(2008: £3,000) higher/lower.
At 31 December 2009, if interest rates on sterling denominated interest-bearing assets and borrowings had been 50 basis
points higher/lower with all other variables held constant, post-tax profit for the year would have been £60,000 (2008:
£49,000) higher/lower.
67
Camellia Plc
Notes to the accounts
37
Financial instruments (continued)
The interest rate exposure of the group’s interest bearing assets and liabilities by currency, at 31 December was:
Assets
Liabilities
Sterling
US Dollar
Euro
Kenyan Shilling
Indian Rupee
Malawi Kwacha
Bangladesh Taka
Australian Dollar
South African Rand
Swiss Franc
Brazilian Real
Chilean Peso
Bermudian Dollar
Canadian Dollar
Japanese Yen
Danish Krone
Other
2009
£’000
151,076
55,414
36,636
10,465
4,862
60
5,775
4,272
246
5,213
3,028
228
1,777
1,606
1,305
517
65
282,545
2008
£’000
188,064
75,103
26,901
3,990
2,845
106
6,141
5,604
423
9,138
816
287
342
1,072
287
560
51
321,730
2009
£’000
139,076
50,637
36,749
–
1,226
627
5,879
4,275
362
4,694
–
–
–
1,611
1,302
516
62
247,016
2008
£’000
178,350
73,829
26,893
2,731
4,255
–
8,769
5,602
315
8,613
–
–
–
1,072
286
559
49
311,323
(B) Credit risk
The group has policies in place to limit its exposure to credit risk. Credit risk arises from cash and cash equivalents,
deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables
and committed transactions. If customers are independently rated, these ratings are used. Otherwise if there is no
independent rating, management assesses the credit quality of the customer taking into account its financial position,
past experience and other factors and if appropriate holding liens over stock and receiving payments in advance of
services or goods as required. Management monitors the utilisation of credit limits regularly.
The group’s approach to customer lending through the group’s banking subsidiaries is risk averse with only 2.0 per cent.
of the customer loan book being unsecured. Collateralised loans are normally secured against cash or property, with
property loans being restricted to 70 per cent. of recent valuation.
The group has a large number of trade receivables, with the largest five receivables at the year end only comprising 19
per cent. (2008: 19 per cent.) of total trade receivables.
(C) Liquidity risk
Ultimate responsibility for liquidity risk management rests with the board of directors. The group manages liquidity risk
by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows and
managing the maturity profiles of financial assets and liabilities.
The two subsidiary companies which are engaged in banking activities, Duncan Lawrie Limited and Duncan Lawrie
(IOM) Limited both have restrictions contained in their memorandum and articles of association which place a ceiling
on their levels of customer lending. Such restrictions effectively limit the customer loan book to the value of the share
capital and reserves of Duncan Lawrie. This fact, in conjunction with the general matching of maturing customer
deposits with market placements and the general use of liquid assets such as certificates of deposit, results in significantly
reduced liquidity risk for Duncan Lawrie and the group.
At 31 December 2009, the group had undrawn agreed facilities of £28,630,000 (2008: £26,985,000), all of which are
due to be reviewed within one year.
68
Notes to the accounts
37
Financial instruments (continued)
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.
At 31 December 2008
Assets
Cash and cash equivalents
Less than
1 year
£’000
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5
years
£’000
Undated
Total
£’000
£’000
(excluding bank subsidiaries)
24,775
–
–
–
–
–
–
–
24,775
591
251,423
3,247
979
–
13,377
–
–
3,632
–
–
262
–
26,531
40,096
32,093
31,967
210
–
–
–
–
210
Loans and advances to banks
by banking subsidiaries
Loans and advances to customers
of banking subsidiaries
Trade and other receivables
Other investments
Liabilities
Deposits by banks at banking
subsidiaries
Customer accounts held at
banking subsidiaries
Trade and other payables
Borrowings
Provisions
Other non-current liabilities
At 31 December 2009
Assets
Cash and cash equivalents
250,832
19,578
31,114
5,436
268,317
35,174
18,629
123
–
(excluding bank subsidiaries)
36,140
Loans and advances to banks
by banking subsidiaries
Loans and advances to customers
of banking subsidiaries
Trade and other receivables
Other investments
193,225
21,651
29,240
12,420
980
–
6,674
–
–
–
–
3,807
928
–
10,191
–
1,766
–
–
–
–
10,939
–
–
1,176
–
2,914
–
122
–
–
3,972
–
–
–
977
–
970
–
118
466
–
–
–
9
281,130
35,174
29,983
123
131
–
36,140
209
193,434
182
–
22,836
40,551
30,168
35,256
–
525
–
–
–
–
589
230,547
34,437
15,880
150
118
Liabilities
Deposits by banks at banking
subsidiaries
Customer accounts held at
banking subsidiaries
Trade and other payables
Borrowings
Provisions
Other non-current liabilities
589
–
–
218,795
34,437
12,762
150
–
2,515
–
1,088
–
–
7,735
–
1,060
–
–
Included in loans and advances to banks by banking subsidiaries repayable in less than 1 year is £37,963,000 (2008:
£21,303,000) repayable on demand and £155,262,000 (2008: £229,529,000) repayable within 3 months.
69
Camellia Plc
Notes to the accounts
37
Financial instruments (continued)
Included in loans and advances to customers of banking subsidiaries repayable in less than 1 year is £2,773,000 (2008:
£3,288,000) repayable on demand, £6,349,000 (2008: £4,105,000) repayable within 3 months and £12,529,000 (2008:
£12,185,000) repayable between 3 and 12 months.
Included in other investments repayable in less than 1 year is £12,420,000 (2008: £5,436,000) repayable between 3 and
12 months.
Included in deposits by banks at banking subsidiaries repayable in less than 1 year is £489,000 (2008: £210,000)
repayable on demand and £100,000 (2008: £nil) repayable within 3 months.
Included in customer accounts held at banking subsidiaries repayable in less than 1 year is £65,600,000 (2008:
£100,102,000) repayable on demand, £144,034,000 (2008: £161,143,000) repayable within 3 months and £9,161,000
(2008: £7,072,000) repayable between 3 and 12 months.
Included in borrowings in less than 1 year is £7,509,000 (2008: £14,856,000) repayable on demand.
38
Principal subsidiary and associated undertakings
Subsidiary undertakings
The principal operating subsidiary undertakings of the group at 31 December 2009, which are wholly owned and
incorporated in Great Britain unless otherwise stated, were:
Agriculture and horticulture
Amgoorie India Limited (Incorporated in India – 99.8 per cent. holding)
C.C. Lawrie Comércio e Participacões Ltda. (Incorporated in Brazil)
Eastern Produce Cape (Pty) Limited (Incorporated in South Africa)
Eastern Produce Kenya Limited (Incorporated in Kenya – 70.0 per cent. holding)
Eastern Produce Malawi Limited (Incorporated in Malawi – 73.2 per cent. holding)
Eastern Produce South Africa (Pty) Limited (Incorporated in South Africa – 73.2 per cent. holding)
Goodricke Group Limited (Incorporated in India – 80.1 per cent. holding)
Horizon Farms (An United States of America general partnership – 80.0 per cent.holding)
Kakuzi Limited (Incorporated in Kenya – 50.7 per cent. holding)
Koomber Tea Company Limited (Incorporated in India)
Longbourne Holdings Limited
Siret Tea Company Limited (Incorporated in Kenya – 59.0 per cent. owned by Kakuzi Limited)
Stewart Holl (India) Limited (Incorporated in India – 92.0 per cent. holding)
Engineering
Abbey Metal Finishing Company Limited
AJT Engineering Limited
AKD Engineering Limited
British Metal Treatments Limited
General Utilities (Stockport) Limited
Food storage and distribution
Affish BV (Incorporated in The Netherlands)
Associated Cold Stores & Transport Limited
Wylax International BV (Incorporated in The Netherlands)
70
Principal
country of
operation
India
Brazil
South Africa
Kenya
Malawi
South Africa
India
USA
Kenya
India
Bangladesh
Kenya
India
UK
UK
UK
UK
UK
The Netherlands
UK
The Netherlands
Notes to the accounts
38
Principal subsidiary and associated undertakings (continued)
Subsidiary undertakings (continued)
Trading and agency
Robertson Bois Dickson Anderson Limited
Banking and financial services
Duncan Lawrie Limited
Duncan Lawrie Asset Management Limited
Duncan Lawrie Holdings Limited
Duncan Lawrie (IOM) Limited (Incorporated in Isle of Man)
Investment holding
Affish Limited
Assam Dooars Investments Limited
Associated Fisheries Limited
Bordure Limited
John Ingham & Sons Limited
Lawrie (Bermuda) Limited (Incorporated in Bermuda)
Lawrie Group Plc
Lawrie International Limited (Incorporated in Bermuda)
Linton Park Plc
Unochrome Industries Limited
Western Dooars Investments Limited
Associated undertakings
The principal associated undertakings of the group at 31 December 2009 were:
Principal
country of
operation
Accounting
date
2009
Chemical and pharmaceutical
Siegfried Holding AG (Incorporated in Switzerland – registered shares)
Switzerland
31 December
Insurance and leasing
BF&M Limited (Incorporated in Bermuda – common stock)
United Insurance Company Limited
Bermuda
31 December
(Incorporated in Bangladesh – ordinary shares)
Bangladesh
31 December
United Leasing Company Limited
(Incorporated in Bangladesh – ordinary shares)
Bangladesh
31 December
Principal
country of
operation
UK
UK
UK
UK
Isle of Man
UK
UK
UK
UK
UK
Bermuda
UK
Bermuda
UK
UK
UK
Group
interest
in equity
capital
per cent.
32.3
25.2
37.0
38.4
Property
West Hamilton Holdings Limited
(Incorporated in Bermuda – common stock)
Bermuda
31 December
28.2
71
Camellia Plc
Notes to the accounts
39 Control of Camellia Plc
Camellia Holding AG holds 1,427,000 ordinary shares of Camellia Plc (representing 51.34 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 to act as trustee of The Camellia Foundation (“the Foundation”). The
Foundation is a Bermudian trust, the income of which is utilised for charitable, educational and humanitarian causes at
the discretion of the trustees.
The activities of Camellia Plc and its group (the “Camellia Group”) are conducted independently of the Foundation
and, other than Mr M Dünki and Mr D A Reeves who are directors of The Camellia Private Trust Company Limited
and act as trustees of the Foundation, none of the directors of Camellia Plc are currently connected with The Camellia
Private Trust Company Limited or the Foundation. While The Camellia Private Trust Company Limited as Trustee
of the Foundation maintains its rights as a shareholder, it has not participated in, and has confirmed to the board of
Camellia Plc that it has no intention of participating in, the day to day running of the business of the Camellia Group.
The Camellia Private Trust Company Limited has also confirmed its agreement that where any director of Camellia Plc
is for the time being connected with the Foundation, 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.
Since the Foundation is a non-trading entity, no transactions or relationships between the Camellia Group and the
Foundation are envisaged, but the board of Camellia Plc will not in any event conduct any transaction or relationship
with the Foundation other than on an arm’s length and normal commercial basis.
40
Events after the balance sheet date
On 15 April 2010, the group disposed of its entire shareholding in Siegfried Holding AG, an associated undertaking
and the proceeds on disposal are £48,850,000 (CHF 79,571,000). The estimated profit before tax on disposal net of
expenses, after the transfer of exchange differences and other movements previously included in reserves, is £200,000.
It is the intention to use the proceeds of the sale for the repayment of debt, the injection of further development capital
into existing subsidiary companies and other general corporate purposes.
A serious fire occurred at the Nuneaton premises of Abbey Metal Finishing on the morning of 22 April 2010. Loss
adjustors have been appointed but it is too soon to assess when the facility will be capable of becoming operational again.
72
Report of the auditors
Independent Auditors’ Report to the Members of Camellia Plc
We have audited the group and parent company financial statements (the “financial statements”) of Camellia Plc for the year
ended 31 December 2009 which comprise the Consolidated Income Statement, the Group and Parent Company Balance
Sheets, the Group and Parent Company Cash Flow Statements, the Group and Parent Company Statement of Comprehensive
Income, the Group and Parent Company Statement of Changes in Equity and the related notes. The financial reporting
framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs)
as adopted by the European Union and, as regards the Company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement set out on page 16, the directors are responsible for the
preparation of the group financial statements and for being satisfied that they give a true and fair view. Our responsibility is
to audit the group financial statements in accordance with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or
assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the Group’s and Company’s circumstances and have been
consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and
the overall presentation of the financial statements.
Opinion on financial statements
In our opinion:
–
–
–
–
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31
December 2009 and of the group’s profit and group’s and parent company’s cash flows for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as
regards the group financial statements, Article 4 of the lAS Regulation.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
–
–
–
the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006; and
the information given in the Directors’ Report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
the information given in the Corporate Governance Statement set out on pages 13 to 15 with respect to internal control
and risk management systems and about share capital structures is consistent with the financial statements.
73
Camellia Plc
Report of the auditors
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
–
–
–
–
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
–
–
the directors’ statement, set out on page 15, in relation to going concern; and
the parts of the Corporate Governance Statement, set out on pages 13 to 15, relating to the company’s compliance with
the nine provisions of the June 2008 Combined Code specified for our review.
John Waters (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
29 April 2010
74
Five year record
2009
£’000
2008
£’000
2007
£’000
2006
£’000
2005
£’000
Revenue – continuing operations
230,270
190,551
161,936
160,552
152,743
Profit before tax
Taxation
Profit from continuing operations
34,143
(11,702)
22,441
24,040
(7,547)
30,651
(3,205)
19,982
(4,808)
22,275
(1,764)
16,493
27,446
15,174
20,511
Profit attributable to equity shareholders
15,897
11,044
25,317
12,903
20,326
Equity dividends paid
2,557
2,557
2,502
2,474
2,284
Equity
Called up share capital
Reserves
Shareholders’ funds
Earnings per share
Dividend paid per share
284
293,570
293,854
284
303,816
284
265,987
284
235,677
284
241,632
304,100
266,271
235,961
241,916
571.9p
92.00p
397.3p
92.00p
910.8p
90.00p
464.2p
89.00p
793.2p
88.00p
75
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Camellia Plc
2009
122