258127 Camellia R&A Cover Spread.qxp 26/03/2020 20:57 Page 1
CAMELLIA PLC
C
a
m
e
l
l
i
a
P
l
c
A
n
n
u
a
l
R
e
p
o
r
t
2
0
1
9
Perivan 258127
2019
132
CAMELLIA PLC
REPORT AND ACCOUNTS 2019
CONTENTS
Camellia at a glance
Directors and advisers
Chairman’s statement
Chief Executive’s report
Chief Financial Officer’s report
Strategic report
Report of the Directors
Corporate governance
Statement of Directors’ responsibilities
Remuneration report
Consolidated income statement
Statement of comprehensive income
Consolidated balance sheet
Company balance sheet
Consolidated cash flow statement
Company cash flow statement
Statement of changes in equity
Accounting policies
Notes to the accounts
Report of the independent auditors
Five year record
page
2
4
5
6
17
21
28
32
36
37
39
40
41
42
43
44
45
46
62
114
123
1
CAMELLIA PLC
CAMELLIA AT A GLANCE
Camellia Plc is an international Group – a global family of diverse companies with a 132-year history
employing approximately 78,000 people worldwide. Our operations are in Agriculture, Engineering, Food
Service and Investments. From the start, Camellia’s ethos has been based on the highest moral and
professional integrity, and a commitment to doing the right thing – ethically and commercially, globally
and locally. Profits are our lifeblood but not our soul.
Our business is built on two fundamental principles:
■
Long-termism. We see ourselves as custodians, holding our business in trust for future generations.
We believe we have a responsibility to ensure the stability, security and continuity of all our
businesses, so they can be passed on to the next generation as enduring operations. We recognise
that people and businesses take time to establish and grow to their full potential and we are happy to
wait for that to happen. We are deeply committed to improving the long-term stability and well-being
of our businesses, the communities and the environments in which we operate.
■
Sustainability. We are committed not only to the ultimate welfare of our employees but also to the
communities in which they live. We believe our businesses can and should grow with respect and
care for the environment rather than at the cost of it. We proactively invest in ensuring that the
environments where we do business are continually protected and improved, and seek to minimise
the impact of our business on the environment.
The profit after tax from continuing operations in the year to 31 December 2019 was £15.1 million (2018:
profit £32.5 million) and the Segment trading profit and loss information set out below is extracted from
note 1 on page 62 of the Accounts.
Our business is made up as follows:
AGRICULTURE
2019: Revenue – £238.7 million, Segment trading profit – £25.2 million
Locations
India, Bangladesh, Kenya, Malawi
Kenya, South Africa, Malawi
Kenya
Brazil
Kenya, Malawi, Brazil
Bangladesh
USA
USA
South Africa
USA
Kenya
Kenya
Kenya
Mature
Area
Ha
33,709
2,834
452
3,580
2,176
1,744
177
131
60
56
–
Immature
Area
Ha
2,608
1,019
346
–
3,637
231
–
–
24
–
10*
738
4,396 head
Core crops
Tea
Macadamia
Avocados
Speciality crops
Arable
Forestry
Rubber
Citrus
Pistachios
Wine grapes
Almonds
Blueberries
Other
Joint Projects
Livestock
* planted in 2019
2
CAMELLIA PLC
CAMELLIA AT A GLANCE
ENGINEERING
2019: Revenue – £22.1 million, Segment trading profit – £Nil
Subsidiary
Locations
Abbey Metal Finishing and Atfin UK, Germany
A JT Engineering
UK
FOOD SERVICE
2019: Revenue – £29.8 million, Segment trading profit – £0.8 million
Subsidiary
ACS&T
Jing Tea
INVESTMENTS
Locations
UK
UK
Investment type
Locations
Investment Portfolio
Investment Property
Collections
Global
UK, Malawi, Brazil
UK, India
* Collections are stated at cost
ASSOCIATES
2019: Share of results after taxation – £4.6 million
Location
Activity
BF&M
United Finance
United Insurance
Bermuda
Bangladesh
Bangladesh
Life and Non-life insurance
Banking
Non-life insurance
Market value at
31/12/19
£’m
47.0
23.1
9.8*
Holding
%
37.8
38.4
37.0
3
CAMELLIA PLC
DIRECTORS AND ADVISERS
Directors
Malcolm Perkins
Chris Relleen
Tom Franks
Graham Mclean
Susan Walker
Jonathon Bond
Gautam Dalal
William Gibson
Simon Turner
Frédéric Vuilleumier
(i) Audit committee
(ii) Remuneration committee
(iii) Nomination committee
Chairman (iii)
Deputy Chairman, independent non-executive
Director and senior independent Director (i) (ii) (iii)
Chief Executive
Director of Agriculture
Chief Financial Officer
Independent non-executive Director
Independent non-executive Director (i)
Independent non-executive Director (i) (ii) (iii)
Non-executive Director
Independent non-executive Director
Group General Counsel
& Company Secretary
Amarpal Takk
Registered office
Linton Park
Linton
Maidstone
Kent ME17 4AB
Registered Number
00029559
Nominated adviser and
broker
Panmure Gordon (UK) Limited
One New Change
London EC4M 9AF
Registrars
Independent auditors
PR
Link Asset Services
The Registry
34 Beckenham Road
Kent BR3 4ZF
Deloitte LLP
Statutory Auditors
1 New Street Square
London EC4A 3HQ
Maitland/AMO
The HKX Building
3 Pancras Square London
N1C 4AG
Website
www.camellia.plc.uk
4
CAMELLIA PLC
CHAIRMAN’S STATEMENT
The results for 2019 reflect a profit before tax from continuing operations of £22.3 million and include
significant provision releases and one off items amounting to £6.2 million (2018: profit before tax from
continuing operations £52.5 million, including provision releases of £14.4 million).
In previous years we have talked extensively about the need to diversify our portfolio of businesses,
particularly in Agriculture, and to ensure that we are as efficient in our production methods as we can be.
The need for this diversification has never been more evident than in 2019, which saw the year open with
an over-supply of tea in the market causing prices to fall and from which they never recovered.
Our own tea production fell slightly short of last year’s record but at 101.4mkg was our second highest
year, reflecting the investment that we have made in replanting and irrigation and the purchase of two
additional estates in Assam. Our other core crops also performed well, and with good prices in the
market, both macadamia and avocado made a significant contribution to Group profit.
More generally, we saw an increasing number of extreme weather events across our operations, with
hurricanes, droughts, floods and excessive temperatures seemingly more frequent and more widespread
than they have ever been. In 2019 we published our first ever comprehensive ESG report to demonstrate
what we are doing to reduce our own environmental footprint, and to mitigate the impacts of climate
change. Whilst we are pleased with our progress in many areas, we are also conscious that we need to do
more and therefore we have also introduced an internal fund, to use some of our centrally held resources
to enable a step change in our sustainability programmes around the world.
Dividend
The Group is set up in a way that reflects our long-term approach, with financial stability and
sustainability being at the heart of our philosophy. The current situation with regard to COVID-19 is
unprecedented not only in its severity but because we cannot tell at this stage for how long it will last nor
what the implications will be. Your Board has therefore decided not to recommend any additional
dividends until we get clarity on the situation. Once we have this clarity and if circumstances so justify,
we will declare a special dividend alongside the interim dividend.
Outlook
Never in my years as Chairman has it been so hard to predict the outcome of the coming year. Whilst
only a small proportion of our operations are direct to the consumer, the ramifications of the COVID-19
outbreak and the economic fallout arising from it are affecting all our businesses to some extent, and the
ultimate impact will not be clear for some months yet. This matter is discussed in more detail in the Chief
Executive’s report. It is of course a situation that changes day by day.
However we remain financially strong, with significant net cash, and have the resources to withstand a
period of disruption. The demand for our agricultural produce will remain and we are managing the
business in a pragmatic manner which we believe will ensure our future prosperity whilst taking the
necessary steps to manage our costs and spending in the short term.
Directors
I am delighted to welcome two new Non-Executive Directors onto the Board. Simon Turner, who is
president of The Camellia Foundation, our majority shareholder, and Jonathon Bond who holds a number
of directorships and has a particular focus on raising standards of governance and performance.
Staff
As always, my thanks go out to all our staff for their efforts in 2019 but in addition I should like to thank
them for their continuing support during this very difficult period.
Malcolm Perkins
Chairman
7 May 2020
5
CAMELLIA PLC
CHIEF EXECUTIVE’S REPORT
COVID-19 AND TRADING UPDATE
People
First, I would like to reiterate our gratitude to all of our staff around the world for their continuing support
both within the business but also within the communities in which they operate.
Trading
Agriculture
All our agricultural operations continue to work as close to normal as is possible with the exception of
India. Following the shut down in India announced on 24 March there has been a gradual easing of
restrictions and currently all tea estates are open but utilising only 25% of their workforce in West Bengal
and 50% of the workforce in Assam in order to maintain social distancing. As a consequence, we expect to
lose the majority of our lucrative first flush and, if the current restrictions continue, a significant proportion
of our second flush crops in India.
Elsewhere the restrictions that we are seeing globally continue to increase with all our countries of
operation experiencing some form of lock down. It remains unclear the extent of the impact these
restrictions will have on our production levels, our distribution channels, demand for our produce and
access to market for our perishable crops such as avocado and citrus. A number of tea auctions have been
cancelled in recent weeks although some have since resumed or are scheduled to resume in May. Overall
tea prices during the first quarter was exceptionally poor as a result of the very high production levels of
2019, but as a consequence of the current crisis we have seen some signs of increased demand and prices
for our teas.
As a result of very dry hot weather in Malawi and South Africa during the fourth quarter of 2019 we are
also anticipating a decline in our macadamia production for 2020 and reduced global demand is also likely
to adversely impact prices.
Engineering
Our engineering businesses are operating at close to normal. Both A JT Engineering (due to its role in the
energy sector) and Abbey Metal Finishing (due to its role for aerospace and military) are deemed to be
essential businesses. We are concerned however that issues in the wider economy could mean that
demand in the oil, energy and aerospace sectors will be very weak in the second half of the year.
Food Service
ACS&T continues to operate but the reduced demand for its transport services which we mentioned on 1
April, means that profitability in H1 2020 is expected to be significantly lower than that for the same period
in 2019. Jing Tea continues to trade at a substantially reduced level. Both businesses’ trading results for the
remainder of the year are dependent on the timing of any resumption of operations in the hospitality and
food service sectors.
Financial Position
The Group has a strong balance sheet with substantial cash liquidity which amounted to £77.1 million in
cash and cash equivalents net of borrowings as at 31 March 2020. In addition, our investment portfolio
had a market value of £43.8 million at 31 March 2020. We continue to conserve cash wherever possible
against a fast changing and unpredictable backdrop.
Community Action
As a Group we are uniquely placed to be able to assist in this crisis. We currently manage over 100
hospitals and clinics in some of the world’s poorest countries where there is little access to public
healthcare. Wherever appropriate our operations are working with the local authorities to ensure that
these facilities are used for the benefit of the whole community. In addition, we are taking a wide range of
steps across different businesses to help wherever possible. These steps include work on face masks by
our engineering businesses in the UK; bulk purchasing of food in Kenya to ensure that our staff and their
families are not forced to pay extortionate prices; purchasing hospital supplies in Malawi; payment of
wages and distribution of food to our staff in India, whether in lock down or working and the provision of
hygiene and social distancing education.
6
CAMELLIA PLC
CHIEF EXECUTIVE’S REPORT
OVERVIEW
After an exceptional 2018, 2019 was a more challenging year for the Group, if not perhaps as challenging
as 2020 is turning out to be.
Our long-term strategy of diversifying our agricultural products continues to impact positively on our
results and we have made good progress in furthering this strategy during the year. On the investment
side:
■
■
■
In Tanzania we make slow but steady progress in completing the acquisition of our first farm. Whilst
waiting for final government approval we have set up an avocado nursery so that there is no delay in
planting out the trees once the land transfer is ultimately sanctioned.
In Kenya the blueberry trial continues, and we harvested our first small crop in September 2019
which was in line with volume expectations with the fruit showing excellent flavour and size. Our first
major crop should be in the autumn of 2020 which will give us a better insight into the prospects for
this operation and allow Kakuzi to make decisions as to the expansion of this trial into a commercial
operation. Our trial of new avocado plantings at Kitale is now in its third year and we are beginning to
get some results which will allow us to make a decision as to whether to turn this into a full
commercial operation.
In South Africa, we completed the purchase of an additional 466Ha of land close to our existing
macadamia operations in Levubu close to Mambedi estate. This will be developed into macadamia
and avocado orchards.
Overall in 2019, our macadamia volumes continued to grow as the trees matured and prices held up well
despite the increased volumes. Our investment in macadamia processing facilities has improved margins
and widened our customer base and we are optimistic that whilst macadamia remains a relatively niche
product amongst edible nuts, the market continues to grow.
Our avocado harvest was, as anticipated, significantly down after last year’s bumper crop but this was
more than compensated for by the excellent prices received from the European market. We continue to
examine ways to even out the natural tendency of the avocado tree to produce significantly larger crops
in alternate years.
The results for our speciality crops were more mixed, edible nuts performed well but we were hit by a
number of weather-related issues in our arable operations in Brazil.
However, whilst our diversification strategy has made good progress, we remain the world’s largest private
grower of black tea which is therefore core to our performance. 2018 saw a record global production of tea
at 5.9 million tonnes and we believe this was exceeded in 2019. This growth was driven partially by
favorable weather conditions in Asia but more significantly by the relentless growth of the smallholder
market. As a result, we witnessed record volumes of tea at the auctions, with consequent weaknesses in
the market prices for black tea, from the start of 2019 and which continued throughout the year.
The drivers of this growth in production vary by geography, but good prices in former years, the ability of
smallholders to produce tea with fewer of the social and certification costs, and a decrease in regulation
have all played their part. There are a number of reasons why this situation will eventually reverse; global
consumption will continue to increase, politicians are becoming increasingly concerned over the damage
to the industry and to rural livelihoods, and producers themselves will abandon growing tea if there is no
money to be made. However, such fundamental changes in the market will take time.
As a result of the above, 2019 turned out to be a difficult year for the Group’s tea operations. Whilst our
own production volumes were excellent at 101.4mkg, reflecting our investment over the past few years,
prices were poor. Although our Indian tea prices were relatively steady, others including Kenya (13%
down), Bangladesh (25% down) and Malawi (14% down) suffered steep falls. The start of 2020 saw
average prices continue to fall in all markets, although there are signs this is reversing on account of the
current crisis.
7
CAMELLIA PLC
CHIEF EXECUTIVE’S REPORT
Despite steep increases in labour costs across all of our tea operations, the significant strides made to
improve both efficiency and productivity through technology and structural reform, have enabled us to
mitigate these increases to a significant extent.
Outside Agriculture, the performance was mixed. Our UK engineering and food service operations were
all constrained by Brexit and other market related issues and our largest associate, BF&M, whilst having
strong underlying growth was hit by two hurricanes in the year which held back profits.
Acquisitions and Investments
As reported in last year’s Annual Report, at the beginning of 2019 we completed the acquisition of two tea
estates in Assam. As stated above we have also completed the purchase of an additional farm close to
our estates in the Levubu district of South Africa which will, in due course, help to compensate for the
loss of Wales estate, the lease for which expires in 2020.
Financial Performance
The underlying profit before tax from continuing operations (i.e. before taking account of the provision releases
and one off items described below) amounts to £16.1 million, down 58% on the comparable result for 2018.
We also recorded the following significant items:
■ Gains arising from the release of provisions in Kenya and India amounting to £9.8 million
■
A £3.6 million charge in respect of Workers Profit Participation contributions for prior years in
Bangladesh which has been recognised as a consequence of regulatory changes in 2019 (further
details are included in the CFO’s report on page 20)
BUSINESS STRATEGY
The overall Group strategy, which is set out on page 21, remains unchanged with each division expected
to perform against an agreed strategy with goals and targets for the short, medium and long-term. These
are summarised below.
Agriculture
Core crops. To focus on our core crops of tea, macadamia and avocado where we have scale and geographic
diversity. Where appropriate opportunities arise, to add to our production capability in these three crops, as
well as to make aligned acquisitions and investments to enable us to capture more of the value chain. To
investigate the possibility of a fourth core crop if suitable opportunities present themselves.
Speciality crops. To maintain our portfolio of speciality crops in order to retain the diversity of location and
crop which has historically proven so valuable in spreading the Group’s political and commodity price risk.
With all our agriculture operations we will have regard to the potential threats arising from politics and
the impact of climate change, particularly in water stressed areas and will adapt our portfolio of
operations accordingly.
Engineering
A JT Engineering. To maintain our presence in the oil services sector whilst diversifying into adjacent energy
related sectors in order to create a sustainably profitable engineering business focused on the wider
energy sector.
Abbey Metal Finishing and Atfin. To continue to grow both businesses as quality suppliers to the aerospace
industry.
Food Service
ACS&T. To continue to operate as a niche high quality business in the storage and distribution of frozen
foods, aiming to achieve critical mass by profitable growth and if appropriate, acquisition.
8
CAMELLIA PLC
CHIEF EXECUTIVE’S REPORT
Jing Tea. To grow the existing respected small brand into a larger, more profitable distributor and retailer
of speciality teas internationally.
Investments
Investment Portfolio. The Group has a portfolio, principally of listed investments, the strategy for which
remains to invest in high quality companies where we believe that there is long-term value. This portfolio
also enables us to balance our geographic risk exposure.
Investment Property. The strategy is to continue to invest in quality assets where an appropriate yield may
be realised. The process of developing some of our existing properties to enhance yield will continue.
Collections. The Group has collections of art, philately and manuscripts which are regularly reviewed and
are added to or sold as appropriate.
Associates
The Group has three associate companies in the financial services sector of which BF&M, the listed
Bermudian insurance business is the most significant. With all our associates, we continually monitor our
investment and may increase or decrease our holding in the future.
PERFORMANCE
Agriculture
In total, the Agriculture division made a segment trading profit of £25.2 million (2018: £51.0 million) on
revenue of £238.7 million (2018: £245.3 million), as set out in note 1 to the Accounts.
Tea Production
2019 saw the Group produce high volumes of tea through our own and managed factories just falling
short of 2018’s record volumes. Total made tea produced was 101.4mkg (2018: 103.1mkg).
India
Bangladesh
Kenya
Malawi
Total own estates
Bought leaf production
Managed client production
Total made tea produced
Mature
area
Ha
15,925
8,660
3,992
5,132
––––––––
33,709
––––––––
Immature
area
Ha
1,375
563
161
509
––––––––
2,608
––––––––
2019
Volume
mkg
32.1
14.2
12.1
17.6
––––––––
76.0
21.1
4.3
––––––––
101.4
––––––––
2018
Volume
mkg
28.1
12.8
14.4
19.1
––––––––
74.4
24.2
4.5
––––––––
103.1
––––––––
Tea pricing and operations
India
Overall, India produced a record volume of tea in 2019 for the second consecutive year. This was
principally as a result of improved volumes from our own estates, and the impact of the two estates that
we bought in Assam at the start of the year. In total our own estate production was up 14% and bought
leaf volumes were relatively stable at 8.2mkg.
Across all our Indian operations the average selling price for the year was 2% down on 2018 primarily due
to a drop in the market value for ‘old season’ teas in the first quarter of 2019.
9
CAMELLIA PLC
CHIEF EXECUTIVE’S REPORT
This and the very significant wage increases that took place during 2018 which totaled 33% in West Bengal
and 22% in Assam has led to a significant pressure on margins which could only be partially mitigated by
productivity and efficiency improvements.
Having recovered well in 2018 from the general strike in 2017, it is disappointing that for 2019 season teas
prices in Darjeeling have slipped back significantly. Darjeeling produces very high quality teas but due to
the altitude and topography, volumes are small and production costs are high. We continue to invest in
marketing and tourism in the region for this unique product.
Packet tea sales volumes in India grew by 8.5% to 11.3 mkg in a highly competitive market due to
continued marketing efforts.
We also opened three new tea lounges in Mumbai, Kolkata and at Mirik Lake in Darjeeling, taking the total
to seven. These café/restaurants help to showcase our finest teas to a wider audience and promote
tourism in Darjeeling.
The replanting programme continued with 239Ha completed and a further 205Ha uprooted for replanting
at a later date.
Politically, the election saw the BJP gain significant ground in both Assam and West Bengal. The National
Citizenship Register is causing tension in the border areas which has the potential to impact operations in
both India and Bangladesh.
Bangladesh
Our Bangladesh tea crop was up on 2018 by 11% at 14.2mkg, as a result of good weather and the
significant progress that we have made on replanting and infilling.
Unfortunately, the increased production resulting from the good weather, together with teas being
available from India caused our average prices to drop.
The replanting and extension programme continued with 161Ha of new tea being established in the year
and an additional three million bushes planted to infill existing fields.
Kenya
Tea production (including smallholders and managed clients) was down on 2018 by 15% and was our
lowest production year since 2012. This was as result of a very dry start to the year from which volumes
never recovered. However, frustratingly, these countrywide lower volumes failed to result in the expected
increase in prices due to the large carry forward stocks of 2018 teas sent to the auction. As a result,
average auction prices fell by 13% during the year.
The collective bargaining agreements covering the period 2014-2019 have now been agreed which has
allowed us to make all outstanding payments to our employees and to release certain provisions which we
were carrying. These agreements not only set pay levels but also productivity which will enable us to
improve efficiency in the future.
The over-production in Kenya is having a severe effect on the livelihood’s of smallholder farmers. This has
resulted in the Kenyan government announcing a range of proposed measures to regulate and control the
tea market. These measures which are currently out for consultation include the banning of private sales
of tea, regulating agency agreements, provisions for the payment of smallholder farmers and ensuring
that more value-added activities take place within Kenya. The final form of these proposals and when they
might be enacted remains unclear.
We replanted a total of 51Ha in 2019 (2018: 41Ha) and uprooted a further 49Ha for replanting in 2020.
Malawi
Although not at 2018 record levels, Eastern Produce Malawi produced its second highest crop (including
smallholders) in the year of 20mkg, down 10% on 2018. However, the Malawi market is linked to the
Mombasa tea-auction and the weakness there left our average price for the year down 14%.
10
CAMELLIA PLC
CHIEF EXECUTIVE’S REPORT
Eastern Produce Malawi continues to produce a little over 40% of Malawi’s total tea and is therefore a key
stakeholder in the MOU 2020 process (a coalition of producers, buyers and NGOs seeking to revitalise the
industry and working towards a sustainable wage rate for employees). As I stated last year, the wage
negotiations and a collective bargaining agreement were successfully concluded during 2018, awarding
22% wage increases but that such increases were only sustainable with the support of international
buyers. The combination of increased costs and reduced prices has resulted in a tea sector in Malawi
which is in danger of becoming unsustainable.
Developments included replanting a total of 77Ha in 2019 (2018: 106Ha) and installing additional irrigation
at Ruo estate.
Macadamia Production
In line with the overall plan to increase our macadamia production, volumes produced in 2019 increased
to 1.3mkg (2018: 1.1mkg).
Malawi
South Africa
Kenya
Total
Mature
area
Ha
1,326
887
621
––––––––
2,834
––––––––
Immature
area
Ha
182
426
411
––––––––
1,019
––––––––
Volume
2019
Tonnes
503
459
313
––––––––
1,275
––––––––
Volume
2018
Tonnes
472
429
229
––––––––
1,130
––––––––
Macadamia Pricing
Macadamia prices remained firm during the year and averaged 4% ahead of 2018 which was encouraging
given the increase in global supply.
Macadamia Operations
Malawi
Volumes were 6% up on 2018 as a result of benign weather.
South Africa
Volumes were 7% up on 2018 despite the Wales estate being hit by a major hailstorm during flowering
which impacted the nut set and reduced volumes by 50% from that estate. Developments included:
■
■
■
■
Completion of the Mambedi dam.
Purchase of an additional 466Ha farm at Beja, close to Mambedi for planting macadamia and
avocado.
Planting of an additional 61Ha at Mambedi.
The incorporation of additional colour sorting capability at the Zetmac processing facility to increase
throughput and efficiencies.
As regards the Wales estate, which amounts to 191Ha of mature macadamia, we have made no significant
progress towards renewing the lease for the property, although we will now be able to harvest the 2020
crop before vacating the estate.
Kenya
Production volumes were 36% up on 2018 as the orchards continue to mature. Developments included
the installation of optical sorting technology at the processing plant.
11
CAMELLIA PLC
CHIEF EXECUTIVE’S REPORT
Avocado Production
Kenya – own estates
– smallholders and outgrowers
Mature
area
Ha
Immature
area
Ha
452
346
Volume
2019
mkg
7.1
1.1
Volume
2018
mkg
11.0
5.0
Avocado Pricing and Operations
Following the bumper crops in 2018, production of Hass from our own orchards was down 35% in 2019
due to the trees going in to an “off” year. This “off” year cycle was experienced in many other producing
countries such as Peru, South Africa and Chile. As a result, global supply volumes were down whilst
demand continued to increase leading to an undersupplied market and very firm pricing with our estate
Hass average prices 152% higher than in 2018.
Smallholder Hass volumes in 2019 were down by 86%, but our outgrowers up by 2%. This was partially due
to generally lower production volumes but also due to smallholders supplying other exporters.
A total of 79Ha of new Hass orchards were planted during the year including 9Ha of the Carmen variety of
Hass.
Pinkerton volumes were up on the previous year by 77% and prices rose by 24%.
We continue to monitor the 23Ha trial of avocados near Kitale in Kenya which we initiated in 2017.
Speciality Crops Production
Arable (Brazil)
Rubber (Bangladesh)
Citrus (USA)
Pistachios (USA)
Wine grapes (South Africa)
Almonds (USA)
Blueberries (Kenya)
Mature
area
Ha
Immature
area
Ha
3,580
1,744
177
131
60
56
–
–
231
–
–
24
–
10
Volume
2019
Tonnes
27,829
650
6,665
10*
394
131
4
Volume
2018
Tonnes
31,445
649
3,773
712
317
111
–
m3
m3
Forestry (Kenya, Brazil, Malawi)
2,176
3,637
86,710**
47,767**
Livestock
No of head No of births No of births
4,396
827
948
2019 was an ‘off’ year for Pistachios
*
** Volumes quoted are for conversion to value addition products rather than fuel wood for our own use
Speciality Crops, Pricing and Operations
Arable
Our arable operation in Brazil had a difficult year due to a combination of weather and pest and disease
related issues. Soya harvest volumes were slightly down (1%) on last year, however prices were up 8%.
Both the maize and oat crops suffered from pest and disease attacks and the wheat from unexpected
frosts in July. Despite these adversities, the farm continues to generate good profits.
Rubber
Rubber is grown on areas of the Bangladesh tea estates unsuited for growing tea. Volumes produced in
2019 were in line with 2018 and although average prices increased by 4% they remain below cost.
12
CAMELLIA PLC
CHIEF EXECUTIVE’S REPORT
Citrus
Citrus volumes were 77% up on last year but prices were 40% lower due to market over supply.
Pistachios
2019 was an off year for our pistachios so a very small volume was produced.
Wine
The harvest this year was much improved on 2018’s drought affected crop with volumes up 24% but sales
continue to disappoint. During the year 11Ha of vines were replanted bringing the total planted area to
84Ha.
Almonds
Almond volumes were 18% ahead of 2018 as the orchards continue to mature; prices remained firm in line
with previous years.
Forestry
Production of Eucalyptus in Brazil doubled in the year due to increased demand from the paper industry.
Kakuzi also saw a 30% increase in production of forestry products for the market in Kenya.
Livestock
Births were down this year due to the drought conditions experienced during the first quarter of the year
which affected the availability and quality of grazing.
Blueberries
As previously reported, a 10Ha trial of blueberries was established at Kakuzi early in 2019. The first crop was
harvested in September 2019 totalling 4 tonnes most of which was sold in the local market. The fruit showed
excellent flavour and sizing which is most encouraging at this point. The first main crop is expected in the
autumn of 2020. If successful, there are substantial additional areas of Kakuzi which could be developed.
Engineering
In total, the Engineering division reached break even (2018: trading loss £0.6 million) on revenue of
£22.1 million (2018: £22.2 million), as set out in note 1 to the Accounts. The division continued to be cash
generative.
A JT Engineering had a much better year with sales rising by 15% to £16.0 million as the strategy to
increase utilisation and diversify into other parts of the energy sector continue to pay off. However
increased overheads meant that the business made a small operating loss in the year.
Abbey Metal Finishing and its subsidiary Atfin both had a difficult year as issues in the aerospace supply
chain and concerns from European customers over Brexit-impacted sales volumes. Combined revenues
were down 9% with a consequent impact on profitability.
Food Service
In total the Food Service division made a segment trading profit of £0.8 million (2018: £1.6 million) on
revenue of £29.8 million (2018: £41.5 million), as set out in note 1 to the Accounts.
ACS&T saw reduced profitability from lower revenue as production issues at its major customer saw
storage volumes fall significantly over the summer.
Jing Tea saw revenues rise by 27%. Shortly before the year end Jing opened its first retail store in St
Christopher’s Place, London which began trading well but is currently closed.
Investments
Investment Portfolio. The gains on sale for the year were £1.1 million (2018: £0.4 million). Of this gain
£0.2 million was reflected in the Income Statement and £0.9 million in the Statement of Comprehensive
Income. The total value of the portfolio at 31 December 2019 was £47.0 million (2018: £39.6 million). The
increase reflects the strength of global equity markets, particularly in the second half of 2019, in part
offset by a number of disposals during the year.
13
CAMELLIA PLC
CHIEF EXECUTIVE’S REPORT
Clearly the market value of the portfolio has fallen significantly in the last few weeks though not as
severely as global markets due to the strength of the yen and we estimate the value at 31 March 2020 to
be £43.8 million.
Investment Property. Work continues on the development of the Linton Park Estate with an additional two
properties expected to be completed and available for rental in 2020. In addition, a property in central
London was refurbished and has now been let.
Collections. The collections are held at cost. A number of minor additions and disposals were made during
the year.
Associates
In total, our share of the results of associates amounted to £4.6 million (2018: £7.6 million).
Although BF&M was adversely impacted by two major hurricanes in 2019, Dorian which hit the Bahamas
and Humberto which hit Bermuda, gross premiums written increased by 12% driven by growth in property
premiums in the Caribbean and higher annuity premiums. BF&M’s profit for the year was Bermudian Dollar
13.1 million (2018: Bermudian Dollar 18.5 million).
Our two associate companies in Bangladesh, United Insurance and United Finance, produced satisfactory
results broadly in line with expectations.
POLITICAL, LEGISLATIVE AND LEGAL ISSUES
The Group is present in many jurisdictions and is subject to local legislation. We previously disclosed that in
2018, the Kenyan National Land Commission was asked by a small number of claimant groups to investigate
historical land injustice claims concerning lands registered in the name of Kakuzi and Eastern Produce Kenya.
The land claims have been refuted through the Kenyan legal system. A constitutional petition has been filed
and also a request to stay the proceedings of the National Land Commission until the legal position has been
determined. This matter is on-going and we continue to keep the situation under review.
Group claims against African operations
As we stated in our trading update of January 2020, Camellia and a number of its subsidiary companies
have received notification of claims to be made in the UK relating to allegations made by multiple
individuals concerning two of those companies’ African operations. The allegations are of serious assault,
harassment and sexual misconduct allegedly committed by certain individuals employed by those two
foreign operating companies. The Company and its wider group takes any complaint of criminality,
misconduct, illegality, or unethical behaviour extremely seriously. At this stage the financial impact of
these claims is impossible to quantify, but the related legal and other costs will be significant. Costs
incurred since notification of these claims in 2019 to the end of March 2020 amount to £3.5 million.
Brexit
Brexit and the potential impact across the Group is something for which we have been preparing over the
last three years. Whilst there is now clarity as to the dates, the significant uncertainty as to the precise
structure of any post-Brexit trading arrangements continues to pose challenges for these preparations.
As we have said previously, whilst we expect there to be some impact on our UK operations, we are
confident that the majority of our operations will be largely unaffected.
The direct impact of a no-deal Brexit on our Group primarily arises from potential import and export tariffs,
changes to the way trade flows between the UK and rest of the world and, from a financial perspective, the
volatility of exchange rates and the potential risk we could incur additional tax costs.
CAPITAL INVESTMENT AND DEVELOPMENT
We continued to invest in our assets during the year and £14.5 million was spent on property, plant,
equipment and investment property (2018: £17.4 million). Key projects are referred to in the operational
reports above. A further £4.6 million (2018: £4.3 million) was invested in bearer crop and forestry plantings.
14
CAMELLIA PLC
CHIEF EXECUTIVE’S REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Sustainability, whether it is environmental or social is fundamental to the ethos of Camellia. Many of our
operations have histories going back over 100 years and we continue to invest in them for the long-term.
Ensuring, therefore, that the environments and communities on which we depend are maintained and
enhanced is key to our future.
In 2019, for the first time we also published a separate Environmental, Social and Governance report. This
ESG report allowed us to add more detail as to the breadth and scale of activities that we undertake in
this area and highlight our commitment to it. We intend to publish an updated version during the course
of 2020. Further guidance on our approach to Governance, Sustainability and CSR is also set out in the
Strategic Report on pages 21 to 27 of this document.
As part of our long-term commitment to the environment we are running a large number of programmes
across our operations to mitigate our environmental impact and to reduce our carbon footprint. Clearly
the ability of our operations to continue to invest in these initiatives depends on their results which can
lead to a stop/start approach to this investment. Furthermore, a number of the potential solutions are
untested in the country or on the crop concerned. We have therefore introduced a Chairman’s Fund, the
aim of which is to utilise some of our centrally held resources to maintain these critical initiatives and to
make a step change in the speed and effectiveness of the programmes. More detail will be available in
our 2020 ESG report to be published later this year.
Performance
As part of our environmental impact assessment we measure total energy consumption, carbon
emissions, and water usage as set out below.
Energy and Carbon
Total energy consumed (TWh)*
Total carbon emissions (tonnes CO2e)
Water
Total water withdrawal (million m3)
2019
2018
2017
0.76
229,703
0.79
217,320
0.79
222,775
42.7
40.7
40.9
* Historical data has been adjusted to reflect more accurate conversion factors published each year by the UK Department for Business,
Energy & Industrial Strategy (BEIS).
These numbers set out actual usage, prior years have not been adjusted to reflect acquisitions, disposals
nor other corporate activity.
Overall our energy usage dropped during the year but our total carbon emissions were up by 5.6%. This
largely reflects the acquisitions of tea estates in India in 2019 which rely on coal as a fuel source. One of
the largest uses of energy in the Group is the requirement to process and dry our tea crop and I am
pleased to report that the continuing investment we have been making to increase energy efficiency in
our tea factories has resulted in a drop in our carbon emissions from 1.48kg to 1.39kg of CO2 per kg of
made tea, a reduction of 6%.
SUMMARY
Although 2019 was a less good year financially for the Group compared with the exceptional results in
2018, we continued to make good progress with our core strategy. Our tea operations continued to
produce excellent volumes and quality of tea and we made significant improvements in efficiency and
productivity. Our two other core crops, macadamia and avocado, once again demonstrated the
importance of this diversification, and whilst not yet large enough, are already showing their ability to
mitigate the cyclicality of the tea market. The investments that we are making in these areas will improve
this situation in the future.
Like all commodities, tea has cycles; cycles which can be long or short depending on a range of factors.
However, tea remains the world’s most widely consumed drink after water, global consumption continues
to increase and inevitably prices will improve albeit it remains unclear as to when.
15
CAMELLIA PLC
CHIEF EXECUTIVE’S REPORT
We continue to invest in sustainability; our first ESG report in 2019 showed off some of the strength and
depth of our commitment in this area and was very positively received by our many stakeholders. Our
new Chairman’s Fund will ensure that we maintain our impetus in this area.
We are fortunate that our balance sheet remains strong with £89.4 million of net cash in the Group and
money market deposits amounting to £6.2 million. However some of this cash is committed for long-term
projects and much of it overseas. At this stage there are a number of short-term calls on this cash and
therefore until we get some certainty as to the future, we believe that it is prudent to conserve cash
wherever we can. We have already put a number of capital projects on hold and have decided not to pay
a final dividend for 2019. If circumstances justify, we will declare a special dividend alongside the interim
dividend.
2020 is likely to be one of the most challenging years that the Group has yet faced and is already testing
our operations across the world. I am delighted by the response of our staff and proud of the efforts that
they have made not just in their own business, but in the wider communities where they operate. This
has been particularly true in the agricultural operations where the Group’s hospitals have been made
available to assist local services.
Tom Franks
Chief Executive
7 May 2020
16
CAMELLIA PLC
CHIEF FINANCIAL OFFICER’S REPORT
Overview of Results
The profit after tax for the year ended 31 December 2019 was £15.1 million (2018: £32.3 million).
Profit before tax from our continuing operations in 2019 was £22.3 million which includes £6.2 million
relating to a number of large separately disclosed items (2018: £52.5 million, including provision releases
of £14.4 million). This reduction in profit before tax reflects, inter alia, lower average selling prices for tea,
improved volumes and strong prices for our macadamia crop, lower volumes and higher prices for our
avocado crop, lower profits at BF&M, and a number of significant items:
■
■
A £9.8 million gain from the release of provisions for wage increases relating to prior years in our
agriculture operations following progress on wage negotiations.
The creation of a £3.6 million charge in Bangladesh for workers profit participation obligations for
prior years which has been recognised as a consequence of regulatory developments during the year,
further details of which are set out below on page 20.
Excluding these items, the underlying profit before tax from continuing operations was £16.1 million (2018:
£38.1 million).
Equity attributable to the owners of Camellia was £395.7 million (2018: £395.5 million) with net cash and
cash equivalents of £89.4 million (2018: £109.6 million) and financial assets at fair value through profit or
loss (ie money market funds) having increased to £6.2 million (2018: £3.7 million).
COVID-19 impact
As set out in the CEO’s Report on page 6, our businesses are currently operating broadly as normal with
the exception of our Indian estates. However, the impact of COVID-19 on the Group during the remainder
of this year is difficult to predict with any certainty. Accordingly, we have taken actions to conserve our
cash during this period of uncertainty by reducing our operating and capital expenditure across the Group
and by deciding not to recommend any additional dividends until we have clarity on the situation.
We have undertaken a scenario planning exercise, further details of which are set out in the Report of the
Directors on page 30, to assess a range of potential impacts on our profits and cashflows. This has
included considering the impact of very substantial sales volume reductions across our major operations
and pricing risks for our macadamia and avocado crops as well as the mitigating actions we could take in
those circumstances. The impact of these on our revenue, were they to occur would have a substantially
negative impact on Group profitability. Further, the scenario modelling indicates that in this event, the
Group would, in the absence of material price increases, or significant levels of overseas government
support, make a substantial loss during 2020.
However, with our substantial cash resources, our investment portfolio and limited gearing, we are well
placed to withstand a period of disruption to our operations and sales.
Currencies
Over the course of the year, Sterling strengthened against all our key operating currencies. This has
resulted in a loss on foreign exchange translation of £16.7 million (2018: gain £11.6 million) which is
reflected in the Statement of Comprehensive Income. Had we translated our profit before tax for the year
using the same average rates as last year, our results for 2019 would have been £0.8 million lower. Our
profit before tax from continuing operations includes an exchange loss of £0.3 million on transactions
during the year (2018: gain £0.2 million).
There has been significant currency volatility during 2020 to date, the impact of which will only become
clear as the year progresses. We are fortunate that much of our revenue is denominated in hard
currencies which provides some hedging against our emerging markets currency risk.
17
CAMELLIA PLC
CHIEF FINANCIAL OFFICER’S REPORT
Cash
The Group’s net cash position decreased to £89.4 million at 31 December 2019 (2018: £109.6 million)
reflecting, inter alia, lower net cash inflows from continuing operating activities of £12.6 million (2018:
inflow £24.5 million) as a result of the reduced trading results. We spent £9.4 million on acquiring
businesses and in addition maintained a significant level of investment in our existing operations and in
purchasing land (£19.0 million). We also increased our holding in BF&M at a cost of £1.3 million. The
Group has loans outstanding amounting to £6.9 million (2018: £3.9 million).
As previously highlighted, a number of the Group’s key trading subsidiaries have minority shareholders
such that when cash is repatriated to the UK by way of dividends, those minorities are entitled to their
share of the relevant dividend. In a number of cases, withholding taxes are also payable from our share
of those dividends.
Funds are reserved within our subsidiary companies to ensure wherever possible a level of headroom
exists against the risk of crop losses and adverse price movements, such as are possible as a result of
COVID-19. In addition funds are held for:
■
Long-term development projects related to the planned continued extension of our core crop
portfolio, including in our new locations.
■ Disputed taxation assessments (see below).
■ Other contingent liabilities.
These will reduce the net cash available to the Group in future years as they are spent, resolved, or (in the
case of the disputed taxation assessments) if they are not settled in the way we expect.
In light of the impact of COVID-19 on equity markets and on interest rates, it is likely that deficit reduction
contributions will be required to our UK defined benefit pension scheme following the completion of our
triennial valuation later this year.
Our businesses are conserving cash pending further clarity on the full impact of the COVID-19 situation
and we expect capital expenditure to be lower in 2020 than historically.
Taxation
The Group’s effective tax rate of 32.3% (2018: 38.2%) is higher than we would want. The key reason for
this is that it reflects the losses which are incurred in the UK for which no tax relief is available and the
fact that we are not able to recognise the associated deferred tax asset on our balance sheet until it is
sufficiently clear when those UK tax losses will be utilised.
Tax and Other Provisions
During the year, the wage negotiations in Kenya were resolved for the Collective Bargaining Agreement
years of 2014 to 2019 and payment made to employees. The balance of the provisions which we were
carrying have now been released, as have certain provisions for wage increases in India, amounting in
aggregate to £9.8 million. As is normal at this time of the year, we have ongoing wage negotiations in
Bangladesh and India. We consider we have made adequate provision for the likely outcome of these.
We quantify our provisions for tax in accordance with IFRIC 23 (Uncertainty over tax treatments) which we
have implemented for the first time this year. The impact of this has not been material to our tax charge
for the year. However, there are a number of significant movements in tax provisions due to changes in
circumstances.
18
CAMELLIA PLC
CHIEF FINANCIAL OFFICER’S REPORT
We have a number of significant uncertain tax situations, the majority of which have been disclosed
previously:
■ During the year we released a provision of £2.3 million for taxation arising from assessments raised
by the Malawi Revenue Authority for unpaid taxes from prior years in light of the assessments having
been set aside by a judicial review hearing and the years in question now falling outside the enquiry
window.
■
■
■
A provision of £1.3 million has been established in respect of possible withholding taxes on branch
remittances from Bangladesh where the Bangladesh Revenue Authority is contesting the applicable
rate.
In India assessments have been received for £3.8 million of excise duties, sales and entry tax £0.9
million and £1.1 million of income taxes. These are being contested and no provisions have been
made.
In India, the long running dispute between our local subsidiaries and the Government of West Bengal
over the payment of a land tax, locally called ‘Salami’, remains unresolved. Lawyers have advised that
payment of Salami does not apply, accordingly no provisions have been made. The sums contested
amount to £1.3 million excluding penalties.
In some of our jurisdictions, the tax authorities have levied assessments in respect of prior years. In a
number of situations, the liability position under statute and case law is clear but unfortunately, in other
situations the law is either unclear or underdeveloped and in these instances we make provisions where
we consider it is more likely than not that a liability will arise and the quantum of provision is determined
in accordance with IFRIC 23.
Pensions and Other Employment Benefits
The Group operates a number of defined benefit pension schemes, the largest of which is in the UK. The
triennial valuation of the UK scheme is due to be carried out in 2020. The 2017 triennial valuation for the
UK scheme, which was closed to future accrual during 2016, showed a funding surplus of £7.1 million.
The recent UK interest rate reductions and the major movements in equity market valuations due to
COVID-19 will have significantly impacted both the scheme’s asset values and its obligations such that
were the valuation to be performed today, the scheme would be in a deficit position.
The overseas defined benefit schemes are located in Bangladesh and India. Our businesses in Kenya,
India and Bangladesh also have obligations to pay terminal gratuities based on years of service and, in
some cases, based on salaries.
In aggregate, our employee benefit schemes currently show deficits on an IAS 19 basis of £22.0 million
(2018: £24.7 million deficit).
Accounting for defined benefit schemes is prescribed by IAS 19 and the quantum of the deficit continues
to be highly sensitive to small changes in assumptions as regards inflation and gilt yields in the relevant
jurisdictions and to asset performance. This year a net actuarial gain of £3.5 million (2018: loss
£0.7 million) is reflected in the Statement of Comprehensive Income. The net gain this year arises
primarily from the UK scheme where strong asset performance was only offset in part by the effect of
lower discount rates and lower inflation assumptions.
Our Income Statement also reflects current and past service costs of £1.6 million (2018: net gain
£5.9 million, including a £9.0 million gain re post-employment benefits curtailment gain) and £1.1 million
(2018: £1.5 million) in respect of employee benefit interest.
19
CAMELLIA PLC
CHIEF FINANCIAL OFFICER’S REPORT
In addition, £3.6 million has been charged to our Income Statement in 2019 in respect of possible
workers profit participation obligations for prior years in Bangladesh which has been recognised as a
consequence of regulatory changes during the year. As announced previously, legislation has been
enacted in Bangladesh requiring certain companies to make workers profit participation payments. The
applicability of this legislation to our tea operations in Bangladesh is not wholly clear, and the
government fund to which payments are to be made has not yet been established. We consider sufficient
provision to have been made for these costs.
Susan Walker
Chief Financial Officer
7 May 2020
20
CAMELLIA PLC
STRATEGIC REPORT
Business Review
The Company is required to set out in this report a fair review of the business of the Group during the
year ended 31 December 2019 and a description of the principal risks and uncertainties facing the Group.
A fair review of the business of the Group is incorporated within the Chairman’s Statement and the Chief
Executive’s report on pages 5 to 16. The Chairman’s statement and the Chief Executive’s report, together
with information contained within the report of the Directors, highlight the key factors affecting the
Group’s development and performance. Further details of the financial performance and position of the
Group are set out in the Chief Financial Officer’s report on pages 17 to 20. Other matters are dealt with
below.
Group Strategy
The Board has adopted the following strategy for the Group:
■
■
■
■
■
To develop a worldwide group of businesses requiring management to take a long-term view.
The achievement of long-term shareholder returns through sustained and targeted investment.
Investing in the environment and sustainability of the communities in which we do business.
Setting the principles which the operating companies need to achieve through their policies and
procedures to ensure that the quality and safety of their products and services meet the highest
international standards.
The continuous refinement and improvement of the Group’s existing businesses using our internal
expertise and financial strength.
The progress against this strategy during the year is set out in further detail in the Chief Executive’s report
shown on pages 6 to 16 and within the Report of the Directors.
Business Model
The Group consists of operations engaged in Agriculture, Engineering and Food Service. The Group also
holds a range of Investments. Operations are managed on a divisional basis with regular reports made to
the Board on performance against the annual budget.
S172 Statement
This section serves as the Company’s section 172 statement and should be read in conjunction with the
whole of the Strategic Report, the Corporate Governance Report and the Statement of Directors’
Responsibilities. Section 172 of the Companies Act 2006 requires Directors to take into consideration the
interests of stakeholders in their decision making.
The Directors continue to have regard to the interests of the Company’s employees and other
stakeholders, including the impact of its activities on the environment and the Company’s reputation,
when making decisions. Acting in good faith and fairly between members, the Directors consider what is
most likely to promote the success of the Company for its members in the long term.
The Board regularly considers the views of its principal stakeholders and how we engage with them. The
stakeholder voice is brought into the boardroom throughout the annual cycle through information
provided by management presentations, meetings and operational visits.
The Board continues to enhance its methods of engagement with the workforce. For example, during
2019 it was concluded that the most effective method to measure engagement across the Group’s UK
staff was to undertake an employee survey, and overseas operations are encouraged to undertake
similar steps.
During the year, the Board reviewed our Group Principal Policies, which includes additional steps to
prevent modern slavery across the operations. For more information, refer to pages 25 to 26.
21
CAMELLIA PLC
STRATEGIC REPORT
Principal Risks and Uncertainties
There are a number of possible risks and uncertainties that could impact the Group’s operations. The
Group regularly monitors the risks at operational and Group level. Information on the Group’s financial
risks is disclosed in note 41 of the Accounts. The following material risks relating to the Group’s principal
operations have been identified.
Agriculture
Risk
Climate change
Potential Impact
Current agricultural patterns and
practices become unsustainable.
Land values and local communities are
impacted.
Mitigation
Geographical spread of operations to
lessen the impact of extreme weather on
the Group as a whole.
Drought
Level of rainfall affecting crop yields.
Price volatility
Fluctuations in commodity prices impact
profitability each season. In the event of a
prolonged depression in the world tea
market the impact on the Group would
be material.
Currency
fluctuation
Profit volatility arising from sales in
US Dollars and Euros where there is no
natural hedge against the cost of
production in local currency.
Cost of labour
Increased cost of production and lower
profitability.
Investment in irrigation, water storage
and drought resistant crop varieties.
Use of forward contracts, product and
crop diversification and building long-term
strategic relationships with key customers.
Monitoring of foreign exchange rates and
cash management.
Introduction of more efficient labour and
field practices and the increased use of
mechanisation and automation.
Paying more for existing property (for
example if freeholds become leaseholds)
or potentially losing access to farms and
estates.
Monitoring local land issues with the
assistance of lawyers and local trade
associations. Maintaining collaborative
relationships with governments at local
and national levels.
Periodic interruptions to the operation of
the businesses at a local level.
Increasing security for our workers and
operations during times of civil unrest.
Inability to carry on business in a manner
which is legal and ethical.
Vulnerability of the employees to injury at
work due to the use of machinery and
chemicals. Payment of fines and claims,
criminal prosecutions and reputational
damage.
Strict adherence to anti-bribery legislation
and the implementation of the Group
Principal Polices.
Strict compliance with legislation and
training employees to adopt safe working
practices. Regular external compliance
reviews.
Long-term
political issues
over land
ownership in
Kenya, Malawi,
South Africa and
Tanzania
Civil unrest and
political
instability
Corruption
Health and safety
22
CAMELLIA PLC
STRATEGIC REPORT
Engineering
Risk
Key customer
dependence
Dependence on
the oil and gas
and aerospace
sectors
Health and safety
Food Service
Risk
Key customer
dependence
Health and safety
Investments
Risk
Market
Group
Risk
Prolonged
impact of a
pandemic
Potential Impact
Mitigation
Losing a major customer.
Diversification of the customer base and
careful customer relationship management.
Changes in market conditions leading to
lower demand for services.
Diversification into other sectors. Close
monitoring of the current sectors.
Vulnerability of the employees to injury at
work due to the use of machinery and
chemicals. Payment of fines and claims
and reputational damage.
Strict compliance with legislation and
training employees to adopt safe working
practices. Regular external compliance
reviews.
Potential Impact
Losing a major customer.
Vulnerability of the employees to injury at
work due to the use of machinery and
chemicals. Payment of fines and claims,
criminal prosecutions and reputational
damage.
Mitigation
Diversification of the customer base and
careful customer relationship
management.
Strict compliance with legislation and
training employees to adopt safe working
practices. Regular external compliance
reviews.
Potential Impact
Mitigation
Decline in the value of investments
and property.
Portfolio diversification, careful stock
selection, the regular monitoring of
individual company stock performance
and a diversified property portfolio.
Potential Impact
Mitigation
Interruption to production and/or
disruption of supply to customers.
Volatile equity markets impacting the
pension schemes’ deficits with a resultant
increase in the funding requirement.
Increased risk of bank failure, and foreign
exchange volatility resulting in increased
costs. Risk of imposition of currency
controls leading to the inability to remit
funds from overseas operations.
Implementation of contingency plans.
Cost reduction and cash management
measures.
Ongoing monitoring of banking partners
and country credit ratings.
23
CAMELLIA PLC
STRATEGIC REPORT
Group (continued)
Risk
UK and Overseas
Pensions
Increases in inflation
and/or reductions in
long- term
government bond
yields
Lower than expected
asset return
Changes in local laws
restricting the
investment choices
for the schemes’
assets
Environmental
Taxation
Uncertainties in
relation to the
interpretation of
complex tax
legislation, or arising
from changes in tax
legislation
Risk that the Group’s
judgements are
challenged by tax
authorities
Legal
Uncertainties in
relation to the
application of English
or other law or
changes in case law
Potential Impact
Mitigation
Increase in the pension schemes’
deficits with a resultant increase in
the funding requirement.
Regular monitoring of the investment
strategy, the funding position of the
pension schemes and investment
performance.
Contamination of local and wider
environment due to the use of
machinery and chemicals. Payment of
fines and claims, criminal prosecutions
and reputational damage.
Strict compliance with legislation, training
employees to adopt safe working practices
and lessen the impact on the
environment.
Future adjustments to taxable income
and expenses already recorded or
increases to the cash tax costs
incurred by the Group in future.
Tax exposures are considered individually,
and judgements made with support from
experienced tax professionals and
external advisors.
Group legal risk in relation to the
activities of overseas operations
(including potential litigation in the
UK) and incurring costs in relation to
the same.
Monitoring the interpretation of law and
taking appropriate legal advice.
IT systems
Interruption to services for customers
and the business.
Implementation of a disaster recovery
plan.
24
CAMELLIA PLC
STRATEGIC REPORT
Group Principal Policies – GPPs
There are a range of issues that are important to the Group and to all of our operations, whatever sector they
operate in. These are set out in the Group Principal Policies which are cascaded across the Group. Each
operation is required to prescribe its own local policies based upon the Group Principal Policies. On an annual
basis, each significant operation confirms to Group its adherence with the Group Principal Policies. Ultimately,
our individual operations have experts who are best placed to identify how each policy can be implemented
and applied which in turn enables them to operate responsibly and ethically over the long-term.
Notwithstanding the fact that overall responsibility for the implementation and enforcement of the GPPs
rests with the management of each operating company, certain GPPs (such as the Anti-Bribery and
Corruption GPP, the Modern Slavery GPP and the Tax GPP) include provisions which are directly effective.
This is the case where observance of these provisions is required in order for Camellia Plc to comply with its
own legal and regulatory obligations.
The GPPs can therefore be grouped into the following four categories:
■
■
■
■
The High-level GPPs
The Compliance GPPs
The Modern Slavery GPP
The Tax Principles
The High-level GPPs comprise the Certification and Traceability GPP, the Health and Safety GPP, the
Environment GPP, and the Employee Welfare GPP. The Compliance GPPs comprise the Anti-Bribery and
Corruption GPP, and the Whistleblowing GPP. A summary of each principal policy is set out below and
they are set out in full on our website.
High-level GPPs
Certification and Traceability
As part of our end to end supply chain, our operations are required to meet the requirements of our
customers and suppliers in terms of certifications and traceability. The vast majority of our tea gardens
are RFA certified and all our macadamia, avocado and winery processing facilities are FSSC 22000
certified. Across the Group, operations have also obtained ISO14001, ISO9001 and ISO45001 and many
other appropriate accreditations.
Health and Safety
We take responsibility for our people by promoting good health and providing a safe and healthy
workplace to protect all employees, contractors, visitors and the public from foreseeable work hazards.
All operations are required to comply with local health and safety legislation, regulations and to obtain
certifications from external authorities.
Environmental
We are mindful of the environment in which we operate, recognising that our operations require natural
resources and that our operations generate emissions and waste. We understand and comply with
current applicable legislation in the jurisdictions in which we operate. Our operations are each required
to commit to policies which reduce their environmental footprint and which include (where appropriate),
carbon, recycling, waste and water.
As part of our wider drive towards greater sustainability, we have developed a range of mid to long-term
targets to reduce, in some cases substantially, the environmental impact of our operations. As an
example, strategic improvements in our usage and sourcing of energy supports our ambition to align with
Science-Based Targets. Targets adopted by the operations to reduce greenhouse gas emissions are
considered ‘Science-Based’ if they are in line with the level of de-carbonisation required to keep the global
temperature increase below 2ºC compared to pre-industrial temperatures.
25
CAMELLIA PLC
STRATEGIC REPORT
Employee Welfare
Our employees are at the heart of what we do, and their welfare is paramount. Operations are required
to have policies and procedures in place which cover equality, health, personal development, training,
diversity, and (where appropriate) education, housing and sanitation.
We consciously and continuously work towards encouraging equality in management positions across
our operations. The Group complies with local regulations to encourage employees with disabilities to
work in our operations and where necessary, makes appropriate adjustments to working practices.
All our tea estates have a hospital, clinic or dispensary. In addition, in India and Bangladesh employees
have access to central group operated hospitals to which more serious cases can be referred. We provide
medical services, including where appropriate antiretroviral drugs, in those communities where HIV/AIDS
is prevalent. We also give medical support to schools that are either run locally or by our operations.
We are committed to providing development opportunities for all. We provide education opportunities in
areas where we operate, either by building and running schools or by supporting state educational
projects in our communities. We also provide programmes for skills development and adult education.
Compliance GPPs
Anti-Bribery and Corruption
The Company has adopted an anti-bribery policy which complies primarily with the requirements of the
UK Bribery Act 2010 although the Board also requires compliance with the laws of all countries in which
the Group operates.
All Group employees, officers and executives, and all those acting for or on the Group’s behalf are strictly
prohibited from offering, paying, soliciting or accepting bribes or kickbacks, including facilitation payments.
Compliance with the anti-bribery policy is monitored by the individual operations and incidents are
reported to the anti-bribery officer for such operation.
In addition, the Board has adopted an anti-facilitation of tax evasion policy which complies with the
requirements of the UK Criminal Finances Act 2017. The policy has been introduced across the Group and
its compliance is monitored at Group and by individual operations.
Whistleblowing
Our whistleblowing policy provides guidelines for people who feel they need to raise certain issues in
confidence. It is designed to protect those raising a genuine concern, in line with the Public Interest
Disclosure Act 1998 or other jurisdictional legislation. Each operation is required to have a designated
Local Whistleblowing Officer. Group employees have access to the whistleblowing officer for the
individual operation, as well as the Group Whistleblowing Officer or the chairman of the Audit committee.
Modern Slavery GPP
The Group continues to comply with the requirements of the Modern Slavery Act 2015, to ensure that
modern slavery and human trafficking are not taking place either within the Group or in the supply chains
of our operations. A copy of the statement for the year ended 31 December 2019 is available on the
Company’s website. In some countries, it is both the cultural norm and permissible for parents to involve
their children in the production process, we do not subscribe to this approach and the use of child labour
is prohibited across the Group. Group operations are required to confirm this statement and adopt local
policies and procedures to ensure continued compliance. This includes setting out codes of conduct
when working alongside customers and suppliers.
Tax Principles
The Group’s tax principles include: compliance with applicable tax laws; payment of the correct tax
amounts; interpretation of tax law; undertaking tax planning based on commercial rationale; and
transparency with tax authorities.
26
CAMELLIA PLC
STRATEGIC REPORT
Key Financial Performance Indicators
The nature of the Group’s principal activities is such that the Board takes a long-term view of its
operations, particularly in Agriculture.
The Board reviews monthly reports with a range of financial and other indicators to monitor the
performance of each division depending on the nature of its operations.
For the Agriculture division, the Board receives monthly data on sales prices and volumes, cost of
production and crop volumes against budget and on a per unit basis. Rainfall and other climate data are
also considered.
For the Engineering and Food Service divisions, the Board receives monthly profit and operating
performance information.
For Investments, the value and performance of the share portfolio is reviewed quarterly.
Certain of the key financial performance indicators are included in the Chief Executive’s report on pages 6
to 16.
Non-Financial Performance Indicators
Each operation has developed non-financial KPIs that are relevant to it, these include:
■ Market trends – including tea auction volumes, demand for each product by country where available,
supply data and market prices.
■ Health & Safety – including days lost to injury, number of accidents, whistleblowing incidents and
updates to legislation.
■
■
Industrial disputes – including days lost to strike action and other significant labour issues.
Land and politics – including elections, material new regulation or case law.
■ Movements in key personnel – including promotions, resignations and retirements of senior
management.
■ Weather and climate – including rainfall, temperatures and long-term meteorological trends.
These are regularly monitored and used by local management. The Board considers such KPIs by
exception where local operations notify that significant material issues have emerged.
Employees
The Group keeps employees informed through internal publications, the website and social media on the
performance of the Group and on matters affecting them as employees and arrangements to that end
are made by the local management.
It is also the Group’s policy that operating companies give due consideration to employment applications
received from disabled persons and to give employees who become disabled every opportunity to
continue their employment.
The table below provides a breakdown of the gender of the Directors and employees at 31 December 2019.
Company Directors
All employees
By order of the Board
Amarpal Takk
Company Secretary
7 May 2020
Men
7
38,721
Women
1
32,569
27
CAMELLIA PLC
REPORT OF THE DIRECTORS
The Directors present their report together with the audited consolidated accounts for the year ended
31 December 2019.
Principal Activities
The Company is a public limited company, which is quoted on the AIM Market of the London Stock
Exchange and incorporated and domiciled in England and Wales. The principal activities of its subsidiary
undertakings comprise:
Agriculture
Engineering
Food Service
Investments
Further details of the Group’s activities are included in the Chief Executive’s report on pages 6 to 16.
Results and Dividends
The profit after tax for the year amounted to £15.1 million (2018: £32.3 million). The Board is not
proposing a final dividend for the year 2019. Therefore, the total dividend payable for 2019 is 42p per
share (2018: 142p per share). Details are shown in note 9 to the Accounts.
Directors
The Directors are listed on page 4. The following Directors had beneficial interests in the shares of the
Company.
Camellia Plc ordinary shares of 10p each:
Malcolm Perkins
Tom Franks
Susan Walker
31 December
2019
1 January
2019
1,673
100
100
1,673
100
100
Under the Company’s articles of association all the Directors are required to retire annually. Accordingly,
Malcolm Perkins, Tom Franks, Susan Walker, Graham Mclean, Chris Relleen, Frédéric Vuilleumier, William
Gibson and Gautam Dalal will retire and, being eligible, will seek re-election at the AGM. Jonathon Bond
and Simon Turner were each appointed as a Non-Executive Director effective from 6 March 2020 and will
seek election to the Board at the AGM.
None of the Directors or their families had a material interest in any contract of significance with the
Company or any subsidiary during, or at the end of, the financial year.
Executive Directors
Malcolm Perkins was appointed a Director in 1999 and Chairman in 2001, having joined Eastern Produce
(Holdings) Limited now Linton Park Plc in 1972. He is a chartered accountant and Chairman of the
Nomination committee.
Tom Franks was appointed as Chief Executive with effect from 1 September 2015. He joined Camellia as
Deputy Chief Executive in October 2014. He is a chartered accountant and a Fellow of the Chartered
Institute of Securities and Investment.
Graham Mclean, a qualified agriculturalist, was appointed as Director of Agriculture in October 2014. He
was previously regional director of the Group’s operations in Africa and has worked for the Group for
more than 25 years. He is Chairman and a non-executive director of Kakuzi Plc.
Susan Walker was appointed Chief Financial Officer for the Group on 4 June 2015. She joined Camellia as
Finance Director Designate on 1 July 2014. She is a chartered certified accountant and a non-executive
director of Goodricke Group Limited and United Finance Limited.
28
CAMELLIA PLC
REPORT OF THE DIRECTORS
Non-Executive Directors
Chris Relleen was formerly a partner at PricewaterhouseCoopers. He was appointed as an independent
non-executive Director and Deputy Chairman in January 2006 having previously been a non-executive
Director of Linton Park Plc. He is senior independent Director, chairman of the Audit committee and a
member of the Nomination and Remuneration committees.
William Gibson was appointed as an independent non-executive Director in September 2014. He was
previously chairman and managing director of Westminster Press and an executive director of the
Financial Times Group. He is chairman of the Remuneration committee and a member of the Audit and
Nomination committees.
Frédéric Vuilleumier was appointed as an independent non-executive Director in March 2013. He is a
partner of Oberson Abels SA, a law office based in Geneva, Switzerland. He was a member of the Audit
committee until April 2019.
Gautam Dalal was appointed as an independent non-executive Director in March 2018. He was previously
a partner at KPMG and a founder-director of the UK India Business Council, a member of the Asian
Business Association and a director of AMREF Health Africa’s International Board. He was appointed a
member of the Audit committee in 2019.
Jonathon Bond was appointed as an independent non-executive Director in March 2020. Jonathon has
spent 25 years in the private equity industry with a particular focus on raising standards of governance
and performance. He is also a senior independent director of Jupiter Fund Management plc, a non-
executive director of Standard Life Private Equity Trust plc and Scottish Widows/LLoyds Bank Insurance.
Simon Turner was appointed as a non-executive Director in March 2020. After an earlier career in the
legal profession, he is now president of the board of the trustee of The Camellia Foundation.
Company Secretary
Amarpal Takk was appointed as Group General Counsel and Company Secretary in April 2018. He is a
qualified solicitor of England and Wales.
Substantial Shareholdings
As at 7 May 2020 the Company has been advised of the following interests in its share capital:
Beneficial shareholder
Shareholder
No. of Shares
Camellia Private Trust Company Limited
Camellia Holding AG
1,427,000
Fide Holding NV*
Quaero Capital SA
Lynchwood Nominees Limited
360,500
HSBC Global Custody
Nominee (UK) Limited
142,773
*Controlled by Nokia Pensioenfonds VZW
% of total
voting rights
51.67
13.05
5.17
Share Capital and Purchase of Own Shares
The Company’s share capital comprises one class of ordinary shares of 10p per share which carry no
restrictions on the transfer of shares or on voting rights (other than as set out in the Company’s articles
of association). There are no agreements known to the Company between shareholders in the Company
which may result in restrictions on the transfer of shares or on voting rights in relation to the Company.
Details of the issued share capital are contained in note 35 to the Accounts.
At the AGM in 2019, shareholders gave authority for the Company to purchase up to 276,200 of its own
shares. This authority expires at the conclusion of this year’s AGM at which a resolution proposing
renewal of the authority will be submitted to shareholders.
29
CAMELLIA PLC
REPORT OF THE DIRECTORS
Auditors
A resolution proposing the reappointment of Deloitte LLP will be put to the AGM.
Each of the persons who were Directors at the time when this Directors’ report was approved has confirmed that:
■
■
So far as each Director is aware, there is no relevant audit information of which the Company’s
auditors are unaware.
Each Director has taken all the steps that ought to have been taken as a Director, including making
appropriate enquiries of fellow Directors and of the Company’s auditors for that purpose, in order to
be aware of any information needed by the Company’s auditors in connection with preparing their
report and to establish that the Company’s auditors are aware of that information.
Employees
Details in relation to employees are set out on page 27.
R&D
The Group undertakes some R&D projects within its operations in order to improve efficiency and grow
revenues.
Future Development
Details of future developments are set out in the Chief Executive’s report.
Going Concern
As set out in the CEO’s Report on page 6, our businesses are currently operating broadly as normal with
the exception of our Indian estates.
The Directors, at the time of approving the financial statements and, after assessing the principal risks
have considered the impact of a severe but plausible downside scenario for COVID-19, with the major
variables being the depth and duration of COVID-19 and the extent of action taken by governments in the
jurisdictions in which we operate. The Directors considered the impact of the current COVID-19
environment on the business for the next 15 months.
Whilst the situation evolves daily making scenario planning difficult, we have considered several variables
which may impact on revenue, profits and cash flows. In light of the nature of our business and our
current approvals/status in our various jurisdictions, we have assumed our operations to be important,
essential businesses which will continue to operate wherever possible with appropriate safety protocol in
place and on the basis that we will also be able to continue to sell our produce to customers.
Whilst the virus will have an impact on many aspects of the Group’s operations, disruption to the
production, distribution, demand for and hence sales of our core crops; tea, macadamia and avocado,
will have the biggest impact on our cashflows. Within that, as tea is still our major revenue generator
(67% of Revenue in 2019) and involves the employment of a large labour force, any disruption to tea
production and/or sales activities will have a disproportionately adverse impact on our cashflows.
All our businesses have put in place contingency plans, aimed at making operational cost reductions and
wherever possible delaying or cancelling non-critical expenditure.
At 31 December 2019, the Group had cash and cash equivalents of £89.4 million with borrowings of
£6.9 million. In addition, the Group had undrawn short-term loan and overdraft facilities of £24.1 million
and a portfolio of liquid investments with a fair market value of £47.0 million.
30
CAMELLIA PLC
REPORT OF THE DIRECTORS
We have modelled various scenarios using assumptions including significantly reduced combined sales
volumes of up to 30% for tea, up to 40% for avocado exports and up to 25% for macadamia during 2020.
The revenue and operational impact of such volume reductions across our operations would have a
substantially negative impact on Group profitability. We have also considered the risk of price reductions
during 2020 for our macadamia and avocado crops. The scenario modelling indicates that the Group
would, in the absence of material price increases, or significant levels of government support, make a
substantial loss during 2020. We would however anticipate a recovery in subsequent years as the impact
of the virus recedes.
Historically in the tea sector, restrictions on, or reductions in the supply of tea either regionally or globally
have led to higher selling prices. It is too soon, and the COVID-19 situation too novel, to determine the
extent to which this may occur in 2020. Accordingly, for the purposes of our downside scenario planning
we have not reflected increased selling prices.
The Directors believe that the Company and the Group are well placed to manage their financing and
other business risks satisfactorily and, have a reasonable expectation that the Company and the Group
will have adequate resources to continue in operational existence for the foreseeable future. The
Directors therefore continue to adopt the going concern basis in preparing the financial statements.
Corporate Governance
The Company’s statement on corporate governance can be found in the Corporate Governance report on
pages 32 to 35.
Political Donations
The Company has no political affiliations and does not make political donations. Its operations work with
governments and other parties around the world on issues that are important to our customers, and
stakeholders, communities and to the interests of the business.
Stewart Holl (India) Limited and Amgoorie India Limited, made an aggregate donation in April 2019 of
Indian Rupees INR 400k (equivalent to approximately £4,400) to Assam Pradesh Congress Committee.
By order of the Board
Amarpal Takk
Company Secretary
7 May 2020
31
CAMELLIA PLC
CORPORATE GOVERNANCE
Statement of Compliance
The Company fully complies with the Quoted Companies Alliance’s Corporate Governance Code for Small
and Mid-size Quoted Companies (“QCA Code”). The Chairman considers the application of standards of
corporate governance that are appropriate for the Group’s nature, status, profile, size and circumstances
to be important in ensuring the Group is managed for the long-term benefit of all stakeholders. There are
ten principles of the QCA Code which the Company complies with in full. The table on our website sets
out how we comply.
The Group consists of a portfolio of businesses which are grouped into independently managed divisions.
These divisions report into the Board by function against a variety of metrics including budgets and
business plans.
The Board
The Board currently comprises ten Directors, six of whom are non-executive Directors. The remaining
Directors are executive Directors, including the Chairman. Chris Relleen, the Deputy Chairman, has been
designated as the senior independent Director. The names and brief biographical details of each Director
appear on pages 28 and 29.
There is on-going dialogue between the Chairman and the Chief Executive with the majority shareholder
whose views are reported to the Board. The Company is also in contact with other significant shareholders.
The Board has established Remuneration, Audit and Nomination committees. Terms of reference of each
of the committees can be viewed on the Company’s website.
The Board is responsible for managing the Group’s business and has adopted a schedule of matters
reserved for its approval. The schedule is reviewed periodically and covers, inter alia, the following areas:
■
■
■
■
■
■
■
■
■
Strategy
Acquisitions and disposals
Financial reporting and control
Internal controls
Approval of expenditure above specified limits
Approval of transactions and contracts above specified limits
Responsibilities for corporate governance
Board membership and committees
Approval of changes to capital structure
A full copy of the schedule is available on the Company’s website.
A report summarising the Group’s financial and operational performance is provided to Directors each
month. Each Director has sufficient information in advance of Board meetings to enable informed
judgements to be made on matters referred to the Board. The Board met nine times in 2019.
Attendance by Directors at Board and committee meetings held during the year was as follows:
Director
Malcolm Perkins
Chris Relleen
Tom Franks
Graham Mclean
Susan Walker
William Gibson
Frédéric Vuilleumier
Gautam Dalal
32
Board
Audit
Remuneration
Nomination
9/9
8/9
9/9
9/9
9/9
9/9
9/9
9/9
–
3/3
–
–
–
2/3
–
3/3
–
1/1
–
–
–
1/1
–
–
1/1
1/1
–
–
–
1/1
–
–
CAMELLIA PLC
CORPORATE GOVERNANCE
Board Evaluation
The Board has agreed to undertake a performance evaluation by way of internal review every three years.
The last evaluation was conducted in 2018. Details of the next review will be disclosed when the next
review is completed at the end of 2021.
Executive Committees
The Board has established the Strategy Group, consisting of the Chairman and the executive Directors of
the Board, and also two Executive Committees. The Agriculture Executive Committee is chaired by the
Director of Agriculture and includes the Chief Executive, Chief Financial Officer, the Group General
Counsel and heads of all the key agricultural operations. The Engineering and Food Service Executive
Committee is chaired by the Chief Executive and includes the Chief Financial Officer, the divisional heads
of Engineering North, Engineering South and Food Service, the Managing Director of Jing Tea, the Group
General Counsel and the UK Head of HR.
Investments and Associates report directly to the Chief Executive.
Nomination Committee
The committee is chaired by Malcolm Perkins. Its other members are William Gibson and Chris Relleen.
The principal responsibilities of the committee are set out below:
■
■
■
Review the balance and composition (including gender and diversity) of the Board, ensuring that they
remain appropriate.
Be responsible for overseeing the Board’s succession planning requirements including the
identification and assessment of potential Board candidates and making recommendations to the
Board for its approval.
Keep under review the leadership needs of, and succession planning for, the Group in relation to
both its executive and non-executive Directors and other senior executives.
The committee met once during the year to consider the composition of the Audit committee.
Audit Committee
The committee is chaired by Chris Relleen. The other members of the committee during the year were
Frédéric Vuilleumier and William Gibson. Gautam Dalal replaced Frédéric Vuilleumier as a member of the
committee from April 2019. During 2019, the committee met on three occasions.
The principal responsibilities of the committee are set out below and were undertaken during the year:
■ Monitor the effectiveness of the Group’s risk management practices.
■
■
Review the effectiveness of the Group’s internal control system. The committee regularly reviews the
effectiveness of internal audit activities carried out by the Group’s accounting function and senior
management.
Review and monitor the financial statements of the Company and the audit of those statements and
to monitor compliance with relevant financial reporting requirements and legislation.
■ Monitor the effectiveness and independence of the external auditors.
■
Review non-audit services provided by the external auditors.
Significant issues considered by the Audit Committee
The Audit committee assesses whether suitable accounting policies have been adopted and whether
management has made appropriate estimates and judgements. In the year under review, the Audit
committee considered the following matters in relation to the financial statements:
33
CAMELLIA PLC
CORPORATE GOVERNANCE
Going concern
The committee considered the appropriateness of the going concern principle of accounting used in
preparing the financial statements in the context, in particular, of the impact of COVID-19 pandemic on
the Group’s cash requirements.
Biological assets
One of the key areas of judgement that the committee considered in reviewing the financial statements
was the valuation of biological assets in accordance with IAS 41. Valuations are based on discounted cash
flows or are carried out by external professional valuers. These were considered for consistency of
approach and assumptions agreed as reasonable. For more details see note 17 to the Accounts.
Pensions
A key area of judgement is in relation to the valuation of the pension schemes obligations. Whilst this is
conducted by independent actuaries, the size of the obligation means that a relatively minor difference in
the assumptions could result in a material change in the quantum of the obligation. The committee
considered the competence of the actuaries and the key assumptions adopted and concluded that the
work performed is sufficient to support the valuation.
Carrying value of intangible assets
The Group’s carrying value of the Jing and Tea City brands and of the goodwill relating to the two Assam
estates were discussed in light of the trading of those businesses. The committee considered the fair
value of the Group’s holdings and whether any impairment in the carrying value had occurred and agreed
that apart from a £0.3m provision impairment of the goodwill relating to the Assam gardens, no
impairment was required.
Carrying value of BF&M
The Group’s carrying value of BF&M is higher than the share price for BF&M. The committee considered
the fair value of the Group’s holding and whether any impairment in the carrying value had occurred and
in view of the control premium associated with our holding concluded that no impairment is required.
Adoption of IFRIC 23, tax and other provisions
The basis of provisions for material uncertain tax situations were considered by the committee as were
the provisions for wage increases in India and in Bangladesh. The committee is satisfied that the
provisions represent best estimates of the likely liabilities.
The committee reviewed the implementation of IFRIC 23’s guidance for quantifying uncertain tax
provisions which was implemented from 1 January 2019.
Adoption of IFRS 16
The Group’s leasing arrangements were reviewed in light of the new lease accounting rules in IFRS 16
which was adopted for the first time from 1 January 2019. The standard has affected primarily the
accounting for the Group’s operating leases and details of the impact on the 2019 financial statements
are included on page 58 to the Accounts.
External auditor
To assess the effectiveness of the external audit process, the external auditor is required to report to the
Audit committee and confirm their independence in accordance with ethical standards and that they had
maintained appropriate internal safeguards to ensure their independence and objectivity. In addition to
the steps taken by the Board to safeguard the auditor’s objectivity, Deloitte operates a five-year rotation
policy for audit partners for a listed entity.
The committee reviewed those non-audit services provided by the external auditor and satisfied itself
that the scale and nature of those services were such that the external auditors objectivity and
independence were safeguarded.
34
CAMELLIA PLC
CORPORATE GOVERNANCE
The committee confirms that the Annual Report and Accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Company’s
performance, business model and strategy.
Remuneration Committee
The committee is chaired by William Gibson and the other member is Chris Relleen.
The responsibilities of the committee include:
■
■
■
The review of the Group’s policy relating to remuneration of the Chairman, executive Directors and
the Company Secretary.
To determine the terms of employment and remuneration of the Chairman, executive Directors and
Company Secretary with a view to ensuring that those individuals are fairly and responsibly
rewarded.
To approve compensation packages or arrangements following the severance of any executive
Director’s service contract.
The Remuneration report appears on pages 37 to 38.
Insurance
The Company purchases insurance to cover its Directors in respect of legal actions against them in their
capacity as Directors of the Company. All Directors have access to independent professional advice at the
Company’s expense.
Share Capital Structure
The share capital of the Company is set out in note 35.
Internal Control and Risk Management Systems
The Directors acknowledge that they are responsible for maintaining a sound system of internal control.
During the year, the Audit committee, on behalf of the Board, reviewed the effectiveness of the framework
of the Group’s system of internal control, the principal features of which are described below.
The key management philosophy of the Company is that the responsibility for efficient day to day
operations remains with the local management. Accountability and delegation of authority are clearly
defined with regular communication between Group head office and the management of the individual
operations. Our key operations have internal audit functions reporting to local audit committees. The
performance of each operation is continually monitored centrally including a critical review of annual
budgets, forecasts and monthly sales, profits and cash reports. Financial results and key operational
statistics and variances from approved plans are carefully monitored. Group senior management regularly
visit operations. However, any system of internal control can provide only reasonable, and not absolute,
assurance against material mis-statement or loss.
By order of the Board
Amarpal Takk
Company Secretary
7 May 2020
35
CAMELLIA PLC
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and Accounts in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that
law the Directors are required to prepare the Group financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the EU and Article 4 of the IAS Regulation and have
also chosen to prepare the parent company financial statements under IFRSs as adopted by the EU.
Under Company law the Directors must not approve the accounts unless they are satisfied that they give
a true and fair view of the state of affairs of the company and of the profit or loss of the Company for that
period. In preparing these financial statements, International Accounting Standard 1 requires that
Directors:
■
■
■
Properly select and apply accounting policies.
Present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information.
Provide additional disclosures when compliance with the specific requirements in IFRSs are
insufficient to enable users to understand the impact of particular transactions, other events and
conditions on the entity’s financial position and financial performance.
■ Make an assessment of the Company’s ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company’s transactions and disclose with reasonable accuracy at any time the financial
position of the Company and enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial
information included on the company’s website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility Statement
We confirm that to the best of our knowledge:
■
■
■
The Financial Statements, prepared in accordance with International Financial Reporting Standards as
adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the consolidation taken as a whole.
The Strategic Report includes a fair review of the development and performance of the business and
the position of the Company and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they face.
The Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders to assess the Company’s position and
performance, business model and strategy.
On behalf of the Board
Malcolm Perkins
Chairman
7 May 2020
36
CAMELLIA PLC
REMUNERATION REPORT
This report is drawn up in accordance with the Companies Act 2006 and the AIM Rules for Companies.
Remuneration Committee
Details of the Remuneration committee are set out on page 35.
Policy on Directors’ Remuneration
The policy agreed by the committee is as follows:
■
■
■
To seek to provide remuneration packages that will attract, retain and motivate the right people for
the roles.
So far as is practicable to align the interests of the executives with those of shareholders.
To reflect the overriding remuneration philosophy and the principles of the wider Group.
In implementing the second point, the Company does not operate profit related bonus, share option or
share incentive schemes for Directors as the Group’s activities are based largely on agriculture, which is
highly dependent on factors outside management control such as the weather and market prices.
The policy is designed to ensure that the Directors manage the Group’s businesses for the long-term in
line with the strategy of the Group.
In determining this remuneration policy and the remuneration of Directors, consideration has been given
to the relevant provisions of the QCA Guidelines.
The remuneration policy was approved by shareholders at the 2017 AGM and applied for a period of
three years until 2020. The committee considers any views of the shareholders expressed on Directors’
remuneration.
At the AGM on 6 June 2019, the Remuneration Report for the year to 31 December 2018 was approved by
shareholders with 99.99% of the votes cast in favour, 0.01% of the votes cast against and 508 votes
withheld.
Service Contracts
Malcolm Perkins, Tom Franks, Graham Mclean and Susan Walker are each employed on rolling service
contracts.
Director
Malcolm Perkins
Tom Franks
Graham Mclean
Susan Walker
Date of Service Contract
25 April 2002
8 April 2015
10 April 2015
14 April 2015
The service contracts are terminable at any time by a one year period of notice from the Company or the
Director. Following their initial appointment non-executive Directors may seek re-election by shareholders
at each subsequent Annual General Meeting. Non-executive Directors do not have service agreements.
There are no specific contractual provisions for compensation upon early termination of a non-executive
Director’s employment.
37
CAMELLIA PLC
REMUNERATION REPORT
The following sections on Directors’ remuneration and pensions have been audited.
Directors’ Remuneration
Executive
Malcolm Perkins
Tom Franks
Susan Walker
Graham Mclean
Non-executive
William Gibson
Chris Relleen
Frédéric Vuilleumier
Gautam Dalal
Total
Remuneration
2019
£
2018
£
Benefits in Kind
2018
2019
£
£
Total
2019
£
2018
£
442,344
594,000
363,000
390,500
442,344
550,000
330,000
363,000
30,172
42,582
34,306
51,006
30,819
65,993
43,211
29,865
472,516
636,582
397,306
441,506
473,163
615,993
373,211
392,865
45,991
49,000
48,696
53,000
43,285
50,000
36,071
46,000
––––––––
––––––––
1,987,844 1,859,387
––––––––
––––––––
–
–
–
–
––––––––
158,066
––––––––
45,991
49,000
–
48,696
53,000
–
43,285
50,000
–
36,071
46,000
–
––––––––
––––––––
––––––––
169,888 2,145,910 2,029,275
––––––––
––––––––
––––––––
Notes
(i)
The executive Directors’ benefits in kind include the value attributed to medical insurance, permanent health
insurance, spouse/partner travel and cash alternatives to company cars.
(ii) Chris Relleen received an additional annual fee for his Chairmanship of the Audit committee.
(iii) William Gibson received an additional annual fee for his Chairmanship of the Remuneration committee.
Directors’ Pensions
Malcolm Perkins received no payment for pensionable service during 2019. Tom Franks, Graham Mclean
and Susan Walker receive an excess non-pensionable salary supplement equivalent to 10% of base salary.
In addition to the above, an unfunded pension of US$200,000 per annum is paid to Gordon Fox, a former
Director of the Company.
By order of the Board
Amarpal Takk
Company Secretary
7 May 2020
38
CAMELLIA PLC
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2019
2019 2018
Separately Separately
Underlying disclosed Underlying disclosed
profit items profit items
(note 4) (note 4) (note 4)
Notes £’m £’m £’m £’m £’m £’m
Continuing operations
Revenue 2 291.5 – 291.5 309.8 – 309.8
Cost of sales (224.1) 6.2 (217.9) (223.6) 14.4 (209.2)
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
Gross profit 67.4 6.2 73.6 86.2 14.4 100.6
Other operating income 4.0 – 4.0 4.0 – 4.0
Distribution costs (15.0) – (15.0) (17.2) – (17.2)
Administrative expenses 3 (46.1) – (46.1) (45.1) – (45.1)
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
Trading profit 1,3 10.3 6.2 16.5 27.9 14.4 42.3
Share of associates’ results 5 4.6 – 4.6 7.6 – 7.6
Provisions and impairment of
property, plant and equipment – – – (0.2) – (0.2)
Loss on disposal of subsidiaries – – – (0.4) – (0.4)
Profit on disposal of financial assets 0.2 – 0.2 0.3 – 0.3
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
Operating profit – continuing
operations 15.1 6.2 21.3 35.2 14.4 49.6
Investment income 0.7 – 0.7 0.8 – 0.8
Finance income 6 3.9 – 3.9 4.0 – 4.0
Finance costs 6 (2.2) – (2.2) (0.6) – (0.6)
Net exchange (loss)/gain 6 (0.3) – (0.3) 0.2 – 0.2
Employee benefit interest 6 (1.1) – (1.1) (1.5) – (1.5)
Net finance income 6 0.3 – 0.3 2.1 – 2.1
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
Profit before tax from
continuing operations 16.1 6.2 22.3 38.1 14.4 52.5
Taxation 7 (7.2) (20.0)
–––––––––– ––––––––––
Profit after tax from
continuing operations 15.1 32.5
Loss from discontinued operation – (0.2)
–––––––––– ––––––––––
Profit for the year 15.1 32.3
–––––––––– ––––––––––
Profit attributable to:
Owners of Camellia Plc 8.3 25.2
Non-controlling interests 6.8 7.1
–––––––––– ––––––––––
15.1 32.3
–––––––––– ––––––––––
Earnings per share –
basic and diluted 10 300.5p
Earnings per share –
continuing operations 10 300.5p
Earnings/(loss) per share –
discontinued operation 10 –
912.4p
919.6p
(7.2)p
39
CAMELLIA PLC
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2019
Group
Profit for the year
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to profit or loss:
Financial assets at fair value through other comprehensive income:
Fair value adjustment released on disposal
Profit on disposal
Changes in the fair value of financial assets
Deferred tax movement in relation to fair value adjustments
Remeasurements of post employment benefit obligations
Deferred tax movement in relation to post employment
benefit obligations
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences
Share of other comprehensive income of associates
Other comprehensive (expense)/income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income attributable to:
Owners of Camellia Plc
Non-controlling interests
Company
Profit for the year
Total comprehensive income for the year
Notes
2019
£’m
2018
£’m
15.1
–––––––––––
32.3
–––––––––––
21
21
34
33
(0.3)
1.2
–––––––––––
0.9
6.9
(0.9)
3.5
(3.8)
3.9
–––––––––––
0.1
(5.6)
1.5
(0.7)
(0.5)
–––––––––––
9.9
–––––––––––
(0.3)
–––––––––––
(5.0)
–––––––––––
(16.7)
0.3
–––––––––––
(16.4)
–––––––––––
(6.5)
–––––––––––
8.6
–––––––––––
4.2
4.4
–––––––––––
8.6
–––––––––––
11.6
0.8
–––––––––––
12.4
–––––––––––
7.4
–––––––––––
39.7
–––––––––––
30.7
9.0
–––––––––––
39.7
–––––––––––
4.2
–––––––––––
4.2
–––––––––––
3.9
–––––––––––
3.9
–––––––––––
40
CAMELLIA PLC
CONSOLIDATED BALANCE SHEET
at 31 December 2019
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investment properties
Biological assets
Prepaid operating leases
Investments in associates
Financial assets at fair value through other comprehensive income
Financial asset at fair value through profit or loss
Financial assets at amortised cost
Other investments–heritage assets
Retirement benefit surplus
Trade and other receivables
Total non-current assets
Current assets
Inventories
Biological assets
Trade and other receivables
Financial assets at amortised cost
Current income tax assets
Cash and cash equivalents (excluding bank overdrafts)
Assets classified as held for sale
Total current assets
LIABILITIES
Current liabilities
Financial liabilities–borrowings
Lease liabilities
Trade and other payables
Current income tax liabilities
Employee benefit obligations
Provisions
Total current liabilities
Net current assets
Total assets less current liabilities
Non-current liabilities
Financial liabilities–borrowings
Lease liabilities
Deferred tax liabilities
Employee benefit obligations
Total non-current liabilities
Net assets
EQUITY
Called up share capital
Share premium
Reserves
Equity attributable to owners of Camellia Plc
Non-controlling interests
Total equity
Notes
2019
£’m
2018
£’m
13
14
15
16
17
18
20
21
22
23
25
34
27
26
17
27
23
28
30
31
29
34
32
30
31
33
34
35
10.3
222.5
18.5
18.3
14.6
–
66.0
37.8
6.2
3.0
9.8
0.7
2.8
–––––––––––
410.5
–––––––––––
49.3
9.1
44.3
–
1.2
91.4
–––––––––––
195.3
–
–––––––––––
195.3
–––––––––––
(5.6)
(1.2)
(48.6)
(4.2)
(0.7)
(8.9)
–––––––––––
(69.2)
–––––––––––
126.1
–––––––––––
536.6
–––––––––––
(3.3)
(11.8)
(47.1)
(22.0)
–––––––––––
(84.2)
–––––––––––
452.4
–––––––––––
0.3
15.3
380.1
–––––––––––
395.7
56.7
–––––––––––
452.4
–––––––––––
9.5
226.3
–
18.0
14.5
1.0
65.7
32.7
3.7
3.0
9.5
0.3
2.7
–––––––––––
386.9
–––––––––––
52.7
8.8
48.5
0.2
0.7
112.4
–––––––––––
223.3
0.2
–––––––––––
223.5
–––––––––––
(3.4)
–
(53.5)
(8.0)
(1.0)
(18.5)
–––––––––––
(84.4)
–––––––––––
139.1
–––––––––––
526.0
–––––––––––
(3.3)
(0.1)
(46.3)
(24.0)
–––––––––––
(73.7)
–––––––––––
452.3
–––––––––––
0.3
15.3
379.9
–––––––––––
395.5
56.8
–––––––––––
452.3
–––––––––––
41
CAMELLIA PLC
COMPANY BALANCE SHEET
at 31 December 2019
ASSETS
Non-current assets
Investments in subsidiaries
Other investments – heritage assets
Total non-current assets
Current assets
Current income tax asset
Cash and cash equivalents
Total current assets
LIABILITIES
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
Share premium
Reserves
Total equity
Notes
2019
£’m
2018
£’m
19
25
28
29
44
33
35
73.5
11.0
–––––––––––
84.5
–––––––––––
0.1
–
–––––––––––
0.1
–––––––––––
(0.6)
(17.0)
–––––––––––
(17.6)
–––––––––––
(17.5)
–––––––––––
67.0
–––––––––––
(0.2)
–––––––––––
(0.2)
–––––––––––
66.8
–––––––––––
0.3
15.3
51.2
–––––––––––
66.8
–––––––––––
73.5
10.7
–––––––––––
84.2
–––––––––––
0.1
0.1
–––––––––––
0.2
–––––––––––
(0.6)
(16.9)
–––––––––––
(17.5)
–––––––––––
(17.3)
–––––––––––
66.9
–––––––––––
(0.2)
–––––––––––
(0.2)
–––––––––––
66.7
–––––––––––
0.3
15.3
51.1
–––––––––––
66.7
–––––––––––
The profit for the company is shown in note 8.
The notes on pages 46 to 113 form part of the financial statements.
The financial statements on pages 39 to 113 were approved on 7 May 2020 by the board of Directors and
signed on their behalf by:
M C Perkins
Chairman
Registered Number 00029559
42
CAMELLIA PLC
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2019
Cash generated from operations
Cash flows from operating activities
Interest received
Interest paid
Income taxes paid
Net cash flow from operating activities
Notes
36
Cash flows from investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Proceeds from sale of non-current assets
Additions to investment property
Biological assets: non-current – disposals/(additions)
Payment for acquisition of a businesses/subsidiary net of cash acquired
Proceeds from sale of subsidiaries net of cash disposed
Proceeds from sale of assets held for sale – investment property
Investment in associates
Dividends received from associates
Purchase of investments
Proceeds from sale of investments
Income from investments
Purchase of other investments – heritage assets
Net cash flow from investing activities
Cash flows from financing activities
Equity dividends paid
Dividends paid to non-controlling interests
New loans
Loans repaid
Payments of lease liabilities
Net cash flow from financing activities
Net decrease in cash and cash equivalents from
continuing operations
Net cash outflow from discontinued operation
Cash and cash equivalents at beginning of year
Exchange (losses)/gains on cash
Cash and cash equivalents at end of year
37
37
37
28
28
2019
£’m
2018
£’m
21.2
4.0
(1.7)
(10.9)
–––––––––––
12.6
–––––––––––
(0.1)
(18.4)
1.7
(0.5)
0.7
(9.4)
-
0.8
(1.3)
3.1
(11.4)
10.3
0.7
(0.3)
–––––––––––
(24.1)
–––––––––––
(4.0)
(4.5)
3.6
(0.6)
(0.4)
–––––––––––
(5.9)
–––––––––––
(17.4)
–
109.6
(2.8)
–––––––––––
89.4
–––––––––––
35.3
3.9
(0.5)
(14.2)
–––––––––––
24.5
–––––––––––
–
(20.5)
0.7
(0.9)
(0.9)
(6.4)
3.6
0.7
(1.0)
2.8
(7.2)
11.4
0.8
(0.1)
–––––––––––
(17.0)
–––––––––––
(3.8)
(3.1)
–
(0.6)
–
–––––––––––
(7.5)
–––––––––––
–
(0.2)
106.8
3.0
–––––––––––
109.6
–––––––––––
For the purposes of the cash flow statement, cash and cash equivalents are included net of overdrafts
repayable on demand.
43
CAMELLIA PLC
COMPANY CASH FLOW STATEMENT
for the year ended 31 December 2019
Cash generated from operations
Profit before tax
Adjustments for:
Interest income
Dividends from group companies
Increase 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
Purchase of other investments - heritage assets
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
Notes
2019
£’m
2018
£’m
8
4.2
3.9
(0.2)
(5.3)
–
0.1
–––––––––––
(1.2)
0.2
–––––––––––
(1.0)
–––––––––––
(0.3)
5.3
–––––––––––
5.0
–––––––––––
(4.1)
–––––––––––
(4.1)
–––––––––––
(0.1)
0.1
–––––––––––
–
–––––––––––
(0.2)
(5.0)
0.4
(0.3)
–––––––––––
(1.2)
0.2
–––––––––––
(1.0)
–––––––––––
(0.1)
5.0
–––––––––––
4.9
–––––––––––
(3.9)
–––––––––––
(3.9)
–––––––––––
–
0.1
–––––––––––
0.1
–––––––––––
28
28
44
CAMELLIA PLC
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2019
Share
Other
Share Treasury Retained
capital premium shares earnings reserves
£’m
£’m
£’m
£’m
£’m
Non-
controlling
interests
£’m
Total
£’m
Total
equity
£’m
Group
At 1 January 2018
Total comprehensive
income for the year
Dividends
Companies joining the Group
Share of associate's other
equity movements
At 31 December 2018
Total comprehensive
income/(expense) for
the year
Dividends
Share of associate's other
equity movements
At 31 December 2019
Company
At 1 January 2018
Total comprehensive
income for the year
Dividends
At 31 December 2018
Total comprehensive
income for the year
Dividends
At 31 December 2019
0.3
15.3
(0.4)
323.8
29.4
368.4
49.5
417.9
–
–
–
–
–
–
–
–
–
30.5
(3.8)
–
0.2
–
–
30.7
(3.8)
–
9.0
(3.1)
1.4
39.7
(6.9)
1.4
–
–––––––
0.3
–
–––––––
15.3
–
–––––––
(0.4)
0.2
–––––––
350.7
–
–––––––
29.6
0.2
–––––––
395.5
–
–––––––
56.8
0.2
–––––––
452.3
–
–
–
–
–
–
11.9
(4.0)
(7.7)
–
4.2
(4.0)
4.4
(4.5)
8.6
(8.5)
–
–––––––
0.3
–––––––
–
–––––––
15.3
–––––––
–
–––––––
(0.4)
–––––––
–
–––––––
358.6
–––––––
–
–––––––
21.9
–––––––
–
–––––––
395.7
–––––––
–
–––––––
56.7
–––––––
–
–––––––
452.4
–––––––
0.3
15.3
–
39.0
12.1
66.7
–
66.7
–
–
–––––––
0.3
–
–
–––––––
15.3
–
–
–––––––
–
3.9
(3.9)
–––––––
39.0
–
–
–––––––
12.1
3.9
(3.9)
–––––––
66.7
–
–
–––––––
–
3.9
(3.9)
–––––––
66.7
–
–
–––––––
0.3
–––––––
–
–
–––––––
15.3
–––––––
–
–
–––––––
–
–––––––
4.2
(4.1)
–––––––
39.1
–––––––
–
–
–––––––
12.1
–––––––
4.2
(4.1)
–––––––
66.8
–––––––
–
–
–––––––
–
–––––––
4.2
(4.1)
–––––––
66.8
–––––––
Other reserves of the group include net exchange differences of £33.0 million deficit (2018: £16.5 million
deficit).
Group retained earnings include £168.4 million (2018: £180.7 million) which would require exchange control
permission for remittance as dividends.
45
CAMELLIA PLC
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, IFRS IC interpretations and the Companies Act 2006
applicable to companies reporting under IFRS.
The consolidated financial statements have been prepared on the historical cost basis as modified by the
revaluation of biological assets, financial assets and financial liabilities and assets held for sale.
Where necessary, comparative figures have been adjusted to conform with changes in presentation in the
current year.
Going concern
The Report of the Directors on page 30 sets out details of the potential substantial risks to our operations
and sales arising from COVID-19 and the potential impact on our profitability and cashflows based on our
scenario planning.
The Directors have, at the time of approving the financial statements, a reasonable expectation that the
Company and the Group have adequate resources to continue to operate for the foreseeable future.
They therefore continue to adopt the going concern basis of accounting in preparing the financial
statements.
Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company (its subsidiaries) made up to 31 December each year.
On acquisition, the assets and liabilities of a subsidiary are measured at their fair values at the date of
acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets
acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the
identifiable net assets acquired (i.e. discount on acquisition) is credited to the income statement in the
period of acquisition. The Group recognises any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, at the non-controlling interest's proportionate share of the recognised
amounts of acquiree's identifiable net assets.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated
Income Statement from the 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
46
CAMELLIA PLC
ACCOUNTING POLICIES
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 equity. When a foreign entity is sold such exchange differences arising since
1 January 2004 are recognised in the Income Statement as part of the gain or loss on disposal.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the exchange rate ruling on the date of acquisition. The
Group has elected to treat goodwill and fair value adjustments arising on acquisitions prior to 1 January
2004, the date of the Group's transition from UK GAAP to IFRS, as sterling denominated assets and
liabilities.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents
amounts receivable for goods and services provided in the normal course of business, net of discounts,
value added tax and other sales related taxes and after eliminating intra-group sales.
Revenue from the sale of goods is recognised when all the following conditions are satisfied:
n
n
Identify contracts with customers
Identify the separate performance obligation
n Determine the transaction price of the contract, and
n
Allocate the transaction price to each of the separate performance obligations
In respect of agricultural produce, revenue is recognised at the point in time that control of goods is
transferred to the customer.
In respect of food storage and distribution services, revenue for handling is recognised at the point that
the goods are actually handled.
In respect of engineering services, revenue is recognised based upon the stage of completion and
includes costs incurred to date, plus accrued profits.
Investment income
Investment income is recognised when the right to receive payment of a dividend is established.
Segmental reporting
IFRS 8 requires operating segments to be identified on the basis of internal reports used to assess
performance and allocate resources by the chief operating decision maker. The chief operating decision
maker has been identified as the Strategy Group led by the CEO. Inter segment sales are not significant.
Intangible assets
(i) Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's
interest in the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary or
associate at the date of acquisition.
Goodwill is recognised as an asset and reviewed for impairment at least annually or more frequently if
events or changes in circumstances indicate a potential impairment. Any impairment is recognised
immediately in the income statement and is not subsequently reversed.
47
CAMELLIA PLC
ACCOUNTING POLICIES
On disposal of a subsidiary or associate, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
(ii) Identifiable intangible assets
Indefinite life identifiable intangible assets include certain brands acquired. They are not amortised but
tested for impairment annually or more frequently if an impairment indicator is triggered, any
impairment is charged to the income statement as it arises. The assessment of the classification of
intangible assets as indefinite is reviewed annually.
Finite life identifiable intangible assets include certain brands, customer relationships and other
intangible assets acquired on the acquisition of subsidiaries. Acquired intangible assets with finite lives
are initially recognised at cost and amortised on a straight-line basis over their estimated useful lives, not
exceeding 20 years. Intangible assets' estimated lives are re-evaluated annually and an impairment test is
carried out if certain indicators of impairment exist.
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
(iii) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and
bring to use the specific software. Computer software licences are held at cost and are amortised on a
straight-line basis over 3 to 7 years.
Costs associated with developing or maintaining computer software programmes are recognised as an
expense as incurred. Costs that are directly associated with identifiable and unique software products
controlled by the Group and which are expected to generate economic benefits exceeding costs beyond
one year, are recognised as an intangible asset and amortised over their estimated useful lives.
Property, plant and equipment
Property, plant and equipment includes biological assets (bearer plants) which are accounted for under
IAS 16.
Land and buildings comprises mainly factories and offices. All property, plant and equipment is shown at
cost less subsequent depreciation and impairment, except for land, which is shown at cost less
impairment. Cost includes expenditure that is directly attributable to the acquisition of these assets.
On transition to IFRS, the Group followed the transitional provisions and elected that previous UK GAAP
revaluations be treated as deemed cost.
Subsequent costs are included in the assets' carrying amount, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. Repairs and maintenance are charged to the income statement during the financial
period in which they are incurred.
No depreciation is provided on freehold land. Depreciation of other property, plant and equipment is
calculated to write off their cost less residual value over their expected useful lives.
The rates of depreciation used for the other assets are as follows:-
Biological assets (Bearer plants)
Freehold and long leasehold buildings
Other short leasehold land and buildings
Plant, machinery, fixtures, fittings and equipment
20 to 50 years
nil to 50 years
unexpired term of the lease
3 to 25 years
No depreciation is provided on bearer plants until maturity when commercial levels of production have
been reached.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance
sheet date.
48
CAMELLIA PLC
ACCOUNTING POLICIES
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.
Investment properties
Properties held to earn rental income rather than for the purpose of the Group’s principal activities are
classified as Investment properties. Investment properties are recorded at cost less accumulated
depreciation and any recognised impairment loss. The depreciation policy is consistent with those
described for other Group properties.
Income from Investment properties is disclosed in ‘Revenue’. The related operating costs are immaterial
and are included within administrative expenses.
Biological assets: non-current
Biological assets are measured at each balance sheet date at fair value and are generally valued at each
year end by independent professional valuers. Any changes in fair value are recognised in the Income
Statement in the year in which they arise. Costs of new areas planted are included as “new planting
additions” in the biological assets note. As timber is harvested the value accumulated to the date of
harvest is treated as “decrease due to harvesting” and charged to cost of sales in the Income Statement.
Biological assets: current
Produce is valued on the basis of net present values of expected future cash flows and includes certain
assumptions about yields, selling prices, costs and discount rates. As the crop is harvested it is
transferred to inventory at fair value.
Financial assets
Classification of financial assets
(i) Equity instruments designated as at fair value through other comprehensive income
(‘FVTOCI’)
On initial recognition, the Group made an irrevocable election (on an instrument-by-instrument basis) to
designate investments in equity instruments as at FVTOCI.
Investments in equity instruments designated as FVTOCI are initially measured at fair value plus
transaction costs. Subsequently, they are measured at fair value with gains and losses arising from
changes in fair value recognised in other comprehensive income and accumulated in the investment
revaluation reserve. The cumulative gain or loss is not reclassified to profit or loss on disposal of the
equity investments, instead, it is transferred to retained earnings.
Dividends on these investments in equity instruments are recognised in profit or loss in accordance with
IFRS 9, unless the dividends clearly represent a recovery of part of the cost of the investment. Dividends
are included as investment income in the consolidated income statement.
(ii) Financial assets at fair value through profit or loss (‘FVTPL’)
Financial assets that do not meet the criteria for being measured FVTOCI or at amortised cost (see (i)
above and (iii) below) are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair
value gains or losses recognised in profit or loss to the extent they are not part of a designated hedging
relationship.
49
CAMELLIA PLC
ACCOUNTING POLICIES
(iii) Amortised cost and effective interest method
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial
recognition minus the principal repayments, plus the cumulative amortisation using the effective interest
method of any difference between that initial amount and the maturity amount, adjusted for any loss
allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before
adjusting for any loss allowance.
The effective interest method is a method of calculating the amortised cost and of allocating interest
income over the relevant period. Interest income is recognised in profit or loss and is included in the
"finance income – interest income" line item (note 6).
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses '(ECL)' on investments in debt
instruments that are measured at amortised cost, lease receivables, trade receivables and contract
assets. The amount of expected credit losses is updated at each reporting date to reflect changes in credit
risk since initial recognition of the respective financial instrument.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the
expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL
that is expected to result from default events on a financial instrument that are possible within 12
months after the reporting date.
The Group always recognises lifetime ECL for trade receivables, contract assets and lease receivables. The
expected credit losses on these financial assets are estimated using a provision matrix based on the
Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general
economic conditions and an assessment of both the current as well as the forecast direction of
conditions at the reporting date, including time value of money where appropriate.
For all other financial instruments, the Group recognises lifetime ECL when there has been a significant
increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has
not increased significantly since initial recognition, the Group measures the loss allowance for that
financial instrument at an amount equal to 12-month ECL.
(i) Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial
recognition, the Group compares the risk of a default occurring on the financial instrument at the
reporting date with the risk of a default occurring on the financial instrument at the date of initial
recognition. In making this assessment, the Group considers both quantitative and qualitative
information that is reasonable and supportable, including historical experience and forward-looking
information that is available without undue cost or effort. Forward-looking information considered
includes the future prospects of the industries in which the Group’s debtors operate, obtained from
economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar
organisations, as well as consideration of various external sources of actual and forecast economic
information that relate to the Group’s core operations.
50
CAMELLIA PLC
ACCOUNTING POLICIES
In particular, the following information is taken into account when assessing whether credit risk has
increased:
n
n
n
n
n
n
An actual or expected significant deterioration in the financial instrument’s external (if available) or
internal credit rating
Significant deterioration in external market indicators of credit risk for a particular financial
instrument
Existing or forecast adverse changes in business, financial or economic conditions that are expected
to cause a significant decrease in the debtor’s ability to meet its debt obligations
An actual or expected significant deterioration in the operating results of the debtor
Significant increases in credit risk on other financial instruments of the same debtor
An actual or expected significant adverse change in the regulatory, economic, or technological
environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt
obligations
Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a
financial asset has increased significantly since initial recognition when contractual payments are more
than 30 days past due, unless the Group has reasonable and supportable information that demonstrates
otherwise.
Despite the foregoing, the Group assumes that the credit risk on a financial instrument has not increased
significantly since initial recognition if the financial instrument is determined to have low credit risk at the
reporting date. A financial instrument is determined to have low credit risk if:
(i) The financial instrument has a low risk of default,
(ii) The debtor has a strong capacity to meet its contractual cash flow obligations in the near term, and
(iii) Adverse changes in economic and business conditions in the longer term may, but will not
necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.
The Group considers a financial asset to have low credit risk when the asset has external credit rating of
‘investment grade’ in accordance with the globally understood definition or if an external rating is not
available, the asset has an internal rating of ‘performing’. Performing means that the counterparty has a
strong financial position and there is no past due amounts.
The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a
significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of
identifying any significant increase in credit risk before the amount becomes past due.
(ii) Definition of default
The Group considers the following as constituting an event of default for internal credit risk management
purposes as historical experience indicates that financial assets that meet either of the following criteria
are generally not recoverable:
n When there is a breach of financial covenants by the debtor; or
n
Information developed internally or obtained from external sources indicates that the debtor is
unlikely to pay its creditors, including the Group, in full (without taking into account any collateral
held by the Group).
Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is
more than 90 days past due unless the Group has reasonable and supportable information to
demonstrate that different default criterion is more appropriate.
51
CAMELLIA PLC
ACCOUNTING POLICIES
(iii) Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the
estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-
impaired includes observable data about the following events:
(a) significant financial difficulty of the issuer or the borrower;
(b) a breach of contract, such as a default or past due event (see (ii) above);
(c)
the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial
difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise
consider;
(d)
it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
(e) a disappearance of an active market for that financial asset because of financial difficulties.
(iv) Write-off policy
The Group writes off a financial asset when there is information indicating that the debtor is in severe
financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed
under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when
the amounts are over two years past due, whichever occurs sooner. Financial assets written off may still
be subject to enforcement activities under the Group’s recovery procedures, taking into account legal
advice where appropriate. Any recoveries made are recognised in profit or loss.
(v) Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss given default
(i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the
probability of default and loss given default is based on historical data adjusted by forward-looking
information as described above.
As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying
amount at the reporting date; for financial guarantee contracts, the exposure includes the amount drawn
down as at the reporting date, together with any additional amounts expected to be drawn down in the
future by default date determined based on historical trend, the Group’s understanding of the specific
future financing needs of the debtors, and other relevant forward-looking information.
For financial assets, the expected credit loss is estimated as the difference between all contractual cash
flows that are due to the Group in accordance with the contract and all the cash flows that the Group
expects to receive, discounted at the original effective interest rate. For a lease receivable, the cash flows
used for determining the expected credit losses are consistent with the cash flows used in measuring the
lease receivable in accordance with IFRS 16.
The Group recognises an impairment gain or loss in profit or loss for all financial instruments with a
corresponding adjustment to their carrying amount through a loss allowance account, except for
investments in equity instruments that are measured at FVTOCI, for which the loss allowance is
recognised in other comprehensive income and accumulated in reserves, and does not reduce the
carrying amount of the financial asset in the balance sheet.
52
CAMELLIA PLC
ACCOUNTING POLICIES
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the
asset expire, or when it transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the
risks and rewards of ownership and continues to control the transferred asset, the Group recognises its
retained interest in the asset and an associated liability for amounts it may have to pay. If the Group
retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group
continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds
received.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s
carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.
In addition, on derecognition of an investment in a debt instrument classified as at FVTOCI, the
cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to
profit or loss. In contrast, on derecognition of an investment in equity instrument which the Group has
elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously accumulated in
the investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained
earnings.
Other investments – heritage assets
Other investments comprise fine art, documents, manuscripts and philately which are measured at cost
as fair value cannot be reliably measured.
Investments in subsidiary companies
Investments in subsidiary companies are included at cost plus incidental expenses less any provision for
impairment. Impairment reviews are performed when there has been an indication of potential
impairment.
Impairment of non-financial 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 assets' carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an assets' 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).
Inventories
Agricultural produce included within inventory largely comprises stock of 'black' tea. In accordance with
IAS 41, on initial recognition, agricultural produce is required to be measured at fair value less estimated
point of sale costs.
Other inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials
and, where applicable, direct labour costs and those overheads that have been incurred in bringing the
inventories to their present location and condition. Cost is calculated using the weighted average method.
Net realisable value represents the estimated selling price less all estimated costs of completion and
selling expenses.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts
are shown within borrowings in current liabilities on the balance sheet.
53
CAMELLIA PLC
ACCOUNTING POLICIES
Discontinued operations and non-current assets held for sale
A discontinued operation is a separate major line of business or geographic area of operation that has
either been disposed of, abandoned or is part of a plan to dispose of a major line of business or
geographic area. An operation is classified as a discontinued operation in the year that the above criteria
are met. In the consolidated Income Statement, profit/loss from discontinued operations is reported
separately from the results from continuing operations. The prior period’s Income Statement and cash
flow are presented on a comparable basis.
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.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. Accounts payable are classified as current liabilities if payment is due
within one year or less. If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest method.
Borrowings
Interest-bearing bank loans and overdrafts are initially recorded at the proceeds received, net of direct
issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue
costs, are accounted for on an accrual basis to the Income Statement using the effective interest method
and are added to the carrying amount of the instrument to the extent that they are not settled in the
period in which they arise.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
reported in the income statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Group
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by
the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amount of assets and liabilities in the financial statements and the corresponding tax bases used in the
computation of taxable profit, and is accounted for using the liability method. Deferred tax is not
accounted for if it arises from initial recognition of an asset or liability in a transaction, other than in a
business combination, that at the time of the transaction affects neither accounting nor taxable profit or
loss. Deferred tax is determined using tax rates and laws that have been enacted or substantively
enacted by the balance sheet date and are expected to apply when the related tax asset is realised or the
tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised. Deferred income tax assets and
liabilities are offset when there is a legally enforceable right to offset current tax assets against current
tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by
the same taxation authority on either the same taxable entity or different taxable entities where there is
an intention to settle the balances on a net basis.
54
CAMELLIA PLC
ACCOUNTING POLICIES
Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates,
except where the timing of the reversal of the temporary difference is controlled by the Group and it is
probable that the temporary difference will not reverse in the foreseeable future.
Employee benefits
(i) Pension obligations
Group companies operate various pension schemes. The schemes are funded through payments to
insurance companies or trustee-administered funds. The Group has both defined benefit and defined
contribution plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a
separate fund. The Group has no legal or constructive obligations to pay further contributions to the
fund. Contributions are recognised as an expense in the Income Statement when they are due.
A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will
receive on retirement, usually dependent on one or more factors such as age, years of service and
compensation. The pension cost for defined benefit schemes is assessed in accordance with the advice
of qualified independent actuaries using the "projected unit" funding method.
The liability recognised in the Balance Sheet in respect of defined benefit pension plans is the present
value of the defined benefit obligation at the balance sheet date less the fair value of plan assets.
Independent actuaries calculate the obligation annually using the "projected unit" funding method.
Actuarial gains and losses arising from experience adjustments and changes in actuarial adjustments are
recognised in full in the period in which they occur, they are not recognised in the Income Statement and
are presented in the Statement of Comprehensive Income.
Past service costs are recognised directly in the Income Statement.
(ii) Other post-employment benefit obligations
Some Group companies have unfunded obligations to pay terminal gratuities to employees. Provisions
are made for the estimated liability for gratuities as a result of services rendered by employees up to the
balance sheet date and any movement in the provision is recognised in the Income Statement.
The estimated monetary liability for employees' accrued annual leave entitlement and workers profit
participation at the balance sheet date is recognised as an accrual.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources will be required to settle the obligation and the
amount has been reliably estimated.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from the proceeds.
Where any Group company purchases the Company’s equity share capital (treasury shares), the
consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted
from equity attributable to the Company’s equity holders until the shares are cancelled or reissued.
Where such shares are subsequently reissued, any consideration received, net of any directly attributable
incremental transaction costs and the related income tax effects, is included in equity attributable to the
Company’s equity holders.
Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial
statements in the period in which the dividends are approved by the Company’s shareholders. Interim
dividends are recognised when paid.
55
CAMELLIA PLC
ACCOUNTING POLICIES
Critical accounting judgements and key sources of estimation uncertainty
In the view of the Directors, the following accounting judgements and estimations have been made in the
process of applying the Group’s accounting policies which have a significant effect on the amounts
recognised in financial statements.
Accounting judgements
Significant judgement in determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered
by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group has the option, under some of its leases to lease the assets for additional terms. The Group
applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it
considers all relevant factors that create an economic incentive for it to exercise the renewal. After the
commencement date, the Group reassesses the lease term if there is a significant event or change in
circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to
renew (e.g., a change in business strategy).
Depreciation and amortisation
Depreciation and amortisation is based on management's estimates of the future useful life of bearer
plants, property, plant and equipment and intangible assets. Estimates may change due to climate
change, 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.
Key sources of estimation uncertainty
Estimates are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting will, by
definition, seldom equal the actual results. The estimates and assumptions that have a risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial year are set
out below.
Impairment of assets
(i)
The Group has significant investments in intangible assets, property, plant and equipment, investment
properties, biological assets, associated companies, financial assets and other investments. These assets
are tested for impairment when circumstances indicate there may be a potential impairment. Goodwill
and intangible assets with an indefinite useful life are tested for impairment at least annually. Factors
considered which could trigger an impairment review include a significant fall in market values, significant
underperformance relative to historical or projected future operating results, a major change in market
conditions or negative cash flows.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted.
Where the asset does not generate cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to
individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating
units for which a reasonable and consistent allocation basis can be identified.
56
CAMELLIA PLC
ACCOUNTING POLICIES
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is treated as a revaluation decrease and to the
extent that the impairment loss is greater than the related revaluation surplus, the excess impairment
loss is recognised in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating
unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit (‘CGU’) in prior years. A reversal of an impairment
loss is recognised immediately in profit or loss to the extent that it eliminates the impairment loss which
has been recognised for the asset in prior years. Any increase in excess of this amount is treated as a
revaluation increase.
Sensitivity analysis
The Group has conducted an analysis of the sensitivity of the impairment test to changes in the key
assumptions used to determine the recoverable amount for each of the group of CGUs to which goodwill
is allocated. The Directors believe that any reasonably possible change in the key assumptions on which
the recoverable amount is based would not cause the aggregate carrying amount to exceed the
aggregate recoverable amount of the related CGUs.
The sensitivity of carrying amounts of biological and financial assets is disclosed in notes 17 and 41
respectively.
(ii) Biological assets
Biological assets are carried at fair value less estimated point-of-sale costs. Where meaningful market-
determined prices do not exist to assess the fair value of biological assets, the fair value has been
determined based on the net present value of expected future cash flows from those assets, discounted
at appropriate pre-tax rates. In determining the fair value of biological assets where the discounting of
expected future cash flows has been used, the Directors have made certain assumptions about expected
life-span of the plantings, yields, selling prices, costs and discount rates. Details of assumptions made and
sensitivity analysis are given in note 17.
(iii) Retirement benefit obligations
Pension accounting requires certain assumptions to be made in order to value obligations and to
determine the impact on the Income Statement. These figures are particularly sensitive to assumptions
for discount rates, mortality, inflation rates and expected long-term rates of return on assets. Details of
assumptions made and sensitivity analysis are given in note 34.
(iv) Taxation and other liabilities
Income tax liabilities include a number of provisions based on management’s interpretation of country
specific tax law and the likelihood of settlement. This can involve a significant amount of judgement as
tax legislation can be complex and open to different interpretation. Management uses professional firms
and previous experience when assessing tax risks. Where actual tax liabilities differ from the provisions,
adjustments are made which can have a material impact on the Group’s profits for the year. It is not
practicable to quantify the range of outcomes with the application of sensitivity analyses. Tax provision
movements are disclosed in note 7. Significant unprovided contingent tax liabilities are disclosed in
note 40.
57
CAMELLIA PLC
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 2019:
IFRS 16 Leases
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously
been classified as operating leases under the principles of IAS 17 Leases. These right-of-use assets and
lease liabilities were measured at the present value of the remaining lease payments, discounted using
the lessee's incremental borrowing rate.
For leases previously classified as finance leases the entity recognised the carrying amount of the lease
asset and lease liability immediately before transition as the carrying amount of the right-of-use asset
and the lease liability at the date of initial application. The measurement principles of IFRS 16 are only
applied after that date.
The Group has applied IFRS 16 using the cumulative catch-up approach and therefore comparative
information has not been restated and is presented under IAS 17.
Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by
the standard:
n
The use of a single discount rate to a portfolio of leases with reasonably similar characteristics
Reliance on previous assessments on whether leases are onerous
The accounting for operating leases with a a remaining lease term of less than 12 months as at 1
January 2019 as short-term leases
The use of hindsight in determining the lease term where the contract contains options to extend or
terminate the lease
n
n
n
The Group has also elected not to reassess whether a contract is or contains a lease at the date of initial
application. Instead, for contracts entered into before the transition date the Group relied on its
assessment made when applying IAS 17.
Adjustments recognised on adoption of IFRS 16
The effect of adopting IFRS 16 on 1 January 2019 was to recognise additional right-of-use assets of
£11.8 million, investment properties of £0.7 million and lease liabilities of £12.2 million, and to
recategorise assets with a carrying amount of £2.9 million.
In doing so, the Group used incremental borrowing rates of between 4.2% to 10.5% on lease terms
ranging from 1 to 103 years. This had no impact on retained earnings.
The difference between lease liabilities of £12.2 million and operating lease commitments previously
disclosed of £26.2 million is the effect of short-term leases not previously recognised of £0.2 million,
discounting of £17.1 million and extension options not previously included in operating lease
commitments of £3.3 million.
Impact of IFRS 16
For the year ended 31 December 2019:
n Depreciation expense increased by £0.9 million relating to the depreciation of additional right-of-use
assets recognised
Rent expense decreased by £0.4 million relating to previous operating leases
Finance costs increased by £0.7 million relating to the interest expense on additional lease liabilities
recognised
Income tax expense decreased by less than £0.1 million relating to the tax effect of those changes
Retained profits decreased by £1.1 million relating to the excess of interest and depreciation over rent
expense and tax
n
n
n
n
58
CAMELLIA PLC
ACCOUNTING POLICIES
Summary of new accounting policies
Set out below are the new accounting policies of the Group upon adoption of IFRS 16:
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and
lease payments made at or before the commencement date less any lease incentives received. Unless the
Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the
recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated
useful life and the lease term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present
value of lease payments to be made over the lease term. The lease payments include fixed payments
(including in-substance fixed payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The
lease payments also include the exercise price of a purchase option reasonably certain to be exercised by
the Group and payments of penalties for terminating a lease, if the lease term reflects the Group
exercising the option to terminate. The variable lease payments that do not depend on an index or a rate
are recognised as expense in the period on which the event or condition that triggers the payment
occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the
lease commencement date if the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured
if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments
or a change in the assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and
equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date
and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption
to leases of office equipment that are considered of low value (i.e., below £0.01 million ). Lease payments
on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis
over the lease term.
Amendments to IAS 19 Employee Benefits Plan Amendment, Curtailment or Settlement
The amendments clarify that the past service cost (or of the gain or loss on settlement) is calculated by
measuring the defined benefit liability (asset) using updated assumptions and comparing benefits offered
and plan assets before and after the plan amendment (or curtailment or settlement) but ignoring the
effect of the asset ceiling (that may arise when the defined benefit plan is in a surplus position). IAS 19 is
now clear that the change in the effect of the asset ceiling that may result from the plan amendment (or
curtailment or settlement) is determined in a second step and is recognised in the normal manner in
other comprehensive income.
The paragraphs that relate to measuring the current service cost and the net interest on the net defined
benefit liability (asset) have also been amended. An entity will now be required to use the updated
assumptions from this remeasurement to determine current service cost and net interest for the
remainder of the reporting period after the change to the plan. In the case of the net interest, the
amendments make it clear that for the period post plan amendment, the net interest is calculated by
multiplying the net defined benefit liability (asset) as remeasured under IAS 19 with the discount rate
used in the remeasurement (also taking into account the effect of contributions and benefit payments on
the net defined benefit liability (asset)).
59
CAMELLIA PLC
ACCOUNTING POLICIES
The amendments are applied prospectively. They apply only to plan amendments, curtailments or
settlements that occur on or after the beginning of the annual period in which the amendments to IAS 19
are first applied.
The amendments to IAS 19 must be applied to annual periods beginning on or after 1 January 2019.
Adoption of this standard did not have a material impact on the consolidated financial statements.
Amendments to IAS 28 Long term Interests in Associates and Joint Ventures
The amendment clarifies that IFRS 9, including its impairment requirements, applies to long term
interests. Furthermore, in applying IFRS 9 to long term interests, an entity does not take into account
adjustments to their carrying amount required by IAS 28 (i.e. adjustments to the carrying amount of long
term interests arising from the allocation of losses of the investee or assessment of impairment in
accordance with IAS 28).
The amendments apply retrospectively to annual reporting periods beginning on or after 1 January 2019.
Adoption of this standard did not have a material impact on the consolidated financial statements.
IFRIC 23 Uncertainty over Income Tax Treatments
IFRIC 23 sets out how to determine the accounting tax position when there is uncertainty over income tax
treatments. The interpretation provided requires an entity to:
n Determine whether uncertain tax positions are assessed separately or as a group; and
n
Assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or
proposed to be used, by an entity in its income tax filings:
n
n
If yes, the entity should determine its accounting tax position consistently with the tax treatment
used or planned to be used in its income tax filings.
If no, the entity should reflect the effect of uncertainty in determining its accounting tax position.
The Interpretation is effective for annual periods beginning on or after 1 January 2019. Entities
can apply the Interpretation with either full retrospective application or modified retrospective
application without restatement of comparatives retrospectively or prospectively.
Adoption of this standard did not have a material impact on the consolidated financial statements.
Annual Improvements to IFRS Standards 2015–2017 Cycle
Amendments to IFRS 3 Business Combinations, IFRS 11 Joint Arrangements, IAS 12
Income Taxes and IAS 23 Borrowing Costs
The Annual Improvements includes amendments to:
(i) IAS 12 Income Taxes
The amendments clarify that an entity should recognise the income tax consequences of dividends in
profit or loss, other comprehensive income or equity according to where the entity originally recognised
the transactions that generated the distributable profits. This is the case irrespective of whether different
tax rates apply to distributed and undistributed profits.
(ii) IAS 23 Borrowing Costs
The amendments clarify that if any specific borrowing remains outstanding after the related asset is
ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows
generally when calculating the capitalisation rate on general borrowings.
60
CAMELLIA PLC
ACCOUNTING POLICIES
Amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes
in Accounting Estimates and Errors
The Group elected to early adopt these amendments which clarify the definition of material and how it
should be applied by including in the definition guidance that until now has featured elsewhere in IFRS
Standards. The amendments ensure that the definition of material is consistent across all IFRS Standards.
(ii) Standards, amendments and interpretations to existing standards that are not yet
effective and have not been adopted early by the Group
Certain new accounting standards and interpretations have been published that are not mandatory for
31 December 2019 reporting periods and have not been early adopted by the Group. The Group's
assessment of the impact of these new standards and interpretations is set out below.
IFRS 10 Consolidated Financial Statements and IAS 28 (amendments) Sale or
Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution of assets
between an investor and its associate or joint venture. Specifically, the amendments state that gains or
losses resulting from the loss of control of a subsidiary that does not contain a business in a transaction
with an associate or a joint venture that is accounted for using the equity method, are recognised in the
parent’s profit or loss only to the extent of the unrelated investors’ interests in that associate or joint
venture. Similarly, gains and losses resulting from the remeasurement of investments retained in any
former subsidiary (that has become an associate or a joint venture that is accounted for using the equity
method) to fair value are recognised in the former parent’s profit or loss only to the extent of the
unrelated investors’ interests in the new associate or joint venture.
The effective date of the amendments has yet to be set, however, earlier application of the amendments
is permitted. The application of these amendments may have an impact on the Group's consolidated
financial statements in future periods should such transactions arise.
61
CAMELLIA PLC
NOTES TO THE ACCOUNTS
1 Business and geographical segments
The principal activities of the Group are as follows:
Agriculture
Engineering
Food Service
For management reporting purposes these activities form the basis on which the Group reports its
primary divisions.
Segment information about these businesses is presented below:
Agriculture
2019
£’m
2018
£’m
Engineering
2019
£’m
2018
£’m
Food Service Other operations Consolidated
2019
£’m
2019
£’m
2019
£’m
2018
£’m
2018
£’m
2018
£’m
22.1
238.7 245.3
309.8
–––––– –––––– –––––– –––––– –––––– –––––– –––––– –––––– –––––– ––––––
52.1
0.1
–––––– –––––– –––––– –––––– –––––– –––––– –––––– ––––––
51.0
291.5
29.8
0.8
(0.6)
41.5
22.2
26.1
25.2
0.8
0.9
1.6
0.1
-
Revenue
External sales
Segment trading profit/(loss)
Unallocated corporate expenses
Trading profit
Share of associates' results
Provisions and impairment of property, plant and equipment
Loss on disposal of subsidiaries
Profit on disposal of financial assets
Investment income
Net finance income
Profit before tax from continuing operations
Taxation
Profit after tax from continuing operations
(9.6)
(9.8)
–––––– ––––––
42.3
16.5
4.6
–
–
0.2
0.7
7.6
(0.2)
(0.4)
0.3
0.8
0.3
2.1
–––––– ––––––
52.5
22.3
(7.2)
(20.0)
–––––– ––––––
32.5
–––––– ––––––
15.1
Other information
Segment assets
Investments in associates
Unallocated assets
Consolidated total assets
Segment liabilities
Unallocated liabilities
Consolidated total liabilities
Capital expenditure
Depreciation
Amortisation
Impairments
364.8
378.9
19.1
14.1
32.9
31.3
19.8
19.6
436.6
443.9
66.0
65.7
(49.8)
(61.5)
(12.1)
(6.0)
(7.0)
(6.2)
(2.6)
–
15.3
16.4
(13.3)
(11.8)
–
(0.3)
–
–
0.6
(1.5)
–
–
0.4
(1.4)
–
–
2.3
(1.8)
(0.3)
–
3.2
(1.9)
(0.4)
–
0.7
(0.2)
–
–
1.4
(0.2)
–
–
103.2
100.8
–––––– ––––––
610.4
–––––– ––––––
(73.7)
605.8
(71.5)
(81.9)
(84.4)
–––––– ––––––
(153.4)
(158.1)
–––––– ––––––
21.4
18.9
(16.8)
(15.3)
(0.3)
(0.3)
(0.4)
–
Segment assets consist primarily of intangible assets, property, plant and equipment, right-of-use assets, investment properties,
biological assets, prepaid operating leases, inventories, trade and other receivables and cash and cash equivalents. Receivables for
tax have been excluded. Investments in associates, valued using the equity method, have been shown separately in the segment
information. Segment liabilities are primarily those relating to the operating activities and generally exclude liabilities for taxes,
short-term loans and non-current liabilities.
62
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
Bangladesh
India
Kenya
Malawi
North America and Bermuda
South Africa
South America
The Group derives revenue from the transfer of goods and services over time and at a point in time in
the following major geographical regions:
United Kingdom
Continental Europe
Bangladesh
India
Kenya
Malawi
North America and Bermuda
South Africa
South America
Other
At a point in time
2018
2019
£’m
£’m
Over time
Total
2019
£’m
2018
£’m
2019
£’m
2018
£’m
56.5
24.0
23.9
92.4
30.2
11.0
14.0
3.0
5.9
29.7
––––––––––
290.6
––––––––––
58.7
36.0
31.7
79.2
40.7
14.0
11.8
2.2
6.1
28.6
––––––––––
309.0
––––––––––
0.8
–
–
–
–
0.1
–
–
–
–
––––––––––
0.9
––––––––––
0.7
–
–
–
–
0.1
–
–
–
–
––––––––––
0.8
––––––––––
57.3
24.0
23.9
92.4
30.2
11.1
14.0
3.0
5.9
29.7
––––––––––
291.5
––––––––––
59.4
36.0
31.7
79.2
40.7
14.1
11.8
2.2
6.1
28.6
––––––––––
309.8
––––––––––
The following is an analysis of the carrying amount of segment assets and additions to property, plant
and equipment and investment properties, analysed by the geographical area in which the assets are
located:
United Kingdom
Continental Europe
Bangladesh
India
Kenya
Malawi
Tanzania
North America and Bermuda
South Africa
South America
Carrying amount of
segment assets
2019
£’m
2018
£’m
Additions to property,
plant and equipment
2018
£’m
2019
£’m
Additions to
investment properties
2018
£’m
2019
£’m
68.3
1.1
68.2
103.1
99.5
54.0
1.3
12.4
18.7
10.0
––––––––––
436.6
––––––––––
62.2
1.4
72.0
101.4
107.0
58.6
–
13.3
16.4
11.6
––––––––––
443.9
––––––––––
3.0
–
2.1
3.6
4.7
1.6
–
–
3.1
0.3
––––––––––
18.4
––––––––––
4.0
0.1
2.5
4.0
5.3
2.0
–
–
2.3
0.3
––––––––––
20.5
––––––––––
0.5
–
–
–
–
–
–
–
–
–
––––––––––
0.5
––––––––––
0.9
–
–
–
–
–
–
–
–
–
––––––––––
0.9
––––––––––
63
CAMELLIA PLC
NOTES TO THE ACCOUNTS
2 Revenue
An analysis of the Group's revenue is as follows:
2019
£’m
2018
£’m
Sale of goods
Distribution and warehousing revenue
Engineering services revenue
Agency commission revenue
Property rental revenue
Total Group revenue
Other operating income
Investment income
Interest income
Total Group income
Disaggregation of revenue from contracts with customers:
242.9
25.6
22.1
–
0.9
––––––––––
291.5
4.0
0.7
3.9
––––––––––
300.1
––––––––––
248.5
38.2
22.2
0.1
0.8
––––––––––
309.8
4.0
0.8
4.0
––––––––––
318.6
––––––––––
Sale of goods
Distribution and warehousing revenue
Engineering services revenue
Agency commission revenue
Property rental revenue
Total Group revenue
At a point in time
2018
2019
£’m
£’m
Over time
2019
£’m
2018
£’m
242.9
25.6
22.1
–
–
––––––––––
290.6
––––––––––
248.5
38.2
22.2
0.1
–
––––––––––
309.0
––––––––––
–
–
–
–
0.9
––––––––––
0.9
––––––––––
–
–
–
–
0.8
––––––––––
0.8
––––––––––
64
CAMELLIA PLC
NOTES TO THE ACCOUNTS
3 Trading profit
The following items have been included in arriving at trading profit:
Employment costs (note 11)
Inventories:
Cost of inventories recognised as an expense (included in cost of sales)
Fair value gain included in Made Tea
Depreciation of property, plant and equipment:
Owned assets
Under finance leases
Right-of-use assets
Amortisation of intangibles (included in administrative expenses)
Impairment of intangibles (included in administrative expenses)
Gain from change in fair value of non-current biological assets
Profit on disposal of property, plant and equipment
Repairs and maintenance expenditure on property, plant and equipment
Currency exchange (gains)/losses (credited)/charged to income include:
Revenue
Cost of sales
Administrative expenses
Investment income
Finance income
2019
£’m
118.0
164.4
0.1
2018
£’m
98.5
162.1
0.2
15.8
–
0.9
0.3
0.3
1.4
0.5
5.4
––––––––––
15.1
0.1
–
0.4
–
1.5
0.1
5.6
––––––––––
–
–
(0.2)
(0.1)
(0.1)
(0.1)
(0.2)
-
0.3
––––––––––
–
––––––––––
(0.2)
––––––––––
(0.6)
––––––––––
During the year the Group (including its overseas subsidiaries) obtained the following services from
the Company's auditor and its associates:
Audit services:
Statutory audit:
Parent company and consolidated financial statements
Subsidiary companies
Audit – related regulatory reporting
Tax compliance services
0.2
0.5
––––––––––
0.7
0.1
0.1
––––––––––
0.9
––––––––––
0.2
0.5
––––––––––
0.7
0.1
–
––––––––––
0.8
––––––––––
65
CAMELLIA PLC
NOTES TO THE ACCOUNTS
4 Underlying profit
The Group seeks to present an indication of the underlying performance which is not impacted by
exceptional items or items considered non-operational in nature. This measure of profit is described
as 'underlying' and is used by management to measure and monitor performance.
The following items have been excluded from the underlying profit measure and have been
separately disclosed:
■
■
■
A £9.8 million gain (2018: £5.4 million gain) from the release of provisions for wage increases
relating to prior years in our Agriculture operations following progress on negotiations.
A charge of £3.6 million (2018: £nil) in relation to workers profit participation in Bangladesh
which mainly relates to prior years obligations and has been recognised as a consequence of
regulatory developments in the current year.
The release of a £nil (2018: £9.0 million) provision in Bangladesh for post-employment benefit
obligations from which the tea industry has been exempted.
5 Share of associates' results
The Group's share of the results of associates is analysed below:
Profit before tax
Taxation
Profit after tax
6 Finance income and costs
Finance costs – interest payable on loans and bank overdrafts
Interest payable on leases
Finance costs
Finance income - interest income on short-term bank deposits
Net exchange (loss)/gain on foreign cash balances
Employee benefit interest (note 34)
Net finance income
2019
£’m
2018
£’m
5.3
(0.7)
––––––––––
4.6
––––––––––
8.4
(0.8)
––––––––––
7.6
––––––––––
2019
£’m
2018
£’m
(1.5)
(0.7)
––––––––––
(2.2)
3.9
(0.3)
(1.1)
––––––––––
0.3
––––––––––
(0.6)
–
––––––––––
(0.6)
4.0
0.2
(1.5)
––––––––––
2.1
––––––––––
66
CAMELLIA PLC
NOTES TO THE ACCOUNTS
7 Taxation
Analysis of charge in the year
Current tax
UK corporation tax
UK corporation tax at 19.0 per cent. (2018: 19.0 per cent.)
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
Tax on profit on ordinary activities
Factors affecting tax charge for the year
Profit on ordinary activities before tax
Share of associated undertakings profit
Adjusted profit on ordinary activities before tax
Tax on ordinary activities at the standard rate of corporation tax
in the UK of 19.0 per cent. (2018: 19.0 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
Other income not charged to tax
Increase in tax losses carried forward
Movement in other timing differences
Total tax charge for the year
2019
£’m
£’m
2018
£’m
0.6
(0.6)
––––––––––
8.7
(2.4)
––––––––––
(1.1)
2.0
––––––––––
2.8
(2.8)
––––––––––
–
14.0
0.1
––––––––––
14.1
––––––––––
14.1
1.5
4.4
––––––––––
5.9
––––––––––
20.0
––––––––––
–
6.3
––––––––––
6.3
0.9
––––––––––
7.2
––––––––––
22.3
(4.6)
––––––––––
17.7
––––––––––
52.3
(7.6)
––––––––––
44.7
––––––––––
3.4
8.5
(2.4)
1.0
3.1
1.0
(0.5)
1.5
0.1
––––––––––
7.2
––––––––––
0.1
1.3
7.2
0.7
(1.0)
2.8
0.4
––––––––––
20.0
––––––––––
Adjustment to tax in respect of prior years includes a credit of £2.3 million relating to a reversal of the
provision previously carried relating to assessments raised by the Malawi Revenue Authority which
are no longer required.
Included within the tax charge is a provision amounting to £0.9 million relating to withholding tax on
prior year branch profit remittances from Bangladesh where the applicable rate of withholding tax is
being contested.
Also included within the tax charge is a credit to deferred tax of £1.3 million relating to the
recognition of workers profit participation liabilties in Bangladesh.
67
CAMELLIA PLC
NOTES TO THE ACCOUNTS
7 Taxation (continued)
The tax charge includes a credit of £0.9 million relating to the recognition of deferred tax losses able
to be utilised to offset gains in the value of financial assets at fair value through other comprehensive
income where the related equal and opposite charge arises in the Statement of Comprehensive
Income.
8 Profit for the year
The profit of the Company was:
2019
£’m
2018
£’m
4.2
––––––––––
3.9
––––––––––
The Company has taken advantage of the exemption under Section 408 of the Companies Act 2006
not to disclose its income statement.
9 Equity dividends
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2018 of
102p (2017: 98p) per share
Interim dividend for the year ended 31 December 2019 of
42p (2018: 40p) per share
2019
£’m
2018
£’m
2.8
2.7
1.2
––––––––––
4.0
––––––––––
1.1
––––––––––
3.8
––––––––––
Dividends amounting to £0.1 million (2018: £0.1 million) have not been included as group companies
hold 62,500 issued shares in the Company. These are classified as treasury shares.
Proposed final dividend for the year ended 31 December 2019 of
nil (2018: 102p) per share
–
––––––––––
2.9
––––––––––
68
CAMELLIA PLC
NOTES TO THE ACCOUNTS
10 Earnings /(loss) per share (EPS)
2019
Weighted
average
Earnings/ number of
(loss)
shares
£’m Number
2018
Weighted
average
number of
shares
Number
EPS
Pence
EPS
Pence
Earnings
£’m
8.3
––––––––––
2,762,000
––––––––––
300.5
––––––––––
25.2
––––––––––
2,762,000
––––––––––
912.4
––––––––––
8.3
––––––––––
2,762,000
––––––––––
300.5
––––––––––
25.4
––––––––––
2,762,000
––––––––––
919.6
––––––––––
–
––––––––––
2,762,000
––––––––––
–
––––––––––
(0.2)
––––––––––
2,762,000
––––––––––
(7.2)
––––––––––
Attributable to ordinary
shareholders
Attributable to ordinary
shareholders - continuing
operations
Attributable to ordinary
shareholders - discontinued
operation
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 35).
11 Employees
Average number of employees by activity:
Agriculture
Engineering
Food Service
Central Management
Employment costs:
Wages and salaries
Social security costs
Employee benefit obligations (note 34) – UK
– Overseas
– Overseas workers profit
participation
– Overseas curtailment gain
2019
Number
2018
Number
77,564
257
313
31
––––––––––
78,165
––––––––––
77,182
225
357
28
––––––––––
77,792
––––––––––
2019
£’m
103.7
2.6
1.7
6.4
2018
£’m
96.2
2.7
2.3
6.3
3.6
–
––––––––––
118.0
––––––––––
–
(9.0)
––––––––––
98.5
––––––––––
Total remuneration paid to key employees who are members of the Executive Committees, excluding
Directors of Camellia Plc, amounted to £2.6 million (2018: £2.9 million).
69
CAMELLIA PLC
NOTES TO THE ACCOUNTS
12 Emoluments of the directors
Aggregate emoluments excluding pension contributions
2019
£’m
2018
£’m
2.1
––––––––––
2.0
––––––––––
Emoluments of the highest paid director excluding pension contributions were £0.6 million (2018:
£0.6 million).
Further details of directors' emoluments are set out on pages 37 to 38.
13 Intangible assets
Group
Cost
At 1 January 2018
Additions
Disposals
Subsidiary joining the group
At 1 January 2019
Exchange differences
Additions
Businesses joining the group
At 31 December 2019
Amortisation
At 1 January 2018
Charge for the year
Disposals
At 1 January 2019
Charge for the year
Impairment
At 31 December 2019
Net book value at 31 December 2019
Net book value at 31 December 2018
Goodwill
£’m
Brands
£’m
–
–
–
–
––––––––––
–
–
–
1.4
––––––––––
1.4
––––––––––
–
–
–
––––––––––
–
–
0.3
––––––––––
0.3
––––––––––
1.1
––––––––––
–
––––––––––
2.3
–
–
6.6
––––––––––
8.9
(0.1)
–
–
––––––––––
8.8
––––––––––
–
–
–
––––––––––
–
–
–
––––––––––
–
––––––––––
8.8
––––––––––
8.9
––––––––––
Computer
software
£’m
2.4
0.1
(0.3)
–
––––––––––
2.2
–
0.1
–
––––––––––
2.3
––––––––––
1.5
0.4
(0.3)
––––––––––
1.6
0.3
–
––––––––––
1.9
––––––––––
0.4
––––––––––
0.6
––––––––––
Total
£’m
4.7
0.1
(0.3)
6.6
––––––––––
11.1
(0.1)
0.1
1.4
––––––––––
12.5
––––––––––
1.5
0.4
(0.3)
––––––––––
1.6
0.3
0.3
––––––––––
2.2
––––––––––
10.3
––––––––––
9.5
––––––––––
Impairment testing
Timing of impairment testing
The Group’s impairment test in respect of goodwill is performed as at 31 December each year. In line
with the accounting policy, impairment testing is also performed whenever there is an indication that
the assets may be impaired. As a result of this testing and following a change in fair value less costs
of disposal as assessed by a professional valuation, an impairment of £0.3 million was made in the
year to 31 December 2019. For the purpose of this impairment testing, the Group’s CGU components
represent the goodwill on the acquisition of tea estates in India by Goodricke Group Limited and
Amgoorie India Limited.
70
CAMELLIA PLC
NOTES TO THE ACCOUNTS
13 Intangible assets (continued)
The Group’s impairment test in respect of brands allocated to each component of the cash-generating
unit (‘CGU’) is performed as at 31 December each year. In line with the accounting policy, impairment
testing is also performed whenever there is an indication that the assets may be impaired. There was no
indication of impairment in the year to 31 December 2019. For the purpose of this impairment testing,
the Group’s CGU components represent the brands owned by Jing Tea Limited and Goodricke Group
Limited.
14 Property, plant and equipment
Group
Deemed cost
At 1 January 2018
Exchange differences
Additions
Disposals
Subsidiaries joining the group
Subsidiaries leaving the group
Reclassification from investment
properties
At 1 January 2019
Reclassification to right–of-use assets
Exchange differences
Additions
Disposals
Businesses joining the group
At 31 December 2019
Depreciation
At 1 January 2018
Exchange differences
Charge for the year
Disposals
Subsidiaries leaving the group
At 1 January 2019
Reclassification to right-of-use assets
Exchange differences
Charge for the year
Disposals
At 31 December 2019
Net book value at 31 December 2019
Net book value at 31 December 2018
Bearer
plants
£’m
133.6
4.9
4.0
(0.4)
–
–
–
––––––––––
142.1
–
(6.7)
4.4
(1.1)
2.6
––––––––––
141.3
––––––––––
16.8
0.8
5.6
(0.2)
–
––––––––––
23.0
–
(1.2)
5.8
(0.9)
––––––––––
26.7
––––––––––
114.6
––––––––––
119.1
––––––––––
Land and
buildings machinery
£’m
Fixtures,
Plant and fittings and
equipment
£’m
£’m
102.1
1.0
6.3
(0.4)
0.4
(1.8)
0.2
––––––––––
107.8
(2.0)
(3.1)
5.8
(1.1)
1.6
––––––––––
109.0
––––––––––
50.9
0.3
2.3
(0.3)
(1.5)
––––––––––
51.7
(0.2)
(1.2)
2.7
(0.7)
––––––––––
52.3
––––––––––
56.7
––––––––––
56.1
––––––––––
106.2
0.4
8.5
(1.8)
0.1
(0.8)
–
––––––––––
112.6
(0.1)
(3.8)
6.6
(2.6)
1.4
––––––––––
114.1
––––––––––
66.6
0.2
6.3
(1.6)
(0.6)
––––––––––
70.9
–
(2.3)
6.5
(2.0)
––––––––––
73.1
––––––––––
41.0
––––––––––
41.7
––––––––––
17.1
0.3
1.7
(0.8)
–
(0.6)
–
––––––––––
17.7
–
(0.4)
1.6
(0.1)
0.1
––––––––––
18.9
––––––––––
8.4
0.2
1.0
(0.8)
(0.5)
––––––––––
8.3
–
(0.3)
0.8
(0.1)
––––––––––
8.7
––––––––––
10.2
––––––––––
9.4
––––––––––
Total
£’m
359.0
6.6
20.5
(3.4)
0.5
(3.2)
0.2
––––––––––
380.2
(2.1)
(14.0)
18.4
(4.9)
5.7
––––––––––
383.3
––––––––––
142.7
1.5
15.2
(2.9)
(2.6)
––––––––––
153.9
(0.2)
(5.0)
15.8
(3.7)
––––––––––
160.8
––––––––––
222.5
––––––––––
226.3
––––––––––
The amount of expenditure for property, plant and equipment in the course of construction (including
immature bearer plants) amounted to £5.5 million (2018: £4.2 million).
71
CAMELLIA PLC
NOTES TO THE ACCOUNTS
15 Right-of-use assets
Group
Deemed cost
Impact on adopting IFRS 16 at 1 January 2019
Reclassification from property, plant and equipment
Reclassification from prepaid operating leases
Exchange differences
Additions
Businesses joining the group
At 31 December 2019
Depreciation
Reclassification from property, plant and equipment
Charge for the year
At 31 December 2019
Net book value at 31 December 2019
Land and
buildings
£’m
Plant and
machinery
£’m
Total
£’m
11.5
2.0
1.0
(0.2)
1.0
3.7
––––––––––
19.0
––––––––––
0.3
0.1
–
–
0.2
–
––––––––––
0.6
––––––––––
11.8
2.1
1.0
(0.2)
1.2
3.7
––––––––––
19.6
––––––––––
0.2
0.7
––––––––––
0.9
––––––––––
–
0.2
––––––––––
0.2
––––––––––
0.2
0.9
––––––––––
1.1
––––––––––
18.1
––––––––––
0.4
––––––––––
18.5
––––––––––
The Group leases many assets including land, buildings and plant. The average lease term is 87 years.
Leases that expired in the year and were replaced by new leases for identical or the same underlying
assets resulted in additions to right-of-use assets of £0.2 million.
The maturity analysis of lease liabilities is presented in note 31.
Amounts recognised in the consolidated income statement:
Interest expense on lease liabilities
Expense relating to short-term leases
2019
£’m
0.7
0.1
––––––––––
72
CAMELLIA PLC
NOTES TO THE ACCOUNTS
16 Investment properties
Group
Cost
At 1 January 2018
Additions
Transfers from property, plant and equipment
Reclassification to assets held for sale
At 1 January 2019
Impact on adopting IFRS 16 at 1 January 2019
Additions
Disposals
At 31 December 2019
Depreciation
At 1 January 2018
Transfers from property, plant and equipment
Charge for the year
At 1 January 2019
Charge for the year
Disposals
At 31 December 2019
Net book value at 31 December 2019
Net book value at 31 December 2018
£’m
19.5
0.9
(0.2)
(0.4)
––––––––––
19.8
0.7
0.5
(1.5)
––––––––––
19.5
––––––––––
1.9
(0.2)
0.1
––––––––––
1.8
0.1
(0.7)
––––––––––
1.2
––––––––––
18.3
––––––––––
18.0
––––––––––
Included in revenue is £0.9 million (2018: £0.8 million) of rental income generated from investment
properties. Direct operating expenses relating to the investment property, the majority of which
generated rental income in the period, amounted to £0.2 million (2018: £0.1 million).
At the end of the year the fair value of Investment properties was £23.1 million (2018: £23.7 million).
Investment properties were valued by the Directors (fair value hierarchy Level 2).
73
CAMELLIA PLC
NOTES TO THE ACCOUNTS
17 Biological assets
Non-current:
Group
At 1 January 2018
Exchange differences
Additions
Gains arising from changes
in fair value less estimated point-of-sale costs
Decreases due to harvesting
At 1 January 2019
Exchange differences
Additions
Gains arising from changes
in fair value less estimated point-of-sale costs
Decreases due to harvesting
At 31 December 2019
Current:
Group
Tea
Edible nuts
Citrus
Soya
Avocado
Other
Forestry
£’m
Livestock
£’m
11.9
0.7
0.3
0.9
0.1
0.1
Total
£’m
12.8
0.8
0.4
1.2
(0.6)
––––––––––
13.5
(0.6)
0.2
1.0
(0.6)
––––––––––
13.5
––––––––––
0.3
(0.4)
––––––––––
1.0
–
–
0.4
(0.3)
––––––––––
1.1
––––––––––
1.5
(1.0)
––––––––––
14.5
(0.6)
0.2
1.4
(0.9)
––––––––––
14.6
––––––––––
2019
£’m
2018
£’m
0.4
3.6
1.1
2.7
1.1
0.2
––––––––––
9.1
––––––––––
0.3
2.8
1.6
3.0
1.0
0.1
––––––––––
8.8
––––––––––
Biological assets are carried at fair value. Where meaningful market-determined prices do not exist to
assess the fair value of biological assets, the fair value has been determined based on the net present
value of expected future cash flows from those assets, discounted at appropriate pre-tax rates. In
determining the fair value of biological assets where the discounting of expected future cash flows
has been used, the Directors have made certain assumptions about the expected life-span of the
plantings, yields, selling prices and costs. There are no individually significant unobservable inputs.
The fair value of livestock is based on market prices of livestock of similar age and sex.
New planting additions represent new areas planted to the particular crop at cost.
As at 31 December 2019 the area planted to Forestry amounted to 5,813 Hectares (2018: 5,982) from
which 173,867 cubic metres (2018: 156,112) were harvested during the year.
Livestock numbers were 4,396 head (2018: 4,436) at 31 December 2019.
Fair value measurement
Livestock biological assets fall under level 2 and all other biological assets fall under level 3 of the
hierarchy defined in IFRS 13.
The basis upon which the valuations are determined is set out in accounting policies on page 49.
74
CAMELLIA PLC
NOTES TO THE ACCOUNTS
17 Biological assets (continued)
Valuations by external professional valuers and those derived from discounted cash flows both make
assumptions based on unobservable inputs of: yields, an increase in which will raise the value; costs,
an increase in which will decrease the value; market prices, an increase in which will raise the value;
life span of the plantings, an increase in which will raise the value; discount rates, an increase in
which will decrease the value. These assumptions vary significantly across different countries, crops
and varieties. In preparing these valuations a long term view is taken on the yields and prices
achievable.
The fair value of biological assets is sensitive to these assumptions, the more significant of which are
as follows:
Non-current:
– Forestry - a 10% movement in the market price for trees or volume of trees assumed would result in
a £1.4 million (2018: £1.4 million) increase/decrease in the fair value of forestry.
Current:
– Macadamia - a 10% increase/decrease in the volumes assumed would result in a £0.6 million (2018:
£0.6 million) increase/decrease in the fair value of macadamia growing crop. A 10% increase/decrease
in selling price assumed for macadamia would result in a £0.7 million (2018: £0.8 million)
increase/decrease in the fair value.
– Avocados - a 10% increase/decrease in the volume or the price assumed would result in a
£0.2 million (2018: £0.1 million) increase/decrease in the fair value of Hass avocados growing crop.
– Soya - a 10% increase/decrease in the volume or the price assumed would result in a £0.3 million
(2018: £0.3 million) increase/decrease in the fair value of soya growing crop.
Financial risk management strategies
The Group is exposed to financial risks arising from changes in the prices of the agricultural products
it produces. There are no futures markets available for the majority of crops grown by the Group. The
Group's exposure to this risk is mitigated by the geographical spread of its operations, selective
forward selling in certain instances when considered appropriate, and regular reviews of available
market data on sales and production. The Group monitors closely the returns it achieves from its
crops and considers replacing its biological assets when yields decline with age or markets change.
Further financial risk arises from changes in market prices of key cost components. Such costs are
closely monitored.
18 Prepaid operating leases
Group
Cost
At 1 January 2018
Exchange differences
At 1 January 2019
Reclassification to right-of-use assets
At 31 December 2019
Net book value at 31 December 2019
Net book value at 31 December 2018
£’m
0.9
0.1
––––––––––
1.0
(1.0)
––––––––––
–
––––––––––
–
––––––––––
1.0
––––––––––
75
CAMELLIA PLC
NOTES TO THE ACCOUNTS
19 Investments in subsidiaries
Company
Cost – At 1 January and 31 December
20 Investments in associates
Group
At 1 January
Exchange differences
Share of profit (note 5)
Dividends
Additions
Other equity movements
At 31 December
Provision for diminution in value
At 1 January
Exchange differences
At 31 December
Net book value at 31 December
2019
£’m
2018
£’m
73.5
––––––––––
73.5
––––––––––
2019
£’m
2018
£’m
93.6
(3.8)
4.6
(3.1)
1.3
0.3
––––––––––
92.9
––––––––––
27.9
(1.0)
––––––––––
26.9
––––––––––
66.0
––––––––––
81.7
5.1
7.6
(2.8)
1.0
1.0
––––––––––
93.6
––––––––––
26.3
1.6
––––––––––
27.9
––––––––––
65.7
––––––––––
Details of the Group's associates are shown in note 42.
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 Liabilities Revenues
£’m
£’m
£’m
Interest Market
value
£’m
held
%
Profit
£’m
2019
Listed
BF&M
United Finance Limited
United Insurance
Company Limited
2018
Listed
BF&M
United Finance Limited
United Insurance
Company Limited
76
Bermuda
Bangladesh
779.1
73.4
(698.9)
(63.3)
74.3
3.4
3.6
0.8
Bangladesh
3.7
––––––––
856.2
––––––––
(1.1)
––––––––
(763.3)
––––––––
0.4
––––––––
78.1
––––––––
0.2
––––––––
4.6
––––––––
Bermuda
Bangladesh
589.5
85.7
(508.8)
(75.3)
64.5
3.5
6.5
0.9
Bangladesh
3.4
––––––––
678.6
––––––––
(0.9)
––––––––
(585.0)
––––––––
0.3
––––––––
68.3
––––––––
0.2
––––––––
7.6
––––––––
37.8
38.4
37.0
52.3
11.1
8.6
––––––––
72.0
––––––––
37.2
38.4
37.0
41.8
12.0
3.6
––––––––
57.4
––––––––
CAMELLIA PLC
NOTES TO THE ACCOUNTS
21 Financial assets at fair value through other comprehensive income
Cost or fair value
At 31 December
Adjustment upon application of IFRS 9
At 1 January
Exchange differences
Fair value adjustment
Additions
Disposals
Fair value adjustment for disposal
At 31 December
Provision for diminution in value
At 31 December
Adjustment upon application of IFRS 9
At 1 January
Exchange differences
Disposals
At 31 December
Group
Company
2019
£’m
2018
£’m
2019
£’m
2018
£’m
35.2
–
––––––––––
35.2
(1.5)
6.9
0.8
(1.1)
(0.3)
––––––––––
40.0
––––––––––
–
43.6
––––––––––
43.6
2.1
(5.6)
–
(1.1)
(3.8)
––––––––––
35.2
––––––––––
0.2
–
––––––––––
0.2
–
–
–
–
–
––––––––––
0.2
––––––––––
–
0.2
––––––––––
0.2
–
–
–
–
–
––––––––––
0.2
––––––––––
2.5
–
––––––––––
2.5
(0.1)
(0.2)
––––––––––
2.2
––––––––––
–
2.4
––––––––––
2.4
0.1
–
––––––––––
2.5
––––––––––
0.2
–
––––––––––
0.2
–
–
––––––––––
0.2
––––––––––
–
0.2
––––––––––
0.2
–
–
––––––––––
0.2
––––––––––
Net book value at 31 December
37.8
––––––––––
32.7
––––––––––
–
––––––––––
–
––––––––––
Financial assets at fair value through other comprehensive income include the following:
Listed securities:
Equity securities - Bermuda
Equity securities - Japan
Equity securities - Switzerland
Equity securities - US
Equity securities - India
Equity securities - Europe
Equity securities - United Kingdom
Equity securities - Other
Group
2019
£’m
2018
£’m
2.0
18.8
11.3
3.9
0.6
0.4
0.3
0.5
––––––––––
37.8
––––––––––
2.6
17.1
8.1
3.6
0.6
0.4
–
0.3
––––––––––
32.7
––––––––––
77
CAMELLIA PLC
NOTES TO THE ACCOUNTS
21 Financial assets at fair value through other comprehensive income (continued)
Financial assets at fair value through other comprehensive income are denominated in the following
currencies:
2019
£’m
0.3
3.9
0.4
11.3
0.6
2.0
18.8
0.5
––––––––––
37.8
––––––––––
2019
£’m
3.7
–
––––––––––
3.7
(0.3)
–
10.6
(7.8)
––––––––––
6.2
––––––––––
Group
2018
£’m
–
3.6
0.4
8.1
0.6
2.6
17.1
0.3
––––––––––
32.7
––––––––––
Group
2018
£’m
–
2.5
––––––––––
2.5
–
0.1
7.2
(6.1)
––––––––––
3.7
––––––––––
Group
2019
£’m
2018
£’m
0.8
3.9
1.4
0.1
––––––––––
6.2
––––––––––
–
–
3.7
–
––––––––––
3.7
––––––––––
Sterling
US Dollar
Euro
Swiss Franc
Indian Rupee
Bermudian Dollar
Japanese Yen
Other
22 Financial assets at fair value through profit or loss
At 31 December
Adjustment upon application of IFRS 9
At 1 January
Exchange differences
Fair value adjustment
Additions
Disposals
At 31 December
Financial assets at fair value through profit or loss include the following:
Listed securities:
Money market - Bermuda
Money market - US
Money market - India
Money market - Switzerland
78
CAMELLIA PLC
NOTES TO THE ACCOUNTS
22 Financial assets at fair value through profit or loss (continued)
Financial assets at fair value through profit or loss are denominated in the following currencies:
Group
US Dollar
Indian Rupee
Bermudian Dollar
Swiss Franc
23 Financial assets at amortised cost
At 31 December
Adjustment upon application of IFRS 9
At 1 January
Exchange differences
Disposals
At 31 December
Financial assets at amortised cost comprises:
Treasury infrastructure bonds – 12.0% to 12.2% interest payable
twice yearly and redeemable in November 2022 – Kenya
Treasury infrastructure bonds – 12.0% to 12.2% interest payable
twice yearly and redeemable in November 2024 – Kenya
Debentures with fixed interest of 12.5% and repayable
twice yearly until 31 October 2019 – Kenya
Current
Non-Current
2019
£’m
3.9
1.4
0.8
0.1
––––––––––
6.2
––––––––––
2018
£’m
–
3.7
–
–
––––––––––
3.7
––––––––––
2019
£’m
–
–
––––––––––
3.2
–
(0.2)
––––––––––
3.0
––––––––––
Group
2018
£’m
–
3.3
––––––––––
3.3
0.1
(0.2)
––––––––––
3.2
––––––––––
2019
£’m
1.5
1.5
2018
£’m
1.5
1.5
–
––––––––––
3.0
––––––––––
–
3.0
––––––––––
3.0
––––––––––
0.2
––––––––––
3.2
––––––––––
0.2
3.0
––––––––––
3.2
––––––––––
79
CAMELLIA PLC
NOTES TO THE ACCOUNTS
24 Available-for-sale financial assets
Cost or fair value
At 31 December
Adjustment upon application of IFRS 9
At 1 January and 31 December
Provision for diminution in value
At 31 December
Adjustment upon application of IFRS 9
At 1 January and 31 December
Net book value at 31 December
25 Other investments – heritage assets
Cost
At 1 January
Additions
At 31 December
Group
Company
2019
£’m
2018
£’m
2019
£’m
2018
£’m
–
–
––––––––––
–
––––––––––
–
–
––––––––––
–
––––––––––
–
––––––––––
49.4
(49.4)
––––––––––
–
––––––––––
2.4
(2.4)
––––––––––
–
––––––––––
–
––––––––––
–
–
––––––––––
–
––––––––––
–
–
––––––––––
–
––––––––––
–
––––––––––
0.2
(0.2)
––––––––––
–
––––––––––
0.2
(0.2)
––––––––––
–
––––––––––
–
––––––––––
Group
Company
2019
£’m
2018
£’m
2019
£’m
2018
£’m
9.5
0.3
––––––––––
9.8
––––––––––
9.4
0.1
––––––––––
9.5
––––––––––
10.7
0.3
––––––––––
11.0
––––––––––
10.6
0.1
––––––––––
10.7
––––––––––
Heritage assets comprise the Group’s and Company’s investment in fine art, philately, documents and
manuscripts. The market value of these collections is expected to be in excess of book value.
26 Inventories
Group
Made Tea
Other agricultural produce
Work in progress
Trading stocks
Raw materials and consumables
2019
£’m
2018
£’m
28.6
5.9
0.1
1.5
13.2
––––––––––
49.3
––––––––––
34.6
2.6
0.1
1.6
13.8
––––––––––
52.7
––––––––––
Made tea inventories include the fair value of green leaf which includes a fair value uplift of
£0.1 million (2018: £0.2 million).
80
CAMELLIA PLC
NOTES TO THE ACCOUNTS
27 Trade and other receivables
Group
Current:
Trade receivables
Amounts owed by associated undertakings
Other receivables
Prepayments and accrued income
Non-current:
Other receivables
Group
2018
£’m
2019
£’m
30.0
0.1
5.8
8.4
––––––––––
44.3
––––––––––
34.5
0.1
6.0
7.9
––––––––––
48.5
––––––––––
2.8
––––––––––
2.7
––––––––––
The carrying amounts of the Group’s trade and other receivables are denominated in the following
currencies:
Current:
Sterling
US Dollar
Euro
Kenyan Shilling
Indian Rupee
Malawian Kwacha
Bangladesh Taka
South African Rand
Brazilian Real
Other
Non-current:
Kenyan Shilling
Indian Rupee
Malawian Kwacha
Bangladesh Taka
2019
£’m
2018
£’m
13.4
2.8
0.1
3.1
18.9
2.1
1.6
0.2
1.4
0.7
––––––––––
44.3
––––––––––
0.5
1.4
0.6
0.3
––––––––––
2.8
––––––––––
13.0
6.2
0.1
3.4
20.0
1.7
2.2
0.2
1.1
0.6
––––––––––
48.5
––––––––––
0.5
1.5
0.4
0.3
––––––––––
2.7
––––––––––
Included within trade receivables is a provision for doubtful debts of £0.5 million (2018: £0.4 million).
All other trade receivables are with normal trading partners and there is no history of defaults.
Trade receivables include receivables of £6.4 million (2018: £5.9 million) which are past due at the
reporting date against which the Group has not provided, as there has not been a significant change
in credit quality and the amounts are still considered recoverable. Ageing of past due but not
provided for receivables is as follows:
81
CAMELLIA PLC
NOTES TO THE ACCOUNTS
27 Trade and other receivables (continued)
Up to 30 days
30-60 days
60-90 days
Over 90 days
2019
£’m
2018
£’m
2.7
1.5
0.5
1.7
––––––––––
6.4
––––––––––
2.5
1.4
0.3
1.7
––––––––––
5.9
––––––––––
28 Cash and cash equivalents (excluding bank overdrafts)
Cash at bank and in hand
Short–term bank deposits
Short-term liquid investments
Group
Company
2019
£’m
2018
£’m
2019
£’m
2018
£’m
31.1
59.5
0.8
––––––––––
91.4
––––––––––
41.3
67.5
3.6
––––––––––
112.4
––––––––––
–
–
–
––––––––––
–
––––––––––
0.1
–
–
––––––––––
0.1
––––––––––
Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow
statement:
Cash and cash equivalents
Bank overdrafts (note 30)
Effective interest rate:
Short-term deposits
Short-term liquid investments
Average maturity period:
Short-term deposits
Short-term liquid investments
2019
£’m
2018
£’m
2019
£’m
2018
£’m
91.4
(2.0)
––––––––––
89.4
––––––––––
112.4
(2.8)
––––––––––
109.6
––––––––––
–
–
––––––––––
–
––––––––––
0.1
–
––––––––––
0.1
––––––––––
2019
2018
2019
2018
0.85 – 12.0% 0.82 – 12.0%
7.04%
5.0%
53 days
24 days
59 days
37 days
–
–
–
–
–
–
–
–
82
CAMELLIA PLC
NOTES TO THE ACCOUNTS
29 Trade and other payables
Current:
Trade payables
Other taxation and social security
Other payables
Accruals and deferred income
30 Financial liabilities – borrowings
Group
Current:
Bank overdrafts
Bank loans
Group
Company
2019
£’m
2018
£’m
2019
£’m
2018
£’m
20.6
0.9
20.5
6.6
––––––––––
48.6
––––––––––
24.8
1.9
17.9
8.9
––––––––––
53.5
––––––––––
–
–
0.2
0.4
––––––––––
0.6
––––––––––
0.1
-
0.1
0.4
––––––––––
0.6
––––––––––
2019
£’m
2018
£’m
2.0
3.6
––––––––––
5.6
––––––––––
2.8
0.6
––––––––––
3.4
––––––––––
2.0
3.6
––––––––––
5.6
––––––––––
2.8
0.6
––––––––––
3.4
––––––––––
3.3
––––––––––
3.3
––––––––––
3.3
––––––––––
3.3
––––––––––
5.6
0.4
1.3
1.6
––––––––––
8.9
––––––––––
3.4
3.3
–
–
––––––––––
6.7
––––––––––
83
Current borrowings include the following amounts
secured on property, plant and equipment and investment properties:
Bank overdrafts
Bank loans
Non-current:
Bank loans
Non-current borrowings include the following amounts
secured on plant and equipment and investment properties:
Bank loans
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
CAMELLIA PLC
NOTES TO THE ACCOUNTS
30 Financial liabilities – borrowings (continued)
The rates of interest payable by the Group ranged between:
Bank overdrafts
Bank loans
31 Lease liabilities
Group
Maturity analysis of lease liabilities is as follows:
Within one year
Between 1 – 2 years
Between 2 – 5 years
Onwards
Analysed as:
Current
Non-current
2019
%
2018
%
2.50 – 18.50 2.50 – 21.00
3.03
3.03
2019
£’m
2018
£’m
1.2
1.2
2.1
8.5
––––––––––
13.0
––––––––––
–
0.1
–
–
––––––––––
0.1
––––––––––
1.2
11.8
––––––––––
13.0
––––––––––
–
0.1
––––––––––
0.1
––––––––––
The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are
monitored within the individual subsidiaries’ finance functions.
84
CAMELLIA PLC
NOTES TO THE ACCOUNTS
32 Provisions
Group
At 1 January 2018
Exchange differences
Utilised in the period
Provided in the period
Unused amounts reversed in period
At 1 January 2019
Exchange differences
Utilised in the period
Provided in the period
Businesses joining the group
Unused amounts reversed in period
At 31 December 2019
Current:
At 31 December 2019
At 31 December 2018
Wages and salaries
£’m
Others
£’m
Total
£’m
18.5
0.6
(4.9)
8.6
(5.4)
––––––––––
17.4
(0.5)
(6.3)
6.8
0.1
(9.8)
––––––––––
7.7
––––––––––
1.2
–
(0.6)
0.6
(0.1)
––––––––––
1.1
–
(0.1)
0.3
–
(0.1)
––––––––––
1.2
––––––––––
19.7
0.6
(5.5)
9.2
(5.5)
––––––––––
18.5
(0.5)
(6.4)
7.1
0.1
(9.9)
––––––––––
8.9
––––––––––
7.7
––––––––––
17.4
––––––––––
1.2
––––––––––
1.1
––––––––––
8.9
––––––––––
18.5
––––––––––
The wages and salaries provisions are in respect of ongoing wage and bonus negotiations in India
and Bangladesh.
£9.8 million (2018: £5.4 million) was reversed from the wages and salaries provision following
progress on negotiations in Kenya and India.
Others relate to provisions for claims and dilapidations.
85
CAMELLIA PLC
NOTES TO THE ACCOUNTS
33 Deferred tax
The net movement on the deferred tax account is set out below:
At 1 January
Exchange differences
Charged to the income statement
Charged/(credited) to other comprehensive income
Businesses joining the group
At 31 December
Group
Company
2019
£’m
46.3
(2.3)
0.9
1.4
0.8
––––––––––
47.1
––––––––––
2018
£’m
40.0
1.5
5.9
(1.1)
–
––––––––––
46.3
––––––––––
2019
£’m
2018
£’m
0.2
–
–
–
–
––––––––––
0.2
––––––––––
0.2
–
–
–
–
––––––––––
0.2
––––––––––
The movement in deferred tax assets and liabilities is set out below:
Deferred tax liabilities
At 1 January 2018
Exchange differences
Charged to the income statement
Credited to other comprehensive income
At 1 January 2019
Exchange differences
Charged/(credited) to the income statement
Charged to other comprehensive income
Businesses joining the group
At 31 December 2019
Deferred tax assets offset
Net deferred tax liability after offset
Accelerated
tax
depreciation
£’m
Other
£’m
Total
£’m
48.1
1.8
1.1
–
––––––––––
51.0
(2.4)
1.9
–
0.8
––––––––––
51.3
––––––––––
4.9
0.3
0.1
(1.5)
––––––––––
3.8
(0.1)
(0.3)
0.9
–
––––––––––
4.3
––––––––––
53.0
2.1
1.2
(1.5)
––––––––––
54.8
(2.5)
1.6
0.9
0.8
––––––––––
55.6
––––––––––
(8.5)
––––––––––
47.1
––––––––––
86
CAMELLIA PLC
NOTES TO THE ACCOUNTS
33 Deferred tax (continued)
Deferred tax assets
At 1 January 2018
Exchange differences
Charged to the income statement
Charged to other comprehensive income
At 1 January 2019
Exchange differences
Credited / (charged) to the income statement
Charged to other comprehensive income
At 31 December 2019
Offset against deferred tax liabilities
Net deferred tax asset after offset
Pension
scheme
asset
£’m
3.2
0.1
(2.7)
(0.3)
––––––––––
0.3
–
0.2
(0.2)
––––––––––
0.3
––––––––––
Tax losses
£’m
4.7
0.2
(1.9)
–
––––––––––
3.0
–
1.5
–
––––––––––
4.5
––––––––––
Other
£’m
Total
£’m
5.1
0.3
(0.1)
(0.1)
––––––––––
5.2
(0.2)
(1.0)
(0.3)
––––––––––
3.7
––––––––––
13.0
0.6
(4.7)
(0.4)
––––––––––
8.5
(0.2)
0.7
(0.5)
––––––––––
8.5
––––––––––
(8.5)
––––––––––
–
––––––––––
Deferred tax liabilities of £24.9 million (2018: £26.9 million) have not been recognised for the
withholding tax and other taxes that would be payable on the unremitted earnings of certain
subsidiaries. Such amounts are permanently reinvested.
Deferred tax assets are recognised for tax losses carried forward only to the extent that the
realisation of the related tax benefit through future taxable profits is probable. The Group has not
recognised deferred tax assets of £11.7 million (2018: £6.1 million) in respect of losses that can be
carried forward against future taxable income.
34 Employee benefit obligations
(i) Pensions
Certain Group subsidiaries operate defined contribution and funded defined benefit pension
schemes. The most significant is the UK funded, defined benefit scheme. The assets of this scheme
are administered by trustees and are kept separate from those of the Group. The performance of the
assets is monitored on a regular basis by the trustees and their investment advisors. A full actuarial
valuation was undertaken as at 1 July 2017 and updated to 31 December 2019 by a qualified
independent actuary. The UK defined benefit pension scheme is closed to new entrants and with
effect from 1 November 2016, the scheme was closed to future accruals. Since that date members
have participated in a defined contribution scheme.
The overseas schemes are operated in Group subsidiaries located in Bangladesh and India. Actuarial
valuations for these schemes have been updated to 31 December 2019 by qualified actuaries.
87
CAMELLIA PLC
NOTES TO THE ACCOUNTS
34 Employee benefit obligations (continued)
Assumptions
The major assumptions used in the 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 (CPI/RPI)
2018
% per annum % per annum
2019
N/a
2.10 – 5.00
1.90
2.10/3.10
N/a
2.30 – 5.00
2.75
2.30/3.30
Assumptions regarding future mortality experience are based on advice received from independent
actuaries. The current mortality tables used are SAPS 2, males 105% and females 104%, on a year of
birth basis, with CMI_2018 future improvement factors and subject to a long term annual rate of
future improvement of 1.25% per annum, smoothing parameter of 7.0 and initial addition parameter
of 0.25% pa. This results in males and females aged 65 having life expectancies of 21.4 years (2018:
21.6 years) and 22.7 years respectively (2018: 22.9 years).
Overseas schemes
Rate of increase in salaries 6.00 – 7.00
Rate of increase to LPI (Limited Price Indexation) pensions in payment 0.00 – 3.00
Discount rate applied to scheme liabilities 7.00 – 9.00
Inflation assumption 6.00 – 7.00
2019
2018
% per annum % per annum
6.00 – 7.00
0.00 – 3.00
7.50
6.00 – 7.00
(ii) Post-employment benefits
Certain Group subsidiaries located in Kenya, India and Bangladesh have an obligation to pay terminal
gratuities, based on years of service. These obligations are estimated annually using the projected
unit method by qualified independent actuaries. Schemes operated in India are funded but the
schemes operated in Kenya and Bangladesh are unfunded. Operations in India and Bangladesh also
have an obligation to pay medical benefits upon retirement. These schemes are unfunded.
Assumptions
The major assumptions used in the valuation to determine the present value of the post-employment
benefit obligations were as follows:
Rate of increase in salaries 6.00 – 7.50
Discount rate applied to scheme liabilities 7.00 – 13.00
Inflation assumptions 0.00 – 7.50
2019
2018
% per annum % per annum
6.00 – 10.00
7.50 – 13.00
0.00 – 10.00
(iii) Leave obligations
Certain Group subsidiaries located in India have an obligation to pay leave benefit, based on years of
service. These obligations are estimated annually using the projected unit method by qualified
independent actuaries. These schemes are unfunded.
88
CAMELLIA PLC
NOTES TO THE ACCOUNTS
34 Employee benefit obligations (continued)
(iv) Profit sharing obligations
Certain Group subsidiaries located in Bangladesh may have an obligation to pay sums for workers
profit participation for prior years based on a rate of 5 per cent. of post tax profit. Provisions have
been made for these sums pending clarification of the appplicability of the legislation.
Sensitivity analysis
The sensitivity of the UK defined benefit obligation to changes in the weighted principal assumptions is:
Discount rate
Discount rate
Rate of RPI inflation
Rate of RPI inflation
Life expectancy
Life expectancy
Change
in assumption
Impact
on defined
benefit
obligation
0.5% higher
0.5% lower
0.25% higher
0.25% lower
+1 year
-1 year
7.1% decrease
7.6% increase
1.8% increase
1.7% decrease
4.5% increase
4.5% decrease
The above changes in assumptions may have an impact on the value of the scheme’s investment
holdings. For example, the scheme holds a proportion of its assets in corporate bonds. A fall in the
discount rate as a result of lower UK corporate bond yields would lead to an increase in the value of
these assets, thus mitigating the increase in the defined benefit obligation to some extent. The
sensitivities have been calculated by changing the key assumption only and leaving all others fixed.
Duration of the scheme liabilities
The weighted average duration of the UK scheme’s liabilities is 15 years.
Analysis of scheme liabilities
The liabilities of the UK scheme are split as follows:
Deferred pensioners
Current pensioners
Total membership
%
41
59
––––––––––
100
––––––––––
89
CAMELLIA PLC
NOTES TO THE ACCOUNTS
34 Employee benefit obligations (continued)
(v) Actuarial valuations
Equities and property
Bonds
Diversified growth
Cash
Total fair value of plan assets
Present value of defined benefit
obligations
Total deficit in the schemes
Amount recognised as asset in
the balance sheet
Amount recognised as current
liability in the balance sheet
Amount recognised as non-current
liability in the balance sheet
Related deferred tax asset (note 33)
Net deficit
2019
UK Overseas
£’m
£’m
87.8
50.8
39.9
1.2
––––––––
179.7
0.9
18.8
–
9.1
––––––––
28.8
Total
£’m
88.7
69.6
39.9
10.3
––––––––
208.5
2018
UK Overseas
£’m
£’m
77.5
47.4
36.4
0.8
––––––––
162.1
0.9
18.6
–
9.0
––––––––
28.5
(193.3)
––––––––
(13.6)
––––––––
(37.2)
––––––––
(8.4)
––––––––
(230.5)
––––––––
(22.0)
––––––––
(178.6)
––––––––
(16.5)
––––––––
(36.7)
––––––––
(8.2)
––––––––
–
–
0.7
0.7
(0.7)
(0.7)
–
–
0.3
(1.0)
Total
£’m
78.4
66.0
36.4
9.8
––––––––
190.6
(215.3)
––––––––
(24.7)
––––––––
0.3
(1.0)
(13.6)
––––––––
(13.6)
–
––––––––
(13.6)
––––––––
(8.4)
––––––––
(8.4)
0.3
––––––––
(8.1)
––––––––
(22.0)
––––––––
(22.0)
0.3
––––––––
(21.7)
––––––––
(16.5)
––––––––
(16.5)
–
––––––––
(16.5)
––––––––
(7.5)
––––––––
(8.2)
0.3
––––––––
(7.9)
––––––––
(24.0)
––––––––
(24.7)
0.3
––––––––
(24.4)
––––––––
Movements in the fair value of scheme assets were as follows:
At 1 January
Expected return on plan assets
Employer contributions
Benefit payments
Businesses joining the group
Company leaving the group
Actuarial gains/(losses)
Exchange differences
At 31 December
2019
UK Overseas
£’m
£’m
162.1
4.3
–
(9.5)
–
–
22.8
–
––––––––
179.7
––––––––
28.5
2.1
2.0
(2.4)
0.7
–
(0.4)
(1.7)
––––––––
28.8
––––––––
Total
£’m
190.6
6.4
2.0
(11.9)
0.7
–
22.4
(1.7)
––––––––
208.5
––––––––
2018
UK Overseas
£’m
£’m
174.3
4.1
0.2
(8.1)
–
–
(8.4)
–
––––––––
162.1
––––––––
32.3
2.0
2.4
(2.9)
–
(5.0)
–
(0.3)
––––––––
28.5
––––––––
Total
£’m
206.6
6.1
2.6
(11.0)
–
(5.0)
(8.4)
(0.3)
––––––––
190.6
––––––––
90
CAMELLIA PLC
NOTES TO THE ACCOUNTS
34 Employee benefit obligations (continued)
Movements in the present value of defined benefit obligations were as follows:
At 1 January
Current service cost
Past service cost
Interest cost
Curtailment gain
Benefit payments
Businesses joining the group
Company leaving the group
Actuarial (losses)/gains
Exchange differences
At 31 December
2019
UK Overseas
£’m
£’m
(178.6)
–
–
(4.8)
–
9.5
–
–
(19.4)
–
––––––––
(193.3)
––––––––
(36.7)
(1.6)
–
(2.7)
–
2.4
(1.2)
–
0.5
2.1
––––––––
(37.2)
––––––––
Total
£’m
(215.3)
(1.6)
–
(7.5)
–
11.9
(1.2)
–
(18.9)
2.1
––––––––
(230.5)
––––––––
2018
UK Overseas
£’m
£’m
(188.6)
–
(0.9)
(4.5)
–
8.1
–
–
7.3
–
––––––––
(178.6)
––––––––
(48.9)
(2.0)
(0.2)
(3.1)
9.0
2.9
–
5.3
0.4
(0.1)
––––––––
(36.7)
––––––––
Total
£’m
(237.5)
(2.0)
(1.1)
(7.6)
9.0
11.0
–
5.3
7.7
(0.1)
––––––––
(215.3)
––––––––
In 2017, the total fair value of plan assets was £206.6 million, the present value of defined benefit
obligations was £237.5 million and the deficit was £30.9 million. In 2016, the total fair value of plan
assets was £194.1 million, the present value of defined benefit obligations was £260.8 million and the
deficit was £66.7 million and in 2015, the total fair value of plan assets was £172.0 million, the present
value of defined benefit obligations was £210.6 million and the deficit was £38.6 million.
Income Statement
The amounts recognised in the Income Statement are as follows:
2019
UK Overseas
£’m
£’m
Total
£’m
2018
UK Overseas
£’m
£’m
Total
£’m
Amounts (charged)/credited to
operating profit:
Current service cost
Past service cost
Curtailment gain
Total operating (charge)/credit
Amounts charged to other
finance costs:
Interest expense
Total (charged)/credited to
income statement
–
–
–
––––––––
–
(1.6)
–
–
––––––––
(1.6)
(1.6)
–
–
––––––––
(1.6)
–
(0.9)
–
––––––––
(0.9)
(2.0)
(0.2)
9.0
––––––––
6.8
(2.0)
(1.1)
9.0
––––––––
5.9
(0.5)
––––––––
(0.6)
––––––––
(1.1)
––––––––
(0.4)
––––––––
(1.1)
––––––––
(1.5)
––––––––
(0.5)
––––––––
(2.2)
––––––––
(2.7)
––––––––
(1.3)
––––––––
5.7
––––––––
4.4
––––––––
In 2018, the curtailment gain of £9.0 million reflected a change to the labour laws in Bangladesh
which exempted the tea industry from the requirement to pay certain post-employment benefits.
Employer contributions to defined contribution schemes are charged to profit when payable and the
costs charged were £6.5 million (2018: £5.5 million).
Liabilities for workers profit participation in Bangladesh are charged to profit when the obligation
arises. The amount of £3.6 million (2018: £nil) charged largely related to prior years and has been
recognised as a consequence of events in the current year.
91
CAMELLIA PLC
NOTES TO THE ACCOUNTS
34 Employee benefit obligations (continued)
Actuarial gains and losses recognised in the Statement of Comprehensive Income
The amounts included in the Statement of Comprehensive Income:
Remeasurements:
Return on plan assets, excluding
amount included in interest
Gain from changes in demographic
assumptions
(Loss)/gain from changes in
financial assumptions
Experience gains/(losses)
Actuarial gain/(loss)
2019
UK Overseas
£’m
£’m
Total
£’m
2018
UK Overseas
£’m
£’m
22.8
(0.4)
22.4
2.2
–
2.2
(8.4)
1.0
–
–
Total
£’m
(8.4)
1.0
(21.6)
–
––––––––
3.4
––––––––
0.4
0.1
––––––––
0.1
––––––––
(21.2)
0.1
––––––––
3.5
––––––––
6.9
(0.6)
––––––––
(1.1)
––––––––
1.4
(1.0)
––––––––
0.4
––––––––
8.3
(1.6)
––––––––
(0.7)
––––––––
Cumulative actuarial losses recognised in the Statement of Comprehensive Income are £22.2 million
(2018: £25.7 million).
As the UK defined benefit pension scheme is closed to future accrual and active members were
transferred to a defined contribution scheme, no employer contributions will be paid for the year
commencing 1 January 2020. No additional funding contributions will be made, as the latest actuarial
valuation shows a funding surplus of £7.1 million.
35 Share capital
Authorised: 2,842,000 (2018: 2,842,000) ordinary shares of 10p each
Allotted, called up and fully paid: ordinary shares of 10p each:
At 1 January and 31 December – 2,824,500 (2018: 2,824,500) shares
2019
£’m
2018
£’m
0.3
––––––––––
0.3
––––––––––
0.3
––––––––––
0.3
––––––––––
Group companies hold 62,500 issued shares in the Company. These are classified as treasury shares.
92
CAMELLIA PLC
NOTES TO THE ACCOUNTS
36 Reconciliation of profit from operations to cash flow
Group
Profit from continuing operations
Share of associates’ results
Depreciation and amortisation
Depreciation of right-of-use assets
Impairment of assets and provisions
Realised movements on biological assets – non-current
Profit on disposal of non-current assets
Loss on disposal of subsidiaries
Profit on disposal of financial assets
Movement in provisions
Increase in working capital
Difference between employee benefit obligations funding
contributions and cost charged
Cash generated from continuing operations
2019
£’m
21.3
(4.6)
16.2
0.9
0.3
(1.4)
(0.5)
–
(0.2)
(9.0)
(5.1)
2018
£’m
49.6
(7.6)
15.5
–
0.2
(1.5)
(0.1)
0.4
(0.3)
(1.2)
(11.4)
3.3
––––––––––
21.2
––––––––––
(8.3)
––––––––––
35.3
––––––––––
37 Changes in liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including
both cash and non-cash changes. Liabilities arising from financing activities are those for which cash
flows were, or future cash flows will be, classified in the Group’s consolidated cash flow statement as
cash flows from financing activities.
Bank
Bank loans
loans
Current Non-current
£’m
£’m
3.9
At 1 January 2018 0.6
–
Loans repaid (0.6)
(0.6)
Transfers 0.6
––––––––––
––––––––––
3.3
At 1 January 2019 0.6
–
On adoption of IFRS 16 –
–
Exchange Differences –
3.3
New loans 0.3
–
New finance leases –
–
Loans repaid (0.6)
–
Lease repayments –
(3.3)
Transfers 3.3
––––––––––
––––––––––
3.3
At 31 December 2019 3.6
––––––––––
––––––––––
The cash flows from bank loans, loans from related parties and other borrowings make up the net
amount of proceeds from borrowings and repayments of borrowings in the cash flow statement.
Leases Leases
Current Non-current
£’m £’m
– 0.1
– –
– –
–––––––––– ––––––––––
– 0.1
1.3 10.9
– (0.1)
– –
0.1 1.1
– –
(0.3) (0.1)
0.1 (0.1)
–––––––––– ––––––––––
1.2 11.8
–––––––––– ––––––––––
Total
£’m
4.6
(0.6)
–
––––––––––
4.0
12.2
(0.1)
3.6
1.2
(0.6)
(0.4)
–
––––––––––
19.9
––––––––––
Other changes include interest accruals and prepayments.
93
CAMELLIA PLC
NOTES TO THE ACCOUNTS
38 Acquisition and disposal of businesses
Acquisitions Acquisitions
2018
2019
£’m
£’m
Fair
Fair value
value
Property, plant and equipment 5.7
Right-of-use asset 3.7
Deferred tax asset –
Inventories 0.1
Trade and other receivables 0.1
Current income tax assets –
Cash and cash equivalents –
Assets classified as held for sale –
Trade and other payables (0.3)
Employee benefit obligations (0.5)
Deferred tax liability (0.8)
––––––––––
8.0
Identifiable intangible assets - Brands –
Identifiable intangible assets – Goodwill 1.4
Non-controlling interest –
Loss on disposal –
––––––––––
9.4
––––––––––
0.5
–
1.1
0.8
1.5
–
0.4
–
(1.6)
–
(1.1)
––––––––––
1.6
6.6
–
(1.4)
–
––––––––––
6.8
––––––––––
Disposals
2018
£’m
Net book
value
0.6
–
0.1
1.6
0.9
0.2
0.2
2.4
(1.3)
(0.3)
–
––––––––––
4.4
–
–
(0.1)
(0.5)
––––––––––
3.8
––––––––––
Satisfied by:
Cash consideration and costs 9.4
––––––––––
6.8
––––––––––
3.8
––––––––––
Net cash (outflow)/inflow arising on acquisitions/disposals:
Cash consideration (9.4)
Less: cash and cash equivalent balances acquired/disposed –
––––––––––
(9.4)
––––––––––
The acquisitions in 2019 related to tea estates in India which were purchased by our Indian
subsidiaries for cash, funded in part by local borrowings.
(6.8)
0.4
––––––––––
(6.4)
––––––––––
3.8
(0.2)
––––––––––
3.6
––––––––––
The acquisitions in 2018 related to the following:
On 8 February 2018 the Group obtained control of Jing Tea Limited after acquiring 80 per cent. of its
share capital for consideration of £5.7 million. Jing Tea Limited is a UK based branded speciality teas
business selling to the retail and food services sectors internationally.
On 6 June 2018 the Group obtained control of Black Gold Oil Tools Limited after acquiring 100 per
cent of its share capital for consideration of £1.1 million. Black Gold Oils Limited is a UK based
Engineering company specialising in the oil services sector.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as
set out in the table above.
Acquisition-related costs (included in administrative expenses) amount to £0.4 million.
Jing Tea Limited contributed £3.3 million revenue and loss of £0.3 million to the Group’s profit for the
period between the date of acquisition and 31 December 2018.
94
CAMELLIA PLC
NOTES TO THE ACCOUNTS
38 Acquisition and disposal of businesses (continued)
Black Gold Oil Tools Limited contributed £0.7 million revenue and loss of £0.3 million to the Group’s
profit for the period between the date of acquisition and the reporting date.
The disposals in 2018 related to the following:
In August 2018, the Group sold its 100 per cent. interest in GU Cutting and Grinding Limited.
In October 2018, the Group sold its 100 per cent. interest in British Metal Treatments Limited.
In November 2018, the Group sold its 51 per cent. interest in XiMo AG.
In December 2018, the Group sold its 100 per cent. interest in Affish BV.
39 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:
Group
Property, plant and equipment
40 Contingent liabilities
2019
£’m
2018
£’m
3.4
––––––––––
1.3
––––––––––
Camellia and a number of its subsidiary companies have received notification of claims to be made in
the UK relating to allegations made by multiple individuals concerning two of those companies'
African operations. The allegations are of serious assault, harassment and sexual misconduct
allegedly committed by certain individuals employed by those two foreign operating companies. At
this stage it is not practicable to estimate the financial impact of these claims.
In India, assessments have been received for excise duties of £3.8 million, sales and entry tax of £0.9
million and of £1.1 million for income tax matters. These are being contested on the basis that they
are without technical merit.
In India, a long running dispute between our local subsidiaries and the Government of West Bengal
over the payment of a land tax, locally called, “Salami”, remains unresolved. Lawyers acting for the
Group have advised that payment of Salami does not apply, accordingly no provisions have been
made. The sum in dispute, excluding fines and penalties, amounts to £1.3 million.
The Group operates in certain countries where its operations are potentially subject to a number of
legal claims. When required, appropriate provisions are made for the expected cost of such claims.
41 Financial instruments
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern, while
maximising the return to stakeholders through the optimisation of its debt and equity balance. The
capital structure of the Group consists of debt, which includes the borrowings and lease liabilities
disclosed in notes 30 and 31, cash and cash equivalents and equity attributable to equity holders of
the parent, comprising issued capital, reserves and retained earnings.
The Board reviews the capital structure, with an objective to ensure that debt as a percentage of
tangible net assets does not exceed 50 per cent..
95
CAMELLIA PLC
NOTES TO THE ACCOUNTS
41 Financial instruments (continued)
The ratio at the year end is as follows:
Borrowings
Lease liabilities
Debt
Tangible net assets
Ratio
2019
£’m
8.9
13.0
––––––––––
21.9
––––––––––
385.4
––––––––––
5.68%
––––––––––
2018
£’m
6.7
0.1
––––––––––
6.8
––––––––––
386.0
––––––––––
1.76%
––––––––––
Debt is defined as long- and short-term borrowings and lease liabilities as detailed in notes 30 and 31.
Tangible net assets includes all capital and reserves of the Group attributable to equity holders of the
parent less intangible assets.
Debt as a percentage of tangible net assets has increased with the introduction of IFRS 16 Leases and
recognition of previously off balance sheet operating leases.
Financial instruments by category
At 31 December 2019
Loans and
receivables
£’m
Financial
assets
£’m
Total
£’m
Group
Assets as per Balance Sheet
Financial assets at fair value through other comprehensive income
Financial asset at fair value through profit or loss
Financial assets at amortised cost – non-current
Trade and other receivables excluding prepayments
Cash and cash equivalents
–
–
–
38.7
91.4
––––––––––
130.1
––––––––––
37.8
6.2
3.0
–
–
––––––––––
47.0
––––––––––
37.8
6.2
3.0
38.7
91.4
––––––––––
177.1
––––––––––
Other financial
liabilities at
amortised cost
£’m
Total
£’m
8.9
13.0
48.6
––––––––––
70.5
––––––––––
8.9
13.0
48.6
––––––––––
70.5
––––––––––
0.6
––––––––––
0.6
––––––––––
Group
Liabilities as per Balance Sheet
Borrowings
Leases liabilities
Trade and other payables
Company
Trade and other payables
96
CAMELLIA PLC
NOTES TO THE ACCOUNTS
41 Financial instruments (continued)
At 31 December 2018
Loans and Available for
sale
receivables
£’m
£’m
Total
£’m
Group
Assets as per Balance Sheet
Financial assets at fair value through other comprehensive income
Financial asset at fair value through profit or loss
Financial assets at amortised cost – non-current
Trade and other receivables excluding prepayments
Financial assets at amortised cost – current
Cash and cash equivalents (excluding bank overdrafts)
–
–
–
43.3
–
112.4
––––––––––
155.7
––––––––––
32.7
3.7
3.0
–
0.2
–
––––––––––
39.6
––––––––––
Other financial
liabilities at
amortised cost
£’m
32.7
3.7
3.0
43.3
0.2
112.4
––––––––––
195.3
––––––––––
Total
£’m
Group
Liabilities as per Balance Sheet
Borrowings
Trade and other payables
Company
Trade and other payables
6.8
53.5
––––––––––
60.3
––––––––––
6.8
53.5
––––––––––
60.3
––––––––––
0.6
––––––––––
0.6
––––––––––
Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method. The
different levels have been defined as follows:
■ Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
■
■
Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).
Inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs) (Level 3).
The following table presents the Group’s financial assets and liabilities that are measured at fair
value. See note 17 for disclosures of biological assets that are measured at fair value.
97
CAMELLIA PLC
NOTES TO THE ACCOUNTS
41 Financial instruments (continued)
At 31 December 2019
Assets
Financial assets at fair value through
other comprehensive income
Financial asset at fair value through profit or loss
Financial assets at amortised cost
At 31 December 2018
Assets
Available-for sale financial assets:
- Equity securities
Debt investments:
- Debentures
Level 1
£’m
Level 2
£’m
Level 3
£’m
Total
£’m
37.8
6.2
3.0
––––––––––
47.0
––––––––––
–
–
–
––––––––––
–
––––––––––
–
–
–
––––––––––
–
––––––––––
37.8
6.2
3.0
––––––––––
47.0
––––––––––
Level 1
£’m
Level 2
£’m
Level 3
£’m
Total
£’m
32.7
3.7
3.2
––––––––––
39.6
––––––––––
–
–
–
––––––––––
–
––––––––––
–
–
–
––––––––––
–
––––––––––
32.7
3.7
3.2
––––––––––
39.6
––––––––––
Financial risk management objectives
The Group finances its operations by a mixture of retained profits, bank borrowings, long-term loans
and leases. The objective is to maintain a balance between continuity of funding and flexibility
through the use of borrowings with a range of maturities. To achieve this, the maturity profile of
borrowings and facilities are regularly reviewed. The Group also seeks to maintain sufficient undrawn
committed borrowing facilities to provide flexibility in the management of the Group’s liquidity.
Given the nature and diversity of the Group’s operations, the Board does not believe a highly complex
use of financial instruments would be of significant benefit to the Group. However, where
appropriate, the Board does authorise the use of certain financial instruments to mitigate financial
risks that face the Group, where it is effective to do so.
Various financial instruments arise directly from the Group’s operations, for example cash and cash
equivalents, trade receivables and trade payables. In addition, the Group uses financial instruments
for two main reasons, namely:
■
■
To finance its operations (to mitigate liquidity risk); and
To manage currency risks arising from its operations and arising from its sources of finance (to
mitigate foreign exchange risk).
The Group did not, in accordance with Group policy, trade in financial instruments throughout the
period under review.
(A) Market risk
(i)
Foreign exchange risk
The Group has no material exposure to foreign currency exchange risk on currencies other than
the functional currencies of the operating entities, with the exception of significant Japanese
financial assets. If the exchange rate of the Japanese Yen to Sterling were to move by 5 per cent,
the Group’s carrying value would increase/decrease by £0.9 million (2018: £0.9 million).
98
CAMELLIA PLC
NOTES TO THE ACCOUNTS
41 Financial instruments (continued)
Currency risks are primarily managed through the use of natural hedging and regularly reviewing
when cash should be exchanged into either sterling or another functional currency.
(ii) Price risk
The Group is exposed to equity securities price risk because of investments held by the Group
and classified on the consolidated balance sheet as financial assets. To manage its price risk
arising from investments in equity securities, the Group diversifies its portfolio.
The majority of the Group’s equity investments are publicly traded and are quoted on stock
exchanges located in Bermuda, India, Japan, Switzerland, UK and US. Should these equity indexes
increase or decrease by 5 per cent. with all other variables held constant and all the Group’s
equity instruments move accordingly, the Group’s carrying value would increase/decrease by
£1.9 million (2018: £1.6 million).
The Group’s exposure to commodity price risk is not significant.
(iii) Cash flow and interest rate risk
The Group’s interest rate risk arises from interest-bearing assets and short and long-term
borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk.
The Group’s UK borrowings of £3.3 million are at fixed rates.
At 31 December 2019, if interest rates on non-sterling denominated interest-bearing assets and
borrowings had been 50 basis points higher/lower with all other variables held constant, post-tax
profit for the year would have been £0.3 million (2018: £0.4 million) higher/lower.
The interest rate exposure of the Group’s interest bearing assets and liabilities by currency, at
31 December was:
Sterling
US Dollar
Euro
Kenyan Shilling
Indian Rupee
Malawian Kwacha
Bangladesh Taka
South African Rand
Brazilian Real
Bermudian Dollar
Tanzanian Shilling
Assets
Liabilities
2019
£’m
2018
£’m
2019
£’m
2018
£’m
22.2
24.6
0.4
16.9
4.2
0.1
15.0
2.2
1.3
3.4
1.1
––––––––––
91.4
––––––––––
28.6
21.7
0.6
24.9
6.0
1.3
17.7
1.5
3.0
7.1
–
––––––––––
112.4
––––––––––
13.3
–
–
0.3
7.0
–
1.2
0.1
–
–
–
––––––––––
21.9
––––––––––
3.9
–
–
–
2.7
–
0.1
0.1
–
–
–
––––––––––
6.8
––––––––––
(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.
99
CAMELLIA PLC
NOTES TO THE ACCOUNTS
41 Financial instruments (continued)
The Group has a large number of trade receivables, the largest five receivables at the year end
comprise 22 per cent. (2018: 17 per cent.) of total trade receivables.
(C) Liquidity risk
Ultimate responsibility for liquidity risk management rests with the board of Directors. The Group
manages liquidity risk by maintaining adequate reserves and banking facilities by continuously
monitoring forecast and actual cash flows and managing the maturity profiles of financial assets and
liabilities.
At 31 December 2019, the Group had undrawn committed facilities of £24.1 million (2018:
£23.5 million), all of which are due to be reviewed within one year.
The table below analyses the Group’s financial assets and liabilities which will be settled on a net
basis into relevant maturity groupings based on the remaining period at the balance sheet date to
the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows.
Less than 1 Between 1
Between 2 Over 5
year and 2 years and 5 years
£’m
£’m
£’m
years Undated
£’m
£’m
Total
£’m
At 31 December 2019
Assets
Financial assets at fair value through
other comprehensive income
Financial asset at fair value through
profit or loss
Financial assets at amortised cost
Trade and other receivables excluding
prepayments
Cash and cash equivalents
–
6.2
–
35.9
91.4
––––––––
133.5
––––––––
–
–
–
2.8
–
––––––––
2.8
––––––––
–
–
3.0
–
–
–
37.8
37.8
–
–
6.2
3.0
–
–
–
–
–––––––– ––––––––
–
–––––––– ––––––––
3.0
–
–
––––––––
37.8
––––––––
38.7
91.4
––––––––
177.1
––––––––
5.6
1.2
0.4
1.2
1.3
2.1
1.6
8.5
–
–
8.9
13.0
Liabilities
Borrowings
Lease liabilities
Trade and other payables excluding
taxation
47.7
––––––––
54.5
––––––––
At 31 December 2018
Assets
Financial assets at fair value through
other comprehensive income
Financial asset at fair value through
profit or loss
Financial assets at amortised cost
Trade and other receivables excluding
prepayments
Cash and cash equivalents
–
3.7
0.2
40.6
112.4
––––––––
156.9
––––––––
Liabilities
Borrowings
Lease liabilities
Trade and other payables excluding
taxation
3.4
–
51.6
––––––––
55.0
––––––––
–
––––––––
1.6
––––––––
–
–
–
2.7
–
––––––––
2.7
––––––––
3.3
0.1
–
––––––––
3.4
––––––––
–
–
–––––––– ––––––––
10.1
–––––––– ––––––––
3.4
–
––––––––
–
––––––––
47.7
––––––––
69.6
––––––––
–
–
1.5
–
32.7
32.7
–
1.5
–
–
3.7
3.2
–
–
–
–
–––––––– ––––––––
1.5
–––––––– ––––––––
1.5
–
–
––––––––
32.7
––––––––
43.3
112.4
––––––––
195.3
––––––––
–
–
–
–
–
–
6.7
0.1
–
–
–––––––– ––––––––
–
–––––––– ––––––––
–
–
––––––––
–
––––––––
51.6
––––––––
58.4
––––––––
Included in borrowings due in less than 1 year is £2.0 million (2018: £2.8 million) repayable on demand.
100
CAMELLIA PLC
NOTES TO THE ACCOUNTS
42 Subsidiary and associated undertakings
Subsidiary undertakings
The subsidiary undertakings of the Group at 31 December 2019, which are wholly owned and
incorporated in Great Britain unless otherwise stated, were:
Principal
country of Registered
Office
operation
Agriculture
Amgoorie India Limited (Incorporated in India – 99.8 per cent. holding)
Amo Tea Company Limited
C.C. Lawrie Comércio e Participacões Ltda. (Incorporated in Brazil)
Chittagong Warehouse Limited (Incorporated in
Bangladesh – 93.3 per cent. holding)
Duncan Brothers Limited (Incorporated in Bangladesh)
Eastern Produce Cape (Pty) Limited (Incorporated in South Africa)
Eastern Produce Estates South Africa (Pty) Limited (Incorporated in
South Africa – held by Eastern Produce South Africa (Pty) Limited)
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)
Eastland Camellia Limited
(Incorporated in Bangladesh – 93.8 per cent. holding)
EP(T) East Africa Limited (Incorporated in Tanzania)
Goodricke Group Limited (Incorporated in India – 74.0 per cent. holding)
Goodricke Tech Limited (Incorporated in India – 99.8 per cent. holding)
Horizon Farms (An United States of America general
partnership – 80 per cent. holding)
Kakuzi Plc (Incorporated in Kenya – 50.7 per cent. holding)
Koomber Tea Company Limited (Incorporated in India)
Octavius Steel & Company of Bangladesh Limited
(Incorporated in Bangladesh)
Robertson Bois Dickson Anderson Limited
Stewart Holl (India) Limited
(Incorporated in India – 92.0 per cent. holding)
Surmah Valley Tea Company Limited
The Allynugger Tea Company Limited
The Chandpore Tea Company Limited
The Lungla (Sylhet) Tea Company Limited
The Mazdehee Tea Company Limited
Victoria Investments Limited
(Incorporated in Malawi – 73.2 per cent. holding)
Zetmac (Pty) Limited (Incorporated in South Africa – 55.8 per cent. held by
Eastern Produce Estates South Africa (Pty) Limited)
Engineering
Abbey Metal Finishing Company Limited
A JT Engineering Limited
Atfin GmbH (Incorporated in Germany – 51.0 per cent. holding)
Black Gold Oil Tools Limited
India
Bangladesh
Brazil
Bangladesh
Bangladesh
South Africa
South Africa
Kenya
Malawi
South Africa
Bangladesh
Tanzania
India
India
USA
Kenya
India
Bangladesh
UK
India
Bangladesh
Bangladesh
Bangladesh
Bangladesh
Bangladesh
Malawi
South Africa
UK
UK
Germany
UK
(ii)
(i)
(vi)
(vii)
(vii)
(viii)
(ix)
(x)
(xii)
(ix)
(vii)
(Xviii)
(iii)
(iii)
(xiii)
(xi)
(iv)
(vii)
(i)
(v)
(i)
(i)
(i)
(i)
(i)
(xii)
(ix)
(i)
(xiv)
(xv)
(xiv)
101
CAMELLIA PLC
NOTES TO THE ACCOUNTS
42 Subsidiary and associated undertakings (continued)
Subsidiary undertakings (continued)
Principal
country of
operation
Registered
Office
Food Service
Associated Cold Stores & Transport Limited
Duncan Products Limited (Incorporated in Bangladesh)
Jing Tea Limited (82.5 per cent. holding)
Investment Holding
Associated Fisheries (Europe) Limited
Assam Dooars Investments Limited
Associated Fisheries Limited
Borbam Limited (Incorporated in India – 99.8 per cent. holding)
Bordure Limited
Duncan Properties Limited (Incorporated in Bangladesh)
Eastern Produce Investments Limited
Elgin Investments Limited (Incorporated in India – 99.8 per cent. holding)
Endogram Limited
EP USA Inc. (Incorporated in the United States of America)
EP California Inc. (Incorporated in the United States of America)
John Ingham & Sons Limited
Koomber Properties Limited (Incorporated in India – 94.0 per cent. holding)
Lawrie (Bermuda) Limited (Incorporated in Bermuda)
Lawrie Group Plc (Owned directly by the Company)
Lawrie International Limited (Incorporated in Bermuda)
Lebong Investments Limited (Incorporated in India – 94.0 per cent. holding)
Linton Park Plc (Owned directly by the Company)
Lintak Investments Limited (Incorporated in Kenya)
Longbourne Holdings Limited
Plantation House Investments Limited
(Incorporated in Malawi – 50.2 per cent. held by subsidiaries)
Shula Limited (Incorporated in Isle of Man) (in liquidation)
Unochrome Industries Limited
Western Dooars Investments Limited
Other
Duncan Lawrie Limited
Duncan Lawrie Holdings Limited
Duncan Lawrie International Holdings Limited (Incorporated in Isle of Man)
(in liquidation)
Duncan Lawrie (IOM) Limited (Incorporated in Isle of Man) (in liquidation)
Duncan Lawrie Offshore Services Limited (Incorporated in Isle of Man)
(in liquidation)
Hobart Place Nominees Limited
Linton Park Services Limited
UK
Bangladesh
UK
UK
UK
UK
India
UK
Bangladesh
UK
India
India
USA
USA
UK
India
Bermuda
UK
Bermuda
India
UK
Kenya
Bangladesh
Malawi
Isle of Man
UK
UK
UK
UK
Isle of Man
Isle of Man
Isle of Man
UK
UK
(i)
(vii)
(i)
(i)
(i)
(i)
(iii)
(i)
(vii)
(i)
(iii)
(iii)
(xiii)
(xiii)
(i)
(iii)
(xx)
(i)
(xx)
(iii)
(i)
(x)
(i)
(xii)
(xix)
(i)
(i)
(i)
(i)
(xvi)
(xvi)
(xvi)
(i)
(i)
102
CAMELLIA PLC
NOTES TO THE ACCOUNTS
42 Subsidiary and associated undertakings (continued)
Subsidiary undertakings (continued)
Principal
country of
operation
Registered
Office
Dormant companies
ACS&T Gloucester Limited
ACS&T Grimsby Limited
ACS&T Humberside Limited
ACS&T Seamer Limited
ACS&T Tewkesbury Limited
ACS&T Wolverhampton Limited
AKD Engineering Limited
Alex Lawrie & Company Limited
Amgoorie Investments Limited
Assam-Dooars Holdings Limited
Associated Fisheries (Scotland) Limited
Banbury Tea Warehouses Limited
Blantyre & East Africa Limited
Blantyre Insurance & General Agencies Limited
(Incorporated in Malawi – Eastern Produce Malawi Limited)
Bonathaba Farms (Pty) Limited (Incorporated in South Africa)
British African Tea Estates (Holdings) Limited
British African Tea Estates Limited
British Heat Treatments Limited
British Indian Tea Company Limited
British United Trawlers Limited
BTS Chemicals Limited
BUT Engineers (Fleetwood) Limited
BUT Engineers (Grimsby) Limited
Camellia Investments Limited
Chisambo Holdings Limited
Chisambo Tea Estate Limited
Cholo Holdings Limited
Craighead Investments Limited
David Field Limited
Dejoo Tea Company Limited
East African Tea Plantations Limited
(Incorporated in Kenya – held by Eastern Produce Kenya Limited)
Eastern Produce Africa Limited
Eastern Produce Kakuzi Services Limited
(Incorporated in Kenya – held by Kakuzi Limited)
EP (RBDA) Limited (Incorporated in Malawi – Eastern Produce Malawi Limited)
Estate Services Limited (Incorporated in Kenya – held by Kakuzi Limited)
Feltham One Limited
Feltham Two Limited
Fescol Limited
G. F. Sleight & Sons Limited
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Malawi
South Africa
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Kenya
UK
Kenya
Malawi
Kenya
UK
UK
UK
UK
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(xiv)
(i)
(xiv)
(xii)
(viii)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(x)
(i)
(x)
(xii)
(xi)
(i)
(i)
(i)
(i)
103
CAMELLIA PLC
NOTES TO THE ACCOUNTS
42 Subsidiary and associated undertakings (continued)
Subsidiary undertakings (continued)
Dormant companies (continued)
Goodricke Lawrie Consultants Limited
Gotha Tea Estates Limited
Granton Transport Limited
Hamstead Village Investments Limited
Hellyer Bros Limited
Horace Hickling & Co Limited
Hudson Brothers Trawlers Limited
Humber Commercials Limited
Humber – St. Andrew’s Engineering Company Limited
Jhanzie Tea Association Ltd
Isa Bheel Tea Company Limited
Jatel Plc
Jetinga Holdings Limited
Jetinga Valley Tea Company Limited
Kaguru EPZ Limited (Incorporated in Kenya – held by Kakuzi Limited)
Kapsumbeiwa Factory Company Limited
Kip Koimet Limited (Incorporated in Kenya – held by Eastern
Produce Kenya Limited)
Kumadzi Tea Estates Limited
Lankapara Tea Company Limited
Lawrie Bhutan Limited
Lawrie Plantation Services Limited
Leasing Investments Limited
Longai Valley Tea Company Limited
Nasonia Tea Company Limited (Incorporated in Malawi)
North West Profiles Limited
Octavius Steel & Company (London) Limited
Robert Hudson Holdings Limited
Rosehaugh (Africa) Limited
Ruo Estates Limited
Ruo Estates Holdings Limited
Sandbach Export Limited
Sapekoe Pusela (Pty) Limited (Incorporated in South Africa – held by
Eastern Produce South Africa (Pty) Limited)
Silverthorne-Gillott Limited
S.I.S. Securities Limited
Sterling Industrial Securities Limited
Stewart Holl Investments Limited
The Amgoorie Tea Estates Limited
The Bagracote Tea Company, Limited
The Ceylon Upcountry Tea Estates Limited
The Dhoolie Tea Company Limited
Principal
country of
operation
Registered
Office
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Kenya
UK
Kenya
UK
UK
UK
UK
UK
UK
Malawi
UK
UK
UK
UK
UK
UK
UK
South Africa
UK
UK
UK
UK
UK
UK
UK
UK
(i)
(i)
(xiv)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(xi)
(i)
(x)
(i)
(i)
(i)
(i)
(i)
(i)
(xii)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(ix)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
104
CAMELLIA PLC
NOTES TO THE ACCOUNTS
42 Subsidiary and associated undertakings (continued)
Subsidiary undertakings (continued)
Dormant companies (continued)
The Doolahat Tea Company Limited
The Eastern Produce and Estates Company Limited
The Endogram Tea Company Limited
The Harmutty Tea Company Limited
The Kapsumbeiwa Tea Company Limited
The Tyspane Tea Company Limited
Thyolo Highlands Tea Estates Limited
Vaghamon (Travancore) Tea Company Limited
Walter Duncan & Goodricke Limited
WDG Properties Limited
Western Dooars Tea Holdings Limited
Principal
country of
operation
Registered
Office
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
Summarised financial information on subsidiaries with material non-controlling interests
Summarised balance sheet
Current
Assets
Liabilities
Total current net assets
Non-current
Assets
Liabilities
Total non-current net assets
Net assets
Eastern Produce
Kenya Limited
as at 31 December
2018
2019
£’m
£’m
Eastern Produce
Malawi Limited
as at 31 December
2018
2019
£’m
£’m
24.4
(13.6)
––––––––––
10.8
––––––––––
33.2
(25.6)
––––––––––
7.6
––––––––––
12.9
(8.9)
––––––––––
4.0
––––––––––
17.3
(10.5)
––––––––––
6.8
––––––––––
27.8
(6.5)
––––––––––
21.3
––––––––––
28.7
(4.3)
––––––––––
24.4
––––––––––
38.6
(11.6)
––––––––––
27.0
––––––––––
41.4
(12.9)
––––––––––
28.5
––––––––––
32.1
––––––––––
32.0
––––––––––
31.0
––––––––––
35.3
––––––––––
105
CAMELLIA PLC
NOTES TO THE ACCOUNTS
42 Subsidiary and associated undertakings (continued)
Subsidiary undertakings (continued)
Summarised balance sheet
Eastern Produce
South Africa Limited
as at 31 December
2018
2019
£’m
£’m
Goodricke Group
Limited
as at 31 December
2018
2019
£’m
£’m
6.1
(3.7)
––––––––––
2.4
––––––––––
6.1
(3.2)
––––––––––
2.9
––––––––––
33.0
(22.5)
––––––––––
10.5
––––––––––
38.3
(24.5)
––––––––––
13.8
––––––––––
9.1
(2.0)
––––––––––
7.1
––––––––––
6.8
(1.5)
––––––––––
5.3
––––––––––
38.3
(12.0)
––––––––––
26.3
––––––––––
34.6
(10.4)
––––––––––
24.2
––––––––––
9.5
––––––––––
8.2
––––––––––
36.8
––––––––––
38.0
––––––––––
Horizon Farms
as at 31 December
2018
2019
£’m
£’m
Kakuzi Plc
as at 31 December
2018
2019
£’m
£’m
5.3
(0.2)
––––––––––
5.1
––––––––––
5.4
(0.8)
––––––––––
4.6
––––––––––
19.3
(1.8)
––––––––––
17.5
––––––––––
17.2
(2.4)
––––––––––
14.8
––––––––––
7.1
(1.7)
––––––––––
5.4
––––––––––
7.9
(0.8)
––––––––––
7.1
––––––––––
28.8
(7.5)
––––––––––
21.3
––––––––––
28.0
(6.8)
––––––––––
21.2
––––––––––
10.5
––––––––––
11.7
––––––––––
38.8
––––––––––
36.0
––––––––––
Current
Assets
Liabilities
Total current net assets
Non-current
Assets
Liabilities
Total non-current net assets
Net assets
Current
Assets
Liabilities
Total current net assets
Non-current
Assets
Liabilities
Total non-current net assets
Net assets
106
CAMELLIA PLC
NOTES TO THE ACCOUNTS
42 Subsidiary and associated undertakings (continued)
Subsidiary undertakings (continued)
Summarised income statement
Revenue
Profit before tax
Taxation
Other comprehensive (expense)/income
Total comprehensive income
Total comprehensive income allocated to
non-controlling interests
Dividends paid to non-controlling interests
Revenue
Profit before tax
Taxation
Other comprehensive expense
Total comprehensive income/(expense)
Eastern Produce
Kenya Limited for year
ended 31 December
2019
£’m
2018
£’m
Eastern Produce
Malawi Limited for
year ended 31 December
2018
£’m
2019
£’m
34.1
––––––––––
11.1
(3.3)
(0.7)
––––––––––
7.1
––––––––––
40.4
––––––––––
10.9
(3.3)
2.3
––––––––––
9.9
––––––––––
25.6
––––––––––
2.0
(0.5)
(1.6)
––––––––––
(0.1)
––––––––––
29.1
––––––––––
8.4
(2.4)
1.9
––––––––––
7.9
––––––––––
2.1
2.1
3.0
1.3
–
1.1
2.1
0.6
Eastern Produce
South Africa Limited for year
ended 31 December
2018
2019
£’m
£’m
Goodricke Group
Limited for year
ended 31 December
2018
2019
£’m
£’m
5.6
––––––––––
1.9
(0.5)
–
––––––––––
1.4
––––––––––
6.4
––––––––––
1.7
(0.5)
(0.8)
––––––––––
0.4
––––––––––
90.5
––––––––––
2.6
(0.2)
(2.6)
––––––––––
(0.2)
––––––––––
83.6
––––––––––
2.7
(1.1)
(1.9)
––––––––––
(0.3)
––––––––––
Total comprehensive income/(expense) allocated to
non-controlling interests
Dividends paid to non-controlling interests
0.4
–
0.1
–
–
0.2
(0.1)
0.3
107
CAMELLIA PLC
NOTES TO THE ACCOUNTS
42 Subsidiary and associated undertakings (continued)
Subsidiary undertakings (continued)
Summarised income statement
Revenue
Profit before tax
Taxation
Other comprehensive (expense)/income
Total comprehensive income
Total comprehensive income allocated to
non-controlling interests
Dividends paid to non-controlling interests
Summarised cash flows
Cash flows from operating activities
Cash generated from operations
Net interest received
Income tax paid
Net cash generated from operating activities
Net cash used in investing activities
Net cash used in financing activities
Net (decrease)/increase in cash and cash
equivalents and bank overdrafts
Cash, cash equivalents and bank overdrafts
at beginning of year
Exchange (losses)/gains on cash and
cash equivalents
Cash, cash equivalents and bank overdrafts
at end of year
Horizon Farms for year
ended 31 December
2018
2019
£’m
£’m
Kakuzi Plc for
year ended
31 December
2019
£’m
2018
£’m
4.8
––––––––––
1.8
(1.1)
(0.3)
––––––––––
0.4
––––––––––
5.2
––––––––––
2.4
(0.8)
0.7
––––––––––
2.3
––––––––––
21.2
––––––––––
7.8
(2.3)
(1.2)
––––––––––
4.3
––––––––––
21.7
–––––––––
5.1
(1.5)
2.5
––––––––––
6.1
––––––––––
0.1
0.3
0.5
0.3
2.1
0.7
3.0
0.5
Eastern Produce
Kenya Limited for year
ended 31 December
2018
2019
£’m
£’m
Eastern Produce
Malawi Limited for
year ended
31 December
2019
£’m
2018
£’m
2.0
1.2
(1.2)
––––––––––
2.0
––––––––––
(1.4)
––––––––––
(7.1)
––––––––––
9.1
1.6
(3.8)
––––––––––
6.9
––––––––––
(1.7)
––––––––––
(4.2)
––––––––––
6.4
0.1
(1.9)
––––––––––
4.6
––––––––––
(1.5)
––––––––––
(4.2)
––––––––––
6.2
0.2
(1.6)
––––––––––
4.8
––––––––––
(1.9)
––––––––––
(2.3)
––––––––––
(6.5)
1.0
22.8
20.4
(1.1)
1.2
0.6
0.5
(0.6)
––––––––––
1.4
––––––––––
–
––––––––––
0.1
––––––––––
15.7
––––––––––
22.8
––––––––––
0.1
––––––––––
1.2
––––––––––
108
CAMELLIA PLC
NOTES TO THE ACCOUNTS
42 Subsidiary and associated undertakings (continued)
Subsidiary undertakings (continued)
Summarised cashflows
Cash flows from operating activities
Cash generated from operations
Net interest received
Income tax paid
Net cash generated from operating activities
Net cash used in investing activities
Net cash used in financing activities
Net increase/(decrease) in cash and cash
equivalents and bank overdrafts
Cash, cash equivalents and bank overdrafts
at beginning of year
Exchange losses on cash and
cash equivalents
Cash, cash equivalents and bank overdrafts
at end of year
Cash flows from operating activities
Cash generated from operations
Net interest received
Income tax paid
Net cash generated from operating activities
Net cash used in investing activities
Net cash used in financing activities
Net increase/(decrease) in cash and
cash equivalents and bank overdrafts
Cash, cash equivalents and bank overdrafts
at beginning of year
Exchange (losses)/gains on cash and
cash equivalents
Cash, cash equivalents and bank overdrafts
at end of year
Eastern Produce
South Africa Limited for
year ended 31 December
2019
£’m
2018
£’m
Goodricke Group
Limited for year
ended 31 December
2018
2019
£’m
£’m
3.2
(0.1)
–
––––––––––
3.1
––––––––––
(2.8)
––––––––––
–
––––––––––
2.1
–
–
––––––––––
2.1
––––––––––
(1.9)
––––––––––
–
––––––––––
9.1
–
(0.5)
––––––––––
8.6
––––––––––
(6.1)
––––––––––
(0.8)
––––––––––
1.3
–
(1.0)
––––––––––
0.3
––––––––––
(1.8)
––––––––––
(1.6)
––––––––––
0.3
2.5
0.2
2.5
1.7
(1.5)
(3.1)
1.6
–
––––––––––
(0.2)
––––––––––
(0.1)
––––––––––
–
––––––––––
2.8
––––––––––
2.5
––––––––––
0.1
––––––––––
(1.5)
––––––––––
Horizon Farms for year
ended 31 December
2018
2019
£’m
£’m
Kakuzi Plc for
year ended
31 December
2019
£’m
2018
£’m
3.1
–
(0.5)
––––––––––
2.6
––––––––––
(0.2)
––––––––––
(1.4)
––––––––––
1.8
–
(0.7)
––––––––––
1.1
––––––––––
–
––––––––––
(1.6)
––––––––––
9.3
0.9
(0.5)
––––––––––
9.7
––––––––––
(6.7)
––––––––––
(1.4)
––––––––––
7.4
0.9
(2.6)
––––––––––
5.7
––––––––––
(5.8)
––––––––––
(1.0)
––––––––––
1.0
2.1
(0.5)
1.6
(1.1)
2.5
11.6
12.6
(0.3)
––––––––––
0.1
––––––––––
(0.6)
––––––––––
0.1
––––––––––
2.8
––––––––––
2.1
––––––––––
12.6
––––––––––
11.6
––––––––––
109
CAMELLIA PLC
NOTES TO THE ACCOUNTS
42 Subsidiary and associated undertakings (continued)
Associated undertakings
The principal associated undertakings of the Group at 31 December 2019 were:
Insurance and banking
BF&M Limited (Incorporated in Bermuda –
common stock)
United Finance Limited
(Incorporated in Bangladesh –
ordinary shares)
United Insurance Company Limited
(Incorporated in Bangladesh –
ordinary shares)
Principal
country of
operation
Registered
Office
Group
interest
Accounting in equity
capital
date
2019 per cent.
Bermuda
(xvii) 31 December
37.8
Bangladesh
(vii) 31 December
38.4
Bangladesh
(vii) 31 December
37.0
110
CAMELLIA PLC
NOTES TO THE ACCOUNTS
42 Subsidiary and associated undertakings (continued)
Registered Offices:
(i) Linton Park
Linton
Maidstone
Kent
ME17 4AB
England
(ii) Amgoorie Tea Garden
PO: Amguri
Haloating - 785 681
Dist: Sibsagar
Assam
India
(iii) Camellia House
14 Gurusaday Road
Kolkata - 700019
West Bengal
India
(viii) Slangrivier Road
Slangrivier Plaas
Wellington
7655
South Africa
(ix) 7 Windsor Street
Tzaneen
850
Limpopo Province
South Africa
(x) New Rehema House
Rhapta Road
Westlands
P O Box 45560
GPO 00100
Nairobi
Kenya
(iv) Koomber Tea Garden
(xi) Main Office
PO: Kumbhir
Cachar - 788 108
Assam
India
(v) Sessa Tea Garden
PO: Dibrugarh - 786001
Dist: Dibrugarh
Assam
India
(vi) Fazenda Maruque s/n
sala 03
Bairro Maruque
Itaberá
São Paulo
Brazil
(vii) Camellia House
22 Kazi Nazrul Islam
Avenue
Dhaka 1000
Bangladesh
Punda Milia Road
Makuyu
P O Box 24
01000 Thika
Kenya
(xii) PO Box 53
Mulanje
Malawi
(xiii) 2520 West Shaw Lane
Suite 101
Fresno
California
USA
(xiv) Craigshaw Crescent
West Tullos
Aberdeen
AB12 3TB
Scotland
(xv) Robert-Drosten-Platz 1
D-82380
Peissenberg
Germany
(xvi) First Names House
Victoria Road
Douglas
Isle of Man
IM2 4DF
(xvii) 112 Pitts Bay Road
Pembroke
Bermuda
HM08
(xviii) 3rd Floor
180 Msasani Bay
Msasani
Dar Es Salaam
Tanzania
111
CAMELLIA PLC
NOTES TO THE ACCOUNTS
43 Control of Camellia Plc
Camellia Holding AG continues to hold 1,427,000 ordinary shares of Camellia Plc (representing
51.67 per cent. of the total voting rights). Camellia Holding AG is owned by The Camellia Private Trust
Company Limited, a private trust company incorporated under the laws of Bermuda as trustee of The
Camellia Foundation ("the Foundation"). The Foundation is a Bermudian trust, the income of which is
utilised for charitable, educational and humanitarian causes at the discretion of the trustees.
The activities of Camellia Plc and its group (the “Camellia Group”) are conducted independently of the
Foundation and other than Simon Turner, who is a director of The Camellia Private Trust Company
and the president of the board of the trustee of the Foundation, none of the directors of Camellia Plc
are connected with The Camellia Private Trust Company Limited or the Foundation. While The
Camellia Private Trust Company Limited as a trustee of the Foundation maintains its rights as a
shareholder, it has not participated in, and has confirmed to the board of Camellia Plc that it has no
intention of participating in, the day to day running of the business of the Camellia Group. The
Camellia Private Trust Company Limited has also confirmed its agreement that where any director of
Camellia Plc is for the time being connected with the Foundation, he should not exercise any voting
rights as a director of Camellia Plc in relation to any matter concerning the Camellia Group’s interest
in any assets in which the Foundation also has a material interest otherwise than through Camellia
Plc.
44 Related party transactions
Group
During the year the Group received rental income from the Foundation of £36,000 (2018: £22,804).
Company
The Company receives financial and secretarial services from Linton Park Plc, a directly owned
subsidiary undertaking. The amount payable for these services for 2019 was £447,121 (2018:
£402,572). At 31 December 2019 £5,943,853 (2018: £9,612,337) is owed to Linton Park Plc and is
unsecured, interest free and has no fixed terms of repayment.
Amounts due to Lawrie Group Plc, a directly owned subsidiary undertaking of £10,876,941 (2018:
£7,076,105) include an unsecured loan note of £4,191,777 (2018: £4,191,777). The remaining balance
is unsecured, interest free and has no fixed terms of repayment.
Amounts due to other group undertakings of £193,187 (2018: £193,405) are unsecured, interest free
and have no fixed terms of repayment.
45 Subsequent events
COVID-19
Subsequent to the balance sheet date, the World Health Organisation declared a pandemic on
11 March, the UK government moved to a ‘delay’ phase on 12 March, announced social distancing
measures on 16 March, and unprecedented ‘stay at home’ restrictions on 23 March. The first large
falls in stock markets occurred in early March. The Group has therefore concluded that the impact of
the virus and the necessity for large scale Government interventions (both in the UK and the other
countries in which the Group operates) in response to COVID-19 only became apparent after the
balance sheet date and therefore that the consequences of such interventions represent non-
adjusting post balance sheet events. The full financial impact of the crisis for 2020 is impossible to
predict with any degree of certainty.
However, it is likely that in addition to the impacts on our revenues and profitability in 2020, the
values attributed to a number of our balance sheet items may be affected.
112
CAMELLIA PLC
NOTES TO THE ACCOUNTS
45 Subsequent events (continued)
Impairment of intangible asset carrying values
Refer to pages 56 to 57 for details of the Group’s impairment methodology, impairment losses and
reversals, net carrying value of intangible assets, and key assumptions and sensitivity analysis.
Subsequent to the balance sheet date, the Group’s Indian operations have seen significant disruption
to production but it is unclear whether and to what extent this will continue and hence whether there
will be any impact on the brand value carried in respect of the Indian Packet tea operations and the
goodwill relating to the two estates in Assam.
Jing Tea has been particularly impacted by the global lockdowns and as a consequence depending on
the duration of the disruption, the brand value carried may be impaired.
Financial assets at fair value through other comprehensive income
COVID-19 has had a significant impact on global stock markets and resulted changes to the dividend
policies and prospects for the portfolio of equities held by the Group.
Defined benefit pension schemes and other employee benefit arrangements
Review of the key financial assumptions relating to the Group’s pension schemes subsequent to the
year end indicate movements as a result of changes in the fair value of the assets held in the
schemes and as a result of reductions in interest rates. It is too early to assess the impact of COVID-
19 upon the Group’s long-term life expectancy assumptions. The fair value of plan assets has reduced
and is expected to be volatile in the short term due to uncertain market conditions.
113
CAMELLIA PLC
REPORT OF THE INDEPENDENT AUDITORS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CAMELLIA PLC
Report on the audit of the financial statements
Opinion
In our opinion:
■
■
■
■
the financial statements of Camellia Plc (the ‘parent company’) and its subsidiaries (the
‘Group’) give a true and fair view of the state of the Group’s and of the parent company’s
affairs as at 31 December 2019 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with International
Financial Reporting Standards (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.
We have audited the financial statements which comprise:
■
■
■
■
■
■
the consolidated income statement;
the consolidated statement of comprehensive income;
the consolidated and parent company balance sheets;
the consolidated and parent company statements of changes in equity;
the consolidated and parent company cash flow statements; and
the related notes 1 to 45.
The financial reporting framework that has been applied in their preparation is applicable law and IFRSs
as adopted by the European Union and, as regards the parent company financial statements, as applied
in accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the auditor’s
responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the parent company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK, including the Financial Reporting
Council’s (the ‘FRC’s’) Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
■
■
■
■
Revenue recognition
Fair value of biological assets under IAS 41 ‘Agriculture’
Impairment of factories and bearer plants
Provisions for tax, legal and employee benefits
■ Going concern assessment and related disclosures
Materiality
The materiality that we used for the Group financial statements was £1.1m
which was determined on the basis of 5% of profit before tax from continuing
operations.
114
CAMELLIA PLC
REPORT OF THE INDEPENDENT AUDITORS
Scoping
Our scoping provides coverage of 91% of the Group’s revenue, 69% of the
Group’s profit before tax and 86% of the Group’s net assets from full scope
audit and specified audit procedures.
Significant changes in We have identified two new key audit matters in the current year:
our approach
(i) Provisions for tax, legal and employee benefits. This have been included
as a key audit matter due to the judgements and estimates involved in
determining the provisions.
(ii) Going concern assessment and related disclosures. This have been
included as a key audit matter due to the judgements relating to
potential impact of COVID-19 on going concern. There are no other
significant changes to our audit approach.
Conclusions relating to going concern
We are required by ISAs (UK) to report in respect of the following matters where:
We have nothing to report in respect of
these matters.
■
■
the Directors’ use of the going concern basis of
accounting in preparation of the financial statements
is not appropriate; or
the Directors have not disclosed in the financial
statements any identified material uncertainties that
may cast significant doubt about the Group’s or the
parent company’s ability to continue to adopt the
going concern basis of accounting for a period of at
least twelve months from the date when the financial
statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we identified. These matters included those
which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Revenue recognition
Key audit matter
description
The Group’s agricultural operations involve a wide range of customer
delivery models, including auction and retail sales. Given the complexity of
the Group’s operations and the terms of business with buyers, there is a risk
of inappropriate cut-off of revenue recognition around the balance sheet
date.
The Group’s agricultural revenue of £238.7m is included within Sale of Goods
of £242.9m (2018: £248.5m) disclosed in note 2 to the financial statements.
Further information regarding the agricultural revenue recognition policy is
in the principal accounting policies disclosed in the financial statements.
115
CAMELLIA PLC
REPORT OF THE INDEPENDENT AUDITORS
How our scope of
work responded to
the key audit matter
We have performed the following procedures in order to address the risk:
– We gained an understanding of the key processes and controls used to
record revenue transactions.
– We performed detailed cut-off testing of revenue transactions during the
period either side of the balance sheet date with reference to the
relevant terms of business, dispatch or delivery documentation as
appropriate.
– We examined material journal entries that were posted to revenue
accounts and obtained supporting evidence to test the appropriateness
of revenue recognition.
Key observations
We have concluded that revenue is appropriately recognised in the correct
accounting period in accordance with IFRS 15
Fair value of biological assets under IAS 41 ‘Agriculture’
Key audit matter
description
The Group holds £9.1m (2018: £8.8m) of biological assets as current assets.
As required by IAS 41 ‘Agriculture’, management estimates the fair value of
these assets through the use of valuation models and recent transaction
prices. Significant judgement is required for key assumptions for each model,
including the life-span of the plantings, yields, selling prices, costs and
discount rates. The valuation is sensitive to some of the underlying
assumptions.
How our scope of
work responded to
the key audit matter
Biological assets are disclosed in note 17 to the financial statements, the
valuation is discussed as a key source of estimation uncertainty and the
valuation policy is disclosed in the principal accounting policies.
We have performed the following procedures in order to address the risk:
– We gained an understanding of key processes and controls around the
valuation of biological assets.
–
For a selection of fair value models:
■ we assessed the inputs by assessing the historical accuracy of
management’s forecasts and comparing to third-party and market
data; and
■ we tested the mechanical integrity of each model.
Key observations
From the work performed, we are satisfied that the key assumptions applied
in respect of the valuation of biological assets are appropriate.
Impairment of factories and bearer plants
Key audit matter
description
The Group holds £222.5m (2018: £226.3m) of property, plant and equipment
(PP&E), which includes factories and bearer plants. For components in the
agriculture segment, management identified gardens as cash generating
units (CGUs) and performed an annual review for indicators of impairment.
This considered indicators such as underutilisation, adverse weather
conditions and land use rights. There is a risk that the indicators of
impairment are not identified appropriately by management eventually
resulting in an impairment charge not being recognised.
PP&E is disclosed in note 14 to the financial statements, the valuation is
discussed as sources of estimation uncertainty, and the valuation policy is
disclosed in the principal accounting policies.
116
CAMELLIA PLC
REPORT OF THE INDEPENDENT AUDITORS
How our scope of
work responded to
the key audit matter
We have performed the following procedures in order to address the risk:
■ We gained an understanding of key processes and controls around the
identification of impairment indicators for factories and bearer plants.
■ We challenged management’s assessment as to whether indicators of
impairment exist for factories and bearer plants with reference to
operating losses incurred, disease or crop damage, long term commodity
price reductions, underutilised plant or warehousing, loss of key
customers, long term failure of water or power supply, variation in rights
to land use, and significant changes in tax or foreign exchange rates.
■
For the CGUs where indicators of impairment were identified, we also
tested management’s determination of the recoverable amount for
these CGUs, which included an assessment of the reasonableness of key
inputs into the valuation and sensitivity analysis thereon.
Key observations
We concur with management that no impairment of factories and bearer
plants is required.
Provision for tax, legal and employee benefits
Key audit matter
description
How our scope of
work responded to
the key audit matter
Given the various jurisdictions in which the Group operates, as described in
the principal risks and uncertainties on page 22, there is a risk relating to
uncertainties in relation to the interpretation of complex tax legislation, or
arising from changes in local regulation or law including those related to
employee benefits.
Judgement is also applied in estimating amounts payable to legal, regulatory
or tax authorities in certain jurisdictions. This gives rise to a risk over the
accuracy and disclosure of provisions and contingent liabilities. There is also
a risk that management may influence these significant estimates and
judgements in order to meet market expectations.
Contingent liabilities are disclosed in note 40 to the financial statements, their
quantification is discussed as sources of estimation uncertainty, and the
accounting policy for provisions is disclosed in the principal accounting policies.
We have performed the following procedures in order to address the risk:
■ We gained an understanding of key processes and controls around
identification of tax, legal and employee benefits matters across the key
components of the Group.
■ We sent confirmations to the Group’s legal counsel in the key
jurisdictions as at 31 December 2019. We also spoke to legal counsel on
selected key issues.
■ We also reviewed the Group’s correspondence with regulatory and tax
authorities and understood management’s interpretation and
application of relevant laws and regulations.
■ Where appropriate, working with the legal specialists, we challenged the
appropriateness of the Group’s assumptions and estimates in relation to
provisions and contingent liabilities.
■ We also assessed the appropriateness of disclosures in the financial
statements.
117
CAMELLIA PLC
REPORT OF THE INDEPENDENT AUDITORS
Key observations
From the work performed, we are satisfied that the key assumptions applied
in respect of the recognition, measurement and disclosure of tax, legal and
employee benefits matters are appropriate.
Going concern assessment and related disclosures
Key audit matter
description
The rapid spread and ongoing uncertainty surrounding the impact of
COVID-19 has increased the complexity associated with the Directors’
assessment of the Group’s and parent company’s ability to continue as a
going concern over a period of at least 12 months from the date of approval
of the Financial Statements. The key considerations in relation to going
concern are associated with the assessment of the Group and parent
company’s capital solvency and liquidity positions.
In addition, there is an increased risk associated with the adequacy of
disclosures over the going concern assessment and events after the
reporting date, particularly given that the majority of economic deterioration
in relation to COVID-19 has occurred subsequent to the balance sheet date.
In making their assessment, the Directors consider that the going concern
basis of accounting is appropriate and that there is no material uncertainty
related to going concern. The Directors have disclosed their explanations and
conclusions on the going concern basis and the key matters considered,
including judgements in relation to the Group’s ability to maintain production
and distribution of its goods in the event of continuing disruption as a result
of COVID-19. Management’s associated consideration of the impact of
COVID-19 on the parent company’s and Group’s ability to continue as a going
concern is detailed on pages 30 and 31 within the Directors' Report. Detail of
the impact of events after the reporting date is presented in note 45.
In performing procedures over management’s going concern assessment, we
reviewed and challenged:
■
■
the scenarios adopted by the Directors to capture potential downside
risks, including the associated macro-economic assumptions; and the
subsequent stress testing output, with a particular focus on the
headroom available and the Group’s cash resources, under severe but
plausible stress scenarios.
the application of additional downside sensitivities including
consideration of reverse-stress testing.
■ Management’s business continuity plans and subsequent changes to
those plans as a consequence of a prolonged impact from the COVID-19
pandemic.
■
the extent and nature of intra-Group funding obligations and ability of
the parent company to repatriate funds from subsidiary companies.
In addition to the above noted procedures, we held meetings with Senior
Management to discuss the Directors’ assessment of going concern and to
challenge matters arising from the review of Management’s going concern
paper.
In order to assess whether the post balance sheet event disclosures in note
45 were appropriate we have evaluated Management’s assessment of the
impact of the significant business developments that occurred after the year
end, including the spread of COVID-19 and the resulting actions taken by
Governments in Bangladesh, India, Kenya and Malawi where Group’s
principal crops are grown.
How our scope of
work responded to
the key audit matter
118
CAMELLIA PLC
REPORT OF THE INDEPENDENT AUDITORS
Key observations
We concurred with management’s going concern conclusions and consider
the disclosures in relation to going concern and events after the reporting
date to be appropriate.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it
probable that the economic decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our audit work and in evaluating the results
of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole
as follows:
Group financial statements
Parent company financial
statements
Materiality
£1.1m
£0.4m
Basis for
determining
materiality
Rationale for the
benchmark
applied
5% of adjusted profit before tax
from continuing operations.
% of net assets, capped at 50% of
Group performance materiality.
We have used a profit based
measure given the Group is listed
and therefore shareholders focus on
profitability. The profit is adjusted to
avoid distortion that could otherwise
arise due to non-recurring items.
We have used net assets measure
given that the parent company is a
holding company, generating no
revenue.
Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in
aggregate, uncorrected and undetected misstatements exceed the materiality for the financial
statements as a whole. Group performance materiality was set at 70% of Group materiality for the 2019
audit (2018: 70%). In determining performance materiality, we considered our assessment of the control
environment and the level of audit adjustments identified in the prior period.
Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in
excess of £0.06m (2018: £0.07m), as well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the financial statements.
An overview of the scope of our audit
The Group undertakes agricultural operations in countries across Africa, North and South America, and
Asia, with its principal crops grown in Bangladesh, India, Kenya and Malawi. The Group’s engineering and
food service operations are located in Europe, principally in the UK. Our Group audit was scoped by
obtaining an understanding of the Group and its environment, including Group-wide controls, and
assessing the risks of material misstatement at the Group level. Of the Group’s 82 principal components,
26 were subject to a full audit and 2 were subject to specified audit procedures where the extent of our
testing was based on our assessment of the risks of material misstatement and of the materiality of the
Group’s operations at those locations.
These 28 components represent the principal business units and account for 89% of the Group’s revenue
and 69% of the Group’s profit before tax and 86% of the Group’s net assets.
119
CAMELLIA PLC
REPORT OF THE INDEPENDENT AUDITORS
The Group engagement team worked from the Group’s UK head office, directing and supervising the
work of component auditors. Senior members of the Group audit team visited the Kenya, Bangladesh
and India components during the current year to discuss the component auditors’ risk assessment, and
review the documentation of the findings from their work.
Scope
Full scope
Specified audit procedures
Review at Group level
Revenue %
91
-
9
Profit before tax %
70
(-1)
31
Net assets %
65
21
14
We have nothing to report in respect of
these matters.
Other information
The Directors are responsible for the other information.
The other information comprises the information included
in the annual report, other than the financial statements
and our auditor’s report thereon.
Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and, in
doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to
be materially misstated.
If we identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether there is a material misstatement in the financial
statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of this
other information, we are required to report that fact.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the Directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the
parent company’s ability to continue as a going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to liquidate
the Group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
120
CAMELLIA PLC
REPORT OF THE INDEPENDENT AUDITORS
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
■
■
the information given in the strategic report and the Directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
the strategic report and the Directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Group and or the parent company and their
environment obtained in the course of the audit, we have not identified any material misstatements in
the strategic report or the Directors’ report.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report
to you if, in our opinion:
We have nothing to report in respect of
these matters.
■ we have not received all the information and
explanations we require for our audit; or
■
■
adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
the parent company financial statements are not in
agreement with the accounting records and returns.
Directors’ remuneration
Under the Companies Act 2006 we are also required to
report if in our opinion certain disclosures of Directors’
remuneration have not been made.
We have nothing to report in respect of
this matter.
121
CAMELLIA PLC
REPORT OF THE INDEPENDENT AUDITORS
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than
the company and the company’s members as a body, for our audit work, for this report, or for the
opinions we have formed.
Michael Williams, FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
7 May 2020
122
CAMELLIA PLC
FIVE YEAR RECORD
2019
£’m
2018
£’m
2017
£’m
Restated
2016
£’m
2015
£’m
Restated
Revenue - continuing operations
291.5
––––––––––
309.8
––––––––––
298.3
––––––––––
257.9
––––––––––
244.7
––––––––––
Profit before tax
Taxation
Profit from continuing operations
(Loss)/profit from
discontinued operation
Profit/(loss) attributable to owners
of the parent
Equity dividends paid
Equity
Called up share capital
Reserves
Total shareholders’ funds
Earnings/(loss) per share
Earnings per share
- continuing operations
Dividend paid per share
22.3
(7.2)
––––––––––
15.1
––––––––––
52.5
(20.0)
––––––––––
32.5
––––––––––
27.6
(12.2)
––––––––––
15.4
––––––––––
26.5
(12.4)
––––––––––
14.1
––––––––––
24.0
(13.2)
––––––––––
10.8
––––––––––
–
––––––––––
(0.2)
––––––––––
14.8
––––––––––
(20.0)
––––––––––
(3.6)
––––––––––
8.3
––––––––––
25.2
––––––––––
23.8
––––––––––
(10.7)
––––––––––
1.4
––––––––––
4.0
––––––––––
3.8
––––––––––
3.6
––––––––––
3.6
––––––––––
3.5
––––––––––
0.3
395.4
––––––––––
395.7
––––––––––
0.3
395.2
––––––––––
395.5
––––––––––
0.3
368.1
––––––––––
368.4
––––––––––
0.3
330.5
––––––––––
330.8
––––––––––
0.3
320.6
––––––––––
320.9
––––––––––
300.5 p
912.4 p 861.7 p
(387.4) p
50.7 p
300.5 p
144 p
919.6 p 325.9 p
132 p
138 p
336.7 p
130 p
181.0 p
126 p
123