KAKUZI PLC
ANNUAL REPORT AND CONSOLIDATED AND COMPANY FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
Kakuzi Plc
Annual Report and Consolidated and Company Financial Statements
For the year ended 31 December 2018
Table of Contents
Company information
Notice of annual general meeting
Chairman’s statement
Report of the Directors
Statement of Directors’ responsibilities
Statement on corporate governance
Corporate Governance Auditor’s Report
Directors’ Remuneration Report
Independent Auditors’ Report
Financial statements:
Consolidated and company statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Company statement of financial position
Consolidated statement of changes in equity
Company statement of changes in equity
Consolidated and company statement of cash flows
Page No
3
4
5 – 7
8 – 9
10
11 - 17
18
19
20 – 23
24
25
26
27
28
29
Notes to the consolidated and company financial statements
30 – 75
Five year record
Major shareholders and distribution schedule
Form of proxy (Annual General Meeting)
76
77
78
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Kakuzi Plc
Company Information
For the year ended 31 December 2018
COUNTRY OF INCORPORATION
The Company is incorporated in Kenya under the Kenyan Companies Act, 2015.
DIRECTORS
The Directors who held office during the year and at the date of this report were:-
Mr. G H Mclean* Chairman
Mr. C J Flowers* Managing Director
Mr. K R Shah
Mr. K W Tarplee*
Mr. N Nganga
Mr. D M Ndonye
Mr. S N Waruhiu
Mr. A N Njoroge
* British
REGISTERED OFFICE
REGISTRARS
Main Office
Punda Milia Road, Makuyu
P O Box 24
01000 THIKA
Telephone (060) 2033012
E-mail: mail@kakuzi.co.ke
Custody & Registrars Services Limited
Bruce House, 6th Floor
Standard Street
P O Box 8484
00100 NAIROBI
Telephone (020) 2230242
Facsimile (020) 2211773
SUBSIDIARY COMPANIES
AUDITOR
Estates Services Limited
Kaguru EPZ Limited
(100% holding)
(100% holding)
Deloitte & Touche
Deloitte Place
Waiyaki Way, Muthangari
P. O. Box 40092
00100 NAIROBI
SECRETARY
BANKERS
John L G Maonga
Maonga Ndonye Associates
Jadala Place, Ngong Lane, Ngong Road
P. O. Box 73248
00200 NAIROBI
Telephone (020) 2149923
ORDINARY SHARES
KCB Bank Kenya Limited
P O Box 30081
00100 NAIROBI
Commercial Bank of Africa Limited
P O Box 45136
00100 NAIROBI
The Company’s ordinary shares are listed on the Nairobi Securities Exchange and the London Stock
Exchange.
3
Kakuzi Plc
Notice of Annual General Meeting
NOTICE is hereby given that the Ninety First Annual General Meeting of the Members of the Company will
be held in the Ballroom at Nairobi Serena Hotel, Nairobi on Tuesday, 14 May 2019 at 12.00 noon for the
following purposes:-
1. To read the notice convening the meeting.
2. To table the proxies and confirm the presence of a quorum.
3. To approve the minutes of the Ninetieth Annual General Meeting held on 15 May 2018.
4. To receive, consider and adopt the financial statements for the year ended 31 December 2018 together
with the reports of the Chairman, the Directors and the Independent Auditors thereon.
5. To declare a first and final dividend of Shs 9.00 per ordinary share (2017: Shs 7.00) for the Financial
Year ended 31 December 2018.
6. To approve the Remuneration Policy of the Company as detailed in the Annual Reports for the Financial
Year ended 31 December 2018.
7. To approve the Remuneration Report of the Board as detailed in the Annual Reports for the Financial
Year ended 31 December 2018.
8. To re-elect Directors:-
i) Mr Daniel Mutisya Ndonye, a Director who retires by rotation in accordance with Article 27 of the
Company’s Articles of Association and, being eligible in accordance with Article 28 of the Company's
Articles of Association, offers himself for re-election.
ii) Mr Stephen Njoroge Waruhiu, a Director who retires by rotation in accordance with Article 27 of the
Company’s Articles of Association and, being eligible in accordance with Article 28 of the Company's
Articles of Association, offers himself for re-election.
9.
In accordance with the provisions of Section 769 of the Kenyan Companies Act, 2015, the following
Directors, being members of the Board Audit & Risk Committee be re-elected to continue to serve as
members of the said Committee:-
a) Mr Daniel M Ndonye
b) Mr Stephen N Waruhiu
c) Mr Andrew N Njoroge
d) Mr Nicholas Nganga
e) Mr Kenneth Tarplee
10. To re-appoint Messrs Deloitte & Touche as Auditors of the Company in accordance with the provisions
of Section 721 (2) of the Kenyan Companies Act, 2015 and to authorise the Directors to fix the Auditors’
remuneration for the ensuing Financial Year in accordance with the provisions of Section 724 (1) of the
Kenyan Companies Act, 2015.
11. To transact any other business of an Annual General Meeting of which due notice has been received.
BY ORDER OF THE BOARD
J L G MAONGA
COMPANY SECRETARY
28 March 2019
Note:
A member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote on
his/her behalf and such proxy need not be a member of the Company.
4
Kakuzi Plc
Chairman’s Statement
For the year ended 31 December 2018
RESULTS
The results for 2018 reflect a pre-tax profit of Shs 684 million compared to Shs 849 million in 2017. The
lower profits are as a result of lower avocado prices achieved, due to a heavily over supplied market in
Europe. Macadamia and forestry profits improved over the previous year as a result of increased production
from our orchards and a rise in the demand for wood products. Earnings per share was Shs 24.57 in 2018
compared to Shs 30.19 in 2017.
DIVIDEND
Kakuzi maintains a strong cash balance, adequate to cover significant investment in new crops, further
expansion of our existing crops and continued development of our processing facilities. In line with Kakuzi’s
long term strategy, the key use of cash is reinvestment in the business. Despite this, we are building a track
record of steady dividend growth, a trend that we intend to maintain.
Your Board recommends a dividend of Shs 9 per share compared to Shs 7 per share in 2017.
OVERVIEW
Kakuzi continues to increase its production volumes of both avocados and macadamia as we see demand
continuing to rise for high quality fruit and nuts. The emphasis on quality cannot be understated as
traditional markets become increasingly conscious of food safety requirements and a rapidly expanding
choice of where to source products from.
The prospects of new market opportunities developing in China are exciting for both Kakuzi and Kenya as a
whole. Kakuzi is working closely with Government authorities to develop the correct protocols which would
enable access to this market for Kenyan avocados.
A new crop development into blueberry production represents a significant milestone for Kakuzi as this
further diversifies our product base and potentially increases the number of markets our products are sold
into.
Our forestry operations continue to perform well and we see the market for good quality, sustainably
produced wood products, remaining stable in the coming years.
Our commitment to principles of long termism, sustainability, environmental protection and a custodial
philosophy over the assets we manage remains unchanged. Our ability to contribute to the National agenda
on food security is reliant upon these core principles.
The international markets we operate within remain stable and secure but are naturally influenced by the
political issues of the day. Brexit is an uncertainty but Kakuzi’s exposure to the UK markets is limited.
OPERATIONS
Kakuzi produced a record volume of avocados from its orchards during the year. This however,
unfortunately coincided with record production from Peru and South Africa leading to a heavily over supplied
market in Europe and a devastating impact on prices. In total Kakuzi exported 2.84 million cartons (1.59
million cartons in 2017). As a result of the prevailing over supplied market conditions, prices were
significantly reduced to levels last seen some years ago and 32% lower than 2017 (Euro 6.26 ‘v’ Euro 9.33 in
2017).
New orchard developments continued during the year and Kakuzi remains on target to meet its strategic goal
of planting 1,200 ha to various avocado cultivars. In order to best manage the packing and export of this
fruit, the Packhouse will be upgraded during 2019. This represents another substantial investment for the
Company.
5
Kakuzi Plc
Chairman’s Statement (continued)
For the year ended 31 December 2018
OPERATIONS (continued)
Kenya’s reputation as an origin for good quality avocado continues to struggle in the international markets,
which remains a challenge for us. It is imperative that, as other countries increase their avocado production,
Kenya builds its quality reputation to avoid a long term impact on its exports.
Macadamia production continues to grow as the orchards mature, processing 229 tons in 2018 against 178
tons in 2017. Our cracking facility completed its third season of operation, exporting the product globally.
We continue to explore value addition opportunities as well as new technologies to enhance processing
efficiency as well as product quality and value.
Kakuzi embarked on a major trial in blueberry production during the year. The first crop is anticipated to be
harvested towards the end of 2019. If this commercial scale trial meets expectations, the venture could
increase significantly.
Sustainably produced, quality wood products returned a good profit for the Company, contributing over Shs
126 million to profits. We believe the market for fence posts, utility poles and sawn timber will remain
relatively stable in the coming years. We continue to fell and replant our forests to ensure we have sufficient
and sustainable product volume to meet market demands.
Our livestock operations produced nearly 1,000 head of cattle for sale during the year. The butchery is
performing well and our herd size remains around 4,400 head. A key aspect to our strategy is to enhance
our contribution to the food security of the Nation as we develop our agriculture further.
Tea prices continue to remain under pressure as Kenya produced record volumes in the year. Whilst overall
this increases the export earnings for the Country, it does however negatively impact on the price growers
receive for each kilo of leaf. At the same time the inflationary pressure from wages and other costs
continues to rise.
GOVERNANCE
Kakuzi undertook a Governance Audit during the year in line with the Capital Markets Authority requirement.
A full statement on this can be found on page 18 of the Annual Report.
During the year Kakuzi also worked with a number of external organisations to ensure that it was operating
within best practices.
We continue to engage constructively on a number of different topics with various stakeholders including our
employees, workers union, local communities, shareholders, national Government, civil society and the
United Nations, and this interaction will continue in the coming year. We received both positive and negative
feedback from the various stakeholders with all information received being addressed by relevant parties.
This stakeholder engagement process is active and on-going.
CSR & SUSTAINABILITY
Kakuzi’s community engagement and social investment continued in the year. Our sustainability program is
aligned with the United Nations Social Development Goals and the greater national development agenda.
Specifically, we focused on economic empowerment of the communities, education program support, health,
water and sanitation and community infrastructure development including roads rehabilitation.
The Kakuzi Avocado Farmer’s Day was attended by over 2,000 smallholders. Farmers were able to receive
technical advice on all aspects of avocado cultivation and production. This year the Company received and
packed an increased volume of avocado through its smallholder program, however, the fruit suffered a
decline in the value of the second payment due to the market conditions alluded to above. Despite this, the
initiative continues to be an important strategic community empowerment program with the aim of educating
the smallholders on the economic benefits of supplying quality and exportable fruit.
6
Kakuzi Plc
Chairman’s Statement (continued)
For the year ended 31 December 2018
CSR & SUSTAINABILITY (continued)
In the year, we launched our annual Sexual Harassment Awareness, Reporting and Prevention (SHARP)
program. This initiative gives all employees a secure and safe environment in which to report any sexual
harassment without fear of reprisal. It establishes mechanisms to address such matters in a confidential and
decisive manner.
Our association with the Carbon Trust, working towards the reduction of our carbon footprint, continues in
earnest to include various initiatives from energy-saving technology. Water security and conservation remain
a critical part of Kakuzi’s daily management activity. Rainwater harvesting and recycling schemes are on-
going, which in turn, support the many Kitchen Garden projects where vegetables are grown by the
employees.
STRATEGIC GOALS & DEVELOPMENTS
Development of our core crop strategy remains on target as well as exploring more ways to contribute to
National food security.
In 2018 the Company spent Shs 498 million on developing our crops and infrastructure and approximately
Shs 580 million is slated for 2019.
Developing our irrigated areas is paramount to our strategy of long term sustainability. To this end, Kakuzi
also undertook a full audit of its dams to ensure they were compliant with National regulations.
STAFF
Kakuzi staff have all shown immense commitment throughout the year and worked tirelessly throughout in all
operations. Special thanks must go to the management and employees of the avocado operation for
ensuring a record avocado season was harvested and exported on time. The operations teams are well
supported by highly capable and efficient finance and administration staff in Nairobi.
LOOKING AHEAD
As a Company we remain cognisant of the difficult trading and political conditions the world is currently
exposed to. We believe that professional and sustainable agriculture is, and must remain, a key component
of the agenda as the impacts of climate change and population pressure weigh heavily on global resources.
Kakuzi is well placed to expand its existing agricultural production and also embark on further diversification
of agricultural products.
Commodity prices and currency fluctuations remain key risks which the Company is exposed to and whilst
we irrigate a significant area of our crops, we still depend upon the weather to recharge our dams and
provide the majority of our growing needs.
I must finally sincerely thank the Directors who have ensured that the interests of Kakuzi’s shareholders are
met with professionalism and transparency. Their advice and direction have been invaluable in assisting
Management to progress in a positive manner throughout the year and I have every confidence that this will
continue into the coming year.
G H MCLEAN
CHAIRMAN
28 March 2019
7
Kakuzi Plc
Report of the Directors
For the year ended 31 December 2018
The Directors submit their report together with the audited financial statements for the year ended 31
December 2018, which disclose the state of affairs of Kakuzi Plc (the “Group and the Company”). The
annual report and financial statements have been prepared in accordance with the Kenyan Companies Act,
2015.
PRINCIPAL ACTIVITIES
The principal activities of the Group comprise:
Growing, packing and selling of avocados
Growing, cracking and selling of macadamia nuts
The cultivation and sale of Tea green leaf
Forestry development & sale of forestry products
Livestock farming and sale of beef
Blueberries development
The two subsidiary companies are dormant.
BUSINESS REVIEW
A review of the business of the Group is incorporated within the Chairman’s statement on pages 5 to 7.
PRINCIPAL RISKS AND UNCERTAINTIES
There are a number possible risks and uncertainties that could impact the Group’s operations. The Group
regularly monitors the risks. The information on the Group’s financial risks is disclosed in Note 4 of the
financial statements. The following risks relating to the Group’s principal operations have been identified:
i)
ii)
iii)
iv)
Climate change: level of rainfall affecting crop yields and in extreme cases, crop viability.
Price volatility: changes in market prices impact profitability each season.
Currency fluctuation: profit volatility arising from sales denominated in foreign currency.
Cost of labour: increased cost of production and lower profitability.
RESULTS AND DIVIDEND
The net profit for the year of Shs 481,594,000 (2017: Shs 591,643,000) has been added to retained
earnings. The Directors recommend the approval of a first and final dividend of Shs 9.00 (2017: Shs 7.00)
per ordinary share.
The results for the year are set out on pages 24 to 75 in the attached financial statements.
ANNUAL GENERAL MEETING
The Ninety first Annual General Meeting of the Company will be held in the Ballroom at Nairobi Serena
Hotel, Nairobi on Tuesday, 14 May 2019 at 12.00 noon.
8
Kakuzi Plc
Report of the Directors (continued)
For the year ended 31 December 2018
DIRECTORS
The Directors who held office during the year and at the date of this report are set out on page 3.
The Directors’ interests in the share capital of the company are listed below: -
At 31 December 2018
Beneficial
Ordinary
shares
Non-Beneficial
Ordinary
shares
At 31 December 2017
Beneficial
Ordinary
shares
Non-beneficial
Ordinary
shares
-
100
-
200
1,000
-
-
-
75
-
-
-
-
-
-
-
-
100
-
200
1,000
-
-
-
75
-
-
-
-
-
-
-
Mr. K W Tarplee
Mr. G H Mclean
Mr. C J Flowers
Mr. K R Shah
Mr. N Nganga
Mr. D M Ndonye
Mr. S N Waruhiu
Mr. A N Njoroge
Mr Daniel Mutisya Ndonye, a Director who retires by rotation in accordance with Article 27 of the Company’s
Articles of Association and, being eligible in accordance with Article 28 of the Company's Articles of
Association, offers himself for re-election.
Mr Stephen Njoroge Waruhiu, a Director who retires by rotation in accordance with Article 27 of the
Company’s Articles of Association and, being eligible in accordance with Article 28 of the Company's Articles
of Association, offers himself for re-election.
In accordance with the provisions of Section 769 of the Kenyan Companies Act, 2015, the following
Directors, being members of the Board Audit & Risk Committee be re-elected to continue to serve as
members of the said Committee:-
a) Mr Daniel M Ndonye
b) Mr Stephen N Waruhiu
c) Mr Andrew N Njoroge
d) Mr Nicholas Nganga
e) Mr Kenneth Tarplee
DISCLOSURE OF INFORMATION TO AUDITORS
Each Director confirms that, so far as he is aware at the time of approval of this report, there is no relevant
audit information of which the Company’s auditor is unaware and that each Director has taken all the steps
that he ought to have taken as a Director to make himself aware of any relevant audit information and to
establish that the Company’s auditor is aware of that information.
AUDITORS
Deloitte & Touche, having expressed their willingness, continue in office in accordance with the provisions of
section 721 (2) of the Kenyan Companies Act, 2015. The Directors monitor the effectiveness, objectivity and
independence of the auditor. The Directors also approve the annual audit engagement contract, which sets
out the terms of the auditor's appointment and the related fees.
BY ORDER OF THE BOARD
K R SHAH
DIRECTOR
28 March 2019
9
Kakuzi Plc
Statement of Directors’ Responsibilities
For the year ended 31 December 2018
The Kenyan Companies Act, 2015 requires the Directors to prepare financial statements for each financial
year which give a true and fair view of the financial position of the Group and the Company at the end of the
financial year and of their financial performance for the year then ended. It also requires the directors to
ensure that the Company and its subsidiaries maintain proper accounting records that are sufficient to show
and explain the transactions of the Group and the Company; disclose with reasonable accuracy at any time
the financial position of the Group and the Company; and that enables them to prepare financial statements
of the Group and the Company that comply with prescribed financial reporting standards and the
requirements of the Kenyan Companies Act, 2015. The Directors are also responsible for safeguarding the
assets of the Group and for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors accept responsibility for the preparation and presentation of these financial statements in
accordance with International Financial Reporting Standards and in the manner required by the Kenyan
Companies Act, 2015. They also accept responsibility for:
i. Designing, implementing and maintaining such internal control as they determine necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud
or error;
ii. Selecting suitable accounting policies and then apply them consistently; and
iii. Making judgements and accounting estimates that are reasonable in the circumstances
In preparing the financial statements, the Directors have assessed the Group’s and the Company’s ability to
continue as going concerns and disclosed, as applicable, matters relating to the use of going concern basis
of preparation of the financial statements. Nothing has come to the attention of the Directors to indicate that
the Group and the Company will not remain going concerns for at least the next twelve months from the date
of this statement.
The Directors acknowledge that the independent audit of the financial statements does not relieve them of
their responsibility.
Approved by the Board of Directors on 28 March 2019 and signed on its behalf by:
K R SHAH
DIRECTOR
C J FLOWERS
DIRECTOR
10
Kakuzi Plc
Statement on Corporate Governance
For the year ended 31 December 2018
The Board is committed to ensuring that the business is run in a professional, transparent, just and equitable
manner so as to protect and enhance shareholder value and satisfy the interests of other stakeholders. The
principles and standards adhered to by the Board have been developed with close reference to guidelines
on corporate governance issued by the The Capital Markets Authority, Code of Corporate Governance
Practices for Issuers of Securities to The Public 2015 (the Code) and other global best practices.
Following the issuance of the Code, the Board embarked on tracking the implementation of the guidelines
and recommendations therein. The Board, in order to ensure that Group is compliant, commissioned a
Governance Audit undertaken by an auditor, accredited by the Institute of Certified Public Secretaries of
Kenya, whose report is on page 18.
This statement describes how the Group applies the main principles of the Code. The Group acknowledges
and continues to consider the recommendations of the Code carefully and implement as appropriate.
In implementing the Code, the Directors have taken account of the Group’s size and structure and the fact
that there is a controlling shareholder, Camellia Plc.
Board Policies
The Board has established a number of policies and procedures to guide the Board and management in the
implementation of the roles and responsibilities of the group’s business. A summary of the Board policies
and related governance documents include;
Board Charter - provides the roles and responsibilities of the Board.
Remuneration Policy - provides guidelines and criteria of Board compensation, attraction and
retention.
Code of Conduct and Ethics of Directors - provides guidance to Directors to help them recognize
and deal with ethical issues, provide mechanisms to report unethical conduct, and help foster a
culture of honesty and accountability. The staff have a separate Code of Conduct and Ethics policy.
Conflict of interest- the Code of Conduct and Ethics contains guidance on conflict of interest.
Corporate Social Responsibility (CSR) Policy - includes purpose, strategies, guiding principles,
partnership focus, and reporting by the Group with respect to CSR as well as the roles and
responsibilities of the Board and employees of the Group regarding CSR. The Group has published
some of its CSR activities on its website.
Procurement Policy - includes the principles for the implementation of the policy, clear guidelines
and operating instructions on all matters relating to procurement, and tender contracts within the
Group as well as a comprehensive list of all the suppliers and vendors engaged by the Group.
Insider trading - the Code of Business Conduct provides guidelines on trading on insider
information.
Information Communication Technology (ICT) Policy - provides guidelines that are aligned to the
strategic objectives of the Group.
Board Size, Composition and Independence
The Board currently comprises of eight Directors, three of whom are independent non-executive Directors.
Of the remaining Directors, two are executive and three are non-executive, including a non-executive
Chairman. The independent and other non-executive Directors constitute three quarters of the Board. The
membership of the Board remained unchanged in 2018. The Directors’ abridged biographies appear on the
Company’s website and the names of the Directors are listed on page 3 of this Annual Report.
11
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2018
The non-executive Directors are independent of management. Their role is to advise, constructively
challenge and monitor the success of management in delivering the agreed strategy within the risk appetite
and control framework that is set by the Board.
The Board is well composed in terms of the range and diversity of skills, experience and industrial
knowledge and has an appropriate balance of executive, non - executive and independent Directors.
Based on the size, complexity and governance needs of the Company, the current Board size is considered
sufficient. The size of the Board has conformed to the applicable legal and regulatory frameworks.
The Board recognises that opportunities exist to consider diversity upon future retirements of non-executive
Directors.
All the Directors excluding the Managing Director are subject to retirement by rotation and must seek re-
election by shareholders at least once every three years in accordance with the Articles of Association. Any
Director appointed during the year is required to retire and seek re-election at the next Annual General
Meeting.
A review of the other listed Company Directorships of the Directors indicated that all the Directors have
complied with the Code, which limits the number of Directorships in listed companies a member of the Board
holds at any given time.
Board Responsibilities
The Board is responsible for managing the Group’s business and has adopted a schedule of matters
reserved for its approval. The schedule is reviewed annually and covers, inter alia, the following areas:
Internal controls
Strategy
Acquisitions and disposals
Financial reporting and control
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
Debt financing
Chairman and Managing Director
The roles of the Board are clearly separated from that of the management. The Chairman provides overall
leadership to the Board without limiting the principles of collective responsibility for Board decisions. The
Managing Director is responsible to the Board and takes responsibility for the effective and efficient running
of the Group businesses on a day-to-day basis.
Company Secretary
The Company Secretary, who is a member of the Institute of Certified Public Secretaries of Kenya and in
good standing, with the assistance of the Finance Director, provides guidance to the Board on its duties and
responsibilities and on other matters of governance and monitoring and coordinating their completion.
Board Remuneration
The Director’s remuneration policy and report including details of their compensation appears on page 19.
12
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2018
Board Meetings
The Board and its Committees meet regularly in accordance with business requirements.
The agenda and supporting papers are distributed in advance of all Board and Committee meetings to allow
time for appropriate review and to facilitate full discussion at all meetings. In 2018 four scheduled Board
meetings were held.
The Board regularly reviews reports on progress against financial objectives, business developments, as
well as investor and external relations. The Chairmen of Board Committees and Managing Director report to
each meeting of the Board on the activities of the Committees since the previous Board meeting. The
Board receives regular reports and presentations from the Managing Director on the environment,
performance and updates on the strategic initiatives as evidenced in all the Board meeting minutes. The
Board also monitors matters arising under the Code of Conduct, the Anti-Bribery and Corruption Policy and
the Whistleblower Policy.
Details of the Board and Board Committee meetings held during the Reporting Period and attendances at
those meetings are set out on page 17.
Directors’ external activities and Conflicts of Interest
Directors have a statutory duty to avoid situations in which they have or may have interests that conflict with
those of the Group. The conflict of interest requirements are embedded in the Code of Conduct and Ethics
policy as well as the Director’s letters of appointment. The Board and Board Committee meetings have a
standing agenda item on declaration of interest, where members declare actual, potential or perceived
conflicts of interest. The declared items of interest are part of the minutes.
Insider Trading
Internal policy and various laws, regulations and guidelines that regulate the Group businesses prohibit
Directors and employees from dealing in the Company’s securities when they are in possession of price-
sensitive information that is not generally available to the market. Information is considered to be “non-
public” unless it has been publicly disclosed, and adequate time has passed for the securities markets to
digest the information. Staff are required to adhere to the Staff Code of Conduct permissible trading activity.
During the year 2018 there were no known or identified instances of insider trading by the Directors,
management and staff of the Group.
Board Structure
The Board has established Committees to assist it in discharging its responsibilities and obligations. The
Committees assist the Board in carrying out its functions and ensuring that there is independent oversight of
internal controls and risk management. These Committees have terms of reference approved by the Board,
indicating their mandate, authority, duties, composition and leadership. The appointment of the members to
these Committees draws on the skills and experience of individual Directors.
Board Committees
The Board has constituted their Committees in compliance with the Code. The Committees in place are the
Audit & Risk Committee and Nomination & Remuneration Committee.
Management and external service providers and experts attend by invitation as circumstances dictate.
Directors’ attendance of these committees is provided on page 17.
Details of these Committees are given here below.
13
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2018
Nomination & Remuneration Committee
The Nomination & Remuneration Committee is chaired by Mr Nicholas Nganga, a non executive Director.
Although the Code recommends that the Chairman of the Nominations Committee should be an independent
Director, the Board considers that Mr Nganga is the appropriate non-executive Director for this role because
of his long standing and experience. Its other members comprise the rest of the Board members. The
principal responsibilities of the Nomination & Remuneration Committee are set out below:
Principal responsibilities
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.
Board performance evaluation and development of Directors.
The Committee met twice during the year as shown on page 17 and deliberated on, amongst other issues
Revised terms of reference of the Nomination Committee and recommended for approval
Approved revised letters of appointment of the Directors
Developed Code of Conduct and Ethics of the Directors
Audit & Risk Committee
The Audit & Risk Committee is chaired by Mr Daniel Ndonye, an independent Director. The other members
of the Committee are Mr Nicholas Nganga, Mr Kenneth Tarplee, Mr Stephen Waruhiu and Mr Andrew
Njoroge. During 2018, the Committee met twice, as shown below on page 17.
All the members of the Audit & Risk Management Committee have the relevant qualifications and expertise
in audit, financial management or accounting.
Principal responsibilities
To review and monitor the financial statements of the Group and the audit of those statements
To monitor compliance with relevant financial reporting requirements and legislation
To monitor the effectiveness and independence of the external auditor
To review effectiveness of the Group’s internal control system. The committee regularly reviews the
effectiveness of internal audit activities carried out by the Group’s audit function and senior
management
To review non-audit services provided by the external auditors.
During the course of the year the Committee received, reviewed, monitored, considered, approved and
guided management and made recommendations to the Board on:
Monitoring developments in accounting, financial reporting and taxation relevant to the Group;
Reviewing significant accounting policies and practices;
Reviewing and making recommendations to the Board for the adoption of the Group’s half-year and
annual financial statements;
Approval of the scope, plan and fees for the 2018 external audit;
Reviewing the independence and performance of the external auditor;
Reviewing Internal Audit reports and approval of the 2018 Internal Audit plan; and
Reviewing and making recommendations to the Board on amendments to Company policies.
14
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2018
Board and Directors Effectiveness and Evaluation in 2018
The Nomination and Remuneration Committee is responsible for determining the process for evaluating
Board performance. Under the Code, the Board is advised to undertake a performance evaluation during the
year. A formal procedure for this is in the process of being conducted.
Board Induction and Continuous Skills development
Once the evaluation is completed and together with the Chairperson, a review of each Board member
development needs, arrangements will be made to ensure Board members go through the necessary
training.
Code of Conduct & Ethics
The Group has established a Code of Conduct and Ethics that binds both the Directors and employees. The
Group takes cognizance of the fact that its operations are closely integrated with the local communities and,
because the very nature of agriculture is long-term, it is aware that it can have an impact on the environment.
The Group policy ensures that its activities meet and exceed the social, economic and environmental
expectations of its stakeholders.
The Whistle Blowing Policy, which is on the Group’s website, sets out the Board of Directors’, managements’
and staff members’ commitment to upholding the highest levels of integrity and observance of the rule of law.
The Anti-Bribery Policy is in place to foster an environment that encourages ethical behaviour and
compliance, whilst an internal committee is in place that meets quarterly to monitor this. Their report is tabled
in every other Board meeting.
Legal Compliance Audit and Reporting
The Group has identified several local and international laws and regulations and performs regular
compliance assessment checks under the various divisions of the Group. A Compliance Register that
identifies the areas of compliance and the level of compliance by the Company is presented to the Board on
a regular basis.
The Board is considering conducting a comprehensive and independent legal audit by an external consultant
in line with the Code’s requirements.
External Auditors
To assess the effectiveness of the external audit process, the external auditor is required to report to the
Audit & Risk 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 auditor objectivity, the Committee has reviewed the
non-audit services provided by the external auditor and satisfied itself that the scale and nature of those
services were such that the external auditors’ objectivity and independence were safeguarded.
The Committee confirms that the Annual Report and Accounts, taken as a whole, are fair, balanced and
understandable and provide the information necessary for shareholders to assess the Group’s performance,
business model and strategy.
15
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2018
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 & Risk Committee, on behalf of the Board, reviewed the effectiveness of the
framework of the Group’s system of internal control.
Accountability and delegation of authority are clearly defined with regular communication between the Board
and management.
The Group has an Internal Audit Department which is an independent function that reports directly to the
Board Audit & Risk Committee and provides independent confirmation that the Company’s business
standards, policies and procedures are being complied with. Where found necessary, corrective action is
recommended.
The performance of each division is continually monitored centrally including a critical review of annual
budgets, forecasts and monthly sales, profits and cash reports.
Financial results and key business statistics and variances from approved plans are carefully monitored.
The Risk Management Policies which are reviewed by the Committee are detailed on Note 4 and are in line
with International Financial Reporting Standards.
Relationship with Shareholders and other Stakeholders
The Group is committed to equitable treatment of its shareholders including the non-controlling and foreign
shareholders. The Group ensures that all shareholders receive full and timely information about its
performance. This is achieved through the distribution of a half yearly interim financial report and the Annual
Report and financial statements as well as through compliance with the relevant continuing obligations under
the Capital Markets Authority Act. The Group’s results are advertised in the press and released to the
securities exchanges within the prescribed period at each half-year and year end.
The published results and related investor information together with all the relevant information relating to the
Group is available on the Group’s website, www.kakuzi.co.ke.
The Company has engaged the services of a registrar, Custody & Registrar Services, who together with the
Finance Director, regularly address issues raised by the shareholders.
Going Concern
The Board confirms the financial statements are prepared on a going concern basis, the Directors are
satisfied that the Group has adequate resources to continue in business for the foreseeable future. In
making this assessment, the Directors have considered a wide range of information relating to present and
future conditions, including future projections of profitability, cash flows and capital resources. For this
reason, it continues to adopt the going concern basis when preparing the financial statements.
BY ORDER OF THE BOARD
K R SHAH
28 March 2019
C J FLOWERS
28 March 2019
16
Kakuzi Plc
Statement on Corporate Governance (continued)
For the year ended 31 December 2018
2018 BOARD & BOARD COMMITTEES MEMBERSHIP AND ATTENDANCE
Director
Classification
Designation
Mr.
Nicholas
Nganga
Mr.
Christopher
Flowers
Mr. Graham
Mclean
Non-executive
Chairman of
Nomination &
Remuneration
Committee
Executive
Managing
Director
Non-executive
Chairman of
Board
Mr. Daniel
M Ndonye
Non-executive
Chairman of
Audit
Committee
Mr. Stephen
Waruhiu
Non-executive
Mr. Andrew
Ndegwa
Njoroge
Non-executive
Mr. Kenneth
W Tarplee
Non-executive
Mr. Ketan
Shah
Executive
Finance
Director
Board
Audit &
Risk
Nomination &
Remuneration
Membership
Attendance
4/4
2/2
2/2
Membership
Attendance
4/4
Membership
Attendance
4/4
Membership
Attendance
√
4/4
Membership
Attendance
3/4
Membership
2/2
2/2
2/2
2/2
2/2
1/2
Attendance
3/4
2/2
1/2
Membership
√
Attendance
2/4
2/2
1/2
Membership
Attendance
√
4/4
√
2/2
2/2
Member of respective committee
Where a Director has missed a Board or Board Committee meeting, an acceptable apology had
been received by the Chairman well in advance of the scheduled meeting.
The Managing Director and Finance Director are not members of the Audit Committee but attend by
invitation
17
Kakuzi Plc
Corporate Governance Auditor’s Report
For the year ended 31 December 2018
REPORT OF THE GOVERNANCE AUDITORS TO THE BOARD OF DIRECTORS OF KAKUZI PLC
INTRODUCTION
We have carried out a Governance Audit of Kakuzi Plc covering the year ended 31 December 2018 through
which we reviewed the Governance Practices, Structures and Systems put in place by the Board of
Directors.
BOARD RESPONSIBILITY
The Board of Directors is responsible for putting in place governance structures and systems that support
the practice of good governance in the Company. The responsibility includes planning, designing and
maintaining governance structures through policy formulation necessary for efficient and effective
management of the Company. The Board of Directors is responsible for ensuring its proper constitution and
composition; ethical leadership and corporate citizenship; accountability, risk management and internal
control; transparency and disclosure; members’ rights and obligations; members’ relationship; compliance
with laws and regulations; sustainability; and performance management.
GOVERNANCE AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on the existence and effectiveness of governance instruments,
policies, structures, systems and practices in the Company within the legal and regulatory framework and in
accordance with best governance practices as envisaged under proper constitution and composition of the
Board of Directors; ethical leadership and corporate citizenship; accountability, risk management and
internal control; transparency and disclosure; members’ rights and obligations; members’ relationship;
compliance with laws and regulations; sustainability; and performance management, based on our audits.
We conducted our audit in accordance with the ICS Governance Audit Standards and Guidelines which
conform to global standards. These standards require that we plan and perform the governance audit to
obtain reasonable assurance on the adequacy and effectiveness of the organizations’ policies, systems,
practices and processes. We believe that our governance audit provides a reasonable basis for our opinion.
OPINION
In our opinion, the Board of Directors of Kakuzi Plc has put in place effective, appropriate and adequate
governance structures within the Company which are in compliance with the legal and regulatory framework
and in line with good governance practices for the interest of stakeholders.
The Governance Auditor engaged in this assignment is Lucy Njoroge, GA/00174.
Lucy Njoroge
Nairobi, Kenya
28 March 2019
18
Kakuzi Plc
Directors’ Remuneration Report
For the year ended 31 December 2018
This report is drawn up in accordance with the Kenyan Companies Act, 2015.
Nomination & Remuneration Committee
Details of the Nomination and Remuneration Committee are set out on page 14.
Policy on Directors Remuneration
The details agreed by the Nomination & Remuneration Committee are 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.
Service Contracts
The Managing Director and the Finance Director are the only Executive Directors of the Company. They
have service contracts with fellow subsidiary companies within the Parent company, Camellia Plc Group, on
rolling service contract basis. Their remuneration is dealt with within the service contracts of those fellow
subsidiary companies.
Following the initial appointments, non-executive Directors may seek re-election by shareholders on a
rotational basis in accordance with the Company’s Articles of Association at Annual General Meetings. Non-
executive Directors do not have service agreements.
Directors’ Remuneration
Directors’ fees are payable after the occurrence of the Board Meetings. The Directors do not receive any
performance based remuneration. No pension contributions are payable on their fees.
The following section has been audited:
Executive
Mr C J Flowers
Mr K R Shah
Non-Executive
Mr G H Mclean
Mr K W Tarplee
Mr N Nganga
Mr D M Ndonye
Mr S N Waruhiu
Mr A N Njoroge
2018
Directors’
Fees
2017
Directors’
Fees
Shs’000 Shs’000
2018
Benefits in
kind
Shs’000
2017
Benefits in
kind
Shs’000
2018
2017
Total
Shs’000
Total
Shs’000
-
-
1,630
1,475
1,790
1,790
1,570
1,570
9,825
-
-
600
600
600
600
600
600
3,600
-
-
-
84
85
85
85
85
424
-
-
-
93
96
96
96
96
477
-
-
1,630
1,559
1,875
1,875
1,655
1,655
10,249
-
-
600
693
696
696
696
696
4,077
BY ORDER OF THE BOARD
K R SHAH
28 March 2019
C J FLOWERS
28 March 2019
19
Deloitte●
Deloitte & Touche
Certified Public Accountants (Kenya) Deloitte Place
Waiyaki Way, Muthangari
P.O. Box 40092 - GPO 00100 Nairobi
Kenya
Tel: +254 (0) 20 423 0000
Cell: +254 (0) 719 039 000 Dropping Zone No.92
Email: admin@deloitte.co.ke www.deloitte.com
Independent auditors’ report
To the shareholders of Kakuzi Plc
Report on the audit of the consolidated and company financial statements
Opinion
We have audited the consolidated and company financial statements of Kakuzi Plc (“the Group”) set out on
pages 24 to 75, which comprise the consolidated and company statements of financial position at
31 December 2018 and the consolidated and company statements of profit or loss and other comprehensive
income, consolidated and company statements of changes in equity and consolidated and company
statement of cash flows for the year then ended, and notes, including a summary of significant accounting
policies.
In our opinion, the consolidated and company financial statements give a true and fair view of financial
position of the Group and the Company as at 31 December 2018 and of their financial performance and cash
flows for the year then ended in accordance with International Financial Reporting Standards and the
requirements of the Kenyan Companies Act, 2015.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the Auditor’s responsibilities for Audit of the consolidated and
company Financial Statements section of our report.
We are independent of the Group in accordance with in accordance with the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with other
ethical requirements that are relevant to our audit of the financial statements in Kenya, and we have fulfilled
our ethical responsibilities in accordance with these requirements and the IESBA Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matter
A key audit matter is a matter that, in our professional judgement, was of most significance in our audit of the
consolidated and company financial statements of the current period. The matter was addressed in the
context of our audit of the consolidated and company financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on the matter.
Opinion
We have audited the consolidated and company financial statements of Kakuzi Plc (“the Group”) set out on
pages 19 to 67, which comprise the consolidated and company statements of financial position at
31 December 2017 and the consolidated and company statement of profit or loss and other comprehensive
income, consolidated and company statements of changes in equity and statements of cash flows for the
In our opinion, the consolidated and company financial statements give a true and fair view of the
consolidated and company financial position of the Group as at 31 December 2017 and of its consolidated
and company financial performance and consolidated and company cash flows for the year then ended in
accordance with International Financial Reporting Standards and the requirements of the Kenyan
Companies
Basis for
Partners: A.N. Muraya F.O. Aloo B.W. Irungu I.Karim D.M. Mbogho R. Mwaura J Nyang’aya F Okwiri F.O. Omondi F Muchena
20
Independent auditors’ report
To the shareholders of Kakuzi Plc (continued)
Report on the audit of the consolidated and company financial statements (continued)
Key Audit Matter
Measurement of biological assets (in the
consolidated and company financial
statements)
The measurement of biological assets at the
end of year involves significant judgements and
estimates by the Directors, which could have
material impact on the financial position and the
results of the Group and the Company.
At the end of year, the carrying value of the
biological assets amounted to Sh 872,955,000
(2017: Sh 859,584,000) as disclosed in Note 6
in
the consolidated and company financial
statements.
the
As discussed
financial
in Note 6 of
statements, biological assets comprise forestry
plantations, livestock and growing agricultural
produce on bearer plants, which are measured
at fair value less costs to sell. The fair value
models accrue the additional value related to
the biological asset as biological transformation
takes place rather than at the time of harvest.
As disclosed in Note 3 to the consolidated and
company
key
assumptions and estimates include expected
future market prices, costs to sell and applicable
adjustments for the age and condition of the
assets. The determination of these assumptions
and estimates require careful judgment by the
Directors and any uncertainty could lead to
material adjustments to the consolidated and
company financial statements.
statements,
financial
the
Refer to Note 2 (g) for the accounting policy on
biological assets; Note 3 for the significant
estimates used in determining the fair values of
biological assets; and Note 6, for the disclosure
on biological assets.
Other information
How Our Audit Addressed the Key Audit Matter
We assessed the competence and objectivity of the
Group's management experts with the responsibility of
determining the valuation of the biological assets. In
addition, we discussed the scope of their work and
reviewed the fair valuation models used for consistency
and mathematical accuracy. We confirmed that the
approach and model used has been consistently applied.
We performed an analysis of the significant assumptions
made in the valuation models and tested them against
available market information. We subjected the key
assumptions to sensitivity analyses.
In addition, we tested a selection of data inputs used
against
financial and operational
information and external sources, to assess the accuracy,
reliability and completeness thereof.
the Directors’
We checked the consistency of application of the fair
value approaches and models over the years.
We evaluated the sufficiency and accuracy of the
disclosures in the notes of the consolidated and company
financial statements.
We also validated the underlying data of acreage and
age of plantations used by the valuer to the Directors’
operational
including
comparison with historical trends.
independent
information,
We found that the models used for the valuation of the
biological assets to be appropriate and reasonable. In
addition,
the consolidated and
company financial statements pertaining to the valuation
and measurement of biological assets were found to be
appropriate.
the disclosures
in
The Directors are responsible for the other information which comprises the Company Information, Notice of
the Annual General Meeting, Chairman’s Statement, Report of the Directors, Statement of Directors’
Responsibilities, Statement on Corporate Governance, Directors’ Remuneration Report, five year record and
major shareholders and distribution schedule which we obtained prior to the date of this auditor’s report and
the Annual Report, which is expected to be made available to us after that date. The other information does
not include the consolidated and company financial statements, and our auditor’s report thereon.
Our opinion on the consolidated and company financial statements does not cover the other information and
we do not express an audit opinion or any form of assurance conclusion thereon.
N
21
Independent auditors’ report
To the shareholders of Kakuzi Plc (continued)
Report on the audit of the consolidated and company financial statements (continued)
Other information (continued)
In connection with our audit of the consolidated and company financial statements, our responsibility is to
read the other information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated and company financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If, based on the work we have performed on the other
information that we obtained prior to the date of this auditor’s report, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this
regard.IN
DEPE
Responsibilities of the Directors and those charged with governance for the consolidated and
company financial statements
The Directors are responsible for the preparation and fair presentation of the consolidated and company
financial statements in accordance with International Financial Reporting Standards and the requirements
of the Kenyan Companies Act, 2015, and for such internal control as the Directors determine are necessary
to enable the preparation of consolidated and company financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated and company financial statements, the Directors are responsible for
assessing the Group’s and 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 and/or Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the Audit of the consolidated and company financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated and company 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 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 consolidated and company financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional
scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated and company financial
statements, whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s and the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors' use of the going concern basis of accounting and
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group and company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor's report to the related disclosures in the consolidated and company financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's report. However, future events or conditions may cause
the Group and/or company to cease to continue as going concerns.
Other information
22
Independent auditors’ report
To the shareholders of Kakuzi Plc (continued)
Report on the audit of the consolidated and company financial statements (continued)
Auditor's Responsibilities for the Audit of the consolidated and company financial statements
(continued)
Evaluate the overall presentation, structure and content of the consolidated and company financial
statements, including the disclosures and whether the consolidated and company financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entity or business
activities within the Group to express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with the Board Audit and Risk Committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings including any significant deficiencies in internal
control that we identify during our audit.
We also provide the Board Audit and Risk Committee with a statement that we have complied with the
relevant ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Board Audit and Risk Committee, we determine those matters
that were of most significance in the audit of the consolidated and company financial statements of the
current period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on other matters prescribed by the Kenya Companies Act, 2015
Report of the Directors
In our opinion the information given in the Report of the Directors on pages 8 to 9 is consistent with the
consolidated and company financial statements.
Directors’ Remuneration Report
In our opinion the auditable part of the Director’s Remuneration report on page 19 has been prepared in
accordance with the Kenyan Companies Act, 2015.
Certified Public Accountants (Kenya)
Nairobi, Kenya
28 March 2019
CPA Anne Muraya, Practising certificate No. 1697.
Signing partner responsible for the independent audit
23
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Consolidated and Company statement of profit or loss and other comprehensive
income
Year ended 31 December
Notes
2018
Shs’000
2017
Shs’000
Sales
Gains arising from changes in fair value less costs to sell of
non-current biological assets
5
3,152,831
2,823,926
6(i)
74,082
82,799
Cost of sales
Gross profit
Other income
Selling and Distribution costs
Operating profit
Interest income
Finance costs
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
3,226,913
(1,742,270)
2,906,725
(1,560,515)
1,484,643
1,346,210
18,678
(942,568)
6,421
(597,948)
560,753
754,683
125,672
(2,342)
95,820
(1,380)
684,083
849,123
7
8
8
5
11(a)
(202,489)
(257,480)
481,594
591,643
Items that are not reclassified to profit or loss:
Remeasurement of post-employment benefit obligations (net of tax)
11(c)
3,046
1,735
Total comprehensive income
484,640
593,378
Earnings per share (Shs):
Basic and diluted earnings per ordinary share
12
24.57
30.19
The notes on pages 30 to 75 are an integral part of these consolidated and company financial
statements.
24
Kakuzi Plc
Consolidated and Company Financial Statements
As at 31 December 2018
Consolidated statement of financial position
EQUITY
Share capital
Other reserves
Retained earnings
Proposed dividend
Total equity
Non current liabilities
Deferred income tax
Post employment benefit obligations
Total equity and non current liabilities
Non current assets
Property, plant and equipment
Biological assets
Prepaid operating lease rentals
Financial assets held at amortised cost
Non current receivables
Current assets
Biological assets – growing agricultural produce
Inventories
Receivables and prepayments
Current tax recoverable
Financial assets held at amortised cost
Cash and bank balances
Current liabilities
Payables and accrued expenses
Current tax payable
Post employment benefit obligations
Notes
13
12(ii)
15
16
17
6(i)
18
20
22
6(ii)
21
22
11(d)
20
24
23
11(d)
16
31 December
2018
Shs’000
31 December
2017
Shs’000
98,000
19,653
4,375,423
176,400
98,000
16,607
4,070,229
137,200
4,669,476
4,322,036
813,557
68,045
881,602
743,775
63,415
807,190
5,551,078
5,129,226
2,705,521
684,202
4,379
200,000
30,023
3,624,125
188,753
169,476
360,786
81,582
15,385
1,500,935
2,316,917
362,776
-
27,188
389,964
2,419,384
663,833
4,384
218,444
32,877
3,338,922
195,751
146,324
291,505
-
124,875
1,648,749
2,407,204
462,339
132,810
21,751
616,900
Net current assets
1,926,953
1,790,304
5,551,078
5,129,226
The notes on pages 30 to 75 are an integral part of these consolidated and company financial
statements.
The consolidated and company financial statements on pages 24 to 75 were approved for issue by the
board of Directors on 28 March 2019 and signed on its behalf by:
K R SHAH
DIRECTOR
C J FLOWERS
DIRECTOR
25
Kakuzi Plc
Consolidated and Company Financial Statements
As at 31 December 2018
Company statement of financial position
EQUITY
Share capital
Other reserves
Retained earnings
Proposed dividend
Total equity
Non current liabilities
Deferred income tax
Post employment benefit obligations
Total equity and non current liabilities
Non current assets
Property, plant and equipment
Biological assets
Prepaid operating lease rentals
Investment in subsidiaries
Financial assets held at amortised cost
Non current receivables
Current assets
Biological assets – growing agricultural produce
Inventories
Receivables and prepayments
Current tax recoverable
Financial assets held at amortised cost
Cash and bank balances
Current liabilities
Payables and accrued expenses
Current tax payable
Post employment benefit obligations
Notes
13
12(ii)
15
16
17
6(i)
18
19
20
22
6(ii)
21
22
11(d)
20
24
23
11(d)
16
31 December
2018
Shs’000
31 December
2017
Shs’000
98,000
19,653
4,371,282
176,400
98,000
16,607
4,066,088
137,200
4,665,335
4,317,895
813,557
68,045
881,602
743,775
63,415
807,190
5,546,937
5,125,085
2,705,521
684,202
4,379
4,295
200,000
30,023
3,628,420
188,753
169,476
360,786
81,529
15,385
1,500,935
2,316,864
371,159
-
27,188
398,347
2,419,384
663,833
4,384
4,295
218,444
32,877
3,343,217
195,751
146,324
291,505
-
124,875
1,648,749
2,407,204
470,722
132,863
21,751
625,336
Net current assets
1,918,517
1,781,868
5,546,937
5,125,085
The notes on pages 30 to 75 are an integral part of these consolidated and company financial
statements.
The consolidated and company financial statements on pages 24 to 75 were approved for issue by the
board of Directors on 28 March 2019 and signed on its behalf by:
K R SHAH
DIRECTOR
C J FLOWERS
DIRECTOR
26
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Consolidated statement of changes in equity
Year ended 31 December 2018
Share
capital
Shs’000
Other
reserves
Shs’000
Retained
earnings
Shs’000
Proposed
dividend
Shs’000
Total
equity
Shs’000
At start of year
98,000
16,607
4,070,229
137,200
4,322,036
Total comprehensive income for the year:
Profit for the year
Other comprehensive income
Total
Transactions with owners:
Dividends:
- Final for 2017
- Proposed for 2018
Total
At end of year
Year ended 31 December 2017
-
-
-
-
-
-
-
3,046
481,594
-
3,046
481,594
-
-
-
481,594
3,046
484,640
-
-
-
-
(176,400)
(137,200)
176,400
(137,200)
-
(176,400)
39,200
(137,200)
98,000
19,653
4,375,423
176,400
4,669,476
At start of year
98,000
14,872
3,615,786
117,600
3,846,258
Total comprehensive income for the year:
Profit for the year
Other comprehensive income
Total
Transactions with owners:
Dividends:
- Final for 2016
- Proposed for 2017
Total
At end of year
-
-
-
-
-
-
-
1,735
591,643
-
1,735
591,643
-
-
-
591,643
1,735
593,378
-
-
-
-
(137,200)
(117,600 )
137,200
(117,600)
-
(137,200)
19,600
(117,600)
98,000
16,607
4,070,229
137,200
4,322,036
The notes on pages 30 to 75 are an integral part of these consolidated and company financial
statements.
27
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Company statement of changes in equity
Year ended 31 December 2018
Share
capital
Shs’000
Other
reserves
Shs’000
Retained
earnings
Shs’000
Proposed
dividend
Shs’000
Total
equity
Shs’000
At start of year
98,000
16,607
4,066,088
137,200
4,317,895
Total comprehensive income for the
year:
Profit for the year
Other comprehensive income
Total
Transactions with owners:
Dividends:
- Final for 2017
- Proposed for 2018
Total
At end of year
Year ended 31 December 2017
-
-
-
-
-
-
-
3,046
481,594
-
3,046
481,594
-
-
-
481,594
3,046
484,640
-
-
-
-
(176,400)
(137,200)
176,400
(137,200)
-
(176,400)
39,200
(137,200)
98,000
19,653
4,371,282
176,400
4,665,335
At start of year
98,000
14,872
3,611,645
117,600
3,842,117
Total comprehensive income for the
year:
Profit for the year
Other comprehensive income
Total
Transactions with owners:
Dividends:
- Final for 2016
- Proposed for 2017
Total
At end of year
-
-
-
-
-
-
-
1,735
591,643
-
1,735
591,643
-
-
-
591,643
1,735
593,378
-
-
-
-
(137,200)
(117,600)
137,200
(117,600)
-
(137,200)
19,600
(117,600)
98,000
16,607
4,066,088
137,200
4,317,895
The notes on pages 30 to 75 are an integral part of these consolidated and company financial
statements.
28
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Consolidated and company statement of cash flows
Operating activities
Cash generated from operations
Interest received
Income tax paid
Notes
Year ended 31 December
2017
Shs’000
2018
Shs’000
25
8
11(d)
583,923
125,672
(348,405 )
951,854
95,820
(122,720 )
Net cash generated from operating activities
361,190
924,954
Investing activities
Purchase of property, plant and equipment
Purchase of biological assets and development
Proceeds from disposal of property, plant and equipment
Proceeds from redemption of financial assets held at
amortised cost
Purchase of financial assets held at amortised cost
17
6(i)
20
20
(469,156 )
(29,820 )
4,641
124,873
-
(277,824 )
(13,199 )
388
15,385
(312,551 )
Net cash used in investing activities
(369,462 )
(587,801 )
Financing activities
Dividend paid
12(ii)
(137,200 )
(117,600 )
Net cash used in financing activities
(137,200 )
(117,600 )
Net (decrease)/increase in cash and cash equivalents
(145,472 )
219,553
Movement in cash and cash equivalents
At start of year
(Decrease)/increase
Effect of exchange rate differences on cash and cash
equivalents
1,648,749
(145,472 )
1,430,576
219,553
8
)
(2,342
)
(1,380
At end of year
24
1,500,935
1,648,749
The notes on pages 30 to 75 are an integral part of these consolidated and company financial
statements.
29
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes to the Consolidated and Company Financial Statements
1 General information
Kakuzi Plc is incorporated in Kenya under the Kenyan Companies Act 2015 as a public limited liability
company, and is domiciled in Kenya. The address of its registered office is:
Main Office
Punda Milia Road, Makuyu
P O Box 24
01000 THIKA
Kenya
The Company’s ordinary shares are listed on the Nairobi Securities Exchange and the London Stock
Exchange.
For Kenyan Companies Act 2015 reporting purposes, the balance sheet is represented by the
statement of financial position and the profit or loss by the statement of profit and loss or other
comprehensive income, in these consolidated and company financial statements.
Reference to, “the Group,” in the consolidated and company financial statements covers the separate
Company financial statements as well. The principal activities of the Group comprise:
growing, packing and selling of avocados
growing, cracking and selling of macadamia nuts
Livestock farming and sale of beef
Blueberries development
the cultivation and sale of Tea green leaf
forestry development & sale of forestry products
2 Accounting policies
The principal accounting policies applied in the preparation of these consolidated and company
financial statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
(a) Statement of compliance
The consolidated and company financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS). The measurement basis applied is the historical
cost basis, except where otherwise stated in the accounting policies below. The consolidated and
company financial statements are presented in Kenya Shillings (Shs), rounded to the nearest thousand.
The preparation of the consolidated and company financial statements in conformity with IFRS requires
the use of certain critical accounting estimates. It also requires the Directors to exercise judgement in
the process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or where assumptions and estimates are significant to the consolidated and
company financial statements, are disclosed in Note 3.
Application of new and revised IFRSs
(i) New and amended IFRS Standards that are effective for the current year ended 31 December
2018
Impact of initial application of IFRS 9 Financial Instruments
In the current year, the Group has applied IFRS 9 Financial Instruments (as revised in July 2014)
and the related consequential amendments to other IFRS Standards that are effective for an annual
period that begins on or after 1 January 2018. The transition provisions of IFRS 9 allow an entity not
to restate comparatives. The Group has elected not to restate comparatives in respect of the
classification and measurement of financial instruments.
30
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(a) Statement of compliance (continued)
Application of new and revised IFRSs (continued)
(i) New and amended IFRS Standards that are effective for the current year ended 31 December
2018 (continued)
Impact of initial application of IFRS 9 Financial Instruments (continued)
Additionally, the Group adopted consequential amendments to IFRS 7 Financial Instruments:
Disclosures that were applied to the disclosures for 2018 only and not to the comparative period.
The standard amends the classification and measurement models for financial assets as set out
below:
1) Classification and measurement of financial assets
The Group has applied the requirements of IFRS 9 to instruments that continue to be recognised as
at 1 January 2018 and has not applied the requirements to instruments that have already been
derecognised as at 1 January 2018. Comparative amounts in relation to instruments that continue to
be recognised as at 1 January 2018 have not been restated where appropriate in accordance with
the transition provisions of the standard.
The Group’s statement of financial position only contains the following financial assets:
1) Trade and other receivables
2) Amounts due from related parties
3) Bank deposits, and cash & bank balances
4) Financial assets held at amortised cost
There has been no change in the measurement criteria for any of the Group’s financial assets on
adoption of IFRS 9 after the consideration of the business model and cash flow characteristics.
Specifically, the trade receivables typically held within a business model whose objective is to collect
the contractual cash flows, and that have contractual cash flows that are solely payments of principal
and interest on the principal amount outstanding, are measured subsequently at amortised cost and
are subject to impairment. See (2) below.
2) Impairment of financial assets
In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model as
opposed to an incurred credit loss model under IAS 39. Specifically, IFRS 9 requires the Group to
recognise a loss allowance for expected credit losses on its financial assets as listed in (1) above.
The Group measured the loss allowance for trade receivables at an amount equal to lifetime
expected credit loss (“ECL”).
The ECL on trade receivables is estimated using a provision matrix by taking into account past
default experience and an analysis of the debtors’ current financial position and adjusted for any
factors that are specific to debtors’ general economic conditions. There has been no material
adjustments to existing provisions.
See (5) below for further financial details of the adjustments.
See note 20 & 22 for details on movement in provisions for the year.
The adoption of the standard has not resulted in any adjustments to the comparatives as allowed by
the provisions of the standard.
31
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(a) Statement of compliance (continued)
Application of new and revised IFRSs (continued)
(i) New and amended IFRS Standards that are effective for the current year ended 31 December
2018 (continued)
Impact of initial application of IFRS 9 Financial Instruments (continued)
3) Classification and measurement of financial liabilities
The application of IFRS 9 has not affected the Group’s accounting for its liabilities. The payables
continue to be recognised initially at fair value and subsequently measured at amortised cost.
4) Disclosures in relation to the initial application of IFRS 9
There were no financial assets or financial liabilities which the Group had previously designated as
at fair value through profit or loss (“FVTPL”) under IAS 39 that were subject to reclassification or
which the Group has elected to reclassify upon the application of IFRS 9.
5) Impact of initial application of IFRS 9 on financial performance
Impairment being carried in the current year are as follows:
Trade receivables (Note 22)
Financial assets held to maturity (Note 20)
The increase in provisions in the current year through the statement of profit or
loss was as follows:
Trade receivables (Note 22)
Financial assets held to maturity (Note 20)
6) Day one adjustment
2018
Shs’000
4,834
3,061
306
3,061
The Group’s financial instruments as carried at fair value or amortised cost are all short and long
term. The financial instruments as at 31 December 2018 do not include any significant long
outstanding balances from the 2017 financial year. Accordingly, the application of IFRS 9 would not
result in any significant adjustment to the opening balance and a day one adjustment to retained
earnings has not been made.
The application of IFRS 9 has had no impact on the cash flows of the Group.
Impact of application of IFRS 15 Revenue from Contracts with Customers
In the current year, the Group has applied IFRS 15 Revenue from Contracts with Customers (as
amended in April 2016) which is effective for an annual period that begins on or after 1 January
2018. IFRS 15 introduced a five step approach to revenue recognition.
32
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(a) Statement of compliance (continued)
Application of new and revised IFRSs (continued)
(i) New and amended IFRS Standards that are effective for the current year ended 31 December
2018 (continued)
Impact of application of IFRS 15 Revenue from Contracts with Customers (continued)
Revenue is recognised at an amount that reflects the consideration to which the entity expects to be
entitled in exchange for goods and services and at a point when the performance obligations associated
with these goods and services has been satisfied.
The Group has applied IFRS 15 in accordance with the fully retrospective transitional approach without
using the practical expedients for completed contracts in IFRS 15:C5(a), and (b), or for modified
contracts in IFRS 15:C5(c) but using the expedient in IFRS 15:C5(d) allowing both non-disclosure of
the amount of the transaction price allocated to the remaining performance obligations, and an
explanation of when it expects to recognise that amount as revenue for all reporting periods presented
before the date of initial application, i.e. 1 January 2018.
The application of IFRS 15 has not had a significant impact on the Group’s accounting policies as the
nature of the Group’s revenue is that revenue is recognised at a point in time. See section 2(d) for the
Group’s accounting policies for its revenue streams. IFRS 15 has not had a significant impact on the
financial position and/or financial performance of the Group. Accordingly, there has been no adjustment
for any of the financial statement line items as a result of the application of IFRS 15.
The following new and revised IFRSs were effective in the current year and had no material impact on
the amounts reported in the consolidated and company financial statements.
Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions
The amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions
clarify the following aspects:
In estimating the fair value of a cash‑ settled share‑ based payment, the accounting for the effects
of vesting and non‑ vesting conditions should follow the same approach as for equity‑ settled
share‑ based payments.
Where tax law or regulation requires an entity to withhold a specified number of equity instruments
equal to the monetary value of the employee’s tax obligation to meet the employee’s tax liability
which is then remitted to the tax authority (typically in cash), i.e. the share‑ based payment
arrangement has a ‘net settlement feature’, such an arrangement should be classified as
equity‑ settled in its entirety, provided that the share‑ based payment would have been classified
as equity‑ settled had it not included the net settlement feature.
A modification of a share‑ based payment that changes the transaction from cash‑ settled to
equity‑ settled should be accounted for as follows:
i)
ii)
the original liability is derecognised;
the equity‑ settled share‑ based payment is recognised at the modification date fair value of
the equity instrument granted to the extent that services have been rendered up to the
modification date; and
iii) any difference between the carrying amount of the liability at the modification date and the
amount recognised in equity should be recognised in profit or loss immediately.
The amendments to the standard had no impact on the Group’s financial statements.
33
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(a) Statement of compliance (continued)
Application of new and revised IFRSs (continued)
(i) New and amended IFRS Standards that are effective for the current year ended 31 December
2018 (continued)
Amendments to IAS 40 Transfers of Investment Property
The amendments to IAS 40 Transfers of Investments Property clarify the following aspects:
Transfer to, or from, investment property necessitates an assessment of whether a property meets,
or has ceased to meet, the definition of investment property, supported by observable evidence that
a change in use has occurred.
An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law
restricts the utilisation of tax losses, an entity would assess a deferred tax asset in combination with
other deferred tax assets of the same type.
The amendments to the standard had no impact on the Group’s financial statements.
Annual Improvements to IFRS Standards 2014-2016 Cycle
The annual improvements to IFRSs 2014-2016 cycle include a number of amendments to various
IFRSs, which are summarised below:
The amendments to IAS 28 Investments in Associates and Joint Ventures clarify that the option for a
venture capital organisation and other similar entities to measure investments in associates and joint
ventures at FVTPL is available separately for each associate or joint venture, and that election should
be made at initial recognition.
In respect of the option for an entity that is not an investment entity (IE) to retain the fair value
measurement applied by its associates and joint ventures that are IEs when applying the equity method,
the amendments make a similar clarification that this choice is available for each IE associate or IE joint
venture.
The amendments to the standard had no impact on the Group’s financial statements.
IFRIC 22 Foreign Currency Transactions and Advance Consideration
IFRIC 22 addresses how to determine the ‘date of transaction’ for the purpose of determining the
exchange rate to use on initial recognition of an asset, expense or income, when consideration for that
item has been paid or received in advance in a foreign currency which resulted in the recognition of a
non‑ monetary asset or non‑ monetary liability (for example, a non‑ refundable deposit or deferred
revenue).
The Interpretation specifies that the date of transaction is the date on which the entity initially
recognises the non‑ monetary asset or non‑ monetary liability arising from the payment or receipt of
advance consideration. If there are multiple payments or receipts in advance, the Interpretation requires
an entity to determine the date of transaction for each payment or receipt of advance consideration.
The application of this interpretation had no effect on the Group’s financial statements.
34
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(a) Statement of compliance (continued)
Application of new and revised IFRSs (continued)
(ii) New and revised IFRS Standards in issue but not yet effective
At the date of authorisation of these financial statements, The Group has not applied the following new
and revised IFRS Standards that have been issued but are not yet effective
New and Amendments to standards
Effective for annual periods beginning on or after
IFRS 16 Leases
1 January 2019, with earlier application permitted
IFRS 17 Insurance Contracts
1 January 2022, with earlier application permitted
Amendments to IFRS 9: Prepayment Features
with Negative Compensation
1 January 2019, with earlier application permitted
Amendments to IAS 28 Long‑ term Interests
in Associates and Joint Ventures
Annual Improvements to IFRS Standards
2015–2017
1 January 2019, with earlier application permitted
1 January 2019, with earlier application permitted
Amendments to IAS 19 Employee Benefits
1 January 2019, with earlier application permitted
IFRIC 23: Uncertainty over Income Tax
Treatments
Effective for annual periods beginning on or after 1
January 2019
IFRS 10 Consolidated Financial Statements
and IAS 28 (amendments)
Effective for annual periods beginning on or after a
date to be determined
The Directors do not expect that the adoption of the Standards listed above will have a material impact on
the financial statements of the Group in future periods, except as noted below:
1) IFRS 16 Leases
IFRS 16 introduces a comprehensive model for the identification of lease arrangements and accounting
treatments for both lessors and lessees. IFRS 16 will supersede the current lease guidance including
IAS 17 Leases and the related interpretations when it becomes effective. IFRS 16 will be adopted by
the Group from 1 January 2019. The new standard eliminates the classification of leases as either
operating leases or finance leases and instead introduces a single lease accounting model.
The right-of-use asset is initially measured at cost and subsequently measured at cost (subject to
certain exceptions)
for any
remeasurement of the lease liability. The lease liability is initially measured at the present value of the
lease payments that are not paid at that date. Subsequently, the lease liability is adjusted for interest
and lease payments, as well as the impact of lease modifications, amongst others.
less accumulated depreciation and
losses, adjusted
impairment
35
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(a) Statement of compliance (continued)
Application of new and revised IFRSs (continued)
(ii) New and revised IFRS Standards in issue but not yet effective (continued)
1) IFRS 16 Leases (continued)
Impact of the new definition of a lease
The Group will make use of the practical expedient available on transition to IFRS 16 not to reassess
whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with IAS
17 and IFRIC 4 will continue to apply to those leases entered or modified before 1 January 2019.
The change in definition of a lease mainly relates to the concept of control. IFRS 16 distinguishes
between leases and service contracts on the basis of whether the use of an identified asset is controlled
by the customer. Control is considered to exist if the customer has:
- The right to obtain substantially all of the economic benefits from the use of an identified asset; and
- The right to direct the use of that asset.
The Group will apply the definition of a lease and related guidance set out in IFRS 16 to all lease
contracts entered into or modified on or after 1 January 2019 (whether it is a lessor or a lessee in the
lease contract). In preparation for the first‑ time application of IFRS 16, the Group has carried out an
implementation project. The project has shown that the new definition in IFRS 16 will not change
significantly the scope of contracts that meet the definition of a lease for the Group.
Impact on Lessee Accounting
Operating leases
IFRS 16 will change how the Group accounts for leases previously classified as operating leases under
IAS 17, which were off‑ balance sheet.
On initial application of IFRS 16, for all leases the Group will:
a) Recognise right-of-use assets and lease liabilities in the consolidated statement of financial
position, initially measured at the present value of the future lease payments;
b) Recognise depreciation of right-of-use assets and interest on lease liabilities in the consolidated
statement of profit or loss;
c) Separate the total amount of cash paid into a principal portion (presented within financing activities)
and interest (presented within operating activities) in the consolidated cash flow statement.
Lease incentives (e.g. rent-free period) will be recognised as part of the measurement of the right-of-
use assets and lease liabilities whereas under IAS 17 they resulted in the recognition of a lease liability
incentive, amortised as a reduction of rental expenses on a straight-line basis.
Under IFRS 16, right-of-use assets will be tested for impairment in accordance with IAS 36 Impairment
of Assets. This will replace the previous requirement to recognise a provision for onerous lease
contracts.
36
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(a) Statement of compliance (continued)
Application of new and revised IFRSs (continued)
(ii) New and revised IFRS Standards in issue but not yet effective (continued)
1)
IFRS 16 Leases (continued)
Impact on Lessee Accounting (continued)
For short-term leases (lease term of 12 months or less) and leases of low‑ value assets, the Group will
opt to recognise a lease expense on a straight-line basis as permitted by IFRS 16.
As at 31 December 2018, the Group has non-cancellable operating lease commitments of Shs
4,379,000. The Directors have assessed the impact of the application of IFRS 16 on the Group’s
financial statements and concluded that the impact is not significant.
2) Amendments to IFRS 9 Prepayment Features with Negative Compensation
The amendments to IFRS 9 clarify that for the purpose of assessing whether a prepayment feature
meets the SPPI condition, the party exercising the option may pay or receive reasonable compensation
for the prepayment irrespective of the reason for prepayment. In other words, prepayment features with
negative compensation do not automatically fail SPPI.
The amendment applies to annual periods beginning on or after 1 January 2019, with earlier application
permitted. There are specific transition provisions depending on when the amendments are first applied,
relative to the initial application of IFRS 9.
The Directors of the Group do not anticipate that the application of the amendments in the future will
have an impact on the consolidated and company financial statements.
3) 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.
Earlier application is permitted. Specific transition provisions apply depending on whether the first‑ time
application of the amendments coincides with that of IFRS 9.
The Directors of the Group do not anticipate that the application of the amendments in the future will
have an impact on the consolidated and company financial statements.
4) Annual improvements to IFRS Standards 2015 – 2017 Cycle
The Annual Improvements to IFRS Standards 2015-2018 cycle makes amendments to the following
standards:
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.
37
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(a) Statement of compliance (continued)
Application of new and revised IFRSs (continued)
(ii) New and revised IFRS Standards in issue but not yet effective (continued)
4) Annual improvements to IFRS Standards 2015 – 2017 Cycle (continued)
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.
IFRS 11 Joint Arrangements - The amendments to IFRS 11 clarify that when a party that participates
in, but does not have joint control of, a joint operation that is a business obtains joint control of such
a joint operation, the entity does not remeasure its PHI in the joint operation. All the amendments are
effective for annual periods beginning on or after 1 January 2019 and generally require prospective
application. Earlier application is permitted.
All the amendments are effective for annual periods beginning on or after 1 January 2019 and generally
require prospective application. Earlier application is permitted.
The Directors of the Group do not anticipate that the application of the amendments in the future will
have an impact on the consolidated and company financial statements.
5) 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 19.99 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)).
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, but they can be applied earlier if an entity elects to do so.
The Directors of the Group do not anticipate that the application of the amendments in the future will
have an impact on the consolidated and company financial statements.
38
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(a) Statement of compliance (continued)
Application of new and revised IFRSs (continued)
(ii) New and revised IFRS Standards in issue but not yet effective (continued)
6) 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 requires an entity to:
• determine whether uncertain tax positions are assessed separately or as a group; and
• 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:
–
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.
The directors of the Group do not anticipate that the application of the amendments in the future will
have an impact on the consolidated and company financial statements.
(iii) Early adoption of standards
The Group did not early-adopt any new or amended standards in 2018.
(b) Consolidation of subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries
are fully consolidated from the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the group.
Intercompany transactions, balances and unrealized gains on transactions between group companies
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an
impairment of the transferred asset. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with policies adopted by the group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the
consolidated statement of profit or loss, statement of comprehensive income, statement of changes in
equity and balance sheet respectively.
(c) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
Executive Directors, who are responsible for allocating resources and assessing performance of the
operating segments and making strategic decisions.
39
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(d) Revenue recognition
The Group recognises revenue mainly from sale of agricultural produce to the export and local markets.
Revenue is shown net of value added tax (VAT), returns, rebates and discounts and after eliminating
sales within the Group.
Revenue is measured based on the consideration to which the Group expects to be entitled in a
contract with a customer and excludes amounts collected on behalf of third parties. The Group
recognises revenue when it transfers control of a product or service to a customer.
For the sale of agricultural produce to the export market, revenue is recognised when control of the
agricultural produce has been transferred to the final customer by selling agents. A receivable is
recognised by the Group upon the agents confirming that the agricultural produce has been delivered to
the final customer as this represents the point at which the right to consideration becomes
unconditional.
For the sale of agricultural produce to the local market, revenue is recognised when control of the
agricultural produce has transferred, being at the point the customer purchases the goods at the retail
outlet or the agricultural produce is delivered to the customer. Payment is due immediately at the point
the customer takes control of the agricultural produce.
Under the Group’s standard contract terms, customers do not have a right to return due to the nature of
the agricultural produce.
(e) Functional currency and translation of foreign currencies
(i)
Functional and presentation currency
Items included in the consolidated and company financial statements are measured using the
currency of the primary economic environment in which the entity operates (‘the functional
currency’). The financial statements are presented in Kenyan Shillings which is the consolidated
and company functional currency.
(ii)
Transactions and balances
Foreign currency transactions are translated into the functional currency of the respective entity
using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions and from the translation at year-end
exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in the statement of comprehensive income.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are
presented in the income statement of comprehensive income within ‘finance income or cost’. All
other foreign exchange gains and losses are presented in the statement of income statement of
comprehensive income within ‘other income’ or ‘other expenses’.
(f) Property, plant and equipment
All categories of property, plant and equipment are initially recorded at historical cost and subsequently
stated at cost less depreciation. Historical cost includes expenditure that is directly attributable to the
acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Group or Company and the cost of the item can be measured reliably. All other repairs and maintenance
are charged to the income statement within ‘cost of production’ during the financial period in which they are
incurred.
40
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(f) Property, plant and equipment (continued)
Bearer plants are classified as immature until the produce can be commercially harvested and are
classified as capital work in progress. At that point they are reclassified to bearer plants and depreciation
commences. Immature plantations are measured at accumulated cost.
Freehold land is not depreciated. Depreciation on other assets is calculated using the straight line method to
write cost to their residual values over their estimated useful life as follows:
Buildings, dams and improvements
Plant and machinery
Motor vehicles, tractors, trailers & implements
Furniture, fittings and equipment
Bearer plants:
- Avocado trees
- Macadamia trees
- Pineapple crop
- Tea bushes
Capital work in progress is not depreciated
Immature period
Estimated useful life
20 – 50 years
10 – 13 years
4 – 10 years
3 – 8 years
4 years
6 years
1 year
4 years
25 years
30 years
2 years
50 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting
date.
Property, plant and equipment are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised in the statement of profit or loss for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash flows (cash-generating units).
Gains and losses on disposal of property, plant and equipment are determined by reference to their
carrying amounts and are taken into account in determining operating profit.
(g) Biological assets
Biological assets comprise forestry, livestock and growing agricultural produce on tea, avocado,
pineapple, and macadamia plantations.
Biological assets are measured on initial recognition and at each reporting date at fair value less costs to
sell. Any gains or losses arising on initial recognition of biological assets and from subsequent changes
in fair value less costs to sell are recognised in the statement of comprehensive income in the year in
which they arise.
The fair value of livestock is determined based on market prices of livestock of similar age, breed and
genetic merit.
The tea bushes, avocado and macadamia trees, and pineapple crops are bearer plants and are
therefore presented and accounted for as property, plant and equipment (see note 2(f)). However, the
produce growing on these trees is accounted for as biological assets until the point of harvest.
Harvested produce is transferred to inventory at fair value less costs to sell when harvested.
Management has assessed the fair value of growing agricultural produce on avocado, macadamia,
pineapple and tea plantations using estimated market prices less costs to sell based on the biological
transformation of the produce at the reporting date.
41
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(g) Biological assets (continued)
The fair value of timber plantations and livestock is based on market prices as valued by external
independent valuers.
Purchases and development of biological assets include cost of planting, breeding and upkeep until they
mature.
Subsequently all costs of upkeep and maintenance of mature biological assets are recognised in the
statement of comprehensive income within ‘cost of production’ under cost of production in the period in
which they are incurred.
(h) Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases are charged to the statement of
comprehensive income within ‘cost of production’ on a straight-line basis over the period of the lease.
(i)
Inventories
Inventories are stated at the lower of cost and net realisable value.
Agricultural produce at the point of harvest is measured at fair value less costs to sell. Any changes
arising on initial recognition of agricultural produce at fair value less costs to sell are recognised in the
statement of comprehensive income in the year in which they arise.
The cost of other inventory is determined by the weighted average method. Net realisable value is the
estimate of the selling price in the ordinary course of business, less the costs of completion and selling
expenses.
Provisions for obsolete, damaged and unusable inventories are made based on inventory aged listings.
(j) Payables
Payables are obligations to pay for goods and 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 (or in the normal operating cycle of the business if longer). If not, they are presented as non-
current liabilities.
Payables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method.
(k) Share capital
Ordinary shares are classified as equity.
(l) 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.
(m) Financial instruments
Financial assets and financial liabilities are recognised on the consolidated and company statement of
financial position when the Group becomes a party to the contractual provisions of the instrument.
42
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(m) Financial instruments (continued)
Trade receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the
ordinary course of business. If collection is expected in one year or less (or in the normal operating
cycle of the business if longer), they are a classified as current assets. If not, they are presented as
non-current assets.
Receivables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest method less provision for impairment. A provision for impairment of receivables is
established using an Estimated Credit Losses (“ECL”) model in line with the requirements of IFRS 9 as
outlined in the next section below. The amount of the provision is the difference between the carrying
amount and the present value of estimated future cash flows, discounted at the effective interest rate.
The amount of the provision is charged to profit or loss.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on investments in debt instruments
that are measured at amortised cost or at fair value through other comprehensive Income (“FVTOCI”),
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.
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 Company measures the loss allowance for that
financial instrument at an amount equal to 12‑ month ECL.
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.
(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.
(ii) Definition of default
The Group considers the following as constituting an event of default for internal credit risk
management purposes as historical experience indicates that financial assets that meet either of the
following criteria are generally not recoverable:
when there is a breach of financial covenants by the debtor; or
information developed internally or obtained from external sources indicates that the debtor is
unlikely to pay its creditors, including the Group, in full (without taking into account any collateral held
by the Group).
43
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(m) Financial instruments (continued)
Impairment of financial assets (continued)
(ii) Definition of default (continued)
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 a more lagging default criterion is more appropriate.
The Group write-offs debt only when there is objective evidence that the debt will not be recovered and
after it has exhausted its collection avenues.
(iii) 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 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.
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.
(iv) Interest income is recognised on a time proportion basis using the effective interest method.
(v) Dividends are recognised as income in the period in which the right to receive payment is
established.
(n) Employee benefits
(i) Post employment benefits obligations
For unionised employees, the Group has an unfunded obligation to pay terminal gratuities under its
Collective Bargaining Agreement with the union. Employees who resign after completing at least ten years
(Nandi Hills employees) or employees who retire and have completed at least five years (Makuyu
employees) of service are entitled to twenty one days pay (Nandi Hills employees) or eighteen days
(Makuyu employees) for each completed year of service respectively. The liability recognised in the
statement of financial position in respect of this defined benefit scheme is the present value of the
defined benefit obligation at the reporting date. The obligation is estimated annually using the projected
unit credit method by independent actuaries. The present value is determined by discounting the
estimated future cash outflows using interest rates of government bonds. The currency and estimated
term of these bonds is consistent with the currency and estimated term of the post-employment benefit
obligation. The obligation relating to employees who have reached the minimum retirement age and
completed the required years of service and are still in employment are classified as payable within the
next twelve months.
44
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(n) Employee benefits (continued)
(i) Post employment benefits obligations (continued)
Remeasurement of post employment benefit obligations arising from experience adjustments and
changes in actuarial assumptions are charged or credited to equity in other comprehensive income in
the period in which they arise.
The Group operates a defined contribution post-employment benefit scheme for management
employees. A defined contribution plan is a pension plan under which the Group pays fixed
contributions into a separate entity. The Group has no legal or constructive obligations to pay further
contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to
employee service in the current and prior periods.
The assets of the defined contribution post-employment benefit scheme are held in a separate trustee
administered fund, which is funded by contributions from both the Group and the employees. The
Group and all its employees also contribute to the statutory National Social Security Fund, which is a
defined contribution scheme.
The Group’s contributions to both these defined contribution schemes are charged to the statement of
comprehensive income within ‘cost of production’ in the year in which they fall due.
(ii) Other entitlements
The estimated monetary liability for employees’ accrued annual leave entitlement at the reporting
date is recognised as an expense accrual.
(o) Current and deferred income tax
The tax expense for the period comprises current and deferred income tax. Tax is recognised in the
statement of profit or loss except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity respectively.
(i) Current income tax
The current income tax charge is calculated on the basis of the tax enacted or substantively enacted at the
reporting date. Directors periodically evaluate positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate
on the basis of amounts expected to be paid to the tax authorities.
(ii) Deferred income tax
Deferred income tax is recognised, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying values in the financial statements. Deferred income tax
is determined using tax rates and laws that have been enacted or substantively enacted at the reporting
date and are expected to apply when the related deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable
profits will be available against which the temporary differences can be utilised.
Deferred income 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.
45
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
2 Accounting policies (continued)
(o) Current and deferred income tax (continued)
(ii) Deferred income tax (continued)
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.
(p) Dividends
Dividends on ordinary shares are charged to equity in the period in which they are declared. Proposed
dividends are shown as a separate component of equity until declared (i.e. proposed dividend).
3 Critical accounting estimates, judgements and assumptions
The estimates and assumptions that have significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are addressed below:
Estimates and judgements are continually evaluated and are based on historical experience and other
factors, including experience of future events that are believed to be reasonable under the
circumstances.
(a) Critical accounting estimates and assumptions
(i) Bearer plants
Critical judgement has been made in determining the useful life and maturity period of the bearer
plants. The useful life of the bearer plant is based on experience and expected productivity of the
plant and the expected replanting schedules.
(ii) Biological assets
Critical assumptions are made by the Directors and the independent valuer in determining the fair
values of biological assets. The key assumptions relate to estimate of future market prices as
adjusted for age and condition of the assets.
(iii) Growing agricultural produce
Critical judgement has been made in determining the fair value of growing agricultural produce on
bearer plant. The key assumptions include the market prices and stage of growth at reporting date
based on past experience.
(iv) Post-employment benefits obligations
Critical assumptions are made by the actuary in determining the present value of the service
gratuities to non-management employees. The carrying amount of the provision and the key
assumptions made in estimating the provision are set out in Note 16.
(b) Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the
reporting period that may have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are discussed below.
46
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
3 Critical accounting estimates, judgements and assumptions (continued)
(b) Key sources of estimation uncertainty (continued)
(i) Income taxes
Significant judgement is required in determining the Group’s provision for income taxes. There are
many transactions and calculations for which the ultimate tax determination is uncertain during the
ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on
estimates of whether additional taxes will be due. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, such differences will impact the income tax and
deferred tax provisions in the period in which such determination is made.
(ii) Property, plant and equipment
Critical estimates are made by directors in determining the useful lives and residual values to property,
plant and equipment based on the intended use of the assets and the economic lives of those assets.
Subsequent changes in circumstances or prospective utilisation of the assets concerned could result in
the actual useful lives or residual values differing from initial estimates.
4
Financial risk management objectives and policies
The Group’s activities expose it to a variety of financial risks, including credit risk, liquidity risk, prices for
its agricultural produce, foreign currency exchange rates and interest rates. The Group’s overall risk
management programme focuses on the unpredictability of financial and agricultural markets and seeks
to minimise potential adverse effects on its financial performance, but the Group does not hedge any
risks.
Financial risk management is carried out by the finance department under policies approved by the
Board of Directors. These policies provide principles for overall risk management, as well as policies
covering specific areas such as foreign exchange risk, interest rate risk and credit risk.
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.
Market risk
(i) Foreign exchange risk
The Group and Company operates internationally and is exposed to foreign exchange risk arising from
various currency exposures, primarily with respect to the US dollar and Euro. Foreign exchange risk
arises from future commercial transactions, and recognised assets and liabilities.
At 31 December 2018, if the Shilling was weaker/stronger by 5% (2017: 5%) against the US dollar with
all other variables held constant, the Group and Company post tax profit would have been Shs
3,467,914 (2017: Shs 20,593,665) higher/lower mainly as a result of US dollar deposits and trade
receivables.
At 31 December 2018 if the Shilling was weaker/stronger by 5% (2017: 5%) against the Euro with all
other variables held constant, the Group and Company post tax profit would have been Shs 600,969
higher/lower (2017: Shs 5,140).
(ii) Price risk
The Group and Company does not hold any financial instruments subject to price risk.
47
Kakuzi Plc
Consolidated and Company Financial Statements
For the year ended 31 December 2018
Notes (continued)
4
Financial risk management objectives and policies (continued)
Market risk (continued)
(iii) Interest rate risk
The Group and Company has interest earning deposits, whose income would be subject to interest rate
risk. An increase/ decrease in interest rates of 5% (2017: 5%) would have resulted in an increase/
decrease in Group and Company post tax profit of Shs 979,122 (2017: Shs 7,308,493).
(iv) Commodity price risk
Commodity price risk in the Group primarily arises from price fluctuations and the availability of
avocado, tea and macadamia. The Group has not entered into derivative transactions to limit these
risks.
If the commodity prices had been 5% higher/(lower) as of December 2018, profit after tax would have
been Shs 147,591,411 (2017: Shs 117,147,829) higher/(lower).
Credit risk
Credit risk arises from deposits with banks, financial assets held at amortised cost as well as trade and
other receivables. The Group does not have any significant concentrations of credit risk. The Group and
Company has policies in place to ensure that sales are made to customers with an appropriate credit
history.
The amount that best represents the Group and Company’s maximum exposure to credit risk at
31 December 2018 is the carrying value of the financial assets in the statement of financial position.
Collateral is held only for staff loans amounting to Shs 37,430,442 (2017: Shs 30,219,705) included in
other receivables. The Group and Company does not grade the credit quality of receivables. All
receivables that are neither past due or impaired are within their approved credit limits, and no
receivables have had their terms renegotiated.
The Group’s current credit risk grading framework comprises the following categories:
Category
Description
Performing
Doubtful
In default
Write off
The counterparty has a low risk of default and does
not have any past-due amounts
Amount is >30 days past due or there has been a
significant increase in credit risk since initial
recognition
Amount is >90 days past due or there is evidence
indicating the asset is credit-impaired
There is evidence indicating that the debtor is in
severe financial difficulty and the Group has no
realistic prospect of recovery
Basis for recognising
expected credit losses
12 – month ECL
Lifetime ECL – not credit
impaired
Lifetime ECL – credit-
impaired
Amount is written off
48
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
4
Financial risk management objectives and policies (continued)
Credit risk (continued)
The tables below detail the credit quality of the Group’s financial assets, as well as the Group’s maximum
exposure to credit risk by credit risk rating grades:
31/12/2018
Note
External
credit
rating
Internal
credit
rating
12-month or
lifetime
ECL?
Gross
carrying
amount
Loss
allowance
Net
carrying
amount
Trade and
other
receivables
Financial
assets held
at amortized
cost
22
N/A Performing
20
B2
N/A
Lifetime ECL
(simplified
approach)
12-month
ECL
Shs’000
Shs’000
Shs’000
100,485
(4,834)
95,651
218,446
(3,061)
215,385
31/12/2017
Note
External
credit
rating
Internal
credit
rating
12-month or
lifetime
ECL?
Gross
carrying
amount
Loss
allowance
Net
carrying
amount
22
N/A Performing
Lifetime ECL
(simplified
approach)
20
N/A
B2 12-month ECL
Shs’000
Shs’000
Shs’000
67,169
(4,528)
62,641
343,319
-
343,319
Trade and
other
receivables
Financial
assets held
at amortized
cost
Liquidity risk
Prudent liquidity risk management includes maintaining sufficient cash balances, and the availability of
funding from an adequate amount of committed credit facilities. Due to the dynamic nature of the
underlying businesses, the finance department maintains flexibility in funding by maintaining availability
under committed credit lines.
Directors monitor rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flow.
49
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
4
Financial risk management objectives and policies (continued)
Liquidity risk (continued)
The table below analyses the Group and Company’s financial liabilities that will be settled on a net basis
into relevant maturity groupings based on the remaining period at the reporting date to the contractual
maturity date. The amounts disclosed in the table below are the contractual undiscounted cash flows.
Balances due within 12 months equal their carrying balances, as the impact of discounting is not
significant.
Group
At 31 December 2018:
- Trade and other payables
At 31 December 2017:
- Trade and other payables
Company
At 31 December 2018:
- Trade and other payables
At 31 December 2017:
- Trade and other payables
Capital management
Less than 1
year
Shs’000
Between 1
and 2 years
Shs’000
Between 2
and 5 years
Shs’000
Over 5 years
Shs’000
362,776
462,339
-
-
-
-
-
-
Less than 1
year
Shs’000
Between 1
and 2 years
Shs’000
Between 2
and 5 years
Shs’000
Over 5 years
Shs’000
371,159
470,722
-
-
-
-
-
-
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a
going concern in order to provide returns for shareholders and to maintain an optimal capital structure
to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may limit the
amount of dividends paid to shareholders.
The Group ensures that funds are available for capital developments by capping the dividends payable.
The dividends paid and proposed are shown in Note 12.
Fair value estimation
IFRS 13 requires disclosure of fair value measurements by level of the following fair value
measurement hierarchy:
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 fair value of financial instruments that are not traded in an active market (for example, over-the-
counter derivatives) is determined by using valuation techniques. These valuation techniques maximise
the use of observable market data where it is available and rely as little as possible on entity specific
estimates. If all significant inputs required to fair value an instrument are observable, the instrument is
included in level 2.
50
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
5 Segmental reporting - Group
Directors have determined the operating segments based on the reports reviewed by the Executive Directors to make strategic decisions.
The Group operates in two geographical areas in Kenya, Makuyu and Nandi Hills, under several operating segments. The principal operating segments currently
consist of Avocados, Macadamia, Tea and Forestry. The business activities of livestock, joint projects and blueberries are included under “all other segments” as they
individually fall below the threshold of 10% of Group sales.
Segment assets consist primarily of property, plant and equipment, biological assets, inventories, receivables and prepayments. Unallocated assets are property,
plant and equipment, and inventories relating to Main Office and Engineering Stores. Segmental liabilities consist primarily of payables and accrued expenses.
Unallocated liabilities are taxes, borrowings and non-current liabilities. The segment information for the reportable segments for the year ended 31 December 2018
and 31 December 2017 is as follows:
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Tea
Avocados
Shs’000
Shs’000
Shs’000
Shs’000
Madacamia
Shs’000
Shs’000
Forestry
All other segments
Shs’000
Shs’000
Shs’000
Shs’000
Consolidated
Shs’000
Shs’000
Sales to external customers
Sales
Comprising
Major external customers sales
All other external customers sales
Geographical analysis
UK & Continental Europe
Kenya
Others
303,573
293,373
2,115,836 1,816,675
368,618
371,562
309,849
219,645
54,955
122,671
3,152,831
2,823,926
303,573
-
293,373
-
2,020,506 1,779,835
36,840
95,330
355,759
12,859
365,736
5,826
-
309,849
-
219,645
-
54,955
-
122,671
2,679,838
472,993
2,438,944
384,982
303,573
293,373
2,115,836
1,816,675
368,618
371,562
309,849
219,645
54,955
122,671
3,152,831
2,823,926
-
303,573
-
-
293,373
-
2,020,506 1,779,835
36,840
-
95,330
-
-
12,859
355,759
-
5,826
365,736
-
309,849
-
-
219,645
-
-
54,955
-
-
122,671
-
2,020,506
776,566
355,759
1,779,835
678,355
365,736
303,573
293,373
2,115,836 1,816,675
368,618
371,562
309,849
219,645
54,955
122,671
3,152,831
2,823,926
51
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
5 Segmental reporting - Group (continued)
2018
2017
2018
2017
2018
2017
Tea
Avocados
Macadamia
2018
Forestry
2017
Shs’000
Shs’000
Shs’000
Shs’000
Shs’000
Shs’000
Shs’000
Shs’000
Shs’000
Shs’000
2018
2017
2018
2017
All other segments
Consolidated
Shs’000
Shs’000
Profit/(loss)
Gross profit /(loss) before depreciation
and fair value changes in non-current
biological assets
Depreciation charge
Changes in fair value of non-current
biological assets
Gross profit/(loss)
Distribution costs
Segment profit
Other income
Interest income
Unallocated admin expenditure
Profit/(loss) before income tax
Income tax expense
Profit/(loss) for the year
Assets (all located in Kenya)
Segment assets
Unallocated assets
Liabilities
Segment liabilities
Unallocated liabilities
Additions
Property, plant and equipment
Biological assets
21,385
(14,356 )
19,013 1,381,968 1,409,412
(62,875 )
(77,292 )
(14,583 )
213,643
(58,288 )
176,463
(51,896 )
96,602
(5,422 )
61,369
(5,634 )
183,063
(27,624 )
(23,557 )
(32,592 )
1,896,661
(182,982 )
1,642,700
(167,580 )
-
7,029
-
7,029
3,548
-
-
10,577
(3,131 )
7,446
-
-
-
4,430 1,304,676 1,346,537
(574,162 )
(925,838 )
772,375
378,838
-
-
-
-
-
-
772,375
378,838
(234,208 )
(112,137 )
538,167
266,701
-
4,430
2,485
-
-
6,915
(2,097 )
4,818
-
155,355
(16,730 )
138,625
-
-
-
138,625
(41,033 )
97,592
-
124,567
(23,786 )
100,781
-
-
-
100,781
(30,560 )
70,221
34,374
125,554
-
125,554
-
-
-
125,554
(37,164 )
88,390
36,741
92,476
-
92,476
-
-
-
92,476
(28,042 )
64,434
39,708
195,147
-
195,147
15,130
123,330
(303,118 )
30,489
(9,024 )
21,465
46,058
(10,091 )
-
(10,091 )
3,936
94,440
(211,709 )
(123,424 )
37,427
(85,997 )
74,082
1,787,761
(942,568 )
845,193
18,678
123,330
(303,118 )
684,083
(202,489 )
481,594
82,799
1,557,919
(597,948 )
959,971
6,421
94,440
(211,709 )
849,123
(257,480 )
591,643
674,099
628,291 1,188,340 1,012,459 1,070,543
983,220
729,416
695,109
435,719
291,033
147,058
149,230
-
38,750
-
-
-
-
190,860
305,805
4,098,117
1,842,925
5,941,042
3,610,112
2,136,014
5,746,126
337,918
933,648
1,271,566
493,785
930,305
1,424,090
1,042
-
1,042
10,009
-
10,009
122,947
-
122,947
90,991
-
90,991
112,303
-
112,303
143,678
-
143,678
1,672
17,254
18,926
3,915
12,795
16,710
231,192
12,566
243,758
29,231
404
29,635
469,156
29,820
498,976
277,824
13,199
291,023
52
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
6 Biological assets – Group and Company
(i) Non current assets
Changes in carrying amounts of non-current biological assets comprise:
Year ended 31 December 2018
Livestock
Shs’000
Plantation
Shs’000
Total
Shs’000
At start of year
Increase due to purchases and development
Gains arising from changes in fair value less
costs to sell
Decrease due to harvest and sales
126,933
12,566
39,708
(50,655)
536,900
17,254
34,374
(32,878)
663,833
29,820
74,082
(83,533)
At end of year
128,552
555,650
684,202
Year ended 31 December 2017
At start of year
Increase due to purchases and development
Gains arising from changes in fair value less
costs to sell
Decrease due to harvest and sales
123,135
404
46,058
(42,664)
517,000
12,795
36,741
(29,636)
640,135
13,199
82,799
(72,300)
At end of year
126,933
536,900
663,833
(ii) Current assets
Growing agricultural produce on bearer plants as at the
reporting date
Avocado
Macadamia
Pineapples
Tea
2018
Shs’000
128,644
57,708
-
2,401
2017
Shs’000
151,294
29,797
11,779
2,881
188,753
195,751
53
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
6 Biological assets – Group and Company (continued)
Biological assets are carried at fair value at the end of each reporting period.
Plantations comprise forestry. The fair value of forestry is determined by external independent valuation
based on recent market transaction prices.
The fair value of livestock is determined based on market prices of livestock of similar age, breed and
genetic merit.
The fair value of growing agricultural produce is estimated using the market approach. The key
assumptions made in the determination of the fair value are:
climatic conditions will remain the same and hence productivity will be similar to prior years
the biological transformation process of the growing agricultural produce will remain consistent to prior
produce
the market price will remain constant based on estimated future market prices
the actual costs to sell will not change significantly from estimated costs
The following table presents Group’s biological assets that are measured at fair value:
Level 1
Level 2
Level 3
Total
Valuation
technique
Shs’000
Shs’000
Shs’000
Shs’000
Year ended 31 December
2018
Livestock
Avocado
Tea
Forestry
Macadamia
Market approach
Market approach
Market approach
Market approach
Market approach
Year ended 31 December
2017
Livestock
Avocado
Tea
Forestry
Macadamia
Pineapple
Market approach
Market approach
Market approach
Market approach
Market approach
Market approach
-
-
-
-
-
-
-
-
-
-
-
-
-
128,552
-
2,401
555,650
-
-
128,644
-
-
57,708
128,552
128,644
2,401
555,650
57,708
686,603
186,352
872,955
126,933
-
2,881
536,900
-
11,779
-
151,294
-
-
29,797
-
126,933
151,294
2,881
536,900
29,797
11,779
678,493
181,091
859,584
There were no transfers between any levels during the year.
54
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
6 Biological assets – Group and Company (continued)
The following unobservable inputs at the respective year ends were used to measure the Group’s avocado growing agricultural produce classified as level 3 of fair
value hierarchy.
Year ended 31 December 2018
Description
Fair value at
31 December
Valuation
techniques
Unobservable
inputs
Range of
unobservable
inputs
Relationship of
unobservable inputs to fair value
Shs’000
Avocado
Produce
128,644 Market approach Yield - Kgs
per Hectare
19,100 The higher the yield, the higher the value
Net price per
carton
€3.98 – €4.81
The higher the market price, the higher the fair value
Stage of growth
12% – 15% The higher the stage of growth, the higher the fair value
Year ended 31 December 2017
Description
Fair value at
31 December
Valuation
techniques
Unobservable
inputs
Range of
unobservable
inputs
Relationship of
unobservable inputs to fair value
Shs’000
Avocado
Produce
151,294 Market approach Yield - Kgs
per Hectare
17,800 The higher the yield, the higher the value
Net price per
carton
€4.70 – €6.21
The higher the market price, the higher the fair value
Stage of growth
12% – 15% The higher the stage of growth, the higher the fair value
55
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
6
Biological assets – Group and Company (continued)
The following unobservable inputs at the year end were used to measure the Group’s macadamia growing agricultural produce
Year ended 31 December 2018
Description
Fair value at
31 December
Valuation
techniques
Unobservable
inputs
Range of
unobservable
inputs
Relationship of
unobservable inputs to fair value
Macadamia
Produce
Shs’000
57,708
Year ended 31 December 2017
Market approach Yield Kgs/Ha
615 The higher the yield, the higher the value
Net price per kg
of Saleable
Kernel
Stage of growth
USD17.05 The higher the market price, the higher the fair value
40% - 45% The higher the stage of growth, the higher the fair value
Description
Fair value at
31 December
Valuation
techniques
Unobservable
inputs
Range of
unobservable
inputs
Relationship of
unobservable inputs to fair value
Macadamia
Produce
Shs’000
29,797
Market approach Yield Kgs/Ha
601 The higher the yield, the higher the value
Net price per kg
of Saleable
Kernel
Stage of growth
USD14.49 The higher the market price, the higher the fair value
40% - 45% The higher the stage of growth, the higher the fair value
The Group and Company changed the valuation method for macadamia produce by adopting Saleable Kernel (SK) as the ‘Highest Best Use’ instead of Nut in
Shell (NIS). The Directors have determined that the most advantageous market for macadamia is the export market for Saleable Kernel. This change has not
been applied retrospectively because it would not have a significant impact on the financial position and/or financial performance of the Group.
56
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
6 Biological assets – Group and Company (continued)
Areas planted at the year end:
Forestry plantations
Cattle numbers at the year end
Areas planted with various crops and
output of agricultural produce during the
year:
Tea (green leaf)
Avocado
Pineapple
Macadamia
2018
Hectares
2017
Hectares
1,813
1,792
Head
4,436
Head
4,409
2018
Hectares
2017
Hectares
Metric tonnes
Metric tonnes
510
717
-
1,032
510
606
24
1,026
7,195
10,819
404
830
6,789
7,282
1,414
568
Cubic metres
Cubic metres
Timber harvested during the year was:
7,823
5,838
Agricultural produce of tea bushes is the harvested green leaf which is processed soon after harvest in a
factory to made tea. Timber is included under inventory.
57
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
6 Biological assets – Group and Company (continued)
Fair value of the agricultural produce harvested during the year after
deducting costs to sell:
Tea (green leaf)
Avocado
Pineapple
Macadamia
Others
7 Other income – Group and Company
Net foreign exchange gain other than cash and cash equivalents
Gain/(loss) on disposal of property, plant and equipment
Rental Income
Sundry
8
Interest income and finance costs -– Group and Company
Interest income
Interest income on short term bank deposits
2018
Shs’000
2017
Shs’000
303,572
977,373
12,207
352,386
306,651
293,374
1,158,723
45,729
349,287
230,291
1,952,189
2,077,404
2018
Shs’000
2017
Shs’000
693
4,604
3,848
9,533
1,714
(186)
3,987
906
18,678
6,421
2018
Shs’000
125,672
2017
Shs’000
95,820
125,672
95,820
Finance costs
Net exchange losses on foreign currency cash & cash equivalents
(2,342)
(1,380)
58
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
9 Expenses by nature – Group and Company
The following items have been charged/ (credited) in arriving at profit before income tax:-
Depreciation on property, plant and equipment (Note 17)
Repairs and maintenance expenditure on property, plant and
equipment
Amortisation of prepaid operating lease rentals (Note 18)
Gains arising from changes in fair value less costs to sell of non-current
biological assets (Note 6 (i))
Cost of inventories sold
Employee benefits expense (Note 10)
Auditor’s remuneration
(Gain)/loss on disposal of property plant and equipment
Directors remuneration
10 Employee benefits expense – Group and Company
The following items are included within employee benefits expense:
Salaries and wages
Post employment benefits costs:
- Post employment benefit obligations (Note 16)
- Defined contribution scheme
- National Social Security Fund
The average number of employees during the year was as follows:
Management
Permanent unionisable employees
Other unionisable employees
2018
Shs’000
2017
Shs’000
182,982
167,580
76,035
5
66,319
5
(74,082)
1,614,653
655,297
6,090
(4,604)
10,249
(82,799)
1,289,324
528,460
5,800
186
4,077
2018
Shs’000
2017
Shs’000
621,907
497,461
17,277
4,575
11,538
16,065
4,139
10,795
655,297
528,460
2018
59
778
2,102
2017
57
829
1,966
2,939
2,852
59
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
11
Income tax – Group and Company
(a) Taxation charge
Current tax
Current tax on profit for the year
Prior year over provision
2018
Shs’000
136,187
(2,174 )
2017
Shs’000
257,351
-
Total current tax expense
134,013
257,351
Deferred income tax charge (Note 15)
68,476
129
Income tax expense
202,489
257,480
(b) Reconciliation of tax based on accounting profit to tax charge
The tax on the Group’s and Company’s profit before income tax differs from the theoretical amount that
would arise using the statutory income tax rate as follows:
Profit before income tax
Tax calculated at the statutory income tax rate of 30%
(2017: 30%)
Tax effect of:
Under provision of deferred tax in prior years
Income not subject to income tax
Expenses not deductible for income tax purposes
Over provision of current income tax in prior year
2018
Shs’000
2017
Shs’000
684,083
849,123
205,225
254,737
1,962
(8,699 )
6,175
(2,174 )
-
(1,586 )
4,329
-
Taxation charge
202,489
257,480
(c) Group and Company tax charge relating to components of other comprehensive income
Remeasurement of post-employment benefit obligations:
Actuarial gain (Note 16)
Charge to other comprehensive income (Note 15)
4,352
(1,306 )
2,479
(744 )
2018
Shs’000
2017
Shs’000
Net charge to other comprehensive income
3,046
1,735
60
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
11
Income tax – Group and Company (Continued)
(d) Current tax payable/ (recoverable)
Group
Company
2018
Shs’000
2017
Shs’000
2018
Shs’000
2017
Shs’000
At start of year
Taxation charge (Note 11 (a))
Paid during the year
132,810
134,013
(348,405 )
(1,821 )
257,351
(122,720 )
132,863
134,013
(348,405 )
(1,768 )
257,351
(122,720 )
At end of year
(81,582 )
132,810
(81,529 )
132,863
12 Earnings and dividends – Group
i) Basic and diluted earnings per ordinary share
Basic earnings per ordinary share is calculated on the profit attributable to the members of Kakuzi Plc
and on the 19,599,999 ordinary shares in issue at 31 December 2018 and 31 December 2017 as
follows:-
2018
2017
Profit attributable to equity holders of the Group (Shs ‘000)
481,594
591,643
Number of ordinary shares in issue (thousands)
19,600
19,600
Basic and diluted earnings per ordinary share (Shs)
24.57
30.19
The Group had no potentially dilutive ordinary shares outstanding at 31 December 2018 and 31
December 2017.
ii) Dividends per ordinary share
At the annual general meeting to be held on 14 May 2019, the Directors will recommend the payment of
a first and final dividend of 180% of par value equivalent to Shs 9.00 per ordinary share (Shs
176,400,000) in respect of the year ended 31 December 2018 ((2017: Shs 7.00 per ordinary share)
(Shs 137,200,000)) ((2016: Shs 6.00 per ordinary share) (Shs 117,600,000)).
13 Share capital
Authorised
At 1 January 2017, 31 December 2017 and 31 December 2018
Number of
ordinary
shares
(Thousands)
Ordinary
share capital
Shs ‘000
20,000
100,000
Issued
At 1 January 2017, 31 December 2017 and 31 December 2018
19,600
98,000
The par value of the shares is Shs 5
61
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
14 Borrowing facilities – Group and Company
2018
Shs’000
2017
Shs’000
The Group has the following undrawn committed borrowing facilities:
Floating rate (expiring within one year)
626,300
626,300
The facilities are subject to annual review at various dates during the year 2019.
The undrawn bank facilities of Shs 626,300,000 are secured by an undertaking, at any time if and when
required by the banks, to execute legal or other mortgages and charges including fixed or floating
charges or assigned in favour of the banks.
15 Deferred income tax – Group and Company
Deferred income tax is calculated using the enacted tax rate of 30% (2017: 30%). The net deferred
taxation liability is attributable to the following items:
Property, plant and equipment
Biological assets
Other temporary differences
2018
Shs’000
672,510
223,320
(82,273)
2017
Shs’000
654,291
215,409
(125,925)
Net deferred income tax liability
813,557
743,775
The movement on the deferred income tax account is as follows:
At start of year
Charge to profit or loss (Note 11(a))
Charge to other comprehensive income (Note 11(c))
2018
Shs’000
743,775
68,476
1,306
2017
Shs’000
742,902
129
744
At end of year
813,557
743,775
The following amounts, determined after appropriate offsetting, are shown in the statement of financial
position.
Deferred income tax assets
Deferred income tax liabilities
62
2018
Shs’000
(82,273 )
895,830
2017
Shs’000
(125,925 )
869,700
813,557
743,775
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
16 Post employment benefit obligations – Group and Company
The amounts recognised in the statement of financial position are determined as follows:
2018
Shs’000
2017
Shs’000
Present value of post employment benefit obligations
95,233
85,166
Split as follows:
Non-current portion
Current portion
68,045
27,188
63,415
21,751
The movement in present value of the post employment benefit obligations is as follows:
At start of year
Net expense recognised in statement of profit or loss and other
comprehensive income
Benefits paid
At end of year
2018
Shs’000
2017
Shs’000
85,166
76,492
12,925
(2,858 )
13,586
(4,912 )
95,233
85,166
The amounts recognised in the statement of profit or loss within ‘cost of sales’ for the year are as
follows:
Current service cost
Past service cost
Interest on obligation
2018
Shs’000
5,535
64
11,678
2017
Shs’000
4,970
-
11,095
Total included in employee benefits expenses (Note 10)
17,277
16,065
Actuarial gain recognised in other comprehensive income (Note 11(c))
4,352
2,479
63
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
16 Post employment benefit obligations Group and Company (continued)
31 December 2018
31 December 2017
Gratuity
(Makuyu)
Shs’000
Gratuity (Nandi
Hills)
Shs’000
Total
Shs’000
Gratuity
(Makuyu)
Shs’000
Gratuity (Nandi
Hills)
Shs’000
Total
Shs’000
At start of year
58,097
27,069
85,166
51,358
25,134
76,492
Current service cost
Past service cost
Interest expense
3,930
64
7,929
1,605
-
3,749
5,535
64
11,678
3,481
-
7,594
1,489
-
3,501
4,970
-
11,095
11,923
5,354
17,277
11,075
4,990
16,065
Remeasurements:
Gain from change in assumptions
Experience losses
(1,590 )
1,400
(4,162 )
-
(5,752 )
1,400
(5,257 )
2,372
(1,219 )
1,625
(6,476 )
3,997
Benefits paid
At end of year
(190 )
(4,162 )
(4,352 )
(2,885 )
406
(2,479 )
(2,652 )
(206 )
(2,858 )
(1,451 )
(3,461 )
(4,912 )
67,178
28,055
95,233
58,097
27,069
85,166
64
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
16 Post employment benefit obligations Group and Company (continued)
The principal actuarial assumptions used are as follows:
Discount rate (% p.a.)
Future salary increases (% p.a.)
first year
second year
Thereafter
Gratuity (Makuyu)
Gratuity (Nandi Hills)
2018
13%
10%
10%
10%
2017
13.5%
10%
10%
10%
2018
13%
10%
10%
10%
2017
13.5%
10%
10%
10%
Mortality (pre-retirement)
A 1949 - 1952
A 1949 - 1952
A 1949 - 1952
A 1949 - 1952
Withdrawals
Ill-Health
At rates consistent with similar
arrangements
At rates consistent with
similar arrangements
At rates consistent with
similar arrangements
At rates consistent with similar
arrangements
At rates consistent with similar
arrangements
At rates consistent with
similar arrangements
At rates consistent with
similar arrangements
At rates consistent with similar
arrangements
Retirement age
55 years
55 years
55 years
55 years
The sensitivity of the defined obligation to changes in the weighted principal assumptions is:
Impact on post employment benefit obligation
Changes in assumption
Increase/Decrease
in assumption
Discount rate
Salary growth rate
by 1%
by 1%
Shs 4,884,000
Not material
65
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
16 Post employment benefit obligations Group and Company (continued)
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and
changes in some of the assumptions may be correlated. When calculating the sensitivity of the post employment benefit obligation to significant actuarial assumptions
the same method (present value of the post employment benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been
applied as when calculating the liability recognised within the statement of financial position.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.
Five year summary:
2018
Shs’000
2017
Shs’000
2016
Shs’000
2015
Shs’000
2014
Shs’000
Present value of post employment benefit obligations – Group and Company
95,233
85,166
76,492
72,000
68,840
Net expense recognised in the statement of comprehensive income – Group and Company
- within ‘cost of sales’
- within ‘other comprehensive income (gain)/loss
17,277
(4,352 )
16,065
(2,479 )
15,116
(8,480 )
14,359
(7,079 )
11,411
8,579
66
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
17 Property, plant and equipment
Group and Company
Year ended 31 December 2018
Cost
At start of year
Transfers
Additions
Disposals
At end of year
Depreciation and impairment
At start of year
Charge for the year
Eliminated on disposals
At end of year
Net book amount
Depreciation and impairment at year end
comprises:
Depreciation
Impairment
Buildings,
freehold land,
dams and
improvements
Shs’000
Plant &
machinery
Shs’000
Bearer plants
Shs’000
Motor
vehicles,
tractors,
trailers and
implements
Shs’000
Furniture,
fittings and
equipment
Shs’000
Capital work
in progress
Shs’000
Total
Shs’000
1,230,229
88,683
-
-
1,266,160
29,903
103,534
(43,481 )
1,318,912
1,356,116
233,319
67,835
-
301,154
524,401
37,468
(43,481 )
518,388
279,890
-
12,581
(124 )
292,347
138,253
22,646
(87 )
160,812
273,826
-
49,076
(14,231 )
308,671
178,660
33,245
(14,231 )
197,674
96,355
-
22,470
(7,602 )
413,410
(118,586 )
281,495
-
3,559,870
-
469,156
(65,438 )
111,223
576,319
3,963,588
65,853
21,788
(7,602 )
80,039
-
-
-
-
1,140,486
182,982
(65,401 )
1,258,067
1,017,758
837,728
131,535
110,997
31,184
576,319
2,705,521
301,154
-
301,154
512,717
5,671
518,388
160,254
558
160,812
197,674
-
197,674
79,953
86
80,039
-
-
-
1,251,752
6,315
1,258,067
Fixed assets stated at cost of Shs 422,069,499 have been fully depreciated. The notional annual depreciation charge in respect of these values would have been
Shs 52,518,213.
Based on an impairment review performed by the directors at 31 December 2018, no indication of further impairment of property, plant and equipment were identified
(2017: none).
Capital work-in-progress largely relates to self-constructed assets that had not been brought into use as at year end and bearer plants that have not yet matured.
67
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
17 Property, plant and equipment (continued)
Group and Company
Year ended 31 December 2017
Cost
At start of year
Transfers
Additions
Disposals
At end of year
Depreciation and impairment
At start of year
Charge for the year
Eliminated on disposals
At end of year
Net book amount
Depreciation and impairment at year end
comprises:
Depreciation
Impairment
Buildings,
freehold land,
dams and
improvements
Shs’000
Plant &
machinery
Shs’000
Bearer plants
Shs’000
Motor
vehicles,
tractors,
trailers and
implements
Shs’000
Furniture,
fittings and
equipment
Shs’000
Capital work
in progress
Shs’000
Total
Shs’000
1,182,306
47,923
-
-
1,174,162
4,771
87,910
(683 )
1,230,229
1,266,160
160,759
72,560
-
233,319
492,861
31,649
(109 )
524,401
262,630
8,633
8,627
-
279,890
115,529
22,724
-
138,253
214,945
-
60,290
(1,409 )
273,826
152,800
27,269
(1,409 )
178,660
996,910
741,759
141,637
95,166
233,319
-
233,319
518,730
5,671
524,401
137,695
558
138,253
178,660
-
178,660
89,390
-
6,965
-
96,355
52,475
13,378
-
65,853
30,502
65,767
86
65,853
360,705
(61,327 )
114,032
-
3,284,138
-
277,824
(2,092 )
413,410
3,559,870
-
-
-
-
974,424
167,580
(1,518 )
1,140,486
413,410
2,419,384
-
-
-
1,134,171
6,315
1,140,486
Fixed assets stated at cost of Shs 488,510,676 have been fully depreciated. The notional annual depreciation charge in respect of these values would have been
Shs 64,939,563
68
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
18 Prepaid operating lease rentals – Group and Company
At start of year
Amortisation charge for the year
2018
Shs’000
2017
Shs’000
4,384
(5)
4,389
(5)
At end of year
4,379
4,384
19
Investment in subsidiaries
The subsidiary companies are all incorporated in Kenya and have the same year end. Estates Services
Limited and Kaguru EPZ Limited are wholly owned and are dormant.
Year ended 31 December 2018
At start of year
At end of year
Year ended 31 December 2017
At start of year
At end of year
Kaguru
EPZ
Limited
Shs’000
Estates
Services
Limited
Shs’000
Total
Shs’000
1,670
2,625
4,295
1,670
2,625
4,295
Kaguru
EPZ
Limited
Shs’000
Estates
Services
Limited
Shs’000
Total
Shs’000
1,670
2,625
4,295
1,670
2,625
4,295
69
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
20 Financial assets held at amortised cost – Group and Company
Financial assets held at amortised cost comprise corporate bonds carried at amortised cost.
Maturity rate
Average
Interest
Rate
Maturity
date
2018
Shs’000
2017
Shs’000
Kengen Limited
12.50%
31-Oct-19
15,385
30,768
Treasury Infrastructure Bonds
12.50%
18-Nov-24
200,000
312,551
The movement in financial assets held to maturity is as follows:
At start of year
Redeemed in the year
Additions in the year
Impairment during the year
215,385
343,319
2018
Shs’000
343,319
(124,873 )
-
(3,061 )
2017
Shs’000
46,153
(15,385 )
312,551
-
At end of year
215,385
343,319
Non current portion
Current portion
200,000
15,385
218,444
124,875
215,385
343,319
The Directors consider that the carrying amounts of the financial assets held to maturity in the
consolidated financial statements approximate their fair values.
21
Inventories – Group and Company
Spare parts and consumable materials
Macadamia nuts
Poles & timber
2018
Shs’000
87,880
36,427
45,169
2017
Shs’000
103,922
-
42,402
Total inventories
169,476
146,324
The cost of inventories recognised as an expense and included in cost of sales amounted to Shs
1,614,653,000 (2017: Shs 1,289,324,000).
70
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
22 Receivables and prepayments – Group and Company
Trade receivables
Loss allowance
Trade receivables - net
Due from related companies (Note 26(v))
Value Added Tax (VAT) Refunds receivable
Other receivables and prepayments
Less non current portion
Current receivables & prepayments
2018
Shs’000
100,485
(4,834 )
95,651
85,559
104,047
105,552
2017
Shs’000
67,169
(4,528)
62,641
133,170
49,768
78,803
390,809
(30,023 )
324,382
(32,877 )
360,786
291,505
Non current receivables
30,023
32,877
Non current receivables are due within five years from reporting date and are secured and interest free.
None of the amounts were impaired (2017: Nil).
The carrying amounts of the current receivables approximate to their fair value.
Trade Receivables
The Directors of the Company estimate the loss allowance on trade receivables at the end of the
reporting period at an amount equal to lifetime expected credit loss (“ECL”).
The expected credit losses on trade receivables are estimated using a provision matrix by reference to
past default experience of the debtor and an analysis of the debtors current financial position, adjusted
for factors that are specific to the debtors, general economic conditions of the industry in which the
debtors operate and an assessment of both the current as well as the forecast direction of conditions at
the reporting date.
The following table details the risk profile of trade receivables based on the Group’s provision matrix.
31/12/2018 & 31/12/2017
Trade receivables – days past due
31 - 60
Not past due
Total
Shs’000 Shs’000 Shs’000 Shs’000 Shs’000 Shs’000
61 - 90
>90
<30
Expected credit loss rate
0%
0%
0%
0%
0%
0%
Estimated
carrying amount at default
total
gross
Lifetime ECL
-
-
-
-
-
-
-
71
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
22 Receivables and prepayments – Group and Company (continued)
The following table shows the movement in lifetime ECL that has been recognised for trade receivables
in accordance with the simplified approach set out in IFRS 9.
Balance at 1 January 2017 under IAS 39 and IFRS 9
Loss allowance charge for the year
Balance as at 31 December 2017
Loss allowance charge for the year
Balance as at 31 December 2018
23 Payables and accrued expenses
Trade payables
Due to related companies (Note 26(v))
Accrued expenses
Leave obligations
Other payables
Collectively
assessed
Individually
assessed
Total
-
4,528
-
4,528
4,528
4,528
306
306
4,834
4,834
-
-
-
-
-
Group
Company
2018
Shs’000
110,312
13,948
27,368
24,181
186,967
2017
Shs’000
42,605
-
27,030
20,751
371,953
2018
Shs’000
110,312
22,331
27,368
24,181
186,967
2017
Shs’000
42,605
8,383
27,030
20,751
371,953
362,776
462,339
371,159
470,722
Leave obligations covers the Group’s liability for accrued annual leave. The movement on the leave
obligations for Group and Company is as follows:
At start of year
Charge for the year
Paid during the year
2018
Shs’000
2017
Shs’000
2018
Shs’000
20,751
29,203
(25,773)
18,497
26,357
(24,103)
20,751
29,203
(25,773)
2017
Shs’000
18,497
26,357
(24,103
At end of year
24,181
20,751
24,181
20,751
The carrying amounts of the payables and accrued expenses approximate to their fair values.
72
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
24 Cash and bank balances – Group and Company
For the purposes of the statement of cash flows, cash and cash equivalents comprise the following:-
Cash at bank and in hand
Short term deposits
2018
Shs’000
2017
Shs’000
77,963
1,422,972
18,884
1,629,865
1,500,935
1,648,749
The short term deposits are denominated in Kenya Shillings (Shs) and United States Dollars (USD) and
have a maturity of three months or less from the date of acquisition or are repayable immediately with no
loss of interest. The effective interest rates on the short term deposits as at 31 December were as
shown below:
Kenya Shillings deposits
United States Dollar deposits
2018
8.03%
3.5%
2017
9.19%
3.25%
The Directors consider that the carrying amounts of cash and bank balances in the consolidated
financial statements approximate their fair values.
25 Note to the consolidated and company statement of cash flows
Reconciliation of profit before income tax to net cash generated from operations:
Profit before income tax
Adjustments for:
Interest income (Note 8)
Net exchange losses on foreign currency cash & cash equivalents
(Note 8)
Depreciation (Note 17)
Amortisation of prepaid operating lease rentals (Note 18)
(Gain)/loss on disposal of property, plant and equipment
Impairment of financial assets held at amortised cost (Note 20)
Gains arising from changes in fair value less estimated point-sale costs of
biological assets (Note 6 (i))
Decrease in the fair value of biological assets due to sales and harvest
and disposal (Note 6 (i))
Fair value movement in biological assets – growing agricultural produce
Changes in working capital:
- (Increase)/decrease in inventories
- Increase in receivables and prepayments
- (Decrease)/increase in payables and accrued expenses
- Increase in post-employment benefit obligations
2018
Shs’000
2017
Shs’000
684,083
849,123
(125,672 )
(95,820 )
2,342
182,982
5
(4,604 )
3,061
1,380
167,580
5
186
-
)
(74,082
)
(82,799
83,533
6,998
(23,152 )
(66,427 )
(99,563 )
14,419
72,300
(31,448 )
24,788
(28,171 )
63,577
11,153
Cash generated from operations
583,923
951,854
73
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
26 Related party transactions – Group and Company
The group is controlled by Camellia Plc, a company incorporated in England. Camellia Plc is the
ultimate parent of the Group. There are other companies that are related to Kakuzi Plc through
common shareholdings or common Directorships. Fellow Subsidiaries within the Camellia Plc Group
act as brokers and managing agents for certain products and operations of the Group.
The following transactions were carried out with related parties:
i) Sale of goods to:
Eastern Produce Kenya Limited
ii) Purchase of goods and services from:
Linton Park Plc
Robertson Bois Dickson Anderson Limited
RBDA Kenya Branch
Eastern Produce Kenya Limited
iii) Key management compensation
Salaries and other short-term employment benefits
Post employment benefits
iv) Directors’ remuneration
Fees for services as a Director
Other emoluments
2018
2017
Shs’000
Shs’000
220,399
257,102
-
-
81,385
71,207
36,572
38,489
-
66,414
152,592
141,475
67,239
608
47,885
567
67,847
48,452
9,825
424
3,600
477
10,249
4,077
The remuneration for directors is determined by the Board members having regard to the
performance of individuals and market trends.
74
Kakuzi Plc
Financial Statements
For the year ended 31 December 2018
Notes (continued)
26 Related party transactions – Group and Company (continued)
v) Outstanding balances arising from sale and purchase of goods and service
Due from related Companies
Eastern Produce Kenya Limited
Due to related Companies
Estates Services Limited
Kaguru EPZ Limited
RBDA Kenya Branch
Eastern Produce Estates South Africa (Pty) Ltd
Group
2018
2017
Company
2018
2017
Shs’000
Shs’000
Shs’000
Shs’000
85,559
133,170
85,559
133,170
-
-
13,925
23
13,948
-
-
-
-
-
2,570
5,813
13,925
23
2,570
5,813
-
-
22,331
8,383
27 Commitments – Group and Company
Capital commitments
Capital expenditure contracted for at the reporting date but not recognised in the financial statements is
as follows:
Property, plant and equipment
28 Subsequent events
2018
Shs’000
2017
Shs’000
9,076
2,414
There were no significant events after the reporting date with a financial statement impact at 31
December 2018.
------------- 000 -------------
75
Kakuzi Plc
Five year record
Turnover
3,152,831
2,823,926
2,651,199
2,481,844
1,689,917
2018
Shs'000
2017
Shs'000
2016
Shs'000
2015
Shs'000
2014
Shs'000
Profit before income tax
Income tax
684,083
(202,489)
849,123
(257,480)
757,779
(195,354)
667,341
(207,627)
232,799
(72,594)
Profit after income tax
481,594
591,643
562,425
459,714
160,205
Profit attributable to the members of
Kakuzi Plc
481,594
591,643
562,425
459,714
160,205
Dividends: -
Proposed final dividend - for the year
176,400
137,200
117,600
98,000
73,500
Capital and reserves: -
Called up share capital
Reserves
98,000
4,567,335
98,000
4,219,895
98,000
3,748,258
98,000
3,345,870
98,000
2,886,728
Total equity
4,665,335
4,317,895
3,846,258
3,443,870
2,984,728
Basic earnings per ordinary share (Shs)
24.57
30.19
28.70
23.45
8.17
Dividends per ordinary share (Shs)
9.00
7.00
6.00
5.00
3.75
Dividend cover
2.73
4.31
4.78
4.69
2.18
Total equity per ordinary share (Shs)
238.03
220.30
196.24
175.71
152.28
All amounts are stated in Kenya shillings thousands (shs’000) except where otherwise indicated.
76
Kakuzi Plc
Major shareholders and distribution schedule
MAJOR SHAREHOLDERS
The 10 major shareholders and their holdings at 31 December 2018 were:
Shareholder name
1
2
3
4
5
6
7
8
9
10
John Kibunga Kimani
Bordure Limited
Lintak Investments Limited
Standard Chartered Nominees A/C 9532
G.H. Kluge & Sons Limited
HSBC Global Custody Nominee (Uk) Limited
Stanbic Nominees Ltd A/C Nr1031143
Kakuzi Neighbourhoods Development Foundation
Joe B.Wanjui
John Okuna Ogango
Number of
ordinary shares
6,024,008
5,107,920
4,828,714
388,334
239,118
200,000
172,383
148,500
122,004
104,400
17,335,381
%
30.73%
26.06%
24.64%
1.98%
1.22%
1.02%
0.88%
0.76%
0.62%
0.53%
88.44%
* Camellia Plc incorporated in England, by virtue of its interests in Bordure Limited incorporated in England
and Lintak Investments Limited incorporated in Kenya, is deemed to be interested in these ordinary shares.
DISTRIBUTION SCHEDULE
The distribution of ordinary shares as at 31 December 2018 was:
Ordinary shares range
Less than 500
501 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 to 1,000,000
Over 1,000,000
Number of
shareholders
Number of
ordinary shares
753
441
46
43
8
3
1,294
126,815
801,114
350,600
885,256
1,475,572
15,960,642
19,599,999
%
0.65%
4.09%
1.79%
4.51%
7.53%
81.43%
100.00%
77
Kakuzi Plc
Form of Proxy (Annual General Meeting)
I/We
.…………………………………………….………..…………………..…………...………...………….…...…….……..,
of ………………………………..………………………………… being a member of the above-named Group,
hereby appoint: ……………………………………………………………………………………………………..……, of
……..………………………………………………....,or failing him …………………………………………………, of
…………………………………………………………………..., or failing him the duly appointed Chairman of the
meeting, as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Group to be
held on the 14th day of May 2019, and at any adjournment thereof.
As witness my hand this …………………………….. day of …………………………………………………..2019
Signed ………………………………………………………………………………………………………………………
Signed ………………………………………………………………………………………………………………………
Note:
1.
2.
3.
A member entitled to attend and vote is entitled to appoint a proxy to attend and vote in his stead and a
proxy need not be a member of the Group.
In the case of a member being a limited Group, this form must be completed under its common seal or
under the hand of an officer or attorney duly authorized in writing.
Proxies must be in the hands of the Group Secretary not less than 48 hours before the time of holding
the meeting.
78
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STAMP
1
D
L
O
F
Kakuzi Plc
P O Box 24
Thika 01000
Kenya
FOLD 3
INSERT FLAP INSIDE