CAMELLIA PLC

Earnings Release • Apr 28, 2016

National Storage Mechanism | Additional information You don't have Javascript enabled. For full functionality this page requires javascript to be enabled. RNS Number : 5763W Camellia PLC 28 April 2016 Camellia Plc Final results Camellia Plc (AIM:CAM) announces its final results for the year ended 31 December 2015. Malcolm Perkins, Chairman of Camellia Plc, stated: "2015 saw substantial improvements in the underlying trading of our businesses led by the performance of our Kenyan tea business and by the steps which we have taken to address the issues in Engineering." "The strength and diversity of our operations, the investments we continue to make in Agriculture, the success we have had in bringing in new management, and the ongoing turnaround, sale or closure of our loss making companies, all point to a more successful future. However conditions in many of our markets remain challenging. In particular, the start of 2016 has seen record tea production in Kenya which has resulted in a significant fall in the market price and the continuing low oil price provides a challenge to certain of our engineering businesses." Financial highlights Year ended Year ended 31 December 2015 31 December 2014 £'m £'m Revenue 257.8 238.9 Headline profit before tax 23.9 17.2 Profit for the year 21.9 8.3 Earnings per share 450.7 p 102.7 p Proposed final dividend 95 p 92 p * Headline profit is a measure of the underlying performance of the group which is not impacted by exceptional items or items considered non-operational in nature Highlights · Agriculture benefitted from strong prices for tea in Kenya but was impacted by a £6.1 million provision for past service costs arising on a new post-employment benefit obligation in Bangladesh · The strategic review of Duncan Lawrie was completed and a plan to invest in and grow the business over the next few years is being implemented · Abbey Metal Finishing is expected to return to profitability under new management with increased focus on customers and improved delivery performance · The closure of AKD Engineering and the sale of Loddon Engineering were completed during the year · AJT Engineering was adversely impacted by conditions in the oil and gas market · A number of changes were made to the Group reporting structure in order to increase skills, create clarity and ensure proper accountability · Continued investment in the development of our assets with £19.4 million spent on property, plant and equipment and investment property · Cash and cash equivalents increased to £65.6 million reflecting strong operational cash inflows from operations of £33.7 million Enquiries Camellia Plc 01622 746655 Tom Franks, CEO Susan Walker, CFO Panmure Gordon 0207 8862500 Nominated Advisor and Broker Andrew Godber Erik Anderson Camellia at a glance Camellia Plc is an international Group - a global family of diverse companies with a 128-year heritage employing approximately 76,000 people worldwide. Our operating divisions include Agriculture, Banking and Financial Services, Engineering, Food Service and Investments. From the start, Camellia's ethos has been based on the highest moral and professional integrity, and a commitment to doing the right thing - ethically and commercially, globally and locally. Profits are our lifeblood but not our soul. Our business is built on two fundamental principles: · Long-termism. We see ourselves as custodians, holding our businesses in trust for future generations. We believe we have a responsibility to ensure the stability, security and continuity of all our businesses, so they can be passed on to the next generation as enduring operations. We recognise that people and businesses take time to establish and grow to their full potential and we are happy to wait for that to happen. We are deeply committed to improving the long-term stability and well-being of our businesses, the communities and the environments in which we are involved. · Sustainability. We are committed not only to the ultimate welfare of our employees but also to the communities in which they live. We believe our businesses can and should grow with respect and care for the environment rather than at the cost of it. We proactively invest in ensuring that the environments where we do business are continually protected and improved, and seek to minimise any damage our activities may cause. Our business is made up of five divisions: AGRICULTURE 2015: Turnover - £186.5 million, Trading profit - £26.3 million, Return on capital - 9.9% Mature Immature Core crops area area Locations Ha. Ha. Tea India, Bangladesh, Kenya, Malawi 31,991 2,626 Macadamia Kenya, South Africa, Malawi 2,165 1,173 Avocados Kenya 412 39 Speciality crops Rubber Bangladesh 1,622 346 Citrus USA 169 8 Arable Brazil 3,374 - Pineapples Kenya 55 - Wine grapes South Africa 62 11 Pistachios USA 131 - Almonds USA - 56 Forestry Kenya, Malawi, Brazil 2,972 3,279 Other Joint Projects Kenya 1,299 - Cattle Kenya 4,500 head BANKING AND FINANCIAL SERVICES 2015: Subsidiaries Turnover - £13.1 million, Trading loss - £3.6 million 2015: Associates Share of results after taxation - £4.2 million (including 6 months results for BF&M) Subsidiary Locations Activity Duncan Lawrie UK, Isle of Man Private banking and wealth management Associates Location Activity Holding % BF&M Bermuda Non life insurance 36.1 United Finance Bangladesh Banking 38.4 United Insurance Bangladesh Non life insurance 37.0 ENGINEERING 2015: Turnover - £18.6 million, Trading loss - £1.2 million Subsidiary Locations Abbey Metal Finishing UK, Germany AJT Engineering UK British Metal Treatments UK GU Cutting and Grinding UK * adjusted to exclude AKD Engineering and Loddon Engineering as they are no longer part of the Group. FOOD SERVICE 2015: Turnover - £31.9 million, Trading profit - £0.7 million, Return on capital - 4.0% Subsidiary Locations ACS&T UK Affish The Netherlands Wylax The Netherlands INVESTMENTS Market value at 31/12/15 Investment type Locations £'m Investment Portfolio Global 30.6 Investment Property UK, Malawi, Isle of Man, Brazil 21.4 Collections UK, India 9.0 * Collections are stated at cost Chairman's statement Our results for the year reflect once again the diversity of our operations and the unpredictability of global markets. Excluding the adjustment for the revaluation of biological assets, which I am pleased to report will have a much reduced impact on our accounts going forward, and the significant provision for post-employment benefits that we have been required to make in Bangladesh, headline profits were £23.9 million compared to £17.2 million in 2014. This result reflects the difficulties that our subsidiaries in the oil services sector have been facing; but also reflects the improved tea prices in Kenya and the improved profitability of our agricultural operations more generally. 2015 was a transitional year for your Group, with the appointment of Tom Franks as the Chief Executive, Graham Mclean as Managing Director of Agriculture and Susan Walker as the Chief Financial Officer and the retirement of a number of longstanding executive directors. As a result there have been consequential changes to both roles and responsibilities and also the organisation of the Group which are set out in the Chief Executive's and corporate governance reports. A detailed statement which shareholders will hopefully find interesting and informative is included as the Chief Executive's report and we have also included substantially more information in the annual accounts to assist shareholders with getting a better understanding of our Group. Notwithstanding these changes, I am pleased to report that the overriding principles of the Group remain constant. We are committed to the development of the business over the long term and to the sustainability of our businesses, the environments and communities in which we operate. As announced previously we took the step during the year of closing one of our subsidiaries, AKD Engineering, following many years of substantial losses. This was not a decision that your Board took lightly, being well aware of the social and other implications of this move, but was unfortunately unavoidable given the trading conditions. We sold the Loddon Engineering business towards the end of the year to the De Swart Group, an owner in a better position to ensure the long term future of that business. Despite these changes, the Group has continued its policy of organic growth and development, further details of which are contained in the Chief Executive's report. Dividend Your Board is recommending a final dividend of 95p per share which, together with the interim dividend already paid of 34p per share, brings the total distribution for the year to 129p per share compared with 126p per share in 2014. Directors During the year Anil Mathur, Chris Ames and Peter Field resigned as directors of the company. I would like to thank them all again for their contribution to the Group, and I am pleased that Peter Field will continue to contribute as Chairman of our operations in India and Bangladesh. Outlook The outlook for 2016 is challenging. Climate change, and in particular erratic rainfall patterns, makes predicting crop volumes difficult. The start of 2016 has seen record tea production in Kenya which has resulted in a significant fall in the market price. The continuing low oil price provides a challenge to our engineering businesses and low interest rates restrict returns in banking. However, the strength and diversity of our operations, the success we have had in bringing in new management where appropriate, and the ongoing turnaround, sale or closure of our loss making companies, all point to a more successful future. Staff As always, my thanks go out to all our staff for their efforts in 2015. Malcolm Perkins Chairman 27 April 2016 Chief Executive's Report I am delighted to present to you my first report as Chief Executive. This year we are making significant additional disclosures which I hope will enhance shareholders understanding of the Group and its strategy. As is inevitable in a Group of this size and diversity, there have been many performance highlights this year but also some areas of the business which have found markets more challenging. Of particular note was the success of our operations in Kenya where a combination of good yields and improved prices delivered significant additional profit. However, the introduction of new post-employment benefits legislation in Bangladesh has meant that we have made a significant provision of £6.4 million this year against this liability and the fall in the oil price hit our subsidiaries (AKD Engineering and AJT Engineering) in that sector very hard. Unfortunately, the continuing weakness in the oil price and the resulting lack of orders for major capital equipment from AKD Engineering meant that we had to close the company in July 2015. We also sold our interest in Loddon Engineering, a Norfolk based stable manufacturer, to a subsidiary of the De Swart Group. MANAGEMENT During the year we reviewed the management of the business. Camellia is diverse and complex in both its markets and geographies and therefore having the right management in place is fundamental to driving performance. We have made a number of changes to management and to reporting lines in order to increase skills, create clarity and ensure proper accountability in the trading businesses. As a result the Group is now managed on a divisional rather than geographic basis. A summary of the new structure together with the revised remit and membership of the executive committees is set out in the corporate governance report. BUSINESS STRATEGY Whilst the overall Group strategy, which is set out on page 15, remains unchanged, each division is now expected to perform against an agreed divisional strategy which sets out the goals and targets for the short and medium term. The divisional strategies may be summarised as follows: Agriculture. The Agriculture division has an exceptional collection of high quality assets spread across a variety of geographies and crops. There are however certain crops where we have scale and geographic spread and therefore the opportunity to build a significant market presence. These are tea, macadamia and avocados. Here we will continue to expand the planted area, enlarge our geographic spread and where appropriate move up the value chain to protect future margins. For the remaining crops, where developing a significant market presence is not practicable but where there are opportunities for profitable investment, we will continue to acquire assets in line with the broader Group strategy. Banking and Financial Services. During the year, the Group performed a strategic review of Duncan Lawrie to establish the best future path for the business. As a result of that review, the Group has approved a new growth strategy to invest in, and expand, Duncan Lawrie. Key components of the new strategy include building the banking operations by increasing both lending and deposits; growing the wealth management business by substantially increasing the assets under management and investing in people and infrastructure to ensure a market leading suite of products and services for our clients. This strategy will require, inter alia, further investment in the business and we have relaxed certain lending restrictions previously imposed by the Group. I anticipate that the strategy will take a number of years to execute and I am pleased to report the appointment of Sally Tennant as the new Chair of Duncan Lawrie, subject to the appropriate regulatory approval, to assist the management team in implementing that strategy. The Group also has three associated companies in the financial services sector, one of which, BF&M, is included as an associate from 1 July 2015 following a purchase of additional shares by the Group and a reassessment of our relationship with BF&M. The Group will continue to monitor its investments in these companies and may increase or decrease its holdings as appropriate. Engineering Engineering North. AJT Engineering has been a strongly profitable business for the Group in the past but is currently impacted by the low oil price and its effect on investment in the North Sea oil industry. As a result, AJT Engineering has had to amend its strategy so as to react to the new environment. This has included taking steps to reduce costs and diversify its customer base. AJT Engineering remains committed to providing a full service to its customers and anticipates emerging from the current hiatus strongly positioned for the future. Engineering South. The principal driver of growth in Engineering South will be Abbey Metal Finishing (Amfin) and its joint venture in Germany, Atfin. Under its new management team, Amfin has taken significant steps in the last 12 months to focus its customer base, improve its delivery performance and return to profitability. The plan is to complete these steps during 2016 and for Amfin to provide the Group with a return on the significant investments made since the fire in 2010. Atfin is taking steps to diversify its customer base and is now moving towards profitability. The remaining businesses in Engineering South are expected to grow organically over the coming years. Food Service UK. ACS&T will continue to operate as a niche high quality operator in the storage and distribution of frozen foods together with some ambient food service provision as demand and space allows. The business will expand and invest where appropriate to continue to serve the needs of its customers. Netherlands. Affish and Wylax, our fish trading and distribution businesses in the Netherlands, have struggled to grow in tough economic conditions. However, following the recent appointment of a new managing director and sales director, these businesses are now looking to expand both their product offering and customer base. Investments Investment Portfolio. The Group has a portfolio, principally of listed investments, under the management of a full time investment manager. The strategy remains to invest for the long term in high quality companies where we believe that there is hidden value. Investment Property. The Group is disclosing for the first time this year the current market value of the investment property portfolio (page 59). The strategy is to continue to invest in quality assets where an appropriate yield may be realised. Collections. The Group has collections of art, philately and manuscripts under the management of a curating team. These assets are regularly reviewed and are added to or sold as appropriate in order to enhance the collections. PERFORMANCE Agriculture Tea Production Mature Immature Volume Volume area area 2015 2014 Ha. Ha. mkg mkg India 14,242 1,481 25.8 25.9 Bangladesh 7,927 1,110 10.3 10.5 Kenya 4,157 - 12.9 14.3 Malawi 5,665 35 14.4 16.9 Total 31,991 2,626 63.4 67.6 Estate volumes only, in addition 14.7 million kg of tea was produced for smallholders (2014 - 15.5 million kg) Tea pricing and operations India Average tea prices in 2015 were up 3.8% in Rupees against 2014 levels, reflecting particularly good performances from our Assam teas, but costs of production were also up, reflecting labour rate increases which impacted margins. A new blending and packing facility for export teas was commissioned in Kolkata during the year with an annual capacity of approximately 4 million kgs per annum. Packet tea sale volumes were up 13.6% on 2014 in this competitive but growing sector of the Indian local tea market. Instant Tea production was down 25% on 2014 with prices also slightly down. During the year, a solar water heating unit was installed at the plant in order to reduce energy costs. Rainforest Alliance Certification was achieved on all Assam and Darjeeling estates along with FSSC 22000 certification in the factories; ISO 22000 certification was achieved for the Dooars' factories. Bangladesh Pricing was up 11% on the previous year due to improved demand at auction and a resumption of high duty tariffs on imported tea. A project to create capacity for irrigation on two gardens commenced during the second quarter having been delayed as a result of political disturbances. Total replanting achieved in the year was 115 Ha leaving a total of 385 Ha under rehabilitation at the end of the year in preparation for future replanting. Kenya As a result of lower production volumes across Kenya as a whole, tea prices were up 35.7% from the previous year's levels. The market for Kenya teas is largely an export one and prices are subject to significant volatility linked to production volumes. Fluctuations in the tea price have a major impact on Group profitability. We continue to produce good quality hand plucked tea, and mechanical harvesting continues on a trial basis. During 2015, we established our first large-scale solar project. Significant reductions in carbon emissions have been achieved as well as a reduction in power costs. All the estates and smallholders remain Rainforest Alliance certified and all factories are ISO 22000 compliant. Malawi In Malawi we experienced highly erratic weather conditions which had a significant adverse effect on crop volumes. The operations experienced serious flooding following drought conditions at the start of the year and then drought conditions re-emerged for most of the year thereafter. Pricing in 2015 was up 3% on 2014 levels but costs per kg increased significantly due to the lower crop, inflationary pressure through substantial currency devaluation and significant wage increases. These circumstances contributed to a substantial decline in the profitability of the tea operations in 2015. The Tea Association of Malawi, of which we are a leading member, in conjunction with the Ethical Tea Partnership, signed up to an extensive five-year revitalisation programme for the industry aimed at addressing workers' wages, smallholder sustainability, product quality and replanting. All estates and smallholders are Rainforest Alliance certified. All factories are Fairtrade certified and two factories continued with UTZ certification. Macadamia Production Mature Immature Volume Volume area area 2015 2014 Ha. Ha. Tonnes Tonnes Malawi 1,202 230 530 583 South Africa 778 271 574 474 Kenya 185 672 52 28 Total 2,165 1,173 1,156 1,085 Macadamia Pricing Pricing for macadamia in 2015 was up 15.3% on 2014 levels and set a record level for the global macadamia kernel market due to continuing demand from China. Macadamia Operations Malawi Production of macadamia nuts was down 9.0% on the previous year due to the impact of dry weather conditions. The processing facility once again achieved ISO 22000 certification. South Africa Volumes in 2015 were significantly ahead of last year. The development of Mambedi Estate to macadamia orchards continues with 98 Ha planted in 2015. A further 80 Ha has been prepared for planting. The processing factory successfully completed the first phase of upgrading to a modern state-of-the-art cracking facility. The plant was also recertified under ISO 22000 for the 2015 season. Kenya New plantings continued with 158 Ha being planted in the year. Construction of a new cracking facility began in April and good progress has been made to date. The facility is expected to open in June 2016. Avocado Production Mature Immature Volume Volume area area 2015 2014 Ha. Ha. mkg mkg Kenya 412 39 7.1 6.3 * Estate volumes only. In addition 2.3 million kg of smallholder fruit was packed (2014 - 2.7 million kg) Avocado Pricing and Operations A record volume of 1.9 million cartons were exported: 17% up on 2014. The smallholder fruit volumes were slightly lower than last year as a result of tight quality controls and lower availability of acceptably sized fruit. Despite this, excellent returns were generated for growers from the fruit exported. The smallholder initiative continues to gain momentum with the number of registered growers increasing each year. Pricing in 2015 was at record levels (up 64% on 2014) as a result of demand from the European market. Speciality Crops Production Mature Immature Volume Volume area area 2015 2014 Ha. Ha. Tonnes Tonnes Rubber (Bangladesh) 1,622 346 629 601 Citrus (USA) 169 8 4,844 5,618 Arable (Brazil) 3,374 - 25,888 17,234 Pineapples (Kenya) 55 - 1,752 1,552 Wine grapes (South Africa) 62 11 625 718 Pistachio (USA) 131 - 31 621 Almonds (USA) - 56 47 - m3 m3 Forestry 2,972 3,279 17,042 13,766 * 2015 was an 'off year' for Pistachios ** Volumes quoted are for conversion to value addition products rather than own use as fuel wood Speciality Crops Pricing and Operations Pricing for rubber in 2015 was 24.4% below 2014 due to the drop in oil prices making synthetic rubber more price competitive than natural latex. There are also significant inventories of natural rubber building in South East Asia which are contributing to the downward pressure on price. Prices for California citrus were slightly up in the year. Reduced volumes in the year reflect the effect of the decision to replace an area of mandarins with a different variety of citrus. Both the maize and soya crops in Brazil sold at higher levels than anticipated. Prices for fresh pineapple production in Kenya were marginally up. Wine grape production in the Western Cape, South Africa was down 13% on last year but bottled wine production and sale volumes were up. Results were in line with expectation although slightly down on the previous year. Pricing for pistachios in 2015 was 28% up on 2014 levels due to demand in the global market. Almond prices were also high but no contribution was attributed to Group profit in 2015 given the immature nature of the trees. Revenues from almonds will be attributed to Group profit for 2016. Forestry operations continued to produce satisfactory volumes for fuel wood and value addition products. We continue to raise cattle on those areas of the Kakuzi Estate in Kenya unsuitable for crop development. In total, the Agriculture division made a trading profit of £26.3 million (2014: £27.2 million) on turnover of £186.5 million (2014: £164.2 million). Banking and Financial Services The low interest rate environment together with restrictions on lending imposed by the Group and costs associated with adjusting to new regulatory requirements, have led to several years of losses at Duncan Lawrie. As a result, the Group undertook a strategic review of the bank during the year, the result of which is the implementation of the growth strategy described above. In 2015 the bank made losses which were significantly above those incurred in 2014, reinforcing the need to execute the new strategy. These losses are likely to continue into 2016 as the bank invests in clients, staff and systems. Our two associated companies in Bangladesh, United Insurance and United Finance, both had a reasonable year with profits marginally ahead of 2014. From 1 July 2015 we are accounting for BF&M, a Bermuda based insurance company, as an associate. BF&M had a strong year in 2015 reporting a profit before tax of Bermudian Dollar 30.1 million (2014: Bermudian Dollar 26.7 million). In total, the Banking and Financial Services division's subsidiaries made a trading loss of £3.6m (2014: trading loss £2.5m) on turnover of £13.1 million (2014: £12.4 million). In addition, our share of the results of associates amounted to £4.2 million (2014: £1.1 million). Engineering Engineering North Engineering North had a difficult year with the fall in the oil price resulting in AJT Engineering in Aberdeen struggling to fill its order book. Turnover at AJT Engineering fell from £12.0 million in 2014 to £9.6 million in 2015. In the current climate it is hard to predict the oil price and the impact that it may have on the industry in Aberdeen and therefore the company is braced for another difficult year. Engineering South Engineering South had a transitional year with the sale and closure of Loddon Engineering and AKD Engineering respectively, and new management teams appointed at Abbey Metal Finishing, Atfin and GU Cutting and Grinding. The continuing turnaround at Abbey Metal Finishing and the disposal of the other loss making businesses means that we anticipate a significantly improved performance in the coming year. In total, the Engineering division made a trading loss of £5.5 million (2014: trading loss £8.4 million) on turnover of £24.1 million (£28.9 million). £4.3 million of the trading loss in 2015 related to AKD Engineering and Loddon Engineering. In addition, during the year we sold three properties and certain assets which were surplus to the requirements of the Engineering division generating a net profit on sale of £3.7million (2014: nil). Food Service ACS&T had a better year than 2014 with turnover increasing by 7.5%, although the market remains competitive in both the storage and distribution areas and as a result profits were marginally down. During the year we also took possession of a new office building in Wolverhampton and implemented a new IT system at all our facilities to manage logistics. In the Netherlands, both Affish and Wylax experienced challenging trading conditions. In total the Food Service division made a trading profit of £0.7 million (2014: £0.9 million) on turnover of £31.9 million (2014: £30.9 million). Investments Investment Portfolio. Despite the significant fluctuations in both global equity and currency markets there was little change in the value of the portfolio. The total value of the portfolio is £30.6 million (2014: £63.5 million) reflecting the reclassification of our holding in BF&M as an associate. Investment Property. The Group is disclosing for the first time this year the current market value of the investment property portfolio (page 59). The Group took the opportunity during the year to acquire further land and buildings at Linton Park. Collections. The value of the collections is held at cost. A number of minor additions and disposals were made during the year. LEGISLATIVE CHANGES The Group is present in many jurisdictions, and is subject to local legislation. The following two issues either have had, or are likely to have, a material impact on the Group. · During 2015, a post-employment benefits law was introduced in Bangladesh entitling workers to a lump sum payment on retirement or termination of employment based upon earnings and length of service. As a result we have made a provision of £6.4 million to cover the potential liability of which £6.1 million relates to past service costs. · At the start of 2016, the Government of Malawi put forward new legislation which proposes, inter alia, the conversion of all freehold property into 50 year leaseholds. The proposed legislation is under discussion and has yet to be passed into law and many of the key provisions such as the costs of the leaseholds and the right to renew leases are as yet unclear. The impact on the Group is therefore hard to assess at this time. DEVELOPMENT During 2015 we continued to invest in the development of our assets and £19.4 million was spent on property, plant and equipment and investment property (2014: £19.0 million) including the following key projects: · Extension of the macadamia dehusking facility and the commencement of the building of the new macadamia cracking plant in Kenya · Phase 1 of the upgrading of the macadamia cracking facility in South Africa · Improvements at four of our tea factories and to the packet tea and instant tea facilities · Solar energy facilities in Kenya and India · Significant irrigation projects across all of the agricultural operations · Construction of a new office building for ACS&T and an IT upgrade · Continuing improvement of our labour housing and facilities for our staff · The acquisition of investment properties in the UK adjacent to our head office at Linton Park. In addition to our continuous programme of replanting our tea areas, a programme to extend our planted areas has been underway for a number of years and in 2015: · 36 Ha of new avocado plantings were carried out in Kenya · 158 Ha of new macadamia plantings were carried out in Kenya and 81 Ha in South Africa. SUSTAINABILITY AND CSR The Group has always had a strong focus on social and environmental responsibility and this is something we intend to maintain and grow. The key aspects of that policy are set out on page 17. The Group strives to develop the workforce through training and to improve housing, healthcare, and education across the Group and in the communities that we work in. This year we have been involved in the tea revitalisation project in Malawi, solar projects in India and Kenya, and have embarked on major housing renewal projects in Malawi, Kenya and India. In addition, I am pleased to report that every operating company in the UK has now been accredited by the Living Wage Foundation as a Living Wage Employer. Tom Franks Chief Executive 27 April 2016 Chief Financial Officer's Report Overview of results After taking account of the provision for past service costs relating to changes in Bangladesh to post-employment benefit entitlements of £6.1 million, gains arising from changes in the fair value of biological assets of £20.6 million (2014: £8.8 million), exceptional and other one off items, the profit before tax for the year to 31 December 2015 amounted to £40.5 million compared with £22.0 million in the previous year. The Group has net assets of £372.8 million (2014: £364.4 million) and net cash and cash equivalents of £65.6 million (2014: £54.1 million), excluding balances relating to our banking operations. Headline profit The headline profit before tax for the year to 31 December 2015 was 39.0% higher than previous year at £23.9 million (2014: £17.2 million). Headline profit is a measure of underlying performance which is not impacted by exceptional and other items considered non-operational in nature and is designed to make clear the underlying trading performance of the Group. Accounting policies and practices We increased our holding in BF&M to 36.1% during the year and, having reassessed our relationship, consider that it is now appropriate to account for it as an associate company rather than as an available for sale financial asset. This has resulted in our proportionate share of BF&M's profit after tax for the period from 1 July 2015 of £2.9 million being included in our results for the year instead of the dividends we received. Following further acquisition of property in the UK during 2015, our investment property holdings are now shown as a separate asset class which continues to be carried at cost. In the interests of providing further clarity for shareholders, the estimated market value is disclosed in note 18 to the financial statements. Impact of changes to the accounting treatment of biological assets (IAS 41 amendments) This is the last year in which IAS 41 will be relevant to the majority of our agricultural operations and from 1 January 2016 our permanent plantings will be classified under IAS 16 as property, plant and equipment to be depreciated over their expected useful life. If the new standard had applied to our 2015 results it would have had the following estimated effect on our reported profits: 2015 £'m Reported profit before tax 40.5 Exclude gain arising from changes in fair value of biological assets reclassified as bearer crops (18.7 ) Depreciation of bearer plants (4.4 ) Fair value adjustments for growing crop 2.6 Restated 2015 profit before tax 20.0 Currencies The Group's operations in Africa and Brazil have seen significant devaluation of their functional currencies during the year. This together with the high rates of inflation in these countries places substantial pressure on our cost base, particularly in Malawi. However, our operations in Africa benefit from the fact that the majority of their sales are in hard currencies, typically US dollars or Euros, which provides some protection. Over the course of the year to 31 December 2015, the Malawi Kwacha weakened by 35.7%, the Kenya Shilling by 6.5%, the South African Rand by 26.5% and the Brazilian Real by 41.3% against Sterling. Cashflow The Group's net cash position increased to £65.6 million at 31 December 2015 (2014: £54.1 million) (excluding net cash balances held within our banking subsidiaries) reflecting strong net cash inflows from operations of £33.7 million (2014: inflow £7.9 million). Taxation The Group's effective tax rate of 45.9% (2014: 62.2%) reflects the continuing losses incurred in the UK which we are currently unable to relieve against profits elsewhere in the Group. It also reflects a provision for taxation in Malawi arising from assessments raised by the Malawi Revenue Authority for unpaid taxes from prior years. We continue to be of the view that the claim is without technical merit. Pensions and post-employment benefits The Group operates a number of defined benefit pension schemes, the largest of which is in the UK. The overseas schemes are located in Bangladesh, India and the Netherlands. The UK scheme has been closed to new entrants for a number of years and of our UK based work force, approximately 15% are members of this scheme. Our businesses in Kenya, India and Bangladesh also have obligations to pay terminal gratuities, based on years of service and, in some cases based on salaries. Our employee benefit schemes currently show net deficits of £38.6 million (2014: £41.6 million net deficit). Accounting for defined benefit schemes is prescribed by IAS 19 and the quantum of the deficit continues to be volatile and sensitive to small changes in assumptions as regards inflation and gilt yields in the relevant jurisdictions. This year a net actuarial gain of £9.1 million (net actuarial loss in 2014 of £20.3 million) is reflected in the Statement of comprehensive income. In addition, £8.4 million (2014: £1.0 million) has been charged to our income statement in respect of employee benefit obligations. £6.4 million of the increase in cost relates to obligations for post-employment benefits arising from recently enacted legislation in Bangladesh, of which £6.1 million relates to relevant employees service with the Group in years prior to the current financial year. The cash flow impact of this legislation will arise over a number of years as staff retire or otherwise leave the business. Contributions to the externally funded defined benefit schemes are determined after consultation with the respective trustees and actuaries. In the UK, additional annual contributions of £0.9 million are being made to reduce the scheme's funding deficit. Shareholders' funds Equity attributable to Camellia's shareholders at the 2015 year end was £330.4 million (2014: £321.7 million). A reconciliation is set out in the Group statement of changes in equity. Susan Walker Chief Financial Officer 27 April 2016 Strategic Report Business review The company is required to set out in this report a fair review of the business of the Group during the year ended 31 December 2015 and a description of principal risks and uncertainties facing the Group. A fair review of the business of the Group is incorporated within the Chairman's statement and the Chief Executive's report on pages 5 to 12. The Chairman's statement and the Chief Executive's report, together with information contained within the report of the directors, highlight the key factors affecting the Group's development and performance. Other matters are dealt with below: Group strategy The Board has adopted the following strategy for the Group: · to develop a worldwide group of businesses requiring management to take a long term view · the achievement of long-term shareholder returns through sustained and targeted investment · investing in the environment and sustainability of the communities in which we do business · ensuring that the quality and safety of our products and services meet the highest international standards · the continuous refinement and improvement of the Group's existing businesses using our internal expertise and financial strength. The progress against this strategy during the year is set out in further detail in the Chief Executive's report shown on pages 6 to 12 and within the report of the directors. Business model The Group consists of businesses engaged in Agriculture, Banking and Financial Services, Engineering, Food Service and Investment. Businesses are managed on a divisional basis with regular reports made to the Board on performance against the annual budget. Principal risks and uncertainties There are a number of possible risks and uncertainties that could impact the Group's businesses. As the Group's businesses are widely spread both in terms of activity and location, it is unlikely that any one single factor could have a material impact on the Group's long-term performance. The following risks relating to the Group's principal operations have been identified: Agriculture The Group's agricultural based businesses are located in Kenya, Malawi, South Africa, Bangladesh, India, Brazil and the USA. The success of these activities is greatly dependent on climatic conditions, controlling plant disease, the cost of labour and the market price. We export a considerable amount of produce through the port of Mombasa in Kenya. Such exports can be seriously delayed by inefficiencies in the operation of the port. In addition, exports from these businesses are subject to foreign exchange fluctuations as products, particularly those from Africa, are normally priced in US dollars or Euros. In Kenya, Malawi and South Africa there are long-term political issues concerning land ownership over which the Group has little control or influence. The Board continues to work with local management and with the assistance of lawyers to monitor land ownership issues that may impact the Group's operations. In Kenya, the length of the leases owned by non-Kenyan citizens and corporations has been reduced from 999 years to 99 years in accordance with the new constitution. In South Africa, on land where ownership claims have been made, any substantiated claim is required to be resolved on a willing buyer willing seller basis and crops are generally only planted following notification to the Land Claims Commission. In Malawi, a bill is currently being debated in the parliament on the foreign ownership of land which could see the freehold land interest being converted to 50 year leasehold. In India, violence from separatist Groups which has been a problem for some years has reduced in Assam, Darjeeling and the Dooars. In Bangladesh, there have been instances of civil unrest and political instability. The situation continues to be monitored and the Group's operations in these regions have generally been able to trade normally. A fourth consecutive year of drought in California brought about a state imposed 25% reduction in water usage by urban consumers. Ground and surface water resources remain scarce and continue to decline, imposing a challenge to management to ensure sufficient water resources are made available for the crops. This was achieved in 2015 because of our investment in irrigation infrastructure over several years, but remains a concern for the future. Engineering A number of the engineering companies are dependent for a significant part of their revenue on the aerospace and the oil and gas industries. As we saw in 2015, a downturn in either of these sectors would have and has had an impact on the level of activity in these businesses. Some of the processes used by the companies involved in metal treatment require high standards of health and safety and environmental management. Failure to maintain these standards could give rise to accidents or environmental damage. Food Service Food Service is a highly competitive industry with low operating margins and is largely dependent on the food industry for the utilisation of cold stores. Cold stores are heavy users of electricity and any significant movement in energy costs can affect the operation's profitability. ACS&T is dependent upon a sophisticated computer system. The failure of this system could have significant consequences for the business although a disaster recovery plan is in place. Banking and Financial Services Duncan Lawrie Limited is regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) and has a well-developed compliance process. The following risks have been identified: · compliance risk - the FCA and the PRA have the power to stop trading activity should there be a serious breach of their regulations. Following the global banking crisis, there have been continual moves by the authorities to tighten regulatory standards and this may lead to a requirement for further capital to be invested in Duncan Lawrie · credit risk - the lending of money gives rise to a credit risk. Duncan Lawrie lends money to customers and places money with other banks and holds interest bearing securities. This credit risk is managed by strict internal procedures · liquidity, interest and foreign exchange rate risk - these risks are monitored closely and reported upon daily against conservative exposure limits. Bank failures in the jurisdictions within which Duncan Lawrie operates can also impact its results as a consequence of industry wide compensation schemes to which it is required to contribute. Further information on the Group's financial risks are disclosed in note 39 of the accounts. Investments The Group owns a number of investments including listed investments. The value of these investments is therefore likely to fluctuate in line with global stock market movements. Pension schemes There is one final salary scheme in the UK which is closed to new entrants and permits an element of future accrual for existing members in the defined benefit section. A material proportion of the assets of the scheme are invested in equities and the value of these assets will fluctuate in line with global equity markets. Continuing improvements in mortality rates may also increase the liabilities of the scheme. The Group's overseas subsidiaries make pension provision for certain employees in accordance with relevant local legislation. Some risk remains if there are changes to the governing legislation, requiring the companies to make larger contributions to these schemes. Some of these pension plans are final salary based and not fully funded. Credit Risk Credit control procedures are in place throughout the Group but the risk remains that some customers may have difficulty making payments. Social and environmental responsibility Background The Group has a wide range of businesses operating around the world in diverse commercial, cultural and regulatory environments. These businesses encompass a correspondingly wide spectrum of employment and environmental issues and our main challenge is to ensure that these are appropriately managed across the Group. The Group's businesses have a duty to meet local regulatory requirements and will always strive to do so. In this respect, there is a distinction between our UK businesses and our agricultural businesses based mostly in developing countries. Whilst the UK businesses are subject to well-developed regulatory regimes in the areas of employment and environmental protection, this is not necessarily the case elsewhere. Our agricultural businesses meet the standards expected by the Group, local legislation and by our customers. Particular challenges and opportunities for the Group lie in the following areas: Child labour: the use of child labour is prohibited by all of our businesses. The minimum legal working age varies around the world and in some countries it is both the cultural norm and permissible for parents to involve their children in the productive process. We do not subscribe to this approach and therefore translating our policy into unambiguous local rules and enforcing these rules requires vigilance. Health and safety: Our European and North-American businesses operate in a strong regulatory climate, and have a good health and safety culture and record. Achieving equivalent standards of health and safety management in our operations in some developing countries is a continuing challenge however improvements have been achieved during the year. Medical care and education: In some countries, our workers and their children do not have access to good state provision of medical or educational services. However, the majority of our tea estates in India and Bangladesh have a hospital and a qualified doctor and our operations in both these countries have central Group hospitals to which more serious illnesses are referred. A number of our African businesses report a high incidence of HIV/AIDS related illnesses. We provide, as a minimum, basic medical services including where appropriate antiretroviral drugs. We also give support to schools that are either run locally or by our companies. Casual labour: Some of our agricultural businesses rely on seasonal labour, notably at harvest time. Our agricultural companies give casual and contract workers employment rights in accordance with the requirements of local legislation. Environmental management: Our UK-based engineering businesses have the greatest potential to create pollution and hazardous waste and need to meet tight legislative standards. Where appropriate, our UK businesses have formal environmental management systems in place and most are independently certified to the international standard ISO 14001. The enforcement of environmental legislation in many countries where we operate is poor and our businesses in these locations have to act on their own initiative to meet international standards of environmental protection. Our agricultural businesses carry out activities that could impact the environment. These businesses have adopted rigorous procedures to reduce the environmental impact of the operations. Greenhouse Gas (GHG) Emissions Our emissions have been calculated based on the GHG Protocol Corporate Standard. Emissions reported correspond with our financial year. Our approach We believe that good management of employment and environmental issues is essential in ensuring the long-term success of our businesses. We are therefore committed to devoting the necessary resources to improve continually our performance in these areas. The Group has a corporate social responsibility policy which is available on the company's website. The Board has adopted an anti-bribery policy which complies with the requirements of the Bribery Act 2010. The policy has been introduced across the Group and its implementation is being monitored. The Board does not permit bribery as part of its business practices. The Board is currently devising a policy to comply with the requirements of the Modern Slavery Act 2015 which will be in place by the end of 2016. Performance There are no current employment or environmental issues that prejudice the continuing development of the Group. None of the Group's businesses were prosecuted for any significant breach of employment legislation during the year. The Board has established a process for ensuring that the corporate social responsibility policy is enforced across the Group. Key financial performance indicators Return on segmental assets The nature of the Group's principal activities is such that the Board takes a long-term view on its operations, particularly in Agriculture. It is also concerned to improve the quality of the Group's assets over the long-term and monitors that by reference to return on net assets achieved in the main segments of the business which are then compared against budget. The returns achieved in the current and prior year were as follows: Banking and Agriculture Financial Services Engineering Food Service 2015 2014 2015 2014 2015 2014 2015 2014 Return on segmental net assets (%) 9.9 10.4 n/a n/a n/a n/a 4.0 5.5 Group borrowings ratio The Board's objective is to ensure that gross borrowings as a percentage of tangible net assets do not exceed 50 per cent. The ratio at 31 December 2015 was 3.3% (2014: 0.9%). Gross borrowings and tangible net assets (share capital and reserves less goodwill and intangible assets) are derived from the consolidated accounts. Key non-financial performance indicators The following information has been compiled based on data provided by the Group's subsidiary undertakings. The Board considers that this information demonstrates the level of compliance with important elements of the Group's principles. The Board will regularly review which key non-financial performance indicators are most appropriate. 1 Compliance 2015 (ii) 2014 2013 a) Prosecutions The number of prosecutions brought in the financial year by the official regulatory bodies responsible for enforcing regulations in the areas of: Employment - - 1 Worker health and safety - - 1 Environmental protection - - 2 b) Formal warnings The number of written warnings during the financial year year by the official regulatory bodies responsible for enforcing regulations in the areas of: Employment - - - Worker health and safety 3 - 1 Environmental protection - - - 2 Child Labour a) Minimum age The number of employees who were less than 15 years old during the financial year - - - b) Access to education The number of employees who were younger than the age for completing compulsory education in their country during the financial year - - - 3 Accidents a) Injury The number of injuries received at work resulting in either absence from work for more than three days, or the injured person being unable to do the full range of their normal duties for more than three days 317 308 8 4 Health a) Sickness absence The number of employee days absence as a result of sickness during the financial year 238,160 (i) 243,094 (i) 227,917 (i) b) Sickness claims The number of claims for compensation arising from occupational health issues received during the financial year in respect of continuing operations 20 167 406 (i) This excludes tea garden workers in India who have a contractual entitlement to fourteen days sickness absence. In Malawi there is high level of sickness due to HIV/AIDS related conditions and malaria. (ii) This excludes figures from AKD Engineering due to its closure during the year and Loddon Engineering which was sold at the end of year. Employees The Group keeps employees informed, through internal publications and other communications, on the performance of the Group and on matters affecting them as employees and arrangements to that end are made by the management of individual subsidiary undertakings. It is also Group policy that proper consideration is given to applications for employment received from disabled persons and to give employees who become disabled every opportunity to continue their employment. The table below provides a breakdown of the gender of the directors and employees at 31 December 2015: Men Women Company directors (i) 6 1 Other senior managers (ii) 7 2 All employees 42,259 34,124 (i) Company directors consists of the company's Board as detailed on page 4. (ii) "Other senior managers" is as defined in The Companies Act 2006 (Strategic report and directors report) Regulations 2013, and includes persons responsible for planning, directing or controlling the activities of the company, or a strategically significant part of the company, other than company directors. By order of the Board Julia Morton Secretary 27 April 2016 Report of the directors The directors present their report together with the audited accounts for the year ended 31 December 2015. Principal activities The company is a public limited company, which is quoted on the AIM Market of the London Stock Exchange and incorporated and domiciled in England and Wales. The principal activities of its subsidiary and associated undertakings comprise:- Agriculture Banking and Financial Services Engineering Food Service Investments Further details of the Group's activities are included in the Chairman's statement and the Chief Executive's report on pages 5 to 12. Results and dividends The profit after taxation for the year amounted to £21.9 million (2014: £8.3 million). The Board has proposed a final dividend for the year of 95p per share payable on 1 July 2016 to holders of the ordinary shares registered at the close of business on 10 June 2016. The total dividend for 2016 is therefore 129p per share (126p per share). Details are shown in note 12. Directors and Secretary The directors are listed on page 4. The following directors had beneficial interests in the shares of the company. 31 December 1 January 2015 2015 Camellia Plc ordinary shares of 10p each: Malcolm Perkins 1,673 1,573 Under the company's articles of association all the directors are required to retire annually. Accordingly, Malcolm Perkins, Tom Franks, Susan Walker, Graham Mclean, Chris Relleen, Frédéric Vuilleumier and William Gibson will retire and, being eligible will seek re-election at the AGM on 2 June 2016. None of the directors or their families had a material interest in any contract of significance with the company or any subsidiary during, or at the end of, the financial year. Executive directors Malcolm Perkins was appointed a director in 1999 and Chairman in 2001 having joined Eastern Produce (Holdings) Limited now Linton Park Plc in 1972. He is a chartered accountant and Chairman of the Nomination Committee. Tom Franks was appointed as Chief Executive with effect from 1 September 2015. He joined Camellia as Deputy Chief Executive in October 2014. He is chairman and a non-executive director of Duncan Lawrie Limited and Duncan Lawrie Asset Management Limited. Graham Mclean, a qualified agriculturalist, was appointed as Managing Director of Agriculture in October 2014. He was previously regional director of the Group's operations in Africa and has worked for the Group for 22 years. He is a non-executive director of Kakuzi Limited. Susan Walker was appointed Chief Financial Officer for the Group on 4 June 2015 having joined Camellia in 2014 as Finance Director Designate and was appointed as an executive director on 2 April 2015. She is a chartered certified accountant and a non-executive director of Goodricke Group Limited, United Finance Limited and Duncan Lawrie Limited. Non-Executive directors Chris Relleen was formerly a partner in PricewaterhouseCoopers. He was appointed as independent non-executive director and deputy chairman in January 2006 having previously been a non-executive director of Linton Park Plc. He is a non-executive director and chairman of the Audit Committee of Duncan Lawrie Limited. He is senior independent director, chairman of the Audit Committee and a member of the Nomination and Remuneration committees. William Gibson was appointed as an independent non-executive director in September 2014. He was previously chairman and managing director of Westminster Press and an executive director of the Financial Times Group. He is chairman of the Remuneration Committee and a member of the Audit and Nomination committees. Frédéric Vuilleumier was appointed as an independent non-executive director in March 2013. He is partner of Oberson Abels SA, a law office based in Geneva, Switzerland. He is a member of the Audit Committee. Secretary Julia Morton has been company secretary since September 2011. Substantial shareholdings As at 27 April 2016 the company has been advised of the following interests in the share capital of the company: % of total Beneficial shareholder Shareholder No of Shares voting rights Camellia Private Trust Company Limited Camellia Holding AG 1,427,000 51.67 Alcatel Bell Pensioenfonds VZW Lynchwood Nominees Limited 153,600 5.56 Fide Holding NV Lynchwood Nominees Limited 150,000 5.43 Quaero Capital SA HSBC Global Custody Nominee (UK) Limited 92,800 3.36 Share capital and purchase of own shares The company's share capital comprises one class of ordinary shares of 10 pence each which carry no restrictions on the transfer of shares or on voting rights (other than as set out in the company's articles of association). There are no agreements known to the company between shareholders in the company which may result in restrictions on the transfer of shares or on voting rights in relation to the company. Details of the issued share capital are contained in note 34 to the accounts. At the annual general meeting in 2015, shareholders gave authority for the company to purchase up to 276,200 of its own shares. This authority expires at the conclusion of this year's annual general meeting. A resolution proposing renewal of the authority will be submitted to shareholders at the next annual general meeting. Disclosure of information to auditors PricewaterhouseCoopers LLP has expressed its willingness to continue as auditors of the company and a resolution proposing PricewaterhouseCoopers LLP re-appointment will be put to the annual general meeting. Each of the persons who were directors at the time when this directors' report was approved has confirmed that: (a) so far as each director is aware, there is no relevant audit information of which the company's auditors are unaware; and (b) each director has taken all the steps that ought to have been taken as a director, including making appropriate enquiries of fellow directors and of the company's auditors for that purpose, in order to be aware of any information needed by the company's auditors in connection with preparing their report and to establish that the company's auditors are aware of that information. Future development Details of future development are set out in the Chief Executive's report. Going concern After reviewing the Group's budget for 2016 and other forecasts, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Therefore they continue to adopt the going concern basis in preparing the accounts. Corporate governance The company's statement on corporate governance can be found in the corporate governance report on pages 25 to 28. By order of the Board Julia Morton Secretary 27 April 2016 Corporate governance Statement of compliance This statement describes how the company applies the main principles of UK Corporate Governance Code 2014 ("the Code"). In implementing the Code, the directors have taken account of the company's size and structure and the fact that there is a controlling shareholder. At the time of the company's delisting from the Main Market of the London Stock Exchange and admission to trading on AIM in September 2014, it was stated that the Board did not envisage that there would be any significant alteration to the standards of reporting and governance which the company maintained at that time. AIM companies are not required to comply with the requirements of the Code. However, the Board has chosen to follow the Code for the year to 31 December 2015. The Group consists of a portfolio of businesses which are grouped into independently managed divisions. These divisions report into the Board by function against a variety of metrics including budgets and business plans. The Board The Board currently comprises seven directors, three of whom are independent non-executive directors. The remaining directors are executive directors, including the executive Chairman. Chris Relleen, the Deputy Chairman, has been designated as the senior independent director. The names and brief biographical details of each director appear on pages 22 and 23. There is on-going dialogue between the Chairman and the majority shareholder whose views are reported to the Board. The company is also in contact with other significant shareholders. The Board has established a remuneration committee, audit committee and nomination committee. Terms of reference of each of the committees can be viewed on the company's website. The Board undertook a performance evaluation during the year by way of an internal review. The Board is responsible for managing the Group's business and has adopted a schedule of matters reserved for its approval. The schedule is reviewed annually and covers, inter alia, the following areas: · Strategy · Acquisitions and disposals · Financial reporting and control · Internal controls · Approval of expenditure above specified limits · Approval of transactions and contracts above specified limits · Responsibilities for corporate governance · Board membership and committees · Approval of changes to capital structure. A full copy of the schedule is available on the company's website. A report summarising the Group's financial and operational performance including detailed information on each of its businesses is sent to directors each month. Each director is provided with sufficient information in advance of Board meetings to enable the directors to make informed judgments on matters referred to the Board. The Board met eleven times in 2015. Attendance by directors at Board and committee meetings held during the year was as follows: Director Board Audit Remuneration Malcolm Perkins 11/11 - - Chris Relleen 10/11 3/3 3/3 Tom Franks 11/11 - - Graham Mclean 11/11 - - Susan Walker 9/9 2/2 - William Gibson 10/11 3/3 3/3 Frédéric Vuillieumer 10/11 3/3 - Anil Mathur 4/4 1/1 - Chris Ames 5/5 - - Peter Field 11/11 - - (i) Anil Mathur attended meetings of the audit committee by invitation in his capacity as finance director until his retirement as a director on 4 June 2015. (ii) Chris Ames resigned from the Board on 10 July 2015. (iii) Susan Walker was appointed as a director on 2 April 2015 and attends meetings of the audit committee by invitation in her capacity as Chief Financial Officer. Executive committees The Board has established the Strategy Group, consisting of the Chairman and the executive directors of the Board, and two Executive Committees. The Agriculture Executive Committee is chaired by the Managing Director of Agriculture and includes the Chief Executive, Chief Financial Officer and heads of all the key agricultural operations. The Engineering and Food Service Executive Committee is chaired by the Chief Executive and includes the Chief Financial Officer, the divisional heads of Engineering North, Engineering South and Food Service, the Company Secretary and the Group Head of HR. Banking and Financial Services (being primarily Duncan Lawrie) and Investments report direct to the Chief Executive. Nomination committee The nomination committee is chaired by Malcolm Perkins. Its other members are William Gibson and Chris Relleen. The principal responsibilities of the nomination committee are set out below: · review the balance and composition (including gender and diversity) of the Board, ensuring that they remain appropriate · be responsible for overseeing the Board's succession planning requirements including the identification and assessment of potential Board candidates and making recommendations to the Board for its approval · keep under review the leadership needs of, and succession planning for, the Group in relation to both its executive and non-executive directors and other senior executives. The committee did not meet during the year. Audit committee The audit committee is chaired by Chris Relleen. The other members of the committee are Frédéric Vuilleumier and William Gibson. During 2015, the committee met on three occasions. Principal responsibilities The principal responsibilities of the audit committee are set out below and were undertaken during the year: · to review and monitor the financial statements of the company and the audit of those statements - to monitor compliance with relevant financial reporting requirements and legislation · to monitor the effectiveness and independence of the external auditor · to review effectiveness of the Group's internal control system. The committee regularly reviews the effectiveness of internal audit activities carried out by the company's Group accounting function and senior management · to review non-audit services provided by the external auditors. Significant issues in relation to financial statements The audit committee assesses whether suitable accounting policies have been adopted and whether management has made appropriate estimates and judgements. In the year under review, the audit committee considered the following significant matters in relation to the financial statements: Biological assets - One of the key areas of judgment that the committee considered in reviewing the financial statements was the valuation of biological assets in accordance with IAS 41. Valuations are carried out by external professional valuers or are based on discounted cash flows. These were agreed for consistency of approach and assumptions agreed as reasonable. For more details see note 19 to the accounts. Pensions - A key area of judgment is in relation to the value of the pension scheme obligation. Whilst this is conducted by independent expert actuaries, the size of the obligation means that a relatively minor difference in the assumptions could result in a material change in the obligation. The committee considered the competence of the actuaries and the assumptions adopted and concluded that the work performed is sufficient to support the value. Goodwill and intangibles - The value of goodwill and intangibles is inherently complex and relies on judgment and estimation. The committee consider the performance of the underlying assets and their ability to continue to support the carrying value. As a result, the committee is satisfied that the carrying value is supported. External auditors To assess the effectiveness of the external audit process, the external auditor is required to report to the audit committee and confirm their independence in accordance with ethical standards and that they had maintained appropriate internal safeguards to ensure their independence and objectivity. In addition to the steps taken by the Board to safeguard auditor objectivity, PricewaterhouseCoopers operates a five year rotation policy for audit partners for a listed entity. The company's external audit was last tendered in 2009, which resulted in a change to PricewaterhouseCoopers at that point. The audit committee is currently undertaking a review of the Group's external audit requirements following a change in the rules on audit rotation in India. The outcome of the review will be announced in due course. The committee reviewed those non-audit services provided by the external auditor and satisfied itself that the scale and nature of those services were such that the external auditors objectivity and independence were safeguarded. The committee confirms that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company's performance, business model and strategy. Remuneration committee The remuneration committee is chaired by William Gibson and the other member is Chris Relleen. The responsibilities of the committee include: · the review of the Group's policy relating to remuneration of the chairman, executive directors and the company secretary · to determine the terms of employment and remuneration of the chairman, executive directors and company secretary with a view to ensuring that those individuals are fairly but responsibly rewarded · to approve compensation packages or arrangements following the severance of any executive director's service contract. The remuneration report appears on pages 30 to 32. Insurance The company purchases insurance to cover its directors in respect of legal actions against them in their capacity as directors of the company. The level of cover is currently £20 million. All directors have access to independent professional advice at the company's expense. Share capital structure The share capital of the Group is set out in note 34. Internal control and risk management systems The directors acknowledge that they are responsible for maintaining a sound system of internal control. During the year, the audit committee, on behalf of the Board, reviewed the effectiveness of the framework of the Group's system of internal control, the principal features of which are described below. Decentralisation is a key management philosophy with responsibility for efficient day to day operations delegated to local management. Accountability and delegation of authority are clearly defined with regular communication between Group head office and local management. The performance of each company is continually monitored centrally including a critical review of annual budgets, forecasts and monthly sales, profits and cash reports. Financial results and key business statistics and variances from approved plans are carefully monitored. Senior management regularly visit and review the Group's operating units. However, any system of internal control can provide only reasonable, and not absolute, assurance against material mis-statement or loss. By order of the Board Julia Morton Secretary 27 April 2016 Statement of directors' responsibilities The directors are responsible for preparing the annual report, the directors' remuneration report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare Group and parent company financial statements for each financial year. Under that law the directors have prepared the Group and parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of both the Group and the parent company and of the profit or loss of the Group and company for that period. In preparing these financial statements, the directors are required to: · select suitable accounting policies and apply them consistently · make judgements and accounting estimates that are reasonable and prudent · state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements · prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and the Group and enable them to ensure that the financial statements and the directors' remuneration report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In addition, each of the directors considers that the annual report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company's performance, business model and strategy. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. On behalf of the Board Malcolm Perkins Chairman 27 April 2016 Remuneration report This report is drawn up in accordance with the Companies Act 2006 and the AIM Rules for Companies. Remuneration committee Details of the remuneration committee ("the committee") are set out on page 28. Policy on directors' remuneration In determining remuneration policy and the remuneration of directors, full consideration has been given to the relevant provisions of the UK Corporate Governance Code 2014. The committee seeks to provide remuneration packages that will attract, retain and motivate the best possible person for each position. The committee also wishes to align the interests of executives with shareholders. The Group's activities are based largely on agriculture, which is highly dependent on factors outside management control (e.g. weather and market prices for our produce), and this is a significant consideration as to why the company does not operate profit related bonus, share option or share incentive schemes for directors. The remuneration policy for executives reflects the overriding remuneration philosophy and principles of the wider Group. When determining the remuneration policy and arrangements for directors, the committee considers pay and employment conditions elsewhere in the Group to ensure that pay structures are appropriately aligned and that levels of remuneration remain appropriate in this context. The remuneration policy, approved by shareholders at the AGM held on 5 June 2014, took effect from the date of that AGM and will be applied for a period of three years until the AGM in 2017. This policy takes into account any views of the shareholders expressed to the committee on directors' remuneration. At the AGM on 4 June 2015, the remuneration report for the year to 31 December 2014 was approved by shareholders with 99.97% of the votes cast in favour, 0.02% of the votes cast against and 0.01% of the votes withheld. Service contracts Malcolm Perkins, Tom Franks, Graham Mclean and Susan Walker are each employed on rolling service contracts. Director Date of Service Contract Malcolm Perkins 25 April 2002 Tom Franks 8 April 2015 Graham Mclean 10 April 2015 Susan Walker 14 April 2015 The service contracts are terminable at any time by a one year period of notice from the company or the director. Following their initial appointment non-executive directors may seek re-election by shareholders at each subsequent annual general meeting. Non-executive directors do not have service agreements. There are no specific contractual provisions for compensation upon early termination of a non-executive director's employment. The remuneration committee reviews salaries annually and will seek independent professional advice when appropriate. The following sections on directors' remuneration and pensions have been audited. Directors' remuneration Basic Remuneration Benefits in Kind Loss of Office Employer Pension Contribution Total 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 £ £ £ £ £ £ £ £ £ £ Executive Malcolm Perkins 442,344 433,671 32,680 32,519 - - 475,024 466,190 Tom Franks 426,800 96,250 49,112 6,974 - - - - 475,912 103,224 Susan Walker 175,963 - 80,153 - - - 14,077 - 270,193 - Graham Mclean 255,000 65,500 26,074 89,111 - - 20,400 5,000 301,474 159,611 Chris Ames 161,890 281,007 13,962 26,161 368,896 - - 3,587 544,748 310,755 Peter Field 271,006 265,692 26,231 26,113 - - - - 297,237 291,805 Anil Mathur 109,671 248,860 26,285 42,268 - - - - 135,956 291,128 Non-executive Martin Dünki - 35,795 - - - - - - - 35,795 William Gibson 42,500 14,167 - - - - - - 42,500 14,167 Chris Relleen 62,500 62,500 - - - - - - 62,500 62,500 Charles Vaughan-Johnson - 18,362 - - - - - - - 18,362 Frederic Vuilleumier 40,000 40,000 - - - - - - 40,000 40,000 Totals 1,987,674 1,561,804 254,497 223,146 368,896 - 34,477 8,587 2,645,544 1,793,537 Notes 1. The Executive directors' benefits in kind include the value attributed to medical insurance, permanent health insurance, spouse/partner travel and cash alternatives to company cars. Susan Walker received a payment of £50,000 for relocation expenses. She was appointed as a director on 2 April 2015. 2. Anil Mathur retired as a director on 4 June 2015. 3. Chris Ames resigned from the board on 10 July 2015 and received a payment of £368,896 for loss of office. This included a payment in lieu of notice equivalent to 12 months of base salary and benefits in kind. 4. Chris Relleen receives an additional annual fee for his chairmanship of the Audit Committee and for his non-executive directorship of Duncan Lawrie Limited. 5. William Gibson receives an additional annual fee for his chairmanship of the Remuneration Committee. 6. Martin Dünki resigned as a director on 24 November 2014. 7. Charles Vaughan-Johnson retired as director on 5 June 2014. Directors' pensions UK employees, including executive directors, are eligible to join pension schemes operated within the Group. Malcolm Perkins was a member of The Linton Park Group Pension Scheme up until 28 February 2010. Peter Field and Anil Mathur were members of the Linton Park Pension Scheme 2011 until 5 April 2012. There was no pensionable service for Malcolm Perkins, Peter Field and Anil Mathur during 2015. Tom Franks receives an excess non-pensionable salary supplement equivalent to 10% of base salary. Chris Ames received an excess non-pensionable salary supplement equivalent to 25% of base salary. Graham Mclean and Susan Walker are members of the Linton Park Group Personal Pension Scheme which is a defined contribution based scheme. In addition to the above, an unfunded pension of US$200,000 per annum is paid to Gordon Fox, a former director of the company. By order of the Board Julia Morton Secretary 27 April 2016 Consolidated income statement for the year ended 31 December 2015 2015 2014 Separately Separately Headline disclosed Headline disclosed profit items Total profit items Total (note 4) (note 4) Notes £'000 £'000 £'000 £'000 £'000 £'000 Revenue 2 257,800 - 257,800 238,868 - 238,868 Cost of sales 3 (173,606 ) (6,056 ) (179,662 ) (163,728 ) - (163,728 ) Gross profit 84,194 (6,056 ) 78,138 75,140 - 75,140 Other operating income 1,872 - 1,872 2,179 - 2,179 Distribution costs (12,954 ) - (12,954 ) (12,700 ) - (12,700 ) Administrative expenses (58,004 ) - (58,004 ) (53,507 ) - (53,507 ) Trading profit 3 15,108 (6,056 ) 9,052 11,112 - 11,112 Share of associates' results 5 4,182 - 4,182 1,092 - 1,092 Impairment of available-for-sale financial assets 6 - (516 ) (516 ) - (2,334 ) (2,334 ) Impairment of property, plant and equipment and provisions 7 - 230 230 - (1,134 ) (1,134 ) Profit on disposal of non-current assets 8 - 3,687 3,687 - - - Profit on disposal of available-for-sale investments - 353 353 - 447 447 Gain arising from changes in fair value of biological assets: Excluding Malawi Kwacha exceptional gain 4,419 7,842 Malawi Kwacha exceptional gain 16,220 978 19 - 20,639 20,639 - 8,820 8,820 Profit from operations 19,290 18,337 37,627 12,204 5,799 18,003 Investment income 1,440 - 1,440 2,161 - 2,161 Finance income 9 3,045 2,864 Finance costs 9 (687 ) (608 ) Net exchange gain 9 798 607 Employee benefit expense 9 (1,699 ) (1,044 ) Net finance income 9 3,156 (1,699 ) 1,457 2,863 (1,044 ) 1,819 Profit before tax 23,886 16,638 40,524 17,228 4,755 21,983 Taxation 10 (18,590 ) (13,673 ) Profit for the year 21,934 8,310 Profit attributable to: Owners of the parent 12,449 2,836 Non-controlling interests 9,485 5,474 21,934 8,310 Earnings per share -basic and diluted 13 450.7p 102.7p Statement of comprehensive income for the year ended 31 December 2015 2015 2014 Notes £'000 £'000 Group Profit for the year 21,934 8,310 Other comprehensive income/(expense): Items that will not be reclassified subsequently to profit or loss: Remeasurements of post employment benefit obligations 33 9,115 (20,341 ) Deferred tax movement in relation to post employment benefit obligations 32 619 698 9,734 (19,643 ) Items that may be reclassified subsequently to profit or loss: Foreign exchange translation differences (15,535 ) 7,533 Available-for-sale investments: Valuation gains taken to equity 23 211 2,822 Transferred to income statement on sale 23 (161 ) (364 ) Share of other comprehensive income of associates (51 ) - Tax relating to components of other comprehensive income (29 ) 72 (15,565 ) 10,063 Other comprehensive expense for the year, net of tax (5,831 ) (9,580 ) Total comprehensive income/(expense) for the year 16,103 (1,270 ) Total comprehensive income/(expense) attributable to: Owners of the parent 12,157 (6,801 ) Non-controlling interests 3,946 5,531 16,103 (1,270 ) Company Profit for the year 4,095 3,610 Total comprehensive income for the year 4,095 3,610 Consolidated balance sheet at 31 December 2015 2015 2014 Notes £'000 £'000 Non-current assets Intangible assets 16 7,915 7,072 Property, plant and equipment 17 92,894 104,923 Investment properties 18 15,751 - Biological assets 19 144,821 139,999 Prepaid operating leases 20 840 900 Investments in associates 22 48,882 8,664 Deferred tax assets 32 2,534 184 Available-for-sale financial assets 23 30,594 63,488 Held-to-maturity financial assets 24 27,661 - Other investments - heritage assets 25 9,020 8,864 Retirement benefit surplus 33 176 805 Trade and other receivables 27 22,734 23,303 Total non-current assets 403,822 358,202 Current assets Inventories 26 37,749 41,841 Trade and other receivables 27 55,554 63,292 Held-to-maturity financial assets 24 1,849 - Current income tax assets 772 548 Cash and cash equivalents 28 237,772 257,164 Total current assets 333,696 362,845 Current liabilities Borrowings 30 (5,366 ) (2,855 ) Trade and other payables 29 (258,894 ) (258,292 ) Current income tax liabilities (9,346 ) (5,609 ) Employee benefit obligations 33 (1,017 ) (527 ) Provisions 31 (267 ) (636 ) Total current liabilities (274,890 ) (267,919 ) Net current assets 58,806 94,926 Total assets less current liabilities 462,628 453,128 Non-current liabilities Borrowings 30 (5,131 ) (42 ) Trade and other payables 29 (4,392 ) (5,130 ) Deferred tax liabilities 32 (42,481 ) (41,618 ) Employee benefit obligations 33 (37,793 ) (41,885 ) Other non-current liabilities - (98 ) Total non-current liabilities (89,797 ) (88,773 ) Net assets 372,831 364,355 Equity Called up share capital 34 282 282 Share premium 15,298 15,298 Reserves 314,850 306,124 Equity attributable to owners of the parent 330,430 321,704 Non-controlling interests 42,401 42,651 Total equity 372,831 364,355 Company balance sheet at 31 December 2015 2015 2014 Notes £'000 £'000 Non-current assets Investments in subsidiaries 21 73,508 73,508 Available-for-sale financial assets 23 170 170 Other investments - heritage assets 25 10,213 8,869 Total non-current assets 83,891 82,547 Current assets Amounts due from group undertakings 10,535 4,885 Current income tax asset 74 74 Cash and cash equivalents 28 2,202 - Total current assets 12,811 4,959 Current liabilities Trade and other payables 29 (133 ) (134 ) Amounts due to group undertakings (30,168 ) (21,483 ) Total current liabilities (30,301 ) (21,617 ) Net current liabilities (17,490 ) (16,658 ) Total assets less current liabilities 66,401 65,889 Non-current liabilities Deferred tax liabilities 32 (216 ) (240 ) Total non-current liabilities (216 ) (240 ) Net assets 66,185 65,649 Equity Called up share capital 34 282 282 Share premium 15,298 15,298 Reserves 50,605 50,069 Total equity 66,185 65,649 The notes on pages 40 to 95 form part of the financial statements. The financial statements on pages 33 to 95 were approved on 27 April 2016 by the board of directors and signed on their behalf by: M C Perkins Chairman Consolidated cash flow statement for the year ended 31 December 2015 2015 2014 Notes £'000 £'000 Cash generated from operations Cash flows from operating activities 35 39,384 17,080 Interest paid (614 ) (655 ) Income taxes paid (9,368 ) (11,595 ) Interest received 3,081 2,871 Dividends received from associates 1,185 244 Net cash flow from operating activities 33,668 7,945 Cash flows from investing activities Purchase of intangible assets (1,362 ) (66 ) Purchase of property, plant and equipment (10,686 ) (19,019 ) Proceeds from sale of non-current assets 6,542 264 Purchase of investment property (8,700 ) - Biological asset - new planting (5,612 ) (5,072 ) Part disposal of subsidiaries 299 251 Non-controlling interest subscription - 88 Purchase of own shares - (471 ) Purchase of available-for-sale financial assets (2,288 ) (308 ) Proceeds from sale of available-for-sale financial assets 1,677 1,935 Income from investments 1,440 2,161 Purchase of other investments - heritage assets (164 ) (126 ) Proceeds from sale of other investments - heritage assets 12 5 Net cash flow from investing activities (18,842 ) (20,358 ) Cash flows from financing activities Equity dividends paid (3,480 ) (3,452 ) Dividends paid to non-controlling interests (4,495 ) (3,990 ) New loans 6,000 157 Loans repaid (397 ) (202 ) Finance lease payments (4 ) (15 ) Net cash flow from financing activities (2,376 ) (7,502 ) Net increase/(decrease) in cash and cash equivalents 12,450 (19,915 ) Cash and cash equivalents at beginning of year 28 54,122 72,900 Exchange (losses)/gains on cash (966 ) 1,137 Cash and cash equivalents at end of year 28 65,606 54,122 For the purposes of the cash flow statement, cash and cash equivalents are included net of overdrafts repayable on demand. These overdrafts are excluded from the definition of cash and cash equivalents disclosed on the balance sheet. Cash and cash equivalents held by the group's banking subsidiaries are excluded. Company cash flow statement for the year ended 31 December 2015 2015 2014 Notes £'000 £'000 Cash generated from operations Profit before tax 4,071 3,592 Adjustments for: (Profit)/loss on disposal of investments (21 ) 2 Interest income (315 ) (308 ) Dividends from group companies (5,500 ) (5,000 ) Decrease in trade and other payables (1 ) (4 ) Net movement in intra-group balances 3,035 532 Cash used in operations 1,269 (1,186 ) Interest received 315 308 Net cash flow from operating activities 1,584 (878 ) Cash flows from investing activities Proceeds from sale of investments 32 5 Purchase of other investments - heritage assets (1,355 ) (126 ) Purchase of own shares - (471 ) Dividends received 5,500 5,000 Net cash flow from investing activities 4,177 4,408 Cash flows from financing activities Equity dividends paid (3,559 ) (3,530 ) Net cash flow from financing activities (3,559 ) (3,530 ) Net movement in cash and cash equivalents 2,202 - Cash and cash equivalents at beginning of year 28 - - Exchange gain on cash - - Cash and cash equivalents at end of year 28 2,202 - Statement in changes in equity for the year ended 31 December 2015 Share Share Treasury Retained Other Non-controlling Total capital premium shares earnings reserves Total interests equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Group At 1 January 2014 283 15,298 (400 ) 323,680 (6,395 ) 332,466 40,788 373,254 Total comprehensive income/(expense) for the year - - - (16,458 ) 9,657 (6,801 ) 5,531 (1,270 ) Dividends - - - (3,452 ) - (3,452 ) (3,990 ) (7,442 ) Non-controlling interest subscription - - - (38 ) - (38 ) 322 284 Purchase of own shares (1 ) - - (471 ) 1 (471 ) - (471 ) At 31 December 2014 282 15,298 (400 ) 303,261 3,263 321,704 42,651 364,355 Total comprehensive (expense)/income for the year - - - 22,160 (10,003 ) 12,157 3,946 16,103 Dividends - - - (3,480 ) - (3,480 ) (4,495 ) (7,975 ) Non-controlling interest subscription - - - (35 ) - (35 ) 299 264 Share of associate's other equity movements - - - 101 - 101 - 101 Loss on dilution of interest in associate - - - (17 ) - (17 ) - (17 ) At 31 December 2015 282 15,298 (400 ) 321,990 (6,740 ) 330,430 42,401 372,831 Company At 1 January 2014 283 15,298 - 38,326 12,133 66,040 - 66,040 Total comprehensive income for the year - - - 3,610 - 3,610 - 3,610 Dividends - - - (3,530 ) - (3,530 ) - (3,530 ) Purchase of own shares (1 ) - - (471 ) 1 (471 ) - (471 ) At 31 December 2014 282 15,298 - 37,935 12,134 65,649 - 65,649 Total comprehensive income for the year - - - 4,095 - 4,095 - 4,095 Dividends - - - (3,559 ) - (3,559 ) - (3,559 ) At 31 December 2015 282 15,298 - 38,471 12,134 66,185 - 66,185 Other reserves of the group and company includes a £33,000 (2014: £33,000) capital redemption reserve and, in respect of the group, net exchange differences of £49,298,000 deficit (2014: £39,021,000 deficit). Group retained earnings includes £140,684,000 (2014: £143,122,000) which would require exchange control permission for remittance as dividends. Accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. Basis of preparation The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, IFRS IC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared on the historical cost basis as modified by the revaluation of biological assets, available-for-sale investments, financial assets and financial liabilities. Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year. Going concern The directors have, at the time of approving the financial statements, a reasonable expectation that the company and the group have adequate resources to continue to operate for the foreseeable future. They therefore continue to adopt the going concern basis of accounting in preparing the financial statements. Basis of consolidation Subsidiaries The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its subsidiaries) made up to 31 December each year. On acquisition, the assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the income statement in the period of acquisition. The group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Associates An associate is an entity over which the group is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of that entity. Investments in associates are accounted for by the equity method of accounting. Under this method the group's share of the post-acquisition profits or losses of associates is recognised in the income statement and its share of post-acquisition movements in reserves is recognised in reserves. Foreign currency translation Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Translation differences on non-monetary items carried at fair value are reported as part of the fair value gain or loss. Gains and losses arising on retranslation are included in the income statement, except for exchange differences arising on non-monetary items where the changes in fair value are recognised directly in equity. The consolidated financial statements are presented in sterling which is the company's functional and presentation currency. On consolidation, income statements and cash flows of foreign entities are translated into pounds sterling at average exchange rates for the year and their balance sheets are translated at the exchange rates ruling at the balance sheet date. Exchange differences arising from the translation of the net investment in foreign entities and of borrowings designated as hedges of such investments, are taken to equity. When a foreign entity is sold such exchange differences arising since 1 January 2004 are recognised in the income statement as part of the gain or loss on disposal. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the exchange rate ruling on the date of acquisition. The group has elected to treat goodwill and fair value adjustments arising on acquisitions prior to 1 January 2004, the date of the group's transition from UK GAAP to IFRS, as sterling denominated assets and liabilities. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, value added tax and other sales related taxes and after eliminating intra-group sales. Revenue from the sale of goods is recognised when all the following conditions are satisfied: (i) the group has transferred to the buyer the significant risks and rewards of ownership of the goods: (ii) the group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (iii) the amount of revenue can be measured reliably; (iv) it is probable that the economic benefits associated with the transaction will flow to the entity; and (v) the costs incurred or to be incurred in respect of the transaction can be measured reliably. Invoices are raised when goods are despatched or when the risks and rewards of ownership otherwise irrevocably pass to the customer. In respect of food storage and distribution services, revenue for handling is recognised at the point that the goods are actually handled. In respect of engineering services, revenue is recognised based upon the stage of completion and includes costs incurred to date, plus accrued profits. In respect of banking and financial services, fees and commissions are generally recognised on an accrual basis when the service has been provided. Investment income Investment income is recognised when the right to receive payment of a dividend is established. Segmental reporting The adoption of IFRS 8 requires operating segments to be identified on the basis of internal reports used to assess performance and allocate resources by the chief operating decision maker. The chief operating decision maker has been identified as the Strategy Group led by the CEO. Inter segment sales are not significant. Exceptional items Exceptional items are those significant items which are separately disclosed by virtue of their size or incidence to enable a full understanding of the group's financial performance. Full disclosure of exceptional items are set out in notes 6, 7 and 8. Intangible assets (i) Goodwill Goodwill arising on consolidation represents the excess of the cost of acquisition over the group's interest in the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary or associate at the date of acquisition. Goodwill is recognised as an asset and reviewed for impairment at least annually or more frequently if events or changes in circumstances indicate a potential impairment. Any impairment is recognised immediately in the income statement and is not subsequently reversed. On disposal of a subsidiary or associate, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. (ii) Identifiable intangible assets Identifiable intangible assets include customer relationships and other intangible assets acquired on the acquisition of subsidiaries. Acquired intangible assets with finite lives are initially recognised at cost and amortised on a straight-line basis over their estimated useful lives, not exceeding 20 years. Intangible assets' estimated lives are re-evaluated annually and an impairment test is carried out if certain indicators of impairment exist. (iii) Computer software Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Computer software licences are held at cost and are amortised on a straight-line basis over 3 to 7 years. Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Costs that are directly associated with identifiable and unique software products controlled by the group and which are expected to generate economic benefits exceeding costs beyond one year, are recognised as an intangible asset and amortised over their estimated useful lives. Property, plant and equipment Land and buildings comprises mainly factories and offices. All property, plant and equipment is shown at cost less subsequent depreciation and impairment, except for land, which is shown at cost less impairment. Cost includes expenditure that is directly attributable to the acquisition of these assets. On transition to IFRS, the group followed the transitional provisions and elected that previous UK GAAP revaluations be treated as deemed cost. Subsequent costs are included in the assets' carrying amount, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. Repairs and maintenance are charged to the income statement during the financial period in which they are incurred. No depreciation is provided on freehold land. Depreciation of other property, plant and equipment is calculated to write off their cost less residual value over their expected useful lives. The rates of depreciation used for the other assets are as follows: Freehold and long leasehold buildings nil to 10 per cent. per annum Other short leasehold land and buildings unexpired term of the lease Plant, machinery, fixtures, fittings and equipment 4 to 33 per cent. per annum Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets, or, where shorter, over the term of the relevant lease. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is included in the income statement. Investment properties Properties held to earn rental income rather than for the purpose of the group's principal activities are classified as Investment properties. Investment properties are recorded at cost less accumulated depreciation and any recognised impairment loss. The depreciation policy is consistent with those described for other group properties. Income from investment properties is disclosed in 'Revenue'. The related operating costs are immaterial and are included within administrative expenses. Biological assets Biological assets are measured at each balance sheet date at fair value. Any changes in fair value are recognised in the income statement in the year in which they arise. The basis under which fair value is determined for the group's biological assets are described below: Tea and rubber are generally valued at each year end by independent professional valuers. The valuations take into account assumptions about the expected life span of plantings, yields, selling prices and sales of similar assets. Costs of new areas planted are included as "new planting additions" in the biological assets note. Growing costs for tea and rubber are accounted for as a cost of inventory in the year in which they are incurred. The group does not recognise the fair value of harvested green leaf within cost of sales in the income statement. The increase in value is in effect offset against the fair value movement in biological assets. Annually harvested agricultural assets such as edible nuts, citrus and avocados are generally valued on the basis of net present values of expected future cash flows from those assets, discounted at appropriate pre-tax rates and including certain assumptions about expected life span of the plantings, yields, selling prices, costs and discount rates. Growing costs incurred during the year are treated as "capitalised cultivation costs" in biological assets. As the crop is harvested and sold these accumulated costs are shown as "decrease due to harvesting" in biological assets and charged to cost of sales in the income statement. Timber is valued on the basis of expected future cash flows from scheduled harvesting dates, discounted at appropriate pre-tax rates and including certain assumptions about expected life span, yields, selling prices, costs and discount rates. Growing costs incurred during the year are treated as "new planting additions" in biological assets. As the trees are harvested the value accumulated to date of harvest is treated as "decrease due to harvesting" and charged to cost of sales in the income statement. Agricultural crops such as soya and maize are valued at estimated selling price less future anticipated costs. Growing costs incurred during the year are treated as "capitalised cultivation costs" in biological assets. As the crops are harvested the value accumulated to date of harvest is treated as "decrease due to harvesting" and charged to cost of sales in the income statement. Financial assets The group classifies its financial assets in the following categories: loans and receivables, available-for-sale and held-to-maturity. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The group's loans and receivables comprise 'trade and other receivables' and 'cash and cash equivalents' in the balance sheet. Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period. Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the group's management has the positive intention and ability to hold to maturity. Were the group to sell other than an insignificant amount of held-to-maturity assets, the entire category would be tainted and reclassified as available-for-sale. Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets are subsequently carried at fair value. Available-for-sale financial assets include shares of listed and unlisted companies. The fair values of listed shares are based on current bid values. Shares in unlisted companies are measured at cost as fair value cannot be reliably measured. Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement as 'Profit/(loss) on disposal of available-for-sale investments'. Dividends on available-for-sale equity instruments are recognised in the income statement as part of investment income when the group's right to receive payments is established. Loans and receivables and held to maturity investments are subsequently carried at amortised cost using the effective interest method. Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Other investments - heritage assets Other investments comprise fine art, documents, manuscripts and philately which are measured at cost as fair value cannot be reliably measured. Investments in subsidiary companies Investments in subsidiary companies are included at cost plus incidental expenses less any provision for impairment. Impairment reviews are performed by the directors when there has been an indication of potential impairment. Impairment of financial assets (i) Assets carried at amortised costs The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. For the loans and receivables category, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement. (ii) Assets classified as available-for-sale In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss is removed from equity and recognised in profit or loss. Impairment losses recognised in the consolidated income statement on equity instruments are not reversed through the consolidated income statement. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the consolidated income statement. Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment and whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. Assets that are subject to amortisation are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets' carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets' fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Leases Leases of property, plant and equipment where the group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of fair value and the estimated present value of the underlying lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate of interest on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in liabilities. The interest element of the finance cost is charged to the income statement over the lease period. Property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset's useful life and the lease term. Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. Inventories Agricultural produce included within inventory largely comprises stock of 'black' tea. This is valued at the lower of cost and net realisable value. Cost includes the growing costs of 'green leaf' up to the date of harvest and factory costs incurred to bring the tea to its manufactured state. In accordance with IAS 41, on initial recognition, agricultural produce is required to be measured at fair value less estimated point of sale costs. Given that there is no open market for green leaf, this is recognised in inventory at the lower of cost or net realisable value. Other inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs of completion and selling expenses. Trade and other receivables Trade receivables are carried at original invoice amount less provision made for impairment of these receivables. A provision for impairment of trade receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms. The amount of the provision is recognised in the income statement. Amounts due from customers of banking subsidiaries consist of loans and receivables which are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the bank provides money, goods or services directly to a customer with no intention of trading the receivable and are carried at amortised cost using the effective interest method. Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. In respect of the group's banking operation, cash and cash equivalents include cash and non-restricted balances with central banks, treasury bills and other eligible bills, loans and advances to banks, amounts due from other banks and short-term government securities. Non-current assets held for sale Non-current assets classified as held for sale are measured at the lower of the carrying amount and fair value less costs to sell. Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Borrowings Interest-bearing bank loans and overdrafts are initially recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis to the income statement using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Taxation The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than in a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related tax asset is realised or the tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future. Employee benefits (i) Pension obligations Group companies operate various pension schemes. The schemes are funded through payments to insurance companies or trustee-administered funds. The group has both defined benefit and defined contribution plans. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate fund. The group has no legal or constructive obligations to pay further contributions to the fund. Contributions are recognised as an expense in the income statement when they are due. A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The pension cost for defined benefit schemes is assessed in accordance with the advice of qualified independent actuaries using the "projected unit" funding method. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. Independent actuaries calculate the obligation annually using the "projected unit" funding method. Actuarial gains and losses arising from experience adjustments and changes in actuarial adjustments are recognised in full in the period in which they occur, they are not recognised in the income statement and are presented in the statement of comprehensive income. Past service costs are recognised directly in the income statement. (ii) Other post-employment benefit obligations Some group companies have unfunded obligations to pay terminal gratuities to employees. Provisions are made for the estimated liability for gratuities as a result of services rendered by employees up to the balance sheet date and any movement in the provision is recognised in the income statement. The estimated monetary liability for employees' accrued annual leave entitlement at the balance sheet date is recognised as an accrual. Provisions Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. The provision for onerous lease commitments is based on the expected vacancy period. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where any group company purchases the company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company's equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the company's equity holders. Dividend distribution Dividend distribution to the company's shareholders is recognised as a liability in the group's financial statements in the period in which the dividends are approved by the company's shareholders. Interim dividends are recognised when paid. Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The group makes estimates and assumptions concerning the future. The resulting accounting will, by definition, seldom equal the actual results. The estimates and assumptions that have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out below. (i) Impairment of assets The group has significant investments in intangible assets, property, plant and equipment, biological assets, associated companies and other investments. These assets are tested for impairment when circumstances indicate there may be a potential impairment. Factors considered which could trigger an impairment review include the significant fall in market values, significant underperformance relative to historical or projected future operating results, a major change in market conditions or negative cash flows. (ii) Depreciation and amortisation Depreciation and amortisation is based on management estimates of the future useful life of property, plant and equipment and intangible assets. Estimates may change due to technological developments, competition, changes in market conditions and other factors and may result in changes in the estimated useful life and in the depreciation and amortisation charges. (iii) Biological assets Biological assets are carried at fair value less estimated point-of-sale costs. Where meaningful market-determined prices do not exist to assess the fair value of biological assets, the fair value has been determined based on the net present value of expected future cash flows from those assets, discounted at appropriate pre-tax rates. In determining the fair value of biological assets where the discounting of expected future cash flows has been used, the directors have made certain assumptions about expected life-span of the plantings, yields, selling prices, costs and discount rates. (iv) Retirement benefit obligations Pension accounting requires certain assumptions to be made in order to value obligations and to determine the impact on the income statement. These figures are particularly sensitive to assumptions for discount rates, mortality, inflation rates and expected long-term rates of return on assets. Details of assumptions made are given in note 33. (v) Taxation The group is subject to taxes in numerous jurisdictions. Significant judgement is required in determining worldwide provisions for taxes. There are many transactions and calculations during the ordinary course of business for which the ultimate tax determination is uncertain. (vi) Identifiable intangible assets - customer relationships As described in note 16, goodwill and identifiable intangible assets relating to customer relationships acquired are valued using industry average multiples of assets under management, with the assumption being made that the nature of the group's assets under management are not dissimilar from industry averages and therefore will be valued in a similar manner. The valuation technique used is therefore sensitive to this assumption. Changes in accounting policy and disclosures (i) New and amended standards adopted by the group There are no new standards, amendments or interpretations with a material impact on the group for the year ended 31 December 2015. (ii) Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the group The following standards and amendments to existing standards have been published and are mandatory for the group's accounting periods beginning on or after 1 January 2016 or later periods, but the group has not adopted them early: A number of new standards and amendments to standards and interpretations are effective for annual periods beginning on or after 1 January 2016, and have not been applied in preparing these consolidated financial statement. None of these is expected to have a significant effect on the consolidated financial statements of the group, except the following set out below: IAS 16 and IAS 41 (amendments) Reporting for bearer plants- effective from 1 January 2016 These amendments change the reporting for bearer plants, such as tea bushes, avocados, macadamia and rubber trees. Bearer plants should be accounted for under IAS 16 in the same way as property, plant and equipment because their operation is similar to that of manufacturing. The produce on bearer plants will remain in the scope of IAS 41. This standard has been endorsed by the EU with an effective date of 1 January 2016. This will have a material impact on the results of the group, the impact of which is illustrated on page 13. IFRS 15 Revenue from contracts with customers - effective from 1 January 2018 This standard will replace IAS 18 which covers contracts for good and services and IAS 11 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer - so the notion of control replaces the existing notion of risks and rewards. The standard permits a modified retrospective approach for the adoption. Under this approach entities will recognise transitional adjustments in retained earnings on the date of initial application (eg 1 January 2018), ie without restating the comparative period. They will only need to apply the new rules to contracts that are not completed as of the date of initial application. At this stage, the group is not able to estimate the impact of the new rules on the financial statements. This standard has not yet been endorsed by the EU. Notes to the accounts 1 Business and geographical segments The principal activities of the group are as follows: Agriculture Engineering Food Service Banking and Financial Services For management reporting purposes these activities form the basis on which the group reports its primary divisions. Segment information about these businesses is presented below: Banking and Agriculture Engineering Food Service Financial Services Other operations Consolidated 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Revenue External sales 186,547 164,247 24,126 28,872 31,903 30,941 13,077 12,373 2,147 2,435 257,800 238,868 Trading profit Segment profit/(loss) 26,300 27,204 (5,462 ) (8,387 ) 723 943 (3,644 ) (2,496 ) (103 ) 131 17,814 17,395 Unallocated corporate expenses (8,762 ) (6,283 ) Trading profit 9,052 11,112 Share of associates' results 4,182 1,092 4,182 1,092 Impairment of available-for-sale financial assets (516 ) (2,334 ) Impairment of property, plant and equipment and provisions 230 (1,134 ) Profit on disposal of non-current assets 3,687 - Profit on disposal of available-for-sale investments 353 447 Gain arising from changes in fair value of biological assets 20,639 8,820 20,639 8,820 Investment income 1,440 2,161 Net finance income 1,457 1,819 Profit before tax 40,524 21,983 Taxation (18,590 ) (13,673 ) Profit after tax 21,934 8,310 Other information Segment assets 311,406 293,750 21,018 30,907 22,817 23,004 247,179 254,503 1,620 1,830 604,040 603,994 Investments in associates 48,882 8,664 48,882 8,664 Unallocated assets 84,596 108,389 Consolidated total assets 737,518 721,047 Segment liabilities (45,399 ) (32,252 ) (4,336 ) (12,107 ) (4,533 ) (5,814 ) (211,100 ) (217,449 ) (516 ) (577 ) (265,884 ) (268,199 ) Unallocated liabilities (98,803 ) (88,493 ) Consolidated total liabilities (364,687 ) (356,692 ) Capital expenditure 7,593 8,492 853 2,213 1,640 2,734 175 193 9,125 5,387 19,386 19,019 Depreciation (4,967 ) (4,876 ) (1,989 ) (2,033 ) (2,011 ) (2,229 ) (305 ) (354 ) (252 ) (167 ) (9,524 ) (9,659 ) Amortisation (6 ) (10 ) (7 ) (2 ) (111 ) (83 ) (392 ) (411 ) (516 ) (506 ) Impairments (824 ) (552 ) (2,360 ) (552 ) (3,184 ) Segment assets consist primarily of intangible assets, property, plant and equipment, investment properties, biological assets, prepaid operating leases, inventories, trade and other receivables and cash and cash equivalents. Receivables for tax have been excluded. Investments in associates, valued using the equity method, have been shown separately in the segment information. Segment liabilities are primarily those relating to the operating activities and generally exclude liabilities for taxes, short-term loans, finance leases and non-current liabilities. Geographical segments The group operations are based in nine main geographical areas. The United Kingdom is the home country of the parent. The principal geographical areas in which the group operates are as follows: United Kingdom Continental Europe Bangladesh India Kenya Malawi North America and Bermuda South Africa South America The following table provides an analysis of the group's sales by geographical market, irrespective of the origin of the goods/services: 2015 2014 £'000 £'000 United Kingdom 62,054 67,478 Continental Europe 30,512 21,396 Bangladesh 17,875 16,645 India 63,495 58,828 Kenya 34,618 25,933 Malawi 5,860 6,092 North America and Bermuda 8,991 11,475 South Africa 1,368 1,168 South America 3,738 5,125 Other 29,289 24,728 257,800 238,868 The following is an analysis of the carrying amount of segment assets and additions to property, plant and equipment and investment properties, analysed by the geographical area in which the assets are located: Carrying amount of segment assets Additions to property, plant and equipment Additions to investment properties 2015 2014 2015 2014 2015 2014 £'000 £'000 £'000 £'000 £'000 £'000 United Kingdom 292,022 304,876 2,939 10,052 8,700 - Continental Europe 4,923 5,590 147 412 - - Bangladesh 59,308 52,663 745 988 - - India 84,897 79,712 2,676 2,883 - - Kenya 73,041 66,189 2,750 1,335 - - Malawi 59,498 62,005 591 1,746 - - North America and Bermuda 11,793 11,170 238 670 - - South Africa 9,883 10,347 387 507 - - South America 8,675 11,442 213 426 - - 604,040 603,994 10,686 19,019 8,700 - Results of banking subsidiaries 2015 2014 £'000 £'000 Interest receivable third parties 3,157 2,415 group companies 32 - Interest payable third parties (576 ) (163 ) group companies (24 ) (17 ) Net interest income 2,589 2,235 Fee and commission income 11,418 10,707 Fee and commission expense (922 ) (586 ) Inter-segment net interest (8 ) 17 Revenue 13,077 12,373 Other operating income 45 211 13,122 12,584 Operating expenses (16,766 ) (15,080 ) Segment loss (3,644 ) (2,496 ) 2 Revenue An analysis of the group's revenue is as follows: 2015 2014 £'000 £'000 Sale of goods 187,712 165,768 Distribution and warehousing revenue 31,903 30,941 Engineering services revenue 24,126 28,872 Banking service revenue 13,077 12,373 Agency commission revenue 523 644 Property rental revenue 459 270 Total group revenue 257,800 238,868 Other operating income 1,872 2,179 Investment income 1,440 2,161 Interest income 3,045 2,864 Total group income 264,157 246,072 3 Trading profit 2015 2014 £'000 £'000 The following items have been included in arriving at trading profit: Employment costs (note 14)* 100,167 82,113 Inventories: Cost of inventories recognised as an expense (included in cost of sales) 124,013 110,492 Cost of inventories provision recognised as an expense (included in cost of sales) 520 411 Cost of inventories provision reversed (included in cost of sales) (22 ) (19 ) Depreciation of property, plant and equipment: Owned assets 9,371 9,619 Under finance leases 114 40 Amortisation of intangibles (included in administrative expenses) 516 506 Impairment of available-for-sale financial assets (included in administrative expenses) 36 26 Profit on disposal of property, plant and equipment (138 ) (125 ) Operating leases - lease payments: Plant and machinery 780 353 Property 711 938 Repairs and maintenance expenditure on property, plant and equipment 4,505 4,650 * Includes a charge of £6,056,000 (2014: £nil) in cost of sales for past service relating to recently enacted legislation in Bangladesh which requires companies to make a payment on retirement or other events terminating employment, based upon compensation and length of service. Currency exchange (gains)/losses (credited)/charged to income include: Revenue (1,747 ) (652 ) Cost of sales 70 (16 ) Distribution costs 18 (173 ) Administrative expenses (52 ) 14 Finance income (798 ) (607 ) (2,509 ) (1,434 ) Included in the amounts above is an exchange gain of £1,792,000 (2014: £1,879,000 gain) relating to the Malawian Kwacha. During the year the group (including its overseas subsidiaries) obtained the following services from the company's auditor and its associates: Audit services: Statutory audit: Parent company and consolidated financial statements 184 179 Subsidiary companies 755 691 939 870 Audit - related regulatory reporting 71 60 Tax services: Compliance services 25 19 Advisory services 105 - Other services not covered above 288 30 1,428 979 4 Headline profit The group seeks to present an indication of the underlying performance which is not impacted by exceptional items or items considered non-operational in nature. This measure of profit is described as 'headline' and is used by management to measure and monitor performance. The following items have been excluded from the headline measure and have been separately disclosed: - Provision for past service costs in Bangladesh. - Exceptional items, including profit and losses from disposal of non-current assets and available-for-sale investments and impairments of non-current assets. - Gains and losses arising from changes in fair value of biological assets, which are a non-cash item, and the directors believe should be excluded to give a better understanding of the group's underlying performance. - Financing income and expense relating to retirement benefits. 5 Share of associates' results The group's share of the results of associates is analysed below: 2015 2014 £'000 £'000 Profit before tax 5,188 1,814 Taxation (1,006 ) (722 ) Profit after tax 4,182 1,092 Following a re-evaluation of the group's relationship with BF&M Limited (note 22), six months of the group's share of BF&M's result for the period ending 31 December 2015 have been included in the above results. In addition, £22,677,000 has been credited to the income statement which reflected the negative goodwill arising from the recognition of BF&M Limited as an associate, this has been offset by an impairment provision of £22,677,000 which has been provided against the group's equity carrying value of this investment to reflect its fair value. The net effect of these two items on the income statement is £nil. 6 Impairment of available-for-sale financial assets Impairment provisions of £279,000 (2014: £2,334,000) and £237,000 (2014: £nil) have been made against the group's investments in Ascendant Group, a Bermudian power company and Bermuda Press Holdings, a Bermudian newspaper publishing and commercial printing company respectively, following significant long-term declines in the value of these investments. 7 Impairment of property, plant and equipment and provisions Following the closure of AKD Engineering Limited in June 2015 and the subsequent sale of the property, plant and equipment, the provisions made in 2014 have now been utilised resulting in a £230,000 credit of excess amounts. In 2014, a total provision of £1,134,000 was made, which included a £824,000 impairment provision against property, plant and equipment and £310,000 of provisions including £267,000 in relation to an onerous lease. 8 Profit on disposal of non-current assets A profit of £1,613,000 was realised in relation to the property, plant and equipment previously owned by AKD Engineering Limited which was sold following the closure of the business at the end of June 2015. Profit of £2,074,000 was realised during the year in relation to the disposal of former sites owned by Abbey Metal Finishing Company Limited and GU Cutting and Grinding Services Limited. 9 Finance income and costs 2015 2014 £'000 £'000 Interest payable on loans and bank overdrafts (687 ) (607 ) Interest payable on obligations under finance leases - (1 ) Finance costs (687 ) (608 ) Finance income - interest income on short-term bank deposits 3,045 2,864 Net exchange gain on foreign cash balances 798 607 Employee benefit expense (note 33) (1,699 ) (1,044 ) Net finance income 1,457 1,819 The above figures do not include any amounts relating to the banking subsidiaries. 10 Taxation Analysis of charge in the year 2015 2014 £'000 £'000 £'000 Current tax UK corporation tax UK corporation tax at 20.25 per cent. (2014: 21.50 per cent.) 152 882 Double tax relief (152 ) (882 ) - - Foreign tax Corporation tax 11,723 10,353 Adjustment in respect of prior years 1,536 646 13,259 10,999 Total current tax 13,259 10,999 Deferred tax Origination and reversal of timing differences Overseas 5,331 2,674 Tax on profit on ordinary activities 18,590 13,673 Factors affecting tax charge for the year Profit on ordinary activities before tax 40,524 21,983 Share of associated undertakings profit (4,182 ) (1,092 ) Group profit on ordinary activities before tax 36,342 20,891 Tax on ordinary activities at the standard rate of corporation tax in the UK of 20.25 per cent. (2014: 21.5 per cent.) 7,359 4,492 Effects of: Adjustment to tax in respect of prior years 1,536 646 Expenses not deductible for tax purposes 1,765 2,477 Adjustment in respect of foreign tax rates 4,991 4,100 Additional tax arising on dividends from overseas companies 1,244 643 Other income not charged to tax (1,295 ) (1,787 ) Increase in tax losses carried forward 2,350 3,207 Movement in other timing differences 640 (105 ) Total tax charge for the year 18,590 13,673 11 Profit for the year 2015 2014 £'000 £'000 The profit of the company was: 4,095 3,610 The company has taken advantage of the exemption under Section 408 of the Companies Act 2006 not to disclose its income statement. 12 Equity dividends 2015 2014 £'000 £'000 Amounts recognised as distributions to equity holders in the period: Final dividend for the year ended 31 December 2014 of 92p (2013: 91p) per share 2,541 2,513 Interim dividend for the year ended 31 December 2015 of 34p (2014: 34p) per share 939 939 3,480 3,452 Dividends amounting to £79,000 (2014: £78,000) have not been included as group companies hold 62,500 issued shares in the company. These are classified as treasury shares. Proposed final dividend for the year ended 31 December 2015 of 95p (2014: 92p) per share 2,683 2,599 The proposed final dividend is subject to approval by the shareholders at the annual general meeting and has not been included as a liability in these financial statements. 13 Earnings per share (EPS) 2015 2014 Weighted Weighted average average number of number of Earnings shares EPS Earnings shares EPS £'000 Number Pence £'000 Number Pence Basic and diluted EPS Attributable to ordinary shareholders 12,449 2,762,000 450.7 2,836 2,762,264 102.7 Basic and diluted earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period, excluding those held by the group as treasury shares (note 34). 14 Employees 2015 2014 Number Number Average number of employees by activity: Agriculture 77,552 79,994 Engineering 319 390 Food Service 307 283 Banking and Financial Services 154 127 Central Management 22 23 Other 21 17 78,375 80,834 2015 2014 £'000 £'000 Employment costs: Wages and salaries 84,280 74,307 Social security costs 3,540 3,626 Employee benefit obligations (see note 33) - UK 2,138 1,872 - Overseas 10,209 2,308 100,167 82,113 Total remuneration paid to key employees who are members of the Executive Committees and who are key employees of Duncan Lawrie, excluding directors of Camellia Plc, amounted to £844,000 (2014: £875,000). Further details of directors' emoluments are set out on pages 30 to 31. 15 Emoluments of the directors 2015 2014 £'000 £'000 Aggregate emoluments excluding pension contributions 2,611 1,785 Emoluments of the highest paid director excluding pension contributions were £476,000 (2014: £466,000). Further details of directors' emoluments are set out on pages 30 to 31. 16 Intangible assets Customer Computer Goodwill relationships software Total £'000 £'000 £'000 £'000 Group Cost At 1 January 2014 3,978 4,814 2,466 11,258 Exchange differences - - 9 9 Additions - - 66 66 Reclassification from property, plant and equipment - - 2,503 2,503 At 1 January 2015 3,978 4,814 5,044 13,836 Exchange differences - - (1 ) (1 ) Additions - - 1,362 1,362 Disposals - - (43 ) (43 ) At 31 December 2015 3,978 4,814 6,362 15,154 Amortisation At 1 January 2014 - 1,833 2,076 3,909 Exchange differences - - 8 8 Reclassification from property, plant and equipment - - 2,341 2,341 Charge for the year - 241 265 506 At 1 January 2015 - 2,074 4,690 6,764 Exchange differences - - 2 2 Disposals - - (43 ) (43 ) Charge for the year - 241 275 516 At 31 December 2015 - 2,315 4,924 7,239 Net book value at 31 December 2015 3,978 2,499 1,438 7,915 Net book value at 31 December 2014 3,978 2,740 354 7,072 Impairment testing Timing of impairment testing The group's impairment test in respect of goodwill and customer relationships allocated to each component of the cash-generating unit ('CGU') is performed as at 31 December each year. In line with the accounting policy, impairment testing is also performed whenever there is an indication that the assets may be impaired. There was no indication of impairment in the year to 31 December 2015. For the purpose of this impairment testing, the group's CGU components represent the wealth management element of the holistic private banking service provided by Duncan Lawrie. Basis of the recoverable amount - value in use or fair value less costs to sell The recoverable amount of the CGU to which customer relationships and goodwill have been allocated was assessed at each respective testing date in 2015 and 2014. The wealth management component of the CGU is assessed on the basis of the fair value less costs to sell by applying industry average multiples to the value of assets under management. Based on the conditions at the balance sheet date, a change in any of the key assumptions described above would not cause an impairment to be recognised in respect of goodwill and customer relationships. The industry multiple applied would have to reduce to 1 per cent. before any impairment of goodwill or customer relationships would arise. 17 Property, plant and equipment Fixtures, Land and Plant and fittings and buildings machinery equipment Total Group £'000 £'000 £'000 £'000 Deemed cost At 1 January 2014 82,920 99,024 20,409 202,353 Exchange differences 1,036 768 123 1,927 Additions 9,881 8,049 1,089 19,019 Disposals (466 ) (1,234 ) (153 ) (1,853 ) Reclassification to intangible assets - - (2,503 ) (2,503 ) At 1 January 2015 93,371 106,607 18,965 218,943 Exchange differences (1,672 ) (3,846 ) (164 ) (5,682 ) Additions 4,189 5,323 1,174 10,686 Disposals (3,775 ) (3,480 ) (952 ) (8,207 ) Reclassification to investment properties (7,750 ) - - (7,750 ) Reclassification to other investments - heritage assets - - (94 ) (94 ) At 31 December 2015 84,363 104,604 18,929 207,896 Depreciation At 1 January 2014 35,249 59,426 11,838 106,513 Exchange differences 409 592 78 1,079 Charge for the year 2,383 6,522 754 9,659 Disposals (452 ) (1,157 ) (105 ) (1,714 ) Impairment provision 337 461 26 824 Reclassification to intangible assets - - (2,341 ) (2,341 ) At 1 January 2015 37,926 65,844 10,250 114,020 Exchange differences (486 ) (1,715 ) (119 ) (2,320 ) Charge for the year 2,592 5,924 969 9,485 Disposals (1,719 ) (3,095 ) (676 ) (5,490 ) Reclassification to investment properties (608 ) - - (608 ) Reclassification to other investments - heritage assets - - (85 ) (85 ) At 31 December 2015 37,705 66,958 10,339 115,002 Net book value at 31 December 2015 46,658 37,646 8,590 92,894 Net book value at 31 December 2014 55,445 40,763 8,715 104,923 Land and buildings at net book value comprise: 2015 2014 £'000 £'000 Freehold 25,363 33,779 Long leasehold 20,794 20,630 Short leasehold 501 1,036 46,658 55,445 Plant and machinery includes assets held under finance leases. The depreciation charge for the year in respect of these assets was £nil (2014: £9,000) and their net book value was £nil (2014: £14,000). The amount of expenditure for property, plant and equipment in the course of construction amounted to £1,901,000 (2014: £948,000). 18 Investment properties £'000 Group Cost At 1 January 2015 - Exchange differences (61 ) Additions 8,700 Transfers from property, plant and equipment 7,750 At 31 December 2015 16,389 Depreciation At 1 January 2015 - Exchange differences (9 ) Charge for the year 39 Transfers from property, plant and equipment 608 At 31 December 2015 638 Net book value at 31 December 2015 15,751 Included in revenue is £459,000 of rental income generated from investment properties. Direct operating expenses arising on the investment property, the majority of which generated rental income in the period, amount to £238,000. At the end of the year the fair value of investment properties was £21,446,000. Investment properties were valued by the directors (fair value hierarchy Level 2). 19 Biological assets Edible Tea nuts Timber Other Total £'000 £'000 £'000 £'000 £'000 Group At 1 January 2014 77,316 21,319 10,193 18,387 127,215 Exchange differences 1,759 (380 ) (67 ) 548 1,860 New planting additions 1,919 2,602 551 - 5,072 Capitalised cultivation costs - 1,285 - 4,351 5,636 Gains arising from changes in fair value less estimated point-of-sale costs 4,566 4,109 (29 ) 174 8,820 Decreases due to harvesting - (2,969 ) (496 ) (5,139 ) (8,604 ) At 1 January 2015 85,560 25,966 10,152 18,321 139,999 Exchange differences (8,002 ) (7,847 ) (1,757 ) (534 ) (18,140 ) New planting additions 2,487 2,602 523 - 5,612 Capitalised cultivation costs - 1,788 - 4,323 6,111 Gains arising from changes in fair value less estimated point-of-sale costs 5,199 12,217 1,748 1,475 20,639 Decreases due to harvesting - (4,009 ) (465 ) (4,926 ) (9,400 ) At 31 December 2015 85,244 30,717 10,201 18,659 144,821 Other includes avocados, citrus, grapes, livestock, maize, pineapples, rubber and soya. Biological assets are carried at fair value. Where meaningful market-determined prices do not exist to assess the fair value of biological assets, the fair value has been determined based on the net present value of expected future cash flows from those assets, discounted at appropriate pre-tax rates. At 31 December 2015 professional valuations were obtained on a significant proportion of assets. In determining the fair value of biological assets where the discounting of expected future cash flows has been used, the directors have made certain assumptions about the expected life-span of the plantings, yields, selling prices and costs. The fair value of livestock is based on market prices of livestock of similar age and sex. New planting additions represents new areas planted to the particular crop at cost. For crops other than tea and rubber capitalised cultivation costs represent annual growing costs incurred. Growing costs for tea and rubber are charged directly to inventory which are included in cost of sales and do not include any uplift on initial recognition as no appropriate market value can be determined for green leaf and rubber produced at harvest prior to manufacturing. Decreases due to harvesting represent values transferred to cost of sales at the point of harvest for agricultural produce other than tea and rubber. The discount rates used reflect the cost of capital, an assessment of country risk and the risks associated with individual crops. The range of discount rates used is: Edible Tea nuts Timber Other % % % % 2015 13.5 12.0 - 17.5 10.5 - 17.5 5.0 - 17.5 2014 13.5 12.0 - 17.5 10.5 - 17.5 5.0 - 17.5 During the year the Malawian kwacha depreciated in value from 725.05 (2014: 712.19) to the pound sterling at 1 January 2015 to 984.22 (2014: 725.05) to the pound sterling at 31 December 2015. The functional currency of our Malawian subsidiaries is the kwacha. The principal assets in Malawi are agricultural assets. As they generate revenues in currencies other than the kwacha their value in hard currency has not fallen in the year. Accordingly, the revaluation of the agricultural assets in kwacha under IAS 41 at 31 December 2015 has generated a credit of £17,917,000 (2014: £6,546,000) including a gain of £16,220,000 (2014: £978,000) due to the currency devaluation which is included in the overall gain of £20,639,000 (2014: £8,820,000) credited to the income statement. This has been largely offset by a foreign exchange translation loss charged to reserves. Fair value measurement All of the biological assets fall under level 3 of the hierarchy defined in IFRS 13. The basis upon which the valuations are determined is set out in accounting policies on page 43. Valuations by external professional valuers and those derived from discounted cash flows both make assumptions based on unobservable inputs of: yields, an increase in which will raise the value; costs, an increase in which will decrease the value; market prices, an increase in which will raise the value; life span of the plantings, an increase in which will raise the value; discount rates, an increase in which will decrease the value. These assumptions vary significantly across different countries, crops and varieties. In preparing these valuations a long term view is taken on the yields and prices achieved. Financial risk management strategies The group is exposed to financial risks arising from changes in the prices of the agricultural products it produces. The group does not anticipate that these prices will decline significantly in the foreseeable future. There are no futures markets available for the majority of crops grown by the group. The group's exposure to this risk is mitigated by the geographical spread of its operations, selective forward selling in certain instances when considered appropriate, and regular review of available market data on sales and production. The group monitors closely the returns it achieves from its crops and considers replacing its biological assets when yields decline with age or markets change. Further financial risk arises from changes in market prices of key cost components, such costs are closely monitored. The estimated fair value of agricultural output from our tea operations after deducting estimated points of sales costs is £79,438,000 (2014: £73,457,000) which includes a gain on initial recognition at the point of harvest of £14,128,000 (2014: £13,093,000). The areas planted to the various crop types at the end of the year were: 2015 2014 Hectares Hectares Tea 34,617 34,345 Macadamia 3,338 3,060 Pistachios 131 130 Almonds 56 56 Timber 6,251 5,822 Arable crops 3,374 3,528 Avocados 451 414 Citrus 177 178 Pineapples 55 50 Rubber 1,968 1,901 Wine grapes 73 75 2015 2014 Head Head Livestock numbers at the end of the year 4,500 3,874 Output of agricultural produce during the year was: 2015 2014 Metric Metric tonnes tonnes Tea 63,366 67,555 Macadamia 1,156 1,085 Pistachios 31 621 Arable crops 22,981 12,838 Avocados 7,084 6,339 Citrus 4,844 5,618 Pineapples 1,752 1,552 Rubber 629 601 Wine grapes 625 718 2015 2014 Cubic Cubic metres metres Timber 125,557 122,768 20 Prepaid operating leases £'000 Group Cost At 1 January 2014 910 Exchange differences 11 At 1 January 2015 921 Exchange differences (60 ) At 31 December 2015 861 Amortisation At 1 January 2014 20 Charge for the year 1 At 1 January 2015 21 Exchange differences (1 ) Charge for the year 1 At 31 December 2015 21 Net book value at 31 December 2015 840 Net book value at 31 December 2014 900 21 Investments in subsidiaries 2015 2014 £'000 £'000 Company Cost At 1 January and 31 December 73,508 73,508 22 Investments in associates 2015 2014 £'000 £'000 Group At 1 January 8,664 7,343 Exchange differences 4,231 473 Transfer from available-for-sale financial assets 34,435 - Negative goodwill on initial recognition as an associate (note 5) 22,677 - Share of profit (note 5) 4,182 1,092 Dividends (1,185 ) (244 ) Other equity movements 33 - At 31 December 73,037 8,664 Provision for diminution in value At 1 January - - Exchange differences 1,478 - Provided during year (note 5) 22,677 - At 31 December 24,155 - Net book value at 31 December 48,882 8,664 From 1 July 2015, following a re-evaluation of the group's relationship with BF&M Limited, the directors concluded that the group is in a position to exercise significant influence over BF&M Limited. As a result the investment in this company has been reclassified from available-for-sale financial assets to an investment in associate. The result of this reclassification is that investments in associates increase by £57,112,000 reflecting the group's equity interest in BF&M Limited and available-for-sale financial assets decline by £34,435,000, being the market value of the group's shareholding. The difference of £22,677,000 has been transferred to the income statement, this is offset by an impairment provision of £22,677,000 which has been made against the group's equity carrying value of this investment, due to the significant difference between the equity value of the investment and the market value at 1 July 2015. Details of the group's associates are shown in note 40. The group's share of the results of its principal associates and its share of the assets (including goodwill) and liabilities are as follows: Country of Interest Market incorporation Assets Liabilities Revenues Profit held value £'000 £'000 £'000 £'000 % £'000 2015 Listed BF&M Limited Bermuda 411,850 (348,899 ) 60,231 2,946 36.1 35,932 United Finance Limited Bangladesh 63,566 (55,359 ) 6,355 1,083 38.4 10,653 United Insurance Company Limited Bangladesh 2,477 (598 ) 283 153 37.0 3,197 477,893 (404,856 ) 66,869 4,182 49,782 2014 Listed United Finance Limited Bangladesh 49,411 (42,455 ) 5,942 949 38.4 10,607 United Insurance Company Limited Bangladesh 2,269 (561 ) 270 143 37.0 3,709 51,680 (43,016 ) 6,212 1,092 14,316 23 Available-for-sale financial assets Group Company 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Cost or fair value At 1 January 67,770 61,697 170 170 Exchange differences 1,328 3,793 - - Transfer to investments in associates (34,435 ) - - - Fair value adjustment 211 2,822 - - Additions 2,288 308 - - Disposals (1,324 ) (486 ) - - Fair value adjustment for disposal (161 ) (364 ) - - At 31 December 35,677 67,770 170 170 Provision for diminution in value At 1 January 4,282 1,696 Exchange differences 249 226 Provided during year 552 2,360 At 31 December 5,083 4,282 Net book value at 31 December 30,594 63,488 170 170 Available-for-sale financial assets include the following: Group Company 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Listed securities: Equity securities - UK 939 862 Equity securities - Bermuda 5,210 39,101 Equity securities - Japan 12,162 11,269 Equity securities - Switzerland 6,645 6,092 Equity securities - US 2,107 2,719 Equity securities - India 1,033 1,809 Equity securities - Europe 366 351 Equity securities - Other 329 338 Debentures with fixed interest of 12.5% and repayable twice yearly until 31 October 2019 - Kenya 573 766 Unlisted investments 1,230 181 170 170 30,594 63,488 170 170 Available-for-sale financial assets are denominated in the following currencies: Group Company 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Sterling 2,159 1,032 170 170 US Dollar 2,107 2,719 Euro 366 351 Swiss Franc 6,645 6,092 Indian Rupee 1,034 1,809 Bermudian Dollar 5,210 39,101 Japanese Yen 12,162 11,269 Kenyan Shilling 580 772 Other 331 343 30,594 63,488 170 170 24 Held-to-maturity financial assets Group 2015 2014 £'000 £'000 Cost or fair value At 1 January - 1,000 Additions 29,510 - Disposals - (1,000 ) At 31 December 29,510 - Net book value comprises: Debt securities 29,510 - Current element 1,849 - Non-current element 27,661 - 29,510 - Debt securities are held by the group's banking operation and are readily tradable in the London markets. 25 Other investments - heritage assets Group Company 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Cost At 1 January 8,864 8,745 8,869 8,750 Additions 164 126 1,355 126 Disposals (17 ) (7 ) (11 ) (7 ) Transfers from property, plant and equipment 9 - - - At 31 December 9,020 8,864 10,213 8,869 Heritage assets comprise the group's and company's investment in fine art, philately, documents and manuscripts. The market value of these collections is expected to be in excess of book value. 26 Inventories 2015 2014 £'000 £'000 Group Made tea 23,557 24,417 Other agricultural produce 1,423 979 Work in progress 1,831 2,773 Trading stocks 1,818 2,659 Raw materials and consumables 9,120 11,013 37,749 41,841 Made tea is included in inventory at cost as no reliable fair value is available to reflect the uplift in value upon initial recognition of harvested green leaf. Included within the inventory value of made tea of £23,557,000 (2014: £24,417,000) are costs associated with the growing and cultivation of green leaf from our own estates of £12,311,000 (2014: £12,095,000). This would increase by £2,580,000 (2014: £2,516,000) if estimated green leaf fair values at harvest were applied. The impact on the income statement would be a decrease in profit for the year to 31 December 2015 of £64,000 (2014: £2,587,000) and a decrease in taxation of £22,000 (2014: £900,000). The year end inventories balance is stated after a write-down provision of £181,000 (2014: £104,000). 27 Trade and other receivables Group 2015 2014 £'000 £'000 Group Current: Amounts due from customers of banking subsidiaries 14,263 16,688 Trade receivables 25,617 28,976 Amounts owed by associated undertakings 11 - Other receivables 7,854 8,532 Prepayments and accrued income 7,809 9,096 55,554 63,292 Non-current: Amounts due from customers of banking subsidiaries 21,570 22,066 Other receivables 1,164 1,237 22,734 23,303 The carrying amounts of the group's trade and other receivables are denominated in the following currencies: 2015 2014 £'000 £'000 Current: Sterling 27,581 33,501 US Dollar 3,129 5,791 Euro 1,230 1,487 Kenyan Shilling 2,420 1,741 Indian Rupee 17,835 16,188 Malawian Kwacha 814 1,183 Bangladesh Taka 1,244 2,144 South African Rand 152 127 Brazilian Real 610 508 Other 539 622 55,554 63,292 Non-current: Sterling 21,490 21,912 US Dollar 81 154 Kenyan Shilling 325 340 Indian Rupee 421 403 Malawian Kwacha 158 230 Bangladesh Taka 259 264 22,734 23,303 Included within trade receivables is a provision for doubtful debts of £947,000 (2014: £595,000) and all other trade receivables are with normal trading partners and there is no history of defaults. Trade receivables include receivables of £6,613,000 (2014: £3,797,000) which are past due at the reporting date against which the group has not provided, as there has not been a significant change in credit quality and the amounts are still considered recoverable. Ageing of past due but not provided for receivables is as follows: 2015 2014 £'000 £'000 Up to 30 days 4,411 2,308 30-60 days 1,417 510 60-90 days 251 496 Over 90 days 534 483 6,613 3,797 28 Cash and cash equivalents Group Company 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Cash at bank and in hand 157,157 190,542 2,202 - Short-term bank deposits 40,149 36,290 - - Short-term liquid investments 40,466 30,332 - - 237,772 257,164 2,202 - Included in the amounts above are cash and short-term funds, time deposits with banks and building societies, UK treasury bills and certificates of deposit amounting to £167,413,000 (2014: £200,285,000) which are held by the group's banking subsidiaries and which are an integral part of the banking operations. 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Cash and cash equivalents (excluding banking operations) 70,359 56,879 2,202 - Bank overdrafts (note 30) (4,753 ) (2,757 ) - - 65,606 54,122 2,202 - 2015 2014 2015 2014 Effective interest rate: Short-term deposits 4.00 - 20.00% 0.40 - 12.00% - - Short-term liquid investments 0.07 - 0.47% 0.00 - 0.77% - - Average maturity period: Short-term deposits 103 days 77 days - - Short-term liquid investments 40 days 16 days - - 29 Trade and other payables Group Company 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Current Amounts due to customers of banking subsidiaries 204,200 209,677 - - Trade payables 26,468 23,913 - - Other taxation and social security 2,671 2,304 - - Other payables 20,175 14,640 133 134 Accruals 5,380 7,758 - - 258,894 258,292 133 134 Non-current: Amounts due to customers of banking subsidiaries 4,392 5,130 - - 30 Financial liabilities - borrowings The repayment of bank loans and overdrafts fall due as follows: 2015 2014 £'000 £'000 Group Current: Bank overdrafts 4,753 2,757 Bank loans 613 94 Finance leases - 4 5,366 2,855 Current borrowings include the following amounts secured on biological assets and property, plant and equipment: Bank overdrafts 3,833 1,429 Bank loans 613 94 Finance leases - 4 Present value of finance lease liabilities 4,446 1,527 Non-current: Bank loans 5,131 42 Non-current borrowings include the following amounts secured on biological assets and investment property: Bank loans 5,131 42 The repayment of bank loans and overdrafts fall due as follows: Within one year or on demand (included in current liabilities) 5,366 2,851 Between 1 - 2 years 609 12 Between 2 - 5 years 4,514 14 After 5 years 8 16 10,497 2,893 Minimum finance lease payments fall due as follows: Within one year or on demand (included in current liabilities) - 4 Present value of finance lease liabilities - 4 The present value of finance lease liabilities fall due as follows: 2015 2014 £'000 £'000 Within one year or on demand (included in current liabilities) - 4 The rates of interest payable by the group ranged between: 2015 2014 % % Overdrafts 2.25 - 36.00 2.25 - 36.00 Bank loans 3.03 9.00 - 13.00 Finance leases - 18.00 31 Provisions Onerous lease Others Total £'000 £'000 £'000 Group At 1 January 2014 450 210 660 Utilised in the period (450 ) - (450 ) Provided in the period 267 159 426 At 1 January 2015 267 369 636 Utilised in the period (63 ) (306 ) (369 ) Provided in the period - 230 230 Unused amounts reversed in period (204 ) (26 ) (230 ) At 31 December 2015 - 267 267 Current: At 31 December 2015 - 267 267 At 31 December 2014 267 369 636 Others relate to provisions for claims and dilapidations. 32 Deferred tax The net movement on the deferred tax account is set out below: Group Company 2015 2014 2015 2014 £'000 £'000 £'000 £'000 At 1 January 41,434 39,106 240 258 Exchange differences (6,228 ) 424 - - Charged/(credited) to the income statement 5,331 2,674 (24 ) (18 ) Credited to equity (590 ) (770 ) - - At 31 December 39,947 41,434 216 240 The movement in deferred tax assets and liabilities is set out below: Deferred tax liabilities Accelerated Pension tax scheme depreciation liability Other Total £'000 £'000 £'000 £'000 At 1 January 2014 40,920 238 204 41,362 Exchange differences 421 13 4 438 Charged/(credited) to the income statement 3,784 102 (208 ) 3,678 Credited to equity - (71 ) - (71 ) At 1 January 2015 45,125 282 - 45,407 Exchange differences (6,316 ) 2 (17 ) (6,331 ) Charged to the income statement 7,165 81 95 7,341 Credited/(charged) to equity 5 (341 ) - (336 ) At 31 December 2015 45,979 24 78 46,081 Deferred tax assets offset (3,600 ) Net deferred tax liability after offset 42,481 Deferred tax assets Pension scheme Tax losses asset Other Total £'000 £'000 £'000 £'000 At 1 January 2014 213 833 1,210 2,256 Exchange differences 15 16 (17 ) 14 Credited/(charged) to the income statement 497 (579 ) 1,086 1,004 Charged to equity - 627 72 699 At 1 January 2015 725 897 2,351 3,973 Exchange differences 4 4 (111 ) (103 ) (Charged)/credited to the income statement (254 ) (14 ) 2,278 2,010 Credited/(charged) to equity - 278 (24 ) 254 At 31 December 2015 475 1,165 4,494 6,134 Offset against deferred tax liabilities (3,600 ) Net deferred tax asset after offset 2,534 Included within deferred tax liabilities are £40,768,000 (2014: £39,495,000) of accelerated tax depreciation relating to biological assets. Deferred tax liabilities of £20,718,000 (2014: £21,415,000) have not been recognised for the withholding tax and other taxes that would be payable on the unremitted earnings of certain subsidiaries. Such amounts are permanently reinvested. Deferred tax assets are recognised for tax losses carried forward only to the extent that the realisation of the related tax benefit through future taxable profits is probable. The group has not recognised deferred tax assets of £7,045,000 (2014: £8,054,000) in respect of losses that can be carried forward against future taxable income. 33 Employee benefit obligations (i) Pensions Certain group subsidiaries operate defined contribution and funded defined benefit pension schemes. The most significant is the UK funded, final salary defined benefit scheme. The assets of this scheme are administered by trustees and are kept separate from those of the group. A full actuarial valuation was undertaken as at 1 July 2014 and updated to 31 December 2015 by a qualified independent actuary. The UK final salary defined benefit pension scheme is closed to new entrants and new employees are eligible to join a group personal pension plan. Active members earn accruals at a rate of 1/80th per year of service. The overseas schemes are operated in group subsidiaries located in Bangladesh, India and the Netherlands. Actuarial valuations have been updated to 31 December 2015 by qualified actuaries for these schemes. Assumptions The major assumptions used in the valuation to determine the present value of the schemes' defined benefit obligations were as follows: 2015 2014 % per annum % per annum UK schemes Rate of increase in salaries 2.00 2.00 Rate of increase to LPI (Limited Price Indexation) pensions in payment 2.00 - 5.00 2.00 - 5.00 Discount rate applied to scheme liabilities 3.50 3.50 Inflation assumption (CPI/RPI) 2.00/3.00 2.00/3.00 Assumptions regarding future mortality experience are based on advice received from independent actuaries. The current mortality tables used are S2PA, on a year of birth basis, with CMI_2013 future improvement factors and subject to a long term annual rate of future improvement of 1.25% per annum. This results in males and females aged 65 having life expectancies of 22 years (2014: 22 years) and 24 years respectively (2014: 24 years). Overseas schemes Rate of increase in salaries 1.50 - 7.00 2.00 - 7.00 Rate of increase to LPI (Limited Price Indexation) pensions in payment 0.00 - 5.00 0.00 - 5.00 Discount rate applied to scheme liabilities 2.30 - 9.0 2.10 - 11.50 Inflation assumption 0.00 - 7.00 0.00 - 7.00 (ii) Post-employment benefits Certain group subsidiaries located in Kenya, India and Bangladesh have an obligation to pay terminal gratuities, based on years of service. These obligations are estimated annually using the projected unit method by qualified independent actuaries. Schemes operated in India are funded but the schemes operated in Kenya and Bangladesh are unfunded. Operations in India and Bangladesh also have an obligation to pay medical benefits upon retirement. These schemes are unfunded. Assumptions The major assumptions used in the valuation to determine the present value of the post-employment benefit obligations were as follows: 2015 2014 % per annum % per annum Rate of increase in salaries 6.00 - 10.00 6.00 - 10.00 Discount rate applied to scheme liabilities 8.00 - 14.00 8.00 - 13.50 Inflation assumptions 0.00 - 10.00 0.00 - 10.00 Sensitivity analysis The sensitivity of the UK defined benefit obligation to changes in the weighted principal assumptions is: Impact on defined Change benefit in assumption obligation Pre-retirement discount rate 0.5% lower 1.8% increase Post-retirement discount rate 0.5% lower 5.7% increase Salary increase rate 0.25% lower 0.2% decrease Inflation rate 0.25% lower 1.5% decrease Long-term rate of improvement of mortality 0.25% higher 1.4% increase The above sensitivity analysis assumes that each assumption is changed independently of the others. Therefore, the disclosures are only a guide because the effect of changing more than one assumption is not cumulative. The sensitivity analysis was calculated by re-running the figures as at the last formal actuarial valuation at 1 July 2014. Therefore the analysis is only approximate for the purpose of these IAS19 disclosures as they are on a different set of assumptions and do not reflect subsequent scheme experience. Duration of the scheme liabilities The weighted average duration of the UK defined benefit obligation is 15 years. Analysis of scheme liabilities As at 1 July 2014 the allocation of the present value of the UK scheme liabilities was as follows: % Active members 11 Deferred pensioners 28 Current pensioners 61 Total membership 100 (iii) Actuarial valuations 2015 2014 UK Overseas Total UK Overseas Total £'000 £'000 £'000 £'000 £'000 £'000 Equities and property 89,640 493 90,133 93,247 494 93,741 Bonds 53,069 12,848 65,917 52,088 11,826 63,914 Cash 6,939 5,356 12,295 4,359 4,197 8,556 Other - 3,682 3,682 - 3,421 3,421 Total fair value of plan assets 149,648 22,379 172,027 149,694 19,938 169,632 Present value of defined benefit obligations (174,129 ) (36,532 ) (210,661 ) (184,326 ) (26,913 ) (211,239 ) Total deficit in the schemes (24,481 ) (14,153 ) (38,634 ) (34,632 ) (6,975 ) (41,607 ) Amount recognised as asset in the balance sheet - 176 176 - 805 805 Amount recognised as current liability in the balance sheet - (1,017 ) (1,017 ) - (527 ) (527 ) Amount recognised as non-current liability in the balance sheet (24,481 ) (13,312 ) (37,793 ) (34,632 ) (7,253 ) (41,885 ) (24,481 ) (14,153 ) (38,634 ) (34,632 ) (6,975 ) (41,607 ) Related deferred tax asset (note 32) - 1,165 1,165 - 897 897 Related deferred tax liability (note 32) - (24 ) (24 ) - (282 ) (282 ) Net deficit (24,481 ) (13,012 ) (37,493 ) (34,632 ) (6,360 ) (40,992 ) Movements in the fair value of scheme assets were as follows: 2015 2014 UK Overseas Total UK Overseas Total £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 149,694 19,938 169,632 145,286 18,748 164,034 Expected return on plan assets 5,125 1,997 7,122 6,406 1,514 7,920 Employer contributions 1,490 2,417 3,907 1,531 635 2,166 Contributions paid by plan participants - 24 24 - 22 22 Benefit payments (8,041 ) (1,826 ) (9,867 ) (7,410 ) (1,336 ) (8,746 ) Actuarial gains/(losses) 1,380 (301 ) 1,079 3,881 (106 ) 3,775 Exchange differences - 130 130 - 461 461 At 31 December 149,648 22,379 172,027 149,694 19,938 169,632 Movements in the present value of defined benefit obligations were as follows: 2015 2014 UK Overseas Total UK Overseas Total £'000 £'000 £'000 £'000 £'000 £'000 At 1 January (184,326 ) (26,913 ) (211,239 ) (162,294 ) (23,081 ) (185,375 ) Current service cost (800 ) (1,507 ) (2,307 ) (769 ) (909 ) (1,678 ) Past service cost - (6,056 ) (6,056 ) - 711 711 Contributions paid by plan participants - (24 ) (24 ) - (22 ) (22 ) Interest cost (6,311 ) (2,480 ) (8,791 ) (7,137 ) (1,827 ) (8,964 ) Benefit payments 8,041 1,826 9,867 7,410 1,336 8,746 Actuarial gains/(losses) 9,267 (1,231 ) 8,036 (21,536 ) (2,580 ) (24,116 ) Exchange differences - (147 ) (147 ) - (541 ) (541 ) At 31 December (174,129 ) (36,532 ) (210,661 ) (184,326 ) (26,913 ) (211,239 ) In 2013, the total fair value of plan assets was £164,034,000, present value of defined benefit obligations was £185,375,000 and the deficit was £21,341,000. In 2012, the total fair value of plan assets was £151,560,000, present value of defined benefit obligations was £184,157,000 and the deficit was £32,597,000 and in 2011, the total fair value of plan assets was £140,343,000, present value of defined benefit obligations was £167,235,000 and the deficit was £26,892,000. Income statement The amounts recognised in the income statement are as follows: 2015 2014 UK Overseas Total UK Overseas Total £'000 £'000 £'000 £'000 £'000 £'000 Amounts charged to operating profit: Current service cost (800) (1,507) (2,307) (769) (909) (1,678) Past service cost - (6,056) (6,056) - 711 711 Total operating charge (800) (7,563) (8,363) (769) (198) (967) Amounts charged to other finance costs: Interest expense (1,186) (483) (1,669) (731) (313) (1,044) Total charged to income statement (1,986) (8,046) (10,032) (1,500) (511) (2,011) The past service cost of £6,056,000 relates to recently enacted legislation in Bangladesh which requires companies to make a payment to employees on retirement or other events terminating employment, based upon compensation and length of service. Current service costs for the overseas operations included £376,000 arising from these changes. Employer contributions to defined contribution schemes are charged to profit when payable and the costs charged were £3,984,000 (2014: £3,213,000). Actuarial gains and losses recognised in the statement of comprehensive income The amounts included in the statement of comprehensive income: 2015 2014 UK Overseas Total UK Overseas Total £'000 £'000 £'000 £'000 £'000 £'000 Actual return less expected return on pension scheme assets 1,380 (301 ) 1,079 3,881 (106 ) 3,775 Experience gains/(losses) arising on scheme liabilities 2,307 (840 ) 1,467 (2,501 ) (312 ) (2,813 ) Changes in assumptions underlying present value of scheme liabilities 6,960 (391 ) 6,569 (19,035 ) (2,268 ) (21,303 ) Actuarial gain/(loss) 10,647 (1,532 ) 9,115 (17,655 ) (2,686 ) (20,341 ) Cumulative actuarial losses recognised in the statement of comprehensive income are £35,000,000 (2014: £44,115,000). The employer contributions to be paid to the UK defined benefit pension scheme for the year commencing 1 January 2016 is 20.0% of pensionable salary for active members plus £918,000 additional contribution to reduce the scheme's funding deficit. 34 Share capital 2015 2014 £'000 £'000 Authorised: 2,842,000 (2014: 2,842,000) ordinary shares of 10p each 284 284 Allotted, called up and fully paid: ordinary shares of 10p each: At 1 January - 2,824,500 (2014: 2,829,700) shares 282 283 Purchase of own shares - nil (2014: 5,200) shares - (1 ) At 31 December - 2,824,500 (2014: 2,824,500) shares 282 282 Group companies hold 62,500 issued shares in the company. These are classified as treasury shares. 35 Reconciliation of profit from operations to cash flow 2015 2014 £'000 £'000 Group Profit from operations 37,627 18,003 Share of associates' results (4,182 ) (1,092 ) Depreciation and amortisation 10,040 10,165 Impairment of assets 552 3,494 Gain arising from changes in fair value of biological assets (20,639 ) (8,820 ) Profit on disposal of non-current assets (3,825 ) (125 ) Profit on disposal of investments (353 ) (447 ) Profit on part disposal of subsidiary (30 ) (56 ) Increase/(decrease) in working capital 12,812 (6,326 ) Pensions and similar provisions less payments 4,025 (1,235 ) Biological assets capitalised cultivation costs (6,111 ) (5,636 ) Biological assets decreases due to harvesting 9,400 8,604 Net decrease in funds of banking subsidiaries 68 551 Cash generated from operations 39,384 17,080 36 Reconciliation of net cash flow to movement in net cash 2015 2014 £'000 £'000 Group Increase/(decrease) in cash and cash equivalents in the year 12,450 (19,915 ) Net cash (inflow)/outflow from (increase)/decrease in debt (5,599 ) 60 Increase/(decrease) in net cash resulting from cash flows 6,851 (19,855 ) Exchange rate movements (971 ) 1,128 Increase/(decrease) in net cash in the year 5,880 (18,727 ) Net cash at beginning of year 53,982 72,709 Net cash at end of year 59,862 53,982 37 Commitments Capital commitments Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows: 2015 2014 £'000 £'000 Group Property, plant and equipment 1,316 824 Biological assets 51 - 1,367 824 Operating leasing commitments - minimum lease payments The group leases land and buildings, plant and machinery under non-cancellable operating lease arrangements, which have various terms and renewal rights. The future aggregate minimum lease payments under non-cancellable operating leases are as follows: 2015 2014 £'000 £'000 Group Land and buildings: Within 1 year 1,367 826 Between 1 - 5 years 2,569 2,206 After 5 years 15,017 12,875 18,953 15,907 Plant and machinery: Within 1 year 187 99 Between 1 - 5 years 224 128 411 227 The group's most significant operating lease commitments are long term property leases with renewal terms in excess of 60 years. 38 Contingencies The group operates in certain countries where its operations are potentially subject to a number of legal claims including taxation. When required, appropriate provisions are made for the expected cost of such claims. 39 Financial instruments Capital risk management The group manages its capital to ensure that the group will be able to continue as a going concern, while maximising the return to stakeholders through the optimisation of its debt and equity balance. The capital structure of the group consists of debt, which includes the borrowings disclosed in note 30, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. The board reviews the capital structure, with an objective to ensure that gross borrowings as a percentage of tangible net assets does not exceed 50 per cent.. The ratio at the year end is as follows: 2015 2014 £'000 £'000 Borrowings 10,497 2,897 Tangible net assets 322,515 314,632 Ratio 3.25% 0.92% Borrowings are defined as current and non-current borrowings, as detailed in note 30. Tangible net assets includes all capital and reserves of the group attributable to equity holders of the parent less intangible assets. Financial instruments by category At 31 December 2015 Loans and Available for Held to receivables sale maturity Total £'000 £'000 £'000 £'000 Group Assets as per balance sheet Available-for-sale financial assets - 30,594 - 30,594 Held-to-maturity financial assets - - 29,510 29,510 Trade and other receivables excluding prepayments 34,646 - - 34,646 Loans and advances to customers of banking subsidiaries 35,833 - - 35,833 Cash and cash equivalents (excluding bank subsidiaries) 70,359 - - 70,359 Loans and advances to banks by banking subsidiaries 167,413 - - 167,413 308,251 30,594 29,510 368,355 Company Available-for-sale financial assets - 170 - 170 Cash and cash equivalents 2,202 - - 2,202 2,202 170 - 2,372 Other financial liabilities at amortised cost Total £'000 £'000 Group Liabilities as per balance sheet Borrowings 10,497 10,497 Amounts due to customers of banking subsidiaries 208,592 208,592 Trade and other payables 52,023 52,023 271,112 271,112 Company Trade and other payables 133 133 At 31 December 2014 Loans and Available for Held to receivables sale maturity Total £'000 £'000 £'000 £'000 Group Assets as per balance sheet Available-for-sale financial assets - 63,488 - 63,488 Trade and other receivables excluding prepayments 38,745 - - 38,745 Loans and advances to customers of banking subsidiaries 38,754 - - 38,754 Cash and cash equivalents (excluding bank subsidiaries) 56,879 - - 56,879 Loans and advances to banks by banking subsidiaries 200,285 - - 200,285 334,663 63,488 - 398,151 Company Available-for-sale financial assets - 170 - 170 Other financial liabilities at amortised cost Total £'000 £'000 Group Liabilities as per balance sheet Borrowings (excluding finance lease liabilities) 2,893 2,893 Finance lease liabilities 4 4 Amounts due to customers of banking subsidiaries 214,807 214,807 Trade and other payables 46,311 46,311 Other non-current liabilities 98 98 264,113 264,113 Company Trade and other payables 134 134 Fair value estimation The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2). - Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3). The following table presents the group's financial assets and liabilities that are measured at fair value. See note 19 for disclosures of biological assets that are measured at fair value. At 31 December 2015 Level 1 Level 2 Level 3 Total £'000 £'000 £'000 £'000 Assets Available-for sale financial assets: - Equity securities 28,791 - 1,230 30,021 Debt investments: - Debentures 573 - - 573 Held-to-maturity financial assets 29,510 - - 29,510 58,874 - 1,230 60,104 At 31 December 2014 Level 1 Level 2 Level 3 Total £'000 £'000 £'000 £'000 Assets Available-for sale financial assets: - Equity securities 62,541 - 181 62,722 Debt investments: - Debentures 766 - - 766 63,307 - 181 63,488 Financial risk management objectives The group finances its operations by a mixture of retained profits, bank borrowings, long-term loans and leases. The objective is to maintain a balance between continuity of funding and flexibility through the use of borrowings with a range of maturities. To achieve this, the maturity profile of borrowings and facilities are regularly reviewed. The group also seeks to maintain sufficient undrawn committed borrowing facilities to provide flexibility in the management of the group's liquidity. Given the nature and diversity of the group's operations, the board does not believe a highly complex use of financial instruments would be of significant benefit to the group. However, where appropriate, the board does authorise the use of certain financial instruments to mitigate financial risks that face the group, where it is effective to do so. Various financial instruments arise directly from the group's operations, for example cash and cash equivalents, trade receivables and trade payables. In addition, the group uses financial instruments for two main reasons, namely: - To finance its operations (to mitigate liquidity risk); - To manage currency risks arising from its operations and arising from its sources of finance (to mitigate foreign exchange risk). The group, including Duncan Lawrie, the group's banking subsidiary, did not, in accordance with group policy, trade in financial instruments throughout the period under review. (A) Market risk (i) Foreign exchange risk The group has no material exposure to foreign currency exchange risk on currencies other than the functional currencies of the operating entities, with the exception of significant Japanese available-for-sale financial assets. A movement by 5 per cent. in the exchange rate of the Japanese Yen with Sterling, would increase/decrease the group's equity balance by £608,000 (2014: £563,000). Currency risks are primarily managed through the use of natural hedging and regularly reviewing when cash should be exchanged into either sterling or another functional currency. (ii) Price risk The group is exposed to equity securities price risk because of investments held by the group and classified on the consolidated balance sheet as available-for-sale. To manage its price risk arising from investments in equity securities, the group diversifies its portfolio. The majority of the group's equity investments are publicly traded and are quoted on stock exchanges located in Bermuda, Japan, Switzerland, UK and US. Should these equity indexes increase or decrease by 5 per cent. with all other variables held constant and all the group's equity instruments move accordingly, the group's equity balance would increase/decrease by £1,440,000 (2014: £3,127,000). The group's exposure to commodity price risk is not significant. (iii) Cash flow and interest rate risk The group's interest rate risk arises from interest-bearing assets and short and long-term borrowings. Borrowings issued at variable rates expose the group to cash flow interest rate risk. The group has no fixed rate exposure. At 31 December 2015, if interest rates on non-sterling denominated interest-bearing assets and borrowings had been 50 basis points higher/lower with all other variables held constant, post-tax profit for the year would have been £266,000 (2014: £215,000) higher/lower. At 31 December 2015, if interest rates on sterling denominated interest-bearing assets and borrowings had been 50 basis points higher/lower with all other variables held constant, post-tax profit for the year would have been £7,000 (2014: £176,000) higher/lower. The interest rate exposure of the group's interest bearing assets and liabilities by currency, at 31 December was: Assets Liabilities 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Sterling 136,675 178,831 135,356 143,660 US Dollar 76,232 52,105 59,126 42,165 Euro 13,136 19,403 12,714 18,666 Swiss Franc 4,482 9,827 4,151 5,231 Kenyan Shilling 15,712 11,915 - 2 Indian Rupee 11,424 7,873 512 807 Malawian Kwacha 36 38 919 785 Bangladesh Taka 8,198 4,066 3,175 248 Australian Dollar 361 527 353 522 South African Rand 1,545 1,359 106 151 Brazilian Real 2,226 3,346 - - Bermudian Dollar 898 1,153 - - Canadian Dollar 2,104 603 2,104 598 Japanese Yen 70 407 69 404 Other 506 4,465 504 4,465 273,605 295,918 219,089 217,704 (B) Credit risk The group has policies in place to limit its exposure to credit risk. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. If customers are independently rated, these ratings are used. Otherwise if there is no independent rating, management assesses the credit quality of the customer taking into account its financial position, past experience and other factors and if appropriate holding liens over stock and receiving payments in advance of services or goods as required. Management monitors the utilisation of credit limits regularly. The group's approach to customer lending through the group's banking subsidiaries is risk averse with only 1.5 per cent. of the customer loan book being unsecured. Collateralised loans are normally secured against cash or property, with property loans being restricted to 70 per cent. of recent valuation although corporate or personal guarantees are also acceptable in some instances. The group has a large number of trade receivables, the largest five receivables at the year end comprise 30 per cent. (2014: 21 per cent.) of total trade receivables. (C) Liquidity risk Ultimate responsibility for liquidity risk management rests with the board of directors. The group manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows and managing the maturity profiles of financial assets and liabilities. The two subsidiary companies which are engaged in banking activities, Duncan Lawrie Limited and Duncan Lawrie (IOM) Limited seek to match maturing customer deposits with market placements and to use liquid assets such as certificates of deposit. This results in reduced liquidity risk for Duncan Lawrie and the group. At 31 December 2015, the group had undrawn committed facilities of £22,247,000 (2014: £24,995,000), all of which are due to be reviewed within one year. The table below analyses the group's financial assets and liabilities which will be settled on a net basis into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows. Less than 1 Between 1 Between 2 Over 5 year and 2 years and 5 years years Undated Total £'000 £'000 £'000 £'000 £'000 £'000 At 31 December 2015 Assets Available-for-sale financial assets 143 143 287 - 30,021 30,594 Held-to-maturity financial assets 1,849 9,352 12,667 5,642 - 29,510 Trade and other receivables 33,482 1,164 - - - 34,646 Loans and advances to customers of banking subsidiaries 14,167 6,698 14,656 216 96 35,833 Cash and cash equivalents (excluding bank subsidiaries) 70,359 - - - - 70,359 Loans and advances to banks by banking subsidiaries 167,211 - - - 202 167,413 287,211 17,357 27,610 5,858 30,319 368,355 Liabilities Borrowings (excluding finance lease liabilities) 5,366 609 4,514 8 - 10,497 Deposits by banks at banking subsidiaries 1,482 - 700 - - 2,182 Customer accounts held at banking subsidiaries 202,677 1,493 2,118 81 41 206,410 Trade and other payables 52,023 - - - - 52,023 261,548 2,102 7,332 89 41 271,112 At 31 December 2014 Assets Available-for-sale financial assets 153 153 460 - 62,722 63,488 Trade and other receivables 37,508 1,237 - - - 38,745 Loans and advances to customers of banking subsidiaries 14,345 5,998 15,163 905 2,343 38,754 Cash and cash equivalents (excluding bank subsidiaries) 56,879 - - - - 56,879 Loans and advances to banks by banking subsidiaries 200,131 - - - 154 200,285 309,016 7,388 15,623 905 65,219 398,151 Liabilities Borrowings (excluding finance lease liabilities) 2,851 12 14 16 - 2,893 Finance lease liabilities 4 - - - - 4 Deposits by banks at banking subsidiaries 1,023 1,160 - - - 2,183 Customer accounts held at banking subsidiaries 208,620 970 2,916 84 34 212,624 Trade and other payables 46,311 - - - - 46,311 Other non-current liabilities - - - 98 - 98 258,809 2,142 2,930 198 34 264,113 Included in loans and advances to banks by banking subsidiaries repayable in less than 1 year is £120,627,000 (2014: £170,486,000) repayable on demand, £43,084,000 (2014: £29,645,000) repayable within 3 months and £3,500,000 (2014: £nil) repayable between 3 and 12 months. Included in loans and advances to customers of banking subsidiaries repayable in less than 1 year is £5,031,000 (2014: £3,723,000) repayable on demand, £4,445,000 (2014: £2,202,000) repayable within 3 months and £4,691,000 (2014: £8,420,000) repayable between 3 and 12 months. Included in held-to-maturity financial assets repayable in less than 1 year is £1,849,000 (2014: £nil) repayable between 3 and 12 months. Included in deposits by banks at banking subsidiaries repayable in less than 1 year is £363,000 (2014: £815,000) repayable on demand and £1,119,000 (2014: £208,000) repayable between 3 and 12 months. Included in customer accounts held at banking subsidiaries repayable in less than 1 year is £176,736,000 (2014: £179,179,000) repayable on demand, £22,457,000 (2014: £25,871,000) repayable within 3 months and £3,484,000 (2014: £3,570,000) repayable between 3 and 12 months. Included in borrowings in less than 1 year is £4,753,000 (2014: £2,757,000) repayable on demand. 40 Subsidiary and associated undertakings Subsidiary undertakings The subsidiary undertakings of the group at 31 December 2015, which are wholly owned and incorporated in Great Britain unless otherwise stated, were: Principal country of operation Agriculture Amgoorie India Limited (Incorporated in India - 99.8% holding) India Amo Tea Company Limited Bangladesh C.C. Lawrie Comércio e Participacões Ltda. (Incorporated in Brazil) Brazil Chittagong Warehouse Limited (Incorporated in Bangladesh - 93.3% holding) Bangladesh Duncan Brothers Limited (Incorporated in Bangladesh) Bangladesh Eastern Produce Cape (Pty) Limited (Incorporated in South Africa) South Africa Eastern Produce Kenya Limited (Incorporated in Kenya - 70.0% holding) Kenya Eastern Produce Malawi Limited (Incorporated in Malawi - 73.2% holding) Malawi Eastern Produce South Africa (Pty) Limited (Incorporated in South Africa - 73.2% holding) South Africa Eastland Camellia Limited (Incorporated in Bangladesh - 93.8% holding) Bangladesh Goodricke Group Limited (Incorporated in India - 76.5% holding) India Eastern Produce Estates South Africa (Pty) Limited (Incorporated in South Africa - held by Easten Produce South Africa (Pty) Limited) South Africa Horizon Farms (An United States of America general partnership - 80% holding) USA Kakuzi Limited (Incorporated in Kenya - 50.7% holding) Kenya Koomber Tea Company Limited (Incorporated in India) India Octavius Steel & Company of Bangladesh Limited (Incorporated in Bangladesh) Bangladesh Robertson Bois Dickson Anderson Limited UK Stewart Holl (India) Limited (Incorporated in India - 92.0% holding) India Surmah Valley Tea Company Limited (Incorporated in Bangladesh) Bangladesh The Allynugger Tea Company Limited Bangladesh The Chandpore Tea Company Limited Bangladesh The Lungla (Sylhet) Tea Company Limited Bangladesh The Mazdehee Tea Company Limited Bangladesh Victoria Investments Limited (Incorporated in Malawi- 73.2% holding) Malawi Zetmac (Pty) Limited (Incorporated in South Africa - 55.8% held by Easten Produce Estates South Africa (Pty) Limited) South Africa Engineering Abbey Metal Finishing Company Limited UK AJT Engineering Limited UK AKD Engineering Limited UK Atfin GmbH (Incorporated in Germany - 51.0% holding) Germany British Metal Treatments Limited UK GU Cutting and Grinding Services Limited UK Unochrome Investments Limited (formerly Loddon Engineering Limited) UK Food Service Affish BV (Incorporated in Holland) The Netherlands Associated Cold Stores & Transport Limited UK Duncan Products Limited (Incorporated in Bangladesh) Bangladesh Wylax International BV (Incorporated in Holland) The Netherlands Banking and Financial Services DDY Nominees Limited UK Duncan Lawrie Limited UK Duncan Lawrie Asset Management Limited UK Duncan Lawrie Holdings Limited UK Duncan Lawrie International Holdings Limited (Incorporated in Isle of Man) Isle of Man Duncan Lawrie (IOM) Limited (Incorporated in Isle of Man) Isle of Man Duncan Lawrie Offshore Services Limited (Incorporated in Isle of Man) Isle of Man Dunlaw Nominees Limited UK Dunman Nominees Limited (Incorporated in Isle of Man) Isle of Man Havelock Nominees Limited (Incorporated in Isle of Man) Isle of Man Hobart Place Nominees Limited UK Mount Havelock Directors Limited (Incorporated in Isle of Man) Isle of Man Mount Havelock Investments Limited (Incorporated in Isle of Man) Isle of Man Mount Havelock Secretaries Limited (Incorporated in Isle of Man) Isle of Man Investment Holding Affish Limited UK Assam Dooars Investments Limited UK Associated Fisheries Limited UK Bordure Limited UK Duncan Properties Limited (Incorporated in Bangladesh) Bangladesh Eastern Produce Investments Limited UK EP USA Inc. (Incorporated in the United States of America) USA EP California Inc. (Incorporated in the United States of America) USA John Ingham & Sons Limited UK Lawrie (Bermuda) Limited (Incorporated in Bermuda) Bermuda Lawrie Group Plc (Owned directly by the company) UK Lawrie International Limited (Incorporated in Bermuda) Bermuda Linton Park Plc (Owned directly by the company) UK Lintak Investments Limited (Incorporated in Kenya) Kenya Longbourne Holdings Limited Bangladesh Plantation House Investments Limited Malawi (Incorporated in Malawi - 50.2% held by subsidiaries) Shula Limited (Incorporated in Isle of Man) Isle of Man Unochrome Industries Limited UK Western Dooars Investments Limited UK Other Linton Park Services Limited UK XiMo AG (Incorporated in Switzerland - 51.0% holding) Switzerland Dormant companies ACS&T Gloucester Limited UK ACS&T Grimsby Limited UK ACS&T Humberside Limited UK ACS&T Seamer Limited UK ACS&T Tewkesbury Limited UK ACS&T Wolverhampton Limited UK Alex Lawrie & Company Limited UK Amgoorie Investments Limited UK Assam-Dooars Holdings Limited UK Associated Fisheries (Scotland) Limited UK Banbury Tea Warehouses Limited UK Blantyre & East Africa Limited UK Blantyre Insurance & General Agencies Limited (Incorporated in Malawi) Malawi Bonathaba Farms (Pty) Limited (Incorporated in South Africa) South Africa British African Tea Estates (Holdings) Limited UK British African Tea Estates Limited UK British Heat Treatments Limited UK British Indian Tea Company Limited UK British United Trawlers Limited UK BTS Chemicals Limited UK BUT Engineers (Fleetwood) Limited UK BUT Engineers (Grimsby) Limited UK Camellia Investments Limited UK Chisambo Holdings Limited UK Chisambo Tea Estate Limited UK Cholo Holdings Limited UK Craighead Investments Limited UK David Field Limited UK East African Tea Plantations Limited (Incorporated in Kenya - held by Eastern Produce Kenya Limited) Kenya Eastern Produce Africa Limited UK Eastern Produce Kakuzi Services Limited (Incorporated in Kenya - held by Kakuzi Limited) Kenya EP (RBDA) Limited (Incorporated in Malawi - Eastern Produce Malawi Limited) Malawi Estate Services Limited (Incorporated in Kenya - held by Kakuzi Limited) Kenya Feltham 1 Limited UK Feltham 2 Limited UK Fescol Limited UK G. F. Sleight & Sons Limited UK Goodricke Lawrie Consultants Limited UK Gotha Tea Estates Limited UK Granton Transport Limited UK Hamstead Village Investments Limited UK Hellyer Brothers Limited UK Horace Hickling & Co. Limited UK Hudson Brothers Trawlers Limited UK Humber Commercials Limited UK Humber St. Andrew's Engineering Company Limited UK Isa Bheel Tea Company Limited UK Jatel Plc UK Jetinga Holdings Limited UK Jetinga Valley Tea Company Limited UK Kaguru EPZ Limited (Incorporated in Kenya - held by Kakuzi Limited) Kenya Kapsumbeiwa Factory Company Limited UK Kip Koimet Limited (Incorporated in Kenya - held by Eastern Produce Kenya Limited) Kenya Kumadzi Tea Estates Limited UK Lankapara Tea Company Limited UK Lawrie Bhutan Limited UK Lawrie Plantation Services Limited UK Leasing Investments Limited UK Nasonia Tea Company Limited (Incorporated in Malawi) Malawi North West Profiles Limited UK Octavius Steel & Company (London) Limited UK Robert Hudson Holdings Limited UK Rosehaugh (Africa) Limited UK Ruo Estates Limited UK Ruo Estates Holdings Limited UK Sandbach Export Limited UK Sapekoe Pusela (Pty) Limited (Incorporated in South Africa - held by Easten Produce South Africa (Pty) Limited) South Africa Silverthorne-Gillott Limited UK SIS Securities Limited UK Sterling Industrial Securities Limited UK Stewart Holl Investments Limited UK The Amgoorie Tea Estates Limited UK The Bagracote Tea Company, Limited UK The Ceylon Upcountry Tea Estates Limited UK The Dejoo Tea Company Limited UK The Dhoolie Tea Company Limited UK The Doolahat Tea Company Limited UK The Eastern Produce & Estates Company Limited UK The Endogram Tea Company Limited UK The Harmutty Tea Company Limited UK The Jhanzie Tea Association Limited UK The Kapsumbeiwa Tea Company Limited UK The Longai Valley Tea Company Limited UK The Tyspane Tea Company Limited UK Thyolo Highlands Tea Estates Limited UK Vaghamon (Travancore) Tea Company Limited UK Walter Duncan & Goodricke Limited UK WDG Properties Limited UK Western Dooars Tea Holdings Limited UK Summarised financial information on subsidiaries with material non-controlling interests Summarised balance sheet Eastern Produce Kenya Limited as at 31 December Eastern Produce Malawi Limited as at 31 December 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Current Assets 24,074 17,573 7,075 9,333 Liabilities (18,516 ) (9,802 ) (8,963 ) (12,811 ) Total current net assets/(liabilities) 5,558 7,771 (1,888 ) (3,478 ) Non-current Assets 24,075 25,108 53,069 52,158 Liabilities (6,152 ) (6,861 ) (15,932 ) (14,756 ) Total non-current net assets 17,923 18,247 37,137 37,402 Net assets 23,481 26,018 35,249 33,924 Eastern Produce South Africa Limited as at 31 December Goodricke Group Limited as at 31 December 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Current Assets 4,562 3,682 30,181 28,589 Liabilities (1,135 ) (643 ) (16,866 ) (14,463 ) Total current net assets 3,427 3,039 13,315 14,126 Non-current Assets 4,829 5,371 24,258 23,627 Liabilities (1,251 ) (1,345 ) (6,316 ) (6,787 ) Total non-current net assets 3,578 4,026 17,942 16,840 Net assets 7,005 7,065 31,257 30,966 Horizon Farms as at 31 December Kakuzi Limited as at 31 December 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Current Assets 2,531 2,633 10,027 8,256 Liabilities (647 ) (318 ) (2,500 ) (1,316 ) Total current net assets 1,884 2,315 7,527 6,940 Non-current Assets 9,262 8,536 20,155 19,095 Liabilities (875 ) (829 ) (4,912 ) (4,924 ) Total non-current net assets 8,387 7,707 15,243 14,171 Net assets 10,271 10,022 22,770 21,111 Summarised income statement Eastern Produce Kenya Limited for year ended 31 December Eastern Produce Malawi Limited for year ended 31 December 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Revenue 39,280 27,783 15,538 18,113 Profit before tax 13,227 4,936 21,037 10,858 Taxation (4,008 ) (1,537 ) (7,267 ) (3,279 ) Other comprehensive income/(expense) 25 (127 ) - - Total comprehensive income 9,244 3,272 13,770 7,579 Total comprehensive income allocated to non-controlling interests 2,773 982 3,690 2,031 Dividends paid to non-controlling interests 3,026 2,686 597 698 Eastern Produce South Africa Limited for year ended 31 December Goodricke Group Limited for year ended 31 December 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Revenue 4,866 4,448 67,461 59,569 Profit before tax 2,478 975 2,241 5,157 Taxation (748 ) (306 ) (1,059 ) (1,509 ) Other comprehensive expense - - (118 ) (1,206 ) Total comprehensive income 1,730 669 1,064 2,442 Total comprehensive income allocated to non-controlling interests 511 179 241 782 Dividends paid to non-controlling interests 68 - 224 211 Horizon Farms as at 31 December Kakuzi Limited as at 31 December 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Revenue 4,052 5,101 14,726 10,101 Profit before tax 1,620 3,246 5,105 1,607 Taxation (616 ) (1,243 ) (1,581 ) (501 ) Other comprehensive income/(expense) - - 33 (41 ) Total comprehensive income 1,004 2,003 3,557 1,065 Total comprehensive income allocated to non-controlling interests 201 401 1,754 525 Dividends paid to non-controlling interests 262 - 242 250 Summarised cash flows Eastern Produce Kenya Limited for year ended 31 December Eastern Produce Malawi Limited for year ended 31 December Eastern Produce South Africa Limited for year ended 31 December 2015 2014 2015 2014 2015 2014 £'000 £'000 £'000 £'000 £'000 £'000 Cash flows from operating activities Cash generated from operations 16,421 4,272 3,489 4,602 854 9 Net interest received 1,284 831 (284 ) 815 72 64 Income tax paid (1,847 ) (1,462 ) (1,289 ) (1,335 ) (233 ) - Net cash generated from operating activities 15,858 3,641 1,916 4,082 693 73 Net cash used in investing activities (945 ) (856 ) (581 ) (1,655 ) (288 ) (461 ) Net cash used in financing activities (10,085 ) (8,954 ) (2,229 ) (2,605 ) (45 ) 13 Net increase/(decrease) in cash and cash equivalents and bank overdrafts 4,828 (6,169 ) (894 ) (178 ) 360 (375 ) Cash, cash equivalents and bank overdrafts at beginning of year 10,291 16,194 (282 ) (113 ) 1,764 2,221 Exchange (losses)/gains on cash and cash equivalents (236 ) 266 272 9 (426 ) (82 ) Cash, cash equivalents and bank overdrafts at end of year 14,883 10,291 (904 ) (282 ) 1,698 1,764 Goodricke Group Limited for year ended 31 December Horizon Farms for year ended 31 December Kakuzi Limited for year ended 31 December 2015 2014 2015 2014 2015 2014 £'000 £'00 £'000 £'00 £'00 £'000 Cash flows from operating activities Cash generated from operations 4,267 3,929 3,312 1,939 5,788 3,196 Net interest received - - - - 509 585 Income tax paid (855 ) (1,659 ) (307 ) (1,243 ) (536 ) (326 ) Net cash generated from operating activities 3,412 2,270 3,005 696 5,761 3,455 Net cash used in investing activities (1,359 ) (1,511 ) (403 ) (856 ) (3,997 ) (2,419 ) Net cash used in financing activities (1,255 ) (1,269 ) (1,309 ) - (491 ) (507 ) Net increase in cash and cash equivalents and bank overdrafts 798 (510 ) 1,293 (160 ) 1,273 529 Cash, cash equivalents and bank overdrafts at beginning of year (168 ) 341 898 1,005 6,896 6,330 Exchange gains/(losses) on cash and cash equivalents 2 1 96 53 (388 ) 37 Cash, cash equivalents and bank overdrafts at end of year 632 (168 ) 2,287 898 7,781 6,896 Associated undertakings The principal associated undertakings of the group at 31 December 2015 were: Group interest Principal Accounting in equity country of date capital operation 2015 per cent. Insurance and banking BF&M Limited (Incorporated in Bermuda - common stock) Bermuda 31 December 36.1 United Insurance Company Limited (Incorporated in Bangladesh - ordinary shares) Bangladesh 31 December 37.0 United Finance Limited (Incorporated in Bangladesh - ordinary shares) Bangladesh 31 December 38.4 41 Control of Camellia Plc Camellia Holding AG continues to hold 1,427,000 ordinary shares of Camellia Plc (representing 51.67 per cent. of the total voting rights). Camellia Holding AG is owned by The Camellia Private Trust Company Limited, a private trust company incorporated under the laws of Bermuda as trustee of The Camellia Foundation ("the Foundation"). The Foundation is a Bermudian trust, the income of which is utilised for charitable, educational and humanitarian causes at the discretion of the trustees. The activities of Camellia Plc and its group (the "Camellia Group") are conducted independently of the Foundation and none of the directors of Camellia Plc are connected with The Camellia Private Trust Company Limited or the Foundation. While The Camellia Private Trust Company Limited as a Trustee of the Foundation maintains its rights as a shareholder, it has not participated in, and has confirmed to the board of Camellia Plc that it has no intention of participating in, the day to day running of the business of the Camellia Group. The Camellia Private Trust Company Limited has also confirmed its agreement that where any director of Camellia Plc is for the time being connected with the Foundation, he should not exercise any voting rights as a director of Camellia Plc in relation to any matter concerning the Camellia Group's interest in any assets in which the Foundation also has a material interest otherwise than through Camellia Plc. Report of the independent auditors Independent auditors' report to the members of Camellia Plc Report on the financial statements Our opinion In our opinion: · Camellia Plc's group financial statements and company financial statements (the "financial statements") give a true and fair view of the state of the group's and of the company's affairs as at 31 December 2015 and of the group's profit and the group's and the company's cash flows for the year then ended; · the group financial statements have been properly prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union; · the company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and · the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. What we have audited The financial statements, included within the Annual Report, comprise: · the Consolidated and Company balance sheet as at 31 December 2015; · the Consolidated income statement and Statement of comprehensive income for the year then ended; · the Consolidated and Company cash flow statement for the year then ended; · the Group and Company Statements of changes in equity for the year then ended; · the accounting policies; and · the notes to the financial statements, which include other explanatory information. Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the financial statements. These are cross-referenced from the financial statements and are identified as audited. The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union, and applicable law, as regards the company financial statements, as applied in accordance with the provisions of the Companies Act 2006. In applying the financial reporting framework, the directors have made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events. Opinions on matters prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and the Report of the directors for the financial year for which the financial statements are prepared is consistent with the financial statements. Other matters on which we are required to report by exception Adequacy of accounting records and information and explanations received Under the Companies Act 2006 we are required to report to you if, in our opinion: · we have not received all the information and explanations we require for our audit; or · adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or · the company financial statements are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. Directors' remuneration Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors' remuneration specified by law are not made. We have no exceptions to report arising from this responsibility. Responsibilities for the financial statements and the audit Our responsibilities and those of the directors As explained more fully in the Statement of Directors' Responsibilities set out on page 29, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK & Ireland) ("ISAs (UK & Ireland)"). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. What an audit of financial statements involves We conducted our audit in accordance with ISAs (UK and Ireland). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: - whether the accounting policies are appropriate to the group's and the company's circumstances and have been consistently applied and adequately disclosed; - the reasonableness of significant accounting estimates made by the directors; and - the overall presentation of the financial statements. We primarily focus our work in these areas by assessing the directors' judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements. We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both. In addition, we read all the financial and non-financial information in the Report and accounts to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. John Ellis (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 27 April 2016 Five year record 2015 2014 2013 2012 2011 £'000 £'000 £'000 £'000 £'000 Revenue - continuing operations 257,800 238,868 251,267 261,529 246,849 Profit before tax 40,524 21,983 59,648 69,710 58,650 Taxation (18,590 ) (13,673 ) (22,105 ) (25,662 ) (16,860 ) Profit from continuing operations 21,934 8,310 37,543 44,048 41,790 Profit attributable to owners of the parent 12,449 2,836 28,297 31,210 33,086 Equity dividends paid 3,480 3,452 3,388 3,224 3,057 Equity Called up share capital 282 282 283 284 284 Reserves 330,148 321,422 332,183 313,526 321,308 Total shareholders' funds 330,430 321,704 332,466 313,810 321,592 Earnings per share 450.7 p 102.7 p 102.2 p 1,122.9 p 1,190.4 p Dividend paid per share 126 p 125 p 122 p 116 p 110 p This information is provided by RNS The company news service from the London Stock Exchange END FR QDLFLQZFZBBK