REG - Camellia PLC - Final Results <Origin Href="QuoteRef">CAME.L</Origin> - Part 5
27/04/2017 07:08
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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.
The fair value of biological assets is sensitive to these assumptions, the more significant of which at 31 December 2016
are as follows:
Non-current:
- Timber - a 10% movement in the market price for trees or the volume of trees assumed would result in a £1.3 million increase/decrease in the fair value of timber.
Current:
- Macadamia - a 10% increase/decrease in the volumes assumed would result in a £0.1 million increase/decrease in the fair value of macadamia growing crop. A 10% increase/decrease in selling price assumed for macadamia would result in a £0.9 million increase/decrease in the fair value.
- Avocados - a 10% increase/decrease in the volume or the price assumed would result in a £0.1 million increase/decrease in the fair value of Hass avocados growing crop.
- Soya - a 10% increase/decrease in the volume or the price assumed would result in a £0.4 million increase/decrease in the fair value of soya growing crop.
Financial risk management strategies
The group is exposed to financial risks arising from changes in the prices of the agricultural products it produces. There
are no futures markets available for the majority of crops grown by the group. The group's exposure to this risk is
mitigated by the geographical spread of its operations, selective forward selling in certain instances when considered
appropriate, and regular 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.
20 Prepaid operating leases
£'m
Group
Cost
At 1 January 2015 0.9
Exchange differences (0.1 )
At 1 January 2016 0.8
Exchange differences 0.2
At 31 December 2016 1.0
Net book value at 31 December 2016 1.0
Net book value at 31 December 2015 0.8
21 Investments in subsidiaries
2016 2015
£'m £'m
Company
Cost
At 1 January and 31 December 73.5 73.5
22 Investments in associates
2016 2015
£'m £'m
Group
At 1 January 73.0 8.7
Exchange differences 14.4 4.2
Transfer from available-for-sale financial assets - 34.4
Negative goodwill on initial recognition as an associate (note 5) - 22.7
Share of profit (note 5) 5.1 4.2
Dividends (2.3 ) (1.2 )
Dilution of holding (0.5 ) -
Other equity movements 0.1 -
At 31 December 89.8 73.0
Provision for diminution in value
At 1 January 24.1 -
Exchange differences 4.7 1.5
Provided during year (note 5) - 22.6
At 31 December 28.8 24.1
Net book value at 31 December 61.0 48.9
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
£'m £'m £'m £'m % £'m
2016
Listed
BF&M Bermuda 522.9 (446.2 ) 71.7 3.8 35.8 52.2
United Finance Limited Bangladesh 80.9 (70.2 ) 7.0 1.1 38.4 12.4
United Insurance
Company Limited Bangladesh 3.1 (0.7 ) 0.3 0.2 37.0 3.7
606.9 (517.1 ) 79.0 5.1 68.3
2015
Listed
BF&M Bermuda 411.9 (348.9 ) 60.2 2.9 36.1 35.9
United Finance Limited Bangladesh 63.5 (55.4 ) 6.4 1.1 38.4 10.7
United Insurance
Company Limited Bangladesh 2.5 (0.6 ) 0.3 0.2 37.0 3.2
477.9 (404.9 ) 66.9 4.2 49.8
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 was
reclassified from available-for-sale financial assets to an investment in associate during 2015. The result of this
reclassification was an increase of £57.1 million in 2015 in investments in associate reflecting the group's equity
interest in BF&M Limited and available-for-sale financial assets declined by £34.4 m, being the market value of the group's
shareholding. The difference of £22.7 million was transferred to the income statement and this was offset by an impairment
provision of £22.7 million which was made against the group's equity carrying value of this investment during 2015, due to
the significant difference between the equity value of the investment and the market value at 1 July 2015.
23 Available-for-sale financial assets
Group Company
2016 2015 2016 2015
£'m £'m £'m £'m
Cost or fair value
At 1 January 35.7 67.8 0.2 0.2
Exchange differences 6.4 1.3 - -
Transfer to investments in associates - (34.4 ) - -
Fair value adjustment 3.5 0.2 - -
Additions 3.4 2.3 - -
Disposals (7.2 ) (1.3 ) - -
Fair value adjustment for disposal (1.2 ) (0.2 ) - -
Reclassification to assets held for resale (1.0 ) - - -
At 31 December 39.6 35.7 0.2 0.2
Provision for diminution in value
At 1 January 5.1 4.3 - -
Exchange differences 0.6 0.2 - -
Provided during year 0.1 0.6 - -
Disposals (3.4 ) - - -
At 31 December 2.4 5.1 - -
Net book value at 31 December 37.2 30.6 0.2 0.2
Available-for-sale financial assets include the following:
Group Company
2016 2015 2016 2015
£'m £'m £'m £'m
Listed securities:
Equity securities - UK - 0.9 - -
Equity securities - Bermuda 5.1 5.2 - -
Equity securities - Japan 15.7 12.2 - -
Equity securities - Switzerland 8.5 6.7 - -
Equity securities - US 2.8 2.1 - -
Equity securities - India 3.5 1.0 - -
Equity securities - Europe 0.5 0.4 - -
Equity securities - Other 0.4 0.3 - -
Debentures with fixed interest of 12.5% and repayable twice yearly until 31 October 2019 - Kenya 0.5 0.6 - -
Unlisted investments 0.2 1.2 0.2 0.2
37.2 30.6 0.2 0.2
Available-for-sale financial assets are denominated in the following currencies:
Group Company
2016 2015 2016 2015
£'m £'m £'m £'m
Sterling 0.2 2.2 0.2 0.2
US Dollar 2.8 2.1 - -
Euro 0.5 0.4 - -
Swiss Franc 8.5 6.6 - -
Indian Rupee 3.5 1.0 - -
Bermudian Dollar 5.1 5.2 - -
Japanese Yen 15.7 12.2 - -
Kenyan Shilling 0.5 0.6 - -
Other 0.4 0.3 - -
37.2 30.6 0.2 0.2
24 Held-to-maturity financial assets
Group
2016 2015
£'m £'m
Cost or fair value
At 1 January 29.5 -
Additions 30.0 29.5
Disposals (29.5) -
Reclassification to assets held for resale (30.0) -
At 31 December - 29.5
Net book value comprises:
Debt securities - 29.5
Current element - 1.8
Non-current element - 27.7
- 29.5
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
2016 2015 2016 2015
£'m £'m £'m £'m
Cost
At 1 January 9.0 8.8 10.2 8.8
Additions 0.2 0.2 0.2 1.4
At 31 December 9.2 9.0 10.4 10.2
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
2016 2015
£'m £'m
Restated
Group
Made tea 34.8 24.1
Other agricultural produce 1.6 1.0
Work in progress 0.4 1.8
Trading stocks 2.2 1.8
Raw materials and consumables 11.6 9.1
50.6 37.8
Made tea was previously included in inventory at cost as no reliable fair value was available to reflect the uplift in
value arising at the point of harvest of green leaf. Following a reassessment, the fair value for green leaf at the point
of harvest can now be more reliably calculated. From 1 January 2015 made tea inventories include the fair value of green
leaf which includes a fair value uplift of £0.8 million (2015: £0.5 million).
27 Trade and other receivables
Group
2016 2015
£'m £'m
Group
Current:
Amounts due from customers of banking subsidiaries - 14.3
Trade receivables 27.8 25.6
Other receivables 7.6 7.9
Prepayments and accrued income 5.2 7.8
40.6 55.6
Non-current:
Amounts due from customers of banking subsidiaries - 21.6
Other receivables 1.8 1.1
1.8 22.7
The carrying amounts of the group's trade and other receivables are denominated in the following currencies:
2016 2015
£'m £'m
Current:
Sterling 9.6 27.6
US Dollar 3.8 3.1
Euro 1.4 1.2
Kenyan Shilling 2.1 2.4
Indian Rupee 19.2 17.8
Malawian Kwacha 0.4 0.8
Bangladesh Taka 1.9 1.3
South African Rand 0.4 0.2
Brazilian Real 1.2 0.6
Other 0.6 0.6
40.6 55.6
Non-current:
Sterling - 21.4
US Dollar 0.3 0.1
Kenyan Shilling 0.5 0.3
Indian Rupee 0.6 0.4
Malawian Kwacha - 0.2
Bangladesh Taka 0.4 0.3
1.8 22.7
Included within trade receivables is a provision for doubtful debts of £0.3 million (2015: £0.9 million) and all other
trade receivables are with normal trading partners and there is no history of defaults.
Trade receivables include receivables of £4.4 million (2015: £6.6 million) which are past due at the reporting date against
which the group has not provided, as there has not been a significant change in credit quality and the amounts are still
considered recoverable. Ageing of past due but not provided for receivables is as follows:
2016 2015
£'m £'m
Up to 30 days 3.1 4.4
30-60 days 0.5 1.4
60-90 days 0.2 0.3
Over 90 days 0.6 0.5
4.4 6.6
28 Cash and cash equivalents
Group Company
2016 2015 2016 2015
£'m £'m £'m £'m
Cash at bank and in hand 31.0 157.2 - 2.2
Short-term bank deposits 37.8 40.1 - -
Short-term liquid investments 4.1 40.5 - -
72.9 237.8 - 2.2
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 £nil (2015: £167.4 million) which are held by the group's banking
subsidiaries and which are an integral part of the banking operations.
Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:
2016 2015 2016 2015
£'m £'m £'m £'m
Cash and cash equivalents (excluding banking 72.9 70.4 - 2.2
operations)
Bank overdrafts (note 30) (1.1 ) (4.8 ) - -
71.8 65.6 - 2.2
2016 2015 2016 2015
Effective interest rate:
Short-term deposits 2.50 - 12.50% 4.00 - 20.00% - -
Short-term liquid investments 6.45 - 6.49% 0.07 - 0.47% - -
Average maturity period:
Short-term deposits 88 days 103 days - -
Short-term liquid investments 46 days 40 days - -
29 Trade and other payables
Group Company
2016 2015 2016 2015
£'m £'m £'m £'m
Current:
Amounts due to customers of banking subsidiaries - 204.2 - -
Trade payables 30.3 26.4 - -
Other taxation and social security 2.6 2.7 - -
Other payables 27.6 20.2 0.1 0.1
Accruals 6.4 5.4 - -
66.9 258.9 0.1 0.1
Non-current:
Amounts due to customers of banking subsidiaries - 4.4 - -
30 Financial liabilities - borrowings
2016 2015
£'m £'m
Group
Current:
Bank overdrafts 1.1 4.8
Bank loans 0.6 0.6
1.7 5.4
Current borrowings include the following amounts secured on property, plant and equipment and investment properties:
Bank overdrafts 0.2 3.8
Bank loans 0.6 0.6
0.8 4.4
Non-current:
Bank loans 4.5 5.1
Non-current borrowings include the following amounts secured on investment properties:
Bank loans 4.5 5.1
The repayment of bank loans and overdrafts fall due as follows:
Within one year or on demand (included in current liabilities) 1.7 5.4
Between 1 - 2 years 0.6 0.6
Between 2 - 5 years 3.9 4.5
6.2 10.5
The rates of interest payable by the group ranged between:
2016 2015
% %
Bank overdrafts 2.00 - 33.00 2.25 - 36.00
Bank loans 3.03 3.03
31 Provisions
Onerous lease Others Total
£'m £'m £'m
Group
At 1 January 2015 0.3 0.4 0.7
Utilised in the period (0.1 ) (0.3 ) (0.4 )
Provided in the period - 0.2 0.2
Unused amounts reversed in period (0.2 ) - (0.2 )
At 1 January 2016 - 0.3 0.3
Utilised in the period - (0.1 ) (0.1 )
Provided in the period - 0.2 0.2
At 31 December 2016 - 0.4 0.4
Current:
At 31 December 2016 - 0.4 0.4
At 31 December 2015 - 0.3 0.3
Others relate to provisions for claims.
32 Deferred tax
The net movement on the deferred tax account is set out below:
Group Company
2016 2015 2016 2015
£'m £'m £'m £'m
Restated
At 1 January 37.2 41.4 0.2 0.2
Exchange differences 6.4 (3.4 ) - -
Charged/(credited) to the income statement 0.7 (0.2 ) - -
Credited to equity (1.2 ) (0.6 ) - -
At 31 December 43.1 37.2 0.2 0.2
The movement in deferred tax assets and liabilities is set out below:
Deferred tax liabilities
Accelerated Employee
tax benefit
depreciation obligations Other Total
£'m £'m £'m £'m
At 1 January 2015 45.1 0.3 - 45.4
Exchange differences (3.5 ) - - (3.5 )
Charged to the income statement 1.6 0.1 0.1 1.8
Credited to equity - (0.4 ) - (0.4 )
At 1 January 2016 43.2 - 0.1 43.3
Exchange differences 7.7 - 0.2 7.9
Charged to the income statement (1.9 ) - 2.8 0.9
At 31 December 2016 49.0 - 3.1 52.1
Deferred tax assets offset (8.8 )
Net deferred tax liability after offset 43.3
Deferred tax assets
Employee
benefit
Tax losses obligations Other Total
£'m £'m £'m £'m
At 1 January 2015 0.7 0.9 2.4 4.0
Exchange differences - - (0.1 ) (0.1 )
(Charged)/credited to the income statement (0.2 ) - 2.2 2.0
Credited to equity - 0.2 - 0.2
At 1 January 2016 0.5 1.1 4.5 6.1
Exchange differences 0.1 0.1 1.3 1.5
(Charged)/credited to the income statement (0.3 ) (1.3 ) 1.8 0.2
Credited to equity - 0.9 0.3 1.2
At 31 December 2016 0.3 0.8 7.9 9.0
Offset against deferred tax liabilities (8.8 )
Net deferred tax asset after offset 0.2
Deferred tax liabilities of £24.3 million (2015: £20.7 million) have not been recognised for the withholding tax and other
taxes that would be payable on the unremitted earnings of certain subsidiaries. Such amounts are permanently reinvested.
Deferred tax assets are recognised for tax losses carried forward only to the extent that the realisation of the related
tax benefit through future taxable profits is probable. The group has not recognised deferred tax assets of £9.5 million
(2015:£7.0 million) 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
2016 by a qualified independent actuary. The UK final salary defined benefit pension scheme is closed to new entrants and
with effect from 1 November 2016, the scheme was closed to future accruals. Since that date these members have participated
in a defined contribution scheme.
The overseas schemes are operated in group subsidiaries located in Bangladesh, India and The Netherlands. Actuarial
valuations have been updated to 31 December 2016 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:
2016 2015
% per annum % per annum
UK schemes
Rate of increase in salaries N/a 2.00
Rate of increase to LPI (Limited Price Indexation) pensions in payment 2.40 - 5.00 2.00 - 5.00
Discount rate applied to scheme liabilities 2.65 3.80
Inflation assumption (CPI/RPI) 2.40/3.40 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 (2015: 22 years) and 24 years respectively (2015: 24 years).
Overseas schemes
Rate of increase in salaries 1.50 - 7.00 1.50 - 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 1.80 - 9.00 2.30 - 9.00
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:
2016 2015
% per annum % per annum
Rate of increase in salaries 6.00 - 10.00 6.00 - 10.00
Discount rate applied to scheme liabilities 6.75 - 14.50 8.00 - 14.00
Inflation assumptions 0.00 - 10.00 0.00 - 10.00
(iii) Leave obligations
Certain group subsidiaries located in India have an obligation to pay leave benefit, based on years of service. Previously
these obligations were included in other creditors but from 2016 these obligations have been estimated annually using the
projected unit method by qualified independent actuaries. These schemes are unfunded.
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
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
(iv) Actuarial valuations
2016 2015
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
Equities and property 96.5 0.7 97.2 89.6 0.5 90.1
Bonds 62.6 17.6 80.2 53.1 12.8 65.9
Cash 5.0 6.8 11.8 6.9 5.4 12.3
Other - 4.9 4.9 - 3.7 3.7
Total fair value of plan assets 164.1 30.0 194.1 149.6 22.4 172.0
Present value of defined benefit obligations (208.7 ) (52.1 ) (260.8 ) (174.1 ) (36.5 ) (210.6 )
Total deficit in the schemes (44.6 ) (22.1 ) (66.7 ) (24.5 ) (14.1 ) (38.6 )
Amount recognised as asset in the balance sheet - 0.1 0.1 - 0.2 0.2
Amount recognised as current liability in the balance sheet - (0.9) (0.9 ) - (1.0 ) (1.0 )
Amount recognised as non-current liability in the balance sheet (44.6 ) (21.3 ) (65.9 ) (24.5 ) (13.3 ) (37.8 )
(44.6 ) (22.1 ) (66.7 ) (24.5 ) (14.1 ) (38.6 )
Related deferred tax asset (note 32) - 0.8 0.8 - 1.1 1.1
Net deficit (44.6 ) (21.3 ) (65.9 ) (24.5 ) (13.0 ) (37.5 )
Movements in the fair value of scheme assets were as follows:
2016 2015
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
At 1 January 149.6 22.4 172.0 149.7 19.9 169.6
Transfer from other creditors - 0.6 0.6 - - -
Expected return on plan 5.6 1.8 7.4 5.1 2.0 7.1
assets
Employer contributions 1.4 2.8 4.2 1.5 2.4 3.9
Benefit payments (7.6 ) (2.1 ) (9.7 ) (8.1 ) (1.8 ) (9.9 )
Actuarial gains/(losses) 15.1 0.4 15.5 1.4 (0.3 ) 1.1
Exchange differences - 4.1 4.1 - 0.2 0.2
At 31 December 164.1 30.0 194.1 149.6 22.4 172.0
Movements in the present value of defined benefit obligations were as follows:
2016 2015
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
At 1 January (174.1 ) (36.5 ) (210.6 ) (184.3 ) (26.9 ) (211.2 )
Transfer from other creditors - (1.1 ) (1.1 ) - - -
Current service cost (0.4 ) (1.8 ) (2.2 ) (0.8 ) (1.5 ) (2.3 )
Past service cost - - - - (6.1 ) (6.1 )
Interest cost (6.5 ) (3.1 ) (9.6 ) (6.3 ) (2.5 ) (8.8 )
Benefit payments 7.6 2.1 9.7 8.1 1.8 9.9
Actuarial (losses)/gains (35.3 ) (4.5 ) (39.8 ) 9.2 (1.2 ) 8.0
Exchange differences - (7.2 ) (7.2 ) - (0.1 ) (0.1 )
At 31 December (208.7 ) (52.1 ) (260.8 ) (174.1 ) (36.5 ) (210.6 )
In 2014, the total fair value of plan assets was £169.6 m, present value of defined benefit obligations was £211.2 million
and the deficit was £41.6 million. In 2013, the total fair value of plan assets was £164.0 million, present value of
defined benefit obligations was £185.4 million and the deficit was £21.4 million and in 2012, the total fair value of plan
assets was £151.6 million, present value of defined benefit obligations was £184.2 million and the deficit was £32.6
million.
Income statement
The amounts recognised in the income statement are as follows:
2016 2015
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
Amounts charged to operating profit:
Current service cost (0.4 ) (1.8 ) (2.2 ) (0.8 ) (1.5 ) (2.3 )
Past service cost - - - - (6.1 ) (6.1 )
Total operating charge (0.4 ) (1.8 ) (2.2 ) (0.8 ) (7.6 ) (8.4 )
Amounts charged to other finance costs:
Interest expense (0.9 ) (1.3 ) (2.2 ) (1.2 ) (0.5 ) (1.7 )
Total charged to income statement (1.3 ) (3.1 ) (4.4 ) (2.0 ) (8.1 ) (10.1 )
The past service cost in 2015 of £6.1 million relates to legislation enacted in Bangladesh which requires companies to make
a payment on retirement or other events terminating employment to all employees, based upon compensation and length of
service.
Employer contributions to defined contribution schemes are charged to profit when payable and the costs charged were £4.6
million (2015: £3.7 million).
Actuarial gains and losses recognised in the statement of comprehensive income
The amounts included in the statement of comprehensive income:
2016 2015
UK Overseas Total UK Overseas Total
£'m £'m £'m £'m £'m £'m
Remeasurements:
Return on plan assets, excluding amount included in interest 15.1 0.4 15.5 1.4 (0.3 ) 1.1
Loss from changes in demographic assumptions - - - (0.8 ) - (0.8 )
(Loss)/gain from changes in financial assumptions (37.1 ) (5.3) (42.4 ) 7.7 (0.4 ) 7.3
Experience gains/(losses) 1.8 0.8 2.6 2.3 (0.8 ) 1.5
Actuarial (loss)/gain (20.2 ) (4.1 ) (24.3 ) 10.6 (1.5 ) 9.1
Cumulative actuarial losses recognised in the statement of comprehensive income are £59.3 million (2015: £35.0 million).
As the UK defined benefit pension scheme was closed to future accrual and active members were transferred to a defined
contribution scheme in 2016, no employer contributions will be paid for the year commencing 1 January 2017, however, a
contribution of £0.9 million will be paid to reduce the scheme's funding deficit.
34 Share capital
2016 2015
£'m £'m
Authorised: 2,842,000 (2015: 2,842,000) ordinary shares of 10p each 0.3 0.3
Allotted, called up and fully paid: ordinary shares of 10p each:
At 1 January and 31 December- 2,824,500 (2015: 2,824,500) shares 0.3 0.3
Group companies hold 62,500 issued shares in the company. These are classified as treasury shares.
35 Reconciliation of profit from continuing operations to cash flow
2016 2015
£'m £'m
Restated
Group
Profit from continuing operations 25.6 21.1
Share of associates' results (5.1 ) (4.2 )
Depreciation and amortisation 14.9 15.7
Impairment of assets 0.1 0.5
Profit on disposal of non-current assets (0.2 ) (3.8 )
Profit on disposal of investments (1.5 ) (0.4 )
Increase in working capital 3.0 10.2
Pensions and similar provisions less payments (1.5 ) 4.0
Cash generated from continuing operations 35.3 43.1
36 Reconciliation of net cash flow to movement in net cash
2016 2015
£'m £'m
Group
(Decrease)/increase in cash and cash equivalents in the year (4.1 ) 12.5
Net cash outflow/(inflow) from decrease/(increase) in debt 0.6 (5.6 )
(Decrease)/increase in net cash resulting from cash flows (3.5 ) 6.9
Exchange rate movements 10.3 (1.0 )
Increase in net cash in the year 6.8 5.9
Net cash at beginning of year 59.9 54.0
Net cash at end of year 66.7 59.9
37 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:
2016 2015
£'m £'m
Group
Property, plant and equipment 1.9 1.4
1.9 1.4
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:
2016 2015
£'m £'m
Group
Land and buildings:
Within 1 year 2.0 1.4
Between 1 - 5 years 2.8 2.6
After 5 years 18.3 15.0
23.1 19.0
Plant and machinery:
Within 1 year 0.3 0.2
Between 1 - 5 years 0.2 0.2
0.5 0.4
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 it will be able to continue as a going concern, while maximising the return to
stakeholders through the optimisation of its debt and equity balance. The capital structure of the group consists of debt,
which includes the borrowings 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:
2016 2015
£'m £'m
Restated
Borrowings 6.2 10.5
Tangible net assets 329.7 313.0
Ratio 1.88% 3.35%
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 2016
Loans and Available for Held to
receivables sale maturity Total
£'m £'m £'m £'m
Group
Assets as per balance sheet
Available-for-sale financial assets - 37.2 - 37.2
Trade and other receivables excluding prepayments 37.2 - - 37.2
Cash and cash equivalents 72.9 - - 72.9
110.1 37.2 - 147.3
Company
Available-for-sale financial assets - 0.2 - 0.2
Other financial
liabilities at
amortised cost Total
£'m £'m
Group
Borrowings 6.2 6.2
Trade and other payables 64.3 64.3
70.5 70.5
Company
Trade and other payables 0.1 0.1
At 31 December 2015
Loans and Available for Held to
receivables sale maturity Total
£'m £'m £'m £'m
Group
Assets as per balance sheet
Available-for-sale financial assets - 30.6 - 30.6
Held-to-maturity financial assets - - 29.5 29.5
Trade and other receivables excluding prepayments 34.7 - - 34.7
Loans and advances to customers of banking 35.8 - - 35.8
subsidiaries
Cash and cash equivalents (excluding bank 70.4 - - 70.4
subsidiaries)
Loans and advances to banks by banking subsidiaries 167.4 - - 167.4
308.3 30.6 29.5 368.4
Company
Available-for-sale financial assets - 0.2 - 0.2
Cash and cash equivalents 2.2 - - 2.2
2.2 0.2 - 2.4
Other financial
liabilities at
amortised cost Total
£'m £'m
Group
Liabilities as per balance sheet
Borrowings 10.5 10.5
Amounts due to customers of banking subsidiaries 208.6 208.6
Trade and other payables 52.0 52.0
271.1 271.1
Company
Trade and other payables 0.1 0.1
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 2016
Level 1 Level 2 Level 3 Total
£'m £'m £'m £'m
Assets
Available-for sale financial assets:
- Equity securities 36.5 - 0.2 36.7
Debt investments:
- Debentures 0.5 - - 0.5
37.0 - 0.2 37.2
At 31 December 2015
Level 1 Level 2 Level 3 Total
£'m £'m £'m £'m
Assets
Available-for sale financial assets:
- Equity securities 28.8 - 1.2 30.0
Debt investments:
- Debentures 0.6 - - 0.6
Held-to-maturity financial assets 29.5 - - 29.5
58.9 - 1.2 60.1
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 year 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, the group's equity balance would increase/decrease by £0.8
million (2015: £0.6 million).
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
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