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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.



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.


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:



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.



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 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.



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.


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.



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.


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.



Mature area
Immature area
Volume 2015*
Volume 2014*

*Estate volumes only, in addition 14.7 million kg of tea was produced for smallholders (2014 – 15.5 million kg)
Tea pricing and operations


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.


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.


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.


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.


 Mature area
Immature area
Volume 2015
Volume 2014
South Africa778271574474


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.



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.


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.



      Mature area
Immature area
Volume 2015*
Volume 2014*

* Estate volumes only. In addition 2.3 million kg of smallholder fruit was packed (2014 – 2.7 million kg)



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.


Mature area
Immature area
Volume 2015
Volume 2014
Rubber (Bangladesh)1,622346629601
Citrus (USA)16984,8445,618
Arable (Brazil)3,374 –25,88817,234
Pineapples (Kenya)55 –1,7521,552
Wine grapes (South Africa)6211625718
Pistachio (USA)13131*621
Almonds (USA)56




* 2015 was an ‘off year’ for Pistachios
** Volumes quoted are for conversion to value addition products rather than own use as fuel wood


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).


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 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).



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).



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.


The value of the collections is held at cost. A number of minor additions and disposals were made during the year.



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.



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.


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