M.P. EVANS GROUP PLC
M.P. Evans Group PLC ("M P Evans" or the "Group"), a producer of Indonesian palm oil and Australian beef cattle, announces its unaudited interim results for the six months ended 30 June 2015.
Highlights
Financials
· Profit for the period, at US$15.3 million, similar to first-half 2014 (US$15.4 million)
· Interim dividend maintained at 2.25p per 10p share
· Indonesian plantation gross profit significantly reduced to US$8.9 million (2014 US$17.0 million) resulting from continuation of weak palm-oil prices
· Australian cattle gross profit (Woodlands) substantially increased to US$1.6 million (2014 US$0.9 million loss) due to good rainfall and strong prices
· Share of associates' profits US$10.6 million (2014 US$8.3 million) - Indonesian palm oil lower, Australian cattle (NAPCo) sharply higher
· Group maintains positive cash balances and modest borrowings
Indonesian palm oil
· F.f.b. crops overall 2% higher on majority-owned estates - 9% higher on new projects
· Associated companies' f.f.b. crops 11% lower
· Palm-oil prices averaged US$673 per tonne, 25% lower than US$895 in first-half 2014
· High oil-extraction rates continue, particularly in Kalimantan (25.6%)
· Costs per tonne similar to first-half 2014, assisted by continuing strengthening of US Dollar against Indonesian Rupiah
· El Niňo event may be under way which could negatively affect crops in 2016 and 2017
· Since period end, palm-oil prices have fallen sharply to current level of around US$550 per tonne
· New mill on Bangka project under construction, expected to be commissioned mid 2016
Australian beef cattle
· Contracts exchanged for the conditional sale of Woodlands for approximately US$20.0 million
· Cattle prices have been at record levels
· Woodlands has enjoyed a favourable season with substantial rainfall - good pasture and forage crop growth
· Despite a mixed season NAPCo's herd has increased significantly in value following strong cattle market
· Group share of NAPCo's profit was US$7.6 million (2014 loss US$0.3 million)
Malaysian property
· Group share of Bertam Properties' small loss US$0.1 million (2014 profit US$2.1 million)
· Fewer property sales completed but considerable number of sales in process
Commenting on the results, the chairman of M. P. Evans, Peter Hadsley-Chaplin, said:-
"The first half of 2015 has proved challenging for the Group's palm-oil operations with a continuation of low palm-oil prices. Despite a dry period in Kalimantan in the second half of 2014, the f.f.b. crop continues upwards and the board remains of the view that the long-term prospects for palm oil are promising.
The Group's cattle activities have enjoyed a period of generally favourable weather combined with strong prices. In the circumstances outlined above with the palm-oil operations, it is pleasing to be able to report a similar Group profit to that achieved in the first half of 2014. Cattle prices have remained at robust levels since the half year but palm-oil prices have weakened further. The results for the whole of 2015 are expected therefore to be lower than for 2014.
The conditional sale of Woodlands for approximately US$20.0 million announced yesterday results from heightened interest in the property following the recent strength of the cattle market and is in line with the board's stated strategy."
16 September 2015
Enquires:
M.P. Evans Group PLC 020 7796 4133 on 16 September 2015 only.
Thereafter telephone 01892 516333
Peter Hadsley-Chaplin Chairman
Philip Fletcher Managing director
Tristan Price Finance director
Peel Hunt LLP 020 7418 8900
Dan Webster
Richard Brown
Hudson Sandler 020 7796 4133
Charlie Jack
Katie Matthews
Bertie Berger
An analysts' meeting will be held today at 9.30 a.m. at the offices of Hudson Sandler, 29 Cloth Fair, London EC1A 7NN
OVERVIEW
The profit for the first half of 2015 was US$15.3 million, a similar overall result when compared with the US$15.4 million for the first half of 2014. The results for the period were characterised by significantly-lower palm-oil prices resulting in lower profits from the Indonesian palm-oil plantations (both majority-owned and those of the associated companies) but markedly-improved cattle prices which produced substantially-higher profits from the beef-cattle activities.
Palm-oil prices, which weakened sharply in the second half of 2014, continued to fall a little further in the first half of 2015. The average Rotterdam c.i.f. price in the first half of 2015 was US$673 per tonne, 25% lower compared with the US$895 for the same period in 2014. The average for the whole of 2014 was US$821. Notwithstanding dryness that has affected parts of Indonesia, the Group's overall crop of oil-palm fresh fruit bunches ("f.f.b.") from its majority-owned estates was, at 187,100 tonnes, 2% higher than the 183,600 tonnes harvested in the first half of 2014. The rising trend of crops on the new projects in Kalimantan and Bangka continued. Extraction rates in the Group's two palm-oil mills continued at high levels.
The f.f.b. crops of the two Indonesian associated companies were in line with expectations but lower than for the same period last year. The lower palm-oil price also adversely affected the results of these companies.
Progress continues on the new Musi Rawas project in South Sumatra. As at the date of this report, some 540 hectares have been planted of which 410 hectares relate to the Group and 130 hectares to the associated smallholders' co-operative. Some 2,750 hectares have been compensated.
Woodlands recorded a sharply-improved result in the first half of 2015, compared with the first half of 2014, following higher Australian cattle prices, improved weight gain and an increase in the size of the herd.
The North Australia Pastoral Company Pty Limited ("NAPCo") also recorded a substantially-better result which was largely attributable to the marked increase in the price of cattle. Cattle prices have continued to rise since the period end. The Group's board will continue to consider any opportunities that may arise in relation to its holding.
The board has declared an interim dividend of 2.25p per share which is the same as the previous year. The dividend will be paid on or after 3 November 2015 to shareholders on the register at the close of business on 25 September 2015. A scrip-dividend alternative continues to be available for this interim dividend. Shareholders who have previously elected to receive their dividends in this manner will automatically receive this dividend as scrip. Shareholders who now wish to make an election to receive this and future dividends as scrip should contact the company secretary by no later than 13 October 2015.
SALE OF WOODLANDS
As announced on 15 September 2015, contracts have been exchanged in relation to the conditional sale of Woodlands for AS$28.0 million (approximately US---$20.0 million). The sale is conditional upon various regulatory approvals, which are all expected to be received within approximately three months. The sale is for the property alone, and both the cattle and the plant and equipment on the property, which are estimated to have a combined value of over A$10 million, will be sold separately. The board determined some time ago, for strategic reasons, to sell Woodlands, but significant interest in the property has developed only in recent months further to the sharp strengthening of the cattle market.
THE PALM-OIL AND BEEF-CATTLE MARKETS
The average palm-oil price for the first half of 2015 was US$673 per tonne (Rotterdam c.i.f.), 25% lower than the US$895 recorded for the first half of 2014. The price remained within the relatively tight range of US$630 to US$680 during the period. General weakness in commodity markets, following uncertainties about the strength of the economy in China, are thought to have impacted on the palm-oil price as well as the existence of plentiful supplies of competing soybean oil.
Low mineral-oil prices have meant that the production of bio-diesel, utilising palm oil, in Indonesia has fallen some way below the mandated 15%. The US$50 per tonne export levy was introduced in July and it is hoped that the utilisation of the proceeds of this levy in subsidising bio-diesel production may have a beneficial effect on palm-oil prices in due course. In the meantime, however, palm-oil prices have weakened further since the half year. As referred to above, and depending on the extent of the effect of the El Niño phenomenon, it is possible that palm-oil production may be adversely affected in 2016 and 2017 in which case this is likely to impact beneficially on palm-oil prices.
Prices for the grass-fed, lighter-weight cattle produced by Woodlands and the grain-finished, heavier cattle produced by NAPCo moved sharply higher during the period. This resulted from an increase in both domestic and export demand, aided by the continued weakening of the Australian Dollar.
RESULTS FOR THE PERIOD
Majority-owned operations
Indonesia
F.f.b. crops from the new projects in Kalimantan and Bangka continued their upward trend in the first half of 2015, when compared with the same period in 2014. The crop in Kalimantan, at 72,300 tonnes, was somewhat less than originally expected following a dry period in the second half of 2014. The increase over the crop in the first half of 2014 (69,300 tonnes) was, as a consequence, a modest 2% but it is expected that there will be an increase in the last quarter of 2015. The crop on the Bangka project, at 31,300 tonnes, was slightly ahead of expectations and 23% ahead of the first half of 2014, as the young areas increase their yields. The f.f.b. purchased from third parties in Kalimantan, at 10,500 tonnes, was 59% ahead of the 6,600 tonnes processed in the same period in 2014 and proved a useful contribution in a period when the Group's own production was restricted by adverse weather.
The crop from the established estates in Sumatra, at 83,500 tonnes, was in line with expectations although 6% lower than the 88,900 tonnes harvested in the first half of 2014. The accelerating replanting programme will, in the short term, restrict the overall annual crops from these estates to approximately the level achieved in 2014 of around 180,000 tonnes. As in most previous years, the crop in the second half of 2015 is expected to be higher than that in the first half.
Extraction rates continued at the very satisfactory levels achieved in recent years. In Kalimantan, the average rate for the first half of 2015 was 25.6% which was in line with the rate for the whole of 2014 and slightly ahead of that for the first half of 2014. Pangkatan Mill achieved 23.2% which was slightly lower than that for the whole of 2014 and for the first half of that year. As referred to in the 2014 annual report, the mill started purchasing f.f.b. from third parties in its locality in the first half of 2015. The extraction rate achieved from such f.f.b. will inevitably be lower than that from the Group's own f.f.b. so a slight reduction in the overall extraction rate was to be expected.
As referred to above under "Palm-oil and beef-cattle markets", palm-oil prices, having fallen sharply in the second half of 2014, remained at these lower levels in the first half of 2015 before weakening further since 30 June 2015. Palm-kernel oil, and therefore the palm kernels that the Group sells, fell similarly.
Cost per tonne of palm products (palm oil plus palm kernels) at US$425 was similar in the first half of 2015 to that for the first half of the previous year. Local inflation of costs was offset by the further strengthening of the US Dollar against the Indonesian Rupiah. It is anticipated that the cost per tonne should reduce in the second half of the year as palm-oil production increases.
As a result of the above, gross profit from the Indonesian palm-oil operations amounted to US$8.9 million for the first half of 2015, a 48% decrease compared with the US$17.0 million for the same period in 2014.
Very little planting was undertaken on the Kalimantan project in the first half of 2015. As at 30 June 2015, some 13,960 hectares had been planted of which 9,790 relate to the Group and 4,170 to the smallholders' co-operatives. The only remaining land to be planted is to be protected by the proposed flood-protection bunds. Official clearances, which have now been received, are required before the construction of the bunds and pump stations can commence. Work is now getting under way on these and planting behind the bunds is expected to start in early 2016. The board's estimate remains that some 15,000 hectares in total will ultimately be able to be planted, of which 10,600 hectares relate to the Group and 4,400 to the smallholders' co-operatives.
On the Bangka project, 580 hectares were planted in the first half of 2015, of which 350 hectares relate to the Group and 230 to the smallholders' co-operatives. As at 30 June 2015, 7,450 hectares had been planted, of which 5,070 relate to the Group and 2,380 to the smallholders' co-operatives. The board's estimate remains that 10,000 hectares in total will ultimately be able to be planted, of which 6,000 relate to the Group.
The 45-tonne-per-hour palm-oil mill currently under construction on the Bangka project is progressing well and is on schedule. The mill is expected to be commissioned in mid-2016.
Crops, production and selling-price details for the majority-owned estates are set out as follows:-
6 months 6 months Year
ended ended ended
30 June Increase/ 30 June 31 December
2015 (decrease) 2014 2014
Tonnes % Tonnes Tonnes
Crops
Own crops
Pangkatan group 61,700 67,400 140,400
Simpang Kiri 21,800 21,500 42,100
------- ------- -------
83,500 (6) 88,900 182,500
Kalimantan 72,300 4 69,300 160,200
Bangka 31,300 23 25,400 42,700
------- ------- -------
187,100 2 183,600 385,400
======= ==== ======= =======
Smallholder co-operative crops
Kalimantan 32,200 23 26,100 64,500
Bangka 14,600 5 13,900 22,200
------- ------- -------
46,800 17 40,000 86,700
======= ==== ======= =======
Outside crop purchased
Kalimantan 10,500 59 6,600 15,600
Pangkatan 3,500 - - -
------- ------- -------
14,000 112 6,600 15,600
======= ==== ======= =======
Production
Crude palm oil
Kalimantan 29,500 14 25,900 61,500
Pangkatan 15,100 (6) 16,000 33,500
------- ------- -------
44,600 6 41,900 95,000
======= ==== ======= =======
Palm kernels
Kalimantan 4,900 29 3,800 10,100
Pangkatan 3,800 (5) 4,000 8,300
------- ------- -------
8,700 12 7,800 18,400
======= === ======= =======
Extraction rates % % %
Crude palm oil
Kalimantan 25.6 25.4 25.6
Pangkatan 23.2 23.8 23.9
======= ======= =======
% % %
Palm kernels
Kalimantan 4.3 3.7 4.2
Pangkatan 5.8 5.9 5.9
======= ======= =======
Selling prices US$ US$ US$
Rotterdam c.i.f. - average per tonne
Crude Palm oil 673 (25) 895 821
Palm-kernel oil 948 (25) 1,270 1,007
======= ==== ===== =======
Australia
Woodlands enjoyed a favourable season in the first half, with substantial rainfall received in both January and April. This enabled good pasture growth as well as the planting of a significant area of forage oats. The additional feed supply in turn afforded the opportunity to purchase more cattle and, accordingly, by the end of the period, the herd had risen to 7,300 head, compared with 5,500 head at the beginning of the period. The increased number of cattle, in addition to improved weight gain and the considerable increase in price during the period, gave rise to a markedly-improved farm profit of US$1.6 million, compared with a loss of US$0.9 million for the same period in 2014.
Gross profit
As a result of all of the above, the gross profit for the first half of 2015 was US$10.5 million, a reduction of 35% compared with the US$16.1 million recorded for the same period in 2014. An analysis of the gross profit/(loss) between the various activities and between the countries in which the Group operates is set out in note 3.
Foreign-exchange difference
The Group principally incurs foreign-exchange differences on monetary Rupiah assets and liabilities held in Indonesia. During the period under review the Indonesian Rupiah depreciated by 6.7% against the US Dollar generating a significant US$4.0 million, unrealised, exchange loss on cash balances, recoverable tax and loans made to the co-operative schemes attached to the Group's new projects. These are allowable against corporation tax liabilities.
Other administrative expenses
Some significant expenditures incurred in the first half of 2014 were not repeated in 2015: the impairment of the land at Woodlands in Australia, a provision against tax deemed not to be recoverable and expenditure on staff bonuses. Additionally, some of the provision against irrecoverable tax made in 2014 was credited back against other administrative expenses in 2015, further widening the difference between expenditure recorded in the first half of the two years. Other administrative expenses excluding exceptional items increased by 1% compared with the equivalent period in 2014.
Biological assets
The International Accounting Standards Board ("IASB") issued an amendment to its standard on biological assets in 2014 which the Group expects the European Union to endorse before the end of 2015. As explained in the 2014 annual report, the Group intends to adopt this amendment with effect from 1 January 2015 (see note 5) and so has applied it to these interim financial statements. From the beginning of 2015, palms will be accounted for at depreciated historical cost rather than as a 'biological asset' valued on the basis of discounted projected future cash flows. This new measurement is consistent with the way in which the Group reported prior to the adoption of IFRS and reflects the board's view that investing in a plantation is similar to constructing a factory in which the machinery is biological rather than mechanical. All of the Group's financial statements since the adoption of IFRS have presented audited figures both including and excluding the oil-palm biological-asset adjustment. The Group retains its plantations which remain as productive as previously but, since the biological valuations produced under IAS41 exceeded the cost of those plantations, the effect of adopting the amendment is to reduce the Group's book net assets at 31 December 2014 by US$89.7 million to US$310.7 million.
IAS41 requires preparers of accounts to recognise the value of growing crop prior to harvest "when, and only when, the fair value or cost of the asset can be measured reliably". It is the considered view of the board, supported by the opinion of the Tropical Growers' Association, that the stock of growing fresh fruit bunches cannot be measured reliably. The Group recognises growing bunches at the point of harvest and so has not recognised crop growing on the Group's palms prior to harvest as an asset (see note 5).
Associated companies
Indonesia
Crops and production for associated companies:-
6 months 6 months Year
ended ended ended
30 June (Decrease)/ 30 June 31 December
2015 Increase 2014 2014
Tonnes % Tonnes Tonnes
F.f.b. crops
PT Agro Muko
- own 153,700 (12) 174,800 344,900
- outgrowers 4,700 4,200 8,500
-------- -------- --------
158,400 (11) 179,000 353,400
PT Kerasaan Indonesia 18,700 (11) 21,100 42,000
-------- ------- --------
177,100 (11) 200,100 395,400
======== ==== ======== ========
Production (PT Agro Muko)
Crude palm oil 35,700 (11) 40,200 79,400
Palm kernels 8,400 (9) 9,200 18,500
======== ==== ======== ========
% % %
Extraction rates
Crude palm oil 22.5 22.5 22.5
Palm kernels 5.3 5.2 5.2
======== ======== ========
Tonnes Tonnes Tonnes
Rubber crops
PT Agro Muko - own 928 7 868 1,520
======== ==== ======== ========
PT Agro Muko's f.f.b. crop, at 153,700 tonnes, whilst a little below expectations in the first half of 2015 was 12% lower than the 174,800 tonnes for the same period in 2014. The accelerated replanting programme which is planned over the next five years is expected to result in crops for the year slightly lower than that achieved in 2014 and is estimated to continue at this level over this five-year period before yields start to increase again. The rubber crop was ahead of expectations in the first half of 2015 and, at 928 tonnes, 7% higher than the 868 tonnes recorded for the same period last year. The sharply-lower palm-oil prices referred to above and similarly-lower rubber prices resulted in significantly-lower profits and the Group's share, US$2.7 million, was 54% lower than the US$6.0 million recorded for the first half of 2014.
Kerasaan Estate's f.f.b. crop of 18,700 tonnes was ahead of expectations for the first half of 2015 but was 11% lower than the 21,100 tonnes harvested in the first half of last year. This, combined with the lower palm-oil prices, resulted in markedly-lower profits and the Group's share amounted to US$0.3 million for the first half of the year compared with US$0.6 million for the same period in 2014, a 46% reduction.
Australia
The Group's share of NAPCo's post-tax profit for the period was US$7.6 million, compared with a loss of US$0.3 million for the same period in 2014. The most significant contribution to the improved result was an increase in the value of the cattle herd which, in turn, was largely a function of the substantial increase in the cattle price. Also contributing to the improved result was the containment of expenditure. Most notable were borrowing costs (down 14% owing to lower interest rates), cattle transport costs (down 12% as a result of lower fuel costs and fewer cattle sold) and supplementary feeding costs (down 18% owing to better seasonal conditions on the breeder properties).
Malaysia
The Group's share of Bertam Properties' result for the first half of 2015 comprised a small loss of US$0.1 million, compared with a profit of US$2.1 million for the first half of 2014. The lower result was primarily a function of timing as many fewer property sales were completed, and hence their profits recognised, in the first half of 2015, compared with a year ago. A considerable number of sales are in process and the profits from many of these are likely to be recognised in the second half of 2015.
CURRENT TRADING AND PROSPECTS
Since 30 June 2015, palm-oil prices have fallen sharply to the current level of around US$550 per tonne, the lowest experienced for a number of years. Recent turbulence on world stock markets emanating from concerns about the Chinese economy have spilled over into commodity markets - palm oil and other vegetable oils have been no exception to this. According to Oil World, bio-diesel production has been at low levels resulting in higher exports of palm oil by Indonesia. As these quantities have not been immediately consumed, some therefore have been added to existing stocks in the importing countries and this has contributed to the price weakness.
Despite the current weakness in the price, the board remains confident that the fundamentals of the palm-oil market remain encouraging. Vegetable oil is a basic foodstuff and increasing demand from a growing world population looks likely to continue. Palm oil delivers by far the highest yield per hectare of all the vegetable oils and has the lowest cost of production. It is therefore well placed, long term, to benefit from the likely future increase in demand.
F.f.b. crops on the Kalimantan project and on the established Sumatran estates are expected, as in most previous years, to be higher in the second half of the year than in the first. The Kalimantan project is currently experiencing an acute dry period which may delay the upturn in crop expected to occur towards the end of the year. The weather pattern in Bangka tends to be different and the second-half crop is likely to be slightly lower than that for the first half. As referred to earlier, it is not clear as to how severe the effects of the current El Niño phenomenon will be. If there is an effect, there will be a continuing impact into 2016 and possibly 2017.
The US Dollar appears to be continuing to strengthen against the Indonesian Rupiah. This has a beneficial effect when the Rupiah costs are translated into US Dollars.
Since the period end, Woodlands has continued to enjoy a good season, whilst conditions across NAPCo's portfolio of properties have been mixed. Cattle prices in Australia have continued to surge, following continued strong export demand, the relatively weak Australian Dollar and a continuing decline in the size of the Australian and US cattle herds. As referred to above, the sale of Woodlands is expected to be completed before the end of the year.
Notwithstanding the strength of the cattle market, unless there is a recovery in palm-oil prices, the results for the whole of 2015 are expected to be lower than for 2014.
Unaudited consolidated income statement
30 June 2015
US$'000
Revenue 39,241
Cost of sales (28,778)
------
Gross profit 10,463
Foreign-exchange loss (3,997)
Other administrative expenses (857)
Other income 309
------
Group operating profit before interest
and tax 5,918
Finance income 505
Finance costs (921)
------
Group-controlled profit before taxation 5,502
Tax on profit on ordinary activities (812)
------
Group-controlled profit after tax 4,690
Share of associated companies' profit
after tax 10,602
------
Profit for the period 15,292
======
Attributable to:
Owners of M.P. Evans Group PLC 14,683
Non-controlling interests 609
------
15,292
======
US Cents
Basic earnings per 10p share 26.53
======
Diluted earnings per 10p share 26.50
======
Unaudited consolidated income statement
Previously
Result for -reported
6 months ended Biological result for 6
30 June 2014 bearer-asset months ended
adjustment adjustment 30 June 2014
US$'000 US$'000 US$'000
Revenue 47,514 - 47,514
Cost of sales (31,408) 1,291 (30,117)
------ ------ ------
Gross profit 16,106 1,291 17,397
Gain on biological assets (note 5) - 4,286 4,286
Planting expenditure - 1,926 1,926
Foreign-exchange gain 662 - 662
Other administrative expenses (4,168) - (4,168)
Other income 356 - 356
------ ------ ------
Group operating profit before interest
and tax 12,956 3,651 16,607
Finance income 848 - 848
Finance costs (1,849) (214) (2,063)
------ ------ ------
Group-controlled profit before taxation 11,955 3,437 15,392
Tax on profit on ordinary activities (4,921) (923) (5,844)
------ ------ ------
Group-controlled profit after tax 7,034 2,514 9,548
Share of associated companies' profit
after tax 8,347 1,138 9,485
------ ------ ------
Profit for the period 15,381 3,652 19,033
====== ====== ======
Attributable to:
Owners of M.P. Evans Group PLC 13,575 3,303 16,878
Non-controlling interests 1,806 349 2,155
------ ------ ------
15,381 3,652 19,033
====== ====== ======
US Cents US Cents
Basic earnings per 10p share 24.74 30.76
====== ======
Diluted earnings per 10p share 24.71 30.72
====== ======
Consolidated income statement
Previously
-reported
Result for Biological result for
year ended 31 bearer-asset year ended 31
December 2014 adjustment December 2014
US$'000 US$'000 US$'000
Revenue 90,922 - 90,922
Cost of sales (58,987) 3,959 (55,028)
------ ------ ------
Gross profit 31,935 3,959 35,894
Gain on biological assets - 15,144 15,144
Planting expenditure - (6,314) (6,314)
Foreign-exchange losses (2,379) - (2,379)
Other administrative expenses (5,870) - (5,870)
Other income 448 - 448
------ ------ ------
Group operating profit before interest
and tax 24,134 12,789 36,923
Finance income 1,650 - 1,650
Finance costs (3,310) (403) (3,713)
------ ------ ------
Group-controlled profit before taxation 22,474 12,386 34,860
Tax on profit on ordinary activities (9,095) (2,923) (12,018)
------ ------ ------
Group-controlled profit after tax 13,379 9,463 22,842
Share of associated companies' profit
after tax 15,308 (1,052) 14,256
------ ------ ------
Profit for the period 28,687 8,411 37,098
====== ====== ======
Attributable to:
Owners of M.P. Evans Group PLC 25,395 8,281 33,676
Non-controlling interests 3,292 130 3,422
------ ------ ------
28,687 8,411 37,098
====== ====== ======
US Cents US Cents
Basic earnings per 10p share 46.04 61.05
====== ======
Diluted earnings per 10p share 45.98 60.97
====== ======
Unaudited consolidated balance sheet
30 June 2015
US$'000
Non-current assets
Goodwill 1,157
Property, plant and equipment 197,014
Investment in associates 96,419
Investments 89
Deferred-tax asset 15,924
-------
310,603
-------
Current assets
Biological assets 6,835
Inventories 6,670
Trade and other receivables 15,689
Current-tax asset 2,544
Cash and cash equivalents 38,878*
-------
70,616
-------
Total assets 381,219
-------
Current liabilities
Borrowings 31,072
Trade and other payables 14,934
Current-tax liabilities 1,443
-------
47,449
-------
-------
Net current assets 23,167
-------
Non-current liabilities
Borrowings 11,765
Deferred-tax liability 139
Retirement-benefit obligations 3,958
-------
15,862
-------
Total liabilities 63,311
=======
-------
Net assets 317,908
=======
Equity
Share capital (note 6) 9,349
Other reserves 73,550
Profit and loss account 214,257
-------
Equity attributable to owners of
M.P. Evans Group PLC 297,156
Non-controlling interests 20,752
-------
Total equity 317,908
=======
* Of this balance US$19.6 million has been pledged as security against bank loans
Unaudited consolidated balance sheet
Biological Previously
bearer-asset -reported
30 June 2014 adjustment 30 June 2014
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets (note 5) - 152,680 152,680
Property, plant and equipment 190,519 (76,863) 113,656
Investment in associates 102,354 28,473 130,827
Investments 104 - 104
Deferred-tax asset 13,707 - 13,707
------- ------- -------
307,841 104,290 412,131
------- ------- -------
Current assets
Biological assets 2,450 - 2,450
Inventories 9,325 (416) 8,909
Trade and other receivables 11,492 - 11,492
Current-tax asset 2,729 - 2,729
Cash and cash equivalents 50,931 - 50,931
------- ------- -------
76,927 (416) 76,511
------- ------- -------
Total assets 384,768 103,874 488,642
------- ------- -------
Current liabilities
Borrowings 31,375 - 31,375
Trade and other payables 13,599 - 13,599
Current-tax liabilities 901 - 901
------- ------- -------
45,875 - 45,875
------- ------- -------
------- ------- -------
Net current assets 31,052 (416) 30,636
------- ------- -------
Non-current liabilities
Borrowings 27,352 - 27,352
Deferred-tax liability 2,942 18,983 21,925
Retirement-benefit obligations 3,430 - 3,430
------- ------- -------
33,724 18,983 52,707
------- ------- -------
Total liabilities 79,599 18,983 98,582
======= ======= =======
------- ------- -------
Net assets 305,169 84,891 390,060
======= ======= =======
Equity
Share capital (note 6) 9,290 - 9,290
Other reserves 81,464 28,473 109,937
Profit and loss account 196,648 47,929 244,577
------- ------- -------
Equity attributable to owners of
M.P. Evans Group PLC 287,402 76,402 363,804
Non-controlling interests 17,767 8,489 26,256
------- ------- -------
Total equity 305,169 84,891 390,060
======= ======= =======
Consolidated balance sheet
Biological Previously
bearer-asset -reported 31
31 December 2014 adjustment December 2014
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets (note 5) - 163,538 163,538
Property, plant and equipment 191,584 (79,601) 111,983
Investments in associates 94,333 26,284 120,617
Investments 96 - 96
Deferred-tax asset 14,137 - 14,137
------- ------- -------
301,307 110,221 411,528
------- ------- -------
Current assets
Biological assets 4,440 - 4,440
Inventories 6,879 415 7,294
Trade and other receivables 13,220 - 13,220
Current-tax asset 2,029 - 2,029
Cash and cash equivalents 48,042 - 48,042
------- ------- -------
74,610 415 75,025
------- ------- -------
Total assets 375,917 110,636 486,553
------- ------- -------
Current liabilities
Borrowings 32,424 - 32,424
Trade and other payables 12,555 - 12,555
Current-tax liabilities 2,202 - 2,202
------- ------- -------
47,181 - 47,181
------- ------- -------
Net current assets 27,429 415 27,844
------- ------- -------
Non-current liabilities
Borrowings 14,103 - 14,103
Deferred-tax liability 199 20,984 21,183
Retirement-benefit obligations 3,765 - 3,765
------- ------- -------
18,067 20,984 39,051
------- ------- -------
Total liabilities 65,248 20,984 86,232
======= ======= =======
Net assets 310,669 89,652 400,321
======= ======= =======
Equity
Share capital (note 6) 9,302 - 9,302
Other reserves 69,258 26,284 95,542
Profit and loss account 211,966 55,098 267,064
------- ------- -------
Equity attributable to owners
of M.P. Evans Group PLC 290,526 81,382 371,908
Non-controlling interests 20,143 8,270 28,413
------- ------- -------
Total equity 310,669 89,652 400,321
======= ======= =======
Unaudited consolidated cash-flow statement
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
US$'000 US$'000 US$'000
Net cash generated by operating ------- ------- -------
activities (note 7) 7,876 14,939 29,106
------- ------- -------
Investing activities
Interest received 505 848 1,650
Sale of shares to non-controlling interest - - 926
Proceeds on disposal of property, plant
and equipment 319 58 415
Purchase of property, plant and equipment (11,977) (8,147) (18,986)
------- ------- -------
Net cash used by investing activities (11,153) (7,241) (15,995)
------- ------- -------
Financing activities
Dividends paid to Company
shareholders (note 4) (3,665) (3,995) (5,462)
Repayment of borrowings (2,580) (9,039) (17,262)
Short-term loan reclassified as
long-term loan - 1,264 -
------- ------- -------
Net cash used by financing activities (6,245) (11,770) (22,724)
------- ------- -------
Net decrease in cash and cash
equivalents (9,522) (4,072) (9,613)
Net cash and cash equivalents at
1 January 15,618 24,638 24,638
Effect of foreign-exchange rates on cash
and cash equivalents 1,710 (1,010) 593
------- ------- -------
Net cash and cash equivalents at
period end 7,806 19,556 15,618
======= ======= =======
Notes to the interim statements
1. STATUTORY INFORMATION
The financial information for the six-month periods ended 30 June 2015 and 2014 has been neither audited nor reviewed by the Group's auditors and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The financial information for the year ended 31 December 2014 is abridged from the statutory accounts. The 31 December 2014 statutory accounts have been reported on by the Group's auditors, PricewaterhouseCoopers LLP, and have been filed with the Registrar of Companies. The report of the auditors thereon was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006, nor did it contain any matters to which the auditors drew attention without qualifying their audit report.
2. ACCOUNTING POLICIES
The consolidated financial results have been prepared in accordance with International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board (IASB) as adopted by the EU, save for the amendments to IAS 16 and IAS 41 issued by the IASB on 30 June 2014 which have been applied by the Group in advance of their anticipated endorsement by the EU during the fourth quarter of 2015, and with those parts of the Companies Act 2006 applicable to companies preparing accounts under IFRS.
Other than changes arising from the adoption of the amendments to IAS 16 and IAS 41 (see note 5 below), the accounting policies of the Group follow those set out in the annual financial statements at 31 December 2014.
3. SEGMENT INFORMATION
The Group's reportable segments follow three areas of activity. These are distinguished by location and product: plantation crops (predominantly palm oil) in Indonesia, with a residual balance in Malaysia; cattle in Australia, and property development in Malaysia.
6 months to 30 June 2015
Share of
Gross associates
Revenue profit/(loss) profit/(loss)
US$'000 US$'000 US$'000
Plantation -Indonesia 37,938 8,869 -
Associate: Agro Muko - - 2,724
Associate: Kerasaan - - 348
Plantation - Malaysia 68 (23) -
------- ------- -------
Plantation 38,006 8,846 3,072
Cattle - Australia 1,211 1,593 -
Associate: NAPCo - - 7,598
Property - Malaysia - - -
Associate: Bertam Properties - - (68)
Other 24 24 -
------- ------- -------
39,241 10,463 10,602
======= ======= =======
6 months to 30 June 2014
Share of
Gross associates
Revenue profit/(loss) profit/(loss)
US$'000 US$'000 US$'000
Plantation -Indonesia 46,516 17,026 -
Associate: Agro Muko - - 5,950
Associate: Kerasaan - - 648
Plantation - Malaysia 81 (40) -
------- ------- -------
Plantation 46,597 16,986 6,598
Cattle - Australia 893 (904) -
Associate: NAPCo - - (347)
Property - Malaysia - - -
Associate: Bertam Properties - - 2,096
Other 24 24 -
------- ------- -------
47,514 16,106 8,347
======= ======= =======
Year to 31 December 2014
Share of
Gross associates
Revenue profit/(loss) profit
US$'000 US$'000 US$'000
Plantation -Indonesia 89,786 31,813 -
Associate: Agro Muko - - 9,856
Associate: Kerasaan - - 1,093
Plantation - Malaysia 124 (92) -
------- ------- -------
Plantation 89,910 31,721 10,949
Cattle - Australia 966 168 -
Associate: NAPCo - - 1,454
Property - Malaysia - - -
Associate: Bertam Properties - - 2,905
Other 46 46 -
------- ------- -------
90,922 31,935 15,308
======= ======= =======
4. DIVIDENDS
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
US$'000 US$'000 US$'000
2013 final dividend - 6.00
per 10p share - 5,647 5,647
2014 interim dividend - 2.25p
per 10p share - - 1,994
2014 final dividend - 6.50p
per 10p share 5,646 - -
------ ------ ------
5,646 5,647 7,641
------ ------ ------
Subsequent to 30 June 2015, the board has declared an interim dividend of 2.25p per 10p share. The dividend will be paid on or after 3 November 2015 to those shareholders on the register at the close of business on 25 September 2015.
A scrip dividend will continue to be available for the interim dividend. Shareholders who have previously elected to receive their dividends in this manner will automatically receive this dividend as scrip. Shareholders who now wish to make an election to receive this and future dividends as scrip should contact the company secretary by no later than 13 October 2015.
TIMETABLE
Ex dividend date 24/09/2015
Record date 25/09/2015
Calculation period 24/09/2015 to 30/09/2015
Last day for scrip elections 13/10/2015
Payment date 03/11/2015
5. BIOLOGICAL ASSETS
On 30 June 2014 IASB issued an amendment to its standard on biological assets, with consequential changes also made to its standard on property, plant and equipment. Adoption of the IASB amendments by the EU is timetabled for the fourth quarter of 2015 so, as permitted under the amendments, the Group intends to adopt their provisions with effect from 1 January 2015, accounting for its plantation assets at depreciated historical cost.
Since it began reporting under IFRS, and hence recognising biological assets in its financial statements, the Group has continuously published audited figures showing what its results would have been without the application of IAS 41 to its "bearer assets", mainly oil palms. These figures (the first column in the Group's three column presentation) showed what the Group's results would have been both prior to the application of IAS 41 and now what they would be after the adoption of the amendments to IAS 41. At 31 December 2014 the Group's net assets would have been US$310.7 million as against US$400.3 million and reported profit for the year then ended US$28.7 million rather than US$37.1 million.
IFRS allows preparers of accounts to recognise the value of growing crop prior to harvest "when, and only when, the fair value or cost of the asset can be measured reliably". It is the considered view of the board, supported by the opinion of the Tropical Growers' Association, that the stock of growing fresh fruit bunches cannot be measured reliably. Hence, crop growing on the Group's palms prior to harvest has not been recognised as an asset.
6. SHARE CAPITAL
30 June 30 June 31 December
2015 2014 2014
Number of shares of 10p each
At 1 January 55,327,395 55,034,876 55,034,876
Issued 304,355 217,060 292,519
---------- ---------- ----------
At period end 55,631,750 55,251,936 55,327,395
========== ========== ==========
US$'000 US$'000 US$'000
At 1 January 9,302 9,253 9,253
Issued 47 37 49
------- ------- -------
At period end 9,349 9,290 9,302
======= ======= =======
No share options were exercised in the period or in 2014, and accordingly there were no cash proceeds. In addition, 304,355 shares were issued in lieu of the 2014 final dividend paid on 18th June 2015 (2014 - 217,060).
7. ANALYSIS OF MOVEMENTS IN CASH FLOW
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
US$'000 US$'000 US$'000
Profit for the period 15,292 15,381 28,687
Share of associated companies' profit
after tax (10,602) (8,347) (15,308)
Tax charge 812 4,921 9,095
Finance costs 921 1,849 3,310
Finance income (505) (848) (1,650)
------- ------- -------
Operating profit 5,918 12,956 24,134
Biological gain (2,040) (2,529) (1,545)
Disposal of non-current assets (195) (3) 833
Release of deferred profit on sale
of land (95) (458) (506)
Depreciation of property, plant
and equipment 4,929 4,712 9,388
Retirement-benefit obligations 458 453 923
Share-based payments 60 63 84
Dividends from associated companies 4,335 5,259 11,742
------- ------- -------
Operating cash flows before
movements in working capital 13,370 20,453 45,053
Increase in inventories (430) (312) (1,018)
(Decrease)/increase in receivables (2,562) 894 (974)
Increase/(decrease) in payables 2,393 3,275 2,265
------- ------- -------
Cash generated by operating activities 12,771 24,310 45,326
Income tax paid (3,974) (7,522) (12,909)
Interest paid (921) (1,849) (3,311)
------- ------- -------
Net cash generated by operating
activities 7,876 14,939 29,106
======= ======= =======
8. POST-BALANCE-SHEET EVENT: SALE OF WOODLANDS
On 15 September the Group entered into a contract for the sale of Woodlands, its wholly-owned Australian cattle-fattening property. The sale is conditional on regulatory approvals, including that of the Australian Foreign Investment Review Board, which are all expected to be received within approximately three months from the date of contract. The sale is for the property alone: both the cattle and plant and equipment on the property will be sold separately. The board determined some time ago, for strategic reasons, to sell Woodlands. Interest in the property developed from the middle of 2015 in line with a significant strengthening of the cattle market. Woodlands is the only operating unit appearing under 'Cattle-Australia' in the Group's segmental reporting (see note 3).
9. EXCHANGE RATES
30 June 30 June 31 December
2015 2014 2014
US$1 = Indonesian Rupiah
- average 12,962 11,726 11,864
- period end 13,332 11,969 12,440
====== ====== ======
US$1 = Australian Dollar
- average 1.28 1.09 1.11
- period end 1.30 1.06 1.22
====== ====== ======
US$1 = Malaysian Ringgit
- average 3.64 3.27 3.27
- period end 3.77 3.21 3.50
====== ====== ======
£1 = US Dollar
- average 1.52 1.67 1.65
- period end 1.57 1.71 1.56
====== ====== ======