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 2014.
Highlights
Financials
· Profit for the period 84% higher at US$19.0 million (2013 US$10.3 million)
· Interim dividend maintained at 2.25p per 10p share
· 127% increase in agricultural gross profit to US$16.1 million (2013 US$7.1 million)
· Continued oil-palm fresh fruit bunches ("f.f.b.") crop increases and higher palm-oil prices
· Share of associates' profits 117% higher at US$9.5 million (2013 US$4.4 million)
· Group maintains positive cash balances and modest borrowings
Indonesian palm oil
· F.f.b. crops 17% higher on majority-owned estates and 9% higher on associates' estates
· Palm-oil prices averaged US$895 per tonne, 6% higher than US$846 in first-half 2013
· High oil-extraction rates continue, particularly in Kalimantan (25.4%), and in North Sumatra (23.8%)
· Dry period in early 2014 led to board reducing estimate of f.f.b. crop for whole year and 2015
· Since half year, palm-oil price has dropped markedly to around US$700 per tonne. Large soybean crops weighing on vegetable-oil markets
Australian beef cattle
· Negotiations in progress for sale of Woodlands
· Reduced operations on Woodlands pending sale and challenging season - loss increased to US$0.9 million (2013 US$0.02 million)
· Group's share of NAPCo's first-half 2014 loss of US$0.3 million significantly reduced from the first-half 2013 loss of US$1.2 million due to increased herd value at 30 June 2014
· Prospect for beef prices looking more favourable following recent rainfall and improving export demand
Malaysian property
· Increase in Group share of profit to US$2.1 million (2013 US$1.1 million)
· Sale of some 300 (2013 - 180) development properties successfully completed and profit recognised
Commenting on the results, the chairman of M. P. Evans, Peter Hadsley-Chaplin, said:-
"It is pleasing to be able to report a significant improvement in the Group's results for the first half of 2014. This was due to higher crops, a slightly-improved palm-oil price and lower costs. However, an acute dry spell at the beginning of the year has meant that crop estimates in the second half of the year and for 2015 have had to be reduced. The palm-oil price has reacted to high soybean crops and has fallen quite sharply since the mid-year.
In line with the Group's strategy, negotiations are in progress for the sale of Woodlands. The Group will continue to hold its investment in NAPCo. Prospects for the cattle price in Australia are more encouraging following some welcome rain and signs of improvement in export demand."
Enquires:
M.P. Evans Group PLC 020 7796 4133 on 15 September 2014 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
Matthew Armitt
Hudson Sandler 020 7796 4133
Charlie Jack
Katie Matthews
Julia Cooke
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 board is pleased to report a profit for the first half of 2014 of US$19.0 million, 84% higher than the US$10.3 million recorded for the same period in 2013.
The expected upward trend of the crop of oil-palm fresh fruit bunches ("f.f.b.") on the Group's majority-owned estates continued with the overall level 17% higher in the first half of 2014 at 183,600 tonnes compared with 156,800 tonnes in the first half of 2013. The average palm-oil price was 6% higher in the first half of the year whilst the price of palm kernels was nearly 60% higher. Extraction rates continued at most satisfactory levels. Group unit costs fell as production increased on the new projects in Kalimantan and Bangka, helped by the further strengthening of the US Dollar against the Indonesian Rupiah.
The associated companies' f.f.b. crops increased by 9% compared with the first half of 2013. As with the Group's majority-owned operations referred to above, the operations also benefited from stronger palm-oil prices.
In view of negotiations with regard to the prospective sale of Woodlands (referred to below under 'Australia'), cattle operations were curtailed at a lower level than would have been the case if operations were planned to continue. As a result of both this and a challenging season, the loss incurred in the first half of 2014 increased when compared to the same period in 2013.
The North Australia Pastoral Company Pty Limited ("NAPCo") recorded a significantly-improved result, albeit a small loss, following an increase in the valuation of its cattle herd, compared with the same period a year ago.
Continuing successful property-development activities by the associated company, Bertam Properties Sdn. Berhad ("Bertam Properties"), resulted in substantially-improved results in the first half of 2014.
The board has declared an interim dividend maintained at 2.25p per share. The dividend will be paid on or after 4 November 2014 to shareholders on the register at the close of business on 26 September 2014. A scrip-dividend alternative continues to be available for this interim dividend.
Progress on the new Musi Rawas project in South Sumatra has been slower than expected. Local elections were held in the area of the project in the early part of the year. Tensions can run high at these times and it was felt prudent to scale back land-compensation negotiations until the elections were over. To date, compensation in respect of some 1,950 hectares has been agreed and planting should commence towards the end of the year.
As referred to below in the review of the results for the period, an acute dry period in some parts of Indonesia in the early part of 2014 is likely to impact negatively on f.f.b. crops in the second half of the year, particularly on the established estates in Sumatra and on the project on Bangka. The original estimated crop for the year for the majority-owned estates was 425,000 tonnes but current indications are that the outturn may be around 385,000 tonnes. It is not clear whether, or to what extent, an "El Niño" event is under way but the dry period in the first half of 2014 is also likely to have an effect on crops in 2015. The board's current prediction is that the original estimate of 500,000 tonnes in 2015 will have to be reduced to between 450,000 and 460,000 tonnes. However, it is usual for oil palms more than to recover from low-cropping periods in later years and the upward crop trend is expected to continue, as originally anticipated, after 2015.
In 2013 the majority shareholders in NAPCo undertook a strategic review. Following this, they indicated their willingness to sell part or all of their holding, and M. P. Evans also indicated its willingness to sell its holding in conjunction with them. The review was drawn to a close in late 2013 without it having led to a sale, but the Group's board will continue to consider any opportunities that arise in relation to its holding.
THE PALM-OIL AND BEEF-CATTLE MARKETS
The average palm-oil price in the first half of 2014 was US$895 per tonne (Rotterdam c.i.f.) compared with US$846 in the first half of 2013. The price started 2014 at around US$850 per tonne before improving in the first quarter to just below US$1,000, with the prospect of an "El Niño" event later in the year and the expected use of palm oil in bio diesel. The price then tailed off in the second quarter, returning at the end of the period to around US$850. Since the period end, prices have dropped further to the current level of around US$700, the lowest for some five years. Overhanging the market has been the very high level of soybean crops in South America in the first half of the year and the prospect of record crops in the US in the second half. On the demand side, the provision of bank credit to purchasers of palm oil in China (the second largest purchaser of palm oil in the world) has recently been severely restricted, thereby reducing purchases by that country. However, it now appears that these restrictions are being eased.
Palm-kernel prices proved to be robust in the first half of the year, although they have fallen back recently. Palm-kernel oil is a lauric oil, as is coconut oil, and the supply of the latter was significantly reduced by the damage to coconut plantations caused at the end of 2013 by Typhoon Haiyan in the Philippines. This had the effect of increasing palm-kernel-oil prices, and therefore the price for palm kernels.
Prices for the grass-fed, lighter-weight cattle (produced by Woodlands) fluctuated considerably during the first half, initially rising in response to the beneficial rainfall received in many parts of Australia but later easing back as a sustained dry period set in. Prices for the grain-finished, heavier cattle (produced by NAPCo) moved broadly higher during the period, albeit in lacklustre conditions, as export demand started to improve. This upward trend has continued into the second half.
RESULTS FOR THE PERIOD
Majority-owned operations
Indonesia
The planned increase in f.f.b. crops on the new projects in Kalimantan and Bangka continued in the first half of 2014. On the Kalimantan project, 69,300 tonnes (first half 2013 - 51,900 tonnes) were achieved and on the Bangka project 25,400 tonnes (first half 2013 - 16,200 tonnes). As anticipated, yields on the young mature areas are increasing and new areas are coming into maturity. Smallholder crops increased in line with the Group's production and, as expected, purchases from third parties fell as competition for f.f.b. in the area increases. The crops from the established Sumatran estates were similar, at 88,900 tonnes, to the 88,700 tonnes recorded for the first half of 2013.
Oil-extraction rates continued at most satisfactory levels. The mill on the Kalimantan project improved its rate yet further to the very acceptable level of 25.4%, whilst the rate at the mill on Pangkatan Estate in Sumatra was similar, at 23.8%, to that achieved in the first half of 2013, albeit a little lower than the rate for the whole of 2013. As referred to in previous reports, this rate, although somewhat lower than that achieved in Kalimantan, is regarded as acceptable given that a significant part of the fruit from Sennah Estate is from sub-standard planting material which is scheduled to be replanted over the next four or five years. Palm-oil prices in the first half of 2014 (average Rotterdam c.i.f. US$895/tonne) were 6% higher than in the same period in 2013 (US$846/tonne). Palm-kernel-oil prices (Rotterdam c.i.f.) were very strong in the first half of the year, averaging US$1,270/tonne (first half of 2013 US$831/tonne). The price that the Group received for the sale of its palm kernels reflected this.
The cost per tonne of palm products (palm oil plus palm kernels) was lower in the first half of 2014 compared with the same period in 2013. The effect of employment-cost inflation was more than offset by the effect of the significant strengthening of the US Dollar against the Indonesian Rupiah and lower global fertiliser costs. As crops increase on the new projects, fixed costs per tonne (which form a substantial part of revenue costs) are reduced.
As a result of the above, gross profit (before the biological-asset adjustment of US$ 1.3 million) from the Indonesian palm-oil operations amounted to US$17.0 million for the first half of 2014, a 139% increase compared with the US$7.1 million for the same period in 2013.
Crops, production and selling-price details for the majority-owned estates are set out as follows:-
6 months 6 months Year
ended ended ended
30 June Increase/ 30 June 31 December
2014 (decrease) 2013 2013
Tonnes % Tonnes Tonnes
Crops
Own crops
Pangkatan group 67,400 65,500 148,800
Simpang Kiri 21,500 23,200 46,600
------- ------- -------
88,900 - 88,700 195,400
Kalimantan 69,300 34 51,900 114,500
Bangka 25,400 57 16,200 34,300
------- ------- -------
Total crops 183,600 17 156,800 344,200
======= ==== ======= =======
Smallholder co-operative crops
Kalimantan 26,100 25 20,800 42,400
Bangka 13,900 60 8,700 18,300
------- ------- -------
40,000 36 29,500 60,700
======= ==== ======= =======
Outside crop purchased
Kalimantan 6,600 (58) 15,900 34,400
======= ==== ======= =======
Production
Crude palm oil
Kalimantan 25,900 17 22,200 47,400
Pangkatan 16,000 1 15,800 35,500
------- ------- -------
41,900 10 38,000 82,900
======= ==== ======= =======
Palm kernels
Kalimantan 3,800 3 3,700 7,800 Pangkatan 4,000 11 3,600 8,600
------- ------- -------
7,800 7 7,300 16,400
======= === ======= =======
Extraction rates % % %
Crude palm oil
Kalimantan 25.4 25.1 24.8
Pangkatan 23.8 24.1 23.9
======= ======= =======
% % % Palm kernels
Kalimantan 3.7 4.2 4.1
Pangkatan 5.9 5.6 5.8
======= ======= =======
Selling prices US$ US$ US$
Rotterdam c.i.f. - average per tonne
Palm oil 895 6 846 856
Palm-kernel oil 1,270 53 831 897
======= ==== ======= =======
Planting on the Bangka and Kalimantan projects progressed slowly during the first half of 2014. On the Kalimantan project, some 13,740 hectares had been planted as at 30 June 2014 of which 9,670 relate to the Group and 4,070 to the smallholders' co-operatives. 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. The majority of the remaining land (approximately 950 hectares) is low-lying in an area near the Mahakam River and, as referred to in the 2013 annual report, the board has now decided to proceed with the construction of flood-protection bunds and pumps. When these areas are flood protected, it is expected that yields will be good. Work has already started on this project and is expected to extend into 2016.
On Bangka the resolution of overlapping claims by tin-mining interests on a significant part of the land on which the Group holds an operating licence is very time consuming. However, the board is optimistic after extensive discussion and negotiation with the local government authorities that the land, subject to compensation being agreed with the users of the land, will now be able to be developed. As at 30 June 2014, some 6,250 hectares had been planted of which 4,200 relate to the Group and 2,050 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 hectares relate to the Group.
Indonesian investment climate
A new draft plantation law has recently been tabled in Indonesia under which foreign ownership of plantations would be restricted to 30% and companies would have five years in which to comply with this ruling. The draft law has not yet been debated in parliament. Under Indonesian convention, the president and parliament would have to be in agreement for this legislation to pass before the current legislature is dissolved on 1 October 2014. However, the current president, Mr Susilo Bambang Yudhoyono, is reported to oppose legislation that adversely affects existing foreign investment in Indonesia. The board therefore considers it unlikely that this proposed plantation law will be enacted under the present administration. Any new legislation would have to be started from the beginning under the administration of the newly-elected president, Mr Joko Widodo.
The board will continue to monitor the situation closely and will, if necessary, liaise with other non-Indonesian plantation companies and industry bodies in lobbying the government to argue against similar proposals being enacted in future. The board has already been considering the merits of a partial listing in Jakarta of its Indonesian business, partly to mitigate this risk.
Australia
In line with the Group's stated strategy, negotiations are in progress with regard to the sale of Woodlands. In the light of the extended negotiations, cattle operations were scaled back to a level lower than would have been the case had the Group continued with the ownership of the property.
2014 started with abundant rain which resulted in good pastures but the benefit of this was reduced by a very dry second quarter. The 676 head on the property at the beginning of the year were already nearly at their sale weight so the further weight gain on these was modest. As a result of this, the overall weight gain was markedly lower in the first half of 2014 compared with the same period in 2013. Moreover, some 4,400 head were purchased during the period but the cattle price dipped at the end of June resulting in a biological-asset reduction that adversely affected the results for the first half.
At the beginning of the period, in addition to the Group's own cattle, some 3,200 head belonging to a third party were being fattened on the property in return for a fee related to weight gain ("agisted"). The average weight gain was satisfactory for the conditions. By the period end, the number of agisted cattle had been reduced to some 2,000.
The lower level of activity, coupled with the fall off in the price (and therefore the valuation of the herd) by the half-year point, negatively affected the trading result and a loss of US$0.9 million (first half 2013 loss US$0.02 million) was recorded. The board has reviewed the value of Woodlands, which is carried in the books at A$ 29.9 million, and has resolved to make a provision of A$ 1.4 million.
Gross profit
As a result of all of the above, the gross profit before the biological bearer-asset adjustment for the first half of 2014 was US$16.1 million, a 127% increase over the US$7.1 million for the same period last year. The table below sets out an analysis of the gross profit/(loss) between the various activities and between the countries in which the Group operates.
Bearer-biological-asset adjustment
During the first half of 2014 the Group recorded a gain on biological assets of US$ 4.3 million. Against these gains were set planting costs of US$ 1.9 million as well as finance and taxation of US$ 1.1 million. Taking into account the depreciation charge avoided, this resulted overall in a net gain on biological assets of US$ 2.5 million (2013 US$ 4.3 million). An increase in the average CPO price per tonne to US$ 638 from US$ 626 used at the previous year end lifted valuations, as did new plantings on the Group's Bangka project and replanting on its North Sumatran estates. The increased CPO price also resulted in an increase in the Group's share in the results of its associated companies of US$ 1.1 million (2013 US$ 0.9 million). Further information about biological assets is set out in note 4.
In June 2014 the International Accounting Standards Board amended its standard on biological assets with the consequence that bearer plants, such as the Group's oil palms, will no longer appear as 'biological assets' but will instead be accounted for as 'property, plant and equipment'. The Group expects to adopt the revised standard from the beginning of 2015. From this point it will therefore cease reporting oil palms at their biological value and revert to using purchase cost, less depreciation (US$1.3 million in the first half of 2014), as reported in the financial statements in the column headed 'Result before biological bearer-asset adjustment'.
Six months ended 30 June 2014
Biological
Cost of bearer-asset Gross
Revenue sales adjustment profit/(loss)
US$'000 US$'000 US$'000 US$'000
Plantations
Indonesia 46,516 (29,490) 1,291 18,317
Malaysia 81 (121) - (40)
------ ------ ------ ------
Total plantations 46,597 (29,611) 1,291 18,277
Cattle - Australia 893 (1,797) - (904)
Other - UK 24 - - 24
------ ------ ------ ------
Group total 47,514 (31,408) 1,291 17,397
====== ====== ====== ======
Six months ended 30 June 2013
Biological
Cost of bearer-asset Gross
Revenue sales adjustment profit/(loss)
US$'000 US$'000 US$'000 US$'000
Plantations
Indonesia 37,613 (30,482) 2,362 9,493
Malaysia 102 (127) - (25)
------ ------ ------ ------
Total plantations 37,715 (30,609) 2,362 9,468
Cattle - Australia 691 (712) - (21)
Other - UK 24 - - 24
------ ------ ------ ------
Group total 38,430 (31,321) 2,362 9,471
====== ====== ====== ======
Year ended 31 December 2013
Biological
Cost of bearer-asset Gross
Revenue sales adjustment profit/(loss)
US$'000 US$'000 US$'000 US$'000
Plantations
Indonesia 76,479 (54,957) 3,298 24,820
Malaysia 203 (244) - (41)
------ ------ ------ ------
Total plantations 76,682 (55,201) 3,298 24,779
Cattle - Australia 5,458 (5,548) - (90)
Other - UK 46 - - 46
------ ------ ------ ------
Group total 82,186 (60,749) 3,298 24,735
====== ====== ====== ======
Associated companies
Indonesia
The Group's share of its Indonesian associated companies' post-tax profits for the period, compared with that for the first half, and for the whole, of 2013, was as follows:-
Six months ended 30 June 2014
Post-tax Post-tax
profit before profit after
biological Biological biological
bearer-asset bearer-asset bearer-asset
adjustment adjustment adjustment
US$'000 US$'000 US$'000
PT Agro Muko (36.84%) 5,951 1,214 7,165
PT Kerasaan Indonesia (38.00%) 648 (77) 571
------ ------ ------
6,599 1,137 7,736
====== ====== ======
Six months ended 30 June 2013
Post-tax Post-tax
profit before profit after
biological Biological biological
bearer-asset bearer-asset bearer-asset
adjustment adjustment adjustment
US$'000 US$'000 US$'000
PT Agro Muko (36.84%) 3,147 1,345 4,492
PT Kerasaan Indonesia (38.00%) 391 (437) (46)
------ ------ ------
3,538 908 4,446
====== ====== ======
Year ended 31 December 2013
Post-tax Post-tax
profit before profit after
biological Biological biological
bearer-asset bearer-asset bearer-asset
adjustment adjustment adjustment
US$'000 US$'000 US$'000
PT Agro Muko (36.84%) 6,949 1,661 8,610
PT Kerasaan Indonesia (38.00%) 955 62 1,017
------ ------ ------
7,904 1,723 9,627
====== ====== ======
Crops and production were as follows:-
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2014 Increase 2013 2013
Tonnes % Tonnes Tonnes
F.f.b. crops
PT Agro Muko
- own 174,800 8 161,700 345,800
- outgrowers 4,200 17 3,600 8,600
-------- -------- --------
179,000 8 165,300 354,400
PT Kerasaan Indonesia 21,100 14 18,500 41,200
-------- ------- --------
200,100 9 183,800 395,600
======== ==== ======== ========
Production (PT Agro Muko)
Crude palm oil 40,200 8 37,200 79,700
Palm kernels 9,200 10 8,400 18,400
======== ==== ======== ========
% % %
Extraction rates
Crude palm oil 22.5 22.5 22.5
Palm kernals 5.2 5.1 5.2
======== ======== ========
Tonnes Tonnes Tonnes
Rubber crops
PT Agro Muko - own 868 20 721 1,440
======== ==== ======== ========
PT Agro Muko's f.f.b. crop, at 174,800 tonnes, was ahead of expectations and 8% higher than the 161,700 tonnes recorded for the first half of 2013. The rubber crop, at 868 tonnes, was 20% higher than the 721 tonnes for the same period in 2013. The unusually wet weather experienced in the first half of 2013, which adversely affected the f.f.b. crop, was not repeated in the first half of 2014. The higher crops combined with stronger palm-oil prices, but weaker rubber prices, resulted in significantly-higher profits for the period.
As expected, Kerasaan Estate's f.f.b. crop has started to recover after the resolution of the severe leaf-pest problems that it experienced over the last two or three years.
Australia
The Group's share of NAPCo's post-tax loss for the period, compared with that for the first half, and for the whole, of 2013, was as follows:-
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
US$'000 US$'000 US$'000
NAPCo (34.37%) (347) (1,213) (2,429)
====== ====== ======
NAPCo's substantially-reduced loss was largely attributable to a significant improvement in the valuation of the company's cattle herd, compared with the first half of 2013. A year ago, cattle prices, as well as both the number and the average weight of the company's cattle, were negatively affected by the drought that persisted for much of 2013. This was not repeated in the first half of 2014. As a continuing drought-resistance measure, the recently-expanded feedlot enabled a much larger number of cattle, especially young, lighter-weight animals, to be retained than in previous years, although this, in turn, resulted in a significant increase in the cost of feeding these cattle.
Malaysia
The Group's share of Bertam Properties' post-tax profit for the period, compared with that for the first half, and for the whole, of 2013 was as follows:-
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
US$'000 US$'000 US$'000
Bertam Properties (40.00%) 2,096 1,131 4,396
====== ====== ======
The sale of development properties continued successfully with some 300 (first half 2013 - 180) completed and the profit recognised. No direct land sales were completed during the period although a number are in the process of being finalised.
Overall share of associates' profits
As a result of the above, the share of the associated companies' profits after tax and, where relevant, after biological-asset adjustments, amounted to US$9.5 million, 117% higher than the US$4.4 million recorded in the same period in 2013.
PROSPECTS
Palm-oil prices have, since the end of the period, fallen sharply to the current level of US$700 per tonne, the lowest level for some five years. The expectation of very high soybean and higher-than-normal sunflower crops in the Northern Hemisphere is weighing on vegetable-oil prices. The acute dry period experienced in the first quarter of 2014 in parts of Malaysia and Indonesia is likely to result in lower production in the second half of the year. This, combined with the possibility of some degree of El Niño event in the latter part of the year and the Indonesian Government enforcing the bio-diesel mandate more robustly may, at some point, provide some support for the palm-oil price.
The dry period in the early part of 2014 affected, more than originally anticipated, the operations on the established estates in Sumatra and on the new project in Bangka. Normally, crops in the second half of the year are higher than in the first but this year, apart from on the Kalimantan project, which did not suffer a dry spell, the outturn for the second half is expected to be similar or lower than the first half. In the light of this, the board's estimate of the f.f.b. crop for the year for the majority-owned estates has been reduced to around 385,000 tonnes from the figure referred to in the 2013 annual report of 425,000 tonnes. In turn, and as foreshadowed in the statement made at the annual general meeting by the chairman, the original estimate of production for 2015 of 500,000 tonnes has been reduced. The latest estimation is between 450,000 and 460,000 tonnes.
Prospects for Australian beef are looking more favourable following recent welcome rainfall in many parts of Australia and as export demand shows continuing signs of improvement.
Unaudited consolidated income statement
Result before 6 months
biological Biological ended
bearer-asset bearer-asset 30 June
adjustment adjustment 2014
US$'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 4) - 4,286 4,286
Planting expenditure - (1,926) (1,926)
Foreign-exchange gains/(losses) 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
====== ======
Unaudited consolidated income statement
Result before 6 months
biological Biological ended
bearer-asset bearer-asset 30 June
adjustment adjustment 2013
US$'000 US$'000 US$'000
Revenue 38,430 - 38,430
Cost of sales (31,321) 2,362 (28,959)
------ ------ ------
Gross profit 7,109 2,362 9,471
Gain on biological assets (note 4) - 6,850 6,850
Planting expenditure - (3,397) (3,397)
Foreign-exchange losses (841) - (841)
Other administrative expenses (2,181) - (2,181)
Other income - - -
------ ------ ------
Group operating profit before interest
and tax 4,087 5,815 9,902
Finance income 438 - 438
Finance costs (1,549) (196) (1,745)
------ ------ ------
Group-controlled profit before taxation 2,976 5,619 8,595
Tax on profit on ordinary activities (1,360) (1,276) (2,636)
------ ------ ------
Group-controlled profit after tax 1,616 4,343 5,959
Share of associated companies' profit
after tax 3,456 908 4,364
------ ------ ------
Profit for the period 5,072 5,251 10,323
====== ====== ======
Attributable to:
Owners of M.P. Evans Group PLC 4,018 4,882 8,900
Non-controlling interests 1,054 369 1,423
------ ------ ------
5,072 5,251 10,323
====== ====== ======
US Cents US Cents
Basic earnings per 10p share 7.32 16.22
====== ======
Diluted earnings per 10p share 7.31 16.20
====== ======
Consolidated income statement
Result before Year
biological Biological ended
bearer-asset bearer-asset 31 December
adjustment adjustment 2013
US$'000 US$'000 US$'000
Revenue 82,186 - 82,186
Cost of sales (60,749) 3,298 (57,451)
------ ------ ------
Gross profit 21,437 3,298 24,735
Gain on biological assets - 9,059 9,059
Planting expenditure - (6,265) (6,265)
Foreign-exchange losses (8,322) - (8,322)
Other administrative expenses (4,444) - (4,444)
Other income 8 - 8
------ ------ ------
Group operating profit before interest
and tax 8,679 6,092 14,771
Finance income 972 - 972
Finance costs (3,121) (399) (3,520)
------ ------ ------
Group-controlled profit before taxation 6,530 5,693 12,223
Tax on profit on ordinary activities 435 (1,381) (946)
------ ------ ------
Group-controlled profit after tax 6,965 4,312 11,277
Share of associated companies' profit
after tax 9,871 1,723 11,594
------ ------ ------
Profit for the period 16,836 6,035 22,871
====== ====== ======
Attributable to:
Owners of M.P. Evans Group PLC 14,438 5,315 19,753
Non-controlling interests 2,398 720 3,118
------ ------ ------
16,836 6,035 22,871
====== ====== ======
US Cents US Cents
Basic earnings per 10p share 26.28 35.96
====== ======
Diluted earnings per 10p share 26.24 35.90
====== ======
Unaudited consolidated balance sheet
Before
biological Biological
bearer-asset bearer-asset 30 June
adjustment adjustment 2014
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets (note 4) - 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 5) 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
======= ======= =======
* Of this balance US$20.1 million has been pledged as security against bank loans
Unaudited consolidated balance sheet
Before
biological Biological
bearer-asset bearer-asset 30 June
adjustment adjustment 2013
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets (note 4) - 146,186 146,186
Property, plant and equipment 181,158 (74,365) 106,793
Investment in associates 97,075 26,521 123,596
Investments 106 - 106
Deferred-tax asset 7,859 - 7,859
------- ------- -------
287,355 98,342 385,697
------- ------- -------
Current assets
Biological assets 4,159 - 4,159
Inventories 7,781 69 7,850
Trade and other receivables 16,416 - 16,416
Current-tax asset 3,390 - 3,390
Cash and cash equivalents 41,208 - 41,208*
------- ------- -------
72,954 69 73,023
------- ------- -------
Total assets 360,309 98,411 458,720
------- ------- -------
Current liabilities
Borrowings 21,475 - 21,475
Trade and other payables 12,420 - 12,420
Current-tax liabilities 309 - 309
------- ------- -------
34,204 - 34,204
------- ------- -------
------- ------- -------
Net current assets 38,750 69 38,819
------- ------- -------
Non-current liabilities
Borrowings 30,344 - 30,344
Deferred-tax liability 2,917 17,955 20,872
Retirement-benefit obligations 4,663 - 4,663
------- ------- -------
37,924 17,955 55,879
------- ------- -------
Total liabilities 72,128 17,955 90,083
======= ======= =======
------- ------- -------
Net assets 288,181 80,456 368,637
======= ======= =======
Equity
Share capital (note 5) 9,243 - 9,243
Other reserves 76,111 26,521 102,632
Profit and loss account 188,585 45,349 233,934
------- ------- -------
Equity attributable to owners of
M.P. Evans Group PLC 273,939 71,870 345,809
Non-controlling interests 14,242 8,586 22,828
------- ------- -------
Total equity 288,181 80,456 368,637
======= ======= =======
Consolidated balance sheet
Before
biological Biological
bearer-asset bearer-asset 31 December
adjustment adjustment 2013
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets (note 4) - 148,394 148,394
Property, plant and equipment 185,471 (76,152) 109,319
Investments in associates 95,521 27,335 122,856
Investments 102 - 102
Deferred-tax asset 14,996 - 14,996
------- ------- -------
297,247 99,577 396,824
------- ------- -------
Current assets
Biological assets 594 - 594
Inventories 8,267 (277) 7,990
Trade and other receivables 12,345 - 12,345
Current-tax asset 2,201 - 2,201
Cash and cash equivalents 56,348 - 56,348
------- ------- -------
79,755 (277) 79,478
------- ------- -------
Total assets 377,002 99,300 476,302
------- ------- -------
Current liabilities
Borrowings 31,710 - 31,710
Trade and other payables 10,311 - 10,311
Current-tax liabilities 4,313 - 4,313
------- ------- -------
46,334 - 46,334
------- ------- -------
Net current assets 33,421 (277) 33,144
------- ------- -------
Non-current liabilities
Borrowings 34,780 - 34,780
Deferred-tax liability 2,903 18,060 20,963
Retirement-benefit obligations 2,933 - 2,933
------- ------- -------
40,616 18,060 58,676
------- ------- -------
Total liabilities 86,950 18,060 105,010
======= ======= =======
Net assets 290,052 81,240 371,292
======= ======= =======
Equity
Share capital (note 5) 9,253 - 9,253
Other reserves 75,212 27,336 102,548
Profit and loss account 189,626 45,764 235,390
------- ------- -------
Equity attributable to owners
of M.P. Evans Group PLC 274,091 73,100 347,191
Non-controlling interests 15,961 8,140 24,101
------- ------- -------
Total equity 290,052 81,240 371,292
======= ======= =======
Unaudited consolidated cash-flow statement
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
US$'000 US$'000 US$'000
Net cash generated by operating
activities (note 6) 14,383 2,393 19,494
------- ------- -------
Investing activities
Interest received 848 438 972
Sale of shares to non-controlling interest - - 498
Proceeds on disposal of property, plant
and equipment 58 158 358
Purchase of property, plant and equipment (5,665) (5,984) (12,261)
Purchase of shares from non-controlling
interest - - (7,100)
Planting expenditure (1,926) (3,397) (6,265)
------- ------- -------
Net cash used by investing activities (6,685) (8,785) (23,798)
------- ------- -------
Financing activities
Dividends paid to Company
shareholders (note 3) (3,995) (4,406) (5,964)
Repayment of borrowings (9,039) (496) (2,318)
Loans drawn down - - 6,800
Proceeds on issue of shares (note 5) - 130 131
Dividend paid to minorities - (400) (896)
Short-term loan reclassified as
long-term loan 1,264 - -
------- ------- -------
Net cash used by financing activities (11,770) (5,172) (2,247)
------- ------- -------
Net decrease in cash and cash
equivalents (4,072) (11,564) (6,551)
Net cash and cash equivalents at
1 January 24,638 29,299 29,299
Effect of foreign-exchange rates on cash
and cash equivalents (1,010) 1,998 1,890
------- ------- -------
Net cash and cash equivalents at
period end 19,556 19,733 24,638
======= ======= =======
Notes to the interim statements
1. STATUTORY INFORMATION
The financial information for the six-month periods ended 30 June 2014 and 2013 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 2013 is abridged from the statutory accounts. The 31 December 2013 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, and with those parts of the Companies Act 2006 applicable to companies preparing accounts under IFRS.
The accounting policies of the Group follow those set out in the annual financial statements at 31 December 2013.
3. DIVIDENDS
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
US$'000 US$'000 US$'000
2012 final dividend - 5.75p
per 10p share - 4,796 4,796
2013 interim dividend - 2.25p
per 10p share - - 1,991
2013 final dividend - 6.00p
per 10p share 5,696 - -
------ ------ ------
5,696 4,796 6,787
------ ------ ------
Subsequent to 30 June 2014, the board has declared an interim dividend of 2.25p per 10p share. The dividend will be paid on or after 4 November 2014 to those shareholders on the register at the close of business on 26 September 2014.
A scrip dividend will continue to be available for the interim dividend. Shareholders who have previously elected to receive their dividends in this manner will automatically receive this dividend as scrip. Shareholders who now wish to make an election to receive this and future dividends as scrip should contact the company secretary by no later than 14 October 2014.
TIMETABLE
Ex dividend date 24/09/2014
Record date 26/09/2014
Calculation period 24/09/2014 to 30/09/2014
Last day for scrip elections 14/10/2014
Payment date 04/11/2014
4. BIOLOGICAL ASSETS
The Group values its plantation assets using a discounted cash flow over the expected 25-year economic life of the asset. The discount rate used in this valuation is 14%. The price of the f.f.b. crop is taken to be a 20-year average based on actual selling prices or, where the plantation has its own mill, an inference based on the widely-quoted commodity price for crude palm oil delivered c.i.f. Rotterdam. The directors have concluded that using a 20-year average provides their best estimate of prices to be achieved over the valuation period.
The long-term average price and exchange rates used in determining the valuations based on cash flows were as follows:
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
Price of crude palm oil
(US$/tonnes, c.i.f Rotterdam) 638 614 626
Exchange rate (Rupiah
per US Dollar) 11,969 9,929 12,189
====== ====== ======
For palm oil, changes in the price assumption have a more than proportionate impact on the valuation of oil-palm plantings.
5. SHARE CAPITAL
30 June 30 June 31 December
2014 2013 2013
Number of shares of 10p each
At 1 January 55,034,876 54,871,402 54,871,402
Issued 217,060 105,350 163,474
---------- ---------- ----------
At period end 55,251,936 54,976,752 55,034,876
========== ========== ==========
US$'000 US$'000 US$'000
At 1 January 9,253 9,227 9,227
Issued 37 16 26
------- ------- -------
At period end 9,290 9,243 9,253
======= ======= =======
During the period, no share options were exercised (2013 - 53,790) and accordingly there were no cash proceeds (2013 US$130,000). In addition, 217,060 shares were issued in lieu of the 2013 final dividend paid on 19 June 2014 (2013 - 51,560).
6. ANALYSIS OF MOVEMENTS IN CASH FLOW
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
US$'000 US$'000 US$'000
Profit for the year 19,033 10,323 22,871
Share of associated companies' profit
after tax (9,485) (4,364) (11,594)
Tax charge 5,844 2,636 946
Finance costs 2,063 1,745 3,520
Finance income (848) (438) (972)
------- ------- -------
Operating profit 16,607 9,902 14,771
Biological gain (6,815) (7,333) (10,064)
Planting expenditure 1,926 3,397 6,265
Disposal of non-current assets (3) (33) 1
Release of deferred profit on sale
of land (458) (161) (323)
Depreciation of property, plant
and equipment 2,940 2,567 5,312
Retirement-benefit obligations 453 322 892
Share-based payments 63 52 82
Dividends from associated companies 5,259 3,804 9,764
------- ------- -------
Operating cash flows before
movements in working capital 19,972 12,517 26,700
(Increase)/decrease in inventories (173) 1,626 5,444
(Decrease)/increase in receivables 894 (2,131) 1,917
Increase/(decrease) in payables 3,275 (2,356) (4,458)
------- ------- -------
Cash generated by operating activities 23,968 9,656 29,603
Income tax paid (7,522) (5,518) (6,589)
Interest paid (2,063) (1,745) (3,520)
------- ------- -------
Net cash generated by operating
activities 14,383 2,393 19,494
======= ======= =======
7. EXCHANGE RATES
30 June 30 June 31 December
2014 2013 2013
US$1 = Indonesian Rupiah
- average 11,726 9,732 10,449
- period end 11,969 9,929 12,189
====== ====== ======
US$1 = Australian Dollar
- average 1.09 0.99 1.04
- period end 1.06 1.09 1.12
====== ====== ======
US$1 = Malaysian Ringgit
- average 3.27 3.07 3.15
- period end 3.21 3.16 3.28
====== ====== ======
£1 = US Dollar
- average 1.67 1.54 1.56
- period end 1.71 1.52 1.66
====== ====== ======
8. DISTRIBUTION
The interim report for the six-month period ended 30 June 2014 will be despatched to shareholders on or before 23 September 2014 and copies thereof will be available on the Company's website (www.mpevans.co.uk) or from the Company at 3 Clanricarde Gardens, Tunbridge Wells, Kent TN1 1HQ on and after that date.
15 September 2014