M.P. EVANS GROUP PLC
M.P. Evans Group PLC ("M P Evans"), a producer of Indonesian palm oil and Australian beef cattle, announces its unaudited interim results for the six months ended 30 June 2013.
Highlights
Financials
· Despite continued crop increases, lower palm-oil price led to 34% reduction in agricultural gross profit to US$9.5 million (2012 US$14.4 million)
· Share of associates' profits 40% lower at US$4.4 million (2012 US$7.3 million) largely due to lower palm-oil price
· Profit for the period 33% lower at US$10.3 million (2012 US$15.3 million)
· Interim dividend maintained at 2.25p per 10p share
· Group maintains positive cash balances and modest borrowings
Indonesian palm oil
· Crops of oil-palm fresh fruit bunches ("f.f.b.") 14% higher on majority-held estates and 3% lower on associates' estates
· Palm-oil prices averaged US$846 per tonne, 23% lower than US$1,096 in first-half 2012
· High oil-extraction rates achieved by Kalimantan and Sumatra mills of 25.1% and 24.1% respectively
· Progress achieved on new Musi Rawas project in South Sumatra
· Group on track to produce 350,000 tonnes of f.f.b. from majority-held estates in 2013 and 500,000 tonnes in 2015
Australian beef cattle
· Woodlands enjoyed good season, with improved weight gains, leading to improved (break-even) result in first half
· Cattle prices declined from end-2012 peak following poor season across much of Australia and continued strength of Australian Dollar
· Group's share of NAPCo's post-tax loss US$1.2 million (2012 share US$1.2 million loss)
· Cattle prices slightly improved since period end as Australian Dollar softens but drier conditions currently prevail
· Discussions continue regarding possible change of control of NAPCo
Malaysian-property
· Group's share of Bertam Properties' profit increased to US$1.1 million (2012 US$0.2 million) following completion of sales of developed housing
· Board retains long-term intention to dispose of the Group's Malaysian property interests, with expected value of over US$40 million
Commenting on the results, the chairman of M. P. Evans, Peter Hadsley-Chaplin, said:-
"The Group's reduction in profit, following the decline in the palm-oil price from around US$1,100 per tonne to the current level of some US$840 per tonne, was mitigated by the anticipated continued increase in crops from the majority-held Indonesian estates. Projected growth to 350,000 tonnes in 2013 is expected to continue to around 500,000 tonnes in 2015. The Australian beef-cattle price is showing welcome signs of improvement following an increase in export demand and a reported tightening of US supply."
Enquires:
M.P. Evans Group PLC 020 7796 4133 on 12 September 2013 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
Matthew Armitt
Hudson Sandler 020 7796 4133
Charlie Jack
Katie Matthews
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
Crops of oil-palm fresh fruit bunches ("f.f.b.") from the Group's majority-owned estates continued their upward trend, increasing by 14%, in the first half of 2013 and oil-extraction rates improved to pleasing levels. However, palm-oil prices for the six months ended 30 June 2013 were significantly below the levels experienced in the same period in 2012. Costs increased as young plantings were brought into maturity although the strengthening of the US Dollar against the Indonesian Rupiah reduced local costs in US-Dollar terms.
The associated plantation companies' f.f.b. crops for the first half of 2013 were down slightly, by 3%, on the same period in 2012 and oil-extraction rates fell as a result of wetter-than-usual weather conditions. The companies were also adversely affected by the lower palm-oil prices referred to above.
Cattle weight gains achieved on Woodlands were slightly higher than for the first half of 2012 and the operations were less affected by the fall in prices than in the previous year. The lower cattle prices resulted in the associated The North Australian Pastoral Company Pty Limited ("NAPCo") recording a similar loss in the first half of 2013 to that in the first half of 2012.
As a result of the above and a higher biological-asset adjustment, the profit for the first half of 2013 was US$10.3 million, 33% lower than the US$15.3 million for the same period in 2012.
The board has declared an interim dividend maintained at 2.25p per share. The dividend will be paid on or after 4 November 2013 to shareholders on the register at the close of business on 27 September 2013. A scrip-dividend alternative continues to be available for this interim dividend.
Progress has been made on the new oil-palm project, Musi Rawas, in South Sumatra, Indonesia, where, as announced in November 2012, the Group gained an operating licence to develop a concession comprising a gross area of 20,000 hectares. The management team is in place and negotiations have begun with local people to agree compensation terms with them. As at the date of this report, some 700 hectares have been acquired. Planting is expected to commence in 2014.
Overall, the Group remains on track to produce 500,000 tonnes of f.f.b. from its majority-held estates in 2015.
As announced on 13 May 2013, the controlling shareholder in NAPCo is considering its strategic options in relation to its shareholding in the company. Third parties have been approached to gauge interest in acquiring a controlling interest in the company. The board of M. P. Evans Group PLC ("MPEG"), the second-largest shareholder in NAPCo, has declared that it will sell its shareholding if an acceptable proposal for a change of control was to result from such a process. Taken together, the controlling shareholder and MPEG own more than 95% of NAPCo. Discussions continue and the Group will update the market when appropriate.
THE PALM-OIL AND BEEF-CATTLE MARKETS
After an uncertain start to the year during which the crude palm oil ("CPO") price eased to some US$ 800 per tonne (Rotterdam c.i.f.), it moved on an upward trend, reflecting weak reported production throughout South East Asia and lower CPO stock levels, before fluctuating around a price of some US$ 850 per tonne. The second quarter saw the price fall back slightly, though not to the levels seen at the beginning of the year, before it once again rose to finish the half year at US$ 870 per tonne. The average price for the first half of the year was US$ 846 per tonne (2012 US$ 1,096). As referred to below under "Prospects", and as expected, the price weakened during the Muslim fasting season in July. It subsequently strengthened noticeably on reports of dryness in both North and South America's main soybean-producing areas, raising doubts as to the extent of very significant crop increases expected from these areas. It has since returned to fluctuate around US$850 per tonne.
Prices for both the grass-fed, lighter-weight cattle (produced by Woodlands) and the heavier, grain-finished cattle (produced by NAPCo), broadly fell during the first half of 2013. This resulted both from the dry conditions experienced across many parts of Australia, putting downward pressure on prices, and from the negative effect on the export market of the continuing strength of the Australian Dollar. Since the period end, however, the Australian Dollar has declined by around 10%, continuing the downward trend which commenced in April 2013, and this has recently begun to have a positive impact on export prices. The global beef-cattle market may also be positively affected by the looming short supply of slaughter-ready cattle reported in the US.
RESULTS FOR THE PERIOD
Majority-owned operations
Indonesia
As expected, the strong improvement in f.f.b. crops on the Kalimantan and Bangka projects continued in the first half of 2013 as areas mature and yields increase as the palms grow older. The f.f.b. crops on the mature Sumatran estates were slightly lower partly because of a dip in the cropping cycle and, as foreshadowed in previous reports, partly because of the larger replanting programme that is under way. In Kalimantan, the Group continues to purchase increasing levels of f.f.b. from the smallholder cooperatives. Purchases are also made from nearby third-party estates but, although difficult to predict, it is expected that these levels will decline as some of those estates not only build their own mills but also compete for other sources of f.f.b. in the area. In addition to the overall higher crop, oil-extraction rates improved impressively in the mills in Kalimantan and Sumatra to the most satisfactory levels of 25.1% and 24.1% respectively. Palm-oil prices in the first half of 2013 (average Rotterdam c.i.f. US$846/tonne) were lower than in the same period in 2012 (US$1,096/tonne). As a result, despite increases in production, Group revenue from palm oil and f.f.b. sales was similar in the 2013 period at US$37.6 million (first half 2012 US$37.4 million).
Costs which were previously capitalised become revenue costs as areas mature. Given the overall young profile of the Group's estates, particularly in Kalimantan and Bangka, significant costs are recognised in this way during each year at this early stage in the development of these new projects.
The plantation industry has experienced some cost pressures, mainly because of significant statutory increases in minimum wages in the various provinces of Indonesia. The majority of workers already earn well above the minimum wage, although the minimum wage does form part of the basis for wage calculations. The effect of this has been mitigated by the strengthening of the US Dollar against the Indonesian Rupiah in the first half of 2013. Intense competition for good-quality management has also exerted upward pressure on staff remuneration levels.
Fertiliser and fuel remain major costs. Most fertiliser costs are US-Dollar denominated. Costs in this area are being reduced by the production and application in the field of organic compost derived from the waste products from the mills (empty fruit bunches and liquid effluent).
The construction of a generator fuelled by methane derived from the effluent in the Kalimantan mill is aimed at driving down the cost of electricity, which was previously produced either by steam-driven turbines in the mills or by standalone diesel-fuelled generators and the commercial benefit from this is expected within the next two or so years, depending upon the actual rate of increase in throughput to the mill. The capture and burning of methane for power generation, in a similarly profitable and environmentally-beneficial way, is under consideration at the Pangkatan mill.
As a result of the above, gross profit (before the biological-asset adjustment) from the Indonesian palm-oil operations amounted to US$7.1 million for the first half of 2013, compared with US$13.3 million for the same period in 2012.
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
2013 (decrease) 2012 2012
Tonnes % Tonnes Tonnes
Crops
Own crops
Pangkatan group 65,500 73,100 157,000
Simpang Kiri 23,200 24,200 51,300
------- ------- -------
88,700 (9) 97,300 208,300
Kalimantan 51,900 98 26,200 73,700
Bangka 16,200 11 14,600 35,000
------- ------- -------
Total crops 156,800 14 138,100 317,000
======= ==== ======= =======
Smallholder co-operative crops
Kalimantan 20,800 91 10,900 29,800
Bangka 8,700 6 8,200 19,700
------- ------- -------
29,500 54 19,100 49,500
======= ==== ======= =======
Outside crop purchased
Kalimantan 15,900 (45) 29,000 60,100
======= ==== ======= =======
Production
Crude palm oil
Pangkatan 15,800 (8) 17,100 35,900
Kalimantan 22,200 42 15,600 39,500
------- ------- -------
38,000 16 32,700 75,400
======= ==== ======= =======
Palm kernels
Pangkatan 3,600 (12) 4,100 8,700
Kalimantan 3,700 54 2,400 6,100
------- ------- -------
7,300 12 6,500 14,800
======= === ======= =======
Extraction rates % % %
Crude palm oil
Pangkatan 24.1 23.4 23.1
Kalimantan 25.1 23.9 24.1
======= ======= =======
% % %
Palm kernels
Pangkatan 5.6 5.7 5.6
Kalimantan 4.2 3.7 3.7
======= ======= =======
Selling prices
Palm oil - Rotterdam c.i.f.
- average per tonne US$846 (23) US$1,096 US$998
======= ==== ======= =======
Planting of the remaining areas of the Kalimantan and Bangka projects has progressed slowly. Inevitably, compensation to the users of the land becomes more time consuming and expensive as the latter stages of development are reached. As at 30 June 2013, some 13,760 hectares had been planted on the Kalimantan project of which 9,750 relate to the Group and 4,010 hectares to the smallholder co-operatives. On the Bangka project, some 5,460 hectares had been planted by this date of which 3,770 hectares related to the Group and 1,690 hectares to the smallholder co-operatives.
The current estimate remains that the areas on these two new projects that may ultimately be planted is 15,000 hectares in Kalimantan and 10,000 hectares on Bangka, of which 10,600 hectares and 6,000 hectares respectively relate to the Group and the balance to the smallholder-co-operative schemes.
Australia
Ample rains at the end of 2012 and in early 2013 resulted in very good pastures and enabled the herd to be rebuilt from the 5,600 head at 1 January 2013 to 10,300 head at 30 June 2013. As has been done in the past, third-party cattle (5,100 on this occasion) have been "agisted" on Woodlands. Agistment is the process whereby third-party cattle are taken onto the property in return for a fee that is based on weight gained. At 30 June 2013, all of these agisted cattle were still on the property although some have since reached optimal weights and been moved off. Conditions have been significantly drier on the property in the middle part of the year.
Weight gains (including those relating to the agisted cattle) in the first half of 2013 were slightly higher than those achieved in the first half of 2012. As in the six months ended 30 June 2012, prices for the type of cattle fattened on Woodlands fell in 2013. However, the effect in 2013 (mainly on the value of the cattle that were on the property throughout the period) was less than in 2012, giving rise to a break-even result compared with a gross loss of US$0.6 million in the six months ended 30 June 2012.
GROSS PROFIT
As a result of all of the above, the gross profit for the first half of 2013 was US$9.5 million, a 34% decrease from the US$14.4 million for the same period last year. The table below sets out an analysis of the gross profit/(loss) between the various activities and between the countries in which the Group operates.
BEARER BIOLOGICAL-ASSET ADJUSTMENT
The biological gain during the period amounted to US$ 6.9 million; against this were set planting costs of US$ 3.4 million but also an upward adjustment reflecting depreciation on plantings of US$ 2.4 million. In total, therefore, the biological-bearer-asset adjustment increased the reported Group operating profit before interest and tax by US$5.8 million (2012 US$ 4.8 million). The main reason for the biological gain was an increase of US$ 12 to US$ 614 in the 20-year average CPO price used to value biological assets (2012 increase of US$ 18 to US$ 590), though a small uplift in planted hectarage also contributed to the gain. The increase in the price of CPO used in the valuation of biological assets also led to an increase of US$ 0.9 million in the Group's share in the results of the associated companies.
Six months ended 30 June 2013
Biological
Cost of bearer-asset Gross
Turnover 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
====== ====== ====== ======
Six months ended 30 June 2012
Biological
Cost of bearer-asset Gross
Turnover sales adjustment profit/(loss)
US$'000 US$'000 US$'000 US$'000
Plantations
Indonesia 37,374 (24,025) 1,520 14,869
Malaysia 150 (113) - 37
------ ------ ------ ------
Total plantations 37,524 (24,138) 1,520 14,906
Cattle - Australia 1,021 (1,593) - (572)
Other - UK 23 - - 23
------ ------ ------ ------
Group total 38,568 (25,731) 1,520 14,357
====== ====== ====== ======
Year ended 31 December 2012
Biological
Cost of bearer-asset Gross
Turnover sales adjustment profit/(loss)
US$'000 US$'000 US$'000 US$'000
Plantations
Indonesia 76,814 (54,374) 2,715 25,155
Malaysia 292 (265) - 27
------ ------ ------ ------
Total plantations 77,106 (54,639) 2,715 25,182
Cattle - Australia 6,061 (8,254) - (2,193)
Other - UK 46 - - 46
------ ------ ------ ------
Group total 83,213 (62,893) 2,715 23,035
====== ====== ====== ======
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 2012, was as follows:-
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$'000
PT Agro Muko (36.84%) 3,147 1,345 4,492
PT Kerasaan Indonesia (38.00%) 391 (437) (46)
------ ------ ------
3,538 908 4,446
====== ====== ======
Six months ended 30 June 2012
Post-tax Post-tax
profit before profit after
biological Biological biological
bearer-asset bearer-asset bearer-asset
adjustment adjustment adjustment
US$'000 US$'000 US$'000
PT Agro Muko (36.84%) 6,295 1,466 7,761
PT Kerasaan Indonesia (38.00%) 592 (32) 560
------ ------ ------
6,887 1,434 8,321
====== ====== ======
Year ended 31 December 2012
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%) 12,015 (26) 11,989
PT Kerasaan Indonesia (38.00%) 1,246 6 1,252
------ ------ ------
13,261 (20) 13,241
====== ====== ======
Crops and production were as follows:-
6 months 6 months Year
ended ended ended
30 June (Decrease)/ 30 June 31 December
2013 increase 2012 2012
Tonnes % Tonnes Tonnes
F.f.b. crops
PT Agro Muko
- own 161,700 (4) 168,400 367,400
- outgrowers 3,600 (5) 3,800 8,600
-------- -------- --------
165,300 172,200 376,000
PT Kerasaan Indonesia 18,500 3 18,000 41,200
-------- ------- --------
183,800 (3) 190,200 417,200
======== ==== ======== ========
Production (PT Agro Muko)
Crude palm oil 37,200 (8) 40,400 87,100
Palm kernels 8,400 (8) 9,100 19,700
======== ==== ======== ========
% % %
Extraction rates
Crude palm oil 22.5 23.5 23.2
Palm kernals 5.1 5.3 5.2
======== ======== ========
Tonnes Tonnes Tonnes
Rubber crops
PT Agro Muko - own 721 (2) 738 1,340
======== ==== ======== ========
The f.f.b. crop recorded by PT Agro Muko was slightly down compared with the first half of 2012 and weather conditions resulted in lower oil-extraction rates. A significant replanting programme for the oil palms is under way as the large early plantings undertaken at the start of the project in the late 1980's and early 1990's reach the age when replanting becomes necessary. As a result of this, f.f.b. crops from the PT Agro Muko estates are likely to continue at approximately the current level, or possibly slightly lower, over the next few years. The rubber replanting programme continues and, as anticipated, the crop is likely to be lower in the short term until the yields on the recently-planted areas start to accelerate.
As with the majority-owned operations referred to above, the palm-oil operations of the two Indonesian associated companies were negatively affected by the sharply-lower palm-oil prices. PT Agro Muko's rubber operations also experienced lower prices as demand slackened in the economies of the major world buyers, China, the US and Europe.
The programme of upgrading the infrastructure, particularly internal roads, on the PT Agro Muko estates continues. A methane-capture plant has recently been commissioned. This will not only provide a source of power generation but should lead to accreditation which will allow the company's palm oil to be sold to European power generators at a premium to prices hitherto achieved.
Progress has been made in resolving the problems arising from the severe leaf-pest attack which adversely affected the f.f.b. crops on Kerasaan Estate over the last two or so years. The crop is starting to recover. Separately, yields have been adversely affected by the incidence of ganoderma, a root disease. Management vigilance and enhanced agricultural practices are tackling this issue.
There was a significant reduction in Kerasaan's biological-asset value during the first half of 2013. This was the product of a very small reduction (US$ 29) in biological-asset value per hectare, and a 7% reduction in hectarage as fields were felled in preparation for replanting. It is expected that the replanting will take place before the end of the year, so this part of the reduction in biological-asset value will be reversed in the results to be reported for the full year.
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 2012, was as follows:-
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
US$'000 US$'000 US$'000
NAPCo (34.37%) (1,213) (1,242) (2,012)
====== ====== ======
A loss was recorded at NAPCo following the price softening mentioned above and a poor season on the majority of its properties which resulted in lighter weights of cattle. As on Woodlands, under international accounting rules, the decline in the value of the entire herd, rather than just those animals sold, is brought to account in the consolidated income statement for the period. The positive corollary is that there will be a correspondingly beneficial impact on future earnings as those unsold cattle gain weight and any price recovery sets in. As a direct result of the recent substantial expansion of the feedlot, some 11,000 cattle, which, in the past, would have had to be sold, are, instead, being brought at lighter-than-usual weights into the feedlot, where they will grow out and gain weight.
Malaysia
The Group's share of Bertam Properties' post-tax profit/(loss) for the period, compared with that for the first half, and for the whole, of 2012 was as follows:-
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
US$'000 US$'000 US$'000
Bertam Properties (40.00%) 1,131 207 (347)
====== ====== ======
Although no direct land sales were completed during the period, sales of a number of developed houses were successfully completed and the profit thereon recognised. As a result, there was a substantial increase of the profit compared with the same period in 2012. A number of direct land sales are in train but the profit will not be recognised until the transactions are fully completed.
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$4.4 million, 40% lower than the US$7.3 million for the same period in 2012.
PROSPECTS
Since the end of the interim period, the palm-oil price weakened in July during the Muslim fasting period, but subsequently strengthened to fluctuate around US$ 850 per tonne. Historically-low stock-usage ratios for CPO, the possibility of mandatory biofuel quotas in, notably, Indonesia, and reports of dryness in oilseed-producing areas in both North and South America suggest support for the CPO price at least at current levels. As is usual, f.f.b. crops are expected to rise during the second half of the year on both the Group's majority-owned estates and those of its associated companies. The 2013 crops on the Group's majority-held estates are expected to reach 350,000 tonnes, which leaves the Group on track to achieve its previously-stated estimate of 500,000 tonnes in 2015.
Prospects for Australian beef are looking more favourable as prices start to edge higher, following an improvement in both domestic and export demand, and as US supply starts to look increasingly tight.
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$'000
Revenue (note 3) 38,430 - 38,430
Cost of sales (31,321) 2,362 (28,959)
------ ------ ------
Gross profit (note 3) 7,109 2,362 9,471
Gain on biological assets (note 4) - 6,850 6,850
Planting expenditure - (3,397) (3,397)
Foreign-exchange losses (841) - (841)
Other administrative expenses (2,181) - (2,181)
Other income - - -
------ ------ ------
Group operating profit before interest
and tax 4,087 5,815 9,902
Finance income 438 - 438
Finance costs (1,549) (196) (1,745)
------ ------ ------
Group-controlled profit before taxation 2,976 5,619 8,595
Tax on profit on ordinary activities (1,360) (1,276) (2,636)
------ ------ ------
Group-controlled profit after tax 1,616 4,343 5,959
Share of associated companies' profit
after tax 3,456 908 4,364
------ ------ ------
Profit for the period 5,072 5,251 10,323
====== ====== ======
Attributable to:
Owners of M.P. Evans Group PLC 4,018 4,882 8,900
Minority interests 1,054 369 1,423
------ ------ ------
5,072 5,251 10,323
====== ====== ======
US Cents US Cents
Basic earnings per 10p share 7.32 16.22
====== ======
Diluted earnings per 10p share 7.31 16.20
====== ======
Unaudited consolidated income statement
Result before 6 months
biological Biological ended
bearer-asset bearer-asset 30 June
adjustment adjustment 2012
US$'000 US$'000 US$'000
Revenue 38,568 - 38,568
Cost of sales (25,731) 1,520 (24,211)
------ ------ ------
Gross profit 12,837 1,520 14,357
Gain on biological assets (note 4) - 5,406 5,406
Planting expenditure - (4,302) (4,302)
Foreign-exchange losses (1,052) - (1,052)
Other administrative expenses (2,020) - (2,020)
Other income 9 - 9
------ ------ ------
Group operating profit before interest
and tax 9,774 2,624 12,398
Finance income 537 - 537
Finance costs (1,752) (154) (1,906)
------ ------ ------
Group-controlled profit before taxation 8,559 2,470 11,029
Tax on profit on ordinary activities (2,368) (617) (2,985)
------ ------ ------
Group-controlled profit after tax 6,191 1,853 8,044
Share of associated companies' profit
after tax 5,852 1,434 7,286
------ ------ ------
Profit for the period 12,043 3,287 15,330
====== ====== ======
Attributable to:
Owners of M.P. Evans Group PLC 10,081 2,827 12,908
Minority interests 1,962 460 2,422
------ ------ ------
12,043 3,287 15,330
====== ====== ======
US Cents US Cents
Basic earnings per 10p share 18.66 23.89
====== ======
Diluted earnings per 10p share 18.44 23.61
====== ======
Unaudited consolidated income statement
Result before Year
biological Biological ended
bearer-asset bearer-asset 31 December
adjustment adjustment 2012
US$'000 US$'000 US$'000
Revenue 83,213 - 83,213
Cost of sales (62,893) 2,715 (60,178)
------ ------ ------
Gross profit 20,320 2,715 23,035
Gain on biological assets - 11,907 11,907
Planting expenditure - (9,784) (9,784)
Foreign-exchange losses (1,761) - (1,761)
Other administrative expenses (4,292) - (4,292)
Other income 17 - 17
------ ------ ------
Group operating profit before interest
and tax 14,284 4,838 19,122
Finance income 1,338 - 1,338
Finance costs (3,437) (323) (3,760)
------ ------ ------
Group-controlled profit before taxation 12,185 4,515 16,700
Tax on profit on ordinary activities (4,791) (1,239) (6,030)
------ ------ ------
Group-controlled profit after tax 7,394 3,276 10,670
Share of associated companies' profit
after tax 10,902 (20) 10,882
------ ------ ------
Profit for the period 18,296 3,256 21,552
====== ====== ======
Attributable to:
Owners of M.P. Evans Group PLC 15,070 2,615 17,685
Minority interests 3,226 641 3,867
------ ------ ------
18,296 3,256 21,552
====== ====== ======
US Cents US Cents
Basic earnings per 10p share 27.70 32.51
====== ======
Diluted earnings per 10p share 27.65 32.44
====== ======
Unaudited consolidated balance sheet
Before
biological Biological
bearer-asset bearer-asset 30 June
adjustment adjustment 2013
US$'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
Minority interests 14,242 8,586 22,828
------- ------- -------
Total equity 288,181 80,456 368,637
======= ======= =======
* Of this balance US$20.1 million has been pledged as security against bank loans
Unaudited consolidated balance sheet
Before
biological Biological
bearer-asset bearer-asset 30 June
adjustment adjustment 2012
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets (note 4) - 132,833 132,833
Property, plant and equipment 168,103 (68,606) 99,497
Investment in associates 105,877 27,068 132,945
Investments 105 - 105
Deferred-tax asset 4,653 - 4,653
------- ------- -------
279,895 91,295 371,190
------- ------- -------
Current assets
Biological assets 9,553 - 9,553
Inventories 12,025 - 12,025
Trade and other receivables 13,270 - 13,270
Current-tax asset 5,658 - 5,658
Cash and cash equivalents 55,014 - 55,014
------- ------- -------
95,520 - 95,520
------- ------- -------
Total assets 375,415 91,295 466,710
------- ------- -------
Current liabilities
Borrowings 25,255 - 25,255
Trade and other payables 16,146 - 16,146
Current-tax liabilities 4,475 - 4,475
------- ------- -------
45,876 - 45,876
------- ------- -------
------- ------- -------
Net current assets 49,644 - 49,644
------- ------- -------
Non-current liabilities
Borrowings 31,215 - 31,215
Deferred-tax liability 3,243 16,057 19,300
Retirement-benefit obligations 3,334 - 3,334
------- ------- -------
37,792 16,057 53,849
------- ------- -------
Total liabilities 83,668 16,057 99,725
======= ======= =======
------- ------- -------
Net assets 291,747 75,238 366,985
======= ======= =======
Equity
Share capital (note 5) 9,105 - 9,105
Other reserves 84,556 27,068 111,624
Profit and loss account 185,762 40,134 225,896
------- ------- -------
Equity attributable to owners of
M.P. Evans Group PLC 279,423 67,202 346,625
Minority interests 12,324 8,036 20,360
------- ------- -------
Total equity 291,747 75,238 366,985
======= ======= =======
Unaudited consolidated balance sheet
Before
biological Biological
bearer-asset bearer-asset 31 December
adjustment adjustment 2012
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets (note 4) - 139,335 139,335
Property, plant and equipment 179,979 (72,617) 107,362
Investments in associates 105,130 25,613 130,743
Investments 109 - 109
Deferred-tax asset 6,454 - 6,454
------- ------- -------
292,829 92,331 385,160
------- ------- -------
Current assets
Biological assets 4,594 - 4,594
Inventories 9,664 (447) 9,217
Trade and other receivables 14,325 - 14,325
Current-tax asset 1,477 - 1,477
Cash and cash equivalents 54,757 - 54,757
------- ------- -------
84,817 (447) 84,370
------- ------- -------
Total assets 377,646 91,884 469,530
------- ------- -------
Current liabilities
Borrowings 25,458 - 25,458
Trade and other payables 14,797 - 14,797
Current-tax liabilities 1,541 - 1,541
------- ------- -------
41,796 - 41,796
------- ------- -------
Net current assets 43,021 (447) 42,574
------- ------- -------
Non-current liabilities
Borrowings 31,423 - 31,423
Deferred-tax liability 2,514 16,679 19,193
Retirement-benefit obligations 4,230 - 4,230
------- ------- -------
38,167 16,679 54,846
------- ------- -------
Total liabilities 79,963 16,679 96,642
======= ======= =======
Net assets 297,683 75,205 372,888
======= ======= =======
Equity
Share capital (note 5 9,227 - 9,227
Other reserves 83,133 25,613 108,746
Profit and loss account 191,734 41,376 233,110
------- ------- -------
Equity attributable to owners
of M.P. Evans Group PLC 284,094 66,989 351,083
Minority interests 13,589 8,216 21,805
------- ------- -------
Total equity 297,683 75,205 372,888
======= ======= =======
Unaudited consolidated cash-flow statement
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
US$'000 US$'000 US$'000
Net cash generated by operating
activities (note 6 2,393 16,548 33,897
------- ------- -------
Investing activities
Interest received 438 537 1,338
Proceeds on disposal of property, plant
and equipment 158 194 239
Purchase of property, plant and equipment (5,984) (6,116) (18,540)
Planting expenditure (3,397) (4,302) (9,784)
------- ------- -------
Net cash used by investing activities (8,785) (9,687) (26,747)
------- ------- -------
Financing activities
Dividends paid to Company
shareholders (note 3) (4,406) (4,360) (6,151)
Repayment of borrowings (496) (475) (1,323)
Loans drawn down - 298 310
Proceeds on issue of shares (note 6) 130 20 1,586
Dividend paid to minorities (400) - -
------- ------- -------
Net cash used by financing
activities (5,172) (4,517) (5,578)
------- ------- -------
Net (decrease)/increase in cash and cash
equivalents (11,564) 2,344 1,572
Net cash and cash equivalents at
1 January 29,299 27,500 27,500
Effect of foreign-exchange rates on cash
and cash equivalents 1,998 (85) 227
------- ------- -------
Net cash and cash equivalents at
period end 19,733 29,759 29,299
======= ======= =======
Notes to the interim statements
1. STATUTORY INFORMATION
The financial information for the six-month periods ended 30 June 2013 and 2012 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 2012 is abridged from the statutory accounts. The 31 December 2012 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 2012.
3. DIVIDENDS
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
US$'000 US$'000 US$'000
2011 final dividend - 5.75p
per 10p share - 4,878 4,877
2012 interim dividend - 2.25p
per 10p share - - 1,985
2012 final dividend - 5.75p
per 10p share 4,796 - -
------ ------ ------
4,796 4,878 6,862
------ ------ ------
Subsequent to 30 June 2013, the board has declared an interim dividend of 2.25p per 10p share. The dividend will be paid on or after 4 November 2013 to those shareholders on the register at the close of business on 27 September 2013.
A scrip dividend will continue to be available for the interim dividend. Shareholders who have previously elected to receive their dividends in this manner will automatically receive this dividend as scrip. Shareholders who now wish to make an election to receive this and future dividends as scrip should contact the company secretary by no later than 14 October 2013.
TIMETABLE
Ex dividend date 25/09/2013
Record date 27/09/2013
Calculation period 25/09/2013 to 01/10/2013
Last day for scrip elections 14/10/2013
Payment date 04/11/2013
4. BIOLOGICAL ASSETS
The Group values its plantation assets using a discounted cash flow over the expected 25-year economic life of the asset. The discount rate used in this valuation is 14%. The price of the f.f.b. crop is taken to be a 20-year average based on actual selling prices or, where the plantation has its own mill, an inference based on the widely-quoted commodity price for crude palm oil delivered c.i.f. Rotterdam. The directors have concluded that using a 20-year average provides their best estimate of prices to be achieved over the valuation period.
The long-term average price and exchange rates used in determining the valuations based on cash flows were as follows:
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
Price of crude palm oil
(US$/tonnes, c.i.f Rotterdam) 614 590 602
Exchange rate (Rupiah
per US Dollar) 9,929 9,480 9,670
====== ====== ======
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
2013 2012 2012
Number of shares of 10p each
At 1 January 54,871,402 54,021,901 54,021,901
Issued 105,350 75,980 849,501
---------- ---------- ----------
At period end 54,976,752 54,097,881 54,871,402
========== ========== ==========
US$'000 US$'000 US$'000
At 1 January 9,227 9,093 9,093
Issued 16 12 134
------- ------- -------
At period end 9,243 9,105 9,227
======= ======= =======
During the period, 53,790 (2012 - 10,000) 10p shares were issued as a result of the exercise of share options. Total cash proceeds received by the Company were US$130,000 (2012 US$20,000). In addition, 51,560 shares were issued in lieu of the 2012 final dividend paid on 20 June 2013 (2012 - 65,980).
6. ANALYSIS OF MOVEMENTS IN CASH FLOW
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
US$'000 US$'000 US$'000
Profit for the year 10,323 15,330 21,552
Share of associated companies' profit
after tax (4,364) (7,286) (10,882)
Tax charge 2,636 2,985 6,030
Finance costs 1,745 1,906 3,760
Finance income (438) (537) (1,338)
------- ------- -------
Operating profit 9,902 12,398 19,122
Biological gain (7,333) (5,669) (12,053)
Planting expenditure 3,397 4,302 9,784
Disposal of non-current assets (33) (52) 207
Add back of land to be sold to
smallholders' co-operative schemes - (27) -
Release of deferred profit on sale
of land (161) (114) (137)
Depreciation of property, plant
and equipment 2,567 2,548 5,211
Retirement-benefit obligations 322 517 1,500
Share-based payments 52 10 23
Dividends from associated companies 3,804 6,074 13,755
------- ------- -------
Operating cash flows before
movements in working capital 12,517 19,987 37,412
Decrease/(increase)in inventories 1,626 (2,854) 5,025
(Increase)/decrease in receivables (2,131) 3,379 164
(Decrease)/increase in payables (3,356) 1,332 (45)
------- ------- -------
Cash used in operating activities 9,656 21,844 42,556
Income tax paid (5,518) (3,390) (4,899)
Interest paid (1,745) (1,906) (3,760)
------- ------- -------
Net cash generated by operating
activities 2,393 16,548 33,897
======= ======= =======
7. EXCHANGE RATES
30 June 30 June 31 December
2013 2012 2012
US$1 = Indonesian Rupiah
- average 9,732 9,171 9,355
- period end 9,929 9,480 9,670
====== ====== ======
US$1 = Australian Dollar
- average 0.99 0.97 0.97
- period end 1.09 0.98 0.96
====== ====== ======
US$1 = Malaysian Ringgit
- average 3.07 3.09 3.09
- period end 3.16 3.18 3.06
====== ====== ======
£1 = US Dollar
- average 1.54 1.58 1.59
- period end 1.52 1.57 1.63
====== ====== ======
8. DISTRIBUTION
The interim report for the six-month period ended 30 June 2013 will be despatched to shareholders on or before 18 September 2013 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.
12 September 2013