Annual Financial Report
M.P. EVANS GROUP PLC
M.P. Evans Group PLC ("MP Evans" or "the Group"), a producer of Indonesian palm oil and Australian beef cattle, announces its unaudited preliminary results for the year ended 31 December 2013.
Highlights
Financial
* Profit for the year US$ 22.87 million (2012 US$21.55 million)
* Earnings per share US cents 35.96 (2012 US cents 32.51 cents)
* Dividend for the year increased by 0.25 pence to 8.25 pence (2.25 pence interim already paid)
Indonesian palm oil
* Plantation profits similar at US$ 24.82 million (2012 US$25.16 million)
* Indonesian f.f.b. crops 9% higher than in 2012 as crops increased
55% on Kalimantan project; remained similar on Bangka project and
were 6% lower on established estates
* Palm-oil price averaged US$856 per tonne (2012 US$998 per tonne).
Price has edged higher in 2014, currently around US$ 900 per tonne
* 1,800 hectares compensated to date on the new Musi Rawas project in
South Sumatra; planting expected to commence in late 2014
* Group's crops expected to continue to rise strongly in future years
Australian beef cattle
* NAPCo made a similar loss to 2012 following very dry conditions, but
helped by newly-expanded feedlot
* Woodlands broke even for the year following increased cattle weight
gain
* Good rainfall received in early 2014 - cattle prices have
strengthened
Malaysian property
* Marked increase in profits by Bertam Properties due to completion of
substantially-increased number of developed-property sales
Commenting on the results, Peter Hadsley-Chaplin, chairman of MP Evans, said:
"Despite a marked, 14%, fall in palm-oil prices during the year, the Group's gross profit from its Indonesian operations was similar to that for 2012 as f.f.b. crops continued to rise, particularly on the new Kalimantan project. F.f.b. crops are expected to continue to rise strongly in the next few years. In Australia, Woodlands approximately broke even whilst NAPCo recorded a similar loss to 2012 after another challenging season. Bertam Properties completed sales of significantly more developed properties than in 2012, resulting in a substantial improvement in its results. The Group's overall profit for the year was 6% higher than in 2012. The board believes that price prospects for both palm oil and beef cattle remain favourable."
Enquiries:
M. P. Evans Group PLC Telephone: 020 7796 4133 on
14 April only
Thereafter - 01892 516333
Peter Hadsley-Chaplin Chairman
Philip Fletcher Managing director
Tristan Price Finance director
Hudson Sandler
Charlie Jack Telephone: 020 7796 4133
Julia Cooke
Peel Hunt LLP Telephone: 020 7418 8900
Dan Webster
Richard Brown
Matthew Armitt
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 OF RESULTS
The profit for the year increased by 6% to US$22.87 million in 2013, compared with US$21.55 million in 2012. Earnings per share rose accordingly to US cents 35.96 (2012 US cents 32.51). The improved profit was achieved largely as a result of a 9% increase in the Group's Indonesian crops of oil palm fresh fruit bunches ("f.f.b."), to 344,200 tonnes, and in spite of a 14% decline in the average palm-oil price to US$ 856 per tonne in 2013. The higher crop level stemmed, in turn, from a significant (expected) increase in crop from the young oil-palm areas on the new Kalimantan project. The reduced profits of the Group's two associated oil-palm companies following similar, or lower, crops, coupled with the effects of the weaker palm-oil price, also impacted on the results. A fall in the Indonesian Rupiah against the US Dollar, notably towards the end of the year, was a benefit in reducing the Group's Indonesian costs but gave rise to a large exchange loss that affected the reported results for the year.
In Australia, Woodlands broke even and a slightly-increased loss was recorded at The North Australian Pastoral Company Pty Limited ("NAPCo") following a very dry and challenging season and similar, or lower, cattle prices. With regard to the Group's "residual" Malaysian property-development activities, a marked improvement in the result was achieved at Bertam Properties Sdn. Berhad ("Bertam Properties") due to an increase in the number of completed sales of developed properties. The Group's share of Bertam Properties' improved result more than offset the oil-palm associates' lower results and a 7% improvement in the associates' results as a whole was therefore achieved.
DIVIDEND
Taking account of the increased profit, the board is recommending a final dividend for the year of 6.00p per share, a 0.25p per share increase compared with the 5.75p in respect of 2012. Together with the interim dividend of 2.25p per share paid in November 2013 (the same as the interim dividend paid in November 2012), the total dividend for the year is therefore 8.25p per share. A scrip-dividend alternative is again being offered.
STRATEGY
The Group's core strategy is to continue to expand its oil-palm areas in Indonesia, in a sustainable and cost-effective manner, and to capitalise on the value of its Australian and Malaysian operations, using any sale proceeds to fund the continuing Indonesian development.
The total planted area of the Group's majority-held Indonesian operations extends to approximately 23,300 hectares, 700 of which were planted on its new projects during 2013. The planted smallholder areas adjoining the new projects amount to 6,000 hectares, 400 of which were planted in 2013. The estimated unplanted land bank is some 9,700 hectares, including the new Musi Rawas project, on the Group's estates and some 5,400 hectares on the adjoining smallholder areas managed by the Group. It is the board's aim for the Group's own areas to be planted at as rapid a rate as the availability of suitable land permits. In addition to the Group's existing unplanted landbank, the board seeks, in the future, to acquire further pieces of land, suitable for sustainable oil-palm development located, if possible, near the Group's existing estates. The extent of any such further acquisitions of land will depend upon available funding. The Group will also seek continually to maintain and, where possible, improve agronomic standards and productivity on its estates leading, ideally, to increased crops of oil-palm f.f.b. and, where relevant, crude palm oil ("CPO"). Furthermore, the Group will continue to work closely with its joint-venture partner, SA SIPEF NV, with regard to the two associated estates which SIPEF manages, to ensure that the highest standards are maintained.
In Australia, on the Group's beef-cattle property, Woodlands, it is aimed to maximise the kilograms of beef produced either for the Group's own cattle or for those owned by third parties. Productivity has been, and, where appropriate, will continue to be, improved through the enhancement of waters and fencing and the upgrading of paddocks. With regard to NAPCo, the aim is to maximise productivity in breeding and fattening cattle. Productivity has in recent years been enhanced both on the principal breeding stations by the sinking of a significant number of new bore holes (thereby providing drinking water for the cattle) and in the grain-finishing feedlot by expansion of the facilities. This has helped to render the operations not only more productive but also more resistant to the effects of drought. The strategy is for more bore holes to be sunk in the future. Notwithstanding the continued improvement measures in place at Woodlands, it remains the board's longer-term intention to dispose of this property as and when a suitable opportunity arises. 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, and prospective sale process, drew to a close in late 2013 but the Group's board will continue to consider any opportunities that arise in relation to its holding.
In Malaysia, the aim is for Bertam Properties to continue to capitalise on the value of its land, either by the development and sale of housing, retail and other units or through the outright sale of raw land. The Group will continue to reap the benefit of this development and sale activity until eventually, in some five to ten years' time, the project is fully developed, or until an acceptable offer is received to acquire the Group's 40% share. It is also the Group's long-term intention to dispose of its adjacent estate and therefore, as a consequence, ultimately to exit Malaysia entirely.
PALM-OIL AND BEEF-CATTLE MARKETS
During 2013, the palm-oil price moved within an unusually-tight band with the high point some US$920/tonne and the low point around US$820/tonne (Rotterdam cif). In previous years, the band has averaged more than US$400/tonne. As reported in Oil World, world stocks and production were high at the beginning of 2013, keeping downward pressure on the price. However, as a result of large supplies of palm oil and clear price competitiveness against other vegetable oils (when it traded, for example, at an unusually-high discount of up to some US$275/tonne to soybean oil rather than the more normal US$100 to US$150), consumption increased and stocks fell. The price differential reduced in the second half to around US$50/tonne at the same time as world production of palm oil fell back. As a result of this, the palm-oil price recovered in the last quarter, although upward pressure on the price was restrained by high soybean crops in the US and above-average soybean plantings in South America.
Prices for both the lighter-weight cattle, produced by Woodlands, and the heavier, grain-finished cattle, produced by NAPCo, broadly fell during the first half of the year, largely as a result of the dry conditions experienced across much of Australia, putting downward pressure on prices. However, the continuing decline in the value of the Australian Dollar had a more positive impact on prices in the second half, especially for NAPCo's heavier-weight cattle, which are more closely linked to the export market. By the year end, prices for lighter-weight cattle continued to trade at below their end-2012 levels, whilst prices for the heavier, grain-finished cattle were similar to their end-2012 levels.
OPERATIONS
Indonesia
Majority-owned estates
The overall Group f.f.b. crop of 344,200 tonnes was 9% higher in 2013 than the 317,000 tonnes harvested in 2012. As expected, the main contributor was the sharply-increased crop on the new Kalimantan project. Set against this, weather-related problems beset the Bangka project, resulting in a small reduction in the crop whilst the established estates in Sumatra experienced a downturn in crops, a phenomenon experienced by other plantations in their locality. As a result of the above, the Group crop of 350,000 tonnes forecast in the 2013 interim report was not achieved by a small margin. The improvement in the extraction rates on both of the Group's palm-oil mills, in Kalimantan and Sumatra, continued in 2013.
Details of crops, production and extraction rates for 2013, with comparative figures for 2012, are set out below:-
Crops and production
2013 Increase 2012
Tonnes % Tonnes
Crops
Own crops
- Pangkatan group 148,800 157,000
- Simpang Kiri 46,600 51,300
------- -------
195,400 (6) 208,300
- Kalimantan 114,500 55 73,700
- Bangka 34,300 (2) 35,000
------- -------
344,200 9 317,000
======= ===== =======
Smallholder co-operative crops
- Kalimantan 42,400 42 29,800
- Bangka 18,300 (7) 19,700
------- -------
60,700 23 49,500
======= ===== =======
Outside crop purchased
- Kalimantan 34,400 (43) 60,100
======= ===== =======
Production
Crude palm oil
- Pangkatan 35,500 35,900
- Kalimantan 47,400 39,500
------- -------
82,900 10 75,400
======= ===== =======
Palm kernels
- Pangkatan 8,600 8,700
- Kalimantan 7,800 6,100
------- -------
16,400 11 14,800
======= ===== =======
% %
Extraction rate
Crude palm oil
- Pangkatan 23.9 23.1
- Kalimantan 24.8 24.1
======= =======
Palm kernels
- Pangkatan 5.8 5.6
- Kalimantan 4.1 3.7
======= =======
Review of operations
Sumatra - established estates
The f.f.b. crops from Pangkatan, Bilah and Sennah Estates are processed by the mill on Pangkatan Estate. Due to replanting undertaken in 2013, there was a smaller productive area (by 250 hectares) on these three estates than in 2012. The composite average yield in 2013, at 24.39 tonnes per hectare (2012 - 24.73 tonnes) for these estates, was virtually identical to the previous year but, because of the smaller mature area, the overall crop was slightly down on last year. The crop from Simpang Kiri Estate was lower than in 2012 as the estate experienced a low-cropping period.
In the long term, crops on these estates are expected to increase as new higher-yielding seedlings are planted, replacing older palms whose yield pattern is deteriorating. Given the age profiles of the estates, there will be a sustained period of replanting over the next eight or so years meaning that, in the short term, total crops are likely to remain at around current levels until the newly-planted areas mature and yields start increasing again. During 2013, 248 hectares were replanted on Pangkatan Estate and 133 hectares on Simpang Kiri Estate. The present plan is to replant, on average, some 450 hectares per annum over the next eight or so years.
Production of crude palm oil at Pangkatan Mill at 35,500 tonnes, was similar to 2012's 35,900 tonnes, despite the lower, f.f.b. throughput in 2013. Continued improvement in the oil-extraction rate was achieved in 2013 by the mill. Close monitoring by field management of fruit ripeness and bunch quality and by mill management of oil losses and general engineering standards has resulted in these high extraction rates.
Management is considering the financial feasibility of capturing methane from Pangkatan Mill's effluent pond to burn and then generate and sell electricity. The methane would be "scrubbed" and then used as fuel in a gas engine, similar to the one successfully installed on the Kalimantan project. The electricity generated should then be able to be sold to the government electricity board (PLN).
Pangkatan Mill was accredited by the Round Table on Sustainable Palm Oil ("RSPO") in 2012. The annual "surveillance" audit was successfully completed in 2013 and, during the year, credits for both CPO and palm kernels were sold through a marketing platform. The mandatorily-required Indonesian Sustainable Palm Oil ("ISPO") audit was also successfully completed in 2013 and certification has been received in 2014.
Sumatra - Musi Rawas project
Progress has been made on the Musi Rawas project in South Sumatra. As at the date of this report, compensation terms have been agreed with the users of the land over some 1,800 hectares. A team, led by an experienced senior group manager, has been installed in an office in a nearby town. A nursery has been created and it is the intention to commence planting at the end of 2014.
The area covered by the Group's permit extends to 20,000 hectares but it is impossible at this stage to predict exactly how much of this will be available for planting. The board currently estimates that approximately half this area, 10,000 hectares, will be plantable. Much will depend upon the Group's ability to agree acceptable terms with the users of the land. The Group has undertaken to develop 30% of the planted land for smallholder cooperatives, the members of which are those who have sold their rights to the land to the Group.
Kalimantan
The planned substantial increase in f.f.b. crops continued in 2013 with 114,500 tonnes harvested, 55% more than 2012's 73,700 tonnes. This increase was despite some unusually-extensive flooding experienced during the year which at times restricted harvesting.
New planting was at modest levels in 2013 with 111 hectares planted for the Group and 24 hectares for the smallholders' cooperatives. The total planted area at the end of the year amounted to 9,809 hectares for the Group and 4,005 for the smallholders' cooperatives. The project is nearing the end of the planting programme and, as normally happens in these circumstances, completing the final small areas takes longer, is more complicated and becomes more expensive. The latest estimate is that approximately a further 800 hectares may be able to be planted on the Group's own areas, bringing the total to some 10,600 hectares. With regard to the smallholders' areas, it is possible that a further 400 or so hectares may be able to be planted, bringing the total to around 4,400 hectares. The potential combined area may ultimately therefore amount to around 15,000 hectares.
The CPO mill has continued to improve its oil-extraction rate and achieved 24.8% in 2013. As with Pangkatan Mill in Sumatra, it is the close monitoring by field management of fruit ripeness and bunch quality and by mill management of oil losses and general engineering standards that has resulted in this high percentage.
The RSPO audit of the Kalimantan project mill took place at the end of 2013. The independent auditors recommended to RSPO that accreditation be granted and the official certification is expected shortly. ISPO and ISCC audits are expected to commence during the course of 2014.
Bangka
The 2013 crops both from the Group's own areas and from the smallholders' cooperatives were unexpectedly lower than for 2012. The climate on Bangka Island is prone to mid-year dry periods which can, but do not necessarily, lead to a downturn in crops some 20 to 24 months later. There was such a dry period in 2011 which appears to have been responsible for the downturn in 2013. At the other end of the spectrum, there was exceptionally heavy rain around the end of 2013 leading to some localised flooding. Crops normally more than recover after a "down" period and, as far as can be assessed at this early stage in the year, this recovery is expected to occur in 2014/15.
The planted area at the end of 2013 amounted in total to approximately 6,000 hectares of which 4,000 related to the Group's areas and 2,000 to the smallholders' cooperatives. Although higher than the previous year, progress on planting was a little disappointing at 972 hectares in total, of which 584 related to the Group and 388 to the cooperatives. As has been referred to in the past, the Group is competing with tin-mining interests on the land. However, management is confident that the goodwill, which has clearly been engendered with local people through the creation and management of first-class oil-palm areas owned by the cooperatives, has resulted and will continue, long term, to result in strong support for the project. It should be stressed that this is a slow process but it is still expected that potentially the project will ultimately extend to some 10,000 hectares, of which 6,000 will relate to the Group and 4,000 to the smallholders.
It has been decided to proceed with the construction of the mill on the project with a view to commissioning in 2016. The exact format of the mill is currently in the process of being decided but it is likely to start off with a 45-tonne line, extendable at a later date by another 15-tonne line depending upon circumstances.
Operating costs
As areas mature, costs which hitherto had been capitalised (or added to the cost of planting) are then treated as revenue costs. In projects, such as Kalimantan and Bangka, with a young age profile and with new plantings becoming mature, significant costs become recognised in this way each year. However, as crop production increases, the fixed-cost element of the Group's costs per kilogram reduces. As foreshadowed in the 2012 annual report, there were significant cost pressures in Indonesia during 2013, particularly with regard to basic wages. These levels are determined annually by the Governments of the various individual provinces and increases reached as high as 49%, in that case in East Kalimantan. Most of the Group's workforce earn well above the minimum wage although this amount does form the basis for wage calculations and substantial increases do therefore impact on overall wage costs.
The US Dollar strengthened sharply against the Indonesian Rupiah during the year. This had the effect of reducing in US-Dollar terms those costs which are denominated in Rupiahs. The most significant such cost, and indeed the biggest single cost, is wages and salaries.
The Group determines its costs as the cost per tonne of "palm products" (palm oil plus palm kernels). Costs include virtually all costs incurred in Indonesia including depreciation and regional-head-office overheads. The overall Group cost per tonne including both the established, mature projects in Sumatra and the new project in Kalimantan was US$460 in 2013 (2012 US$ 500). The cost per tonne for the Sumatran estates was US$270 (2012 US$ 290) whilst the higher costs on the new Kalimantan project continue to fall markedly as production increases.
Environmental and social factors
The Group is committed to producing environmentally-sustainable palm oil. Pangkatan Mill is already RSPO-accredited and the Kalimantan Mill is in the process of achieving this. The two mills are also at various stages in the process of ISPO and ISCC accreditation. The Bangka project, although not yet in a position to become RSPO accredited until its mill is in operation and it is selling CPO, already adheres to the RSPO "Principles and Criteria".
Australia
The Woodlands cattle aggregation fell just short of breaking even on its cattle operations. In addition to cattle trading profits of US$ 1.41 million (2012 US$ 0.20 million), Woodlands gained income of US$ 0.52 million (2012 US$ nil) from fattening third parties' cattle for a fee per kilogram of weight gained ("agistment"). At the beginning of the year the herd consisted of 5,562 of Woodlands' own cattle; to this were added 7,349 cattle on agistment as Woodlands sold 4,872 of its own cattle, and by the year end all but 676 of the 3,837 herd on Woodlands were agisted cattle.
Total weight gained by the cattle on Woodlands, both its own herd and the agisted cattle, increased during 2013 by 45% to 1.46 million kilograms. Pleasingly, despite the well-publicised adverse weather conditions, average weight gain per cattle day for the year was 0.55 kilograms, just a little short of the 0.60 kilogram-per-day target. The cattle gained weight at a significantly-higher rate in the first half of the year, benefiting from good early rains, before the drought conditions experienced in much of Australia limited their ability to find the nutrition they needed to grow from the drying pastures.
FINANCIAL RESULTS
As a result of the above, the Group's gross profit amounted to US$24.74 million (2012 US$23.04 million).
Bearer biological-asset adjustment
The price of CPO strengthened significantly in the last quarter of 2013 and remains at a good level. This led to an increase in the 20-year average price per tonne of CPO used in the valuation of the Group's biological assets to US$ 626 (2012 US$602). This was one of two main factors behind a biological gain of US$ 9.06 million (2012 US$ 11.91 million). The other, as highlighted in the 2012 annual report, was the absence of further cost increases flowing from the drive during 2010-13 to improve field standards in the mature estates. The value of new planting added during the year contributed US$ 2.88 million (2012 US$ 3.29 million) towards the reported biological gain. Overall, the effect on profit of all the components of the bearer-biological-asset adjustment amounted to US$ 6.04 million (2012 US$ 3.26 million).
Foreign-exchange losses
The Group reported markedly-higher foreign-exchange losses in the year under review than in the previous year, with losses amounting to US$ 8.32 million (2012 loss US$ 1.76 million). This represents losses arising from a 'mark-to-market' exercise carried out at the year end which significantly reduced, in US-Dollar terms, bank balances held in Indonesian Rupiahs and amounts recoverable from the Group's smallholder co-operative schemes denominated in Indonesian Rupiahs, following the notable depreciation of the Rupiah against the US Dollar. The Group expects that, in due course, these losses will be offset by using bank balances and repayments made by the co-operatives to meet Rupiah-denominated expenses and investment outlays. In addition, there was some CPO stock on hand at the year end which likewise suffered an exchange loss due to the Rupiah's depreciation against the US Dollar. Furthermore, since foreign-exchange losses are allowable against Indonesian corporation tax liabilities, the Group's tax charge for the year is unusually low.
Associated companies
The Group's share of its associated companies' profits for the year, including the share of the Indonesian companies' biological-bearer-asset adjustments, compared with last year, was as follows:-
Post-tax Post-tax
Profit/(loss) profit/(loss)
before after
biological Biological biological
2013 bearer-asset bearer-asset bearer-asset
adjustment adjustment adjustment
US$'000 US$'000 US$'000
PT Agro Muko (36.84%) 6,949 1,661 8,610
PT Kerasaan Indonesia (38.00%) 955 62 1,017
------ ------ ------
Total Indonesia 7,904 1,723 9,627
NAPCo (34.37%) (2,429) - (2,429)
Bertam Properties (40.00%) 4,396 - 4,396
------ ------ ------
Total 9,871 1,723 11,594
====== ====== ======
Post-tax Post-tax
Profit/(loss) profit/(loss)
before after
biological Biological biological
2012 bearer-asset bearer-asset bearer-asset
adjustment adjustment adjustment
US$'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
------ ------ ------
Total Indonesia 13,261 (20) 13,241
NAPCo (34.37%) (2,012) - (2,012)
Bertam Properties (40.00%) (347) - (347)
------ ------ ------
Total 10,902 (20) 10,882
====== ====== ======
Indonesia
PT Agro Muko is entering a phase of replanting in which it is expected the crop will fall slightly. This was the case in 2013 where PT Agro Muko's own crop fell by 6% and, combined with disappointing extraction rates and lower prices, this resulted in lower revenues and profits. The Group's share of results before the bearer-biological-asset adjustment amounted to US$ 6.95 million (2012 US$ 12.02 million), a fall of 42% on the previous year. The programme of replanting of rubber areas continued in 2013, but the year did see a small increase in the volume of rubber tapped. Despite the increase in volume, PT Agro Muko's rubber profits nonetheless fell sharply due to lower rubber prices. PT Kerasaan Indonesia maintained its crop as estate management brought under control the leaf-pest attack described in the 2012 annual report. This estate's results were nevertheless lower than in the previous year due to the fall in the price of CPO. As a result of the above, the Group's combined share of the post-tax, pre-bearer-biological-asset-adjustment profit of these two associated companies in 2013 was US$ 7.90 million, 40% lower than the US$ 13.26 million recorded in 2012.
The Group's share of the post-tax, post-biological-bearer-asset-adjustment profit of the Indonesian associates amounted to US$ 9.63 million (2011 US$ 13.24 million), a reduction of some 27%. The Group received gross dividends of US$ 5.16 million from PT Agro Muko in 2013 (2012 US$ 9.21 million, gross). Gross dividends from PT Kerasaan Indonesia were US$ 0.57 million (2012 US$ 1.03 million, gross).
Crops and production
Increase/
2013 (decrease) 2012
Tonnes % Tonnes
F.f.b. crops
PT Agro Muko
- own 345,800 (6) 367,400
- outgrowers 8,600 - 8,600
------- -------
354,400 (6) 376,000
- PT Kerasaan Indonesia 41,200 - 41,200
------- -------
395,600 (5) 417,200
======= ==== =======
Production (PT Agro Muko)
- crude palm oil 79,700 (8) 87,100
- palm kernels 18,400 (7) 19,700
======= ==== =======
% %
Extraction rates
- crude palm oil 22.5 23.2
- palm kernels 5.2 5.2
======= =======
Tonnes Tonnes
Rubber crops
PT Agro Muko - own 1,440 7 1,340
======= ==== =======
Australia
The severe drought which affected much of Australia during 2013 adversely affected NAPCo's operations and results. It was possible substantially to maintain the breeding herd by using the capacity of the recently-expanded Wainui feedlot to absorb young "weaner" cattle earlier than they would normally be admitted, although overall herd numbers fell by a little under 10,000 head. Increasingly dry conditions resulted in modest weight gains and, in addition to the slight fall in herd size, this led to another significant reduction in the year-end valuation of NAPCo's herd. As a result of this, the Group's share of NAPCo's loss in 2013 amounted to US$ 2.43 million (2012 US$ 2.01 million). The Group's share of NAPCo's gross dividends amounted to US$ 0.55 million (2012 US$ 0.93 million gross).
Malaysia
Partially-completed development-property sales that were not brought to book in 2012 under the accounting standard IFRIC 15 are reflected in the 2013 results of Bertam Properties. Property-development revenue increased from RM 5.15 million in 2012 to RM 144.77 million in 2013, generating a profit after tax of RM 35.34 million (2012 loss RM 4.58 million). In US-Dollar terms, the Group's share of this profit was US$ 4.49 million (2012 loss US$ 0.59 million). Overall, the Group's share of Bertam Properties' profit for the year amounted to US$ 4.40 million (2012 loss US$ 0.35 million). The Group's share of Bertam Properties' dividends amounted to US$ 3.49 million (2012 US$ 2.59 million).
Profit for the year
As a result of all the above, the Group profit for the year amounted to US$ 22.87 million, an increase of US$ 1.32 million (6%) compared with the US$ 21.55 million reported for 2012. This rise in reported profit led to an increase of 11% in basic earnings per share to US cents 35.96 (2012 US cents 32.51).
CURRENT TRADING AND PROSPECTS
F.f.b. crops harvested on the majority-owned estates amounted to 88,400 tonnes for the first three months of 2014 compared with 78,700 tonnes for the same period last year. The rising trend on the two new projects continued with 18,300 tonnes harvested, 13% higher than the 16,200 tonnes recorded in the same period in 2013. This was despite a short period of acute flooding experienced in Kalimantan in the early part of the year. As expected, the crop on the established Sumatran estates at 43,000 tonnes was similar to the 42,500 tonnes for the same period in 2013. Although it is too early in the year to determine with precision what the crop for the whole year will be, the board's current estimate is that the outturn will be approximately 425,000 tonnes. If this is achieved, the Group will remain broadly on track to reach its target of 500,000 tonnes in 2015. Crops will continue to rise substantially after 2015 but the level will at least partly depend upon the future rate of plantings. F.f.b. crops from the associated companies were a little higher than for the same period last year.
With world stocks having fallen substantially by the end of 2013 and with the prospect of significant usage of palm oil for bio diesel in Indonesia, the palm-oil price strengthened in the first part of 2014 and is currently trading at around US$ 900/tonne (Rotterdam c.i.f.). These positive factors supporting the price are limited to some extent by the unusually large areas of soybeans that have been planted in the current season in South America.
Significant rainfall both on Woodlands and across most of the NAPCo properties represent a welcome relief to the extremely dry conditions suffered in 2013. Australian beef-cattle prices have recently increased, partly in response to the rainfall and partly as export demands continue to grow, especially in Asia, helped by the weakening of the Australian Dollar. As with palm oil, price prospects appear favourable.
RETIREMENT OF DIRECTOR
Konrad Legg has elected to retire as a director at the forthcoming annual general meeting. He has served with distinction on this and other Group boards since the 1970's, bringing his extensive agribusiness experience to bear on the board's deliberations. Notwithstanding his unusual length of service, he has retained his independent approach throughout and proved time and again to be an invaluable contributor. I am sure that shareholders will join me in thanking him and wishing him well for the future.
Peter Hadsley-Chaplin
Chairman
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2013
Result before Year
biological Biological ended
bearer-asset bearer-asset 31 December
adjustment adjustment 2013
US$'000 US$'000 US$'000
Revenue 82,186 - 82,186
Cost of sales (60,749) 3,298 (57,451)
------ ------ ------
Gross profit 21,437 3,298 24,735
Gain on biological
assets (note 4) - 9,059 9,059
Planting expenditure - (6,265) (6,265)
Foreign-exchange (losses)/gains (8,322) - (8,322)
Other administrative expenses (4,444) - (4,444)
Other income 8 - 8
------ ------ ------
Operating profit 8,679 6,092 14,771
Finance income 972 - 972
Finance costs (3,121) (399) (3,520)
------ ------ ------
Group-controlled profit
before tax 6,530 5,693 12,223
Tax on profit on ordinary
activities (note 2) 435 (1,381) (946)
------ ------ ------
Group-controlled profit
after tax 6,965 4,312 11,277
Share of associated companies'
profit after tax 9,871 1,723 11,594
------ ------ ------
Profit for the year 16,836 6,035 22,871
====== ====== ======
Attributable to:
Owners of M.P. Evans Group PLC 14,438 5,315 19,753
Non-controlling interests 2,398 720 3,118
------ ------ ------
16,836 6,035 22,871
====== ====== ======
(US cents) (US cents)
Basic earnings per 10p share 26.28 35.96
===== ======
(US cents) (US cents)
Diluted earnings per 10p share 26.24 35.90
===== ======
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2012
Result before Year
biological Biological ended
bearer-asset bearer-asset 31 December
adjustment adjustment 2012
US$'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 (note 4) - 11,907 11,907
Planting expenditure - (9,784) (9,784)
Foreign-exchange (losses)/gains (1,761) - (1,761)
Other administrative expenses (4,292) - (4,292)
Other income 17 - 17
------ ------ ------
Operating profit 14,284 4,838 19,122
Finance income 1,338 - 1,338
Finance costs (3,437) (323) (3,760)
------ ------ ------
Group-controlled profit
before tax 12,185 4,515 16,700
Tax on profit on ordinary
activities (note 2) (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 year 18,296 3,256 21,552
====== ====== ======
Attributable to:
Owners of M.P. Evans Group PLC 15,070 2,615 17,685
Non-controlling 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
===== ======
(US cents) (US cents)
Diluted earnings per 10p share 27.65 32.44
===== ======
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2013
2013 2012
US$'000 US$'000
Other comprehensive (expense)/income
Previously unrealised profit on sale of land
to associated undertaking released to the
consolidated income statement on sale of
that land by the associate (323) (137)
Exchange differences on translation of
foreign operations (11,785) 295
Other comprehensive expense 806 (192)
------ ------
Other comprehensive expense(net of
tax) for the year (11,302) (34)
Profit for the year 22,871 21,552
------ ------
Total comprehensive income 11,569 21,518
====== ======
Attributable to:
Owners of M.P. Evans Group PLC 8,327 17,651
Non-controlling interests 3,242 3,867
------ ------
11,569 21,518
====== ======
CONSOLIDATED BALANCE SHEET
at 31 December 2013
Before
biological Biological
bearer-asset bearer-asset 31 December
adjustment adjustment 2013
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets - 148,394 148,394
Property, plant and equipment 185,471 (76,152) 109,319
Investments in associates 95,521 27,335 122,856
Investments 102 - 102
Deferred-tax asset 14,996 - 14,996
------- ------- -------
297,247 99,577 396,824
------- ------- -------
Current assets
Biological assets 594 - 594
Inventories 8,267 (277) 7,990
Trade and other receivables 12,345 - 12,345
Current-tax asset 2,201 - 2,201
Cash and cash equivalents 56,348 - 56,348
------- ------- -------
79,755 (277) 79,478
------- ------- -------
Total assets 377,002 99,300 476,302
======= ======= =======
Current liabilities
Borrowings 31,710 - 31,710
Trade and other payables 10,311 - 10,311
Current-tax liability 4,313 - 4,313
------- ------- -------
46,334 - 46,334
------- ------- -------
Net current assets 33,421 (277) 33,144
------- ------- -------
Non-current liabilities
Borrowings 34,780 - 34,780
Deferred-tax liability 2,903 18,060 20,963
Retirement-benefit obligations 2,933 - 2,933
------- ------- -------
40,616 18,060 58,676
------- ------- -------
Total liabilities 86,950 18,060 105,010
======= ======= =======
Net assets 290,052 81,240 371,292
======= ======= =======
Equity
Share capital 9,253 - 9,253
Other reserves 75,212 27,336 102,548
Retained earnings 189,626 45,764 235,390
------- ------- -------
Equity attributable to the owners
of M.P. Evans Group PLC 274,091 73,100 347,191
Minority interests 15,961 8,140 24,101
------- ------- -------
Total equity 290,052 81,240 371,292
======= ======= =======
CONSOLIDATED BALANCE SHEET
at 31 December 2012
Before
biological Biological
bearer-asset bearer-asset 31 December
adjustment adjustment 2012
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets - 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 liability 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 9,227 - 9,227
Other reserves 83,133 25,613 108,746
Retained earnings 191,734 41,376 233,110
------- ------- -------
Equity attributable to the owners
of M.P. Evans Group PLC 284,094 66,989 351,083
Non-controlling interests 13,589 8,216 21,805
------- ------- -------
Total equity 297,683 75,205 372,888
======= ======= =======
CONSOLIDATED CASH-FLOW STATEMENT
for the year ended 31 December 2013
Year ended Year ended
31 December 31 December
2013 2012
US$'000 US$'000
Net cash generated by operating activities 19,494 33,897
------ ------
Investing activities
Interest received 972 1,338
Proceeds on disposal of assets 358 239
Purchase of property, plant and equipment (12,261) (18,540)
Purchase of shares from minority (7,100) -
Sale of shares to minority 498 -
Planting expenditure (6,265) (9,784)
------ ------
Net cash used by investing activities (23,798) (26,747)
------ ------
Financing activities
Dividends paid to Company shareholders (5,964) (6,151)
Repayment of borrowings (2,318) (1,323)
Proceeds on issue of shares 131 1,586
Dividend paid to non-controlling interests (896) -
Loan drawdown 6,800 310
------ ------
Net cash used by financing activities (2,247) (5,578)
------ ------
Net (decrease)/increase in cash
and cash equivalents (6,551) 1,572
Net cash and cash equivalents 1 January 29,299 27,500
Effect of foreign-exchange rates on
cash and cash equivalents 1,890 227
------ ------
Net cash and cash equivalents at 31 December 24,638 29,299
====== ======
NOTES
1. Dividends paid and proposed
2013 2012
US$'000 US$'000
2013 interim dividend - 2.25p per 10p share
(2012 interim dividend - 2.25p) 1,991 1,985
2012 final dividend - 5.75p per 10p share
(2011 final dividend - 5.75p) 4,796 4,877
------ ------
6,787 6,862
====== ======
Following the year end the board has proposed a final dividend for 2013 of 6.00p per 10p share amounting to US$4.89 million. Shareholders will again have the option to elect to receive the dividend in shares rather than in cash. The calculation period will be 23 April to 29 April 2014. The dividend will be paid on or after 19 June 2014 to those shareholders on the register at the close of business on 25 April 2014, as follows:
2013 2012
Ex-dividend date 23 April 2014 24 April 2013
Record date 25 April 2014 26 April 2013
Final date for receipt of election
instruction 29 May 2014 30 May 2013
Definitive share certificates posted 18 June 2014 19 June 2013
First day of dealing in the new shares 19 June 2014 20 June 2013
Dividend payable on or after 19 June 2014 20 June 2013
2. Tax on profit on ordinary activities
2013 2012
US$'000 US$'000
United Kingdom corporation-tax charge
for the year 384 370
Relief for overseas taxation (384) (370)
------ ------
- -
Overseas taxation 10,881 8,821
Adjustments in respect of prior years 18 (5)
------ ------
Total current tax 10,899 8,816
Deferred taxation - origination and reversal
Of temporary differences (9,953) (2,786)
------ ------
946 6,030
------ ------
3. Basic and diluted earnings per share
The calculation of earnings per 10p share is based on:-
2013 2013 2012 2012
US$'000 Number of US$'000 Number of
shares shares
Profit for the year
attributable to the owners
of M.P. Evans Group PLC 19,753 17,685
====== ======
Average number of shares
in issue 54,936,947 54,406,455
Diluted average number of
shares in issue* 55,025,655 54,509,339
========== ==========
* The difference between the number of shares in issue and the diluted number of shares relates to unexercised share options held by directors and key employees of the Group.
4. Biological assets
Non-current biological assets comprise plantation bearer assets. The Group values these 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 crop (oil-palm fresh fruit bunches) is taken to be the 20-year average based on historical 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 the best estimate of the prices to be achieved over the valuation period.
In the balance sheet, the adjustment column shows that the recognition of the biological-asset valuation replaces depreciated-historical-planting costs of US$76.15 million (2012 US$72.62 million) which, prior to the adoption of IFRS, were included in the carrying value of property, plant and equipment. These costs are now replaced by the biological bearer-asset adjustment which, including the Group's share of the asset recognised by associates, together with the related deferred tax, amounts to US$ 157.39 million (2012 US$147.82 million).
5. Financial information
The information in this preliminary results announcement has been prepared on the basis of the accounting policies which have been set out in the Group accounts for the year ended 31 December 2012 and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. No standards or amendments to existing standards adopted with effect from 1 January 2013 have had a material impact on the Group. Full accounts of M.P. Evans Group PLC for the year ended 31 December 2012, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under section 498(2) or (3) of the Companies Act 2006.
The statutory accounts for the year ended 31 December 2013 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement. The auditors anticipate issuing an unmodified opinion.
6. International Financial Reporting Standards
This announcement is based on the Group's financial statements which are being prepared in accordance with International Financial Reporting Standards ("IFRS"), as adopted for use in the EU.
Whilst the financial information included in this announcement has been prepared in accordance with the recognition and measurement criteria of IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Group expects to publish full financial statements that comply with IFRS on or after 25 April 2014.
7. Timetable
The report and financial statements will be available on the Group's website on or after 25 April 2014 and despatched to shareholders shortly thereafter. The annual general meeting will be held on 5 June 2014.
8. Distribution
Copies of the full report and financial statements for the year ended 31 December 2013 will be available from the Company, 3 Clanricarde Gardens, Tunbridge Wells, Kent TN1 1HQ.
By order of the board
Mrs Claire Hayes
Secretary
14 April 2014
This information is provided by RNS
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