Annual Financial Report
M.P. Evans Group PLC advises that the following replaces the Annual Financial Report announcement released 14 April 2015 at 7:00 a.m. under RNS number: 0712K and now corrects the proposed final dividend amount payable as set out in Note 1 to the accounts. All other details remain unchanged. The full amended text appears below.
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 2014.
Highlights
Financial
* Profit for the year increased by 62% to US$ 37.1 million (2013
US$22.9 million)
* Earnings per share US cents 61.0 (2013 US cents 36.0 cents)
* Total dividend per share for the year increased by 0.50 pence to
8.75 pence (2.25 pence interim already paid)
Indonesian palm oil
* Plantation profits 44% higher at US$ 35.8 million (2013 US$24.8 million)
* Indonesian f.f.b. crops 12% higher than in 2013 as crops increased
40% on Kalimantan and 24% on Bangka project and were 7% lower on
established estates
* Palm-oil price averaged US$821 per tonne (2013 US$856 per tonne);
currently around US$650 per tonne
* 2,200 hectares compensated at year end on the new Musi Rawas project
in South Sumatra; planting commenced in late 2014
* Group's crops projected to continue rising strongly in future years
Australian beef cattle
* NAPCo made profits after 2013 loss as cattle prices strengthened
markedly
* Woodlands made small profit as cattle price strengthened though
weight gain fell
* Good rainfall received in 2015 - cattle prices have remained firm
Malaysian property
* Reduced profits by Bertam Properties as completed sales comprised lower-value properties
Commenting on the results, Peter Hadsley-Chaplin, executive chairman of MP Evans, said:
"It is pleasing to report that the Group's overall profit for the year, US$37.1 million, was 62% higher than 2013's US$22.9 million. The continuing upward trend of f.f.b. crops on the new projects, excellent extraction rates and the beneficial effect on costs of the weakening of the Indonesian Rupiah resulted in a significant improvement in plantation profits. The cattle operations benefited from markedly improved prices. Cattle prices have remained firm so far in 2015 but palm-oil prices, having weakened sharply in the last quarter of 2014, have not, to date, shown any significant improvement. Nonetheless, healthy profit margins are still achievable."
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
Katie Matthews
Bertie Berger
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 board is pleased to report that the profit for the year increased by 62% to US$37.1 million, compared with US$22.9 million in 2013. Earnings per share rose accordingly by 70% to US cents 61.0 (2013 US cents 36.0 cents).
The markedly-improved profit was achieved largely as a result of a 12% increase in the Group's Indonesian crops of oil palm fresh fruit bunches ("f.f.b."), to 385,400 tonnes, despite a 4% decline in the average palm-oil price to US$ 821 per tonne in 2014 compared with 2013. The higher crop level was mainly attributable to a significant increase from the Group's two new projects in East Kalimantan and on Bangka Island. The profits of the Group's two associated oil-palm companies were similar to last year.
In Australia, a small profit was recorded at Woodlands, compared with a small loss last year, while similarly, at The North Australian Pastoral Company Pty Limited ("NAPCo"), last year's loss was turned round to a profit. This resulted from a sharp increase in cattle prices, especially for the heavier, export-orientated cattle produced by NAPCo. With regard to the Group's Malaysian property-development activities, the Group's share of the profit achieved by Bertam Properties Sdn. Berhad declined following a lower average value of completed property sales. Overall, chiefly because of the substantially-improved result at NAPCo, the Group's share of its associated companies' profits increased by 23%.
DIVIDEND
Taking account of the increased profit, the board is recommending a final dividend for the year of 6.50p per share, a 0.50p per share increase compared with the 6.00p per share in respect of 2013. Together with the interim dividend of 2.25p per share paid in November 2014 (the same as the interim dividend paid in November 2013), the total dividend for the year is therefore 8.75p per share. A scrip-dividend alternative is again being offered (provided that resolution 11 is passed at the annual general meeting).
STRATEGY
The Group's 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.
Indonesia
The total planted area of the Group's majority-held Indonesian operations extends to approximately 24,100 hectares, 910 of which were planted on its new projects during 2014. The planted smallholder areas adjoining the new projects amount to 6,300 hectares, 320 of which were planted in 2014. The estimated unplanted land bank is some 9,000 hectares, including the new Musi Rawas project, on the Group's estates and some 5,100 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 Group will also seek continually to maintain and, where possible, improve agronomic standards and productivity on its estates leading, ideally, to increased crops of f.f.b. and, where relevant, production of crude palm oil ("CPO"). Furthermore, the Group will continue to work closely with its joint-venture partner, SA SIPEF NV ("SIPEF"), with regard to the two associated estates which SIPEF manages, to ensure that the highest standards are maintained.
Australia
In Australia, on the Group's beef-cattle property, Woodlands, it is aimed to maximise the kilograms of beef produced. Productivity has been, and, where appropriate, will continue to be, improved through the enhancement of waters and fencing and the upgrading of paddocks. Notwithstanding the continued improvement measures in place at Woodlands, it remains the board's intention to dispose of this property as and when suitable terms are agreed. 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. These measures have 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. In addition, over the past quarter century substantial improvements have been made to the genetic characteristics of the herd and the strategy is for this programme to continue.
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 without a sale in late 2013. The Group's board will continue to consider any opportunities that arise in relation to its holding.
Malaysia
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 from Malaysia entirely.
Palm-oil and beef-cattle markets
Average palm-oil prices (Rotterdam cif) were 4% lower in 2014 at US$821 per tonne, compared with US$856 in 2013. Downward pressure on the price primarily related to the significant increase in the production of oilseeds, particularly soybeans, in the year. Of the major oils, the price of palm oil remained the firmest with the normal discount to soybean oil narrowing to below US$100 per tonne, compared with the average in recent years of over US$150.
Palm-oil prices remained relatively strong in the first quarter of 2014 as dry weather in the main producing countries, Indonesia and Malaysia, and the prospect of El-Niño conditions later in the year (which did not materialise) reduced crop expectations. The early dry period did indeed affect crops later in the year and world supply (opening stocks plus production) increased considerably more slowly than in 2013.
Early price firmness was also helped by the Indonesian Government's plans to boost bio-diesel admixture to 10%. However, the dramatic fall in the mineral-oil price in the second half of the year resulted in palm oil becoming uneconomic for this purpose and so blending and exports reduced significantly. Palm-oil prices fell accordingly.
Palm-oil use by the major buyers, India, China and the EU, stagnated or fell in 2014 and world consumption increased (1.5 million tonnes) less than in previous years (2013-5.2 million tonnes). Indonesia became the world's biggest palm-oil user.
Palm-kernel-oil prices followed palm-oil prices and weakened in the latter part of the year, although not to the same extent. The fall in coconut-oil production (a lauric oil like palm-kernel oil) in the Philippines following Typhoon Haiyan in 2013 was still having some effect in supporting lauric-oil prices in 2014.
Prices for both the lighter-weight cattle produced by Woodlands and the heavier, grain-finished cattle produced by NAPCo broadly rose during the course of 2014. The continuing decline in the value of the Australian Dollar boosted export demand, especially from Asia, which impacted positively on prices, particularly towards the year end. Higher-than-usual slaughter rates in Australia, owing to the continuing drought, led to record volumes, at record prices, of both beef and live-cattle exports from Australia during the year.
REVIEW OF OPERATIONS
Indonesia
Majority-owned estates
Crops and production
The overall Group f.f.b. crop of 385,400 tonnes was 12% higher than the 344,200 tonnes recorded for 2013. As referred to in the 2014 interim report, the original crop estimate for the year of 425,000 tonnes had to be revised downwards mid-year to 385,000 tonnes, which was indeed achieved, as a result of an acute dry period experienced in the early part of the year. The dry period particularly affected the estates in North Sumatra and Bangka. However, notwithstanding this temporary setback, the Group's overall upward trend of crops continued and, in the circumstances, it is still pleasing to report a 12% increase, primarily derived from the Kalimantan project. Oil-extraction rates continued at most satisfactory levels in 2014 with the Kalimatan mill achieving an increase to the commendable level of 25.6%.
Details of crops, production and extraction rates for 2014, with comparative figures for 2013, are set out below:-
Crops and production
2014 Increase 2013
Tonnes % Tonnes
Crops
Own crops
- Pangkatan group 140,400 148,800
- Simpang Kiri 42,100 46,600
------- -------
182,500 (7) 195,400
- Kalimantan 160,200 40 114,500
- Bangka 42,700 24 34,300
------- -------
385,400 12 344,200
======= ===== =======
Smallholder co-operative crops
- Kalimantan 64,500 52 42,400
- Bangka 22,200 21 18,300
------- -------
86,700 43 60,700
======= ===== =======
Outside crop purchased
- Kalimantan 15,600 55 34,400
======= ===== =======
Production
Crude palm oil
- Kalimantan 61,500 47,400
- Pangkatan 33,500 35,500
------- -------
95,000 15 82,900
======= ===== =======
Palm kernels
- Kalimantan 10,100 7,800
- Pangkatan 8,300 8,600
------- -------
18,400 12 16,400
======= ===== =======
% %
Extraction rate
Crude palm oil
- Kalimantan 25.6 24.8
- Pangkatan 23.9 23.9
======= =======
Palm kernels
- Kalimantan 4.2 4.1
- Pangkatan 5.9 5.8
======= =======
Sumatra - established estates
The four established estates in Sumatra continue to operate well. As anticipated in the 2014 interim report, the unusually dry months in the early part of 2014 impacted negatively on the f.f.b. crop in the second half of the year. The crop for the second half was similar to that in the first, whereas in more normal years it would be markedly higher than in the first half.
As has been referred to in previous annual reports, two of the estates, Bilah and Simpang Kiri, were established as new projects in the early 1980's. The programme for replanting their earlier plantings, in which the yields are falling, is under way. This programme will continue for the next seven or eight years and the yields are expected to remain, in total, at around current levels until the new replantings mature and yields start to accelerate. During 2014, 136 hectares were replanted on Bilah Estate, 60 hectares on Sennah Estate and 109 hectares on Simpang Kiri Estate, totalling 305 hectares. Over the next few years, the programme is to replant between 350 and 600 hectares each year.
The oil-extraction rate achieved by Pangkatan Mill (which processes the f.f.b. from Pangkatan, Bilah and Sennah Estates) continued during 2014 at the very acceptable average rate of 23.9%. The essential close coordination between mill and field management ensured that fruit of the optimum quality and ripeness is delivered to the mill for processing. High engineering standards required in the mill were sustained, achieving good extraction rates and oil quality and minimum oil losses.
Consideration is still being given by management to capturing methane from Pangkatan Mill's effluent pond, "scrubbing" it, burning it in a gas engine and selling the resultant electricity to the government electricity board ("PLN"). This project will only progress if acceptable terms can be negotiated with PLN.
During 2014, Pangkatan Mill received International Sustainability and Carbon Certification ("ISCC"). The mill is already accredited by the international Round Table on Sustainable Palm Oil ("RSPO") and as Indonesian Sustainable Palm Oil ("ISPO"). The annual RSPO "surveillance" audit was successfully completed in 2014. During the year, credits for both CPO and palm kernels were sold through a marketing platform with those for palm-kernel oil (and therefore palm kernels) being particularly robust following the devastating effects on Philippine coconut plantations (like palm-kernel oil, coconut oil is a lauric oil) of Typhoon Haiyan. Premia were also received from buyers for accredited CPO and also for good-quality CPO with low percentages of free fatty acid ("f.f.a.")
Sumatra - Musi Rawas project
Modest progress was made during 2014 on the Musi Rawas project in South Sumatra. Local elections were held in the area of the project and it was felt prudent to suspend land-compensation negotiations until the elections were over. Towards the end of 2014, these negotiations re-started and, as at the end of the year, some 2,200 hectares had been compensated. Planting commenced at the end of the year with just under 100 hectares in the ground at the year end. An experienced management team is in place and the nursery is now well established, ready for the planting programme which is under way.
The board currently estimates that some 10,000 hectares might ultimately be plantable although it is very difficult at this early stage to be certain what will transpire. As has been said before, 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 the smallholders' co-operatives. The members of the co-operatives will be those who have agreed to sell their rights to the land to the Group.
Kalimantan
The 40% increase in the f.f.b. crop to 160,200 tonnes in 2014, compared with the 114,500 tonnes recorded in 2013, continues the expected upward trend from this young project. The f.f.b. purchased from the associated co-operative schemes increased similarly.
Planting progressed at modest levels during 2014 as the project nears completion. At the end of 2014, some 13,940 hectares had been planted of which 9,780 hectares relate to the Group and 4,160 hectares to the smallholders' co-operatives. The board's estimation remains that, ultimately, some 15,000 hectares will be planted of which 10,600 hectares will relate to the Group. The unplanted balance is largely low-lying, flood-prone land which, it is intended, will be protected from flooding by the construction of bunds and the installation of powerful pumps. Preliminary work has already commenced and official clearances and permissions are currently being sought from the authorities for the project. It is hoped that, once these have been received, work proper will commence during 2015 and is expected to extend into 2016. It is anticipated that approximately 950 hectares will be able to be flood-protected and yields from these areas are expected to be high. In addition, there are 900 hectares that have already been planted but which are susceptible to regular flooding. These areas will be protected by the new bunds and yields are expected to improve markedly as a result.
The CPO mill continued to improve its oil-extraction rate and it is pleasing to report that an outstanding average rate of 25.6% was achieved in 2014. Close coordination between mill and field management was maintained during the year and high engineering standards were achieved.
During 2014, the Kalimantan mill was accredited by RSPO. The ISPO and ISCC audit process got under way in 2014 and accreditation is expected to be completed in 2015.
Bangka
The 24% increase in the f.f.b. crop to 42,700 tonnes in 2014, compared with the 34,300 tonnes recorded in 2013, continues the upward trend from this young project after the setback experienced in 2013. The unexpected downturn in that year was caused by adverse weather but a further two dry spells in 2014 also negatively impacted on the 2014 crop in the latter part of the year, although not to the extent experienced in 2013. Bangka Island normally has a dry period in the middle of the year but a virtual absence of rainfall in February and March 2014 resulted in the crop in the last quarter falling off markedly. Rat damage to the fruit on the palms, which occurs in dry periods as the rats seek moisture, also negatively impacted the f.f.b. crop.
The planted area at the end of 2014 amounted to 6,880 hectares in total of which 4,730 related to the Group and 2,150 to the smallholders' co-operatives. Planting progress was relatively modest during the year, amounting to 820 hectares in total, of which 640 related to the Group and 180 to the co-operatives. Dealings with competing tin-mining interests continued to be very time consuming but it is encouraging that progress, albeit slow, continues to be made and it remains the board's view that ultimately 10,000 hectares will be planted, of which 6,000 will relate to the Group and 4,000 to the co-operatives.
Good progress has been made with the mill. A tender process has been completed and contracts awarded. Work on the ground will start shortly and commissioning of the mill is expected to take place in mid-2016 at an estimated cost of approximately US$13 million. The mill will initially be rated at 45-tonne per hour expandable by another 15 tonnes at a later date. Methane will be captured from the liquid effluent, "scrubbed" and then burnt in a gas engine, producing power for the project. Surplus electricity will be generated and it is hoped that acceptable terms can be agreed with the government electricity board, PLN, to sell it into the grid.
The f.f.b. harvested on the Bangka project is currently sold under contract to nearby mills. When the Group's own mill is in operation the sale of CPO and palm kernels, less the manufacturing costs, will be more profitable than selling f.f.b. to third-party mills.
Operating costs
Increased throughput at the Group's Kalimantan mill has, as expected, reduced the unit costs of producing palm products (CPO and palm kernels). This benign volume effect was strengthened by the weakness of the Indonesian Rupiah against the US Dollar which had the effect of reducing, in US Dollar terms, operating costs incurred in local currency. The Group's two mills and supplying estates now have a combined operating cost of US$ 370 per tonne of palm products ("CPO and palm kernels").
Environmental and social factors
The Group is committed to producing environmentally-sustainable palm oil. The Kalimantan and Pangkatan Mills are already RSPO-accredited. Pangkatan Mill is also ISPO and ISCC accredited whilst the Kalimantan mill is in the process of applying for 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
Woodlands
As referred to in the interim report, negotiations are still in progress regarding the sale of Woodlands but the property continues to be operated on a 'business-as-usual' basis until a sale is concluded. Income from cattle trading, at US$2.1 million, was markedly higher than the US$1.4 million reported for 2013, though income from fattening third parties' cattle for a fee per kilogram of weight gained (agistment) fell slightly from US$0.5 million to US$0.3 million. Given the improving prospects for the beef market, the board took the view that it should stock Woodlands with its own herd, and so cattle on agistment were replaced with cattle purchased on Woodlands' own account. By the end of the year, the 5,600 cattle on the property at the beginning of the year had either been sold or returned to their third-party owners. In their place, 5,500 young cattle were purchased and grazed on Woodlands' pastures.
At the year end, the value of the herd reflected the significant increase in the price for beef cattle reported above, contributing to the much-improved cattle-trading result. Good rains were received early in the year but were not followed up by meaningful volumes of moisture, leading to another difficult season after the drought experienced in 2013. In addition, for much of the year, Woodlands' own herd was comprised of older animals that gain weight more slowly than young animals. As a result, it was not possible to sustain the only modestly-reduced pace of weight gain achieved in the early months of the year and, overall, weight gain for the year fell to the low level of 0.22 kg per cattle day (2013 - 0.55 kg per cattle day). Hence, poor weight gain went some way to erasing the benefit of higher beef-cattle prices so, in total, Woodlands made a profit in the year under review of US$ 0.2 million (2013 loss of US$0.1 million).
As a result of the above, the Group's gross profit amounted to US$ 35.9 million (2013 US$ 24.7 million).
Bearer-biological-asset adjustment
Whilst, as widely documented in this report, the price of CPO fell during 2014, the 20-year average price of CPO used to value the Group's biological assets nevertheless rose to US$ 641 (2013 US$ 626). This was the principal factor leading to a biological gain of US$ 15.1 million (2013 US$ 9.1 million), supported by a reduction in unit costs partly arising from a weaker Indonesian Rupiah. The value of new plantings contributed US$ 2.9 million towards the reported biological gain (2013 US$ 2.9 million). Overall, the net effect on profit of all the components of the bearer-biological-asset adjustment amounted to US$ 8.4 million (2013 US$ 6.0 million).
Following an amendment to International Accounting Standard 41: Biological Assets issued by the International Accounting Standards Board in June 2014, the Group intends to account for its plantings under International Accounting Standard 16: Property, Plant and Equipment. Hence, as from 1 January 2015 the Group will measure its planting at depreciated cost rather than as a 'biological asset' determined using a valuation model based on discounted cash flow. This future measure is shown in the column of the income statement and balance sheet in this annual report described as '(Result) before bearer-biological-asset adjustment'.
Associated companies
The Group's share of its associated companies' profits, 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
2014 bearer-asset bearer-asset bearer-asset
adjustment adjustment adjustment
US$'000 US$'000 US$'000
PT Agro Muko (36.84%) 9,856 (1,013) 8,843
PT Kerasaan Indonesia (38.00%) 1,093 (39) 1,054
------ ------ ------
Total Indonesia 10,949 (1,052) 9,897
NAPCo (34.37%) 1,454 - 1,454
Bertam Properties (40.00%) 2,905 - 2,905
------ ------ ------
Total 15,308 (1,052) 14,256
====== ====== ======
Post-tax Post-tax
Profit/(loss) profit/(loss)
before after
biological Biological biological
2013 bearer-asset bearer-asset bearer-asset
adjustment adjustment adjustment
US$'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
====== ====== ======
Indonesia
As foreshadowed in the 2013 annual report, PT Agro Muko ("Agro Muko") has entered a period of replanting during which it is projected that its crop will fall slightly, though there was only a marginal drop in 2014's crop compared with 2013 as the average yield rose slightly across a smaller mature hectarage. The modest oil-extraction rate of 22.5% seen in 2013 was repeated in 2014 and so production of CPO in 2014 was only fractionally below that in 2013. Against this background, Agro Muko was able to achieve significantly higher prices in 2014 than in 2013, partly as a result of achieving a good premium for its RSPO-certified oil and partly from its export sales which are sold for physical delivery up to three months forward. This, together with stronger prices for palm kernels, produced a 17% increase in revenue. By contrast, rubber production increased as the areas that have been replanted over recent years mature, though a 26% fall in prices led to a fall in rubber profits. The Group's share of results before the biological-bearer-asset adjustment amounted to US$ 9.9 million (2013 US$ 6.9 million). The crop, and results, of PT Kerasaan Indonesia ("Kerasaan") were very similar to those in 2013. As a result of the above, the Group's combined share of the post-tax, pre-biological-bearer-asset adjustment profit of these two associated companies in 2014 was US$ 10.9 million, an improvement of US$ 3.0 million (39%) on the US$ 7.9 million recorded in 2013.
The Group's share of the post-biological-bearer-asset-adjustment, post-tax profit of the Indonesian associates amounted to US$ 9.9 million (2013 US$ 9.6 million). The Group received gross dividends of US$ 9.2 million from Agro Muko in 2014 (2013 US$ 5.2 million, gross). Gross dividends from Kerasaan were US$ 0.9 million (2013 US$ 0.6 million, gross).
Details of crops, production and extraction rates for 2014, with comparative figures for 2013, are set out below:-
Crops and production
Increase/
2014 (decrease) 2013
Tonnes % Tonnes
F.f.b. crops
PT Agro Muko
- own 344,900 - 345,800
- outgrowers 8,500 (1) 8,600
------- -------
353,400 - 354,400
- PT Kerasaan Indonesia 42,000 2 41,200
------- -------
395,400 - 395,600
======= ==== =======
Production (PT Agro Muko)
- crude palm oil 79,400 - 79,700
- palm kernels 18,500 1 18,400
======= ==== =======
% %
Extraction rates
- crude palm oil 22.5 22.5
- palm kernels 5.2 5.2
======= =======
Tonnes Tonnes
Rubber crops
PT Agro Muko - own 1,520 6 1,440
======= ==== =======
Australia
Following a severe drought in 2013, difficult conditions persisted across much of eastern Australia during 2014 despite which NAPCo was able to report sales revenue slightly higher than for 2013. Prices for all NAPCo's cattle increased steadily throughout the year and NAPCo worked hard to maintain its herd though, at the year end, numbers had nonetheless fallen by 5%, or 10,000 head (2013 - 9,500 head). This was largely due to lower brandings resulting from the poor seasonal conditions. Adverse conditions also affected revenue since cattle were slower to achieve required sales weights. Slower weight gain led to a 9% fall in the number of animals sold, offsetting to some degree the general rise in cattle prices that produced a significant increase in the year-end valuation of the herd, itself central to the much-improved result reported by NAPCo. NAPCo's expanded feedlot at Wainui was beneficially put to full use in mitigating the effects of the indifferent conditions though leading to higher costs as feedlot rations were increased at a time of high grain prices. As a result of all these factors, the Group's share of NAPCo's profit amounted to US$1.5 million (2013 loss of US$2.4 million). The Group's share of NAPCo's gross dividends was US$0.4 million (2013 US$0.6 million, gross).
Malaysia
Property-development revenue fell during 2014 to US$36.5 million compared with the US$46.0 million reported in 2013, generating a profit after tax of US$7.7 million (2013 US$11.2 million). Bertam Properties increased its completed sales of developed properties to over 1,000 units during the year compared with some 500 in 2013. The sales in the current year were, however, mostly at the lower end of the market on which the profit margin is smaller. As noted in previous annual reports, property-development revenue is brought to book under the international accounting standard IFRIC 15 only when a sale is fully completed. Exceptional income of US$1.5 million in 2013, relating mainly to forfeiture fees paid by purchasers defaulting on contracts to buy land and contractor penalties, was not repeated in 2014. There were no sales of land during 2014 and the golf operation continued to make a small loss. Overall, the Group's share of Bertam Properties' profit for the year amounted to US$ 2.9 million, gross (2013 US$ 4.4 million, gross). The Group's share of Bertam Properties' gross dividends amounted to US$ 1.2 million (2013 US$ 3.5 million, gross).
Profit for the year
As a result of all the above, the Group profit for the year amounted to US$ 37.1 million, an increase of US$ 14.2 million (62%) compared with the US$ 22.9 million reported for 2013. This rise in reported profit led to an increase of 71% in basic earnings per share to US cents 61.0 (2013 US cents 36.0).
CURRENT TRADING AND PROSPECTS
Indonesia
The Group's f.f.b. crops are expected to continue to rise substantially both in 2015 and in subsequent years. Notwithstanding the decline in the palm-oil price in the last two years, healthy profit margins are still achievable and the board believes growth in Indonesian domestic and global demand makes the long-term outlook for palm oil positive.
The unusually dry period at the beginning of 2014 had a negative impact on f.f.b. crops in the latter part of that year and this impact has continued to be felt into the first quarter of 2015. The crops from the majority-owned estates for the three months ended 31 March 2015, with comparative figures for the same period in 2014, were as follows:-
3 months Increase/ 3 months
ended 31 (decrease) ended 31
March 2015 March 2014
Tonnes % Tonnes
Sumatra 36,200 (16) 43,000
Kalimantan 35,100 8 32,600
Bangka 13,500 5 12,800
------ ------
84,800 (4) 88,400
====== === ======
The established Sumatran estates and the Bangka project were particularly affected in 2015 by the dry weather in 2014 and the Kalimantan project has also recorded crops sharply below expectations (although 8% higher than for the same period last year) related to flooding in February 2015. Crops have recently started to pick up. The associated companies' f.f.b. crops have, as on the Group's majority-owned estates, been lower so far in 2015 than expectations and lower than for the first quarter of 2014.
Palm-oil prices have hovered between US$650 and US$700 per tonne (Rotterdam c.i.f.) so far in 2015 reflecting, on the upside, a slowdown in palm-oil production (relating to last year's dry weather) and, on the downside, continuing weakness in mineral-oil prices. As reported by Oil World, the weakness of mineral-oil prices has made palm oil less competitive in the energy sector despite increased subsidies being made available by the Indonesian Government in respect of bio-diesel. Moreover, the Indonesian Government has introduced a US$50 levy per tonne of CPO when the existing export tax falls to zero.
The Indonesian Rupiah has weakened in the first part of 2015 to the current level of around US$1 = Rp 13,000 compared with Rp 12,500 at the end of 2014. This has a beneficial effect on the Group's Rupiah-based costs (both revenue and capital) when translated into the functional currency, US Dollars.
Indonesian investment climate
The 2014 interim report referred to the fact that a draft plantation law had been tabled, although not at that time enacted, in the Indonesian House of Representatives. This draft law included provisions which, if passed, would have restricted foreign ownership of plantations in Indonesia to 30%. A modified version of the draft law was subsequently passed on 29 September 2014 that did not include the 30% cap on foreign investment. The law mandates the Government to prioritise domestic investment, protect local customary rights, empower local farmers and to set a cap on foreign investment at some point in the future. The current cap is 95%.
Australia
Welcome rainfall both on Woodlands and across most of the NAPCo properties was received in early 2015, and substantial further rainfall has recently been received on Woodlands. Cattle prices moved sharply higher, to record levels, in response both to the rainfall and to the weakening Australian Dollar and consequent increase in export demand. Prices have eased a little but are still above where they were at the end of 2014. The longer-term outlook for the Australian cattle industry appears favourable, as demand for high-quality red meat, especially in Asia, continues to rise and as herd numbers both in Australia and in the US continue to fall.
Peter Hadsley-Chaplin
Chairman
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2014
Result before Year
biological Biological ended
bearer-asset bearer-asset 31 December
adjustment adjustment 2014
US$'000 US$'000 US$'000
Revenue 90,922 - 90,922
Cost of sales (58,987) 3,959 (55,028)
------ ------ ------
Gross profit 31,935 3,959 35,894
Gain on biological
assets (note 4) - 15,144 15,144
Planting expenditure - (6,314) (6,314)
Foreign-exchange losses (2,379) - (2,379)
Other administrative expenses (5,870) - (5,870)
Other income 448 - 448
------ ------ ------
Operating profit 24,134 12,789 36,923
Finance income 1,650 - 1,650
Finance costs (3,310) (403) (3,713)
------ ------ ------
Group-controlled profit
before tax 22,474 12,386 34,860
Tax on profit on ordinary
activities (note 2) (9,095) (2,923) (12,018)
------ ------ ------
Group-controlled profit
after tax 13,379 9,463 22,842
Share of associated companies'
profit/(loss) after tax 15,308 (1,052) 14,256
------ ------ ------
Profit for the year 28,687 8,411 37,098
====== ====== ======
Attributable to:
Owners of M.P. Evans Group PLC 25,395 8,281 33,676
Non-controlling interests 3,292 130 3,422
------ ------ ------
28,687 8,411 37,098
====== ====== ======
(US cents) (US cents)
Basic earnings per 10p share 46.04 61.05
===== ======
(US cents) (US cents)
Diluted earnings per 10p share 45.98 60.97
===== ======
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$'000
Revenue 82,186 - 82,186
Cost of sales (60,749) 3,298 (57,451)
------ ------ ------
Gross profit 21,437 3,298 24,735
Gain on biological
assets (note 4) - 9,059 9,059
Planting expenditure - (6,265) (6,265)
Foreign-exchange (losses)/gains (8,322) - (8,322)
Other administrative expenses (4,444) - (4,444)
Other income 8 - 8
------ ------ ------
Operating profit 8,679 6,092 14,771
Finance income 972 - 972
Finance costs (3,121) (399) (3,520)
------ ------ ------
Group-controlled profit
before tax 6,530 5,693 12,223
Tax on profit on ordinary
activities (note 2) 435 (1,381) (946)
------ ------ ------
Group-controlled profit
after tax 6,965 4,312 11,277
Share of associated companies'
profit after tax 9,871 1,723 11,594
------ ------ ------
Profit for the year 16,836 6,035 22,871
====== ====== ======
Attributable to:
Owners of M.P. Evans Group PLC 14,438 5,315 19,753
Non-controlling interests 2,398 720 3,118
------ ------ ------
16,836 6,035 22,871
====== ====== ======
(US cents) (US cents)
Basic earnings per 10p share 26.28 35.96
===== ======
(US cents) (US cents)
Diluted earnings per 10p share 26.24 35.90
===== ======
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2014
2014 2013
US$'000 US$'000
Other comprehensive (expense)/income
Exchange loss on translation of
foreign operations (4,060) (11,785)
Previously unrealised profit on sale of land
to associated undertaking released to the
consolidated income statement on sale of
that land by the associate (458) (323)
Release of deferred tax 2,460 -
Other comprehensive (expense)/income (633) 806
------ ------
Other comprehensive expense(net of
tax) for the year (2,691) (11,302)
Profit for the year 37,098 22,871
------ ------
Total comprehensive income 34,407 11,569
====== ======
Attributable to:
Owners of M.P. Evans Group PLC 30,095 8,327
Non-controlling interests 4,312 3,242
------ ------
34,407 11,569
====== ======
CONSOLIDATED BALANCE SHEET
at 31 December 2014
Before
biological Biological
bearer-asset bearer-asset 31 December
adjustment adjustment 2014
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets - 163,538 163,538
Property, plant and equipment 191,584 (79,601) 111,983
Investments in associates 94,333 26,284 120,617
Investments 96 - 96
Deferred-tax asset 14,137 - 14,137
------- ------- -------
301,307 110,221 411,528
------- ------- -------
Current assets
Biological assets 4,440 - 4,440
Inventories 6,879 415 7,294
Trade and other receivables 13,220 - 13,220
Current-tax asset 2,029 - 2,029
Cash and cash equivalents 48,042 - 48,042
------- ------- -------
74,610 415 75,025
------- ------- -------
Total assets 375,917 110,636 486,553
======= ======= =======
Current liabilities
Borrowings 32,424 - 32,424
Trade and other payables 12,555 - 12,555
Current-tax liability 2,202 - 2,202
------- ------- -------
47,181 - 47,181
------- ------- -------
Net current assets 27,429 415 27,844
------- ------- -------
Non-current liabilities
Borrowings 14,103 - 14,103
Deferred-tax liability 199 20,984 21,183
Retirement-benefit obligations 3,765 - 3,765
------- ------- -------
18,067 20,984 39,051
------- ------- -------
Total liabilities 65,248 20,984 86,232
======= ======= =======
Net assets 310,669 89,652 400,321
======= ======= =======
Equity
Share capital 9,302 - 9,302
Other reserves 69,258 26,284 95,542
Retained earnings 211,966 55,098 267,064
------- ------- -------
Equity attributable to the owners
of M.P. Evans Group PLC 290,526 81,382 371,908
Non-controlling interests 20,143 8,270 28,413
------- ------- -------
Total equity 310,669 89,652 400,321
======= ======= =======
CONSOLIDATED BALANCE SHEET
at 31 December 2013
Before
biological Biological
bearer-asset bearer-asset 31 December
adjustment adjustment 2013
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets - 148,394 148,394
Property, plant and equipment 185,471 (76,152) 109,319
Investments in associates 95,521 27,335 122,856
Investments 102 - 102
Deferred-tax asset 14,996 - 14,996
------- ------- -------
297,247 99,577 396,824
------- ------- -------
Current assets
Biological assets 594 - 594
Inventories 8,267 (277) 7,990
Trade and other receivables 12,345 - 12,345
Current-tax asset 2,201 - 2,201
Cash and cash equivalents 56,348 - 56,348
------- ------- -------
79,755 (277) 79,478
------- ------- -------
Total assets 377,002 99,300 476,302
======= ======= =======
Current liabilities
Borrowings 31,710 - 31,710
Trade and other payables 10,311 - 10,311
Current-tax liability 4,313 - 4,313
------- ------- -------
46,334 - 46,334
------- ------- -------
Net current assets 33,421 (277) 33,144
------- ------- -------
Non-current liabilities
Borrowings 34,780 - 34,780
Deferred-tax liability 2,903 18,060 20,963
Retirement-benefit obligations 2,933 - 2,933
------- ------- -------
40,616 18,060 58,676
------- ------- -------
Total liabilities 86,950 18,060 105,010
======= ======= =======
Net assets 290,052 81,240 371,292
======= ======= =======
Equity
Share capital 9,253 - 9,253
Other reserves 75,212 27,336 102,548
Retained earnings 189,626 45,764 235,390
------- ------- -------
Equity attributable to the owners
of M.P. Evans Group PLC 274,091 73,100 347,191
Minority interests 15,961 8,140 24,101
------- ------- -------
Total equity 290,052 81,240 371,292
======= ======= =======
CONSOLIDATED CASH-FLOW STATEMENT
for the year ended 31 December 2014
Year ended Year ended
31 December 31 December
2014 2013
US$'000 US$'000
Net cash generated by operating activities 28,351 19,494
------ ------
Investing activities
Interest received 1,650 972
Sale of shares to non-controlling interest 926 498
Proceeds on disposal of assets 415 358
Purchase of property, plant and equipment (11,917) (12,261)
Purchase of shares from non-controlling interest - (7,100)
Planting expenditure (6,314) (6,265)
------ ------
Net cash used by investing activities (15,240) (23,798)
------ ------
Financing activities
Loan drawdown - 6,800
Proceeds on issue of shares - 131
Dividends paid to Company shareholders (5,462) (5,964)
Repayment of borrowings (17,262) (2,318)
Dividend paid to non-controlling interest - (896)
------ ------
Net cash used by financing activities (22,724) (2,247)
------ ------
Net decrease and cash and
cash equivalents (9,613) (6,551)
Net cash and cash equivalents 1 January 24,638 29,299
Effect of foreign-exchange rates on
cash and cash equivalents 593 1,890
------ ------
Net cash and cash equivalents at 31 December 15,618 24,638
====== ======
NOTES
1. Dividends paid and proposed
2014 2013
US$'000 US$'000
2014 interim dividend - 2.25p per 10p share
(2013 interim dividend - 2.25p) 1,994 1,991
2013 final dividend - 6.00p per 10p share
(2012 final dividend - 5.75p) 5,647 4,796
------ ------
7,641 6,787
====== ======
Following the year end, the board has proposed a final dividend for 2014 of 6.50p per 10p share amounting to US$5.3 million. Shareholders will again have the option to elect to receive the dividend in shares rather than in cash (provided that resolution 11 is passed at the annual general meeting). The calculation period will be 23 April to 29 April 2015. The dividend will be paid on or after 18 June 2015 to those shareholders on the register at the close of business on 24 April 2015, as follows:
2014 2013
Ex-dividend date 23 April 2015 23 April 2014
Record date 24 April 2015 25 April 2014
Final date for receipt of election
instruction 28 May 2015 29 May 2014
Definitive share certificates posted 17 June 2015 18 June 2014
First day of dealing in the new shares 18 June 2015 19 June 2014
Dividend payable on or after 18 June 2015 19 June 2014
2. Tax on profit on ordinary activities
2014 2013
US$'000 US$'000
United Kingdom corporation-tax charge
for the year 413 384
Relief for overseas taxation (413) (384)
------ ------
- -
Overseas taxation 8,152 10,881
Adjustments in respect of prior years - 18
------ ------
Total current tax 8,152 10,899
Deferred taxation - origination and reversal
Of temporary differences 3,866 (9,953)
------ ------
12,018 946
------ ------
3. Basic and diluted earnings per share
The calculation of earnings per 10p share is based on:-
2014 2014 2013 2013
US$'000 Number of US$'000 Number of
shares shares
Profit for the year
attributable to the owners
of M.P. Evans Group PLC 33,676 19,753
====== ======
Average number of shares
in issue 55,163,657 54,936,947
Diluted average number of
shares in issue* 55,235,438 55,025,655
========== ==========
* The difference between the number of shares in issue and the diluted number of shares relates to unexercised share options held by directors and key employees of the Group.
4. Biological assets
Non-current biological assets comprise plantation bearer assets. The Group values these plantation assets using a discounted cash flow over the expected 25-year economic life of the asset. The discount rate used in this valuation is 14%. The price of the crop (oil-palm fresh fruit bunches) is taken to be the 20-year average based on historical selling prices or, where the plantation has its own mill, an inference based on the widely-quoted commodity price for crude palm oil delivered c.i.f. Rotterdam. The directors have concluded that using a 20-year average provides the best estimate of the prices to be achieved over the valuation period.
In the balance sheet, the adjustment column shows that the recognition of the biological-asset valuation replaces depreciated-historical-planting costs of US$ 79.60 million (2013 US$76.15 million) which, prior to the adoption of IFRS, were included in the carrying value of property, plant and equipment. These costs are now replaced by the biological bearer-asset adjustment which, including the Group's share of the asset recognised by associates, together with the related deferred tax, amounts to US$ 169.25 million (2013 US$157.39 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 2013 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 2014 have had a material impact on the Group. Full accounts of M.P. Evans Group PLC for the year ended 31 December 2013, 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 2014 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 24 April 2015.
7. Timetable
The report and financial statements will be available on the Group's website on or after 24 April 2015 and despatched to shareholders shortly thereafter. The annual general meeting will be held on 5 June 2015.
8. Distribution
Copies of the full report and financial statements for the year ended 31 December 2014 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 2015
This information is provided by RNS
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