Half Yearly Report
M.P. EVANS GROUP PLC
M.P. Evans Group PLC, a producer of Indonesian palm oil and Australian beef cattle, announces its unaudited interim results for the six months ended 30 June 2011.
Highlights
Financials
· Profit for the period increased 86% to US$22.36 million (2010 US$12.04 million)
· Interim dividend increased to 2.25p per 10p share (2010 - 2.00p)
· Balance sheet further strengthened by increasing operating cash inflows
Indonesian palm oil
· Plantation gross profit 53% higher at US$13.43 million (2010 US$8.78 million)
· Crops of oil-palm fresh fruit bunches ("f.f.b.") 36% higher than in first half 2010 on
majority-owned estates and 10% higher on associates' estates
· Palm-oil prices averaged US$1,195 per tonne, 48% higher than US$809 in first half
2010
· New palm-oil mill on Kalimantan project expected to be commissioned, on target,
at end of 2011
· 16,200 hectares (including 4,800 hectares owned by smallholders' cooperatives)
now planted on new projects
· Palm-oil price remains at healthy level of around US$1,100 per tonne
Australian beef cattle
· Widespread rainfall in early part of year benefited pasture growth on Woodlands
and NAPCo
· Cattle prices strong throughout much of first half although dipped at half-year point, when herd valued for accounting purposes, though have since recovered
· NAPCo benefited from sales at good prices, Woodlands negatively affected by
lower cattle price at half year
· Group share of NAPCo's profit 30% higher at US$2.88 million (2010 US$2.21 million)
· Woodlands agricultural gross loss US$0.47 million (2010 US$0.40 million)
Malaysian-property and other asset disposals
· Strategy remains to dispose of remaining Malaysian assets with expected value of
some US$45 million
Commenting on the results, the chairman of M. P. Evans, Peter Hadsley-Chaplin, said:-
"A substantial increase in the Group's profit in the first half of 2011 was achieved as a result of marked increases in f.f.b. crops and continued firm palm-oil prices. The new oil-palm projects in Indonesia are starting to produce significant volumes of f.f.b. and this sharp upward trend is expected to continue for the next few years. Indeed, we are on track more than to double production of f.f.b. to 500,000 tonnes in 2015. The palm-oil price remains at around US$1,100 per tonne, an historically-robust level.
In Australia, abundant rainfall in the first part of 2011 produced good pasture growth and weight gain. Cattle prices were at healthy levels for most of the first half although they tailed off at the half-year point. They have, however, since recovered.
Prospects for both Indonesian palm oil and Australian beef cattle remain very favourable"
Enquires:
M.P. Evans Group PLC 020 7796 4133 on 14 September 2011 only
Thereafter telephone 01892 516333
Peter Hadsley-Chaplin Chairman
Philip Fletcher Managing director
Tristan Price Finance director
Peel Hunt LLP 020 7418 8900
Dan Webster
Hudson Sandler 020 7796 4133
Charlie Jack
An analysts' meeting will be held today at 9.30 a.m. at the offices of Hudson Sandler, 29 Cloth Fair, London EC1A 7NN
OVERVIEW
The board is delighted to report a profit after tax of US$22.36 million for the six months ended 30 June 2011, which represents a substantial 86% increase over the profit of US$12.04 million recorded for the same period in 2010. This increase was primarily attributable to higher crops of oil-palm fresh fruit bunches ("f.f.b.") in Indonesia and continuing robust palm-oil prices. The Group's balance sheet has continued to strengthen, bolstered by increasing cash flows from operating activities.
The board has declared an increased interim dividend of 2.25p per share (2010 - 2.00p). The dividend will be paid on or after 4 November 2011 to shareholders on the register at the close of business on 30 September 2011. A scrip dividend will continue to be available for the interim dividend. Shareholders who have previously elected to receive their dividends in this manner will automatically receive this dividend as scrip. Shareholders who now wish to make an election to receive this and future dividends as scrip should contact the company secretary.
STRATEGIC DEVELOPMENTS, INCLUDING NEW PROJECTS
Indonesian palm-oil
From the existing majority-owned areas planted to date (both established estates and new projects), the f.f.b. crops, which amounted to some 200,000 tonnes in 2010, are forecast to reach 300,000 tonnes in 2012 and 500,000 tonnes in 2015. These are very significant increases and, subject to palm-oil prices remaining at the current healthy levels, are likely to impact extremely favourably on the Group's revenue in the near future and to provide the means to maintain the Group's continuing development programme.
Construction of the 60-tonne-per-hour palm-oil mill in Kalimantan remains on target. It is expected to be commissioned at the end of the year, together with the palm-oil bulking station on the banks of the Mahakam River. The operation of the mill will enable the Group to maximise income from the newly-maturing project in Kalimantan. The current, temporary, arrangements involve selling f.f.b. to a third-party mill in the vicinity of the project.
As expected. planting has slowed on the new projects compared with previous years. In Kalimantan, the main areas have been developed and it is now a question of filling in relatively small areas. In Bangka, it remains unclear how much land will ultimately be plantable but slow, steady, progress continues as the Group expands the project area. The main constraint in making progress with planting is the very time-consuming process of agreeing mutually-acceptable compensation terms with local people who have carried out some planting and improvement on this government-owned land.
As at the date of this report, nearly 16,200 hectares in total have been planted, 12,200 in Kalimantan and 4,000 in Bangka. Of these, areas, 4,800 hectares have been allocated to the smallholder co-operative schemes, 3,500 on Kalimantan and 1,300 on Bangka. The board continues to seek new areas of environmentally-suitable land for development.
The Pangkatan palm-oil mill and the three estates supplying f.f.b. to it, Pangkatan, Bilah and Sennah, will shortly be undergoing an audit in the process of seeking accreditation from the Round Table on Sustainable Palm Oil ("RSPO"). Once the new mill in Kalimantan is fully operating, the project there is expected to undergo an RSPO audit in the middle of 2012.
Australian beef-cattle activities
Although no further shares in NAPCo were acquired in the first half, the board continues to seek to build on the Group's 34.4% holding. The expansion of NAPCo's feedlot has recently been completed doubling capacity to 18,500 head, enabling more value to be added to a greater number of cattle. It will also allow better management of seasonal fluctuations by bringing younger cattle into the feedlot at times of extremely dry weather, rather than being forced to sell them, as has sometimes occurred in the past. The programme continues of constructing more bore holes on the company's main breeding property, Alexandria Station, allowing more breeders to be run.
As a result of the significant pasture-improvement work at Woodlands over the past few years, the property's herd has increased considerably to the level at 30 June of some 11,300 head of cattle. Whilst it is believed this figure can be improved upon by another 2,000 to 3,000 head, the board's long-term aim is to sell Woodlands and to focus on its investment in NAPCo.
Divestment from Malaysia
It remains the board's intention to dispose of the Group's residual property interests in the Penang region, which are estimated to be worth some US$45 million, when a suitable opportunity arises. In the meantime, the Bertam Properties project and the small remainder of Bertam Estate continue to generate useful revenue.
THE PALM-OIL MARKET
As a result of wider economic uncertainty, commodity prices generally retreated in the first half of 2011 from historically-high levels and palm oil was no exception to this. The 2010/11 crops of soybeans in South America were higher than had originally been expected and, with plantings in the US higher than in 2010 and the recovery this year of oilseed plantings in the Black Sea region, production has recovered bringing supply and demand more into balance, with vegetable-oil stocks (particularly palm oil) increasing. As a result of this, palm-oil prices have eased to the current, nonetheless strong, level of around US$1,100 per tonne (Rotterdam cif) from the very high levels of around US$1,300 experienced at the end of 2010. Demand remains buoyant for the traditional use of palm oil as cooking oil, as well as increasing demand for bio diesel.
THE BEEF-CATTLE MARKET
Australian prices for grass-fed, lighter-weight cattle (such as those produced by Woodlands) started the year on a firm footing, buoyed by the excellent season, with graziers across much of the country seeking to acquire more cattle. Similarly, prices for the heavier "grain-finished" cattle (such as those produced by NAPCo) started at a high level, supported by market reports of the US herd being at its lowest level since 1958. The strength in both lighter- and heavier-weight markets prevailed through to April when lighter-weight cattle traded at record highs. However, in May, a downward correction started to occur in both markets, as export demand tailed off considerably as a result of the substantial strengthening of the Australian Dollar. The market also came under some selling pressure following the temporary (as it transpired) ban by the Australian government on live cattle exports to Indonesia. However, prices have recently recovered.
Results for the period
MAJORITY-OWNED OPERATIONS
Indonesia
As referred to above, palm-oil prices were at robust levels during the period. The average price for the first half of 2011 was US$1,195 per tonne, some 48% higher than the average of US$809 for the same period in 2010.
F.f.b. crops from the established Sumatran estates were substantially higher (21%) in the first half of 2011 compared with the first half of 2010. The beneficial results of investment in roads and drainage and the tightening of harvesting disciplines are beginning to be felt. As would be expected, the f.f.b. crops from the new projects in Kalimantan and Bangka are increasing markedly as new areas come into harvesting and the young areas increase their yields year by year. Overall, the Group f.f.b. crop was 36% higher than for the same period in 2010.
The weakening of the US Dollar against the Indonesian Rupiah had a negative impact on local costs (when translated into US Dollars). In addition, the strength of mineral-oil prices resulted in higher fertiliser and fuel prices.
As a result of the above, the gross profit from the majority-owned Indonesian estates amounted to US$13.43 million, a 53% increase over the US$8.78 million recorded for the first half of 2010. It should be noted this is despite the loss recorded by the Kalimantan project, as would be expected in the very early stage of production (harvesting started in the second half of 2010). In addition (as noted below under "Other administrative expenses"), gross profit for the six months ended 30 June 2010 did not include Jakarta head-office costs of US$0.52 million which were included in "Other administrative costs" for that period.
Crops, production and selling-price details for the majority-owned estates are set out as follows:-
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2011 2010 Increase 2010
Tonnes Tonnes % Tonnes
1) Crops - oil-palm fresh
fruit bunches ("f.f.b.")
Sumatran estates
- Pangkatan group 68,500 55,800 130,200
- Simpang Kiri 23,100 19,800 41,200
------- ------- -------
91,600 75,600 21 171,400
Bangka 11,200 7,500 49 18,900
Kalimantan 10,000 - - 6,100
------- ------- -------
Total crops 112,800 83,100 36 196,400
------- ------- -- -------
2) Production - (Pangkatan mill)
Crude palm oil 15,700 12,800 23 30,000
Palm kernels 3,900 3,100 26 7,300
------- ------- -- -------
3) Extraction rate % % %
Crude palm oil 23.1 23.0 23.0
Palm kernels 5.7 5.5 5.6
------- ------- -------
4) Selling prices
Palm oil - Rotterdam c.i.f.
- average per tonne US$1,195 US$809 48 US$905
------- ------- -- -------
Australia
The herd on the Woodlands aggregation was built up further during the first half of the year and stood at some 11,300 head at 30 June 2011 (7,900 at 30 June 2010 and 10,200 at 31 December 2010). There was abundant rainfall in the early part of 2011 and, as a result, the pastures were lush for the first half of the year which enabled the herd to be increased. Good weight gains were achieved. Unfortunately, although cattle prices strengthened during the early part of the period, they had fallen quite sharply by the mid-year point and it is at that date that the valuation of the herd is calculated for accounting purposes. The fall in the cattle price has been attributed to the strength of the Australian Dollar and weaker demand from Asian customers, particularly in Japan following the tsunami. Since then, cattle prices have strengthened. Costs were trimmed during the period but the reduction was similar to the reduction in cattle profits referred to above so the Australian-Dollar gross loss was similar for the first half of 2011 to what it was in the first half of 2010. Because of the weakening of the US Dollar, the gross loss in US-Dollar terms amounted to US$0.47 million, compared with a loss of US$0.40 million for the same period last year.
GROSS PROFIT
As a result of all of the above, the gross profit for the first half of 2011 was US$12.93 million, a 57% increase over the US$8.25 million for the same period last year. The following table sets out an analysis of the gross profit/(loss) between the various activities and between the countries in which the Group operates:-
Six months ended 30 June 2011
Biological
Cost of bearer-asset Gross
Turnover sales adjustment profit/(loss)
US$'000 US$'000 US$'000 US$'000
Plantations
Indonesia 27,359 (14,792) 867 13,434
Malaysia 178 (222) - (44)
------ ------ ------ ------
Total plantations 27,537 (15,014) 867 13,390
Cattle - Australia 689 (1,154) - (465)
Other - UK - - - -
------ ------ ------ ------
Group total 28,226 (16,168) 867 12,925
------ ------ ------ ------
Six months ended 30 June 2010
Biological
Cost of bearer-asset Gross
Turnover sales adjustment profit/(loss)
US$'000 US$'000 US$'000 US$'000
Plantations
Indonesia 14,973 (6,652) 458 8,779
Malaysia 360 (492) - (132)
------ ------ ------ ------
Total plantations 15,333 (7,144) 458 8,647
Cattle - Australia - (396) - (396)
Other - UK - - - -
------ ------ ------ ------
Group total 15,333 (7,540) 458 8,251
------ ------ ------ ------
Year ended 31 December 2010
Biological
Cost of bearer-asset Gross
Turnover sales adjustment profit/(loss)
US$'000 US$'000 US$'000 US$'000
Plantations
Indonesia 39,162 (17,811) 1,011 22,362
Malaysia 698 (789) - (91)
------ ------ ------ ------
Total plantations 39,860 (18,600) 1,011 22,271
Cattle - Australia 2,184 (1,933) - 251
Other - UK 47 - - 47
------ ------ ------ ------
Group total 42,091 (20,533) 1,011 22,569
------ ------ ------ ------
BEARER BIOLOGICAL-ASSET ADJUSTMENT
Biological gain during the period amounted to US$8.79 million. This increase is the product of two countervailing movements: on the one hand an increase in the price of crude palm oil used to establish biological value from US$533 at 31 December 2010 to US$554 at 30 June 2011, but on the other hand an increase in the cost base, notably from the increasing price of fertilizers over the last three years. As required under the relevant accounting standard, this biological gain is offset in the income statement by planting expenditure of US$7.09 million. The same influences affected the associated companies. In addition, during the period a small amount of land which had been included in the balance sheet at its biological-asset value was sold to a smallholder co-operative incurring a small loss of US$0.23 million. Further information about biological assets is set out in note 4.
ASSOCIATED COMPANIES
Indonesia
The Group's share of its Indonesian associated companies' post-tax profits for the period, compared with that for the first half, and for the whole, of 2010, was as follows:-
Six months ended 30 June 2011
Post-tax Post-tax
profit before Biological profit after
biological bearer-asset biological
bearer-asset adjustment bearer-asset
adjustment (see below) adjustment
US$'000 US$'000 US$'000
PT Agro Muko (36.84%) 7,611 1,137 8,748
PT Kerasaan Indonesia (38.00%) 924 (57) 867
------ ------ ------
8,535 1,080 9,615
------ ------ ------
Six months ended 30 June 2010
Post-tax Post-tax
profit before Biological profit after
biological bearer-asset biological
bearer-asset adjustment bearer-asset
adjustment (see below) adjustment
US$'000 US$'000 US$'000
PT Agro Muko (36.84%) 3,377 865 4,242
PT Kerasaan Indonesia (38.00%) 808 (184) 624
------ ------ ------
4,185 681 4,866
------ ------ ------
Year ended 31 December 2010
Post-tax Post-tax
profit before Biological profit after
biological bearer-asset biological
bearer-asset adjustment bearer-asset
adjustment (see below) adjustment
US$'000 US$'000 US$'000
PT Agro Muko (36.84%) 9,029 (2,933) 6,096
PT Kerasaan Indonesia (38.00%) 1,745 (68) 1,677
------ ------ ------
10,774 (3,001) 7,773
------ ------ ------
Biological bearer-asset adjustment
30 June 2011
PT Agro PT Kerasaan
Muko Indonesia
US$'000 US$'000
Cost of sales 180 13
Gain on biological assets 1,560 2
Planting expenditure (225) (90)
Deferred tax (378) 18
-------- --------
1,137 (57)
-------- --------
30 June 2010
PT Agro PT Kerasaan
Muko Indonesia
US$'000 US$'000
Cost of sales 153 19
Gain on biological assets 2,174 (22)
Planting expenditure (1,173) (243)
Deferred tax (289) 62
-------- --------
865 (184)
-------- --------
31 December 2010
PT Agro PT Kerasaan
Muko Indonesia
US$'000 US$'000
Cost of sales 276 25
Gain on biological assets (2,615) (56)
Planting expenditure (1,572) (60)
Deferred tax 978 23
-------- --------
(2,933) (68)
-------- --------
Crops and production were as follows:-
6 months 6 months Year
ended ended ended
30 June 30 June Increase/ 31 December
2011 2010 (decrease) 2010
Tonnes Tonnes % Tonnes
Crops - f.f.b.
- PT Agro Muko - own 163,100 140,700 16 317,900
- outgrowers 3,600 5,000 (28) 16,100
-------- -------- --------
- total 166,700 145,700 14 334,000
- PT Kerasaan Indonesia 20,700 24,000 (14) 48,200
-------- -------- --------
187,400 169,700 10 382,200
-------- -------- --- --------
Production
(PT Agro Muko) - crude palm oil 40,000 33,400 16 75,800
- palm kernels 8,500 7,700 10 17,100
-------- -------- -- --------
% % %
Extraction rate - crude palm oil 23.9 22.7 22.7
- palm kernals 5.1 5.0 5.1
------- ------- -------
Tonnes Tonnes % Tonnes
Rubber crops
(PT Agro Muko) 876 742 18 1,189
-------- -------- -- --------
As with the Group's majority-owned plantation operations in Indonesia, the associated companies benefited from the continuing strength of the palm-oil price. PT Agro Muko reported a particularly marked increase in its f.f.b. crop (up 16%). The significant expenditure incurred in upgrading the extensive road system on the project is beginning to pay dividends and year-round access to difficult areas has been substantially improved. Favourable weather has also benefited crop collection and extraction rates. Because of very favourable rubber prices, some replanting was delayed and consequently crops have been considerably higher than had been originally expected.
The f.f.b. crop reported by PT Kerasaan Indonesia was lower than for the same period last year but the high palm-oil price resulted in the company recording significantly higher profits. The crop is expected to recover to some extent in the second half of the year.
Australia
The Group's share of NAPCo's post-tax profit for the period, compared with that for the first half, and for the whole, of 2010, was as follows:-
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
US$'000 US$'000 US$'000
NAPCo (34.37%) 2,880 2,208 2,365
------ ------ ------
NAPCo enjoyed another improved result following the good season and the firm prices secured on cattle sales throughout much of the period. The properties generally remained in excellent order during the period, although heavy rainfall and flooding caused some delays in the transportation of cattle from two of the breeding properties. As referred to earlier, cattle prices were buoyant throughout much of the period but started to decline in May, as a result of the continuing strength of the Australian Dollar, which, in turn, impacted on demand, particularly from two of Australia's main export markets, Japan and Korea. This period-end price softening reduced the value placed on the weight gained by NAPCo's cattle.
Malaysia
The Group's share of Bertam Properties Sdn. Berhad's ("Bertam Properties") post-tax profit for the period, compared with that for the first half, and for the whole, of 2010, was as follows:-
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
US$'000 US$'000 US$'000
Bertam Properties (40.00%) 796 643 2,987
------ ------ ------
No land sales were completed during the first half of 2011. A number of potential sales are, however, in the pipeline. The Malaysian property market remained reasonably robust during the period and the company's development activities continued successfully with higher profits recorded. Meanwhile, increased profits were reported from the small remaining area under oil palms as the operations benefited from the strength of the palm-oil price.
OTHER ADMINISTRATIVE EXPENSES
Other administrative expenses were considerably lower for the six months ended 30 June 2011 compared with the same period in 2010. As referred to in the 2010 annual report, an impairment review was carried out in 2010 with regard to the amounts which can realistically be recovered from the smallholder co-operatives. The cost of planting on the land owned by the co-operatives was provided on loan, in the first instance, by the Group after which bank finance available to the co-operatives has been, or will be, used to repay the Group. The impairment review as at 30 June 2010 gave rise to a provision of US$1.57 million but this provision was reduced by US$0.44 million for the purposes of the 31 December 2010 accounts. A further review as at 30 June 2011 has indicated the provision is largely no longer required and, accordingly, a credit for US$1.09 million has been recorded in the 2011 interim consolidated income statement.
The Company's share price was lower at 30 June 2011 than it was at 31 December 2010. Accordingly, the provision for UK National Insurance on the future exercise of options under the executive option scheme was reduced at 30 June 2011.
As referred to in the 2010 interim and annual reports, Jakarta head-office costs for the six months ended 30 June 2010 amounting to US$0.52 million were included under "Other administrative expenses" but, following a review, it was decided that, for the 31 December 2010 accounts onwards, these costs would be included in cost of sales or, where appropriate, added to the cost of planting. Accordingly, both cost of sales and other administrative expenses should be adjusted by this amount in the 30 June 2010 figures in order to facilitate a direct comparison with the six months ended 30 June 2011
BORROWINGS
In March 2011 the Group signed an eight-year term loan facility for US$20.95 million with Bank CIMB Niaga, a subsidiary of the CIMB Group based in Malaysia. These borrowings are secured in the short term on Group cash deposited in Bank CIMB Niaga accounts, but in the longer term will be secured against the leases granted on the Group's new projects in Kalimantan. At 30 June 2011, the Group had drawn US$12.92 million of the facility. In parallel with its lending to the Group, Bank CIMB Niaga is providing financing to the smallholder cooperative schemes on the Group's project in East Kalimantan, some of which is secured against Group cash deposited in CIMB Niaga accounts. In total US$ 18.3 million of the Group's cash balances have been pledged in this way.
At 30 June 2011, the Group had drawn 43.63 million Ringgit of its 60.0 million Ringgit facility with AmBank (Malaysia) Berhad. Following a change to the loan contract to clarify the term structure of the agreement, the loan has been classified as a non-current liability. This reclassification has been applied to the figures reported for the year end 31 December 2010.
PROSPECTS
Uncertainty remains in world financial markets which has also affected agricultural commodities, although palm oil has held up at the healthy price of around US$1,100 per tonne (Rotterdam cif). Concerns about the reduction in the level of the 2011 soybean crop in the USA and the 2012 crops in South America, allied to forecasts of excess demand for soybean and worries about the possible onset of another La Niña episode, have been supporting vegetable-oil prices. Palm-oil stocks had increased markedly in early 2011 but larger-than-expected exports by Malaysia recently have reduced these stock levels. Palm oil remains at a larger-than-normal discount to its main rival, soybean oil, which is seen as a positive factor in palm oil's favour. Since the period end the Indonesian government has restructured the palm-oil export tax, resulting in a higher tax on crude palm oil at between US$750 and US$1,150 per tonne, but reduced outside this range. At the current price, this represents an increase in tax of some US$15 per tonne.
As in previous years, f.f.b. crops on the established estates in Sumatra, both majority-owned and the associates, are expected to be higher in the second half of the year than the first although PT Agro Muko's crop may be a little lower than the exceptionally high levels achieved in the first half of the year. Crops on the new projects in Kalimantan and Bangka are forecast to continue their sharp upward trend. As referred to above, the Group's new mill in Kalimantan is expected to be commissioned at the end of the year.
In Australia, after initially continuing to decline, prices for both the lighter- and heavier-weight cattle have started to recover as the Australian Dollar has eased a little from its peak levels. The lifting in July by the Australian government of the live-trade ban, reopening the trade to those supply chains that can meet traceability criteria and existing international welfare standards, also helped to provide some support.
Subject to palm-oil and beef-cattle prices remaining at or around their current level, the Group is expected to report another successful year's results.
Unaudited consolidated income statement
FOR THE SIX MONTHS ENDED 30 JUNE 2011
Result before 6 months
biological Biological ended
bearer-asset bearer-asset 30 June
adjustment adjustment 2011
US$'000 US$'000 US$'000
Revenue 28,226 - 28,226
Cost of sales (16,168) 867 (15,301)
------ ------ ------
Gross profit 12,058 867 12,925
Gain on biological assets (note 4) - 8,787 8,787
Planting expenditure - (7,088) (7,088)
Foreign-exchange gains 1,485 - 1,485
Other administrative expenses (787) (230) (1,017)
Other income 117 - 117
------ ------ ------
Group operating profit before interest
and tax 12,873 2,336 15,209
Finance income 528 - 528
Finance costs (1,077) (174) (1,251)
------ ------ ------
Group-controlled profit before taxation 12,324 2,162 14,486
Tax on profit on ordinary activities (4,860) (554) (5,414)
------ ------ ------
Group-controlled profit after tax 7,464 1,608 9,072
Share of associated companies' profit
after tax 12,211 1,080 13,291
------ ------ ------
Profit after tax 19,675 2,688 22,363
------ ------ ------
Attributable to:
Owners of M.P. Evans Group PLC 17,208 2,549 19,757
Minority interests 2,467 139 2,606
------ ------ ------
19,675 2,688 22,363
------ ------ ------
US Cents
Basic earnings per 10p share 37.21
------
Diluted earnings per 10p share 36.49
------
Unaudited consolidated income statement
FOR THE SIX MONTHS ENDED 30 JUNE 2010
Result before 6 months
biological Biological ended
bearer-asset bearer-asset 30 June
adjustment adjustment 2010
US$'000 US$'000 US$'000
Revenue 15,333 - 15,333
Cost of sales (7,540) 458 (7,082)
------ ------ ------
Gross profit 7,793 458 8,251
Gain on biological assets (note 4) - 10,947 10,947
Planting expenditure - (8,474) (8,474)
Foreign-exchange gains 1,816 - 1,816
Other administrative expenses (5,133) - (5,133)
Other income 101 - 101
------ ------ ------
Group operating profit before interest
and tax 4,577 2,931 7,508
Finance income 236 - 236
Finance costs (775) - (775)
------ ------ ------
Group-controlled profit before taxation 4,038 2,931 6,969
Tax on profit on ordinary activities (2,108) (542) (2,650)
------ ------ ------
Group-controlled profit after tax 1,930 2,389 4,319
Share of associated companies' profit
after tax 7,036 681 7,717
------ ------ ------
Profit after tax 8,966 3,070 12,036
------ ------ ------
Attributable to:
Owners of M.P. Evans Group PLC 7,716 2,656 10,372
Minority interests 1,250 414 1,664
------ ------ ------
8,966 3,070 12,036
------ ------ ------
US Cents
Basic earnings per 10p share 19.54
------
Diluted earnings per 10p share 19.20
------
Consolidated income statement
FOR THE YEAR ENDED 31 DECEMBER 2010
Result before Year
biological Biological ended
bearer-asset bearer-asset 31 December
adjustment adjustment 2010
US$'000 US$'000 US$'000
Revenue 42,091 - 42,091
Cost of sales (20,533) 1,011 (19,522)
------ ------ ------
Gross profit 21,558 1,011 22,569
Gain on biological assets - 17,589 17,589
Planting expenditure - (15,204) (15,204)
Foreign-exchange gains 739 - 739
Other administrative expenses (5,616) - (5,616)
Other income 218 - 218
------ ------ ------
Group operating profit before interest
and tax 16,899 3,396 20,295
Finance income 711 - 711
Finance costs (1,647) - (1,647)
------ ------ ------
Group-controlled profit before taxation 15,963 3,396 19,359
Tax on profit on ordinary activities (7,459) (577) (8,036)
------ ------ ------
Group-controlled profit after tax 8,504 2,819 11,323
Share of associated companies' profit
after tax 16,126 (3,001) 13,125
------ ------ ------
Profit after tax 24,630 (182) 24,448
------ ------ ------
Attributable to:
Owners of M.P. Evans Group PLC 21,636 271 21,907
Minority interests 2,994 (453) 2,541
------ ------ ------
24,630 (182) 24,448
------ ------ ------
US cents
Basic earnings per 10p share 41.17
------
Diluted earnings per 10p share 40.52
------
Unaudited consolidated balance sheet
AT 30 JUNE 2011
Before
biological Biological
bearer-asset bearer-asset 30 June
adjustment adjustment 2011
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets (note 4) - 118,279 118,279
Property, plant and equipment 140,709 (57,670) 83,039
Investment in associates 113,075 23,883 136,958
Investments 152 - 152
Deferred-tax asset 683 - 683
------- ------- -------
255,776 84,492 340,268
------- ------- -------
Current assets
Biological assets 9,462 - 9,462
Inventories 9,767 - 9,767
Trade and other receivables 25,778 - 25,778
Current-tax asset 2,496 - 2,496
Cash and cash equivalents 47,020 - 47,020*
------- ------- -------
94,523 - 94,523
------- ------- -------
Total assets 350,299 84,492 434,791
------- ------- -------
Current liabilities
Borrowings 26,617 - 26,617
Trade and other payables 10,180 - 10,180
Current-tax liabilities 3,752 - 3,752
------- ------- -------
40,549 - 40,549
------- ------- -------
------- ------- -------
Net current assets 53,974 - 53,974
------- ------- -------
Non-current liabilities
Borrowings 27,468 - 27,468
Deferred-tax liability 3,698 15,152 18,850
Retirement-benefit obligations 2,581 - 2,581
------- ------- -------
33,747 15,152 48,899
------- ------- -------
Total liabilities 74,296 15,152 89,448
------- ------- -------
------- ------- -------
Net assets 276,003 69,340 345,343
------- ------- -------
Equity
Share capital (note 5) 8,998 - 8,998
Other reserves 89,970 23,884 113,854
Profit and loss account 167,263 37,858 205,121
------- ------- -------
Equity attributable to owners of
M.P. Evans Group PLC 266,231 61,742 327,973
Minority interests 9,772 7,598 17,370
------- ------- -------
Total equity 276,003 69,340 345,343
------- ------- -------
* Of this balance US$18.3 million has been pledged as security against bank loans
Unaudited consolidated balance sheet
AT 30 JUNE 2010
Before
Biological Biological
bearer-asset bearer-asset 30 June
adjustment adjustment 2010
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,891 - 1,891
Biological assets (note 4) - 104,428 104,428
Property, plant and equipment 100,613 (44,351) 56,262
Investment in associates 91,344 23,383 114,727
Investments 2,624 - 2,624
Deferred-tax asset 2,177 - 2,177
------- ------- -------
198,649 83,460 282,109
------- ------- -------
Current assets
Biological assets 5,273 - 5,273
Inventories 7,905 - 7,905
Trade and other receivables 23,506 - 23,506
Current-tax asset 2,124 - 2,124
Cash and cash equivalents 23,756 - 23,756
------- ------- -------
62,564 - 62,564
------- ------- -------
Total assets 261,213 83,460 344,673
------- ------- -------
Current liabilities
Borrowings 20,975 - 20,975
Trade and other payables 10,803 - 10,803
Current-tax liabilities 649 - 649
------- ------- -------
32,427 - 32,427
------- ------- -------
------- ------- -------
Net current assets 30,137 - 30,137
------- ------- -------
Non-current liabilities
Borrowings - - -
Deferred-tax liability 2,629 14,563 17,192
Retirement-benefit obligations 1,557 - 1,557
------- ------- -------
4,186 14,563 18,749
------- ------- -------
Total liabilities 36,613 14,563 51,176
------- ------- -------
------- ------- -------
Net assets 224,600 68,897 293,497
------- ------- -------
Equity
Share capital (note 5) 8,980 - 8,980
Other reserves 68,061 23,383 91,444
Profit and loss account 142,000 37,193 179,193
------- ------- -------
Equity attributable to owners of
M.P. Evans Group PLC 219,041 60,576 279,617
Minority interests 5,559 8,321 13,880
------- ------- -------
Total equity 224,600 68,897 293,497
------- ------- -------
Consolidated balance sheet
AT 31 DECEMBER 2010
Before
biological Biological
bearer-asset bearer-asset 31 December
adjustment adjustment 2010
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets (note 4) - 110,862 110,862
Property, plant and equipment 120,476 (52,416) 68,060
Investments in associates 106,776 22,803 129,579
Investments 149 - 149
Deferred-tax asset 808 - 808
------- ------- -------
229,366 81,249 310,615
------- ------- -------
Current assets
Biological assets 7,991 - 7,991
Inventories 7,921 - 7,921
Trade and other receivables 24,388 - 24,388
Current-tax asset 1,962 - 1,962
Cash and cash equivalents 35,399 - 35,399
------- ------- -------
77,661 - 77,661
------- ------- -------
Total assets 307,027 81,249 388,276
------- ------- -------
Current liabilities
Borrowings 25,255 - 25,255
Trade and other payables 8,278 - 8,278
Current-tax liabilities 2,611 - 2,611
------- ------- -------
36,144 - 36,144
------- ------- -------
Net current assets 41,517 - 41,517
------- ------- -------
Non-current liabilities
Borrowings 10,175 - 10,175
Deferred-tax liability 3,178 14,597 17,775
Retirement-benefit obligations 1,840 - 1,840
------- ------- -------
15,193 14,597 29,790
------- ------- -------
Total liabilities 51,337 14,597 65,934
------- ------- -------
Net assets 255,690 66,652 322,342
------- ------- -------
Equity
Share capital (note 5) 8,987 - 8,987
Other reserves 82,250 22,803 105,053
Profit and loss account 157,149 36,389 193,538
------- ------- -------
Equity attributable to the owners
of M.P. Evans Group PLC 248,386 59,192 307,578
Minority interests 7,304 7,460 14,764
------- ------- -------
Total equity 255,690 66,652 322,342
------- ------- -------
Unaudited consolidated cash-flow statement
FOR THE SIX MONTHS ENDED 30 JUNE 2011
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
US$'000 US$'000 US$'000
Net cash generated by operating
activities (note 6) 19,340 5,206 19,417
------- ------- -------
Investing activities
Interest received 528 236 711
Proceeds on disposal of property, plant
and equipment 247 322 690
Proceeds on disposal of investments - - 3,255
Purchase of property, plant and equipment (14,945) (1,612) (9,920)
Planting expenditure (7,088) (8,474) (15,204)
Purchase of shares in associated company - (5,484) (7,310)
------- ------- -------
Net cash from investing activities (21,258) (15,012) (27,778)
------- ------- -------
Financing activities
Dividends paid to Company
shareholders (note 3) (4,266) (3,608) (5,064)
Repayment of borrowings - (2,010) (2,011)
Loans drawn down 17,508 - 10,175
Proceeds on issue of shares (note 5) 10 1,285 1,301
Dividend paid to minorities - - -
------- ------- -------
Net cash used by financing activities 13,252 (4,333) 4,401
------- ------- -------
Net increase/(decrease) in cash and cash
equivalents 11,334 (14,139) (3,960)
Net cash and cash equivalents at beginning
of the period 10,144 15,784 15,784
Effect of foreign-exchange rates on cash
and cash equivalents (1,075) 1,136 (1,680)
------- ------- -------
Net cash and cash equivalents at end of
the period 20,403 2,781 10,144
------- ------- -------
Notes to the interim statements
FOR THE SIX MONTHS ENDED 30 JUNE 2011
1. STATUTORY INFORMATION
The financial information for the six-month periods ended 30 June 2011 and 2010 has been neither audited nor reviewed by the Group's auditors and does not constitute accounts within the meaning of section 423 of the Companies Act 2006. The financial information for the year ended 31 December 2010 is abridged from the statutory accounts. The 31 December 2010 statutory accounts have been reported on by the Group's auditors, PricewaterhouseCoopers LLP, and have been filed with the Registrar of Companies. The report of the auditors thereon was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006, nor did it contain any matters to which the auditors drew attention without qualifying their audit report.
2. ACCOUNTING POLICIES
The consolidated financial results have been prepared in accordance with International Financial Reported Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board (IASB) as adopted by the EU, and with those parts of the Companies Act 2006 applicable to companies preparing accounts under IFRS.
The accounting policies of the Group follow those set out in the annual financial statements at 31 December 2010.
3. DIVIDENDS
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
US$'000 US$'000 US$'000
2009 final dividend - 5.00p
per 10p share - 3,993 3,993
2010 interim dividend - 2.00p
per 10p share - - 1,663
2010 final dividend - 5.50p
per 10p share 4,725 - -
------ ------ ------
4,725 3,993 5,656
------ ------ ------
Subsequent to 30 June 2011, the board has declared an interim dividend of 2.25p per 10p share. The dividend will be paid on or after 4 November 2011 to those shareholders on the register at the close of business on 30 September 2011. The board has decided to make a scrip dividend available for this interim dividend. Shareholders who have previously elected to receive their dividends in this manner will therefore automatically receive this dividend as scrip. Shareholders who now wish to make an election to receive this and future dividends as scrip should contact the company secretary by no later than 14 October 2011.
TIMETABLE
Ex dividend date 28/09/2011
Record date 30/09/2011
Calculation period 28/09/2011 to 04/10/2011
Last day for script elections 14/10/2011
Payment date 04/11/2011
4. BIOLOGICAL ASSETS
The Group values its plantation assets using a discounted cash flow over the expected 25-year economic life of the asset. The discount rate used in this valuation is 14%. The price of the f.f.b. crop is taken to be a 20-year average based on actual selling prices or, where the plantation has its own mill, an inference based on the widely-quoted commodity price for crude palm oil delivered c.i.f. Rotterdam. The directors have concluded that using a 20-year average provides their best estimate of prices to be achieved over the valuation period.
The long-term average price and exchange rates used in determining the valuations based on cash flows were as follows:
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
US$'000 US$'000 US$'000
Price of crude palm oil
(US$/t, c.i.f Rotterdam) 554 515 533
Exchange rate (Rupiah
per US dollar) 8,597 9,083 8,891
------ ------ ------
For palm oil, changes in the price assumption have a more than proportionate impact on the valuation of oil-palm plantings.
5. SHARE CAPITAL
30 June 30 June 31 December
2011 2010 2010
Number of shares of 10p each
At 1 January 53,357,455 52,271,315 52,271,315
Issued 70,085 1,044,853 1,086,140
---------- ---------- ----------
At period end 53,427,540 53,316,168 53,357,455
---------- ---------- ----------
US$'000 US$'000 US$'000
At 1 January 8,987 8,821 8,821
Issued 11 159 166
------- ------- -------
At period end 8,998 8,980 8,987
------- ------- -------
During the period, 5,000 (2010 - 968,100) 10p shares were issued as a result of the exercise of share options. Total cash proceeds received by the Company were US$9,563 (2010 US$1,285,140). In addition, 65,085 shares were issued in lieu of the 2010 final dividend paid on 17 June 2011 (2010 - 76,753).
6. ANALYSIS OF MOVEMENTS IN CASH FLOW
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
US$'000 US$'000 US$'000
Operating profit 15,209 7,508 20,295
Biological gain (10,286) (13,571) (20,251)
Planting expenditure 7,088 8,474 15,204
Disposal of non-current assets 94 133 1,903
Provision on land to be sold to
smallholders' co-operative schemes (863) 1,567 1,350
Release of deferred profit on sale
of land (29) (31) (326)
Depreciation of property, plant
and equipment 1,432 1,570 2,585
Retirement-benefit obligations 645 307 529
Share-based payments 29 61 66
Dividends from associated companies 9,634 9,001 14,454
------- ------- -------
Operating cash flows before
movements in working capital 22,953 15,019 35,809
Decrease/(increase)in inventories 108 202 (622)
Increase in receivables (490) (8,651) (10,760)
Increase in payables 1,822 1,555 515
------- ------- -------
Cash used in operating activities 24,393 8,125 24,942
Income tax paid (3,802) (2,144) (3,878)
Interest paid (1,251) (775) (1,647)
------- ------- -------
Net cash generated by operating
activities 19,340 5,206 19,417
------- ------- -------
7. EXCHANGE RATES
30 June 30 June 31 December
2011 2010 2010
US$1 = Indonesian Rupiah
- average 8,743 9,182 9,081
- period end 8,597 9,083 8,991
------ ------ ------
US$1 = Australian Dollar
- average 0.97 1.12 1.09
- period end 0.93 1.18 0.98
------ ------ ------
US$1 = Malaysian Ringgit
- average 3.03 3.31 3.22
- period end 3.02 3.24 3.08
------ ------ ------
£1 = US Dollar
- average 1.62 1.53 1.55
- period end 1.61 1.50 1.57
------ ------ ------
8. DISTRIBUTION
The interim report for the six-month period ended 30 June 2011 will be despatched to shareholders on or before 16 September 2011 and copies thereof will be available from the Company at 3 Clanricarde Gardens, Tunbridge Wells, Kent TN1 1HQ on and after that date.
14 September 2011
This information is provided by RNS
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