Half Yearly Report
M.P. EVANS GROUP PLC
M.P. Evans Group PLC ("M P Evans"), a producer of Indonesian palm oil and Australian beef cattle, announces its unaudited interim results for the six months ended 30 June 2012.
Highlights
Financials
· Agricultural gross profit 15% higher at US$14.36 million (2011 US$12.54 million)
· Share of associates' profits 45% lower at US$7.29 million (2011 US$13.29 million) largely due to non-cash losses in NAPCo
· Profit for the period 31 % lower at US$15.33 million (2011 US$22.36 million)
· Interim dividend maintained at 2.25p per 10p share
· Balance sheet further strengthened by robust operating cash flows
Indonesian palm oil
· Crops of oil-palm fresh fruit bunches ("f.f.b.") 22% higher on majority-held estates and 1% higher on associates' estates
· Palm-oil prices averaged US$1,096 per tonne, 8% lower than US$1,195 in first-half 2011
· New Kalimantan project achieved break even
· Group on track to produce 300,000 tonnes of f.f.b. from majority-held estates in 2012
· Group continues to plant more land on existing projects and to seek new land in which to invest
Australian beef cattle
· Woodlands herd maintained at over 10,000 head, with improved weight gains, during first half
· Cattle prices declined from end-2011 peak following continued strength of Australian Dollar and slackening of demand in South East Asia affecting results of cattle operations
· Woodlands agricultural gross loss US$0.57 million (2011 US$0.46 million loss)
· Group's share of NAPCo's post-tax loss US$1.24 million (2011 share US$2.88 million profit)
Malaysian-property
· Property sales slower than same period in 2011 but expected to improve in second half
· Board's long-term intention to dispose of the Group's Malaysian property interests, with expected value of over US$40 million
Commenting on the results, the chairman of M. P. Evans, Peter Hadsley-Chaplin, said:-
"Overall, the Group has performed well in the first half of 2012 and it is particularly pleasing to note the increase in palm-oil profits from the majority-held operations, following a strong increase in f.f.b. crops and despite a softening of the palm-oil price. Projected growth in the Group's crops to 300,000 tonnes in 2012 is expected to continue to around 500,000 tonnes in 2015. Although the beef-cattle operations suffered a loss in the first half, the prospects for Australian beef remain favourable"
Enquires:
M.P. Evans Group PLC 020 7796 4133 on 14 September 2012 only
Thereafter telephone 01892 516333
Peter Hadsley-Chaplin Chairman
Philip Fletcher Managing director
Tristan Price Finance director
Peel Hunt LLP 020 7418 8900
Dan Webster
Matthew Armitt
Hudson Sandler 020 7796 4133
Charlie Jack
Katie Matthews
An analysts' meeting will be held today at 9.30 a.m. at the offices of Hudson Sandler, 29 Cloth Fair, London EC1A 7NN
OVERVIEW
The strong increase in the level of crops from the Group's new Indonesian palm-oil projects continues. As a result, the board is pleased to report a higher gross profit from the majority-owned palm-oil operations resulting from these substantially-higher crops, partly offset by lower palm-oil prices. The associated plantation companies, which recorded similar overall crops to the previous year, reported lower profits resulting from the lower palm-oil and rubber prices.
The results of the Group's cattle operations (both majority-owned and associated) suffered from a marked downturn in cattle prices at the half year, resulting in non-cash losses being recognised in the income statement.
As a result of the above and also of adverse exchange differences and higher administrative expenses, the profit after tax for the first half of 2012 was US$15.33 million, 31% lower than the US$22.36 million for the same period in 2011. The balance sheet was further strengthened by robust operating cash flows.
The board has declared an interim dividend maintained at 2.25p per share. The dividend will be paid on or after 5 November 2012 to shareholders on the register at the close of business on 28 September 2012. A scrip-dividend alternative continues to be available for this interim dividend. Shareholders who have previously elected to receive their dividends in this manner will automatically receive this dividend as scrip. Shareholders who now wish to make an election to receive this and future dividends as scrip should contact the company secretary by no later than 15 October 2012.
STRATEGIC DEVELOPMENTS, INCLUDING NEW PROJECTS
Indonesian palm oil
The crop of oil-palm fresh fruit bunches ("f.f.b.") from the Group's majority-owned areas (both established and new projects) is forecast to reach approximately 300,000 tonnes for the whole of 2012. Further growth is expected to produce around 500,000 tonnes in 2015 which should generate significantly higher revenues and cash flows, subject to palm-oil prices remaining at reasonable levels.
Planting started slowly on the new projects in 2012. In the first half of the year, 300 hectares were planted on the Kalimantan project, of which 100 hectares related to the smallholders. As at 30 June 2012, the project extended to 13,100 hectares of which 3,700 hectares have been developed on behalf of the smallholder cooperatives. On the Bangka project 300 hectares were planted in the first half of 2012, of which 100 hectares related to the smallholders. As at 30 June 2012, the project extended to 4,700 hectares, of which 1,500 hectares have been developed on behalf of the smallholder cooperatives.
It remains uncertain how much further land will be available for planting on the new projects. Agreeing compensation levels with local people is a time-consuming and unpredictable process. As the Kalimantan project nears completion the "tidying up" and processing of the final areas becomes more cumbersome and it is particularly difficult to anticipate what may be available on the Bangka project where there are competing tin-mining activities. The Group has established a good name in both locations with the local population for the way in which the smallholder schemes have been set up and run. It is believed that this will persuade more people to support the development of further areas but this takes time. The latest broad estimate is that, on the Kalimantan project, approximately a further 2,900 hectares might be able to be developed, of which some 900 will relate to the smallholder schemes. On Bangka, it is thought that up to 5,300 hectares might be available, of which approximately 2,500 hectares will relate to the smallholder schemes.
The board is actively investigating further land for development. Only land with environmentally-suitable features is being considered.
The Pangkatan palm-oil mill and the three estates supplying f.f.b. to it, Pankgatan, Bilah and Sennah, are in the final phases of accreditation by the Round Table on Sustainable Palm Oil ("RSPO"). It is hoped that this accreditation will be received before the end of 2012. Now that the Kalimantan mill is fully operating, it is expected that the RSPO audit process will commence before the end of the year.
Australian beef cattle
No further shares in NAPCo were acquired during the first half but the board will continue to review any opportunities that arise in respect of the Group's shareholding. The water-development programme on Alexandria Station, the company's largest breeding property, has been substantially completed. This has enabled the number of calves branded annually to be increased from some 32,000 to 40,000 in the last decade. It will also allow the rotation, or "spelling", of more paddocks so the property as a whole may more readily carry a greater number of cattle on a continuous basis. As referred to in the 2011 annual report, the extension to the feedlot was completed in the latter part of 2011. This has enabled greater economies of scale and flexibility of timing with regard to bringing cattle into the feedlot when seasonal conditions warrant it. It will also enable cattle to be acquired from outside the company to be brought in for grain fattening, although this is currently not economically viable in view of the recent rise in the price of grain.
With regard to Woodlands, the pasture-development programme is now largely complete and, other than in unusually dry conditions, an average herd size of at least 10,000 head should be able to be maintained.
Divestment from Malaysia
It remains the board's long-term intention to dispose of the 70-hectare Bertam Estate and the Group's 40% investment in Bertam Properties Sdn. Berhad ("Bertam Properties"). It is, however, the intention to benefit in the next few years from the cash flows generated by Bertam Properties which are largely distributed by way of dividend. It may be the appropriate time to seek to divest Bertam Properties once it is reduced in size after selling some of its land bank and distributing surplus cash and reserves. In the meantime, it is expected that Bertam Estate will continue to increase in value as the adjacent Bertam Properties land is developed or sold. The value of Bertam Estate is estimated to be in excess of US$13.5 million and the investment in Bertam Properties in the region of US$30.0 million.
THE PALM-OIL MARKET
The palm-oil price strengthened in the first quarter of the year but then weakened in the second quarter on the expectation of increasing palm-oil production in the two main producing countries, Indonesia and Malaysia, and large soybean plantings in the US. As at 30 June 2012, it had fallen to around US$950 per tonne (Rotterdam c.i.f.) The average for the first half of 2012 was US$1,096 compared with US$1,195 for the first half of 2011. As referred to below under "Prospects", the price has improved a little in the second half of 2012.
THE BEEF-CATTLE MARKET
The high price recorded in the latter part of 2011 for both the grass-fed, lighter-weight, cattle (produced by Woodlands) and the heavier, grain-finished, cattle (produced by NAPCo) were not sustained and gradually fell back, albeit to levels which were still relatively high by historical standards. One of the reasons for this softening was the more sluggish demand for beef from two of Australia's traditional export markets, Japan and Korea. This was, in turn, influenced by the continuing strength of the Australian Dollar. Also, the increase in the price of grain, which had a particularly negative impact on the US grain-fed market, affected the Australian and other world markets. However, by May, prices had started to recover and some of these gains were carried through to the end of June and beyond. Since the period end, there has been a slight decline in the grass-fed market, following the onset of dry weather in many parts of Australia.
RESULTS FOR THE PERIOD
Majority-owned operations
Indonesia
In the first half of 2012, the new projects achieved markedly-improved f.f.b. crops compared with the first half of 2011 and, despite lower palm-oil prices and increased costs, substantially improved their results. The established Sumatran estates increased their f.f.b. crops more modestly over the same two six-month periods but reduced their profits because of the lower palm-oil prices referred to above. Overall, the gross profit from the majority-owned Indonesian estates for the six months ended 30 June 2012 amounted to US$14.87 million, a 14% increase over the US$13.05 million relating to the same period in 2011.
It is pleasing to report that, as a result of increasing crops and the utilisation of the new palm-oil mill, the Kalimantan project approximately broke even in the first half of 2012 compared with a loss incurred in the same period in 2011.
F.f.b. crops continued the increases achieved over recent years with the overall crop for the first half of 2012 22% higher than for the same period last year. The crops from the new projects are on a sharp upward trend as the new areas mature and start producing fruit whilst those that have already matured increase yields year by year. The established estates in North Sumatra continued their improved yields as the benefits from the infrastructure improvements over the last two or so years are being felt.
The US Dollar strengthened against the Indonesian Rupiah at the end of 2011 and in early 2012. This had the effect of reducing Rupiah-based costs in US-Dollar terms, although there were cost pressures arising from the continuing strength of mineral-oil prices, which affect fertiliser and fuel costs, and from the remuneration of skilled senior staff. Furthermore, on the new projects recently-matured areas attracted costs previously capitalised. When the yields on these areas accelerate, the reduction in the gross-profit margin will be reversed as new plantings become mature. Depreciation on the new Kalimantan mill has been included for the first time in the first half of 2012.
Crops, production and selling-price details for the majority-owned estates are set out as follows:-
6 months 6 months Year
ended ended ended
30 June Increase/ 30 June 31 December
2012 (decrease) 2011 2011
Tonnes % Tonnes Tonnes
1) Crops f.f.b.
Sumatran estates
- Pangkatan group 73,100 68,500 149,300
- Simpang Kiri 24,200 23,100 50,200
------- ------- -------
97,300 6 91,600 199,500
Bangka 14,600 30 11,200 26,700
Kalimantan 26,200 162 10,000 23,100
------- ------- -------
Total crops 138,100 22 112,800 249,300
======= ==== ======= =======
2) Production
Pangkatan mill
Crude palm oil 17,100 9 15,700 34,700
Palm kernels 4,100 5 3,900 8,500
======= ==== ======= =======
Kalimantan mill
Crude palm oil 15,600 - 900
Palm kernels 2,400 - 200
======= ======= =======
3) Extraction rate % % %
Pangkatan mill
Crude palm oil 23.4 23.1 23.2
Palm kernels 5.7 5.7 5.7
======= ======= =======
% % %
Kalimantan mill
Crude palm oil 23.9 - 23.2
Palm kernels 3.7 - 4.4
======= ======= =======
4) Selling prices
Palm oil - Rotterdam c.i.f.
- average per tonne US$1,096 (8) US$1,195 US$1,123
======= ==== ======= =======
Australia
The abundant rains at the end of 2011 resulted in good pasture growth during the first half of 2012. This enabled the herd to be maintained at over 10,000 head during the period (since reduced to 8,000 following the onset of drier weather) and also resulted in markedly-improved weight gains during the first half of the year. Unfortunately, cattle prices fell during the period from the peak at the end of 2011, mainly as a result of a falling off in demand in South East Asia and the continuing strength of the Australian Dollar versus the US Dollar. As a consequence of the above, the gross loss for the first half of 2012 amounted to US$0.57 million compared with US$0.46 million for the same period in 2011.
Gross profit
As a result of all of the above, the gross profit for the first half of 2012 was US$14.36 million, a 15% increase over the US$12.54 million for the same period last year. The table below sets out an analysis of the gross profit/(loss) between the various activities and between the countries in which the Group operates.
Six months ended 30 June 2012
Biological
Cost of bearer-asset Gross
Turnover sales adjustment profit/(loss)
US$'000 US$'000 US$'000 US$'000
Plantations
Indonesia 37,374 (24,025) 1,520 14,869
Malaysia 150 (113) - 37
------ ------ ------ ------
Total plantations 37,524 (24,138) 1,520 14,906
Cattle - Australia 1,021 (1,593) - (572)
Other - UK 23 - - 23
------ ------ ------ ------
Group total 38,568 (25,731) 1,520 14,357
====== ====== ====== ======
Six months ended 30 June 2011
Biological
Cost of bearer-asset Gross
Turnover sales adjustment profit/(loss)
US$'000 US$'000 US$'000 US$'000
Plantations
Indonesia 27,359 (15,180) 867 13,046
Malaysia 178 (222) - (44)
------ ------ ------ ------
Total plantations 27,537 (15,402) 867 13,002
Cattle - Australia 689 (1,153) - (464)
Other - UK - - - -
------ ------ ------ ------
Group total 28,226 (16,555) 867 12,538
====== ====== ====== ======
Year ended 31 December 2011
Biological
Cost of bearer-asset Gross
Turnover sales adjustment profit/(loss)
US$'000 US$'000 US$'000 US$'000
Plantations
Indonesia 54,938 (30,912) 1,799 25,825
Malaysia 337 (400) - (63)
------ ------ ------ ------
Total plantations 55,275 (31,312) 1,799 25,762
Cattle - Australia 2,435 (2,324) - 111
Other - UK 46 - - 46
------ ------ ------ ------
Group total 57,756 (33,636) 1,799 25,919
====== ====== ====== ======
Bearer biological-asset adjustment
The biological gain during the period amounted to US$ 5.4 million offset, as is required under the relevant accounting standard, by planting expenditure of US$ 4.3 million. The biological gain was largely due to an increase in the price of crude palm oil used in making the valuation, which increased by US$18 per tonne (2011 US$21) compared with the previous year end. The price used in the valuation, a twenty-year average, was US$590 per tonne (2011 US$554). Additional planting of 400 hectares further bolstered this biological gain, although together the positive factors were offset by an increase in costs. The total biological bearer-asset adjustment made a modest contribution of US$ 1.9 million to reported Group-controlled profit after tax, with an additional positive adjustment of US$1.4 million in respect of associated companies, which were similarly affected by the increase in the crude-palm-oil price and cost pressures. Further information about biological assets is set out in note 4.
Associated companies
Indonesia
The Group's share of its Indonesian associated companies' post-tax profits for the period, compared with that for the first half, and for the whole, of 2011, was as follows:-
Six months ended 30 June 2012
Post-tax Post-tax
profit before profit after
biological Biological biological
bearer-asset bearer-asset bearer-asset
adjustment adjustment adjustment
US$'000 US$'000 US$'000
PT Agro Muko (36.84%) 6,295 1,466 7,761
PT Kerasaan Indonesia (38.00%) 592 (32) 560
------ ------ ------
6,887 1,434 8,321
====== ====== ======
Six months ended 30 June 2011
Post-tax Post-tax
profit before profit after
biological Biological biological
bearer-asset bearer-asset bearer-asset
adjustment adjustment adjustment
US$'000 US$'000 US$'000
PT Agro Muko (36.84%) 7,611 1,137 8,748
PT Kerasaan Indonesia (38.00%) 924 (57) 867
------ ------ ------
8,535 1,080 9,615
====== ====== ======
Year ended 31 December 2011
Post-tax Post-tax
profit before profit after
biological Biological biological
bearer-asset bearer-asset bearer-asset
adjustment adjustment adjustment
US$'000 US$'000 US$'000
PT Agro Muko (36.84%) 13,912 2,357 16,269
PT Kerasaan Indonesia (38.00%) 1,880 472 2,352
------ ------ ------
15,792 2,829 18,621
====== ====== ======
Crops and production were as follows:-
6 months 6 months Year
ended ended ended
30 June Increase/ 30 June 31 December
2012 (decrease) 2011 2011
Tonnes % Tonnes Tonnes
Crops - f.f.b.
- PT Agro Muko - own 168,400 3 163,100 354,100
- outgrowers 3,800 6 3,600 14,400
-------- -------- --------
- total 172,200 3 166,700 368,500
- PT Kerasaan Indonesia 18,000 (13) 20,700 47,100
-------- ------- --------
190,200 1 187,400 415,600
======== ==== ======== ========
Production
(PT Agro Muko) - crude palm oil 40,400 1 40,000 88,200
- palm kernels 9,100 7 8,500 19,200
======== ==== ======== ========
% % %
Extraction rate - crude palm oil 23.5 23.9 23.9
- palm kernals 5.3 5.1 5.2
======== ======== ========
Tonnes Tonnes Tonnes
Rubber crops
(PT Agro Muko) 738 (16) 876 1,546
======== ==== ======== ========
PT Agro Muko's f.f.b. crop was 3% ahead of that for the first half of 2011. The programme of infrastructure improvements, particularly roads, continues and is contributing to the higher crop being harvested. Improved access allows harvesting at all times of the year, whereas, in the past, this was not possible during particularly wet periods. As with the majority-owned estates referred to above, the lower palm-oil prices and adverse exchange-rate movements had a negative impact on earnings. In addition, the unusually benign dry weather conditions in the first half of 2011 were not repeated in the first half of 2012 and, accordingly, the overall extraction rate fell.
As expected, the results from the rubber operations were also lower in the first half of 2012 compared with the first half of 2011. Rubber prices were some 30% lower in US-Dollar terms and the crop was also lower following the intensive tapping that took place in 2011 prior to replanting in 2012.
Kerasaan Estate has experienced a severe leaf-pest attack which has reduced crop levels. This is being treated by means of chemical insecticide sprays. The lower crop and the weaker palm-oil prices referred to above resulted in a reduction in profits for the six months ended 30 June 2012 compared with the same period in 2011.
Australia
The Group's share of NAPCo's post-tax (loss)/ profit for the period, compared with that for the first half, and for the whole, of 2011, was as follows:-
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
US$'000 US$'000 US$'000
NAPCo (34.37%) (1,242) 2,880 4,231
====== ====== ======
A loss was recorded at NAPCo as a result of the decline in prices described under "The beef-cattle market" above. As on Woodlands, under international accounting rules, the decline in the value of the entire herd is effectively brought to account in the consolidated income statement for the period. In the event that prices recover in the second half, this loss will be reversed. NAPCo's fourteen properties generally enjoyed a good season, with most having plentiful feed, following the good rainfall in the latter part of 2011 and in early 2012. This enabled the cattle to go through the period under review in good condition, whilst gaining weight.
Malaysia
The Group's share of Bertam Properties' post-tax profit for the period, compared with that for the first half, and for the whole, of 2011 was as follows:-
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
US$'000 US$'000 US$'000
Bertam Properties (40.00%) 207 796 1,786
====== ====== ======
One sale of land of some 2.3 hectares was completed during the six months ended 30 June 2012 at a good price. Sales of another 10 hectares are expected to be finalised either in the remainder of 2012 or early in 2013. The completion of sales of properties developed by the company during the first half of 2012 was considerably slower than in the same period last year but is expected to improve in the second half of the year.
Overall share of associates' profits
As a result of the above, the share of the associated companies' profits after tax amounted to US$7.29 million compared with US$13.29 million for the same period in 2011.
Other administrative expenses and taxation
Other administrative expenses, at US$2.02 million, were substantially higher than the US$0.63 million recorded for the same period in 2011. This arose primarily because of a one-off credit in the first half of 2011, following an impairment review, of US$1.09 million from releasing a provision against the amounts deemed recoverable from the Indonesian smallholder cooperatives. In addition, with the Company's share price at 30 June 2012 higher than it was at 31 December 2011, this gave rise to a higher provision for potential UK National Insurance on the future exercise of options under the executive option scheme. By contrast, the downward movement of the share price in the first half of 2011 gave rise to a reduction in the provision for that period. The rate of tax was lower compared with last year since less Indonesian withholding tax was incurred as dividends from the Group's Indonesian associated companies fell. Furthermore, uncrystallised exchange gains in Indonesia on intra-Group transactions, which are eliminated on consolidation, triggered a tax charge in 2011 but have given way to exchange losses in the current year as the Rupiah has weakened.
PROSPECTS
World economic uncertainty continues amid the European debt crisis and concerns over weakening growth in China and India. Commodities in general have been weaker. Palm oil was no exception to this and the price fell back in the second quarter of 2012 to around US$950 per tonne (Rotterdam c.i.f.) at the mid-year. However, severe hot weather and the absence of rainfall in the US in the third quarter of the year has reduced the prospects for the cultivation of soybeans and the price of soybean oil has increased sharply of late. Palm oil has also improved but not to the same extent and the normal discount to soybean oil has widened sharply. This situation is regarded as supportive of the current palm-oil price (around US$1,000 per tonne) in a period when the production of palm oil is expected to be on the increase. Strong demand continues from the traditional palm-oil markets of India, China, Europe and Indonesia itself.
As is normally the case, the f.f.b. crops on the established estates in the north of Sumatra, both majority-owned and associated, are expected to be higher in the second half of the year than the first. PT Agro Muko's f.f.b. crop is expected to be similar in the second half of the year to the first. The upward crop trend on the new projects has now begun to show and is expected to continue. The crops in the second half are expected comfortably to exceed those in the first half. The Group is on track to achieve 300,000 tonnes from the majority-owned estates in 2012.
Prospects for Australian beef continue to be favourable as Australia remains well placed to serve a growing demand for red-meat consumption in Asia where tastes continue to incline towards the higher-quality end of the market.
Unaudited consolidated income statement
FOR THE SIX MONTHS ENDED 30 JUNE 2012
Result before 6 months
biological Biological ended
bearer-asset bearer-asset 30 June
adjustment adjustment 2012
US$'000 US$'000 US$'000
Revenue 38,568 - 38,568
Cost of sales (25,731) 1,520 (24,211)
------ ------ ------
Gross profit 12,837 1,520 14,357
Gain on biological assets (note 4) - 5,406 5,406
Planting expenditure - (4,302) (4,302)
Foreign-exchange losses (1,052) - (1,052)
Other administrative expenses (2,020) - (2,020)
Other income 9 - 9
------ ------ ------
Group operating profit before interest
and tax 9,774 2,624 12,398
Finance income 537 - 537
Finance costs (1,752) (154) (1,906)
------ ------ ------
Group-controlled profit before taxation 8,559 2,470 11,029
Tax on profit on ordinary activities (2,368) (617) (2,985)
------ ------ ------
Group-controlled profit after tax 6,191 1,853 8,044
Share of associated companies' profit
after tax 5,852 1,434 7,286
------ ------ ------
Profit for the period 12,043 3,287 15,330
====== ====== ======
Attributable to:
Owners of M.P. Evans Group PLC 10,081 2,827 12,908
Minority interests 1,962 460 2,422
------ ------ ------
12,043 3,287 15,330
====== ====== ======
US Cents US Cents
Basic earnings per 10p share 18.66 23.89
====== ======
Diluted earnings per 10p share 18.44 23.61
====== ======
Unaudited consolidated income statement
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 (16,555) 867 (15,688)
------ ------ ------
Gross profit 11,671 867 12,538
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 (400) (230) (630)
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 for the period 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 US Cents
Basic earnings per 10p share 32.24 37.21
====== ======
Diluted earnings per 10p share 31.62 36.49
====== ======
* US$387,000 which had been classified as administrative expenses in the
2011 interim report were classified as cost of sales in the 2011 annual
report. The figures presented here are consistent with those in the annual
report.
Unaudited consolidated income statement
FOR THE YEAR ENDED 31 DECEMBER 2011
Result before Year
biological Biological ended
bearer-asset bearer-asset 31 December
adjustment adjustment 2011
US$'000 US$'000 US$'000
Revenue 57,756 - 57,756
Cost of sales (33,636) 1,799 (31,837)
------ ------ ------
Gross profit 24,120 1,799 25,919
Gain on biological assets - 17,936 17,936
Planting expenditure - (15,619) (15,619)
Foreign-exchange gains 528 - 528
Other administrative expenses (2,470) (230) (2,700)
Other income 143 - 143
------ ------ ------
Group operating profit before interest
and tax 22,321 3,886 26,207
Finance income 1,078 - 1,078
Finance costs (2,361) (574) (2,935)
------ ------ ------
Group-controlled profit before taxation 21,038 3,312 24,350
Tax on profit on ordinary activities (8,450) (842) (9,292)
------ ------ ------
Group-controlled profit after tax 12,588 2,470 15,058
Share of associated companies' profit
after tax 21,809 2,829 24,638
------ ------ ------
Profit for the period 34,397 5,299 39,696
====== ====== ======
Attributable to:
Owners of M.P. Evans Group PLC 30,340 5,182 35,522
Minority interests 4,057 117 4,174
------ ------ ------
34,397 5,299 39,696
====== ====== ======
US Cents US Cents
Basic earnings per 10p share 56.71 66.39
====== ======
Diluted earnings per 10p share 56.06 65.64
====== ======
Unaudited consolidated balance sheet
AT 30 JUNE 2012
Before
biological Biological
bearer-asset bearer-asset 30 June
adjustment adjustment 2012
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets (note 4) - 132,833 132,833
Property, plant and equipment 168,103 (68,606) 99,497
Investment in associates 105,877 27,068 132,945
Investments 105 - 105
Deferred-tax asset 4,653 - 4,653
------- ------- -------
279,895 91,295 371,190
------- ------- -------
Current assets
Biological assets 9,553 - 9,553
Inventories 12,025 - 12,025
Trade and other receivables 13,270 - 13,270
Current-tax asset 5,658 - 5,658
Cash and cash equivalents 55,014 - 55,014*
------- ------- -------
95,520 - 95,520
------- ------- -------
Total assets 375,415 91,295 466,710
------- ------- -------
Current liabilities
Borrowings 25,255 - 25,255
Trade and other payables 16,146 - 16,146
Current-tax liabilities 4,475 - 4,475
------- ------- -------
45,876 - 45,876
------- ------- -------
------- ------- -------
Net current assets 49,644 - 49,644
------- ------- -------
Non-current liabilities
Borrowings 31,215 - 31,215
Deferred-tax liability 3,243 16,057 19,300
Retirement-benefit obligations 3,334 - 3,334
------- ------- -------
37,792 16,057 53,849
------- ------- -------
Total liabilities 83,668 16,057 99,725
======= ======= =======
------- ------- -------
Net assets 291,747 75,238 366,985
======= ======= =======
Equity
Share capital (note 5) 9,105 - 9,105
Other reserves 84,556 27,068 111,624
Profit and loss account 185,762 40,134 225,896
------- ------- -------
Equity attributable to owners of
M.P. Evans Group PLC 279,423 67,202 346,625
Minority interests 12,324 8,036 20,360
------- ------- -------
Total equity 291,747 75,238 366,985
======= ======= =======
* Of this balance US$20.1 million has been pledged as security against bank loans
Unaudited consolidated balance sheet
AT 30 JUNE 2011
Before
biological Biological
bearer-asset bearer-asset 30 June
adjustment adjustment 2011
US$'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
======= ======= =======
Unaudited consolidated balance sheet
AT 31 DECEMBER 2011
Before
biological Biological
bearer-asset bearer-asset 31 December
adjustment adjustment 2011
US$'000 US$'000 US$'000
Non-current assets
Goodwill 1,157 - 1,157
Biological assets (note 4) - 127,428 127,428
Property, plant and equipment 161,700 (65,670) 96,030
Investments in associates 106,026 25,633 131,659
Investments 145 - 145
Deferred-tax asset 2,808 - 2,808
Non-current debtor 2,189 - 2,189
------- ------- -------
274,025 87,391 361,416
------- ------- -------
Current assets
Biological assets 9,878 - 9,878
Inventories 8,582 - 8,582
Trade and other receivables 14,439 - 14,439
Current-tax asset 6,300 - 6,300
Cash and cash equivalents 52,755 - 52,755
------- ------- -------
91,954 - 91,954
------- ------- -------
Total assets 365,979 87,391 453,370
------- ------- -------
Current liabilities
Borrowings 25,255 - 25,255
Trade and other payables 14,814 - 14,814
Current-tax liabilities 4,322 - 4,322
------- ------- -------
44,391 - 44,391
------- ------- -------
Net current assets 47,563 - 47,563
------- ------- -------
Non-current liabilities
Borrowings 31,450 - 31,450
Deferred-tax liability 3,213 15,440 18,653
Retirement-benefit obligations 2,963 - 2,963
------- ------- -------
37,626 15,440 53,066
------- ------- -------
Total liabilities 82,017 15,440 97,457
======= ======= =======
Net assets 283,962 71,951 355,913
======= ======= =======
Equity
Share capital (note 5) 9,093 - 9,093
Other reserves 84,320 25,633 109,953
Profit and loss account 180,187 38,742 218,929
------- ------- -------
Equity attributable to owners
of M.P. Evans Group PLC 273,600 64,375 337,975
Minority interests 10,362 7,576 17,938
------- ------- -------
Total equity 283,962 71,951 355,913
======= ======= =======
Unaudited consolidated cash-flow statement
FOR THE SIX MONTHS ENDED 30 JUNE 2012
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
US$'000 US$'000 US$'000
Net cash generated by operating
activities (note 6) 16,548 19,340 48,339
------- ------- -------
Investing activities
Interest received 537 528 1,078
Proceeds on disposal of property, plant
and equipment 194 247 598
Purchase of property, plant and equipment (6,116) (14,945) (31,789)
Planting expenditure (4,302) (7,088) (15,619)
------- ------- -------
Net cash used by investing activities (9,687) (21,258) (45,732)
------- ------- -------
Financing activities
Dividends paid to Company
shareholders (note 3) (4,360) (4,266) (6,064)
Repayment of borrowings (475) - -
Loans drawn down 298 17,508 20,921
Proceeds on issue of shares (note 5) 20 10 1,034
Dividend paid to minorities - - (1,000)
------- ------- -------
Net cash (used)/generated by financing
activities (4,517) 13,252 14,891
------- ------- -------
Net increase in cash and cash
equivalents 2,344 11,334 17,498
Net cash and cash equivalents at beginning
of the period 27,500 10,144 10,144
Effect of foreign-exchange rates on cash
and cash equivalents (85) (1,075) (142)
------- ------- -------
Net cash and cash equivalents at end of
the period 29,759 20,403 27,500
======= ======= =======
Notes to the interim statements
FOR THE SIX MONTHS ENDED 30 JUNE 2012
1. STATUTORY INFORMATION
The financial information for the six-month periods ended 30 June 2012 and 2011 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 2011 is abridged from the statutory accounts. The 31 December 2011 statutory accounts have been reported on by the Group's auditors, PricewaterhouseCoopers LLP, and have been filed with the Registrar of Companies. The report of the auditors thereon was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006, nor did it contain any matters to which the auditors drew attention without qualifying their audit report.
2. ACCOUNTING POLICIES
The consolidated financial results have been prepared in accordance with International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board (IASB) as adopted by the EU, and with those parts of the Companies Act 2006 applicable to companies preparing accounts under IFRS.
The accounting policies of the Group follow those set out in the annual financial statements at 31 December 2011.
3. DIVIDENDS
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
US$'000 US$'000 US$'000
2010 final dividend - 5.50p
per 10p share - 4,725 4,725
2011 interim dividend - 2.25p
per 10p share - - 1,887
2011 final dividend - 5.75p
per 10p share 4,878 - -
------ ------ ------
4,878 4,725 6,612
------ ------ ------
Subsequent to 30 June 2012, the board has declared an interim dividend of 2.25p per 10p share. The dividend will be paid on or after 5 November 2012 to those shareholders on the register at the close of business on 28 September 2012.
A scrip dividend will continue to be available for the interim dividend. Shareholders who have previously elected to receive their dividends in this manner will automatically receive this dividend as scrip. Shareholders who now wish to make an election to receive this and future dividends as scrip should contact the company secretary by no later than 15 October 2012.
TIMETABLE
Ex dividend date 28/09/2012
Record date 30/09/2012
Calculation period 28/09/2012 to 04/10/2012
Last day for scrip elections 14/10/2012
Payment date 04/11/2012
4. BIOLOGICAL ASSETS
The Group values its plantation assets using a discounted cash flow over the expected 25-year economic life of the asset. The discount rate used in this valuation is 14%. The price of the f.f.b. crop is taken to be a 20-year average based on actual selling prices or, where the plantation has its own mill, an inference based on the widely-quoted commodity price for crude palm oil delivered c.i.f. Rotterdam. The directors have concluded that using a 20-year average provides their best estimate of prices to be achieved over the valuation period.
The long-term average price and exchange rates used in determining the valuations based on cash flows were as follows:
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
Price of crude palm oil
(US$/tonnes, c.i.f Rotterdam) 590 554 572
Exchange rate (Rupiah
per US Dollar) 9,480 8,597 9,068
====== ====== ======
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
2012 2011 2011
Number of shares of 10p each
At 1 January 54,021,901 53,357,455 53,357,455
Issued 75,980 70,085 664,446
---------- ---------- ----------
At period end 54,097,881 53,427,540 54,021,901
========== ========== ==========
US$'000 US$'000 US$'000
At 1 January 9,093 8,987 8,987
Issued 12 11 106
------- ------- -------
At period end 9,105 8,998 9,093
======= ======= =======
During the period, 10,000 (2011 - 5,000) 10p shares were issued as a result of the exercise of share options. Total cash proceeds received by the Company were US$20,000 (2011 US$10,000). In addition, 65,980 shares were issued in lieu of the 2011 final dividend paid on 21 June 2012 (2011 - 65,085).
6. ANALYSIS OF MOVEMENTS IN CASH FLOW
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
US$'000 US$'000 US$'000
Profit for the year 15,330 22,363 39,696
Share of associated companies' profit
after tax (7,286) (13,291) (24,638)
Tax charge 2,985 5,414 9,292
Finance costs 1,906 1,251 2,935
Finance income (537) (528) (1,078)
------- ------- -------
Operating profit 12,398 15,209 26,207
Biological gain (5,669) (10,286) (20,215)
Planting expenditure 4,302 7,088 15,619
Disposal of non-current assets (52) 94 1,441
Add back of land to be sold to
smallholders' co-operative schemes (27) (863) (961)
Release of deferred profit on sale
of land (114) (29) (54)
Depreciation of property, plant
and equipment 2,548 1,432 3,139
Retirement-benefit obligations 517 645 1,215
Share-based payments 10 29 28
Dividends from associated companies 6,074 9,634 22,206
------- ------- -------
Operating cash flows before
movements in working capital 19,987 22,953 48,625
(Increase)/decrease in inventories (2,854) 108 (270)
Decrease/(increase)in receivables 3,379 (490) 10,846
Increase in payables 1,332 1,822 7,073
------- ------- -------
Cash generated by operating
activities 21,844 24,393 66,274
Income tax paid (3,390) (3,802) (15,000)
Interest paid (1,906) (1,251) (2,935)
------- ------- -------
Net cash generated by operating
activities 16,548 19,340 48,339
======= ======= =======
7. EXCHANGE RATES
30 June 30 June 31 December
2012 2011 2011
US$1 = Indonesian Rupiah
- average 9,171 8,743 8,763
- period end 9,480 8,597 9,068
====== ====== ======
US$1 = Australian Dollar
- average 0.97 0.97 0.97
- period end 0.98 0.93 0.98
====== ====== ======
US$1 = Malaysian Ringgit
- average 3.09 3.03 3.06
- period end 3.18 3.02 3.17
====== ====== ======
£1 = US Dollar
- average 1.58 1.62 1.60
- period end 1.57 1.61 1.56
====== ====== ======
8. DISTRIBUTION
The interim report for the six-month period ended 30 June 2012 will be despatched to shareholders on or before 19 September 2012 and copies thereof will be available on the Company's website (www.mpevans.co.uk) or from the Company at 3 Clanricarde Gardens, Tunbridge Wells, Kent TN1 1HQ on and after that date.
14 September 2012
This information is provided by RNS
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