Interim Results

RNS Number : 7865N
M. P. Evans Group PLC
12 September 2013
 



M.P. EVANS GROUP PLC

  

M.P. Evans Group PLC ("M P Evans"), a producer of Indonesian palm oil and Australian beef cattle, announces its unaudited interim results for the six months ended 30 June 2013.

 

 

Highlights

 

Financials

·      Despite continued crop increases, lower palm-oil price led to 34% reduction in agricultural gross profit to US$9.5 million (2012 US$14.4 million)

·      Share of associates' profits 40% lower at US$4.4 million (2012 US$7.3 million) largely due to lower palm-oil price

·      Profit for the period 33% lower at US$10.3 million (2012 US$15.3 million)

·      Interim dividend maintained at 2.25p per 10p share

·      Group maintains positive cash balances and modest borrowings

 

Indonesian palm oil

·      Crops of oil-palm fresh fruit bunches ("f.f.b.") 14% higher on majority-held estates and 3% lower on associates' estates

·      Palm-oil prices averaged US$846 per tonne, 23% lower than US$1,096 in first-half 2012

·      High oil-extraction rates achieved by Kalimantan and Sumatra mills of 25.1% and 24.1% respectively

·      Progress achieved on new Musi Rawas project in South Sumatra

·      Group on track to produce 350,000 tonnes of f.f.b. from majority-held estates in 2013 and 500,000 tonnes in 2015

 

Australian beef cattle

·      Woodlands enjoyed good season, with improved weight gains, leading to improved (break-even) result in first half

·      Cattle prices declined from end-2012 peak following poor season across much of Australia and  continued strength of Australian Dollar

·      Group's share of NAPCo's post-tax loss US$1.2 million (2012 share US$1.2 million loss)

·      Cattle prices slightly improved since period end as Australian Dollar softens but drier conditions currently prevail

·      Discussions continue regarding possible change of control of NAPCo

 

Malaysian-property

·      Group's share of Bertam Properties' profit increased to US$1.1 million (2012 US$0.2 million) following completion of sales of developed housing

·      Board retains long-term intention to dispose of the Group's Malaysian property interests, with expected value of over US$40 million

 

Commenting on the results, the chairman of M. P. Evans, Peter Hadsley-Chaplin, said:-

 

"The Group's reduction in profit, following the decline in the palm-oil price from around US$1,100 per tonne to the current level of some US$840 per tonne, was mitigated by the anticipated continued increase in crops from the majority-held Indonesian estates.  Projected growth to 350,000 tonnes in 2013 is expected to continue to around 500,000 tonnes in 2015.  The Australian beef-cattle price is showing welcome signs of improvement following an increase in export demand and a reported tightening of US supply." 

 

 

 

Enquires:

M.P. Evans Group PLC                 020 7796 4133 on 12 September 2013 only

                                                        Thereafter telephone 01892 516333

 

Peter Hadsley-Chaplin               Chairman

Philip Fletcher                             Managing director

Tristan Price                                 Finance director

 

Peel Hunt LLP                                020 7418 8900

Dan Webster

Matthew Armitt

 

Hudson Sandler                           020 7796 4133

Charlie Jack

Katie Matthews

 

An analysts' meeting will be held today at 9.30 a.m. at the offices of Hudson Sandler, 29 Cloth Fair, London EC1A 7NN

 

 

 

 



 

 

OVERVIEW

Crops of oil-palm fresh fruit bunches ("f.f.b.") from the Group's majority-owned estates continued their upward trend, increasing by 14%, in the first half of 2013 and oil-extraction rates improved to pleasing levels.  However, palm-oil prices for the six months ended 30 June 2013 were significantly below the levels experienced in the same period in 2012.  Costs increased as young plantings were brought into maturity although the strengthening of the US Dollar against the Indonesian Rupiah reduced local costs in US-Dollar terms.

 

The associated plantation companies' f.f.b. crops for the first half of 2013 were down slightly, by 3%, on the same period in 2012 and oil-extraction rates fell as a result of wetter-than-usual weather conditions.  The companies were also adversely affected by the lower palm-oil prices referred to above.

 

Cattle weight gains achieved on Woodlands were slightly higher than for the first half of 2012 and the operations were less affected by the fall in prices than in the previous year.  The lower cattle prices resulted in the associated The North Australian Pastoral Company Pty Limited ("NAPCo") recording a similar loss in the first half of 2013 to that in the first half of 2012. 

 

As a result of the above and a higher biological-asset adjustment, the profit for the first half of 2013 was US$10.3 million, 33% lower than the US$15.3 million for the same period in 2012.

 

The board has declared an interim dividend maintained at 2.25p per share.  The dividend will be paid on or after 4 November 2013 to shareholders on the register at the close of business on 27 September 2013.  A scrip-dividend alternative continues to be available for this interim dividend. 

 

Progress has been made on the new oil-palm project, Musi Rawas, in South Sumatra, Indonesia, where, as announced in November 2012, the Group gained an operating licence to develop a concession comprising a gross area of 20,000 hectares.  The management team is in place and negotiations have begun with local people to agree compensation terms with them.  As at the date of this report, some 700 hectares have been acquired.  Planting is expected to commence in 2014.

 

Overall, the Group remains on track to produce 500,000 tonnes of f.f.b. from its majority-held estates in 2015.

 

As announced on 13 May 2013, the controlling shareholder in NAPCo is considering its strategic options in relation to its shareholding in the company.  Third parties have been  approached to gauge interest in acquiring a controlling interest in the company.  The board of M. P. Evans Group PLC ("MPEG"), the second-largest shareholder in NAPCo, has declared that it will sell its shareholding if an acceptable proposal for a change of control was to result from such a process.  Taken together, the controlling shareholder and MPEG own more than 95% of NAPCo.  Discussions continue and the Group will update the market when appropriate.

 

 

THE PALM-OIL AND BEEF-CATTLE MARKETS

After an uncertain start to the year during which the crude palm oil ("CPO") price eased to some US$ 800 per tonne (Rotterdam c.i.f.), it moved on an upward trend, reflecting weak reported production throughout South East Asia and lower CPO stock levels, before fluctuating around a price of some US$ 850 per tonne. The second quarter saw the price fall back slightly, though not to the levels seen at the beginning of the year, before it once again rose to finish the half year at US$ 870 per tonne. The average price for the first half of the year was US$ 846 per tonne (2012 US$ 1,096). As referred to below under "Prospects", and as expected, the price weakened during the Muslim fasting season in July. It subsequently strengthened noticeably on reports of dryness in both North and South America's main soybean-producing areas, raising doubts as to the extent of very significant crop increases expected from these areas.  It has since returned to fluctuate around US$850 per tonne.

 

Prices for both the grass-fed, lighter-weight cattle (produced by Woodlands) and the heavier, grain-finished cattle (produced by NAPCo), broadly fell during the first half of 2013.  This resulted both from the dry conditions experienced across many parts of Australia, putting downward pressure on prices, and from the negative effect on the export market of the continuing strength of the Australian Dollar.  Since the period end, however, the Australian Dollar has declined by around 10%, continuing the downward trend which commenced in April 2013, and this has recently begun to have a positive impact on export prices.  The global beef-cattle market may also be positively affected by the looming short supply of slaughter-ready cattle reported in the US.

 

RESULTS FOR THE PERIOD

 

Majority-owned operations

Indonesia

 

As expected, the strong improvement in f.f.b. crops on the Kalimantan and Bangka projects continued in the first half of 2013 as areas mature and yields increase as the palms grow older.  The f.f.b. crops on the mature Sumatran estates were slightly lower partly because of a dip in the cropping cycle and, as foreshadowed in previous reports, partly because of the larger replanting programme that is under way. In Kalimantan, the Group continues to purchase increasing levels of f.f.b. from the smallholder cooperatives.  Purchases are also made from nearby third-party estates but, although difficult to predict, it is expected that these levels will decline as some of those estates not only build their own mills but also compete for other sources of f.f.b. in the area.  In addition to the overall higher crop, oil-extraction rates improved impressively in the mills in Kalimantan and Sumatra to the most satisfactory levels of 25.1% and 24.1% respectively.  Palm-oil prices in the first half of 2013 (average Rotterdam c.i.f. US$846/tonne) were lower than in the same period in 2012 (US$1,096/tonne).  As a result, despite increases in production, Group revenue from palm oil and f.f.b. sales was similar in the 2013 period at US$37.6 million (first half 2012 US$37.4 million).

 

Costs which were previously capitalised become revenue costs as areas mature.  Given the overall young profile of the Group's estates, particularly in Kalimantan and Bangka, significant costs are recognised in this way during each year at this early stage in the development of these new projects.

 

The plantation industry has experienced some cost pressures, mainly because of significant statutory increases in minimum wages in the various provinces of Indonesia.  The majority of workers already earn well above the minimum wage, although the minimum wage does form part of the basis for wage calculations.  The effect of this has been mitigated by the strengthening of the US Dollar against the Indonesian Rupiah in the first half of 2013.  Intense competition for good-quality management has also exerted upward pressure on staff remuneration levels.

 

Fertiliser and fuel remain major costs.  Most fertiliser costs are US-Dollar denominated.  Costs in this area are being reduced by the production and application in the field of organic compost derived from the waste products from the mills (empty fruit bunches and liquid effluent).  

 

The construction of a generator fuelled by methane derived from the effluent in the Kalimantan mill is aimed at driving down the cost of electricity, which was previously produced either by steam-driven turbines in the mills or by standalone diesel-fuelled generators and the commercial benefit from this is expected within the next two or so years, depending upon the actual rate of increase in throughput to the mill.  The capture and burning of methane for power generation, in a similarly profitable and environmentally-beneficial way, is under consideration at the Pangkatan mill.

 

As a result of the above, gross profit (before the biological-asset adjustment) from the Indonesian palm-oil operations amounted to US$7.1 million for the first half of 2013, compared with US$13.3 million for the same period in 2012.

 

Crops, production and selling-price details for the majority-owned estates are set out as follows:-

 

                                      6 months              6 months         Year

                                         ended                 ended        ended

                                       30 June   Increase/   30 June  31 December

                                          2013  (decrease)      2012         2012

                                        Tonnes           %    Tonnes       Tonnes

Crops      

Own crops   

 Pangkatan group                        65,500                73,100      157,000

 Simpang Kiri                           23,200                24,200       51,300

                                       -------               -------      -------

                                        88,700         (9)    97,300      208,300

 

 Kalimantan                             51,900         98     26,200       73,700

 Bangka                                 16,200         11     14,600       35,000

                                       -------               -------      -------

 Total crops                           156,800         14    138,100      317,000

                                       =======       ====    =======      =======

 

Smallholder co-operative crops

  Kalimantan                            20,800         91     10,900       29,800

  Bangka                                 8,700          6      8,200       19,700

                                       -------               -------      -------

                                        29,500         54     19,100       49,500

                                       =======       ====    =======      =======

Outside crop purchased

  Kalimantan                            15,900        (45)    29,000       60,100

                                       =======       ====    =======      =======

 

 

Production

Crude palm oil

  Pangkatan                             15,800         (8)    17,100       35,900

  Kalimantan                            22,200         42     15,600       39,500

                                       -------               -------      -------

                                        38,000         16     32,700       75,400

                                       =======       ====    =======      =======

 

 Palm kernels    

  Pangkatan                              3,600        (12)     4,100        8,700

  Kalimantan                             3,700         54      2,400        6,100

                                       -------               -------      -------

                                         7,300         12      6,500       14,800

                                       =======        ===    =======      =======

 

Extraction rates                             %                     %            %

Crude palm oil

  Pangkatan                               24.1                  23.4         23.1

  Kalimantan                              25.1                  23.9         24.1

                                       =======               =======      =======

 

                                             %                     %            %          

Palm kernels   

  Pangkatan                                5.6                   5.7          5.6

  Kalimantan                               4.2                   3.7          3.7

                                       =======               =======      =======

 

Selling prices

Palm oil - Rotterdam c.i.f.

  - average per tonne                   US$846        (23)  US$1,096       US$998 

                                       =======       ====    =======      =======

 

 

Planting of the remaining areas of the Kalimantan and Bangka projects has progressed slowly.  Inevitably, compensation to the users of the land becomes more time consuming and expensive as the latter stages of development are reached.  As at 30 June 2013, some 13,760 hectares had been planted on the Kalimantan project of which 9,750 relate to the Group and 4,010 hectares to the smallholder co-operatives.  On the Bangka project, some 5,460 hectares had been planted by this date of which 3,770 hectares related to the Group and 1,690 hectares to the smallholder co-operatives.

 

The current estimate remains that the areas on these two new projects that may ultimately be planted is 15,000 hectares in Kalimantan and 10,000 hectares on Bangka, of which 10,600 hectares and 6,000 hectares respectively relate to the Group and the balance to the smallholder-co-operative schemes.

 

Australia

Ample rains at the end of 2012 and in early 2013 resulted in very good pastures and enabled the herd to be rebuilt from the 5,600 head at 1 January 2013 to 10,300 head at 30 June 2013.  As has been done in the past, third-party cattle (5,100 on this occasion) have been "agisted" on Woodlands.   Agistment is the process whereby third-party cattle are taken onto the property in return for a fee that is based on weight gained.  At 30 June 2013, all of these agisted cattle were still on the property although some have since reached optimal weights and been moved off.   Conditions have been significantly drier on the property in the middle part of the year. 

 

Weight gains (including those relating to the agisted cattle) in the first half of 2013 were slightly higher than those achieved in the first half of 2012.  As in the six months ended 30 June 2012, prices for the type of cattle fattened on Woodlands fell in 2013.  However, the effect in 2013 (mainly on the value of the cattle that were on the property throughout the period) was less than in 2012, giving rise to a break-even result compared with a gross loss of US$0.6 million in the six months ended 30 June 2012. 

 

GROSS PROFIT

 

As a result of all of the above, the gross profit for the first half of 2013 was US$9.5 million, a 34% decrease from the US$14.4 million for the same period last year.  The table below sets out an analysis of the gross profit/(loss) between the various activities and between the countries in which the Group operates.

 

 

BEARER BIOLOGICAL-ASSET ADJUSTMENT

The biological gain during the period amounted to US$ 6.9 million; against this were set planting costs of US$ 3.4 million but also an upward adjustment reflecting depreciation on plantings of US$ 2.4 million. In total, therefore, the biological-bearer-asset adjustment increased the reported Group operating profit before interest and tax by US$5.8 million (2012 US$ 4.8 million). The main reason for the biological gain was an increase of US$ 12 to US$ 614 in the 20-year average CPO price used to value biological assets (2012 increase of US$ 18 to US$ 590), though a small uplift in planted hectarage also contributed to the gain. The increase in the price of CPO used in the valuation of biological assets also led to an increase of US$ 0.9 million in the Group's share in the results of the associated companies.

 

Six months ended 30 June 2013

                                                        Biological

                                             Cost of  bearer-asset         Gross

                              Turnover         sales    adjustment  profit/(loss)

                               US$'000       US$'000       US$'000       US$'000

Plantations

Indonesia                       37,613       (30,482)        2,362         9,493

Malaysia                           102          (127)            -           (25)

                                ------        ------        ------        ------

Total plantations               37,715       (30,609)        2,362         9,468

 

Cattle - Australia                 691          (712)            -           (21)

 

Other - UK                          24             -             -            24

                                ------        ------        ------        ------

Group total                     38,430       (31,321)        2,362         9,471

                                ======        ======        ======        ======

 

Six months ended 30 June 2012

                                                        Biological

                                             Cost of  bearer-asset         Gross

                              Turnover         sales    adjustment  profit/(loss)

                               US$'000       US$'000       US$'000       US$'000

Plantations

Indonesia                       37,374       (24,025)        1,520        14,869

Malaysia                           150          (113)            -            37

                                ------        ------        ------        ------

Total plantations               37,524       (24,138)        1,520        14,906

 

Cattle - Australia               1,021        (1,593)            -          (572)

 

Other - UK                          23             -             -            23

                                ------        ------        ------        ------

Group total                     38,568       (25,731)        1,520        14,357

                                ======        ======        ======        ======

 

 

Year ended 31 December 2012

                                                        Biological

                                             Cost of  bearer-asset         Gross

                              Turnover         sales    adjustment  profit/(loss)

                               US$'000       US$'000       US$'000       US$'000

Plantations

Indonesia                       76,814       (54,374)        2,715        25,155

Malaysia                           292          (265)            -            27

                                ------        ------        ------        ------

Total plantations               77,106       (54,639)        2,715        25,182

 

Cattle - Australia               6,061        (8,254)            -        (2,193)

 

Other - UK                          46             -             -            46

                                ------        ------        ------        ------

Group total                     83,213       (62,893)        2,715        23,035

                                ======        ======        ======        ======

 

 

 

ASSOCIATED COMPANIES

Indonesia

The Group's share of its Indonesian associated companies' post-tax profits for the period, compared with that for the first half, and for the whole, of 2012, was as follows:-

 

Six months ended 30 June 2013

                                         Post-tax                      Post-tax

                                    profit before                  profit after

                                       biological     Biological     biological

                                     bearer-asset   bearer-asset   bearer-asset

                                       adjustment     adjustment     adjustment

                                          US$'000        US$'000        US$'000

 

PT Agro Muko (36.84%)                       3,147          1,345          4,492

PT Kerasaan Indonesia (38.00%)                391           (437)           (46)

                                           ------         ------         ------

                                            3,538            908          4,446

                                           ======         ======         ======

 

Six months ended 30 June 2012

                                         Post-tax                      Post-tax

                                    profit before                  profit after

                                       biological     Biological     biological

                                     bearer-asset   bearer-asset   bearer-asset

                                       adjustment      adjustment    adjustment

                                          US$'000        US$'000        US$'000

 

PT Agro Muko (36.84%)                       6,295          1,466          7,761

PT Kerasaan Indonesia (38.00%)                592            (32)           560

                                           ------         ------         ------

                                            6,887          1,434          8,321

                                           ======         ======         ======

 

Year ended 31 December 2012

                                         Post-tax                      Post-tax

                                    profit before                  profit after

                                       biological     Biological     biological

                                     bearer-asset   bearer-asset   bearer-asset

                                       adjustment     adjustment     adjustment

                                          US$'000        US$'000        US$'000

 

PT Agro Muko (36.84%)                      12,015            (26)        11,989

PT Kerasaan Indonesia (38.00%)              1,246              6          1,252

                                           ------         ------         ------

                                           13,261            (20)        13,241

                                           ======         ======         ======

 

 

 

 

 

Crops and production were as follows:-

 

                                      6 months                 6 months        Year

                                         ended                    ended       ended

                                       30 June    (Decrease)/   30 June 31 December

                                          2013     increase        2012        2012

                                        Tonnes             %     Tonnes      Tonnes

F.f.b. crops

PT Agro Muko

  - own                                161,700            (4)   168,400     367,400

  - outgrowers                           3,600            (5)     3,800       8,600

                                      --------                 --------    --------

                                       165,300                  172,200     376,000

 

PT Kerasaan Indonesia                   18,500             3     18,000      41,200

                                      --------                  -------    --------

                                       183,800            (3)   190,200     417,200

                                      ========          ====   ========    ========

 

Production (PT Agro Muko)

  Crude palm oil                        37,200            (8)    40,400      87,100

  Palm kernels                           8,400            (8)     9,100      19,700

                                      ========          ====   ========    ========

 

                                             %                        %           %

Extraction rates

  Crude palm oil                          22.5                     23.5        23.2

  Palm kernals                             5.1                      5.3         5.2

                                      ========                 ========    ========

 

                                        Tonnes                   Tonnes      Tonnes

Rubber crops

  PT Agro Muko - own                       721            (2)       738       1,340

                                      ========          ====   ========    ========

 

 

The f.f.b. crop recorded by PT Agro Muko was slightly down compared with the first half of 2012 and weather conditions resulted in lower oil-extraction rates.  A significant replanting programme for the oil palms is under way as the large early plantings undertaken at the start of the project in the late 1980's and early 1990's reach the age when replanting becomes necessary.  As a result of this, f.f.b. crops from the PT Agro Muko estates are likely to continue at approximately the current level, or possibly slightly lower, over the next few years.  The rubber replanting programme continues and, as anticipated, the crop is likely to be lower in the short term until the yields on the recently-planted areas start to accelerate.

 

As with the majority-owned operations referred to above, the palm-oil operations of the two Indonesian associated companies were negatively affected by the sharply-lower palm-oil prices.  PT Agro Muko's rubber operations also experienced lower prices as demand slackened in the economies of the major world buyers, China, the US and Europe.

 

The programme of upgrading the infrastructure, particularly internal roads, on the PT Agro Muko estates continues.  A methane-capture plant has recently been commissioned.  This will not only provide a source of power generation but should lead to accreditation which will allow the company's palm oil to be sold to European power generators at a premium to prices hitherto achieved.

 

Progress has been made in resolving the problems arising from the severe leaf-pest attack which adversely affected the f.f.b. crops on Kerasaan Estate over the last two or so years.  The crop is starting to recover.  Separately, yields have been adversely affected by the incidence of ganoderma, a root disease.  Management vigilance and enhanced agricultural practices are tackling this issue.

 

There was a significant reduction in Kerasaan's biological-asset value during the first half of 2013. This was the product of a very small reduction (US$ 29) in biological-asset value per hectare, and a 7% reduction in hectarage as fields were felled in preparation for replanting. It is expected that the replanting will take place before the end of the year, so this part of the reduction in biological-asset value will be reversed in the results to be reported for the full year.

 

 

Australia

The Group's share of NAPCo's post-tax loss for the period, compared with that for the first half, and for the whole, of 2012, was as follows:-

 

                                         6 months       6 months           Year

                                            ended          ended          ended

                                          30 June        30 June    31 December

                                             2013           2012           2012

                                          US$'000        US$'000        US$'000

 

NAPCo (34.37%)                             (1,213)        (1,242)        (2,012)

                                           ======         ======         ======

 

 

A loss was recorded at NAPCo following the price softening mentioned above and a poor season on the majority of its properties which resulted in lighter weights of cattle.  As on Woodlands, under international accounting rules, the decline in the value of the entire herd, rather than just those animals sold, is brought to account in the consolidated income statement for the period.  The positive corollary is that there will be a correspondingly beneficial impact on future earnings as those unsold cattle gain weight and any price recovery sets in.  As a direct result of the recent substantial expansion of the feedlot, some 11,000 cattle, which, in the past, would have had to be sold, are, instead, being brought at lighter-than-usual weights into the feedlot, where they will grow out and gain weight.

 

Malaysia

The Group's share of Bertam Properties' post-tax profit/(loss) for the period, compared with that for the first half, and for the whole, of 2012 was as follows:-

 

 

                                         6 months       6 months           Year

                                            ended          ended          ended

                                          30 June        30 June    31 December

                                             2013           2012           2012

                                          US$'000        US$'000        US$'000

 

Bertam Properties (40.00%)                  1,131            207           (347)

                                           ======         ======         ======

 

 

Although no direct land sales were completed during the period, sales of a number of developed houses were successfully completed and the profit thereon recognised.  As a result, there was a substantial increase of the profit compared with the same period in 2012.  A number of direct land sales are in train but the profit will not be recognised until the transactions are fully completed.

 

Overall share of associates' profits

As a result of the above, the share of the associated companies' profits after tax and, where relevant, after biological-asset adjustments, amounted to US$4.4 million, 40% lower than the US$7.3 million for the same period in 2012.

 

PROSPECTS

Since the end of the interim period, the palm-oil price weakened in July during the Muslim fasting period, but subsequently strengthened to fluctuate around US$ 850 per tonne. Historically-low stock-usage ratios for CPO, the possibility of mandatory biofuel quotas in, notably, Indonesia, and reports of dryness in oilseed-producing areas in both North and South America suggest support for the CPO price at least at current levels. As is usual, f.f.b. crops are expected to rise during the second half of the year on both the Group's majority-owned estates and those of its associated companies. The 2013 crops on the Group's majority-held estates are expected to reach 350,000 tonnes, which leaves the Group on track to achieve its previously-stated estimate of 500,000 tonnes in 2015.

 

Prospects for Australian beef are looking more favourable as prices start to edge higher, following an improvement in both domestic and export demand, and as US supply starts to look increasingly tight.

 

 

 

Unaudited consolidated income statement

FOR THE SIX MONTHS ENDED 30 JUNE 2013

 

 

                                    Result before                      6 months

                                       biological     Biological          ended

                                     bearer-asset   bearer-asset        30 June

                                       adjustment     adjustment           2013

                                          US$'000        US$'000        US$'000

 

Revenue (note 3)                           38,430              -         38,430

 

Cost of sales                             (31,321)         2,362        (28,959)

                                           ------         ------         ------

Gross profit (note 3)                       7,109          2,362          9,471

 

Gain on biological assets (note 4)              -          6,850          6,850

Planting expenditure                            -         (3,397)        (3,397)

Foreign-exchange losses                      (841)             -           (841)

Other administrative expenses              (2,181)             -         (2,181)

Other income                                    -              -              -

                                           ------         ------         ------

Group operating profit before interest

 and tax                                    4,087          5,815          9,902

 

Finance income                                438              -            438

Finance costs                              (1,549)          (196)        (1,745)

                                           ------         ------         ------

Group-controlled profit before taxation     2,976          5,619          8,595

 

Tax on profit on ordinary activities       (1,360)        (1,276)        (2,636)

                                           ------         ------         ------

Group-controlled profit after tax           1,616          4,343          5,959

 

Share of associated companies' profit

 after tax                                  3,456            908          4,364

                                           ------         ------         ------

Profit for the period                       5,072          5,251         10,323

                                           ======         ======         ======

 

Attributable to:

Owners of M.P. Evans Group PLC              4,018          4,882          8,900

Minority interests                          1,054            369          1,423

                                           ------         ------         ------

                                            5,072          5,251         10,323

                                           ======         ======         ======

 

                                         US Cents                      US Cents

 

Basic earnings per 10p share                 7.32                         16.22

                                           ======                        ======

 

Diluted earnings per 10p share               7.31                         16.20

                                           ======                        ======

 

 

 

Unaudited consolidated income statement

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 YEAR ENDED 31 DECEMBER 2012

 

                                    Result before                          Year

                                       biological     Biological          ended

                                     bearer-asset   bearer-asset    31 December

                                       adjustment     adjustment           2012

                                          US$'000        US$'000        US$'000

 

Revenue                                    83,213              -         83,213

Cost of sales                             (62,893)         2,715        (60,178)

                                           ------         ------         ------

Gross profit                               20,320          2,715         23,035

 

Gain on biological assets                       -         11,907         11,907

Planting expenditure                            -         (9,784)        (9,784)

Foreign-exchange losses                    (1,761)             -         (1,761)

Other administrative expenses              (4,292)             -         (4,292)

Other income                                   17              -             17

                                           ------         ------         ------

Group operating profit before interest

 and tax                                   14,284          4,838         19,122

 

Finance income                              1,338              -          1,338

Finance costs                              (3,437)          (323)        (3,760)

                                           ------         ------         ------

Group-controlled profit before taxation    12,185          4,515         16,700

 

Tax on profit on ordinary activities       (4,791)        (1,239)        (6,030)

                                           ------         ------         ------

Group-controlled profit after tax           7,394          3,276         10,670

 

 

 

Share of associated companies' profit

 after tax                                 10,902            (20)        10,882

                                           ------         ------         ------

Profit for the period                      18,296          3,256         21,552

                                           ======         ======         ======

 

Attributable to:

Owners of M.P. Evans Group PLC             15,070          2,615         17,685

Minority interests                          3,226            641          3,867

                                           ------         ------         ------

                                           18,296          3,256         21,552

                                           ======         ======         ======

 

                                         US Cents                      US Cents

 

Basic earnings per 10p share                27.70                         32.51

                                           ======                        ======

 

Diluted earnings per 10p share              27.65                         32.44

                                           ======                        ======

 

 

Unaudited consolidated balance sheet

AT 30 JUNE 2013

 

                                           Before

                                       biological    Biological

                                     bearer-asset   bearer-asset        30 June

                                       adjustment     adjustment           2013

                                          US$'000        US$'000        US$'000

Non-current assets

Goodwill                                    1,157              -          1,157

Biological assets (note 4)                      -        146,186        146,186

Property, plant and equipment             181,158        (74,365)       106,793

Investment in associates                   97,075         26,521        123,596

Investments                                   106              -            106

Deferred-tax asset                          7,859              -          7,859

                                          -------        -------        -------

                                          287,355         98,342        385,697

                                          -------        -------        -------

Current assets

Biological assets                           4,159              -          4,159

Inventories                                 7,781             69          7,850

Trade and other receivables                16,416              -         16,416

Current-tax asset                           3,390              -          3,390

Cash and cash equivalents                  41,208              -         41,208*

                                          -------        -------        -------

                                           72,954             69         73,023

                                          -------        -------        -------

 

Total assets                              360,309         98,411        458,720

                                          -------        -------        -------

 

Current liabilities

Borrowings                                 21,475              -         21,475

Trade and other payables                   12,420              -         12,420

Current-tax liabilities                       309              -            309

                                          -------        -------        -------

                                           34,204              -         34,204

                                          -------        -------        -------

 

                                          -------        -------        -------

Net current assets                         38,750             69         38,819

                                          -------        -------        -------

 

Non-current liabilities

Borrowings                                 30,344              -         30,344

Deferred-tax liability                      2,917         17,955         20,872

Retirement-benefit obligations              4,663              -          4,663

                                          -------        -------        -------

                                           37,924         17,955         55,879

                                          -------        -------        -------

 

Total liabilities                          72,128         17,955         90,083

                                          =======        =======        =======

 

                                          -------        -------        -------

Net assets                                288,181         80,456        368,637

                                          =======        =======        =======

 

Equity

Share capital (note 5)                      9,243              -          9,243

Other reserves                             76,111         26,521        102,632

Profit and loss account                   188,585         45,349        233,934

                                          -------        -------        -------

Equity attributable to owners of

 M.P. Evans Group PLC                     273,939         71,870        345,809

 

Minority interests                         14,242          8,586         22,828

                                          -------        -------        -------

Total equity                              288,181         80,456        368,637

                                          =======        =======        =======

 

Of this balance US$20.1 million has been pledged as security against bank loans

 

 

Unaudited consolidated balance sheet

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

                                          =======        =======        =======

 

 

 

 

Unaudited consolidated balance sheet

AT 31 DECEMBER  2012

 

                                          Before

                                       biological     Biological

                                     bearer-asset   bearer-asset    31 December

                                       adjustment     adjustment           2012

                                          US$'000        US$'000        US$'000

Non-current assets

Goodwill                                    1,157              -          1,157

Biological assets (note 4)                      -        139,335        139,335

Property, plant and equipment             179,979        (72,617)       107,362

Investments in associates                 105,130         25,613        130,743

Investments                                   109              -            109

Deferred-tax asset                          6,454              -          6,454

                                          -------        -------        -------

                                          292,829         92,331        385,160

                                          -------        -------        -------

Current assets

Biological assets                           4,594              -          4,594

Inventories                                 9,664           (447)         9,217

Trade and other receivables                14,325              -         14,325

Current-tax asset                           1,477              -          1,477

Cash and cash equivalents                  54,757              -         54,757

                                          -------        -------        -------

                                           84,817           (447)        84,370

                                          -------        -------        -------

 

Total assets                              377,646         91,884        469,530

                                          -------        -------        -------

Current liabilities

Borrowings                                 25,458              -         25,458

Trade and other payables                   14,797              -         14,797

Current-tax liabilities                     1,541              -          1,541

                                          -------        -------        -------

                                           41,796              -         41,796

                                          -------        -------        -------

 

Net current assets                         43,021           (447)        42,574

                                          -------        -------        -------

Non-current liabilities

Borrowings                                 31,423              -         31,423

Deferred-tax liability                      2,514         16,679         19,193

Retirement-benefit obligations              4,230              -          4,230

                                          -------        -------        -------

                                           38,167         16,679         54,846

                                          -------        -------        -------

 

 

Total liabilities                          79,963         16,679         96,642

                                          =======        =======        =======

 

Net assets                                297,683         75,205        372,888

                                          =======        =======        =======

Equity

Share capital (note 5                      9,227              -          9,227

Other reserves                             83,133         25,613        108,746

Profit and loss account                   191,734         41,376        233,110

                                          -------        -------        -------

Equity attributable to owners

 of M.P. Evans Group PLC                  284,094         66,989        351,083

 

Minority interests                         13,589          8,216         21,805

                                          -------        -------        -------

Total equity                              297,683         75,205        372,888

                                          =======        =======        =======

 

 

Unaudited consolidated cash-flow statement

FOR THE SIX MONTHS ENDED 30 JUNE 2013

 

                                         6 months       6 months           Year

                                            ended          ended          ended

                                          30 June        30 June    31 December

                                             2013           2012           2012

                                          US$'000        US$'000        US$'000

Net cash generated by operating

 activities (note 6                        2,393         16,548         33,897

                                          -------        -------        -------

Investing activities

Interest received                             438            537          1,338

Proceeds on disposal of property, plant

 and equipment                                158            194            239

Purchase of property, plant and equipment  (5,984)        (6,116)       (18,540)

Planting expenditure                       (3,397)        (4,302)        (9,784)

                                          -------        -------        -------

Net cash used by investing activities      (8,785)        (9,687)       (26,747)

                                          -------        -------        -------

 

Financing activities

Dividends paid to Company

 shareholders (note 3)                     (4,406)        (4,360)        (6,151)

Repayment of borrowings                      (496)          (475)        (1,323)

Loans drawn down                                -            298            310

Proceeds on issue of shares (note 6)          130             20          1,586

Dividend paid to minorities                  (400)             -              -

                                          -------        -------        -------

Net cash  used by financing

 activities                                (5,172)        (4,517)        (5,578)

                                          -------        -------        -------

 

Net (decrease)/increase in cash and cash

 equivalents                              (11,564)         2,344          1,572

 

Net cash and cash equivalents at          

 1 January                                 29,299         27,500         27,500

 

Effect of foreign-exchange rates on cash

 and cash equivalents                       1,998            (85)           227

                                          -------        -------        -------

Net cash and cash equivalents at       

 period end                                19,733         29,759         29,299

                                          =======        =======        =======

 

 

 

Notes to the interim statements

FOR THE SIX MONTHS ENDED 30 JUNE 2013

 

 

1.     STATUTORY INFORMATION

The financial information for the six-month periods ended 30 June 2013 and 2012 has been neither audited nor reviewed by the Group's auditors and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.  The financial information for the year ended 31 December 2012 is abridged from the statutory accounts. The 31 December 2012 statutory accounts have been reported on by the Group's auditors, PricewaterhouseCoopers LLP, and have been filed with the Registrar of Companies.  The report of the auditors thereon was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006, nor did it contain any matters to which the auditors drew attention without qualifying their audit report.

 

 

2.     ACCOUNTING POLICIES

The consolidated financial results have been prepared in accordance with International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board (IASB) as adopted by the EU, and with those parts of the Companies Act 2006 applicable to companies preparing accounts under IFRS.

 

The accounting policies of the Group follow those set out in the annual financial statements at 31 December 2012. 

 

 

3.     DIVIDENDS

 

                                      6 months       6 months           Year

                                         ended          ended          ended

                                       30 June        30 June    31 December

                                          2013           2012           2012

                                       US$'000        US$'000        US$'000

2011 final dividend - 5.75p

 per 10p share                               -          4,878          4,877

2012 interim dividend - 2.25p

 per 10p share                               -              -          1,985

2012 final dividend - 5.75p

 per 10p share                           4,796              -              -

                                        ------         ------         ------

                                         4,796          4,878          6,862

                                        ------         ------         ------

 

Subsequent to 30 June 2013, the board has declared an interim dividend of 2.25p per 10p share. The dividend will be paid on or after 4 November 2013 to those shareholders on the register at the close of business on 27 September 2013.

 

A scrip dividend will continue to be available for the interim dividend.  Shareholders who have previously elected to receive their dividends in this manner will automatically receive this dividend as scrip.  Shareholders who now wish to make an election to receive this and future dividends as scrip should contact the company secretary by no later than 14 October 2013.

 

TIMETABLE

Ex dividend date                                                  25/09/2013

Record date                                                       27/09/2013

Calculation period                                  25/09/2013 to 01/10/2013

Last day for scrip elections                                      14/10/2013

Payment date                                                      04/11/2013

 

  

4.     BIOLOGICAL ASSETS

The Group values its plantation assets using a discounted cash flow over the expected 25-year economic life of the asset. The discount rate used in this valuation is 14%. The price of the f.f.b. crop is taken to be a 20-year average based on actual selling prices or, where the plantation has its own mill, an inference based on the widely-quoted commodity price for crude palm oil delivered c.i.f. Rotterdam. The directors have concluded that using a 20-year average provides their best estimate of prices to be achieved over the valuation period.

 

The long-term average price and exchange rates used in determining the valuations based on cash flows were as follows:

 

                                      6 months       6 months           Year

                                         ended          ended          ended

                                       30 June        30 June    31 December

                                          2013           2012           2012

                                       

Price of crude palm oil

 (US$/tonnes, c.i.f Rotterdam)             614            590            602

 

Exchange rate (Rupiah

 per US Dollar)                          9,929          9,480          9,670

                                        ======         ======         ======

 

For palm oil, changes in the price assumption have a more than proportionate impact on the valuation of oil-palm plantings.

 

 

5.     SHARE CAPITAL

 

                                       30 June        30 June    31 December

                                          2013           2012           2012

Number of shares of 10p each

At 1 January                        54,871,402     54,021,901     54,021,901

Issued                                 105,350         75,980        849,501

                                    ----------     ----------     ----------

At period end                       54,976,752     54,097,881     54,871,402

                                    ==========     ==========     ==========

 

                                       US$'000        US$'000        US$'000

At 1 January                             9,227          9,093          9,093

Issued                                      16             12            134

                                       -------        -------        -------

At period end                            9,243          9,105          9,227

                                       =======        =======        =======

 

During the period, 53,790 (2012 - 10,000) 10p shares were issued as a result of the exercise of share options. Total cash proceeds received by the Company were US$130,000 (2012 US$20,000). In addition, 51,560 shares were issued in lieu of the 2012 final dividend paid on 20 June 2013 (2012 - 65,980).

 

 

6.     ANALYSIS OF MOVEMENTS IN CASH FLOW

 

                                      6 months       6 months           Year

                                         ended          ended          ended

                                       30 June        30 June    31 December

                                          2013           2012           2012

                                       US$'000        US$'000        US$'000

 

Profit for the year                     10,323         15,330         21,552

Share of associated companies' profit

 after tax                              (4,364)        (7,286)       (10,882)

Tax charge                               2,636          2,985          6,030

Finance costs                            1,745          1,906          3,760

Finance income                            (438)          (537)        (1,338)

                                       -------        -------        -------

Operating profit                         9,902         12,398         19,122

 

Biological gain                         (7,333)        (5,669)       (12,053)

Planting expenditure                     3,397          4,302          9,784

Disposal of non-current assets             (33)           (52)           207

Add back of land to be sold to

 smallholders' co-operative schemes          -            (27)             -

Release of deferred profit on sale

 of land                                  (161)          (114)          (137)

Depreciation of property, plant

 and equipment                           2,567          2,548          5,211

Retirement-benefit obligations             322            517          1,500

Share-based payments                        52             10             23

Dividends from associated companies      3,804          6,074         13,755

                                       -------        -------        -------

Operating cash flows before

 movements in working capital           12,517         19,987         37,412

 

Decrease/(increase)in inventories        1,626         (2,854)         5,025

(Increase)/decrease in receivables      (2,131)         3,379            164

(Decrease)/increase in payables         (3,356)         1,332            (45)

                                       -------        -------        -------

Cash used in operating activities        9,656         21,844         42,556

 

Income tax paid                         (5,518)        (3,390)        (4,899)

Interest paid                           (1,745)        (1,906)        (3,760)

                                       -------        -------        -------

Net cash generated by operating

 activities                              2,393         16,548         33,897

                                       =======        =======        =======

 

 

7.     EXCHANGE RATES

 

                                       30 June        30 June    31 December

                                          2013           2012           2012

 

US$1 = Indonesian Rupiah

 - average                               9,732          9,171          9,355

 - period end                            9,929          9,480          9,670

                                        ======         ======         ======

US$1 = Australian Dollar

 - average                                0.99           0.97           0.97

 - period end                             1.09           0.98           0.96

                                        ======         ======         ======

US$1 = Malaysian Ringgit

 - average                                3.07           3.09           3.09

 - period end                             3.16           3.18           3.06

                                        ======         ======         ======

£1 = US Dollar

 - average                                1.54           1.58           1.59

 - period end                             1.52           1.57           1.63

                                        ======         ======         ======

 

 

8.     DISTRIBUTION

The interim report for the six-month period ended 30 June 2013 will be despatched to shareholders on or before 18 September 2013 and copies thereof will be available on the Company's website (www.mpevans.co.uk) or from the Company at 3 Clanricarde Gardens, Tunbridge Wells, Kent TN1 1HQ on and after that date.

 

 

 

12 September 2013

 

 


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